NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AUDITED)
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 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 subsidiaries
shall herein be collectively referred to as the “Company”.
Going concern
– The accompanying
financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. The Company has incurred cumulative net losses of $27,831,352 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 December 31, 2015 and December 31, 2014,
respectively.
Fair Value of Financial Instruments
SKINVISIBLE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AUDITED)
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 December 31, 2015, the Company
had not recorded a reserve for doubtful accounts. The Company has $1,135,000 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.
SKINVISIBLE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AUDITED)
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 an Employee Stock Purchase Plan based on the estimated
fair values.
Stock based compensation expense recognized
under ASC 718-10 for the year ended December 31, 2015 and December 31, 2014 totaled $13,800 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
December 31, 2015 and December 31, 2014:
|
|
December 31, 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
|
|
|
(325,855
|
)
|
|
|
(324,275
|
)
|
Fixed assets, net of accumulated depreciation
|
|
$
|
1,695
|
|
|
$
|
3,275
|
|
Depreciation expense for the years ended December
31, 2015 and 2014 was $1,580 and $1.462, respectively.
SKINVISIBLE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AUDITED)
3. INVENTORY
Inventory consist of the following as of December
31, 2015 and December 31, 2014
|
|
December 31, 2015
|
|
December 31, 2014
|
Shipping and Packing materials
|
|
$
|
11,651
|
|
|
$
|
14,758
|
|
Marketing Supplies
|
|
|
19,346
|
|
|
|
—
|
|
Finished Goods
|
|
|
19,082
|
|
|
|
51,756
|
|
Raw Materials
|
|
|
40,893
|
|
|
|
16,641
|
|
Total
|
|
$
|
90,972
|
|
|
$
|
83,155
|
|
4. INTANGIBLE AND OTHER ASSETS
Patents and trademarks are capitalized at their
historical cost and are amortized over their estimated useful lives. As of December 31, 2015, patents and trademarks total $646,169,
net of $344,451 of accumulated amortization. Amortization expense for the years ended December 31, 2015 and 2014 was $56,428 and
$38,959
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 December
31, 2015.
5. STOCK OPTIONS AND WARRANTS
The following is a summary of option activity
during the year ended December 31, 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
|
|
|
1,500,000
|
|
|
|
0.06
|
|
Options canceled
|
|
|
—
|
|
|
|
—
|
|
Options exercised
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2015
|
|
|
8.450.000
|
|
|
$
|
0.05
|
|
As of December 31, 2015, 8,450,000 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 year ended December 31, 2015.
Stock warrants -
The following is a summary of warrants activity
during the year ended December 31, 2015.
SKINVISIBLE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AUDITED)
|
|
Number of Shares
|
|
Weighted Average Exercise Price
|
Balance, December 31, 2014
|
|
|
2,541,030
|
|
|
$
|
0.05
|
|
|
|
|
|
|
|
|
|
|
Warrants granted and assumed
|
|
|
1,625,000
|
|
|
|
0.06
|
|
Warrants expired
|
|
|
1,196,280
|
|
|
|
0.05
|
|
Warrants canceled
|
|
|
—
|
|
|
|
—
|
|
Warrants exercised
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2015
|
|
|
2,969,750
|
|
|
$
|
0.06
|
|
All warrants outstanding as of December 31,
2015 are exercisable.
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”. During year
ending December 31, 2015 the Company made principal payments of $94,500.
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". As of December 31, 2015, $935,500
in notes have reached their initial
maturity date, note holders of $770,400
in debt executed agreements extending their
notes for an additional 12 months upon the same terms.
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 September 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 December 31, 2015, $1,845,500
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 December 31, 2015, $9,769 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.
