SKINVISIBLE, INC. 10-K

Item 8. Financial Statements and Supplementary Data Index to Financial Statements Required by Article 8 of Regulation S- X: Audited Financial Statements: F- 1 Report of Independent Registered Public Accounting Firm (GreenGrowth CPAs PCOAB # 6580 ) F-2 Report of Independent Registered Public Accounting Firm (Gries & Associates, LLC ) F- 3 Consolidated Balance Sheets as of December 31, 2023 and 2022 F- 3 Consolidated Statements of Operations for the years ended December 31, 2023 and 2022 F- 4 Consolidated Statement of Stockholders’ Deficit for the years ended December 31, 2023 and 2022 F- 5 Consolidated Statements of Cash Flows for the years ended December 31, 2023 and 2022 F- 6 Notes to Consolidated Financial Statements 21 Table of Contents PCA (5/23) REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors and Stockholders Skinvisible, Inc Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Skinvisible, Inc (the Company) as of year end, December 31, 2023, and the related consolidated statements of operations, consolidated statement of stockholders’ deficit, and consolidated statement of cash flows for the period ended December 31, 2023, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and the results of its operations and its cash flows for each of the years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America. The financial statements of the Company as of December 31, 2022, were audited by other auditors whose report dated March 28, 2023, expressed an unqualified opinion on those statements. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Emphasis of Matter Regarding Going Concern The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As described in Note 2 to the financial statements, the Company has sustained a net loss of $2,360,848 for the year under audit and has accumulated losses of $39,358,896. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our opinion is not modified with respect to this matter. Description of the Matter Convertible Debentures As described in the Consolidated Balance Sheet and in Note 5 to the consolidated financial statements, the Company has established convertible debentures of $5,372,402 as of December 31, 2023. The promissory notes are unsecure, due five years from issuance, and bear an interest rate of 10%. How We Addressed the Matter in Our Audit Our procedures consisted of performing review of the agreement signed and review of the adjustments made on the renegotiation of the c onvertible debentures , we also confirmed the unlikelihood of those convertible debentures to be converted. Based on the audit procedures performed, we found the reserve levels to be reasonable. /s/ GreenGrowth CPAs Los Angeles, CA April 15, 2024 We have served as the Company´s auditor since 2023 APPENDIX 9B F- 1 Table of Contents Gries & Associates, LLC Certified Public Accountants 501 S. Cherry Street Ste 1100 Denver, Colorado 80246 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders Skinvisible, Inc. Opinion on the Financial Statements We have audited the accompanying balance sheets of Skinvisible, Inc. (the Company), which comprise the balance sheet as of December 31, 2022 and 2021 and the related statements of Operations, Changes in Stockholder’s Equity, and Cash Flows for the years then ended, and the related notes to the financial statements. In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the period then ended in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United Sates) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we were required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluation of the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgements. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the disclosures to which it relates. Emphasis of Matter Regarding Going Concern The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As described in Note 2 to the financial statements, the Company has not generated any revenues since inception and sustained a net loss of $1,224,887 for the year under audit and has accumulated losses of $36,998,048. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our opinion is not modified with respect to this matter. Emphasis of Matters-Risks and Uncertainties The Company is not able to predict the ultimate impact that COVID -19 will have on its business. However, if the current economic conditions continue, the pandemic could have an adverse impact on the economies and financial markets of many countries, including the geographical area in which the Company plans to operate. /s/ Gries & Associates, LLC We have served as the Company’s auditor since 2021. Denver, Colorado March 28, 2023 F- 2 Table of Contents SKINVISIBLE, INC. CONSOLIDATED BALANCE SHEETS (AUDITED) December 31, 2023 December 31, 2022 ASSETS Current assets Cash $ 888 $ 81,378 Accounts receivable 5,000 5,000 Accounts receivable - Related party 21,592 14,073 Prepaid expense and other current assets 7,980 9,495 Total current assets 35,460 109,946 Patents and trademarks, net 127,409 136,847 Total assets $ 162,869 $ 246,793 LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities Accounts payable and accrued liabilities $ 438,668 $ 1,201,937 Accrued interest payable 2,575,595 1,955,820 Loans from related party 6,000 — Loans payable 433,600 433,600 Convertible notes payable 40,000 40,000 Derivative liability 18,544 13,629 Total current liabilities 3,512,407 3,644,986 Convertible