The accompanying notes are an integral part
of these consolidated financial statements.
The accompanying notes are an integral part
of these consolidated financial statements.
The accompanying notes are an integral part
of these consolidated financial statements.
The accompanying notes are an integral part
of these consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
|
|
1.
|
DESCRIPTION OF THE COMPANY
AND BASIS OF PRESENTATION
|
The Company is a manufacturer
and distributor of cosmetic dentistry products, including a full line of professional dental tooth whitening products which are
distributed in Europe, Asia and the United States. The Company manufactures many of its products in Ghent, Belgium as well as outsourced
manufacturing in Beijing, China. The Company distributes its products using both its own internal sales force and through
the use of third party distributors.
In these notes, the terms “Remedent”,
“Company”, “we”, “us” or “our” mean Remedent, Inc. and all of its subsidiaries,
whose operations are included in these consolidated financial statements.
The Company’s financial
statements have been prepared on an accrual basis of accounting, in conformity with accounting principles generally accepted in
the United States of America. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary
for a fair presentation of financial position and the results of operations for the periods presented have been reflected herein.
These financial statements of
the Company are prepared using accounting principles generally accepted in the United States of America applicable to a going concern,
which contemplates the realization of assets and liquidation of liabilities in the normal course of business. Despite the net profit
for the accounting years ending March 2019, March 31, 2018 and March 31, 2017, the accumulated losses of the past affect the financial
situation of the Company. The continuation of the Company as a going concern is dependent upon the Company’s ability to continue
to generate profitable operations. As of June 30, 2019, the Company had a working capital deficit of $1,738,300, and an accumulated
deficit of $17,908,311. Additional funding may be required in order to support the Company’s operations and the execution
of its business plan.
There can be no assurance that
the Company will be successful in raising the required capital or that it will ultimately attain a successful level of operations.
These risks, among others, are also discussed in ITEM 1A – Risk Factors in the Company’s annual report on Form 10-K
filed on July 28, 2019 with the SEC.
The Company has conducted a
subsequent events review through the date the financial statements were issued, and has concluded that there were no subsequent
events requiring adjustments or additional disclosures to the Company's financial statements at June 30, 2019.
|
|
2.
|
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
|
The accounting policies of the
Company, as applied in the interim consolidated financial statements presented herein are substantially the same as presented in
the Company’s Form 10-K for the year ended March 31, 2019, except as may be indicated below:
Basis of Consolidation
The accompanying consolidated
financial statements include the accounts of: Remedent N.V. (incorporated in Belgium) located in Ghent, Belgium, Remedent Professional,
Inc. and Remedent Professional Holdings, Inc. (both incorporated in California and inactive), Glamtech-USA, Inc. (a Delaware corporation
acquired effective August 24, 2008), Condor North America LLC, a Nevada Corporation, Remedent N.V.’s 50 % owned subsidiary,
Biotech Dental Benelux N.V., a Belgium private company located in Ghent, Remedent N.V.’s 51% owned subsidiary, GlamSmile
Deutschland GmbH, a German private company located in Munich (effective March 31, 2014 this subsidiary is inactive), Remedent N.V.’s
80 % owned subsidiary, GlamSmile Rome, an Italian private company located in Rome (effective March 31, 2014 this subsidiary is
inactive).
Remedent N.V. owns 21.51% of
Glamsmile Dental Technology Ltd., a Cayman Islands company (“Glamsmile Dental”). The subsidiaries of Glamsmile Dental
include: Glamsmile (Asia) Limited, a company organized and existing under the laws of Hong Kong, Beijing Glamsmile Technology Development
Ltd., a 100% owned subsidiary or GlamSmile Asia, its 80% owned subsidiary Beijing Glamsmile Trading Co., Ltd. and its 98% owned
subsidiary Beijing Glamsmile Dental Clinic Co., Ltd., including its 100% owned Shanghai Glamsmile Dental Clinic Co., Ltd., its
100% owned Guangzhou Dental Clinic Co., Ltd. and its 50% owned Whenzhou GlamSmile Dental Clinic Ltd., which are accounted for using
the equity method after January 31, 2012 (see Note 3 – Long-term Investment); In addition, a 3.03% ownership interest in
Condor Technologies N.V. ( a Belgium private company) and a 26.09% ownership interest in Metrics in Balance N.V. (a Belgium corporation).
