Company Quick10K Filing
Remedent
Price0.30 EPS0
Shares20 P/E3
MCap6 P/FCF11
Net Debt-0 EBIT2
TEV6 TEV/EBIT3
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-12-31 Filed 2021-02-16
10-Q 2020-09-30 Filed 2020-11-16
10-Q 2020-06-30 Filed 2020-08-14
10-K 2020-03-31 Filed 2020-06-29
10-Q 2019-12-31 Filed 2020-02-14
10-Q 2019-09-30 Filed 2019-11-14
10-Q 2019-06-30 Filed 2019-08-14
10-K 2019-03-31 Filed 2019-06-28
10-Q 2018-12-31 Filed 2019-02-14
10-Q 2018-09-30 Filed 2018-11-14
10-Q 2018-06-30 Filed 2018-08-14
10-K 2018-03-31 Filed 2018-07-13
10-Q 2017-12-31 Filed 2018-02-14
10-Q 2017-09-30 Filed 2017-11-14
10-Q 2017-06-30 Filed 2017-08-14
10-K 2017-03-31 Filed 2017-06-29
10-Q 2016-12-31 Filed 2017-02-14
10-Q 2016-09-30 Filed 2016-11-14
10-Q 2016-06-30 Filed 2016-08-15
10-K 2016-03-31 Filed 2016-06-29
10-Q 2015-12-31 Filed 2016-02-16
10-Q 2015-09-30 Filed 2015-11-16
10-Q 2015-06-30 Filed 2015-08-14
10-K 2015-03-31 Filed 2015-06-29
10-Q 2014-12-31 Filed 2015-02-23
10-Q 2014-09-30 Filed 2014-11-19
10-Q 2014-06-30 Filed 2014-08-19
10-K 2014-03-31 Filed 2014-07-14
10-Q 2013-12-31 Filed 2014-02-14
10-Q 2013-09-30 Filed 2013-11-19
10-Q 2013-06-30 Filed 2013-08-14
10-K 2013-03-31 Filed 2013-07-15
10-Q 2012-06-30 Filed 2012-08-14
10-K 2012-03-31 Filed 2012-07-16
10-Q 2011-09-30 Filed 2011-11-21
10-Q 2011-06-30 Filed 2011-08-15
10-K 2011-03-31 Filed 2011-07-14
10-Q 2010-12-31 Filed 2011-02-14
10-Q 2010-09-30 Filed 2010-11-15
10-Q 2010-06-30 Filed 2010-08-16
10-K 2010-03-31 Filed 2010-07-13
10-Q 2009-12-31 Filed 2010-02-16

REMI 10Q Quarterly Report

Part I - Financial Information
Item 1.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. [Removed and Reserved]
Item 5. Other Information
Item 6. Exhibits
EX-31.1 tm215411d1_ex31-1.htm
EX-31.2 tm215411d1_ex31-2.htm
EX-32.1 tm215411d1_ex32-1.htm
EX-32.2 tm215411d1_ex32-2.htm

Remedent Earnings 2020-12-31

Balance SheetIncome StatementCash Flow
10.08.06.04.02.00.02012201420172020
Assets, Equity
10.07.95.93.81.8-0.32012201420172020
Rev, G Profit, Net Income
1.71.20.60.1-0.5-1.02012201420172020
Ops, Inv, Fin

10-Q 1 tm215411d1_10q.htm FORM 10-Q

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the Quarterly Period Ended December 31, 2020

 

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _____ to _____.

 

Commission File No. 001-15975

 

REMEDENT, INC.

(Exact Name of Registrant as Specified in Its Charter)

 

Nevada   86-0837251

(State or Other Jurisdiction

Of Incorporation or Organization)

 

(I.R.S. Employer Identification

Number)

     
Zuiderlaan 1-3 bus 8, 9000 Ghent, Belgium   N/A
(Address of Principal Executive Offices)   (Zip Code)

 

Registrant’s telephone number, including area code 011 32 9 241 58 80

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 ¨

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes x                                   No ¨

 

Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  (Check one):

 

Large accelerated filer ¨ Accelerated filer ¨
Non-accelerated filer x Smaller reporting company x
    Accelerated filer ¨

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨                                 No x

 

The number of common shares of registrant’s stock outstanding as of February 16, 2021 was 19,995,969.

 

 

 

 

 

 

REMEDENT, INC.

 

FORM 10-Q INDEX

 

    Page Number
     
PART I – FINANCIAL INFORMATION    
Item 1.  Financial Statements    
Consolidated Balance Sheets as of December 31, 2020 (Unaudited) and March 31, 2020   3
Consolidated Statements of Operations for the Three and Nine months Ended December 31, 2020 and December 31, 2019 (Unaudited)   4
Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine months Ended December 31, 2020 and December 31, 2019 (Unaudited)   5
Consolidated Statements of Cash Flows for the Nine months Ended December 31, 2020 and December 31, 2019 (Unaudited)   6
Notes to Consolidated Financial Statements (Unaudited)   7
Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations   18
Item 3.  Quantitative and Qualitative Disclosures About Market Risk   21
Item 4.  Controls and Procedures   21
     
PART II – OTHER INFORMATION    
Item 1.     Legal Proceedings   22
Item 1A.  Risk Factors   22
Item 2.     Unregistered Sales of Equity Securities and Use of Proceeds   22
Item 3.     Defaults Upon Senior Securities   22
Item 4.     [Removed and Reserved.]   22
Item 5.     Other Information   22
Item 6.     Exhibits   23
Signature Page   24

 

2

 

 

PART I – FINANCIAL INFORMATION

Item 1.

REMEDENT, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 

 

   December 31, 2020   March 31, 2020 
   (unaudited)       
ASSETS          
CURRENT ASSETS:          
Cash and cash equivalents  $83,296   $114,634 
Accounts receivable, net of allowance for doubtful accounts of $172,447 at December 31, 2020 and $154,447 at March 31, 2020   474,611    329,340 
Inventories, net   107,582    90,841 
Prepaid expenses and other current assets   34,046    146,249 
Total current assets   699,535    681,064 
           
PROPERTY AND EQUIPMENT, NET   75,144    67,092 
PATENTS, NET   2,703     
OTHER ASSETS          
Equity investment in GlamSmile Asia Ltd (Note 3)   2,035,535    2,150,724 
Investment in Condor Technology (Note 3)   1,294,708    1,159,561 
  Investment in Metrics in Balance (Note 3)   3,455,122    3,450,598 
Total assets  $7,562,747   $7,509,039 
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)          
CURRENT LIABILITIES:          
Accounts payable  $2,371,173   $2,294,884 
Accrued liabilities   403,680    486,763 
Deferred revenue   137,491    100,571 
Total current liabilities   2,912,344    2,882,218 
Long-term portion of lease liabilities   5,455    5,455 
Total liabilities   2,917,799    2,887,673 
           
