0001647488-15-000172.txt : 20151116 0001647488-15-000172.hdr.sgml : 20151116 20151116170639 ACCESSION NUMBER: 0001647488-15-000172 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 18 CONFORMED PERIOD OF REPORT: 20150930 FILED AS OF DATE: 20151116 DATE AS OF CHANGE: 20151116 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SKINVISIBLE INC CENTRAL INDEX KEY: 0001085277 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 880344219 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-25911 FILM NUMBER: 151236094 BUSINESS ADDRESS: STREET 1: 6320 S SANDHILL ROAD STREET 2: SUITE 10 CITY: LAS VEGAS STATE: NV ZIP: 89120 BUSINESS PHONE: 7024337154 MAIL ADDRESS: STREET 1: 6320 S SANDHILL ROAD STREET 2: SUITE 10 CITY: LAS VEGAS STATE: NV ZIP: 89120 10-Q 1 mainbody.htm SKVI10Q093015

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 10-Q

 

[X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended September 30, 2015
[  ] Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from __________  to __________
Commission File Number: 000-25911

 

Skinvisible, Inc.

(Exact name of Registrant as specified in its charter)

 

Nevada 88-0344219
(State or other jurisdiction of incorporation or organization)  (IRS Employer Identification No.)

 

6320 South Sandhill Road, Suite 10, Las Vegas, NV 89120
(Address of principal executive offices)

 

702.433.7154
(Registrant’s telephone number)
 _______________________________________________________________
(Former name, former address and former fiscal year, if changed since last report)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days

[X] Yes [ ] No

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [ ]

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

[  ] Large accelerated filer [  ] Accelerated filer
[  ] Non-accelerated filer [X] Smaller reporting company

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). [ ] Yes [X] No

 

State the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 114,157,969 common shares as of October 25, 2015

   

TABLE OF CONTENTS

 

Page 

 

PART I – FINANCIAL INFORMATION

 

Item 1: Financial Statements 3
Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations 4
Item 3: Quantitative and Qualitative Disclosures About Market Risk 12
Item 4: Controls and Procedures 12

 

PART II – OTHER INFORMATION

 

Item 1: Legal Proceedings 13
Item 2: Unregistered Sales of Equity Securities and Use of Proceeds 13
Item 3: Defaults Upon Senior Securities 13
Item 4: Mine Safety Disclosure 13
Item 5: Other Information 13
Item 6: Exhibits 13

 

 2 

PART I - FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

Our consolidated financial statements included in this Form 10-Q are as follows:

 

F-1   Consolidated Balance Sheets as of September 30, 2015 and December 31, 2014 (unaudited);

 

F-2   Consolidated Statements of Operations for the three and nine months ended September 30, 2015 and 2014 (unaudited);

 

F-3   Consolidated Statements of Cash Flow for the nine months ended September 30, 2015 and 2014 (unaudited);

 

F-4   Notes to Consolidated Financial Statements.

 

These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the SEC instructions to Form 10-Q.  In the opinion of management, all adjustments considered necessary for a fair presentation have been included.  Operating results for the interim period ended September 30, 2015 are not necessarily indicative of the results that can be expected for the full year.

 

 3 

 SKINVISIBLE, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

 

  September 30, 2015  December 31, 2014
ASSETS         
Current assets         
Cash $—     $196,602 
Accounts receivable  6,833    9,457 
Inventory  89,751    83,155 
Due from related party  1,145    1,145 
Prepaid expense and other current assets  —      —   
Total current assets  97,729    290,359 
Fixed assets, net of accumulated depreciation of $325,460 and  $324,275, respectively  2,090    3,275 
Intangible and other assets:         
Patents and trademarks, net of accumulated amortization of $330,215 and $288,203, respectively  315,954    352,420 
Total assets $415,773   $646,054 
          
LIABILITIES AND STOCKHOLDERS' DEFICIT         
Current liabilities         
Accounts payable and accrued liabilities $728,582   $420,762 
Bank overdraft  32,787    —   
Accrued interest payable  497,899    348,111 
Loans from related party  1,910    1,910 
Loans payable  1,549,900    —   
Convertible notes payable, net of unamortized debt discount of $38,046 and $26,822, respectively  1,149,040    1,112,764 
Convertible notes payable related party, net of unamortized discount of $634,320 and $874,163, respectively  1,413,111    1,173,178 
Total current liabilities  5,373,229    3,056,725 
Loans payable  731,600    1,940,000 
Total liabilities  6,104,829    4,996,725 
          
Stockholders' deficit         
Common stock; $0.001 par value; 200,000,000 shares authorized; 113,957,969  and 111,813,969   shares issued and outstanding at September 30, 2015 and December 31, 2014, respectively  114,158    111,814 
Additional paid-in capital  21,527,741    21,378,656 
Stock payable  —      —   
Accumulated deficit  (27,330,955)   (25,841,141)
Total stockholders' deficit  (5,689,056)   (4,350,671)
Total liabilities and stockholders' deficit $415,773   $646,054 

 

See Accompanying Notes to Consolidated Financial Statements.

 F-1 

SKINVISIBLE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

 

Three months ending  Nine months ending
September 30, 2015  September 30, 2014  September 30, 2015  September 30, 2014
Revenues $30,377   $22,303   $158,428   $41,276 
Cost of revenues  9,859    674    56,047    3,907 
Gross profit  20,518    21,629    102,381    37,369 
Operating expenses                   
Depreciation and amortization  14,631    9,680    43,377    28,027 
Selling general and administrative  255,436    373,101    900,605    758,997 
Total operating expenses  270,067    382,781    943,982    787,024 
Loss from operations  (249,549)   (361,152)   (841,601)   (749,655)
Other income and (expense)                   
Other income  —      70    26    258 
Interest expense  (232,107)   (200,944)   (650,079)   (551,872)
Gain on extinguishment of debt  400    (4,054)   1,840    (5,044)
Total other expense  (231,707)   (204,928)   (648,213)   (556,658)
Net loss $(481,256)  $(566,080)  $(1,489,814)  $(1,306,313)
Basic loss per common share $(0.00)  $(0.01)  $(0.01)  $(0.01)
Basic weighted average common shares outstanding  113,957,969    111,609,529    113,957,969    111,317,222 

 

See Accompanying Notes to Consolidated Financial Statements.

 F-2 

SKINVISIBLE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

Nine Months Ended
September 30, 2015  September 30, 2014
Cash flows from operating activities:         
Net loss $(1,489,814)  $(1,306,313)
Adjustments to reconcile net loss to net  cash used in operating activities:         
Depreciation and amortization  43,377    28,027 
Stock-based compensation  8,800    31,050 
Amortization of debt discount  327,478    250,558 
Gain (Loss) on extinguishment of debt  (1,840)   5,044 
Bank overdraft  32,787    —   
Changes in operating assets and liabilities:         
Increase in inventory  (6,596)   (59,393)
Decrease (increase) in accounts receivable  2,624    (9,030)
Increase (decrease) in prepaid assets  —      1 
Increase in accounts payable and accrued liabilities  321,020    105,803 
Increase in accrued interest  149,788    133,516 
Net cash used in operating activities  (612,376)   (820,737)
Cash flows from investing activities:         
Purchase of fixed and intangible assets  (5,726)   (15,855)
Net cash used in investing activities  (5,726)   (15,855)
Cash flows from financing activities:         
Proceeds from sale of common stock  80,000    —   
Proceeds from related party loans, net of payments  —      78 
Payments on notes payable  (89,500)   —   
Proceeds from notes payable  431,000    594,400 
Payments on convertible notes payable  —      (13,000)
Net cash provided by (used in) financing activities  421,500    581,478 
Net change in cash  (196,602)   (255,114)
Cash, beginning of period  196,602    513,420 
Cash, end of period $—     $258,306 
Supplemental disclosure of cash flow information:         
Cash paid for interest $211,564   $144,708 
Cash paid for tax $—     $—   
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:         
Non-cash investing and financing activities:         
Accrued expenses converted to notes $118,126   $156,684 
Common stock issued on extiguishment of debts $5,760   $20,644 

 

See Accompanying Notes to Consolidated Financial Statements. 

 F-3 

SKINVISIBLE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

1. DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES

 

Description of business – Skinvisible, Inc., (referred to as the “Company”) is focused on the development and manufacture and sales of innovative topical, transdermal and mucosal polymer-based delivery system technologies and formulations incorporating its patent-pending formula/process for combining hydrophilic and hydrophobic polymer emulsions. The technologies and formulations have broad industry applications within the pharmaceutical, over-the-counter, personal skincare and cosmetic arenas. Additionally, the Company’s non-dermatological formulations, offer solutions for a broad spectrum of markets women’s health, pain management, and others. The Company maintains executive and sales offices in Las Vegas, Nevada.

 

History – Skinvisible, Inc. (referred to as the “Company”) was incorporated in Nevada on March 6, 1998, under the name of Microbial Solutions, Inc. The Company underwent a name change on February 26, 1999, when it changed its name to Skinvisible, Inc. The Company’s subsidiary’s name of Manloe Labs, Inc. was also changed to Skinvisible Pharmaceuticals, Inc.

 

On September 9, 2014, the Company formed Kinatri USA Inc., a new wholly-owned subsidiary, to market a premium line of scientifically formulated skincare products powered by our patented Invisicare® technology. As part of our strategic focus on revenue generation and creating shareholder value, Kintari USA Inc. products will be sold via network marketing.

The Kintari product portfolio consists of anti-aging products to help fight the signs of aging. These products have been developed using proven anti-aging ingredients with scientific evidence of their effectiveness at reducing the look of fine lines and wrinkles resulting in youthful looking skin. These potent ingredients will be powered by patented Invisicare technology, providing consumers with unique, effective products which we believe cannot be duplicated. Additional products will be added to enhance this product line as the company grows and expands.

Skinvisible, Inc. together with its subsidiary shall herein be collectively referred to as the “Company”.

 

Going concern – The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred cumulative net losses of $27,330,955 since its inception and requires capital for its contemplated operational and marketing activities to take place. The Company’s ability to raise additional capital through the future issuances of common stock is unknown. The obtainment of additional financing, the successful development of the Company’s contemplated plan of operations, and its transition, ultimately, to the attainment of profitable operations are necessary for the Company to continue operations. The ability to successfully resolve these factors raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements of the Company do not include any adjustments that may result from the outcome of these aforementioned uncertainties.

 

Principles of consolidation – The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany balances and transactions have been eliminated.

 

Use of estimates – The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

 

Cash and cash equivalents

For purposes of the statement of cash flows, the Company considers all highly liquid investments and short-term debt instruments with original maturities of three months or less to be cash equivalents. There are $0 and $196,602 in cash and cash equivalents as of September 30, 2015 and December 31, 2014, respectively.

 

Fair Value of Financial Instruments

The carrying amounts reflected in the balance sheets for cash, accounts payable and accrued expenses approximate the respective fair values due to the short maturities of these items.

 F-4 

SKINVISIBLE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

As required by the Fair Value Measurements and Disclosures Topic of the FASB ASC, fair value is measured based on a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

 

The three levels of the fair value hierarchy are described below:

 

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

 

Level 2: Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability;

 

Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

 

Revenue recognition

Product sales – Revenues from the sale of products (Invisicare® polymers) are recognized when title to the products are transferred to the customer and only when no further contingencies or material performance obligations are warranted, and thereby have earned the right to receive reasonably assured payments for products sold and delivered.

 

Royalty sales – The Company also recognizes royalty revenue from licensing its patented product formulations only when earned, when no further contingencies or material performance obligations are warranted, and thereby have earned the right to receive and retain reasonably assured payments.

Distribution and license rights sales – The Company also recognizes revenue from distribution and license rights only when earned (and are amortized over a five year period), when no further contingencies or material performance obligations are warranted, and thereby have earned the right to receive and retain reasonably assured payments.

Costs of Revenue – Cost of revenue includes raw materials, component parts, and shipping supplies. Shipping and handling costs is not a significant portion of the cost of revenue.

Accounts Receivable – Accounts receivable is comprised of uncollateralized customer obligations due under normal trade terms requiring payment within 30 days from the invoice date. The carrying amount of accounts receivable is reviewed periodically for collectability. If management determines that collection is unlikely, an allowance that reflects management’s best estimate of the amounts that will not be collected is recorded. Management reviews each accounts receivable balance that exceeds 30 days from the invoice date and, based on an assessment of creditworthiness, estimates the portion, if any, of the balance that will not be collected. As of September 30, 2015, the Company had not recorded a reserve for doubtful accounts. The Company has $1,000,000 in convertible notes payable which are secured by the accounts receivable of a license agreement the Company has with Women's Choice Pharmaceuticals, LLC on its proprietary prescription product, ProCort®.

 

Inventory – Substantially all inventory consists of finished goods and are valued based upon first-in first-out ("FIFO") cost, not in excess of market. The determination of whether the carrying amount of inventory requires a write-down is based on an evaluation of inventory.

 

Goodwill and intangible assets – The Company follows Financial Accounting Standard Board’s (FASB) Codification Topic 350-10 (“ASC 350-10”), “Intangibles – Goodwill and Other”. According to this statement, goodwill and intangible assets with indefinite lives are no longer subject to amortization, but rather an annual assessment of impairment by applying a fair-value based test. Fair value for goodwill is based on discounted cash flows, market multiples and/or appraised values as appropriate. Under ASC 350-10, the carrying value of assets are calculated at the lowest level for which there are identifiable cash flows.

 F-5 

SKINVISIBLE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

Income taxes – The Company accounts for its income taxes in accordance with FASB Codification Topic ASC 740-10, “Income Taxes”, which requires recognition of deferred tax assets and liabilities for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

 

Stock-based compensation – The Company follows the guidelines in FASB Codification Topic ASC 718-10 “Compensation-Stock Compensation”, which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors including employee stock options and employee stock purchases related to a Employee Stock Purchase Plan based on the estimated fair values.

 

Stock based compensation expense recognized under ASC 718-10 for the year ended September 30, 2015 and December 31, 2014 totaled $8,800 and $54,450, respectively.

 

Earnings (loss) per share – The Company reports earnings (loss) per share in accordance with FASB Codification Topic ASC 260-10 “Earnings Per Share”, Basic earnings (loss) per share is computed by dividing income (loss) available to common shareholders by the weighted average number of common shares available. Diluted earnings (loss) per share is computed similar to basic earnings (loss) per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. Diluted earnings (loss) per share has not been presented since the effect of the assumed exercise of options and warrants to purchase common shares (common stock equivalents) would have an anti-dilutive effect.

 

2. FIXED ASSETS

 

Fixed assets consist of the following as of September 30, 2015 and December 31, 2014:

 

September 30, 2015 December 31, 2014
Machinery and equipment $             48,163 $             48,163
Furniture and fixtures 113,635 113,635
Computers, equipment and software 39,722 39,722
Leasehold improvements 12,569 12,569
Lab equipment 113,461 113,461
 Total 327,550 327,550
Less: accumulated depreciation (325,460) (324,275)
Fixed assets, net of accumulated depreciation $ 2,090 $ 3,275

 

Depreciation expense for the nine months ended September 30, 2015 and 2014 was $1,185 and $1,067, respectively.

 

3. INVENTORY

 

Inventory consist of the following as of September 30, 2015 and December 31, 2014

 

September 30, 2015 December 31, 2014
Shipping and Packing materials $ 13,033 $ 14,758
Marketing Supplies 19,761 -
Finished Goods            7,084 $            51,756
Raw Materials 49,873 16,641
 Total 89,751 83,155

 

 F-6 

SKINVISIBLE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

4.    INTANGIBLE AND OTHER ASSETS

 

Patents and trademarks are capitalized at their historical cost and are amortized over their estimated useful lives. As of September 30, 2015, patents and trademarks total $646,169, net of $330,215 of accumulated amortization. Amortization expense for the nine months ended September 30, 2015 and 2014 was $42,192 and $26,960 respectively.

 

License and distributor rights (“agreement”) were acquired by the Company in January 1999 and provide exclusive use distribution of polymers and polymer based products. The Company has a non-expiring term on the license and distribution rights. Accordingly, the Company annually assesses this license and distribution rights for impairment and has determined that no impairment write-down is considered necessary as of September 30, 2015.

 

5. STOCK OPTIONS AND WARRANTS

 

The following is a summary of option activity during the nine months ended September 30, 2015.

 

  Number of Shares  Weighted Average
Exercise Price
Balance, December 31, 2014  9,750,000   $0.05 
          
Options granted and assumed  200,000    0.05 
Options expired  200,000    0.05 
Options canceled  —      —   
Options exercised  —      —   
          
Balance, September 30, 2015  9,750,000   $0.05 

 

As of September 30, 2015, 9,750,000 stock options are exercisable.

 

On March 31, 2015, the Company granted stock options for 200,000 shares of its common stock with a strike price of $0.05. The stock options were exercisable upon grant and have a life of 5 years. The stock options were valued at $8,800 using the Black-Scholes option pricing model based upon the following assumptions: term of 5 years,  risk free interest rate of 1.37%, a dividend yield of 0% and volatility rates of 483%.   The Company recorded an expense of $8,800 for the nine months ended September 30, 2015.

 

Stock warrants -

 

The following is a summary of warrants activity during the nine months ended September 30, 2015.

 

  Number of Shares  Weighted Average
Exercise Price
Balance, December 31, 2014  2,541,030   $0.05 
          
Warrants granted and assumed  1,000,000    0.07 
Warrants expired  1,196,280    0.05 
Warrants canceled  —      —   
Warrants exercised  —      —   
          
Balance, September 30, 2015  2,344,750   $0.07 

 

All warrants outstanding as of September 30, 2015 are exercisable.

 F-7 

SKINVISIBLE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

6. NOTES PAYABLE

 

On May 22, 2013 the Company approved a financing plan to offer accredited investors up to $1,000,000 in secured promissory notes. During the year ended December 31, 2013 the Company entered into twenty-four 9% notes payable to investors and received total proceeds of $1,000,000. The notes are due two years from the anniversary date of execution. The Notes are secured by the US Patent rights granted for the Company's Sunscreen Products: US patent number #8,128,913: "Sunscreen Composition with Enhanced UV-A Absorber Stability and Methods". As of September 30, 2015 several notes had reached their initial maturity date, all note holders executed agreements extending the note for an additional 12 months upon the same terms. During the nine months ending September 30, 2015 the Company made principal payments of $89,000.

 

On May 19, 2014 the Company approved a financing plan to offer accredited investors up to an additional $1,000,000 in secured promissory notes. For the period from May 19, 2014 to March 31, 2015 the Company entered into twenty-seven 9% notes payable to investors and received total proceeds of $1,000,000. The notes are due two years from the anniversary date of execution. The Notes are secured by the US Patent rights granted for the Company's Sunscreen Products: US patent number #8,128,913: "Sunscreen Composition with Enhanced UV-A Absorber Stability and Methods".

 

During the three months ended June 30, 2015 the Company entered into eight additional 9% notes payable to investors and received total proceeds of $208,000. The notes are due two years from the anniversary date of execution. The Notes are secured by the US Patent rights granted for the Company's Sunscreen Products: US patent number #8,128,913: "Sunscreen Composition with Enhanced UV-A Absorber Stability and Methods".

 

During the three months ended June 30, 2015 the Company entered into five additional 9% notes payable to investors and received total proceeds of $131,000. The notes are due two years from the anniversary date of execution. The Notes are secured by the US Patent rights granted for the Company's Sunscreen Products: US patent number #8,128,913: "Sunscreen Composition with Enhanced UV-A Absorber Stability and Methods".

 

As of September 30, 2015 $1,549,900 of the Notes were due in less than 12 months and have been classified as Current notes payable.

 

7.    RELATED PARTY TRANSACTIONS

 

During the year ended 2013 various officers advanced funds to support the daily operations of the company. As of September 30, 2015, $1,910 remained due to related parties as repayment for advanced monies, all related other party notes have been extinguished or re-negotiated as convertible notes. See note 10.

 

8. CONVERTIBLE NOTES PAYABLE

 

Convertible Notes Payable at consists of the following: September 30,  December 31,
  2015  2014
$52,476 face value,10% unsecured note payable to an investor, note interest and principal are due on demand.  The note could be converted to option rights for Skinvisible, Inc. shares at ten cents per share ($0.10), these rights expired January 12, 2010. The Note is currently in default, no penalties occur due to default. $28,476   $28,476 
Unamortized debt discount  —      —   
Total, net of unamortized discount  28,476    28,476 
$1,000,000 face value 9% unsecured notes payable to investors, due in 2015. At the investor’s option until the repayment date, the note and related interest may be converted to shares of the Company’s common stock a discount of 90% of the current share price after the first anniversary of the note. The Notes are secured by the accounts receivable of a license agreement the Company has with Womens Choice Pharmaceuticals, LLC on its proprietary prescription product, ProCort®. The Company has determined the value associated with the beneficial conversion feature in connection with the notes and interest to be $111,110. The aggregate original issue discount feature has been accreted and charged to interest expenses as a financing expense in the amount of $31,078 during the nine months ended September 30, 2015. The original issue discount feature is valued under the intrinsic value method.
 
On the Company executed extension agreements with several note holder who's note had reached maturity. The notes were extended for an additional 12 months.
 1,000,000    1,000,000 
Original issue discount  111,110    111,110 
Unamortized debt discount  (3,724)   (26,822)
Total, net of unamortized discount  1,107,386    1,084,288 
          
On July 28, 2015, we entered into a convertible promissory note pursuant to which we borrowed $47,500. Interest under the convertible promissory note is 8% per annum, and the principal and all accrued but unpaid interest is due on April 30, 2016. The note is convertible at any time following 180 days after the issuance date at noteholders option into shares of our common stock at a variable conversion price of 58% of the lowest average three day market price of our common stock during the 10 trading days prior to the notice of conversion, subject to adjustment as described in the note. The holder’s ability to convert the note, however, is limited in that it will not be permitted to convert any portion of the note if the number of shares of our common stock beneficially owned by the holder and its affiliates, together with the number of shares of our common stock issuable upon any full or partial conversion, would exceed 9.99% of our outstanding shares of common stock.
 
