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, 2017June 30, 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 code011 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.
Yesx 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).
Yesx No¨
Indicate by checkmarkcheck mark whether the registrantRegistrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company”company,” and “emerging growth company“company” in Rule 12b-2 of the Exchange Act. (Check one):
| Large accelerated filer | ¨ | Accelerated filer | ¨ |
| Non-accelerated filer | Smaller reporting company | x | |
| Emerging growth company | ¨ | ||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes¨ Nox
The number of common shares of registrant’s stock outstanding as of FebruaryAugust 14, 20182020 was 19,995,969.
REMEDENT, INC.
FORM 10-Q INDEX
PART I – FINANCIAL INFORMATION
REMEDENT, INC. AND SUBSIDIARIES
December 31, 2017 | March 31, 2017 | |||||||
| ASSETS | (unaudited) | |||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | 59,299 | $ | 147,106 | ||||
| Accounts receivable, net of allowance for doubtful accounts of $185,566 at December 31, 2017 and $164,321 at March 31, 2017 | 1,102,332 | 943,251 | ||||||
| Inventories, net | 125,094 | 110,404 | ||||||
| Prepaid expense | 358,100 | 84,139 | ||||||
| Total current assets | 1,644,825 | 1,284,900 | ||||||
| PROPERTY AND EQUIPMENT, NET | 198,135 | 274,357 | ||||||
| OTHER ASSETS | ||||||||
| Investment in GlamSmile Asia Ltd | 2,220,700 | 1,970,245 | ||||||
| Investment in MFI (Note 3) | 1,200,292 | 1,200,292 | ||||||
| Total assets | $ | 5,263,952 | $ | 4,729,794 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts payable | 1,452,931 | $ | 1,038,686 | |||||
| Accrued liabilities | 343,424 | 441,250 | ||||||
| Deferred revenue | 94,893 | 72,235 | ||||||
| Total current liabilities | 1,891,248 | 1,552,171 | ||||||
| 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, 2017 and March 31, 2017 respectively) | 19,996 | 19,996 | ||||||
| Treasury stock, at cost; 723,000 shares outstanding at December 31, 2017 and March 31, 2017 respectively | (831,450 | ) | (831,450 | ) | ||||
| Additional paid-in capital | 24,906,269 | 24,906,269 | ||||||
| Accumulated deficit | (19,805,434 | ) | (19,969,732 | ) | ||||
| Accumulated other comprehensive (loss) (foreign currency translation adjustment) | (1,088,949 | ) | (1,114,234 | ) | ||||
| Obligation to issue shares (Note 3) | 97,500 | 97,500 | ||||||
| Total Remedent, Inc. stockholders’ equity | 3,297,932 | 3,108,349 | ||||||
| Non-controlling interest | 74,772 | 69,274 | ||||||
| Total stockholders’ equity | 3,372,704 | 3,177,623 | ||||||
| Total liabilities and equity | $ | 5,263,952 | $ | 4,729,794 | ||||
The accompanying notes are an integral part of these consolidated financial statements.
REMEDENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the three months ended December 31, | For the nine months ended December 31, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Net sales | $ | 745,103 | $ | 592,952 | $ | 2,215,136 | $ | 1,818,865 | ||||||||
| Cost of sales | 203,729 | 165,086 | 734,601 | 561,912 | ||||||||||||
| Gross profit | 541,374 | 427,866 | 1,480,535 | 1,256,953 | ||||||||||||
| Operating Expenses | ||||||||||||||||
| Research and development | — | 733 | 1,860 | 8,424 | ||||||||||||
| Sales and marketing | 252,417 | 160,602 | 731,622 | 430,318 | ||||||||||||
| General and administrative | 287,029 | 257,822 | 734,826 | 785,622 | ||||||||||||
| Depreciation and amortization | 25,206 | 39,874 | 74,521 | 121,313 | ||||||||||||
| TOTAL OPERATING EXPENSES | 564,652 | 459,031 | 1,542,829 | 1,345,677 | ||||||||||||
| (LOSS) INCOME FROM OPERATIONS | (23,278 | ) | (31,165 | ) | (62,294 | ) | (88,724 | ) | ||||||||
| OTHER INCOME (EXPENSES) | ||||||||||||||||
| Equity income from investments | 73,327 | 133,267 | 250,455 | 344,430 | ||||||||||||
| Interest expense | (1,953 | ) | (2,517 | ) | (13,824 | ) | (34,114 | ) | ||||||||
| Interest / Other income (expense) | 76 | 2,790 | (2,119 | ) | 3,527 | |||||||||||
| Other deductions | (1,996 | ) | (80 | ) | (2,017 | ) | (1,976 | ) | ||||||||
| TOTAL OTHER INCOME | 69,454 | 133,460 | 232,495 | 311,867 | ||||||||||||
| NET INCOME BEFORE TAXES AND NON-CONTROLLING INTEREST | 46,176 | 102,295 | 170,201 | 223,143 | ||||||||||||
| PROVISION FOR INCOME TAXES | (407 | ) | 1,558 | (407 | ) | 3,998 | ||||||||||
| INCOME FROM CONTINUING OPERATIONS BEFORE NON-CONTROLLING INTEREST, NET OF TAX | 45,769 | 103,853 | 169,794 | 227,141 | ||||||||||||
| NET INCOME (LOSS) ATTRIBUTABLE TO NON-CONTROLLING INTEREST | 6,370 | 8,022 | (5,496 | ) | 15,642 | |||||||||||
| NET INCOME ATTRIBUTABLE TO REMEDENT INC. COMMON SHAREHOLDERS | $ | 52,139 | $ | 111,875 | $ | 164,298 | $ | 242,783 | ||||||||
| INCOME PER SHARE | ||||||||||||||||
| Basic | $ | 0.00 | $ | 0.00 | $ | 0.01 | $ | 0.01 | ||||||||
| Fully diluted | $ | 0.00 | $ | 0.00 | $ | 0.01 | $ | 0.01 | ||||||||
| 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 | ||||||||||||
| June 30, 2020 | March 31, 2020 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | 96,074 | $ | 114,634 | ||||
| Accounts receivable, net of allowance for doubtful accounts of $157,847 at June 30, 2020 and $154,447 at March 31, 2020 | 336,247 | 329,340 | ||||||
| Inventories, net | 99,746 | 90,841 | ||||||
| Prepaid expenses and other current assets | 125,187 | 146,249 | ||||||
| Total current assets | 657,254 | 681,064 | ||||||
| PROPERTY AND EQUIPMENT, NET OTHER ASSETS | 44,705 | 67,092 | ||||||
