SKIN ELEMENTS LIMITED

COVER TO BE SUPPLIED

Preliminary Final Report

SKIN ELEMENTS LIMITED A B N 9 0 6 0 8 0 4 7 7 9 4

and its controlled entities APPENDIX 4E Preliminary Final Report 30 June 2022

SKIN ELEMENTS LIMITED

APPENDIX 4E Preliminary Final Report 30 June 2022

and controlled entities

ABN 90 608 047 794

Corporate directory

Current Directors Peter Malone Executive Chairman Phil Giglia Non-Executive Director Lee Christensen Non-Executive Director

Company Secretary

Phil Giglia

Registered Office Share Registry Street: 1242 Hay Street Link Market Services Limited WEST PERTH WA 6005 Street: Level 12, QV1 Building, 250 St Georges Terrace Postal: 1242 Hay Street PERTH WA 6000 WEST PERTH WA 6005 Telephone: 1300 554 474 (within Australia) Telephon e: +61 (0)8 6311 1900 +61 1300 554 474 (International) Facsimile: +61 (0)8 6311 1999 Facsimile: +61 (0)8 6370 4203 Email: [email protected] Email: [email protected] Website: www.skinelementslimited.com Website: www.linkmarketservices.com.au

Auditors Securities Exchange BDO Audit (WA) Pty Ltd Australian Securities Exchange Mia Yellagonga Tower 2 Level 40, Central Park, 152-158 St Georges Terrace 5 Spring Street Perth WA 6000 Perth WA 6000 Telephone: 131 ASX (131 279) (within Australia) Telephon e: +61 (0)8 6382 4600 Telephone: +61 (0)2 9338 0000 Facsimile: +61 (0)8 6382 4601 Facsimile: +61 (0)2 9227 0885 Website: www.bdo.com.au Website: www.asx.com.au ASX Code: SKN

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SKIN ELEMENTS LIMITED

Preliminary Final Report 30 June 2022

and controlled entities

ABN 90 608 047 794

APPENDIX 4E

Company update .................................................................................................................................................................... 1 Results for announcement to the Market .............................................................................................................................. 5 Consolidated statement of profit or loss and other comprehensive income ......................................................................... 7 Consolidated statement of financial position ........................................................................................................................ 8 Consolidated statement of changes in equity ........................................................................................................................ 9 Consolidated statement of cash flows .................................................................................................................................. 10 Notes to the preliminary final report ................................................................................................................................... 11

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SKIN ELEMENTS LIMITED and controlled entities

APPENDIX 4E Preliminary Final Report 30 June 2022

ABN 90 608 047 794

Company update

1. Operating and financial review

1.1. Nature of Operations and Principal Activities

Skin Elements Limited is a developer, manufacturer, distributor, and retailer of its leading proprietary all-natural antimicrobial SE Formula[TM] . The SE Formula[TM] is used in the Company’s proprietary brands including Invisi-Shield SuprCuvr plant-based hospital grade disinfectant range the Soleo Organics natural sunscreen brand, the PapayaActivs therapeutic skincare range and the Elizabeth Jane Natural Cosmetics.

1.2. Operations Review

1.2.1. SuprCuvr Hospital Grade Disinfectant

SuprCuvr is a TGA registered hospital-grade disinfectant made from a 100% plant-based formula. Independent laboratory tests have confirmed that SuprCuvr has 99.99999% (7 log reduction) effectiveness against COVID 19 and other germs and is the first and only approved disinfectant globally with a 99.99999% efficacy against COVID 19.

The combination of TGA registration with high efficacy in a 100% plant-based organic certified formula presents a significant market opportunity for SuprCuvr including in large-scale settings where disinfectants are deployed.

SKN has now commenced development of marketing programs to drive revenue through its distribution channels and online retail store.

1.2.2. SuprCuvr Distribution Agreement with Pacific Health

Skin Elements entered into a binding Agreement with Pacific Health Care Pty Ltd (Pacific Health) for the exclusive distribution of SuprCuvr in Australia and New Zealand in the previous quarter (ASX announcement, 17 January 2022).

Pacific Health Care was established in Perth in 1987, and has a successful track record of selling and distributing a range of consumable medical products into the Australian medical industry.

Its customers include, state governments (NSW Health, WA Health, Queensland Health and Tasmania Health), hospitals (St John of God Hospitals and Perth Children’s Hospital), clinics, aged care facilities, general practitioners and dentists, surgical and medical sub-distributors, veterinary clinics, and at home patients.

