SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
(Mark
One)
x
QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the
Quarterly Period Ended December 31, 2008
¨
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
|
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86-0837251
|
|
(State
or Other Jurisdiction
Of
Incorporation or Organization)
|
(I.R.S.
Employer Identification
Number)
|
|
|
|
|
Xavier
De Cocklaan 42, 9831 Deurle, Belgium
|
N/A
|
|
(Address
of Principal Executive Offices)
|
(Zip
Code)
|
Registrant’s
telephone number, including area code
011 32 9
321 70 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 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” and “smaller
reporting company” in Rule 12b-3 of the Exchange Act. (Check
one):
|
Large
accelerated filer
|
¨
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Accelerated
filer
|
¨
|
|
|
|
|
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Non-accelerated
filer
|
¨
|
Smaller
reporting company
|
x
|
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(Do
not check if a smaller reporting company)
|
|
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act.
Yes
¨
No
x
As of
February 13, 2009, there were 19,995,969 outstanding shares of the registrant’s
common stock, includes 723,000 shares of treasury stock.
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Page Numbe
r
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1
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2
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3
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4
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5
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21
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29
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29
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30
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30
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30
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31
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31
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31
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31
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32
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REMEDENT,
INC. AND SUBSIDIARIES
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December 31, 2008
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March 31, 2008
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(unaudited)
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ASSETS
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CURRENT
ASSETS:
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Cash
and cash equivalents
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$
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2,569,888
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$
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1,728,281
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Accounts
receivable, net of allowance for doubtful accounts of $28,310 at
December 31, 2008 and $32,181 at March 31, 2008
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2,612,651
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1,902,920
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Inventories,
net
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1,936,603
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1,360,709
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Prepaid
expense
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1,582,502
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970,173
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Total
current assets
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8,701,644
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5,962,083
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PROPERTY
AND EQUIPMENT, NET
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917,261
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692,609
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OTHER
ASSETS
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675,000
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675,000
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Patents,
net
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251,125
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115,827
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$
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10,545,030
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$
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7,445,519
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TOTAL
ASSETS
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LIABILITIES
AND STOCKHOLDERS’ EQUITY
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CURRENT
LIABILITIES:
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Current
portion, long term debt
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$
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20,072
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$
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58,583
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Line
of Credit
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907,558
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779,718
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Accounts
payable
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1,444,087
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2,002,439
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Accrued
liabilities
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1,043,501
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781,737
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Income
taxes payable
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10,989
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15,121
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Total
current liabilities
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3,426,207
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3,637,598
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LONG
TERM DEBT
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178,392
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94,754
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MINORITY
INTEREST
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782,497
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—
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STOCKHOLDERS’
EQUITY:
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Preferred
Stock $0.001 par value (10,000,000 shares authorized, none issued and
outstanding)
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—
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—
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Common
stock, $0.001 par value;
(50,000,000
shares authorized, 19,995,969 and 18,637,803 shares issued and outstanding
at December 31, 2008 and March 31, 2008 respectively
)
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19,996
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18,638
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Additional
paid-in capital
|
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23,700,875
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17,929,992
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Accumulated
other comprehensive income (loss) (foreign currency translation
adjustment)
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(595,224
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)
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27,650
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Accumulated
deficit
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(16,136,263
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)
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(14,263,113
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)
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Treasury
stock, at cost; 723,000 and 0 shares at December 31, 2008 and March 31,
2008 respectively
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(831,450
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)
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—
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Total
stockholders’ equity
|
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6,157,934
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3,713,167
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TOTAL
LIABILITIES AND STOCKHOLDERS’ EQUITY
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$
|
10,545,030
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$
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7,445,519
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COMMITMENTS
(Note 22)
The
accompanying notes are an integral part of these consolidated financial
statements.
REMEDENT, INC. AND
SUBSIDIARIES
(unaudited)
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|
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For
the three months ended
December
31,
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For
the nine months ended
December
31,
|
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2008
|
|
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2007
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2008
|
|
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2007
|
|
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|
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|
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Net
sales
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$
|
4,842,628
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$
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2,132,950
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$
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11,249,186
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$
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4,453,899
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Cost
of sales
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2,909,531
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1,271,430
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4,964,408
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2,623,506
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Gross
profit
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1,933,097
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861,520
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6,284,778
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1,830,393
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Operating
Expenses
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Research
and development
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52,006
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172,108
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224,379
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247,665
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Sales
and marketing
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912,422
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611,144
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2,423,928
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996,937
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General
and administrative
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1,268,500
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1,087,313
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3,672,536
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2,891,165
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Depreciation
and amortization
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167,399
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80,157
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441,771
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215,941
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TOTAL
OPERATING EXPENSES
|
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2,400,327
|
|
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1,950,722
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6,762,614
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4,351,708
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INCOME
(LOSS) FROM OPERATIONS
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(467,230
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)
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(1,089,202
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)
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(477,836
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)
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(2,521,315
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)
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OTHER
INCOME (EXPENSES)
|
|
|
|
|
|
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|
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|
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Warrants
issued pursuant to Distribution Agreement
|
|
|
—
|
|
|
|
—
|
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|
(4,323,207
|
)
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|
|
—
|
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Gain
on disposition of OTC (Note 3)
|
|
|
2,830,953
|
|
|
|
—
|
|
|
|
2,830,953
|
|
|
|
—
|
|
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Interest
expense
|
|
|
(168,659
|
)
|
|
|
(16,588
|
)
|
|
|
(250,175
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)
|
|
|
(71,802
|
)
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Interest
income
|
|
|
289,646
|
|
|
|
9,040
|
|
|
|
347,113
|
|
|
|
100,665
|
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TOTAL
OTHER INCOME (EXPENSES)
|
|
|
2,951,940
|
|
|
|
(7,548
|
)
|
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(1,395,316
|
)
|
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28,863
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|
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NET
INCOME (LOSS)
|
|
$
|
2,484,710
|
|
|
$
|
(1,096,750
|
)
|
|
$
|
(1,873,152
|
)
|
|
$
|
(2,492,452
|
)
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INCOME
(LOSS) PER SHARE
|
|
|
|
|
|
|
|
|
|
|
|
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Basic
and fully diluted
|
|
$
|
0.13
|
|
|
$
|
(0.06
|
)
|
|
$
|
(0.10
|
)
|
|
$
|
(0.14
|
)
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|
WEIGHTED
AVERAGE SHARES OUTSTANDING
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Basic
and fully diluted
|
|
|
19,332,760
|
|
|
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18,602,115
|
|
|
|
19,045,368
|
|
|
|
17,557,700
|
|
The
accompanying notes are an integral part of these consolidated financial
statements.
REMEDENT,
INC. AND SUBSIDIARIES
|
|
|
For
the three months ended
December 31,
|
|
|
For
the nine months ended
December 31,
|
|
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
Net
Income (Loss)
|
|
$
|
2,484,710
|
|
|
$
|
(1,096,750
|
)
|
|
$
|
(1,873,152
|
)
|
|
$
|
(2,492,452
|
)
|
|
OTHER
COMPREHENSIVE INCOME (LOSS):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
currency translation adjustment
|
|
|
(409,200
|
)
|
|
|
58,949
|
|
|
|
(622,874
|
)
|
|
|
10,345
|
|
|
Comprehensive
income (loss)
|
|
$
|
2,075,510
|
|
|
$
|
(1,037,801
|
)
|
|
$
|
(2,496,026
|
)
|
|
$
|
(2,482,107
|
)
|
REMEDENT, INC. AND
SUBSIDIARIES
(unaudited)
|
|
|
For
the nine months ended
December 31,
|
|
|
|
|
2008
|
|
|
2007
|
|
|
CASH
FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(1,873,152
|
)
|
|
$
|
(2,492,452
|
)
|
|
Adjustments
to reconcile net income (loss) to net cash used by operating
activities
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
441,771
|
|
|
|
215,941
|
|
|
Inventory
reserve
|
|
|
394
|
|
|
|
—
|
|
|
Allowance
for doubtful accounts
|
|
|
(3,871
|
)
|
|
|
(13,417
|
)
|
|
Stock
based compensation
|
|
|
265,275
|
|
|
|
101,271
|
|
|
Gain
on disposition of OTC
|
|
|
(2,830,953
|
)
|
|
|
—
|
|
|
Warrants
issued pursuant to Distribution Agreement
|
|
|
4,323,207
|
|
|
|
—
|
|
|
Changes
in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
(709,731
|
)
|
|
|
137,273
|
|
|
Inventories
|
|
|
(575,894
|
)
|
|
|
4,043
|
|
|
Prepaid
expenses
|
|
|
(612,329
|
)
|
|
|
(352,607
|
)
|
|
Accounts
payable
|
|
|
(558,352
|
)
|
|
|
203,075
|
|
|
Accrued
liabilities
|
|
|
261,764
|
|
|
|
(35,253
|
)
|
|
Income
taxes payable
|
|
|
(4,132
|
)
|
|
|
81,859
|
|
|
Net
cash used by operating activities
|
|
|
(1,876,003
|
)
|
|
|
(2,150,267
|
)
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term
investments
|
|
|
—
|
|
|
|
(675,000
|
)
|
|
Purchases
of patents
|
|
|
—
|
|
|
|
(11,998
|
)
|
|
Purchases
of equipment
|
|
|
(455,694
|
)
|
|
|
(165,195
|
)
|
|
Net
cash used by investing activities
|
|
|
(455,694
|
)
|
|
|
(852,193
|
)
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Net
proceeds from issuance of stock
|
|
|
—
|
|
|
|
5,792,893
|
|
|
Proceeds
on sale of minority interest in Sylphar NV
|
|
|
2,782,000
|
|
|
|
—
|
|
|
Proceeds
from (principal payments on) capital lease note payable
|
|
|
45,127
|
|
|
|
(31,684
|
)
|
|
Proceeds
from (repayments of) line of credit
|
|
|
127,840
|
|
|
|
(716,932
|
)
|
|
Net
cash provided by financing activities
|
|
|
2,954,967
|
|
|
|
5,044,277
|
|
|
NET
(DECREASE) INCREASE IN CASH
|
|
|
623,270
|
|
|
|
2,041,817
|
|
|
Effect
of exchange rate changes on cash and cash equivalents
|
|
|
218,337
|
|
|
|
(152,245
|
)
|
|
CASH
AND CASH EQUIVALENTS, BEGINNING
|
|
|
1,728,281
|
|
|
|
126,966
|
|
|
CASH
AND CASH EQUIVALENTS, ENDING
|
|
$
|
2,569,888
|
|
|
$
|
2,016,538
|
|
|
Supplemental
Information:
|
|
|
|
|
|
|
|
|
|
Interest
paid
|
|
$
|
98,493
|
|
|
$
|
14,418
|
|
|
Income
taxes paid
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Schedule
of non-cash financing and investing activities:
|
|
|
|
|
|
|
|
|
|
Restricted
shares returned to treasury in exchange for 50% of OTC
Business
|
|
$
|
831,450
|
|
|
$
|
—
|
|
|
Warrants
issued pursuant to Distribution Agreement
|
|
$
|
4,323,207
|
|
|
$
|
—
|
|
|
Shares
issued for purchase of GlamTech
|
|
$
|
625,000
|
|
|
$
|
—
|
|
|
Shares
issued as prepayment for goods
|
|
$
|
250,000
|
|
|
$
|
—
|
|
|
Shares
issued for license
|
|
$
|
319,483
|
|
|
$
|
—
|
|
The
accompanying notes are an integral part of these consolidated financial
statements.
(unaudited)
|
1.
|
BACKGROUND AND
ORGANIZATION
|
The
Company is a manufacturer and distributor of cosmetic dentistry products,
including a full line of professional dental and retail “Over-The-Counter” tooth
whitening products which are distributed in Europe, Asia and the
United States. The Company manufactures many of its products in its facility in
Deurle, Belgium as well as outsourced manufacturing in China. The Company
distributes its products using both its own internal sales force and through the
use of third party distributors.