EQUITY:          
Preferred Stock $0.001 par value (10,000,000 shares authorized, none issued and outstanding)        
Common stock, $0.001 par value; (50,000,000 shares authorized, 19,995,969 shares issued and outstanding at December 31, 2020 and March 31, 2020 respectively)   19,996    19,996 
Treasury stock, at cost; 723,000 shares outstanding at December 31, 2020 and March 31, 2020 respectively   (831,450)   (831,450)
Additional paid-in capital   24,906,269    24,906,269 
Accumulated deficit   (18,475,808)   (18,575,388)
Accumulated other comprehensive income (loss) (foreign currency translation adjustment)   (1,154,583)   (1,070,239)
Obligation to issue shares (Note 3)   97,500    97,500 
Total Remedent, Inc. stockholders’ equity   4,561,924    4,546,688 
Non-controlling interest   83,024    74,678 
Total stockholders’ equity   4,644,948    4,621,366 
Total liabilities and equity  $7,562,747   $7,509,039 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

3

 

 

REMEDENT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

  

For the three months ended

December 31,

  

For the nine months ended

December 31,

 
   2020   2019   2020   2019 
Net sales  $337,468   $262,077   $878,519   $814,111 
Cost of sales   128,432    94,562    308,032    239,432 
Gross profit   209,036    167,515    570,487    574,679 
Operating Expenses                    
Sales and marketing   45,464    94,867    83,073    295,165 
General and administrative   140,513    178,919    372,995    507,914 
Depreciation and amortization   8,681    16,745    28,224    58,314 
TOTAL OPERATING EXPENSES   194,658    290,531    484,292    861,393 
(LOSS) INCOME FROM OPERATIONS   14,378    (123,016)   86,195    (286,714)
OTHER INCOME (EXPENSES)                    
Equity (loss) income from investments   91,467    (30,799)   24,482    (201,751)
Interest expense   (1,380)   (2,029)   (3,155)   (5,039)
Interest / Other income (expense)               (1,355)
Other deductions   (3,673)   (5,755)   2,784    (1,788)
TOTAL OTHER INCOME   86,414    (38,583)   24,111    (209,933)
INCOME (LOSS) BEFORE NON-CONTROLLING INTEREST   100,792    (161,599)   110,306    (496,647)
PROVISION FOR INCOME TAXES   (2,402)   (1,683)   (2,402)   (1,683)
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE NON-CONTROLLING INTEREST, NET OF TAX   98,390    (163,282)   107,904    (498,330)
NET INCOME (LOSS) ATTRIBUTABLE TO NON-CONTROLLING INTEREST   3,934   (14,756)   8,324   932 
NET INCOME (LOSS) ATTRIBUTABLE TO REMEDENT INC. COMMON SHAREHOLDERS  $94,456   $(148,526)  $99,580   $(499,262)
                     
INCOME PER SHARE                    
Basic  $0.00   $(0.01)  $0.00   $(0.02)
Fully diluted  $0.00   $(0.01)  $0.00   $(0.02)
WEIGHTED AVERAGE SHARES OUTSTANDING                    
Basic   19,995,969    19,995,969    19,995,969    19,995,969 
Fully diluted   19,995,969    19,995,969    19,995,969    19,995,969 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

4

 

 

REMEDENT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

 

  

For the three months ended

December 31,

  

For the nine months ended

December 31,

 
   2020   2019   2020   2019 
NET INCOME  $98,390   $(163,282)  $107,904   $(498,330)
OTHER COMPREHENSIVE INCOME (LOSS):                    
Foreign currency translation adjustment   (18,718)   (12,228)   (84,344)   36 
TOTAL COMPREHENSIVE INCOME (LOSS)   79,672    (175,510)   23,560    (498,294)
LESS: COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO NON-CONTROLLING INTERESTS   (3,934)   (14,756)   (8,324)   932 
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO REMEDENT INC. common shareholders  $83,606   $(160,754)  $31,884   $(499,226)

 

The accompanying notes are an integral part of these consolidated financial statements.

 

5

 

 

REMEDENT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

  

For the nine months ended

December 31,

 
   2020   2019 
CASH FLOWS FROM OPERATING ACTIVITIES          
Net income (loss)  $107,904   $(498,330)
Adjustments to reconcile net income to net cash used by operating activities          
     Depreciation and amortization   28,224    58,314 
     Inventory reserve   74,142    (6,023)
     Allowance for doubtful accounts   18,000    (1,377)
     Equity investment   (24,482)   201,751 
Changes in operating assets and liabilities:          
     Accounts receivable   (145,271)   (129,649)
     Inventories   (16,741)   (8,180)
     Prepaid expenses   112,203    217,696 
     Accounts payable   76,291    217,459 
     Accrued liabilities   (83,083)   (65,483)
     Deferred revenue   36,920    48,915 
Net cash provided by (used by) operating activities   184,107    35,093 
CASH FLOWS FROM INVESTING ACTIVITIES          
Patent costs   (2,703)    
Net cash (used by) investing activities   (2,703)    
Net increase in cash   181,404    35,093 
Effect of exchange rate changes on cash and cash equivalents   (212,742)   (83)
CASH AND CASH EQUIVALENTS, BEGINNING   114,634    66,539 
CASH AND CASH EQUIVALENTS, ENDING  $83,296   $101,549 
Supplemental Information:          
Interest paid  $3,155   $5,039 
Income taxes paid  $   $ 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

6

 

 

REMEDENT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

1.DESCRIPTION OF THE COMPANY AND BASIS OF PRESENTATION

 

The Company is a manufacturer and distributor of cosmetic dentistry products, including a full line of professional dental tooth whitening products which are distributed in Europe, Asia and the United States. The Company manufactures many of its products in Ghent, Belgium as well as outsourced manufacturing in Beijing, China.  The Company distributes its products using both its own internal sales force and through the use of third party distributors.

 

In these notes, the terms “Remedent”, “Company”, “we”, “us” or “our” mean Remedent, Inc. and all of its subsidiaries, whose operations are included in these consolidated financial statements.

 

The Company’s financial statements have been prepared on an accrual basis of accounting, in conformity with accounting principles generally accepted in the United States of America. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the periods presented have been reflected herein.

 

These financial statements of the Company are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. Despite the net profit for the accounting years ending March 31, 2019, March 31, 2018 and March 31, 2017, the accumulated losses of the past affect the financial situation of the Company. The continuation of the Company as a going concern is dependent upon the Company’s ability to continue to generate profitable operations. As of December 31, 2020, the Company had a working capital deficit of $2,212,809, and an accumulated deficit of $18,475,808. Additional funding may be required in order to support the Company’s operations and the execution of its business plan.

 

There can be no assurance that the Company will be successful in raising the required capital or that it will ultimately attain a successful level of operations. These risks, among others, are also discussed in ITEM 1A – Risk Factors in the Company’s annual report on Form 10-K filed on June 29, 2020 with the SEC.

 

The Company has conducted a subsequent events review through the date the financial statements were issued, and has concluded that there were no subsequent events requiring adjustments or additional disclosures to the Company's financial statements at December 31, 2020.

