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 endedDecember
                    31, 2006[
                    ]
                TRANSITION
                    REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                    ACTFor
                    the transition period from _________ to ________Commission
                    file number000-25911
 
 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:702-433-7154
  Securities
                    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. $691,452
 
 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.
 $13,699,320
            as of March 28, 2007
 
 State
            the
            number of shares outstanding of each of the issuer’s classes of common equity,
            as of the latest practicable date. 64,443,778 Common Shares as of December
            31,
            2006
 
 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
                11Item
                    3.
                Legal
                    Proceedings
                11Item
                    4.
                Submission
                    of Matters to a Vote of Security
                    Holders
                11PART
                    IIItem
                    5.
                Market
                    for Common Equity and Related Stockholder Matters
                12Item
                    6.
                Management’s
                    Discussion and Analysis
                15Item
                    7.
                Financial
                    Statements
                21Item
                    8.
                Changes
                    In and Disagreements With Accountants on Accounting and
                    Financial Disclosure
                22Item
                    8A.
                Controls
                    and Procedures
                22Item
                    8B.
                Other
                    Information
                23PART
                    IIIItem
                    9.
                Directors,
                    Executive Officers, Promoters and Control Persons;
                    Compliance With Section 16(a) of the Exchange Act
                23Item
                    10.
                Executive
                    Compensation
                26Item
                    11.
                Security
                    Ownership of Certain Beneficial Owners and Management
                    and Related Stockholder Matters
                28Item
                    12.
                Certain
                    Relationships and Related
                    Transactions
                29Item
                    13.
                Exhibits
                29Item
                    14.
                Principal
                    Accountant Fees and Services
                30
  2
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              of Contents
  **** **PART
          I**
 **Item1.
          Description of Business**
  **Overview**
 
 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.
 
 **Description
          of Current Products and Agreements**
 
 Cosmetics
          and Personal Care Markets
 
 On
          October 7, 2005, we entered into a Master Sales, Collaboration and Distribution
          Agreement (“Agreement”) with EMD Chemicals Inc. (“EMD”), a New York corporation
          and affiliate of Merck KGaA of Darmstadt, Germany.  Under the terms of this
          Agreement, we granted EMD the exclusive right to distribute and sell our
          patented polymer delivery system, Invisicare, for the cosmetics and personal
          care markets in the entire world. EMD will be entitled to commission income
          based upon the gross revenues from the sale of sublicensing agreements
          as well
          as the polymers.  The initial term of this Agreement is until December 31,
          2008 and this Agreement will automatically renew for successive three year
          terms
          unless either party provides fourteen months advance notice of its intention
          to
          terminate or not renew the Agreement.
 
 As
          part
          of the consideration of the Agreement, we granted EMD options to purchase
          shares
          of our common stock. We executed a stock option agreement on February 27,
          2006
          where we granted EMD the option to purchase 5,817,525 shares of common
          stock at
          the exercise price of $0.172 per share exercisable until December 31, 2006.
          These options expired and were not exercised.
  3
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  Antibacterial/Antimicrobial
          Hand Sanitizer Lotion
 
 On
          February 21, 2005, we entered into a definitive distribution agreement
          with
          Dermal Defense, Inc. (“Dermal Defense”). Pursuant to this agreement, Dermal
          Defense acquired the exclusive marketing and distribution rights in the
          United
          States of America, Canada and Mexico for our antimicrobial hand sanitizer
          lotion
          composition which utilizes the active ingredient Triclosan 1% and incorporates
          our patented Invisicare ® polymer
          delivery system (the “Product”).
 
 Dermal
          Defense acquired these rights for the purchase price of $1,000,000 which
          has
          been paid in full. Under the terms of this agreement, Dermal Defense is
          obligated to pay us a royalty fee quarterly in the amount of $20,000 or
          5% of
          gross revenues generated by Dermal Defense from sales of the product in
          the
          quarter, whichever is greater.
 
 During
          the second quarter of 2005 and with our approval, Dermal Defense entered
          into an
          exclusive sub-distribution agreement with JD Nelson & Associates of Columbus
          Ohio (“JD Nelson”) and transferred all of its rights to distribute, market, and
          sell our antimicrobial hand sanitizer lotion in the United States of America,
          Canada and Mexico. Under the terms of the sub- distribution agreement,
          JD Nelson
          will pay a license fee and royalty on product sales to Dermal Defense and
          Dermal
          Defense will continue to pay us as agreed in the Distribution Agreement
          of
          February 21, 2005. As a result, the fees and royalties that we are due
          under
          this agreement remain unchanged. Currently, all required fees and royalties
          due
          in accordance with this agreement are paid and current. Dermal Defense
          and JD
          Nelson & Associates are prohibited under this agreement from manufacturing,
          marketing, distributing, or selling any competing product while the Distribution
          Agreement is in full force and effect.
 
 In
          December 2006, we entered into an Amended Distribution Agreement to revise
          the
          terms of the marketing and distribution rights granted to Dermal Defense
          and
          those rights provided to JD Nelson as a sub-distributor. In the Amended
          Distribution Agreement, we expanded the product for which rights were conferred
          to include our antimicrobial hand sanitizer lotion composition which utilizes
          the active ingredient Triclosan 1% and any other active ingredients included
          in
          the FDA Monograph exclusive of Chlorhexidine, Chlorhexidine gluconate or
          iodine
          or any combinations of iodine or Chlorhexidine gluconate or Chlorhexidine.
          In
          accordance with the Amended Distribution Agreement, JD Nelson must now
          pay all
          royalties under this arrangement directly to us.
 
 In
          May
          2005, we entered into a Distribution Agreement (“Agreement”) with Safe4Hours,
          Inc. (“Safe4Hours”), a Nevada corporation. Under the terms of this Agreement, we
          granted Safe4Hours the exclusive right 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. The Agreement prohibited Safe4Hours from manufacturing, marketing,
          distributing, or selling any competing product while the Agreement was
          in full
          force and effect. Safe4Hours acquired these rights for an up-front fee
          of
          $1,000,000, of which only $100,000 was received. The remaining $900,000
          balance
          was to be paid in quarterly installments based upon a predetermined formula
          until the remaining balance is received, and a royalty fee of no less than
          5% of
          gross revenue of all sales. Safe4Hours did not pay any quarterly installments
          under the terms of the Agreement and we were negotiating with
  4
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  Safe4Hours
          to revise the payment terms for the remaining $900,000 due under this Agreement.
          Following these negotiations, we were unable to reach an agreement and
          terminated the Agreement as a result of Safe4Hours’ failure to materially
          perform its obligations under the Agreement. We are currently negotiating
          with
          JD Nelson to acquire these rights. We have extended an option to JD Nelson
          to
          acquire these rights by March 31, 2007 for consideration of $500,000 and
          a 10%
          royalty payment. We can provide no assurance that we will execute an agreement
          with JD Nelson for these rights.
  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. We are negotiating with Cross Global
          regarding
          this matter and have taken no further action at this time. 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.
 