On
December 11, 2008, the Company completed a restructuring in the form of a
management-led buyout of 50% of its OTC retail business. The buyout
was led by Mr. List, the Company’s former director and Chief Executive Officer,
with financing provided by Concordia Fund VC, a non-affiliated foreign
investment fund. Prior to the sale, the Board approved a
restructuring plan and strategy for transferring the Company’s OTC
business through a series of transactions involving subsidiary formations,
contributions of subsidiary(ies) interests and sales of stock interests through
subsidiary transactions, with particular emphasis focused on current OTC
business operations conducted through the Company’s subsidiaries, both
internationally and within the domestic U.S. (the “Plan”).
The total
consideration for the sale of OTC business is approximately €4,654,736, which
consists of (1) €1,000,000 in cash,
(2) €654,736 based on the exchange rate as of January 12,
2008 for the 723,000 restricted shares of the Company previously held by Mr.
List (valued at $1.15 per share for an aggregate value of $831,450),
and (3) €3,000,000 which is the estimated value of the ownership interest of 50
% of the shares of Remedent OTC held by the Company.
Pursuant
to the agreements described in Note 3, the sale was conducted through a series
of transactions which included the consolidation of all of the ownership
interest of the Company’s subsidiaries operating the OTC business into Remedent
OTC; a sale of 50% of Remedent OTC to Mr. List; the formation of
Sylphar Holding B.V., a Dutch holding company, followed by
a contribution of the OTC subsidiaries to Sylphar Holding by Remedent
OTC, and a subsequent investment by Concordia of €2,000,000. Although
Mr. List resigned as director and Chief Executive Officer of the Company and
Remedent N.V., Mr. List remains involved in the key management of the OTC
business.
As a
result of the series of transactions related to the sale, the Company now owns
50% of Remedent OTC with Mr. List owning the other 50%, and maintains control of
Remedent OTC as a result of its current control of the Board. In
addition, the Company now owns a partial interest in Sylphar Holding through
Remedent OTC’s 75% ownership interest in Sylphar Holding, which interest is
subject to dilution of up to 24% upon exercise of a call option held by
Concordia Fund VC, who currently owns the remaining 25%. As a
result of the sale, all of the OTC business previously operated by the Company
directly is now operated and held by Sylphar Holding.
|
2.
|
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
|
Organization
and Principles of Consolidation
The
accompanying consolidated financial statements include the accounts
of:
(a)
Pre-OTC Restructuring
Remedent,
Inc., a Nevada corporation, and its subsidiaries, Remedent N.V. (incorporated in
Belgium) located in Deurle, Belgium, Remedent Professional, Inc. (incorporated
in California and a subsidiary of Remedent Professional Holdings, Inc.),
Remedent Asia Pte. Ltd. ( a wholly-owned subsidiary formed under the laws of
Singapore), Sylphar N.V. (incorporated in Belgium as a wholly owned subsidiary
on September 24, 2007), and Glamtech-USA, Inc. (a Delaware corporation acquired
effective August 24, 2008).
(b)
Post-OTC Restructuring
Remedent,
Inc., a Nevada corporation, and its subsidiaries, Remedent N.V. (incorporated in
Belgium and located in Deurle, Belgium, Remedent Professional, Inc.
(incorporated in California), Glamtech-USA, Inc. (a Delaware corporation
acquired effective August 24, 2008), Remedent OTC B.V. a Dutch Holding company,
and a 50% owned subsidiary, Sylphar Holding B.V. (a Dutch holding company and a
37.50% owned and controlled subsidiary by Remedent, Inc.), Sylphar N.V. ( a
wholly-owned subsidiary of Sylphar Holding B.V.), Sylphar USA,
Inc. (Nevada corporation and wholly-owned subsidiary
of Sylphar Holding B.V.), and Sylphar Asia Pte ( an Asian company,
and wholly-owned subsidiary of Sylphar Holding B.V.).
Remedent,
Inc. is a holding company with headquarters in Deurle, Belgium. Remedent
Professional, Inc. and Remedent Professional Holdings, Inc. have been dormant
since inception. The rebranded Sylphar Asia Pte Ltd (former Remedent Asia Pte.
Ltd.) commenced operations as of July 2005.
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 its 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 nine months ended December 31,
2008, are not necessarily indicative of the results that may be expected for the
year ended March 31, 2009. Accordingly, your attention is directed to
footnote disclosures found in the Annual Report on Form 10-KSB for the year
ended March 31, 2008, and particularly to Note 2, which includes a summary
of significant accounting policies.
Basis of
Presentation
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 and are presented in US dollars unless otherwise
noted. These principles contemplate the realization of assets and
liquidation of liabilities in the normal course of business. These financial
statements do not include any adjustments that might be necessary if the Company
is unable to continue as a going concern.
Revenue
Recognition
The
Company recognizes revenue from product sales when persuasive evidence of a sale
exists: that is, a product is shipped under an agreement with a customer; risk
of loss and title has passed to the customer; the fee is fixed or determinable;
and collection of the resulting receivable is reasonably assured. Sales
allowances are estimated based upon historical experience of sales
returns.
Pervasiveness
of Estimates
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires the Company to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. On an on-going basis, the Company evaluates estimates and
judgments, including those related to revenue, bad debts, inventories, fixed
assets, intangible assets, stock based compensation, income taxes, and
contingencies. Estimates are based on historical experience and on various other
assumptions that the Company believes reasonable in the circumstances. The
results form the basis for making judgments about the carrying values of assets
and liabilities that are not readily apparent from other sources. Actual results
could differ from those estimates.
Accounting
Policy Change and
New Accounting
Pronouncements
(a)
Adoption of New Accounting Policy
In
February 2007, the Financial Accounting Standards Board ("FASB") issued SFAS No.
159, "
The Fair Value Option
for Financial Assets and Financial Liabilities
". This Statement permits
entities to choose to measure many financial assets and financial liabilities at
fair value. Unrealized gains and losses on items for which the fair value option
has been elected will be reported in earnings. SFAS No. 159 is effective for
fiscal years beginning after November 15, 2007.
The
Company adopted the provisions of SFAS No. 159 on April 1, 2008. The adoption of
SFAS No. 159 did not have a material impact on the Company’s financial
reporting.
(b)
New Accounting Pronouncements
In March
2008, the FASB issued SFAS No. 161, “
Disclosures about Derivative
Instruments and Hedging
Activities”
. This statement changes the disclosure requirements for
derivative instruments and hedging activities. Entities are required to provide
enhanced disclosures about (a) how and why an entity uses derivative
instruments, (b) how derivative instruments and related hedged items are
accounted for under SFAS No. 133, Accounting for Derivative Instruments and
Hedging Activities, and its related interpretations, and (c) how derivative
instruments and related hedged items affect an entity’s financial position,
financial performance, and cash flows. This statement is effective for financial
statements issued for fiscal years and interim periods beginning after November
15, 2008 (the Company’s fiscal year beginning April 1, 2009), with early
application encouraged. This statement encourages, but does not require,
comparative disclosures for earlier periods at initial adoption. Management is
in the process of evaluating the impact the future application of this
pronouncement may have on its consolidated financial statements.
In
December 2007, the FASB issued SFAS No. 141 (Revised 2007) “
Business
Combinations
”. SFAS 141
(Revised) establishes principles and requirements for how the acquirer of a
business recognizes and measures in its financial statements the identifiable
assets acquired, the liabilities assumed, and any noncontrolling interest in the
acquiree. The statement also provides guidance for recognizing and measuring the
goodwill acquired in the business combination and determines what information to
disclose to enable users of the financial statements to evaluate the nature and
financial effects of the business combination. The guidance will become
effective for the Company’s fiscal year beginning April 1, 2009. Management is
in the process of evaluating the impact SFAS 141 (Revised) will have on the
Company’s financial statements upon adoption.
In
February 2008, the FASB released FSP No. FAS 157-2. FSP No. FAS 157-2 defers the
effective date of SFAS 157, "
Fair Value Measurements
", for
one year for nonfinancial assets and nonfinancial liabilities that are
recognized or disclosed at fair value in the financial statements on a
nonrecurring basis. It does not defer recognition and disclosure requirements
for financial assets and financial liabilities, or for nonfinancial assets and
nonfinancial liabilities that are remeasured at least annually.
In
December 2007, the FASB issued SFAS No. 160 “
Noncontrolling Interests in
Consolidated Financial
Statements — an amendment of ARB No. 51
”. SFAS 160 establishes accounting
and reporting standards for the noncontrolling interest in a subsidiary and for
the deconsolidation of a subsidiary. The guidance will become effective for the
Company’s fiscal year beginning April 1, 2009. Management is in the process of
evaluating the impact SFAS 160 will have on the Company’s financial statements
upon adoption.
In April
2008, the FASB issued FSP No. 142-3,
Determination of the Useful Life of
Intangible Assets
(“FSP FAS 142-3”), which amends the factors that should
be considered in developing renewal or extension assumptions used to determine
the useful life of a recognized intangible asset under FASB Statement No. 142,
Goodwill and Other Intangible Assets (“SFAS 142”). The intent of FSP FAS 142-3
is to improve the consistency between the useful life of a recognized intangible
asset under SFAS 142 and the period of expected cash flows used to measure the
fair value of the asset under SFAS 141(R) and other U.S. generally accepted
accounting principles. FSP FAS 142-3 requires an entity to disclose information
for a recognized intangible asset that enables users of the financial statements
to assess the extent to which the expected future cash flows associated with the
asset are affected by the entity’s intent and/or ability to renew or extend the
arrangement. FSP FAS 142-3 is effective for financial statements issued for
fiscal years beginning after December 15, 2008, and interim periods within those
fiscal years. The Company does not expect the adoption of FSP FAS 142-3 to have
a material impact on the Company’s financial position or results of
operations.
In May
2008, the FASB issued FASB Staff Position No. APB 14-1,
Accounting for Convertible Debt
Instruments That May Be Settled in Cash Upon Conversion (Including Partial Cash
Settlement)
(“FSP No. APB 14-1”). FSP No. APB 14-1 applies to convertible
debt instruments that, by their stated terms, may be settled in cash (or other
assets) upon conversion, including partial cash settlement, unless the embedded
conversion option is required to be separately accounted for as a derivative
under SFAS 133. FSP No. APB 14-1 specifies that issuers of convertible debt
instruments should separately account for the liability and equity components in
a manner that will reflect the entity’s nonconvertible debt borrowing rate when
interest cost is recognized in subsequent periods. FSP No. APB 14-1 is effective
for financial statements issued for fiscal years beginning after December 15,
2008, and interim periods within those fiscal years. FSP No. APB 14-1 will be
applied retrospectively to all periods presented. The cumulative effect of the
change in accounting principle on periods prior to those presented will be
recognized as of the beginning of the first period presented. An offsetting
adjustment will be made to the opening balance of retained earnings for that
period, presented separately. The adoption of APB 14-1 is not
expected to have a material impact upon the Company’s financial position or
results of operations.
|
3.
|
RESTRUCTURING
OF OTC BUSINESS
|
To
effectuate the restructuring Plan relating to the management led buyout of the
Over-The-Counter (“OTC”) business the Company entered into the following series
of related agreements:
On
December 10, 2008, the Company entered into a Contribution Agreement with
Sylphar USA, Inc., a newly incorporated Nevada corporation and wholly owned
subsidiary of the Company (“Sylphar USA”), pursuant to which the Company made a
capital contribution of certain assets and liabilities relating to the OTC
business which was valued at $460,568 to Sylphar USA in exchange for 460,568
shares of common stock, par value $1.00, of Sylphar USA.
On
December 10, 2008, the Company entered into a Share Purchase Agreement with
Remedent, N.V., a wholly owned subsidiary of the Company formed under the laws
of Belgium (“Remedent N.V.”), pursuant to which the Company purchased a 99%
ownership interest in Sylphar, N.V. a subsidiary of the Company formed under the
laws of Belgium, from Remedent N.V. As a result of the Sylphar Purchase
Agreement, Sylphar N.V. became a wholly owned subsidiary of the Company. As
consideration for the 99 shares (“Sylphar Shares”), the Company agreed to pay
Remedent N.V. €1,881,000, which was based on the valuations provided
by an independent assessor, by executing an unsecured non-interest bearing
promissory note (the “Promissory Note”) on behalf of Remedent N.V. for the
principal amount of €1,000,160 (the “Debt”) and having the remainder
balance of €880,840 reflected on the existing intercompany account between
Remedent N.V. and the Company.
