Attached files
file | filename |
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EX-32.1 - REMEDENT, INC. | v202053_ex32-1.htm |
EX-31.2 - REMEDENT, INC. | v202053_ex31-2.htm |
EX-31.1 - REMEDENT, INC. | v202053_ex31-1.htm |
EX-32.2 - REMEDENT, INC. | v202053_ex32-2.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
(Mark
One)
¨ QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the
Quarterly Period Ended September 30, 2010
¨ TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the
transition period from _____ to _____.
Commission File No.
001-15975
REMEDENT,
INC.
(Exact
Name of Registrant as Specified in Its Charter)
Nevada
|
86-0837251
|
|
(State
or Other Jurisdiction
Of
Incorporation or Organization)
|
(I.R.S.
Employer Identification
Number)
|
|
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 check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T ( § 232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).
Yes ¨
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-2 of the Exchange Act. (Check
one):
Large
accelerated filer
|
¨
|
Accelerated
filer
|
¨
|
Non-accelerated
filer
|
¨
|
Smaller
reporting company
|
x
|
(Do
not check if a smaller reporting
company)
|
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
November 10, 2010, there were 19,995,969 outstanding shares of the registrant’s
common stock, includes 723,000 shares of treasury
stock.
REMEDENT,
INC.
FORM
10-Q INDEX
Page Number
|
||
PART
I – FINANCIAL INFORMATION
|
||
Item
1. Financial Statements
|
||
Condensed
Consolidated Balance Sheets as of September 30, 2010 (Unaudited) and March
31, 2010
|
1
|
|
Condensed
Consolidated Statements of Operations for the Three and Six
Months Ended September 30, 2010 and September 30, 2009
(Unaudited)
|
2
|
|
Condensed
Consolidated Statements of Comprehensive Income (Loss) for the Three and
Six Months Ended September 30, 2010 and September 30, 2009
(Unaudited)
|
3
|
|
Condensed
Consolidated Statements of Cash Flows for the Three and Six Months Ended
September 30, 2010 and September 30, 2009 (Unaudited)
|
4
|
|
Notes
to Condensed Consolidated Financial Statements (Unaudited)
|
5
|
|
Item
2. Management’s Discussion and Analysis of Financial Condition
and Results of Operations
|
19
|
|
Item
3. Quantitative and Qualitative Disclosures About
Market Risk
|
23
|
|
Item
4T. Controls and Procedures
|
23
|
|
PART
II – OTHER INFORMATION
|
||
Item
1. Legal Proceedings
|
24
|
|
Item
1A. Risk Factors
|
24
|
|
Item
2. Unregistered Sales of Equity Securities
and Use of Proceeds
|
24
|
|
Item
3. Defaults Upon Senior
Securities
|
24
|
|
Item
4. [Removed and Reserved].
|
24
|
|
Item
5. Other Information
|
24
|
|
Item
6. Exhibits
|
25
|
|
Signature
Page
|
26
|
PART
I – FINANCIAL INFORMATION
Item
1.
REMEDENT,
INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEETS
September 30, 2010
|
March 31, 2010
|
|||||||
(unaudited)
|
||||||||
ASSETS
|
||||||||
CURRENT
ASSETS:
|
||||||||
Cash
and cash equivalents
|
$
|
2,471,552
|
$
|
613,466
|
||||
Accounts
receivable, net of allowance for doubtful accounts of $33,854 at September
30, 2010 and $65,845 at March 31, 2010
|
1,631,444
|
806,931
|
||||||
Inventories,
net
|
2,141,487
|
2,161,692
|
||||||
Prepaid
expenses
|
1,000,860
|
920,487
|
||||||
Total
current assets
|
7,245,343
|
4,502,576
|
||||||
PROPERTY
AND EQUIPMENT, NET
|
1,447,324
|
1,735,719
|
||||||
OTHER
ASSETS
|
||||||||
Long
term investments and advances
|
750,000
|
750,000
|
||||||
Patents,
net
|
243,355
|
246,992
|
||||||
Goodwill
|
699,635
|
699,635
|
||||||
Total
assets
|
$
|
10,385,657
|
$
|
7,934,922
|
||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||
CURRENT
LIABILITIES:
|
||||||||
Current
portion, long term debt
|
$
|
124,026
|
$
|
215,489
|
||||
Line
of Credit
|
1,984,708
|
674,600
|
||||||
Accounts
payable
|
1,720,255
|
1,932,684
|
||||||
Accrued
liabilities
|
1,125,260
|
491,536
|
||||||
Due
to related parties
|
265,857
|
268,484
|
||||||
Total
current liabilities
|
5,220,106
|
3,582,793
|
||||||
Long
term debt less current portion
|
458,236
|
425,882
|
||||||
Total
liabilities
|
5,678,342
|
4,008,675
|
||||||
EQUITY:
|
||||||||
REMEDENT,
INC. STOCKHOLDERS’ EQUITY
|
||||||||
Preferred
Stock $0.001 par value (10,000,000 shares authorized, none issued and
outstanding)
|
—
|
—
|
||||||
Common
stock, $0.001 par value; (50,000,000 shares authorized, 19,995,969 shares
issued and outstanding at September 30, 2010 and March 31,
2010)
|
19,996
|
19,996
|
||||||
Treasury
stock, at cost; 723,000 shares at September 30, 2010 and March 31,
2010
|
(831,450
|
)
|
(831,450
|
)
|
||||
Additional
paid-in capital
|
24,829,833
|
24,742,201
|
||||||
Accumulated
deficit
|
(19,052,527
|
)
|
(19,565,943
|
)
|
||||
Accumulated
other comprehensive (loss) (foreign currency translation
adjustment)
|
(671,819
|
)
|
(650,059
|
)
|
||||
Obligation
to issue shares
|
97,500
|
97,500
|
||||||
Total
Remedent, Inc. stockholders’ equity
|
4,391,533
|
3,812,245
|
||||||
Non-controlling
interest
|
315,782
|
114,002
|
||||||
Total
stockholders’ equity
|
4,707,315
|
3,926,247
|
||||||
Total
liabilities and equity
|
$
|
10,385,657
|
$
|
7,934,922
|
COMMITMENTS
(Note 19)
The
accompanying notes are an integral part of these consolidated financial
statements.
1
REMEDENT,
INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
For the three months ended
September 30,
|
For the six months ended
September 30,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
Net
sales
|
$ | 3,101,553 | $ | 1,780,301 | $ | 6,538,312 | $ | 3,941,104 | ||||||||
Cost
of sales
|
793,942 | 1,302,237 | 1,708,279 | 2,398,244 | ||||||||||||
Gross
profit
|
2,307,611 | 478,064 | 4,830,033 | 1,542,860 | ||||||||||||
Operating
Expenses
|
||||||||||||||||
Research
and development
|
111,994 | 54,522 | 177,539 | 81,120 | ||||||||||||
Sales
and marketing
|
394,014 | 137,076 | 906,990 | 488,011 | ||||||||||||
General
and administrative
|
1,255,597 | 1,102,634 | 2,408,309 | 2,145,398 | ||||||||||||
Depreciation
and amortization
|
183,025 | 177,914 | 384,227 | 351,358 | ||||||||||||
TOTAL
OPERATING EXPENSES
|
1,944,630 | 1,472,146 | 3,877,065 | 3,065,887 | ||||||||||||
INCOME
(LOSS) FROM OPERATIONS
|
362,981 | (994,082 | ) | 952,968 | (1,523,027 | ) | ||||||||||
OTHER
INCOME (EXPENSES)
|
||||||||||||||||
Warrants
issued
|
— | (159,888 | ) | — | (159,888 | ) | ||||||||||
Interest
expense
|
(34,446 | ) | (39,207 | ) | (89,337 | ) | (63,853 | ) | ||||||||
Interest
income
|
72,987 | 25,160 | 111,847 | 91,158 | ||||||||||||
TOTAL
OTHER INCOME (EXPENSES)
|
38,541 | (173,935 | ) | 22,510 | (132,583 | ) | ||||||||||
NET
INCOME (LOSS) BEFORE INCOME TAXES AND NON-CONTROLLING
INTEREST
|
401,522 | (1,168,017 | ) | 975,478 | (1,655,610 | ) | ||||||||||
PROVISION
FOR INCOME TAXES
|
(42,946 | ) | — | (49,175 | ) | — | ||||||||||
INCOME
FROM CONTINUING OPERATIONS BEFORE NON-CONTROLLING INTEREST, NET OF
TAX
|
358,576 | (1,168,017 | ) | 926,303 | (1,655,610 | ) | ||||||||||
LESS:
NET INCOME (LOSS) ATTRIBUTABLE TO NON-CONTROLLING INTEREST
|
157,351 | (329,234 | ) | 412,888 | (267,396 | ) | ||||||||||
NET
INCOME (LOSS) ATTRIBUTABLE TO REMEDENT, INC. Common
Stockholders
|
$ | 201,225 | $ | (838,783 | ) | $ | 513,415 | $ | (1,388,214 | ) | ||||||
INCOME
(LOSS) PER SHARE
|
||||||||||||||||
Basic
|
$ | 0.01 | $ | (0.04 | ) | $ | 0.03 | $ | (0.07 | ) | ||||||
Fully
diluted
|
$ | 0.01 | $ | (0.04 | ) | $ | 0.02 | $ | (0.07 | ) | ||||||
WEIGHTED
AVERAGE SHARES OUTSTANDING
|
||||||||||||||||
Basic
|
19,995,969 | 19,995,969 | 19,995,969 | 19,995,969 | ||||||||||||
Fully
diluted
|
33,595,142 | 33,999,738 | 33,989,738 | 33,999,738 |
The
accompanying notes are an integral part of these consolidated financial
statements.