| Equity investment in GlamSmile Asia Ltd (Note 3) | 2,125,233 | 2,150,724 | ||||||
| Investment in Condor Technology (Note 3) | 1,185,093 | 1,159,561 | ||||||
| Investment in Metrics in Balance (Note 3) | 3,449,956 | 3,450,598 | ||||||
| Total assets | $ | 7,462,241 | $ | 7,509,039 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts payable | $ | 2,341,125 | $ | 2,294,884 | ||||
| Accrued liabilities | 444,903 | 486,763 | ||||||
| Deferred revenue | 77,221 | 100,571 | ||||||
| Total current liabilities | 2,863,249 | 2,882,218 | ||||||
| Long-term debt | 5,455 | 5,455 | ||||||
| TOTAL LIABILITIES | 2,868,704 | 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 June 30, 2020 and March 31, 2020 respectively) | 19,996 | 19,996 | ||||||
| Treasury stock, at cost; 723,000 shares outstanding at June 30, 2020 and March 31, 2020 respectively | (831,450 | ) | (831,450 | ) | ||||
| Additional paid-in capital | 24,906,269 | 24,906,269 | ||||||
| Accumulated deficit | (18,574,264 | ) | (18,575,388 | ) | ||||
| Accumulated other comprehensive income (loss) (foreign currency translation adjustment) | (1,105,355 | ) | (1,070,239 | ) | ||||
| Obligation to issue shares (Note 3) | 97,500 | 97,500 | ||||||
| Total Remedent, Inc. stockholders’ equity | 4,512,696 | 4,546,688 | ||||||
| Non-controlling interest | 80,841 | 74,678 | ||||||
| Total stockholders’ equity | 4,593,537 | 4,621,366 | ||||||
| Total liabilities and equity | $ | 7,462,241 | $ | 7,509,039 | ||||
The accompanying notes are an integral part of these consolidated financial statements.
REMEDENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| For the three months ended | ||||||||
| June 30, | ||||||||
| 2020 | 2019 | |||||||
| Net sales | $ | 219,129 | $ | 309,964 | ||||
| Cost of sales | 66,528 | 77,007 | ||||||
| Gross profit | 152,601 | 232,957 | ||||||
| Operating Expenses | ||||||||
| Sales and marketing | 11,055 | 106,738 | ||||||
| General and administrative | 120,366 | 170,956 | ||||||
| Depreciation and amortization | 10,676 | 22,435 | ||||||
| TOTAL OPERATING EXPENSES | 142,097 | 300,129 | ||||||
| INCOME (LOSS) FROM OPERATIONS | 10,504 | (67,172 | ) | |||||
| OTHER INCOME (EXPENSES) | ||||||||
| Equity loss from investments | (601 | ) | (101,274 | ) | ||||
| Interest expense | (914 | ) | (1,667 | ) | ||||
| Other (expenses) income | (1,724 | ) | 4,312 | |||||
| TOTAL OTHER INCOME | (3,239 | ) | (98,629 | ) | ||||
| NET INCOME (LOSS) BEFORE NON-CONTROLLING INTEREST | $ | 7,265 | $ | (165,801 | ) | |||
| NET INCOME ATTRIBUTABLE TO NON-CONTROLLING INTEREST | (6,141 | ) | (25,344 | ) | ||||
| NET INCOME (LOSS) ATTRIBUTABLE TO REMEDENT SHAREHOLDERS | $ | 1,124 | $ | (191,145 | ) | |||
| INCOME (LOSS) 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.
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, | For the three months ended June 30, | ||||||||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | 2020 | 2019 | |||||||||||||||||||
| Net Income | $ | 52,139 | $ | 111,875 | $ | 164,298 | $ | 242,783 | ||||||||||||||||
| NET INCOME (LOSS) | $ | 7,265 | $ | (165,801 | ) | |||||||||||||||||||
| OTHER COMPREHENSIVE INCOME (LOSS): | ||||||||||||||||||||||||
| Foreign currency translation adjustment | 9,800 | (46,657 | ) | 25,286 | (66,458 | ) | (35,116 | ) | (43,240 | ) | ||||||||||||||
| COMPREHENSIVE INCOME | $ | 61,939 | $ | 65,218 | $ | 189,584 | $ | 176,325 | ||||||||||||||||
| TOTAL OTHER COMPREHENSIVE INCOME (LOSS) | (27,851 | ) | (209,041 | ) | ||||||||||||||||||||
| LESS: COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO NON-CONTROLLING INTERESTS | (6,141 | ) | (25,344 | ) | ||||||||||||||||||||
| COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO REMEDENT, INC. common shareholders | $ | (33,992 | ) | $ | (234,385 | ) | ||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
REMEDENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the nine months ended December 31, | ||||||||||||||||
| 2017 | 2016 | For the three months ended June 30, | ||||||||||||||
| 2020 | 2019 | |||||||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||||||||
| Net income | $ | 164,298 | $ | 242,783 | ||||||||||||
| Adjustments to reconcile net income to net cash used by operating activities | ||||||||||||||||
| Net income (loss) | $ | 7,265 | $ | (165,801 | ) | |||||||||||
| Adjustments to reconcile net income (loss) to net cash used by operating activities | ||||||||||||||||
| Depreciation and amortization | 74,521 | 121,313 | 10,676 | 22,435 | ||||||||||||
| Inventory reserve | 65,352 | (31,010 | ) | 12,618 | 4,679 | |||||||||||
| Allowance for doubtful accounts | 21,245 | (7,553 | ) | 3,400 | 1,237 | |||||||||||
| Changes in operating assets and liabilities: | ||||||||||||||||
| Equity investment | (250,455 | ) | (344,430 | ) | 601 | 101,274 | ||||||||||
| Changes in operating assets and liabilities: | ||||||||||||||||
| Accounts receivable | (159,081 | ) | 53,516 | (6,907 | ) | (168,322 | ) | |||||||||
| Inventories | (14,690 | ) | 49,000 | (8,905 | ) | 95 | ||||||||||
| Prepaid expenses | (273,961 | ) | 49,197 | 21,062 | 140,261 | |||||||||||
| Accounts payable | 414,245 | 52,469 | 46,243 | 83,050 | ||||||||||||
| Accrued liabilities | (97,826 | ) | (119,807 | ) | (41,860 | ) | (63,859 | ) | ||||||||
| Deferred revenue | 22,658 | (35,231 | ) | (23,350 | ) | 69,546 | ||||||||||
| Net cash used by operating activities | (33,694 | ) | 30,247 | 20,843 | 24,595 | |||||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||||||||