Then
pursuant to a Deed of Contribution, the Company transferred all of the Company’s
ownership interest in its OTC operating subsidiaries, consisting of Sylphar USA,
Remedent Asia PTE, Sylphar N.V. (“OTC Subsidiaries”), into Remedent OTC B.V., a
Dutch holding company and a wholly owned subsidiary of the Company (“Remedent
OTC”) in exchange for €1,000,160 and an allocation and administer the balance of
the aggregate value of the OTC Subsidiaries and the consideration as share
premium in the books of the Company.
Subsequent
to the contribution of the OTC Subsidiaries to Remedent OTC, the Company sold
fifty percent (50%) of its interest in Remedent OTC to Robin List, a former
Chief Executive Officer, President and Director of the Company, in exchange for
723,000 restricted shares of common stock of the Company held by Mr. List
(“Exchanged Shares”), pursuant to a Share Purchase Agreement on December 10,
2008. The Exchanged Shares were returned to treasury. The Exchanged Shares
were valued at $1.15 per share, based on the average of the 52 week high and low
bid, for an aggregate value of $831,450. As a result, Mr. List and the Company
equally own 50% of Remedent OTC with the Company currently controlling Remedent
OTC through its board representations pursuant to the terms of a certain Voting
Agreement entered into by the Company and Mr. List concurrently with the Share
Purchase Agreement. The Voting Agreement provides that, the Company will
initially have 2 board representation and Mr. List will have 1 board
representation. However upon the occurrence of a “Triggering Event”
(as defined in the Voting Agreement), the Company will have 1 board
representation and Mr. List will have 2 board representations.
On
December 11, 2008, the Company entered into an Investment and Shareholders’
Agreement with Remedent OTC, Concordia Fund V.C., a non-affiliated Dutch private
equity fund (“Concordia”), Mr. List, Sylphar Holding, B.V., a Dutch holding
company and wholly owned subsidiary of Remedent OTC (“Sylphar Holding”) and the
OTC Subsidiaries pursuant to which Concordia agreed to purchase shares of
Sylphar Holding from Remedent OTC representing a 12.5% ownership interest in
Sylphar Holding for €1,000,000 and invest an additional €1,000,000 in Sylphar
Holding for an additional 12.5% ownership interest in Sylphar Holding,
representing an aggregate ownership interest of 25% in Sylphar Holding.
Furthermore, Concordia was granted a call option exercisable from January 1,
2009 until December 31, 2010, unless otherwise extended to September 30, 2011
pursuant to the terms of such agreement, to purchase an additional 24% ownership
interest in Sylphar Holding for €2,000,000 or any pro rata portion
thereof. It was further agreed upon that the €1,000,000 received from
Concordia would be used to pay off the Debt. The shares of Sylphar
Holding are subject to certain drag along rights in the event there is an offer
to purchase such shares.
Pro
Forma Summary Financial Data
The
following pro forma summary financial data presents our pro forma condensed
combined financial information as if we had completed the disposition of 50% of
the OTC business at the beginning of each period shown. This pro forma financial
information should be read in conjunction with the Company’s financial
statements as at March 31, 2008 and December 31, 2008.
|
|
|
For
the three months ended
December
31,
|
|
|
For
the nine months ended
December
31,
|
|
|
|
|
Pro
Forma
(unaudited)
|
|
|
Pro
Forma
(unaudited)
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales
|
|
$
|
4,842,628
|
|
|
$
|
2,132,950
|
|
|
$
|
11,249,186
|
|
|
$
|
4,453,899
|
|
|
Cost
of sales
|
|
|
2,909,531
|
|
|
|
1,271,430
|
|
|
|
4,964,408
|
|
|
|
2,623,506
|
|
|
Gross
profit
|
|
|
1,933,097
|
|
|
|
861,520
|
|
|
|
6,284,778
|
|
|
|
1,803,393
|
|
|
Operating
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research
and development
|
|
|
52,006
|
|
|
|
172,108
|
|
|
|
224,379
|
|
|
|
247,665
|
|
|
Sales
and marketing
|
|
|
912,422
|
|
|
|
611,144
|
|
|
|
2,423,928
|
|
|
|
996,937
|
|
|
General
and administrative
|
|
|
1,268,500
|
|
|
|
1,087,313
|
|
|
|
3,672,536
|
|
|
|
2,891,165
|
|
|
Depreciation
and amortization
|
|
|
167,399
|
|
|
|
80,157
|
|
|
|
441,771
|
|
|
|
215,941
|
|
|
TOTAL
OPERATING EXPENSES
|
|
|
2,400,327
|
|
|
|
1,950,722
|
|
|
|
6,762,614
|
|
|
|
4,351,708
|
|
|
INCOME
(LOSS) FROM OPERATIONS
|
|
|
(467,230
|
)
|
|
|
(1,089,202
|
)
|
|
|
(477,836
|
)
|
|
|
(2,521,315
|
)
|
|
OTHER
INCOME (EXPENSES)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants
issued pursuant to Distribution Agreement
|
|
|
—
|
|
|
|
—
|
|
|
|
(4,323,207
|
)
|
|
|
—
|
|
|
Other
income – Sale of asset
|
|
|
2,830,953
|
|
|
|
—
|
|
|
|
2,830,943
|
|
|
|
—
|
|
|
Interest
expense
|
|
|
(168,659
|
)
|
|
|
(16,588
|
)
|
|
|
(250,175
|
)
|
|
|
(71,802
|
)
|
|
Interest
income
|
|
|
289,646
|
|
|
|
9,040
|
|
|
|
347,113
|
|
|
|
100,665
|
|
|
TOTAL
OTHER INCOME (EXPENSES)
|
|
|
2,951,940
|
|
|
|
(7,548
|
)
|
|
|
(1,395,316
|
)
|
|
|
28,863
|
|
|
NET
LOSS
|
|
|
2,484,710
|
|
|
|
(1,096,750
|
)
|
|
|
(1,873,152
|
)
|
|
|
(2,492,452
|
)
|
|
Allocated
to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Remedent
Inc.
|
|
|
2,562,338
|
|
|
|
(1,125,107
|
)
|
|
|
(1,672,711
|
)
|
|
|
(1,993,580
|
)
|
|
Minority
interest
|
|
|
(77,628
|
)
|
|
|
28,357
|
|
|
|
(200,441
|
)
|
|
|
(498,873
|
)
|
|
INCOME
(LOSS) PER SHARE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allocated
to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Remedent
Inc.
|
|
$
|
0.13
|
|
|
$
|
(0.06
|
)
|
|
$
|
(0.09
|
)
|
|
$
|
(0.11
|
)
|
|
Minority
interest
|
|
$
|
(0.00
|
)
|
|
$
|
0.00
|
|
|
$
|
(0.01
|
)
|
|
$
|
(0.03
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED
AVERAGE SHARES OUTSTANDING
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and fully diluted
|
|
|
19,332,760
|
|
|
|
18,602,115
|
|
|
|
19,045,368
|
|
|
|
17,557,700
|
|
|
4.
|
DISTRIBUTION
AGREEMENT
|
On
August 24, 2008, the Company entered into a distribution agreement (the “
Distribution Agreement”) with Den-Mat Holdings, LLC, a Delaware limited
liability company (“Den-Mat”). Under the terms of the Distribution
Agreement, the Company:
|
(a)
|
appointed
Den-Mat to be the sole and exclusive distributor to market, license and
sell certain products relating to the Company’s GlamSmile tray technology,
including, but not limited to, its GlamSmile veneer products and other
related veneer products (the “Products”), throughout the world, with the
exception of Australia, Austria, Belgium, Brazil, France (including
Dom-Tom), Germany, Italy, New Zealand, Oman, Poland, Qatar, Saudi Arabia,
Singapore, Switzerland, Thailand, and United Arab Emirates (collectively
the “Excluded Markets”) and the China Market;
and
|
|
(b)
|
granted
Den-Mat a sole and exclusive, transferable and sublicensable right and
license to use all intellectual property related to the Products
throughout specified territory, as well as certain rights in the excluded
markets and rights in future intellectual property. Such rights include
the right to manufacture the Products upon payment of royalties for the
initial three year guaranty period (“Guaranty Period”). Upon the
expiration of the Guaranty Period, as detailed in the Distribution
Agreement, the sole and exclusive distribution rights and licenses granted
under the Agreement automatically become non-exclusive distribution rights
and licenses, and all rights to use the “GlamSmile” name and mark shall
cease unless the Guaranty Period is extended by Den-Mat under the terms of
the Distribution Agreement. Upon termination of the Distribution
Agreement, all of Den-Mat’s rights in the Company’s intellectual property,
including the right to manufacture the Products shall
cease.
|
As
consideration for such distribution, licensing and manufacturing rights, Den-Mat
agreed to pay the Company: (i) an initial payment of $2,425,000 (received
in the period ended September 30, 2008); (ii) a payment of $250,000
for each of the first three contract periods in the initial Guaranty Period,
subject to certain terms and conditions; (iii) certain periodic payments as
additional paid-up royalties in the aggregate amount of $500,000; (iv) a
payment of $1,000,000 promptly after Den-Mat manufactures a limited quantity of
Products at a facility owned or leased by Den-Mat; (v) a payment of
$1,000,000 promptly upon completion of certain training of Den-Mat’s personnel;
(vi) a payment of $ 1,000,000 upon the first to occur of
(a)February 1, 2009 of (b) the date thirty (30) days after den-Mat
sells GlamSmile Products incorporating twenty thousand (20,000) Units/Teeth to
customers regardless of whether Den-Mat has manufactured such Units/Teeth in a
Den-Mat facility or has purchased such Units/Teeth from Remedent;
(vii) certain milestone payments; and (viii) certain royalty payments.
Further, as consideration for Den-Mat’s obligations under the Distribution
Agreement, the Company agreed to, among other things: (i) issue to Den-Mat
or an entity to be designated by Den-Mat, warrants to purchase up to 3,378,379
shares of the Corporation’s common stock, par value $0.001 per share (the
“Warrant Shares”) at an exercise price of $1.48 per share, exercisable for a
period of five years (the “Den-Mat Warrant”) (issued in the period ended
September 30, 2008); (ii) execute and deliver to Den-Mat a
registration rights agreement covering the registration of the Warrant Shares
(the “Registration Rights Agreement”); and (iii) cause its Chairman of the
Board, Guy De Vreese, to execute and deliver to Den-Mat a non-competition
agreement.
|
5.
|
ACQUISITION
OF GLAMTECH-USA, INC.
|
On August
24, 2008, as part of the consideration for the rescission and release under the
Rescission Agreement entered into between the Company, our wholly owned
subsidiary, Remedent N.V., and Glamtech-USA, Inc., a Delaware corporation
(“Glamtech”), the Company entered into a Stock Purchase Agreement (the “Stock
Purchase Agreement”) with each of the two Glamtech shareholders (the “Holders”),
for the purchase of 100% of Glamtech’s outstanding common stock in exchange for,
among certain other consideration: at the election of the Holders at
any time within 6 months, to receive either, but not both, (a) an aggregate of
1,000,000 restricted shares of the registrant’s common stock (the “Shares”), or
(b) five (5) year warrants valued by the registrant’s Board of Directors at
$1.48 per warrant, to purchase an aggregate of 1,247,216 restricted shares of
the registrant’s common stock at a exercise price of $1.30 per share (the
“Warrant Shares”). Further, pursuant to the terms of the Stock
Purchase Agreement, the Company agreed to register the Shares or the Warrant
Shares, as applicable, on a registration statement with the U.S. Securities and
Exchange Commission no later than thirty (30) calendar days following the date
of the Holder’s election, but no sooner than seventy-five (75) days from the
effective date of the Stock Purchase Agreement. All of the securities
issued to the two Glamtech shareholders are exempt from the registration
requirements of the Securities Act of 1933, as amended, pursuant to Sections
4(2), and Rule 506 of Regulation D of the Securities and Exchange Commission and
from various similar state exemptions.
During
the quarter ended December 31, 2008, both Holders elected to receive a total of
1,000,000 restricted shares. The shares were issued prior to December
31, 2008 and were recorded at a fair value of $625,000.
