Company Quick10K Filing
Quick10K
Remedent
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$0.30 20 $6
10-Q 2019-06-30 Quarter: 2019-06-30
10-K 2019-03-31 Annual: 2019-03-31
10-Q 2018-12-31 Quarter: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-K 2018-03-31 Annual: 2018-03-31
10-Q 2017-12-31 Quarter: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-K 2017-03-31 Annual: 2017-03-31
10-Q 2016-12-31 Quarter: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-K 2016-03-31 Annual: 2016-03-31
10-Q 2015-12-31 Quarter: 2015-12-31
10-Q 2015-09-30 Quarter: 2015-09-30
10-Q 2015-06-30 Quarter: 2015-06-30
10-K 2015-03-31 Annual: 2015-03-31
10-Q 2014-12-31 Quarter: 2014-12-31
10-Q 2014-09-30 Quarter: 2014-09-30
10-Q 2014-06-30 Quarter: 2014-06-30
10-K 2014-03-31 Annual: 2014-03-31
10-Q 2013-12-31 Quarter: 2013-12-31
ICGL Image Chain Group Limited 152,562
TEP Tucson Electric Power 1,446
SNWV Sanuwave Health 28
TDNT Trident Brands 25
ORRP Oroplata Resources 15
ARS Aleris 0
POTO Potomac Futures Fund 0
OWCP OWC Pharmaceutical Research 0
CPFH Capital Financial Holdings 0
HCT Healthcare Trust 0
REMI 2019-06-30
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 tv526746_ex31-1.htm
EX-31.2 tv526746_ex31-2.htm
EX-32.1 tv526746_ex32-1.htm
EX-32.2 tv526746_ex32-2.htm

Remedent Earnings 2019-06-30

REMI 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 tv526746_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 June 30, 2019

 

¨ 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

 

Securities registered pursuant to Section 12(b) of the Act: None

 

Title of each class:   Trading Symbol(s)   Name of each exchange on which registered:
N/A   N/A   N/A

 

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 every Interactive Data File required to be submitted 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 such files).

Yes x                                 No ¨

 

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check One):

 

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

  

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 August 14, 2019 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 June 30, 2019 (Unaudited) and March 31, 2019   3
Consolidated Statements of Operations for the Three Months Ended June 30, 2019 and June 30, 2018 (Unaudited)   4
Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended June 30, 2019 and June 30, 2018 (Unaudited)   5
Consolidated Statements of Cash Flows for the Three Months Ended June 30, 2019 and June 30, 2018 (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   20
Item 4.     Controls and Procedures   20
     
PART II –   OTHER INFORMATION    
Item 1.     Legal Proceedings   21
Item 1A.  Risk Factors   21
Item 2.     Unregistered Sales of Equity Securities and Use of Proceeds   21
Item 3.     Defaults Upon Senior Securities   21
Item 4.     [Removed and Reserved.]   21
Item 5.     Other Information   21
Item 6.     Exhibits   22
Signature Page   23

 

2 

 

 

PART I – FINANCIAL INFORMATION

Item 1.

 

REMEDENT, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 

   June 30, 2019   March 31, 2019 
   (unaudited)     
ASSETS          
CURRENT ASSETS:          
Cash and cash equivalents  $79,536   $66,539 
Accounts receivable, net of allowance for doubtful accounts of $159,140 at June 30, 2019 and $157,903 at March 31, 2019   402,230    233,908 
Inventories, net   110,867    110,962 
Prepaid expenses and other current assets   261,401    244,524 
Total current assets   854,034    655,933 
           
PROPERTY AND EQUIPMENT, NET   65,740    125,733 
           
OTHER ASSETS          
Equity investment in GlamSmile Asia Ltd (Note 3)   2,349,202    2,306,817 
Investment in Condor Technology (Note 3)   1,194,799    1,335,680 
Investment in Metrics in Balance (Note 3)   3,469,233    3,472,011 
Total assets  $7,933,008   $7,896,174 
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)          
CURRENT LIABILITIES:          
Accounts payable  $2,002,144   $1,919,095 
Accrued liabilities   456,792    450,347 
Deferred revenue   133,398    63,852 
Total current liabilities   2,592,334    2,433,294 
Long-term portion of lease liabilities   86,834     
Total liabilities   2,679,168    2,433,294 
           