| Purchases of equipment | (4,341 | ) | (28,910 | ) | ||||||||||||
| Net cash used by investing activities | (4,341 | ) | (28,910 | ) | ||||||||||||
| NET INCREASE (DECREASE) IN CASH | (38,035 | ) | 1,337 | 20,843 | 24,595 | |||||||||||
| Effect of exchange rate changes on cash and cash equivalents | (49,772 | ) | (9,407 | ) | (39,403 | ) | (11,598 | ) | ||||||||
| CASH AND CASH EQUIVALENTS, BEGINNING | 147,106 | 94,434 | 114,634 | 66,539 | ||||||||||||
| CASH AND CASH EQUIVALENTS, ENDING | $ | 59,299 | $ | 86,364 | $ | 96,074 | $ | 79,536 | ||||||||
| Supplemental Information: | ||||||||||||||||
| Supplemental Cash Flow Disclosure: | ||||||||||||||||
| Interest paid | $ | 13,824 | $ | 9,046 | $ | 914 | $ | 1,667 | ||||||||
| 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.
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 its facility 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, 20172018 and March 31, 2016,2017, 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, 2017June 30, 2020, the Company had a working capital deficit of $246,423,$2,205,995, and an accumulated deficit of $19,805,434.$18,574,264. 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, 20172020 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, 2017.June 30, 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, 2017,2020, except as may be indicated below:
Organization and Principles 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) and, 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 %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.
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 thethree and ninethe three months ended December 31, 2017,June 30, 2020, are not necessarily indicative of the results that may be expected for the year ended March 31, 2017.2021. Accordingly, your attention is directed to footnote disclosures found in the Annual Report on Form 10-K for the year ending March 31, 2017,2020, 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:
Nine months ended December 31, 2017 | Year ended March 31, 2017 | Three months ended June 30, 2020 | Year ended March 31, 2020 | |||||||||||||
| Product warranty liability: | ||||||||||||||||
| Opening balance | $ | 5,333 | $5, 695 | $ | 5,496 | $ | 5,619 | |||||||||
| Accruals for product warranties issued in the period | 690 | — | 121 | — | ||||||||||||
| Adjustments to liabilities for pre-existing warranties | — | (362 | ) | — | (123 | ) | ||||||||||
| Ending liability | $ | 6,023 | $ | 5,333 | $ | 5,617 | $ | 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 $6,023$5,617 and $5,333$5,496 as of December 31, 2017June 30, 2020 and March 31, 2017,2020, 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, 2017June 30, 2020 and March 31, 2017,2020, the Company had 19,995,969, shares of common stock issued and outstanding. At December 31, 2017 and March 31, 2017, theThe Company did not have any warrants outstanding but had 787,500 and 1,357,500or options outstanding respectively. at either of June 30, 2020 or March 31, 2020.
Further, pursuant to ASC 260-10-50-1(c), if a fully diluted share calculation was computed for the three and nine month periods ended December 31, 2017 and December 31, 2016 respectively, it would have excluded all options respectively since the Company’s average share trading price during the three month and nine month periods ended December 31, 2017 and December 31, 2016 were less than the exercise price of all options.
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)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, 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 gains/(losses)(loss) and gains of $25,285$(35,116) and $(66,458)$(43,240) for the ninethree months ended December 31, 2017June 30, 2020 and 2016,2019, respectively. These amounts have been recorded as a separate component of stockholders’ equity (deficit).
NewRecent Accounting Pronouncements
RecentChanges to GAAP are established by the Financial Accounting Pronouncements Not Yet AdoptedStandards Board (the “FASB”) in the form of accounting standards updates (“ASUs”) to the FASB’s Accounting Standards Codification.
In May 2014,The Company considers the FASB issued ASU 2014-09, “Revenue from Contracts with Customers” (ASC 606). The standard, as subsequently amended, is intended to clarify the principles for recognizing revenue for U.S. GAAP by creating a new Topic 606, “Revenue from Contracts with Customers”. This guidance supersedes the revenue recognition requirements in ASC 605, “Revenue Recognition”,applicability and supersedes some cost guidance included in Subtopic 605-35, “Revenue Recognition—Construction-Typeimpact of all ASUs. ASUs not listed below were assessed and Production-Type Contracts”. The core principle of the accounting standard is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expectsdetermined not to be entitled in exchange for those goodapplicable or services. The amendments should be applied by either (1) retrospectivelyare expected to each prior reporting period presented; or (2) retrospectively withhave minimal impact on the cumulative effect of initially applying this ASU recognized at the date of initial application. The new guidance is effective for fiscal years beginning after December 15, 2017, which, for the Company, means the fiscal year beginning April 1, 2018. The Company is currently evaluating the new guidance to determine the impact it will have on itsCompany’s consolidated financial statements.position and results of operations.
