What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-11-19 compared with 2021-08-16 · 157 added, 161 removed, 45 unchanged (88% of the section changed)

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

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.

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additional factors that could materially affect our financial results, is included herein and in our other filings with the SEC.

The full extent of the impact

of the COVID-19 pandemic on our business, operations and financial results will depend on numerous evolving factors that we may not be

able to accurately predict at the present time.

In an effort to contain COVID-19 or slow its spread, governments around the world have

enacted various measures, including orders to close all businesses not deemed “essential,” isolate residents to their homes

or places of residence, and practice social distancing when engaging in essential activities.

We anticipate that these actions and the

global health crisis caused by COVID-19 will negatively impact business activity across the globe.

While we have not observed any noticeable

impact on our revenue related to these conditions in the past fiscal year, or through the date of this filing, we cannot estimate the

impact COVID-19 will have in the future as business and consumer activity decelerates across the globe.

We will continue to actively

monitor the situation and may take further actions that alter our business operations as may be required by federal, state, local or foreign

authorities, or that we determine are in the best interests of our employees, customers, partners and stockholders.

It is not clear what

the potential effects any such alterations or modifications may have on our business, including the effects on our customers, partners,

or vendors, or on our financial results.

The full extent of the impact of the COVID-19 pandemic on our business,

operations and financial results will depend on numerous evolving factors that we may not be able to accurately predict at the present

In an effort to contain COVID-19 or slow its spread, governments around the world have enacted various measures, including orders

to close all businesses not deemed “essential,” isolate residents to their homes or places of residence, and practice social

distancing when engaging in essential activities.

We anticipate that these actions and the global health crisis caused by COVID-19 will

negatively impact business activity across the globe.

While we have not observed any noticeable impact on our revenue related to these

conditions in the past fiscal year, or through the date of this filing, we cannot estimate the impact COVID-19 will have in the future

as business and consumer activity decelerates across the globe.

We will continue to actively monitor the situation and may take

further actions that alter our business operations as may be required by federal, state, local or foreign authorities, or that we determine

are in the best interests of our employees, customers, partners and stockholders.

It is not clear what the potential effects any such

alterations or modifications may have on our business, including the effects on our customers, partners, or vendors, or on our financial

Recent Developments

On October 17, 2019, we entered an Exclusive

License Agreement with Quoin Pharmaceuticals, Inc., a Delaware corporation (“Quoin”) pursuant to which we granted to Quoin

a license to certain patents for the development of products for commercial sale.

In exchange for the license, Quoin agreed to pay to

us a license fee of $1,000,000 (the “License Fee”) and a single digit royalty interest of all net sales on the licensed products

subject to adjustment in certain situations.

The agreement also requires that Quoin make certain milestone payments to us upon achieving

regulatory approval milestones for certain drug products.

The agreement was subject to termination,

if among other things, 50% of the license fee is not paid by December 31, 2019 and if the full License Fee is not paid by March 31, 2020.

No payments were made by Quoin and the agreement was terminated.

Both Parties subsequently determined that they continue to see the value

in a partnership and therefore on May 8, 2020 and again on July 31, 2020 the companies agreed to extend the Exclusive License Agreement

under the same terms to expire on September 30, 2020, and on January 27, 2021 the companies agreed to revise the milestone payments due

under the agreement and to extend the agreement indefinitely.

On June 14, 2021, the Company entered

into an amendment to change the terms of the license Fee as shown below.

As partial consideration for the rights

conveyed by Skinvisible under this Agreement, Licensee agrees to pay to Skinvisible a one-time, non-refundable, non-creditable license

issue fee of one million USD dollars (USO $1,000,000) (''License Fee'').

To date, Licensee has paid three hundred ninety-two thousand

five hundred US dollars (USD $392,500) of this fee as part of the First Half Payment of the License Fee.

The balance due of the First

Half Payment is one hundred seven thousand five hundred US dollars (USD $107,500) which was received on July 7.

A further payment of two

hundred and fifty thousand dollars ($250,000) is due no later than ten (10) business days after receipt by Licensee of additional funding

from Altium Capital which coincides with the approval from the SEC on Quoin’s merger with a NASDAQ listed company, expected in September.

