REMEDENT, INC. Forward Looking Statements
The discussion contained herein is for the three and nine months endedDecember 31, 2020 andDecember 31, 2019 . The following discussion should be read in conjunction with the Company's consolidated financial statements and the notes to the consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for the quarterly period endedDecember 31, 2020 . In addition to historical information, this section contains "forward-looking" statements, including statements regarding the growth of product lines, optimism regarding the business, expanding sales and other statements. Words such as expects, anticipates, intends, plans, believes, sees, estimates and variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks and uncertainties that are difficult to predict. Actual results could vary materially from the description contained herein due to many factors including continued market acceptance of our products. In addition, actual results could vary materially based on changes or slower growth in the oral care and cosmetic dentistry products market; the potential inability to realize expected benefits and synergies; domestic and international business and economic conditions; changes in the dental industry; unexpected difficulties in penetrating the oral care and cosmetic dentistry products market; changes in customer demand or ordering patterns; changes in the competitive environment including pricing pressures or technological changes; technological advances; shortages of manufacturing capacity; future production variables impacting excess inventory and other risk factors. Factors that could cause or contribute to any differences are discussed in "Risk Factors" and elsewhere in the Company's annual report on Form 10-K filed onJune 29, 2020 with theSecurities 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 endedDecember 31, 2020 . The information contained in this Quarterly Report on Form 10-Q for the quarterly period endedDecember 31, 2020 is not a complete description of the Company's business or the risks associated with an investment in the Company's common stock. Each reader should carefully review and consider the various disclosures made by the Company in this Quarterly Report on Form 10-Q and in the Company's other filings with theSecurities 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 inEurope . 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 inEurope ,Asia andthe United States . We distribute our products using both our own internal sales force and through the use of third party distributors. 18 Result of Operations
Comparative detail of results as a percentage of sales is as follows:
For the three months ended For the nine months ended
December 31, December 31,
2020 2019 2020 2019
NET SALES 100.00 % 100.00 % 100.00 % 100.00 %
COST OF SALES 38.06 % 36.08 % 35.06 % 29.41 %
GROSS PROFIT 61.94 % 63.92 % 64.94 % 70.59 %
OPERATING EXPENSES
Sales and marketing 13.47 % 36.20 % 9.46 % 36.26 %
General and administrative 41.64 % 68.27 % 42.46 % 62.39 %Depreciation and amortization 2.57 % 6.39 % 3.21 % 7.16 % TOTAL OPERATING EXPENSES 57.68 % 110.86 % 55.13 % 105.81 % INCOME (LOSS) FROM OPERATIONS 4.26 % (46.94 )% 9.81 % (35.22 )% Other income 25.61 % (14.72 )% 2.74 % (25.79 )% INCOME (LOSS) BEFORE INCOME TAXES 29.87 % (61.66 )% 12.55 % (61.00 )% Income taxes (0.71 )% (0.64 )% (0.27 )% (0.21 )% NET INCOME (LOSS) 29.16 % (62.30 )% 12.28 % (61.21 )% NET INCOME (LOSS) ATTRIBUTABLE TO NON-CONTROLLING INTEREST (1.17 )% (5.63 )% (0.95 )% 0.11 % NET INCOME (LOSS) ATTRIBUTABLE TO REMEDENT INC. COMMON SHAREHOLDERS 27.99 % (56.67 )% 11.33 % (61.33 )% Net Sales
Net sales increased by approximately 28.8% to$337,468 for the three months endedDecember 31, 2020 as compared to$262,077 for the three months endedDecember 31, 2019 . The increase in sales is primarily due to increased sales in our GlamSmile Division and Implant Division during the quarter endingDecember 31, 2020 . Net sales increased by approximately 7.9% to$878,519 for the nine months endedDecember 31, 2020 as compared to$814,111 for the nine months endedDecember 31, 2019 . Net sales increased in the nine months endedDecember 31, 2020 mainly because of increased sales in our GlamSmile Division. Cost of Sales
Cost of sales increased approximately 35.8% to
Cost of sales increased approximately 28.7% to$308,032 for the nine months endedDecember 31, 2020 as compared to$239,432 for the nine months endedDecember 31, 2019 . Cost of sales increased mainly because of increased sales in our GlamSmile division offset by reduced sales in our other divisions, mainly due to the impact of the coronavirus since the beginning of the current fiscal year startingApril 2020 . Gross Profit Our gross profit increased by$41,521 or 24.8% to$209,036 for the three months endedDecember 31, 2020 as compared to$167,515 for the three months endedDecember 31, 2019 due to increased sales in our GlamSmile and Implant Division as described above. Our gross profit as a percentage of sales decreased to 61.94% in the three months endedDecember 31, 2020 as compared to 63.92% for the three months endedDecember 31, 2019 . Our gross profit decreased by$4,192 or 0.7%, to$570,487 for the nine months endedDecember 31, 2020 as compared to$574,679 for the nine months endedDecember 31, 2019 primarily because of reduced sales in our Implant Division, known for its higher margins. These reduced sales are mainly due to the impact of the coronavirus during the first quarter of the current fiscal year, startingApril 2020 . 19 Operating Expenses Research and Development. Our research and development costs were nil for each of the three months endedDecember 31, 2020 and 2019 and for the nine months endedDecember 31, 2020 , and for the nine months endedDecember 31, 2019 . Our research and development expenses have decreased because of the finalization of our Software program the "Smile me Mirror". Sales and marketing costs. Our sales and marketing costs for the three months endedDecember 31, 2020 and 2019 were$45,464 and$94,867 respectively, representing a decrease of$49,403 or 52.1%. The decrease is largely due to decreased attendance at trade shows and reduced travelling due to our reduced active approach in the US market and in general due to the COVID-19 mandatory restrictions.