Remedent, Inc. is a holding
company with headquarters in Ghent, Belgium. Remedent Professional, Inc. and Remedent Professional Holdings, Inc. have been dormant
since inception.
For all periods presented, all
significant inter-company accounts and transactions have been eliminated in the consolidated financial statements and corporate
administrative costs are not allocated to subsidiaries.
Interim Financial
Information
The interim consolidated financial
statements of Remedent, Inc. and Subsidiaries (the “Company”) are condensed and do not include some of the information
necessary to obtain a complete understanding of the financial data. Management believes that all adjustments necessary for a fair
presentation of results have been included in the unaudited consolidated financial statements for the interim periods presented.
Operating results for the three months ended June 30, 2019, are not necessarily indicative of the results that may be expected
for the year ended March 31, 2019. Accordingly, your attention is directed to footnote disclosures found in the Annual Report
on Form 10-K for the year ending March 31, 2019, and particularly to Note 2, which includes a summary of significant accounting
policies.
Warranties
The Company typically warrants
its products against defects in material and workmanship for a period of 24 months from shipment.
A tabular reconciliation of
the Company’s aggregate product warranty liability for the reporting periods is as follows:
|
|
|
Three months
ended
June 30, 2019
|
|
|
Year
ended
March 31, 2019
|
|
|
Product warranty liability:
|
|
|
|
|
|
|
|
|
|
Opening balance
|
|
$
|
5,619
|
|
|
$
|
6,164
|
|
|
Accruals for product warranties issued in the period
|
|
|
44
|
|
|
|
—
|
|
|
Adjustments to liabilities for pre-existing warranties
|
|
|
—
|
|
|
|
(545
|
)
|
|
Ending liability
|
|
$
|
5,663
|
|
|
$
|
5,619
|
|
Based upon historical trends
and warranties provided by the Company’s suppliers and sub-contractors, the Company has made a provision for warranty costs
of $5,663 and $5,619 as of June 30, 2019 and March 31, 2019, respectively.
Computation of Earnings (Loss)
per Share
Basic net income (loss) per
common share is computed by dividing net income (loss) attributable to common stockholders by the weighted average number of shares
of common stock outstanding during the period. Net income (loss) per common share attributable to common stockholders assuming
dilution is computed by dividing net income by the weighted average number of shares of common stock outstanding plus the number
of additional common shares that would have been outstanding if all dilutive potential common shares had been issued.
On April 1, 2009, the Company
adopted changes issued by the FASB to the calculation of earnings per share. These changes state that unvested share-based payment
awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities
and shall be included in the computation of earnings per share pursuant to the two-class method for all periods presented. The
adoption of this change had no impact on the Company’s basic or diluted net loss per share because the Company has never
issued any share-based awards that contain non-forfeitable rights.
At each of June 30, 2019 and
March 31, 2019, the Company had 19,995,969, shares of common stock issued and outstanding. The Company did not have
any warrants or options outstanding at either of June 30, 2019 or March 31, 2019.
Conversion of Foreign Currencies
The reporting and functional
currency for the consolidated financial statements of the Company is the U.S. dollar. The home currency for the Company’s
European subsidiaries, Remedent N.V., Biotech Dental Benelux N.V., Metrics in Balance N.V. , GlamSmile Rome and GlamSmile Deutschland
GmbH, is the Euro, for Glamsmile Asia Ltd., and its subsidiaries, the Hong Kong dollar and the Chinese Renmimbi (“RMB”)
for Mainland China. The assets and liabilities of companies whose functional currency is other that the U.S. dollar are included
in the consolidation by translating the assets and liabilities at the exchange rates applicable at the end of the reporting period.
The statements of income of such companies are translated at the average exchange rates during the applicable period. Translation
gains or losses are accumulated as a separate component of stockholders’ equity.
Comprehensive Income (Loss)
Comprehensive income (loss)
includes all changes in equity except those resulting from investments by owners and distributions to owners, including accumulated
foreign currency translation, and unrealized gains or losses on ‘Available For Sale (AFS)’ securities. During the three
months ended June 30, 2019 and 2018 the Company did not record any unrealized gains or losses on AFS securities.