2
REMEDENT,
INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
For the three months ended
September 30,
|
For the six months ended
September 30,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
Net
Income (Loss) Attributable to Remedent Common Stockholders
|
$ | 201,225 | $ | (838,783 | ) | $ | 513,415 | $ | (1,388,214 | ) | ||||||
OTHER
COMPREHENSIVE INCOME (LOSS):
|
||||||||||||||||
Foreign
currency translation adjustment
|
154,529 | 60,761 | (23,119 | ) | 118,329 | |||||||||||
Total
Other Comprehensive income (loss)
|
355,754 | (778,022 | ) | 490,296 | (1,269,885 | ) | ||||||||||
LESS:
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO NON-CONTROLLING
INTEREST
|
12,721 | 13,836 | (3,143 | ) | 56,084 | |||||||||||
COMPREHENSIVE
INCOME (LOSS)ATTRIBUTABLE TO REMEDENT Common Stockholders
|
$ | 343,033 | $ | (791,858 | ) | $ | 493,459 | $ | (1,325,969 | ) |
The
accompanying notes are an integral part of these consolidated financial
statements.
3
REMEDENT,
INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
For the six months ended
September 30,
|
||||||||
2010
|
2009
|
|||||||
CASH
FLOWS FROM OPERATING ACTIVITIES
|
||||||||
Net
income (loss) for the period
|
$ |
926,303
|
$
|
(1,655,610)
|
||||
Adjustments
to reconcile net income (loss) to net cash used by operating
activities
|
||||||||
Depreciation
and amortization
|
384,227
|
351,358
|
||||||
Inventory
reserve
|
(60,484)
|
1,364
|
||||||
Allowance
for doubtful accounts
|
(31,991)
|
3,508
|
||||||
Value
of stock options issued to employees and consultants
|
87,632
|
202,900
|
||||||
Warrants
issued
|
—
|
159,888
|
||||||
Changes
in operating assets and liabilities:
|
||||||||
Accounts
receivable
|
(824,513)
|
2,327,164
|
||||||
Inventories
|
20,205
|
(143,712)
|
||||||
Prepaid
expenses
|
(80,373)
|
(76,159)
|
||||||
Accounts
payable
|
(316,733)
|
(307,289)
|
||||||
Accrued
liabilities
|
633,724
|
(835,910)
|
||||||
Due
torelated parties
|
(2,627)
|
—
|
||||||
Income
taxes payable
|
—
|
(1,375)
|
||||||
Net
cash provided by operating activities
|
735,370
|
26,127
|
||||||
CASH
FLOWS FROM INVESTING ACTIVITIES
|
||||||||
Purchases
of patents
|
(51,233)
|
—
|
||||||
Purchases
of equipment
|
(134,075)
|
(543,513)
|
||||||
Net
cash used by investing activities
|
(185,308)
|
(543,513)
|
||||||
CASH
FLOWS FROM FINANCING ACTIVITIES
|
||||||||
Net
(repayments of) capital lease note payable
|
(59,109)
|
210,304
|
||||||
Proceeds
from line of credit
|
1,310,108
|
68,200
|
||||||
Net
cash provided by financing activities
|
1,250,999
|
278,504
|
||||||
NET
(DECREASE) INCREASE IN CASH
|
1,801,061
|
(238,882)
|
||||||
Effect
of exchange rate changes on cash and cash equivalents
|
57,025
|
117,983
|
||||||
CASH
AND CASH EQUIVALENTS, BEGINNING
|
613,466
|
1,807,271
|
||||||
CASH
AND CASH EQUIVALENTS, ENDING
|
$ |
2,471,552
|
$
|
1,686,372
|
||||
Supplemental
Information:
|
||||||||
Interest
paid
|
$ |
55,367
|
$
|
32,864
|
||||
Income
taxes paid
|
$ |
-
|
$
|
-
|
The
accompanying notes are an integral part of these consolidated financial
statements.
4
REMEDENT,
INC. AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1.
|
DESCRIPTION OF THE COMPANY AND
BASIS OF PRESENTATION
|
The
Company is a manufacturer and distributor of cosmetic dentistry products,
including a full line of professional dental 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 its facility in Beijing, China and in
France. The Company distributes its products using both its own
internal sales force and through the use of third party
distributors.
The
Company’s financial statements have been prepared on an accrual basis of
accounting, in conformity with accounting principles generally accepted in the
United States of America.
In these
notes, the terms “Remedent”, “Company”, “we”, “us” or “our” mean Remedent, Inc.
and all of its subsidiaries, whose operations are included in these consolidated
financial statements.
The
Company has conducted a subsequent events review through the date the financial
statements were issued, and has concluded that there were no subsequent events
requiring adjustments or additional disclosures to the Company's financial
statements at September 30, 2010.
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
|
Organization
and Principles of Consolidation
The
accompanying consolidated financial statements include the accounts of: Remedent
N.V. (incorporated in Belgium) located in Deurle, Belgium, Remedent
Professional, Inc. (incorporated in California), Glamtech-USA, Inc. (a Delaware
corporation acquired effective August 24, 2008) and its 50.98% owned subsidiary,
Glamsmile Asia Ltd.(with its subsidiaries, a GlamSmile Studio in Hong Kong, a
GlamSmile Studio in Mainland China (Beijing) and our GlamSmile production Lab,
also located in China (Beijing)) , Remedent OTC B.V. (a Dutch Holding company)
and a 50% owned subsidiary, Sylphar Holding B.V. (a Dutch holding company), a
37.50% owned and controlled subsidiary of Remedent Inc., Sylphar N.V., a 100%
owned company by Sylphar Holding BV, Sylphar USA, a 100% owned Nevada
corporation by Sylphar Holding BV. And Sylphar Asia Pte, a 100% owned Asian
company owned by Sylphar Holding BV (collectively, the “Company”).
Remedent,
Inc. is a holding company with headquarters in Deurle, Belgium. Remedent
Professional, Inc. and Remedent Professional Holdings, Inc. have been dormant
since inception.
For all
periods presented, all significant inter-company accounts and transactions have
been eliminated in the consolidated financial statements and corporate
administrative costs are not allocated to subsidiaries.
Interim
Financial Information
The
interim consolidated financial statements of Remedent, Inc. and Subsidiaries
(the “Company”) are condensed and do not include some of the information
necessary to obtain a complete understanding of the financial data. Management
believes that all adjustments necessary for a fair presentation of results have
been included in the unaudited consolidated financial statements for the interim
periods presented. Operating results for the six months ended September 30,
2010, are not necessarily indicative of the results that may be expected for the
year ended March 31, 2011. Accordingly, your attention is directed to
footnote disclosures found in the Annual Report on Form 10-K for the year ending
March 31, 2010, and particularly to Note 2, which includes a summary of
significant accounting policies.
5
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.
