Prospectus
Supplement No. 2 to
Prospectus
dated May 14, 2009
Filed
Pursuant to Rule 424(b)(3)
Registration
No. 333-144745
Supplement
No. 2
To
Prospectus
Dated
May 14, 2009
This
Prospectus Supplement No. 2 supplements our combined Prospectus dated May 14,
2009 as supplemented by that certain Prospectus Supplement No.1 as filed
with the Securities and Exchange Commission (“SEC”) on September 2, 2009, and
includes our Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 2009 as filed with the SEC on November 16, 2009 (collectively, the
“Prospectus”). This Prospectus Supplement No. 2 is not complete
without, and may not be delivered or utilized except in connection with, the
Prospectus, including any amendments or supplements thereto. We may
amend or supplement the Prospectus from time to time by filing amendments or
supplements as required. We encourage you to read this Prospectus
Supplement No. 2 carefully with the Prospectus.
The
Prospectus relates to the sale or other disposition of 4,032,287 shares of
common stock, par value $.001 per share, by those certain Selling Security
Holders listed under “Selling Security Holders” starting on page 15 of the
Prospectus dated May 14, 2009 or their transferees. The Prospectus
also covers the sale or other disposition of 7,775,745 shares of our common
stock by the Selling Security Holders or their transferees upon the exercise of
outstanding warrants. We will receive gross proceeds of $12,187,133
if all of the warrants are exercised for cash by the Selling Security
Holders. We will not receive any proceeds from the sale or other
disposition of any common stock by the Selling Security Holders or their
transferees.
Our
common stock trades on the Over-The-Counter Bulletin Board, under the symbol
“REMI.” On November 23, 2009, the last reported sale price for our common stock
was $0.40. There is no public market for the warrants.
The
Selling Security Holders may, from time to time, sell, transfer or otherwise
dispose of any or all of their shares of common stock on any stock exchange,
market or trading facility on which the shares are traded or in private
transactions. These dispositions may be at fixed prices, at
prevailing market prices at the time of sale, at prices related to the
prevailing market price, at varying prices determined at the time of sale or at
negotiated prices. See the “Plan of Distribution” beginning on page
19 of the Prospectus.
________________
INVESTING
IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE
“RISK
FACTORS”
BEGINNING ON PAGE 4
OF
THE PROSPECTUS DATED MAY 14, 2009, AND THE RISK FACTORS IN OUR ANNUAL REPORT ON
FORM 10-K FOR THE YEAR ENDED MARCH 31, 2009 AS FILED WITH THE SEC ON JUNE
29, 2009.
This Prospectus Supplement No. 2
supplements our combined prospectus under Rule 429 of the Securities Act of
1933, as amended (the “Act”), that relates to those of our securities that have
previously been registered under the Act on registration statements, or
post-effective amendments thereto, as applicable (File Nos.: 333-127193 and
333-144745).
________________
The
date of this Prospectus Supplement No. 2 is November 25, 2009.
UNITED
STATES 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 September 30, 2009
¨
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-3 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 , 2009, 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, 2009 (Unaudited) and March
31, 2009
|
1
|
Condensed