The Company’s only component
of other comprehensive income is the accumulated foreign currency translation consisting of (loss) and gains of $(43,240) and $18,705
for the three months ended June 30, 2019 and 2018, respectively. These amounts have been recorded as a separate component of stockholders’
equity (deficit).
Recent Accounting Pronouncements
Changes to GAAP are established
by the Financial Accounting Standards Board (the “FASB”) in the form of accounting standards updates (“ASUs”)
to the FASB’s Accounting Standards Codification.
The Company considers the applicability
and impact of all ASUs. ASUs not listed below were assessed and determined not to be applicable or are expected to have minimal
impact on the Company’s consolidated financial position and results of operations.
Adopted Accounting Pronouncements
In February 2016, the FASB established
ASU Topic 842 – Leases, by issuing ASU Topic No. 2016-02 (“Topic 842”), which requires lessees to recognize lease
on-balance sheet and disclose key information about leasing arrangements. Topic 842 was subsequently amended by ASU Topic 2018-11
– Targeted Improvements. The new standard establishes a right-of-use model (“ROU”) that requires a lessee to
recognize a ROU asset and a lease liability for all leases with a term longer than 12 months. Leases will be classified as finance
or operating, with classification affecting the pattern and classification of expense recognition in the statement of operations.
The Company adopted Topic 842
in the first quarter of 2019 utilizing the modified retrospective transition method and a cumulative effect adjustment at the beginning
of the first quarter of 2019. The Company has elected the package of practical expedients, which allows the Company not to reassess
(1) whether any expired or existing contracts as of the adoption date are or contain a lease, (2) lease classification for any
expired or existing leases as of the adoption date, and (3) initial direct costs for any existing leases as of the adoption date.
The Company did not elect to apply the hindsight practical expedient when determining lease term and assessing impairment of the
right-to-use assets. The adoption of Topic 842 resulted in the recognition of right-of use assets of approximately $180,926 and
lease liabilities for operating leases of approximately $180,926 and no cumulative effect adjustment on retained earnings on its
unaudited Consolidated Balance Sheets or material impact to its unaudited Consolidated Statements of Operations and Comprehensive
Loss in the period of adoption. Right-of-use assets are included in Prepaid and other assets, and lease liabilities are included
in Accrued liabilities in the unaudited consolidated balance sheet for the period ended June 30, 2019. See Note 13 — Leases,
for additional information.
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.
In addition, in connection with
the contemplated transactions in the Share Purchase Agreement on January 20, 2012, the Company entered into a Distribution, License
and Manufacturing Agreement with Glamsmile Dental pursuant to which the Company appointed Glamsmile Dental as the exclusive distributor
and licensee of Glamsmile Veneer Products bearing the “Glamsmile” name and mark in the B2C Market in the People’s
Republic of China (including Hong Kong and Macau) and Republic of China (Taiwan) and granted related manufacturing rights and licenses
in exchange for the original issuance of 2,857,143 shares of Preference A-1 Shares of Glamsmile Dental and $250,000 (the receipt
of which was acknowledged as an offset to payment of certain invoices of Glamsmile (Asia) Limited).
On February 10, 2012, the sale
of the Preference A-1 Shares and the Preference A Shares was completed. As a result of the closing, the equity ownership of Glamsmile
Dental, on an as converted basis, is as follows: 31.4% by the Investors, 39.2 % by Gallant, and 29.4% by the Company. Mr. De Vreese,
our chairman, will remain as a director of Glamsmile Dental along with Mr. David Lok, who is the Chief Executive Officer and director
of Glamsmile Dental and principal of Gallant. The Investors have a right to appoint one director of Glamsmile Dental, and accordingly
the Board of Directors of Glamsmile Dental will consist of Mr. De Vreese, Mr. Lok and a director appointed by the Investors.
In conjunction with the transaction
and resulting deconsolidation of Glamsmile Dental, the Company recorded a gain of $1,470,776, calculated as follows:
|
Consideration received
|
|
$
|
2,000,000
|
|
|
Fair value of 29.4% interest
|
|
|
2,055,884
|
|
|
Carrying value of non-controlling interest
|
|
|
1,117,938
|
|
|
Less: carrying value of former subsidiary’s net assets
|
|
|
(2,002,329
|
)
|
|
Goodwill
|
|
|
(699,635
|
)
|
|
Investment China & Hong Kong
|
|
|
(1,082
|
)
|
|
Rescission agreement Excelsior (Note 11)
|
|
|
(1,000,000
|
)
|
|
|
|
$
|
1,470,776
|
|
For the three month periods
ended June 30, 2019 and June 30, 2018 the Company recorded equity (loss) income of $(3,731) and $64,648 respectively as “Other
(expenses) income” for its portion of the net income recorded by GlamSmile Dental Technology Ltd.