 

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

The accounting policies of the Company, as applied in the interim consolidated financial statements presented herein are substantially the same as presented in the Company’s Form 10-K for the year ended March 31, 2020, except as may be indicated below:

 

Interim Financial Information

 

The interim consolidated financial statements of Remedent, Inc. and Subsidiaries (the “Company”) are condensed and do not include some of the information necessary to obtain a complete understanding of the financial data. Management believes that all adjustments necessary for a fair presentation of results have been included in the unaudited consolidated financial statements for the interim periods presented. Operating results for the three and nine months ended December 31, 2020, are not necessarily indicative of the results that may be expected for the year ended March 31, 2021. Accordingly, your attention is directed to footnote disclosures found in the Annual Report on Form 10-K for the year ending March 31, 2020, and particularly to Note 2, which includes a summary of significant accounting policies.

 

Basis of Consolidation

 

The accompanying consolidated financial statements include the accounts of: Remedent N.V. (incorporated in Belgium) located in Ghent, Belgium, Remedent Professional, Inc. and Remedent Professional Holdings, Inc. (both incorporated in California and inactive), Glamtech-USA, Inc. (a Delaware corporation acquired effective August 24, 2008), Condor North America LLC, a Nevada Corporation (effective March 31, 2020 this subsidiary is inactive), Remedent N.V.’s 50 % owned subsidiary, Biotech Dental Benelux N.V., a Belgium private company located in Ghent, Remedent N.V.’s 51% owned subsidiary, GlamSmile Deutschland GmbH, a German private company located in Munich (effective March 31, 2014 this subsidiary is inactive), Remedent N.V.’s 80 % owned subsidiary, GlamSmile Rome, an Italian private company located in Rome (effective March 31, 2014 this subsidiary is inactive).

 

7

 

 

Remedent N.V. owns 21.51% of Glamsmile Dental Technology Ltd., a Cayman Islands company (“Glamsmile Dental”). The subsidiaries of Glamsmile Dental include: Glamsmile (Asia) Limited, a company organized and existing under the laws of Hong Kong, Beijing Glamsmile Technology Development Ltd., a 100% owned subsidiary or GlamSmile Asia, its 80% owned subsidiary Beijing Glamsmile Trading Co., Ltd. and its 98% owned subsidiary Beijing Glamsmile Dental Clinic Co., Ltd., including its 100% owned Shanghai Glamsmile Dental Clinic Co., Ltd., its 100% owned Guangzhou Dental Clinic Co., Ltd. and its 50% owned Whenzhou GlamSmile Dental Clinic Ltd., which are accounted for using the equity method after January 31, 2012 (see Note 3 – Long-term Investment).

 

Remedent, Inc. is a holding company with headquarters in Ghent, Belgium. Remedent Professional, Inc. and Remedent Professional Holdings, Inc. have been dormant since inception.

 

For all periods presented, all significant inter-company accounts and transactions have been eliminated in the consolidated financial statements and corporate administrative costs are not allocated to subsidiaries.

 

Warranties

 

The Company typically warrants its products against defects in material and workmanship for a period of 24 months from shipment.

 

A tabular reconciliation of the Company’s aggregate product warranty liability for the reporting periods is as follows:

 

  

Nine months

ended

December 31, 2020

  

Year ended

March 31, 2020

 
Product warranty liability:          
Opening balance  $5,496   $5,610 
Accruals for product warranties issued in the period   640     
Adjustments to liabilities for pre-existing warranties       (123)
Ending liability  $6,136   $5,496 

 

Based upon historical trends and warranties provided by the Company’s suppliers and sub-contractors, the Company has made a provision for warranty costs of $6,136 and $5,496 as of December 31, 2020 and March 31, 2020, respectively.

 

Computation of Earnings (Loss) per Share

 

Basic net income (loss) per common share is computed by dividing net income (loss) attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Net income (loss) per common share attributable to common stockholders assuming dilution is computed by dividing net income by the weighted average number of shares of common stock outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued.

  

On April 1, 2009, the Company adopted changes issued by the FASB to the calculation of earnings per share. These changes state that unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method for all periods presented. The adoption of this change had no impact on the Company’s basic or diluted net loss per share because the Company has never issued any share-based awards that contain non-forfeitable rights.

 

At each of December 31, 2020 and March 31, 2020, the Company had 19,995,969, shares of common stock issued and outstanding.  The Company did not have any warrants or options outstanding at either of December 31, 2020 or March 31, 2020.

 

8

 

 

Conversion of Foreign Currencies

 

The reporting and functional currency for the consolidated financial statements of the Company is the U.S. dollar. The home currency for the Company’s European subsidiaries, Remedent N.V., Biotech Dental Benelux N.V., Metrics in Balance N.V. , GlamSmile Rome and GlamSmile Deutschland GmbH, is the Euro, for Glamsmile Asia Ltd., and its subsidiaries, the Hong Kong dollar and the Chinese Renmimbi (“RMB”) for Mainland China. The assets and liabilities of companies whose functional currency is other that the U.S. dollar are included in the consolidation by translating the assets and liabilities at the exchange rates applicable at the end of the reporting period. The statements of income of such companies are translated at the average exchange rates during the applicable period. Translation gains or losses are accumulated as a separate component of stockholders’ equity.

 

Comprehensive Income (Loss)

 

Comprehensive income (loss) includes all changes in equity except those resulting from investments by owners and distributions to owners, including accumulated foreign currency translation, and unrealized gains or losses on ‘Available For Sale (AFS)’ securities. During the nine months ended December 31, 2020 and 2019 the Company did not record any unrealized gains or losses on AFS securities.

 

The Company’s only component of other comprehensive income is the accumulated foreign currency translation consisting of (losses) / gains of ($84,344) and $36 for the nine months ended December 31, 2020 and 2019, respectively. These amounts have been recorded as a separate component of stockholders’ equity (deficit).

 

Recent Accounting Pronouncements

 

Changes to GAAP are established by the Financial Accounting Standards Board (the “FASB”) in the form of accounting standards updates (“ASUs”) to the FASB’s Accounting Standards Codification.

 

The Company considers the applicability and impact of all ASUs. ASUs not listed below were assessed and determined not to be applicable or are expected to have minimal impact on the Company’s consolidated financial position and results of operations.

 

Adopted Accounting Pronouncements

 

In February 2016, the FASB established ASU Topic 842 – Leases, by issuing ASU Topic No. 2016-02 (“Topic 842”), which requires lessees to recognize lease on-balance sheet and disclose key information about leasing arrangements. Topic 842 was subsequently amended by ASU Topic 2018-11 – Targeted Improvements. The new standard establishes a right-of-use model (“ROU”) that requires a lessee to recognize a ROU asset and a lease liability for all leases with a term longer than 12 months. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the statement of operations.

 

The Company adopted Topic 842 in the first quarter of 2019 utilizing the modified retrospective transition method and a cumulative effect adjustment at the beginning of the first quarter of 2019. The Company has elected the package of practical expedients, which allows the Company not to reassess (1) whether any expired or existing contracts as of the adoption date are or contain a lease, (2) lease classification for any expired or existing leases as of the adoption date, and (3) initial direct costs for any existing leases as of the adoption date. The Company did not elect to apply the hindsight practical expedient when determining lease term and assessing impairment of the right-to-use assets. The adoption of Topic 842 resulted in the recognition of right-of use assets of approximately $180,926 and lease liabilities for operating leases of approximately $180,926 and no cumulative effect adjustment on retained earnings on its unaudited Consolidated Balance Sheets or material impact to its unaudited Consolidated Statements of Operations and Comprehensive Loss in the period of adoption. Right-of-use assets are included in Prepaid and other assets, and lease liabilities are included in Accrued liabilities in the unaudited consolidated balance sheet for the period ended December 31, 2020. See Note 13 — Leases, for additional information.