Consolidated Statements of Operations for the Three and Six Months Ended
September 30, 2009 and September 30, 2008 (Unaudited)
|
2
|
Condensed
Consolidated Statements of Comprehensive Income (Loss) for the Three
and Six Months Ended September 30, 2009 and September 30, 2008
(Unaudited)
|
3
|
Condensed
Consolidated Statements of Cash Flows for the Six Months Ended September
30, 2009 and September 30, 2008 (Unaudited)
|
4
|
Notes
to Interim Condensed Consolidated Financial Statements
(Unaudited)
|
5
|
Item
2. Management’s Discussion and Analysis of Financial Condition
and Results of Operations
|
21
|
Item
3. Quantitative and Qualitative Disclosures About Market
Risk
|
26
|
Item
4T. Controls and Procedures
|
26
|
|
|
PART II – OTHER INFORMATION
|
|
Item 1. Legal
Proceedings
|
27
|
Item 1A. Risk Factors
|
27
|
Item 2. Unregistered Sales of
Equity Securities and Use of Proceeds
|
27
|
Item 3. Defaults Upon Senior
Securities
|
28
|
Item 4. Submission of Matters to a
Vote of Security Holders
|
28
|
Item 5. Other
Information
|
28
|
Item 6. Exhibits
|
28
|
Signature Page
|
30
|
PART
I – FINANCIAL INFORMATION
Item
1. Financial Statements
REMEDENT,
INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
September
30, 2009
|
|
|
March 31, 2009
|
|
|
|
(unaudited)
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
CURRENT
ASSETS:
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$
|
1,686,372
|
|
|
$
|
1,807,271
|
|
Accounts
receivable, net of allowance for doubtful accounts of $37,474 at
September 30, 2009 and $33,966 at March 31, 2009
|
|
|
880,956
|
|
|
|
3,208,120
|
|
Inventories,
net
|
|
|
2,081,658
|
|
|
|
1,937,946
|
|
Prepaid
expenses
|
|
|
1,387,059
|
|
|
|
1,310,900
|
|
Total
current assets
|
|
|
6,036,045
|
|
|
|
8,264,237
|
|
PROPERTY
AND EQUIPMENT, NET
|
|
|
1,246,287
|
|
|
|
1,024,999
|
|
OTHER
ASSETS
|
|
|
|
|
|
|
|
|
Long
term investments and advances
|
|
|
750,000
|
|
|
|
750,000
|
|
Patents,
net
|
|
|
129,447
|
|
|
|
163,106
|
|
Total
assets
|
|
$
|
8,161,779
|
|
|
$
|
10,202,342
|
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
|
|
|
|
|
Current
portion, long term debt
|
|
$
|
73,109
|
|
|
$
|
78,798
|
|
Line
of Credit
|
|
|
728,400
|
|
|
|
660,200
|
|
Accounts
payable
|
|
|
1,091,131
|
|
|
|
1,398,420
|
|
Accrued
liabilities
|
|
|
754,450
|
|
|
|
1,590,360
|
|
Income
taxes payable
|
|
|
37,964
|
|
|
|
39,339
|
|
Total
current liabilities
|
|
|
2,685,054
|
|
|
|
3,767,117
|
|
Long
term debt less current portion
|
|
|
316,535
|
|
|
|
100,542
|
|
Total
liabilities
|
|
|
3,001,589
|
|
|
|
3,867,659
|
|
|
|
|
|
|
|
|
|
|
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, 2009 and March 31,
2009)
|
|
|
19,996
|
|
|
|
19,996
|
|
Treasury
stock, at cost; 723,000 shares at September 30, 2009 and March 31,
2009
|
|
|
(831,450
|
)
|
|
|
(831,450
|
)
|
Additional
paid-in capital
|
|
|
24,468,843
|
|
|
|
24,106,055
|
|
Accumulated
deficit
|
|
|
(18,604,242
|
)
|
|
|
(17,216,028
|
)
|
Accumulated
other comprehensive (loss) (foreign currency translation
adjustment)
|
|
|
(522,266
|
)
|
|
|
(640,595
|
)
|
Total
Remedent, Inc. stockholders’ equity
|
|
|
4,530,881
|
|
|
|
5,437,978
|
|
Non-controlling
interest (Note 3)
|
|
|
629,309
|
|
|
|
896,705
|
|
Total
stockholders’ equity
|
|
|
5,160,190
|
|
|
|
6,334,683
|
|
Total
liabilities and equity
|
|
$
|
8,161,779
|
|
|
$
|
10,202,342
|
|
COMMITMENTS
(Note 19)
The
accompanying notes are an integral part of these consolidated financial
statements.