The Agreement represents the next step in the commercialisation strategy for SuprCuvr. It allows Skin Elements to leverage off Pacific Health’s existing health distribution networks and drive sales into the Australian and New Zealand markets, and underpin the Company’s operations to further execute its global commercialisation strategy.

The Agreement is for an initial term of 12 months, which will be extended for up to an additional 48 months in total subject to achievement of minimum sales volumes each year. The Agreement targets sales volumes of 1.2 million litres of SuprCuvr in year one, and total sales volumes of 5.5692 million litres over the duration of the Agreement, subject to the achievement of annual sales targets.

During the year Pacific Health continued to make strong progress in establishing a broad-based distributor network for SuprCuvr, with a focus on the government, corporate and retail sectors. SKN has delivered over 88,000 units of SuprCuvr for invoice value of over $1.2m. Pacific Health has paid $200k of this with the balance to be paid over the coming months.

Pacific Health also made presentations to key private hospitals in WA and other states, and has undertaken trials with mining companies, education campuses, and transport and logistics centres in WA.

In the retail space, SuprCuvr is currently stocked in 168 IGA and 15 Good Grocer IGA supermarkets in Western Australia, and is also available through Pacific Health’s online store; www.pacifichealthcare.com.au.

1.2.3. Other Distribution Opportunities

Skin Elements also progressed a number of other distribution opportunities for SuprCuvr, and other products from its range, in a number of international markets.

This included a distribution opportunity for SuprCuvr in New Zealand and Hong Kong. The Company is also examining opportunities in Indonesia and Taiwan.

The Company also commenced discussions in respect of a potential distribution agreement for the Soléo Organics sunscreen range in the United Kingdom.

These discussions are of a positive nature and are all ongoing, but there is no certainty that any sales or distribution agreements will be entered into. Skin Elements will update the market on any material progress on these, or any other, sales or distribution discussions.

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SKIN ELEMENTS LIMITED and controlled entities

APPENDIX 4E Preliminary Final Report 30 June 2022

ABN 90 608 047 794

Company update

1.2.4. Expanding the SuprCuvr Product Range

Skin Elements is actively seeking to expand the SuprCuvr product range by offering new products at different price points. The Company is investigating the development of such a SuprCuvr product for sale in the supermarket and cleaning sectors.

1.2.5. Other Product Extensions

The Company is also investigating a number of potential opportunities to extend the application of SuprCuvr beyond its use as a hospital-grade disinfectant. The disinfectant market is the core focus for Skin Elements with SuprCuvr, but its unique combination of high-efficacy and plant-based natural formula also provides options to extend the product into other uses.

Independent laboratory tests were conducted on the anti-fungal capacity of SuprCuvr. Specifically, it was tested for efficacy against black mould (Aspergillus niger) and Candida albicans, a highly prevalent source of fungal infections in humans.

The independent tests successfully confirmed SuprCuvr’s efficacy in providing protection against these moulds and fungi. This positive outcome has the potential to open up new product applications for SuprCuvr, and the Company plans to progress these opportunities to expand the SuprCuvr product range.

In a household setting, mould and fungus are major problems in spaces that have dampness or a lack of ventilation, and can be a health hazard. Typically, products used to prevent or minimise such impacts are chemically-based, and the opportunity to use SuprCuvr’s 100% plant-based formula in these environments has the potential to provide an effective alternative solution.

1.2.6. Marketing

Skin Elements continued to support sales and marketing efforts through the development of video advertisements and marketing materials, and updating SuperCuvr packaging to reduce costs and simplify production.

1.2.7. Soleo Organics Sunscreen

Soléo Organics is a natural and organic sunscreen. It provides very high protection (SPF30), broad spectrum sun protection from both UV-A and UV-B solar radiation while providing natural moisturising skin care from its botanical-extract ingredients.

The Soleo Organics sunscreen range is now fully available, and the Company has updated and optimised its www.soleoorganics.com and www.sknlife.com online store websites to drive sales through these channels, with a view to attracting more international sales and driving larger volume sales.

The Company also prepared presentations and sales materials for national and international retail outlet channels.

During the year the Soleo Organics’ High Performance Coconut Sunscreen and Face Moisturising Sunscreen were both selected as finalists in the Clean Beauty Awards for 2022.

1.2.8. Appointment of New Director

On 31 August 2021, SKN appointed Mr Lee Christensen to the Board as a Non-Executive Director. Mr Christensen’s appointment brings broad experience and skills to the Board, assisting the Company develop its corporate strategy and governance as it transitions from research & development to commercial operations.

Mr Christensen’s appointment follows the resignation of Mr John Poulsen as a Non-Executive Director.