Goodwill
impairment
The
Company performs impairment tests related to goodwill annually and whenever
events or changes in circumstances suggest that it is more likely than not that
the fair value of the reported unit is below its carrying value. To September
30, 2010, management has not identified any impairment of goodwill.
Fair
Value of Financial Instruments
The
Company’s financial instruments consist of cash and cash equivalents, accounts
receivable, accounts payable, accrued liabilities, line of credit and long-term
debt. The carrying amounts of cash and cash equivalents, accounts receivable,
accounts payable and accrued liabilities approximate their respective fair
values because of the short maturities of those instruments. The Company’s
long-term debt consists of its revolving credit facility and long-term capital
lease obligations. The carrying value of the revolving credit facility
approximates fair value because of its variable short-term interest
rates. The fair value of the Company’s long-term capital lease
obligations is based on current rates for similar financing.
Computation
of Earnings (Loss) per Share
In
accordance with FASB ASC 260-10-15, the Company presents both basic and diluted
earnings per share (“EPS”). Basic EPS excludes dilution and is
computed by dividing net income (loss) allocable to common stockholders by the
weighted average number of shares outstanding for the period. Diluted
earnings per share reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised or converted
into common stock, where such exercise or conversion would result in a lower EPS
amount.
Liquidity
and Management Plans
Historically,
the Company has relied on a combination of fundraising from the sale and
issuance of equity securities and cash generated from product and service
revenues to provide funding for its operations. As of September 30, 2010, the
Company had cash and cash equivalents of $2,471,552. The Company believes that
these balances, along with its line of credit, will provide sufficient financing
in order to fund its working and other capital requirements over the course of
the next twelve months. The Company will continue to review its expected cash
requirements, make all efforts to collect any aged receivables, and take
appropriate cost reduction measures to ensure that it has sufficient working
capital to fund its operations. In the event additional needs for cash arise,
the Company may seek to raise additional funds from a combination of sources
including issuance of debt or equity securities. Additional financing may not be
available on terms favorable to the Company, or at all. Any additional financing
activity could be dilutive to the Company's current stockholders. If adequate
funds are not available or are not available on acceptable terms, the Company's
ability to take advantage of unanticipated opportunities or respond to
competitive pressures could be limited.
6
Recent
Accounting Pronouncements
With the
exception of those discussed below, there are no unadopted accounting
pronouncements and there have been no recent accounting pronouncements or
changes in accounting pronouncements during the six months ended September 30,
2010, as compared to the recent accounting pronouncements described in the
Company's Annual Report on Form 10-K for the fiscal year ended March 31,
2010, that are of significance, or potential significance, to the
Company.
In
January 2010, the Financial Accounting Standards Board ("FASB") issued
additional guidance on fair value disclosures. The new guidance clarifies two
existing disclosure requirements and requires two new disclosures as follows:
(1) a "gross" presentation of activities (purchases, sales, and
settlements) within the Level 3 rollforward reconciliation, which will replace
the "net" presentation format; and (2) detailed disclosures about the
transfers in and out of Level 1 and 2 measurements. This guidance is effective
for the first interim or annual reporting period beginning after
December 15, 2009, except for the gross presentation of the Level 3
rollforward information, which is required for annual reporting periods
beginning after December 15, 2010, and for interim reporting periods
thereafter. The Company adopted the amended fair value disclosures guidance on
April 1, 2010, except for the gross presentation of the Level 3 rollforward
information, which the Company is not required to adopt until April 1,
2011. The adoption of this standard has had no impact upon the
Company’s consolidated financial statements.
In
October 2009, the FASB issued new standards for revenue recognition with respect
to multiple-deliverable arrangements. As a result of the new standards,
multiple-deliverable arrangements will be separated in more circumstances than
under existing revenue recognitions standards. The new standards establish a
selling price hierarchy for determining the selling price of a deliverable. Such
selling price for each deliverable will be based on vendor-specific objective
evidence if available, third-party evidence if vendor-specific objective
evidence is not available, or estimated selling price if neither vendor-specific
objective evidence nor third-party evidence is available. The new standards also
replaces the term fair value in the revenue allocation guidance with selling
price to clarify that the allocation of revenue is based on entity-specific
assumptions rather than assumptions of a marketplace participant. The new
standards are effective for revenue arrangements that begin or are changed in
fiscal years starting after June 15, 2010 and early adoption is permitted. The
Company is currently evaluating the impact of this amendment on its revenue
recognition policies as well as the impact on its financial
statements.
3.
|
ACQUISITION OF GLAMSMILE ASIA
LTD.
|
Effective
January 1, 2010 the Company acquired 50.98% of the issued and outstanding shares
of Glamsmile Asia Ltd. (“Glamsmile Asia”), a private Hong Kong company, with
subsidiaries in Hong Kong and Mainland China, in exchange for the following
consideration:
|
1.
|
325,000 Euro
(US$466,725). As of March 31, 2010, the Company owed a balance
of $71,885 on its purchase of the shares of Glamsmile Asia, which amount
was recorded as due to related
parties;
|
|
2.
|
250,000 shares of common stock to
be issued during the fiscal year ended March 31, 2011 ($97,500 was
recorded as an obligation to issue shares as at September 30, 2010 and
March 31, 2010);
|
|
3.
|
100,000 options on closing
(issued);
|
|
4.
|
100,000 options per opened store
at closing (issued);
|
|
5.
|
100,000 options for each
additional store opened before the end of 2011 at the price of the opening
date of the store;
|
|
6.
|
Assumption of Glamsmile’s January
1, 2010 deficit of $73,302. The non-controlling interest is
non-participating until such time as the net profit from Glamsmile Asia
exceeds prior losses of $73,302;
and
|
7
|
7.
|
Repayment of the founding
shareholder’s original advances in the amount of $196,599. The
balance of $196,599, recorded as due to related parties as at September
30, 2010 and March 31, 2010, is unsecured, non-interest bearing and has no
specific terms of repayment other than it will be paid out of revenues
from Glamsmile, as working capital
allows.
|
All
options reside under the Company’s option plan and are five year
options.
Also
pursuant to the agreement, the Company has granted irrevocable right to
Glamsmile Asia to use the Glamsmile trademark in Greater China.
In
connection with this acquisition the Company has recorded goodwill of
$699,635. If new information is received by the Company during the
measurement period, the goodwill recorded may be subject to change.
During
the six months ended September 30, 2010, the Company recorded $279,997 as due to
the Glamsmile non-controlling interest, net of the assumption of prior losses,
as described in point 6 above.
During
the quarter ended September 30, 2010, the Company paid $1,359 for 10,400
Glamsmile shares.
4.
|
DISTRIBUTION
AGREEMENTS
|
Den-Mat
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 Distribution, the Company 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 all French overseas
territories “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 (the “Territory”).
As
consideration for such distribution, licensing and manufacturing rights, Den-Mat
will pay the Company:
|
(i)
|
an initial payment of
$2,425,000;
|
|
(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 or (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 the
Company;
|
|
(vii)
|
certain milestone payments;
and
|
|
(viii)
|
certain royalty
payments.
|
8
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”) which as of September 30,
2010 has not yet been filed;
and
|
|
(iii)
|
cause its Chairman of the Board,
Guy De Vreese, to execute and deliver to Den-Mat a non-competition
agreement.
|
On June
3, 2009, the Distribution Agreement was amended and restated (the “Amended
Agreement”). The Amended Agreement modifies and clarifies certain terms and
provisions which among other things includes:
|
(1)
|
the expansion of the list of
Excluded Markets to include Spain, Japan, Portugal, South Korea and South
Africa for a period of time;
|
|
(2)
|
clarification that Den-Mat’s
distribution and license rights are non-exclusive to market, sell and
distribute the Products directly to consumers through retail locations
(“B2C Market”) in the Territory and an undertaking to form a separate
subsidiary to and to issue warrants to Den-Mat in the subsidiary in the
event that the Company decides to commercially exploit the B2C Market in
North America after January 1,
2010;
|
|
(3)
|
subject to certain exceptions, a
commitment from the Company to use Den-Mat as its supplier to purchase all
of its, and its licensee’s, GlamSmile products in the B2C Market from
Den-Mat, with reciprocal commitment from Den-Mat to sell such
products;
|
|
(4)
|
modification of certain defined
terms such as “Guaranty Period,” “Exclusivity Period” and addition of the
term “Contract Period”; and
|
|
(5)
|
the “Guaranty Period” (as defined
therein) is no longer a three year period but has been changed
to the first three “Contract Periods”. The first Contract
Period commences on the first day of the Guaranty Period (which the
Parties agreed has commenced as of April 1, 2009), and continues for
fifteen (15) months or such longer period that would be necessary in order
for Den-Mat to purchase a certain minimum number of Units/Teeth as agreed
upon in the Amended Agreement (“Minimum Purchase Requirement”) in the
event that the Company’s manufacturing capacity falls below a certain
threshold. The second and each subsequent GlamSmile Contract
Period begins on the next day following the end of the preceding “Contract
Period” and continues for twelve (12) months or such longer period that
would be necessary in order for Den-Mat to meet its Minimum Purchase
Requirement in the event that the Company’s manufacturing capacity falls
below a certain threshold.
|
In August
2009, the Distribution Agreement was further amended (the “August Amendment”).