REMEDENT, INC. AND
SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
|
|
For
the three months ended
September
30,
|
|
|
For
the six months ended
September
30,
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales
|
|
$
|
1,780,301
|
|
|
$
|
2,771,079
|
|
|
$
|
3,941,104
|
|
|
$
|
6,406,558
|
|
Cost
of sales
|
|
|
1,302,237
|
|
|
|
785,453
|
|
|
|
2,398,244
|
|
|
|
2,054,877
|
|
Gross
profit
|
|
|
478,064
|
|
|
|
1,985,626
|
|
|
|
1,542,860
|
|
|
|
4,351,681
|
|
Operating
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research
and development
|
|
|
54,522
|
|
|
|
47,415
|
|
|
|
81,120
|
|
|
|
172,373
|
|
Sales
and marketing
|
|
|
137,076
|
|
|
|
840,207
|
|
|
|
488,011
|
|
|
|
1,511,506
|
|
General
and administrative
|
|
|
1,102,634
|
|
|
|
1,273,723
|
|
|
|
2,145,398
|
|
|
|
2,404,036
|
|
Depreciation
and amortization
|
|
|
177,914
|
|
|
|
183,111
|
|
|
|
351,358
|
|
|
|
274,372
|
|
TOTAL
OPERATING EXPENSES
|
|
|
1,472,146
|
|
|
|
2,344,456
|
|
|
|
3,065,887
|
|
|
|
4,362,287
|
|
INCOME
(LOSS) FROM OPERATIONS
|
|
|
(994,082
|
)
|
|
|
(358,830
|
)
|
|
|
(1,523,027
|
)
|
|
|
(10,606
|
)
|
OTHER
INCOME (EXPENSES)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants
issued
|
|
|
(159,888
|
)
|
|
|
(4,323,207
|
)
|
|
|
(159,888
|
)
|
|
|
(4,323,207
|
)
|
Interest
expense
|
|
|
(39,207
|
)
|
|
|
(44,836
|
)
|
|
|
(68,853
|
)
|
|
|
(80,180
|
)
|
Interest
income
|
|
|
25,160
|
|
|
|
39,845
|
|
|
|
91,158
|
|
|
|
56,131
|
|
TOTAL
OTHER INCOME (EXPENSES)
|
|
|
(173,935
|
)
|
|
|
(4,328,198
|
)
|
|
|
(132,583
|
)
|
|
|
(4,347,256
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
LOSS
|
|
|
(1,168,017
|
)
|
|
|
(4,687,028
|
)
|
|
|
(1,655,610
|
)
|
|
|
(4,357,862
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LESS:
NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTEREST
|
|
|
(329,234
|
)
|
|
|
-
|
|
|
|
(267,396
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
LOSS ATTRIBUTABLE TO REMEDENT, INC. Common Stockholders
|
|
$
|
(838,783
|
)
|
|
$
|
(4,687,028
|
)
|
|
$
|
(1,388,214
|
)
|
|
$
|
(4,357,862
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS
PER SHARE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and fully diluted
|
|
$
|
(0.04
|
)
|
|
$
|
(0.25
|
)
|
|
$
|
(0.07
|
)
|
|
$
|
(0.23
|
)
|
WEIGHTED
AVERAGE SHARES OUTSTANDING
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and fully diluted
|
|
|
19,995,969
|
|
|
|
18,968,717
|
|
|
|
19,995,969
|
|
|
|
18,804,164
|
|
The
accompanying notes are an integral part of these consolidated financial
statements.
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,
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
Net
(Loss) Income Attributable to Remedent Common Stockholders
|
|
$
|
(838,783
|
)
|
|
$
|
(4,687,028
|
)
|
|
$
|
(1,388,214
|
)
|
|
$
|
(4,357,862
|
)
|
OTHER
COMPREHENSIVE INCOME (LOSS):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
currency translation adjustment
|
|
|
60,761
|
|
|
|
(241,266
|
)
|
|
|
118,329
|
|
|
|
(213,674
|
)
|
Total
Other Comprehensive income (loss)
|
|
|
(778,022
|
)
|
|
|
(4,928,294
|
)
|
|
|
(1,269,885
|
)
|
|
|
(4,571,536
|
)
|
LESS:
COMPREHENSIVE INCOME ATTRIBUTABLE TO NON-CONTROLLING
INTEREST
|
|
|
13,836
|
|
|
|
-
|
|
|
|
56,084
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMPREHENSIVE
(LOSS)ATTRIBUTABLE TO REMEDENT Common Stockholders
|
|
$
|
(764,186
|
)
|
|
$
|
(4,928,294
|
)
|
|
$
|
(1,213,801
|
)
|
|
$
|
(4,571,536
|
)
|
The
accompanying notes are an integral part of these consolidated financial
statements.
