10-Q 1 tv500291_10q.htm 10-Q

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

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

 

For the Quarterly Period Ended June 30, 2018

 

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

 

For the transition period from _____ to _____.

 

Commission File No. 001-15975

 

REMEDENT, INC.

(Exact Name of Registrant as Specified in Its Charter)

 

Nevada   86-0837251

(State or Other Jurisdiction

Of Incorporation or Organization)

 

(I.R.S. Employer Identification

Number)

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

 

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

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days.

Yes x                                  No ¨

 

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

Yes x                                  No ¨

 

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

 

Large accelerated filer ¨ Accelerated filer ¨
       
Non-accelerated filer ¨ Smaller reporting company x
(Do not check if a smaller reporting company)
   

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 ¨                                   No x

 

The number of common shares of registrant’s stock outstanding as of August 14, 2018 was 19,995,969.

 

 

 

 1 

 

 

REMEDENT, INC.

 

FORM 10-Q INDEX

 

   Page Number 
     
PART I – FINANCIAL INFORMATION     
  Item 1. Financial Statements     
Consolidated Balance Sheets as of June 30, 2018 (Unaudited) and March 31, 2018   3 
Consolidated Statements of Operations for the Three Months Ended June 30, 2018 and June 30, 2017 (Unaudited)   4 
Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended June 30, 2018 and June 30, 2017 (Unaudited)   5 
Consolidated Statements of Cash Flows for the Three Months Ended June 30, 2018 and June 30, 2017 (Unaudited)   6 
Notes to Consolidated Financial Statements (Unaudited)   7 
  Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations   17 
  Item 3. Quantitative and Qualitative Disclosures About Market Risk   19 
  Item 4. Controls and Procedures   19 
      
PART II – OTHER INFORMATION     
  Item 1. Legal Proceedings   20 
  Item 1A. Risk Factors   20 
  Item 2. Unregistered Sales of Equity Securities and Use of Proceeds   20 
  Item 3. Defaults Upon Senior Securities   20 
  Item 4.  [Removed and Reserved.]   20 
  Item 5. Other Information   20 
  Item 6. Exhibits   21 
  Signature Page   22 

 

 2 

 

 

PART I – FINANCIAL INFORMATION

Item 1.

REMEDENT, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 

   June 30, 2018   March 31, 2018 
ASSETS   (unaudited)      
CURRENT ASSETS:          
Cash and cash equivalents  $75,860   $92,875 
Accounts receivable, net of allowance for doubtful accounts of $179,373 at June 30, 2018 and $189,926 at March 31, 2018   1,032,167    1,157,424 
Inventories, net   114,733    123,112 
Prepaid expense   278,723    297,211 
Total current assets   1,501,483    1,670,622 
           
PROPERTY AND EQUIPMENT, NET   148,263    143,682 
OTHER ASSETS          
Investment in GlamSmile Asia Ltd   2,248,868    2,245,137 
Investment in Condor Technology (Note 3)   1,378,653    1,378,653 
Investment in Smilewise   2,592     
Total assets  $5,279,859   $5,438,094 
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)          
CURRENT LIABILITIES:          
Accounts payable  $1,700,005   $1,569,067 
Accrued liabilities   299,240    423,539 
Deferred revenue   57,463    81,875 
Due to related parties   48,901    51,778 
Total current liabilities   2,105,609    2,126,259 
           
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, 2018 and March 31, 2018 respectively)   19,996    19,996 
Treasury stock, at cost; 723,000 shares outstanding at June 30, 2018 and March 31, 2018 respectively   (831,450)   (831,450)
Additional paid-in capital   24,906,269    24,906,269 
Accumulated deficit   (20,183,087)   (20,024,323)
Accumulated other comprehensive income (loss) (foreign currency translation adjustment)   (917,848)   (936,553)
Obligation to issue shares (Note 3)   97,500    97,500 
Total Remedent, Inc. stockholders’ equity   3,091,380    3,231,439 
Non-controlling interest   82,870    80,396 
Total stockholders’ equity   3,174,250    3,311,835 
Total liabilities and equity  $5,279,859   $5,438,094 