The Company has determined the value associated with the beneficial conversion feature in connection with the notes negotiated on July 28, 2015 to be $34,397. The aggregate beneficial conversion feature has been accreted and charged to interest expenses as a financing expense in the amount of $7,947 during the nine months ending September 30, 2015. The beneficial conversion feature is valued under the intrinsic value method
 47,500    —   
Unamortized debt discount  (34,322)   —   
Total, net of unamortized discount  13,178    —   
          
  $1,149,040   $1,112,764 

 

 F-8 

SKINVISIBLE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

10. CONVERTIBLE NOTES PAYABLE RELATED PARTY

 

Convertible Notes Payable Related Party at consists of the following: September 30,  December 31,
  2015  2014
On December 31, 2011, the Company re-negotiated accrued salaries and interest for three employees. Under the terms of the agreements, the notes dated before December 31, 2010, and all salaries not previously converted were converted to promissory notes convertible into common stock with a warrant feature. The promissory notes are unsecured, due five years from issuance, and bear an interest rate of 10%. At the investor’s option until the repayment date, the note may be converted to shares of the Company’s common stock at a fixed price of $0.04 per share along with additional warrants to purchase one share for every two shares issued at the exercise price of $0.06 per share for three years after the conversion date. The Company has determined the value associated with the beneficial conversion feature in connection with the notes negotiated on December 31, 2011 to be $1,123,078. The aggregate beneficial conversion feature has been accreted and charged to interest expenses as a financing expense in the amount of $124,544 during the nine months ending September 30, 2015.  The beneficial conversion feature is valued under the intrinsic value method.  In the year ending December 2013, the Company  made $51,485 in cash payments to reduce the note balance.  1,071,593    1,071,593 
Unamortized debt discount  (208,939)   (333,483)
          
On June 30, 2012, the Company re-negotiated accrued salaries and interest for three employees. Under the terms of the agreements, the notes dated before July 1, 2011, and all salaries not previously converted were converted to promissory notes convertible into common stock with a warrant feature. The promissory notes are unsecured, due five years from issuance, and bear an interest rate of 10%. At the investor’s option until the repayment date, the note may be converted to shares of the Company’s common stock at a fixed price of $0.04 per share along with additional warrants to purchase one share for every two shares issued at the exercise price of $0.06 per share for three years after the conversion date. The Company has determined the value associated with the beneficial conversion feature in connection with the  notes to be $209,809. The aggregate beneficial conversion feature has been accreted and charged to interest expenses as a financing expense in the amount of $31,098 during the nine months ending September 30, 2015.  The beneficial conversion feature is valued under the intrinsic value method.  On January 18, 2013, the Company  made a $3,990 cash payment to reduce the note balance.  321,032    321,032 
Unamortized debt discount  (72,788)   (103,886)
          
On December 30 and 31, 2012, the Company re-negotiated accrued salaries and interest for three employees. Under the terms of the agreements,  $182,083 of related party notes accrued interest and salaries not previously converted were converted to promissory notes convertible into common stock with a warrant feature. The $182,083 face value promissory notes are unsecured, due five years from issuance, and bear an interest rate of 10%. At the investor’s option until the repayment date, the note may be converted to shares of the Company’s common stock at a fixed price of $0.03 per share along with additional warrants to purchase one share for every two shares issued at the exercise price of $0.04 per share for three years after the conversion date. The Company has determined the value associated with the beneficial conversion feature in connection with the notes to be $182,083. The aggregate beneficial conversion feature has been accreted and charged to interest expenses as a financing expense in the amount of $27,223 during the nine months ending September 30, 2015.  The beneficial conversion feature is valued under the intrinsic value method.  182,083    182,083 
Unamortized debt discount  (82,054)   (109,277)

 

 F-9 

SKINVISIBLE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

On June 30, 2013, the Company re-negotiated accrued salaries and interest for two employees. Under the terms of the agreements,  $106,153 of accrued interest and salaries were converted to promissory notes convertible into common stock with a warrant feature. The $106,153 face value promissory notes are unsecured, due five years from issuance, and bear an interest rate of 10%. At the investor’s option until the repayment date, the note may be converted to shares of the Company’s common stock at a fixed price of $0.03 per share along with additional warrants to purchase one share for every two shares issued at the exercise price of $0.04 per share for three years after the conversion date. The Company has determined the value associated with the beneficial conversion feature in connection with the notes to be $70,768. The aggregate beneficial conversion feature has been accreted and charged to interest expenses as a financing expense in the amount of $10,579 during the nine months ending September 30, 2015.  The beneficial conversion feature is valued under the intrinsic value method.  106,152    106,152 
Unamortized debt discount  (38,912)   (49,491)
 On December 31, 2013, the Company re-negotiated accrued salaries and interest for three employees. Under the terms of the agreements, $142,501 of accrued interest and salaries not previously converted were converted to promissory notes convertible into common stock with a warrant feature. The $142,501 face value promissory notes are unsecured, due five years from issuance, and bear an interest rate of 10%. At the investor’s option until the repayment date, the note may be converted to shares of the Company’s common stock at a fixed price of $0.03 per share along with additional warrants to purchase one share for every two shares issued at the exercise price of $0.04 per share for three years after the conversion date. The Company has determined the value associated with the beneficial conversion feature in connection with the notes to be $94,909. The aggregate beneficial conversion feature has been accreted and charged to interest expenses as a financing expense in the amount of $14,189 during the nine months ending September 30, 2015. The beneficial conversion feature is valued under the intrinsic value method.  142,501    142,501 
Unamortized debt discount  (61,748)   (75,937)
On June 30, 2014, the Company re-negotiated accrued salaries and interest for three employees. Under the terms of the agreements,  $118,126 of accrued salaries not previously converted were converted to promissory notes convertible into common stock with a warrant feature. The $118,126 face value promissory notes are unsecured, due five years from issuance, and bear an interest rate of 10%. At the investor’s option until the repayment date, the note may be converted to shares of the Company’s common stock at a fixed price of $0.025 per share along with additional warrants to purchase one share for every two shares issued at the exercise price of $0.03 per share for three years after the conversion date. The Company has determined the value associated with the beneficial conversion feature in connection with the notes to be $118,126. The aggregate beneficial conversion feature has been accreted and charged to interest expenses as a financing expense in the amount of $17,661 during the nine months ending September 30, 2015.   The beneficial conversion feature is valued under the intrinsic value method.  118,126    118,126 
Unamortized debt discount  (88,562)   (106,223)
On September 30, 2014, the Company re-negotiated accrued salaries and interest for two employees. Under the terms of the agreements,  $40,558 of accrued salaries not previously converted were converted to promissory notes convertible into common stock with a warrant feature. The $40,558 face value promissory notes are unsecured, due five years from issuance, and bear an interest rate of 10%. At the investor’s option until the repayment date, the note may be converted to shares of the Company’s common stock at a fixed price of $0.04 per share along with additional warrants to purchase one share for every two shares issued at the exercise price of $0.05 per share for three years after the conversion date. The Company has determined the value associated with the beneficial conversion feature in connection with the notes to be $40,466. The aggregate beneficial conversion feature has been accreted and charged to interest expenses as a financing expense in the amount of $6,050 during the nine months ending September 30, 2015.  The beneficial conversion feature is valued under the intrinsic value method.  40,558    40,558 
Unamortized debt discount  (32,377)   (38,427)
On December 31, 2014, the Company re-negotiated accrued salaries and interest for two employees. Under the terms of the agreements,  $65,295 of accrued salaries not previously converted were converted to promissory notes convertible into common stock with a warrant feature. The $65,295 face value promissory notes are unsecured, due five years from issuance, and bear an interest rate of 10%. At the investor’s option until the repayment date, the note may be converted to shares of the Company’s common stock at a fixed price of $0.04 per share along with additional warrants to purchase one share for every two shares issued at the exercise price of $0.05 per share for three years after the conversion date. The Company has determined the value associated with the beneficial conversion feature in connection with the notes to be $57,439. The aggregate beneficial conversion feature has been accreted and charged to interest expenses as a financing expense in the amount of $8,589 during the nine months ending September 30, 2015.  The beneficial conversion feature is valued under the intrinsic value method.  65,295    65,295 
Unamortized debt discount  (48,850)   (57,438)
          
  $1,413,110   $1,173,178 

 

 F-10 

SKINVISIBLE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

11. STOCKHOLDERS’ DEFICIT

 

The Company is authorized to issue 200,000,000 shares of $0.001 par value common stock. The Company had 113,957,969 and 111,813,969 issued and outstanding shares of common stock as of September 30, 2015 and December 31, 2014, respectively.

 

On January 26, 2015 the Company received $50,000 pursuant to a private placement agreement with an investor to purchase 1,250,000 shares of Skinvisible Inc. $0.001 par value common stock and 625,000 warrants. The warrants allow the holder to purchase shares of the Company's common stock at $0.07 on or before January 21, 2016.

 

On January 27, 2015 the Company received $30,000 pursuant to a private placement agreement with an investor to purchase 750,000 shares of Skinvisible Inc. $0.001 par value common stock and 375,000 warrants. The warrants allow the holder to purchase shares of the Company's common stock at $0.07 on or before January 21, 2016.

 

On April 1, 2015, 72,000 shares were issued to settle $3,600 of accrued expenses due to a director of the Company.

 

On June 30, 2015, 72,000 shares were issued to settle $3,600 of accrued expenses due to a director of the Company. A gain of $1,440 was recognized as a result of this settlement.

 

On August 24, 2015, the company settled $6,000 of debt due to two parties with 200,000 shares of common stock. A gain of $400 was recognized as a result of this settlement.

 

12. COMMITMENTS AND CONTINGENCIES

 

Lease obligations – The Company has operating leases for its offices. Future minimum lease payments under the operating leases for the facilities as of September 30, 2015, are as follows:

 

2015 12,042

2016 5,717

 

Rental expense, resulting from operating lease agreements, approximated $32,619 and $31,368 for the nine months ended September 30, 2015 and 2014, respectively.

 

13.    SUBSEQUENT EVENTS

 

On October 26, 2015, we entered into a convertible promissory note pursuant to which we borrowed $135,000. Interest under the convertible promissory note is 9% per annum, and the principal and all accrued but unpaid interest is due on October 26, 2017. The note is convertible at any time following the third month anniversary after the issuance date at noteholders option into shares of our common stock at a variable conversion price of 90% of the average of the Trading Prices for the common stock during the five Trading Day period ending on the latest complete Trading Day prior to the Conversion Date, subject to adjustment as described in the note. The holder’s ability to convert the note, however, is limited in that it will not be permitted to convert any portion of the note if the number of shares of our common stock beneficially owned by the holder and its affiliates, together with the number of shares of our common stock issuable upon any full or partial conversion, would exceed 4.99% of our outstanding shares of common stock.

 

On October 1, 2015, we entered into a convertible promissory note with Greg McCartney a director of the Company. The $10,800 face value promissory note is unsecured, due five years from issuance, and bears an interest rate of 10%. At the investor’s option until the repayment date, the note may be converted to shares of the Company’s common stock at a fixed price of $0.02 per share along with an additional warrant to purchase one share for every two shares issued at the exercise price of $0.03 per share for three years after the conversion date.

 F-11 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Forward-Looking Statements

 

Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.   These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions.  We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of complying with those safe-harbor provisions.  Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain.  Factors which could have a material adverse affect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.  We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.  Further information concerning our business, including additional factors that could materially affect our financial results, is included herein and in our other filings with the SEC.

 

Company Overview

 

We, through our wholly owned subsidiary Skinvisible Pharmaceuticals Inc., are a pharmaceutical research and development (“R&D”) company that has developed and patented an innovative polymer delivery system, Invisicare® and formulated over forty topical skin products, which we out-license globally. We were incorporated in 1998, and target an estimated $80 billion global skincare and dermatology market and a $30 billion global over-the-counter market as well as other healthcare / medical and consumer goods markets.

 

With the research and development complete on forty products and numerous patents issued (technology and product patents), we are ready to monetize our investment. Our business model will continue to be to out-license our patented prescription and over-the-counter (“OTC”) products featuring Invisicare to established manufacturers and marketers of brands internationally and to maximize profits from the products we have already out-licensed. We have also formed a commercial subsidiary, Kintari USA Inc., in order to take our cosmeceutical and select OTC products with Invisicare to market.

 

The opportunity for us to license our products continues to be a viable model as the need for pharmaceutical companies to access external R&D companies for new products due to their own down-sizing or elimination of internal R&D departments. The demand for our products is enhanced due to the granting of key US and international patents and the completed development of a number of unique products.



 4 

Our Plan for the Next Twelve Months

 

Our growth strategy is to:

 

1.Generate revenue from direct sales of our cosmeceutical/OTC product line;

 

2.Capitalize on the success of current licensees;

 

3.Increase the value of our current pipeline; and

 

4.4. Boost licensing revenues by securing additional licensees globally and develop a robust royalty revenue stream that will finance our future growth.

 

Kintari USA Inc.:

 

On September 9, 2014, we formed Kinatri USA Inc., a new wholly-owned subsidiary of Kintari International Inc., wholly-owned subsidiary of Skinvisible Inc., to market a premium line of scientifically formulated skincare products powered by our patented Invisicare® technology. The company was officially launched January 15, 2015. As part of our strategic focus on revenue generation and creating shareholder value, Kintari USA Inc. products will be sold via network marketing. The products will be sold initially in the US and then in Canada in 2016.

 

The Kintari product portfolio consists of 2 anti-aging products to help fight the signs of aging. These products have been developed using proven anti-aging ingredients with scientific evidence of their effectiveness at reducing the look of fine lines and wrinkles resulting in youthful looking skin. These potent ingredients will be powered by patented Invisicare technology, providing consumers with unique, effective products which we believe cannot be duplicated. Additional products will be added to enhance this product line as the company grows and starting with our Skinbrella® SPF 30 sunscreen which was launched in April 2015.

 

Capitalize On Current Licensees:

 

We have licensees around the globe. Two of these licensees are currently in the marketplace: Avon Products globally and Women’s Choice Pharmaceuticals in the United States.

 

We continue to work diligently with our licensees to ensure they have a smooth manufacturing process, ongoing R&D support and marketing feedback.

 5 

 

Avon Products, Inc:

Product: We have a long-term contract with Avon globally for over ten years to provide Invisicare polymer for their long-lasting lipsticks.

 

Sales: Invisicare polymers are purchased directly from Skinvisible.

 

Women’s Choice Pharmaceuticals:

Product: ProCort®, long lasting prescription hemorrhoid cream launched in the United States August 2011.

 

Sales and Royalties: Skinvisible receives a royalty based on net sales of ProCort. This past year Women's Choice Pharmaceuticals LLC partnered with Advanced Medical Enterprises, LLC to market ProCort® in Puerto Rico. With over thirty pharmaceutical sales reps calling on OBGYNs in the US, Women’s Choice has been successfully growing their sales of ProCort® and we look forward to increased growth for the rest of 2015. Women’s Choice is seeking to form other strategic alliances in order to increase its sales efforts by targeting new territories and targeting medical specialists which previously were not called upon.

 

Product Updates:

 

We have additional information on specific products which add value to Skinvisible’s product pipeline.

 

DermSafe® Hand Sanitizer

Skinvisible’s hand sanitizer formulated with Invisicare® and chlorhexidine gluconate has received registration in Belgium on behalf of Skinvisible. This registration allows Skinvisible to make DermSafe® available in most of Europe through a simple registration process. The Company is currently seeking licensees and/or distributors to begin the sale of DermSafe in the EU. This registration has recently been granted for a ten year term to expire in 2024. The product will be sold through Kintari Canada Inc. when it launches in 2016.

Sunless Tanning Products: We have developed a new sunless tanning mousse / foam which uses a unique foam with Invisicare®, developed specifically for its foaming properties. This adds to Skinvisible’s line of sunless tanning products which includes sunless tanning lotions (light, medium and dark), pre-sun moisturizer and after-sun moisturizer along with sunless tanning spray products for commercial use. The addition of a sunless tanning mousse enhances this line of products.

 

Sunscreen Products: We have developed 3 broad spectrum sunscreens, with SPF 15, 30 and 50 (the highest SPF allowed by the FDA). All are formulated with Avobenzone, the only UVA sun filter allowed under the US FDA monograph. This UVA/UVB sunscreen was granted a patent from the United States patent office in 2013. Avobenzone is known for breaking down in the sun after only two hours – thus the requirement to reapply every 2 hours. Skinvisible’s patent was granted based on Invisicare's® minimum 8 hour photo stability. For countries outside the United States, Skinvisible has additionally patented UVA/UVB sunscreens formulated with Tinosorb S.

 

In March 25, 2014, we announced that we have successfully completed independent testing to validate our broad spectrum sunscreen claims according to new labeling guidelines by the FDA which are designed to help reduce the incidents of skin cancer in the U.S.

 6 

 

Skinvisible sunscreens can be labeled with the following claims:

 

Claim # 1 – Broad-Spectrum: According to the FDA, in order for a sunscreen to be labeled “broad spectrum” it must prove it protects against both UVA and UVB rays by having an SPF (Sun Protection Factor) of at least 15 and a critical wave length of at least 370 nm. Skinvisible’s sunscreen has surpassed both of these criteria, allowing Skinvisible’s broad spectrum sunscreen label to also state “prevents sunburn, skin cancer and aging due to the sun.”

 

Claim # 2 – Water-Resistant 80 Minutes: The FDA sunscreen water resistant claim requires that a sunscreen must have the same SPF after being in water or sweating for 40 or 80 minutes. Skinvisible’s testing was conducted at an independent laboratory specializing in sunscreen testing. The test involved human subjects that applied sunscreen to their arm, followed by the immersion of the arm into a Jacuzzi for 80 minutes (10 minutes in / 10 minutes out). Skinvisible’s sunscreen successfully completed this testing and is allowed to use “Water-resistant for 80 Minutes” on its sunscreen label, the longest length of time allowed by the FDA.

 

Claim # 3 – Unique Patented Technology / Eight-Hour Photostability: As previously announced, Skinvisible was granted a patent from the United States Patent and Trademark Office entitled “Sunscreen Composition with Enhanced UVA Absorber Stability and Methods”, which provides protection until November 2029. Skinvisible successfully formulated a unique Invisicare® delivery system specifically for stabilizing avobenzone; the key sunscreen used in the USA. Data submitted to the US patent office proved that Skinvisible’s sunscreen provides a minimum of eight hours of photostability.

 

Increasing The Value Of Skinvisible’s Pipeline: Clinical Enhancement Of Pipeline

 

We have a pipeline of over forty products which are available for licensing. Testing is conducted in-house generating proof of concept including release of the active ingredient as well as long term shelf life (stability). Additional studies conducted on specific products including skin sensitivity, toxicity and product efficacy are outsourced to FDA compliant laboratories. These studies are critical in attracting potential licensees. Our clinical strategy is to:

 

  • Add new studies for our prescription products. Our clinical strategy is to increase the amount of outsourced studies, specifically for our prescription products. Additional studies including skin penetration and skin irritation studies will add to the integrity and value of our products available for licensing.

  • Add new long-term efficacy studies for our DermSafe® hand sanitizer. In 2013, we commissioned an independent laboratory to further analyze the long-term effectiveness of DermSafe® when put in contact with two bacteria; the “super bug” MRSA and E. coli, the “restaurant bug” since it is often transmitted by food and food handlers. The long-term effectiveness of two bacteria; Methicillin-resistant Staphylococcus aureus or MRSA (ATCC #33591) and Escherichia coli or E. coli (ATCC #43888") were tested up to four hours after application. The results showed that the individual arms of subjects which had DermSafe® applied and were even rinsed prior to each bacteria challenge, showed a 95.83% reduction at the 4 hour time point for MRSA and 99.38% for E. coli. In 2013, we obtained the registration rights for DermSafe® in Belgium. This designation allows for the sale and/ or registration of DermSafe in most EU countries. A strategy is being developed along with a larger global strategy to bring DermSafe to the EU and. Skinvisible has also commissioned further testing of DermSafe against the (Middle East Respiratory Syndrome Coronavirus (MERS-CoV); a SARS-like virus and the avian influenza A virus, H7N9.

  • We continue to look for avenues to obtain orphan drug status for our Netherton syndrome product. Netherton syndrome is a disease caused by a genetic defect which causes the skin to continually exfoliate, never forming a skin bond. This leaves the patient highly susceptible to infection and dealing with a life-long condition that has no cure. Our product has shown excellent results in lab studies blocking the enzyme that breaks down the skin and we are seeking “Orphan Drug” designation in both the US (FDA) and Europe (EMA). We have reformulated our product to better meet the demands of this very debilitating disease and will be undergoing a clinical Netherton syndrome study with a subject before the end of 2015.
  • The advantages of obtaining Orphan Drug designation is that it provides various incentives including a reduction or elimination of registration and market authorization fees, protocol assistance, and seven years of market exclusivity for the product in the US and ten years in Europe. There can be no assurances that our project will be successful.

 7 

 

Secure Additional Licensees:

 

We are in discussions and undergoing internal discussions with various pharmaceutical companies for licenses.

 

To facilitate further expansion, we are seeking an exclusive license with a proven US or global based Pharmaceutical Company for our existing Rx product formulations. The licensee would be expected to pay all costs in getting FDA approval. The licensee would pay Skinvisible for the license in milestone payments as Clinical Phases are proven.

 

Results of Operations for the Three and Nine Months Ended September 30, 2015 and 2014

 

Revenues

 

Our revenue from product sales, royalties on patent licenses and license fees for the three months ended September 30, 2015 was $30,377, an increase from $22,303 for the same period ended September 30, 2014. Our revenue from product sales, royalties on patent licenses and license fees for the nine months ended September 30, 2015 was $158,428, an increase from $41,276 for the same period ended September 30, 2014.

 

The increase in revenue for the three and nine months ended September 30, 2015 was mainly due to an increase in product sales. With the launch of Kintari USA Inc., we expect increased revenue from our line of anti-aging products and select over-the-counter products.

 

Cost of Revenues

 

Our cost of revenues for the three months ended September 30, 2015 increased to $9,859 from the prior year period when cost of revenues was $674. Our cost of revenues for the nine months ended September 30, 2015 increased to $56,047 from the prior year period when cost of revenues was $3,907. Our cost of revenues increased for the three and nine months ended September 30, 2015 over the prior year period as a result of increased product sales. We expect this trend to continue with sales from Kintari USA Inc.

 

Gross Profit

 

Gross profit for the three months ended September 30, 2015 was $20,518, or approximately 67% of sales. Gross profit for the three months ended September 30, 2014 was $21,629, or approximately 96% of sales. Gross profit for the nine months ended September 30, 2015 was $102,381, or approximately 65% of sales. Gross profit for the nine months ended September 30, 2014 was $37,369, or approximately 90% of sales. Our gross profit margin fell in 2015 as compared with 2014 as a result of increased cost of revenues from product sales. We expect this trend to continue for the last quarter of 2015 and into 2016.

 

Operating Expenses

 

Operating expenses decreased to $270,067 for the three months ended September 30, 2015 from $382,781 for the same period ended September 30, 2014. Operating expenses increased to $943,982 for the nine months ended September 30, 2015 from $787,024 for the same period ended September 30, 2014.

 

Our operating expenses for the nine months ended September 30, 2015 consisted mainly of accrued salaries and wages of $238,950, salaries and wages of $153,828, commissions of $115,483, consulting fees of $105,234, travel expenses of $64,875, depreciation and amortization expenses of $43,377, rent of $32,619, accounting and audit expenses of $28,092, license and permit fees of $20,232 and payroll tax expense of $19,320. In comparison, our operating expenses for the nine months ended September 30, 2014 consisted mainly of salaries and wages of $136,318, accrued salaries and wages of $165,652, consulting fees of $182,748, research and development of $48,231, accounting and audit expenses of $30,069, rent of $31,368, depreciation and amortization expenses of $28,027, legal fees of $24,539 and travel of $19,949.

 8 

 

Other Expenses

 

We had other expenses of $231,707 for the three months ended September 30, 2015, compared with other expenses of $204,928 for the three months ended September 30, 2014. This was largely the result of $232,107 in interest expenses for the three months ended September 30, 2015 from $200,944 in the prior period ended September 30, 2014.