The August Amendment expands the Company’s products covered under the
Distribution Agreement to include the Company’s new Prego System Technology
(“Prego System”), also commonly known as “Glamstrip”. Under the Amendment, the
$250,000 payment which was originally due upon the expiration of the first
Contract Period (as defined in the Distribution Agreement) is now due on the
earlier occurrence of (i) sixty days from August 11, 2009 or (ii) the
performance of the Company’s live patient clinical demonstration of the Prego
System to be performed at Den-Mat’s reasonable satisfaction.
9
The
August Amendment also provides for (a) the royalty rate for products
manufactured and sold by Den-Mat using the Prego System after the Guaranty
Period (as defined in the Distribution Agreement), (b) Den-Mat’s right to elect
to manufacture or purchase from a third party manufacturer any or all portion of
the minimum purchase requirements under the Distribution Agreement provided
however, that if Den-Mat fails to purchase the minimum number of Units/Teeth as
required during any month, Den-Mat may cure such default by paying the Company a
certain royalty on the difference between the minimum purchase requirement and
the amount actual purchased by Den-Mat during such month, with such royalties
accruing and being due and payable upon the earlier occurrence of either (1) one
hundred twenty days from August 11, 2009 or (2) the successful performance
of the Company’s live patient demonstration of the First Fit
Technology licensed to Den-Mat pursuant to the First Fit-Crown Distribution
and License Agreement, to be performed at Den-Mat’s reasonable
satisfaction; and all shortfall payments thereafter being due and payable within
15 days after the end of the month in which shortfall occurred, and (c)
Den-Mat’s option to purchase a certain number of Prego Systems in lieu of Trays
during each of the first three Contract Periods pursuant to the terms, including
price and conditions, set forth in the Amendment so long as such option is
exercised during the period commencing on August 11, 2009 and ending on the
later of either 91 days or 31 days after the Company demonstrates to Den-Mat
that it has the capacity to produce a certain number of Prego System per
Contract Period. Furthermore under the Amendment, if Den-Mat fails to purchase
the required minimum Trays during any Contract Period, such failure may be cured
by payment equal to the difference between the aggregate purchase price that
would have been paid had Den-Mat purchased the required minimum and the
aggregate purchase price actually paid for such Contract Year within 30 days
after the end of such Contract Period. With the exception of the provisions
amended by the Amendment, the Distribution Agreement remains in full force and
effect.
First
Fit Distribution Agreement
On June
3, 2009, the Company entered into the First Fit-Crown Distribution and License
Agreement (the “First Fit Distribution Agreement”) with
Den-Mat. Under the terms of the First Fit Distribution Agreement, the
Company appointed Den-Mat to be its sole and exclusive distributor to market,
license and sell certain products relating to the Company’s proprietary First
Fit technology (the “First Fit Products”), in the United States, Canada and
Mexico (the “First Fit Territory”). In connection therewith, the
Company also granted Den-Mat certain non-exclusive rights to manufacture and
produce the First Fit Products in the First-Fit Territory; and a sole and
exclusive transferable and sub-licensable right and license to use the Company’s
intellectual property rights relating to the First Fit Products to perform its
obligations as a distributor (provided the Company retains the right to use and
license related intellectual property in connection with the manufacture of the
First Fit Products for sale outside of the First Fit
Territory).
Consummation
of the First Fit Distribution Agreement is subject to: completion of Den-Mat’s
due diligence; execution and delivery of Non-Competition Agreements; and the
delivery of the Development Payment and first installment of the License Payment
(the “Development Payment” and License Payment” are defined below).
Under the
First Fit Distribution Agreement, the Company granted such distribution rights,
licensing rights and manufacturing rights, in consideration for the
following: (i) a non-refundable development fee of Four Hundred
Thousand Dollars ($400,000) (the “Development Payment”) payable in two
installments of $50,000 each, one within seven days after the effective date of
the First Fit Distribution Agreement, and another $350,000 payment within twenty
one days after the Effective Date ($400,000 received as at June 30, 2009); (ii)
a non-refundable license fee of $600,000 payable in three equal installments of
$200,000 each, with the first installment payable on the Closing Date, and with
the second and third installments payable on the 30 th and 60
th
day, respectively, after the Closing Date (received); (iii) certain royalty
payments based on the sales of the First Fit Products by Den-Mat or its
sub-licensees; and (iv) certain minimum royalty payments to maintain
exclusivity.
Den-Mat’s
rights as an exclusive distributor and licensee will continue at least through
the first Contract Period (defined below) and until the termination of the First
Fit Distribution Agreement. Den-Mat’s exclusivity ends at the end of
any Contract Period in which Den-Mat fails to make certain minimum royalty
payments. In the event that such exclusivity is terminated, Den-Mat
has the option to either terminate the First Fit Distribution Agreement upon
ninety (90) days written notice, or become a non-exclusive distributor and
licensee, in which event Den-Mat’s obligation to pay certain agreed upon
royalties would continue. “Contract Period” means the
following periods: (A) the first eighteen months beginning on the first day of
the month following the month in which the Closing occurs, provided that if
Den-Mat is not fully operational within sixty days after the Closing Date, the
first Contract Period will be extended by one day for each day after the
sixtieth day until Den-Mat becomes fully operational; (B) the subsequent twelve
months; and (C) each subsequent twelve month period thereafter, in each case
during which the First Fit Distribution Agreement is in effect.
10
On March
29, 2010, a certain Amendment No. 1 was made to the First Fit Distribution
Agreement dated June 3, 2009. The terms of Amendment No. 1 are as
follows:
The total
purchase price for the First Fit IP consists of installment payments and royalty
payments. The cash component of the purchase price of the First
Fit IP is $2,850,000 to be paid in the form of cash in the following
installments: (a) $50,000 upon delivery by Remedent to Den-Mat of a working
prototype of the First Fit crown (received); (b) $525,000 on or before March 15,
2010 (received); (c) $700,000 on June 30, 2010 (received); and (d)
$500,000 on December 31, 2010, June 30, 2011 and December 31, 2011. In
connection with the execution of the First Fit Agreement, Den-Mat also agreed to
make an advance cash payment of $75,000 to the Company towards the purchase
price (received). In addition to the cash component, Den-Mat agreed
to pay Remedent a capital payment equal to a certain percent of Den-Mat’s net
revenues generated by the sale of the First Fit products.
Concurrently
with the execution of the First Fit Amendment, the Company and Den-Mat entered
into Amendment No. 2 to the Amended and Restated Distribution, License and
Manufacturing Agreement (“Glamsmile Amendment”) with Den-Mat pursuant to which
certain provisions of a certain Amended and Restated Distribution, License and
Manufacturing Agreement previously entered into by the Company and Den-Mat on
June 3, 2009 and subsequently amended on August 11, 2009, were
amended. The Glamsmile Amendment became effective concurrently with
the effectiveness of the First Fit Amendment on February 16, 2010 (the
“Amendment No. 2 Effective Date”). Among other things, the Glamsmile
Amendment (1) permits the Company to purchase its requirements for GlamSmile
Products from another party, other than Den-Mat, provided the Company
pays Den-Mat a royalty payment on net revenues received by the Company per
unit/tooth, (2) decreases the percentage of securities to be covered in a
warrant to purchase securities of B2C Market Subsidiary and the exercise price
of such warrant to be issued to Den-Mat in the event a B2C Market
Subsidiary is formed under the terms set forth in such agreement, (3) expands
the definition of “Excluded Market” to include Australia, Belgium, France and
United Arab Emirates, and (4) provides a consulting fee, equal to a percentage
of net revenues received by Den-Mat from the Sale of unit/teeth and trays, to
the Company for its services, support and certain additional
consideration, (5) terminates certain provisions relating to minimum requirement
obligations and rights, and (6) amends the formula for calculation of a certain
exit fee in the event of a change of control. The Amendment became binding
within the period ended September 30, 2010.