 

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, 
   2018   2017 
         
Net sales  $434,848   $791,339 
Cost of sales   105,534    333,172 
Gross profit   329,314    458,167 
Operating Expenses          
Research and development   120    1,639 
Sales and marketing   193,899    239,148 
General and administrative   267,467    185,507 
Depreciation and amortization   24,415    24,644 
TOTAL OPERATING EXPENSES   485,901    450,938 
INCOME (LOSS) FROM OPERATIONS   (156,587)   7,229 
OTHER INCOME (EXPENSES)          
Equity income from investments   3,731    64,648 
Interest expense   (1,992)   (1,884)
Interest /other income   229     
Other (expenses)   (1,671)   (1,924)
TOTAL OTHER INCOME   297    60,840 
           
NET (LOSS) INCOME  BEFORE NON-CONTROLLING INTEREST  $(156,290)  $68,069 
NET INCOME (LOSS) ATTRIBUTABLE TO NON-CONTROLLING INTEREST   (2,474)   (5,638)
NET INCOME ATTRIBUTABLE TO REMEDENT SHAREHOLDERS  $(158,764)  $62,431 
           
(LOSS) INCOME PER SHARE          
Basic  $0.00   $0.00 
Fully diluted  $0.00   $0.00 
           
WEIGHTED AVERAGE SHARES OUTSTANDING          
Basic   19,995,969    19,995,969 
Fully diluted   19,995,969    19,995,969 

 

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

 

 4 

 

  

REMEDENT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

 

  

For the three months ended 

June 30,

 
   2018   2017 
         
NET (LOSS) INCOME  $(156,290)  $68,069 
OTHER COMPREHENSIVE INCOME (LOSS):          
Foreign currency translation adjustment   18,705    (5,587)
TOTAL OTHER COMPREHENSIVE INCOME (LOSS)   (137,585)   62,482 
LESS: COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO NON-CONTROLLING INTERESTS   (2,474)   (5,638)
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO REMEDENT, INC. common shareholders  $(140,059)  $56,844 

 

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,

 
   2018   2017 
         
CASH FLOWS FROM OPERATING ACTIVITIES          
Net income (loss)  $(156,290)  $68,069 
Adjustments to reconcile net income (loss) to net cash used by operating activities          
Depreciation and amortization   24,415    24,644 
Inventory reserve   (36,592)   40,198 
Allowance for doubtful accounts   (10,553)   11,401 
Changes in operating assets and liabilities:          
Equity investment   (3,731)   (64,648)
Accounts receivable   125,257    (5,566)
Inventories   8,379    (5,963)
Prepaid expenses   18,488    (23,544)
Accounts payable   130,939    24,349 
Accrued liabilities   (124,299)   (79,490)
Deferred revenue   (24,412)   (22,967)
Due to related parties   (2,877)    
Net cash used by operating activities   (51,276)   (33,517)
CASH FLOWS FROM INVESTING ACTIVITIES          
Purchases of equipment       (610)
Net cash used by investing activities       (610)
NET INCREASE (DECREASE) IN CASH   (51,276)   (34,127)
Effect of exchange rate changes on cash and cash equivalents   34,261    (45,813)
CASH AND CASH EQUIVALENTS, BEGINNING   92,875    147,106 
CASH AND CASH EQUIVALENTS, ENDING  $75,860   $67,166 
Supplemental Information:          
Interest paid  $1,992   $1,884 
Income taxes paid  $   $ 

 

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

 

 6 

 

 

REMEDENT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

1. DESCRIPTION OF THE COMPANY AND BASIS OF PRESENTATION

 

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

 

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

 

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

 

These financial statements of the Company are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. Despite the net profit for the accounting years ending March 31, 2017 and March 31, 2016, 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, 2018, the Company had a working capital deficit of $604,126, and an accumulated deficit of $20,183,087. Additional funding may be required in order to support the Company’s operations and the execution of its business plan.