On June
25, 2007, the Company completed its private offering of 5,600,000 shares of its
common stock, par value $.001 per share at a purchase price of $1.25 per share
(the “Shares”) and warrants to purchase 4,200,000 shares of common stock, par
value $.001 per share, at an exercise price of $1.55 per share (the “Warrants”)
to certain institutional and accredited investors, for an aggregate purchase
price of $7,000,000 (the “Offering”).
Under the
terms of the Offering, the Warrants are exercisable for a period of five years
and entitle the holder to purchase one share of restricted common stock (the
“Warrant Shares”) for $1.55 per Warrant Share. The Company also has the right to
redeem the Warrants for $0.001 per Warrant Share covered by the Warrants if the
Shares trade on the OTC Electronic Bulletin Board or similar market above $5.25
per share for 20 consecutive trading days following the initial effective date
of the registration statement covering the resale of the Shares and Warrant
Shares, based upon the closing bid price for the Shares for each trading day
(the “Redemption Right”). Once the Redemption Right vests, the Company has the
right, but not the obligation, to redeem the Warrants for $0.001 per Warrant
Share covered by the Warrants upon 30 days written notice to the holders of the
Warrants.
Under the
terms of the Purchase Agreement and the Registration Rights Agreement, the
Company was required to prepare and file with the Securities and Exchange
Commission (the “Commission”) a registration statement covering the resale of
the Shares and the Warrant Shares. The Company agreed to prepare and file a
registration statement covering the resale no later than 30 days after the
Closing. The registration statement became effective October 23,
2007.
The
Company engaged Roth Capital Partners, LLC, as its exclusive agent to offer the
Shares and Warrants (the “Placement Agent”). The Placement Agent is entitled to
a fee equal to ten percent (10%) of the gross proceeds derived from the
Offering, of which the Placement Agent may, at its option, receive up to 2% of
its 10% fee in securities issued in the Offering. Further, the Company agreed to
pay the Placement Agent 5% of the exercise price of the Warrants promptly
following the Company’s receipt thereof. In addition, the Company agreed to
reimburse the Placement Agent for its out-of-pocket expenses related to the
Offering, including an up front payment of $25,000 to cover such expenses, of
which any unused amount would be netted against the Placement Agent’s 10%
fee.
As of
December 31, 2008, the total costs of this private placement were $1,235,223,
comprising of: commissions of $762,505; out-of-pocket costs of $25,000;
professional fees of $375,738 and direct travel costs of $71,980; and have been
recorded against share capital as a cost of financing.
The
Offering was conducted in reliance upon an exemption from registration under the
Securities Act of 1933, as amended (the “Securities Act”), including, without
limitation, that under Section 506 of Regulation D promulgated under the
Securities Act. The Units were offered and sold by the Company to accredited
investors in reliance on Section 506 of Regulation D of the Securities
Act.
Financial
Instruments — Financial instruments, which potentially subject the Company to
concentrations of credit risk, consist principally of trade accounts
receivable.
Concentrations
of credit risk with respect to trade receivables are normally limited due to the
number of customers comprising the Company’s customer base and their dispersion
across different geographic areas. At December 31, 2008 two customers accounted
for 69% of the Company’s trade 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 nine month period ended December 31, 2008,
the Company had five suppliers who accounted for a total of 29% of gross
purchases. For the nine month period ended December 31, 2007, the
Company had five suppliers who accounted for a total of 55% of gross
purchases.
Revenues
— For the nine months ended December 31, 2008 the Company had five customers
that accounted for 55% of total revenues. Out of these five
customers, one accounted for 60% and another accounted for 11% of total
revenues. For the nine month period ended December 31, 2007 the Company had five
customers that accounted for 62% of total revenues.
|
8.
|
ACCOUNTS RECEIVABLE AND
ALLOWANCE FOR DOUBTFUL
ACCOUNTS
|
A summary
of accounts receivable and allowance for doubtful accounts as of December 31,
2008 and March 31, 2008 is as follows:
|
|
|
December 31, 2008
|
|
|
March 31, 2008
|
|
|
Accounts
receivable, gross
|
|
$
|
2,640,961
|
|
|
$
|
1,935,101
|
|
|
Less:
allowance for doubtful accounts
|
|
|
(28,310
|
)
|
|
|
(32,181
|
)
|
|
Accounts
receivable, net
|
|
$
|
2,612,651
|
|
|
$
|
1,902,920
|
|
Inventories
are stated at the lower of cost (weighted average) or market. Inventory costs
include material, labor and manufacturing overhead. Individual components of
inventory are listed below as follows:
|
|
|
December 31, 2008
|
|
|
March 31, 2008
|
|
|
Raw
materials
|
|
$
|
22,251
|
|
|
$
|
29,788
|
|
|
Components
|
|
|
1,105,195
|
|
|
|
970,101
|
|
|
Finished
goods
|
|
|
823,067
|
|
|
|
376,632
|
|
|
|
|
|
1,950,513
|
|
|
|
1,376,521
|
|
|
Less:
reserve for obsolescence
|
|
|
(13,910
|
)
|
|
|
(15,812
|
)
|
|
Net
inventory
|
|
$
|
1,936,603
|
|
|
$
|
1,360,709
|
|
Prepaid
expenses are summarized as follows:
|
|
|
December
31, 2008
|
|
|
March
31, 2008
|
|
|
Prepaid
materials and components
|
|
$
|
1,406,386
|
|
|
$
|
588,639
|
|
|
Prepaid
Belgium income taxes
|
|
|
—
|
|
|
|
79,060
|
|
|
Prepaid
consulting
|
|
|
11,367
|
|
|
|
62,237
|
|
|
VAT
payments in excess of VAT receipts
|
|
|
95,177
|
|
|
|
117,467
|
|
|
Royalties
|
|
|
34,775
|
|
|
|
39,530
|
|
|
Prepaid
trade show expenses
|
|
|
4,341
|
|
|
|
25,276
|
|
|
Prepaid
rent
|
|
|
831
|
|
|
|
10,812
|
|
|
Other
|
|
|
32,625
|
|
|
|
47,152
|
|
|
|
|
$
|
1,582,502
|
|
|
$
|
970,173
|
|
|
11.
|
PROPERTY AND
EQUIPMENT
|
Property
and equipment are summarized as follows:
|
|
|
December
31, 2008
|
|
|
March
31, 2008
|
|
|
Furniture
and Fixtures
|
|
$
|
216,741
|
|
|
$
|
182,079
|
|
|
Machinery
and Equipment
|
|
|
1,288,283
|
|
|
|
801,251
|
|
|
Tooling
|
|
|
188,450
|
|
|
|
254,450
|
|
|
|
|
|
1,693,474
|
|
|
|
1,237,780
|
|
|
Accumulated
depreciation
|
|
|
(776,213
|
)
|
|
|
(545,171
|
)
|
|
Property
& equipment, net
|
|
$
|
917,261
|
|
|
$
|
692,609
|
|
|
12.
|
LONG
TERM INVESTMENTS AND ADVANCES
|
Innovative Medical & Dental
Solutions, LLC (“IMDS, LLC”)
Effective
July 15, 2007 the Company entered into a Limited Liability Company Merger and
Equity Reallocation Agreement (the “Participation Agreement”) through its
subsidiary, Remedent N.V. Pursuant to the terms of the Participation Agreement,
the Company has acquired a 10% equity interest in IMDS, LLC in consideration for
$300,000 which was converted against IMDS receivables.
The
agreement stipulates certain exclusive world wide rights to certain tooth
whitening technology, and the right to purchase at standard cost certain
whitening lights and accessories and to sell such lights in markets not served
by the LLC. The terms of the Participation Agreement also provide that Remedent
N.V. has the first right to purchase additional equity. Parties to the
Participation Agreement include two officers of IMDS, LLC, and an individual who
is both an officer and director of Remedent Inc., and certain unrelated
parties.
IMDS, LLC
is registered with the Secretary of the State of Florida as a limited liability
company and with the Secretary of the State of California as a foreign
corporation authorized to operate in California. IMDS, LLC is merging with White
Science World Wide, LLC, a limited liability company organized under the laws of
the State of Georgia. The merged companies are operating as a single entity as
IMDS, LLC, a Florida limited liability company.
Soca Networks Singapore
(“Soca”)
Pursuant
to the terms of a letter of intent dated December 17, 2007, the Company has
agreed to purchase 20% of Soca for a total purchase price of $750,000. Half of
the purchase price has been advanced $375,000 to Soca as a down payment, pending
completion of the agreement terms. The balance of $375,000 is to be paid through
the issuance of 220,588 common shares of the Company’s common stock. The final
agreement is currently being negotiated and management expects to close the
agreement, and issue the 220,588 common shares within the first half of calendar
year 2009.
Teeth
Whitening Patents
In
October 2004, the Company acquired from the inventor the exclusive, perpetual
license to two issued United States patents which are applicable to several
teeth whitening products currently being marketed by the Company. Pursuant to
the terms of the license agreement, the Company was granted an exclusive,
worldwide, perpetual license to manufacture, market, distribute and sell the
products contemplated by the patents subject to the payment of $65,000 as
reimbursement to the patent holder for legal and other costs associated with
obtaining the patents, which was paid in October 2004, and royalties for each
unit sold subject to an annual minimum royalty of $100,000 per year. The Company
is amortizing the initial cost of $65,000 for these patents over a ten year
period and accordingly has recorded $27,625 of accumulated amortization for this
patent as of December 31, 2008. The Company accrues this royalty when it becomes
payable to inventory therefore no provision has been made for this obligation as
of December 31, 2008 (2007-Nil).
Universal
Applicator Patent
In
September 2004, the Company entered into an agreement with Lident N.V.
(“Lident”), a company controlled by Mr. De Vreese, the Company’s Chairman, to
obtain an option, exercisable through December 31, 2005, to license an
international patent (excluding the US) and worldwide manufacturing and
distribution rights for a potential new product which Lident had been assigned
certain rights by the inventors of the products, who are unrelated parties,
prior to Mr. De Vreese association with the Company. The patent is an Italian
patent which relates to a single use universal applicator for dental pastes,
salves, creams, powders, liquids and other substances where manual application
could be relevant. The Company has filed to have the patent approved throughout
Europe. The agreement required the Company to advance to the inventors through
Lident a fully refundable deposit of €100,000 subject to the Company’s due
diligence regarding the enforceability of the patent and marketability of the
product, which, if viable, would be assigned to the Company for additional
consideration to the inventors of €100,000 and an ongoing royalty from sales of
products related to the patent equal to 3% of net sales and, if not viable, the
deposit would be repaid in full by Lident. The consideration the Company had
agreed to pay Lident upon the exercise of the option is the same as the
consideration Lident is obligated to pay the original inventors. Consequently,
Lident would not have profited from the exercise of the option. Furthermore, at
a meeting of the Company’s Board of Directors on July 13, 2005, the Board
accepted Lident’s offer to facilitate an assignment of Lident’s intellectual
property rights to the technology to the Company in exchange for the
reimbursement of Lident’s actual costs incurred relating to the intellectual
property. Consequently, when the Company exercises the option, all future
payments, other than the reimbursement of costs would be paid directly to the
original inventors and not to Lident.
On
December 12, 2005, the Company exercised the option and the Company and the
patent holder agreed to revise the assignment agreement whereby the Company
agreed to pay €50,000 additional compensation in the form of prepaid royalties
instead of the €100,000 previously agreed, €25,000 of which had been paid by the
Company in September 2005 and the remaining €25,000 to be paid upon the
Company’s first shipment of a product covered by the patent. As of December 31,
2008 the Company has not yet received the final product. The patent is being
amortized over five (5) years and accordingly, the Company has recorded $73,297
of accumulated amortization for this patent as of December 31,
2008.
On
October 8, 2004, our wholly owned subsidiary, Remedent N.V., obtained a
mixed-use line of credit facility with Fortis Bank, a Belgian bank, for
€1,070,000 (the “Facility”). The Facility was secured by a first lien on the
assets of Remedent N.V. The purpose of the Facility is to provide working
capital to grow our business and to finance certain accounts receivable as
necessary. Since opening the Facility in 2004, Remedent N.V. and Fortis Bank
have subsequently amended the Facility several times to increase or decrease the
line of credit. On May 3, 2005 the Facility was amended to decrease the line of
credit to €1,050,000. On March 13, 2006 the Facility was amended to increase the
mixed-use line of credit to €2,300,000, consisting of a €1,800,000 credit line
based on the eligible accounts receivable and a €500,000 general line of credit.