Adopted Accounting Pronouncements
In February 2016, the FASB issuedestablished ASU Topic 842 – Leases, by issuing ASU Topic No. 2016-02 “Leases” (Topic 842). The FASB issued this update(“Topic 842”), which requires lessees to increase transparency and comparability among organizations by recognizingrecognize lease assets and lease liabilities on the balanceon-balance sheet and disclosingdisclose key information about leasing arrangements. Topic 842 was subsequently amended by ASU Topic 2018-11 – Targeted Improvements. The updated guidance is effectivenew standard establishes a right-of-use model (“ROU”) that requires a lessee to recognize a ROU asset and a lease liability for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. Early adoptionall leases with a term longer than 12 months. Leases will be classified as finance or operating, with classification affecting the pattern and classification of the standard is permitted. We are currently evaluating the impact of the adoption of this guidance on our consolidated financial statements. However, we do not expect the adoption will have a material increaseexpense recognition in the assets and liabilitiesstatement of our consolidated balance sheet.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 reviewedelected 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 recent accounting pronouncementsassets, and concluded that theylease liabilities are either not applicable toincluded in Accrued liabilities in the business, or that no material effect is expected onunaudited consolidated balance sheet for the consolidated financial statements as a result of future adoption.period ended June 30, 2020. See Note 13 — Leases, for additional information.
9
| 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 | |
| 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. As of March 31, 2014 the Company has received $1,850,000 and has recorded the balance of $1,150,000 as an amount receivable.
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.
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 | $ | 2,000,000 | ||||
| Fair value of 29.4% interest | 2,055,884 | 2,055,884 | ||||||
| Carrying value of non-controlling interest | 1,117,938 | 1,117,938 | ||||||
| Less: carrying value of former subsidiary’s net assets | (2,002,329 | ) | (2,002,329 | ) | ||||
| Goodwill | (699,635 | ) | (699,635 | ) | ||||
| Investment China & Hong Kong | (1,082 | ) | (1,082 | ) | ||||
| Rescission agreement Excelsior (Note 11) | (1,000,000 | ) | ||||||
| Rescission agreement Excelsior | (1,000,000 | ) | ||||||
| $ | 1,470,776 | $ | 1,470,776 | |||||
For the ninethree month periods ended December 31, 2017June 30, 2020 and December 31, 2016June 30, 2019 the Company recorded equity (loss) income of $250,455$(25,491) and $344,430$42,385 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, 2017 | Nine months ended December 31, 2016 | Three months ended June 30, 2020 | Three months ended June 30, 2019 | ||||||||||||
| Revenues | $ | 5,393,457 | $ | 5,561,925 | $ | 998,272 | $ | 1,380,967 | ||||||||
| Gross profit | 4,620,453 | 5,055,836 | 650,853 | 860,324 | ||||||||||||
| Income (loss) from operations | 1,327,759 | 3,973,737 | (85,689 | ) | 218,279 | |||||||||||
| Net income | $ | 1,164,370 | $ | 1,601,254 | $ | (118,507 | ) | $ | 197,050 | |||||||
CONDOR TECHNOLOGIES NV (formerly Medical Franchises & Investments (“MFI”)
Effective March 31, 2013, the Company acquired 6.12 %6.12% of the issued and outstanding shares of Medical Franchises & Investments N.V., a Belgium corporation ("MFICondor Technologies NV") 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. BecauseAs a result of our adoption of ASU 2016-01, the investment is being recognized as an available-for-sale investment,a financial instrument with a readily determinable fair value and an unrecognized profitgain of $399,188 (2016-loss of $27,724)$25,532 has been recorded in accumulated other comprehensive income due to the fair value per share at March 31, 2017,June 30, 2020, being $17.07$16.85 (€16,00)15,00) per share. Future unrealized gains and losses onFurther, 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 investmentunrecognized profit of $178,361 recorded in MFI will also be recognized in2018 from other comprehensive income until realized.
Per ASC-320-10-25-1, investments in debt and equity securities that have readily determinable fair values and are not classified as trading or held-to-maturity securities, are classified as available-for-sale securities.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. During November 2016, the name of the Company MFI NV was changed and renamed to Condor Technologies NV.
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 increase 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 have recorded a loss of $(21,413). 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, 2020 and March 31, 2019 unrealized net gains (loss) on our investment in MIB were $(21,413) and $2,832,822 respectively. As at June 30, 2020, we recorded a net loss for the quarter ending June 30, 2020 of $(642), reflecting Remedent’s 26.9% of the total quarter loss, compared to a net loss for the quarter ending June 30, 2019 of $(2,778), reflecting Remedent’s 26.09% of the total quarter loss. The recent impact of COVID-19 has caused a short-term delay in sales which is currently normalizing to pre-COVID-19 levels.
The following tables represent the summary financial information of MIB as derived from its financial statements and prepared under US GAAP:
| Operating data: | June 30, 2020 | June 30, 2019 | ||||||
| Revenues | $ | 33,304 | $ | 6,428 | ||||
| Gross profit | 9,162 | 5,938 | ||||||
| Income (loss) from operations | (1,103 | ) | (7,734 | ) | ||||
| Net income (loss) | $ | (2,461 | ) | $ | (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 December 31, 2017,June 30, 2020, five customers accounted for 75.45%14.93% of the Company’s trade accounts receivables, and two customersone customer accounted for 62.66%7.09%. At December 31, 2016,June 30, 2019, five customers accounted for 78.51%17.69% of the Company’s trade accounts receivables, and two customersone customer accounted for 60.10%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 nine months ended December 31, 2017As at June 30, 2020 the Company had five suppliers who accounted for 57.49%39.61% of accounts payable. For the ninethree months ended December 31, 2016June 30, 2019 the Company had five suppliers who accounted for 68.55%45.65% of accounts payable.gross purchases.