 

There can be no assurance that the Company will be successful in raising the required capital or that it will ultimately attain a successful level of operations. These risks, among others, are also discussed in ITEM 1A – Risk Factors in the Company’s annual report on Form 10-K filed on July 13, 2018 with the SEC.

 

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, 2018, except as may be indicated below:

 

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, 2018.

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Consolidation

 

The accompanying consolidated financial statements include the accounts of: Remedent N.V. (incorporated in Belgium) located in Ghent, Belgium, Remedent Professional, Inc. and Remedent Professional Holdings, Inc. (both incorporated in California and inactive), Glamtech-USA, Inc. (a Delaware corporation acquired effective August 24, 2008), Condor North America LLC, a Nevada Corporation, 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) and Remedent N.V.’s 60% owned subsidiary, SmileWise Corporate B.V.B.A., a Belgium private company located in Ghent.

 

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

 

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

 

 7 

 

 

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, 2018, are not necessarily indicative of the results that may be expected for the year ended March 31, 2019. Accordingly, your attention is directed to footnote disclosures found in the Annual Report on Form 10-K for the year ending March 31, 2018, 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, 2018

  

Year 
ended

March 31, 2018

 
Product warranty liability:          
Opening balance  $6,164   $5,333 
Accruals for product warranties issued in the period       831 
Adjustments to liabilities for pre-existing warranties   (342)    
Ending liability  $5,822   $6,164 

 

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 $5,822 and $6,164 as of June 30, 2018 and March 31, 2018, 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, 2018 and March 31, 2018, the Company had 19,995,969, shares of common stock issued and outstanding.  The Company did not have any warrants outstanding but had 787,500 options outstanding as at June 30, 2018 and March 31, 2018 respectively.  

 

Pursuant to ASC 260-10-50-1(c), if a fully diluted share calculation was computed for the three month period ended June 30, 2018 and the three month period ended June 30, 2017 respectively, it would have excluded all options respectively since the Company’s average share trading price during the three month periods ended June 30, 2018 and June 30, 2017 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., SmileWise Corporate B.V.B.A., 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.

 

 8 

 

 

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, 2018 and 2017 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 $18,705 and $(5,587) for the three months ended June 30, 2018 and 2017, respectively. These amounts have been recorded as a separate component of stockholders’ equity (deficit).

 

Recently Adopted Accounting Pronouncements

 

Effective April 1, 2018, the Company adopted Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers”, as amended (Topic 606, commonly referred to as ASC 606) to all contracts using the modified retrospective method. Because the adoption of ASC 606 did not result in any significant change to the Company’s revenue accounting, our opening retained earnings balance has not been changed. Also, the comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods.

 

Most of the Company’s sales revenue continues to be recognized when products are shipped from manufacturing facilities. For certain customer loyalty and free goods, the Company continues to recognize the proportionate revenue and cost of product when the incentives are shipped. For contracts with customers where performance occurs over time, such as software sales, the Company recognizes revenue ratably over the performance period.

 

Recent Accounting Pronouncements Not Yet Adopted

 

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)”. This accounting standard seeks to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Current US GAAP does not require lessees to recognize assets and liabilities arising from operating leases on the balance sheet. This standard also provides guidance from the lessees’ perspective on how to determine if a lease is an operating lease or a financing lease and the differences in accounting for each. In January 2018, the FASB issued ASU No. 2018-01, which allows for an entity to elect an optional transition practical expedient for land easements that exist or expired before adoption of Topic 842. The adoption of this standard is required for interim and fiscal periods ending after December 15, 2018 and it is required to be applied using the modified retrospective approach. Early adoption is permitted. The Company is currently assessing the impact that this standard will have on its financial position, results of operations, cash flows and disclosures.

 

The Company has reviewed other recent accounting pronouncements and concluded that they are either not applicable to the business, or that no material effect is expected on the consolidated financial statements as a result of future adoption.