The latest amendment to the Facility, dated January 3, 2008, amended and
decreased the mixed-use line of credit to €2,050,000, to be used by Remedent
N.V. and/or Sylphar N.V. Each line of credit carries its own interest rates and
fees as provided in the Facility. Remedent N.V. and Sylphar N.V. are currently
only utilizing two lines of credit, advances based on account receivables and
the straight loan. As of December 31, 2008 and March 31, 2008, Remedent N.V. and
Sylphar N.V. had in aggregate, $907,558 and $779,718 in advances outstanding,
respectively, under this mixed-use line of credit facility.
On June
15, 2005, the Company entered into two five year capital lease agreements for
manufacturing equipment totaling €70,296 (US $84,650). On October 24, 2006, the
Company entered into another five year capital lease agreement for additional
manufacturing equipment totaling €123,367 (US $148,559). On May 15, 2008, the
Company entered into a third capital lease agreement over a three year
period for additional manufacturing equipment totaling €63,395 (US $
98,516).The leases require monthly payments of principal and interest at 7.43%
of €1,172 (US$1,630,52 at December 31, 2008) for the first two leases and 9.72%
of €2,056 (US$2,859,90 at December 31, 2008) and provide for buyouts at the
conclusion of the five year term of €2,820 (US$3,923) or 4.0% of original value
for the first two contracts and €4,933 (US $6,861) or 4.0 % of the original
value for the second contract. The third lease contract requires monthly
payments of principal and interest at 9.40% of €1,761 (US $ 2,449,55 at December
31, 2008) and provides for buyout at the conclusion of the three year term of
€633,95 (US $ 881,82) or 1% of the original value of this contract.
The net
book value as of December 31, 2008 and March 31, 2008 of the equipment subject
to the foregoing leases are $198,464 and $251,854, respectively.
|
16.
|
DUE TO RELATED PARTIES AND
RELATED PARTY TRANSACTIONS
|
Borrowings
from employees and entities controlled by officers of the Company are,
unsecured, non-interest bearing, and due on demand.
Transactions
with related parties that are not otherwise disclosed elsewhere in these
financial statements consisted of the following:
Compensation:
During
the nine month periods ended December 31, 2008 and 2007 respectively, the
Company incurred $514,836 and $483,304 respectively, as compensation for all
directors and officers.
Sales
Transactions:
One of
the Company’s directors owns a minority interest in a client company, IMDS Inc.,
to which goods were sold during the nine months ended December 31, 2008 and 2007
totaling $87,463 and $29,524 respectively. Accounts receivable with this
customer as at December 31, 2008 and March 31, 2008 totaled $33,601 and $80,523
respectively.
Other
Transactions:
In
connection with the restructuring of the OTC business, the Company sold fifty
percent (50%) of its interest in Remedent OTC to Robin List, a former Chief
Executive Officer, President and Director of the Company, in exchange for
723,000 restricted shares of common stock of the Company held by Mr. List
(“Exchanged Shares”), pursuant to a Share Purchase Agreement on December 10,
2008. The Exchanged Shares were returned to treasury. The
Exchanged Shares were valued at $1.15 per share, based on the average of the 52
week high and low bid, for an aggregate value of $831,450. As a
result, Mr. List and the Company equally own 50% of Remedent OTC with the
Company currently controlling Remedent OTC through its board representations
pursuant to the terms of a certain Voting Agreement entered into by the Company
and Mr. List concurrently with the Share Purchase Agreement. The
Voting Agreement provided that, the Company would initially have 2 board
representation and Mr. List would will have 1 board
representation. However upon the occurrence of a “Triggering Event”
(as defined in the Voting Agreement), the Company would have 1 board
representation and Mr. List would have 2 board representations.
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 reflecting arms length consideration payable for
similar services or transfers.
Accrued
liabilities are summarized as follows:
|
|
|
December
31, 2008
|
|
|
March
31, 2008
|
|
|
Accrued
employee benefit taxes and payroll
|
|
$
|
183,150
|
|
|
$
|
178,645
|
|
|
Accrued
Travel
|
|
|
13,220
|
|
|
|
17,667
|
|
|
Advances
and deposits
|
|
|
97,827
|
|
|
|
212,736
|
|
|
Commissions
|
|
|
268,687
|
|
|
|
130,875
|
|
|
Accrued
audit and tax preparation fees
|
|
|
2,607
|
|
|
|
4,000
|
|
|
Reserve
for warranty costs
|
|
|
20,865
|
|
|
|
23,718
|
|
|
Accrued
interest
|
|
|
1,459
|
|
|
|
984
|
|
|
Accrued
consulting fees
|
|
|
56,728
|
|
|
|
35,204
|
|
|
Accrued
VAT
|
|
|
15,219
|
|
|
|
—
|
|
|
Other
accrued expenses
|
|
|
383,739
|
|
|
|
177,908
|
|
|
|
|
$
|
1,043,501
|
|
|
$
|
781,737
|
|
On July
11, 2008, the Company issued 358,166 shares of restricted common stock as
partial payment of products and certain exclusivity rights pursuant
to the terms of the Distribution Agreement dated as of June 30, 2008,
which was filed on a Form 8-K on July 7, 2008. The value of the
shares issued was $569,483. The securities issued are exempt from the
registration requirements of the Securities Act of 1933, as amended, pursuant to
Sections 4(2), and Rule 506 of Regulation D of the Securities and Exchange
Commission and from various similar state exemptions.
On each
of November 7, 2008 and December 23, 2008 the Company issued 500,000 common
shares to each of the previous Glamtech shareholders. The 1,000,000
shares were valued at $625,000. (See Note 5.)
On
December 8, 2008 a total of 723,000 restricted common shares were returned to
treasury pursuant to the Company’s sale of 50% of its OTC
business. (See Note 3.)
|
19.
|
EQUITY COMPENSATION
PLANS
|
The Board
of Directors and stockholders approved the Nonstatutory Stock Option Plan (the
“2001 Plan”) and adopted it on May 29, 2001. The Company has reserved 250,000
shares of its common stock for issuance to the directors, employees and
consultants under the Plan. The Plan is administered by the Board of Directors.
Vesting terms of the options range from immediately to five years.
Pursuant
to an Information Statement on Schedule 14C mailed on May 9, 2005 to all
stockholders of record as of the close of business on February 1, 2005 and
became effective June 3, 2005, the Company authorized the implementation of a
2004 Incentive and Nonstatutory Stock Option Plan (“2004 Plan”) reserving
800,000 shares of common stock for issuance to employees, directors and
consultants of the Company or any subsidiaries. This plan became effective as of
June 3, 2005 after the Company had completed a one for twenty reverse
split.
On August
17, 2007, pursuant to the terms of the Company’s 2004 Plan, the Company granted
to an employee 100,000 options to purchase the Company’s common stock at a price
of $1.50 per share. These options will vest over the next 3 years and are
exercisable for a period of 5 years. The Company valued the foregoing options
using the Black Scholes option pricing model using the following assumptions: no
dividend yield; expected volatility rate of 115%; risk free interest rate of
4.75% and an average life of 5 years resulting in a value of $1.24 per option
granted. The value of these options will be recognized on a straight-line basis
over the next three years and accordingly a value of $28,780 has been recorded
in the year ended March 31, 2008.
On
September 21, 2007 the Company granted to employees and directors a total of
570,000 options to purchase the Company’s common stock at a price of $1.75 per
share. These options will vest over the next 3 years and are exercisable for a
period of 10 years. The Company valued the foregoing options using the Black
Scholes option pricing model using the following assumptions: no dividend yield;
expected volatility rate of 115%; risk free interest rate of 4.75% and an
average life of 7 years resulting in a value of $1.47 per option granted. The
value of these options will be recognized on a straight-line basis over the next
three years and accordingly a value of $265,275 has been recorded in the nine
months ended December 31, 2008 (2007 - $101,271).
A summary
of the option activity for the nine months ended December 31, 2008 pursuant to
the terms of the plans is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding
|
|
|
Weighted
Average
|
|
|
Outstanding
|
|
|
Weighted
Average
|
|
|
Outstanding
|
|
|
Weighted
Average
|
|
|
Options
outstanding , March 31, 2008
|
|
|
222,500
|
|
|
$
|
1.29
|
|
|
|
730,666
|
|
|
$
|
4.46
|
|
|
|
150,000
|
|
|
$
|
1.75
|
|
|
Granted
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Exercised
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Cancelled
or expired
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Options
outstanding, December 31, 2008
|
|
|
222,500
|
|
|
$
|
1.29
|
|
|
|
730,666
|
|
|
$
|
4.46
|
|
|
|
150,000
|
|
|
$
|
1.75
|
|
|
Options
exercisable December 31, 2008
|
|
|
222,500
|
|
|
$
|
1.29
|
|
|
|
383,999
|
|
|
$
|
4.46
|
|
|
|
—
|
|
|
|
—
|
|
|
Exercise
price range
|
|
$
|
1.00 to $4.00
|
|
|
|
|
|
|
$
|
1.50 to $4.00
|
|
|
|
|
|
|
$
|
1.75
|
|
|
|
|
|
|
Weighted
average remaining life
|
|
3.28 years
|
|
|
|
|
|
|
6.23 years
|
|
|
|
|
|
|
8.73 years
|
|
|
|
|
|
|
Shares
available for future issuance
|
|
|
27,500
|
|
|
|
|
|
|
|
69,334
|
|
|
|
|
|
|
|
N/A
|
|
|
|
|
|
A summary
of the Company’s equity compensation plans approved and not approved by
shareholders is as follows:
|
|
|
Number
of
securities
to be
issued
upon
exercise
of
outstanding
options,
warrants
and
right
|
|
|
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
|
|
|
1,103,166
|
|
|
$
|
1.93
|
|
|
|
96,834
|
|
|
Equity
Compensation Plans not approved by security holders
|
|
|
297,298
|
|
|
$
|
1.50
|
|
|
NA
|
|
|
|
|
|
1,400,464
|
|
|
$
|
1.84
|
|
|
|
96,834
|
|
Prior to
January 1, 2006, the Company accounted for employee stock-based compensation
under the recognition and measurement principles of Accounting Principles Board
Opinion (“APB”) No. 25, “Accounting for Stock Issued to Employees,” and related
Interpretations, as permitted by SFAS No. 123, “Accounting for Stock-Based
Compensation”. Under the recognition principles of APB No. 25, compensation
expense related to restricted stock and performance units was recognized in the
financial statements. However, APB No. 25 generally did not require the
recognition of compensation expense for stock options because the exercise price
of these instruments was generally equal to the fair value of the underlying
common stock on the date of grant, and the related number of shares granted were
fixed at that point in time.
Effective
January 1, 2006, the Company adopted the fair value recognition provisions of
SFAS No. 123(R), “Share-Based Payment”. In addition to recognizing compensation
expense related to restricted stock and performance units, SFAS No. 123(R) also
requires recognition of compensation expense related to the estimated fair value
of stock options. The Company adopted SFAS No. 123(R) using the
modified-prospective-transition method. Under that transition method,
compensation expense recognized subsequent to adoption includes: (a)
compensation cost for all share-based payments granted prior to, but not yet
vested as of January 1, 2006, based on the values estimated in accordance with
the original provisions of SFAS No. 123, and (b) compensation cost for all
share-based payments granted subsequent to January 1, 2006, based on the
grant-date fair values estimated in accordance with the provisions of SFAS No.