 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.
  5
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              of Contents
  **Status
          of Research and Development for New Applications**
 
 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:
 
 ·
              Insect
                  repellent ·
              Sunscreens ·
              Antifungal ·
              Acne ·
              Topical
                  analgesic ·
              Atopic
                  dermatitis ·
              Antimicrobial
                  hand sanitizer 
 Insect
          Repellents
 
 We
          are in
          the process of developing an insect repellent with an active ingredient
          that
          incorporates our topical polymer-based delivery systems and are presently
          undergoing in-house research. We anticipate that our research will be completed
          during the second quarter of 2007.  Our current research efforts are being
          devoted to producing a stick application for this product. In the event
          that we
          are successful in developing an effective insect repellent that incorporates
          our
          topical polymer-based delivery systems, the rights to distribute and sell
          the
          developed product will be subject to the terms of an Agreement with EMD
          Chemicals, the owner of the active ingredient. There can be no assurance
          that we
          will be successful in developing a viable insect repellent that incorporates
          our
          topical polymer-based delivery systems and the active ingredient.
 
 Sunscreen
 
 We
          developed and successfully tested the application of our polymer delivery
          vehicles 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.
 
 Antifungal
 
 We
          have
          an oral agreement with a pharmaceutical company relating to the development
          of
          an antifungal product that incorporates Invisicare with the active ingredient
          Clotrimazole. We have completed our initial research and development of
          this
          product and are awaiting the results of
  6
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  this
          study.  If this pharmaceutical company is satisfied with the study, we
          would expect to execute a licensing agreement with this company. A definitive
          licensing agreement would require the company to pay us an upfront license
          fee
          plus ongoing royalty payments based on territorial sales of the product. 
There can be no assurance that we will be successful in executing a license
          agreement for this product.
 
 Acne
 
 We
          have
          an oral agreement with a pharmaceutical company relating to the development
          of
          an acne product that incorporates Invisicare with the active ingredient
          retinoic
          acid. We have completed our initial research and development of this product
          and
          are waiting the results of this study.  If this pharmaceutical company is
          satisfied with the study, we would expect to execute a licensing agreement
          with
          this company. A definitive licensing agreement would require the company
          to pay
          us an upfront license fee plus ongoing royalty payments based on territorial
          sales of the product.  There can be no assurance that we will be successful
          in executing a license agreement for this product.
 
 Topical
          Analgesic
 
 We
          have
          an agreement with an OTC pharmaceutical company relating to the development
          of
          an analgesic that incorporates Invisicare with the active ingredient menthol.
          We
          have completed our research and development of this product and are expecting
          to
          execute a licensing agreement with this company. A definitive licensing
          agreement would require the company to pay us an upfront license fee plus
          ongoing royalty payments based on territorial sales of the product.  There
          can be no assurance that we will be successful in executing a license agreement
          for this product.
 
 Non-steroidal
          atopic dermatitis
 
 During
          the three months ended June 30, 2006, we developed a non-steroidal atopic
          dermatitis product, also referred to as hydro-gel, for atopic dermatitis
          that
          incorporates Invisicare for a pharmaceutical company. In July 2006, we
          were
          notified of a change in the FDA’s approval process and the pharmaceutical
          company declined to proceed forward following this change. We are now seeking
          to
          make this product available to a pharmaceutical company that can successfully
          secure FDA approval for the marketing and distribution of this product.
          There
          can be no assurance that this product will receive FDA approval. We are
          presently working with a pharmaceutical company in Canada to obtain approval
          to
          market and distribute this product in Canada.
 
 Antimicrobial
          Hand Sanitizer Lotion
 
 We
          have
          developed and are currently testing a new antimicrobial hand sanitizer
          lotion
          that utilizes the active ingredient Chlorhexidine (“Chlorhexidine antimicrobial
          hand sanitizer”).  Chlorhexidine is the active agent in scrub
          soaps currently used in the operating rooms of most hospitals worldwide.
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  As
          a part
          our development efforts to develop the Chlorhexidine antimicrobial hand
          sanitizer lotion, we developed a research plan that comprises of several
          studies.  The first and second studies were in-vitro tests designed to
          gauge the effectiveness of the Chlorhexidine antimicrobial hand sanitizer
          lotion
          when exposed to certain bacteria.  We received positive results from the
          first study.  The results of the second study indicated that further
          strengthening of the product could improve the product’s effectiveness. 
Our research department implemented the appropriate improvements and commenced
          a
          third study on viruses during the fourth quarter.  The third study was
          conducted by Retroscreen Virology Ltd. (“RVL”), a research company that is a
          division of St. Bartholomew's Hospital and the Royal London Hospital based
          in
          London, England, and designed to test the effectiveness of the Chlorhexidine
          antimicrobial hand sanitizer lotion in killing the H5N1 virus also known
          as the
          bird flu virus or avian flu. In-vitro testing conducted by RVL confirmed
          that
          the Chlorhexidine antimicrobial hand sanitizer lotion got a greater than
          99.9%
          inactivation/kill on the H5N1 virus at the following four points: 15 seconds,
          30
          seconds, 1 minute, and 5 minutes following contact. This in-vitro study
          was
          conducted by placing the Chlorhexidine antimicrobial hand sanitizer lotion
          in a
          dish and then exposing the H5N1 virus at the forgoing time intervals. Based
          upon
          these positive results, we retained RVL to conduct a further ex-vivo study
          to
          provide data on the effectiveness of the Chlorhexidine antimicrobial hand
          sanitizer when exposed to the H5N1 virus over an extended period of time. 
This ex-vitro study was conducted by applying the Chlorhexidine antimicrobial
          hand sanitizer lotion to dead skin specimens, simulating normal conditions
          of
          wash-off and skin perspiration, and then exposing the H5N1 virus to the
          skin
          specimen at various extended time intervals.
 
 This
          ex-vivo study confirmed that the Chlorhexidine antimicrobial hand sanitizer
          lotion got a greater than 98% inactivation/kill on the H5N1 virus at various
          intervals following application up to four hours. This study verifies that
          the
          patented polymer delivery system Invisicare® successfully holds the active
          ingredient Chlorhexidine on the skin for extended periods of time. Additional
          in-vitro studies performed by RVL using the Chlorhexidine antimicrobial
          hand
          sanitizer lotion confirmed a greater than 99.9% inactivation/kill on the
          seasonal flu virus Influenza A (H1 and H3) as well as Influenza B. We have
          suspended further studies until such time that we are able to enter into
          an
          agreement with a potential licensee for this product.
 
 We
          also
          commissioned another study referred to as a human repeat insult patch test
          (HRIPT).  This study exposes a minimum of 100 persons to the Chlorhexidine
          antimicrobial hand sanitizer to determine if continued use and exposure
          to the
          product will result in skin complications or sensitivities.  This study was
          completed and indicated that 5 people out of the 100 tested experienced
          a mild
          sensitization to the product. This study used a method that kept the product
          moist and occluded which was inconsistent with the product’s intended use. We
          are preparing a further study to test the product under normal use conditions.
 