 

We had other expenses of $648,213 for the nine months ended September 30, 2015, compared with other expenses of $556,658 for the nine months ended September 30, 2014. This was largely the result of $650,079 in interest expenses for the nine months ended September 30, 2015 from $551,872 in the prior period ended September 30, 2014.

 

We expect to continue to experience high interest payments in the future as a result of our outstanding liabilities. If we are unable to generate sufficient revenues and/or additional financing to service this debt, there is a risk the lenders will call the notes and we will be unable to repay the loans. If this happens, we could go out of business.

 

Net Loss

 

We recorded a net loss of $481,256 for the three months ended September 30, 2015, as compared with a net loss of $566,080 for the three months ended September 30, 2014. We recorded a net loss of $1,489,814 for the nine months ended September 30, 2015, as compared with a net loss of $1,306,313 for the nine months ended September 30, 2014.

 

Liquidity and Capital Resources

 

As of September 30, 2015, we had total current assets of $97,729 and total assets in the amount of $415,773. Our total current liabilities as of September 30, 2015 were $5,373,229. We had a working capital deficit of $5,275,500 as of September 30, 2015.

 

Operating activities used $612,376 in cash for the nine months ended September 30, 2015. Our net loss of $1,489,814 was the main component of our negative operating cash flow, offset mainly by amortization of debt discount of $327,478, an increase in accounts payable and accrued liabilities of $321,020 and an increase of accrued interest of $149,788.

 

Cash flows used by investing activities during the nine months ended September 30, 2015 was $5,726 as a result of the purchase of fixed and intangible assets.

 

Cash flows provided by financing activities during the nine months ended September 30, 2015 amounted to $421,500 and consisted of $431,000 in proceeds from notes payable and $80,000 in proceeds from the sale of common stock, offset by $89,500 in payments on notes payable.

 

During the year ended December 31, 2013, we entered into twenty-four 9% notes payable to investors and received total proceeds of $1,000,000. The notes are due two years from the anniversary date of execution. The Notes are secured by the US Patent rights granted for the Company's Sunscreen Products: US patent number #8,128,913: "Sunscreen Composition with Enhanced UV-A Absorber Stability and Methods." As of September 30, 2015 several notes had reached their initial maturity date. All note holders executed agreements extending the note for an additional 12 months upon the same terms. 

 

On May 19, 2014, we approved a financing plan to offer accredited investors up to an additional $1,000,000 in secured promissory notes. For the period from May 19, 2014 to June 30, 2015, we entered into forty 9% notes payable to investors and received total proceeds of $1,339,000. The notes are due two years from the anniversary date of execution. The Notes are secured by the US Patent rights granted for the Company's Sunscreen Products: US patent number #8,128,913: "Sunscreen Composition with Enhanced UV-A Absorber Stability and Methods".

 

On July 28, 2015, we entered into a convertible promissory note pursuant to which we borrowed $47,500. Interest under the convertible promissory note is 8% per annum, and the principal and all accrued but unpaid interest is due on April 30, 2016. The note is convertible at any time following 180 days after the issuance date at noteholders option into shares of our common stock at a variable conversion price of 58% of the lowest average three day market price of our common stock during the 10 trading days prior to the notice of conversion, subject to adjustment as described in the note.

 9 

 

The holder’s ability to convert the note, however, is limited in that it will not be permitted to convert any portion of the note if the number of shares of our common stock beneficially owned by the holder and its affiliates, together with the number of shares of our common stock issuable upon any full or partial conversion, would exceed 9.99% of our outstanding shares of common stock. The holder has the right to waive this term upon 61 days’ notice to us.

 

During the first 180 days following the date of the note we have the right to prepay the principal and accrued but unpaid interest due under the note, together with any other amounts we may owe the holder under the terms of the note, at a graduating premium ranging from 125% to 150%. After this initial 180 day period, we do not have a right to prepay the note.

 

There are certain covenants we agreed to, including without limitation, a right of first refusal in favor of the holder, price protection on dilutive issuances, a restriction on stock repurchases, a prohibition on borrowing under certain circumstances and the sale of our assets outside of the ordinary course of business.

 

All amounts due under the note become immediately due and payable by us upon the occurrence of an event of default, which includes (i) our failure to pay the amounts due at maturity, (ii) our failure to deliver shares of our common stock upon any conversion of the note, (iii) a breach of the covenants, representations or warranties, (iv) the appointment of a trustee, a judgment against us in excess of $50,000 (subject to a cure period), a liquidation of our company or the filing of a bankruptcy petition, (v) failure to remain current in our reporting obligations under the Securities Exchange Act of 1934 or the removal of our common stock from quotation on the OTC markets, (vi) any restatement of our financial statements, or (vii) a reverse stock split without notice to the lender, as well as certain other provisions as set forth in the note.

 

On October 1, 2015, we entered into a convertible promissory note with Greg McCartney, our director. The $10,800 face value promissory note is unsecured, due five years from issuance, and bears an interest rate of 10%. At the investor’s option until the repayment date, the note may be converted to shares of our common stock at a fixed price of $0.02 per share along with an additional warrant to purchase one share for every two shares issued at the exercise price of $0.03 per share for three years after the conversion date.

 

On October 26, 2015, we entered into a convertible promissory note pursuant to which we borrowed $135,000. Interest under the convertible promissory note is 9% per annum, and the principal and all accrued but unpaid interest is due on October 26, 2017. The note is convertible at any time following the third month anniversary after the issuance date at noteholders option into shares of our common stock at a variable conversion price of 90% of the average of the Trading Prices for the common stock during the five Trading Day period ending on the latest complete Trading Day prior to the Conversion Date, subject to adjustment as described in the note. The holder’s ability to convert the note, however, is limited in that it will not be permitted to convert any portion of the note if the number of shares of our common stock beneficially owned by the holder and its affiliates, together with the number of shares of our common stock issuable upon any full or partial conversion, would exceed 4.99% of our outstanding shares of common stock.

 

The note is secured by the accounts receivable of a license agreement we have with Women's Choice Pharmaceuticals, LLC on its proprietary prescription product, ProCort®. The form of convertible promissory note is attached as an exhibit to the Form 8-K we filed on January 1, 2013.

 

Based upon our current financial condition, we do not have sufficient cash to operate our business at the current level for the next twelve months. We intend to fund operations through increased sales and debt and/or equity financing arrangements, which may be insufficient to fund expenditures or other cash requirements. We plan to seek additional financing in a private equity offering to secure funding for operations. There can be no assurance that we will be successful in raising additional funding. If we are not able to secure additional funding, the implementation of our business plan will be impaired. There can be no assurance that such additional financing will be available to us on acceptable terms or at all.

 10 

 

Off Balance Sheet Arrangements

 

As of September 30, 2015, there were no off balance sheet arrangements.

 

Critical Accounting Policies

 

In December 2001, the SEC requested that all registrants list their most “critical accounting polices” in the Management Discussion and Analysis. The SEC indicated that a “critical accounting policy” is one which is both important to the portrayal of a company’s financial condition and results, and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.

 

Going concern – The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. We have incurred cumulative net losses of $27,330,955 since our inception and require capital for our contemplated operational and marketing activities to take place. Our ability to raise additional capital through the future issuances of common stock is unknown. The obtainment of additional financing, the successful development of our contemplated plan of operations, and our transition, ultimately, to the attainment of profitable operations are necessary for us to continue operations. The ability to successfully resolve these factors raise substantial doubt about our ability to continue as a going concern. These consolidated financial statements do not include any adjustments that may result from the outcome of these aforementioned uncertainties.

 

Product sales – Revenues from the sale of products (Invisicare® polymers) are recognized when title to the products are transferred to the customer and only when no further contingencies or material performance obligations are warranted, and thereby have earned the right to receive reasonably assured payments for products sold and delivered.

 

Royalty sales – We also recognize royalty revenue from licensing our patented product formulations only when earned, with no further contingencies or material performance obligations are warranted, and thereby have earned the right to receive and retain reasonably assured payments.

 

Distribution and license rights sales – We also recognize revenue from distribution and license rights only when earned (and are amortized over a five year period), with no further contingencies or material performance obligations are warranted, and thereby have earned the right to receive and retain reasonably assured payments.

 

Costs of Revenue – Cost of revenue includes raw materials, component parts, and shipping supplies. Shipping and handling costs is not a significant portion of the cost of revenue.

 

Accounts Receivable – Accounts receivable is comprised of uncollateralized customer obligations due under normal trade terms requiring payment within 30 days from the invoice date. The carrying amount of accounts receivable is reviewed periodically for collectability. If management determines that collection is unlikely, an allowance that reflects management’s best estimate of the amounts that will not be collected is recorded. Management reviews each accounts receivable balance that exceeds 30 days from the invoice date and, based on an assessment of creditworthiness, estimates the portion, if any, of the balance that will not be collected. As of September 30, 2015, the Company had not recorded a reserve for doubtful accounts. The Company has $1,000,000 in convertible notes payable which are secured by the accounts receivable of a license agreement the Company has with Women's Choice Pharmaceuticals, LLC on its proprietary prescription product, ProCort®.

 

Recently Issued Accounting Pronouncements

 

We do not expect the adoption of recently issued accounting pronouncements to have a significant impact on our results of operations, financial position or cash flow.

 11 

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

A smaller reporting company is not required to provide the information required by this Item.

 

Item 4. Controls and Procedures

 

Disclosure Controls and Procedures

 

We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of September 30, 2015. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2015, our disclosure controls and procedures were not effective due to the presence of material weaknesses in internal control over financial reporting.

 

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. Management has identified the following material weaknesses which have caused management to conclude that, as of September 30, 2015, our disclosure controls and procedures were not effective: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines.

 

Remediation Plan to Address the Material Weaknesses in Internal Control over Financial Reporting

 

Our company plans to take steps to enhance and improve the design of our internal controls over financial reporting. During the period covered by this quarterly report on Form 10-Q, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses, we plan to implement the following changes during our fiscal year ending December 31, 2015: (i) appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk management; and (ii) adopt sufficient written policies and procedures for accounting and financial reporting. The remediation efforts set out are largely dependent upon our securing additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing such funds, remediation efforts may be adversely affected in a material manner.

 

Changes in Internal Control over Financial Reporting

 

There were no changes in our internal control over financial reporting during the three months ended September 30, 2015 that have materially affected, or are reasonable likely to materially affect, our internal control over financial reporting.

 12 

 

PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings

 

We are not a party to any pending legal proceeding. We are not aware of any pending legal proceeding to which any of our officers, directors, or any beneficial holders of 5% or more of our voting securities are adverse to us or have a material interest adverse to us.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

The information set forth below relates to our issuances of securities without registration under the Securities Act of 1933 during the reporting period which were not previously included in a Quarterly Report on Form 10-Q or Current Report on Form 8-K.

 

During the three months ended September 30, 2015, we issued a total of 272,000 shares of common stock for the conversion of debts totaling $9,600.

 

On October 1, 2015, we entered into a convertible promissory note with Greg McCartney, our director. The $10,800 face value promissory note is unsecured, due five years from issuance, and bears an interest rate of 10%. At the investor’s option until the repayment date, the note may be converted to shares of our common stock at a fixed price of $0.02 per share along with an additional warrant to purchase one share for every two shares issued at the exercise price of $0.03 per share for three years after the conversion date.

 

These securities were issued pursuant to Section 4(2) of the Securities Act and/or Rule 506 promulgated thereunder. The holders represented their intention to acquire the securities for investment only and not with a view towards distribution. The investors were given adequate information about us to make an informed investment decision. We did not engage in any general solicitation or advertising. We directed our transfer agent to issue the stock certificates with the appropriate restrictive legend affixed to the restricted stock.

 

Item 3. Defaults upon Senior Securities

 

None

 

Item 4. Mine Safety Disclosures

 

Not applicable.

 

Item 5. Other Information

 

None

 

Item 6. Exhibits

 

Exhibit Number Description of Exhibit
10.1 July 28, 2015 Convertible Promissory Note
10.2 October 1, 2015 Convertible Promissory Note
31.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2 Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101** The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2015 formatted in Extensible Business Reporting Language (XBRL).
**Provided herewith

 

 13 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

Skinvisible, Inc.
Date:  November 16, 2015

By: /s/ Terry Howlett

Terry Howlett

Title:   Chief Executive Officer, Chief Financial Officer and Director

 

 14 

EX-31.1 2 ex31_1.htm EXHIBIT 31.1

CERTIFICATIONS

 

I, Terry Howlett, certify that;

 

1. I have reviewed this quarterly report on Form 10-Q for the quarter ended September 30, 2015 of Skinvisible, Inc. (the “registrant”);

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: November 16, 2015

 

/s/ Terry Howlett

By: Terry Howlett

Title: Chief Executive Officer

EX-31.2 3 ex31_2.htm EXHIBIT 31.2

CERTIFICATIONS

 

I, Terry Howlett, certify that;

 

1. I have reviewed this quarterly report on Form 10-Q for the quarter ended September 30, 2015 of Skinvisible, Inc. (the “registrant”);

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: November 16, 2015

 

/s/ Terry Howlett

By: Terry Howlett

Title: Chief Financial Officer

EX-32.1 4 ex32_1.htm EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND

CHIEF FINANCIAL OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the quarterly Report of Skinvisible, Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2015 filed with the Securities and Exchange Commission (the “Report”), I, Terry Howlett, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

 

1.The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and

 

2.The information contained in the Report fairly presents, in all material respects, the consolidated financial condition of the Company as of the dates presented and the consolidated result of operations of the Company for the periods presented.

 

By: /s/ Terry
Howlett
Name: Terry Howlett
Title: Principal Executive Officer, Principal Financial Officer and Director
Date: November 16, 2015

 

This certification has been furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

EX-10.1 5 ex10_1.htm EXHIBIT 10.1

NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

 

 

Principal Amount: $47,500.00 Issue Date: July 28, 2015
Purchase Price: $47,500.00  

 

CONVERTIBLE PROMISSORY NOTE

 

FOR VALUE RECEIVED, SKINVISIBLE, INC., a Nevada corporation (hereinafter called the “Borrower”), hereby promises to pay to the order VIS VIRES GROUP, INC., a New York corporation, or registered assigns (the “Holder”) the sum of $47,500.00 together with any interest as set forth herein, on April 30, 2016 (the “Maturity Date”), and to pay interest on the unpaid principal balance hereof at the rate of eight percent (8%) (the “Interest Rate”) per annum from the date hereof (the “Issue Date”) until the same becomes due and payable, whether at maturity or upon acceleration or by prepayment or otherwise. This Note may not be prepaid in whole or in part except as otherwise explicitly set forth herein. Any amount of principal or interest on this Note which is not paid when due shall bear interest at the rate of twenty two percent (22%) per annum from the due date thereof until the same is paid (“Default Interest”). Interest shall commence accruing on the date that the Note is fully paid and shall be computed on the basis of a 365-day year and the actual number of days elapsed. All payments due hereunder (to the extent not converted into common stock, $0.001 par value per share (the “Common Stock”) in accordance with the terms hereof) shall be made in lawful money of the United States of America. All payments shall be made at such address as the Holder shall hereafter give to the Borrower by written notice made in accordance with the provisions of this Note. Whenever any amount expressed to be due by the terms of this Note is due on any day which is not a business day, the same shall instead be due on the next succeeding day which is a business day and, in the case of any interest payment date which is not the date on which this Note is paid in full, the

 
 

 

 

extension of the due date thereof shall not be taken into account for purposes of determining the amount of interest due on such date. As used in this Note, the term “business day” shall mean any day other than a Saturday, Sunday or a day on which commercial banks in the city of New York, New York are authorized or required by law or executive order to remain closed. Each capitalized term used herein, and not otherwise defined, shall have the meaning ascribed thereto in that certain Securities Purchase Agreement dated the date hereof, pursuant to which this Note was originally issued (the “Purchase Agreement”).

 

This Note is free from all taxes, liens, claims and encumbrances with respect to the issue thereof and shall not be subject to preemptive rights or other similar rights of shareholders of the Borrower and will not impose personal liability upon the holder thereof.

 

The following terms shall apply to this Note:

 

ARTICLE I. CONVERSION RIGHTS

 

1.1  Conversion Right. The Holder shall have the right from time to time, and at any time during the period beginning on the date which is one hundred eighty (180) days following the date of this Note and ending on the later of: (i) the Maturity Date and (ii) the date of payment of the Default Amount (as defined in Article III) pursuant to Section 1.6(a) or Article III, each in respect of the remaining outstanding principal (and accrued interest) amount of this Note to convert all or any part of the outstanding and unpaid principal amount of this Note into fully paid and non- assessable shares of Common Stock, as such Common Stock exists on the Issue Date, or any shares of capital stock or other securities of the Borrower into which such Common Stock shall hereafter be changed or reclassified at the conversion price (the “Conversion Price”) determined as provided herein (a “Conversion”); provided, however, that in no event shall the Holder be entitled to convert any portion of this Note in excess of that portion of this Note upon conversion of which the sum of (1) the number of shares of Common Stock beneficially owned by the Holder and its affiliates (other than shares of Common Stock which may be deemed beneficially owned through the ownership of the unconverted portion of the Notes or the unexercised or unconverted portion of any other security of the Borrower subject to a limitation on conversion or exercise analogous to the limitations contained herein) and (2) the number of shares of Common Stock issuable upon the conversion of the portion of this Note with respect to which the determination of this proviso is being made, would result in beneficial ownership by the Holder and its affiliates of more than 9.99% of the outstanding shares of Common Stock. For purposes of the proviso to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Regulations 13D-G thereunder, except as otherwise provided in clause (1) of such proviso, provided, further, however, that the limitations on conversion may be waived by the Holder upon, at the election of the Holder, not less than 61 days’ prior notice to the Borrower, and the provisions of the conversion limitation shall continue to apply until such 61st day (or such later date, as determined by the Holder, as may be specified

 
 

 

 

in such notice of waiver). The number of shares of Common Stock to be issued upon each conversion of this Note shall be determined by dividing the Conversion Amount (as defined below) by the applicable Conversion Price then in effect on the date specified in the notice of conversion, in the form attached hereto as Exhibit A (the “Notice of Conversion”), delivered to the Borrower by the Holder in accordance with Section 1.4 below; provided that the Notice of Conversion is submitted by facsimile or e-mail (or by other means resulting in, or reasonably expected to result in, notice) to the Borrower before 6:00 p.m., New York, New York time on such conversion date (the “Conversion Date”). The term “Conversion Amount” means, with respect to any conversion of this Note, the sum of (1) the principal amount of this Note to be converted in such conversion plus (2) at the Holder’s option, accrued and unpaid interest, if any, on such principal amount at the interest rates provided in this Note to the Conversion Date, plus

(3) at the Holder’s option, Default Interest, if any, on the amounts referred to in the immediately preceding clauses (1) and/or (2) plus (4) at the Holder’s option, any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof.

 

1.2Conversion Price.

 

(a)    Calculation of Conversion Price. The conversion price (the “Conversion Price”) shall equal the Variable Conversion Price (as defined herein) (subject to equitable adjustments for stock splits, stock dividends or rights offerings by the Borrower relating to the Borrower’s securities or the securities of any subsidiary of the Borrower, combinations, recapitalization, reclassifications, extraordinary distributions and similar events). The "Variable Conversion Price" shall mean 58% multiplied by the Market Price (as defined herein) (representing a discount rate of 42%). “Market Price” means the average of the lowest three (3) Trading Prices (as defined below) for the Common Stock during ten (10) Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. “Trading Price” means, for any security as of any date, the closing bid price on the Over-the-Counter Bulletin Board, Pink Sheets electronic quotation system or applicable trading market (the “OTC”) as reported by a reliable reporting service (“Reporting Service”) designated by the Holder (i.e. Bloomberg) or, if the OTC is not the principal trading market for such security, the closing bid price of such security on the principal securities exchange or trading market where such security is listed or traded or, if no closing bid price of such security is available in any of the foregoing manners, the average of the closing bid prices of any market makers for such security that are listed in the “pink sheets”. If the Trading Price cannot be calculated for such security on such date in the manner provided above, the Trading Price shall be the fair market value as mutually determined by the Borrower and the holders of a majority in interest of the Notes being converted for which the calculation of the Trading Price is required in order to determine the Conversion Price of such Notes. “Trading Day” shall mean any day on which the Common Stock is tradable for any period on the OTC, or on the principal securities exchange or other securities market on which the Common Stock is then being traded.

 
 

 

 

(b)   Conversion Price During Major Announcements. Notwithstanding anything contained in Section 1.2(a) to the contrary, in the event the Borrower (i) makes a public announcement that it intends to consolidate or merge with any other corporation (other than a merger in which the Borrower is the surviving or continuing corporation and its capital stock is unchanged) or sell or transfer all or substantially all of the assets of the Borrower or (ii) any person, group or entity (including the Borrower) publicly announces a tender offer to purchase 50% or more of the Borrower’s Common Stock (or any other takeover scheme) (the date of the announcement referred to in clause (i) or (ii) is hereinafter referred to as the “Announcement Date”), then the Conversion Price shall, effective upon the Announcement Date and continuing through the Adjusted Conversion Price Termination Date (as defined below), be equal to the lower of (x) the Conversion Price which would have been applicable for a Conversion occurring on the Announcement Date and (y) the Conversion Price that would otherwise be in effect. From and after the Adjusted Conversion Price Termination Date, the Conversion Price shall be determined as set forth in this Section 1.2(a). For purposes hereof, “Adjusted Conversion Price Termination Date” shall mean, with respect to any proposed transaction or tender offer (or takeover scheme) for which a public announcement as contemplated by this Section 1.2(b) has been made, the date upon which the Borrower (in the case of clause (i) above) or the person, group or entity (in the case of clause (ii) above) consummates or publicly announces the termination or abandonment of the proposed transaction or tender offer (or takeover scheme) which caused this Section 1.2(b) to become operative.

 

1.3  Authorized Shares. The Borrower covenants that during the period the conversion right exists, the Borrower will reserve from its authorized and unissued Common Stock a sufficient number of shares, free from preemptive rights, to provide for the issuance of Common Stock upon the full conversion of this Note issued pursuant to the Purchase Agreement. The Borrower is required at all times to have authorized and reserved six times the number of shares that is actually issuable upon full conversion of the Note (based on the Conversion Price of the Notes in effect from time to time)(the “Reserved Amount”). The Reserved Amount shall be increased from time to time in accordance with the Borrower’s obligations hereunder. The Borrower represents that upon issuance, such shares will be duly and validly issued, fully paid and non-assessable. In addition, if the Borrower shall issue any securities or make any change to its capital structure which would change the number of shares of Common Stock into which the Notes shall be convertible at the then current Conversion Price, the Borrower shall at the same time make proper provision so that thereafter there shall be a sufficient number of shares of Common Stock authorized and reserved, free from preemptive rights, for conversion of the outstanding Notes. The Borrower (i) acknowledges that it has irrevocably instructed its transfer agent to issue certificates for the Common Stock issuable upon conversion of this Note, and

(ii)   agrees that its issuance of this Note shall constitute full authority to its officers and agents who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for shares of Common Stock in accordance with the terms and conditions of this Note.

 
 

 

 

If, at any time the Borrower does not maintain the Reserved Amount it will be considered an Event of Default under Section 3.2 of the Note.