 

9

 

 

3.LONG-TERM INVESTMENTS

 

  GLAMSMILE ASIA LTD.

 

Acquisition

 

Effective January 1, 2010 the Company acquired 50.98% of the issued and outstanding shares of Glamsmile Asia Ltd. (“Glamsmile Asia” or “Glamsmile”), a private Hong Kong company, with subsidiaries in Hong Kong and Mainland China, in exchange for the following consideration:

 

  1. 325,000 Euro (US$466,725).  As of March 31, 2011 the full amount was paid.
  2. 250,000 shares of common stock to be issued during the fiscal year ended March 31, 2011 ($97,500 was recorded as an obligation to issue shares as at March 31, 2010).  The parties have agreed that the shares will be issued during fiscal year ended March 31, 2015.
  3. 100,000 options on closing (issued);
  4. 100,000 options per opened store at closing (issued);
  5. 100,000 options for each additional store opened before the end of 2011 at the price of the opening date of the store;
  6. Assumption of Glamsmile’s January 1, 2010 deficit of $73,302.; and
  7. Repayment of the founding shareholder’s original advances in the amount of $196,599.  The balance of $196,599, recorded as due to related parties at March 31, 2010, is unsecured, non-interest bearing and has no specific terms of repayment other than it will be paid out of revenues from Glamsmile, as working capital allows.  During the year ended March 31, 2011 a total of $101,245 was paid to the founding shareholder, leaving a balance due of $95,354 on June 27, 2011. As at March 31, 2012 the full amount was paid.

 

All options reside under the Company’s option plan and are five year options.

 

Also pursuant to the agreement, the Company granted irrevocable right to Glamsmile Asia to use the Glamsmile trademark in Greater China.

 

The Company acquired a 50.98% interest in GlamSmile Asia Ltd. (“GlamSmile Asia”) in order to obtain a platform in the Chinese Market to expand and introduce our GlamSmile Asia concept into the Chinese Market. In order to sell into the Chinese Market, an approval by Chinese Authorities is required, in the form of licenses. As GlamSmile Asia was already the owner of such licenses prior to the acquisition, this was an important advantage. We obtained control of GlamSmile Asia through the acquisition of the 50.98% interest and the appointment of our CEO as a Board member of GlamSmile Asia.

 

On January 30, 2014, the Company has sold a total of 2,500,000 ordinary shares of its investment in GlamSmile Dental Technology Ltd for $3,000,000 and recognized a gain on the sale in the amount of $1,582,597.

 

Effective March 31, 2014 the Company has retained a 21.51% ownership in GlamSmile Asia Ltd. 

 

Deconsolidation

 

On January 28, 2012, the Company entered into a Preference A Shares and Preference A-1 Shares Purchase Agreement (“Share Purchase Agreement”) with Glamsmile Dental Technology Ltd., a Cayman Islands company and a subsidiary of the Company (“Glamsmile Dental”), Glamsmile (Asia) Limited, a company organized and existing under the laws of Hong Kong and a substantially owned subsidiary of Glamsmile Dental, Beijing Glamsmile Technology Development Ltd., Beijing Glamsmile Trading Co., Ltd., Beijing Glamsmile Dental Clinic Co., Ltd., and Shanghai Glamsmile Dental Clinic Co., Ltd., Gallant Network Limited, a shareholder of Glamsmile Dental (“Gallant”), and IDG-Accel China Growth Fund III L.P. (“IDG Growth”), IDG-Accel China III Investors L.P.(“IDG Investors”) and Crown Link Group Limited (“Crown”)(“IDG Growth, IDG Investors and Crown collectively referred to as the “Investors”), pursuant to which the Investors agreed to (i) purchase from the Company an aggregate of 2,857,143 shares of Preference A-1 Shares of Glamsmile Dental, which represents all of the issued and outstanding Preference A-1 Shares of Glamsmile Dental, for an aggregate purchase price of $2,000,000, and (ii) purchase from Glamsmile Dental an aggregate of 5,000,000 shares of Preference A Shares for an aggregate purchase price of $5,000,000.

 

Under the terms of the Share Purchase Agreement, the Company agreed (a) to indemnify the Investors and their respective affiliates for losses arising out of a breach, or inaccuracy or misrepresentation in any representation or warranty made by the Company or a breach or violation of a covenant or agreement made by the Company for up to $1,500,000, and (b) to transfer 500,000 shares of Glamsmile Dental owned by the Company to the Investors in the event of breach of certain covenants by the Company. In connection with the Share Purchase Agreement, the Company also agreed to enter into an Investor’s Rights Agreement, Right of First Refusal and Co-Sale Agreement, and Voting Agreement with the parties.

 

10

 

 

In addition, in connection with the contemplated transactions in the Share Purchase Agreement on January 20, 2012, the Company entered into a Distribution, License and Manufacturing Agreement with Glamsmile Dental pursuant to which the Company appointed Glamsmile Dental as the exclusive distributor and licensee of Glamsmile Veneer Products bearing the “Glamsmile” name and mark in the B2C Market in the People’s Republic of China (including Hong Kong and Macau) and Republic of China (Taiwan) and granted related manufacturing rights and licenses in exchange for the original issuance of 2,857,143 shares of Preference A-1 Shares of Glamsmile Dental and $250,000 (the receipt of which was acknowledged as an offset to payment of certain invoices of Glamsmile (Asia) Limited).

 

On February 10, 2012, the sale of the Preference A-1 Shares and the Preference A Shares was completed. As a result of the closing, the equity ownership of Glamsmile Dental, on an as converted basis, is as follows: 31.4% by the Investors, 39.2 % by Gallant, and 29.4% by the Company. Mr. De Vreese, our chairman, will remain as a director of Glamsmile Dental along with Mr. David Lok, who is the Chief Executive Officer and director of Glamsmile Dental and principal of Gallant. The Investors have a right to appoint one director of Glamsmile Dental, and accordingly the Board of Directors of Glamsmile Dental will consist of Mr. De Vreese, Mr. Lok and a director appointed by the Investors.

 

In conjunction with the transaction and resulting deconsolidation of Glamsmile Dental, the Company recorded a gain of $1,470,776, calculated as follows:

 

Consideration received  $2,000,000 
Fair value of 29.4% interest   2,055,884 
Carrying value of non-controlling interest   1,117,938 
Less: carrying value of former subsidiary’s net assets   (2,002,329)
Goodwill   (699,635)
Investment China & Hong Kong   (1,082)
Rescission agreement  Excelsior  (Note 11)   (1,000,000)
   $1,470,776 

 

For the nine month periods ended December 31, 2020 and December 31, 2019 the Company recorded equity (loss) income of $(115,189) and $(28,667) respectively as “Other (expenses) income” for its portion of the net income recorded by GlamSmile Dental Technology Ltd.