SKINVISIBLE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AUDITED)
8. CONVERTIBLE NOTES PAYABLE
Convertible Notes Payable at consists of the following:
|
|
December 31,
|
|
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 the Company’s shares at ten cents per share ($0.10), these rights expired on January 12, 2010. The note is currently in default, but 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 $26,822 during the year ended December 31, 2015. The original issue discount feature is valued under the intrinsic value method. The notes have reach maturity and are now in default, under the notes default provisions the entire balance is now due upon demand.
|
|
|
1,000,000
|
|
|
|
1,000,000
|
|
Original issue discount
|
|
|
111,110
|
|
|
|
111,110
|
|
Unamortized debt discount
|
|
|
—
|
|
|
|
(26,822
|
)
|
Total, net of unamortized discount
|
|
|
1,111,110
|
|
|
|
1,084,288
|
|
On July 28, 2015, the Company entered into a convertible promissory note pursuant to which it 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 the Company’s 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 $44,634. The aggregate beneficial conversion feature has been accreted and charged to interest expenses as a financing expense in the amount of $25,137
during the year ending December 31, 2015. The beneficial conversion feature is valued under the intrinsic value method
|
|
|
47,500
|
|
|
|
—
|
|
Unamortized debt discount
|
|
|
(19,497
|
)
|
|
|
—
|
|
Total, net of unamortized discount
|
|
|
28,003
|
|
|
|
—
|
|
On October 8, 2015, the Company entered into a convertible promissory note pursuant to which it borrowed $25,000. Interest under the convertible promissory note is 10% per annum, and the principal and all accrued but unpaid interest is due on March 5, 2016. The note is convertible into 1,250,000 shares of the Company’s common stock at a price of $0.02 per share and 625,000 warrants exercisable at $0.04 per share.
The Company has determined the value associated with the beneficial conversion feature in connection with the notes negotiated on October 8, 2015 to be $16,648. The note was converted on November 30, 2015. The aggregate beneficial conversion feature has been accreted and charged to interest expenses as a financing expense in the amount of $16,648 for the year ending December 31, 2015. The beneficial conversion feature is valued under the intrinsic value method
|
|
|
—
|
|
|
|
—
|
|
Unamortized debt discount
|
|
|
—
|
|
|
|
—
|
|
Total, net of unamortized discount
|
|
|
—
|
|
|
|
—
|
|
$135,000 face value 9% unsecured notes payable to investors, due October 26, 2017. 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 $117,535. The aggregate original issue discount feature has been accreted and charged to interest expenses as a financing expense in the amount of $10,625
during the year ended December 31, 2015. The original issue discount feature is valued under the intrinsic value method.
|
|
|
135,000
|
|
|
|
—
|
|
Unamortized debt discount
|
|
|
(106,908
|
)
|
|
|
—
|
|
Total, net of unamortized discount
|
|
|
28,092
|
|
|
|
—
|
|
On December 17, 2015, the Company entered into a convertible promissory note pursuant to which it borrowed $25,000. Interest under the convertible promissory note is 10% per annum, and the principal and all accrued but unpaid interest is due on May 17, 2016. The note is convertible into 1,250,000 shares of the Company’s common stock at a price of $0.02 per share and 625,000 warrants exercisable at $0.04 per share.
The Company has determined the value associated with the beneficial conversion feature in connection with the notes negotiated on December 17, 2015 to be $16,648. The aggregate beneficial conversion feature has been accreted and charged to interest expenses as a financing expense in the amount of $1,544 for the year ending December 31, 2015. The beneficial conversion feature is valued under the intrinsic value method
|
|
|
25,000
|
|
|
|
—
|
|
Unamortized debt discount
|
|
|
(15,104
|
)
|
|
|
—
|
|
Total, net of unamortized discount
|
|
|
9,896
|
|
|
|
—
|
|
|
|
$
|
1,205,576
|
|
|
$
|
1,112,764
|
|
SKINVISIBLE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AUDITED)
10. CONVERTIBLE NOTES PAYABLE RELATED PARTY
Convertible Notes Payable Related Party at consists of the following:
|
December 31,
|
|
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 $166,514 during the year ending December 31, 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
|
|
(166,969
|
)
|
|
|
(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 $41,576 during the year ending December 31, 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
|
|
(62,310
|
)
|
|
|
(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 $36,396 during the year ending December 31, 2015. The beneficial conversion feature is valued under the intrinsic value method.