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 June 30, 2019 and March 31, 2019 respectively)   19,996    19,996 
Treasury stock, at cost; 723,000 shares outstanding at June 30, 2019 and March 31, 2019 respectively   (831,450)   (831,450)
Additional paid-in capital   24,906,269    24,906,269 
Accumulated deficit   (17,908,311)   (17,717,166)
Accumulated other comprehensive income (loss) (foreign currency translation adjustment)   (1,126,232)   (1,082,992)
Obligation to issue shares (Note 3)   97,500    97,500 
Total Remedent, Inc. stockholders’ equity   5,157,772    5,392,157 
Non-controlling interest   96,068    70,723 
Total stockholders’ equity   5,253,840    5,462,880 
Total liabilities and equity  $7,933,008   $7,896,174 

 

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 
   June 30, 
   2019   2018 
Net sales  $309,964   $434,848 
Cost of sales   77,007    105,534 
Gross profit   232,957    329,314 
Operating Expenses          
Research and development       120 
Sales and marketing   106,738    193,899 
General and administrative   170,956    267,467 
Depreciation and amortization   22,435    24,415 
TOTAL OPERATING EXPENSES   300,129    485,901 
INCOME (LOSS) FROM OPERATIONS   (67,172)   (156,587)
OTHER INCOME (EXPENSES)          
Equity loss from investments   (101,274)   3,731 
Interest expense   (1,667)   (1,992)
Interest /other income       229 
Other income (expenses)   4,312    (1,671)
TOTAL OTHER INCOME   (98,629)   297 
           
NET (LOSS) INCOME  BEFORE NON-CONTROLLING INTEREST  $(165,801)  $(156,290)
NET LOSS (INCOME) ATTRIBUTABLE TO NON-CONTROLLING INTEREST   (25,344)   (2,474)
NET (LOSS) ATTRIBUTABLE TO REMEDENT SHAREHOLDERS  $(191,145)  $(158,764)
           
(LOSS) INCOME PER SHARE          
Basic  $(0.00)  $(0.00)
Fully diluted  $(0.00)  $(0.00)
           
WEIGHTED AVERAGE SHARES OUTSTANDING          
Basic   19,995,969    19,995,969 
Fully diluted   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 June 30,

 
   2019   2018 
NET (LOSS) INCOME  $(165,801)  $(156,290)
OTHER COMPREHENSIVE INCOME (LOSS):          
Foreign currency translation adjustment   (43,240)   18,705 
TOTAL OTHER COMPREHENSIVE INCOME (LOSS)   (209,041)   (137,585)
LESS: COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO NON-CONTROLLING INTERESTS   (25,344)   (2,474)
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO REMEDENT, INC. common shareholders  $(234,385)  $(140,059)

 

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 three months ended

June 30,

 
   2019   2018 
CASH FLOWS FROM OPERATING ACTIVITIES          
Net income (loss)  $(165,801)  $(156,290)
Adjustments to reconcile net income (loss) to net cash used by operating activities          
Depreciation and amortization   22,435    24,415 
Inventory reserve   4,679    (36,592)
Allowance for doubtful accounts   1,237    (10,553)
Changes in operating assets and liabilities:          
Equity investment   101,274    (3,731)
Accounts receivable   (168,322)   125,257 
Inventories   95    8,379 
Prepaid expenses   140,261    18,488 
Accounts payable   83,050    130,939 
Accrued liabilities   (63,859)   (124,299)
Deferred revenue   69,546    (24,412)
Due to related parties       (2,877)
Net cash used by operating activities   24,595    (51,276)
           
NET INCREASE (DECREASE) IN CASH   24,595    (51,276)
Effect of exchange rate changes on cash and cash equivalents   (37,934)   34,261 
CASH AND CASH EQUIVALENTS, BEGINNING   66,539    92,875 
CASH AND CASH EQUIVALENTS, ENDING  $79,536   $75,860 
           
Supplemental Cash Flow Disclosure:          
Interest paid  $1,667   $1,992 
Income taxes paid  $   $ 
Non cash right-of-use assets obtained in exchange for lease obligations   170,899     

 

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 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 June 30, 2019, the Company had a working capital deficit of $1,738,300, and an accumulated deficit of $17,908,311. 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 July 28, 2019 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 June 30, 2019.

 

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, 2019, except as may be indicated below:

 

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, 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).

 

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); In addition, a 3.03% ownership interest in Condor Technologies N.V. ( a Belgium private company) and a 26.09% ownership interest in Metrics in Balance N.V. (a Belgium corporation).

 

7 

 

 

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.

 

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 months ended June 30, 2019, are not necessarily indicative of the results that may be expected for the year ended March 31, 2019. Accordingly, your attention is directed to footnote disclosures found in the Annual Report on Form 10-K for the year ending March 31, 2019, and particularly to Note 2, which includes a summary of significant accounting policies.