notes payable related party, net of unamortized discount of $ 0 and $ 1,532,992 respectively 5,372,403 2,992,143 Convertible notes payable, net of unamortized debt discount of $ 63,785 and $ 127,434 , respectively 301,102 250,267 Total liabilities 9,185,912 6,887,396 Stockholders' deficit Common stock; $ 0.001 par value; 200,000,000 shares authorized; 4,539,843 shares issued and outstanding at December 31, 2023 and December 31, 2022, respectively 4,540 4,540 Additional paid-in capital 30,352,905 30,352,905 Accumulated deficit ( 39,380,488 ) ( 36,998,048 ) Total stockholders' deficit ( 9,023,043 ) ( 6,640,603 ) Total liabilities and stockholders' deficit $ 162,869 $ 246,793 See Accompanying Notes to Consolidated Financial Statements. F- 3 Table of Contents SKINVISIBLE, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (AUDITED) Years ended December 31, 2023 December 31, 2022 Revenues $ 20,000 $ 279,296 Cost of revenues — 4,808 Gross profit 20,000 274,488 Operating expenses Depreciation and amortization 18,771 18,738 Selling general and administrative 491,604 494,182 Total operating expenses 510,375 512,920 Loss from operations ( 490,375 ) ( 238,432 ) Other income and (expense) Gain/(loss) on settlement of debt — 144,379 Interest expense ( 1,887,150 ) ( 1,162,869 ) Gain/(loss) on change in derivative liability ( 4,915 ) 32,035 Total other income (expense) ( 1,892,065 ) ( 986,455 ) Net income (loss) $ ( 2,382,440 ) $ ( 1,224,887 ) Basic income (loss) per common share $ ( 0.52 ) $ ( 0.27 ) Fully diluted income (loss) per common share $ ( 0.52 ) $ ( 0.27 ) Basic weighted average common shares outstanding 4,539,843 4,539,843 Fully diluted weighted average common shares outstanding 4,539,843 4,539,843 See Accompanying Notes to Consolidated Financial Statements. F- 4 Table of Contents SKINVISIBLE, INC. CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT (AUDITED) Common Stock Shares Amount Additional Paid-in Capital Shares payable Accumulated Deficit Total Stockholders' Deficit Balance, December 31, 2021 4,539,843 4,540 30,352,905 — ( 35,773,161 ) ( 5,415,716 ) Net loss — — — — ( 1,224,887 ) ( 1,224,887 ) Balance, December 31, 2022 4,539,843 4,540 30,352,905 — ( 36,998,048 ) ( 6,640,603 ) Net loss — — — — ( 2,382,440 ) ( 2,382,440 ) Balance, December 31, 2023 4,539,843 $ 4,540 $ 30,352,905 $ — $ ( 39,380,488 ) $ ( 9,023,043 ) See Accompanying Notes to Consolidated Financial Statements. F- 5 Table of Contents SKINVISIBLE, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (AUDITED) Years ended December 31, 2023 December 31, 2022 Cash flows from operating activities: Net loss $ ( 2,382,440 ) $ ( 1,224,887 ) Adjustments to reconcile net loss to net cash provided (used) by operating activities: Depreciation and amortization 18,771 18,738 Allowance for doubtful accounts 21,592 — Amortization of debt discount 1,278,901 660,686 Gain/(loss) on settlement of debt — ( 144,379 ) Gain/(loss) on change in derivative liability 4,915 ( 32,035 ) Changes in operating assets and liabilities: Decrease (Increase) in prepaid assets 1,515 ( 1,370 ) Decrease (Increase) in accounts receivable — ( 18,991 ) Increase (decrease) in accounts payable and accrued liabilities 388,926 306,655 Decrease in due from related party ( 29,111 ) — Increase in accrued interest 619,774 480,753 Net cash provided (used in) operating activities ( 77,157 ) 45,170 Cash flows from investing activities: Purchase of intangible assets ( 9,333 ) ( 2,530 ) Net cash used in investing activities ( 9,333 ) ( 2,530 ) Cash flows from financing activities: Payments on related party loans — ( 27,299 ) Proceeds from related party loans 6,000 — Net cash provided by (used in) financing activities 6,000 ( 27,299 ) Net change in cash ( 80,490 ) 15,341 Cash, beginning of period 81,378 66,037 Cash, end of period $ 888 $ 81,378 Supplemental disclosure of cash flow information: Cash paid for interest $ — $ — Cash paid for tax $ — $ — SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Non-cash investing and financing activities: Accrued salary settled with Convertible notes payable related party 1,152,194 — See Accompanying Notes to Consolidated Financial Statements. F- 6 Table of Contents SKINVISIBLE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. DESCRIPTION OF BUSINESS AND HISTORY Description of business Skinvisible, Inc., (referred to as the “Company”) is focused on the development, 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 including women’s health, pain management, and others. The Company maintains executive and sales offices in Las Vegas, Nevada. History 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. Skinvisible, Inc., together with its subsidiaries, shall herein be collectively referred to as the “Company.” 2. BASIS OF PRESENTATION AND GOING CONCERN Basis of presentation The accompanying audited financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the period presented have been reflected herein. 