Revenues — For the ninethree months ended December 31, 2017June 30, 2020 the Company had five customers that accounted for 54.67%39.49% of total revenues. Tworevenues and one of the fivethose customers accounted for 41.24%15.99% of total revenues. For the ninethree months ended December 31, 2016June 30, 2019 the Company had five customers that accounted for 63.59%58.13% of total revenues. Tworevenues and one of the fivethose customers accounted for 52.94%14.67% of total revenues.
| 5. | ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS |
The Company’s accounts receivable at period end were as follows:
| December 31, 2017 | March 31, 2017 | June 30, 2020 | March 31, 2020 | |||||||||||||
| Accounts receivable, gross | $ | 1,287,898 | $ | 1,107,572 | $ | 494,094 | $ | 483,787 | ||||||||
| Less: allowance for doubtful accounts | (185,566 | ) | (164,321 | ) | (157,847 | ) | (154,447 | ) | ||||||||
| Accounts receivable, net | $ | 1,102,332 | $ | 943,251 | $ | 336,247 | $ | 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, 2017 | March 31, 2017 | June 30, 2020 | March 31, 2020 | |||||||||||||
| Raw materials | $ | 18,746 | $ | 12,254 | $ | 7,987 | $ | 7,483 | ||||||||
| Components | 131,352 | 132,741 | 103,656 | 91,808 | ||||||||||||
| Finished goods | 619,752 | 544,813 | 573,825 | 564,654 | ||||||||||||
| 769,850 | 689,808 | 685,468 | 663,945 | |||||||||||||
| Less: reserve for obsolescence | (644,756 | ) | (579,404 | ) | (585,722 | ) | (573,104 | ) | ||||||||
| Net inventory | $ | 125,094 | $ | 110,404 | $ | 99,746 | $ | 90,841 | ||||||||
| 7. | PREPAID EXPENSES AND OTHER ASSETS |
Prepaid expenses and other assets are summarized as follows:
| December 31, 2017 | March 31, 2017 | June 30, 2020 | March 31, 2020 | |||||||||||||
| Prepaid materials and components | $ | 343,747 | $ | 13,023 | $ | 52,174 | 51,050 | |||||||||
| VAT payments in excess of VAT receipts | 1,694 | 44,842 | 2,825 | 3,947 | ||||||||||||
| Prepaid consulting | 948 | 15,354 | ||||||||||||||
| Prepaid rent | 4,739 | 3,266 | ||||||||||||||
| Other | 6,972 | 7,654 | 8,516 | 4,418 | ||||||||||||
| Right-of-use assets | 61,672 | 86,834 | ||||||||||||||
| $ | 358,100 | $ | 84,139 | $ | 125,187 | $ | 146,249 | |||||||||
| 8. | PROPERTY AND EQUIPMENT |
Property and equipment are summarized as follows:
| December 31, 2017 | March 31, 2017 | |||||||
| Furniture and Fixtures | $ | 476,936 | $ | 472,530 | ||||
| Machinery and Equipment | 2,104,720 | 2,104,720 | ||||||
| 2,581,656 | 2,577,250 | |||||||
| Accumulated depreciation | (2,383,521 | ) | (2,302,893 | ) | ||||
| Property & equipment, net | $ | 198,135 | $ | 274,357 | ||||
| June 30, 2020 | March 31, 2020 | |||||||
| Furniture and Fixtures | $ | 480,252 | $ | 480,252 | ||||
| Machinery and Equipment | 1,917,825 | 1,917,825 | ||||||
| 2,398,077 | 2,398,077 | |||||||
| Accumulated depreciation | (2,353,372 | ) | (2,330,985 | ) | ||||
| Property & equipment, net | $ | 44,705 | $ | 67,092 | ||||
| 9. |
Secured Debt Agreement
On June 3, 2011, the Company obtained a loan in the principal amount of $1,000,000 (the “Loan”) from an unrelated private company, Excelsior Medical (HK) (“EM”). In connection with the Loan, the Company issued a promissory note, with a simple interest rate of 5% per annum, secured by certain assets of the Company (the “Note”). The maturity date of the Loan is June 3, 2014. Interest of $50,000 per annum is payable in cash on an annual basis.
Effective as of January 11, 2012, the Company entered into a Rescission Agreement with EM and Asia Best Healthcare Co., Ltd. Under the Rescission Agreement, the Company agreed to repay a total of $1,000,000 received under the Distribution Agreement, plus a simple interest rate of 5%, beginning on June 30, 2012, according to the following payment schedule: (i) $250,000 to be paid no later than June 30, 2012, (ii) $250,000 plus interest on June 30, 2012, (iii) $250,000 plus interest on December 31, 2012, and (iv) $250,000 plus interest on June 30, 2013. The Company also agreed to secure such obligations owed to EM with certain collateral of the Company. During the period ended December 31, 2012 a partial payment of $20,000 in interest has been made.
Final settlement agreements were re-negotiated with EM and Asia Best Healthcare Co, Ltd. during January 2017. The Company agreed to pay a total amount of $500,000 to EM as final settlement and simultaneously agreed to pay a total amount of $500,000 to Asia Best Healthcare co., Ltd as final settlement of the loan agreement. Both payments were executed on March 6, 2017 as final settlement.
| 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 ninethree month periods ended December 31, 2017June 30, 2020 and 20162019 respectively, the Company incurred $165,500$55,076 and $129,096$55,624 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.
| ACCRUED LIABILITIES |
Accrued liabilities are summarized as follows:
| December 31, 2017 | March 31, 2017 | |||||||
| Accrued employee benefit taxes and payroll | $ | 133,580 | $ | 126,767 | ||||
| Accrued travel | 6,023 | 5,333 | ||||||
| Accrued audit and tax preparation fees | 14,335 | 38,960 | ||||||
| Accrued commission | 29,770 | — | ||||||
| Reserve for warranty costs | 6,023 | 5,333 | ||||||
| Accrued consulting fees | 128,276 | 120,000 | ||||||
| Tax reserve | 175 | — | ||||||
| VAT to be paid | 16,822 | 5,009 | ||||||
| Other accrued expenses | 8,420 | 139,848 | ||||||
| $ | 343,424 | $ | 441,250 | |||||
| June 30, 2020 | March 31, 2020 | |||||||
| Accrued employee benefit taxes and payroll | $ | 80,594 | $ | 102,207 | ||||
| Accrued travel | 5,617 | 5,496 | ||||||
| Accrued audit and tax preparation fees | 12,207 | 17,395 | ||||||
| Reserve for warranty costs | 5,617 | 5,496 | ||||||
| Accrued commission | 15,000 | 15,000 | ||||||
| Accrued consulting fees | 207,285 | 196,633 | ||||||
| Tax reserve | 2,263 | 5,630 | ||||||
| Accrued interest | 6,450 | — | ||||||
| VAT to be paid | — | 7,997 | ||||||
| Other accrued expenses + lease liability | 109,870 | 130,909 | ||||||
| $ | 444,903 | $ | 486,763 | |||||
| EQUITY COMPENSATION PLANS |
As of December 31, 2017,June 30, 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 CompanyCompany’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 December 31, 2017 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 March 31, 2017 | 357,500 | $ | 0.96 | 1,000,000 | $ | 1.21 | ||||||||||
| Options expired | — | (570,000 | ) | |||||||||||||
| Options outstanding and exercisable December 31 , 2017 | 357,500 | $ | 0.50 | 430,000 | $ | 0.50 | ||||||||||
| Exercise price range | $ | 0.50 | $ | 0.50 | ||||||||||||
| Weighted average remaining life | 1.22 years | 1.22 years | ||||||||||||||
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)) | 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 | 787,000 | $ | 0.50 | 1,175,000 | 0 | $ | 0.50 | 1,962,500 | ||||||||||||||||
For the ninethree month periods ended December 31, 2017June 30, 2020 and December 31, 2016June 30, 2019 the Company has not recognized $Nil and $Nil inany stock based compensation expense in the consolidated statement of operations. No stock options were outstanding or were granted or cancelled/expiredcancelled in the ninethree month periods ended December 31, 2017June 30, 2020 and December 31, 2016.June 30, 2019.