 In
          the
          event that the Chlorhexidine antimicrobial hand sanitizer lotion proves
          to be a
          viable product, we may be required to file a New Drug Application with
          the US
          FDA because the drug Chlorhexidine is not presently an approved drug under
          the
          FDA Tentative Final Monograph (TFM) for Hand Sanitizers. We may also be
          required
          to seek similar regulatory approvals in other foreign jurisdictions. If
          we are
          required to file a New Drug Application with the US FDA, further development
          of
          this product may be both time and cost prohibitive for us. It is our intention
          to seek a pharmaceutical partner to fund there additional studies required
          to
          obtain FDA
  8
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  approval.
          There can be no assurance that we will successfully complete the research
          and
          development of this product and/or receive approval to make the Chlorhexidine
          antimicrobial hand sanitizer lotion available for sale in the United States
          or
          other foreign jurisdictions.
 
 We
          filed
          a patent application on the Chlorhexidine Hand Sanitizer Lotion formula
          with the
          United States Patent and Trademark Office. We can provide no assurance
          that we
          will receive patent approval for the Chlorhexidine Hand Sanitizer Lotion
          formula.
 
 We
          have
          retained a consultant in China to assist us in securing regulatory approval
          for
          this product within China. Our efforts to secure regulatory approval for
          this
          product in China are ongoing and we can provide no assurance that we will
          successfully receive the required approval to market and distribute this
          product
          within China.
 
 In
          December 2006, the Chlorhexidine antimicrobial hand sanitizer has received
          approval for marketing in Canada.
 
 We
          have
          reached a verbal agreement with EMD Chemicals of Hawthorne, NY, an affiliate
          of
          Merck KGaA of Darmstadt, Germany, to joint venture the distribution of
          this
          product in Southeast Asia and are presently seeking to memorialize this
          agreement in a written contract.
  ***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.
 
 ***Patents,
          Licenses, Trademarks, Franchises, Concessions, Royalty Agreements, or Labor
          Contracts***
 
 Patents
 
 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
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  Manufacturing
          the Patent Office further split this application into 2 distinct patents.
          Topical Compositions and Methods of Use are pending.
 
 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..
 
 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.
  ***Research
          and Development***
 
 We
          incurred research and development expenditures in the fiscal year ended
          December
          31, 2006 of $172,764 and $57,091 for the fiscal year ended December 31,
          2005.
 
 ***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.
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  ***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 6 total employees, including our sole executive officer,
          and all
          are full-time employees.
 
 During
          the year ended December 31, 2006, we retained two additional chemists to
          provide
          research and product development services.
 
 **Item2.
          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.
 
 **Item3.
          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.
 
 **Item4.
          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, 2006.
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  **PART
          II**
 
 **Item5.
          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, 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
                
                0.24Fiscal
                    Year Ended December 31, 2005Quarter
                    Ended
                
                High
                    $
                
                Low
                    $March
                    31, 2005
                
                0.20
                
                0.16June
                    30, 2005
                
                0.195
                
                0.17September
                    30, 2005
                
                0.21
                
                0.195December
                    31, 2005
                
                0.28
                
                0.19
 
 **Penny
          Stock**
 
 The
          SEC
          has adopted rules that regulate broker-dealer practices in connection with
          transactions 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;
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  (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
          December 31, 2006, we had approximately one hundred eighty (180) holders
          of
          record of our common stock and several hundred other stockholders 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
 
 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.
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  During
          the three months ended December 31, 2006, we entered into debt conversion
          agreements with two lenders converting the total principal balances of
          $19,000
          into 76,000 restricted shares of our common stock. These shares were issued
          pursuant to Section 4(2) of the Securities Act. The lenders represented
          their
          intention to acquire the securities for investment only and not with a
          view
          towards distribution. The lenders 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.
 
 During
          the three months ended December 31, 2006, we granted options to purchase
          130,000
          shares of our common stock, exercisable at $0.27 per share for a period
          of 5
          years from the date of issuance, to two consultants in exchange for services
          rendered. These options were issued pursuant to Section 4(2) of the Securities
          Act. We did not engage in any general solicitation or advertising.
 
 During
          the three months ended December 31, 2006, we issued 1,240,000 shares of
          our
          common stock, par value $0.001, at $0.20 per share. The gross proceeds
          we
          received from this offering were $248,000.  We completed this offering
          pursuant to Regulation S of the Securities Act.  Each investor represented
          to us that he was a non-US person as defined in Regulation S.  We did not
          engage in a distribution of this offering in the United States.  Each
          investor represented his intention to acquire the securities for investment
          only
          and not with a view toward distribution.  We requested our stock transfer
          agent to affix appropriate legends to the stock certificate issued to each
          investor in accordance with Regulation S and the transfer agent affixed
          the
          appropriate legends.  Each investor was given adequate access to sufficient
          information about us to make an informed investment decision.
  During
            the three months ended September 30, 2006, we issued 10,000 shares of
            our common
            stock in exchange for the exercise of warrants previously issued. We
            received
            gross proceeds of $20,000 upon the exercise of these warrants. These
            securities
            were issued pursuant to Section 4(2) of the Securities Act of 1933. We
            did not
            engage in any general solicitation or advertising. We issued the stock
            certificates and affixed the appropriate legends to the restricted
            stock.
 
 During
            the three months ended March 31, 2006, we issued 1,702,500 shares of
            our common
            stock in exchange for the exercise of warrants previously issued. We
            received
            gross proceeds of $278,625 upon the exercise of these warrants. These
            securities
            were issued pursuant to Section 4(2) of the Securities Act of 1933. We
            did not
            engage in any general solicitation or advertising. We issued the stock
            certificates and affixed the appropriate legends to the restricted
            stock.
 **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, 2006.
 
 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 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.
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 **Equity
          Compensation Plans as of December 31, 2006**
 A
                B
                C**Plan
                    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
                1,600,000
                0.215
                9,900,000Equity
                    compensation plans
                  not
                    approved by security
                  holders
                4,210,000
                0.0785
                -Total
                5,810,000
                $0.0863
                9,900,000
 
 **Item6.
          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 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
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  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, 2006 and
          2005**
 
 *Revenues*
 
 Our
          total
          revenue reported for the year ended December 31, 2006 was $691,452, a 19%
          decrease from $850,280 for the year ended December 31, 2005. During the
          year
          ended December 31, 2006, $434,333 of the revenue generated was attributable
          to
          payments for royalties and distribution and licensing rights of our products
          and
          $257,119 of the revenue generated was attributable to product sales. For
          the
          year ended December 31, 2005, we generated revenue of $273,520 from product
          sales and $556,000 from distribution and licensing rights. The decrease
          in
          revenues for the year ended December 31, 2006 from the prior year is
          attributable to a shift in our business during the reporting period where
          we
          primarily sold our polymers and not packaged products that incorporate
          our
          polymers. The revenues received for sales of just the polymers are significantly
          less that the revenues received for producing packaged products that incorporate
          our polymers.
 