 

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.

 

 9 

 

 

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.

 

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.

 

 10 

 

 

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

 

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

 

For the three month periods ended June 30, 2018 and June 30, 2017 the Company recorded equity (loss) income of $(3,731) and $64,648 respectively as “Other (expenses) income” for its portion of the net income recorded by GlamSmile Dental Technology Ltd.

 

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

 

Operating data: 

Three months

ended
June 30, 2018

  

Three months

ended
June 30, 2017

 
Revenues  $1,232,863   $1,526,768 
Gross profit   1,029,647    1,352,155 
Income (loss) from operations   54,503    381,796 
   Net income  $17,346   $300,550 

 

CONDOR TECHNOLOGIES (formerly Medical Franchises & Investments”)

 

Effective March 31, 2013, the Company acquired 6.12 % of the issued and outstanding shares of Condor Technologies NV, a Belgium corporation ("Condor") 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 Condor 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. Because the investment is being recognized as an available-for-sale investment future unrealized gains and losses on the investment in Condor will also be recognized in 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.

 

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.

 

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, 2018, five customers accounted for 85.33% of the Company’s trade accounts receivables, and one customer accounted for 70.11%.   At March 31, 2018 five customers accounted for a total of 78.12% of the Company’s trade accounts receivable and one of those customers accounted for 60.77% of total accounts receivable. The Company performs ongoing credit evaluations of its customers and normally does not require collateral to support accounts receivable.

 

Purchases — The Company has diversified its sources for product components and finished goods and, as a result, the loss of a supplier would not have a material impact on the Company’s operations.  For the three months ended June 30, 2018 the Company had five suppliers who accounted for 50.31% of gross purchases. At March 31, 2018 the Company had five suppliers who accounted for 54.48% of gross purchases.

 

Revenues —  For the three months ended June 30, 2018 the Company had five customers that accounted for 84.76% of total revenues and one of those customers accounted for 32.49% of total revenues. For the three months ended June 30, 2017 the Company had five customers that accounted for 51.20% of total revenues and one of those customers accounted for 31.91% of total revenues.

 

 11 

 

 

5.ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS

 

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

 

   June 30, 2018   March 31, 2018 
Accounts receivable, gross  $1,211,540   $1,347,350 
Less: allowance for doubtful accounts   (179,373)   (189,926)
Accounts receivable, net  $1,032,167   $1,157,424 

 

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, 2018   March 31, 2018 
Raw materials  $11,630   $12,683 
Components   124,325    134,660 
Finished goods   600,731    634,314 
    736,686    781,657 
Less: reserve for obsolescence   (621,953)   (658,545)
Net inventory  $114,733   $123,112 

 

7.PREPAID EXPENSES

 

Prepaid expenses are summarized as follows:

 

   June 30, 2018   March 31, 2018 
Prepaid materials and components  $199,717   $235,010 
VAT payments in excess of VAT receipts       969 
Prepaid consulting   915    1,733 
Prepaid advertising   11,463     
Prepaid rent       1,277 
Prepaid tradeshow   5,011     
Other   61,617    58,222 
   $278,723   $297,211 

 

8.PROPERTY AND EQUIPMENT

 

Property and equipment are summarized as follows:

 

   June 30, 2018   March 31, 2018 
Furniture and Fixtures  $477,001   $477,001 
Machinery and Equipment   2,104,720    2,104,720 
    2,581,721    2,581,721 
Accumulated depreciation   (2,433,458)   (2,438,039)
Property & equipment, net  $148,263   $143,682 

 

 12 

 

 

9.LONG TERM DEBT

 

Secured Debt Agreements (1)

 

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.

 

10.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, 2018 and 2017 respectively, the Company incurred $56,941 and $40,216 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.