 

1.4Method of Conversion.

 

(a)    Mechanics of Conversion. Subject to Section 1.1, this Note may be converted by the Holder in whole or in part at any time from time to time after the Issue Date, by

(A)  submitting to the Borrower a Notice of Conversion (by facsimile, e-mail or other reasonable means of communication dispatched on the Conversion Date prior to 6:00 p.m., New York, New York time) and (B) subject to Section 1.4(b), surrendering this Note at the principal office of the Borrower.

 

(b)   Surrender of Note Upon Conversion. Notwithstanding anything to the contrary set forth herein, upon conversion of this Note in accordance with the terms hereof, the Holder shall not be required to physically surrender this Note to the Borrower unless the entire unpaid principal amount of this Note is so converted. The Holder and the Borrower shall maintain records showing the principal amount so converted and the dates of such conversions or shall use such other method, reasonably satisfactory to the Holder and the Borrower, so as not to require physical surrender of this Note upon each such conversion. In the event of any dispute or discrepancy, such records of the Borrower shall, prima facie, be controlling and determinative in the absence of manifest error. Notwithstanding the foregoing, if any portion of this Note is converted as aforesaid, the Holder may not transfer this Note unless the Holder first physically surrenders this Note to the Borrower, whereupon the Borrower will forthwith issue and deliver upon the order of the Holder a new Note of like tenor, registered as the Holder (upon payment by the Holder of any applicable transfer taxes) may request, representing in the aggregate the remaining unpaid principal amount of this Note. The Holder and any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions of this paragraph, following conversion of a portion of this Note, the unpaid and unconverted principal amount of this Note represented by this Note may be less than the amount stated on the face hereof.

 

(c)    Payment of Taxes. The Borrower shall not be required to pay any tax which may be payable in respect of any transfer involved in the issue and delivery of shares of Common Stock or other securities or property on conversion of this Note in a name other than that of the Holder (or in street name), and the Borrower shall not be required to issue or deliver any such shares or other securities or property unless and until the person or persons (other than the Holder or the custodian in whose street name such shares are to be held for the Holder’s account) requesting the issuance thereof shall have paid to the Borrower the amount of any such tax or shall have established to the satisfaction of the Borrower that such tax has been paid.

 

(d)   Delivery of Common Stock Upon Conversion. Upon receipt by the Borrower from the Holder of a facsimile transmission or e-mail (or other reasonable means of communication) of a Notice of Conversion meeting the requirements for conversion as provided

 
 

 

 

in this Section 1.4, the Borrower shall issue and deliver or cause to be issued and delivered to or upon the order of the Holder certificates for the Common Stock issuable upon such conversion within three (3) business days after such receipt (the “Deadline”) (and, solely in the case of conversion of the entire unpaid principal amount hereof, surrender of this Note) in accordance with the terms hereof and the Purchase Agreement.

 

(e)    Obligation of Borrower to Deliver Common Stock. Upon receipt by the Borrower of a Notice of Conversion, the Holder shall be deemed to be the holder of record of the Common Stock issuable upon such conversion, the outstanding principal amount and the amount of accrued and unpaid interest on this Note shall be reduced to reflect such conversion, and, unless the Borrower defaults on its obligations under this Article I, all rights with respect to the portion of this Note being so converted shall forthwith terminate except the right to receive the Common Stock or other securities, cash or other assets, as herein provided, on such conversion. If the Holder shall have given a Notice of Conversion as provided herein, the Borrower’s obligation to issue and deliver the certificates for Common Stock shall be absolute and unconditional, irrespective of the absence of any action by the Holder to enforce the same, any waiver or consent with respect to any provision thereof, the recovery of any judgment against any person or any action to enforce the same, any failure or delay in the enforcement of any other obligation of the Borrower to the holder of record, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder of any obligation to the Borrower, and irrespective of any other circumstance which might otherwise limit such obligation of the Borrower to the Holder in connection with such conversion. The Conversion Date specified in the Notice of Conversion shall be the Conversion Date so long as the Notice of Conversion is received by the Borrower before 6:00 p.m., New York, New York time, on such date.

 

(f)    Delivery of Common Stock by Electronic Transfer. In lieu of delivering physical certificates representing the Common Stock issuable upon conversion, provided the Borrower is participating in the Depository Trust Company (“DTC”) Fast Automated Securities Transfer (“FAST”) program, upon request of the Holder and its compliance with the provisions contained in Section 1.1 and in this Section 1.4, the Borrower shall use its best efforts to cause its transfer agent to electronically transmit the Common Stock issuable upon conversion to the Holder by crediting the account of Holder’s Prime Broker with DTC through its Deposit Withdrawal Agent Commission (“DWAC”) system.

 

(g)   Failure to Deliver Common Stock Prior to Deadline. Without in any way limiting the Holder’s right to pursue other remedies, including actual damages and/or equitable relief, the parties agree that if delivery of the Common Stock issuable upon conversion of this Note is not delivered by the Deadline (other than a failure due to the circumstances described in Section 1.3 above, which failure shall be governed by such Section) the Borrower shall pay to the Holder $2,000 per day in cash, for each day beyond the Deadline that the Borrower fails to deliver such Common Stock. Such cash amount shall be paid to Holder by the

 
 

 

 

fifth day of the month following the month in which it has accrued or, at the option of the Holder (by written notice to the Borrower by the first day of the month following the month in which it has accrued), shall be added to the principal amount of this Note, in which event interest shall accrue thereon in accordance with the terms of this Note and such additional principal amount shall be convertible into Common Stock in accordance with the terms of this Note. The Borrower agrees that the right to convert is a valuable right to the Holder. The damages resulting from a failure, attempt to frustrate, interference with such conversion right are difficult if not impossible to qualify. Accordingly the parties acknowledge that the liquidated damages provision contained in this Section 1.4(g) are justified.

 

1.5  Concerning the Shares. The shares of Common Stock issuable upon conversion of this Note may not be sold or transferred unless (i) such shares are sold pursuant to an effective registration statement under the Act or (ii) the Borrower or its transfer agent shall have been furnished with an opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of counsel in comparable transactions) to the effect that the shares to be sold or transferred may be sold or transferred pursuant to an exemption from such registration or (iii) such shares are sold or transferred pursuant to Rule 144 under the Act (or a successor rule) (“Rule 144”) or (iv) such shares are transferred to an “affiliate” (as defined in Rule 144) of the Borrower who agrees to sell or otherwise transfer the shares only in accordance with this Section 1.5 and who is an Accredited Investor (as defined in the Purchase Agreement). Except as otherwise provided in the Purchase Agreement (and subject to the removal provisions set forth below), until such time as the shares of Common Stock issuable upon conversion of this Note have been registered under the Act or otherwise may be sold pursuant to Rule 144 without any restriction as to the number of securities as of a particular date that can then be immediately sold, each certificate for shares of Common Stock issuable upon conversion of this Note that has not been so included in an effective registration statement or that has not been sold pursuant to an effective registration statement or an exemption that permits removal of the legend, shall bear a legend substantially in the following form, as appropriate:

 

“NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.”

 
 

 

 

The legend set forth above shall be removed and the Borrower shall issue to the Holder a new certificate therefore free of any transfer legend if (i) the Borrower or its transfer agent shall have received an opinion of counsel, in form, substance and scope customary for opinions of counsel in comparable transactions, to the effect that a public sale or transfer of such Common Stock may be made without registration under the Act, which opinion shall be accepted by the Company so that the sale or transfer is effected or (ii) in the case of the Common Stock issuable upon conversion of this Note, such security is registered for sale by the Holder under an effective registration statement filed under the Act or otherwise may be sold pursuant to Rule 144 without any restriction as to the number of securities as of a particular date that can then be immediately sold. In the event that the Company does not accept the opinion of counsel provided by the Holder with respect to the transfer of Securities pursuant to an exemption from registration, such as Rule 144 or Regulation S, at the Deadline, it will be considered an Event of Default pursuant to Section 3.2 of the Note.

 

1.6Effect of Certain Events.

 

(a)    Effect of Merger, Consolidation, Etc. At the option of the Holder, the sale, conveyance or disposition of all or substantially all of the assets of the Borrower, the effectuation by the Borrower of a transaction or series of related transactions in which more than 50% of the voting power of the Borrower is disposed of, or the consolidation, merger or other business combination of the Borrower with or into any other Person (as defined below) or Persons when the Borrower is not the survivor shall either: (i) be deemed to be an Event of Default (as defined in Article III) pursuant to which the Borrower shall be required to pay to the Holder upon the consummation of and as a condition to such transaction an amount equal to the Default Amount (as defined in Article III) or (ii) be treated pursuant to Section 1.6(b) hereof. “Person” shall mean any individual, corporation, limited liability company, partnership, association, trust or other entity or organization.

 

(b)   Adjustment Due to Merger, Consolidation, Etc. If, at any time when this Note is issued and outstanding and prior to conversion of all of the Notes, there shall be any merger, consolidation, exchange of shares, recapitalization, reorganization, or other similar event, as a result of which shares of Common Stock of the Borrower shall be changed into the same or a different number of shares of another class or classes of stock or securities of the Borrower or another entity, or in case of any sale or conveyance of all or substantially all of the assets of the Borrower other than in connection with a plan of complete liquidation of the Borrower, then the Holder of this Note shall thereafter have the right to receive upon conversion of this Note, upon the basis and upon the terms and conditions specified herein and in lieu of the shares of Common Stock immediately theretofore issuable upon conversion, such stock, securities or assets which the Holder would have been entitled to receive in such transaction had

 
 

 

 

this Note been converted in full immediately prior to such transaction (without regard to any limitations on conversion set forth herein), and in any such case appropriate provisions shall be made with respect to the rights and interests of the Holder of this Note to the end that the provisions hereof (including, without limitation, provisions for adjustment of the Conversion Price and of the number of shares issuable upon conversion of the Note) shall thereafter be applicable, as nearly as may be practicable in relation to any securities or assets thereafter deliverable upon the conversion hereof. The Borrower shall not affect any transaction described in this Section 1.6(b) unless (a) it first gives, to the extent practicable, thirty (30) days prior written notice (but in any event at least fifteen (15) days prior written notice) of the record date of the special meeting of shareholders to approve, or if there is no such record date, the consummation of, such merger, consolidation, exchange of shares, recapitalization, reorganization or other similar event or sale of assets (during which time the Holder shall be entitled to convert this Note) and (b) the resulting successor or acquiring entity (if not the Borrower) assumes by written instrument the obligations of this Section 1.6(b). The above provisions shall similarly apply to successive consolidations, mergers, sales, transfers or share exchanges.

 

(c)    Adjustment Due to Distribution. If the Borrower shall declare or make any distribution of its assets (or rights to acquire its assets) to holders of Common Stock as a dividend, stock repurchase, by way of return of capital or otherwise (including any dividend or distribution to the Borrower’s shareholders in cash or shares (or rights to acquire shares) of capital stock of a subsidiary (i.e., a spin-off)) (a “Distribution”), then the Holder of this Note shall be entitled, upon any conversion of this Note after the date of record for determining shareholders entitled to such Distribution, to receive the amount of such assets which would have been payable to the Holder with respect to the shares of Common Stock issuable upon such conversion had such Holder been the holder of such shares of Common Stock on the record date for the determination of shareholders entitled to such Distribution.

 

(d)   Purchase Rights. If, at any time when any Notes are issued and outstanding, the Borrower issues any convertible securities or rights to purchase stock, warrants, securities or other property (the “Purchase Rights”) pro rata to the record holders of any class of Common Stock, then the Holder of this Note will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which such Holder could have acquired if such Holder had held the number of shares of Common Stock acquirable upon complete conversion of this Note (without regard to any limitations on conversion contained herein) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights or, if no such record is taken, the date as of which the record holders of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.

 

(e)    Notice of Adjustments. Upon the occurrence of each adjustment or readjustment of the Conversion Price as a result of the events described in this Section 1.6, the Borrower, at its expense, shall promptly compute such adjustment or readjustment and prepare

 
 

 

 

and furnish to the Holder a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Borrower shall, upon the written request at any time of the Holder, furnish to such Holder a like certificate setting forth (i) such adjustment or readjustment, (ii) the Conversion Price at the time in effect and (iii) the number of shares of Common Stock and the amount, if any, of other securities or property which at the time would be received upon conversion of the Note.

 

1.7  Trading Market Limitations. Unless permitted by the applicable rules and regulations of the principal securities market on which the Common Stock is then listed or traded, in no event shall the Borrower issue upon conversion of or otherwise pursuant to this Note and the other Notes issued pursuant to the Purchase Agreement more than the maximum number of shares of Common Stock that the Borrower can issue pursuant to any rule of the principal United States securities market on which the Common Stock is then traded (the “Maximum Share Amount”), which shall be 9.99% of the total shares outstanding on the Closing Date (as defined in the Purchase Agreement), subject to equitable adjustment from time to time for stock splits, stock dividends, combinations, capital reorganizations and similar events relating to the Common Stock occurring after the date hereof. Once the Maximum Share Amount has been issued, if the Borrower fails to eliminate any prohibitions under applicable law or the rules or regulations of any stock exchange, interdealer quotation system or other self-regulatory organization with jurisdiction over the Borrower or any of its securities on the Borrower’s ability to issue shares of Common Stock in excess of the Maximum Share Amount, in lieu of any further right to convert this Note, this will be considered an Event of Default under Section 3.3 of the Note.

 

1.8  Status as Shareholder. Upon submission of a Notice of Conversion by a Holder, (i) the shares covered thereby (other than the shares, if any, which cannot be issued because their issuance would exceed such Holder’s allocated portion of the Reserved Amount or Maximum Share Amount) shall be deemed converted into shares of Common Stock and (ii) the Holder’s rights as a Holder of such converted portion of this Note shall cease and terminate, excepting only the right to receive certificates for such shares of Common Stock and to any remedies provided herein or otherwise available at law or in equity to such Holder because of a failure by the Borrower to comply with the terms of this Note. Notwithstanding the foregoing, if a Holder has not received certificates for all shares of Common Stock prior to the tenth (10th) business day after the expiration of the Deadline with respect to a conversion of any portion of this Note for any reason, then (unless the Holder otherwise elects to retain its status as a holder of Common Stock by so notifying the Borrower) the Holder shall regain the rights of a Holder of this Note with respect to such unconverted portions of this Note and the Borrower shall, as soon as practicable, return such unconverted Note to the Holder or, if the Note has not been surrendered, adjust its records to reflect that such portion of this Note has not been converted. In all cases, the Holder shall retain all of its rights and remedies (including, without limitation, (i) the right to receive Conversion Default Payments pursuant to Section 1.3 to the extent required thereby for such Conversion Default and any subsequent Conversion Default and (ii) the right to

 
 

 

 

have the Conversion Price with respect to subsequent conversions determined in accordance with Section 1.3) for the Borrower’s failure to convert this Note.

 

1.9              Prepayment. Notwithstanding anything to the contrary contained in this Note, at any time during the periods set forth on the table immediately following this paragraph (the “Prepayment Periods”), the Borrower shall have the right, exercisable on not less than three

(3) Trading Days prior written notice to the Holder of the Note to prepay the outstanding Note (principal and accrued interest), in full, in accordance with this Section 1.9. Any notice of prepayment hereunder (an “Optional Prepayment Notice”) shall be delivered to the Holder of the Note at its registered addresses and shall state: (1) that the Borrower is exercising its right to prepay the Note, and (2) the date of prepayment which shall be not more than three (3) Trading Days from the date of the Optional Prepayment Notice. On the date fixed for prepayment (the “Optional Prepayment Date”), the Borrower shall make payment of the Optional Prepayment Amount (as defined below) to Holder, or upon the order of the Holder as specified by the Holder in writing to the Borrower, at least one (1) business day prior to the Optional Prepayment Date. If the Borrower exercises its right to prepay the Note, the Borrower shall make payment to the Holder of an amount in cash (the “Optional Prepayment Amount”) equal to the percentage (“Prepayment Percentage”) as set forth in the table immediately following this paragraph opposite the applicable Prepayment Period, multiplied by the sum of: (w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note to the Optional Prepayment Date plus (y) Default Interest, if any, on the amounts referred to in clauses (w) and (x) plus (z) any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof. If the Borrower delivers an Optional Prepayment Notice and fails to pay the Optional Prepayment Amount due to the Holder of the Note within two (2) business days following the Optional Prepayment Date, the Borrower shall forever forfeit its right to prepay the Note pursuant to this Section 1.9. 

 

Prepayment Period Prepayment Percentage
1. The period beginning on the Issue Date and ending on the date which is thirty (30) days following the Issue Date. 125%
2. The period beginning on the date which is thirty- one (31) days following the Issue Date and ending on the date which is sixty (60) days following the Issue Date 130%

3. The period beginning on the date which is sixty-one

(61) days following the Issue Date and ending on the date which is

135%
 
 

 

 

ninety (90) days following the Issue Date

4. The period beginning on the date that is ninety-one

(91) day from the Issue Date and ending one hundred twenty (120) days following the Issue Date

140%
5. The period beginning on the date that is one hundred twenty-one (121) day from the Issue Date and ending one hundred fifty (150) days following the Issue Date 145%
6. The period beginning on the date that is one hundred fifty-one (151) day from the Issue Date and ending one hundred eighty (180) days following the Issue Date 150%

 

After the expiration of one hundred eighty (180) days following the Issue Date, the Borrower shall have no right of prepayment.

  

ARTICLE II. CERTAIN COVENANTS

 

2.1  Distributions on Capital Stock. So long as the Borrower shall have any obligation under this Note, the Borrower shall not without the Holder’s written consent (a) pay, declare or set apart for such payment, any dividend or other distribution (whether in cash, property or other securities) on shares of capital stock other than dividends on shares of Common Stock solely in the form of additional shares of Common Stock or (b) directly or indirectly or through any subsidiary make any other payment or distribution in respect of its capital stock except for distributions pursuant to any shareholders’ rights plan which is approved by a majority of the Borrower’s disinterested directors.

 

2.2  Restriction on Stock Repurchases. So long as the Borrower shall have any obligation under this Note, the Borrower shall not without the Holder’s written consent redeem, repurchase or otherwise acquire (whether for cash or in exchange for property or other securities or otherwise) in any one transaction or series of related transactions any shares of capital stock of the Borrower or any warrants, rights or options to purchase or acquire any such shares.

 

2.3  Borrowings. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the Holder’s written consent, (a) create, incur, assume guarantee, endorse, contingently agree to purchase or otherwise become liable upon the obligation of any other person, firm, partnership, joint venture or corporation, except by the endorsement of negotiable instruments for deposit or collection, or (b) suffer to exist any liability

 
 

 

 

for borrowed money, except any borrowings that does not render the Borrower a "Shell" company as defined in Rule 12b-2 under the Securities Exchange Act of 1934.

 

2.4  Sale of Assets. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the Holder’s written consent, sell, lease or otherwise dispose of any significant portion of its assets outside the ordinary course of business. Any consent to the disposition of any assets may be conditioned on a specified use of the proceeds of disposition.

 

2.5  Advances and Loans. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the Holder’s written consent, lend money, give credit or make advances to any person, firm, joint venture or corporation, including, without limitation, officers, directors, employees, subsidiaries and affiliates of the Borrower, except loans, credits or advances (a) in existence or committed on the date hereof and which the Borrower has informed Holder in writing prior to the date hereof, (b) made in the ordinary course of business or (c) not in excess of $100,000. 

 

ARTICLE III. EVENTS OF DEFAULT

 

If any of the following events of default (each, an “Event of Default”) shall occur:

 

3.1  Failure to Pay Principal or Interest. The Borrower fails to pay the principal hereof or interest thereon when due on this Note, whether at maturity, upon acceleration or otherwise.

 

3.2  Conversion and the Shares. The Borrower fails to issue shares of Common Stock to the Holder (or announces or threatens in writing that it will not honor its obligation to do so) upon exercise by the Holder of the conversion rights of the Holder in accordance with the terms of this Note, fails to transfer or cause its transfer agent to transfer (issue) (electronically or in certificated form) any certificate for shares of Common Stock issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note, the Borrower directs its transfer agent not to transfer or delays, impairs, and/or hinders its transfer agent in transferring (or issuing) (electronically or in certificated form) any certificate for shares of Common Stock to be issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note, or fails to remove (or directs its transfer agent not to remove or impairs, delays, and/or hinders its transfer agent from removing) any restrictive legend (or to withdraw any stop transfer instructions in respect thereof) on any certificate for any shares of Common Stock issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note (or makes any written announcement, statement or threat that it does not intend to honor the obligations described in this paragraph) and any such failure shall continue uncured (or any written announcement, statement or threat not to honor its

 
 

 

 

obligations shall not be rescinded in writing) for three (3) business days after the Holder shall have delivered a Notice of Conversion. It is an obligation of the Borrower to remain current in its obligations to its transfer agent. It shall be an event of default of this Note, if a conversion of this Note is delayed, hindered or frustrated due to a balance owed by the Borrower to its transfer agent. If at the option of the Holder, the Holder advances any funds to the Borrower’s transfer agent in order to process a conversion, such advanced funds shall be paid by the Borrower to the Holder within forty eight (48) hours of a demand from the Holder.

 

3.3  Breach of Covenants. The Borrower breaches any material covenant or other material term or condition contained in this Note and any collateral documents including but not limited to the Purchase Agreement and such breach continues for a period of ten (10) days after written notice thereof to the Borrower from the Holder.

 

3.4  Breach of Representations and Warranties. Any representation or warranty of the Borrower made herein or in any agreement, statement or certificate given in writing pursuant hereto or in connection herewith (including, without limitation, the Purchase Agreement), shall be false or misleading in any material respect when made and the breach of which has (or with the passage of time will have) a material adverse effect on the rights of the Holder with respect to this Note or the Purchase Agreement.

 

3.5  Receiver or Trustee. The Borrower or any subsidiary of the Borrower shall make an assignment for the benefit of creditors, or apply for or consent to the appointment of a receiver or trustee for it or for a substantial part of its property or business, or such a receiver or trustee shall otherwise be appointed.

 

3.6  Judgments. Any money judgment, writ or similar process shall be entered or filed against the Borrower or any subsidiary of the Borrower or any of its property or other assets for more than $50,000, and shall remain unvacated, unbonded or unstayed for a period of twenty

(20) days unless otherwise consented to by the Holder, which consent will not be unreasonably withheld.

 

3.7  Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings, voluntary or involuntary, for relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Borrower or any subsidiary of the Borrower.

 

3.8  Delisting of Common Stock. The Borrower shall fail to maintain the listing of the Common Stock on at least one of the OTC (which specifically includes the Pink Sheets electronic quotation system) or an equivalent replacement exchange, the Nasdaq National Market, the Nasdaq SmallCap Market, the New York Stock Exchange, or the American Stock Exchange.

 
 

 

 

3.9  Failure to Comply with the Exchange Act. The Borrower shall fail to comply with the reporting requirements of the Exchange Act; and/or the Borrower shall cease to be subject to the reporting requirements of the Exchange Act.

 

3.10          Liquidation. Any dissolution, liquidation, or winding up of Borrower or any substantial portion of its business.

