UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549





FORM
10-KSB


[X]
              ANNUAL
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934For the fiscal year
      ended December
      31, 2007[X]
              TRANSITION
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
      ACTFor the transition
      period from _________ to ________Commission file
      number 000-25911
  Skinvisible,
      Inc.(Name
      of small business issuer in its charter)Nevada
              88-0344219(State
      or other jurisdiction of incorporation or organization)
              (I.R.S.
      Employer Identification No.)6320 South Sandhill
      Road Suite 10, Las Vegas, Nevada
              89120(Address
      of principal executive offices)
              (Zip
      Code)Issuer’s telephone
      number:  702-433-7154Securities
      registered under Section 12(b) of the Exchange Act:Title
      of each class
              Name
      of each exchange on which registeredNone
              Not
      ApplicableSecurities
      registered under Section 12(g) of the Exchange Act:Common Stock, par
      value $0.001(Title
      of class)


Check
whether the Issuer (1) filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act during the past  12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days.    Yes [X]       No
[   ]





Check if
disclosure of delinquent filers in response to Item 405 of Regulation S-B is not
contained in this form, and no disclosure will be contained, to the best of
registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB [   ]





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).   Yes
[   ]   No [X]





State
issuer’s revenue for its most recent fiscal
year.  $777,685





State the
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the average bid and asked price of such
common equity, as of a specified date within the past 60 days.


$6,361,259.03
as of April 11, 2008





State the
number of shares outstanding of each of the issuer’s classes of common equity,
as of the latest practicable date.   75,487,238 Common Shares as
of March 31, 2008.





Transitional
Small Business Disclosure Format (Check One):  Yes
[   ]   No [X]




Table of Contents





TABLE OF
CONTENTS





PagePART
      IItem 1.
            Description of Business
            3Item 2.
            Description of Property
            8Item 3.
            Legal Proceedings
            9Item 4.
            Submission of Matters to a Vote of Security
      Holders
            9PART
      IIItem 5.
            Market for Common Equity and Related Stockholder
      Matters
            9Item 6.
            Management’s Discussion and Analysis
            12Item 7.
            Financial Statements
            17Item 8.
            Changes In and Disagreements With Accountants on Accounting and
      Financial Disclosure
            18Item 8A.
            Controls and Procedures
            18Item 8B.
            Other Information
            19PART
      IIIItem 9.
            Directors, Executive Officers, Promoters and Control Persons;
      Compliance With Section 16(a) of the Exchange Act
            19Item 10.
            Executive Compensation
            23Item 11.
            Security Ownership of Certain Beneficial Owners and Management
      and Related Stockholder Matters
            25Item 12.
            Certain Relationships and Related
    Transactions
            26Item 13.
            Exhibits
            26Item 14.
            Principal Accountant Fees and Services
            27





2
 Table of Contents





PART I




Item
1.   Description of BusinessOverview





We
develop innovative polymer delivery vehicles and related compositions that
hold active ingredients on the skin for up to four hours when applied
topically. We designed a process for combining water soluble and insoluble
polymers that is specifically formulated to carry water insoluble active
ingredients in water-based products without the use of alcohol, silicones,
waxes, or other organic solvents. This enables active agents the ability to
perform their intended functions for an extended period of time. Our polymer
delivery vehicles trademarked Invisicare® allow normal skin respiration and
perspiration. The polymer compositions we develop wear off as part of the
natural exfoliation process of the skin's outer layer cells.





Products
that successfully incorporate Invisicare to date include antimicrobial hand
sanitizer lotions, suncare products, skincare moisturizers, sunless tanning
products as well as various dermatology products for various skin
disorders.  On an ongoing basis, we are seeking to develop polymer
formulations that can successfully be incorporated into other
products.


Our
primary objective is to license Invisicare to established brand
manufacturers and marketers of prescription and over-the-counter
products in the dermatological, medical, cosmetic, and skincare
markets. With the exception of sales to one vendor, our management’s policy is
to only sell Invisicare to vendors that have executed a license agreement with
us. We conduct our research and development in-house. We engage an outside party
that currently handles all of our manufacturing and distribution
needs.





Developments
in our Current Products and Agreements





Aside
from disclosures provided below, we have no developments to report in our
current product line or distribution agreements in place for those
products.





Patent
Developments





On
January 4, 2000, we filed a patent application for our antimicrobial dermal
barrier composition. We received patent approval (US Patent No. 6,582,683) for
our antimicrobial dermal barrier formulation in February 2003 and received the
patent certificate in June 2003.





We filed
a patent application on August 20, 2001 titled “Topical Compositions, Topical
Composition Precursors, and Methods for Manufacturing and Using” for our Invisicare®topical compositions and our methodology for manufacturing and
utilization of numerous delivery systems and related applications. The United
States Patent and Trademark Office split this application into three different
applications as follows: (a) Methods of Manufacturing (b) Topical Compositions
and (c) Methods of Use. We received patent approval for the application on
Methods of Manufacturing (US Patent No. 6,756,059). However, as the Patent
approval of June 2003 already was covered on one of the polymer compositions
noted in the Methods of Manufacturing the Patent Office further split this
application into 2 distinct patents. Topical Compositions and Methods of Use are
pending.




3
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We have
also filed under the Patent Cooperation Treaty (PCT) the Patent titled “Topical
Compositions, Topical Composition Precursors, and Methods for Manufacturing and
Using” for certain foreign countries. As of December 31, 2005, this patent
application is still pending.





In
addition to the United States patents currently pending on the core patent
technology, we have filed 6 more patents which cover product classes including
sunless tanning spray, sunless tanning lotion, sunscreens, chlorhexidine
antimicrobial hand lotion, anti-fungal and acne formulations..





During
the current reporting period, we have been granted a comprehensive patent in
India. The patent grants protection for our Invisicare product in the areas of
“Topical Composition,” “Topical Composition Precursor,” and “Methods for
Manufacturing and Using.” These key patent components now allow for the
protected manufacturing, marketing and distribution of our Invisicare technology
in India. We are also seeking patent protection for our dermatology products
formulated with Invisicare for India. Management believes that India, with a
population of over 1.1 billion people, will be a key market for our
company.





Trademarks





In
January 2002, we received trademark approval in the United States for the name
"Invisicare" to
identify our family of polymer delivery systems. We have filed this trade name
with the Cosmetic, Fragrance and Toiletries Association ("CFTA") as an
ingredient for use in skincare and cosmetic formulations.





We have
also applied and received trademark approval for the corporate logo “Skinvisible” and for our
sunless and sun tanning products under the name “Solerra” both in the US and
Canada.





We are
seeking to extend the protection of our trademarks in additional countries where
we currently conduct business and those additional countries where we intend to
conduct business.




Antibacterial/Antimicrobial
Hand Sanitizer Lotion





Last
quarter, we reported attempts to negotiate with JD Nelson to acquire rights from
us to distribute, market, sell, and promote our antimicrobial hand sanitizer
lotion that utilizes the active ingredient Triclosan 1% in every country in the
world except Canada, the United States, and Mexico. (JD Nelson currently has
rights to market and distribute our antimicrobial hand sanitizer lotion
composition in the United States of America, Canada and Mexico.) We offered to
JD Nelson these acquisition rights in exchange for $500,000 and a 10% royalty
payment. We extended the termination date of our offer to JD Nelson to acquire
these rights to August 31, 2007. As of the date of this report, no agreement
with JD Nelson has been reached.  As such, we have abandoned
negotiations with JD Nelson and we are currently looking to establish
relationships with potential distributors in countries other than North
America.  We can provide no assurance that we will be able to execute
any agreement with a potential distributor for these rights.





4
 Table of Contents




Sunless Tanning Spray
Product





On June
9, 2004, our wholly-owned subsidiary, Skinvisible Pharmaceuticals, Inc., entered
into a Trademark License Agreement and Distribution Agreement ("Distribution
Agreement") with Cross Global, Inc. ("Cross Global"), a Delaware corporation, to
grant Cross Global the exclusive right to distribute, market, sell, and promote
our proprietary sunless tanning spray products in Canada, the United States,
Mexico, Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland,
Luxembourg, Netherlands, Portugal, Spain, Sweden, United Kingdom, and Israel.
Cross Global is also utilizing our proprietary polymer formula to manufacture
nine additional sun care related products.





Pursuant
to the terms of the Distribution Agreement, Cross Global paid us the license fee
of $1,000,000. Under the terms of this agreement, we are to receive a minimum
royalty fee quarterly of not less than 5% of gross revenue of all sales of our
proprietary sunless tanning spray products or $25,000, whichever is greater. We
extended the minimum royalty payments terms on 3 different occasions in an
effort to accommodate and assist Cross Global in the early stage of their
operations. Despite our efforts, Cross Global remains delinquent for the minimum
payments due at the present time in the amount of $120,000. We have the ability
to terminate the Distribution Agreement as a result of this material breach upon
providing notice to Cross Global. Cross Global is prohibited under this
agreement from manufacturing, marketing, distributing, or selling any competing
product while the Distribution Agreement is in full force and
effect.





We have
negotiated a new agreement with Sunless Beauty Inc. (“Sunless Beauty”), a
company with the same shareholder base as Cross Global, which will replace the
existing agreement with Cross Global regarding this matter. The new agreement
releases and forever discharges Cross Global from the $120,000 delinquency and
requirement to pay a minimum royalty payment monthly. The new agreement offers
Sunless Beauty the exclusive right to utilize our proprietary polymer formula in
connection with the distribution, marketing, and sale of sunless tanning
products in the applicable territory, but only for use in their proprietary
product called Solerra Mitt, which is a sunless tanning mitt. They are required
to purchase the Invisicare exclusively form Skinvisible and pay a royalty of 5%
on Mitt sales within the territory.  Further information on Sunless
Beauty and the sunless tanning products they sell can be obtained at www.solerra.com.





Acne
Formulation





On
January 30, 2008 , our wholly-owned subsidiary, Skinvisible Pharmaceuticals,
Inc., entered into a Trademark License Agreement and Distribution Agreement
("Distribution Agreement") with Panalab Internacional S.A. ("Panalab"). The
Agreement is for the right to develop and commercialize Skinvisible's
prescription anti-acne products formulated with adapalene and Invisicare® in
Argentina, Brazil and Chile.





Under the
terms of the agreement Panalab, a multi-national dermatology company
headquartered in Panama with subsidiaries and partners in most Latin American
countries, will be responsible for filing and obtaining marketing approval in
the countries they have licensed. While all terms of the agreement were not
disclosed, Skinvisible will receive a research and development fee




5
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plus a
licensing fee allocated as an upfront fee plus milestone payments. In addition
the Company will receive royalties based on revenues generated by the sale of
the products. According to the agreement, Panalab will have the right to
manufacture, distribute, market, sell and promote the adapalene formulations in
the specified territory.





Sunscreen and Skin Care
Products





We
developed and successfully tested the application of Invisicare in sunscreen
products with SPF 15 and SPF 30, sunless tanning lotions, moisturizing creams,
aloe after-sun products, and other skin care products. We currently offer
Invisicare for incorporation into these products on a private label basis and
have multiple agreements in place.





During
the reporting period, we developed two additional sunscreen
products.   One of the products utilizes the active ingredient
Parsol 1789.  The other product utilizes the active ingredient
Tinasorb which has been approved for distribution in Europe, Japan, Australia
and recently Canada.  Tinasorb has not yet have approval in the US.
Tinasorb is a broad spectrum UVA/UVB ingredient. The manufacturer of Tinasorb is
Ciba Chemicals. It is our intention to license out the distribution of both of
these formulas where approved.