123(R). Consistent with the modified-prospective-transition method, the
Company’s results of operations for prior periods have not been adjusted to
reflect the adoption of FAS 123(R).
|
20.
|
COMMON STOCK WARRANTS AND OTHER
OPTIONS
|
As of
December 31, 2008, the Company has 10,638,405 warrants outstanding to purchase
the Company’s common stock that were not granted under shareholder approved
equity compensation plans at prices ranging between $1.20 and $3.00 per share
with expiration dates between August 2007 and August 2013 as
follows:
|
|
|
Outstanding
Warrants
|
|
|
Weighted
Average
Exercise
Price
|
|
|
Warrants
and options outstanding , March 31, 2008
|
|
|
7,260,026
|
|
|
$
|
1.67
|
|
|
Granted
|
|
|
3,378,379
|
|
|
|
1.48
|
|
|
Exercised
|
|
|
—
|
|
|
|
—
|
|
|
Cancelled
or expired
|
|
|
—
|
|
|
|
—
|
|
|
Warrants
exercisable December 31, 2008
|
|
|
10,638,405
|
|
|
$
|
1.58
|
|
|
Exercise
price range
|
|
$
|
1.20 to $3.00
|
|
|
|
|
|
|
Weighted
average remaining life
|
|
3.29 Years
|
|
|
|
|
|
The
Company valued the warrants granted in the period at $4,323,207, using the Black
Scholes option pricing model using the following assumptions: no dividend yield;
expected volatility rate of 131%; risk free interest rate of 3.07% and an
average life of 5 years resulting in a value of $1.28 per option
granted.
The
Company’s only operating segment consists of dental products and oral hygiene
products. Since the Company only has one segment, no further segment
information is presented.
Customers
Outside of the United States
|
|
|
December 31, 2008
|
|
|
December 31, 2007
|
|
|
U.S.
sales
|
|
$
|
7,045,496
|
|
|
$
|
316,208
|
|
|
Foreign
sales
|
|
|
4,203,690
|
|
|
|
4,137,691
|
|
|
|
|
$
|
11,249,186
|
|
|
$
|
4,453,899
|
|
Real
Estate Lease
The
Company leases its 26,915 square feet office and warehouse facility in Deurle,
Belgium from an unrelated party pursuant to a nine year lease commencing
December 20, 2001 at a base rent of $7,018 per month ($9,756 per month at
December 31, 2008). The minimum aggregate rent to be paid over the remaining
lease term based upon the conversion rate for the €at December 31, 2008 is
$316,314.
Minimum
monthly lease payments for real estate, and all other leased equipment for the
next three years are as follows based upon the conversion rate for the (Euro) at
December 31, 2008.
|
March
31, 2009
|
|
$
|
211,655
|
|
|
March
31, 2010
|
|
|
67,607
|
|
|
March
31, 2011
|
|
|
37,052
|
|
|
Total:
|
|
$
|
316,314
|
|
Factoring
Agreement
On April
24, 2008, the Company entered into a Factoring Agreement (“Agreement”) with
First Community Financial, a division of Pacific Western Bank (“First
Community”) whereby First Community may purchase, from time to time, on a
limited recourse basis such of the Company’s accounts now existing or hereafter
created and arising out of the sale of goods or service by the Company. The
factoring credit facility limit is $1,000,000 and amounts factored are subject
to an interest rate of prime plus 2%. Security for the factoring credit facility
is a first charge over all the assets of the Company. The Agreement shall remain
in effect until October 16, 2008 and may be renewed for successive nine month
periods. At October 16, 2008 the Company decided not to renew the
Factoring Agreement.
OEM
Agreement
On June
30, 2008, the Company entered into an OEM Agreement (“Agreement”) with SensAble
Technologies, Inc., a corporation under the laws of Delaware (“SensAble”)
whereby the Company intends to integrate SensAble products and technology into
the Company’s system. The Agreement provides the Company with the exclusive
right to distribute certain SensAble products throughout the world for a period
of twelve months from the date of the Agreement. The Company has the option and
right to extend the initial twelve month exclusivity period for another twelve
months. The term of the Agreement will be for two years and began on June 30,
2008.
Forward Looking
Statements
The
discussion contained herein is for the three months ended December 31, 2008 and
2007. The following discussion should be read in conjunction with the Company’s
condensed consolidated financial statements and the notes to the condensed
consolidated financial statements included elsewhere in this Quarterly Report on
Form 10-Q for the quarterly period ended December 31, 2008. 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-KSB filed on
July 15, 2008 with the Securities and Exchange
Commission. Except as required by applicable law or regulation, the
Company undertakes no obligation to revise or update any forward-looking
statements contained in this Quarterly Report on Form 10-Q for the quarterly
period ended December 31, 2008. The information contained in this Quarterly
Report on Form 10-Q for the quarterly period ended December 31, 2008 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
design, develop, manufacture and distribute cosmetic dentistry
products. Leveraging our knowledge of regulatory requirements
regarding dental products and management’s experience in the needs of the
professional dental community, we have developed a line of professional veneers
as well as a family of teeth whitening products for both professional and
“Over-The-Counter” (“OTC”) use, that are distributed in Europe, Asia and the
United States. We manufacture many of our products in our facility in Deurle,
Belgium as well as outsourced manufacturing in China. We distribute our products
using both our own internal sales force and through the use of third party
distributors. As a result of this approach, in just four years we
have established dealers in 35 countries encompassing, Europe, Asia, Latin
America, the Pacific Rim and the Middle East.
In the
fall of 2006, we launched a proprietary veneer technology product line called
GlamSmile™. GlamSmile veneers are ultra thin claddings made from a
mixture of a hybrid composite and porcelain materials which are attached to the
front of the patient’s teeth. Because GlamSmile veneers are so thin,
the dentist does not need to remove healthy tooth structure leaving the
patient’s healthy tooth structure intact, which results in several important
benefits: (i) no local anesthesia is required to prepare the teeth; (ii) reduced
(if any) tooth sensitivity post-procedure; and (iii) the process is
reversible. In addition, in March 31, 2006, a variation of our
MetaTray® product named iWhite® was introduced to our global retail distribution
network. We introduced MetaTray in August 2005, our next generation
of products targeted for the professional dentist market. MetaTray is
a completely self-contained whitening system that can be administered by
dentists.
As a
result of the recent restructuring of the Company’s OTC business, the Company
intends to focus solely on its full line of professional dental products for the
professional market and its Glamsmile veneer product lines and continue to share
an ownership interest in the OTC business.
For the
quarter ending December 31, 2008, 96.48% of our revenue has been generated by
our Belgian subsidiaries (Remedent N.V. and Sylphar N.V.); 1.15% by our U.S.
entities and 2.37% by our Asian subsidiary.
Den-Mat
Transaction
As
previously disclosed on Form 10-Q for period ended September 30, 2008 filed with
the Securities and Exchange Commission on November 19, 2008, on
August 24, 2008, we entered into a Distribution, License and Manufacturing
Agreement with our wholly owned subsidiary, Remedent N.V., and Den-Mat Holdings,
LLC, a Delaware limited liability company (“Den-Mat”), whereby we appointed
Den-Mat to be the sole and exclusive distributor to market, license and sell
certain products relating to our GlamSmile tray technology, including, but not
limited to, our GlamSmile veneer products and other related veneer products (the
“Products”), throughout the world, with the exception of Australia, Austria,
Belgium, Brazil, France (including Dom-Tom), Germany, Italy, New Zealand, Oman,
Poland, Qatar, Saudi Arabia, Singapore, Switzerland, Thailand, and United Arab
Emirates (collectively the “Excluded Markets”) and the China
Market.
Further,
as a condition to the Den-Mat transaction, on August 24, 2008, we entered into a
Rescission Agreement with Glamtech-USA, Inc., a Delaware corporation
(“Glamtech”). We had previously granted Glamtech the exclusive right
to distribute our GlamSmile veneer products in the United States and Canada
pursuant to an Exclusive Distribution Agreement, dated April 10, 2008, and in
the United Kingdom pursuant to an Exclusive Distribution Agreement dated May
2008. Concurrently, we entered into a Stock Purchase Agreement (the
“Stock Purchase Agreement”) with each of the two Glamtech shareholders (the
“Holders”), for the purchase of all of Glamtech’s outstanding common stock in
exchange for: (i) at the election of the Holders at any time within 6 months, to
receive either, but not both, (a) an aggregate of one million (1,000,000)
restricted shares of our common stock (the “Shares”), or (b) five (5) year
warrants (the “Warrants”), valued by our Board of Directors at $1.48 per
warrant, to purchase an aggregate of one million two hundred and forty-seven
thousand two hundred and sixteen (1,247,216) restricted shares of our common
stock at a exercise price of $1.30 per share (the “Warrant Shares”); and
together with either the Shares or the Warrants, (ii) certain limited royalty
payments allocated to sales in the United States, Canada, and the United Kingdom
of the Products during the term of our Distribution Agreement with Den-Mat. As
of December 31, 2008, the Shares were issued.
Restructuring
Plan
On December 11, 2008, we completed a
restructuring in the form of a management-led buyout of 50% of our
OTC retail business. The buyout was led by Mr. List, our former
director and Chief Executive Officer, with financing provided by Concordia Fund,
B.V, a non-affiliated foreign investment fund (“Concordia”). Prior to the sale,
our Board approved a restructuring plan and strategy for transferring our OTC
business through a series of transactions involving subsidiary formations,
contributions of subsidiary(ies) interests and sales of stock interests through
subsidiary transactions, with particular emphasis focused on current OTC
business operations conducted through our subsidiaries, both internationally and
within the domestic U.S. (the “Plan”).
To
effectuate the restructuring Plan we entered into the following series of
related agreements:
|
·
|
On
December 10, 2008, Remedent, Inc. entered into a Contribution Agreement
with Sylphar USA, Inc., a newly incorporated Nevada corporation and wholly
owned subsidiary of the Remedent, Inc. (“Sylphar USA”), pursuant to which
Remedent, Inc. made a capital contribution of certain assets and
liabilities relating to the OTC business which was valued at $460,568 to
Sylphar USA in exchange for 460,568 shares of common stock, par value
$1.00, of Sylphar USA.
|
|
·
|
On
December 10, 2008, Remedent, Inc. entered into a Share Purchase Agreement
with Remedent, N.V., a wholly owned subsidiary of Remedent, Inc. formed
under the laws of Belgium (“Remedent N.V.”), pursuant to which Remedent,
Inc. purchased a 99% ownership interest in Sylphar, N.V., a subsidiary of
Remedent, Inc. formed under the laws of Belgium, from Remedent
N.V. As a result of such Purchase Agreement, Sylphar N.V.
became a wholly owned subsidiary of Remedent, Inc. As consideration for
the 99 shares (“Sylphar Shares”), Remedent, Inc. agreed to pay Remedent
N.V. €1,881,000, which was based on the valuations provided by
an independent assessor, by executing an unsecured non-interest bearing
promissory note (the “Promissory Note”) on behalf of Remedent N.V. for the
principal amount of €1,000,160 (the “Debt”) and having the
remainder balance of €880,840 reflected on the existing intercompany
account between Remedent N.V. and Remedent, Inc. In December 2008, we
received €1,000,160 from Concordia which was used to repay the
Debt. As previously agreed upon by Remedent N.V. and
Remedent, Inc., the remaining balance of €880,840
is reflected on the existing intercompany account between
Remedent N.V. and Remedent, Inc.
|
|
·
|
Then
pursuant to a Deed of Contribution, Remedent, Inc. transferred all of its
ownership interest in its OTC operating subsidiaries, consisting of
Sylphar USA, Remedent Asia PTE, Sylphar N.V. (“OTC Subsidiaries”), into
Remedent OTC B.V., a Dutch holding company and a wholly owned subsidiary
of Remedent, Inc. (“Remedent OTC”) in exchange for €1,000,160 and an
allocation and administer the balance of the aggregate value of the OTC
Subsidiaries and the consideration as share premium in the books of
Remedent, Inc.
|
|
·
|
Subsequent
to the contribution of the OTC Subsidiaries to Remedent OTC, Remedent,
Inc. sold fifty percent (50%) of its interest in Remedent OTC to Robin
List, its former Chief Executive Officer, President and
Director, in exchange for 723,000 restricted shares of common stock of
Remedent, Inc. held by Mr. List (“Exchanged Shares”), pursuant to a Share
Purchase Agreement on December 10, 2008. The Exchanged Shares
were returned to treasury. The Exchanged Shares were valued at
$1.15 per share, based on the average of the 52 week high and low bid, for
an aggregate value of $831,450. As a result, Mr. List and
Remedent, Inc. equally own 50% of Remedent OTC with Remedent, Inc.
currently controlling Remedent OTC through its board representations
pursuant to the terms of a certain Voting Agreement entered into by
Remedent, Inc. and Mr. List concurrently with the Share Purchase
Agreement. The Voting Agreement provided that, Remedent, Inc.