 

3.11          Cessation of Operations. Any cessation of operations by Borrower or Borrower admits it is otherwise generally unable to pay its debts as such debts become due, provided, however, that any disclosure of the Borrower’s ability to continue as a “going concern” shall not be an admission that the Borrower cannot pay its debts as they become due.

 

3.12          Maintenance of Assets. The failure by Borrower to maintain any material intellectual property rights, personal, real property or other assets which are necessary to conduct its business (whether now or in the future).

 

3.13          Financial Statement Restatement. The restatement of any financial statements filed by the Borrower with the SEC for any date or period from two years prior to the Issue Date of this Note and until this Note is no longer outstanding, if the result of such restatement would, by comparison to the unrestated financial statement, have constituted a material adverse effect on the rights of the Holder with respect to this Note or the Purchase Agreement.

 

3.14          Reverse Splits. The Borrower effectuates a reverse split of its Common Stock without twenty (20) days prior written notice to the Holder. 

 

3.15          Replacement of Transfer Agent. In the event that the Borrower proposes to replace its transfer agent, the Borrower fails to provide, prior to the effective date of such replacement, a fully executed Irrevocable Transfer Agent Instructions in a form as initially delivered pursuant to the Purchase Agreement (including but not limited to the provision to irrevocably reserve shares of Common Stock in the Reserved Amount) signed by the successor transfer agent to Borrower and the Borrower. 

 

3.16          Cross-Default. Notwithstanding anything to the contrary contained in this Note or the other related or companion documents, a breach or default by the Borrower of any covenant or other term or condition contained in any of the Other Agreements, after the passage of all applicable notice and cure or grace periods, shall, at the option of the Holder, be considered a default under this Note and the Other Agreements, in which event the Holder shall be entitled (but in no event required) to apply all rights and remedies of the Holder under the terms of this Note and the Other Agreements by reason of a default under said Other Agreement or

 
 

 

 

hereunder. “Other Agreements” means, collectively, all agreements and instruments between, among or by: (1) the Borrower, and, or for the benefit of, (2) the Holder and any affiliate of the Holder, including, without limitation, promissory notes; provided, however, the term “Other Agreements” shall not include the related or companion documents to this Note. Each of the loan transactions will be cross-defaulted with each other loan transaction and with all other existing and future debt of Borrower to the Holder.

 

Upon the occurrence of any Event of Default specified in Section 3.1 (solely with respect to failure to pay the principal hereof or interest thereon when due at the Maturity Date), the Note shall become immediately due and payable and the Borrower shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount equal to the Default Sum (as defined herein). UPON THE OCCURRENCE OF ANY EVENT OF DEFAULT SPECIFIED IN SECTION 3.2, THE NOTE SHALL BECOME IMMEDIATELY DUE AND PAYABLE AND THE BORROWER SHALL PAY TO THE HOLDER, IN FULL SATISFACTION OF ITS OBLIGATIONS HEREUNDER, AN AMOUNT EQUAL TO: (Y) THE DEFAULT SUM (AS

DEFINED HEREIN); MULTIPLIED BY (Z) TWO (2). Upon the occurrence of any Event of Default, other than Section 3.2, exercisable through the delivery of written notice to the Borrower by such Holders (the “Default Notice”), the Note shall become immediately due and payable and the Borrower shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount equal to the greater of (i) 150% times the sum of (w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note to the date of payment (the “Mandatory Prepayment Date”) plus (y) Default Interest, if any, on the amounts referred to in clauses (w) and/or (x) plus (z) any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof (the then outstanding principal amount of this Note to the date of payment plus the amounts referred to in clauses (x), (y) and (z) shall collectively be known as the “Default Sum”) or (ii) the “parity value” of the Default Sum to be prepaid, where parity value means (a) the highest number of shares of Common Stock issuable upon conversion of or otherwise pursuant to such Default Sum in accordance with Article I, treating the Trading Day immediately preceding the Mandatory Prepayment Date as the “Conversion Date” for purposes of determining the lowest applicable Conversion Price, unless the Default Event arises as a result of a breach in respect of a specific Conversion Date in which case such Conversion Date shall be the Conversion Date), multiplied by (b) the highest Closing Price for the Common Stock during the period beginning on the date of first occurrence of the Event of Default and ending one day prior to the Mandatory Prepayment Date (the “Default Amount”) and all other amounts payable hereunder shall immediately become due and payable, all without demand, presentment or notice, all of which hereby are expressly waived, together with all costs, including, without limitation, legal fees and expenses, of collection, and the Holder shall be entitled to exercise all other rights and remedies available at law or in equity.

 

If the Borrower fails to pay the Default Amount within five (5) business days of written notice that such amount is due and payable, then the Holder shall have the right at any time, so long and to the extent that there are sufficient authorized shares, to require the Borrower, upon

 
 

 

 

written notice, to convert the Default Amount into shares of Common Stock of the Borrower pursuant to Section 1.1 hereof. 

 

ARTICLE IV. MISCELLANEOUS

 

4.1  Failure or Indulgence Not Waiver. No failure or delay on the part of the Holder in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privileges. All rights and remedies existing hereunder are cumulative to, and not exclusive of, any rights or remedies otherwise available.

 

4.2  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) personally served, (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 hand delivery, telegram, or facsimile, addressed as set forth below 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 second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be:

 

If to the Borrower, to: SKINVISIBLE, INC.

6320 S. Sandhill Road - Suite 10 Las Vegas, NV

Attn: TERRY HOWLETT, Chief Executive Officer facsimile:

 

With a copy by fax only to (which copy shall not constitute notice): [enter name of law firm]

Attn: [attorney name] [enter address line 1] [enter city, state, zip]

facsimile: [enter fax number]

 
 

  

If to the Holder:

VIS VIRES GROUP, INC.

111 Great Neck Road Suite 216, Great Neck, NY 11021

Attn: Curt Kramer, President

e-mail: info@visviresgroup.com

 

 

With a copy by fax only to (which copy shall not constitute notice): Naidich Wurman LLP

111 Great Neck Road Suite 214 Great Neck, NY 11021

Att: Judah A. Eisner, Esq. facsimile: 516-466-3555

 

4.3  Amendments. This Note and any provision hereof may only be amended by an instrument in writing signed by the Borrower and the Holder. The term “Note” and all reference thereto, as used throughout this instrument, shall mean this instrument (and the other Notes issued pursuant to the Purchase Agreement) as originally executed, or if later amended or supplemented, then as so amended or supplemented.

 

4.4  Assignability. This Note shall be binding upon the Borrower and its successors and assigns, and shall inure to be the benefit of the Holder and its successors and assigns. Each transferee of this Note must be an “accredited investor” (as defined in Rule 501(a) of the 1933 Act). Notwithstanding anything in this Note to the contrary, this Note may be pledged as collateral in connection with a bona fide margin account or other lending arrangement.

 

4.5  Cost of Collection. If default is made in the payment of this Note, the Borrower shall pay the Holder hereof costs of collection, including reasonable attorneys’ fees.

 

4.6  Governing Law. This Note shall be governed by and construed in accordance with the laws of the State of New York without regard to principles of conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated by this Note shall be brought only in the state courts of New York or in the federal courts located in the state and county of Nassau. The parties to this Note hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens. The Borrower and Holder waive trial by jury. The prevailing party shall be entitled to recover from the other party its reasonable attorney's fees and costs. In the event that any provision of this Note or any other agreement delivered in connection herewith is invalid or unenforceable under any applicable

 
 

 

 

statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of any agreement. Each party hereby irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding in connection with this Agreement or any other Transaction Document by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.

 

4.7  Certain Amounts. Whenever pursuant to this Note the Borrower is required to pay an amount in excess of the outstanding principal amount (or the portion thereof required to be paid at that time) plus accrued and unpaid interest plus Default Interest on such interest, the Borrower and the Holder agree that the actual damages to the Holder from the receipt of cash payment on this Note may be difficult to determine and the amount to be so paid by the Borrower represents stipulated damages and not a penalty and is intended to compensate the Holder in part for loss of the opportunity to convert this Note and to earn a return from the sale of shares of Common Stock acquired upon conversion of this Note at a price in excess of the price paid for such shares pursuant to this Note. The Borrower and the Holder hereby agree that such amount of stipulated damages is not plainly disproportionate to the possible loss to the Holder from the receipt of a cash payment without the opportunity to convert this Note into shares of Common Stock.

 

4.8  Purchase Agreement. By its acceptance of this Note, each party agrees to be bound by the applicable terms of the Purchase Agreement.

 

4.9  Notice of Corporate Events. Except as otherwise provided below, the Holder of this Note shall have no rights as a Holder of Common Stock unless and only to the extent that it converts this Note into Common Stock. The Borrower shall provide the Holder with prior notification of any meeting of the Borrower’s shareholders (and copies of proxy materials and other information sent to shareholders). In the event of any taking by the Borrower of a record of its shareholders for the purpose of determining shareholders who are entitled to receive payment of any dividend or other distribution, any right to subscribe for, purchase or otherwise acquire (including by way of merger, consolidation, reclassification or recapitalization) any share of any class or any other securities or property, or to receive any other right, or for the purpose of determining shareholders who are entitled to vote in connection with any proposed sale, lease or conveyance of all or substantially all of the assets of the Borrower or any proposed liquidation, dissolution or winding up of the Borrower, the Borrower shall mail a notice to the Holder, at least twenty (20) days prior to the record date specified therein (or thirty (30) days prior to the consummation of the transaction or event, whichever is earlier), of the date on which any such

 
 

 

 

record is to be taken for the purpose of such dividend, distribution, right or other event, and a brief statement regarding the amount and character of such dividend, distribution, right or other event to the extent known at such time. The Borrower shall make a public announcement of any event requiring notification to the Holder hereunder substantially simultaneously with the notification to the Holder in accordance with the terms of this Section 4.9.

 

4.10          Remedies. The Borrower acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder, by vitiating the intent and purpose of the transaction contemplated hereby. Accordingly, the Borrower acknowledges that the remedy at law for a breach of its obligations under this Note will be inadequate and agrees, in the event of a breach or threatened breach by the Borrower of the provisions of this Note, that the Holder shall be entitled, in addition to all other available remedies at law or in equity, and in addition to the penalties assessable herein, to an injunction or injunctions restraining, preventing or curing any breach of this Note and to enforce specifically the terms and provisions thereof, without the necessity of showing economic loss and without any bond or other security being required. 

 

IN WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by its duly authorized officer this July 28, 2015.

 

SKINVISIBLE, INC.

 

By: /s/ TERRY HOWLETT

Chief Executive Officer

 
 

 

EXHIBIT A -- NOTICE OF CONVERSION

 

The undersigned hereby elects to convert $_______ principal amount of the Note (defined below) into that number of shares of Common Stock to be issued pursuant to the conversion of the Note (“Common Stock”) as set forth below, of SKINVISIBLE, INC., a Nevada corporation (the “Borrower”) according to the conditions of the convertible note of the Borrower dated as of July 28, 2015 (the “Note”), as of the date written below. No fee will be charged to the Holder for any conversion, except for transfer taxes, if any.

 

Box Checked as to applicable instructions:

 

[ ] The Borrower shall electronically transmit the Common Stock issuable pursuant to this Notice of Conversion to the account of the undersigned or its nominee with DTC through its Deposit Withdrawal Agent Commission system (“DWAC Transfer”).

 

Name of DTC Prime Broker: Account Number:

 

[ ] The undersigned hereby requests that the Borrower issue a certificate or certificates for the number of shares of Common Stock set forth below (which numbers are based on the Holder’s calculation attached hereto) in the name(s) specified immediately below or, if additional space is necessary, on an attachment hereto:

 

VIS VIRES GROUP, INC.

111 Great Neck Road Suite 216,

Great Neck, NY 11021 Attention: Certificate Delivery

e-mail: info@visviresgroup.com

 

Date of Conversion:______

Applicable Conversion Price: $ ______

Number of Shares of Common Stock to be Issued

Pursuant to Conversion of the Notes: ______

Amount of Principal Balance Due remaining

Under the Note after this conversion: ______

 

VIS VIRES GROUP, INC.

 

By:

Name: Curt Kramer

Title: President

EX-10.2 6 ex10_2.htm EXHIBIT 10.2

PROMISSORY NOTE Debt

 

$10,800.00 Date: October 1, 2015

 

FOR VALUE RECEIVED, the undersigned, Skinvisible, Inc., of 6320 South Sandhill Road, Suite 10, Las Vegas, NV 89120 promises to pay to the order of Greg McCartney ("Debtor"), whose address is #307 - 15338 18th Ave., Surrey, B.C. V4A 1W8 Canada, or such other place as the Lender may designate in writing to the undersigned, the principal sum of Ten Thousand Eight Dollars ($10,800.00), together with interest thereon from the date hereof until paid, at the rate of ten percent (10%) per annum as follows: The entire principal and interest amount shall be repaid on or before December 30, 2020.

All or any part of the aforesaid principal sum plus interest may be prepaid at any time and from time to time without penalty. This note is in regards to debt for Director fees due to Mr. McCartney as of October 1, 2015 for the 9 months of 2015.

Upon written request by Debtor, the principal of this debt and accrued interest may be converted to common shares of Skinvisible, Inc. at the price of Two cents ($0.02) per share at any time up until December 30, 2020. In addition, the Company will issue a warrant agreement in the name of your designate, which will give the holder the right to purchase further shares at Three Cents ($0.03) per share if exercised within 3 years following the conversion date. The warrant agreement will give the holder the right to purchase one share for every two shares acquired by the holder in this transaction for an aggregate total of Two Hundred and Seventy Thousand (270,000) additional shares at the above price.

 

This note is made and executed under, and is in all respects governed by, the laws of the State of Nevada.

 

/s/ Terry Howlett

Skinvisible, Inc.

 

TOTAL $10,800.00

GRAND TOTAL

$10,800.00

# of Shares @ = 540,000

Warrants @ = 270,000

 

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At the investor&#146;s option until the repayment date, the note may be converted to shares of the Company&#146;s common stock at a fixed price of $0.02 per share along with an additional warrant to purchase one share for every two shares issued at the exercise price of $0.03 per share for three years after the conversion date.</font></p> 28476 1000000 47500 28476 1000000 111110 111110 1149040 1112764 13178 1107386 1112764 3600 3600 200000 6000 2017-10-26 EX-101.SCH 14 skvi-20150930.xsd XBRL SCHEMA FILE 00000001 - Document - Document and Entity Information link:presentationLink link:calculationLink link:definitionLink 00000002 - Statement - Balance Sheets link:presentationLink link:calculationLink link:definitionLink 00000003 - Statement - Balance Sheets (Parenthetical) link:presentationLink link:calculationLink link:definitionLink 00000004 - Statement - Statements of Operations link:presentationLink link:calculationLink link:definitionLink 00000005 - Statement - Statements of Cash Flows link:presentationLink link:calculationLink link:definitionLink 00000006 - 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Is Entity a Voluntary Filer? Is Entity's Reporting Status Current? Entity Filer Category Entity Public Float Entity Common Stock, Shares Outstanding Document Fiscal Period Focus Document Fiscal Year Focus Statement of Financial Position [Abstract] ASSETS Current assets Cash Accounts receivable Inventory Due from related party Prepaid expense and other current assets Total current assets Fixed assets, net of accumulated depreciation of $325,460 and $324,275, respectively Intangible and other assets: Patents and trademarks, net of accumulated amortization of $330,215 and $288,203, respectively Total assets LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities Accounts payable and accrued liabilities Bank overdraft Accrued interest payable Loans from related party Loans payable Convertible notes payable, net of unamortized debt discount of $38,046 and $26,822, respectively Convertible notes payable related party, net of unamortized discount of $634,320 and $874,163, respectively Total current liabilities Loans payable Total liabilities Stockholders' deficit Common stock; $0.001 par value; 200,000,000 shares authorized; 113,957,969 and 111,813,969 shares issued and outstanding at September 30, 2015 and December 31, 2014, respectively Additional paid-in capital Stock payable Accumulated deficit Total stockholders' deficit Total liabilities and stockholders' deficit Common Stock, Par Value Common Stock, Shares Authorized Common Stock, Issued Accumulated Depreciation Convertible Notes Payable, net of unamortized debt discount Convertible Notes Payable, related party, net of unamortized discount Accumulated Amortization Income Statement [Abstract] Revenues Cost of revenues Gross profit Operating expenses Depreciation and amortization Selling general and administrative Total operating expenses Loss from operations Other income and (expense) Other income Interest expense Gain on extinguishment of debt Total other expense Net loss Basic loss per common share Basic weighted average common shares outstanding Statement of Cash Flows [Abstract] Cash flows from operating activities: Adjustments to reconcile net loss to net cash used in operating activities: Stock-based compensation Amortization of debt discount Gain (Loss) on extinguishment of debt Bank overdraft Changes in operating assets and liabilities: Increase in inventory Decrease (increase) in accounts receivable Increase (decrease) in prepaid assets Increase in accounts payable and accrued liabilities Increase in accrued interest Net cash used in operating activities Cash flows from investing activities: Purchase of fixed and intangible assets Net cash used in investing activities Cash flows from financing activities: Proceeds from sale of common stock Proceeds from related party loans, net of payments Payments on notes payable Proceeds from notes payable Payments on convertible notes payable Net cash provided by (used in) financing activities Net change in cash Cash, beginning of period Cash, end of period Supplemental disclosure of cash flow information: Cash paid for interest Cash paid for tax Non-cash investing and financing activities: Accrued expenses converted to notes Common stock issued on extiguishment of debts Accounting Policies [Abstract] DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES Property, Plant and Equipment [Abstract] FIXED ASSETS Inventory Disclosure [Abstract] INVENTORY Notes to Financial Statements INTANGIBLE AND OTHER ASSETS Temporary Equity Disclosure [Abstract] STOCK OPTIONS AND WARRANTS NOTES PAYABLE Related Party Transactions [Abstract] RELATED PARTY TRANSACTIONS CONVERTIBLE NOTES PAYABLE CONVERTIBLE NOTES PAYABLE RELATED PARTY Equity [Abstract] STOCKHOLDERS DEFICIT Commitments and Contingencies Disclosure [Abstract] COMMITMENTS AND CONTINGENCIES Subsequent Events [Abstract] SUBSEQUENT EVENTS Description of Business History Going Concern Principles of Consolidation Use of Estimates Cash and Cash Equivalents Fair Value of Financial Instruments Revenue Recognition Accounts Receivable Inventory Goodwill and Intangible Assets Income Taxes Stock-based Compensation Earnings (loss) Per Share Schedule of Property and Plan Equipment Schedule of Inventory Summary of Options Summary of Warrants Schedule of Conversions of Stock Convertible Notes Payable Related Party Disclosure Date of Incorporation Accumulated Deficit Convertible Notes Payable Stock based compenstation Machinery and equipment Furniture and fixtures Computers, equipment and software Leasehold improvements Lab equipment Total Less: accumulated depreciation Fixed assets, net of accumulated depreciation Depreciation expense Shipping and Packing Materials Marketing Supplies Finished Goods Raw Materials Total Patents and trademarks, Gross Amortization Expense Stock Options And Warrants - Summary Of Options Details Beginning Balance, number of shares Beginning Balance, weighted average exercise price Options granted and assumed, number of shares Options granted and assumed, weighted average exercise price Options expired, number of shares . Options cancelled, number of shares Options cancelled, weighted average exercise price Options exercised, number of shares Options exercised, weighted average exercise price Ending Balance, number of shares Ending Balance, weighted average exercise price Beginning Balance, number of shares Beginning Balance, weighted average exercise price Warrants granted and assumed, number of shares Warrants granted and assumed, weighted average exercise price Warrants expired, number of shares Warrants expired, weighted average exercise price Warrants cancelled, number of shares Warrants cancelled, weighted average exercise price Warrants exercised, number of shares Warrants exercised, weighted average exercise price Ending Balance, number of shares Ending Balance, weighted average exercise price Statement [Table] Statement [Line Items] Stock Options, Date Granted Stock Options, exercisable Stock Options, shares Stock Options, strick price Stock Options, expected life Stock Options, value Expense Date of Warrant Issuance Common Stock, Issued Exercise Price Warrant, expected life Consulting Expense Financing Plan Approved Secured Promissory Notes, max amount offered Promissory Notes, Interest Rate Promissory Notes, Proceeds Promissory Notes, Due Due to Related Party Related Party Transaction [Axis] Convertible Note Payable #1 Convertible Note Payable #2 Original issue discount Unamortized debt discount Convertible Notes Payable Convertible Note Payable #1 Unamortized Debt Discount Convertible Note Payable #2 Unamortized Debt Discount Convertible Note Payable #3 Unamortized Debt Discount Convertible Note Payable #4 Unamortized Debt Discount Convertible Note Payable #5 Unamortized Debt Discount Convertible Note Payable #6 Unamortized Debt Discount Convertible Note Payable #7 Unamortized Debt Discount Convertible Note Payable #8 Unamortized Debt Discount Convertible Notes Payable Convertible Notes Payable, Value Interest Rate Option Rights, Price per Share Expiration Date Beneficial conversion feature Financing expense Due Date Interest Rate Common Stock, Fixed Price Conversion Feature, number of warrants to purchase for every two shares issued Warrants, Exercise Price Conversion Date Beneficial Conversion Feature Financing Expense Cash payments to reduce note balance Date of Issuance Note, Face Amount Common Stock, Shares Issued Warrants, Issued Common Stock, Share Value Common Stock, Shares Issued, Debt Settlement Common Stock, Shares Issued, Debt Settlement, Value Operating leases for 2015 Operating leases for 2016 Rental expense Convertible Note Payable, Date Maturity Date Assets, Current Assets Liabilities, Current Loans Payable, Current Liabilities Stockholders' Equity Attributable to Parent Liabilities and Equity Gross Profit Operating Expenses Other Income Other Expenses Proceeds from (Repayments of) Bank Overdrafts Net Cash Provided by (Used in) Investing Activities Repayments of Notes Payable RepaymentsOfConvertibleNotesPayable Net Cash Provided by (Used in) Financing Activities Inventory, Policy [Policy Text Block] Property, Plant and Equipment, Gross OptionsIssued OptionIssuedPrice WarrantsIssued WarrantsIssuedPrice Class of Warrant or Right, Number of Securities Called by Warrants or Rights UnamortizedDebtDiscount ConvertibleNotePayableRelatedParty1 ConvertibleNotePayableRelatedParty2 DebtInstrumentUnamortizedDiscount2 DebtInstrumentUnamortizedDiscount3 DebtInstrumentUnamortizedDiscount4 DebtInstrumentUnamortizedDiscount5 DebtInstrumentUnamortizedDiscount6 DebtInstrumentUnamortizedDiscount7 DebtInstrumentUnamortizedDiscount8 EX-101.PRE 18 skvi-20150930_pre.xml XBRL PRESENTATION FILE XML 19 R39.htm IDEA: XBRL DOCUMENT v3.3.0.814
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($)
9 Months Ended
Sep. 30, 2015
Sep. 30, 2014
Commitments and Contingencies Disclosure [Abstract]    
Operating leases for 2015 $ 12,042  
Operating leases for 2016 5,717  
Rental expense $ 32,619 $ 31,368
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RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)
Sep. 30, 2015
Dec. 31, 2014
Related Party Transactions [Abstract]    
Due to Related Party $ 1,145 $ 1,145
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FIXED ASSETS - Schedule of Property and Plan Equipment (Details) - USD ($)
Sep. 30, 2015
Dec. 31, 2014
Property, Plant and Equipment [Abstract]    
Machinery and equipment $ 48,163 $ 48,163
Furniture and fixtures 113,635 113,635
Computers, equipment and software 39,722 39,722
Leasehold improvements 12,569 12,569
Lab equipment 113,461 113,461
Total 327,550 327,550
Less: accumulated depreciation (325,460) (324,275)
Fixed assets, net of accumulated depreciation $ 2,090 $ 3,275
XML 24 R37.htm IDEA: XBRL DOCUMENT v3.3.0.814
CONVERTIBLE NOTES PAYABLE RELATED PARTY (Details Narrative)
9 Months Ended
Sep. 30, 2015
USD ($)
$ / shares
shares
Convertible Notes Payable Related Party 1  
Convertible Notes Payable, Value $ 1,071,593
Due Date 5 years
Interest Rate 10.00%
Common Stock, Fixed Price | $ / shares $ .04
Conversion Feature, number of warrants to purchase for every two shares issued | shares 1
Warrants, Exercise Price | $ / shares $ 0.06
Conversion Date 3 years
Beneficial Conversion Feature $ 1,123,078
Financing Expense 124,544
Cash payments to reduce note balance 51,485
Convertible Notes Payable Related Party 2  
Convertible Notes Payable, Value $ 321,032
Due Date 5 years
Interest Rate 10.00%
Common Stock, Fixed Price | $ / shares $ 0.04
Conversion Feature, number of warrants to purchase for every two shares issued | shares 1
Warrants, Exercise Price | $ / shares $ 0.06
Conversion Date 3 years
Beneficial Conversion Feature $ 209,809
Financing Expense 31,098
Cash payments to reduce note balance 3,990
Convertible Notes Payable Related Party 3  
Convertible Notes Payable, Value $ 182,083
Due Date 5 years
Interest Rate 10.00%
Common Stock, Fixed Price | $ / shares $ 0.03
Conversion Feature, number of warrants to purchase for every two shares issued | shares 1
Warrants, Exercise Price | $ / shares $ 0.04
Conversion Date 3 years
Beneficial Conversion Feature $ 182,083
Financing Expense 27,223
Convertible Notes Payable Related Party 4  
Convertible Notes Payable, Value $ 106,153
Due Date 5 years
Interest Rate 10.00%
Common Stock, Fixed Price | $ / shares $ 0.03
Conversion Feature, number of warrants to purchase for every two shares issued | shares 1
Warrants, Exercise Price | $ / shares $ 0.04
Conversion Date 3 years
Beneficial Conversion Feature $ 70,768
Financing Expense 10,579
Convertible Notes Payable Related Party 5  
Convertible Notes Payable, Value $ 142,501
Due Date 5 years
Interest Rate 10.00%
Common Stock, Fixed Price | $ / shares $ 0.03
Conversion Feature, number of warrants to purchase for every two shares issued | shares 1
Warrants, Exercise Price | $ / shares $ .04
Conversion Date 3 years
Beneficial Conversion Feature $ 94,909
Financing Expense 14,189
Convertible Notes Payable Related Party 6  
Convertible Notes Payable, Value $ 118,126
Due Date 5 years
Interest Rate 10.00%
Common Stock, Fixed Price | $ / shares $ .025
Conversion Feature, number of warrants to purchase for every two shares issued | shares 1
Warrants, Exercise Price | $ / shares $ .03
Conversion Date 3 years
Beneficial Conversion Feature $ 118,126
Financing Expense 17,661
Convertible Notes Payable Related Party 7  
Convertible Notes Payable, Value $ 40,558
Due Date 5 years
Interest Rate 10.00%
Common Stock, Fixed Price | $ / shares $ 0.04
Conversion Feature, number of warrants to purchase for every two shares issued | shares 1
Warrants, Exercise Price | $ / shares $ .05
Conversion Date 3 years
Beneficial Conversion Feature $ 40,466
Financing Expense 6,050
Convertible Notes Payable Related Party 8  
Convertible Notes Payable, Value $ 65,295
Due Date 5 years
Interest Rate 10.00%
Common Stock, Fixed Price | $ / shares $ .04
Conversion Feature, number of warrants to purchase for every two shares issued | shares 1
Warrants, Exercise Price | $ / shares $ .05
Conversion Date 3 years
Beneficial Conversion Feature $ 57,439
Financing Expense $ 8,589
XML 25 R9.htm IDEA: XBRL DOCUMENT v3.3.0.814
INTANGIBLE AND OTHER ASSETS
9 Months Ended
Sep. 30, 2015
Notes to Financial Statements  
INTANGIBLE AND OTHER ASSETS