 *Cost
          of Revenues*
 
 Our
          cost
          of revenues for the year ended December 31, 2006 decreased to $77,465 from
          the
          prior year when cost of revenues was $140,399. The decrease in our cost
          of
          revenues for the year ended December 31, 2006 from the prior year is
          attributable to a shift in our business during the reporting period where
          we
          primarily sold Invisicare and not completed/packaged products that incorporate
          Invisicare. During the period we granted our 2 major licensees the rights
          to
          manufacture the finished product formulations themselves. This resulted
          in a
          significant drop in product revenue.
 
 *Gross
          Profit*
 
 Gross
          profit for the year ended December 31, 2006 was $613,987, or approximately
          88%
          of sales. Gross profit for the year ended December 31, 2005 was $850,280,
          or
          approximately 83% of sales. The decrease in total gross profit for the
          for the
          year ended December 31, 2006 from the prior year is attributable to lower
          product sales and less revenue generated from royalties and distribution
          and
          licensing rights.
  *Operating
          Expenses*
 
 Operating
          expenses increased to $2,711,783 for the year ended December 31, 2006 from
          $1,743,139 for the year ended December 31, 2005. Our operating expenses
          for the
          year ended December 31, 2006 consisted of depreciation and amortization
          expenses
          of $261,187 and selling, general and administrative expenses of $2,450,596.
          Our
          operating expenses for the year ended December 31, 2005 consisted of
          depreciation and amortization expenses of $275,710 and selling,
  16
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  general
          and administrative expenses of $1,467,429. We incurred stock-based compensation
          expenses of $859,160 for the year ended December 31, 2006, as compared
          to $4,257
          for the year ended December 31, 2005. The increase in operating expenses
          for the
          year ended December 31, 2006 from the prior year is primarily attributable
          to
          expenditures associated with the research and development of the Chlorhexidine
          antimicrobial hand sanitizer lotion and an expense of $643,051 incurred
          in
          connection with the issuance of stock options to EMD pursuant to a distribution
          agreement entered into in October 2005.
 
 *Net
          Loss*
 
 Net
          loss
          for the year ended December 31, 2006 was $2,097,604, compared to net loss
          of
          $1,031,151 for the year ended December 31, 2005. The increase in our net
          loss
          was primarily attributable to increased expenditures for research and product
          development expenses associated with the issuance of stock options during
          the
          reporting period.
 
 **Liquidity
          and Capital Resources**
 
 As
          of
          December 31, 2006, we had total current assets of $106,364 and total assets
          in
          the amount of $887,191. Our total current liabilities as of December 31,
          2006
          were $1,150,028. We had a working capital deficit of $1,043,664 as of December
          31, 2006.
 
 Operating
          activities used $862,075 in cash for the year ended December 31, 2006.
          Our net
          loss of $2,097,604 was the primary component of our negative operating
          cash
          flow. Cash flows used by investing activities during the year ended December
          31,
          2006 was $13,847 for the purchase of fixed assets and intangible assets.
          Cash
          flows provided by financing activities during the year ended December 31,
          2006
          consisted of $870,500 as proceeds from the issuance of common stock and
          $25,728
          as proceeds from a related party payable.
 
 Based
          upon our current financial condition, we 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, 2006, 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 $13,689,926 since our
  17
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  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
          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
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  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 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**
 
 The
          FASB
          has published FASB Interpretation (FIN) No. 48 (FIN No. 48), Accounting
          for
          Uncertainty in Income Taxes, to address the noncomparability in reporting
          tax
          assets and liabilities resulting from a lack of specific guidance in FASB
          Statement of Financial Accounting Standards (SFAS) No. 109 (SFAS No. 109),
          Accounting for Income Taxes, on the uncertainty in income taxes recognized
          in an
          enterprise’s financial statements. Specifically, FIN No. 48 prescribes (a) a
          consistent recognition threshold and (b) a measurement
          attribute for the financial statement recognition and measurement of a
          tax
          position taken or expected to be taken in a tax return, and provides related
          guidance on derecognition, classification, interest and penalties, accounting
          in
          interim periods, disclosure, and transition. FIN No. 48 will apply to fiscal
          years beginning after December 15, 2006, with earlier adoption permitted.
          We do
          not expect the adoption of FIN No. 48 to have a material effect on our
          financial
          statements.
 
 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. Based on the funded status of our plans as of the date
          of our
          most recent actuarial valuation, we expect the adoption of FAS 158 to reduce
          reported stockholders' equity by approximately $100 million. However, the
          actual
          impact of adopting FAS 158 is highly dependent on a number of factors,
          including
          the discount rates in effect at the next measurement date, and the actual
          rate
          of return
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  on
          pension assets during fiscal 2007. These factors could significantly increase
          or
          decrease the expected impact of adopting FAS 158.
  In
          September, 2006, the Securities and Exchange Commission (SEC) issued Staff
          Accounting Bulletin 108, “Considering the Effects on Prior Year Misstatements
          when Quantifying Misstatements in Current Year Financial Statements,” (“SAB
          108”). SAB 108 requires registrants to quantify errors using both the income
          statement method (i.e. iron curtain method) and the rollover method and
          requires
          adjustment if either method indicates a material error. If a correction
          in the
          current year relating to prior year errors is material to the current year,
          then
          the prior year financial information needs to be corrected. A correction
          to the
          prior year results that are not material to those years would not require
          a
“restatement process” where prior financials would be amended. SAB 108 is
          effective for fiscal years ending after November 15, 2006. We do not anticipate
          that SAB 108 will have a material effect on our financial position, results
          of
          operations or cash flows.
 
 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.
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 **Item7.
          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,
                    2006F-3
                Consolidated
                    Statements of Operations - Years Ended December
                    31, 2006 and December 31, 2005F-4
                Consolidated
                    Statement of Stockholders’ Equity (Deficit) and
                    Comprehensive Loss for the Years Ended December 31, 2006 and
                    December 31,
                    2005F-5
                Consolidated
                    Statements of Cash Flows for the Years Ended
                    December 31, 2006 and December 31, 2005F-6
                Notes
                    to Consolidated Financial
                    Statements
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  REPORTOF
        INDEPENDENT REGISTERED PUBLIC ACCOUNTANTING
        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, 2006, and the related consolidated statements of operations,
        stockholders’ equity, and cash flows for the years ended December 31, 2006
        and 200 5.
        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, 2006, and the consolidated results of its operations and cash
        flows
        for the years ended December 31, 2006 and 2005 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, Certified Public Accountants
 March
        29,
        2007
 Westlake
        Village, California


F-1
 Table
          of Contents


SKINVISIBLE,
      INC.