would initially have 2 board representation and Mr. List would will have 1
board representation. However upon the occurrence of a
“Triggering Event” (as defined in the Voting Agreement), Remedent, Inc.
will have 1 board representation and Mr. List will have 2 board
representations.
|
|
·
|
On
December 11, 2008, Remedent, Inc. entered into an Investment and
Shareholders’ Agreement with Remedent OTC, Concordia Fund V.C., a
non-affiliated Dutch private equity fund (“Concordia”), Mr. List, Sylphar
Holding, B.V., a Dutch holding company and wholly owned subsidiary of
Remedent OTC (“Sylphar Holding”) and the OTC Subsidiaries pursuant to
which Concordia agreed to purchase shares of Sylphar Holding from Remedent
OTC representing a 12.5% ownership interest in Sylphar Holding for
€1,000,000 and invest an additional €1,000,000 in Sylphar Holding for an
additional 12.5% ownership interest in Sylphar Holding, representing an
aggregate ownership interest of 25% in Sylphar Holding. Furthermore,
Concordia was granted a call option exercisable from January 1, 2009 until
December 31, 2010, unless otherwise extended to September 30, 2011
pursuant to the terms of such agreement, to purchase an additional 24%
ownership interest in Sylphar Holding for €2,000,000 or any pro rata
portion thereof. The shares of Sylphar Holding are subject to
certain drag along rights in the event there is an offer to purchase such
shares. It was further agreed upon that the €1,000,000 received from
Concordia would be used to pay off the Debt. Such funds from
Concordia were received and used to pay off the Debt in December
2008.
|
We
believe that the total consideration for the sale of OTC business is
approximately €4,654,736, which consists of (1) €1,000,000 in cash,
(2) €654,736 based on the exchange rate as of January 12,
2008 for the 723,000 restricted previously held by Mr. List (valued at $1.15 per
share for an aggregate value of $831,450), and (3) €3,000,000 which
is the estimated value of the ownership interest of 50 % of the shares of
Remedent OTC held by us.
As a result of the series of
transactions related to the sale, we now own 50% of Remedent OTC with Mr. List
owning the other 50%, and maintain control of Remedent OTC as a result of our
current control of the board. In addition, we now
own an interest in Sylphar Holding through Remedent OTC’s
75% ownership interest in Sylphar Holding, which interest is subject to dilution
of up to 24% upon exercise of a call option held by Concordia, who currently
owns the remaining 25%. As a result of the sale, all of
the OTC business previously directly operated by us is now operated
and held by Sylphar Holding. Although Mr. List resigned as our
director and Chief Executive Officer, Mr. List remains involved in the key
management of the OTC business.
The sale is consistent with our
strategic plan to separate the OTC business from our professional business. With
the restructuring and additional cash received from the sale of the OTC
business, we intend to focus solely on our full line of professional dental
products for the professional market and our Glamsmile veneer product lines. In
addition, although we do not operate the OTC business directly, as a result of
our 50% ownership interest in Remedent OTC, we continue to share an
ownership interest in the OTC business.
Our
Critical Accounting Policies
The discussion and analysis of our
financial condition and results of operations is based upon our consolidated
financial statements, which have been prepared in accordance with accounting
principles generally accepted in the United States of America. The
preparation of these financial statements requires us to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenues and
expenses, and related disclosure of contingent assets and
liabilities. On an ongoing basis, we evaluate our estimates,
including those related to bad debts, intangible assets, income taxes, and
contingencies and litigation, among others. We base our estimates on
historical experience and on various other assumptions that we believe to be
reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ
from these estimates under different assumptions or conditions. We believe that
certain critical accounting policies affect our more significant judgments and
estimates used in the preparation of our consolidated financial statements:
revenue recognition, inventory valuation, research and development costs,
stock-based compensation, impairment of long-lived assets and conversion of
foreign currencies. These accounting policies are discussed in “ITEM
6 - MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION” contained in our
Annual Report on Form 10-KSB for the fiscal year ended March 31, 2008, as well
as in the notes to the March 31, 2008 consolidated financial statements and
the notes to the interim financial statements for subsequent
periods.
Results
of Operations
The
following table presents our consolidated statements of loss, as a percentage of
sales, for the periods indicated.
|
|
|
For
the three months ended
December
31,
|
|
|
For
the nine months ended
December
31,
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
SALES
|
|
|
100.00
|
%
|
|
|
100.00
|
%
|
|
|
100.00
|
%
|
|
|
100.00
|
%
|
|
COST
OF SALES
|
|
|
60.08
|
%
|
|
|
58.20
|
%
|
|
|
44.13
|
%
|
|
|
58.23
|
%
|
|
GROSS
PROFIT
|
|
|
39.92
|
%
|
|
|
41.80
|
%
|
|
|
55.87
|
%
|
|
|
41.77
|
%
|
|
OPERATING
EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research
and development
|
|
|
1.07
|
%
|
|
|
8.07
|
%
|
|
|
1.99
|
%
|
|
|
5.56
|
%
|
|
Sales
and marketing
|
|
|
18.84
|
%
|
|
|
28.65
|
%
|
|
|
21.55
|
%
|
|
|
22.38
|
%
|
|
General
and administrative
|
|
|
26.19
|
%
|
|
|
50.98
|
%
|
|
|
32.65
|
%
|
|
|
64.91
|
%
|
|
Depreciation
and amortization
|
|
|
3.46
|
%
|
|
|
3.76
|
%
|
|
|
3.93
|
%
|
|
|
4.85
|
%
|
|
TOTAL
OPERATING EXPENSES
|
|
|
49.57
|
%
|
|
|
91.46
|
%
|
|
|
60.12
|
%
|
|
|
97.70
|
%
|
|
LOSS
FROM OPERATIONS
|
|
|
(9.65
|
)%
|
|
|
(49.66
|
)%
|
|
|
(4.25
|
)%
|
|
|
(55.93
|
)%
|
|
Other
income (expense)
|
|
|
60.96
|
%
|
|
|
(0.35
|
)%
|
|
|
(12.40
|
)%
|
|
|
0.65
|
%
|
|
INCOME
(LOSS) BEFORE INCOME TAXES
|
|
|
51.31
|
%
|
|
|
(50.01
|
)%
|
|
|
(16.65
|
)%
|
|
|
(55.28
|
)%
|
|
NET
INCOME (LOSS)
|
|
|
51.31
|
%
|
|
|
(50.01
|
)%
|
|
|
(16.65
|
)%
|
|
|
(55.28
|
)%
|
Net
Sales
Net sales
increased for the three months ended December 31, 2008 by $2,709,678 or 127%, to
$4,842,628 as compared to $2,132,950 for the three months ended December 31,
2007. For the three months ended December 31, 2008, the increase in sales is
primarily due to the increased sales of the GlamSmile Product
Group.
For the nine months ended December 31,
2008, sales increased by $6,795,287 or 152.6% to $11,249,186 as
compared to $4,453,899 for the nine months ended December 31, 2007 primarily for
the reasons discussed above for the three month period.
Cost
of Sales
Cost of
sales increased for the three months ended December 31, 2008 by $1,638,101, or
128.8% to $2,909,531 as compared to $1,271,430 for the three months ended
December 31, 2007. However cost of sales, as a percentage of net sales, was
approximately 60% in each of the three months ended December 31, 2007 and
December 31, 2008. Cost of sales has increased because of increased sales of
higher margin products and improved cost efficiencies.
We have
re-organized our production process and have increased our in-house
manufacturing resulting in lower costs than our previously outsourced third
party manufacturing. We continue to closely monitor and look for new strategies
to optimize and improve our current processes in order to decrease our
costs.
For the
nine months ended December 31, 2008, cost of sales increased by $2,340,902 or
89.2% from $2,623,506 for the nine months ended December 31, 2007 to $4,964,408
for the nine months ended December 31, 2008. This increase is directly
associated with increased sales. However, cost of sales as a
percentage of net sales has decreased from 58.23% for the nine month period
ended December 31, 2007 to 44.13% for the nine month period ended December 31,
2008 primarily for the same reasons discussed above for the three month
period.
Gross
Profit
Our gross
profit increased by $1,071,577 or 124.4%, to $1,933,097 for the three month
period ended December 31, 2008 as compared to $861,520 for the three month
period ended December 31, 2007. Our gross profit as a percentage of sales was
approximately 40% in each of the three months ended December 31, 2008 and 2007.
The increase in gross profit is the result of the increased sales of higher
margin products and the decrease in cost of sales as discussed
above.
Our gross
profit increased by $4,454,385 or 243%, to $6,284,778 for the nine month period
ended December 31, 2008 as compared to $1,830,393 for the nine month period
ended December 31, 2007. Our gross profit as a percentage of sales increased
from 42% in the nine months ended December 31, 2007 to 56% for the nine months
ended December 31, 2008.
Research and
Development
.
Research
and development expenses decreased by $120,102 or 69.8%, to $52,006 for the
three months ended December 31, 2008 as compared to $172,108 for the three
months ended December 31, 2007.
For the
nine months ended December 31, 2008, research and development expenses decreased
by $23,286 or 9.4% to $224,379 as compared to $247,665 for the nine months ended
December 31, 2007.
The principal
reason for this decrease is that the majority of investments in relation to the
development of new products took place during 2007. The release of these new
products is scheduled for the six months.
Sales
and Marketing Costs
Sales and marketing costs increased by
$301,278, or 49.3%, to $912,422 for the three months ended December 31, 2008 as
compared to $611,144 for the three months ended December 31, 2007. The increase
is largely due to increased provisions for commissions in relation to our sales
people and increased marketing costs to promote our products in new acquired
markets in different countries.
For the
nine months ended December 31, 2008, sales and marketing costs increased by
$1,426,991 or 143.1% to $2,423,928 as compared to $996,937 for the nine months
ended December 31, 2007. The principal reasons for increased
sales and marketing costs are as discussed above.
General
and Administrative Costs
General
and administrative costs for the three months ended December 31, 2008 and 2007
were $1,268,500 and $1,087,313, respectively, representing an increase of
$181,187 or 16.7%. The increase in general and administrative costs as compared
to the prior year is the result of our investments made to increase customer
support concurrent with the launch of our GlamSmile veneers product line in both
Europe and the US.
For the
nine months ended December 31, 2008, general and administrative costs increased
by $781,372, or 27%, to $3,672,536 as compared to $2,891,164 for the nine months
ended December 31, 2007. The foregoing increase is the result of three month
increase discussed above.
Depreciation
and Amortization
Our depreciation and amortization
expense increased from $80,157 to $167,399 for the three months ended December
31, 2008 compared to the three months ended December 31, 2007, an increase of
108.8%. The increase is mostly due to the investment in a semi-automatic
production machine for the production of our foam strips, which will allow us to
significantly increase our production capacity. This investment allowed us to
streamline and improve production significantly with resultant increases in
capacity and quality as well as decreased costs. Secondly, investments are being
made in software and related hardware to bring the design of veneers to the next
level which will allow the dentist to modify the design of the final product,
gaining substantial time in the production process.
For the
nine months ended December 31, 2008, depreciation and amortization costs
increased $225,830 or 104.6% to $441,771 as compared to $215,941 for the nine
months ended December 31, 2007. The foregoing increase is the result of three
month increase discussed above.
Net
Interest and Other Expenses
Net
interest expense increased by $152,071 to $168,659 from $16,588 during the three
months ended December 31, 2008 over the comparable three months ended December
31, 2007. The increase is mainly the result of our increased utilization of our
bank credit facility.
For the
nine months ended December 31, 2008, interest expense increased by $178,373 to
$250,175 as compared to $71,802 for the nine months ended December
31, 2007. The main reason is the increased use of our available bank credit
facility which occurred primarily because of investments made in light of the
new agreement with Den-Mat which was finalized effective August 24, 2008. The
investments are in order to support increasing demand for our veneer product and
are specifically related to inventory and a new production
facility.
During
the three months ended December 31, 2008 we granted 3,738,379 warrants to
purchase our common stock to Den-Mat. The Company valued the warrants
at $4,323,207, using the Black Scholes option pricing model using the following
assumptions: no dividend yield; expected volatility rate of 131%; risk free
interest rate of 3.07% and an average life of 5 years resulting in a value of
$1.28 per option granted. This was a non-cash expense.
