-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RKGcz8vWBz3PuWv3D0BOmX6YcxQacdmm9NTSOJio0BxiAgNuJn2LNfm+kRJO4Nz4 iks55vjmAlzFgy9HsEdopw== 0001075793-02-000185.txt : 20020515 0001075793-02-000185.hdr.sgml : 20020515 ACCESSION NUMBER: 0001075793-02-000185 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20020331 FILED AS OF DATE: 20020515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SKINVISIBLE INC CENTRAL INDEX KEY: 0001085277 STANDARD INDUSTRIAL CLASSIFICATION: SOAP, DETERGENT, CLEANING PREPARATIONS, PERFUMES, COSMETICS [2840] IRS NUMBER: 880344219 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-25911 FILM NUMBER: 02648250 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 10QSB 1 tenqsbskivisible.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-QSB [X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 2002 [ ] Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from __________ to __________ Commission File Number 0-25911 SKINVISIBLE, INC. ----------------- (Exact name of Small Business Issuer as specified in its charter) Nevada 88-0344219 - ------ ---------- (State or other jurisdiction of (IRS Employer incorporation) Identification No.) 6320 South Sandhill Road, Suite 10, Las Vegas, Nevada 89120 ----------------------------------------------------------- (Address of principal executive offices) ---------------------------------------- 702-433-7154 ------------ (Issuer's telephone number) --------------------------- _________________________________________________________________ (Former name, former address and former fiscal year if changed since last report) State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 24,566,808 shares of Common Stock as of April 30, 2002. Transitional Small Business Disclosure Format (check one): Yes [ ] No [X] PART I FINANCIAL INFORMATION Item 1. Financial Statements GENERAL The Company's unaudited financial statements for the three months ended March 31, 2002 are included with this Form 10-QSB. The unaudited financial statements for the three months ended March 31, 2002 include: (a) Consolidated Balance Sheet as of March 31, 2002, March 31, 2001 and December 31, 2001; (b) Consolidated Statement of Operations and Accumulated Deficit - Three months ended March 31, 2002 and March 31, 2001; (c) Consolidated Statement of Changes in Shareholders' Equity - Three months ended March 31, 2002 and March 31, 2001; (d) Consolidated Statement of Cash flows - Three months ended March 31, 2002 and March 31, 2001 The accompanying unaudited financial statements have been prepared in accordance with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B, and therefore, do not include all information and footnotes necessary for a complete presentation of financial position, results of operations, cash flows, and stockholders' equity in conformity with generally accepted accounting principles. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature. Operating results for the three months ended March 31, 2002 are not necessarily indicative of the results that can be expected for the year ending December 31, 2002. 2
SKINVISIBLE, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET MARCH 31 DECEMBER 31 --------- ------------ 2002 2001 2001 ------------------- ---------- Current Assets (unaudited) (unaudited) (audited) Cash 1,455 $ 3,480 $ 2,335 Accounts Receivable 9,668 9,199 7,904 Inventory 118,126 140,797 124,328 Prepaid Expenses 2,901 9,529 3,321 Prepaid License Fee 50,000 50,000 50,000 ---------------------------------- Total Current Assets 182,150 213,005 187,888 Property and Equipment Furniture and Equipment 135,434 135,434 135,434 Laboratory Build-Out 332,318 323,518 332,318 ---------------------------------- Total Property and Equipment 467,752 458,952 467,752 Less Accumulated Depreciation (234,743) (155,341) (214,634) ---------------------------------- Net Property and Equipment 233,009 303,611 253,118 Other Assets - Exclusive Distribution Rights 200,000 200,000 200,000 - Patents & Trademarks 18,232 0 17,532 - Prepaid Royalty 1,000,000 1,000,000 1,000,000 - Deposits 725 725 725 ------------------------------------ 1,218,957 1,200,725 1,218,257 ------------------------------------ TOTAL ASSETS 1,634,116 $ 1,717,341 $ 1,659,263 ===================================== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts Payable and Accrued Expenses 513,322 $ 99,910 $ 424,094 Loan Payable 333,681 157,143 242,992 ------------------------------------- Total Current Liabilities 847,003 257,053 667,086 Stockholders' Equity Common Stock, $0.001 par value 100,000,000 shares authorized, 21,316,808, 15,632,033 and 21,052,033 shares issued 21,317 15,632 21,052 Additional paid in capital 8,587,661 7,903,868 8,561,448 Accumulated Deficit (7,821,865) (6,459,212) (7,590,323) ------------------------------------- Total Stockholders' Equity 787,113 1,460,288 992,177 ------------------------------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 1,634,116 $1,717,341 $1,659,263 =====================================