5.
|
CONCENTRATION OF
RISK
|
Financial
Instruments — Financial instruments, which potentially subject the Company to
concentrations of credit risk, consist principally of trade accounts
receivable.
Concentrations
of credit risk with respect to trade receivables are normally limited due to the
number of customers comprising the Company’s customer base and their dispersion
across different geographic areas. At September 30, 2010, five
customers accounted for 56% of the Company’s trade accounts receivables, and one
customer accounted for 25%. At September 30, 2009, two customers
accounted for a total of 17% 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 six months ended September 30,
2010 the Company had five suppliers who accounted for 32% of gross purchases.
For the six months ended September 30, 2009 the Company had five suppliers who
accounted for 20% of gross purchases.
Revenues
— For the six months ended September 30, 2010 the Company had five customers
that accounted for 38% of total revenues and one customer accounted for 21% of
total revenues. For the six months ended September 30, 2009 the
Company had five customers that accounted for 60% of total
revenues.
11
6.
|
ACCOUNTS RECEIVABLE AND ALLOWANCE
FOR DOUBTFUL ACCOUNTS
|
The
Company’s accounts receivable at September 30, 2010 and March 31, 2010 were as
follows:
September 30, 2010
|
March 31, 2010
|
|||||||
Accounts
receivable, gross
|
$
|
1,665,298
|
$
|
872,776
|
||||
Less:
allowance for doubtful accounts
|
(33,854
|
)
|
(65,845
|
)
|
||||
Accounts
receivable, net
|
$
|
1,631,444
|
$
|
806,931
|
7.
|
INVENTORIES
|
Inventories
at September 30, 2010 and March 31, 2010 are stated at the lower of cost
(first-in, first-out) or net realizable value and consisted of the
following:
September 30, 2010
|
March 31, 2010
|
|||||||
Raw
materials
|
$
|
51,566
|
$
|
20,641
|
||||
Components
|
848,466
|
1,024,908
|
||||||
Finished
goods
|
1,263,306
|
1,198,478
|
||||||
2,163,338
|
2,244,027
|
|||||||
Less:
reserve for obsolescence
|
(21,851
|
)
|
(82,335
|
)
|
||||
Net
inventory
|
$
|
2,141,487
|
$
|
2,161,692
|
8.
|
PREPAID
EXPENSES
|
Prepaid
expenses are summarized as follows:
September 30, 2010
|
March 31, 2010
|
|||||||
Prepaid
materials and components
|
$
|
723,356
|
$
|
701,035
|
||||
Prepaid
income taxes
|
6,233
|
4,332
|
||||||
Prepaid
consulting
|
28,517
|
22,095
|
||||||
VAT
payments in excess of VAT receipts
|
106,601
|
98,702
|
||||||
Royalties
|
62,759
|
39,905
|
||||||
Prepaid
trade show expenses
|
11,821
|
10,000
|
||||||
Prepaid
rent
|
12,939
|
1,409
|
||||||
Other
|
48,634
|
43,009
|
||||||
$
|
1,000,860
|
$
|
920,487
|
9.
|
PROPERTY AND
EQUIPMENT
|
Property
and equipment are summarized as follows:
September 30, 2010
|
March 31, 2010
|
|||||||
Furniture
and Fixtures
|
$
|
445,720
|
$
|
436,978
|
||||
Machinery
and Equipment
|
2,677,926
|
2,461,659
|
||||||
Tooling
|
188,450
|
188,450
|
||||||
3,312,096
|
3,087,087
|
|||||||
Accumulated
depreciation
|
(1,864,772
|
)
|
(1,351,368
|
)
|
||||
Property
& equipment, net
|
$
|
1,447,324
|
$
|
1,735,719
|
Tooling
includes a payment made to a company called Sensable, in reference to the
development of a tailored veneer modeling solution, referred to as “GlamSmile
Design Software”.
12
10.
|
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 acquired a 10% equity interest in IMDS, LLC in consideration for
$300,000 which was converted against IMDS receivables.
The
agreement stipulates certain exclusive worldwide 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.
As of
September 30, 2010 the Company the Company has written off its investment in
IMDS.
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 was 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 during the fiscal year ended
March 31, 2011.
11.
|
LICENSED
PATENTS
|
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 $39,000 of accumulated amortization for this
patent as of September 30, 2010. The Company accrues this royalty when it
becomes payable to inventory therefore no provision has been made for this
obligation as of September 30, 2010.
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.
13
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 was paid by the
Company in September 2005 and the remaining €25,000 is to be paid upon the
Company’s first shipment of a product covered by the patent. As of
September 30, 2010 the Company has not yet received the final Product. The
patent is being amortized over five (5) years and accordingly, the Company has
recorded $114,898 of accumulated amortization for this patent as of September
30, 2010.
12.
|
LINE OF
CREDIT
|
On October 8, 2004, the Company’s
wholly owned subsidiary, Remedent N.V., obtained a mixed-use line of credit
facility with BNP Paribas 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 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. On January 3, 2008,
an amendment was made decreasing the mixed-use line of credit to €2,050,000, to
be used by Remedent NV and/or Sylphar NV. Each line of credit carries its own
interest rates and fees as provided in the Facility and varies from the current
prevailing bank rate.
The
latest amendment to the Facility, dated June 7, 2010, amended and split the line
of credit to €1,250,000, to be used by Remedent NV and €1,000,000 to be used
Sylphar NV. Each line of credit carries its own interest rates and fees as
provided in the Facility and vary from the current prevailing bank rate of
approximately 2.9%, for draws on the credit line, to 8.4% for advances on
accounts receivable concerning Remedent N.V. and similar for Sylphar N.V.
Remedent N.V and Sylphar NV are currently only utilizing two lines of credit,
advances based on account receivables and the straight loan. As of September 30,
2010 and March 31, 2010, Remedent N.V. and Sylphar N.V. had in aggregate,
$1,984,708 and $674,600 in advances outstanding, respectively, under the
mixed-use line of credit facilities.
13.
|
LONG TERM
DEBT
|
On
October 24, 2006, the Company entered into a five year capital lease agreement
for manufacturing equipment totaling €123,367 (US $169,445). On May 15, 2008,
the Company entered into an additional capital lease agreement over a three year
period for additional manufacturing equipment totaling €63,395 (US $87,073). On
August 18, 2009, the Company entered into another capital lease agreement over a
three year period for additional manufacturing equipment totaling € 170,756 (US
$234,533). On January 15, 2010, the Company entered into an additional capital
lease agreement over a 5 year period for veneer manufacturing equipment totaling
€ 251,903 (US $345,989). On June 16, 2010, the Company entered into a further
capital lease agreement over a 5 year period for additional veneer manufacturing
equipment totaling € 30,248 (US $41,546).
The net
book value as of September 30, 2010 and March 31, 2010 of the equipment subject
to the foregoing leases are $558,335 and $641,371 respectively.
14.
|
DUE TO RELATED PARTIES AND
RELATED PARTY TRANSACTIONS
|
Transactions
with related parties not disclosed elsewhere in these financial statements
consisted of the following:
Compensation:
During
the six month periods ended September 30, 2010 and 2009 respectively, the
Company incurred $371,569 and $371,841 respectively, as compensation for all
directors and officers.
14
Sales
Transactions:
One of
the Company’s directors owns a minority interest in a client company, IMDS Inc.
(“IMDS”) Accounts receivable at period end with this customer totaled nil and
$31,895 as at September 30, 2010 and March 31, 2010 respectively.
As of
September 30, 2010 the Company has written off its investment in
IMDS.
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.