|
|
182,083
|
|
|
|
182,083
|
Unamortized debt discount
|
|
(72,881
|
)
|
|
|
(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 $14,146 during the year ending December 31, 2015. The beneficial conversion feature is valued under the intrinsic value method.
|
|
106,152
|
|
|
|
106,152
|
Unamortized debt discount
|
|
(35,345
|
)
|
|
|
(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 $18,971 during year ending December 31, 2015. The beneficial conversion feature is valued under the intrinsic value method.
|
|
142,501
|
|
|
|
142,501
|
Unamortized debt discount
|
|
(56,966
|
)
|
|
|
(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 $23,613 during the year ending December 31, 2015. The beneficial conversion feature is valued under the intrinsic value method.
|
|
118,126
|
|
|
|
118,126
|
Unamortized debt discount
|
|
(82,610
|
)
|
|
|
(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 $8,089 during year ending December 31, 2015. The beneficial conversion feature is valued under the intrinsic value method.
|
|
40,558
|
|
|
|
40,558
|
Unamortized debt discount
|
|
(30,338
|
)
|
|
|
(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 $11,481 during the year ending December 31, 2015. The beneficial conversion feature is valued under the intrinsic value method.
|
|
65,295
|
|
|
|
65,295
|
Unamortized debt discount
|
|
(45,957
|
)
|
|
|
(57,438)
|
On December 31, 2015, the Company re-negotiated accrued salaries and interest for three employees and a director. Under the terms of the agreements, $343,687 of accrued salaries and director fees not previously converted were converted to promissory notes convertible into common stock with a warrant feature. The $343,687 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 $0.02 per share along with additional warrants to purchase one share for every two shares issued at the exercise price of $0.02 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 $341,703. The aggregate beneficial conversion feature will be accreted and charged to interest expenses as a financing expense. The beneficial conversion feature is valued under the intrinsic value method.
|
|
343,687
|
|
|
|
|
Unamortized debt discount
|
|
(341,703
|
)
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,495,948
|
|
|
$
|
1,173
,178
|
SKINVISIBLE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AUDITED)
11. STOCKHOLDERS’ DEFICIT
The Company is authorized to issue 200,000,000
shares of $0.001 par value common stock. The Company had 115,701,969 and 111,813,969 issued and outstanding shares of common stock
as of December 31, 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 the Company’s $0.001 par value
common stock and warrants to purchase 625,000 shares of the Company’s common stock. 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 the Company’s $0.001 par value common
stock and warrants to purchase 375,000 shares of the Company’s common stock. 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 of the Company’s
common stock were issued to settle $3,600 of accrued expenses due to a director of the Company.
On June 30, 2015, 72,000 shares of the Company’s
common stock 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 in exchange for 200,000 shares of the Company’s common stock. A gain of $400 was recognized as
a result of this settlement.
On October 1, 2015, 72,000 shares of the Company’s
common stock were issued to settle $3,600 of accrued expenses due to a director of the Company. A gain of $1,944 was recognized
as a result of this settlement.
On November 30, 2015, the Company issued 1,250,000
shares of the Company’s common stock and warrants to purchase 625,000 shares of the Company’s common stock to a note
holder to settle $25,000 in notes payable. See Note 8 for additional details.
On December 20, 2015, the Company settled $2,500
of debt due to a consultant in exchange for 100,000 shares of the Company’s common stock. A gain of $500 was recognized as
a result of this settlement.
On December 30, 2015, 72,000 shares of the
Company’s common stock 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.
SKINVISIBLE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AUDITED)
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 December
31, 2015, are as follows:
2016 34,301
2017 5,718
Rental expense, resulting from operating lease
agreements, approximated $43,478 and $41,868 for the years ended December 31, 2015 and 2014, respectively.
13. SUBSEQUENT EVENTS
On February 10, 2016, the Company issued to
employees five year options to purchase a total of 4,150,000
shares of its common stock
at an exercise price of $0.02 per share.
From January 27, 2016 to February 1, 2016,
the Company issued 1,350,000 shares of its common stock to settle $27,500 in outstanding debt.
On January 4, 2016, the Company settled $4,500
of debt due to a consultant in exchange for 150,000 shares of the Company’s common stock.