REMEDENT,
INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
|
|
For the six months ended
September 30,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
Net
(loss) income
|
|
$
|
(1,655,610)
|
|
|
$
|
(4,357,862)
|
|
Adjustments
to reconcile net income (loss) to net cash used by operating
activities
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
351,358
|
|
|
|
274,372
|
|
Inventory
reserve
|
|
|
1,364
|
|
|
|
(1,508)
|
|
Allowance
for doubtful accounts
|
|
|
3,508
|
|
|
|
(3,072)
|
|
Value
of stock options issued to employees and consultants
|
|
|
202,900
|
|
|
|
176,850
|
|
Warrants
issued
|
|
|
159,888
|
|
|
|
4,323,207
|
|
Changes
in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
2,327,164
|
|
|
|
30,098
|
|
Inventories
|
|
|
(143,712)
|
|
|
|
(454,602)
|
|
Prepaid
expenses
|
|
|
(76,159)
|
|
|
|
(913,581)
|
|
Accounts
payable
|
|
|
(307,289)
|
|
|
|
(9,123)
|
|
Accrued
liabilities
|
|
|
(835,910)
|
|
|
|
325,754
|
|
Income
taxes payable
|
|
|
(1,375)
|
|
|
|
(3,822)
|
|
Net
cash used by operating activities
|
|
|
26,127
|
|
|
|
(613,289)
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
Purchases
of equipment
|
|
|
(543,513)
|
|
|
|
(329,755)
|
|
Net
cash used by investing activities
|
|
|
(543,513)
|
|
|
|
(329,755)
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
Net
(repayments of) capital lease note payable
|
|
|
210,304
|
|
|
|
63,995
|
|
Proceeds
from line of credit
|
|
|
68,200
|
|
|
|
850,824
|
|
Net
cash provided by financing activities
|
|
|
278,504
|
|
|
|
914,819
|
|
NET
(DECREASE) INCREASE IN CASH
|
|
|
(238,882)
|
|
|
|
(28,225)
|
|
Effect
of exchange rate changes on cash and cash equivalents
|
|
|
117,983
|
|
|
|
11,164
|
|
CASH
AND CASH EQUIVALENTS, BEGINNING
|
|
|
1,807,271
|
|
|
|
1,728,281
|
|
CASH
AND CASH EQUIVALENTS, ENDING
|
|
$
|
1,686,372
|
|
|
$
|
1,711,220
|
|
Supplemental
Information:
|
|
|
|
|
|
|
|
|
Interest
paid
|
|
$
|
32,864
|
|
|
$
|
65,010
|
|
Income
taxes paid
|
|
$
|
-
|
|
|
$
|
-
|
|
The
accompanying notes are an integral part of these consolidated financial
statements.
REMEDENT, INC. AND SUBSIDIARIES
NOTES
TO INTERIM CONDENSED 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, in 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.
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), 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 by 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. The rebranded Sylphar Asia Pte Ltd (former Remedent Asia Pte.
Ltd.), commenced operations as of July 2005.
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,
2009, are not necessarily indicative of the results that may be expected for the
year ended March 31, 2010. Accordingly, your attention is directed to
footnote disclosures found in the Annual Report on Form 10-K for the year ending
March 31, 2009, and particularly to Note 2, which includes a summary of
significant accounting policies.
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.
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.
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.
Non-controlling
Interest
The
Company adopted ASC Topic 810 (formerly SFAS 160)
Noncontrolling Interests in
Consolidated Financial Statements
— an Amendment of Accounting
Research Bulletin No. 51
as of April 1, 2009. SFAS 160 establishes
accounting and reporting standards for ownership interests in subsidiaries held
by parties other than the parent, the amount of consolidated net income
attributable to the parent and to the noncontrolling interest, changes in a
parent’s ownership interest and the valuation of retained noncontrolling equity
investments when a subsidiary is deconsolidated. ASC Topic 810 also establishes
reporting requirements that provide sufficient disclosures that clearly identify
and distinguish between the interest of the parent and the interests of the
noncontrolling owner. The adoption of ASC Topic 810 impacted the presentation of
our consolidated financial position, results of operations and cash
flows.
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.
Comparative
Figures
Certain
comparative figures have been reclassified in order to conform to the current
year’s financial statement presentation. The reclassifications
included the retrospective adoption of ASC Topic 810 as described in Note 2
under “Non-controlling Interest”. The reclassification had no impact
upon previously reported net income available to common stockholders or earnings
per share.
Computation
of Earnings (Loss) per Share
The
Company computes net income (loss) per share as follows: Basic
earnings per share (“EPS”) is computed by dividing net income (loss) available
to common shareholders (numerator) by the weighted average number of common
shares outstanding (denominator) during the period. Diluted EPS gives effect to
all dilutive potential common shares outstanding during the period including
stock options, using the treasury stock method, and convertible notes, using the
if-converted method. In computing diluted EPS, the average stock price for the
period is used in determining the number of shares assumed to be purchased from
the exercise of stock options or warrants. Diluted EPS excludes all dilutive
potential common shares if their effect is anti-dilutive. Outstanding options of
2,068,166 and 1,103,166 for the six month periods ended September 30, 2009
and 2008, respectively, have been excluded from the above calculations as they
would be anti-dilutive. Outstanding warrants for the three and six months ended
September 30, 2009 and September 30, 2008 were 11,848,305
and 10,638,405 respectively, have also been excluded from the above
calculations as they would be anti-dilutive.