Patents and trademarks are capitalized at their historical cost and are amortized over their estimated useful lives. As of September 30, 2015, patents and trademarks total $646,169, net of $330,215 of accumulated amortization. Amortization expense for the nine months ended September 30, 2015 and 2014 was $42,192 and $26,960 respectively.

 

License and distributor rights (“agreement”) were acquired by the Company in January 1999 and provide exclusive use distribution of polymers and polymer based products. The Company has a non-expiring term on the license and distribution rights. Accordingly, the Company annually assesses this license and distribution rights for impairment and has determined that no impairment write-down is considered necessary as of September 30, 2015.

XML 26 R29.htm IDEA: XBRL DOCUMENT v3.3.0.814
STOCK OPTIONS AND WARRANTS - Summary of Options (Details) - $ / shares
3 Months Ended 12 Months Ended
Sep. 30, 2015
Dec. 31, 2014
Stock Options And Warrants - Summary Of Options Details    
Options granted and assumed, number of shares 200,000  
Options granted and assumed, weighted average exercise price $ 0.05  
Options expired, number of shares 200,000  
. $ 0.05  
Options cancelled, number of shares
Options cancelled, weighted average exercise price
Options exercised, number of shares
Options exercised, weighted average exercise price
Ending Balance, number of shares 9,750,000 9,750,000
Ending Balance, weighted average exercise price $ 0.05 $ 0.05
XML 27 R28.htm IDEA: XBRL DOCUMENT v3.3.0.814
INTANGIBLE AND OTHER ASSETS (Details Narrative) - USD ($)
9 Months Ended
Sep. 30, 2015
Sep. 30, 2014
Dec. 31, 2014
Notes to Financial Statements      
Patents and trademarks, Gross $ 646,169    
Accumulated Amortization 330,215   $ 288,203
Amortization Expense $ 42,192 $ 26,960  
XML 28 R30.htm IDEA: XBRL DOCUMENT v3.3.0.814
STOCK OPTIONS AND WARRANTS - Summary of Warrants (Details) - $ / shares
9 Months Ended 12 Months Ended
Sep. 30, 2015
Dec. 31, 2014
Temporary Equity Disclosure [Abstract]    
Beginning Balance, number of shares 2,541,030  
Beginning Balance, weighted average exercise price $ 0.05  
Warrants granted and assumed, number of shares 1,000,000  
Warrants granted and assumed, weighted average exercise price $ 0.07  
Warrants expired, number of shares 1,196,280  
Warrants expired, weighted average exercise price $ 0.05  
Warrants cancelled, number of shares
Warrants cancelled, weighted average exercise price
Warrants exercised, number of shares
Warrants exercised, weighted average exercise price
Ending Balance, number of shares 2,334,750 2,541,030
Ending Balance, weighted average exercise price $ 0.07 $ 0.05
XML 29 R31.htm IDEA: XBRL DOCUMENT v3.3.0.814
STOCK OPTIONS AND WARRANTS (Details Narrative)
9 Months Ended
Sep. 30, 2015
USD ($)
$ / shares
shares
Stock Options, exercisable 9,750,000
Stock Options Granted 1  
Stock Options, Date Granted Mar. 31, 2015
Stock Options, shares 200,000
Stock Options, strick price | $ / shares $ .05
Stock Options, expected life 5 years
Stock Options, value | $ $ 8,800
Expense | $ $ 8,800
XML 30 R8.htm IDEA: XBRL DOCUMENT v3.3.0.814
INVENTORY
9 Months Ended
Sep. 30, 2015
Inventory Disclosure [Abstract]  
INVENTORY

Inventory consist of the following as of September 30, 2015 and December 31, 2014

 

    September 30, 2015   December 31, 2014
Shipping and Packing materials $ 13,033 $ 14,758
Marketing Supplies   19,761   -
Finished Goods              7,084 $            51,756
Raw Materials   49,873   16,641
 Total   89,751   83,155

 

XML 31 R32.htm IDEA: XBRL DOCUMENT v3.3.0.814
NOTES PAYABLE (Details Narrative) - USD ($)
3 Months Ended 9 Months Ended
Jun. 30, 2015
Sep. 30, 2015
Sep. 30, 2014
Dec. 31, 2014
May. 20, 2014
Loans payable   $ 1,549,900    
Payments on notes payable   $ (89,500)    
Twenty Four Notes Payble          
Financing Plan Approved   May 22, 2013      
Secured Promissory Notes, max amount offered   $ 1,000,000      
Promissory Notes, Interest Rate   9.00%      
Promissory Notes, Proceeds   $ 1,000,000      
Promissory Notes, Due   2 years      
Payments on notes payable   $ 89,000      
Twenty Seven Notes Payable          
Financing Plan Approved   May 19, 2014      
Secured Promissory Notes, max amount offered         $ 1,000,000
Promissory Notes, Interest Rate         9.00%
Promissory Notes, Proceeds   $ 1,000,000      
Promissory Notes, Due   2 years      
Eight Notes Payable          
Promissory Notes, Interest Rate   9.00%      
Promissory Notes, Proceeds $ 208,000        
Promissory Notes, Due 2 years        
Five Notes Payable          
Promissory Notes, Interest Rate   9.00%      
Promissory Notes, Proceeds   $ 131,000      
Promissory Notes, Due   2 years      
XML 32 R40.htm IDEA: XBRL DOCUMENT v3.3.0.814
SUBSEQUENT EVENTS (Details Narrative)
9 Months Ended
Sep. 30, 2015
USD ($)
Convertible Note 4  
Convertible Note Payable, Date Oct. 26, 2015
Convertible Notes Payable, Value $ 135,000
Interest Rate 9.00%
Maturity Date Oct. 26, 2017
Convertible Notes Payable Related Party 9  
Convertible Note Payable, Date Oct. 01, 2015
Convertible Notes Payable, Value $ 108,000
Interest Rate 10.00%
Due Date 5 years
XML 33 R2.htm IDEA: XBRL DOCUMENT v3.3.0.814
Balance Sheets - USD ($)
Sep. 30, 2015
Dec. 31, 2014
Current assets    
Cash $ 196,602
Accounts receivable $ 6,833 9,457
Inventory 89,751 83,155
Due from related party $ 1,145 $ 1,145
Prepaid expense and other current assets
Total current assets $ 97,729 $ 290,359
Fixed assets, net of accumulated depreciation of $325,460 and $324,275, respectively 2,090 3,275
Intangible and other assets:    
Patents and trademarks, net of accumulated amortization of $330,215 and $288,203, respectively 315,954 352,420
Total assets 415,773 646,054
Current liabilities    
Accounts payable and accrued liabilities 728,582 $ 420,762
Bank overdraft 32,787
Accrued interest payable 497,899 $ 348,111
Loans from related party 1,910 $ 1,910
Loans payable 1,549,900
Convertible notes payable, net of unamortized debt discount of $38,046 and $26,822, respectively 1,149,040 $ 1,112,764
Convertible notes payable related party, net of unamortized discount of $634,320 and $874,163, respectively 1,413,111 1,173,178
Total current liabilities 5,373,229 3,056,725
Loans payable 731,600 1,940,000
Total liabilities 6,104,829 4,996,725
Stockholders' deficit    
Common stock; $0.001 par value; 200,000,000 shares authorized; 113,957,969 and 111,813,969 shares issued and outstanding at September 30, 2015 and December 31, 2014, respectively 114,158 111,814
Additional paid-in capital $ 21,527,741 $ 21,378,656
Stock payable
Accumulated deficit $ (27,330,955) $ (25,841,141)
Total stockholders' deficit (5,689,056) (4,350,671)
Total liabilities and stockholders' deficit $ 415,773 $ 646,054
XML 34 R6.htm IDEA: XBRL DOCUMENT v3.3.0.814
DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES
9 Months Ended
Sep. 30, 2015
Accounting Policies [Abstract]  
DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES

Description of business – Skinvisible, Inc., (referred to as the “Company”) is focused on the development and manufacture and sales of innovative topical, transdermal and mucosal polymer-based delivery system technologies and formulations incorporating its patent-pending formula/process for combining hydrophilic and hydrophobic polymer emulsions. The technologies and formulations have broad industry applications within the pharmaceutical, over-the-counter, personal skincare and cosmetic arenas. Additionally, the Company’s non-dermatological formulations, offer solutions for a broad spectrum of markets women’s health, pain management, and others. The Company maintains executive and sales offices in Las Vegas, Nevada.

 

History – Skinvisible, Inc. (referred to as the “Company”) was incorporated in Nevada on March 6, 1998, under the name of Microbial Solutions, Inc. The Company underwent a name change on February 26, 1999, when it changed its name to Skinvisible, Inc. The Company’s subsidiary’s name of Manloe Labs, Inc. was also changed to Skinvisible Pharmaceuticals, Inc.

 

On September 9, 2014, the Company formed Kinatri USA Inc., a new wholly-owned subsidiary, to market a premium line of scientifically formulated skincare products powered by our patented Invisicare® technology. As part of our strategic focus on revenue generation and creating shareholder value, Kintari USA Inc. products will be sold via network marketing.

The Kintari product portfolio consists of anti-aging products to help fight the signs of aging. These products have been developed using proven anti-aging ingredients with scientific evidence of their effectiveness at reducing the look of fine lines and wrinkles resulting in youthful looking skin. These potent ingredients will be powered by patented Invisicare technology, providing consumers with unique, effective products which we believe cannot be duplicated. Additional products will be added to enhance this product line as the company grows and expands.

Skinvisible, Inc. together with its subsidiary shall herein be collectively referred to as the “Company”.

 

Going concern – The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred cumulative net losses of $27,330,955 since its inception and requires capital for its contemplated operational and marketing activities to take place. The Company’s ability to raise additional capital through the future issuances of common stock is unknown. The obtainment of additional financing, the successful development of the Company’s contemplated plan of operations, and its transition, ultimately, to the attainment of profitable operations are necessary for the Company to continue operations. The ability to successfully resolve these factors raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements of the Company do not include any adjustments that may result from the outcome of these aforementioned uncertainties.

 

Principles of consolidation – The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany balances and transactions have been eliminated.

 

Use of estimates – The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

 

Cash and cash equivalents

For purposes of the statement of cash flows, the Company considers all highly liquid investments and short-term debt instruments with original maturities of three months or less to be cash equivalents. There are $0 and $196,602 in cash and cash equivalents as of September 30, 2015 and December 31, 2014, respectively.

 

Fair Value of Financial Instruments

The carrying amounts reflected in the balance sheets for cash, accounts payable and accrued expenses approximate the respective fair values due to the short maturities of these items.

 

As required by the Fair Value Measurements and Disclosures Topic of the FASB ASC, fair value is measured based on a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

 

The three levels of the fair value hierarchy are described below:

 

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

 

Level 2: Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability;

 

Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

 

Revenue recognition

Product sales – Revenues from the sale of products (Invisicare® polymers) are recognized when title to the products are transferred to the customer and only when no further contingencies or material performance obligations are warranted, and thereby have earned the right to receive reasonably assured payments for products sold and delivered.

 

Royalty sales – The Company also recognizes royalty revenue from licensing its patented product formulations only when earned, when no further contingencies or material performance obligations are warranted, and thereby have earned the right to receive and retain reasonably assured payments.

Distribution and license rights sales – The Company also recognizes revenue from distribution and license rights only when earned (and are amortized over a five year period), when no further contingencies or material performance obligations are warranted, and thereby have earned the right to receive and retain reasonably assured payments.

Costs of Revenue – Cost of revenue includes raw materials, component parts, and shipping supplies. Shipping and handling costs is not a significant portion of the cost of revenue.

Accounts Receivable – Accounts receivable is comprised of uncollateralized customer obligations due under normal trade terms requiring payment within 30 days from the invoice date. The carrying amount of accounts receivable is reviewed periodically for collectability. If management determines that collection is unlikely, an allowance that reflects management’s best estimate of the amounts that will not be collected is recorded. Management reviews each accounts receivable balance that exceeds 30 days from the invoice date and, based on an assessment of creditworthiness, estimates the portion, if any, of the balance that will not be collected. As of September 30, 2015, the Company had not recorded a reserve for doubtful accounts. The Company has $1,000,000 in convertible notes payable which are secured by the accounts receivable of a license agreement the Company has with Women's Choice Pharmaceuticals, LLC on its proprietary prescription product, ProCort®.

 

Inventory – Substantially all inventory consists of finished goods and are valued based upon first-in first-out ("FIFO") cost, not in excess of market. The determination of whether the carrying amount of inventory requires a write-down is based on an evaluation of inventory.

 

Goodwill and intangible assets – The Company follows Financial Accounting Standard Board’s (FASB) Codification Topic 350-10 (“ASC 350-10”), “Intangibles – Goodwill and Other”. According to this statement, goodwill and intangible assets with indefinite lives are no longer subject to amortization, but rather an annual assessment of impairment by applying a fair-value based test. Fair value for goodwill is based on discounted cash flows, market multiples and/or appraised values as appropriate. Under ASC 350-10, the carrying value of assets are calculated at the lowest level for which there are identifiable cash flows.

  

Income taxes – The Company accounts for its income taxes in accordance with FASB Codification Topic ASC 740-10, “Income Taxes”, which requires recognition of deferred tax assets and liabilities for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

 

Stock-based compensation – The Company follows the guidelines in FASB Codification Topic ASC 718-10 “Compensation-Stock Compensation”, which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors including employee stock options and employee stock purchases related to a Employee Stock Purchase Plan based on the estimated fair values.

 

Stock based compensation expense recognized under ASC 718-10 for the year ended September 30, 2015 and December 31, 2014 totaled $8,800 and $54,450, respectively.

 

Earnings (loss) per share – The Company reports earnings (loss) per share in accordance with FASB Codification Topic ASC 260-10 “Earnings Per Share”, Basic earnings (loss) per share is computed by dividing income (loss) available to common shareholders by the weighted average number of common shares available. Diluted earnings (loss) per share is computed similar to basic earnings (loss) per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. Diluted earnings (loss) per share has not been presented since the effect of the assumed exercise of options and warrants to purchase common shares (common stock equivalents) would have an anti-dilutive effect.

XML 35 R35.htm IDEA: XBRL DOCUMENT v3.3.0.814
CONVERTIBLE NOTES PAYABLE RELATED PARTY - Convertible Notes Payable Related Party Disclouser (Details) - USD ($)
Sep. 30, 2015
Dec. 31, 2014
Notes to Financial Statements    
Convertible Note Payable #1 $ 1,071,593 $ 1,071,593
Unamortized Debt Discount (208,939) (333,483)
Convertible Note Payable #2 321,032 321,032
Unamortized Debt Discount (72,788) (103,886)
Convertible Note Payable #3 182,083 182,083
Unamortized Debt Discount (82,054) (109,277)
Convertible Note Payable #4 106,152 106,152
Unamortized Debt Discount (38,912) (49,491)
Convertible Note Payable #5 142,501 142,501
Unamortized Debt Discount (61,748) (75,937)
Convertible Note Payable #6 118,126 118,126
Unamortized Debt Discount (88,562) (106,223)
Convertible Note Payable #7 40,558 40,558
Unamortized Debt Discount (32,377) (38,427)
Convertible Note Payable #8 65,295 65,295
Unamortized Debt Discount (48,850) (57,438)
Convertible Notes Payable $ 1,413,111 $ 1,173,178
XML 36 R22.htm IDEA: XBRL DOCUMENT v3.3.0.814
CONVERTIBLE NOTES PAYABLE (Tables)
9 Months Ended
Sep. 30, 2015
Notes to Financial Statements  
Schedule of Conversions of Stock
Convertible Notes Payable at consists of the following: September 30,  December 31,
  2015  2014
$52,476 face value,10% unsecured note payable to an investor, note interest and principal are due on demand.  The note could be converted to option rights for Skinvisible, Inc. shares at ten cents per share ($0.10), these rights expired January 12, 2010. The Note is currently in default, no penalties occur due to default. $28,476   $28,476 
Unamortized debt discount  —      —   
Total, net of unamortized discount  28,476    28,476 
$1,000,000 face value 9% unsecured notes payable to investors, due in 2015. At the investor’s option until the repayment date, the note and related interest may be converted to shares of the Company’s common stock a discount of 90% of the current share price after the first anniversary of the note. The Notes are secured by the accounts receivable of a license agreement the Company has with Womens Choice Pharmaceuticals, LLC on its proprietary prescription product, ProCort®. The Company has determined the value associated with the beneficial conversion feature in connection with the notes and interest to be $111,110. The aggregate original issue discount feature has been accreted and charged to interest expenses as a financing expense in the amount of $31,078 during the nine months ended September 30, 2015. The original issue discount feature is valued under the intrinsic value method.
 
On the Company executed extension agreements with several note holder who's note had reached maturity. The notes were extended for an additional 12 months.
 1,000,000    1,000,000 
Original issue discount  111,110    111,110 
Unamortized debt discount  (3,724)   (26,822)
Total, net of unamortized discount  1,107,386    1,084,288 
          
On July 28, 2015, we entered into a convertible promissory note pursuant to which we borrowed $47,500. Interest under the convertible promissory note is 8% per annum, and the principal and all accrued but unpaid interest is due on April 30, 2016. The note is convertible at any time following 180 days after the issuance date at noteholders option into shares of our common stock at a variable conversion price of 58% of the lowest average three day market price of our common stock during the 10 trading days prior to the notice of conversion, subject to adjustment as described in the note. The holder’s ability to convert the note, however, is limited in that it will not be permitted to convert any portion of the note if the number of shares of our common stock beneficially owned by the holder and its affiliates, together with the number of shares of our common stock issuable upon any full or partial conversion, would exceed 9.99% of our outstanding shares of common stock.
 
