What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-05-16 compared with 2021-11-19 · 185 added, 150 removed, 52 unchanged (87% of the section changed)

25 unchanged sentences

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

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.

Company Overview

We, through our wholly owned subsidiary Skinvisible

Pharmaceuticals Inc., are a pharmaceutical research and development (“R&D”) company that has developed and patented an

innovative polymer delivery system, Invisicare® and formulated over forty topical skin products, which we out-license globally.

were incorporated in 1998, and target an estimated $80 billion global skincare and dermatology market and a $30 billion global over-the-counter

market as well as other healthcare / medical and consumer goods markets.

With the research and development complete on

forty products and numerous patents issued (technology and product patents), we are ready to monetize our investment.

Our business model

will continue to be to out-license our patented prescription and over-the-counter (“OTC”) products featuring Invisicare to

established manufacturers and marketers of brands internationally and to maximize profits from the products we have already out-licensed.

The opportunity for us to license our products

continues to be a viable model as the need for pharmaceutical companies to access external R&D companies for new products due to their

own down-sizing or elimination of internal R&D departments.

The demand for our products is enhanced due to the granting of key US

and international patents and the completed development of a number of unique products.

Our Flagship Product

Pivotal to our success is our patented polymer

delivery system technology Invisicare.

Invisicare is a patented polymer delivery system that enhances the delivery of active ingredients

for topically applied skin care products.

Its patented technology has a unique formula and process for combining active ingredients with

a delivery system that extends the duration of time the product remains on the skin and active.

Invisicare is specifically formulated to

carry water insoluble active and certain cationic active ingredients in water-based products without the use of alcohol, silicones, waxes,

or other organic solvents.

Products utilizing Invisicare have the proven ability to bond active ingredients to the skin for up to four

hours and longer.

They are non-occlusive and allow normal skin respiration and perspiration while moisturizing and protecting against

exposure from a wide variety of environmental irritants.

When topically applied, these formulated products

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.

They allow enhanced delivery performance for a variety of skincare agents resulting in improved efficacy,

longer duration of action, reduced irritation and lower dosage of active agent required.

The "invisible" polymer compositions

wear off as part of the natural exfoliation process of the skin's outer layer cells.

The advantage of products formulated with Invisicare

is (1) Invisicare’s ability to bind active ingredients (the drug) to the skin, forming a protective bond on the skin, for extended

periods of time;

(2) Invisicare can deliver targeted levels (high or low) of therapeutic or cosmetic ingredients to the skin in a controlled

(3) Invisicare can help to reduce the irritation of some active ingredients due to how it controls the slower release of that

active ingredient;

and (4) Invisicare science proves that it provides a protective skin barrier which helps retain the natural moisture

content of the skin, while still allowing it to breathe.

These benefits present an excellent opportunity for clear scientific advantages

and marketing messages which resonate with physicians and consumers.

We have positioned ourselves in the $80 billion

worldwide prescription and over-the-counter dermatology and skincare market.

We generate revenue by:

We develop topical prescription

and over-the-counter products enhanced with Invisicare to license to pharmaceutical and consumer goods companies around the world for

an upfront fee and ongoing royalties;

CO-DEVELOPMENT :

We assist pharmaceutical

clients in the early development of the most optimal formulation, which they then take forward into clinical testing;

LIFE CYCLE MANAGEMENT :

We provide cost-effective

solutions to global pharmaceutical companies by reformulating their products coming off patent with a new Invisicare patent and new product

benefits and line extensions.

Pharmaceutical companies are under a lot of pressure to develop innovative strategies to counteract the

revenue loss from their drugs coming off patent.

License Agreement with Quoin

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

9 unchanged sentences

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

to expire on December 31, 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:

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, 2021.

We received a payment of $50,000 during the three months ended March 31, 2022.

The remaining balance of two

hundred thousand dollars ($200,000) was still outstanding as of March 31, 2022,and was received on May 10, 2022.

Additionally, the milestones in the initial agreement were changed as shown

(i) Successful

2 unchanged sentences

completion of Phase 3 testing:

(iii) Regulatory

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

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.