 

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:

 

  

Three months

ended

June 30, 2019

  

Year

ended

March 31, 2019

 
Product warranty liability:          
Opening balance  $5,619   $6,164 
Accruals for product warranties issued in the period   44     
Adjustments to liabilities for pre-existing warranties       (545)
Ending liability  $5,663   $5,619 

 

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 $5,663 and $5,619 as of June 30, 2019 and March 31, 2019, 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 June 30, 2019 and March 31, 2019, 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 June 30, 2019 or March 31, 2019.

 

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 three months ended June 30, 2019 and 2018 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 (loss) and gains of $(43,240) and $18,705 for the three months ended June 30, 2019 and 2018, 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 June 30, 2019. 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 three month periods ended June 30, 2019 and June 30, 2018 the Company recorded equity (loss) income of $(3,731) and $64,648 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:

 

   Three months
ended
June 30, 2019
   Three months
ended
June 30, 2018
 
Operating data:          
Revenues  $1,380,967   $1,232,863 
Gross profit   860,324    1,029,647 
Income (loss) from operations   218,279    54,503 
Net income  $197,050   $17,346 

 

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 loss of $(42,973) has been recorded in income due to the fair value per share at March 31, 2019, being $18.99 (€16,90) per share. The fair value per share at June 30, 2019 was $16,99 (€15,00) per share, resulting in a loss of $(140,881) which was recorded in income. 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, 2019 we have 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, 2019 unrealized net gains on our investment in MIB were $2,832,822. As at June 30, 2019, we recorded a net loss for the quarter ending June 30, 2019 of $(2,778), reflecting Remedent’s 26,09% of the total quarter loss.

 

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

 

   June 30, 2019 
Operating data:     
Revenues  $6,428 
Gross profit   5,938 
Income (loss) from operations   (7,734)
Net income (loss)  $(10,649)

 

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 June 30, 2019, five customers accounted for 17.69% of the Company’s trade accounts receivables, and one customer accounted for 5.85%.   The Company performs ongoing credit evaluations of its customers and normally does not require collateral to support accounts receivable.

 

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 three months ended June 30, 2019 the Company had five suppliers who accounted for 45.65% of gross purchases. At June 30, 2018 the Company had five suppliers who accounted for 54.48% of gross purchases.

 

Revenues —  For the three months ended June 30, 2019 the Company had five customers that accounted for 58.13% of total revenues and one of those customers accounted for 14.67% of total revenues. For the three months ended June 30, 2018 the Company had five customers that accounted for 84.76% of total revenues and one of those customers accounted for 32.49% of total revenues.

 

12 

 

 

5.ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS

 

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

 

   June 30, 2019   March 31, 2019 
Accounts receivable, gross  $561,370    391,811 
Less: allowance for doubtful accounts   (159,140)   (157,903)
Accounts receivable, net  $402,230    233,908 

 

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:

 

   June 30, 2019   March 31, 2019 
Raw materials  $9,151    9,151 
Components   133,123    121,941 
Finished goods   570,705    577,303 
    712,979    708,395 
Less: reserve for obsolescence   (602,112)   (597,433)
Net inventory  $110,867    110,962 

 

7.PREPAID EXPENSES AND OTHER ASSETS

 

Prepaid expenses and other assets are summarized as follows:

 

   June 30, 2019   March 31, 2019 
Prepaid materials and components  $74,713    217,172 
VAT payments in excess of VAT receipts   7,355    7,355 
Prepaid rent   1,301     
Prepaid tradeshow   4,972    4,933 
Other   15,922    15,064 
Right-of-use assets   157,138     
   $261,401   $244,524 

 

8.PROPERTY AND EQUIPMENT

 

Property and equipment are summarized as follows:

 

   June 30, 2019   March 31, 2019 
Furniture and Fixtures  $478,406    478,406 
Machinery and Equipment   2,154,822    2,154,822 
    2,633,228    2,633,228 
Accumulated depreciation   (2,567,488)   (2,507,495)
Property & equipment, net  $65,740    125,733 

 

13 

 

 

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 three month periods ended June 30, 2019 and 2018 respectively, the Company incurred $55,624 and $56,941 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:

 

   June 30, 2019   March 31, 2019 
Accrued employee benefit taxes and payroll  $110,844    176,858 
Accrued travel   5,663    5,619 
Accrued audit and tax preparation fees   12,550    23,255 
Reserve for warranty costs   5,663    5,619 
Accrued consulting fees   194,386    179,669 
Tax reserve   759    753 
VAT to be paid   14,695    7,462 
Other accrued expenses + lease liability   112,232    51,112 
   $456,792    450,347 

 

11.EQUITY COMPENSATION PLANS

 

As of June 30, 2019, 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.