The Company has determined the value associated with the beneficial conversion feature in connection with the notes negotiated on July 28, 2015 to be $34,397. The aggregate beneficial conversion feature has been accreted and charged to interest expenses as a financing expense in the amount of $7,947 during the nine months ending September 30, 2015. The beneficial conversion feature is valued under the intrinsic value method
 47,500    —   
Unamortized debt discount  (34,322)   —   
Total, net of unamortized discount  13,178    —   
          
  $1,149,040   $1,112,764 
XML 37 R36.htm IDEA: XBRL DOCUMENT v3.3.0.814
CONVERTIBLE NOTES PAYABLE (Details Narrative) - USD ($)
9 Months Ended
Sep. 30, 2015
Dec. 31, 2014
Convertible Note 1    
Convertible Notes Payable, Value   $ 52,476
Interest Rate   10.00%
Option Rights, Price per Share   $ 0.10
Expiration Date Jan. 12, 2010  
Convertible Note 2    
Convertible Notes Payable, Value   $ 1,000,000
Interest Rate   9.00%
Expiration Date Oct. 01, 2016  
Beneficial conversion feature $ 111,110  
Financing expense $ 20,689  
Convertible Note 3    
Convertible Notes Payable, Value   $ 47,500
Interest Rate   8.00%
Expiration Date Apr. 30, 2016  
Beneficial conversion feature $ 34,397  
Financing expense $ 7,947  
XML 38 R24.htm IDEA: XBRL DOCUMENT v3.3.0.814
DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES (Details Narrative) - USD ($)
9 Months Ended 12 Months Ended
Sep. 30, 2015
Sep. 30, 2014
Dec. 31, 2014
Dec. 31, 2013
Accounting Policies [Abstract]        
Date of Incorporation Mar. 06, 1998      
Accumulated Deficit $ (27,330,955)   $ (25,841,141)  
Cash $ 258,306 196,602 $ 513,420
Convertible Notes Payable $ 1,000,000      
Stock based compenstation $ 8,800 $ 31,050 $ 54,450  
XML 39 Show.js IDEA: XBRL DOCUMENT /** * Rivet Software Inc. * * @copyright Copyright (c) 2006-2011 Rivet Software, Inc. All rights reserved. * Version 2.4.0.3 * */ var Show = {}; Show.LastAR = null, Show.hideAR = function(){ Show.LastAR.style.display = 'none'; }; Show.showAR = function ( link, id, win ){ if( Show.LastAR ){ Show.hideAR(); } var ref = link; do { ref = ref.nextSibling; } while (ref && ref.nodeName != 'TABLE'); if (!ref || ref.nodeName != 'TABLE') { var tmp = win ? win.document.getElementById(id) : document.getElementById(id); if( tmp ){ ref = tmp.cloneNode(true); ref.id = ''; link.parentNode.appendChild(ref); } } if( ref ){ ref.style.display = 'block'; Show.LastAR = ref; } }; Show.toggleNext = function( link ){ var ref = link; do{ ref = ref.nextSibling; }while( ref.nodeName != 'DIV' ); if( ref.style && ref.style.display && ref.style.display == 'none' ){ ref.style.display = 'block'; if( link.textContent ){ link.textContent = link.textContent.replace( '+', '-' ); }else{ link.innerText = link.innerText.replace( '+', '-' ); } }else{ ref.style.display = 'none'; if( link.textContent ){ link.textContent = link.textContent.replace( '-', '+' ); }else{ link.innerText = link.innerText.replace( '-', '+' ); } } }; XML 40 R7.htm IDEA: XBRL DOCUMENT v3.3.0.814
FIXED ASSETS
9 Months Ended
Sep. 30, 2015
Property, Plant and Equipment [Abstract]  
FIXED ASSETS

Fixed assets consist of the following as of September 30, 2015 and December 31, 2014:

 

    September 30, 2015   December 31, 2014
Machinery and equipment $             48,163 $             48,163
Furniture and fixtures   113,635   113,635
Computers, equipment and software   39,722   39,722
Leasehold improvements   12,569   12,569
Lab equipment   113,461   113,461
 Total   327,550   327,550
Less: accumulated depreciation   (325,460)   (324,275)
Fixed assets, net of accumulated depreciation $ 2,090 $ 3,275

 

Depreciation expense for the nine months ended September 30, 2015 and 2014 was $1,185 and $1,067, respectively.

XML 41 R3.htm IDEA: XBRL DOCUMENT v3.3.0.814
Balance Sheets (Parenthetical) - USD ($)
Sep. 30, 2015
Dec. 31, 2014
Statement of Financial Position [Abstract]    
Common Stock, Par Value $ .001 $ 0.001
Common Stock, Shares Authorized 200,000,000 200,000,000
Common Stock, Issued 113,957,969 111,813,969
Accumulated Depreciation $ 325,460 $ 324,275
Convertible Notes Payable, net of unamortized debt discount 38,046 26,822
Convertible Notes Payable, related party, net of unamortized discount 634,320 874,163
Accumulated Amortization $ 330,215 $ 288,203
XML 42 R17.htm IDEA: XBRL DOCUMENT v3.3.0.814
SUBSEQUENT EVENTS
9 Months Ended
Sep. 30, 2015
Subsequent Events [Abstract]  
SUBSEQUENT EVENTS

On October 26, 2015, we entered into a convertible promissory note pursuant to which we borrowed $135,000. Interest under the convertible promissory note is 9% per annum, and the principal and all accrued but unpaid interest is due on October 26, 2017. The note is convertible at any time following the third month anniversary after the issuance date at noteholders option into shares of our common stock at a variable conversion price of 90% of the average of the Trading Prices for the common stock during the five Trading Day period ending on the latest complete Trading Day prior to the Conversion Date, subject to adjustment as described in the note. The holder’s ability to convert the note, however, is limited in that it will not be permitted to convert any portion of the note if the number of shares of our common stock beneficially owned by the holder and its affiliates, together with the number of shares of our common stock issuable upon any full or partial conversion, would exceed 4.99% of our outstanding shares of common stock.

 

On October 1, 2015, we entered into a convertible promissory note with Greg McCartney a director of the Company. The $10,800 face value promissory note is unsecured, due five years from issuance, and bears an interest rate of 10%. At the investor’s option until the repayment date, the note may be converted to shares of the Company’s common stock at a fixed price of $0.02 per share along with an additional warrant to purchase one share for every two shares issued at the exercise price of $0.03 per share for three years after the conversion date.

XML 43 R1.htm IDEA: XBRL DOCUMENT v3.3.0.814
Document and Entity Information - shares
9 Months Ended
Sep. 30, 2015
Oct. 25, 2015
Document And Entity Information    
Entity Registrant Name SKINVISIBLE INC  
Entity Central Index Key 0001085277  
Document Type 10-Q  
Document Period End Date Sep. 30, 2015  
Amendment Flag false  
Current Fiscal Year End Date --12-31  
Is Entity a Well-known Seasoned Issuer? No  
Is Entity a Voluntary Filer? No  
Is Entity's Reporting Status Current? Yes  
Entity Filer Category Smaller Reporting Company  
Entity Common Stock, Shares Outstanding   114,157,969
Document Fiscal Period Focus Q3  
Document Fiscal Year Focus 2015  
XML 44 R18.htm IDEA: XBRL DOCUMENT v3.3.0.814
DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES (Policies)
9 Months Ended
Sep. 30, 2015
Accounting Policies [Abstract]  
Description of Business

Skinvisible, Inc., (referred to as the “Company”) is focused on the development and manufacture and sales of innovative topical, transdermal and mucosal polymer-based delivery system technologies and formulations incorporating its patent-pending formula/process for combining hydrophilic and hydrophobic polymer emulsions. The technologies and formulations have broad industry applications within the pharmaceutical, over-the-counter, personal skincare and cosmetic arenas. Additionally, the Company’s non-dermatological formulations, offer solutions for a broad spectrum of markets women’s health, pain management, and others. The Company maintains executive and sales offices in Las Vegas, Nevada.

History

Skinvisible, Inc. (referred to as the “Company”) was incorporated in Nevada on March 6, 1998, under the name of Microbial Solutions, Inc. The Company underwent a name change on February 26, 1999, when it changed its name to Skinvisible, Inc. The Company’s subsidiary’s name of Manloe Labs, Inc. was also changed to Skinvisible Pharmaceuticals, Inc.

 

On September 9, 2014, the Company formed Kinatri USA Inc., a new wholly-owned subsidiary, to market a premium line of scientifically formulated skincare products powered by our patented Invisicare® technology. As part of our strategic focus on revenue generation and creating shareholder value, Kintari USA Inc. products will be sold via network marketing.

The Kintari product portfolio consists of anti-aging products to help fight the signs of aging. These products have been developed using proven anti-aging ingredients with scientific evidence of their effectiveness at reducing the look of fine lines and wrinkles resulting in youthful looking skin. These potent ingredients will be powered by patented Invisicare technology, providing consumers with unique, effective products which we believe cannot be duplicated. Additional products will be added to enhance this product line as the company grows and expands.

Skinvisible, Inc. together with its subsidiary shall herein be collectively referred to as the “Company”.

Going Concern

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred cumulative net losses of $27,330,955 since its inception and requires capital for its contemplated operational and marketing activities to take place. The Company’s ability to raise additional capital through the future issuances of common stock is unknown. The obtainment of additional financing, the successful development of the Company’s contemplated plan of operations, and its transition, ultimately, to the attainment of profitable operations are necessary for the Company to continue operations. The ability to successfully resolve these factors raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements of the Company do not include any adjustments that may result from the outcome of these aforementioned uncertainties.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany balances and transactions have been eliminated.

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

For purposes of the statement of cash flows, the Company considers all highly liquid investments and short-term debt instruments with original maturities of three months or less to be cash equivalents. There are $0 and $196,602 in cash and cash equivalents as of September 30, 2015 and December 31, 2014, respectively.

Fair Value of Financial Instruments

The carrying amounts reflected in the balance sheets for cash, accounts payable and accrued expenses approximate the respective fair values due to the short maturities of these items.

 

As required by the Fair Value Measurements and Disclosures Topic of the FASB ASC, fair value is measured based on a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

 

The three levels of the fair value hierarchy are described below:

 

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

 

Level 2: Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability;

 

Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

Revenue Recognition

Product sales – Revenues from the sale of products (Invisicare® polymers) are recognized when title to the products are transferred to the customer and only when no further contingencies or material performance obligations are warranted, and thereby have earned the right to receive reasonably assured payments for products sold and delivered.

 

Royalty sales – The Company also recognizes royalty revenue from licensing its patented product formulations only when earned, when no further contingencies or material performance obligations are warranted, and thereby have earned the right to receive and retain reasonably assured payments.

Distribution and license rights sales – The Company also recognizes revenue from distribution and license rights only when earned (and are amortized over a five year period), when no further contingencies or material performance obligations are warranted, and thereby have earned the right to receive and retain reasonably assured payments.

Costs of Revenue – Cost of revenue includes raw materials, component parts, and shipping supplies. Shipping and handling costs is not a significant portion of the cost of revenue.

Accounts Receivable

Accounts receivable is comprised of uncollateralized customer obligations due under normal trade terms requiring payment within 30 days from the invoice date. The carrying amount of accounts receivable is reviewed periodically for collectability. If management determines that collection is unlikely, an allowance that reflects management’s best estimate of the amounts that will not be collected is recorded. Management reviews each accounts receivable balance that exceeds 30 days from the invoice date and, based on an assessment of creditworthiness, estimates the portion, if any, of the balance that will not be collected. As of September 30, 2015, the Company had not recorded a reserve for doubtful accounts. The Company has $1,000,000 in convertible notes payable which are secured by the accounts receivable of a license agreement the Company has with Women's Choice Pharmaceuticals, LLC on its proprietary prescription product, ProCort®.

Inventory

Substantially all inventory consists of finished goods and are valued based upon first-in first-out ("FIFO") cost, not in excess of market. The determination of whether the carrying amount of inventory requires a write-down is based on an evaluation of inventory.

Goodwill and Intangible Assets

The Company follows Financial Accounting Standard Board’s (FASB) Codification Topic 350-10 (“ASC 350-10”), “Intangibles – Goodwill and Other”. According to this statement, goodwill and intangible assets with indefinite lives are no longer subject to amortization, but rather an annual assessment of impairment by applying a fair-value based test. Fair value for goodwill is based on discounted cash flows, market multiples and/or appraised values as appropriate. Under ASC 350-10, the carrying value of assets are calculated at the lowest level for which there are identifiable cash flows.

Income Taxes

The Company accounts for its income taxes in accordance with FASB Codification Topic ASC 740-10, “Income Taxes”, which requires recognition of deferred tax assets and liabilities for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

Stock-based Compensation

The Company follows the guidelines in FASB Codification Topic ASC 718-10 “Compensation-Stock Compensation”, which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors including employee stock options and employee stock purchases related to a Employee Stock Purchase Plan based on the estimated fair values.

 

Stock based compensation expense recognized under ASC 718-10 for the year ended September 30, 2015 and December 31, 2014 totaled $8,800 and $54,450, respectively.

Earnings (loss) Per Share

The Company reports earnings (loss) per share in accordance with FASB Codification Topic ASC 260-10 “Earnings Per Share”, Basic earnings (loss) per share is computed by dividing income (loss) available to common shareholders by the weighted average number of common shares available. Diluted earnings (loss) per share is computed similar to basic earnings (loss) per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. Diluted earnings (loss) per share has not been presented since the effect of the assumed exercise of options and warrants to purchase common shares (common stock equivalents) would have an anti-dilutive effect.

XML 45 R4.htm IDEA: XBRL DOCUMENT v3.3.0.814
Statements of Operations - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2015
Sep. 30, 2014
Sep. 30, 2015
Sep. 30, 2014
Income Statement [Abstract]        
Revenues $ 30,377 $ 22,303 $ 158,428 $ 41,276
Cost of revenues 9,859 674 56,047 3,907
Gross profit 20,518 21,629 102,381 37,369
Operating expenses        
Depreciation and amortization 14,631 9,680 43,377 28,027
Selling general and administrative 255,436 373,101 900,605 758,997
Total operating expenses 270,067 382,781 943,982 787,024
Loss from operations $ (249,549) (361,152) (841,601) (749,655)
Other income and (expense)        
Other income 70 26 258
Interest expense $ (232,107) (200,944) (650,079) (551,872)
Gain on extinguishment of debt 400 (4,054) 1,840 (5,044)
Total other expense (231,707) (204,928) (648,213) (556,658)
Net loss $ (481,256) $ (566,080) $ (1,489,814) $ (1,306,313)
Basic loss per common share $ (0.00) $ (0.01) $ (0.01) $ (0.01)
Basic weighted average common shares outstanding 113,957,969 111,609,529 113,957,969 111,317,222
XML 46 R12.htm IDEA: XBRL DOCUMENT v3.3.0.814
RELATED PARTY TRANSACTIONS
9 Months Ended
Sep. 30, 2015
Related Party Transactions [Abstract]  
RELATED PARTY TRANSACTIONS

During the year ended 2013 various officers advanced funds to support the daily operations of the company. As of September 30, 2015, $1,910 remained due to related parties as repayment for advanced monies, all related other party notes have been extinguished or re-negotiated as convertible notes. See note 10.

XML 47 R11.htm IDEA: XBRL DOCUMENT v3.3.0.814
NOTES PAYABLE
9 Months Ended
Sep. 30, 2015
Notes to Financial Statements  
NOTES PAYABLE

On May 22, 2013 the Company approved a financing plan to offer accredited investors up to $1,000,000 in secured promissory notes. During the year ended December 31, 2013 the Company entered into twenty-four 9% notes payable to investors and received total proceeds of $1,000,000. The notes are due two years from the anniversary date of execution. The Notes are secured by the US Patent rights granted for the Company's Sunscreen Products: US patent number #8,128,913: "Sunscreen Composition with Enhanced UV-A Absorber Stability and Methods". As of September 30, 2015 several notes had reached their initial maturity date, all note holders executed agreements extending the note for an additional 12 months upon the same terms. During the nine months ending September 30, 2015 the Company made principal payments of $89,000.

 

On May 19, 2014 the Company approved a financing plan to offer accredited investors up to an additional $1,000,000 in secured promissory notes. For the period from May 19, 2014 to March 31, 2015 the Company entered into twenty-seven 9% notes payable to investors and received total proceeds of $1,000,000. The notes are due two years from the anniversary date of execution. The Notes are secured by the US Patent rights granted for the Company's Sunscreen Products: US patent number #8,128,913: "Sunscreen Composition with Enhanced UV-A Absorber Stability and Methods".

 

During the three months ended June 30, 2015 the Company entered into eight additional 9% notes payable to investors and received total proceeds of $208,000. The notes are due two years from the anniversary date of execution. The Notes are secured by the US Patent rights granted for the Company's Sunscreen Products: US patent number #8,128,913: "Sunscreen Composition with Enhanced UV-A Absorber Stability and Methods". 

 

During the three months ended June 30, 2015 the Company entered into five additional 9% notes payable to investors and received total proceeds of $131,000. The notes are due two years from the anniversary date of execution. The Notes are secured by the US Patent rights granted for the Company's Sunscreen Products: US patent number #8,128,913: "Sunscreen Composition with Enhanced UV-A Absorber Stability and Methods".

 

As of September 30, 2015 $1,549,900 of the Notes were due in less than 12 months and have been classified as Current notes payable.

XML 48 R23.htm IDEA: XBRL DOCUMENT v3.3.0.814
CONVERTIBLE NOTES PAYABLE RELATED PARTY (Tables)
9 Months Ended
Sep. 30, 2015
Notes to Financial Statements  
Convertible Notes Payable Related Party Disclosure
Convertible Notes Payable Related Party at consists of the following: September 30,  December 31,
  2015  2014
On December 31, 2011, the Company re-negotiated accrued salaries and interest for three employees. Under the terms of the agreements, the notes dated before December 31, 2010, and all salaries not previously converted were converted to promissory notes convertible into common stock with a warrant feature. The promissory notes are unsecured, due five years from issuance, and bear an interest rate of 10%. At the investor’s option until the repayment date, the note may be converted to shares of the Company’s common stock at a fixed price of $0.04 per share along with additional warrants to purchase one share for every two shares issued at the exercise price of $0.06 per share for three years after the conversion date. The Company has determined the value associated with the beneficial conversion feature in connection with the notes negotiated on December 31, 2011 to be $1,123,078. The aggregate beneficial conversion feature has been accreted and charged to interest expenses as a financing expense in the amount of $124,544 during the nine months ending September 30, 2015.  The beneficial conversion feature is valued under the intrinsic value method.  In the year ending December 2013, the Company  made $51,485 in cash payments to reduce the note balance.  1,071,593    1,071,593 
Unamortized debt discount  (208,939)   (333,483)
On June 30, 2012, the Company re-negotiated accrued salaries and interest for three employees. Under the terms of the agreements, the notes dated before July 1, 2011, and all salaries not previously converted were converted to promissory notes convertible into common stock with a warrant feature. The promissory notes are unsecured, due five years from issuance, and bear an interest rate of 10%. At the investor’s option until the repayment date, the note may be converted to shares of the Company’s common stock at a fixed price of $0.04 per share along with additional warrants to purchase one share for every two shares issued at the exercise price of $0.06 per share for three years after the conversion date. The Company has determined the value associated with the beneficial conversion feature in connection with the  notes to be $209,809. The aggregate beneficial conversion feature has been accreted and charged to interest expenses as a financing expense in the amount of $31,098 during the nine months ending September 30, 2015.  The beneficial conversion feature is valued under the intrinsic value method.  On January 18, 2013, the Company  made a $3,990 cash payment to reduce the note balance.  321,032    321,032 
Unamortized debt discount  (72,788)   (103,886)
On December 30 and 31, 2012, the Company re-negotiated accrued salaries and interest for three employees. Under the terms of the agreements,  $182,083 of related party notes accrued interest and salaries not previously converted were converted to promissory notes convertible into common stock with a warrant feature. The $182,083 face value promissory notes are unsecured, due five years from issuance, and bear an interest rate of 10%. At the investor’s option until the repayment date, the note may be converted to shares of the Company’s common stock at a fixed price of $0.03 per share along with additional warrants to purchase one share for every two shares issued at the exercise price of $0.04 per share for three years after the conversion date. The Company has determined the value associated with the beneficial conversion feature in connection with the notes to be $182,083. The aggregate beneficial conversion feature has been accreted and charged to interest expenses as a financing expense in the amount of $27,223 during the nine months ending September 30, 2015.  The beneficial conversion feature is valued under the intrinsic value method.  182,083    182,083 
Unamortized debt discount  (82,054)   (109,277)

On June 30, 2013, the Company re-negotiated accrued salaries and interest for two employees. Under the terms of the agreements,  $106,153 of accrued interest and salaries were converted to promissory notes convertible into common stock with a warrant feature. The $106,153 face value promissory notes are unsecured, due five years from issuance, and bear an interest rate of 10%. At the investor’s option until the repayment date, the note may be converted to shares of the Company’s common stock at a fixed price of $0.03 per share along with additional warrants to purchase one share for every two shares issued at the exercise price of $0.04 per share for three years after the conversion date. The Company has determined the value associated with the beneficial conversion feature in connection with the notes to be $70,768. The aggregate beneficial conversion feature has been accreted and charged to interest expenses as a financing expense in the amount of $10,579 during the nine months ending September 30, 2015.  The beneficial conversion feature is valued under the intrinsic value method.  106,152    106,152 
Unamortized debt discount  (38,912)   (49,491)
 On December 31, 2013, the Company re-negotiated accrued salaries and interest for three employees. Under the terms of the agreements, $142,501 of accrued interest and salaries not previously converted were converted to promissory notes convertible into common stock with a warrant feature. The $142,501 face value promissory notes are unsecured, due five years from issuance, and bear an interest rate of 10%. At the investor’s option until the repayment date, the note may be converted to shares of the Company’s common stock at a fixed price of $0.03 per share along with additional warrants to purchase one share for every two shares issued at the exercise price of $0.04 per share for three years after the conversion date. The Company has determined the value associated with the beneficial conversion feature in connection with the notes to be $94,909. The aggregate beneficial conversion feature has been accreted and charged to interest expenses as a financing expense in the amount of $14,189 during the nine months ending September 30, 2015. The beneficial conversion feature is valued under the intrinsic value method.  142,501    142,501 
Unamortized debt discount  (61,748)   (75,937)
On June 30, 2014, the Company re-negotiated accrued salaries and interest for three employees. Under the terms of the agreements,  $118,126 of accrued salaries not previously converted were converted to promissory notes convertible into common stock with a warrant feature. The $118,126 face value promissory notes are unsecured, due five years from issuance, and bear an interest rate of 10%. At the investor’s option until the repayment date, the note may be converted to shares of the Company’s common stock at a fixed price of $0.025 per share along with additional warrants to purchase one share for every two shares issued at the exercise price of $0.03 per share for three years after the conversion date. The Company has determined the value associated with the beneficial conversion feature in connection with the notes to be $118,126. The aggregate beneficial conversion feature has been accreted and charged to interest expenses as a financing expense in the amount of $17,661 during the nine months ending September 30, 2015.   The beneficial conversion feature is valued under the intrinsic value method.  118,126    118,126 
Unamortized debt discount  (88,562)   (106,223)
On September 30, 2014, the Company re-negotiated accrued salaries and interest for two employees. Under the terms of the agreements,  $40,558 of accrued salaries not previously converted were converted to promissory notes convertible into common stock with a warrant feature. The $40,558 face value promissory notes are unsecured, due five years from issuance, and bear an interest rate of 10%. At the investor’s option until the repayment date, the note may be converted to shares of the Company’s common stock at a fixed price of $0.04 per share along with additional warrants to purchase one share for every two shares issued at the exercise price of $0.05 per share for three years after the conversion date. The Company has determined the value associated with the beneficial conversion feature in connection with the notes to be $40,466. The aggregate beneficial conversion feature has been accreted and charged to interest expenses as a financing expense in the amount of $6,050 during the nine months ending September 30, 2015.  The beneficial conversion feature is valued under the intrinsic value method.  40,558    40,558 
Unamortized debt discount  (32,377)   (38,427)
On December 31, 2014, the Company re-negotiated accrued salaries and interest for two employees. Under the terms of the agreements,  $65,295 of accrued salaries not previously converted were converted to promissory notes convertible into common stock with a warrant feature. The $65,295 face value promissory notes are unsecured, due five years from issuance, and bear an interest rate of 10%. At the investor’s option until the repayment date, the note may be converted to shares of the Company’s common stock at a fixed price of $0.04 per share along with additional warrants to purchase one share for every two shares issued at the exercise price of $0.05 per share for three years after the conversion date. The Company has determined the value associated with the beneficial conversion feature in connection with the notes to be $57,439. The aggregate beneficial conversion feature has been accreted and charged to interest expenses as a financing expense in the amount of $8,589 during the nine months ending September 30, 2015.  The beneficial conversion feature is valued under the intrinsic value method.  65,295    65,295 
Unamortized debt discount  (48,850)   (57,438)
          
  $1,413,110   $1,173,178 

 

XML 49 R19.htm IDEA: XBRL DOCUMENT v3.3.0.814
FIXED ASSETS (Tables)
9 Months Ended
Sep. 30, 2015
Property, Plant and Equipment [Abstract]  
Schedule of Property and Plan Equipment
    September 30, 2015   December 31, 2014
Machinery and equipment $             48,163 $             48,163
Furniture and fixtures   113,635   113,635
Computers, equipment and software   39,722   39,722
Leasehold improvements   12,569   12,569
Lab equipment   113,461   113,461
 Total   327,550   327,550
Less: accumulated depreciation   (325,460)   (324,275)
Fixed assets, net of accumulated depreciation $ 2,090 $ 3,275
XML 50 R15.htm IDEA: XBRL DOCUMENT v3.3.0.814
STOCKHOLDERS DEFICIT
9 Months Ended
Sep. 30, 2015
Equity [Abstract]  
STOCKHOLDERS DEFICIT

The Company is authorized to issue 200,000,000 shares of $0.001 par value common stock. The Company had 113,957,969 and 111,813,969 issued and outstanding shares of common stock as of September 30, 2015 and December 31, 2014, respectively.