 

11.ACCRUED LIABILITIES

 

Accrued liabilities are summarized as follows:

 

   June 30, 2018   March 31, 2018 
Accrued employee benefit taxes and payroll  $123,332   $218,361 
Accrued travel   5,822    6,164 
Accrued audit and tax preparation fees   11,352    24,520 
Reserve for warranty costs   5,822    6,164 
Accrued consulting fees   134,742    136,726 
Tax reserve   1,333    1,412 
VAT to be paid   4,924    12,472 
Other accrued expenses   11,913    17,720 
   $299,240   $423,539 

 

12.EQUITY COMPENSATION PLANS

 

As of June 30, 2018, the Company had two equity compensation plans approved by its stockholders (1) the 2004 Incentive and Non-statutory Stock Option Plan (the “2004 Plan”); and (2) the 2007 Equity Incentive Plan (the “2007 Plan”). The Company’s approved the 2004 Plan reserving 800,000 shares of common stock of the Company pursuant to an Information Statement on Schedule 14C filed with the Commission on May 9, 2005.  Finally, the Company’s stockholders approved the 2007 Plan reserving 1,000,000 shares of common stock of the Company pursuant to a Definitive Proxy Statement on Schedule 14A filed with the Commission on October 2, 2007.

 

In addition to the equity compensation plans approved by the Company’s stockholders, the Company has 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.

 

 13 

 

 

The following table provides aggregate information as of June 30, 2018 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, 2018 and June 30, 2018   357,500    0.50    430,000    1.21 
Exercise price range  $0.50        $0.50      
Weighted average remaining life   0.72 years         0.72 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))

 
Equity Compensation Plans approved by security holders   787,500   $0.50    1,175,000 

 

For the three month periods ended June 30, 2018 and June 30, 2017 the Company has not recognized any stock based compensation expense in the consolidated statement of operations.  No stock options were granted or cancelled in the three month periods ended June 30, 2018 and June 30, 2017.

 

13.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., SmileWise Corporate B.V.B.A. 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, 2018 and 69.12% of our sales for the three months ended June 30, 2017 were generated from customers outside of the United States.

 

14.COMMITMENTS

 

Real Estate Lease:

 

The Company leases an office facility of 5,187 square feet in Gent, Belgium from an unrelated party pursuant to a lease expiring December 31, 2010 at a base rent of €6,353 per month for the total location ($7,397 per month at June 30, 2018).

 

Secondly, the Company leases an office facility of 635 square feet in Brussels, Belgium from an unrelated party pursuant to a lease expiring June 30, 2018 at a base rent of €969 per month for the total location ($1,128 per month at June 30, 2018).

 

 14 

 

 

Real Estate Lease and All Other Leased Equipment:

 

Minimum monthly lease payments for real estate, and all other leased equipment are as follows based upon the conversion rate for the (Euro) at June 30, 2018:

 

March 31, 2019  $79,204 
March 31, 2020   105,605 
March 31, 2021   83,413 
March 31, 2022   5,613 
Total:  $273,835 

 

15.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, 2018   March 31, 2018 
       Carrying   Fair   Carrying   Fair 
   Level   Value   Value   value   Value 
Cash   1   $75,860   $75,860   $92,875   $92,875 
Accounts receivable   2   $1,032,167   $1,032,167   $1,157,424   $1,157,424 

Long Term investment and advance -

GlamSmile Dental Technology Asia

   3   $2,248,868   $2,248,868   $2,245,137   $2,245,137 
Long term investments and advances Condor   1   $1,378,653   $1,378,653   $1,378,653   $1,378,653 
Investment in Smilewise   2   $2,592   $2,592           
Deferred revenue   2   $57,463   $57,463   $81,875   $81,875 
Accounts payable   2   $1,700,005   $1,700,005   $1,569,067   $1,569,067 
Accrued liabilities   2   $299,240   $299,240   $423,539   $423,539 

 

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 three month period ended June 30, 2018. 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):

 

 15 

 

 

  

Three month period

ended June 30, 2018

  

Three month period

ended June 30, 2017

 
Long term investments and advances:          
Beginning balance  $2,245,137   $1,970,245 
Gains (losses) included in net loss   3,731    64,648 
Transfers in (out of level 3)        
           