| 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 82.5% of our sales for the nine months ended December 31, 2017 and 100% of our sales for the ninethree months ended December 31, 2016June 30, 2020 and 100.00% of our sales for the three months ended June 30, 2019 were generated from customers outside of the United States.
Real Estate Lease:
The Company enters into operating leases an office facility of 5,187 square feet in Ghent, Belgium from an unrelated party pursuant to a nine year lease commencing September 1, 2008 at a base rent of €5,712 per month for the total location ($6,880 per month at December 31, 2017).
Secondly, the Company leases an office facility of 635 square feet in Brussels, Belgium from an unrelated party pursuant to a nine year lease commencing July 1, 2012 at a base rent of €969 per month for the total location ($1,167 per month at December 31, 2017).
Real Estate Lease and All Other Leased Equipment:
Minimum monthly lease paymentsprimarily for real estate, office equipment and allvehicles. 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 leased equipmentcurrent 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, 2020 | ||||
| Cash paid for operating lease liabilities | $ | 25,162 | ||
| 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.
Maturities of lease liabilities are as follows based upon the conversion rate for the (Euro) at December 31, 2017:follows:
| March 31, 2018 | $ | 30,816 | ||
| March 31, 2019 | 123,264 | |||
| March 31, 2020 | 123,264 | |||
| March 31, 2021 | 100,306 | |||
| Balance | 9,310 | |||
| Total: | $ | 386,960 |
| 2020 | $ | 58,426 | ||
| 2021 | 5,569 | |||
| $ | 63,995 | |||
| Less imputed interest | (2,323 | ) | ||
| Total lease liabilities | $ | 61,672 |
| Current operating lease liabilities | $ | 56,217 | ||
| Non-current lease liabilities | 5,455 | |||
| Total lease liabilities | $ | 61,672 |
As of June 30, 2020, right-of-use assets were $61,672 and lease liabilities were $61,672. During the three months ended June 30, 2020, the Company did not enter into any new lease arrangements, and did not have any arrangements that had not yet commenced.
| 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, 2017 | March 31, 2017 | June 30, 2020 | March 31, 2020 | |||||||||||||||||||||||||||||||||||||
| Carrying | Fair | Carrying | Fair | Carrying | Fair | Carrying | Fair | |||||||||||||||||||||||||||||||||
| Level | Value | Value | value | value | Level | Value | Value | value | Value | |||||||||||||||||||||||||||||||
| Cash | 1 | $ | 59,299 | $ | 59,299 | $ | 147,106 | $ | 147,106 | 1 | $ | 96,074 | $ | 96,074 | $ | 114,634 | $ | 114,634 | ||||||||||||||||||||||
| Accounts receivable | 2 | $ | 1,102,332 | $ | 1,102,332 | $ | 943,251 | $ | 943,251 | 2 | $ | 336,247 | $ | 336,247 | $ | 329,340 | $ | 329,340 | ||||||||||||||||||||||
| Long Term investment and advance - GlamSmile Dental Technology Asia | 2 | $ | 2,220,700 | $ | 2,220,700 | $ | 1,970,245 | $ | 1,970,245 | 3 | $ | 2,125,233 | $ | 2,125,233 | $ | 2,150,724 | $ | 2,150,724 | ||||||||||||||||||||||
| Long term investments and advances Condor | 1 | $ | 1,200,292 | $ | 1,200,292 | $ | 1,200,292 | $ | 1,200,292 | 1 | $ | 1,185,093 | $ | 1,185,093 | $ | 1,159,561 | $ | 1,159,561 | ||||||||||||||||||||||
| Investment in Metrics in Balance | 1 | $ | 3,449,956 | $ | 3,449,956 | $ | 3,450,598 | $ | 3,450,598 | |||||||||||||||||||||||||||||||
| Deferred revenue | 2 | $ | 94,893 | $ | 94,893 | $ | 72,235 | $ | 72,235 | 2 | $ | 77,221 | $ | 77,221 | $ | 100,571 | $ | 100,571 | ||||||||||||||||||||||
| Accounts payable | 2 | $ | 1,452,931 | $ | 1,452,931 | $ | 1,038,686 | $ | 1,038,686 | 2 | $ | 2,341,125 | $ | 2,341,125 | $ | 2,294,884 | $ | 2,294,884 | ||||||||||||||||||||||
| Accrued liabilities | 2 | $ | 343,424 | $ | 343,424 | $ | 441,250 | $ | 441,250 | 2 | $ | 444,903 | $ | 444,903 | $ | 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.