Adoption
of New Accounting Standards
Effective
April 1, 2009, we adopted Financial Accounting Standards Board (FASB) Statement
of Financial Accounting Standards (SFAS) ASC Topic 855 (formerly FASB 165) “
Subsequent Events
.”
This Statement establishes the accounting for, and disclosure of, material
events that occur after the balance sheet date, but before the financial
statements are issued. In general, these events will be recognized if the
condition existed at the date of the balance sheet, and will not be recognized
if the condition did not exist at the balance sheet date. Disclosure is required
for non-recognized events if required to keep the financial statements from
being misleading. The guidance in this Statement is very similar to current
guidance provided in auditing literature and, therefore, will not result in
significant changes in practice. Subsequent events have been evaluated through
the date our interim financial statements were issued—the filing time and date
of our second quarter in 2009 on Quarterly Report on Form 10-Q.
In
April 2009, the FASB issued three FASB Staff Positions (FSP’s) (now superseded
by the FASB Accounting Standards Codification) that are intended to provide
additional application guidance and enhance disclosures about
fair value measurements and impairments of securities.
|
·
|
ASC
Topic 820-10-65 (formerly FSP No. 157-4), “
Determining Fair Value When
the Volume and Level of Activity for the Asset or Liability Have
Significantly Decreased and Identifying Transactions That
Are Not Orderly
” (FSP 157-4), clarifies the objective and method
of fair value measurement even when there has been a
significant decrease in market activity for the asset
being measured.
|
|
·
|
ASC Topic 320 (ASC 320-10-65)
(formerly FSP No. 115-2 and FSP No. 124-2) “
Recognition
and Presentation of Other-Than-Temporary
Impairments
”, (FSP
115-2 and FSP 124-2), establish a new model for measuring
other-than-temporary impairments for debt securities,
including criteria for when to recognize a
write-down through earnings versus other comprehensive
income.
|
|
·
|
ASC Topic 825 (ASC 825-10-65)
(formerly FSP No. 107-1 and APB 28-1) “
Interim
Disclosures About Fair Value of
Financial Instruments
”, expand the fair value
disclosures required for all financial instruments within
the scope of SFAS, No. 107, “Disclosures about Fair Value
of Financial Instruments” (FSP 107-1 and APB 28-1)
to interim periods. This guidance increases the frequency
of fair value disclosures from annual only to quarterly. FSP
No. 107-1 is effective for interim and annual periods ending after
June 15, 2009. The adoption of FSP No. 107-1 did not have a
material effect on the Company’s results of operations or consolidated
financial position, but will enhance required
disclosures.
|
All of
these FSP’s are effective for interim and annual periods ending
after June 15, 2009, our quarter ended June 30, 2009. The
adoption of these FSP’s has not had a material impact on our consolidated
results of operations and financial condition. However, adoption of FSP 107-1
and APB 28-1 during the six months ended September 30, 2009 has resulted in
increased disclosures in our consolidated
financial statements.
Recently
Issued Accounting Pronouncements
In June
2009, the Financial Accounting Standard Board (“FASB”) issued Accounting
Standards Update (“ASU”) No. 2009-01 “
Generally Accepted Accounting
Principles
” (ASC Topic 105) which establishes the FASB Accounting
Standards
Codification (“the
Codification” or
“ASC”) as the official single source of authoritative GAAP. All existing
accounting standards are superseded. All other accounting guidance not included
in the
Codification will be considered non-authoritative. The
Codification also includes all relevant SEC guidance organized
using the same topical structure in separate sections within the
Codification.
Following
the
Codification, the Board will not issue new standards in the
form of Statements, FASB Staff Positions or Emerging Issues Task Force (“EITF”)
Abstracts. Instead, it will issue ASU which will serve to update the
Codification, provide background information about the guidance and
provide the basis for conclusions on the changes to the
Codification.