The remaining balance of two hundred and fifty thousand dollars ($250,000) will be paid on December 31, 2021.

Additionally, the milestones in the

initial agreement were changed as shown below:

On October 17, 2019, we entered an Exclusive License Agreement

with Quoin Pharmaceuticals, Inc., a Delaware corporation (“Quoin”) pursuant to which we granted to Quoin a license to certain

patents for the development of products for commercial sale.

In exchange for the license, Quoin agreed to pay to us a license fee of $1,000,000

(the “License Fee”) and a single digit royalty interest of all net sales on the licensed products subject to adjustment in

certain situations.

The agreement also requires that Quoin make certain milestone payments to us upon achieving regulatory approval milestones

for certain drug products.

The agreement was subject to termination, if among other things,

50% of the license fee is not paid by December 31, 2019 and if the full License Fee is not paid by March 31, 2020.

No payments were made

by Quoin and the agreement was terminated.

Both Parties subsequently determined that they continue to see the value in a partnership and

therefore on May 8, 2020 and again on July 31, 2020 the companies agreed to extend the Exclusive License Agreement under the same terms

to expire on September 30, 2020, and on January 27, 2021 the companies agreed to revise the milestone payments due under the agreement

and to extend the agreement indefinitely.

On June 14, 2021, the Company entered into an amendment to change

the terms of the license Fee as shown below.

As partial consideration for the rights conveyed by Skinvisible

under this Agreement, Licensee agrees to pay to Skinvisible a one-time, non-refundable, non-creditable license issue fee of one million

USD dollars (USO $1,000,000) (''License Fee'').

To date, Licensee has paid three hundred ninety-two thousand five hundred US dollars (USD

$392,500) of this fee as part of the First Half Payment of the License Fee.

The balance due of the First Half Payment is one hundred seven

thousand five hundred US dollars (USD $107,500) which was received on July 7.

A further payment of two hundred and fifty thousand dollars

($250,000) is due no later than ten (10) business days after receipt by Licensee of additional funding from Altium Capital which coincides

with the approval from the SEC on Quoin’s merger with a NASDAQ listed company, which closed in October.

The remaining balance of

two hundred and fifty thousand dollars ($250,000) will be paid on December 31, 2021.

Additionally, the milestones in the initial agreement were changed

as shown below:

(i) Successful

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approval in either 1· the US or EU, whichever happens first:

Results of Operations for the Three and Six Months Ended

June 30, 2021 and 2020

Our revenue, which we combine from product sales, royalties

on patent licenses and license fees (product development fees), was $287,099 for the three months ended June 30, 2021, an increase from

$119,970 for the same period ended June 30, 2020.

Our revenue was $299,150 for the six months ended June 30, 2021, an increase from $136,022

for the same period ended June 30, 2020.

The revenue for both periods in 2021 was mainly from license

fees with Quoin and the revenue for both periods in 2020 was mainly from license fees with Ovation.

We hope to generate more revenues

from our licenses with Quoin and Ovation for the rest of the year.

We had $3,300 in cost of revenues for the six months

ended June 30, 2021, no cost of revenues for the three months ended June 30, 2021, and no cost of revenues for the three and six months

ended June 30, 2020, so our gross profit was $287,099 and $295,850 for the three and six months ended June 30, 2021, respectively, as

compared with gross profit of $119,970 and $136,022 for the three and six months ended June 30, 2020, respectively.

We had some product sales resulting in a reduced

gross profit for 2021 as compared with 2020.

We hope that our gross profit increases in 2021 with more revenues from our licenses with

Quoin and Ovation expected for the rest of the year, which do not have a cost of revenue component.

Results of Operations for the Three and Nine Months Ended

September 30, 2021 and 2020

Our revenue, which we combine from product sales, royalties on

patent licenses and license fees (product development fees), was $111,421 for the three months ended September 30, 2021, an increase from

$6,816 for the same period ended September 30, 2020.

Our revenue was $410,571 for the nine months ended September 30, 2021, an increase

from $142,838 for the same period ended September 30, 2020.

The revenue for both periods in 2021 was mainly from license fees

with Quoin and the revenue for both periods in 2020 was mainly from license fees with Ovation.