Our sales and marketing costs decreased by$212,092 or 71.9% to$83,073 for the nine months endedDecember 31, 2020 as compared to$295,165 for the nine months endedDecember 31, 2019 mainly because of our reduced advertising and marketing costs spent due to the COVID-19 mandatory restrictions and impact in general General and administrative costs. Our general and administrative costs for the three months endedDecember 31, 2020 and 2019 were$140,513 and$178,919 respectively, representing a decrease of$38,406 or 21.5%. The decrease in general and administrative costs is largely due to increased synergy between our internal divisions as a result of ongoing internal reorganization. Our general and administrative costs for the nine months endedDecember 31, 2020 and 2019 were$372,995 and$507,914 respectively, representing a decrease of$134,919 or 26.6%. The decrease in general and administration costs is largely due to increased synergy between our internal divisions as a result of ongoing internal reorganization and in general due to the COVID-19 mandatory restrictions.
Depreciation and amortization. Our depreciation and amortization decreased
Our depreciation and amortization was
Other income (expense). Our other income / (expense) was$86,414 for the three months endedDecember 31, 2020 as compared to$(38,583) for the three months endedDecember 31, 2019 , a decrease in expense of$124,997 . The decrease in other expense was primarily as a result of decreased equity losses and other expenses.
Our net other (expense) decreased by
Internal and External Sources of Liquidity
As ofDecember 31, 2020 , we had current assets of$699,535 compared to$681,064 atMarch 31, 2020 . This increase of$18,471 was primarily due to an increase in accounts receivable of$145,271 and an increase in inventories of$16,741 , offset by a decrease in cash of$31,338 and a decrease in prepaid expenses and other current assets of$112,203 . As ofDecember 31, 2020 , we had cash and cash equivalents of$83,296 . 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 ofGlamSmile Studios inEurope . We will continue to review our expected cash requirements, make all efforts to collect any aged receivables, and take appropriate cost reduction measures to ensure that we have sufficient working capital to fund our operations. In the event additional needs for cash arise, we may seek to raise additional funds from a combination of sources including issuance of debt or equity securities. Additional financing may not be available on terms favorable to us, or at all. Any additional financing activity could be dilutive to our current stockholders. If adequate funds are not available or are not available on acceptable terms, our ability to take advantage of unanticipated opportunities or respond to competitive pressures could be limited. Cash and Cash equivalents
Our balance sheet at
20
Operations
Net cash provided by operations was $184,107 for the nine months ended December
31, 2020 as compared to $35,093 the nine months ended December 31, 2019 . The
increase in net cash provided by operations for the nine months ended December
31, 2020 as compared to the nine months ended December 31, 2019 is primarily as
a result of decreased losses resulting from the Company's reduction in costs.
Investing activities
Net cash provided by (used by) investing activities totaled ($2,703 ) for the
three months ended December 31, 2020 , as compared to $nil for the three months
ended December 31, 2019 .
Financing activities
Net cash provided by financing activities totaled $nil for the three months
ended
During the nine months endedDecember 31, 2020 andDecember 31, 2019 , we recognized an increase / (decrease) in cash and cash equivalents of ($212,742 ) and ($83 ), respectively, from the effect of exchange rates between the Euro
and the US Dollar.
Off-Balance Sheet Arrangements
At
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