Liquidity and Capital
Resources
Cash
and Cash Equivalents
Our
balance sheet at December 31, 2008 reflects cash and cash equivalents of
$2,569,888 as compared to $1,728,281 as of March 31, 2008, an increase of
$841,607. Cash has increased significantly in the period ended
December 31, 2008 largely as a result of cash received from Concordia in the
amount of $2,782,000.
For the remainder of fiscal year 2009,
we believe that, with our current cash and amounts to be received from our cash
receivables, we have sufficient working capital to satisfy our
working capital requirements. We currently have a mixed-use line of credit
of €2,050,000. As of December 31, 2008, we had in the
aggregate $907,558 in advances outstanding under this mixed-use line of credit
facility. As it may be required, we intend to draw from our credit
facility.
In addition, from time to time we may
be required to raise capital to continue our current operations, reduce advances
outstanding on our credit facilities, and to fund future growth.
Operations
Net cash
used by operations decreased by $274,264 resulting in net cash being used by
operations of $1,876,003 for the nine months ended December 31, 2008 as compared
to net cash used by operations of $2,150,267 for the nine months ended December
31, 2007. The decrease in net cash used by operations for the nine months ended
December 31, 2008 as compared to the nine months ended December 31, 2007 is
attributable to several factors. Net loss of $1,873,152 when offset
by two significant non-cash items (1) the $4,323,207 value of the Den-Mat
warrants; and (2) the $2,830,953 gain on the disposition of Sylphar, becomes a
use of cash of $380,898. The use of cash is further increased by an
increase of (1) accounts receivable of $709,732 (versus a provision of cash for
2007 of $137,273); (2) inventories of $575,894 (versus a provision of cash of
$4,043 for 2007); and (3) prepaids of $558,352 (versus a provision of cash for
2007 of $352,607. Management has attributed the increased use of cash
for accounts receivable, inventories and prepaids primarily somewhat to the
slowdown in the general economy but primarily due to increased
sales.
As of the
date of this filing, there has been no indication of a trend of increased
doubtful accounts or slower payments. As a result, at this time, we
do not anticipate increased reserves.
Investing
Activities
Net cash
used in investing activities totaled $455,694 for the nine months ended December
31, 2008 as compared to net cash used in investing activities of $852,193 for
the nine months ended December 31, 2007. Cash used in investing activities in
the nine months ended December 31, 2008 was mainly for equipment to be used in
the production process of veneers, additional hardware equipment in
relation to support our GlamSmile product line in combination with our new
designed software, enabling the dentist to interfere in the production process,
investments made for moldings concerning the GlamSmile product group and
moldings for new OTC products.
Financing
Activities
Net cash
provided by financing activities totaled $2,954,967 for the nine months ended
December 31, 2008 as compared to net cash provided in financing activities of
$5,044,277 for the nine months ended December 31, 2007.Net cash provided from
financing activities in the nine month period ended December 31, 2007 was higher
than in the nine months ended December 31, 2008 primarily because of the
$2,782,000 in net cash received on the sale of Sylphar N.V. and an increase in
the use of the Company’s line of credit of $127,840. There have been
no changes to our line of credit as noted in Note 14 to the interim
financial statements herein.
During the nine months ended December
31, 2008 we recognized an increase in cash and cash equivalents of $218,337
(2007 – $152,245) as a result of the effect of exchange rates between the Euro
and the US Dollar.
Off-Balance Sheet
Arrangements
At December 31, 2008, we did not have
any transactions, obligations or relationships that could be considered
off-balance sheet arrangements.
Not
Applicable.
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 (our Principal Accounting 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 December 31,
2008. Based on this evaluation, the Chief Executive Officer and the
Chief Financial Officer have concluded that our disclosure controls and
procedures were effective as of December 31, 2008.
Change
in Internal Control Over Financial Reporting
There have been no changes in the
Company’s internal controls over financial reporting identified in connection
with the evaluation of disclosure controls and procedures discussed above that
occurred during the quarter ended December 31, 2008 or subsequent to that date
that have materially affected, or are reasonably likely to materially affect,
the Company’s internal control over financial reporting.
To the best knowledge of management,
there are no material legal proceedings pending against the
Company.
Not
Applicable.
ISSUER
PURCHASES OF EQUITY SECURITIES
|
Period
|
|
(a)
Total
Number of Shares (or Units) Purchased
|
|
|
(b)
Average
Price Paid per Share (or Unit)
|
|
|
(c)
Total
Number of Shares (or Units) Purchased as Part of Publicly Announced Plans
or Programs
|
|
(d)
Maximum
Number (or Appropriate Dollar Value) of Shares (or Units) that May Yet Be
Purchased Under the Plans or Programs.
|
|
Month
1
(October
1, 2008- October 31, 2008)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Not
Applicable
|
|
Month 2
(November
1, 2008- November 30, 2008)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Not
Applicable
|
|
Month
3
(December
1, 2008-December 31, 2008
|
|
|
723,000
|
(1)
|
|
$
|
1.15
|
|
|
|
0
|
|
Not
Applicable
|
|
Total
|
|
|
723,000
|
|
|
$
|
1.15
|
|
|
|
0
|
|
Not
Applicable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
In
connection with the restructuring Plan, on December 11, 2008, subsequent
to the contribution of the OTC Subsidiaries to Remedent
OTC, the Company sold fifty percent (50%) of its interest in
Remedent OTC to Robin List, a former Chief Executive Officer,
President and Director of the Company, in exchange for 723,000 restricted
shares of common stock of the Company held by Mr. List (“Exchanged
Shares”), pursuant to a Share Purchase Agreement on December 10,
2008. The Exchanged Shares were valued at $1.15 per share,
based on the average of the 52 week high and low bid, for an aggregate
value of $831,450. The Exchanged Shares are currently
held as treasury stock of the
Company.
|
None.
No
matters were submitted to a vote of security holders during the quarter ended
December 31, 2008.
None.
|
|
|
|
|
3.1
|
|
Articles
of Incorporation of Jofran Confectioners International, Inc., a Nevada
corporation, dated July 31, 1986 (1)
|
|
3.2
|
|
Amendment
to Articles of Incorporation changing name from Jofran Confectioners
International, Inc., a Nevada corporation, to Cliff Typographers, Inc., a
Nevada corporation, dated July 31, 1986 (1)
|
|
3.3
|
|
Amendment
to Articles of Incorporation changing name from Cliff Typographers, Inc.,
a Nevada corporation, to Cliff Graphics International, Inc., a Nevada
corporation, dated January 9, 1987 (1)
|
|
3.4
|
|
Amendment
to Articles of Incorporation changing name from Cliff Graphics
International, Inc., a Nevada corporation, to Global Golf Holdings, Inc.,
a Nevada corporation, dated March 8, 1995 (1)
|
|
3.5
|
|
Amendment
to Articles of Incorporation changing name from Global Golf Holdings,
Inc., a Nevada corporation, to Dino Minichiello Fashions, Inc., a Nevada
corporation, dated November 20, 1997 (1)
|
|
3.6
|
|
Amendment
to Articles of Incorporation changing name from Dino Minichiello Fashions,
Inc., a Nevada corporation, to Resort World Enterprises, Inc., a Nevada
corporation, dated August 18, 1998 (1)
|
|
3.7
|
|
Amendment
to Articles of Incorporation changing name from Resort World Enterprises,
Inc., a Nevada corporation, to Remedent , Inc., dated October 5, 1998
(1)
|
|
3.8
|
|
Amended
and Restated Articles of Incorporation changing name from Remedent, USA,
Inc. to Remedent, Inc. and to effect a one-for-twenty reverse stock split
on June 3, 2005 (2)
|
|
3.9
|
|
Amended
and Restated Bylaws (2)
|
|
4.1
|
|
Specimen
of Stock Certificate (3)
|
|
4.2
|
|
Form
of Subscription Agreement (4)
|
|
4.3
|
|
Form
of Warrant for Common Stock (4)
|
|
4.4
|
|
Form
of Registration Rights Agreement (4)
|
|
4.5
|
|
Form
of Warrant for Unit (5)
|
|
4.6
|
|
Form
of Warrant for Common Stock (6)
|
|
4.7
|
|
Form
of Warrant dated August 24, 2008 for Den-Mat Holdings, LLC
(7)
|
|
4.8
|
|
Form
of Stock Purchase Agreement dated August 24, 2008 entered into in
connection with the Rescission Agreement dated August 24, 2008 by and
between Remedent, Inc., Remedent N.V. and Glamtech-USA, Inc.
(7)
|
|
10.1
|
|
Distribution,
License and Manufacturing Agreement, dated August 24, 2008, by and between
Remedent, Inc., Remedent N.V. and Den-Mat Holdings, LLC
(7)
|
|
10.2
|
|
Form
of Registration Rights Agreement dated August 24, 2008 between Remedent,
Inc. and Den-Mat Holdings, LLC (7)
|
|
10.3
|
|
Rescission
Agreement, dated August 24, 2008, by and between Remedent, Inc., Remedent
N.V. and Glamtech-USA, Inc. (7)
|
|
10.4
|
|
Distribution
Agreement, dated June 30, 2008, by and between Remedent, Inc. and SensAble
Technologies, Inc. (8)
|
|
10.5
|
|
Contribution
Agreement dated December 10, 2008, by and between Remedent, Inc., and
Sylphar USA, Inc.(9)
|
|
10.6
|
|
Share
Purchase Agreement , dated December 10, 2008 between Remedent, Inc. and
Robin List (Remedent OTC B.V.)(9)
|
|
10.7
|
|
Deed
of Contribution of Remedent OTC B.V. effective December 10, 2008
(9)
|
|
10.8
|
|
Share
Purchase Agreement, dated December 10, 2008, by and between Remedent, Inc.
and Remedent N.V. (Sylphar N.V.) (9)
|
|
10.9
|
|
Investment
and Shareholders’ Agreement, dated December 11, 2008, between Remedent
OTC, B.V., Concordia Fund, B.V., Remedent, Inc., Robin List, Sylphar
Holding B.V., and the Existing Subsidiaries (9)
|
|
10.10
|
|
Promissory
Note dated December 10, 2008 (9)
|
|
10.11
|
|
Voting
Agreement, dated December 10, 2008 (9)
|
|
|
|
Certifications
of the Chief Executive Officer under Section 302 of the Sarbanes-Oxley
Act.*
|
|
|
|
Certifications
of the Chief Financial Officer under Section 302 of the Sarbanes-Oxley
Act.*
|
|
|
|
Certifications
of the Chief Executive Officer under Section 906 of the Sarbanes-Oxley
Act.*
|
|
|
|
Certifications
of the Chief Financial Officer under Section 906 of the Sarbanes-Oxley
Act.*
|
|
|
|
|
|
(1)
|
Incorporated
by reference from Registration Statement on Form SB-2 filed with the SEC
on July 24, 2002.
|
|
(2)
|
Incorporated
by reference from Form 8-K filed with the SEC on June 8,
2005.
|
|
(3)
|
Incorporated
by reference from Form SB-2 filed with the SEC on August 4,
2005.
|
|
(4)
|
Incorporated
by reference from Form 8-K filed with the SEC on July 11,
2005.
|
|
(5)
|
Incorporated
by reference from Form SB-2/A filed with the SEC on October 26,
2005.
|
|
(6)
|
Incorporated
by reference from Form 8-K filed with the SEC on June 27,
2007.
|
|
(7)
|
Incorporated
by reference from Form 8-K filed with the SEC on August 28,
2008.
|
|
(8)
|
Incorporated
by reference from Form 8-K filed with the SEC on July 7,
2008.
|
|
(9)
|
Incorporated
by reference from Form 8-K filed with the SEC on December 16,
2008.
|
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:
February 23, 2009
|
By:
|
/s/
Guy De Vreese
|
|
|
|
Name: Guy
De Vreese
|
|
|
|
Title: Chief
Executive Officer
|
|
|
|
|
|
|
|
Date:
February 23, 2009
|
By:
|
/s/
Stephen Ross
|
|
|
|
Name: Stephen
Ross
|
|
|
|
Title: Chief
Financial Officer
|
|
|
|
|
|
|
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