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. For the year ended December 31, 2023, the Company had a net loss of $ 2,382,440 . The Company has also incurred cumulative net losses of $ 39,380,488 since its inception and requires capital for its contemplated operational and marketing activities to take place. These factors, among others, raises substantial doubt about the Company’s ability to continue as a going concern within one year from the date of filing. Managements plans for the Company are to generate the necessary funding through licensing of its core products and to seek additional debt and equity funding. However, the Company’s ability to generate the necessary funds through licensing or raise additional capital through the future issuances of common stock or debt 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 consolidated financial statements of the Company do not include any adjustments that may result from the outcome of these aforementioned uncertainties. The Company's operations and business have experienced disruption due to the unprecedented conditions surrounding the COVID-19 pandemic spreading throughout the United States and elsewhere. The spread of COVID-19 has caused a change in the availability of our staff and support services. Due to the COVID-19 pandemic, there has been uncertainty and disruption in the global economy and financial markets. The Company is not aware of any specific event or circumstance that would require an update to its estimates or judgments or a revision of the carrying value of its assets or liabilities as of the date of issuance of this filing. These estimates could change in the future, as new events occur, or additional information is obtained. F- 7 Table of Contents 3. SUMMARY OF SIGNIFICANT POLICIES This summary of significant accounting policies of Skinvisible Inc. is presented to assist in understanding the Company’s consolidated financial statements. The consolidated financial statements and notes are representations of the Company’s management, who are responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the consolidated financial statements. Principles of consolidation The consolidated financial statements include the accounts of the Company and its subsidiary Skinvisible Pharmaceuticals Inc. 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 of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include estimates used to review the Company’s impairments and estimations of long-lived assets, allowances for uncollectible accounts, inventory valuation, and the valuations of non-cash capital stock issuances. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable in the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Cash and cash equivalents For purposes of the statement of cash flows, the Company considers all highly liquid investments and short-term instruments with original maturities of three months or less to be cash equivalents. Fair Value of financial instruments The carrying value of cash, accounts payable and accrued expenses, and debt (See Notes 6 & 8) approximate their fair values because of the short-term nature of these instruments. Management believes the Company is not exposed to significant interest or credit risks arising from these financial instruments. The carrying amount of the Company’s convertible debt is also stated at a fair value of $ 5,764,477 since the stated rate of interest approximates market rates. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs. The Company utilizes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable. • Level 1 Quoted prices in active markets for identical assets or liabilities. These are typically obtained from real-time quotes for transactions in active exchange markets involving identical assets. The Company uses Level 1 measurements to value the transactions when it issues shares, warrants, options and debt with beneficial conversion features. • Level 2 Quoted prices for similar assets and liabilities in active markets; quoted prices included for identical or similar assets and liabilities that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. These are typically obtained from readily available pricing sources for comparable instruments. The Company did not rely on any Level 2 measurements for any of its transactions in the periods included in these financial statements. • Level 3 Unobservable inputs, where there is little or no market activity for the asset or liability. These inputs reflect the reporting entity’s own beliefs about the assumptions that market participants would use in pricing the asset or liability, based on the best information available in the circumstances. The Company did not rely on any Level 3 measurements for any of its transactions in the periods included in these financial statements. F- 8 Table of Contents Revenue recognition We recognize revenue in accordance with generally accepted accounting principles as outlined in the Financial Accounting Standard Board's (“FASB”) Accounting Standards Codification (“ASC”) 606, Revenue From Contracts with Customers, which requires that five steps be followed in evaluating revenue recognition: (i) identify the contract with the customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price; and (v) recognize revenue when or as the entity satisfied a performance obligation. 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 when no further contingencies or material performance obligations are warranted, and thereby have earned the right to receive and retain reasonably assured payments. The Company has made an accounting policy election to exclude from the measurement of the transaction price all taxes assessed by governmental authorities that are collected by the Company from its customers (sales and use taxes, value added taxes, some excise taxes). 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, 2023 and 2022, the Company had recorded allowances for doubtful receivables in the amounts of 21,592 and $0, respectively. 