Status
of Research and Development for New Applications





We
believe that the enhancement and extension of our existing products and the
development of new product categories have contributed significantly to our
growth to date and are necessary for our continued growth. Our management
evaluates new ideas and seeks to develop new products and improvements to
existing products to satisfy industry requirements and changing consumer
preferences. We seek to identify trends in consumer preferences and to generate
new product ideas. Specific to the objective of generating new products, we are
continuing our research and development toward developing additional
applications with Invisicare. We are currently at various development stages for
the following potential applications using Invisicare:




6
 Table of Contents






Skinvisible’s Formulas with
      Invisicare:
              graphic 1





ACTIVE
      INGREDIENT
            TYPE
            Availability
            PatentAcneAdapalene
      Cream (0.1% & 0.3%)
            Rx
            yes
            pendingAdapalene
      Gel (0.1% & 0.3%)
            Rx
            yes
            pendingClindamycin
      Hydrochloride Cream (1%)
            Rx
            yes
            pendingRetinoic
      Acid Cream (0.1%)
            Rx
            yes
            pendingAnalgesicsTopical
      Spray with Menthol (6% & 8%)
            OTC
            yes
            technologyTopical
      Roll-On with Menthol (6% & 8%)
            OTC
            yes
            technologyTopical
      Cream with Salicylate (10%)
            OTC
            yes
            technologyAnti-AgingRetinol
      Cream & Lotion (0.15% )
            Cosmetic
            yes
            technologyRetinol
      Cream (0.3%)
            Cosmetic
            yes
            technologyAnti-FungalTerbinafine
      Cream, Gel  (1%)
            OTC
            yes
            pendingNaftifine
      Cream (1%)
            Rx
            yes
            pendingClotrimazole
      Cream (1%)
            OTC
            yes
            pendingAnti-InflammatoryHydrocortisone
      Cream (1%)
            OTC
            yes
            technologyTriamcinolone
      (1%)
            Rx
            yes
            technologyTriamcinolone
      Acetonide (1%)
            Rx
            yes
            technologyClobetasole
      Proprionate (0.3%)
            Rx
            in-progress
            technologyBetamethasone
      (1%)
            Rx
            yes
            technologyAntimicrobial
      Hand Sanitizing LotionTriclosan
      Lotion (1%) with Nonoxynol-9
            OTC
            yes*
            grantedTriclosan
      Lotion (1%) with Tomadol 901
            OTC
            yes*
            grantedBenzalkonium
      Chloride Lotion (0.13%)
            OTC
            yes*
            grantedChlorhexidine
      Gluconate Lotion (4%)
            OTC
      / NDA
            in-progress
            pendingMoisturizersNon-Steroidal
      Atopic Dermatitis Cream
            Rx
      / Cosmetic
            yes
            technologySkin
      Protectant Lotion with Allantoin (0.5%)
            OTC
            yes
            technologySuper
      Moisturizer with Ectoin
            Cosmetic
            yes
            technologyUVA
      / UVB  SunscreenParsol
      1789 - SPF 30 Lotion
            OTC
            in-progress
            pendingTinosorb
      S – SPF 30  Lotion
            OTC
            in-progress
            pendingOther
      Skin / HairSkin
      Whitening, Hyperpigmentation
            Cosmetic
            in-progress
            technologyScar
      Lotion with Onion Bulb
            Cosmetic
            yes
            technologyGlycolic
      Acid Cream (5% & 10%)
            Cosmetic
            yes
            technologyFragrance
      – Long Lasting Gel
            Cosmetic
            yes
            technology


*excludes North America




7
 Table of Contents




Competition





Our
primary business objective is to license our technology and formulated products
to manufacturers of Rx and OTC skincare products.  Market research
undertaken to date has indicated that, at present, there is reasonably limited
competition for our polymer-based delivery systems and related technologies such
as delivery vehicles and technologies that offer the same performance
capabilities for topically administered products.





Research and Development
Expenditures





We
incurred research and development expenditures in the fiscal year ended December
31, 2007 of $20,291 and $172,674 for the fiscal year ended December 31,
2006.





Existing
and Probable Governmental Regulation





We are
not subject to any significant or material federal or state government
regulation in connection with the research and development and licensing of our
innovative topical polymer-based delivery systems and technologies.





With
respect to our products under development, our licensing agreements require the
licensee to seek all required approvals for marketing, distribution, and sale in
the jurisdictions for which it is desired to make the product available should
we succeed in developing a successful product.





We are
not subject to any significant or material environmental regulation in the
normal operation of our business.





Compliance
with Environmental Laws





We did
not incur any costs in connection with the compliance with any federal, state,
or local environmental laws.





Employees





We
currently have 5 total employees, including our sole executive officer, and all
are full-time employees.





Item 2.   Description of Property





Currently,
we do not own any real estate. We are leasing our executive offices and research
facility. We are located at 6320 South Sandhill Road, Suite 10, Las Vegas,
Nevada 89120.





Skinvisible
Pharmaceuticals, Inc., our wholly owed subsidiary, owns the manufacturing and
laboratory equipment at this location.





8
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Item 3.   Legal Proceedings





We are
not a party to any pending legal proceeding. We are not aware of any pending
legal proceeding to which any of our officers, directors, or any beneficial
holders of 5% or more of our voting securities are adverse to us or have a
material interest adverse to us.





Item 4.   Submission of Matters to a Vote of Security
Holders





No
matters have been submitted to our security holders for a vote, through the
solicitation of proxies or otherwise, during the fourth quarter of the fiscal
year ended December 31, 2007.





PART II





Item 5.    Market for Common Equity and Related
Stockholder Matters





Market
Information





Our
common stock is currently quoted on the OTC Bulletin Board (“OTCBB”), which is
sponsored by the NASD.  The OTCBB is a network of security dealers who
buy and sell stock.  The dealers are connected by a computer network
that provides information on current "bids" and "asks", as well as volume
information.  Our shares are quoted on the OTCBB under the symbol
“SKVI.”





The
following table sets forth the range of high and low bid quotations for our
common stock for each of the periods indicated as reported by the
OTCBB.  These quotations reflect inter-dealer prices, without retail
mark-up, mark-down or commission and may not necessarily represent actual
transactions.





Fiscal
      Year Ending December 31, 2007Quarter
      Ended
            
            High
      $
            
            Low
      $March
      31, 2007
            
            0.25
            
            0.23June
      30, 2007
            
            0.35
            
            0.20September
      30, 2007
            
            0.32
            
            0.18December
      31, 2007
            
            0.30
            
            0.13Fiscal
      Year Ended December 31, 2006Quarter
      Ended
            
            High
      $
            
            Low
      $March
      31, 2006
            
            0.72
            
            0.18June
      30, 2006
            
            0.62
            
            0.362September
      30, 2006
            
            0.37
            
            0.30December
      31, 2006
            
            0.75
            
            0.24








Penny
Stock





The SEC
has adopted rules that regulate broker-dealer practices in connection with
transactions




9
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in penny
stocks. Penny stocks are generally equity securities with a market price of less
than $5.00, other than securities registered on certain national securities
exchanges or quoted on the NASDAQ system, provided that current price and volume
information with respect to transactions in such securities is provided by the
exchange or system. The penny stock rules require a broker-dealer, prior to a
transaction in a penny stock, to deliver a standardized risk disclosure document
prepared by the SEC, that: (a) contains a description of the nature and level of
risk in the market for penny stocks in both public offerings and secondary
trading; (b) contains a description of the broker's or dealer's duties to the
customer and of the rights and remedies available to the customer with respect
to a violation of such duties or other requirements of the securities laws; (c)
contains a brief, clear, narrative description of a dealer market, including bid
and ask prices for penny stocks and the significance of the spread between the
bid and ask price; (d) contains a toll-free telephone number for inquiries on
disciplinary actions; (e) defines significant terms in the disclosure document
or in the conduct of trading in penny stocks; and (f) contains such other
information and is in such form, including language, type size and format, as
the SEC shall require by rule or regulation.





The
broker-dealer also must provide, prior to effecting any transaction in a penny
stock, the customer with (a) bid and offer quotations for the penny stock; (b)
the compensation of the broker-dealer and its salesperson in the transaction;
(c) the number of shares to which such bid and ask prices apply, or other
comparable information relating to the depth and liquidity of the market for
such stock; and (d) a monthly account statement showing the market value of each
penny stock held in the customer's account.





In
addition, the penny stock rules require that prior to a transaction in a penny
stock not otherwise exempt from those rules, the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written acknowledgment of the receipt
of a risk disclosure statement, a written agreement as to transactions involving
penny stocks, and a signed and dated copy of a written suitability
statement.





These
disclosure requirements may have the effect of reducing the trading activity for
our common stock. Therefore, stockholders may have difficulty selling our
securities.





Holders
of Our Common Stock





As of
March 31, 2008, we had approximately one hundred eighty-four (184) holders of
record of our common stock and several hundred other stockholders who hold
shares in street name.





Dividends





There are
no restrictions in our articles of incorporation or bylaws that restrict us from
declaring dividends. The Nevada Revised Statutes, however, do prohibit us from
declaring dividends where, after giving effect to the distribution of the
dividend:





1.
            We
      would not be able to pay our debts as they become due in the usual course
      of business; or




10
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2.
            Our
      total assets would be less than the sum of our total liabilities, plus the
      amount that would be needed to satisfy the rights of shareholders who have
      preferential rights superior to those receiving the
      distribution.





Recent
Sales of Unregistered Securities





The
information set forth below relates to our issuances of securities without
registration under the Securities Act of 1933 during the reporting period which
were not previously included in a Quarterly Report on Form 10-QSB or Current
Report on Form 8-K.





On
October 19, 2007, we entered into a loan conversion agreement at a rate of $0.15
per share with five shareholders, converting total principal debt balances of
$129,450 into 863,000 restricted shares of our common stock. These shares were
issued pursuant to Section 4(2) of the Securities Act. The shareholders
represented their intention to acquire the securities for investment only and
not with a view towards distribution. The shareholders were given adequate
information about us to make an informed investment decision. We did not engage
in any general solicitation or advertising. We directed our transfer agent to
issue the stock certificates with the appropriate restrictive legend affixed to
the restricted stock.





On
November 27, 2007, entered into debt conversion agreements at a rate of $0.10
per share with four shareholders, converting total principal debt balances of
$229,000 into 2,290,000 restricted shares of our common stock. These shares were
issued pursuant to Section 4(2) of the Securities Act. The shareholders
represented their intention to acquire the securities for investment only and
not with a view towards distribution. The shareholders were given adequate
information about us to make an informed investment decision. We did not engage
in any general solicitation or advertising. We directed our transfer agent to
issue the stock certificates with the appropriate restrictive legend affixed to
the restricted stock.





On
November 30, 2007, one shareholder exercised warrants to purchase 210,000 shares
at a price of $0.05 per share. These shares were issued pursuant to the terms of
the Company’s applicable Private Offering Memorandum dated September 30,
2002.





On
October 11, 2007, we granted options to purchase 200,000 shares of our common
stock, exercisable at $0.20 per share for a period of 5 years from the date of
issuance, to shareholder Dr. George Korkos in exchange for consulting services
to be rendered. These options were issued pursuant to Section 4(2) of the
Securities Act. We did not engage in any general solicitation or
advertising.





Securities
Authorized for Issuance Under Equity Compensation Plans





The
following table provides information about our compensation plans under which
shares of common stock may be issued upon the exercise of options as of December
31, 2007.





In July
2006, we adopted the 2006 Skinvisible, Inc. Stock Option Plan, which provides
for the grant of incentive stock options, non-qualified stock options, stock
appreciation rights, restricted




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stock,
performance shares and performance units, and stock awards our officers,
directors or employees of, as well as advisers and consultants. This plan was
confirmed by our stockholders on August 7, 2006 at the annual shareholders
meeting.





Under the
2006 Skinvisible, Inc. Stock Option Plan, we reserved 10,000,000 shares of
common stock for the granting of options and rights.





Equity
Compensation Plans as of December 31, 2007


A
            B
            CPlan
      Category
            Number
      of securities to be issued upon exercise of outstanding options, warrants
      and rights
            Weighted-average
      exercise price of outstanding options, warrants and right
            Number
      of securities remaining available for future issuance under equity
      compensation plans (excluding securities reflected in column
      (A))Equity
      compensation plans
              approved
      by security
              holders
            4,345,000
            0.24
            5,655,000Equity
      compensation plans
              not
      approved by security
              holders
            4,210,000
            0.0785
            -Total
            8,555,000
            $0.16
            5,655,000










Item 6.  Management’s Discussion and
Analysis


Forward-Looking
Statements




Certain
statements, other than purely historical information, including estimates,
projections, statements relating to our business plans, objectives, and expected
operating results, and the assumptions upon which those statements are based,
are “forward-looking statements” within the meaning of the Private Securities
Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933
and Section 21E of the Securities Exchange Act of
1934.   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




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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.