(iii) Regulatory approval in either 1· the US or EU,

whichever happens first:

Results of Operations for the Three Months Ended March 31, 2022 and

Our revenue, which we combine from product sales,

royalties on patent licenses and license fees (product development fees), was $59,980 for the three months ended March 31, 2022, an increase

from $12,051 for the same period ended March 31, 2021

The revenue for 2022 was mainly from license fees with Quoin and the revenue

for 2021 was mainly from license fees with Quoin and Ovation.

We hope to generate more revenues from our licenses with Quoin and Ovation

for the rest of 2022.

We had $1,508 in cost of revenues for the three months ended March 31,

2022 and $3,300 in cost of revenues for the same period ended 2021, so our gross profit was $58,472 and $8,751 for the three months ended

March 31, 2022 and 2021, respectively.

We had some cost of product in 2021 as compared with 2022 where

Our gross profit increased in 2022 due to more revenues from our license with Quoin, and we hope to generate more revenues

from our licenses with Quoin and Ovation for the rest of 2022, which do not have a cost of revenue component.

Operating Expenses

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.

Operating expenses increased to $138,011 for the three months ended March

31, 2022 from $119,878 for the same period ended March 31, 2021.

Our operating expenses for the three months ended

March 31, 2022 consisted primarily of accrued salaries and wages of $87,942, audit and accounting of $28,809, insurance of $6,744 and

amortization of $4,251.

Our operating expenses for the three months ended March 31, 2021 consisted mainly of accrued salaries and wages

of $87,942, audit and accounting of $13,610, and amortization of $4,251.

Other Expenses

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 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.

We had other expenses of $134,980 for the three months ended March 31,

2022, as compared with other expenses of $324,378 for the three months ended March 31, 2021.

Our other expenses for the three months ended March

31, 2022 consisted mainly of interest expense, netted against a gain on settlement of debt.

Our other expenses for the three months ended

March 31, 2021 consisted mainly of interest expense.

We recorded a net loss of $214,519 for the three months ended March 31,

2022, as compared with a net loss of $435,505 for the three months ended March 31, 2021.

Liquidity and Capital Resources

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 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

flow for each period was largely the result of the amortization of debt discount and changes in accounts payable and accrued liabilities

and accrued interest.

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.

As of March 31, 2022, we had total current assets

of $35,126 and total assets in the amount of $183,588.

Our total current liabilities as of March 31, 2022 were $3,067,102.

We had a working

capital deficit of $2,883,514 as of March 31, 2022, compared with a working capital deficit of $3,031,976 as of December 31, 2021.

Operating activities used $40,940 in cash for the

three months ended March 31, 2022, as compared with $15,663 used for the three months ended March 31, 2021.

Our negative operating cash

flow for 2022 was largely the result of the net loss for the period.

Our negative operating cash flow for 2021 was largely the result

of our net loss for the period, offset by adjustments to amortization of debt discount and increases in accrued interest

We used cash of $0 and $450 in investing activities

for the three months ended March 31, 2022 and 2021, respectively, for the purchase of fixed and intangible assets.

Cash flows used by financing activities during the

three months ended March 31, 2022 amounted to $0, as compared with cash used of $7,616 for the three months ended March 31, 2021.

cash flow for the three months ended March 31, 2021 consisted of repayments of related party loans.

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 $35,607,779 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.

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 $35,987,680 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.

Off Balance Sheet Arrangements

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

As of March 31, 2022, there were no off balance sheet arrangements.

Critical Accounting Policies

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.

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

Royalty sales – We also recognize royalty revenue from licensing

our patented product formulations only when earned, with no further contingencies or material performance obligations are warranted, and

thereby have earned the right to receive and retain reasonably assured payments.

Distribution and license rights sales – We also recognize

revenue from distribution and license rights only when earned (and are amortized over a five-year period), with no further contingencies

or material performance obligations are warranted, and thereby have earned the right to receive and retain reasonably assured payments.

Costs of Revenue – Cost of revenue includes raw materials,

component parts, and shipping supplies.

Shipping and handling costs is not a significant portion of the cost of revenue.

Accounts Receivable – Accounts receivable is comprised of

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

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 March 31, 2022, we had not recorded a reserve for doubtful accounts.

Recently Issued Accounting Pronouncements

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.

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.

Quantitative and Qualitative Disclosures About Market Risk

2 unchanged sentences

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