The
Codification is not intended to change GAAP, but it will change the
way GAAP is organized and presented. The
Codification is
effective for our second-quarter 2009 financial statements and the principal
impact on our financial statements is limited to disclosures as all future
references to authoritative accounting literature will be referenced in
accordance with the
Codification. In order to ease the
transition to the
Codification, we are providing the
Codification cross-reference alongside the references to the
standards issued and adopted prior to the adoption of the
Codification.
In August
2009, the FASB issued ASU No. 2009-05
“Measuring Liabilities at Fair
Value” (amendments to ASC Topic 820, Fair Value Measurements and
Disclosures)”
(“ASU 2009-05”)which amends Fair Value Measurements and
Disclosures – Overall (ASC Topic 820-10) to provide guidance on the fair value
measurement of liabilities. This update requires clarification for circumstances
in which a quoted price in an active market for the identical liability is not
available, a reporting entity is required to measure fair value using one or
more of the following techniques: 1) a valuation technique that uses either the
quoted price of the identical liability when traded as an asset or quoted prices
for similar liabilities or similar liabilities when traded as an asset; or 2)
another valuation technique that is consistent with the principles in ASC Topic
820 such as the income and market approach to valuation. The amendments in this
update also clarify that when estimating the fair value of a liability, a
reporting entity is not required to include a separate input or adjustment to
other inputs relating to the existence of a restriction that prevents the
transfer of the liability. This update further clarifies that if the fair value
of a liability is determined by reference to a quoted price in an active market
for an identical liability, that price would be considered a Level 1 measurement
in the fair value hierarchy. Similarly, if the identical liability has a quoted
price when traded as an asset in an active market, it is also a Level 1 fair
value measurement if no adjustments to the quoted price of the asset are
required. This update is effective for our third quarter 2009. Management is
currently evaluating the potential impact of ASU No. 2009-05 on our financial
statements.
In
October 2009, the FASB issued ASU 2009-13,
“Multiple-Deliverable Revenue
Arrangements, (amendments to ASC Topic 605, Revenue Recognition)”
(“ASU
2009-13”). ASU 2009-13 requires entities to allocate revenue in an arrangement
using estimated selling prices of the delivered goods and services based on a
selling price hierarchy. The amendments eliminate the residual method of revenue
allocation and require revenue to be allocated using the relative selling price
method. ASU 2009-13 should be applied on a prospective basis for revenue
arrangements entered into or materially modified in fiscal years beginning on or
after June 15, 2010, with early adoption permitted. Management is currently
evaluating the potential impact of ASU2009-13 on our financial
statements.
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, NV, a wholly owned subsidiary of the Company formed under the laws of
Belgium (“Remedent NV”), pursuant to which the Company purchased a 99% ownership
interest in Sylphar, NV, a subsidiary of the Company formed under the laws of
Belgium, from Remedent NV. As a result of the Sylphar Purchase
Agreement, Sylphar NV became a wholly owned subsidiary of the Company. As
consideration for the 99 shares (“Sylphar Shares”), the Company agreed to pay
Remedent NV €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 NV 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 NV 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 NV (“OTC Subsidiaries”), into Remedent OTC BV, a
Dutch holding company and a wholly owned subsidiary of the Company (“Remedent
OTC”) in exchange for €1,000,160.
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
representations 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, BV, 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 were received
from Concordia and used to pay off the Debt in December
2008. Subsequently, all of the OTC Subsidiaries were transferred and
are currently held and operated by Sylphar Holding.
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.
|
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 March 31, 2009
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.
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 30th and 60th day,
respectively, after the Closing Date; (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.
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, 2009, two customers
accounted for a total of 17% of the Company’s trade accounts
receivable. At September 30, 2008, one customer accounted for a total
of 53% 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, 2009 the
Company had five suppliers who accounted for 20% of gross
purchases. For the six months ended September 30, 2008 the Company
had five suppliers who accounted for 24% of gross purchases.
Revenues
— For the six months ended September 30, 2009 the Company had five customers
that accounted for 60% of total revenues. For the six months ended
September 30, 2008 the Company had five customers that accounted for 55% of
total revenues.