Results
of Operations for the Years Ended December 31, 2007 and 2006





Revenues





Our total
revenue reported for the year ended December 31, 2007 was $777,685, a 12.47%
increase from $691,452for the year ended December 31, 2006.  The
increase in revenues for the year ended December 31, 2007 from the prior year is
attributable to increased sales of polymers to our licensees. During the year
ending 2006 we sold finished product formulations with the polymers incorporated
into the finished formulas. We no longer supply finished product formulas as our
licensees now manufacture themselves.





Cost
of Revenues





Our cost
of revenues for the year ended December 31, 2007 increased to $140,875 from the
prior year when cost of revenues was $77,465. The increase in our cost of
revenues for the year ended December 31, 2007 from the prior year is
attributable to a shift in our business during the reporting period where we
primarily sold the polymers and not completed formulated products that
incorporate the polymers.





Gross
Profit





Gross
profit for the year ended December 31, 2007 was $636,810, or approximately 82%
of sales. Gross profit for the year ended December 31, 2006 was $613,987, or
approximately 89% of sales. The increase in total gross profit for the
for  year ended December 31, 2007 from the prior year is attributable
to higher sales of polymers and increased revenue generated from
royalties.




Operating
Expenses





Operating
expenses decreased to $2,001,955 for the year ended December 31, 2007 from
$2,710,840 for the year ended December 31, 2006. Our operating expenses for the
year ended December 31, 2007 consisted of depreciation and amortization expenses
of $18,176 and selling, stock based compensation of $475,006 and general and
administrative expenses of $1,508,773. Our operating expenses for the year ended
December 31, 2006 consisted of depreciation and amortization expenses of
$21,187, stock based compensation of $859,160 and selling, general




13
 Table of Contents




and
administrative expenses of $1,830,493.  The decrease in operating
expenses for the year ended December 31, 2007 from the prior year is primarily
attributable to not manufacturing finished product formulas and only selling
polymers.





Net
Loss





Net loss
for the year ended December 31, 2007 was $1,606,922, compared to net loss of
$2,097,604 for the year ended December 31, 2006. The decrease in our net loss
was primarily attributable to not manufacturing finished product formulas and
only selling polymers.





Liquidity
and Capital Resources





As of
December 31, 2007, we had total current assets of $425,528 and total assets in
the amount of $712,841. Our total current liabilities as of December 31, 2007
were $1,069,805.  We had a working capital deficit of $644,277 as of
December 31, 2007.





Operating
activities used $743,872 in cash for the year ended December 31, 2007. Our net
loss of $1,606,922 was the primary component of our negative operating cash
flow. Cash flows used by investing activities during the year ended December 31,
2007 was $4,662.  Cash flows provided by financing activities during
the year ended December 31, 2007 consisted of $153,132 as proceeds from related
party loans, $410,500 as proceeds from the issuance of convertible notes
payable, and $198,000 as proceeds from the issuance of common
stock.





Based
upon our current financial condition, we do not have insufficient 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.





Off
Balance Sheet Arrangements





As of
December 31, 2007, there were no off balance sheet arrangements.





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
approximately $15,296,848 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 the 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




14
 Table of Contents




factors
raise substantial doubt about our ability to continue as a going concern. Our
consolidated financial statements do not include any adjustments that may result
from the outcome of these aforementioned uncertainties.





Critical
Accounting Policies





In
December 2001, the SEC requested that all registrants list their three to five
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. We believe that the following accounting policies fit this
definition.





Revenue
Recognition





Revenues
are recognized during the period in which the revenues are earned. Costs and
expenses are recognized during the period in which they are
incurred.





Fixed
Assets





Fixed
assets are stated at cost less accumulated depreciation. Depreciation is
provided principally on the straight-line method over the estimated useful lives
of the assets, which are generally 3 to 10 years. The cost of repairs and
maintenance is charged to expense as incurred. Expenditures for property
betterments and renewals are capitalized. Upon sale or other disposition of a
depreciable asset, cost and accumulated depreciation are removed from the
accounts and any gain or loss is reflected in other income
(expense).





We
periodically evaluate whether events and circumstances have occurred that may
warrant revision of the estimated useful life of fixed assets or whether the
remaining balance of fixed assets should be evaluated for possible impairment.
We use an estimate of the related undiscounted cash flows over the remaining
life of the fixed assets in measuring their recoverability.





Goodwill
and Intangible Assets





Beginning
January 1, 2002, we adopted Statement of Financial Accounting Standards (“SFAS”)
No. 142, “Goodwill and Other Intangible Assets”. According to this statement,
goodwill and 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. Fair value for goodwill is based on discounted cash
flows, market multiples and/or appraised values as appropriate. Under SFAS No.
142, the carrying value of assets are calculated at the lowest level for which
there are identifiable cash flows.





SFAS 142
requires us to compare the fair value of the reporting unit to its carrying
amount on an annual basis to determine if there is potential impairment. If the
fair value of the reporting unit is less than its carrying value, an impairment
loss is recorded to the extent that the fair value of the




15
 Table of Contents




goodwill
within the reporting unit is less than its carrying value. Upon adoption and
during 2002, we completed an impairment review and did not recognize any
impairment of goodwill and other intangible assets already included in the
financial statements. We expect to receive future benefits from previously
acquired goodwill over an indefinite period of time. Accordingly, beginning
January 1, 2002, we have foregone all related amortization expense. Prior to
January 1, 2002, we amortized goodwill over an estimated useful life ranging
from 3 to 15 years using the straight-line method.





Recently Issued Accounting
Pronouncements




In
September 2006, the FASB issued SFAS No. 157 “Fair Value
Measurements”.  SFAS No. 157 defines fair value, establishes a
framework for measuring fair value in generally accepted accounting principles
and expands disclosure about fair values.  This statement is effective
for financial statements issued for fiscal years beginning after November 15,
2007, and interim periods within those fiscal years.  Management
believes that the adoption of SFAS No. 157 will not have a material impact on
our consolidated financial results.






In
September 2006, the FASB issued Statement No. 158, "Employer's Accounting for
Defined Benefit Pension and Other Postretirement Plans - an amendment of FASB
Statements No. 87, 88, 106, and 132(R)" (FAS 158). FAS 158 requires that
employers recognize the funded status of their defined benefit pension and other
postretirement plans on the balance sheet and recognize as a component of other
comprehensive income, net of tax, the plan-related gains or losses and prior
service costs or credits that arise during the period but are not recognized as
components of net periodic benefit cost. We will prospectively adopt FAS 158 on
April 30, 2007.  Management believes that the adoption of SFAS No. 158
will not have a material impact on the consolidated financial results of the
Company.






In
February 2007, the FASB issued Statement No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities, including an amendment of FASB
Statement No. 115" (FAS 159). FAS 159 permits companies to choose to measure
many financial instruments and certain other items at fair value that are not
currently required to be measured at fair value and establishes presentation and
disclosure requirements designed to facilitate comparisons between companies
that choose different measurement attributes for similar types of assets and
liabilities. The provisions of FAS 159 become effective as of the beginning of
our 2009 fiscal year. We are currently evaluating the impact that FAS 159 will
have on our financial statements.






In
December 2007, the FASB issued SFAS 160, Noncontrolling Interests in
Consolidated Financial Statements, an amendment of ARB No. 51 which applies to
all entities that prepare consolidated financial statements, except
not-for-profit organizations, but will affect only those entities that have an
outstanding noncontrolling interest in one or more subsidiaries or that
deconsolidate a subsidiary. The statement is effective for annual periods
beginning after December 15, 2008.




At
December 31, 2007, the Company did not have any derivative instruments or
hedging activities. Management is aware of the requirements of SFAS 161 and will
disclose when appropriate.




In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments
and Hedging Activities – an amendment of FASB Statement No. 133,” (SFAS “161”)
as amended and interpreted, which requires enhanced disclosures about an
entity’s derivative and hedging activities and thereby improves the transparency
of financial reporting.  Disclosing the fair values of derivative
instruments and their gains and losses in a tabular format provides a more
complete picture of the location in an entity’s financial statements of both the
derivative positions existing at period end and the effect of using derivatives
during the reporting period.  Entities are required to provide
enhanced disclosures about (a) how and why an entity uses derivative
instruments, (b) how derivative instruments and related hedged items are
accounted for under Statement 133 and its related interpretations, and (c) how
derivative instruments and related hedged items affect an entity’s financial
position, financial performance, and cash flows.  SFAS No. 161 is
effective for financial statements issued for fiscal years and interim periods
beginning after November 15, 2008.  Early adoption is
permitted.




16
 Table of Contents




Item 7.   Financial Statements




Index to
Financial Statements:




Audited
      Financial Statements:F-1
            Report of Independent Registered Public Accounting
      FirmF-2
            Consolidated Balance Sheet as of December 31,
      2007F-3
            Consolidated Statements of Operations – Years Ended December
      31, 2007 and December 31, 2006F-4
            Consolidated Statement of Stockholders’ Equity (Deficit) and
      Comprehensive Loss for the Years Ended December 31, 2007 and December 31,
      2006F-5
            Consolidated Statements of Cash Flows for the Years Ended
      December 31, 2007 and December 31, 2006F-6
            Notes to Consolidated Financial
    Statements




17
 Table of Contents








SARNA &
      COMPANYCertified
              Public
              Accountants310
              N. Westlake
              Boulevard
              Suite 270
            Westlake
              Village
              California
              91362
            805
              371-8900
              Fax
      805
              379-0140




REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 
 To the
Board of Directors
 Skinvisible,
Inc.
 Las
Vegas, Nevada
 
 We have
audited the accompanying consolidated balance sheet of Skinvisible, Inc. as of
December 31, 2007, and the related consolidated statements of operations,
stockholders’ equity (deficit), and cash flows for the years ended December 31,
2007 and 2006. These consolidated financial statements are the responsibility of
the Company’s management.  Our responsibility is to express an opinion
on these consolidated financial statements based on our audit.
 
 We
conducted our audit in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall consolidated financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
 
 In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of Skinvisible, Inc. as of
December 31, 2007, and the consolidated results of its operations and cash flows
for the years ended December 31, 2007 and 2006 in conformity with accounting
principles generally accepted in the United States.
 
 The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 1 to the financial
statements, the Company has suffered recurring losses from operations, which
raise substantial doubt about its ability to continue as a going concern.
Management's plans regarding those matters also are described in Note 1. Absent
the successful completion of one of these alternatives, the Company’s operating
results will increasingly become uncertain.  The financial statements
do not contain any adjustments that might result from the outcome of this
uncertainty.
 