 

The following tables represent the summary financial information of GlamSmile Asia as derived from its financial statements and prepared under US GAAP:

 

Operating data:  Nine months ended
December 31, 2020
   Nine months ended
December 31, 2019
 
Revenues  $3,172,318   $3,607,967 
Gross profit   2,147,669    2,376,689 
Income (loss) from operations   (436,589)   (42,360)
  Net income  $(535,517)  $(133,272)

 

CONDOR TECHNOLOGIES (formerly Medical Franchises & Investments”)

 

Effective March 31, 2013, the Company acquired 6.12% of the issued and outstanding shares of Condor Technologies NV (formerly Medical Franchises & Investments N.V.), a Belgium corporation in exchange for a cash prepayment of $314,778 that was made during the fiscal year ended March 31, 2012. The Company’s investment in 70,334 shares of MFI NV has been recorded at the fair value of $787,339 which is the quoted market price of approximately USD $11.19 (€8.70) per share. As a result of our adoption of ASU 2016-01, the investment is being recognized as a financial instrument with a readily determinable fair value and an unrecognized gain of $51,695 has been recorded in income due to the fair value per share at December 31, 2020, being $17,58 (€15,00) per share. Further, as a result of our adoption of ASU 2016-01, we have recorded a transition date adjustment as at April 1, 2018 to reclassify the unrecognized profit of $178,361 recorded in 2018 from other comprehensive income to deficit.

 

MFI NV has been founded to market an advance in dental technology which has the potential to replace the process of making mechanical impressions of teeth and bite structures with a digital/optical scan.

 

11

 

 

METRICS IN BALANCE N.V.

 

Effective November 22, 2018, the Company acquired 63,112 shares or 3.08% of the issued and outstanding shares of Metrics in Balance N.V., a Belgium Corporation (“MIB”). As of March 29, 2019, our 60% ownership of SmileWise was merged into MIB, and we converted cash payments to MIB of $123,912 (€ 110,271) to MIB shares; resulting in an increased in our shareholding of MIB by 1,082,190 shares to a total of 1,145,302 or 26.09%. MIB listed on the Euronext, Paris, France in March 2018 and trading has been minimal to date. Consequently, the quoted market price has not been disclosed because it may not be representative of the fair value of our investment. MIB has been founded to allow healthcare and dental professionals to determine the relationship between malocclusion and posture problems thereby enabling therapy to improve quality of life.

 

As a result of the increase in share ownership the Company has determined that significant control exists and consequently the investment is being recorded as an equity investment and all gains or losses are recorded in income.

 

During the year ended March 31, 2020 we recorded a loss of ($21,413). During the year ended March 31, 2019 we recorded $2,832,822 in equity income comprised of a gain on merger of SmileWise in the amount of $3,007,301 resulting from the re-measurement of the value of SmileWise, offset by an equity loss of $174,479. SmileWise was fair valued using an average of discounted cash flow and comparable exit methods employing the following inputs: discounted cash flows using a weighted average cost of capital (“WAAC”) of 23%; software as a service (“SaaS”) multiples, dental industry multiples and mergers and acquisition (“M&A”) multiples of between 5.1 and 18.5. As at March 31, 2020 and March 31, 2019 unrealized net gains (loss) on our investment in MIB were ($2,413) and $2,832,822 respectively.

 

As at December 31, 2020, we recorded a net loss for the three and nine months ending December 31, 2020 of $(8,465) and $(4,524) respectively, reflecting Remedent’s 26.09%. As at December 31, 2019, we recorded a net loss for the three and nine months ending December 31, 2019 of $(8,934) and $(12,580) respectively, reflecting Remedent’s 26.09%.

 

The following table represents the summary financial information of MIB as derived from its financial statements and prepared under US GAAP:

 

Operating data:  Nine months ended
December 31, 2020
   Nine months ended
December 31, 2019
 
Revenues  $33,304   $26,948 
Gross profit   9,162    26,458 
Income (loss) from operations   21,186    (64,452)
  Net (loss)  $17,341   $(48,217)

 

SMILEWISE CORPORATE B.V.B.A.

 

Effective April 16, 2018, the Company acquired 60% of the issued and outstanding shares of SmileWise Corporate B.V.B.A., a Belgium corporation (“SmileWise’) in exchange for a cash payment of $2,592 (€2,226) that was made during April 2018. As of March 29, 2019, 100% of SmileWise was merged into MIB. This merger/integration was completed because SmileWise needed a new ‘practice-building’ clinical concept and MIB needed a team to fill the clinics with patients. SmileWise is a dental marketing agency and software developer catering to dentists.

 

4.  CONCENTRATION OF RISK

 

Financial Instruments — Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of trade accounts receivable.

 

Concentrations of credit risk with respect to trade receivables are normally limited due to the number of customers comprising the Company’s customer base and their dispersion across different geographic areas. At December 31, 2020, five customers accounted for 11.72% of the Company’s trade accounts receivables, and two customers accounted for 7.11%.  At December 31, 2019, five customers accounted for 12.66% of the Company’s trade accounts receivables, and two customers accounted for 6.73%. The Company performs ongoing credit evaluations of its customers and normally does not require collateral to support accounts receivable.

 

12

 

 

Purchases — The Company has diversified its sources for product components and finished goods and, as a result, the loss of a supplier would not have a material impact on the Company’s operations.  For the nine months ended December 31, 2020 the Company had five suppliers who accounted for 46.07% of accounts payable. For the nine months ended December 31, 2019 the Company had five suppliers who accounted for 44.93% of accounts payable.

 

Revenues —  For the nine months ended December 31, 2020 the Company had five customers that accounted for 36.45% of total revenues. Two of the five customers accounted for 27.33% of total revenues. For the nine months ended December 31, 2019 the Company had five customers that accounted for 31.39% of total revenues. Two of the five customers accounted for 16.16% of total revenues.

 

5. ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS

 

The Company’s accounts receivable at period end were as follows:

 

   December 31, 2020   March 31, 2020 
Accounts receivable, gross  $647,058   $483,787 
Less: allowance for doubtful accounts   (172,447)   (154,447)
Accounts receivable, net  $474,611   $329,340 

 

6.  INVENTORIES

 

Inventories at period end are stated at the lower of cost (first-in, first-out) or net realizable value and consisted of the following:

 

   December 31, 2020   March 31, 2020 
Raw materials  $8,290   $7,483 
Components   108,811    91,808 
Finished goods   637,727    564,654 
    754,828    663,945 
Less: reserve for obsolescence   (647,246)   (573,104)
Net inventory  $107,582   $90,841 

 

 

7.  PREPAID EXPENSES AND OTHER ASSETS

 

Prepaid expenses and other assets are summarized as follows:

 

   December 31, 2020   March 31, 2020 
Prepaid materials and components  $20,184   $51,050 
VAT payments in excess of VAT receipts       3,947 
Other   4,433    4,418 
Right-of-use assets   9,429    86,834 
   $34,046   $146,249 

 

13

 

 

8.PROPERTY AND EQUIPMENT

 

Property and equipment are summarized as follows:

 

   December 31, 2020   March 31, 2020 
Furniture and Fixtures  $480,252   $480,252 
Machinery and Equipment   1,389,406    1,917,825 
    1,869,658    2,398,077 
Accumulated depreciation   (1,794,514)   (2,330,985)
Property & equipment, net  $75,144   $67,092 

 

9. DUE TO RELATED PARTIES AND RELATED PARTY TRANSACTIONS

 

Transactions with related parties not disclosed elsewhere in these financial statements consisted of the following:

 

Compensation:

 

During the nine month periods ended December 31, 2020 and 2019 respectively, the Company incurred $159,443 and $151,328 respectively, as compensation for all directors and officers.