The following tables represent
the summary financial information of GlamSmile Asia as derived from its financial statements and prepared under US GAAP:
|
|
|
Three months
ended
June 30, 2019
|
|
|
Three months
ended
June 30, 2018
|
|
|
Operating data:
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
1,380,967
|
|
|
$
|
1,232,863
|
|
|
Gross profit
|
|
|
860,324
|
|
|
|
1,029,647
|
|
|
Income (loss) from operations
|
|
|
218,279
|
|
|
|
54,503
|
|
|
Net income
|
|
$
|
197,050
|
|
|
$
|
17,346
|
|
CONDOR TECHNOLOGIES (formerly
Medical Franchises & Investments”)
Effective March 31, 2013, the
Company acquired 6.12% of the issued and outstanding shares of Condor Technologies NV (formerly Medical Franchises & Investments
N.V.), a Belgium corporation in exchange for a cash prepayment of $314,778 that was made during the fiscal year ended March 31,
2012. The Company’s investment in 70,334 shares of MFI NV has been recorded at the fair value of $787,339 which is the quoted
market price of approximately USD $11.19 (€8.70) per share. As a result of our adoption of ASU 2016-01, the investment is
being recognized as a financial instrument with a readily determinable fair value and an unrecognized loss of $(42,973) has been
recorded in income due to the fair value per share at March 31, 2019, being $18.99 (€16,90) per share. The fair value per
share at June 30, 2019 was $16,99 (€15,00) per share, resulting in a loss of $(140,881) which was recorded in income. Further,
as a result of our adoption of ASU 2016-01, we have recorded a transition date adjustment as at April 1, 2018 to reclassify
the unrecognized profit of $178,361 recorded in 2018 from other comprehensive income to deficit.
MFI NV has been founded to market
an advance in dental technology which has the potential to replace the process of making mechanical impressions of teeth and bite
structures with a digital/optical scan.
METRICS IN BALANCE N.V.
Effective November 22, 2018,
the Company acquired 63,112 shares or 3.08% of the issued and outstanding shares of Metrics in Balance N.V., a Belgium Corporation
(“MIB”). As of March 29, 2019, our 60% ownership of SmileWise was merged into MIB, and we converted cash payments to
MIB of $123,912 (€ 110,271) to MIB shares; resulting in an increased in our shareholding of MIB by 1,082,190 shares to a total
of 1,145,302 or 26.09%. MIB listed on the Euronext, Paris, France in March 2018 and trading has been minimal to date. Consequently,
the quoted market price has not been disclosed because it may not be representative of the fair value of our investment. MIB has
been founded to allow healthcare and dental professionals to determine the relationship between malocclusion and posture problems
thereby enabling therapy to improve quality of life.
As a result of the increase
in share ownership the Company has determined that significant control exists and consequently the investment is being recorded
as an equity investment and all gains or losses are recorded in income.
During the year ended March
31, 2019 we have recorded $2,832,822 in equity income comprised of a gain on merger of SmileWise in the amount of $3,007,301 resulting
from the re-measurement of the value of SmileWise, offset by an equity loss of $174,479. SmileWise was fair valued using an average
of discounted cash flow and comparable exit methods employing the following inputs: discounted cash flows using a weighted average
cost of capital (“WAAC”) of 23%; software as a service (“SaaS”) multiples, dental industry multiples and
mergers and acquisition (“M&A”) multiples of between 5.1 and 18.5. As at March 31, 2019 unrealized net gains on
our investment in MIB were $2,832,822. As at June 30, 2019, we recorded a net loss for the quarter ending June 30, 2019 of $(2,778),
reflecting Remedent’s 26,09% of the total quarter loss.
The following tables represent
the summary financial information of MIB as derived from its financial statements and prepared under US GAAP:
|
|
|
June 30, 2019
|
|
|
Operating data:
|
|
|
|
|
|
Revenues
|
|
$
|
6,428
|
|
|
Gross profit
|
|
|
5,938
|
|
|
Income (loss) from operations
|
|
|
(7,734
|
)
|
|
Net income (loss)
|
|
$
|
(10,649
|
)
|
SMILEWISE CORPORATE B.V.B.A.