 Sarna & Company
 Sarna
& Company
 April 10,
2008
 Westlake
Village, California


F-1
 Table of Contents




CONSOLIDATED BALANCE SHEET






ASSETS
              December
      31, 2007Current
      assetsCash
              $
              63,168Accounts
      receivable
              
              42,088Inventory
              
              20,455Due
      from related party
              
              1,196Financing
      cost, net of accumulated amortization of $344
              
              53,484Prepaid
      royalty fees - current portion
              
              240,000Prepaid
      expense and other current assets
              
              5,137Total
      current assets
              
              425,528Fixed
      assets, net of accumulated depreciation of $317,657
              
              22,440Intangible
      and other assetsPatents
      and trademarks, net of accumulated amortization of $40,021
              
              34,873License
      and distributor rights
              
              50,000Prepaid
      royalty fees - long term portion
              
              180,000Total
      assets
              $
              712,841LIABILITIES
      AND STOCKHOLDERS' DEFICITCurrent
      liabilitiesAccounts
      payable and accrued liabilities
              $
              479,554Accrued
      interest payable
              
              6,948Loans
      from related party
              
              78,860Convertible
      notes payable, net of unamortized debt discount of $95,557
              
              54,443Unearned
      revenue
              
              450,000Total
      current liabilities
              
              1,069,805Total
      liabilities
              
              1,069,805Commitments
      and contingencies
              
              --Stockholders'
      deficitCommon
      stock; $0.001 par value; 100,000,000 shares70,739,248 shares
      issued and outstanding
              
              70,739Additional
      paid-in capital
              
              14,869,145Accumulated
      deficit
              
              (15,296,848)Total
      stockholders' deficit
              
              (356,964)Total
      liabilities and stockholders' deficit
              $
              712,841




F-2
 Table of Contents


SKINVISIBLE,
INC.
 CONSOLIDATED STATEMENTS OF OPERATIONS
 For
      the year endedDecember 31,
      2007
                
                For
      the year ended
                  December
      31, 2006Revenues
                $
                777,685
                
                $
                691,452Cost
      of revenues
                
                140,875
                
                
                77,465Gross
      profit
                
                636,810
                
                
                613,987Operating
      expensesDepreciation
      and amortization
                
                18,176
                
                
                21,187Stock
      based compensation
                
                475,006
                
                
                859,160Selling
      general and administrative
                
                1,508,773
                
                
                1,830,493Total
      operating expenses
                
                2,001,955
                
                
                2,710,840Loss
      before provision for income taxes
                
                (1,365,145)
                
                
                (2,096,853)Other
      income (expense)
                
                --
                
                
                192Interest
      expense
                
                (241,777)
                
                
                (943)Total
      other income (expense)
                
                (241,777)
                
                
                (751)Provision
      for income taxes
                
                --
                
                
                --Net
      loss
                $
                (1,606,922)
                
                $
                (2,097,604)Basic
      loss per common share
                $
                (0.02)
                
                $
                (0.03)Basic
      weighted average commonshares outstanding
                
                66,150,436
                
                
                61,925,163
  See
Accompanying Notes to Consolidated Financial Statements
  F-3
 Table of Contents
 SKINVISIBLE,
INC.
 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
  Common
      Stock
                  Shares Amount
                
                Additional
                  Paid-in
                  Capital
                
                Stock
                  Subscription
                  Receivable
                
                Treasury
                  Stock
                
                Accumulated
                  Deficit
                
                Total
                  Stockholders'
                  Equity
      (Deficit)Balance,
      December 31, 2005
                58,225,248
                
                $
                58,225
                
                $
                11,486,002
                
                $
                134,873
                
                
                
                $
                (11,592,322)
                
                $
                86,778Issuance
      of stock for cash, $0.15 per share
                3,415,000
                
                
                3,415
                
                
                508,708
                
                
                (134,873)
                
                
                
                
                --
                
                
                377,250Issuance
      of stock for cash, $0.03 per share
                50,000
                
                
                50
                
                
                1,429
                
                
                --
                
                
                
                
                --
                
                
                1,479Issuance
      of stock for cash, $0.05 per share
                75,000
                
                
                75
                
                
                3,675
                
                
                --
                
                
                
                
                --
                
                
                3,750Issuance
      of stock for services, $0.05 per share
                50,000
                
                
                50
                
                
                2,450
                
                
                --
                
                
                
                
                --
                
                
                2,500Issuance
      of stock for cash, $0.08 per share
                75,000
                
                
                75
                
                
                5,925
                
                
                --
                
                
                
                
                --
                
                
                6,000Issuance
      of stock for cash, $0.10 per share
                112,500
                
                
                113
                
                
                11,137
                
                
                --
                
                
                
                
                --
                
                
                11,250Issuance
      of stock for cash, $0.18 per share
                110,000
                
                
                110
                
                
                19,690
                
                
                --
                
                
                
                
                --
                
                
                19,800Issuance
      of stock for cash, $0.20 per share
                915,000
                
                
                915
                
                
                182,056
                
                
                --
                
                
                
                
                --
                
                
                182,971Issuance
      of stock options for services
                --
                
                
                --
                
                
                643,051
                
                
                --
                
                
                
                
                --
                
                
                643,051Issuance
      of stock options to employees and directors
                --
                
                
                --
                
                
                120,131
                
                
                --
                
                
                
                
                --
                
                
                120,131Issuance
      of stock options for services
                
                
                
                
                
                
                73,002
                
                
                --
                
                
                
                
                --
                
                
                73,002Issuance
      of stock for debt , $ 0.25  per share
                20,000
                
                
                20
                
                
                4,980
                
                
                --
                
                
                
                
                --
                
                
                5,000Issuance
      of stock for debt , $ 0.25  per share
                56,000
                
                
                56
                
                
                13,944
                
                
                --
                
                
                
                
                --
                
                
                14,000Issuance
      of stock for cash, $0.20 share
                1,340,000
                
                
                1,340
                
                
                266,660
                
                
                --
                
                
                
                
                --
                
                
                268,000Issuance
      of stock options for services
                
                
                
                
                
                
                8,995
                
                
                --
                
                
                
                
                --
                
                
                8,995Issuance
      of stock option to employees
                
                
                
                
                
                
                11,482
                
                
                --
                
                
                
                
                --
                
                
                11,482Effect
      of foreign currency translation
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                
                
                --
                
                
                --Net
      loss
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                
                
                (2,097,604)
                
                
                (2,097,604)Balance,
      December 31, 2006
                64,443,748
                
                
                64,444
                
                
                13,363,317
                
                
                --
                
                
                --
                
                
                (13,689,926)
                
                
                (262,165)Issuance
      of stock for cash, $0.20 per share
                775,000
                
                
                775
                
                
                154,225
                
                
                --
                
                
                --
                
                
                --
                
                
                155,000Issuance
      of stock for services, $0.20 per share
                242,500
                
                
                242
                
                
                50,758
                
                
                --
                
                
                --
                
                
                --
                
                
                51,000Issuance
      of stock upon exercise of options for cash,$0.10 per
      share
                300,000
                
                
                300
                
                
                29,700
                
                
                --
                
                
                --
                
                
                --
                
                
                30,000Return
      of stock for accounts receivable
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                (48,931)
                
                
                --
                
                
                (48,931)Issuance
      of 150,000 shares of  treasury stock for services,$0.25 per
      share
                --
                
                
                --
                
                
                (11,431)
                
                
                --
                
                
                48,931
                
                
                --
                
                
                37,500Issuance
      of stock upon exercise of options foraccounts payable, $0.05 per
      share
                200,000
                
                
                200
                
                
                9,800
                
                
                --
                
                
                --
                
                
                --
                
                
                10,000Issuance
      of stock for accounts payable, $0.10 per share
                130,000
                
                
                130
                
                
                12,870
                
                
                --
                
                
                --
                
                
                --
                
                
                13,000Issuance
      of stock for accounts payable $0.20 share
                70,000
                
                
                70
                
                
                13,930
                
                
                --
                
                
                --
                
                
                --
                
                
                14,000Issuance
      of stock upon exercise of options for cash,$0.05 per
      share
                260,000
                
                
                260
                
                
                12,740
                
                
                --
                
                
                --
                
                
                --
                
                
                13,000Issuance
      of stock for services, $0.10 per share
                160,000
                
                
                160
                
                
                15,840
                
                
                --
                
                
                --
                
                
                --
                
                
                16,000Issuance
      of stock upon exercise of warrants in lieu of debt,$0.05 per
      share
                500,000
                
                
                500
                
                
                24,500
                
                
                --
                
                
                --
                
                
                --
                
                
                25,000Issuance
      of stock in lieu of debt, $0.10 per share
                750,000
                
                
                750
                
                
                74,250
                
                
                --
                
                
                --
                
                
                --
                
                
                75,000Issuance
      of stock for conversion of loan, $0.10 per share
                250,000
                
                
                250
                
                
                24,750
                
                
                --
                
                
                --
                
                
                --
                
                
                25,000Issuance
      of stock upon exercise of warrants for conversion of loan, $0.10 per
      share
                210,000
                
                
                210
                
                
                10,290
                
                
                --
                
                
                --
                
                
                --
                
                
                10,500Issuance
      of stock for conversion of loan, $0.15 per share
                863,000
                
                
                863
                
                
                128,587
                
                
                --
                
                
                --
                
                
                --
                
                
                129,450Issuance
      of stock for conversion of loan, $0.20 per share
                500,000
                
                
                500
                
                
                99,500
                
                
                --
                
                
                --
                
                
                --
                
                
                100,000Issuance
      of stock for services, $0.25 per share
                20,000
                
                
                20
                
                
                4,980
                
                
                --
                
                
                --
                
                
                --
                
                
                5,000Issuance
      of stock for accounts payable, $0.25 per share
                40,000
                
                
                40
                
                
                9,960
                
                
                --
                
                
                --
                
                
                --
                
                
                10,000Issuance
      of stock for donation, $0.20 per share
                25,000
                
                
                25
                
                
                4,975
                
                
                --
                
                
                --
                
                
                --
                
                
                5,000Issuance
      of stock for salaries owed, $0.10 per share
                1,000,000
                
                
                1,000
                
                
                99,000
                
                
                --
                
                
                --
                
                
                --
                
                
                100,000Beneficial
      Conversion feature related toconvertible notes
      payable
                --
                
                
                --
                
                
                311,655
                
                
                --
                
                
                --
                
                
                --
                
                
                311,655Financing
      costs related to convertible notes payable
                --
                
                
                --
                
                
                54,443
                
                
                --
                
                
                --
                
                
                --
                
                
                54,443Vesting
      of employee stock options
                --
                
                
                --
                
                
                78,441
                
                
                --
                
                
                --
                
                
                --
                
                
                78,441Issuance
      of stock options for services
                --
                
                
                --
                
                
                292,065
                
                
                --
                
                
                --
                
                
                --
                
                
                292,065Net
      loss
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                (1,606,922)
                
                
                (1,606,922)Balance,
      December 31, 2007
                70,739,248
                
                $
                70,739
                
                
                14,869,145
                
                $
                --
                
                $
                --
                
                $
                (15,296,848)
                
                $
                (356,964)
   F-4
 Table of Contents
 SKINVISIBLE,
INC.
 CONSOLIDATED STATEMENTS OF CASH FLOWS
  For
      the year ended
                  December
      31, 2007
                
                For
      the year ended
                  December
      31, 2006Cash
      flows from operating activities:Net
      loss
                $
                (1,606,922)
                
                $
                (2,097,604)Adjustments
      to reconcile net loss to netcash
      used by operating activities:Depreciation
      and amortization
                
                18,176
                
                
                21,187Stock
      based compensation
                
                475,006
                
                
                859,160Stock
      issued for donation
                
                5,000
                
                
                --Interest
      expense related to beneficial conversion feature
                
                217,056
                
                
                943Changes
      in operating assets and liabilities:Decrease
      in inventory
                
                2,447
                
                
                50,892Increase
      in accounts receivable
                
                (37,207)
                
                
                99,177Decrease
      in prepaid expenses and other current assets
                
                13,324
                
                
                2,883Increase
      in related party receivable
                
                (77)
                
                
                --Decrease
      in prepaid royalty fees
                
                240,000
                
                
                240,000Increase
      in accounts payable and accrued liabilities
                
                317,927
                
                
                113,322Increase
      in accrued interest
                
                11,398
                
                
                --Decrease
      in unearned revenue
                
                (400,000)
                
                
                (153,000)Net
      cash provided (used) by operating activities
                
                (743,872)
                
                
                (863,040)Cash
      flows from investing activities:Purchase
      of fixed assets and untangible assets
                
                (4,662)
                
                
                (13,847)Net
      cash used by investing activities
                
                (4,662)
                
                
                (13,847)Cash
      flows from financing activities:Proceeds
      from related party loans
                
                153,132
                
                
                25,728Proceeds
      from convertible notes payable
                
                410,500
                
                
                --proceeds
      from stock subscription payable
                
                --
                
                
                --Proceeds
      from issuance of common stock
                
                198,000
                
                
                870,500Net
      cash provided by financing activities
                
                761,632
                
                
                896,228Net
      change in cash
                
                13,098
                
                
                19,341Cash,
      beginning of period
                
                50,070
                
                
                30,729Cash,
      end of period
                $
                63,168
                
                $
                50,070
  
  F-5
 Table of Contents
 SKINVISIBLE,
INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (AUDITED)




1.
              DESCRIPTION OF
      BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT
    POLICIES
 
 Description of business- Skinvisible, Inc., (referred to as the “Company”) is focused on the
development and manufacture of innovative topical 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. The Company’s
antibacterial/antimicrobial hand sanitizer formulations, available for private
label commercialization opportunities, offer skincare solutions for the
healthcare, food service, industrial, cosmetic and salon industries, as well as
for personal use in the retail marketplace. The Company maintains manufacturing,
executive and sales offices in Las Vegas, Nevada.
 