CONSOLIDATED BALANCESHEET




ASSETS
            December
                31, 2006Current
              assetsCash
            $
            50,070Accounts
                receivable
            
            28,812Inventory
            
            22,902Due
                from related party
            
            1,119Prepaid
                expense and other current assets
            
            3,461Total
                current assets
            
            106,364Fixed
              assets, net
            
            29,652Intangible
              and other assetsPatents
                and trademarks, net
            
            41,175License
                and distributor rights
            
            50,000Prepaid
                royalty fees
            
            660,000Total
              assets
            $
            887,191LIABILITIES
              AND STOCKHOLDERS' DEFICITCurrent
              liabilitiesAccounts
                payable and accrued liabilities
            $
            299,300Loans
                from related party
            
            25,728Unearned
                revenue
            
            825,000Total
                current liabilities
            
            1,150,028Long-term
              liabilities
            
            --Total
              liabilities
            
            1,150,028Commitments
              and contingencies
            
            --Stockholders'
              deficitCommon
                  stock; $0.001 par value; 100,000,000 shares64,443,748
                  shares issued and outstanding
            
            64,444Additional
                paid-in capital
            
            13,363,317Stock
                subscription payable
            
            --Accumulated
                other comprehensive loss
            
            (672)Accumulated
                deficit
            
            (13,689,926)Total
                stockholders' deficit
            
            (262,837)$
            887,191Total
              liabilities and stockholders' equity




See
      Accompanying Report of Independent Registered Public Accounting Firm and Notes
      to Consolidated Financial Statements


F-2
 Table
          of Contents
 SKINVISIBLE,
        INC.
 CONSOLIDATED
STATEMENTSOF
        OPERATIONS
 For
                    the twelve months ended
                  December
                    31, 2006
                
                For
                    the twelve months ended
                  December
                    31, 2005Revenues
                $
                691,452
                
                $
                850,280Cost
                  of revenues
                
                77,465
                
                
                140,399Gross
                    profit
                
                613,987
                
                
                709,881Operating
                  expensesDepreciation
                    and amortization
                
                261,187
                
                
                275,710Selling
                    general and administrative
                
                2,450,596
                
                
                1,467,429Total
                    operating expenses
                
                2,711,783
                
                
                1,743,139Loss
                    before provision for income taxes
                
                (2,097,796)
                
                
                (1,033,258)Other
                  income (expense)
                
                192
                
                
                2,107Total
                    other income (expense)
                
                192
                
                
                2,107Provision
                  for income taxes
                
                --
                
                
                --Net
                  loss
                $
                (2,097,604)
                
                $
                (1,031,151)Other
                  comprehensive income (loss)Foreign
                    currency translation adjustment
                
                (672)
                
                
                --Comprehensive
                  loss
                $
                (2,098,276)
                
                $
                (1,031,151)Basic
                  income (loss) per common share
                
                (0.03)
                
                
                (0.02)Diluted
                  income (loss) per common share
                
                (0.03)
                
                
                (0.02)Basic
                    weighted average common shares outstanding
                
                61,925,163
                
                
                57,263,522
  See
        Accompanying Report of Independent Registered
        Public Accounting Firm and Notes to Consolidated Financial
        Statements
 F-3
 Table
            of Contents


SKINVISIBLE,
      INC.


CONSOLIDATED
      STATEMENT OF STOCKHOLDERS'EQUITY




Common
                  Stock
              
              Additional
              
              Accumulated
                    Other
                    Compreshensive
              
              Stock
                  Subscription
              
              Accumulated
              
              Total
                  Stockholders'Shares
              
              Amount
              
              Paid-in
                  Capital
              
              Income
                  (Loss)
              
              Receivable
              
              Deficit
              
              EquityBalance,
                  December 31, 2003
              $
              48,714,618
              
              $
              48,715
              
              $
              10,450,665
              
              $
              --
              
              $
              --
              
              $
              (9,756,199)
              
              $
              743,181Issuance
                  of stock for cash, weighted average price of $0.10 per
                  share
              
              6,579,130
              
              
              6,579
              
              
              601,315
              
              
              --
              
              
              --
              
              
              --
              
              
              607,894Issuance
                  of stock for services, $ 0.10 per share
              
              331,500
              
              
              331
              
              
              31,819
              
              
              --
              
              
              --
              
              
              --
              
              
              32,150Net
                  loss
              
              --
              
              
              --
              
              
              --
              
              
              --
              
              
              --
              
              
              (804,972)
              
              
              (804,972)Balance,
                  December 31, 2004
              
              55,625,248
              
              
              55,625
              
              
              11,083,799
              
              
              --
              
              
              --
              
              
              (10,561,171)
              
              
              578,253Issuance
                  of stock for services, $ 0.18 per share
              
              1,100,000
              
              
              1,100
              
              
              196,900
              
              
              --
              
              
              --
              
              
              --
              
              
              198,000Issuance
                  of stock in lieu of debt, $ 0.13 per share
              
              1,000,000
              
              
              1,000
              
              
              129,000
              
              
              --
              
              
              --
              
              
              --
              
              
              130,000Issuance
                  of stock for settlement of debt, $0.10 per share
              
              100,000
              
              
              100
              
              
              9,900
              
              
              --
              
              
              --
              
              
              --
              
              
              10,000Issuance
                  of stock for cash, $0.10 per share
              
              100,000
              
              
              100
              
              
              9,900
              
              
              --
              
              
              --
              
              
              --
              
              
              10,000Issuance
                  of stock in lieu of debt, $ 0.10 per share
              
              210,000
              
              
              210
              
              
              20,790
              
              
              --
              
              
              --
              
              
              --
              
              
              21,000Issuance
                  of stock for cash, $0.05 per share
              
              40,000
              
              
              40
              
              
              1,960
              
              
              --
              
              
              --
              
              
              --
              
              
              2,000Issuance
                  of stock for services, $ 0.21 per share
              
              50,000
              
              
              50
              
              
              10,450
              
              
              --
              
              
              --
              
              
              --
              
              
              10,500Cash
                  rceived for future issuance of stock
              
              --
              
              
              --
              
              
              --
              
              
              --
              
              
              134,873
              
              
              --
              
              
              134,873Issuance
                  of stock options
              
              --
              
              
              --
              
              
              4,257
              
              
              --
              
              
              --
              
              
              --
              
              
              4,257Issuance
                  of stock warrants
              
              --
              
              
              --
              
              
              19,046
              
              
              --
              
              
              --
              
              
              --
              
              
              19,046Net
                  loss
              
              --
              
              
              --
              
              
              --
              
              
              --
              
              
              --
              
              
              (1,031,151)
              
              
              (1,031,151)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
              
              --
              
              
              --
              
              
              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
              
              --
              
              
              --
              
              
              --
              
              
              (672)
              
              
              --
              
              
              --
              
              
              (672)Net
                  loss
              
              --
              
              
              --
              
              
              --
              
              
              --
              
              
              --
              
              
              (2,097,604)
              
              
              (2,097,604)Balance,
                  December 31, 2006
              
              64,443,748
              
              $
              64,444
              
              $
              13,363,317
              
              $
              (672)
              
              $
              --
              
              $
              (13,689,926)
              
              $
              (262,837)




See
        Accompanying Report of Independent Registered
        Public Accounting Firm and Notes to Consolidated Financial
        Statements
 F-4
 Table
            of Contents


SKINVISIBLE,
      INC.