We hope to generate more revenues from

our licenses with Quoin and Ovation for the rest of the year.

We had $3,300 in cost of revenues for the nine months ended September

30, 2021, no cost of revenues for the three months ended September 30, 2021, and no cost of revenues for the three and nine months ended

September 30, 2020, so our gross profit was $111,421 and $407,271 for the three and nine months ended September 30, 2021, respectively,

as compared with gross profit of $6,816 and $142,838 for the three and nine months ended September 30, 2020, respectively.

We had some product sales resulting in a reduced gross profit for

2021 as compared with 2020.

Our gross profit increased in 2021 due to more revenues from our licenses with Quoin and Ovation expected

for the rest of the year, which do not have a cost of revenue component.

Operating Expenses

Operating expenses decreased to $127,579 for the three

months ended June 30, 2021 from $132,732 for the same period ended June 30, 2020.

Operating expenses decreased to $247,457 for the six

months ended June 30, 2021 from $278,776 for the same period ended June 30, 2020.

Our operating expenses for all periods consisted mainly

of selling, general and administrative expenses.

Our selling, general and administrative expenses for

the six months ended June 30, 2021 consisted mainly of accrued salaries and wages of $165,845, audit and accounting of $32,993.

In comparison,

our selling general and administrative expenses for the six months ended June 30, 2020 consisted mainly of accrued salaries and wages

Operating expenses increased to $119,274 for the three months ended

September 30, 2021 from $125,438 for the same period ended September 30, 2020.

Operating expenses decreased to $366,731 for the nine months

ended September 30, 2021 from $404,214 for the same period ended September 30, 2020.

Our operating expenses for all periods consisted mainly of selling,

general and administrative expenses.

Our selling, general and administrative expenses for the nine months

ended September 30, 2021 consisted mainly of accrued salaries and wages of $243,826, audit and accounting of $43,102.

In comparison, our

selling general and administrative expenses for the nine months ended September 30, 2020 consisted mainly of accrued salaries and wages

of $263,827 and audit and accounting of $55,089.

Other Expenses

We had other expenses of $428,034 for the three

months ended June 30, 2021, as compared with other expenses of $300,031 for the three months ended June 30, 2020.

We had other expenses

of $752,412 for the six months ended June 30, 2021, as compared with other expenses of $600,123 for the six months ended June 30, 2020.

Our other expenses for the three months ended

June 30, 2021 consisted mainly of interest expense and a loss on the changes in derivative liability, offset by a gain on the settlement

Our other expenses for the six months ended June 30, 2021 consisted mainly of interest expense and a loss on the changes in derivative

We had other expenses of $195,499 for the three months ended September

30, 2021, as compared with other expenses of $291,137 for the three months ended September 30, 2020.

We had other expenses of $947,911

for the nine months ended September 30, 2021, as compared with other expenses of $891,260 for the nine months ended September 30, 2020.

Our other expenses for the three months ended September 30, 2021

consisted mainly of interest expense and a loss on the changes in derivative liability, offset by a gain on the settlement of debt.

other expenses for the nine months ended September 30, 2021 consisted mainly of interest expense and a loss on the changes in derivative

liability, offset by a gain on the settlement of debt.

Our other expenses for the six months ended June 30, 2020 consisted mainly of interest

We recorded a net loss of $268,514 for the three months

ended June 30, 2021, as compared with a net loss of $312,793 for the three months ended June 30, 2020.

We recorded a net loss of $704,019

for the six months ended June 30, 2021, as compared with a net loss of $742,877 for the six months ended June 30, 2020.

Our other expenses for the nine months ended September 30, 2020 consisted mainly

of a loss on the settlement of debt and interest expense.

We recorded a net loss of $203,352 for the three months ended September

30, 2021, as compared with a net loss of $409,759 for the three months ended September 30, 2020.

We recorded a net loss of $907,371 for

the nine months ended September 30, 2021, as compared with a net loss of $1,152,636 for the nine months ended September 30, 2020.

Liquidity and Capital Resources

As of June 30, 2021, we had total current assets of

As of September 30, 2021, we had total current assets of $58,021

and total assets in the amount of $215,771.