 History-
Skinvisible, Inc. ( referred to as 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 subsidiary shall herein be collectively referred to as
the “Company”.
 
 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 $15,296,848 since its inception and requires capital for its contemplated
operational and marketing activities to take place. The Company’s ability to
raise additional capital through the future issuances of common stock 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 ability to successfully resolve these factors raise
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.
 
 Principles of consolidation- The consolidated financial statements include the accounts of the
Company and its subsidiary. All significant intercompany balances and
transactions have been eliminated.
 
 Definition of fiscal year- The Company’s fiscal year end is December 31.
 
 Use of estimates-
The preparation of consolidated financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the consolidated financial statements and the reported amounts of
revenue and expenses during the reporting period. Actual results could differ
from those estimates.
 
 Revenue
recognition
 Product sales -
Revenues from the sale of products 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 – The
Company also recognizes royalty revenue from licensing its patent and
trademarks, 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 – The Company also recognizes revenue from distribution and
license rights 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.
 
 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.
  F-6
 Table of Contents
 SKINVISIBLE,
INC.
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (AUDITED)
  1.    
DESCRIPTION OF
BUSINESS AND SUMMARY OF SIGNIFICANT POLICIES(continued)
 
 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.  At December 31, 2007
the Company did not recorded a reserve for doubtful accounts.
 
 Inventory-
Substantially all inventory consist of finished goods and are valued based upon
first-in first-out ("FIFO") cost, not in excess of market. The determination of
whether the carrying amount of inventory requires a write-down is based on an
evaluation of inventory.
 
 Fixed assets- Fixed
assets are stated at cost less accumulated depreciation. Depreciation is
provided principally on the straight-line method over the estimated useful lives
of the assets, which are generally 3 to 10 years. The cost of repairs and
maintenance is charged to expense as incurred. Expenditures for property
betterments and renewals are capitalized. Upon sale or other disposition of a
depreciable asset, cost and accumulated depreciation are removed from the
accounts and any gain or loss is reflected in other income
(expense).
 
 The
Company periodically evaluates whether events and circumstances have occurred
that may warrant revision of the estimated useful life of fixed assets or
whether the remaining balance of fixed assets should be evaluated for possible
impairment. The Company uses an estimate of the related undiscounted cash flows
over the remaining life of the fixed assets in measuring their
recoverability.
 
 Goodwill and intangible
assets- Beginning January 1, 2002, the Company adopted Statement of
Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and Other Intangible
Assets”. According to this statement, goodwill and 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. Fair value for
goodwill is based on discounted cash flows, market multiples and/or appraised
values as appropriate. Under SFAS No. 142, the carrying value of assets are
calculated at the lowest level for which there are identifiable cash
flows.
 
 SFAS 142
requires the Company to compare the fair value of the reporting unit to its
carrying amount on an annual basis to determine if there is potential
impairment. If the fair value of the reporting unit is less than its carrying
value, an impairment loss is recorded to the extent that the fair value of the
goodwill within the reporting unit is less than its carrying value. Upon
adoption and during 2002, the Company completed an impairment review and did not
recognize any impairment of goodwill and other intangible assets already
included in the financial statements. The Company expects to receive future
benefits from previously acquired goodwill over an indefinite period of time.
Accordingly, beginning January 1, 2002, the Company has foregone all related
amortization expense. Prior to January 1, 2002, the Company amortized goodwill
over an estimated useful life ranging from 3 to 15 years using the straight-line
method.
 
 Fair value of financial
instruments- Financial accounting standards Statement No. 107,
“Disclosure About Fair Value of Financial Instruments”, requires the Company to
disclose, when reasonably attainable, the fair market values of its assets and
liabilities which are deemed to be financial instruments. The carrying amounts
and estimated fair values of the Company’s financial instruments approximate
their fair value due to the short-term nature.
 
 Income taxes- The
Company accounts for its income taxes in accordance with Statement of Financial
Accounting Standards No. 109, 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-7
 Table of Contents
 SKINVISIBLE,
INC.
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (AUDITED)
 1.
              DESCRIPTION OF
      BUSINESS AND SUMMARY OF SIGNIFICANT POLICIES(continued)
 
 Comprehensive income (loss)- The Company has no components of other comprehensive income.
Accordingly, net loss equals comprehensive loss for all periods.
 
 Segment information-
The Company discloses segment information in accordance with Statements of
Financial Accounting Standards (SFAS) No. 131, “Disclosures about Segments of an
Enterprise and Related Information,” which uses the Management approach to
determine reportable segments. The Company operates under one
segment.
 
 Advertising costs-
Advertising costs incurred in the normal course of operations are expensed as
incurred. During the years ended December 31, 2007 and 2006, the Company
incurred advertising costs totaling $58,233 and $87,741,
respectively.
 
 Research and development
costs - Research and development costs are charged to expense when
incurred. Costs incurred to internally develop the product, including costs
incurred during all phases of development, are charged to expense as
incurred.
 
 Expenses of offering- The Company accounts for specific incremental costs directly to a
proposed or actual offering of securities as a direct charge against the gross
proceeds of the offering.
 
 Stock-based compensation- On January 1, 2005, the Company adopted SFAS No. 123 (R) “Share-Based
Payment” 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 a Employee Stock
Purchase Plan based on the estimated fair values.
 
 The
Company adopted SFAS No. 123(R) using the modified prospective transition
method, which required the application of the accounting standard as of January
1, 2005.  The accompanying consolidated financial statements as of and
for the year ended December 31, 2007 reflect the impact of SFAS No.
123(R).  In accordance with the modified prospective transition
method, the Company’s accompanying consolidated financial statements for the
prior periods have not been restated, and do not include the impact of SFAS No.
123(R).  Stock based compensation expense recognized under SFAS No.
123(R) for the years ended  December 31, 2007 and 2006 totaled
$475,006 and $974,902, respectively.
 
 Earnings (loss) per
share - The Company reports earnings (loss) per share in accordance with
SFAS No. 128, "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 since the effect of the assumed exercise of options and
warrants to purchase common shares (common stock equivalents) would have an
anti-dilutive effect. For the years ended December 31, 2007 and 2006,
common stock equivalent shares excluded from the earnings (loss) per share
calculations totaled 8,472,500 and 7,230,000, respectively.
 
 Recent accounting
pronouncements - In September 2006, the FASB issued SFAS No. 157 “Fair
Value Measurements”.  SFAS No. 157 defines fair value, establishes a
framework for measuring fair value in generally accepted accounting principles
and expands disclosure about fair values.  This statement is effective
for financial statements issued for fiscal years beginning after November 15,
2007, and interim periods within those fiscal years.  Management
believes that the adoption of SFAS No. 157 will not have a material impact on
the consolidated financial results of the Company.
  F-8
 Table of Contents
 SKINVISIBLE,
INC.
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (AUDITED)
  1.
              DESCRIPTION OF
      BUSINESS AND SUMMARY OF SIGNIFICANT POLICIES(continued)
  Recent accounting
pronouncements (continued)
  In
September 2006, the FASB issued Statement No. 158, "Employer's Accounting for
Defined Benefit Pension and Other Postretirement Plans - an amendment of FASB
Statements No. 87, 88, 106, and 132(R)" (FAS 158). FAS 158 requires that
employers recognize the funded status of their defined benefit pension and other
postretirement plans on the balance sheet and recognize as a component of other
comprehensive income, net of tax, the plan-related gains or losses and prior
service costs or credits that arise during the period but are not recognized as
components of net periodic benefit cost. We will prospectively adopt FAS 158 on
April 30, 2007. Management believes that the adoption of SFAS No. 158 will not
have a material impact on the consolidated financial results of the
Company.
  In
February 2007, the FASB issued Statement No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities, including an amendment of FASB
Statement No. 115" (FAS 159). FAS 159 permits companies to choose to measure
many financial instruments and certain other items at fair value that are not
currently required to be measured at fair value and establishes presentation and
disclosure requirements designed to facilitate comparisons between companies
that choose different measurement attributes for similar types of assets and
liabilities. The provisions of FAS 159 become effective as of the beginning of
our 2009 fiscal year. We are currently evaluating the impact that FAS 159 will
have on our financial statements.
 
 In
December 2007, the FASB issued SFAS 160, Noncontrolling Interests in
Consolidated Financial Statements, an amendment of ARB No. 51 which applies to
all entities that prepare consolidated financial statements, except
not-for-profit organizations, but will affect only those entities that have an
outstanding noncontrolling interest in one or more subsidiaries or that
deconsolidate a subsidiary. The statement is effective for annual periods
beginning after December 15, 2008.
 
 In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative
Instruments and Hedging Activities – an amendment of FASB Statement No. 133,”
(SFAS “161”) as amended and interpreted, which requires enhanced disclosures
about an entity’s derivative and hedging activities and thereby improves the
transparency of financial reporting.  Disclosing the fair values of
derivative instruments and their gains and losses in a tabular format provides a
more complete picture of the location in an entity’s financial statements of
both the derivative positions existing at period end and the effect of using
derivatives during the reporting period.  Entities are required to provide
enhanced disclosures about (a) how and why an entity uses derivative
instruments, (b) how derivative instruments and related hedged items are
accounted for under Statement 133 and its related interpretations, and (c) how
derivative instruments and related hedged items affect an entity’s financial
position, financial performance, and cash flows.  SFAS No. 161 is
effective for financial statements issued for fiscal years and interim periods
beginning after November 15, 2008.  Early adoption
is permitted.
  At
December 31, 2007, the Company did not have any derivative instruments or
hedging activities. Management is aware of the requirements
of SFAS 161 and will disclose when appropriate.
  Reclassification–
The financial statements from 2006 reflect certain reclassifications, which will
have no effect on net income, to conform to classifications in the current
year.
 
 F-9
 Table of Contents
 SKINVISIBLE,
INC.
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (AUDITED)
 
 2.    
FIXED
ASSETS
 
 Fixed
assets consist of the following as of December 31, 2007:
   Machinery
      and equipment
              $
              55,463Furniture
      and fixtures
              
              113,635Computers, equipment
      and software
              
              42,484Leasehold
      improvements
              
              12,569Lab
      equipment
              
              115,946340,097Less: accumulated
      depreciation
              
              317,657Fixed assets, net of
      accumulated depreciation
              $
              22,440
  Depreciation
expense for the years ending December 31, 2007 and 2006 was $7,023 and $10,343,
respectively.
  INTANGIBLE AND OTHER ASSETS
 Patents
and trademarks are capitalized at its historical cost and are amortized over
their useful lives. As of December 31, 2007, patents and trademarks total
$74,894, and  amortization expense for 2007 and 2006 were $10,963 and
$10,219, respectivley.
 
 License
and distributor rights (“agreement”) was acquired by the Company in January 1999
and provides 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, 2007.
 
 Future
amortization expense for patents and trademarks as of December 31, 2007 are as
follows:
   2008
              $
              11,2562009
              
              11,2562010
              
              3,2232011
              
              3,2232012
              
              3,223
 
 Prepaid
royalties fees are amounts prepaid by the Company related to the license and
distributor rights. The future royalties payments required by the Company total
$2,000,000. The royalties fees are to be paid at the equal to the greater of (a)
$6,000 per month; or (b) 1.5% of net revenues realized by the sale of the
associated polymer products subject to a cap of $2,000,000. The Company will
make payments of $6,000 per month, and by a payment on any royalties in excess
of $72,000 in each year payable on an annual basis calculated within 60 days of
each anniversary date of the agreement. The future royalties payments are to be
amortized over eight years, which is the life of the agreement.  As of
December 31, 2007, the Company has paid a total of  $1,880,000 of
which $1,220,000 has been expensed and $420,000 has been recorded as prepaid
royalties the Company will expense the prepayment in the future in accordance to
the terms of the agreement. The remaining future royalties payments related to
the agreement approximates $120,000.
 4.    
UNEARNED
REVENUE
  
 Unearned
      revenue totaling $450,000 as of December 31, 2007 relates to two marketing
      and distribution rights agreements entered into during 2004 for which
      monies were received and not considered earned. (See Note 7 for further
      discussion.)
  F-10
 Table of Contents
 SKINVISIBLE,
INC.
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (AUDITED)
 
 5.      ACCOUNTS PAYABLE AND ACCRUED
LIABILITIES
  Accounts
payable and accrued liabilities consist of the following as of December 31,
2007:
   Accounts payable
              $
              256,695Credit
      card payable
              
              106,338Accrued officers
      salary payables
              
              105,453Accrued
      payroll taxes
              
              9,848Other accrued expenses
              
              1,220$
              479,554
   6.
              STOCK OPTIONS AND
      WARRANTS
 
 Stock options employees and
directors– During the years ended December 31, 2007 and 2006, the
Company granted stock options to employees and directors
totaling  2,075,000 and 7,292,525  shares of its common
stock with a weighted average strike price of $0.24 and $0.13 per share,
respectively. Certain stock options were exercisable upon grant and have a life
ranging from 3 months to 5 years. The stock options have been valued at $221,867
using the Black-Scholes option pricing model based upon the following
assumptions: term of 5 years,  risk free interest rates ranging from
3.5% to 4.5%, a dividend yield of 0% and volatility rates ranging from 178 % to
184%.  The vesting periods range from 1 year to 3
years.  The Company has recorded an expense of $78,441  for
the year ended December 31, 2007 based upon the vested portion of the stock
options totaling 691,667 up through December 31, 2007.
 