CONSOLIDATED
      STATEMENTS OF CASHFLOWS


For
                  the twelve months ended
                December
                  31, 2006
              
              For
                  the twelve months ended
                December
                  31, 2005Cash
                flows from operating activities:Net
                  loss
              $
              (2,097,604)
              
              $
              (1,031,151)Adjustments
                  to reconcile net loss to net cash
                  used by operating activities:Depreciation
                  and amortization
              
              261,187
              
              
              275,710Stock
                  based compensation
              
              859,160
              
              
              241,803Loss
                  on disposal of assets
              
              --
              
              
              --Changes
                  in operating assets and liabilities:Change
                  from currency translation
              
              
              
              
              --Change
                  in inventory
              
              50,892
              
              
              38,848Change
                  in accounts receivable
              
              99,177
              
              
              (108,048)Change
                  in deposits
              
              --Change
                  in prepaid expenses and other current assets
              
              2,883
              
              
              (4,423)--
              
              
              --Change
                  in stock subscription receivableChange
                  in bank overdraft
              
              --
              
              
              --Change
                  in accounts payable and accrued liabilities
              
              111,584
              
              
              11,399Change
                  in unearned revenue
              
              (153,000)
              
              
              355,000Net
                  cash used by operating activities
              
              (862,075)
              
              
              (204,501)Cash
                flows from investing activities:Purchase
                  of fixed assets and untangible assets
              
              (13,847)
              
              
              (4,077)Net
                  cash used by investing activities
              
              (13,847)
              
              
              (4,077)Cash
                flows from financing activities:Proceeds
                  from related party payable
              
              25,728
              
              
              --Proceeds
                  from stock subscription payable
              
              --
              
              
              134,873Proceeds
                  from issuance of common stock
              
              870,500
              
              
              12,000Net
                  cash provided by financing activities
              
              896,228
              
              
              146,873Effect
                of exchange rate changes on cash and assets
              
              (965)
              
              
              --Net
                change in cash
              
              19,341
              
              
              (61,705)Cash,
                beginning of year
              
              30,729
              
              
              92,434Cash,
                end of year
              $
              50,070
              
              $
              30,729Supplemental
                disclosure of cash flow information:Stock
                  issued for conversion of accounts payable, 100,000 shares at
                  $0.10
              $
              --
              
              $
              21,000Stock
                  issued for conversion of accounts payable, 76,000 shares at
                  $0.25
              $
              19,000
              
              $
              --




See
      Accompanying Report of Independent Registered
      Public Accounting Firm and Notes to Consolidated Financial
      Statements


F-5
 Table
          of Contents


SKINVISIBLE,
      INC.


NOTESTO
      CONSOLIDATED FINANCIAL STATEMENTS


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.





During
      1999, the Company also formed a subsidiary titled Skinvisible International,
      Inc. and Skinvisible Pharmaceuticals (Canada), Inc. On January 1, 2000, the
      Company decided to discontinue operations of its subsidiary, Skinvisible
      International, Inc.





Skinvisible,
      Inc. together with its subsidiaries 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 approximately $13,689,926 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 the 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
      subsidiaries. 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 -
      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.





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.





F-6
 Table
          of Contents
 SKINVISIBLE,
          INC.
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS





1. DESCRIPTION
      OF BUSINESS AND SUMMARY OF SIGNIFICANT POLICIES (continued)





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.





Earnings
      (loss) per share -
      Basic
      earnings (loss) per share exclude any dilutive effects of options, warrants
      and
      convertible securities. Basic earnings (loss) per share is computed using the
      weighted-average number of outstanding common stocks during the applicable
      period. Diluted earnings per share is computed using the weighted-average number
      of common and common stock equivalent shares outstanding during the period.
      Common stock equivalent shares are excluded from the computation if their effect
      is antidilutive.





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.





Comprehensive
      income (loss) -
      The
      Company has no components of other comprehensive income. Accordingly, net loss
      equals comprehensive loss for all periods.





F-7
 Table
          of Contents
 SKINVISIBLE,
          INC.
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS





1. DESCRIPTION
      OF BUSINESS AND SUMMARY OF SIGNIFICANT POLICIES (continued)





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, 2006 and 2005, the Company
      incurred advertising costs totaling $87,741 and $32,913, 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, 2006 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, 2006 and 2005 totaled $86,576 and $4,257 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 would have an anti-dilutive effect.





Recent
      accounting pronouncements - The
      FASB
      has published FASB Interpretation (FIN) No. 48 (FIN No. 48), Accounting for
      Uncertainty in Income Taxes, to address the noncomparability in reporting tax
      assets and liabilities resulting from a lack of specific guidance in FASB
      Statement of Financial Accounting Standards (SFAS) No. 109 (SFAS No. 109),
      Accounting for Income Taxes, on the uncertainty in income taxes recognized
      in an
      enterprise’s financial statements. Specifically, FIN No. 48 prescribes (a) a
      consistent recognition threshold and (b) a measurement
      attribute for the financial statement recognition and measurement of a tax
      position taken or expected to be taken in a tax return, and provides related
      guidance on derecognition, classification, interest and penalties, accounting
      in
      interim periods, disclosure, and transition. FIN No. 48 will apply to fiscal
      years beginning after December 15, 2006, with earlier adoption permitted. The
      Company does not expect the adoption of FIN No. 48 to have a material effect
      on
      its financial statements.





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





1. DESCRIPTION
      OF BUSINESS AND SUMMARY OF SIGNIFICANT POLICIES (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. Based on the funded status of our plans as of the date of our
      most recent actuarial valuation, we expect the adoption of FAS 158 to reduce
      reported stockholders' equity by approximately $100 million. However, the actual
      impact of adopting FAS 158 is highly dependent on a number of factors, including
      the discount rates in effect at the next measurement date, and the actual rate
      of return on pension assets during fiscal 2007. These factors could
      significantly increase or decrease the expected impact of adopting FAS 158.





In
      September, 2006, the Securities and Exchange Commission (SEC) issued Staff
      Accounting Bulletin 108, “Considering the Effects on Prior Year Misstatements
      when Quantifying Misstatements in Current Year Financial Statements,” (“SAB
      108”). SAB 108 requires registrants to quantify errors using both the income
      statement method (i.e. iron curtain method) and the rollover method and requires
      adjustment if either method indicates a material error. If a correction in
      the
      current year relating to prior year errors is material to the current year,
      then
      the prior year financial information needs to be corrected. A correction to
      the
      prior year results that are not material to those years, would not require
      a
“restatement process” where prior financials would be amended. SAB 108 is
      effective for fiscal years ending after November 15, 2006. We do not anticipate
      that SAB 108 will have a material effect on our financial position, results
      of
      operations or cash flows.




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.





Reclassification -
      The
      financial statements from 2005 reflect certain reclassifications, which will
      have no effect on net income, to conform to classifications in the current
      year.





