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. These forward-looking statements generally are identified by the words "believes," "project," "expects," "anticipates," "estimates," "intends," "strategy," "plan," "may," "will," "would," "will be," "will continue," "will likely result," and similar expressions. We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of complying with those safe-harbor provisions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse affect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Further information concerning our business, including additional factors that could materially affect our financial results, is included herein and in our other filings with the SEC.





Overview



COVID-19


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.

In March 2020, we enacted precautionary measures to protect the health and safety of our employees and partners. These measures include closing our office, having employees work from home, and eliminating all travel. While having employees work from home may have a negative impact on efficiency and may result in negligible increases in costs, it does have an impact on our ability to execute on our agreements to deliver our core products.

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.





Recent Developments


License with Quoin Pharmaceuticals, Inc.

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.





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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. 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 now on September 30, 2020. As of the date of this filing no payments had been received.

License with Ovation Science Inc.

On February 3, 2020, we entered into a License Agreement with Ovation Science Inc. pursuant to which Skinvisible granted to Ovation Science Inc. a license for the manufacture and distribution rights to its hand sanitizer product, DermSafe. In exchange for the license, Ovation Science Inc. agreed to pay to Skinvisible a royalty percentage on all net sales on the licensed products subject to adjustment in certain situations plus a license fee payable in year 3 of the agreement if it chooses to continue the license. On June 10, 2020, the agreement was further amended to provide additonal assignment rights for its hand sanitizer products in exchange for $100,000 which was recognized as revenue during the nine months ended September 30, 2020.

Results of Operations for the Three Months Ended September 30, 2020 and 2019





Revenues


Our revenue from product sales, royalties on patent licenses and license fees (product development fees) for the three months ended September 30, 2020 was $6,186, a decrease from $11,295 for the same period ended September 30, 2019.

The decrease in revenue for three months ended September 30, 2020 was mainly due to decreased product sales. We hope to achieve increased revenues for the balance of 2020, as a result of our License Agreement with Quoin Pharmaceuticals, Inc.





Cost of Revenues


Our cost of revenues for the three months ended September 30, 2020 was $0, compared with the prior year period when cost of revenues was $250.

Our cost of revenues decreased for the three months ended September 30, 2020 over the prior year period because our revenues in 2020 were attributable to our license with Ovation Science.





Gross Profit


Gross profit for the three months ended September 30, 2020 was $6,816 , as compared with gross profit of $11,045 for the three months ended September 30, 2019.





Operating Expenses



Operating expenses decreased to $125,438 for the three months ended September 30, 2020 from $147,970 for the same period ended September 30, 2019.

Our operating expenses for the three months ended September 30, 2020 consisted mainly of accrued salaries and wages of $87,941, audit and accounting of $9,609, and amortization of $4,292. In comparison, our operating expenses for the three months ended September 30, 2019 consisted mainly of accrued salaries and wages of $87,942, audit and accounting of $9,610, rent of $15,673 and depreciation and amortization of $10,185.





Other Expenses


We had other expenses of $291,137 for the three months ended September 30, 2020, compared with other expenses of $211,817 for the three months ended September 30, 2019.

Our other expenses for the three months ended September 30, 2020 consisting entirely of $291,137 in interest expense, which includes interest expense of $125,861 and debt discount amortization of $165,276, compared with the three months ended September 30, 2019 which consisted primarily of $305,009 in interest expense which includes interest expense of $138,059 and debt discount amortization of $166,950, offset by other income from related party of $93,192.





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Net Loss


We recorded a net loss of $409,759 for the three months ended September 30, 2020, as compared with a net loss of $348,742 for the three months ended September 30, 2019.

Results of Operations for the Nine Months Ended September 30, 2020 and 2019





Revenues


Our revenue from product sales, royalties on patent licenses and license fees (product development fees) for the nine months ended September 30, 2020 was $142,838, an increase from $32,379 for the same period ended September 30, 2019.

The increase in revenue for nine months ended September 30, 2020 was mainly due to our license agreement with Ovation Science. We hope to generate more revenues from this license and the license with Quoin for the rest of the year.





Cost of Revenues


Our cost of revenues for the nine months ended September 30, 2020 was $0, compared with the prior year period when cost of revenues was $7,199.

Our cost of revenues decreased for the ninemonths ended September 30, 2020 over the prior year period because our revenues in 2020 were attributable to our license with Ovation Science.





Gross Profit


Gross profit for the nine months ended September 30, 2020 was $142,838 , as compared with gross profit of $25,180 for the nine months ended September 30, 2019.





Operating Expenses



Operating expenses decreased to $404,214 for the nine months ended September 30, 2020 from $447,493 for the same period ended September 30, 2019.

Our operating expenses for the nine months ended September 30, 2020 consisted mainly of accrued salaries and wages of $263,826, audit and accounting of $55,089, and amortization of $23,973. In comparison, our operating expenses for the nine months ended September 30, 2019 consisted mainly of salaries and wages of $263,827, audit and accounting of $41,852, rent of $45,002, insurance of $11,471 and amortization and depreciation of $29,815





Other Expenses


We had other expenses of $891,260 for the nine months ended September 30, 2020, compared with other expenses of $852,539 for the nine months ended September 30, 2019.

Our other expenses for the nine months ended September 30, 2020 consisting entirely of interest expense which includes, interest expense of $395,710 and debt discount amortization of $495,550, compared with the nine months ended September 30, 2019 which consisted primarily of $710,233 in interest expense which includes, interest expense of $315,973 and debt discount amortization of $394,260 , loss on extinguishment of debts of $247,998, offset by income related party of $105,692.





Net Loss


We recorded a net loss of $1,152,636 for the nine months ended September 30, 2020, as compared with a net loss of $1,274,852 for the nine months ended September 30, 2019.





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Liquidity and Capital Resources

As of September 30, 2020, we had total current assets of $25,917 and total assets in the amount of $184,096. Our total current liabilities as of September 30, 2020 were $2,576,485. We had a working capital deficit of $2,550,568 as of September 30, 2020, compared with a working capital deficit of $2,753,277 as of September 30, 2019.

Operating activities provided $15,588 in cash for the nine months ended September 30, 2020, as compared with $41,976 used for the nine months ended September 30, 2019. Our positive operating cash flow for the nine months ended September 30, 2020 is largely the result of an increase in accrued interest, accounts payable and accrued liabilities, offset mainly by our net loss for the period, compared with the nine month ended September 30, 2019, which recorded a negative operating cash flow largely as the result of our net loss for the period.

We used cash of $16,767 and $24,320 in investing activities for the nine months ended September 30, 2020 and 2019, respectively, for the purchase of intangible assets.

Cash flows provided by financing activities during the nine months ended September 30, 2020 amounted to $11,700, as compared with $74,644 for the nine months ended September 30, 2019. Our cash flows for the ninemonths ended September 30, 2020 and 2019 consisted of proceeds from 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 $34,405,432 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, 2020, 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.





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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. 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 September 30, 2020, the Company had not recorded a reserve for doubtful accounts. The Company has $175,000 in convertible notes payable which are secured by the accounts receivable of a license agreement the Company has with Women's Choice Pharmaceuticals, LLC on its proprietary prescription product, ProCort®.

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.

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