6.
|
ACCOUNTS RECEIVABLE AND ALLOWANCE
FOR DOUBTFUL ACCOUNTS
|
A summary
of accounts receivable and allowance for doubtful accounts as of September 30,
2009 and March 31, 2009 is as follows:
|
|
September 30, 2009
|
|
|
March 31 2009
|
|
Accounts
receivable, gross
|
|
$
|
918,430
|
|
|
$
|
3,242,086
|
|
Less:
allowance for doubtful accounts
|
|
|
(37,474)
|
)
|
|
|
(33,966
|
)
|
Accounts
receivable, net
|
|
$
|
880,956
|
|
|
$
|
3,208,120
|
|
Inventories
at September 30, 2009 and March 31, 2009 are stated at the lower of cost
(first-in, first-out) or net realizable value and consisted of the
following:
|
|
September 30, 2009
|
|
|
March 31, 2009
|
|
Raw
materials
|
|
$
|
17,559
|
|
|
$
|
20,941
|
|
Components
|
|
|
1,053,790
|
|
|
|
1,017,286
|
|
Finished
goods
|
|
|
1,024,877
|
|
|
|
912,923
|
|
|
|
|
2,096,226
|
|
|
|
1,951,150
|
|
Less:
reserve for obsolescence
|
|
|
(14,568
|
)
|
|
|
(13,204
|
)
|
Net
inventory
|
|
$
|
2,081,658
|
|
|
$
|
1,937,946
|
|
|
|
September 30, 2009
|
|
|
March 31, 2009
|
|
Prepaid
materials and components
|
|
$
|
1,187,428
|
|
|
$
|
1,127,225
|
|
Prepaid
consulting
|
|
|
17,577
|
|
|
|
18,119
|
|
VAT
payments in excess of VAT receipts
|
|
|
85,025
|
|
|
|
99,315
|
|
Royalties
|
|
|
43,088
|
|
|
|
39,053
|
|
Prepaid
trade show expenses
|
|
|
6,558
|
|
|
|
—
|
|
Prepaid
rent
|
|
|
—
|
|
|
|
1,584
|
|
Other
|
|
|
47,383
|
|
|
|
25,604
|
|
|
|
$
|
1,387,059
|
|
|
$
|
1,310,900
|
|
9.
|
PROPERTY
AND EQUIPMENT
|
Property
and equipment are summarized as follows:
|
|
September 30, 2009
|
|
|
March 31, 2009
|
|
Furniture
and Fixtures
|
|
$
|
371,372
|
|
|
$
|
350,662
|
|
Machinery
and Equipment
|
|
|
1,749,673
|
|
|
|
1,351,870
|
|
Tooling
|
|
|
188,450
|
|
|
|
188,450
|
|
|
|
|
2,309,495
|
|
|
|
1,890,982
|
|
Accumulated
depreciation
|
|
|
(1,063,208
|
)
|
|
|
(865,983
|
)
|
Property
& equipment, net
|
|
$
|
1,246,287
|
|
|
$
|
1,024,999
|
|
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, 2009 the Company had recorded a 100% allowance against its
investment in IMDS because IMDS financial information is
unavailable. The provision will be re-evaluated as soon as
information becomes available.
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 remainder 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 $32,500 of accumulated amortization for this
patent as of September 30, 2009. The Company accrues this royalty when it
becomes payable to inventory therefore no provision has been made for this
obligation as of September 30, 2009 (March 31, 2009-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 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,
2009 the Company has not yet received the final Product. The patent is being
amortized over five (5) years and accordingly, the Company has recorded $91,126
of accumulated amortization for this patent as of September 30,
2009.
On
October 8, 2004, the Company’s 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 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 NV and/or 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 9.9% for advances on accounts receivable. 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 September 30, 2009 and
March 31, 2009, Remedent N.V. and Sylphar N.V. had in aggregate, $728,400 and
$660,200 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 $85,231). On October 24, 2006, the
Company entered into another five year capital lease agreement for additional
manufacturing equipment totaling €123,367 (US $157,503). 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). On August
18, 2009, the Company entered into a fourth capital lease agreement over a three
year period for additional manufacturing equipment totaling € 172,798 (US
$251,733).
The
leases require monthly payments of principal and interest at 7.43% of €1,172
(US$1,707 at September 30, 2009) for the first two leases and 9.72% of €2,056
(US $2,995 at September 30, 2009) and provide for buyouts at the conclusion of
the five year term of €2,820 (US$4,108) or 4.0% of original value for the first
two contracts and €4,933 (US $7,186) 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 $2,565 at September 30, 2009) and provides
for buyout at the conclusion of the three year term of €634 (US $924) or 1% of
the original value of this contract.