 

On January 26, 2015 the Company received $50,000 pursuant to a private placement agreement with an investor to purchase 1,250,000 shares of Skinvisible Inc. $0.001 par value common stock and 625,000 warrants. The warrants allow the holder to purchase shares of the Company's common stock at $0.07 on or before January 21, 2016.

 

On January 27, 2015 the Company received $30,000 pursuant to a private placement agreement with an investor to purchase 750,000 shares of Skinvisible Inc. $0.001 par value common stock and 375,000 warrants. The warrants allow the holder to purchase shares of the Company's common stock at $0.07 on or before January 21, 2016.

 

On April 1, 2015, 72,000 shares were issued to settle $3,600 of accrued expenses due to a director of the Company.

 

On June 30, 2015, 72,000 shares were issued to settle $3,600 of accrued expenses due to a director of the Company. A gain of $1,440 was recognized as a result of this settlement.

 

On August 24, 2015, the company settled $6,000 of debt due to two parties with 200,000 shares of common stock. A gain of $400 was recognized as a result of this settlement.

XML 51 R13.htm IDEA: XBRL DOCUMENT v3.3.0.814
CONVERTIBLE NOTES PAYABLE
9 Months Ended
Sep. 30, 2015
Notes to Financial Statements  
CONVERTIBLE NOTES PAYABLE
Convertible Notes Payable at consists of the following: September 30,  December 31,
  2015  2014
$52,476 face value,10% unsecured note payable to an investor, note interest and principal are due on demand.  The note could be converted to option rights for Skinvisible, Inc. shares at ten cents per share ($0.10), these rights expired January 12, 2010. The Note is currently in default, no penalties occur due to default. $28,476   $28,476 
Unamortized debt discount  —      —   
Total, net of unamortized discount  28,476    28,476 
$1,000,000 face value 9% unsecured notes payable to investors, due in 2015. At the investor’s option until the repayment date, the note and related interest may be converted to shares of the Company’s common stock a discount of 90% of the current share price after the first anniversary of the note. The Notes are secured by the accounts receivable of a license agreement the Company has with Womens Choice Pharmaceuticals, LLC on its proprietary prescription product, ProCort®. The Company has determined the value associated with the beneficial conversion feature in connection with the notes and interest to be $111,110. The aggregate original issue discount feature has been accreted and charged to interest expenses as a financing expense in the amount of $31,078 during the nine months ended September 30, 2015. The original issue discount feature is valued under the intrinsic value method.
 
On the Company executed extension agreements with several note holder who's note had reached maturity. The notes were extended for an additional 12 months.
 1,000,000    1,000,000 
Original issue discount  111,110    111,110 
Unamortized debt discount  (3,724)   (26,822)
Total, net of unamortized discount  1,107,386    1,084,288 
          
On July 28, 2015, we entered into a convertible promissory note pursuant to which we borrowed $47,500. Interest under the convertible promissory note is 8% per annum, and the principal and all accrued but unpaid interest is due on April 30, 2016. The note is convertible at any time following 180 days after the issuance date at noteholders option into shares of our common stock at a variable conversion price of 58% of the lowest average three day market price of our common stock during the 10 trading days prior to the notice of conversion, subject to adjustment as described in the note. The holder’s ability to convert the note, however, is limited in that it will not be permitted to convert any portion of the note if the number of shares of our common stock beneficially owned by the holder and its affiliates, together with the number of shares of our common stock issuable upon any full or partial conversion, would exceed 9.99% of our outstanding shares of common stock.
 
The Company has determined the value associated with the beneficial conversion feature in connection with the notes negotiated on July 28, 2015 to be $34,397. The aggregate beneficial conversion feature has been accreted and charged to interest expenses as a financing expense in the amount of $7,947 during the nine months ending September 30, 2015. The beneficial conversion feature is valued under the intrinsic value method
 47,500    —   
Unamortized debt discount  (34,322)   —   
Total, net of unamortized discount  13,178    —   
          
  $1,149,040   $1,112,764 

 

XML 52 R14.htm IDEA: XBRL DOCUMENT v3.3.0.814
CONVERTIBLE NOTES PAYABLE RELATED PARTY
9 Months Ended
Sep. 30, 2015
Notes to Financial Statements  
CONVERTIBLE NOTES PAYABLE RELATED PARTY
Convertible Notes Payable Related Party at consists of the following: September 30,  December 31,
  2015  2014
On December 31, 2011, the Company re-negotiated accrued salaries and interest for three employees. Under the terms of the agreements, the notes dated before December 31, 2010, and all salaries not previously converted were converted to promissory notes convertible into common stock with a warrant feature. The promissory notes are unsecured, due five years from issuance, and bear an interest rate of 10%. At the investor’s option until the repayment date, the note may be converted to shares of the Company’s common stock at a fixed price of $0.04 per share along with additional warrants to purchase one share for every two shares issued at the exercise price of $0.06 per share for three years after the conversion date. The Company has determined the value associated with the beneficial conversion feature in connection with the notes negotiated on December 31, 2011 to be $1,123,078. The aggregate beneficial conversion feature has been accreted and charged to interest expenses as a financing expense in the amount of $124,544 during the nine months ending September 30, 2015.  The beneficial conversion feature is valued under the intrinsic value method.  In the year ending December 2013, the Company  made $51,485 in cash payments to reduce the note balance.  1,071,593    1,071,593 
Unamortized debt discount  (208,939)   (333,483)
On June 30, 2012, the Company re-negotiated accrued salaries and interest for three employees. Under the terms of the agreements, the notes dated before July 1, 2011, and all salaries not previously converted were converted to promissory notes convertible into common stock with a warrant feature. The promissory notes are unsecured, due five years from issuance, and bear an interest rate of 10%. At the investor’s option until the repayment date, the note may be converted to shares of the Company’s common stock at a fixed price of $0.04 per share along with additional warrants to purchase one share for every two shares issued at the exercise price of $0.06 per share for three years after the conversion date. The Company has determined the value associated with the beneficial conversion feature in connection with the  notes to be $209,809. The aggregate beneficial conversion feature has been accreted and charged to interest expenses as a financing expense in the amount of $31,098 during the nine months ending September 30, 2015.  The beneficial conversion feature is valued under the intrinsic value method.  On January 18, 2013, the Company  made a $3,990 cash payment to reduce the note balance.  321,032    321,032 
Unamortized debt discount  (72,788)   (103,886)
On December 30 and 31, 2012, the Company re-negotiated accrued salaries and interest for three employees. Under the terms of the agreements,  $182,083 of related party notes accrued interest and salaries not previously converted were converted to promissory notes convertible into common stock with a warrant feature. The $182,083 face value promissory notes are unsecured, due five years from issuance, and bear an interest rate of 10%. At the investor’s option until the repayment date, the note may be converted to shares of the Company’s common stock at a fixed price of $0.03 per share along with additional warrants to purchase one share for every two shares issued at the exercise price of $0.04 per share for three years after the conversion date. The Company has determined the value associated with the beneficial conversion feature in connection with the notes to be $182,083. The aggregate beneficial conversion feature has been accreted and charged to interest expenses as a financing expense in the amount of $27,223 during the nine months ending September 30, 2015.  The beneficial conversion feature is valued under the intrinsic value method.  182,083    182,083 
Unamortized debt discount  (82,054)   (109,277)

On June 30, 2013, the Company re-negotiated accrued salaries and interest for two employees. Under the terms of the agreements,  $106,153 of accrued interest and salaries were converted to promissory notes convertible into common stock with a warrant feature. The $106,153 face value promissory notes are unsecured, due five years from issuance, and bear an interest rate of 10%. At the investor’s option until the repayment date, the note may be converted to shares of the Company’s common stock at a fixed price of $0.03 per share along with additional warrants to purchase one share for every two shares issued at the exercise price of $0.04 per share for three years after the conversion date. The Company has determined the value associated with the beneficial conversion feature in connection with the notes to be $70,768. The aggregate beneficial conversion feature has been accreted and charged to interest expenses as a financing expense in the amount of $10,579 during the nine months ending September 30, 2015.  The beneficial conversion feature is valued under the intrinsic value method.  106,152    106,152 
Unamortized debt discount  (38,912)   (49,491)
 On December 31, 2013, the Company re-negotiated accrued salaries and interest for three employees. Under the terms of the agreements, $142,501 of accrued interest and salaries not previously converted were converted to promissory notes convertible into common stock with a warrant feature. The $142,501 face value promissory notes are unsecured, due five years from issuance, and bear an interest rate of 10%. At the investor’s option until the repayment date, the note may be converted to shares of the Company’s common stock at a fixed price of $0.03 per share along with additional warrants to purchase one share for every two shares issued at the exercise price of $0.04 per share for three years after the conversion date. The Company has determined the value associated with the beneficial conversion feature in connection with the notes to be $94,909. The aggregate beneficial conversion feature has been accreted and charged to interest expenses as a financing expense in the amount of $14,189 during the nine months ending September 30, 2015. The beneficial conversion feature is valued under the intrinsic value method.  142,501    142,501 
Unamortized debt discount  (61,748)   (75,937)
On June 30, 2014, the Company re-negotiated accrued salaries and interest for three employees. Under the terms of the agreements,  $118,126 of accrued salaries not previously converted were converted to promissory notes convertible into common stock with a warrant feature. The $118,126 face value promissory notes are unsecured, due five years from issuance, and bear an interest rate of 10%. At the investor’s option until the repayment date, the note may be converted to shares of the Company’s common stock at a fixed price of $0.025 per share along with additional warrants to purchase one share for every two shares issued at the exercise price of $0.03 per share for three years after the conversion date. The Company has determined the value associated with the beneficial conversion feature in connection with the notes to be $118,126. The aggregate beneficial conversion feature has been accreted and charged to interest expenses as a financing expense in the amount of $17,661 during the nine months ending September 30, 2015.   The beneficial conversion feature is valued under the intrinsic value method.  118,126    118,126 
Unamortized debt discount  (88,562)   (106,223)
On September 30, 2014, the Company re-negotiated accrued salaries and interest for two employees. Under the terms of the agreements,  $40,558 of accrued salaries not previously converted were converted to promissory notes convertible into common stock with a warrant feature. The $40,558 face value promissory notes are unsecured, due five years from issuance, and bear an interest rate of 10%. At the investor’s option until the repayment date, the note may be converted to shares of the Company’s common stock at a fixed price of $0.04 per share along with additional warrants to purchase one share for every two shares issued at the exercise price of $0.05 per share for three years after the conversion date. The Company has determined the value associated with the beneficial conversion feature in connection with the notes to be $40,466. The aggregate beneficial conversion feature has been accreted and charged to interest expenses as a financing expense in the amount of $6,050 during the nine months ending September 30, 2015.  The beneficial conversion feature is valued under the intrinsic value method.  40,558    40,558 
Unamortized debt discount  (32,377)   (38,427)
On December 31, 2014, the Company re-negotiated accrued salaries and interest for two employees. Under the terms of the agreements,  $65,295 of accrued salaries not previously converted were converted to promissory notes convertible into common stock with a warrant feature. The $65,295 face value promissory notes are unsecured, due five years from issuance, and bear an interest rate of 10%. At the investor’s option until the repayment date, the note may be converted to shares of the Company’s common stock at a fixed price of $0.04 per share along with additional warrants to purchase one share for every two shares issued at the exercise price of $0.05 per share for three years after the conversion date. The Company has determined the value associated with the beneficial conversion feature in connection with the notes to be $57,439. The aggregate beneficial conversion feature has been accreted and charged to interest expenses as a financing expense in the amount of $8,589 during the nine months ending September 30, 2015.  The beneficial conversion feature is valued under the intrinsic value method.  65,295    65,295 
Unamortized debt discount  (48,850)   (57,438)
          
  $1,413,110   $1,173,178 

 

XML 53 R16.htm IDEA: XBRL DOCUMENT v3.3.0.814
COMMITMENTS AND CONTINGENCIES
9 Months Ended
Sep. 30, 2015
Commitments and Contingencies Disclosure [Abstract]  
COMMITMENTS AND CONTINGENCIES

Lease obligations – The Company has operating leases for its offices. Future minimum lease payments under the operating leases for the facilities as of September 30, 2015, are as follows:

 

2015 12,042

2016 5,717

 

Rental expense, resulting from operating lease agreements, approximated $32,619 and $31,368 for the nine months ended September 30, 2015 and 2014, respectively.

XML 54 R34.htm IDEA: XBRL DOCUMENT v3.3.0.814
CONVERTIBLE NOTES PAYABLE - Schedule of Conversions of Stock (Details) - USD ($)
Sep. 30, 2015
Dec. 31, 2014
Convertible Notes Payable $ 1,149,040 $ 1,112,764
Convertible Note 3    
Convertible Note Payable #1  
Unamortized debt discount  
Convertible Note 1 & 2    
Convertible Note Payable #2 111,110 $ 111,110
Unamortized debt discount (3,724) (26,822)
Convertible Notes Payable 1,107,386 1,112,764
Convertible Note 1    
Convertible Note Payable #1 28,476 28,476
Convertible Note 2    
Convertible Note Payable #1 1,000,000 $ 1,000,000
Convertible Note 3    
Convertible Note Payable #1 47,500  
Unamortized debt discount (34,322)  
Convertible Notes Payable $ 13,178  
XML 55 R21.htm IDEA: XBRL DOCUMENT v3.3.0.814
STOCK OPTIONS AND WARRANTS (Tables)
9 Months Ended
Sep. 30, 2015
Temporary Equity Disclosure [Abstract]  
Summary of Options
  Number of Shares  Weighted Average
Exercise Price
Balance, December 31, 2014  9,750,000   $0.05 
          
Options granted and assumed  200,000    0.05 
Options expired  200,000    0.05 
Options canceled  —      —   
Options exercised  —      —   
          
Balance, September 30, 2015  9,750,000   $0.05 
Summary of Warrants
  Number of Shares   Weighted Average Exercise Price
Balance, December 31, 2014   2,541,030     $ 0.05  
               
Warrants granted and assumed   1,000,000       0.07  
Warrants expired   1,196,280       0.05  
Warrants canceled   —         —    
Warrants exercised   —         —    
               
Balance, September 30, 2015   2,344,750     $ 0.07  
XML 56 R26.htm IDEA: XBRL DOCUMENT v3.3.0.814
FIXED ASSETS (Details Narrative) - USD ($)
9 Months Ended
Sep. 30, 2015
Sep. 30, 2014
Property, Plant and Equipment [Abstract]    
Depreciation expense $ 1,185 $ 1,067
XML 57 R5.htm IDEA: XBRL DOCUMENT v3.3.0.814
Statements of Cash Flows - USD ($)
9 Months Ended
Sep. 30, 2015
Sep. 30, 2014
Cash flows from operating activities:    
Net loss $ (1,489,814) $ (1,306,313)
Adjustments to reconcile net loss to net cash used in operating activities:    
Depreciation and amortization 43,377 28,027
Stock-based compensation 8,800 31,050
Amortization of debt discount 327,478 250,558
Gain (Loss) on extinguishment of debt (1,840) $ 5,044
Bank overdraft 32,787
Changes in operating assets and liabilities:    
Increase in inventory (6,596) $ (59,393)
Decrease (increase) in accounts receivable $ 2,624 (9,030)
Increase (decrease) in prepaid assets 1
Increase in accounts payable and accrued liabilities $ 321,020 105,803
Increase in accrued interest 149,788 133,516
Net cash used in operating activities (612,376) (820,737)
Cash flows from investing activities:    
Purchase of fixed and intangible assets (5,726) (15,855)
Net cash used in investing activities (5,726) $ (15,855)
Cash flows from financing activities:    
Proceeds from sale of common stock $ 80,000
Proceeds from related party loans, net of payments $ 78
Payments on notes payable $ (89,500)
Proceeds from notes payable $ 431,000 $ 594,400
Payments on convertible notes payable (13,000)
Net cash provided by (used in) financing activities $ 421,500 581,478
Net change in cash (196,602) (255,114)
Cash, beginning of period $ 196,602 513,420
Cash, end of period 258,306
Supplemental disclosure of cash flow information:    
Cash paid for interest $ 211,564 $ 144,708
Cash paid for tax
Non-cash investing and financing activities:    
Accrued expenses converted to notes $ 118,126 $ 156,684
Common stock issued on extiguishment of debts $ 5,760 $ 20,644
XML 58 R10.htm IDEA: XBRL DOCUMENT v3.3.0.814
STOCK OPTIONS AND WARRANTS
9 Months Ended
Sep. 30, 2015
Temporary Equity Disclosure [Abstract]  
STOCK OPTIONS AND WARRANTS

The following is a summary of option activity during the nine months ended September 30, 2015.

 

  Number of Shares  Weighted Average
Exercise Price
Balance, December 31, 2014  9,750,000   $0.05 
          
Options granted and assumed  200,000    0.05 
Options expired  200,000    0.05 
Options canceled  —      —   
Options exercised  —      —   
          
Balance, September 30, 2015  9,750,000   $0.05 

 

As of September 30, 2015, 9,750,000 stock options are exercisable.

 

On March 31, 2015, the Company granted stock options for 200,000 shares of its common stock with a strike price of $0.05. The stock options were exercisable upon grant and have a life of 5 years. The stock options were valued at $8,800 using the Black-Scholes option pricing model based upon the following assumptions: term of 5 years,  risk free interest rate of 1.37%, a dividend yield of 0% and volatility rates of 483%.   The Company recorded an expense of $8,800 for the nine months ended September 30, 2015.

 

Stock warrants -

 

The following is a summary of warrants activity during the nine months ended September 30, 2015.

 

  Number of Shares   Weighted Average Exercise Price
Balance, December 31, 2014   2,541,030     $ 0.05  
               
Warrants granted and assumed   1,000,000       0.07  
Warrants expired   1,196,280       0.05  
Warrants canceled   —         —    
Warrants exercised   —         —    
               
Balance, September 30, 2015   2,344,750     $ 0.07  

 

All warrants outstanding as of September 30, 2015 are exercisable.

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INVENTORY - Schedule of Inventory (Details) - USD ($)
Sep. 30, 2015
Dec. 31, 2014
Inventory Disclosure [Abstract]    
Shipping and Packing Materials $ 13,033 $ 14,758
Marketing Supplies 19,761
Finished Goods 7,084 $ 51,756
Raw Materials 49,873 16,641
Total $ 89,751 $ 83,155

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In ''Statements of Cash Flows'', column(s) 1, 2, 5 are contained in other reports, so were removed by flow through suppression. skvi-20150930.xml skvi-20150930_cal.xml skvi-20150930_def.xml skvi-20150930_lab.xml skvi-20150930_pre.xml skvi-20150930.xsd true true XML 62 R38.htm IDEA: XBRL DOCUMENT v3.3.0.814
STOCKHOLDERS DEFICIT (Details Narrative) - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2015
Sep. 30, 2014
Sep. 30, 2015
Sep. 30, 2014
Dec. 31, 2014
Common Stock, Par Value $ .001   $ .001   $ 0.001
Common Stock, Shares Authorized 200,000,000   200,000,000   200,000,000
Common Stock, Issued 113,957,969   113,957,969   111,813,969
Gain (Loss) on extinguishment of debt $ (400) $ 4,054 $ (1,840) $ 5,044  
Issuance 1          
Common Stock, Par Value $ .001   $ .001    
Date of Issuance     Jan. 26, 2015    
Note, Face Amount $ 50,000   $ 50,000    
Common Stock, Shares Issued     1,250,000    
Warrants, Issued 625,000   625,000    
Warrants, Exercise Price $ .07   $ .07    
Issuance 2          
Common Stock, Par Value $ .001   $ .001    
Date of Issuance     Jan. 27, 2015    
Note, Face Amount $ 30,000   $ 30,000    
Common Stock, Shares Issued     750,000    
Warrants, Issued 375,000   375,000    
Warrants, Exercise Price $ .07   $ .07    
Issuance 3          
Date of Issuance     Apr. 01, 2015    
Common Stock, Shares Issued     72,000    
Common Stock, Share Value     $ 3,600    
Issuance 4          
Date of Issuance     Jun. 30, 2015    
Common Stock, Shares Issued     72,000    
Common Stock, Share Value     $ 3,600    
Gain (Loss) on extinguishment of debt     $ 1,440    
Issuance 5          
Date of Issuance     Aug. 24, 2015    
Common Stock, Shares Issued, Debt Settlement     200,000    
Common Stock, Shares Issued, Debt Settlement, Value     $ 6,000    
Gain (Loss) on extinguishment of debt     $ 400    
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INVENTORY (Tables)
9 Months Ended
Sep. 30, 2015
Inventory Disclosure [Abstract]  
Schedule of Inventory
    September 30, 2015   December 31, 2014
Shipping and Packing materials $ 13,033 $ 14,758
Marketing Supplies   19,761   -
Finished Goods              7,084 $            51,756
Raw Materials   49,873   16,641
 Total   89,751   83,155