15.
|
ACCRUED
LIABILITIES
|
Accrued
liabilities are summarized as follows:
September 30, 2010
|
March 31, 2010
|
|||||||
Accrued
employee benefit taxes and payroll
|
$ | 269,500 | $ | 182,137 | ||||
Accrued
travel
|
13,741 | 31,891 | ||||||
Advances
and deposits
|
578,760 | 116,687 | ||||||
Commissions
|
39,228 | 21,597 | ||||||
Accrued
audit and tax preparation fees
|
16,093 | 11,152 | ||||||
Reserve
for warranty costs
|
20,603 | 20,238 | ||||||
Accrued
interest
|
— | 168 | ||||||
Accrued
consulting fees
|
65,143 | 47,382 | ||||||
Other
accrued expenses
|
122,192 | 60,284 | ||||||
$ | 1,125,260 | $ | 491,536 |
16.
|
EQUITY COMPENSATION
PLANS
|
As of
September 30, 2010, the Company had three equity compensation plans approved by
its stockholders (1) the 2001 Incentive and Non-statutory Stock Option Plan (the
“2001 Plan”), (2) the 2004 Incentive and Non-statutory Stock Option Plan (the
“2004 Plan”); and (3) the 2007 Equity Incentive Plan (the “2007 Plan”). The
Company’s stockholders approved the 2001 Plan reserving 250,000 shares of common
stock of the Company pursuant to an Information Statement on Schedule 14C filed
with the Commission on August 15, 2001. In addition, the Company’s stockholders
approved the 2004 Plan reserving 800,000 shares of common stock of the Company
pursuant to an Information Statement on Schedule 14C filed with the Commission
on May 9, 2005. Finally, the Company’s stockholders approved the 2007
Plan reserving 1,000,000 shares of common stock of the Company pursuant to a
Definitive Proxy Statement on Schedule 14A filed with the Commission on October
2, 2007.
In addition to the equity
compensation plans approved by the Company’s stockholders, the Company has
issued options and warrants to individuals pursuant to individual compensation
plans not approved by our stockholders. These options and warrants
have been issued in exchange for services or goods received by the
Company.
The
following table provides aggregate information as of September 30, 2010 with
respect to all compensation plans (including individual compensation
arrangements) under which equity securities are authorized for
issuance.
A summary
of the option activity for the six month period ended September 30, 2010
pursuant to the terms of the plans is as follows:
15
Exercise
Price
2001 Plan
|
2004 Plan
|
2007 Plan
|
Other
|
|||||||||||||||||||||||||||||
Outstanding
Options
|
Weighted
Average
Exercise
Price
|
Outstanding
Options
|
Weighted
Average
Exercise
Price
|
Outstanding
Options
|
Weighted
Average
Exercise
Price
|
Outstanding
Options
|
Weighted
Average
Exercise
Price
|
|||||||||||||||||||||||||
Options
outstanding, March 31, 2010 and September 30, 2010
|
250,000
|
1.20
|
668,166
|
0.89
|
1,000,000
|
1.20
|
350,000
|
0.87
|
||||||||||||||||||||||||
Options
exercisable, September 30, 2010
|
231,667
|
1.20
|
555,666
|
1.65
|
1,000,000
|
1.20
|
300,000
|
0.70
|
||||||||||||||||||||||||
Exercise
price range
|
$
|
0.50
- $2.39
|
$
|
0.50
- $4.00
|
$
|
0.50 - $1.75
|
$
|
.39
- 1.75
|
||||||||||||||||||||||||
Weighted
average remaining life
|
2.27
years
|
4.4 years
|
7.62 years
|
4.56
years
|
A summary
of the Company’s equity compensation plans approved and not approved by
shareholders is as follows:
Plan Category
|
Number of
securities to
be
issued upon
exercise of
of
outstanding
options,
warrants
and rights
|
Weighted-average
exercise price of
outstanding
options
warrants and
rights
|
Number of
securities
remaining
available for
future
issuance
under
equity
compensation
plans
(excluding
securities
reflected
in column (a))
|
|||||||||
Equity
Compensation Plans approved by security holders
|
1,918,166
|
$
|
1.15
|
131,834
|
||||||||
Equity
Compensation Plans not approved by security holders
|
820,000
|
$
|
.97
|
NA
|
||||||||
Total
|
2,738,166
|
$
|
1.19
|
131,834
|
For the
six month period ended September 30, 2010 the Company recognized $87,632 (2009 —
$202,900) in compensation expense in the consolidated statement of
operations. No stock options were granted or cancelled/expired in the
six month period ended September 30, 2010.
17.
|
COMMON
STOCK WARRANTS AND OTHER OPTIONS
|
As of
September 30, 2010, the Company has warrants to purchase the Company’s common
stock outstanding that were not granted under shareholder approved equity
compensation plans as follows:
Outstanding
Warrants
|
Weighted
Average
Exercise
Price
|
|||||||
Warrants
and options outstanding, March 31, 2010
|
11,108,305
|
$
|
1.55
|
|||||
Cancelled
or expired
|
(3,020,026
|
)
|
1.86
|
|||||
Warrants
outstanding September 30, 2010
|
8,088,279
|
1.50
|
||||||
Warrants
exercisable September 30, 2010
|
8,088,279
|
$
|
1.50
|
|||||
Exercise
price range
|
$
|
1.00 to $3.00
|
||||||
Weighted
average remaining life
|
2.21 Years
|
16
During
the six month period ended September 30, 2010, a total of 3,020,026 warrants
expired unexercised.
18.
|
SEGMENT
INFORMATION
|
The
Company’s only operating segment consists of dental products and oral hygiene
products sold by Remedent Inc., Remedent N.V., Sylphar N.V., GlamSmile Beijing
Dental Clinic Co. Ltd. and Remedent Asia Ltd. Since the Company only
has one segment, no further segment information is presented.
Customers
Outside of the United States
September 30, 2010
|
September 30, 2009
|
|||||||
U.S.
sales
|
$
|
1,617,698
|
$
|
1,231,062
|
||||
Foreign
sales
|
4,920,614
|
2,710,042
|
||||||
$
|
6,538,312
|
$
|
3,941,104
|
19.
|
COMMITMENTS
|
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 € 7,266 per month ($9,980 per month at
September 30, 2010).
The
Company leases a smaller office facility of 2,045 square feet in Gent, Belgium
to support the sales and marketing division of our veneer business, from an
unrelated party pursuant to a nine year lease commencing September 1, 2008.
Additionally, to support and house our Research and Development Division, as of
October 15, 2009, an additional 2,290 square feet are being leased from the same
unrelated party from which we lease our sales and marketing division, at a
base rent of € 4,930 per month for the total location ($6,771 per month at
September 30, 2010).
Minimum
monthly lease payments for real estate, and all other leased equipment are as
follows based upon the conversion rate for the (Euro) at September 30,
2010:
March 31, 2011
|
242,665
|
|||
March
31, 2012
|
381,007
|
|||
March
31, 2013
|
287,418
|
|||
March
31, 2014
|
235,966
|
|||
March
31, 2015
|
95,151
|
|||
After
five years
|
223,443
|
|||
Total:
|
$
|
1,465,650
|
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 will 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. On
July 2009, the Company renewed the first half of the second year. The
Company is currently in negotiation with SensAble for the development of new
enhanced software.
17
20.
|
FINANCIAL
INSTRUMENTS
|
The FASB
ASC topic 820 on fair value measurement and disclosures establishes three levels
of inputs that may be used to measure fair value: quoted prices in active
markets for identical assets or liabilities (referred to as Level 1), observable
inputs other than Level 1 that are observable for the asset or liability either
directly or indirectly (referred to as Level 2), and unobservable inputs to the
valuation methodology that are significant to the measurement of fair value of
assets or liabilities (referred to as Level 3).
The
carrying values and fair values of our financial instruments are as
follows:
September 30, 2010
|
March 31, 2010
|
|||||||||||||||||
Carrying
|
Fair
|
Carrying
|
Fair
|
|||||||||||||||
Level
|
value
|
value
|
value
|
value
|
||||||||||||||
Cash
|
1
|
$
|
2,471,552
|
$
|
2,471,552
|
$
|
613,466
|
$
|
613,466
|
|||||||||
Accounts
receivable
|
2
|
$
|
1,631,444
|
$
|
1,631,444
|
$
|
811,009
|
$
|
811,009
|
|||||||||
Line
of credit
|
2
|
$
|
1,984,708
|
$
|
1,984,708
|
$
|
674,600
|
$
|
674,600
|
|||||||||
Accounts
payable
|
2
|
$
|
1,720,255
|
$
|
1,720,255
|
$
|
1,932,683
|
$
|
1,932,683
|
|||||||||
Accrued
liabilities
|
2
|
$
|
1,125,260
|
$
|
1,125,260
|
$
|
1,016,220
|
$
|
1,016,220
|
|||||||||
Due
to related parties
|
2
|
$
|
265,857
|
$
|
265,857
|
$
|
268,484
|
$
|
268,484
|
|||||||||
Long
term debt
|
2
|
$
|
582,262
|
$
|
582,262
|
$
|
641,371
|
$
|
641,371
|
The
following method was used to estimate the fair values of our financial
instruments:
The
carrying amount approximates fair value because of the short maturity of the
instruments.