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 sixthree month period ended December 31, 2017.June 30, 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 | ||||
| Long term investments and advances: | ||||
| Beginning balance | $ | 1,970,245 | ||
| Gains (losses) included in net loss | 250,455 | |||
| Transfers in (out of level 3) | — | |||
| Ending balance | $ | 2,220,700 | ||
| Three month period ended June 30, 2020 | Three month period ended June 30, 2019 | |||||||
| Long term investments and advances: | ||||||||
| Beginning balance | $ | 2,150,724 | $ | 2,306,817 | ||||
| Gains (losses) included in net loss | (25,491 | ) | 42,385 | |||||
| Transfers in (out of level 3) | — | — | ||||||
| Ending balance | $ | 2,125,233 | $ | 2,349,202 | ||||
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, 2017June 30, 2020 and December 31, 2016.June 30, 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, 2017.June 30, 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, 20152020 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, 2017.June 30, 2020. The information contained in this Quarterly Report on Form 10-Q for the quarterly period ended December 31, 2017June 30, 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.
ResultsResult of Operations
Comparative detail of results as a percentage of sales, is as follows:
| For the three months ended | ||||||||||||||||||||||||
For the three months ended December 31, | For the nine months ended December 31, | June 30, | ||||||||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | 2020 | 2019 | |||||||||||||||||||
| (unaudited) | ||||||||||||||||||||||||
| NET SALES | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | ||||||||||||
| COST OF SALES | 27.34 | % | 27.84 | % | 33.16 | % | 30.89 | % | 30.36 | % | 24.84 | % | ||||||||||||
| GROSS PROFIT | 72.66 | % | 72.16 | % | 66.84 | % | 69.11 | % | 69.64 | % | 75.16 | % | ||||||||||||
| OPERATING EXPENSES | ||||||||||||||||||||||||
| Research and development | 0.00 | % | 0.12 | % | 0.08 | % | 0.46 | % | ||||||||||||||||
| Sales and marketing | 33.88 | % | 27.09 | % | 33.03 | % | 23.66 | % | 5.04 | % | 34.44 | % | ||||||||||||
| General and administrative | 38.52 | % | 43.48 | % | 33.17 | % | 43.19 | % | 54.93 | % | 55.15 | % | ||||||||||||
| Depreciation and amortization | 3.38 | % | 6.72 | % | 3.36 | % | 6.67 | % | 4.87 | % | 7.24 | % | ||||||||||||
| TOTAL OPERATING EXPENSES | 75.78 | % | 77.41 | % | 69.65 | % | 73.98 | % | 64.85 | % | 96.83 | % | ||||||||||||
| INCOME (LOSS) FROM OPERATIONS | (3.12 | )% | (5.25 | )% | (2.81 | )% | (4.87 | )% | 4.79 | % | (21.67 | )% | ||||||||||||
| Other income | 9.32 | % | 22.51 | % | 10.50 | % | 17.15 | % | ||||||||||||||||
| INCOME (LOSS) BEFORE INCOME TAXES | 6.20 | % | 17.26 | % | 7.69 | % | 12.28 | % | ||||||||||||||||
| Income taxes | (0.05 | )% | 0.26 | % | (0.02 | )% | 0.22 | % | ||||||||||||||||
| Other income (expenses) | (1.48 | )% | (31.82 | )% | ||||||||||||||||||||
| NET INCOME (LOSS) BEFORE NON-CONTROLLING INTEREST | 3.32 | % | (53.49 | )% | ||||||||||||||||||||
| NON-CONTROLLING INTEREST | (2.80 | )% | (8.18 | )% | ||||||||||||||||||||
| NET INCOME | 6.15 | % | 17.52 | % | 7.67 | % | 12.50 | % | 0.51 | % | (61.67 | )% | ||||||||||||
| NET INCOME (LOSS) ATTRIBUTABLE TO NON-CONTROLLING INTEREST | (0.85 | )% | 1.35 | % | (0.25 | )% | 0.86 | % | ||||||||||||||||
| NET INCOME (LOSS) ATTRIBUTABLE TO REMEDENT INC. COMMON SHAREHOLDERS | 7.00 | % | 18.87 | % | 7.42 | % | 13.36 | % | ||||||||||||||||
Net Sales
Net sales increaseddecreased by $90,835 or approximately 25.7%29.3% to $745,103$219,129 for the three months ended December 31, 2017June 30, 2020 as compared to $592,952$309,964 for the three months ended December 31, 2016.June 30, 2019. The increasedecrease in sales is primarily due to the operational change in our recent launchGlamSmile division. We are now receiving a royalty payment from our Belgium customers based on quarterly production, rather than invoicing on a finished goods basis, thereby providing our customers with more flexibility and ensuring we are paid on a timely basis for 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.
Net sales increased In anticipation of our new and improved 3D scanner, which will be an easy-to-use scanner with none to minimum additional user training required and that is planned to be available by approximately 21.8% to $2,215,136 for the nine months ended December 31, 2017 as compared to $1,818,865 for the nine months ended December 31, 2016. Net sales increasedyear-end 2020, we reduced our active approach in the nine months ended December 2017 31, 2017 forUS market. Additionally, the same reasonimpact of the coronavirus (now commonly known as COVID-19) created a substantial decrease in sales during the three month variance.past quarter.
Cost of Sales
Cost of sales increaseddecreased approximately 23.4%13.6% to $203,729$66,528 for the three months ended December 31, 2017June 30, 2020 as compared to $165,086$77,007 for the three months ended December 31, 2016. CostJune 30, 2019. The decrease in cost of sales is primarily due to the operational change in our GlamSmile division as a percentage of net sales, has decreased to 27.34% in the quarter ended December 31, 2017 as compared to 27.84% in the quarter ended December 31 2016.
Cost of sales increased approximately 30.7% to $734,601we changed our profit model for the nine months ended December 31, 2017 as comparedBelgium customers to $561,912 forroyalty income, resulting in decreased cost of sales. Also, the nine months ended December 31, 2016. Cost of sales, as a percentage of net sales, has increased to 33.16% in the nine months ended December 31, 2017, as compared to 30.89% in the nine months ended December 31, 2016 mainly because of increasedreduced sales of our Condor 3D Scanner.Scanner has also decreased our cost of sales.