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SKINVISIBLE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT (unaudited) THREE MONTHS ENDED MARCH 31 2002 2001 ----------------------- Revenues $ 55,620 $ 6,009 Cost of Sales Beginning Inventory 124,328 143,047 Purchases 10,611 4,277 ----------------------- Total Available 134,939 147,324 Less: Ending Inventory (118,126) (140,797) Sample Distribution & Inventory Adjustments (7) (4,786) ----------------------- Total Cost of Sales 16,806 1,741 ----------------------- Gross Profit 38,814 4,268 Operating Expenses (270,356) (431,849) Loss Before Provision for Income Taxes (231,542) ( 427,581) Provision for Income Taxes (0) (0) ------------------------ Net Loss (231,542) ( 427,581) Accumulated Deficit, Beginning Of Period (7,590,323) (6,031,631) ------------------------ Accumulated Deficit, End of Period (7,821,865)$(6,459,212) ======================== Net Loss per Share $(.01) $(.04) ======================== Weighted Average Shares Outstanding 21,311,675 11,438,473 ========================
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SKINVISIBLE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (unaudited) THREE MONTHS ENDED MARCH 31 2002 2001 - ------------------------------------------------------------------------- Shares of Common Stock Issued: Beginning Balance 21,052,033 14,122,033 Issuance Pursuant to: Stock Offering 0 1,510,000 Stock Option Plan 264,775 0 ----------------------- Ending Balance 21,316,808 15,632,033 ======================= Common Stock Par Value Beginning Balance $ 21,052 $ 14,122 Issuance Pursuant to: Stock Offering 0 1,510 Stock Option Plan 265 0 ------------------------- Ending Balance 21,317 15,632 ------------------------- Additional Paid in Capital Beginning Balance 8,561,448 7,361,778 Issuance Pursuant to: Stock Offering 0 542,090 Stock Option Plan 26,213 0 ------------------------- Ending Balance 8,587,661 7,903,868 ------------------------- Accumulate Deficit Beginning Balance (7,590,323)(6,031,631) Net Loss (231,542)( 427,581) ------------------------- Ending Balance (7,821,865)(6,459,212) ------------------------- Total Stockholders' Equity $ 787,113 $1,460,288 ==========================
5 SKINVISIBLE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited) THREE MONTHS ENDED MARCH 31 2002 2001 --------------- Cash Flows from Operating Activities: Net Loss $( 231,542) $ ( 427,581) Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities Depreciation 20,109 19,505 (Increase) Decrease in: Accounts Receivable (3,952) 1,847 Inventory 6,202 557 Advances 2,188 (605) Other Assets - Prepaid Expenses 420 3,243 - Deposits 0 0 Increase (Decrease) in: Accounts Payable and Accrued Expenses 89,228 (40,450) ---------- ----------- Net Cash Used by Operating Activities (117,347) (443,484) Cash Flows from Investing Activities: Patents & Trademarks (700) 0 Purchases of Property and Equipment 0 (135) --------- ----------- Net Cash Used by Investing Activities (700) (135) Cash Flows from Financing Activities: Payment of Loan Principal 90,689 (105,374) Net Proceeds from the Issuance of Common Stock 26,478 543,600 --------- ----------- Net Cash Provided by Financing Activities 117,167 438,226 --------- ----------- Net Increase (Decrease) in Cash (880) (5,393) Cash at Beginning of Period 2,335 8,873 --------- ----------- Cash at End of Period $ 1,455 3,480 --------- ----------- Supplemental Disclosure: Interest Paid $ 5,719 $ 10,265 ========== =========== 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations GENERAL Skinvisible, Inc. (the "Company") is focused on the development of innovative topical polymer-based delivery systems and technologies, incorporating its proprietary process for combining hydrophilic and hydrophobic polymers into stable water emulsions. The Company's primary marketing objectives are to license its technologies and/or sell its delivery systems to established brand manufacturers and marketers of topical prescription Rx, over-the-counter, cosmetic and skincare products to provide enhanced performance capabilities. When topically applied, products incorporating the Company's delivery systems adhere to the skin's outer layers, forming a protective bond, resisting wash-off, and delivering targeted levels of therapeutic or cosmetic skincare agents to the skin. Proven or potential applications identified to date include antimicrobial hand sanitizers, suncare and lipcare formulations, skincare moisturizers, anti-fungals, insect repellents, and acne, eczema and psoriasis treatment applications. The Company's short-term strategy includes revenue generation from private label business opportunities for its antimicrobial hand sanitizer formulations. The Company is also offering private label