 Stock options non-employees
and directors– During the years ended December 31, 2007 and 2006, the
Company granted stock options for services totaling  637,500 and
670,000  shares of its common stock with a weighted average strike
price of $0.25 and $0.30 per share, respectively. Certain stock options were
exercisable upon grant and have a life ranging from 3 months to 5 years. The
stock options have been valued at $292,065 using the Black-Scholes
option  pricing model based upon the following assumptions: term of 5
years,  risk free interest rates ranging from 3.5% to 4.5%, a dividend
yield of 0% and volatility rates ranging from  120% to
139%.
 
 The
following is a summary of option activity during the years ended December 31,
2007 and 2006:
  NumberOfShares
              
              WeightedAverageExercise
      PriceBalance,
      December 31, 2005
              2,825,000
              
              $
              0.08Options granted and assumed
              7,292,525
              
              
              0.13Options expired
              5,817,525
              
              
              --Options canceled
              --
              
              
              --Options exercised
              100,000
              
              
              0.05Balance,
      December 31, 2006
              4,200,000
              
              $
              0.11Options granted and assumed
              2,075,000
              
              
              0.24Options expired
              --
              
              
              --Options canceled
              --
              
              
              --Options exercised
              760,000
              
              
              0.05Balance,
      December 31, 2007
              5,515,000
              
              $
              .17
  As of
December 31, 2007 and 2006, 4,031,500 and 2,671,667 stock options, respectively,
are exercisable.
 
 F-11
 Table of Contents
 SKINVISIBLE,
INC.
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (AUDITED)
 
 6.
              STOCK OPTIONS AND
      WARRANTS (continued)
  Stock warrants
-
 
 The
following is a summary of warrants activity during the years ended December 31,
2007 and 2006:
 
 NumberOfShares
              
              WeightedAverageExercise
      PriceBalance,
      December 31, 2005
              7,162,000
              
              $
              0.15Warrants granted and assumed
              670,000
              
              
              0.30Warrants expired
              4,802,000
              
              
              0.20Warrants canceled
              --
              
              
              --Warrants exercised
              --
              
              
              --Balance,
      December 31, 2006
              3,030,000
              
              $
              0.11Warrants granted and assumed
              1,911,500
              
              
              0.25Warrants expired
              --
              
              
              --Warrants canceled
              --
              
              
              --Warrants exercised
              710,000
              
              
              0.05Balance,
      December 31, 2007
              4,231,500
              
              $
              0.15
  All
warrants outstanding as of December 31, 2007 and 2006 are
exercisable.
 
 7.      INCOME
TAXES
 
 At
December 31, 2007 and 2006, the Company had a federal operating loss
carryforward of approximately $6,220,500 and $4,470,500, respectively, which
begins to expire in 2018.
 
 Components
of net deferred tax assets, including a valuation allowance, are as follows at
December 31:
 
 2007
              
              2006Deferred
      tax assets:Net
      operating loss carryforward
              $
              2,177,187
              
              $
              1,564,674Stock-based
      compensation
              
              168,877
              
              
              296,687Total
      deferred tax assets
              
              2,346,064
              
              
              1,861,361Less:
      Valuation Allowance
              
              (2,346,064)
              
              
              (1,861,361)Net
      Deferred Tax Assets
              $
              --
              
              $
              --
 
 The
valuation allowance for deferred tax assets as of December 31, 2007 and 2006 was
$2,346,064 and $1,861,361, respectively.  In assessing the recovery of
the deferred tax assets, management considers whether it is more likely than not
that some portion or all of the deferred tax assets will not be
realized.  The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income in the periods in which
those temporary differences become deductible.  Management considers
the scheduled reversals of future deferred tax liabilities, projected future
taxable income, and tax planning strategies in making this
assessment.  As a result, management determined it was more likely
than not the deferred tax assets would not be realized as of December 31, 2007
and 2006, and recorded a full valuation allowance.
 
 F-12
 Table of Contents
 SKINVISIBLE,
INC.
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (AUDITED)
 7.      INCOME TAXES
(continued)
 
 Reconciliation
between the statutory rate and the effective tax rate for the years ended
December 31, 2007 and 2006 is as follows:
 
 2007
              
              2006Federal
      statutory tax rate
              (35.0)%
              
              (35.0)%Change
      in valuation allowance
              35.0%
              
              35.0%Effective
      tax rate
              0.0%
              
              0.0%
 
 
 8.   
LETTER OF INTENT AND
DEFINITIVE AGREEMENT
 
 In March
2004, the Company entered into a letter of intent (“LOI”) with Dermal Defense,
Inc. for the exclusive marketing and distribution rights to its patented
Antimicrobial Hand Sanitizer product for North America. Terms of the LOI require
Dermal Defense, Inc. to pay a fee of $1 million comprising of a non-refundable
deposit of $250,000 with the balance of $750,000 payable as to $75,000 per
calendar quarter or 5% of product sales (whichever is greater) until the entire
$750,000 is received. The $1 million fee will be recognized as revenue ratably
over a five year period. As of December 31, 2007, the Company has received
$1,000,000 and has reflected $200,000 as unearned revenue and $800,000 as
revenue on cumulative basis of which $200,000 has been recorded as revenue for
both years ended December 31, 2007 and 2006. In addition and further to the
payment fee of $1 million, Dermal Defense, Inc. agrees to pay a royalty fee of
5% on product sales of the Antimicrobial Hand Sanitizer.
 
 In June
2004, the Company entered into a definitive agreement with Cross Global, Inc.
(“Cross Global”) whereby, the Company would provide exclusive marketing and
distribution rights to its proprietary "Sunless Tanning Spray Formulation" for
Canada, the United States, Mexico, Austria, Belgium, Denmark, Finland, France,
Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain,
Sweden, United Kingdom and Israel. In addition CGI is granted the right to use
the name "Solerra(TM)" within the territory. Terms of the agreement require
Cross Global to pay a fee of $1 million comprising of a non-refundable deposit
of $200,000 with the balance of $800,000 payable as $200,000 due August 30,
2004, November 30, 2004, February 28, 2005 and May 30, 2005. The $1 million fee
will be recognized as revenue ratably over a five year period. As of December
31, 2007, the Company has received $1,000,000 and has reflected $250,000 as
unearned revenue and $750,000 as revenue on a cumulative basis of which $200,000
has been recorded as revenue for both years ended December 31, 2007 and
2006.  In addition and further to the payment fee of $1 million, Cross
Global agrees to pay a royalty fee of 5% on product sales of the Sunless Tanning
Spray Formulation.
 
 On April
11, 2007, we entered into a Licensing Agreement (“Agreement”) with DRJ Group,
Inc. (“DRJ”), a California corporation. Under the terms of this Agreement, we
granted DRJ the exclusive right to distribute, market, sell, and promote a
topical analgesic that incorporates our proprietary and patented Invisicare
polymer in North America. DRJ manufactures STOPAIN®, a cream product topically
applied which is designed to provide relief to people suffering from muscle
stiffness, arthritis or muscle strains. Under the terms of the Agreement, the
Company will generate revenues from product sales of Invisicare to DRJ and be
entitled to receive royalties from all product sales generated by
DRJ.  As of December 31, 2007, the Company has received $22,179 in
royalties from DRJ.
  F-13
 Table of Contents
 SKINVISIBLE,
INC.
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (AUDITED)
  9.      CONVERTIBLE NOTES
PAYABLE
 
 During
2007, the Company issued an aggregate of $260,500 consisting of promissory
convertible notes to seven individuals. The notes are due by August 30, 2007,
one note due June 30, 2007, accruing interest at 10% per annum. At the
investor’s option until the repayment date. The note can be converted to shares
of the Company’s common stock at  a fixed price of $0.20 per share
along with additional warrants to purchase one share per every twoshares issued at the
exercise price of $0.25 per share if exercised in year one and $0.30 per share
if exercised in year two and available only upon conversion of the note
payable.   As of December 31, 2007, $260,500 plus accrued
interest of $5,650 were converted into 2,073,000 shares.
 
 In
accordance with EITF 00-27, the Company has determined value associated with the
conversion feature and detachable warrants issued in connection with these
convertible notes payable. The Company has determined the debentures to have a
beneficial conversion feature totaling $216,098 which has been fully expensed as
of December 31, 2007.  The beneficial conversion feature has been
recorded as a debt discount which will be amortized over the life of the
loan.  The beneficial conversion feature is valued under the intrinsic
value method and warrants were valued under the Black-Scholes option pricing
model using the following assumptions: stock price range from $0.23 to $0.31,
life of  3 years, a dividend yield of 0%, volatility raging from 78%
to 127%, and a debt discount rate of 4.50%.   The investor shall
have one year from December 11, 2007 to exercise 1,250,000
warrants.  The warrant strike price shall be $0.25 per
share.  The Company has determined the warrants to have a value of
$78,915 which has been fully expensed as of December 31, 2007.
 
 During 2007, the Company issued a
$150,000 promissory convertible note from one individual. The note is due by
December 11, 2008, accruing interest at 10% per annum. At the investor’s option
until the repayment date. The note can be converted to shares of the Company’s
common stock at a fixed price of $0.075 per share along with additional warrants
to purchase one share per every two shares issued at the exercise price of
$0.15 per share if exercised in year one and available only upon conversion of
the note payable.  As of December 31, 2007, the $150,000 convertible
note payable remains outstanding.
 
 In
accordance with EITF 00-27, the Company has determined value associated with the
conversion feature and detachable warrants issued in connection with these
convertible notes payable. The Company has determined the debentures to have a
beneficial conversion feature totaling $95,557.  The beneficial
conversion feature has been recorded as a debt discount which will be amortized
over the life of the loan.  The beneficial conversion feature is
valued under the intrinsic value method and warrants were valued under the
Black-Scholes option pricing model using the following assumptions: stock price
of $0.14, life of  3 years, a dividend yield of 0%, volatility of
106%, and a debt discount rate of 4.50%.   The investor shall
have one year from December 11, 2007 to exercise 1,000,000
warrants.  The warrant strike price shall be $0.15 per
share.  The Company has determined the warrants to have a value of
$53,829 which has been reflected as a financing cost and will be amortized over
the life of the loan.   As of December 31, 2007, financing costs
total $53,484, net of accumulated amortization of $344.
 
 10.    RELATED PARTY
TRANSACTIONS
 
 As of
December 31,  2007, the Company had an unsecured loan payable due to
the CEO with an interest rate of 10% per annum, due on demand totaling
$68,360.
 
 As of
December 31, 2007, the Company had an unsecured loan payable due to a
shareholder, bearing no interest, due on demand totaling $10,500.
 
 As of
December 31, 2007, the Company had a receivable due to them from a shareholder
totaling $1,196.
 
 F-14
 Table of Contents
 SKINVISIBLE,
INC.
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 (AUDITED)
 
 11.  COMMITMENTS AND
CONTINGENCIES
 
 Lease obligations –
The Company has operating leases for its offices.  The lease for its
offices expires on December 29, 2009.  Future minimum lease payments
under the operating leases for the facilities as of December 31, 2007 are as
follows:
   2008
              $
              97,0282009
              
              98,622
   SUBSEQUENT
EVENTS
  
 During
the three months ended March 31, 2008, the Company issued 2,000,000 shares of
common stock for a conversion of a loanat $0.075 per share totaling
$150,000.
 