Gross Profit
Our gross profit increaseddecreased by $113,508$80,356 or 26.5%34.5% to $541,374$152,601 for the three months ended December 31, 2017June 30, 2020 as compared to $427,866$232,957 for the three months ended December 31, 2016.June 30, 2019 due to the reduced sales described above. Our gross profit as a percentage of sales increaseddecreased to 72.66%69.64% in the three months ended December 31, 2017June 30, 2020 as compared to 72.16%75.16% for the three months ended December 31, 2016June 30, 2019, primarily because of increasedthe reduced sales in our implant division and of our 3D Scanner product.
Our gross profit increased by $223,582 or 17.8%, to $1,480,535 for the nine months ended December 31, 2017 as compared to $1,256,953 for the nine months ended December 31, 2016 primarily because of our launch of our 3D Scanner in the American market.described above.
Operating Expenses
Research and Development. Our research and development expenses decreased to $nil for the three months ended December 31, 2017 as compared to $733 for the three months ended December 31, 2016 a decrease of 100.0%. The decrease in our research and development costs was primarily because of the finalization of our Software program the ‘Smile Me Mirror’.
Our research and development costs decreased by $6,564 or 77% to $1,860 for the nine months ended December 31, 2017 as compared to $8,424 for the nine months ended December 31, 2016.
Sales and marketing costs. Our sales and marketing costs for the three months ended December 31, 2017June 30, 2020 and 20162019 were $252,417$11,055 and $160,602$106,738 respectively, representing an increasea decrease of $91,815$95,683 or 56.2%89.6%.
Our sales and marketing costs increased by $301,304 or 70% to $731,622 for the nine months ended December 31, 2017 as compared to $430,318 for the nine months ended December 31, 2016Costs decreased because of hiring new people for our sales force and increaseddecreased attendance at trade shows.shows and reduced travelling due to our reduced active approach in the US market and in general due to the COVID-19 mandatory restrictions.
General and administrative costs. Our general and administrative costs for the three months ended December 31, 2017June 30, 2020 and 20162019 were $287,029$120,366 and $257,822$170,956 respectively, representing an increasea decrease of $29,207,$50,590 or 11.3%29.6%. Our general and administrative costs for the nine months ended December 31, 2017 and 2016 were $734,826 and $785,622 respectively, representing a decreasehave decreased because of $50,796 or 6.5%. The decrease in general and administration costs is largely due toan increased synergy between our internal divisions as a result of an ongoing internal reorganization.
Depreciation and amortization. Our depreciation and amortization was $25,206decreased $11,759 or 52.4% to $10,676 for the three months ended December 31, 2017June 30, 2020 as compared to $39,874$22,435 for the three months ended December 31, 2016. Our depreciation and amortization was $74,521 for the nine months ended December 31, 2017 versus $121,313 for the nine months ended December 31, 2016. Depreciation and amortization has decreasedJune 30, 2019. The decrease is primarily because of the age of our equipment.investments in equipment have declined relative to prior years.
Other income.income (expense). Our net other income / (expense) was $69,454$(3,239) for the three months ended December 31, 2017June 30, 2020 as compared to $133,460$(98,629) for the three months ended December 31, 2016,June 30, 2019, a decrease in other incomeexpense of $64,006. $95,390. The decrease in other incomeexpense was primarily becauseas a result of decreased equity incomeloss from our investments. Our net other income decreased by $79,372 to $232,495 for the nine months ended December 31, 2017 as compared to $311,867 for the nine months ended December 31, 2016, for the same reason as the three month variance.
Internal and External Sources of Liquidity
As of December 31, 2017,June 30, 2020, we had current assets of $1,644,825$657,254 compared to $1,284,900$681,064 at March 31, 2017. The increase2020. This decrease of $359,925$23,810 was primarily due to an increase of accounts receivable of $159,081, increase in inventories of $14,690, increase in prepaid expenses of $273,961, and a decrease in cash of $87,807.$18,560 and decrease in prepaid expenses of $21,062, offset by an increase in accounts receivable of $6,907 and increase in inventories of $8,905.
As of December 31, 2017,June 30, 2020, we had cash and cash equivalents of $59,299.$96,074. 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, 2017June 30, 2020 reflects cash and cash equivalents of $59,299$96,074 as compared to $147,106$114,634 as of March 31, 2017,2020, a decrease of $87,087.$18,560.
Operations
Net cash usedprovided by operations was $33,694$20,843 for the ninethree months ended December 31, 2017June 30, 2020 as compared to net cash provided by operations of $30,247$24,595 for the ninethree months ended December 31, 2016.June 30, 2019. The increase of $63,941decrease in net cash usedprovided by operations for the ninethree months ended December 31, 2017June 30, 2020 as compared to the ninethree months ended December 31, 2016June 30, 2019 is primarily becauseas a result of decreased income of $78,485.
Investing activities
Net cash useda $173,066 decrease in investing activities totaled $4,341 for the nine months ended December 31, 2017 as comparednet loss offset by non-cash adjustments to net loss and a net use of cash used by investing activities of $28,910 for the nine months ended December 31, 2016. Cash used in the nine months ended December 31, 2017operating assets and 2016 was primarily for investing in equipment.liabilities totaling $(176,818).
Financing activities
Net cash provided by financing activities totaled $nil for the three months ended June 30, 2020, as compared to $nil for the three months ended June 30, 2019.
During the ninethree months ended December 31, 2017June 30, 2020 and December 31, 2016,June 30, 2019, we recognized aan increase / (decrease) in cash and cash equivalents of $(49,772)$(39,403) and $(9,407)$(11,598), respectively, from the effect of exchange rates between the Euro and the US Dollar.
Off-Balance Sheet Arrangements
At December 31, 2017,June 30, 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.
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, 2017.June 30, 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, 2017.June 30, 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, 2017June 30, 2020 or subsequent to that date that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
20
To the best knowledge of management, there are no material legal proceedings pending against the Company.
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]
None.
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
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: | By: | /s/ Guy De Vreese | |
| Name: | Guy De Vreese | ||
Title: | Chief Executive Officer
| ||
| Date: | By: | /s/ Philippe Van Acker | |
| Name: | Philippe Van Acker | ||
Title: | Chief Financial Officer
| ||