Effective April 16, 2018,
the Company acquired 60% of the issued and outstanding shares of SmileWise Corporate B.V.B.A., a Belgium corporation (“SmileWise’)
in exchange for a cash payment of $2,592 (€2,226) that was made during April 2018. As of March 29, 2019, 100% of SmileWise
was merged into MIB. This merger/integration was completed because SmileWise needed a new ‘practice-building’ clinical
concept and MIB needed a team to fill the clinics with patients. SmileWise is a dental marketing agency and software developer
catering to dentists.
Financial Instruments —
Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of trade accounts
receivable.
Concentrations of credit risk
with respect to trade receivables are normally limited due to the number of customers comprising the Company’s customer base
and their dispersion across different geographic areas. At June 30, 2019, five customers accounted for 17.69% of the
Company’s trade accounts receivables, and one customer accounted for 5.85%. The Company performs ongoing credit
evaluations of its customers and normally does not require collateral to support accounts receivable.
Purchases — The Company
has diversified its sources for product components and finished goods and, as a result, the loss of a supplier would not have a
material impact on the Company’s operations. For the three months ended June 30, 2019 the Company had five suppliers
who accounted for 45.65% of gross purchases. At June 30, 2018 the Company had five suppliers who accounted for 54.48% of gross
purchases.
Revenues — For
the three months ended June 30, 2019 the Company had five customers that accounted for 58.13% of total revenues and one of those
customers accounted for 14.67% of total revenues. For the three months ended June 30, 2018 the Company had five customers that
accounted for 84.76% of total revenues and one of those customers accounted for 32.49% of total revenues.
|
|
5.
|
ACCOUNTS RECEIVABLE
AND ALLOWANCE FOR DOUBTFUL ACCOUNTS
|
The Company’s
accounts receivable at period end were as follows:
|
|
|
June 30, 2019
|
|
|
March 31, 2019
|
|
|
Accounts receivable, gross
|
|
$
|
561,370
|
|
|
|
391,811
|
|
|
Less: allowance for doubtful accounts
|
|
|
(159,140
|
)
|
|
|
(157,903
|
)
|
|
Accounts receivable, net
|
|
$
|
402,230
|
|
|
|
233,908
|
|
Inventories at period end are
stated at the lower of cost (first-in, first-out) or net realizable value and consisted of the following:
|
|
|
June 30, 2019
|
|
|
March 31, 2019
|
|
|
Raw materials
|
|
$
|
9,151
|
|
|
|
9,151
|
|
|
Components
|
|
|
133,123
|
|
|
|
121,941
|
|
|
Finished goods
|
|
|
570,705
|
|
|
|
577,303
|
|
|
|
|
|
712,979
|
|
|
|
708,395
|
|
|
Less: reserve for obsolescence
|
|
|
(602,112
|
)
|
|
|
(597,433
|
)
|
|
Net inventory
|
|
$
|
110,867
|
|
|
|
110,962
|
|
|
|
7.
|
PREPAID EXPENSES AND
OTHER ASSETS
|
Prepaid expenses and
other assets are summarized as follows:
|
|
|
June 30, 2019
|
|
|
March 31, 2019
|
|
|
Prepaid materials and components
|
|
$
|
74,713
|
|
|
|
217,172
|
|
|
VAT payments in excess of VAT receipts
|
|
|
7,355
|
|
|
|
7,355
|
|
|
Prepaid rent
|
|
|
1,301
|
|
|
|
—
|
|
|
Prepaid tradeshow
|
|
|
4,972
|
|
|
|
4,933
|
|
|
Other
|
|
|
15,922
|
|
|
|
15,064
|
|
|
Right-of-use assets
|
|
|
157,138
|
|
|
|
—
|
|
|
|
|
$
|
261,401
|
|
|
$
|
244,524
|
|
|
|
8.