Our total current liabilities as of June 30, 2021 were $3,070,119.

We had a working

capital deficit of $3,001,767 as of June 30, 2021, compared with a working capital deficit of $2,668,871 as of December 31, 2020.

Operating activities provided $171,043 in cash for

the six months ended June 30, 2021, as compared with $36,464 provided for the six months ended June 30, 2020.

Our total current liabilities as of September 30, 2021 were $3,108,168.

We had a working capital

deficit of $3,050,147 as of September 30, 2021, compared with a working capital deficit of $2,668,871 as of December 31, 2020.

Operating activities provided $220,791 in cash for the nine months

ended September 30, 2021, as compared with $15,588 provided for the nine months ended September 30, 2020.

Our positive operating cash

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and accrued interest.

We used cash of $20,864 and $14,673 in investing activities

for the six months ended June 30, 2021 and 2020, respectively, for the purchase of fixed and intangible assets.

Cash flows used by financing activities during the six months

ended June 30, 2021 amounted to $131,100, as compared with cash provided of $12,000 for the six months ended June 30, 2020.

financing cash flow for the six months ended June 30, 2021 resulted from the repayments of debt.

Our positive financing cash flow for

the six months ended June 30, 2020 consisted of proceeds from related party loans, offset by repayments on the same.

The features of the debt instruments and payables concerning

our financing activities are detailed in the footnotes to our financial statements.

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.

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

We used cash of $20,864 and $16,767 in investing activities for

the nine months ended September 30, 2021 and 2020, respectively, for the purchase of fixed and intangible assets.

Cash flows used by financing activities during the nine months

ended September 30, 2021 amounted to $186,600, as compared with cash provided of $11,700 for the nine months ended September 30, 2020.

Our negative financing cash flow for the nine months ended September 30, 2021 resulted from the repayments of debt.

Our positive financing

cash flow for the nine months ended September 30, 2020 consisted of proceeds from related party loans, offset by repayments on the same.

The features of the debt instruments and payables concerning our

financing activities are detailed in the footnotes to our financial statements.

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.

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 $35,404,427 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.

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 $35,607,779 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

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.

Off Balance Sheet Arrangements

As of June 30, 2021, there were no off balance sheet arrangements.

As of September 30, 2021, 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.

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

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

Accounts Receivable – Accounts receivable is

comprised of uncollateralized customer obligations due under normal trade terms requiring payment within 30 days from the invoice

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

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 June 30, 2021, we had not

recorded a reserve for doubtful accounts.

The discussion and analysis of our financial

condition and results of operations is based upon the accompanying financial statements, which have been prepared in accordance with the

accounting principles generally accepted in the United States of America and are expressed in United States dollars.

Preparing financial

statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and

These estimates and assumptions are affected by management’s application of accounting policies.

We believe that understanding

the basis and nature of the estimates and assumptions involved with the following aspects of our financial statements is critical to an

understanding of our financial statements.

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.

In August 2020, FASB issued ASU 2020-06, Accounting for Convertible

Instruments and Contracts in an Entity;

Own Equity (“ASU 2020-06”), as part of its overall simplification initiative to reduce

costs and complexity of applying accounting standards while maintaining or improving the usefulness of the information provided to users

of financial statements.

Among other changes, the new guidance removes from GAAP separation models for convertible debt that require the

convertible debt to be separated into a debt and equity component, unless the conversion feature is required to be bifurcated and accounted

for as a derivative or the debt is issued at a substantial premium.

As a result, after adopting the guidance, entities will no longer

separately present such embedded conversion features in equity, and will instead account for the convertible debt wholly as debt.

new guidance also requires use of the “if-converted” method when calculating the dilutive impact of convertible debt on earnings

per share, which is consistent with the Company’s current accounting treatment under the current guidance.

The guidance is effective

for financial statements issued for fiscal years beginning after December 15, 2021,

and interim periods within those fiscal years, with early adoption permitted, but

only at the beginning of the fiscal year.

The Company is currently evaluating the impact the adoption of ASU 2020-06 will have on the

Company’s financial statements.

Quantitative and Qualitative Disclosures About Market Risk

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis