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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Remedent Inc (PK) | USOTC:REMI | OTCMarkets | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.05 | 0.05 | 0.055 | 0.00 | 13:10:53 |
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, 2020
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____.
Commission File No. 001-15975
REMEDENT, INC.
(Exact Name of Registrant as Specified in Its Charter)
Nevada | 86-0837251 | |
(State or Other Jurisdiction Of Incorporation or Organization) |
(I.R.S. Employer Identification Number) |
|
Zuiderlaan 1-3 bus 8, 9000 Ghent, Belgium | N/A | |
(Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including area code 011 32 9 241 58 80
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days.
Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically 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.
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, 2020 was 19,995,969.
REMEDENT, INC.
FORM 10-Q INDEX
2
PART I – FINANCIAL INFORMATION
REMEDENT, INC. AND SUBSIDIARIES
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.
3
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.
4
REMEDENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
For the three months ended June 30, | ||||||||
2020 | 2019 | |||||||
NET INCOME (LOSS) | $ | 7,265 | $ | (165,801 | ) | |||
OTHER COMPREHENSIVE INCOME (LOSS): | ||||||||
Foreign currency translation adjustment | (35,116 | ) | (43,240 | ) | ||||
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.
5
REMEDENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the three months ended June 30, |
||||||||
2020 | 2019 | |||||||
CASH FLOWS FROM 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 | 10,676 | 22,435 | ||||||
Inventory reserve | 12,618 | 4,679 | ||||||
Allowance for doubtful accounts | 3,400 | 1,237 | ||||||
Changes in operating assets and liabilities: | ||||||||
Equity investment | 601 | 101,274 | ||||||
Accounts receivable | (6,907 | ) | (168,322 | ) | ||||
Inventories | (8,905 | ) | 95 | |||||
Prepaid expenses | 21,062 | 140,261 | ||||||
Accounts payable | 46,243 | 83,050 | ||||||
Accrued liabilities | (41,860 | ) | (63,859 | ) | ||||
Deferred revenue | (23,350 | ) | 69,546 | |||||
Net cash used by operating activities | 20,843 | 24,595 | ||||||
NET INCREASE (DECREASE) IN CASH | 20,843 | 24,595 | ||||||
Effect of exchange rate changes on cash and cash equivalents | (39,403 | ) | (11,598 | ) | ||||
CASH AND CASH EQUIVALENTS, BEGINNING | 114,634 | 66,539 | ||||||
CASH AND CASH EQUIVALENTS, ENDING | $ | 96,074 | $ | 79,536 | ||||
Supplemental Cash Flow Disclosure: | ||||||||
Interest paid | $ | 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.
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, 2020, the Company had a working capital deficit of $2,205,995, and an accumulated deficit of $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, 2020 with the SEC.
The Company has conducted a subsequent events review through the date the financial statements were issued, and has concluded that there were no subsequent events requiring adjustments or additional disclosures to the Company's financial statements at 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, 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), 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).
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, 2020, are not necessarily indicative of the results that may be expected for the year ended March 31, 2021. Accordingly, your attention is directed to footnote disclosures found in the Annual Report on Form 10-K for the year ending March 31, 2020, and particularly to Note 2, which includes a summary of significant accounting policies.
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, 2020 |
Year ended March 31, 2020 |
|||||||
Product warranty liability: | ||||||||
Opening balance | $ | 5,496 | $ | 5,619 | ||||
Accruals for product warranties issued in the period | 121 | — | ||||||
Adjustments to liabilities for pre-existing warranties | — | (123 | ) | |||||
Ending liability | $ | 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 $5,617 and $5,496 as of June 30, 2020 and March 31, 2020, respectively.
Computation of Earnings (Loss) per Share
Basic net income (loss) per common share is computed by dividing net income (loss) attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Net income (loss) per common share attributable to common stockholders assuming dilution is computed by dividing net income by the weighted average number of shares of common stock outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued.
On April 1, 2009, the Company adopted changes issued by the FASB to the calculation of earnings per share. These changes state that unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method for all periods presented. The adoption of this change had no impact on the Company’s basic or diluted net loss per share because the Company has never issued any share-based awards that contain non-forfeitable rights.
At each of June 30, 2020 and March 31, 2020, the Company had 19,995,969, shares of common stock issued and outstanding. The Company did not have any warrants or options outstanding at either of June 30, 2020 or March 31, 2020.
8
Conversion of Foreign Currencies
The reporting and functional currency for the consolidated financial statements of the Company is the U.S. dollar. The home currency for the Company’s European subsidiaries, Remedent N.V., Biotech Dental Benelux N.V., Metrics in Balance N.V. , GlamSmile Rome and GlamSmile Deutschland GmbH, is the Euro, for Glamsmile Asia Ltd., and its subsidiaries, the Hong Kong dollar and the Chinese Renmimbi (“RMB”) for Mainland China. The assets and liabilities of companies whose functional currency is other that the U.S. dollar are included in the consolidation by translating the assets and liabilities at the exchange rates applicable at the end of the reporting period. The statements of income of such companies are translated at the average exchange rates during the applicable period. Translation gains or losses are accumulated as a separate component of stockholders’ equity.
Comprehensive Income (Loss)
Comprehensive income (loss) includes all changes in equity except those resulting from investments by owners and distributions to owners, including accumulated foreign currency translation, and unrealized gains or losses on ‘Available For Sale (AFS)’ securities. During the 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 (loss) and gains of $(35,116) and $(43,240) for the three months ended June 30, 2020 and 2019, respectively. These amounts have been recorded as a separate component of stockholders’ equity (deficit).
Recent Accounting Pronouncements
Changes to GAAP are established by the Financial Accounting Standards Board (the “FASB”) in the form of accounting standards updates (“ASUs”) to the FASB’s Accounting Standards Codification.
The Company considers the applicability and impact of all ASUs. ASUs not listed below were assessed and determined not to be applicable or are expected to have minimal impact on the Company’s consolidated financial position and results of operations.
Adopted Accounting Pronouncements
In February 2016, the FASB established ASU Topic 842 – Leases, by issuing ASU Topic No. 2016-02 (“Topic 842”), which requires lessees to recognize lease on-balance sheet and disclose key information about leasing arrangements. Topic 842 was subsequently amended by ASU Topic 2018-11 – Targeted Improvements. The new standard establishes a right-of-use model (“ROU”) that requires a lessee to recognize a ROU asset and a lease liability for all leases with a term longer than 12 months. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the statement of operations.
The Company adopted Topic 842 in the first quarter of 2019 utilizing the modified retrospective transition method and a cumulative effect adjustment at the beginning of the first quarter of 2019. The Company has elected the package of practical expedients, which allows the Company not to reassess (1) whether any expired or existing contracts as of the adoption date are or contain a lease, (2) lease classification for any expired or existing leases as of the adoption date, and (3) initial direct costs for any existing leases as of the adoption date. The Company did not elect to apply the hindsight practical expedient when determining lease term and assessing impairment of the right-to-use assets. The adoption of Topic 842 resulted in the recognition of right-of use assets of approximately $180,926 and lease liabilities for operating leases of approximately $180,926 and no cumulative effect adjustment on retained earnings on its unaudited Consolidated Balance Sheets or material impact to its unaudited Consolidated Statements of Operations and Comprehensive Loss in the period of adoption. Right-of-use assets are included in Prepaid and other assets, and lease liabilities are included in Accrued liabilities in the unaudited consolidated balance sheet for the period ended June 30, 2020. See Note 13 — Leases, for additional information.
9
3. | LONG-TERM INVESTMENTS |
GLAMSMILE ASIA LTD. |
Acquisition
Effective January 1, 2010 the Company acquired 50.98% of the issued and outstanding shares of Glamsmile Asia Ltd. (“Glamsmile Asia” or “Glamsmile”), a private Hong Kong company, with subsidiaries in Hong Kong and Mainland China, in exchange for the following consideration:
1. | 325,000 Euro (US$466,725). As of March 31, 2011 the full amount was paid. | |
2. | 250,000 shares of common stock to be issued during the fiscal year ended March 31, 2011 ($97,500 was recorded as an obligation to issue shares as at March 31, 2010). The parties have agreed that the shares will be issued during fiscal year ended March 31, 2015. | |
3. | 100,000 options on closing (issued); | |
4. | 100,000 options per opened store at closing (issued); | |
5. | 100,000 options for each additional store opened before the end of 2011 at the price of the opening date of the store; | |
6. | Assumption of Glamsmile’s January 1, 2010 deficit of $73,302.; and | |
7. | Repayment of the founding shareholder’s original advances in the amount of $196,599. The balance of $196,599, recorded as due to related parties at March 31, 2010, is unsecured, non-interest bearing and has no specific terms of repayment other than it will be paid out of revenues from Glamsmile, as working capital allows. During the year ended March 31, 2011 a total of $101,245 was paid to the founding shareholder, leaving a balance due of $95,354 on June 27, 2011. As at March 31, 2012 the full amount was paid. |
All options reside under the Company’s option plan and are five year options.
Also pursuant to the agreement, the Company granted irrevocable right to Glamsmile Asia to use the Glamsmile trademark in Greater China.
The Company acquired a 50.98% interest in GlamSmile Asia Ltd. (“GlamSmile Asia”) in order to obtain a platform in the Chinese Market to expand and introduce our GlamSmile Asia concept into the Chinese Market. In order to sell into the Chinese Market, an approval by Chinese Authorities is required, in the form of licenses. As GlamSmile Asia was already the owner of such licenses prior to the acquisition, this was an important advantage. We obtained control of GlamSmile Asia through the acquisition of the 50.98% interest and the appointment of our CEO as a Board member of GlamSmile Asia.
On January 30, 2014, the Company has sold a total of 2,500,000 ordinary shares of its investment in GlamSmile Dental Technology Ltd for $3,000,000 and recognized a gain on the sale in the amount of $1,582,597.
Effective March 31, 2014 the Company has retained a 21.51% ownership in GlamSmile Asia Ltd.
Deconsolidation
On January 28, 2012, the Company entered into a Preference A Shares and Preference A-1 Shares Purchase Agreement (“Share Purchase Agreement”) with Glamsmile Dental Technology Ltd., a Cayman Islands company and a subsidiary of the Company (“Glamsmile Dental”), Glamsmile (Asia) Limited, a company organized and existing under the laws of Hong Kong and a substantially owned subsidiary of Glamsmile Dental, Beijing Glamsmile Technology Development Ltd., Beijing Glamsmile Trading Co., Ltd., Beijing Glamsmile Dental Clinic Co., Ltd., and Shanghai Glamsmile Dental Clinic Co., Ltd., Gallant Network Limited, a shareholder of Glamsmile Dental (“Gallant”), and IDG-Accel China Growth Fund III L.P. (“IDG Growth”), IDG-Accel China III Investors L.P.(“IDG Investors”) and Crown Link Group Limited (“Crown”)(“IDG Growth, IDG Investors and Crown collectively referred to as the “Investors”), pursuant to which the Investors agreed to (i) purchase from the Company an aggregate of 2,857,143 shares of Preference A-1 Shares of Glamsmile Dental, which represents all of the issued and outstanding Preference A-1 Shares of Glamsmile Dental, for an aggregate purchase price of $2,000,000, and (ii) purchase from Glamsmile Dental an aggregate of 5,000,000 shares of Preference A Shares for an aggregate purchase price of $5,000,000.
Under the terms of the Share Purchase Agreement, the Company agreed (a) to indemnify the Investors and their respective affiliates for losses arising out of a breach, or inaccuracy or misrepresentation in any representation or warranty made by the Company or a breach or violation of a covenant or agreement made by the Company for up to $1,500,000, and (b) to transfer 500,000 shares of Glamsmile Dental owned by the Company to the Investors in the event of breach of certain covenants by the Company. In connection with the Share Purchase Agreement, the Company also agreed to enter into an Investor’s Rights Agreement, Right of First Refusal and Co-Sale Agreement, and Voting Agreement with the parties.
10
In addition, in connection with the contemplated transactions in the Share Purchase Agreement on January 20, 2012, the Company entered into a Distribution, License and Manufacturing Agreement with Glamsmile Dental pursuant to which the Company appointed Glamsmile Dental as the exclusive distributor and licensee of Glamsmile Veneer Products bearing the “Glamsmile” name and mark in the B2C Market in the People’s Republic of China (including Hong Kong and Macau) and Republic of China (Taiwan) and granted related manufacturing rights and licenses in exchange for the original issuance of 2,857,143 shares of Preference A-1 Shares of Glamsmile Dental and $250,000 (the receipt of which was acknowledged as an offset to payment of certain invoices of Glamsmile (Asia) Limited).
On February 10, 2012, the sale of the Preference A-1 Shares and the Preference A Shares was completed. As a result of the closing, the equity ownership of Glamsmile Dental, on an as converted basis, is as follows: 31.4% by the Investors, 39.2 % by Gallant, and 29.4% by the Company. Mr. De Vreese, our chairman, will remain as a director of Glamsmile Dental along with Mr. David Lok, who is the Chief Executive Officer and director of Glamsmile Dental and principal of Gallant. The Investors have a right to appoint one director of Glamsmile Dental, and accordingly the Board of Directors of Glamsmile Dental will consist of Mr. De Vreese, Mr. Lok and a director appointed by the Investors.
In conjunction with the transaction and resulting deconsolidation of Glamsmile Dental, the Company recorded a gain of $1,470,776, calculated as follows:
Consideration received | $ | 2,000,000 | ||
Fair value of 29.4% interest | 2,055,884 | |||
Carrying value of non-controlling interest | 1,117,938 | |||
Less: carrying value of former subsidiary’s net assets | (2,002,329 | ) | ||
Goodwill | (699,635 | ) | ||
Investment China & Hong Kong | (1,082 | ) | ||
Rescission agreement Excelsior | (1,000,000 | ) | ||
$ | 1,470,776 |
For the three month periods ended June 30, 2020 and June 30, 2019 the Company recorded equity (loss) income of $(25,491) and $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: | Three months ended June 30, 2020 | Three months ended June 30, 2019 | ||||||
Revenues | $ | 998,272 | $ | 1,380,967 | ||||
Gross profit | 650,853 | 860,324 | ||||||
Income (loss) from operations | (85,689 | ) | 218,279 | |||||
Net income | $ | (118,507 | ) | $ | 197,050 |
CONDOR TECHNOLOGIES (formerly Medical Franchises & Investments (“MFI”)
Effective March 31, 2013, the Company acquired 6.12% of the issued and outstanding shares of Medical Franchises & Investments N.V., a Belgium corporation ("Condor 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. As a result of our adoption of ASU 2016-01, the investment is being recognized as a financial instrument with a readily determinable fair value and an unrecognized gain of $25,532 has been recorded in income due to the fair value per share at June 30, 2020, being $16.85 (€15,00) per share. Further, as a result of our adoption of ASU 2016-01, we have recorded a transition date adjustment as at April 1, 2018 to reclassify the unrecognized profit of $178,361 recorded in 2018 from other comprehensive income to deficit.
MFI NV has been founded to market an advance in dental technology which has the potential to replace the process of making mechanical impressions of teeth and bite structures with a digital/optical scan. During November 2016, the name of the Company MFI NV was changed and renamed to Condor Technologies NV.
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 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 June 30, 2020, five customers accounted for 14.93% of the Company’s trade accounts receivables, and one customer accounted for 7.09%. 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. As at June 30, 2020 the Company had five suppliers who accounted for 39.61% of accounts payable. For the three months ended June 30, 2019 the Company had five suppliers who accounted for 45.65% of gross purchases.
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Revenues — For the three months ended June 30, 2020 the Company had five customers that accounted for 39.49% of total revenues and one of those customers accounted for 15.99% of total 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.
5. | ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS |
The Company’s accounts receivable at period end were as follows:
June 30,
2020 |
March 31,
2020 |
|||||||
Accounts receivable, gross | $ | 494,094 | $ | 483,787 | ||||
Less: allowance for doubtful accounts | (157,847 | ) | (154,447 | ) | ||||
Accounts receivable, net | $ | 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:
June 30,
2020 |
March 31,
2020 |
|||||||
Raw materials | $ | 7,987 | $ | 7,483 | ||||
Components | 103,656 | 91,808 | ||||||
Finished goods | 573,825 | 564,654 | ||||||
685,468 | 663,945 | |||||||
Less: reserve for obsolescence | (585,722 | ) | (573,104 | ) | ||||
Net inventory | $ | 99,746 | $ | 90,841 |
7. | PREPAID EXPENSES AND OTHER ASSETS |
Prepaid expenses and other assets are summarized as follows:
June 30,
2020 |
March 31,
2020 |
|||||||
Prepaid materials and components | $ | 52,174 | 51,050 | |||||
VAT payments in excess of VAT receipts | 2,825 | 3,947 | ||||||
Other | 8,516 | 4,418 | ||||||
Right-of-use assets | 61,672 | 86,834 | ||||||
$ | 125,187 | $ | 146,249 |
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8. | PROPERTY AND EQUIPMENT |
Property and equipment are summarized as follows:
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. | 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, 2020 and 2019 respectively, the Company incurred $55,076 and $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.
10. | ACCRUED LIABILITIES |
Accrued liabilities are summarized as follows:
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 |
11. | EQUITY COMPENSATION PLANS |
As of 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 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.
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In addition to the equity compensation plans approved by the Company’s stockholders, the Company has previously issued options and warrants to individuals pursuant to individual compensation plans not approved by our stockholders. These options and warrants have been issued in exchange for services or goods received by the Company.
A summary of the Company’s equity compensation plans approved and not approved by shareholders is as follows:
Plan Category |
Number of
securities to be issued upon exercise of of outstanding options, warrants and rights |
Weighted-average
exercise price of outstanding options warrants and rights |
Number of
securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) |
|||||||||
Equity Compensation Plans approved by security holders | 0 | $ | 0.50 | 1,962,500 |
For the three month periods ended June 30, 2020 and June 30, 2019 the Company has not recognized any stock based compensation expense in the consolidated statement of operations. No stock options were outstanding or were granted or cancelled in the three month periods ended June 30, 2020 and June 30, 2019.
12. | SEGMENT INFORMATION |
The Company’s only operating segment consists of dental products and oral hygiene products sold by Remedent Inc., Condor North America LLC., Remedent N.V., Metrics in Balance N.V. and Biotech Dental Benelux N.V. Our operations are primarily in Europe and Asia and 100% of our sales for the three months ended June 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.
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, 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.
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Maturities of lease liabilities are as follows:
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.
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, 2020 | March 31, 2020 | |||||||||||||||||||
Carrying | Fair | Carrying | Fair | |||||||||||||||||
Level | Value | Value | value | Value | ||||||||||||||||
Cash | 1 | $ | 96,074 | $ | 96,074 | $ | 114,634 | $ | 114,634 | |||||||||||
Accounts receivable | 2 | $ | 336,247 | $ | 336,247 | $ | 329,340 | $ | 329,340 | |||||||||||
Long Term investment and advance - GlamSmile Dental Technology Asia | 3 | $ | 2,125,233 | $ | 2,125,233 | $ | 2,150,724 | $ | 2,150,724 | |||||||||||
Long term investments and advances Condor | 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 | $ | 77,221 | $ | 77,221 | $ | 100,571 | $ | 100,571 | |||||||||||
Accounts payable | 2 | $ | 2,341,125 | $ | 2,341,125 | $ | 2,294,884 | $ | 2,294,884 | |||||||||||
Accrued liabilities | 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.
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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, 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):
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 |
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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, 2020 and 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 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, 2020 with the Securities and Exchange Commission. Except as required by applicable law or regulation, the Company undertakes no obligation to revise or update any forward-looking statements contained in this Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2020. The information contained in this Quarterly Report on Form 10-Q for the quarterly period ended June 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.
Result of Operations
Comparative detail of results as a percentage of sales, is as follows:
For the three months ended | ||||||||
June 30, | ||||||||
2020 | 2019 | |||||||
(unaudited) | ||||||||
NET SALES | 100.00 | % | 100.00 | % | ||||
COST OF SALES | 30.36 | % | 24.84 | % | ||||
GROSS PROFIT | 69.64 | % | 75.16 | % | ||||
OPERATING EXPENSES | ||||||||
Sales and marketing | 5.04 | % | 34.44 | % | ||||
General and administrative | 54.93 | % | 55.15 | % | ||||
Depreciation and amortization | 4.87 | % | 7.24 | % | ||||
TOTAL OPERATING EXPENSES | 64.85 | % | 96.83 | % | ||||
INCOME (LOSS) FROM OPERATIONS | 4.79 | % | (21.67 | )% | ||||
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 | 0.51 | % | (61.67 | )% | ||||
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Net Sales
Net sales decreased by $90,835 or approximately 29.3% to $219,129 for the three months ended June 30, 2020 as compared to $309,964 for the three months ended June 30, 2019. 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 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. 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 year-end 2020, we reduced our active approach in the US market. Additionally, the impact of the coronavirus (now commonly known as COVID-19) created a substantial decrease in sales during the past quarter.
Cost of Sales
Cost of sales decreased approximately 13.6% to $66,528 for the three months ended June 30, 2020 as compared to $77,007 for the three months ended June 30, 2019. 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 royalty income, resulting in decreased cost of sales. Also, the reduced sales of our Condor 3D Scanner has also decreased our cost of sales.
Gross Profit
Our gross profit decreased by $80,356 or 34.5% to $152,601 for the three months ended June 30, 2020 as compared to $232,957 for the three months ended June 30, 2019 due to the reduced sales described above. Our gross profit as a percentage of sales decreased to 69.64% in the three months ended June 30, 2020 as compared to 75.16% for the three months ended June 30, 2019, primarily because of the reduced sales described above.
Operating Expenses
Sales and marketing costs. Our sales and marketing costs for the three months ended June 30, 2020 and 2019 were $11,055 and $106,738 respectively, representing a decrease of $95,683 or 89.6%. Costs decreased because of decreased attendance at trade shows and reduced travelling due to our reduced active approach in the US market and in general due to the COVID-19 mandatory restrictions.
General and administrative costs. Our general and administrative costs for the three months ended June 30, 2020 and 2019 were $120,366 and $170,956 respectively, representing a decrease of $50,590 or 29.6%. Our general and administrative costs have decreased because of an increased synergy between our internal divisions as a result of an ongoing internal reorganization.
Depreciation and amortization. Our depreciation and amortization decreased $11,759 or 52.4% to $10,676 for the three months ended June 30, 2020 as compared to $22,435 for the three months ended June 30, 2019. The decrease is primarily because our investments in equipment have declined relative to prior years.
Other income (expense). Our other income / (expense) was $(3,239) for the three months ended June 30, 2020 as compared to $(98,629) for the three months ended June 30, 2019, a decrease in expense of $95,390. The decrease in other expense was primarily as a result of decreased equity loss from our investments.
Internal and External Sources of Liquidity
As of June 30, 2020, we had current assets of $657,254 compared to $681,064 at March 31, 2020. This decrease of $23,810 was primarily due to a decrease in cash of $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 June 30, 2020, we had cash and cash equivalents of $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.
19
Cash and Cash equivalents
Our balance sheet at June 30, 2020 reflects cash and cash equivalents of $96,074 as compared to $114,634 as of March 31, 2020, a decrease of $18,560.
Operations
Net cash provided by operations was $20,843 for the three months ended June 30, 2020 as compared to net cash provided by operations of $24,595 for the three months ended June 30, 2019. The decrease in net cash provided by operations for the three months ended June 30, 2020 as compared to the three months ended June 30, 2019 is primarily as a result of a $173,066 decrease in net loss offset by non-cash adjustments to net loss and a net use of cash by operating assets and 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 three months ended June 30, 2020 and June 30, 2019, we recognized an increase / (decrease) in cash and cash equivalents of $(39,403) and $(11,598), respectively, from the effect of exchange rates between the Euro and the US Dollar.
Off-Balance Sheet Arrangements
At 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..
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, 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 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 June 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.
None.
21
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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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, 2020 | By: | /s/ Guy De Vreese | |
Name: | Guy De Vreese | ||
Title: |
Chief Executive Officer
(Principal Executive Officer) |
||
Date: August 14, 2020 | By: | /s/ Philippe Van Acker | |
Name: | Philippe Van Acker | ||
Title: |
Chief Financial Officer
(Principal Financial and Accounting Officer) |
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1 Month Remedent (PK) Chart |
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