1.2.9. Research & Development Rebate ( R&D )

With the Company focus on development of its natural antimicrobial technologies, SKN has received approval and payment from AusIndustry for the 2021 R&D Rebate of $989K and recognised $984K R&D Rebate for the R&D expenditure invested in the twelve months to 30 June 2022 which is expected to be received in September 2022.

1.2.10. Placement raises $2.1 million

During the period, the Company completed a placement of 26,250,000 ordinary fully paid shares at $0.08 each raising $2.1 million cash under the Company’s LR7.1 and 7.1A placement capacity. The funds were used to fund its stated business plans including the launch of its new TGA registered SuprCuvr plant-based hospital grade disinfectant and provided working capital for the Company.

1.2.11. LDA Capital $20 million equity funding facility

On 6 April 2021 SKN announced it had entered into an equity funding facility agreement (Agreement) with LDA Capital, under which LDA Capital has agreed to provide Skin Elements with up to $20 million in committed equity capital over the next 36 months (ASX announcement, 6 April 2021).

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SKIN ELEMENTS LIMITED and controlled entities ABN 90 608 047 794

APPENDIX 4E Preliminary Final Report 30 June 2022

Company update

The Agreement enables Skin Elements to issue shares to LDA Capital over the next three years at the Company’s discretion at a floor price to be determined by Skin Elements and receive funds for the issue of those shares.

The Agreement allows Skin Elements to access committed equity capital on a flexible basis by managing the timing and size of each capital drawdown. The Agreement ensures that Company has access to additional equity capital as required to support its growth into new markets, support existing sales channels and fund the anticipated commercial scale sales and distribution opportunities for SuprCuvr and the Company’s other product 0lines.

As part consideration for entering into POA, the Company issued to LDA Capital 26,000,000 unlisted options all expiring on 15 March 2024 which were initially recognised using a fair value assessment of $604,000 as a prepayment (asset) and derivative liability. At balance date the fair value of the derivative liability has been reassessed to $53,000 due to the time value of money and the amount of $492,208 is recognised as a fair value gain to P&L.

The Company also has on issue to LDA Capital 27,500,000 shares (“Collateral Shares”) for nil consideration. LDA Capital will hold these shares until such time that the Company issues the initial call notice. At that time, and subject to certain limitations set out in the POA, LDA Capital may sell collateral shares on market. Under the POA, unused Collateral Shares may be used for a subsequent call, bought back by the Company for nominal consideration or transferred to a trustee or nominee of the Company for nominal consideration.

The Company is also required to pay a commitment fee of A$400,000 to LDA Capital which is payable in cash in four equal instalments at closing of the Company’s first four capital calls. It was agreed between SKN and LDA Capital to release 2,000,000 SKN collateral shares held by LDA Capital in lieu of the first initial commitment fee of $100,000 cash (price of $0.05 each). This amount has been bought to account as a pre-paid capital raising cost.

1.2.12. Entitlement Issue to raise over $2 million

The Company has advised that it will be undertaking a non renounceable pro rata entitlement issue at an issue price of $0.08 per share on the basis of one (1) new share for every fifteen (15) ordinary shares held. Shareholders who subscribe for the entitlement issue will also receive one attaching listed option for every two new shares issued, exercisable at $0.10 and expiring on 15 March 2024.

Under the entitlement issue up to 25,298,484 shares and 12,649,242 attached options will be issued to raise up to $2,023,879 (before costs). An updated timetable has been announced with the issue of a prospectus and entitlement application forms in October 2022 with completion in November 2022.

1.3. Financial Review

1.3.1. Key profit and loss measures

Movement (increased/ decreased) Movement $
	2022 2021
	$ $
Revenues from ordinary activities increased 1,119,589 Loss from ordinary activities after tax decreased 1,420,235 EBITDA decreased (1,346,738) 1.3.2. Key net asset measures	1,408,330 288,741 (1,622,288) (3,042,523) (1,202,749) (2,549,487)
Movement (increased/ decreased) Movement $
	2022 2021
	$ $
Cash and cash equivalents increased 460,418 Working capital_(excluding prepayments) _increased 703,715 Net tangible assets increased 1,015,572 Net assets increased 615,492	748,050 287,632 1,943,454 1,239,739 2,327,997 1,312,425 10,218,067 9,602,575

The financial statements have been prepared on a going concern basis, which contemplates the continuity of normal business activity and the realisation of assets and the settlement of liabilities in the ordinary course of business.