 

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.

 

The following table provides aggregate information as of June 30, 2019 with respect to all compensation plans (including individual compensation arrangements) under which equity securities are authorized for issuance.

 

   2004 Plan   2007 Plan 
  

Outstanding

Options

  

Weighted

Average

Exercise

Price

  

Outstanding

Options

  

Weighted

Average

Exercise

Price

 
Options outstanding and exercisable June  30, 2018   357,500    0.50    430,000    1.21 
Options expired unexercised   (357,500)        (430,000)     
Options outstanding and exercisable March 31, 2019 and June  30, 2019                  

 

 

14 

 

 

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 three month periods ended June 30, 2019 and June 30, 2018 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 three month periods ended June 30, 2019 and June 30, 2018.

  

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 three months ended June 30, 2019 and 100.00% of our sales for the three months ended June 30, 2018 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:

 

   Three Months 
   Ended 
   June 30, 2019 
Cash paid for operating lease liabilities  $26,592 
Right-of-use assets obtained in exchange for new operating lease obligations     
Weighted-average remaining lease term, real estate   1.75 years 
Weighted-average remaining lease term, all other leased equipment   2.84 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 June 30, 2019, were as follows:

 

Due in 12-month period ended June 30,     
2020  $79,778 
2021   85,551 
Thereafter   5,569 
   $170,898 
Less imputed interest   (13,759)
Total lease liabilities  $157,138 
      
Current operating lease liabilities  $70,304 
Non-current lease liabilities   86,834 
Total lease liabilities  $157,138 

 

As of June 30, 2019, right-of-use assets were $157,138 and lease liabilities were $157,138. During the three months ended June 30, 2019, 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:

 

       June 30, 2019   March 31, 2019 
       Carrying   Fair   Carrying   Fair 
   Level   Value   Value   value   Value 
Cash   1   $79,536    79,536   $66,539   $66,539 
Accounts receivable   2   $402,230    402,230   $233,908   $233,908 
Long Term investment and advance - GlamSmile Dental Technology Asia   3   $2,349,202    2,349,202   $2,306,817   $2,306,817 
Long term investments and advances Condor   1   $1,194,799    1,194,799   $1,335,680   $1,335,680 
Investment in Metrics in Balance   2   $3,469,233    3,469,233    3,472,011   $3,472,011 
Deferred revenue   2   $133,398    133,398   $63,852   $63,852 
Accounts payable   2   $2,002,144    2,002,144   $1,919,095   $1,919,095 
Accrued liabilities   2   $456,792    456,792   $450,347   $450,347 

 

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 June 30, 2019. 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):

 

   Three month period
ended June 30, 2019
   Three month period
ended June 30, 2018
 
Long term investments and advances:          
Beginning balance  $2,306,817   $2,245,137 
Gains (losses) included in net loss   42,385    3,731 
Transfers in (out of level 3)        
           
Ending balance  $2,349,202   $2,248,868 

 

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 months ended June 30, 2019 and June 30, 2018. 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 June 30, 2019.  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 July 13, 2018 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 June 30, 2019. The information contained in this Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2019 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.

  

Result of Operations

 

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

 

   For the three months ended 
   June 30, 
   2019   2018 
   (unaudited) 
NET SALES   100.00%   100.00%
COST OF SALES   24.84%   24.27%
GROSS PROFIT   75.16%   75.73%
OPERATING EXPENSES          
Research and development   0.00%   0.03%
Sales and marketing   34.44%   44.59%
General and administrative   55.15%   61.51%
Depreciation and amortization   7.24%   5.61%
TOTAL OPERATING EXPENSES   96.83%   111.74%
INCOME (LOSS) FROM OPERATIONS   (21.67)%   (36.01)%
Other income (expenses)   (31.82)%   0.07%
NET INCOME (LOSS) BEFORE NON-CONTROLLING INTEREST   (53.49)%   (35.94)%
NON-CONTROLLING INTEREST   (8.18)%   (0.57)%
NET INCOME   (61.67)%   (36.51)%

 

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Net Sales

  

Net sales decreased by approximately 28.7% to $309,964 for the three months ended June 30, 2019 as compared to $434,848 for the three months ended June 30, 2018.  The decrease in sales is primarily due to the operational change in our GlamSmile division. We are now receiving a royalty payment from our Belgium customers based on monthly production, rather than invoicing on a finished good basis, thereby providing our customers with more flexibility in choosing the production lab that fits them best. The royalty is applicable on each veneer produced. The decrease in sales is also partially due to the reduced sales of our Condor 3D Scanner in the North American market. In anticipation of our additional tool for the Condor 3D Scanner, which will be an easy-to-use addition (with none to minimum additional user training required) to the already existing Condor 3D Scanner and which will be available by the year-end, we reduced our active approach in the US market.