opportunities for its clinically tested sunscreen formulation which allows labeling as "Very Water Resistant with an SPF of 30" in accordance with FDA Final Sunscreen Monograph requirements. In January 2002 the Company received trademark approval in the U.S. for the name "Invisicare" to identify its family of polymer delivery systems. The Company plans to file this trade name with the Cosmetic, fragrance and Toiletries Association ("CFTA") as an ingredient for use in skincare and cosmetic formulations. It is the Company's intention to direct its ongoing energies and resources towards: * Expanding research and development of its Invisicare delivery systems and related technologies; * Identifying additional applications and opportunities for its Invisicare delivery systems, either independently or in collaboration with established manufacturing and/or marketing companies; * Maximizing efforts for the licensing of its technologies and/or sale of its Invisicare delivery systems to manufacturers/marketers of topically administered Rx prescription, over-the-counter, cosmetic, and skincare products. The Company is pursuing potential business opportunities, strategic alliances and collaborations directly and through sales agents/brokers. In this activity, the Company 7 has targeted Rx pharmaceutical, over-the-counter, cosmetic, healthcare, and other brand manufacturers. The Company has entered into a number of Confidentiality/Non-Disclosure Agreements during 2001 and is presently undergoing negotiations or actively working with a variety of existing or potential customers for the purpose of developing or selling its products. Patent Applications: The Company filed a patent application in August 2001 for its Invisicare topical compositions and its methodology for manufacturing and utilization of numerous delivery systems and related applications. In January 2000 the Company filed a patent application for its antimicrobial dermal barrier formulation, which utilized one of the Invisicare delivery systems. This initial application was intended to obtain patent protection for the Company's original finished skin protector product. Background & History of Operations: At its inception, the Company's strategy was to develop and market a line of antimicrobial protective hand-care products that incorporated its proprietary polymer emulsion invention. These finished products were intended for a variety of industries, including medical, food service, industrial, salon, and personal-care markets. The Company also marketed and sold its antibacterial/antimicrobial skincare sanitizers under the trade name Safe4Hours to the retail/commercial market. After extensive ongoing market investigations, analysis of regulatory requirements and strategic planning and evaluation, the Company subsequently determined that the highest and best use of its resources would be achieved by focusing on development of topical polymer-based delivery systems and related technologies, rather than pursuing the commercialization of its own antimicrobial and/or dermal barrier formulations that would require extensive lead-times and regulatory processes for each product application, significant human and financial resources for a variety of specialized markets, and extensive marketing efforts to compete in a saturated marketplace dominated by large established suppliers. The Company redefined its long-term strategies and objectives to focus on independent and collaborative research & development of its Invisicare polymer delivery systems and related technologies for a variety of product applications. 8 RESULTS OF OPERATIONS Net revenue for the three months ended March 31, 2002 increased to $55,620 from $6,009 for the three months ended March 31, 2001. This increase in revenue was mainly due to private label sales, product development fees charged to other pharmaceutical companies, and polymer sales to cosmetic manufacturers through the Company's sales agent/broker network. This is in line with the Company's re-directed focus of directly pursuing private label business opportunities with existing retail suppliers/distributors, as well as selling or licensing its delivery systems to established manufacturers for enhanced product formulations and applications in the cosmetic, over-the-counter, and pharmaceutical skincare markets. Gross profit for the three months ended March 31, 2002 increased to $38,814 from $4,268 for the three months ended March 31, 2001. The Company's operating expenses decreased to $270,356 for the three months ended March 31, 2002 from $431,849 for the three months ended March 31, 2001. This decrease in expenses was due to management's continuing efforts to reduce costs. The Company incurred marketing and selling expenses in the amount of $48,731 for the three months ended March 31, 2002 compared with $129,840 for the three months ended March 31, 2001. The