 

All related party transactions involving provision of services or tangible assets were recorded at the exchange amount, which is the value established and agreed to by the related parties and reflects arms’ length consideration payable for similar services or transfers.

 

 

10. ACCRUED LIABILITIES

 

Accrued liabilities are summarized as follows:

 

   December 31, 2020   March 31, 2020 
Accrued employee benefit taxes and payroll  $123,295   $102,207 
Accrued travel   6,136    5,496 
Accrued audit and tax preparation fees   14,691    17,395 
Reserve for warranty costs   6,136    5,496 
Accrued commission   15,000    15,000 
Accrued consulting fees   197,538    196,633 
Tax reserve   4,940    5,630 
VAT to be paid   15,138    7,997 
Accrued interest   1,160     
Other accrued expenses + lease liability   19,646    130,909 
   $403,680   $486,763 

 

11. EQUITY COMPENSATION PLANS

 

As of December 31, 2020, the Company had two equity compensation plans approved by its stockholders (1) the 2004 Incentive and Non-statutory Stock Option Plan (the “2004 Plan”); and (2) the 2007 Equity Incentive Plan (the “2007 Plan”). The Company’s approved the 2004 Plan reserving 800,000 shares of common stock of the Company pursuant to an Information Statement on Schedule 14C filed with the Commission on May 9, 2005.  Finally, the Company’s stockholders approved the 2007 Plan reserving 1,000,000 shares of common stock of the Company pursuant to a Definitive Proxy Statement on Schedule 14A filed with the Commission on October 2, 2007.

 

14

 

 

In addition to the equity compensation plans approved by the Company’s stockholders, the Company has previously issued options and warrants to individuals pursuant to individual compensation plans not approved by our stockholders.  These options and warrants have been issued in exchange for services or goods received by the Company.

 

A summary of the Company’s equity compensation plans approved and not approved by shareholders is as follows:

 

Plan Category 

Number of

securities to

be

issued upon

exercise of

of

outstanding

options,

warrants

and rights

  

Weighted-average

exercise price of

outstanding

options

warrants and

rights

  

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   0   $0.50    1,962,500 

 

For the nine month periods ended December 31, 2020 and December 31, 2019 the Company has not recognized any stock based compensation expense in the consolidated statement of operations.  No stock options were granted or cancelled in the nine month periods ended December 31, 2020 and December 31, 2019.

 

12. SEGMENT INFORMATION

 

The Company’s only operating segment consists of dental products and oral hygiene products sold by Remedent Inc., Condor North America LLC., Remedent N.V., Metrics in Balance N.V. and Biotech Dental Benelux N.V. Our operations are primarily in Europe and Asia and 100% of our sales for the nine months ended December 31, 2020 and 100.00% of our sales for the nine months ended December 31, 2019 were generated from customers outside of the United States.

 

13.

LEASES

 

The Company enters into operating leases primarily for real estate, office equipment and vehicles. Lease terms generally range from four to nine years. On April 1, 2019, the Company adopted Topic 842, using the modified-retrospective approach as discussed in Note 2, and as a result, recognized a right-of-use asset of $170,898 and a lease liability of $170,898. No cumulative-effect adjustment to retained earnings was required upon adoption of Topic 842. Right-of use-assets are recorded in prepaid expenses and other current assets and lease liabilities are recorded in accrued liabilities or other liabilities depending on whether they are current or noncurrent. The Company uses a 12% rate to determine the present value of the lease payments.

 

Information related to the Company’s right-of-use assets and related liabilities were as follows:

 

   Nine Months 
   Ended 
   December 31, 2020 
Cash paid for operating lease liabilities  $14,524 
Right-of-use assets obtained in exchange for new operating lease obligations     
Weighted-average remaining lease term, real estate   0.25 years 
Weighted-average remaining lease term, all other leased equipment   0.83 years 
Weighted-average discount rate   12%

 

The Company excludes short-term leases (those with lease terms of less than one year at inception) from the measurement of lease liabilities or right-of-use assets.

 

15

 

 

Maturities of lease liabilities as of December 31, 2020, were as follows:

 

Due in 12-month period ended December 31,  Nine months ended December 31, 2020  

Year ended

March 31, 2020

 
2020  $4,177   $85,550 
2021   5,569    5,569 
    9,746    91,119 
Less imputed interest   (317)   (4,285)
Total lease liabilities  $9,429   $86,834 
           
Current operating lease liabilities   3,974   $81,379 
Non-current lease liabilities   5,455    5,455 
Total lease liabilities  $9,429   $86,834 

 

As of December 31, 2020, right-of-use assets were $9,429 and lease liabilities were $9,429. During the nine months ended December 31, 2020, the Company did not enter into any new lease arrangements, and did not have any arrangements that had not yet commenced.

 

14. FINANCIAL INSTRUMENTS

 

The FASB ASC topic 820 on fair value measurement and disclosures establishes three levels of inputs that may be used to measure fair value: quoted prices in active markets for identical assets or liabilities (referred to as Level 1), observable inputs other than Level 1 that are observable for the asset or liability either directly or indirectly (referred to as Level 2), and unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities (referred to as Level 3).

 

The carrying values and fair values of our financial instruments are as follows:

 

       December 31, 2020   March 31, 2020 
       Carrying   Fair   Carrying   Fair 
   Level   Value   Value   value   Value 
Cash   1   $83,296   $83,296   $114,634   $114,634 
Accounts receivable   2   $474,611   $474,611   $329,340   $329,340 
Long Term investment and advance - GlamSmile Dental Technology Asia   3   $2,035,535   $2,035,535   $2,150,724   $2,150,724 
Long term investments and advances Condor   1   $1,294,708   $1,294,708   $1,159,561   $1,159,561 
Investment in Metrics in Balance   2   $3,455,122   $3,455,122   $3,450,598   $3,450,598 
Deferred revenue   2   $137,491   $137,491   $100,571   $100,571 
Accounts payable   2   $2,371,173   $2,371,173   $2,294,884   $2,294,884 
Accrued liabilities   2   $403,680   $403,680   $486,763   $486,763 

 

The following method was used to estimate the fair values of our financial instruments:

 

The carrying amount of level 1 and level 2 financial instruments approximates fair value because of the short maturity of the instruments.

 

Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies, or similar techniques, and at least one significant model assumption or input is unobservable. Level 3 financial assets also include certain investment securities for which there is limited market activity such that the determination of fair value requires significant judgment or estimation.

