On 8 October 2018, Skin Elements Ltd (ASX: SKN) announced that it has entered into a Memorandum of Understanding (MoU) with Affinity Energy and Health Limited (ASX: AEB) for the purpose of using the Affinityâs products like algae biomass and oils, and cannabis oils to develop different varieties ofÂ natural skin care products.
It is a great opportunity for both the company to work together on the development of a new range of algae and cannabidiol (CBD) based products for supply to key global markets and to deliver enhanced product specifications for Skin Elements skin care products. The economic impact of the MoU is yet to be determined and commercial terms and financial arrangements are going to be negotiated at an appropriate time with the progress of product development initiatives.Â
Skin Elements is focused on the development, manufacture, and sales of natural and organic skin care products which includes the market-leading Soleo Organics 100% natural and organic sunscreen, PapayaActivs natural therapeutics, Complete Esscience natural skincare and Elizabeth Jane Natural Cosmetics skincare.
Affinityâs core operating division is focused on the development of both algae-based and cannabis-based products for supply to global nutraceutical markets. Under the MOU, Affinity is required to supply its high-quality algae and cannabis oil formulations in either discrete or blended forms, which will be further utilized by the Skin Elements to develop new and innovative product formulations. Affinity is currently producing highly concentrated Omega-3 based algae (Schizochytrium and Nannochloropsis, Isochyrsis and Tetralselmis), all of which have been acknowledged and documented to provide skin care benefits.
Skin Elements and Affinity will now partner to create a unique and beneficial product range which, in combination with an effective marketing campaign, could be a major advantage for both the companies as there are very few skin care companies in the world which offers combined all-natural algae and CBD products.
In FY 2018, the revenue from operating activities of Skin Elements increased by 170 percent to $838,292 as compared to the previous year. The Revenue of the company increased mainly due to increased online sales promotion and expanding full product ranges into wholesaler and distributor networks throughout Australia. In FY 2018, the research and development expenses increased from zero in FY 2017 to $1 million in FY 2018. Due to increase in the research and development expenditure and administration and corporate expenses, the company suffered a Net loss of $2.72 million in FY 2018 which was a loss of $1.6 million in the previous year. The net cash outflow from operating activities is $1.3 million in FY 2018. The company was having cash and cash equivalent of $ 195,661 at the end of FY 2018. The basic loss per share of the company was 0.035 cents per share in FY 2018.
In the past six months, the share price of Skin Element Limited decreased by 33.53 percent as on 11 October 2018. SKNâs shares traded at $0.060 with a market capitalization of circa $7.74 million as on 12 October 2018 (AEST 4:00 PM).
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