18
Item
2. Management’s Discussion and Analysis of Financial Condition and
Results of Operations
Forward
Looking Statements
The
discussion contained herein is for the three and six months ended September 30,
2010 and 2009. 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 September 30,
2010. In addition to historical information, this section contains
“forward-looking” statements, including statements regarding the growth of
product lines, optimism regarding the business, expanding sales and other
statements. Words such as expects, anticipates, intends, plans, believes, sees,
estimates and variations of such words and similar expressions are intended to
identify such forward-looking statements. These statements are not guarantees of
future performance and involve certain risks and uncertainties that are
difficult to predict. Actual results could vary materially from the description
contained herein due to many factors including continued market acceptance of
our products. In addition, actual results could vary materially based on changes
or slower growth in the oral care and cosmetic dentistry products market; the
potential inability to realize expected benefits and synergies; domestic and
international business and economic conditions; changes in the dental industry;
unexpected difficulties in penetrating the oral care and cosmetic dentistry
products market; changes in customer demand or ordering patterns; changes in the
competitive environment including pricing pressures or technological changes;
technological advances; shortages of manufacturing capacity; future production
variables impacting excess inventory and other risk factors. Factors
that could cause or contribute to any differences are discussed in “Risk
Factors” and elsewhere in the Company’s annual report on Form 10-K filed on July
13, 2010 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 September 30, 2010. The
information contained in this Quarterly Report on Form 10-Q for the quarterly
period ended September 30, 2010 is not a complete description of the Company’s
business or the risks associated with an investment in the Company’s common
stock. Each reader should carefully review and consider the various disclosures
made by the Company in this Quarterly Report on Form 10-Q and in the Company’s
other filings with the Securities and Exchange Commission.
Overview
We
specialize in the research, development, and manufacturing of oral care and
cosmetic dentistry products. We are one of the leading manufacturers
of cosmetic dentistry products in Europe. Leveraging our knowledge of
regulatory requirements regarding dental products and management’s experience in
the needs of the professional dental community, we design, develop, manufacture
and distribute our cosmetic dentistry products, including a full line of
professional dental products that are distributed in Europe, Asia and the United
States. We manufacture many of our products at 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.
19
Result
of Operations
Comparative
detail of results as a percentage of sales, is as follows:
For the three months ended
September 30,
|
For the six months ended
September 30,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
NET
SALES
|
100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | ||||||||
COST
OF SALES
|
25.60 | % | 73.15 | % | 26.13 | % | 60.85 | % | ||||||||
GROSS
PROFIT
|
74.40 | % | 26.85 | % | 73.87 | % | 39.15 | % | ||||||||
OPERATING
EXPENSES
|
||||||||||||||||
Research
and development
|
3.61 | % | 3.06 | % | 2.72 | % | 2.06 | % | ||||||||
Sales
and marketing
|
12.70 | % | 7.70 | % | 13.87 | % | 12.38 | % | ||||||||
General
and administrative
|
40.48 | % | 61.94 | % | 36.83 | % | 54.44 | % | ||||||||
Depreciation
and amortization
|
5.90 | % | 9.99 | % | 5.88 | % | 8.92 | % | ||||||||
TOTAL
OPERATING EXPENSES
|
62.70 | % | 82.69 | % | 59.30 | % | 77.80 | % | ||||||||
INCOME
(LOSS) FROM OPERATIONS
|
11.70 | % | (55.84 | )% | 14.58 | % | (38.65 | )% | ||||||||
Other
income (expense)
|
1.24 | % | (9.77 | )% | 0.34 | % | (3.36 | )% | ||||||||
NET
INCOME (LOSS)
|
12.95 | % | (65.61 | )% | 14.92 | % | (42.01 | )% | ||||||||
INCOME
TAXES
|
(1.38 | )% | — | (0.75 | )% | — | ||||||||||
Net
income (loss) attributable toNon-controlling interest
|
5.07 | % | (18.49 | )% | 6.31 | % | (6.78 | )% | ||||||||
LOSS
ATTRIBUTABLE TO REMEDENT SHAREHOLDERS
|
6.50 | % | (47.11 | )% | 7.86 | % | (35.23 | )% |
Net
Sales
We experienced a sales increase for the
three months ended September 30, 2010 of $1,321,252 or 74.2%, to $3,101,553 as
compared to $1,780,301 for the three months ended September 30, 2009. The
increase in sales was mainly due to increased sales in the Asian GlamSmile
facilities in Beijing and Hong Kong. Our sales also increased as a
result of the launch of new, higher margin, OTC products.
We
experienced a sales increase for the six months ended September 30, 2010 of
$2,597,208 or 65.9%, to $6,538,312 as compared to $3,941,104 for the six months
ended September 30, 2009. As noted above, the increase in sales was mainly
due to increased sales in the Asian GlamSmile facilities in Beijing and Hong
Kong. Our sales also increased as a result of the launch of new,
higher margin, OTC products.
Cost
of Sales
Our cost
of sales decreased for the three months ended September 30, 2010 by $508,295 or
39% to $793,942 as compared to $1,302,237 for the three months ended September
30, 2009. Cost of sales, as a percentage of net sales, has decreased to 25.6% in
the quarter ended September 30, 2010 as compared to 73.15% in the quarter ended
September 30, 2009. Cost of sales as a percentage of sales has
decreased because of reduced production costs of our veneer
product.
Cost of sales decreased for the six
months ended September 30, 2010 by $689,965 to $1,708,279 or 28.8% as compared
to $2,398,244 for the six months ended September 30, 2009. Cost of
sales, as a percentage of net sales, has decreased to 26.13% in the six month
period ended September 30, 2010 as opposed to 60.85% in the six month period
ended September 30, 2009. As noted above, cost of sales as a
percentage of sales has decreased primarily because of reduced production costs
for our veneer product.
20
We continue to closely monitor and look
for new strategies to optimize and improve our current processes in order to
decrease our costs.
Gross
Profit
Our
gross profit increased by $1,829,547 to $2,307,611 for the three month period
ended September 30, 2010 as compared to $478,064 for the three month period
ended September 30, 2009. Our gross profit as a percentage of sales increased to
74.4% in the three months ended September 30, 2010 as compared to 26.85% for the
three months ended September 30, 2009. The increase in gross profit is the
result of our sales in our Asian facilities where we sell direct instead of
indirect, thereby creating higher margins. Also, the launch of new higher margin
OTC products had a positive impact upon our gross profit.
Our gross
profit increased by $3,287,173 or 213.1%, to $4,830,033 for the six month period
ended September 30, 2010 as compared to $1,542,860 for the six month period
ended September 30, 2009. Our gross profit as a percentage of sales increased to
73.87% in the six months ended September 30, 2010 as compared to 39.15% for the
six months ended September 30, 2009. As noted above, the increase in
gross profit is the result of our sales in our Asian facilities where we sell
direct instead of indirect, thereby creating higher margins. Also, the launch of
new higher margin OTC products had a positive impact upon our gross
profit.
Operating
Expenses
Research and Development. Our
research and development expenses increased by $57,472 to $111,994, or 105.4%,
for the three months ended September 30, 2010 as compared to $54,522 for the
three months ended September 30, 2009. Research and Development
expenses have increased primarily because of our work with respect to the new
milling machine and the “First-Fit Concept”.
Our
research and development expenses increased by $96,419 to $177,539 or 118.9%,
for the six months ended September 30, 2010 as compared to $81,120 for the
six months ended September 30, 2009. Research and development has
increased mainly because of work related to the new milling machine and the
“First-Fit Concept”, as noted above.
Sales and marketing costs. Our
sales and marketing costs increased by $256,938 or 187.4%, to $394,014 for the
three months ended September 30, 2010 as compared to $137,076 for the three
months ended September 30, 2010. The increase is largely due to our new Asian
GlamSmile Sales Facilities.