2. FIXED
      ASSETS





Fixed
      assets consist of the following as of December 31, 2006:




Machinery
              and
              equipment
            $
            55,463Furniture
              and fixtures
            
            113,635Computers,
              equipment and software
            
            41,889Leasehold
              improvements
            
            12,569Lab
              equipment
            
            115,946339,502Less:
              accumulated depreciation
            
            309,850Fixed
              assets, net
            $
            29,652




F-9
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SKINVISIBLE,
        INC.
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS


3. INTANGIBLE
      AND OTHER ASSETS





Patents
      and trademarks are capitalized at its historical cost and are amortized over
      their useful lives. As of December 31, 2006, patents and trademarks total
      $70,233, net of accumulated amortization of $29,058.





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, 2006.





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 annual basis calculated within 60 days of
      each anniversary date of the agreement. As of December 31, 2006, the Company
      has
      paid a total of $1,880,000 of which $1,220,000 has been expensed and $660,000
      has been recorded as prepaid royalties which will expense in the future in
      accordance to the terms of the agreement. The remaining future royalties
      payments related to the agreement approximates $120,000.





4. STOCK
      OPTIONS AND WARRANTS





Stock
      options employees and directors -
      During
      the year ended December 31, 2006 and 2005, the Company granted stock options
      to
      employees and directors totaling 1,050,000 and 35,000 shares of its common
      stock
      with a weighted average strike price of $0.21 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 193%.
      The Company has recorded an expense of $131,613 for the year ended December
      31,
      2006 based upon the vested portion of the stock options totaling 691,667 up
      through December 31, 2006.





Stock
      options non-employees and directors -
      During
      the year ended December 31, 2006 and 2005, the Company granted stock options
      for
      services totaling 425,000 and 145,000 shares of its common stock with a weighted
      average strike price of $0.19 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 $81,997 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 193%.





During
      the year ending December 31, 2006 the Company entered into an agreement as
      discussed in note 5, which included stock options of 5,817,525 shares of common
      stock, with a strike price of $0.17. The options expired December 31, 2006.




F-10
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          of Contents
 SKINVISIBLE,
          INC.
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS





4. STOCK
      OPTIONS AND WARRANTS (continued)





The
      following is a summary of options activity during the years ended December
      31,
      2006 and 2005:


Number
                  of
                  Shares
            
            Weighted
                  Average
                  Exercise
                    PriceBalance,
                December 31, 2004
            
            2,720,000
            
            $
            0.08Options
                granted and assumed
            
            180,000
            
            
            0.13Options
                expired
            
            --
            
            
            --Options
                canceled
            
            --
            
            
            --Options
                exercised
            
            75,000
            
            
            0.05Balance,
                December 31, 2005
            
            2,825,000
            
            $
            0.08Options
                granted and assumed
            
            7,292,525
            
            
            0.18Options
                expired
            
            5,817,525
            
            
            --Options
                canceled
            
            --
            
            
            --Options
                exercised
            
            100,000
            
            
            0.12Balance,
                December 31, 2006
            
            4,200,000
            
            $
            .11




Stock
      warrants - During
      the year ended December 31, 2006, the Company granted stock warrants related
      to
      common stock issued through a private placement totaling 670,000 with a strike
      price of $0.30 per share.





The
      following is a summary of warrants activity during the years ended December
      31,
      2006 and 2005:





Number
                  of
                  Shares
            
            Weighted
                  Average
                  Exercise
                    PriceBalance,
                December 31, 2004
            
            7,162,000
            
            $
            0.15Warrants
                granted and assumed
            
            --
            
            
            --Warrants
                expired
            
            --
            
            
            --Warrants
                canceled
            
            --
            
            
            --Warrants
                exercised
            
            --
            
            
            --Balance,
                December 31, 2005
            
            7,162,000
            
            $
            0.15Warrants
                granted and assumed
            
            670,000
            
            
            0.30Warrants
                expired
            
            4,802,500
            
            
            0.20Warrants
                canceled
            
            --
            
            
            --Warrants
                exercised
            
            --
            
            
            --Balance,
                December 31, 2006
            
            3,030,000
            
            $
            0.11




F-11
 Table
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 SKINVISIBLE,
          INC.
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS


5. 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, 2006, the Company has received
      $925,000 and has reflected $375,000 as unearned revenue and $550,000 as revenue
      in the accompanying consolidated financial statements. 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, 2006, the Company has received $1,000,000 and has reflected $450,000 as
      unearned revenue and $550,000 as revenue in the accompanying consolidated
      financial statements. 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.





In
      May
      2005, the Company entered into a distribution agreement with Safe4Hours, Inc.
      (“Safe4Hours”) whereby, the Company would provide exclusive marketing and
      distribution rights to its proprietary antimicrobial hand sanitizer for all
      countries of the world except Canada, United States, and Mexico. Terms of the
      agreement required Safe4Hours to pay a fee of $1 million comprising of a
      non-refundable deposit of $25,000 with the balance of $975,000 payable as
      recognized as revenue ratably over a five year period. As of December 31, 2006,
      the Company has received $120,000 and has reflected $120,000 as revenue in
      the
      accompanying consolidated financial statements. The terms of the agreement
      were
      not satisfied and the contract was cancelled as of December 31,
      2006.





In
      October 2005, the Company entered into a distribution agreement with EMD
      Chemicals Inc. (“EMD”) whereby, the Company would provide exclusive marketing
      and distribution rights to its proprietary polymer delivery system “Invisicare”
for all countries of the world. Terms of the agreement states that the Company
      would grant EMD options to purchase shares of their common stock. A stock option
      agreement was executed on February 27, 2006, where the Company granted EMD
      the
      option to purchase 5,817,525 shares of common stock at the exercise price of
      $0.172 per share exercisable until December 31, 2006. The option was valued
      at
      $643,051  determined
      using Black-Scholes option pricing model based on the following assumptions:
      term of 0.84 year, volatility rate of 192%, risk free interest rate of 3.5%
      and
      dividend yield of 0% The
      option expired on December 31, 2006 but the expense remained incurred as it
      was
      deemed as a contract negotiation incentive.





6. COMMITMENTS
      AND CONTINGENCIES





Lease
      obligations - The
      Company has operating leases for its offices. Future minimum lease payments
      under the operating leases for the facilities as of December 31, 2006 are as
      follows:




2007
            $
            $95,4642008
            
            97.0282009
            
            98,622




Rental
      expense, resulting from operating lease agreements, approximated $93,711 for
      the
      year ended December 31, 2006.




7. SUBSEQUENT
      EVENTS




In
      January and February 2007, the Company issued 75,000 shares of common stock
      relating to the 2006 Private Placement for $0.20 cents per share for a total
      received of $15,000.




F-12
 Table
          of Contents
  **Item8.
          Changes In and Disagreements with Accountants on Accounting
          and Financial** **Disclosure**
 
 No
          events
          occurred requiring disclosure under Item 304(b) of Regulation S-B.
 