 

16

 

 

The Company reviews the fair value hierarchy classification on a quarterly basis. Changes in the ability to observe valuation inputs may result in a reclassification of levels for certain securities within the fair value hierarchy. The Company’s policy is to recognize transfers into and out of levels within the fair value hierarchy at the end of the fiscal quarter in which the actual event or change in circumstances that caused the transfer occurs. There were no significant transfers between Level 1, Level 2, or Level 3 during the three month period ended December 31, 2020. When a determination is made to classify an asset or liability within Level 3, the determination is based upon the significance of the unobservable inputs to the overall fair value measurement. The following table provides a reconciliation of the beginning and ending balances of the item measured at fair value on a recurring basis in the table above that used significant unobservable inputs (Level 3):

 

   Nine month period ended
December 31,
2020
   Nine month period ended
December 31,
2019
 
Long term investments and advances:          
Beginning balance  $2,150,724   $2,306,817 
Gains (losses) included in net loss   (115,189)   (28,667)
Transfers in (out of level 3)        
           
Ending balance  $2,035,535   $2,278,150 

 

17

 

 

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Forward Looking Statements

 

The discussion contained herein is for the three and nine months ended December 31, 2020 and December 31, 2019. The following discussion should be read in conjunction with the Company’s consolidated financial statements and the notes to the consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for the quarterly period ended December 31, 2020.  In addition to historical information, this section contains “forward-looking” statements, including statements regarding the growth of product lines, optimism regarding the business, expanding sales and other statements. Words such as expects, anticipates, intends, plans, believes, sees, estimates and variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks and uncertainties that are difficult to predict. Actual results could vary materially from the description contained herein due to many factors including continued market acceptance of our products. In addition, actual results could vary materially based on changes or slower growth in the oral care and cosmetic dentistry products market; the potential inability to realize expected benefits and synergies; domestic and international business and economic conditions; changes in the dental industry; unexpected difficulties in penetrating the oral care and cosmetic dentistry products market; changes in customer demand or ordering patterns; changes in the competitive environment including pricing pressures or technological changes; technological advances; shortages of manufacturing capacity; future production variables impacting excess inventory and other risk factors.  Factors that could cause or contribute to any differences are discussed in “Risk Factors” and elsewhere in the Company’s annual report on Form 10-K filed on June 29, 2020 with the Securities and Exchange Commission.  Except as required by applicable law or regulation, the Company undertakes no obligation to revise or update any forward-looking statements contained in this Quarterly Report on Form 10-Q for the quarterly period ended December 31, 2020. The information contained in this Quarterly Report on Form 10-Q for the quarterly period ended December 31, 2020 is not a complete description of the Company’s business or the risks associated with an investment in the Company’s common stock. Each reader should carefully review and consider the various disclosures made by the Company in this Quarterly Report on Form 10-Q and in the Company’s other filings with the Securities and Exchange Commission.

 

Overview

 

We specialize in the research, development, and manufacturing of oral care and cosmetic dentistry products.  We are one of the leading manufacturers of cosmetic dentistry products in Europe.  Leveraging our knowledge of regulatory requirements regarding dental products and management’s experience in the needs of the professional dental community, we design, develop, manufacture and distribute our cosmetic dentistry products, including a full line of professional dental products that are distributed in Europe, Asia and the United States.    We distribute our products using both our own internal sales force and through the use of third party distributors.

 

18

 

 

Result of Operations

 

Comparative detail of results as a percentage of sales is as follows:

 

  

For the three months ended

December 31,

  

For the nine months ended

December 31,

 
   2020   2019   2020   2019 
NET SALES   100.00%   100.00%   100.00%   100.00%
COST OF SALES   38.06%   36.08%   35.06%   29.41%
GROSS PROFIT   61.94%   63.92%   64.94%   70.59%
OPERATING EXPENSES                    
Sales and marketing   13.47%   36.20%   9.46%   36.26%
General and administrative   41.64%   68.27%   42.46%   62.39%
Depreciation and amortization   2.57%   6.39%   3.21%   7.16%
TOTAL OPERATING EXPENSES   57.68%   110.86%   55.13%   105.81%
INCOME (LOSS) FROM OPERATIONS   4.26%   (46.94)%   9.81%   (35.22)%
Other income   25.61%   (14.72)%   2.74%   (25.79)%
INCOME (LOSS) BEFORE INCOME TAXES   29.87%   (61.66)%   12.55%   (61.00)%
Income taxes   (0.71)%   (0.64)%   (0.27)%   (0.21)%
NET INCOME (LOSS)   29.16%   (62.30)%   12.28%   (61.21)%
NET INCOME (LOSS) ATTRIBUTABLE TO NON-CONTROLLING INTEREST   (1.17)%   (5.63)%   (0.95)%   0.11%
NET INCOME (LOSS) ATTRIBUTABLE TO REMEDENT INC. COMMON SHAREHOLDERS   27.99%   (56.67)%   11.33%   (61.33)%

 

Net Sales

 

Net sales increased by approximately 28.8% to $337,468 for the three months ended December 31, 2020 as compared to $262,077 for the three months ended December 31, 2019.  The increase in sales is primarily due to increased sales in our GlamSmile Division and Implant Division during the quarter ending December 31, 2020.

 

Net sales increased by approximately 7.9% to $878,519 for the nine months ended December 31, 2020 as compared to $814,111 for the nine months ended December 31, 2019.  Net sales increased in the nine months ended December 31, 2020 mainly because of increased sales in our GlamSmile Division.

 

Cost of Sales

 

Cost of sales increased approximately 35.8% to $128,432 for the three months ended December 31, 2020 as compared to $94,562 for the three months ended December 31, 2019.  The increase in cost of sales is primarily due to the increased sales in our GlamSmile and Implant Divisions over the past quarter.

 

Cost of sales increased approximately 28.7% to $308,032 for the nine months ended December 31, 2020 as compared to $239,432 for the nine months ended December 31, 2019. Cost of sales increased mainly because of increased sales in our GlamSmile division offset by reduced sales in our other divisions, mainly due to the impact of the coronavirus since the beginning of the current fiscal year starting April 2020.

 

Gross Profit

 

Our gross profit increased by $41,521 or 24.8% to $209,036 for the three months ended December 31, 2020 as compared to $167,515 for the three months ended December 31, 2019 due to increased sales in our GlamSmile and Implant Division as described above. Our gross profit as a percentage of sales decreased to 61.94% in the three months ended December 31, 2020 as compared to 63.92% for the three months ended December 31, 2019.

 

Our gross profit decreased by $4,192 or 0.7%, to $570,487 for the nine months ended December 31, 2020 as compared to $574,679 for the nine months ended December 31, 2019 primarily because of reduced sales in our Implant Division, known for its higher margins. These reduced sales are mainly due to the impact of the coronavirus during the first quarter of the current fiscal year, starting April 2020.

 

19

 

 

Operating Expenses

 

Research and Development.  Our research and development costs were nil for each of the three months ended December 31, 2020 and 2019 and for the nine months ended December 31, 2020, and for the nine months ended December 31, 2019. Our research and development expenses have decreased because of the finalization of our Software program the “Smile me Mirror”.