1.4. Impact of Coronavirus (COVID-19) Pandemic

Whilst SKN has continued to operate from West Perth premises during the period, the impact of COVID-19 restrictions has seen delay of orders from national and international distributors, restrictions on travel and reduced ability to meet with distributors and new customers, increased costs and shipment timeframes for national and international freight, and delayed production and the delivery of inventories from its contract manufacturers in Victoria and Queensland.

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SKIN ELEMENTS LIMITED

APPENDIX 4E Preliminary Final Report 30 June 2022

and controlled entities

ABN 90 608 047 794

Company update

1.5. Future Developments, Prospects, and Business Strategies

Likely developments in the operations, business strategies and prospects of the Group include:

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The Company may place equity and receive up to $20 million in committed equity capital over the next 36 months under the equity funding facility with LDA Capital.

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The Company may undertake future capital raising through an entitlement issue, and the consideration of other equity and debt proposals

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The Company intends to continue to focus on development and commercialisation of its natural anti-microbial technology as set out in its review of operations.

Other likely developments, future prospects and business strategies of the operations of the Group and the expected results of those operations have not been included in this report particularly given the early stage of the Company’s commercial operations with its new expanded range of natural and organic products. The Directors believe that the inclusion of such information would be likely to be unreasonably prejudicial to the Group.

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SKIN ELEMENTS LIMITED and controlled entities ABN 90 608 047 794

APPENDIX 4E

Preliminary Final Report

30 June 2022

Results for announcement to the Market

for the year ended 30 June 2022

1. Reporting period(item 1)	30 June 2022 30 June 2021	30 June 2022 30 June 2021
Report for the financial year ended: Previous corresponding period is the year months ended:

2. Results for announcement to the market	Movement	Percentage Amount
		% $

Increase in revenues from ordinary activities (item 2.1) ↑ Decrease in loss from ordinary activities after tax attributable to members (item 2.2)  Decrease in loss after tax attributable to members (item 2.3) 
	↑	387.75 to 1,408,330


		(46.68) to (1,622,288)


		(46.68) to (1,622,288)


2.1. Dividends(item 2.4)		Amount per Franked amount
		Security per security

		₵ %
Interim dividend		nil n/a
Final dividend		nil n/a
Record date for determining entitlements to the dividend (item 2.5) n/a 2.2. Brief explanation of any of the figures reported above necessary to enable the figures to be understood(item 2.6): Refer to Company update on page1of this report.

3. Preliminary Final Report 3.1. Statement of comprehensive income(item 3): Refer to Consolidated statement of profit or loss and other comprehensive income on page 7 3.2. Statement of financial position(item 4): Refer to Consolidated statement of financial position on page 8 3.3. Statement of cash flows(item 5): Refer to Consolidated statement of cash flows on page 10 3.4. Statement of changes in equity(item 6): Refer to Consolidated statement of changes in equity on page 9

4.	Dividends(item 7)and Returns to shareholders including distributions and buy backs(item 14.2)
	Nil.
4.1.	Details of dividend or distribution reinvestment plans in operation are described below(item 8):
	Not applicable

5. Ratios	Previous
	Current corresponding

	Period Period
	$ $
5.1. *Financial Information relatingto 5.2 and 5.3:*** Earnings for the period attributable to owners of the parent Net assets _Less:_Intangible assets (including net deferred tax balances) Net tangible assets	(1,622,288) (3,042,523)
	10,218,067 9,602,575 (7,890,070) (8,290,150)
	2,327,997 1,312,425

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SKIN ELEMENTS LIMITED

APPENDIX 4E Preliminary Final Report 30 June 2022

and controlled entities

ABN 90 608 047 794

Results for announcement to the Market

for the year ended 30 June 2022

5 Ratios(cont.)	Previous
	Current corresponding

	Period Period
	No. No.
Fully paid ordinary shares 407,727,266 379,477,266 Weighted average number of ordinary shares outstanding during the period used in calculation of basic EPS 399,923,157 351,137,666 ₵ ₵ 5.2. Net tangible assets backing per share(item 9): 0.571 0.346 5.3. Earnings per share attributable to owners of the parent(item 14.1): (0.406) (0.866) As at 30 June 2022 the Group has 26,000,000 unissued shares under options (2021: 26,000,000) and 209,000,000 performance shares on issue (2021: 47,000,000). The Group does not report diluted earnings per share on losses generated by the Group. During the year, the Group's unissued shares under option and performance shares were anti-dilutive.	407,727,266 379,477,266 399,923,157 351,137,666
	₵ ₵