|
PROPERTY AND EQUIPMENT
|
Property and equipment
are summarized as follows:
|
|
|
June 30, 2019
|
|
|
March 31, 2019
|
|
|
Furniture and Fixtures
|
|
$
|
478,406
|
|
|
|
478,406
|
|
|
Machinery and Equipment
|
|
|
2,154,822
|
|
|
|
2,154,822
|
|
|
|
|
|
2,633,228
|
|
|
|
2,633,228
|
|
|
Accumulated depreciation
|
|
|
(2,567,488
|
)
|
|
|
(2,507,495
|
)
|
|
Property & equipment, net
|
|
$
|
65,740
|
|
|
|
125,733
|
|
|
|
9.
|
DUE TO RELATED PARTIES
AND RELATED PARTY TRANSACTIONS
|
Transactions with
related parties not disclosed elsewhere in these financial statements consisted of the following:
Compensation:
During the three month periods
ended June 30, 2019 and 2018 respectively, the Company incurred $55,624 and $56,941 respectively, as compensation for all directors
and officers.
All related party transactions
involving provision of services or tangible assets were recorded at the exchange amount, which is the value established and agreed
to by the related parties and reflects arms’ length consideration payable for similar services or transfers.
Accrued liabilities
are summarized as follows:
|
|
|
June 30, 2019
|
|
|
March 31, 2019
|
|
|
Accrued employee benefit taxes and payroll
|
|
$
|
110,844
|
|
|
|
176,858
|
|
|
Accrued travel
|
|
|
5,663
|
|
|
|
5,619
|
|
|
Accrued audit and tax preparation fees
|
|
|
12,550
|
|
|
|
23,255
|
|
|
Reserve for warranty costs
|
|
|
5,663
|
|
|
|
5,619
|
|
|
Accrued consulting fees
|
|
|
194,386
|
|
|
|
179,669
|
|
|
Tax reserve
|
|
|
759
|
|
|
|
753
|
|
|
VAT to be paid
|
|
|
14,695
|
|
|
|
7,462
|
|
|
Other accrued expenses + lease liability
|
|
|
112,232
|
|
|
|
51,112
|
|
|
|
|
$
|
456,792
|
|
|
|
450,347
|
|
|
|
11.
|
EQUITY COMPENSATION
PLANS
|
As of June 30, 2019, the Company
had two equity compensation plans approved by its stockholders (1) the 2004 Incentive and Non-statutory Stock Option Plan (the
“2004 Plan”); and (2) the 2007 Equity Incentive Plan (the “2007 Plan”). The Company’s approved the
2004 Plan reserving 800,000 shares of common stock of the Company pursuant to an Information Statement on Schedule 14C filed with
the Commission on May 9, 2005. Finally, the Company’s stockholders approved the 2007 Plan reserving 1,000,000
shares of common stock of the Company pursuant to a Definitive Proxy Statement on Schedule 14A filed with the Commission on October
2, 2007.
In addition to the equity compensation
plans approved by the Company’s stockholders, the Company has previously issued options and warrants to individuals pursuant
to individual compensation plans not approved by our stockholders. These options and warrants have been issued in exchange
for services or goods received by the Company.
The following table provides
aggregate information as of June 30, 2019 with respect to all compensation plans (including individual compensation arrangements)
under which equity securities are authorized for issuance.
A summary of the Company’s
equity compensation plans approved and not approved by shareholders is as follows:
For the three month periods
ended June 30, 2019 and June 30, 2018 the Company has not recognized any stock based compensation expense in the consolidated statement
of operations. No stock options were granted or cancelled in the three month periods ended June 30, 2019 and June 30, 2018.
The Company’s only operating
segment consists of dental products and oral hygiene products sold by Remedent Inc., Condor North America LLC., Remedent N.V.,
Metrics in Balance N.V. and Biotech Dental Benelux N.V. Our operations are primarily in Europe and Asia and 100% of our sales for
the three months ended June 30, 2019 and 100.00% of our sales for the three months ended June 30, 2018 were generated from customers
outside of the United States.
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:
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.
As of June 30, 2019, right-of-use assets were $157,138
and lease liabilities were $157,138. During the three months ended June 30, 2019, the Company did not enter into any new lease
arrangements, and did not have any arrangements that had not yet commenced.
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:
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, 2019. When a determination is made to classify an asset or liability within Level 3, the determination is
based upon the significance of the unobservable inputs to the overall fair value measurement. The following table provides a reconciliation
of the beginning and ending balances of the item measured at fair value on a recurring basis in the table above that used significant
unobservable inputs (Level 3):