 During
the three months ended March 31, 2008, the Company issued 248,000 shares of
common stock for payment on accounts payable at $0.10 per share totaling
$24,000.
 
 During
the three months ended March 31, 2008, the Company issued 799,990 shares of
common stock for a conversion of a loan at $0.10 per share totaling
$79,999.
 
 During
the three months ended March 31, 2008, the Company issued 1,200,000 shares of
common stock for a conversion of a loan at $0.05 per share totaling
$60,000.


F-15
 Table of Contents




Item
8.   Changes In and Disagreements with Accountants on Accounting
and FinancialDisclosure





No events
occurred requiring disclosure under Item 304(b) of Regulation S-B.





Item 8A.  Controls and Procedures





The
Company maintains disclosure controls and procedures that are designed to ensure
that information required to be disclosed in the Company's Exchange Act reports
is recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commission rules and forms, and that
such information is accumulated and communicated to the Company's management to
allow timely decisions regarding required disclosure based closely on the
definition of "disclosure controls and procedures" in Rule 13a-15(e) and
15d-15(e). In designing and evaluating the disclosure controls and procedures,
management recognized that any controls and procedures, no matter how well
designed and operated, can provide only reasonable assurance of achieving the
desired control objectives, and management necessarily was required to apply its
judgment in evaluating the cost-benefit relationship of possible controls and
procedures.





The
Company carried out an evaluation, under the supervision and with the
participation of our principal executive officer and principal financial
officer, of the effectiveness of the design and operation of the Company's
disclosure controls and procedures as of the end of the period covered in this
report. Based on the foregoing, our principal executive officer and principal
financial officer concluded that the Company's disclosure controls and
procedures were effective.




There has
been no change in our internal controls over financial reporting that occurred
during the period covered by this Annual Report on Form 10-KSB that has
materially affected, or is reasonably likely to materially affect, our internal
controls over financial reporting.




Management’s Annual Report on
Internal Control Over Financial Reporting.




The
Company’s management is responsible for establishing and maintaining adequate
control over financial reporting, as such term is defined in Rules 13a-15(f) and
15d-15(f) under the Securities Exchange Act of 1934. Under the supervision and
with the participation of the Company’s management, including our principal
executive and principal financial officers, conducted an evaluation of the
effectiveness of its internal control over financial reporting based on the
framework in Internal Control - Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (the “COSO Framework”).
Based on this evaluation under the COSO Framework management concluded that its
internal control over financial reporting was effective as of December 31,
2007.




This
annual report does not include an attestation report of the Company’s registered
public accounting firm regarding internal control over financial
reporting.  Management’s report was not subject to attestation by the
Company’s registered public accounting firm pursuant to temporary rules of the
Securities and Exchange Commission that permit the company to provide only
management’s report in this annual report.





18
 Table of Contents




Limitations on the
Effectiveness of Internal Controls





Our
management does not expect that our disclosure controls and procedures or our
internal control over financial reporting will necessarily prevent all fraud and
material error. Our disclosure controls and procedures are designed to provide
reasonable assurance of achieving our objectives and our Chief Executive Officer
and Chief Financial Officer concluded that our disclosure controls and
procedures are effective at that reasonable assurance level.  Further,
the design of a control system must reflect the fact that there are resource
constraints, and the benefits of controls must be considered relative to their
costs. Because of the inherent limitations in all control systems, no evaluation
of controls can provide absolute assurance that all control issues and instances
of fraud, if any, within our company have been detected. These inherent
limitations include the realities that judgments in decision-making can be
faulty, and that breakdowns can occur because of simple error or mistake.
Additionally, controls can be circumvented by the individual acts of some
persons, by collusion of two or more people, or by management override of the
internal control. The design of any system of controls also is based in part
upon certain assumptions about the likelihood of future events, and there can be
no assurance that any design will succeed in achieving its stated goals under
all potential future conditions. Over time, control may become inadequate
because of changes in conditions, or the degree of compliance with the policies
or procedures may deteriorate.





Item 8B.  Other information





None.





PART III





Item
9.  Directors, Executive Officers, Promoters and Control Persons;
Compliance withSection
16(a) of the Exchange Act





The
following information sets forth the names of our current directors and
executive officers, their ages and their present positions.





Name
            Age
            Position(s)
      and Office(s) HeldTerry
      Howlett
            60
            Chief
      Executive Officer, Chief Financial Officer, &
  DirectorBrian
      Piwek
            62
            DirectorGreg
      McCartney
            56
            Director





Set forth
below is a brief description of the background and business experience of each
of our current executive officers and directors.





Mr. Terry H. Howlett, has been
our Chief Executive Officer & Director since March 5, 1998. Mr. Howlett has
a diversified background in market initialization and development, sales and
venture capital financing for emerging growth companies. He has held senior
management, marketing and sales positions with various companies, including the
Canadian Federation of




19
 Table of Contents




Independent
Business, Family Life Insurance, and Avacare of Canada and founded Presley
Laboratories, Inc., which marketed cosmetic and skin, care products on a direct
sales basis. For the ten years prior to becoming President of the Company, Mr.
Howlett was the President and CEO of Voice-it Solutions, Inc., a publicly traded
company on the Vancouver Stock exchange that made voice response software for
order entry systems.




Mr. Brian Piwek joined our
board of directors in January, 2008. Mr. Piwek's experience and expertise is in
the international retail industry. He was president of Overwaitea Foods
supermarket from 1991 until 1997. In 1997 Brian accepted the position as Co-CEO
with A&P Canada (The Great Atlantic & Pacific Tea Company Inc.) and in
2000 was appointed Chairman, President and CEO of A&P Canada. In late 2002
he moved to the U.S. as President and Chief Executive Officer of A&P US (New
York Stock Exchange symbol "GAP") where he began the turnaround of North
America's oldest retail food chain. Brian retired from A&P in July 2005.
Brian is an MBA graduate and has served on many voluntary boards.




Mr. Greg McCartney has been a
member of our board of directors since January 10, 2005. Mr. McCartney is
Managing Director of Taylor, Butterfield & Worth Asset Management
Corporation a management consulting services firm assisting clients in
becoming  fully reporting public companies. Previously Mr. McCartney
was the Chairman of the Board for Genesis Bioventures (formely BioLabs) and also
formerly served as their CEO. Genesis Bioventures is currently trading on the
OTCBB. Mr. McCartney has over 20 years experience serving as officer and
director of both private and public companies in various manufacturing and
technology industries. Prior to founding BioLabs in 1997, Mr. McCartney was the
founder and director of Aspenwood Holdings Corporation, a business consulting
firm specializing in financing, public relations and venture capital in the
technology and manufacturing industries. From 1986 to 1995 he was the President
of an emerging high technology company and also served as officer and director
of other companies. Previously, he was involved with international real estate
and land development.





Term
of Office





Our
directors are appointed for a one-year term to hold office until the next annual
meeting of our shareholders or until removed from office in accordance with our
bylaws.





Our
executive officers are appointed by our board of directors and hold office until
removed by the board.





Significant
Employees





We have
one significant employee that makes a significant contribution to our business
other than our officers and directors.





Dr. James A. Roszell, Ph.D,is
a doctoral chemist with over 35 years' experience in product formulation,
experimental design, analysis, and method validation. Since joining
Skinvisible in 1998, he has been responsible for research and
development of our patented technology, related polymer delivery vehicles,
product formulations and compositions. Dr. Roszell is a joint




20
 Table of Contents




contributor
to Skinvisible's Patent Number 6.756.059 and responsible for our eight
pending patents. Prior to joining Skinvisible, he worked as chemist
for Supertech Products, Inc. in Florida where his responsibilities included
ensuring compliance with OSHA, EPA and other standards and regulations,
maintenance of quality control, research and development for new products. Dr.
Roszell's background includes work in chemical, pharmaceutical,
environmental and clinical laboratory arenas. His chemical and scientific
expertise makes a significant contribution to our business.





Family
Relationships





There are
no family relationships between or among the directors, executive officers or
persons nominated or chosen by us to become directors or executive
officers.





Involvement
in Certain Legal Proceedings





To  the
best of our knowledge, during the past five years, none of the
following  occurred with  respect to a present
director,  person nominated to become director, executive officer,
or  control person:  (1)  any bankruptcy petition
filed by or against any business of which such person was a general partner or
executive officer either at  the  time  of the
bankruptcy or within two years prior to that time; (2) any conviction in a
criminal  proceeding  or  being subject to a
pending criminal proceeding (excluding  traffic  violations
and other minor offenses); (3) being subject to any order, judgment or decree,
not subsequently reversed, suspended or  vacated, of  any
court  of  competent  jurisdiction,  permanently  or
temporarily enjoining, barring, suspending or otherwise limiting his or her
involvement in  any  type of business, securities or banking
activities; and (4) being found
by  a  court  of  competent  jurisdiction  (in  a  civil
action), the SEC or the
Commodities  Futures  Trading  Commission to have
violated a federal or state securities or commodities law, and the judgment has
not been reversed, suspended or vacated.





Audit
Committee





We do not
have a separately-designated standing audit committee.  The entire
board of directors performs the functions of an audit committee, but no written
charter governs the actions of the board of directors when performing the
functions of that would generally be performed by an audit committee. The board
of directors approves the selection of our independent accountants and meets and
interacts with the independent accountants to discuss issues related to
financial reporting. In addition, the board of directors reviews the scope and
results of the audit with the independent accountants, reviews with management
and the independent accountants our annual operating results, considers the
adequacy of our internal accounting procedures and considers other auditing and
accounting matters including fees to be paid to the independent auditor and the
performance of the independent auditor.





We do not
have an audit committee financial expert because of the size of our company and
our board of directors at this time.  We believe that we do not
require an audit committee financial expert at this time because we retain
outside consultants who possess these attributes as
needed.





For the
fiscal year ending December 31, 2007, the board of directors:




21
 Table of Contents




1.
            Reviewed
      and discussed the audited financial statements with management,
      and





2.
            Reviewed
      and discussed the written disclosures and the letter from our independent
      auditors on the matters relating to the auditor's
      independence.





Based
upon the board of directors’ review and discussion of the matters above, the
board of directors authorized inclusion of the audited financial statements for
the year ended December 31, 2007 to be included in this Annual Report on Form
10-KSB and filed with the Securities and Exchange Commission.





Section
16(a) Beneficial Ownership Reporting Compliance





Section
16(a) of the Exchange Act requires our directors and executive officers and
persons who beneficially own more than ten percent of a registered class of the
Company’s equity securities to file with the SEC initial reports of ownership
and reports of changes in ownership of common stock and other equity securities
of the Company.  Officers, directors and greater than ten percent
beneficial shareholders are required by SEC regulations to furnish us with
copies of all Section 16(a) forms they file.  To the best of our
knowledge based solely on a review of Forms 3, 4, and 5 (and any amendments
thereof) received by us during or with respect to the year ended December 31,
2007, the following persons have failed to file, on a timely basis, the
identified reports required by Section 16(a) of the Exchange Act during fiscal
year ended December 31, 2007:




Name
      and principal position
            Number
      of
              late
      reports
            Transactions
      not
              timely
      reported
            Known
      failures to
              file
      a required formTerry
      Howlett
              CEO,
      CFO & Director
            3
            0
            0Jost
      Steinbruchel
              former
      Director
            0
            0
            0Greg
      McCartney
              Director
            1
            0
            0





Code
of Ethics Disclosure





We
adopted a Code of Ethics for Financial Executives, which include our principal
executive officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions. The Code of Ethics was
filed as an exhibit to the annual report on Form 10KSB for the fiscal year ended
December 31, 2004 and filed with the SEC on April 14, 2005.





22
 Table of Contents




Item 10.  Executive Compensation





Compensation
Discussion and Analysis





The
Company currently has an employment agreement with its sole executive officer,
Terry Howlett.   The term of the agreement is three (3)
years.  Unless extended or renewed, the agreement will terminate on
January 1, 2009.  Under the agreement, Mr. Howlett earns a cash
stipend of $13,333.33 per month ($160,000 per year).  In addition, the
agreement provides for Mr. Howlett to be awarded stock options at the discretion
of the board of directors.  Our two independent directors currently
receive a stipend of $1,000 per month, in addition to discretionary awards of
stock options.