 

Sales and marketing costs. Our sales and marketing costs for the three months ended December 31, 2020 and 2019 were $45,464 and $94,867 respectively, representing a decrease of $49,403 or 52.1%. The decrease is largely due to decreased attendance at trade shows and reduced travelling due to our reduced active approach in the US market and in general due to the COVID-19 mandatory restrictions.

 

Our sales and marketing costs decreased by $212,092 or 71.9% to $83,073 for the nine months ended December 31, 2020 as compared to $295,165 for the nine months ended December 31, 2019 mainly because of our reduced advertising and marketing costs spent due to the COVID-19 mandatory restrictions and impact in general

 

General and administrative costs. Our general and administrative costs for the three months ended December 31, 2020 and 2019 were $140,513 and $178,919 respectively, representing a decrease of $38,406 or 21.5%. The decrease in general and administrative costs is largely due to increased synergy between our internal divisions as a result of ongoing internal reorganization.

 

Our general and administrative costs for the nine months ended December 31, 2020 and 2019 were $372,995 and $507,914 respectively, representing a decrease of $134,919 or 26.6%.  The decrease in general and administration costs is largely due to increased synergy between our internal divisions as a result of ongoing internal reorganization and in general due to the COVID-19 mandatory restrictions.

 

Depreciation and amortization.   Our depreciation and amortization decreased $8,064 or 48.2% to $8,681 for the three months ended December 31, 2020 as compared to $16,745 for the three months ended December 31, 2019. 

 

Our depreciation and amortization was $28,224 for the nine months ended December 31, 2020 versus $58,314 for the nine months ended December 31, 2019. The decrease is primarily because our investments in equipment have declined relative to prior years.

 

Other income (expense).   Our other income / (expense) was $86,414 for the three months ended December 31, 2020 as compared to $(38,583) for the three months ended December 31, 2019, a decrease in expense of $124,997. The decrease in other expense was primarily as a result of decreased equity losses and other expenses.

 

Our net other (expense) decreased by $228,488 to $24,111 for the nine months ended December 31, 2020 as compared to ($209,933) for the nine months ended December 31, 2019, for the same reason as the three month variance.

 

Internal and External Sources of Liquidity

 

As of December 31, 2020, we had current assets of $699,535 compared to $681,064 at March 31, 2020. This increase of $18,471 was primarily due to an increase in accounts receivable of $145,271 and an increase in inventories of $16,741, offset by a decrease in cash of $31,338 and a decrease in prepaid expenses and other current assets of $112,203.

 

As of December 31, 2020, we had cash and cash equivalents of $83,296. We anticipate that we will need to raise additional funds to satisfy our working capital requirements and implement our business strategy to expand our direct to consumer business model. We intend to continue to look for opportunities to expand the number of GlamSmile Studios in Europe.  We will continue to review our expected cash requirements, make all efforts to collect any aged receivables, and take appropriate cost reduction measures to ensure that we have sufficient working capital to fund our operations. In the event additional needs for cash arise, we may seek to raise additional funds from a combination of sources including issuance of debt or equity securities. Additional financing may not be available on terms favorable to us, or at all. Any additional financing activity could be dilutive to our current stockholders. If adequate funds are not available or are not available on acceptable terms, our ability to take advantage of unanticipated opportunities or respond to competitive pressures could be limited.

 

Cash and Cash equivalents

 

Our balance sheet at December 31, 2020 reflects cash and cash equivalents of $83,296 as compared to $114,634 as of March 31, 2020, a decrease of $31,338.

 

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Operations

 

Net cash provided by operations was $184,107 for the nine months ended December 31, 2020 as compared to $35,093 the nine months ended December 31, 2019. The increase in net cash provided by operations for the nine months ended December 31, 2020 as compared to the nine months ended December 31, 2019 is primarily as a result of decreased losses resulting from the Company’s reduction in costs.

 

Investing activities

 

Net cash provided by (used by) investing activities totaled ($2,703) for the three months ended December 31, 2020, as compared to $nil for the three months ended December 31, 2019.  

 

Financing activities

 

Net cash provided by financing activities totaled $nil for the three months ended December 31, 2020, as compared to $nil for the three months ended December 31, 2019.  

 

During the nine months ended December 31, 2020 and December 31, 2019, we recognized an increase / (decrease) in cash and cash equivalents of ($212,742) and ($83), respectively, from the effect of exchange rates between the Euro and the US Dollar.

 

Off-Balance Sheet Arrangements

 

At December 31, 2020, we did not have any transactions, obligations or relationships that could be considered off-balance sheet arrangements.

 

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

 

Not Applicable.

 

Item 4.  Controls and Procedures

 

Disclosure Controls and Procedures

 

We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized, and reported within the required time periods and that such information is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure.  In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can only provide reasonable assurance of achieving the desired control objective, and management is required to exercise its judgment in evaluating the cost-benefit relationship of possible controls and procedures..

 

Management conducted an evaluation, under the supervision and with the participation of the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2020.  Based on this evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of December 31, 2020.

 

Changes in Internal Control Over Financial Reporting

 

There have been no material changes in our  internal controls over financial reporting identified in connection with the evaluation of disclosure controls and procedures discussed above that occurred during the quarter ended December 31, 2020 or subsequent to that date that have materially affected, or are reasonably likely to materially affect, our  internal control over financial reporting.

 

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PART II - OTHER INFORMATION

 

Item 1.  Legal Proceedings

 

To the best knowledge of management, there are no material legal proceedings pending against the Company.

 

Item 1A.  Risk Factors

 

Not Applicable.

 

Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds

 

None. 

 

Item 3.  Defaults Upon Senior Securities

 

None.

 

Item 4.  [Removed and Reserved]

 

Item 5.  Other Information

 

None.

 

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Item 6.  Exhibits

 

EXHIBIT INDEX

 

Exhibit No   Description
     
31.1*   Certifications of the Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act
     
31.2*   Certifications of the Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act
     
32.1*   Certifications of the Chief Executive Officer under Section 906 of the Sarbanes-Oxley Act
     
32.2*   Certifications of the Chief Financial Officer under Section 906 of the Sarbanes-Oxley Act
     
101.INS*   XBRL Instance Document
     
101.SCH*   XBRL Taxonomy Extension Schema
     
101.CAL*   XBRL Taxonomy Extension Calculation Linkbase
     
101.DEF*   XBRL Taxonomy Extension Definition Linkbase
     
101.LAB*   XBRL Taxonomy Extension Label Linkbase
     
101.PRE*   XBRL Taxonomy Extension Presentation Linkbase

 

 

* Filed herewith

 

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SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934 the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  REMEDENT, INC.
   
Date:    February 16, 2021 By: /s/ Guy De Vreese
    Name:  Guy De Vreese
   

Title:   Chief Executive Officer

    (Principal Executive Officer)

   
Date:    February 16, 2021 By: /s/ Philippe Van Acker
    Name:  Philippe Van Acker
   

Title:   Chief Financial Officer

    (Principal Financial and Accounting Officer)

 

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