Company incurred general and administrative costs in the amount of $221,625 for the three months ended March 31, 2002 compared with $302,009 for the three months ended March 31, 2001. Some of these general and administrative costs included the following: Professional fees in the amount of $8,802 for the three months ended March 31, 2002 compared to $7,414 for the same period in 2001; Salaries and Wages which decreased to $122,876 for the three months ended March 31, 2002, compared with $136,240 for the three months ended March 31, 2001; and Outside Management Consultant costs in the amount of $16,542 for the three months ended March 31, 2002, compared to $92,399 for the three months ended March 31, 2001. The Company had net losses of $231,542 for the three months ended March 31, 2002, down from $427,581 for the same period ended March 31, 2001. The losses were funded by various financings and short-term loans obtained during the period. Generally, the reduction in net losses was the result of the cost savings realized by the Company's change in marketing focus and its continuing efforts to trim operating expenditures. The loss per share for the three months ended March 31, 2002, was $0.01, down from a loss of $0.03 per share for the same period in 2001. The Company anticipates that losses will likely continue into the foreseeable future, until sufficient revenues are generated to cover its operating expenditures. 9 LIQUIDITY AND CAPITAL RESOURCES The Company's operations have been financed principally through a combination of private sales of the Company's equity securities and short-term loans. The Company had cash of $1,455 as of March 31, 2002, compared to $3,480 as of March 31, 2001. The Company has outstanding loans payable with interest in the amount of $333,681 as of March 31, 2002. The Company had accounts payable and accrued expenses in the amount of $513,322 as of March 31, 2002, compared to $99,910 as of March 31, 2001. Until revenues increase or the Company receives additional funding, certain creditors and employees have agreed to defer receipt of payments or salaries, respectively. This accounts for the rise in our accounts payable and accrued expenses. Cash used in operating activities for the three months ended March 31, 2002 decreased to $117,347 down from $443,484 for the three months ended March 31, 2001. This can be mainly attributed to a decrease in the use of outside consultants, a decrease in staffing, and an increase in accounts payable and accrued expenses as outlined in the previous paragraph. Cash used in investing activities for the three months ended March 31, 2002 and 2001, was $700 and $135 respectively. Future issuances of the Company's equity or debt securities will be required in order for the Company to clear up some of its debt and continue to finance its operations, as the Company's present revenues are insufficient to meet operating expenses. Present revenues have increased slightly due to the Company's re-directed focus of pursuing private label business opportunities, charging product development fees, as well as sales of its polymer delivery systems. The Company will continue with these efforts as well as pursue possible licensing of its delivery systems to established manufacturers in the cosmetic, over-the-counter, and pharmaceutical skincare markets. The Company periodically revises its plan of operations as new situations arise. Over the next nine months remaining in the fiscal year ending December 31, 2002, the Company expects to realize approximately $732,000 from operating revenues after deduction of costs of goods sold, and existing cash reserves. These projected revenues are comprised of private label sales of the polymer-based formulations, product development fees, as well as sales of its polymer-based delivery systems or licensing of its polymer-based delivery system technologies. In that same nine-month period, the Company anticipates incurring approximately $698,000 in operating expenses. Any revenues that fall short of these projections will need to be raised through additional debt or equity financing. The Company is presently undertaking a search for additional equity financing to cover these anticipated expenses and expected operational losses; however, the Company has not, as yet, formalized or entered into any such arrangements, and cannot offer any assurance that such financing will be available when needed. The failure to obtain such 10 financing in a timely manner would have a significant negative effect on the future operations and may result in the Company being forced to cease operations. PART II - OTHER INFORMATION Item 1. Legal Proceedings The Company is not a party to any material legal proceedings and, to the Company's knowledge, no such proceedings are threatened or contemplated. Item 2. Changes in Securities and Use of Proceeds In January 2002, the