 **Item8A.
          Controls and Procedures**
 
 We
          carried out an evaluation of the effectiveness of the design and operation
          of
          our disclosure controls and procedures (as defined in Exchange Act Rules
          13a-15(e) and 15d-15(e)) as of December 31, 2006. This evaluation was carried
          out under the supervision and with the participation of our Chief Executive
          Officer and our Chief Financial Officer, Mr. Terry Howlett. Based upon
          that
          evaluation, our Chief Executive Officer and Chief Financial Officer concluded
          that, as of December 31, 2006, our disclosure controls and procedures are
          effective. There have been no significant changes in our internal controls
          over
          financial reporting during the quarter ended December 31, 2006 that have
          materially affected or are reasonably likely to materially affect such
          controls.
 
 Disclosure
          controls and procedures are controls and other procedures that are designed
          to
          ensure that information required to be disclosed in our reports filed or
          submitted under the Exchange Act are recorded, processed, summarized and
          reported, within the time periods specified in the SEC's rules and forms.
          Disclosure controls and procedures include, without limitation, controls
          and
          procedures designed to ensure that information required to be disclosed
          in our
          reports filed under the Exchange Act is accumulated and communicated to
          management, including our Chief Executive Officer and Chief Financial Officer,
          to allow timely decisions regarding required disclosure.
 
 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.
  22
 Table
              of Contents
  **Item
          8B. Other information**
 
 None.
 
 **PART
          III**
 
 **Item9.
          Directors, Executive Officers, Promoters and Control Persons;
          Compliance with** **Section
          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
                59
                Chief
                    Executive Officer, Chief Financial Officer, &
                    DirectorJost
                    Steinbruchel
                66
                DirectorGreg
                    McCartney
                55
                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 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.
          Jost Steinbruchel** ,
          has
          been a member of our board of directors since February 17, 1999. Mr.
          Steinbruchel has operated his own company since 1984, in Geneva Switzerland
          specializing in financial engineering in international trade throughout
          a wide
          network of banking relations, principally in Europe, China, Australia and
          Africa. Previously, he spent 20 years of his professional career as an
          executive
          in international banking with Lloyds of London, Citicorp and Credit Suisse.
          Mr.
          Steinbruchel has a law degree from Sorboure, Paris.
  **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
  23
 Table
              of Contents
  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 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
  24
 Table
              of Contents
  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, 2006, the board of directors:
 
 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, 2006 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,
          2006, 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, 2006:
  25
 Table
              of Contents
  Name
                    and principal position
                Number
                    of
                  late
                    reports
                Transactions
                    not
                  timely
                    reported
                Known
                    failures to
                  file
                    a required formTerry
                    Howlett
                  CEO,
                    CFO & Director
                0
                0
                0Jost
                    Steinbruchel
                  Director
                0
                0
                0Greg
                    McCartney
                  Director
                0
                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.
  **Item10.
          Executive Compensation**
 
 **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 2006 and
          2005.
 
 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
                2006
                  2005
                160,000
                  145,000
                -
                  -
                36,000
                  85,000
                -
                  -
                -
                  -
                -
                  -
                -
                  24,522
                196,000
                  254,522
 
 **Narrative
          Disclosure to the Summary Compensation Table**
  We
          have a
          3 year employment agreement dated January 1, 2006 with Mr. Howlett. Mr.
          Howlett
          was paid an annual base salary of $165,000 for the year ended December
          31, 2006
          and $145,000 for the year ended December 31, 2005. During the fiscal year
          ended
          December 31, 2006, we granted Mr. Howlett options to purchase 200,000 shares
          of
          our common stock at the exercise price of $0.18 per share with an expiration
          date of January 3, 2011. These options are fully
  26
 Table
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  vested
          and immediately exercisable. The aggregate value of these options 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.
 
 **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,
          2006.
 
 **OUTSTANDING
                    EQUITY AWARDS AT FISCAL YEAR-END**OPTION
                    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
                200,000
                  1,200,000
                  1,000,000
                -
                  -
                  -
                -
                  -
                  -
                0.18
                  0.05
                  0.05
                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,
          2006.
 
 **DIRECTOR
                    COMPENSATION**Name
                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
                12,000
                -
                18,000
                -
                -
                -
                30,000Greg
                    McCartney
                12,000
                -
                18,000
                -
                -
                -
                30,000
  27
 Table
              of Contents
  **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.
 
 During
          the fiscal year ended 2006, we granted Mr. McCartney and Mr. Steinbruchel
          each
          100,000 stock options at the exercise price of $0.18 per share with an
          expiration date of January 4, 2011 in exchange for services
          rendered as members of our board of directors .
 
 **Item11.
          Security Ownership of Certain Beneficial Owners and
          Management and Related** **Stockholder
          Matters**
 
 The
          following table sets forth, as of December 31, 2007, 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 64,443,748 shares of
          common
          stock issued and outstanding on December 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
                5,523,248
                    shares
                12.3%(2)Common
                Jost
                    Steinbruchel
                1,750,000
                    shares
                4.9%(3)Common
                Greg
                    McCartney
                90,000
                    shares
                0.5%(4)**Total
                    of All Directors and Executive Officers:**
                7,363,248
                    shares
                17.7%**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 1,200,000
                  shares at
                  a price of $0.05; options that may be exercised immediately to
                  purchase
                  200,000 shares at a price of $0.18, and warrants that may be immediately
                  exercised to purchase 1,000,000 shares at a price of
                  $0.05. (3)
              Includes
                  options that may be exercised immediately to purchase 300,000 shares
                  at a
                  price of $0.05, options that may be exercised immediately to purchase
                  100,000 shares at a price of $0.18, and warrants that may be exercised
                  immediately to purchase 1,000,000 shares at a price of
                  $0.05  28
 Table
              of Contents
  (4)
              Includes
                  options that may be exercised immediately to purchase 100,000 shares
                  at a
                  price of $0.10 and options that may be exercised immediately to
                  purchase
                  100,000 shares at a price of $0.18. 
 **Item12.
          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, 2006
          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 **.**
 
 **Item13.
          Exhibits**
 
 Exhibit
                    Number
                Description10.1
                Amendment
                    to Distribution Agreement (1)10.2
                Employment
                    Agreement with Terry
                    Howlett14.1
                Code
                    of Ethics(2)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 Current report on Form 10-KSB filed with the Securities
                  and Exchange Commission on April 14,
                  2005. 29
 Table
                of Contents
  **Item14.
          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, 2006 and December 31,
          2005
          were approximately $21,770 and $19,890 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, 2006 and 2005.
 
 **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, 2006 and 2005 were $0 and $0 respectively.
 30
 Table
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  **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
                    Howlett
                  Chief
                    Executive Officer and Chief Financial Officer
                  April
                    2, 2007
  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
                
                /s/Jost
                  SteinbruchelTerry
                    Howlett
                  Director
                  April
                    2, 2007
                
                Jost Steinbruchel
                  Director
                  April
                    2, 2007By:
                /s/Greg
                  McCartneyGreg
                    McCartney
                  Director
                  April
                    2, 2007