Our sales
and marketing costs increased by $418,979 or 85.9%, to $906,990 for the six
months ended September 30, 2010 as compared to $488,011 for the six months ended
September 30, 2009. The increase is largely due to market efforts associated
with our new Asian GlamSmile Sales Facilities.
General and administrative
costs. Our general and administrative costs for the three months ended
September 30, 2010 and 2009 were $1,255,597 and $1,102,634, respectively,
representing an increase of $152,963 or 13.9%. The Company’s general and
administrative costs have increased primarily because of increased costs
associated with our Asian GlamSmile facilities.
Our
general and administrative costs for the six months ended September 30,
2010 and 2009 were $2,408,309 and $2,145,398 respectively, representing an
increase of $262,911 or 12.3%. As noted above, our general and
administrative costs have increased primarily as a result of costs associated
with our Asian GlamSmile facilities.
21
Depreciation and amortization.
Our depreciation and amortization increased $5,111 or 2.9%, to $183,025 for the
three months ended September 30, 2010 as compared to $177,914 for the three
months ended September 30, 2009. The increase is largely because of
amortization and depreciation associated with our Asian GlamSmile
Production Lab in Beijing.
Our
depreciation and amortization increased $32,869 or 9.4%, to $384,227 for the six
months ended September 30, 2010 as compared to $351,358 for the six months ended
September 30, 2009. As noted above, the increase is largely because
of amortization and depreciation associated with our Asian GlamSmile
Production Lab in Beijing.
Other
income (expense). Our other income (expense) was $38,541
for the three months ended September 30, 2010 as compared to $(173,935) for the
three months ended September 30, 2009, a decrease in expense of $212,476. The
decrease is primarily because in the three month period ended September 30,
2009, warrants valued at $159,888 were expensed and none were issued in the
quarter ended September 30, 2010. Also, interest income in the three
months ended September 30, 2010 was $72,987 as opposed to $25,160 in the three
months ended September 30, 2009.
Our other
income (expense) for the six months ended September 30, 2010 increased by
$155,093, from ($132,583) to $22,510 primarily because no warrants were issued
in the six months ended September 30, 2010.
Internal
and External Sources of Liquidity
As of
September 30, 2010, we had current assets of $7,245,343 compared to $4,502,576
at March 31, 2010. This increase of $2,742,767 was primarily due to an increase
in cash of $1,858,086 and an increase in accounts receivable of $824,513.
Current liabilities at September 30, 2010 were $5,220,106 as compared to
$3,582,793 at March 31, 2010. The increase in current liabilities of
$1,637,313 was primarily as a result of the increase in use of our line of
credit by $1,310,108, and a total increase in accounts payable, accrued
liabilities and amounts due to related parties of $418,668, offset by a decrease
in the current portion of the long term debt of $91,463.
The
increase in our use of our line of credit is approximately equal to the
decrease in our accounts payable and the increase in our accounts
receivable. At September 30, 2010 we believe we have approximately
$764,000 available under our line of credit.
As of
September 30, 2010, we had cash and cash equivalents of $2,471,552. We believe
that these balances, along with our line of credit, will provide sufficient
financing in order to fund our working and other capital requirements over the
course of the next twelve months. We will continue to review our expected
cash requirements, make all efforts to collect any aged receivables, and take
appropriate cost reduction measures to ensure that we have sufficient
working capital to fund our operations. In the event additional needs for cash
arise, we may seek to raise additional funds from a combination of sources
including issuance of debt or equity securities. Additional financing may not be
available on terms favorable to us, or at all. Any additional financing activity
could be dilutive to our current stockholders. If adequate funds are not
available or are not available on acceptable terms, our ability to take
advantage of unanticipated opportunities or respond to competitive pressures
could be limited.
At this
time, we do not expect to purchase or sell any property or equipment over the
next 12 months. We do not currently expect a significant change in the number of
its employees over the next 12 months.
Cash
and Cash equivalents
Our
balance sheet at September 30, 2010 reflects cash and cash equivalents of
$2,471,552 as compared to $613,466 as of March 31, 2010, an increase of
$1,858,086. The increase of cash and cash equivalents is primarily as a result
of increased sales, combined with an increase in the use of our line of credit,
as described above.
22
Operations
Net cash
provided by operations was $735,370 for the six months ended September 30, 2010
as compared to net cash provided by operations of $26,127 for the six months
ended September 30, 2009. The increase in net cash provided by operations for
the six months ended September 30, 2010 as compared to the six months ended
September 30, 2009 is primarily as a result of our success in the Asian market,
combined with the success of our newly launched OTC products, which have been
very well received.
Investing
activities
Net cash
used in investing activities totaled $185,308 for the six months ended September
30, 2010 as compared to net cash used in investing activities of $543,513 for
the six months ended September 30, 2009. Cash used in the six months ended
September 30, 2010 was mainly for additional equipment for the production
of veneers. Cash used in the six months ended September 30, 2009 was mainly
for machinery and related software to support our increasing number of
veneer designers.
Financing
activities
Net cash
provided by financing activities totaled $1,250,999 for the six months ended
September 30, 2010, as compared to $278,504 for the six months ended September
30, 2009. The increase in the net cash provided by financing
activities in the six month period ended September 30, 2010 was primarily the
result of increased use of our line of credit.
During
the six months ended September 30, 2010 and September 30, 2009, we recognized an
increase in cash and cash equivalents of $57,025 and $117,983, respectively,
from the effect of exchange rates between the Euro and the US
Dollar.
Off-Balance
Sheet Arrangements
At
September 30, 2010, we did not have any transactions, obligations or
relationships that could be considered off-balance sheet
arrangements.
Item
3. Quantitative and Qualitative Disclosures About Market
Risk
Not
Applicable.
Item
4T. Controls and Procedures
Disclosure
Controls and Procedures
We maintain disclosure controls and
procedures designed to ensure that information required to be disclosed in our
reports filed under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), is recorded, processed, summarized, and reported within the
required time periods and that such information is accumulated and communicated
to our management, including our Chief Executive Officer and our Chief Financial
Officer, as appropriate, to allow for timely decisions regarding required
disclosure. In designing and evaluating the disclosure controls and
procedures, management recognizes that any controls and procedures, no matter
how well designed and operated, can only provide reasonable assurance of
achieving the desired control objective, and management is required to exercise
its judgment in evaluating the cost-benefit relationship of possible controls
and procedures .
23
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 September
30, 2010. 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 September 30, 2010.
Changes
in Internal Control Over Financial Reporting
There
have been no material changes in our internal controls over financial
reporting identified in connection with the evaluation of disclosure controls
and procedures discussed above that occurred during the quarter ended September
30, 2010 or subsequent to that date that have materially affected, or are
reasonably likely to materially affect, our internal control over
financial reporting.
PART
II - OTHER INFORMATION
Item
1. Legal Proceedings
To the
best knowledge of management, there are no material legal proceedings pending
against the Company.
Item
1A. Risk Factors
Not
Applicable.
Item
2. Unregistered Sales of Equity Securities and Use of
Proceeds
None.
Item
3. Defaults Upon Senior Securities
None.
Item
4. [Removed and Reserved]
Item
5. Other Information
None.
24
Item
6. Exhibits
EXHIBIT
INDEX
Exhibit No
|
Description
|
|
31.1
|
Certifications
of the Chief Executive Officer under Section 302 of the Sarbanes-Oxley
Act.*
|
|
31.2
|
Certifications
of the Chief Financial Officer under Section 302 of the Sarbanes-Oxley
Act.*
|
|
32.1
|
Certifications
of the Chief Executive Officer under Section 906 of the Sarbanes-Oxley
Act.*
|
|
32.2
|
Certifications
of the Chief Financial Officer under Section 906 of the Sarbanes-Oxley
Act.*
|
* Filed
herewith.
25
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934 the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
REMEDENT,
INC.
|
||
Date: November
12, 2010
|
By:
|
/s/ Guy De Vreese |
Name: Guy
De Vreese
|
||
Title:
Chief Executive Officer
(Principal Executive Officer)
|
||
Date: November
12, 2010
|
By:
|
/s/ Stephen Ross |
Name: Stephen
Ross
|
||
Title:
Chief Financial Officer
(Principal Accounting
Officer)
|
26