 

Cost of Sales

 

Cost of sales decreased approximately 27.0% to $77,007 for the three months ended June 30, 2019 as compared to $105,534 for the three months ended June 30, 2018.  The decrease in cost of sales is primarily due to the operational change in our GlamSmile division as we changed our profit model for the Belgium customers to a royalty income, resulting in decreased cost of Sales. Secondly, the reduced sales of our Condor 3D Scanner in anticipation of the launch of our additional tool, the “Condor Flash” results in a decreased cost of sales.

  

Gross Profit

 

Our gross profit decreased by $96,357 or 29.3% to $232,957 for the three months ended June 30, 2019 as compared to $329,314 for the three months ended June 30, 2018 due to the reduced sales described above. Our gross profit as a percentage of sales decreased to 75.16% in the three months ended June 30, 2019 as compared to 75.73% for the three months ended June 30, 2018.

 

Operating Expenses

 

Research and Development.  Our research and development expenses decreased by $120 to $Nil for the three months ended June 30, 2019 as compared to $120 for the three months ended June 30, 2018, a decrease of 100.0%. Our research and development costs have decreased primarily because of the finalization of our Software program.

 

Sales and marketing costs.  Our sales and marketing costs for the three months ended June 30, 2019 and 2018 were $106,738 and $193,899 respectively, representing a decrease of $87,161 or 45.0%. The decrease is largely due to decreased attendance at trade shows and reduced travelling due to our reduced active approach in the US market.

 

General and administrative costs.  Our general and administrative costs for the three months ended June 30, 2019 and 2017 were $170,956 and $267,467 respectively, representing a decrease of $96,511 or 36.1%. The decrease in general and administrative costs is largely due to increased synergy between our internal divisions as a result of ongoing internal reorganization.

 

Depreciation and amortization.  Our depreciation and amortization decreased $1,980 or 8.1% to $22,435 for the three months ended June 30, 2019 as compared to $24,415 for the three months ended June 30, 2018. 

 

Other income (expense).  Our other income / (expense) was ($98,629) for the three months ended June 30, 2019 as compared to $297 for the three months ended June 30, 2018, an increase in expense of $98,926. The increase in other expense was primarily as a result of decreased equity income from our investments.

 

Internal and External Sources of Liquidity

 

As of June 30, 2019, we had current assets of $867,795 compared to $655,933 at March 31, 2019. This increase of $211,862 was primarily due to an increase in accounts receivable of $168,322, an increase in prepaid expenses and other current assets, and an increase in cash of $12,997, offset by a decrease in inventories of $95.

 

As of June 30, 2019, we had cash and cash equivalents of $79,536. 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.

 

19 

 

 

Cash and Cash equivalents

 

Our balance sheet at June 30, 2019 reflects cash and cash equivalents of $79,536 as compared to $66,539 as of March 31, 2019, an increase of $12,997.

 

Operations

 

Net cash provided by operations was $24,595 for the three months ended June 30, 2019 as compared to net cash (used by) operations of $(51,276) for the three months ended June 30, 2018. The increase in net cash provided by operations for the three months ended June 30, 2019 as compared to the three months ended June 30, 2018 is primarily as a result of a $131,370 decrease in net loss offset by non-cash adjustments to net loss of $51,081 and a net use of cash by operating assets and liabilities totaling ($106,580).

 

Investing activities

 

Net cash provided by investing activities totaled $nil for the three months ended June 30, 2019, as compared to $nil for the three months ended June 30, 2018.  

 

Financing activities

 

Net cash provided by financing activities totaled $nil for the three months ended June 30, 2019, as compared to $nil for the three months ended June 30, 2018.  

 

During the three months ended June 30, 2019 and June 30, 2018, we recognized an increase / (decrease) in cash and cash equivalents of $(37,934) and $34,261, respectively, from the effect of exchange rates between the Euro and the US Dollar.

 

Off-Balance Sheet Arrangements

 

At June 30, 2019, 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 June 30, 2019.  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 June 30, 2019.

 

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 June 30, 2019 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:    August 14, 2019 By: /s/ Guy De Vreese
    Name:  Guy De Vreese
   

Title:   Chief Executive Officer

            (Principal Executive Officer)

   
Date:    August 14, 2019 By: /s/ Philippe Van Acker
    Name:  Philippe Van Acker
   

Title:   Chief Financial Officer

            (Principal Financial and Accounting Officer)

 

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