SKINVISIBLE, INC. 10-K

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Forward-Looking Statements This annual report contains forward-looking statements. Forward-looking statements are projections of events, revenues, income, future economic performance or management’s plans and objectives for our future operations. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled “Risk Factors” and the risks set out below, any of which may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. These risks include, by way of example and not in limitation: • the uncertainty of profitability based upon our history of losses; • legislative or regulatory changes concerning skincare research and therapies; • risks related to failure to obtain adequate financing on a timely basis and on acceptable terms to continue as going concern; • risks related to our operations and uncertainties related to our business plan and business strategy; • changes in economic conditions; • uncertainty with respect to intellectual property rights, protecting those rights and claims of infringement of other’s intellectual property; • competition; and • cybersecurity concerns This list is not an exhaustive list of the factors that may affect any of our forward-looking statements. These and other factors should be considered carefully, including those contained in this Annual Report under “Risk Factors,” and readers should not place undue reliance on our forward-looking statements. Forward looking statements are made based on management’s beliefs, estimates and opinions on the date the statements are made, and we undertake no obligation to update forward-looking statements if these beliefs, estimates and opinions or other circumstances should change. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results. Our financial statements are stated in United States dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles. 18 Table of Contents Results of Operations for the Years Ended December 31, 2025 and 2024 Revenues Our revenue, which we combine from product sales, royalties on patent licenses and license fees (product development fees), was $20,000 for the year ended December 31, 2025 as compared with $20,000 for the year ended 2024. We hope to generate more revenues from our licenses with Quoin and Ovation in 2026. We also plan to enter into commercial arrangements with pharma and biotech companies to exploit our patent applications that were recently filed, and we hope to generate revenue from these efforts in the future. Gross Profit We had $0 in cost of revenues for the year ended December 31, 2025 and 2024, so our gross profit was $20,000 and $20,000, or 100% of sales for 2025 and 2024. Operating Expenses Operating expenses decreased to $516,315 for the year ended December 31, 2025, from $609,589 for the year ended December 31, 2024. Our operating expenses for all periods consisted mainly of selling, general and administrative expenses, which, consisted mainly of accrued salaries and wages and audit and accounting fees. Our selling, general and administrative expenses for the year December 31, 2025, consisted mainly of accrued salaries and wages of $347,892 and audit and accounting of $58,479. In comparison, our selling, general and administrative expenses for the year December 31, 2024, consisted mainly of accrued salaries and wages of $351,269 and audit and accounting of $56,857. We expect our operating expenses will increase in the future as the Company begins to generate more licensing revenue. Other Income / Expenses We had other expenses of $567,719 for the year ended December 31, 2025, as compared with other income of $23,935 for the year ended December 31, 2024. Our other expense for the year ended December 31, 2025 consisted mainly of interest expense netted against other income related to the sale of polymer. Our other expense for the year ended December 31, 2024 consisted mainly of interest expense, netted against a gain on settlement of debt and gain on derivative liability changes. Net Loss We recorded a net loss of $1,064,034 for the year ended December 31, 2025, as compared with a net loss of $565,654 for the year ended December 31, 2024. Liquidity and Capital Resources Going concern – The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred cumulative net losses of $41,010,176 since its inception and requires capital for its contemplated operational and marketing activities to take place. The Company’s ability to generate the necessary funds through licensing of its core products or the ability to 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. These factors, among others, raises substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements of the Company do not include any adjustments that may result from the outcome of these aforementioned uncertainties. 19 Table of Contents As of December 31, 2025, we had total current assets of $27,531 and total assets in the amount of $127,567. Our total current liabilities as of December 31, 2025, were $5,017,945. We had a working capital deficit of $4,990,414 as of December 31, 2025, compared with a working capital deficit of $3,637,658 as of December 31, 2024. Operating activities used $38,410 in cash for the year ended December 31, 2025, as compared with $69,834 used for the year ended December 31, 2024. Our negative operating cash flows for 2025 and 2024 were largely the result of our net loss for those quarters, mainly offset by changes in operating assets and liabilities and the amortization of debt discount and amortization. We used cash of $4,086 and $9,218 in investing activities for the years ended December 31, 2025 and 2024, respectively, for the purchase of intangible and fixed assets. Cash flows provided by financing activities during the year ended December 31, 2025 amounted to $34,780, as compared with cash provided of $88,500 for the year ended December 31, 2024. Our positive financing cash flow for the year ended December 31, 2025 resulted from common stock issued for cash and proceeds from notes payable. Our positive financing cash flow for the year ended December 31, 2024 resulted from proceeds from related parties notes. 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 capital. Off Balance Sheet Arrangements As of December 31, 2025, 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 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. 20 Table of Contents 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, 2025, we had not recorded a reserve for doubtful accounts. Recently Issued Accounting Pronouncements In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The amendments in this ASU require disclosures, on an annual and interim basis, of significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”), as well as the aggregate amount of other segment items included in the reported measure of segment profit or loss. This ASU requires that a public entity disclose the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. This ASU is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, with early adoption permitted. The amendments in this ASU should be applied retrospectively to all prior periods presented in the financial statements. The Company adopted the ASU and determined that its adoption did not have a material impact on the Company’s consolidated financial statements and related disclosures. As defined in the ASU, operating segments are components of an enterprise about which discrete financial information is regularly provided to the CODM in making decisions on how to allocate resources and assess performance for the organization. The Company operates and manages its business as one reportable and operating segment. The Company’s CODM is the Chief Executive Officer. The Company’s CODM reviews consolidated operating results to make decisions about allocating resources and assessing performance for the entire Company. In July 2025, the FASB issued Accounting Standards Update 2025-05, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets ("ASU 2025-05"). ASU 2025-05 provides a practical expedient that all entities can use when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under ASC 606, Revenue from Contracts with Customers. Under this practical expedient, an entity is allowed to assume that the current conditions it has applied in determining credit loss allowances for current accounts receivable and current contract assets remain unchanged for the remaining life of those assets. ASU 2025-05 is effective for fiscal years beginning after December 15, 2025, and interim reporting periods in those years. Entities that elect the practical expedient and, if applicable, make the accounting policy election are required to apply the amendments prospectively. The Company is currently evaluating the impact of ASU 2025-05 on its financial statements and disclosures. In November 2025, the FASB issued ASU No. 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements. The amendments clarify and reorganize existing interim reporting guidance, including the scope of Topic 270 and interim disclosure requirements, and introduce a disclosure principle requiring entities to disclose material events or changes occurring since the most recent annual reporting period. ASU 2025-11 is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2025-11 on its financial statements and related disclosures. In December 2025, the FASB issued ASU 2025-12, Accounting Standards Codification Improvements, which clarifies guidance and makes minor improvements across various topics, including earnings per share, receivables, revenue, income taxes, and equity. This ASU is effective for annual periods beginning after December 15, 2026, and interim periods within those annual periods, with early adoption permitted. The Company is currently evaluating the impact of the new guidance on its financial statements and disclosures. The Company does not believe that other standards, which have been issued but are not yet effective, will have a significant impact on its financial statements. 21 Table of Contents Item 7A. Quantitative and Qualitative Disclosures About Market Risk A smaller reporting company is not required to provide the information required by this Item.