Ending balance  $2,248,868   $2,034,893 

 

 16 

 

 

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, 2018 and June 30, 2017. 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, 2018. In addition to historical information, this section contains “forward-looking” statements, including statements regarding the growth of product lines, optimism regarding the business, expanding sales and other statements. Words such as expects, anticipates, intends, plans, believes, sees, estimates and variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks and uncertainties that are difficult to predict. Actual results could vary materially from the description contained herein due to many factors including continued market acceptance of our products. In addition, actual results could vary materially based on changes or slower growth in the oral care and cosmetic dentistry products market; the potential inability to realize expected benefits and synergies; domestic and international business and economic conditions; changes in the dental industry; unexpected difficulties in penetrating the oral care and cosmetic dentistry products market; changes in customer demand or ordering patterns; changes in the competitive environment including pricing pressures or technological changes; technological advances; shortages of manufacturing capacity; future production variables impacting excess inventory and other risk factors.  Factors that could cause or contribute to any differences are discussed in “Risk Factors” and elsewhere in the Company’s annual report on Form 10-K filed on July 13, 2018 with the Securities and Exchange Commission.  Except as required by applicable law or regulation, the Company undertakes no obligation to revise or update any forward-looking statements contained in this Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2018. The information contained in this Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2018 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, 
   2018   2017 
   (unaudited) 
NET SALES   100.00%   100.00%
COST OF SALES   24.27%   42.10%
GROSS PROFIT   75.73%   57.90%
OPERATING EXPENSES          
Research and development   0.03%   0.21%
Sales and marketing   44.59%   30.22%
General and administrative   61.51%   23.44%
Depreciation and amortization   5.61%   3.11%
TOTAL OPERATING EXPENSES   111.74%   56.98%
INCOME (LOSS) FROM OPERATIONS   (36.01)%   0.92%
Other income   0.07%   7.68%
NET INCOME (LOSS) BEFORE NON-CONTROLLING INTEREST   (35.94)%   8.60%
NON-CONTROLLING INTEREST   (0.57)%   (0.71)%
NET INCOME   (36.51)%   7.89%

 

 17 

 

 

Net Sales

  

Net sales decreased by approximately 45% to $434,848 for the three months ended June 30, 2018 as compared to $791,339 for the three months ended June 30, 2017.  The decrease in sales is primarily due to the reduced sales of our Condor 3D Scanner in the North American market. In anticipation of our additional tool for the Condor 3D Scanner, which will be an easy-to-use addition (with non to a minimum of additional user training) to the already existing Condor 3D Scanner and which will be available by the year-end, we reduced our active approach in the US market.

 

Cost of Sales

 

Cost of sales decreased approximately 68.3% to $105,534 for the three months ended June 30, 2018 as compared to $333,172 for the three months ended June 30, 2017.  The decrease in cost of sales is primarily due to the reduced sales of our Condor 3D Scanner in anticipation of the launch of our additional tool, the “Condor Flash”.

  

Gross Profit

 

Our gross profit decreased by $128,853 or 28.1% to $329,314 for the three months ended June 30, 2018 as compared to $458,167 for the three months ended June 30, 2017 due to the reduced sales described above. Our gross profit as a percentage of sales increased to 75.73% in the three months ended June 30, 2018 as compared to 58% for the three months ended June 30, 2017. Our gross profit has increased because of increased veneer sales.

 

Operating Expenses

 

Research and Development.  Our research and development expenses decreased by $1,519 to $120 for the three months ended June 30, 2018 as compared to $1,639 for the three months ended June 30, 2017, a decrease of 92.7%. Our research and development costs have decreased primarily because of the finalization of our Software program.

 

Sales and marketing costs. Our sales and marketing costs for the three months ended June 30, 2018 and 2017 were $193,899 and $239,148 respectively, representing a decrease of $45,249 or 18.9%.  The decrease is largely due to less attendance at smaller trade shows in preference to as attendance at the most important trade show, IDS, which only takes place every 2 years.