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, 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. 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. F- 9 Table of Contents 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. 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 for the year ending December 31, 2022 since the effect of the assumed exercise of options and warrants to purchase common shares (common stock equivalents) would have an anti-dilutive effect. There 82,981,326 additional shares issuable in connection with outstanding options, warrants, stock payable and convertible debts as of December 31, 2023 The shares issuable under each instrument is as follows; 82,981,326 shares issuable under convertible notes. Recently issued accounting pronouncements In August 2020, the FASB issued ASU 2020-06, “Debt - Debt with Conversion and Other Options (subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (subtopic 815-40),” which reduces the number of accounting models in ASC 470-20 that require separate accounting for embedded conversion features. As a result, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost as long as no other features require bifurcation and recognition as derivatives. By removing those separation models, the effective interest rate of convertible debt instruments will be closer to the coupon interest rate. Further, the diluted net income per share calculation for convertible instruments will require the Company to use the if-converted method. The treasury stock method should no longer be used to calculate diluted net income per share for convertible instruments. The amendment will be effective for the Company for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. 4. INTANGIBLE AND OTHER ASSETS Patents and other intangible assets are capitalized at their historical cost and are amortized over their estimated useful lives. As of December 31, 2023 intangible assets total $ 127,409 , net of $ 167,045 of accumulated amortization. As of December 31, 2022, intangible assets total $ 136,847 , net of $ 148,273 of accumulated amortization. License and distributor rights 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, 2023. F- 10 Table of Contents 5. RELATED PARTY TRANSACTIONS Convertible Notes Related Party Convertible Notes Payable Related Party consists of the following: December 31, 2023 December 31, 2022 On June 30, 2019, the Company renegotiated accrued salaries, accrued interest, unpaid reimbursements, cash advances, and outstanding convertible notes for its two officers. Under the terms of the agreements, all outstanding notes totaling $ 2,464,480 , accrued interest of $ 966,203 , accrued salaries of $ 617,915 , accrued vacation of $ 64,423 , unpaid reimbursements of $ 11,942 and cash advances of $ 110,245 were converted to promissory notes convertible into common stock with a warrant feature. The convertible 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 $0.20 per share along with warrants to purchase one share for every two shares issued at the exercise price of $0.30 per share for three years after the conversion date . On January 31, 2023 the notes holders settled the Through the issuance of a new convertible promissory note dated January 31, 2023. The Company has determined the value associated with the beneficial conversion feature in connection with the notes to be $ 3,369,244 . The aggregate beneficial conversion feature associated with these notes has been accreted and charged to interest expenses as a financing expense in the amount of $ 1,228,066 and $ 457,389 during the year ended December 31, 2023 and 2022, respectively. $ — $ 4,220,209 On January 31, 2023, the Company renegotiated accrued salaries, vacation, and outstanding convertible notes for its two officers. Under the terms of the agreements, all outstanding notes totaling $ 4,220,209 , accrued salaries of $ 1,062,000 , accrued vacation of $ 90,193 were converted to promissory notes convertible into common stock with a warrant feature. The convertible 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 $0.10 per share along with warrants to purchase one share for every two shares issued at the exercise price of $0.15 per share for three years after the conversion date . 5,372,402 — Unamortized debt discount — ( 1,228,066 ) Total, net of unamortized discount $ 5,372,402 $ 2,992,143 F- 11 Table of Contents 6. NOTES PAYABLE Secured debt offering During the period from May 22, 2013 and December 31, 2018, the Company entered into a 9 % notes payable to nineteen investors and received proceeds of $ 552,000 . The notes were 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, 2023, $ 433,600 of the outstanding notes payable are past due and in default and have been classified as current notes payable. 7. CONVERTIBLE NOTES PAYABLE Convertible Notes Payable consists of the following: December 31, December 31, 2023 2022 $ 40,000 face value 9 % secured 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 notes have reached maturity and are now in default, under the notes default provisions the entire balance is now due upon demand. 