Company issued a total of 264,775 shares of common stock to four (4) employees and one (1) consultant upon the exercise of their stock options granted pursuant to the Company's incentive stock option plan. These shares were issued at a price of $0.10 per share, for a total purchase price of $26,477.50. On April 26, 2002, in consideration for services provided to the Company, a total of 1,250,000 restricted common shares were issued to three (3) directors and three (3) employees of the Company. On April 26, 2002, as part of a loan conversion agreement, the Company issued 2,000,000 restricted common shares to one (1) accredited investor at a price of $0.05 per share as well as warrants for the purchase of 1,000,000 shares of common stock. Item 3. Defaults Upon Senior Securities: None Item 4. Submission of Matters to a Vote of Security Holders: None Item 5. Other Information: None Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits: 10.1 Loan Conversion Agreement with Robert F. Lutz (b) Reports on Form 8-K: None 11 SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SKINVISIBLE, INC. Date: May 14, 2002 By: /s/ Terry Howlett --------------------------------- Terry Howlett President 12 EX-10 3 loanconvagmntrlutz.txt LOAN CONVERSION AGREEMENT THIS LOAN CONVERSION AGREEMENT (the "Agreement") is entered into as of February 22, 2002 (the "Effective Date") by and between Robert F. Lutz ("Lender") whose address is 71 Biltmore Estates, Phoenix, AZ 85016, and Skinvisible, Inc., a Nevada corporation (the "Company"), whose address is 6320 South Sandhill Road, Suite 10, Las Vegas, NV 89120. REFERENCE is hereby made to a Promissory Note between the Company and Lender dated February 2, 2002 (the "Note"). WHEREAS, the Lender advanced, in total, the sum of Fifty Thousand Dollars ($50,000), (the "Principal") to the Company in exchange for the Notes. NOW THEREFORE, in consideration of the covenants contained herein, the above recitals and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: The Lender hereby waives any and all interest payable in connection with the Note and releases the Company from the liability to pay said interest to Lender. The Principal amount of the Note will be converted into One Million (1,000,000) shares of common stock of Skinvisible, Inc. at the rate of $0.05 per share. The share certificate will be issued in the name Lutz Family Trust. In addition, the Company will issue a warrant agreement in the name of Lutz Family Trust, which will give the holder the right to purchase further shares at $0.30 per share if exercised in year one, and $0.40 per share if exercised in year two. 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 500,000 additional shares at the above prices. IN WITNESS WHEREOF, the parties, intending to be bound hereby, have executed this Agreement as of the date first written above. /s/ Robert F. Lutz ____________________________________ By: Robert F. Lutz SKINVISIBLE, INC. /s/ Terry Howlett ____________________________________ By: Terry Howlett, President EX-10 4 loanconversagmntlutzr.txt LOAN CONVERSION AGREEMENT THIS LOAN CONVERSION AGREEMENT (the "Agreement") is entered into as of April 2, 2002 (the "Effective Date") by and between Robert F. Lutz ("Lender") whose address is 71 Biltmore Estates, Phoenix, AZ 85016, and Skinvisible, Inc., a Nevada corporation (the "Company"), whose address is 6320 South Sandhill Road, Suite 10, Las Vegas, NV 89120. REFERENCE is hereby made to a Promissory Note between the Company and Lender dated March 8, 2002 (the "Note"). WHEREAS, the Lender advanced, in total, the sum of Fifty Thousand Dollars ($50,000), (the "Principal") to the Company in exchange for the Notes. NOW THEREFORE, in consideration of the covenants contained herein, the above recitals and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: The Lender hereby waives any and all interest payable in connection with the Note and releases the Company from the liability to pay said interest to Lender. The Principal amount of the Note will be converted into One Million (1,000,000) shares of common stock of Skinvisible, Inc. at the rate of $0.05 per share. The share certificate will be issued in the name Lutz Family Trust. In addition, the Company will issue a warrant agreement in the name of Lutz Family Trust, which will give the holder the right to purchase further shares at $0.30 per share if exercised in year one, and $0.40 per share if exercised in year two. 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 500,000 additional shares at the above prices. IN WITNESS WHEREOF, the parties, intending to be bound hereby, have executed this Agreement as of the date first written above. /s/ Robert F. Lutz ____________________________________ By: Robert F. Lutz SKINVISIBLE, INC. /s/ Terry Howlett ____________________________________ By: Terry Howlett, President -----END PRIVACY-ENHANCED MESSAGE-----