6. Details of entities over which control has been gained or lost during the period(item 10):	6. Details of entities over which control has been gained or lost during the period(item 10):
6.1. Control gained over entities Name of entities (item 10.1) Nil Date(s) of gain of control (item 10.2) 6.2. Loss of control of entities Name of entities (item 10.1) Nil Date(s) of loss of control (item 10.2) N/A 6.3. Contribution to consolidated profit (loss) from ordinary activities after tax by the controlled entities to the date(s) in the current period when control was gained / lost (item 10.3). Nil 6.4. Profit (loss) from ordinary activities after tax of the controlled entities for the whole of the previous corresponding period (item 10.3) Nil

7. Details of associates and joint venture(item 11):
Name of entities (item 11.1) Nil Percentage holding in each of these entities (item 11.2) n/a
	Previous
	Current corresponding
	Period Period
	$ $
Aggregate share of profits (losses) of these entities (item 11.3)	N/A N/A

8. Any other significant information needed by an investor to make an informed assessment of the entity’s financial
performance and financial position (item 12):
Refer to Companyupdate onpage 1 of this report.

9. The financial information provided in the Appendix 4E is based on the preliminary final report (attached), which has
been prepared in accordance with Australian Accounting Standards (item 13).

10. Commentary on the results for the period(item 14):
Refer to Company update on page 1. The Group had revenue of $1,408,330 (2021: $288,741) for the period.

		Refer to Company update on page 1. The Group had revenue of $1,408,330 (2021: $288,741) for the period.
11.		The preliminary final report has been prepared based on the 30 June 2022 accounts which are in the process of being audited
		by an independent Audit Firm in accordance with the requirements of s.302 of the_Corporations Act 2001_(Cth). (item 15)

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APPENDIX 4E Preliminary Final Report

30 June 2022

and controlled entities

ABN 90 608 047 794

Consolidated statement of profit or loss and other comprehensive income for the year ended 30 June 2022

for the year ended 30 June 2022
Note	2022 2021
	$ $
Continuing operations Revenue 1.1 Cost of sales Gross profit Other income 1.2 Administrative and other costs Research and development costs Selling and distribution costs Operating profit Interest and finance costs Profit / (loss) before tax 2.1 Income tax benefit 3.1 Net profit for the year Other comprehensive income, net of income tax Other comprehensive income for the period, net of tax Total comprehensive income attributable to members of the parent entity	1,408,330 288,741 (365,174) (98,302)
	1,043,156 190,439 1,476,671 1,140,003 (1,679,332) (1,832,987) (2,024,235) (2,244,421) (425,183) (206,429)
	(1,608,923) (2,953,395) (13,365) (89,128)
	(1,622,288) (3,042,523) - -
	(1,622,288) (3,042,523)
	- -
	- -
	(1,622,288) (3,042,523)

The consolidated statement of profit or loss and other comprehensive income is to be read in conjunction with the accompanying notes.

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SKIN ELEMENTS LIMITED

APPENDIX 4E

Preliminary Final Report

and controlled entities

30 June 2022

ABN 90 608 047 794

Consolidated statement of financial position

as at 30 June 2022

Consolidated statement of financial position as at 30 June 2022
Note	2022 2021
	$ $
Current assets Cash and cash equivalents 4.1 Trade and other receivables 4.2.1 Inventories 5.1 Other current assets 4.3.1 Financial Assets 4.6.1 Total current assets Non-current assets Right of use asset - property, plant, and equipment Financial Assets 4.6.1 Intangible assets 5.2 Total non-current assets Total assets Current liabilities Trade and other payables 4.4.1 Borrowings 4.5.1 Derivative liabilities 4.6.2 Total current liabilities Non-current liabilities Trade and other payables 4.4.2 Derivative liabilities 4.6.2 Total non-current liabilities Total liabilities Net assets Equity Issued capital 6.1.1 Reserves 6.4 Accumulated losses Total equity	748,050 287,632 1,357,892 1,122,891 154,274 223,225 88,489 72,225 502,000 502,000
	2,850,705 2,207,973
	20,554 26,648 502,000 502,000 7,890,070 8,290,150
	8,412,624 8,818,798
	11,263,329 11,026,771
	767,733 647,998 24,529 30,990 26,500 272,604
	818,762 951,592
	200,000 200,000 26,500 272,604
	226,500 472,604
	1,045,262 1,424,196
	10,218,067 9,602,575
	- - 23,037,154 20,978,594 270,472 91,252 (13,089,559) (11,467,271)
	10,218,067 9,602,575

The consolidated statement of financial position is to be read in conjunction with the accompanying notes.

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APPENDIX 4E Preliminary Final Report

and controlled entities

30 June 2022