40,000 40,000 Original issue discount — — Unamortized debt discount — — Total, net of unamortized discount 40,000 40,000 On June 30, 2019, the Company renegotiated accrued salaries and interest and outstanding convertible notes for a former employee. Under the terms of the agreements, all outstanding notes totaling $ 224,064 , accrued interest of $ 119,278 , accrued salaries of $ 7,260 and accrued vacation of $ 1,473 were converted to a promissory note convertible into common stock with a warrant feature. The convertible promissory note is unsecured, due five years from issuance, and bears an interest rate of 10 % . At the noteholder’s option until the repayment date, the note may be converted to shares of the Company’s common stock at a fixed price of $0.20 per share along with warrants to purchase one share for every two shares issued at the exercise price of $0.30 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 $ 152,642 as valued under the intrinsic value method. The aggregate beneficial conversion feature has been accreted and charged to interest expenses in the amount of $ 38,023 and $ 50,974 for the year ended December 31, 2023 and 2022, respectively. 352,075 352,075 Unamortized debt discount ( 50,973 ) ( 101,808 ) Total, net of unamortized discount 341,102 250,267 Total Convertible Notes $ 341,102 $ 290,267 Current portion: 40,000 40,000 Total long-term convertible notes $ 301,102 $ 250,267 F- 12 Table of Contents 8. COMMITMENTS AND CONTINGENCIES License Agreement On October 17, 2019, Skinvisible entered an Exclusive License Agreement with Quoin pursuant to which Skinvisible 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 Skinvisible a license fee of $ 1,000,000 and a royalty percentage on all net sales on the licensed products subject to adjustment in certain situations. The agreement also requires that Quoin make certain milestone payments to Skinvisible upon achieving regulatory approval milestones for certain drug products. The agreement is 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 on December 31, 2019 . 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, as amended 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 ( $ 1,000,000 ). 9. INCOME TAXES The Company provides for income taxes under FASB ASC 740, Accounting for Income Taxes. FASB ASC 740 requires the use of an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect currently. FASB ASC 740 requires the reduction of deferred tax assets by a valuation allowance, if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. In the Company’s opinion, it is uncertain whether they will generate sufficient taxable income in the future to fully utilize the net deferred tax asset. Accordingly, a valuation allowance equal to the deferred tax asset has been recorded. The total deferred tax asset is approximately $ 8.3 million as of December 31, 2023 which is calculated by multiplying a 21 % estimated tax rate by the cumulative net operating loss (NOL) of approximately $ 39.0 million. Due to the enactment of the Tax Reform Act of 2017, we have calculated our deferred tax assets using an estimated corporate tax rate of 21 % . US Tax codes and laws may be subject to further reform or adjustment which may have a material impact to the Company’s deferred tax assets and liabilities. The Company will recognize interest and penalties related to uncertain tax positions as a component of income tax expense. As of December 31, 2023, the Company had no accrued interest or penalties related to uncertain tax positions and no amounts have been recognized in the Company’s statement of operations. F- 13 Table of Contents The significant components of the Company's deferred tax assets and liabilities as of December 31, 2023 and 2022 are as follows: As of December 31, 2023 2022 Cumulative tax net operating losses (in millions) $ 39.0 $ 37.0 Deferred tax asset (in millions) $ 8.3 $ 7.8 Valuation allowance (in millions) ( 8.3 ) ( 7.8 Current taxes payable — — Income tax expense $ — $ — As of December 31, 2023 and 2022, the Company had gross federal net operating loss carryforwards of approximately $ 39.0 million and $ 37.0 million, respectively. The Company plans to file its U.S. federal return for the year ended December 31, 2023 upon the issuance of this filing. Upon filing of the tax return for the year ended December 31, 2023 the actual deferred tax asset and associated valuation allowance available to the Company may differ from management’s estimates. The tax years 2020-2022 remained open to examination for federal income tax purposes by the major tax jurisdictions to which the Company is subject. No tax returns are currently under examination by any tax authorities. 10. STOCKHOLDERS’ DEFICIT The Company is authorized to issue 200,000,000 shares of $ 0.001 par value common stock. The Company had 4,539,843 and 4,539,843 issued and outstanding shares of common stock as of December 31, 2023 and 2022, respectively. 11. SUBSEQUENT EVENTS In accordance with ASC Topic 855-10, the Company has analyzed its operations subsequent to December 31, 2023 to the date these financial statements were available to be issued and has determined that it does not have any material subsequent events to disclose in these financial statements. F- 14 Table of Contents Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure We (the “Company”) were informed that Gries & Associates, LLC (“Gries”) had sold its business to GreenGrowth CPAs (“GreenGrowth”). On October 17, 2023, we engaged and executed an agreement with GreenGrowth, as the Company’s new independent accountant to replace Gries. The engagement of GreenGrowth was approved by our Board of Directors.