Currently,
the objective of the cash compensation paid by the company is to provide fair
reimbursement for the time spent by our executive officer and independent
directors to the extent feasible within the financial constraints faced by our
developing business.  The stock options granted to our executive
officer and to our independent directors are intended to provide these
individuals with incentives to pursue the growth and development of the
company’s operations and business opportunities. Although the options awarded to
our executive and directors are typically exercisable immediately, they also
remain valid and exercisable for terms of several years.  We believe
this provides the proper balance of short-term and long-term incentives to
increase the value of the company.  Although an immediate increase in
share price following the issuance of the options would obviously result in a
profit if those options were exercised, the longer exercisable period of the
options also provides an incentive to increase value over the long term and
gives our executive officer and directors the opportunity to realize gains based
on the sustained growth of our operations and revenues.





In
addition, our sole executive officer holds substantial ownership in the company
and is generally motivated by a strong entrepreneurial interest in expanding our
operations and revenue base to the best of his ability.




Summary
Compensation Table




The table
below summarizes all compensation awarded to, earned by, or paid to our former
or current executive officers for the fiscal years ended 2007 and
2006.





SUMMARY
      COMPENSATION TABLEName
              and
              principal
              position
            Year
            Salary($)
            Bonus
              ($)
            Stock
              Awards
              ($)
            Option
              Awards
              ($)
            Non-Equity
              Incentive
      Plan
              Compensation
              ($)
            Nonqualified
              Deferred
              Compensation
              Earnings
      ($)
            All
      Other
              Compensation
              ($)
            Total
              ($)Terry
      Howlett
              CEO
      & CFO
            2007
              2006
            160,000
              160,000
            -
              -
            -
              -
            182,252
              36,000
            -
              -
            -
              -
            -
              -
            342,252
              196,000




Narrative
Disclosure to the Summary Compensation Table




We have a
3 year employment agreement dated January 1, 2006 with Mr.
Howlett.  Mr. Howlett earned an annual base salary of $160,000 for the
year ended December 31, 2007 and $160,000 for the year ended December 31,
2006.  Due to financial constraints, however, we were only able to
actually pay Mr. Howlett $58,769.22 in cash during the fiscal
year.  During the fiscal year ended December 31, 2007, we granted Mr.
Howlett options to purchase 1,000,000 shares of our common stock at the exercise
price of $0.24 per share with an expiration date of July 29,
2012.  These options are fully vested and immediately
exercisable.  The aggregate value of these options, which totaled
$182,252, was computed in accordance with FAS 123R and is reported in the
summary compensation table above in the column titled “Option
Awards.”





At no
time during the last fiscal year was any outstanding option repriced or
otherwise modified.  There was no tandem feature, reload feature, or
tax-reimbursement feature associated with any of the stock options we granted to
our executive officers or otherwise.




23
 Table of Contents




Outstanding
Equity Awards at Fiscal Year-End





The table
below summarizes all unexercised options, stock that has not vested, and equity
incentive plan awards for each named executive officer as of December 31,
2007.





OUTSTANDING
      EQUITY AWARDS AT FISCAL YEAR-ENDOPTION
      AWARDS
            STOCK
      AWARDSName
            Number
      of
              Securities
              Underlying
              Unexercised
              Options
              (#)
              Exercisable
            Number
      of
              Securities
              Underlying
              Unexercised
              Options
              (#)
              Unexercisable
            Equity
              Incentive
              Plan
              Awards:
              Number
      of
              Securities
              Underlying
              Unexercised
              Unearned
              Options
              (#)
            Option
              Exercise
              Price
              ($)
            Option
              Expiration
              Date
            Number
              of
              Shares
              or
      Units
              of
              Stock
      That
              Have
              Not
              Vested
              (#)
            Market
              Value
              of
              Shares
              or
              Units
              of
              Stock
              That
              Have
              Not
              Vested
              ($)
            Equity
              Incentive
              Plan
              Awards:
              Number
              of
              Unearned
              Shares,
              Units
      or
              Other
              Rights
              That
      Have
              Not
              Vested
              (#)
            Equity
              Incentive
              Plan
              Awards:
              Market
      or
              Payout
              Value
      of
              Unearned
              Shares,
              Units
      or
              Other
              Rights
              That
              Have
      Not
              Vested
              (#)Terry
      Howlett
            1,000,000
              200,000
              1,200,000
              500,000
            -
              -
              -
            -
              -
              -
            0.24
              0.18
              0.05
              0.05
            7/29/2012
              1/3/2011
              04/01/2008
              09/29/2008
            -
              -
              -
              -
            -
              -
              -
              -
            -
              -
              -
              -
            -
              -
              -
              -








Compensation
of Directors





The table
below summarizes all compensation of our directors as of December 31,
2007.





DIRECTOR
      COMPENSATIONName
            Fees
      Earned or
              Paid
      in
              Cash
              ($)
            Stock
      Awards
              ($)
            Option
      Awards
              ($)
            Non-Equity
              Incentive
              Plan
              Compensation
              ($)
            Non-Qualified
              Deferred
              Compensation
              Earnings
              ($)
            All
              Other
              Compensation
              ($)
            Total
              ($)Terry
      Howlett
            -
            -
            -
            -
            -
            -
            -Jost
      Steinbruchel, former director
            12,000
            -
            45,563
            -
            -
            -
            57,563Greg
      McCartney
            12,000
            -
            45,563
            -
            -
            -
            57,563Brian
      Piwek
            n/a
            n/a
            n/a
            n/a
            n/a
            n/a
            n/a





Narrative
Disclosure to the Director Compensation Table





The all
fees earned or paid in cash and stock options awards granted to Terry Howlett
were earned in connection with his service as an executive
officer.   Mr. Howlett received no compensation for his service
as a member of our board of directors.





We pay
our independent directors a monthly fee of $1,000.  Mr. McCartney and
Mr. Steinbruchel each received a total of $12,000 in consideration for services
rendered as members of our board of directors.  In addition, Mr.
McCartney and Mr. Steinbruchel each received options to purchase 250,000 shares
of common stock at an exercise price of $0.24 per share.  These
options are fully vested and immediately exercisable.  The aggregate
value of these options, which totaled $45,563 for each independent director, was
computed in accordance with FAS 123R and is reported in the director
compensation table above in the column titled “Option Awards.”





24
 Table of Contents




Item
11.  Security Ownership of Certain Beneficial Owners and Management
and RelatedStockholder
Matters





The
following table sets forth, as of March 31, 2008, the beneficial ownership of
our common stock by each executive officer and director, by each person known by
us to beneficially own more than 5% of the our common stock and by the executive
officers and directors as a group.  Except as otherwise indicated, all
shares are owned directly and the percentage shown is based on 75,487,238 shares
of common stock issued and outstanding on March 31, 2007.Except as otherwise
indicated, the address of each person named in this table is c/o Skinvisible,
Inc., 6320 South Sandhill Road, Suite 10, Las Vegas, Nevada 89120.





Title
      of class
            Name
      and address
              of
      beneficial owner (1)
            Amount
      of
              beneficial
      ownership
            Percent
              of
      class*Executive
      Officers & Directors:Common
            Terry
      Howlett
            9,823,248
      shares
            13.01%
      (2)Common
            Brian
      Piwek
            600,990
      shares
            0.80%
      (3)Common
            Greg
      McCartney
            905,000
      shares
            1.20%
      (4)Total
      of All Directors and Executive Officers:
            11,329,238
      shares
            15.01%More
      Than 5% Beneficial Owners:None




(1)
            As
      used in this table, "beneficial ownership" means the sole or shared power
      to vote, or to direct the voting of, a security, or the sole or shared
      investment power with respect to a security (i.e., the power to dispose
      of, or to direct the disposition of, a security). In addition, for
      purposes of this table, a person is deemed, as of any date, to have
      "beneficial ownership" of any security that such person has the right to
      acquire within 60 days after such date.(2)
            Includes
      options that may be exercised immediately to purchase 1,000,000 shares at
      a price of $0.24, options that may be exercised immediately to purchase
      200,000 shares at a price of $0.18, options that may be exercised
      immediately to purchase 400,000 shares at $0.10, and warrants that may be
      immediately exercised to purchase 500,000 shares at a price of
      $0.15.(3)
            Includes
      options that may be immediately exercised to purchase 200,000 shares at a
      price of $0.10 and warrants that may be immediately exercised to purchase
      125,000 at $0.12(4)
            Includes
      options that may be exercised immediately to purchase 100,000 shares at a
      price of $0.10, options that may be exercised immediately to purchase
      100,000 shares at a price of $0.18, options that may be exercised
      immediately to purchase 250,000 shares at $0.24, and options that may be
      exercised immediately to purchase 200,000 shares at
  $0.10.











25
 Table of Contents





Item 12.   Certain Relationships and Related
Transactions





None of
our directors or executive officers, nor any proposed nominee for election as a
director, nor any person who beneficially owns, directly or indirectly, shares
carrying more than 5% of the voting rights attached to all of our outstanding
shares, nor any members of the immediate family (including spouse, parents,
children, siblings, and in-laws) of any of the foregoing persons has any
material interest, direct or indirect, in any transaction since the beginning of
our last fiscal year on January 1, 2007 or in any presently proposed transaction
which, in either case, has or will materially affect us.





Our
policy regarding related transactions requires that any director or officer who
has an interest in any transaction disclose the presence and the nature of the
interest to the board of directors prior to any approval of the transaction by
the board of directors. The transaction may then be approved by a majority of
the disinterested directors, provided that an interested director may be counted
in determining the presence of a quorum at the meeting of the board of directors
to approve the transaction.





Item 13.   Exhibits





Exhibit
      Number
            Description10.1
            Amendment
      to Distribution Agreement (1)10.2
            Employment Agreement
      with Terry Howlett(2)14.1
            Code
      of Ethics(3)31.1
            Certification of Chief Executive Officer pursuant to
      Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to
      Section 302 of the Sarbanes-Oxley Act of 200231.2
            Certification of Chief Financial Officer pursuant to
      Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to
      Section 302 of the Sarbanes-Oxley Act of 200232.1
            Certification of Chief Executive Officer and Chief
      Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant
      to Section 906 of the Sarbanes-Oxley Act of
  2002




(1)
              Certain
      portions of this exhibit have been omitted pursuant to a request for
      confidential treatment and those portions have been filed separately with
      the Securities and Exchange Commission(2)
              Incorporated
      by reference to annual report on Form 10-KSB filed with the Securities and
      Exchange Commission on April 2,
2007.




(3)
            Incorporated
      by reference to annual report on Form 10-KSB filed with the Securities and
      Exchange Commission on April 14,
2005.




26
 Table of Contents




Item 14.   Principal Accountant Fees and
Services





Audit
Fees





The
aggregate fees billed by our auditors for professional services rendered in
connection with a review of the financial statements included in our quarterly
reports on Form 10-QSB and the audit of our annual consolidated financial
statements for the fiscal years ended December 31, 2007 and December 31, 2006
were approximately $31,990 and $26,980 respectively.





Audit-Related
Fees





Our
auditors did not bill any additional fees for assurance and related services
that are reasonably related to the performance of the audit or review of our
financial statements.





Tax
Fees





The
aggregate fees billed by our auditors for professional services for tax
compliance, tax advice, and tax planning were $0 and $0 for the fiscal years
ended December 31, 2007 and 2006.





All
Other Fees





The
aggregate fees billed by our auditors for all other non-audit services, such as
attending meetings and other miscellaneous financial consulting, for the fiscal
years ended December 31, 2007 and 2006 were $0 and $0 respectively.




27
 Table of Contents




SIGNATURES





In
accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.





Skinvisible,
Inc.




By:
            /s/Terry HowlettTerry
    HowlettChief Executive
      Officer and Chief Financial OfficerApril 11,
    2008




In
accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated:




By:
            /s/Terry Howlett
            
            By:
            /s/Brian PiwekTerry
    Howlett
            
            
            Brian
  PiwekDirector
            
            
            DirectorApril 11,
    2008
            
            
            April 11,
    2008




By:
            /s/Greg
McCartneyGreg
    McCartneyDirectorApril
      11, 2008