 

General and administrative costs. Our general and administrative costs for the three months ended June 30, 2018 and 2017 were $267,467 and $185,507 respectively, representing an increase of $81,960 or 44.2%. The increase in general and administrative costs is largely due to further implementation and completion of our North American team which was not yet fully in place during the quarter ending June 30, 2017.

 

Depreciation and amortization.  Our depreciation and amortization decreased $229 or 0.9% to $24,415 for the three months ended June 30, 2018 as compared to $24,644 for the three months ended June 30, 2017. 

 

Other income (expense).  Our other income was $297 for the three months ended June 30, 2018 as compared to $60,840 for the three months ended June 30, 2017, a decrease of $60,543, or 99.5%. The decrease in other income was primarily as a result of decreased equity income. During the quarter ended June 30, 2018 we earned equity income from our investment in GlamSmile Dental Technology Ltd., of $3,731 versus $64,648 for the quarter ended June 30, 2017.

 

Internal and External Sources of Liquidity

 

As of June 30, 2018, we had current assets of $1,501,483 compared to $1,670,622 at March 31, 2018. This decrease of $169,139 was primarily due to a decrease in cash of $17,015, decrease in accounts receivable of $125,257, decrease in inventories of $8,379 and a decrease in prepaid expense of $18,488.

 

As of June 30, 2018, we had cash and cash equivalents of $75,860. 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.

 

 18 

 

 

Cash and Cash equivalents

 

Our balance sheet at June 30, 2018 reflects cash and cash equivalents of $75,860 as compared to $92,875 as of March 31, 2018, a decrease of $17,015.

 

Operations

 

Net cash provided by (used by) operations was $(51,276) for the three months ended June 30, 2018 as compared to net cash provided by operations of $(33,517) for the three months ended June 30, 2017. The decrease in net cash provided by operations for the three months ended June 30, 2018 as compared to the three months ended June 30, 2017 is primarily as a result of net cash used by net loss inclusive of non-cash adjustments totaling $(323,332), offset by changes in operating assets and liabilities of $305,573.

 

Investing activities

 

Net cash used in investing activities totaled $nil for the three months ended June 30, 2018 as compared to net cash used in investing activities of $610 for the three months ended June 30, 2017. Cash used in the three months ended June 30, 2018 and 2017 was mainly for additional equipment.

 

Financing activities

 

Net cash provided by financing activities totaled $nil for the three months ended June 30, 2018, as compared to $nil for the three months ended June 30, 2017.  

 

During the three months ended June 30, 2018 and June 30, 2017, we recognized an increase / (decrease) in cash and cash equivalents of $34,261 and $(45,813), respectively, from the effect of exchange rates between the Euro and the US Dollar.

 

Off-Balance Sheet Arrangements

 

At June 30, 2018, 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, 2018.  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, 2018.

 

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, 2018 or subsequent to that date that have materially affected, or are reasonably likely to materially affect, our  internal control over financial reporting.

 

 19 

 

 

PART II - OTHER INFORMATION

 

Item 1.  Legal Proceedings

 

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

 

Item 1A.  Risk Factors

 

Not Applicable.

 

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

 

None. 

 

Item 3.  Defaults Upon Senior Securities

 

None.

 

Item 4.  [Removed and Reserved]

 

Item 5.  Other Information

 

None.

 

 20 

 

 

Item 6.  Exhibits

 

EXHIBIT INDEX

 

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

__________________


 

* Filed herewith

 

 21 

 

 

SIGNATURES

 

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

 

  REMEDENT, INC.
   
Date:    August 14, 2018 By: /s/ Guy De Vreese
    Name: Guy De Vreese
   

Title:   

Chief Executive Officer

(Principal Executive Officer)

   
Date:    August 14, 2018 By: /s/ Philippe Van Acker
    Name: Philippe Van Acker
   

Title:

Chief Financial Officer

(Principal Financial and Accounting Officer)

 

 22