The
fourth lease contract requires monthly payments of principal and interest at
8.18% of €5,052 (US $7,360 at September 30, 2009) and provides for buyout at the
conclusion of the three year term of €1,728 (US $2,517) or 1% of the original
value of this contract.
The net
book value as of September 30, 2009 and March 31, 2009 of the equipment subject
to the foregoing leases are $385,529 and $179,339, respectively.
14.
|
RELATED PARTY
TRANSACTIONS
|
Transactions
with related parties, not disclosed elsewhere in these financial statements,
consisted of the following:
Compensation:
During
the six months ended September 30, 2009 and 2008 the Company incurred $371,841
and $349,569 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 six months ended September 30, 2009 and 2008
totaling $0 and $41,035 respectively. Accounts receivable at period end with
this customer totaled $33,982 and $31,895 as at September 30, 2009 and March 31,
2009 respectively.
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:
|
|
September 30,
2009
|
|
|
March 31,
2009
|
|
Accrued
employee benefit taxes and payroll
|
|
$
|
271,731
|
|
|
$
|
246,925
|
|
Accrued
Travel
|
|
|
16,338
|
|
|
|
13,170
|
|
Advances
and deposits
|
|
|
28,305
|
|
|
|
298,809
|
|
Commissions
|
|
|
15,364
|
|
|
|
258,105
|
|
Accrued
audit and tax preparation fees
|
|
|
7,335
|
|
|
|
8,947
|
|
Reserve
for warranty costs
|
|
|
21,852
|
|
|
|
19,806
|
|
Accrued
interest
|
|
|
-
|
|
|
|
1,279
|
|
Accrued
consulting fees
|
|
|
26,063
|
|
|
|
37,308
|
|
Other
accrued expenses
|
|
|
367,462
|
|
|
|
706,011
|
|
|
|
$
|
754,450
|
|
|
$
|
1,590,360
|
|
16.
|
EQUITY COMPENSATION
PLANS
|
As of
September 30, 2009, 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, 2009 with
respect to all compensation plans (including individual compensation
arrangements) under which equity securities are authorized for
issuance.
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
|
|
|
1,507,298
|
|
|
$
|
1.22
|
|
|
|
NA
|
|
Total
|
|
|
3,425,464
|
|
|
$
|
1.22
|
|
|
|
131,834
|
|
A summary
of the option activity for the six month period ended September 30, 2009
pursuant to the terms of the plans is as follows:
|
|
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, 2009
|
|
|
250,500
|
|
|
|
1.20
|
|
|
|
668,166
|
|
|
|
0.89
|
|
|
|
1,000,000
|
|
|
|
1.15
|
|
|
|
150,000
|
|
|
|
1.75
|
|
Granted
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Exercised
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Cancelled
or expired
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Options
outstanding, September 30, 2009
|
|
|
250,000
|
|
|
|
1.20
|
|
|
|
668,166
|
|
|
|
0.89
|
|
|
|
1,000,000
|
|
|
|
1.15
|
|
|
|
150,000
|
|
|
|
1.75
|
|
Options
exercisable September 30, 2009
|
|
|
231,667
|
|
|
|
1.20
|
|
|
|
555,666
|
|
|
|
1.65
|
|
|
|
863,331
|
|
|
|
1.04
|
|
|
|
100,000
|
|
|
|
1.75
|
|
Exercise
price range
|
|
$
|
0.50 - $2.39
|
|
|
|
|
|
|
$
|
0.50 - $4.00
|
|
|
|
|
|
|
$
|
0.50 - $1.75
|
|
|
|
|
|
|
$
|
1.75
|
|
|
|
|
|
Weighted
average remaining life
|
|
3.27
years
|
|
|
|
|
|
|
5.10
years
|
|
|
|
|
|
|
8.47
years
|
|
|
|
|
|
|
8.00
years
|
|
|
|
|
|
For the
six month period ended September 30, 2009 the Company recognized $202,900 (2008
— $189,696) in stock based compensation expense in the consolidated statement of
operations with respect to vested options.
17.
|
COMMON STOCK WARRANTS AND OTHER
OPTIONS
|
As of
September 30, 2009, 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, 2009
|
|
|
10,638,305
|
|
|
$
|
1.58
|
|
Granted
|
|
|
1,210,000
|
|
|
|
1.00
|
|
Exercised
|
|
|
—
|
|
|
|
—
|
|
Cancelled
or expired
|
|
|
—
|
|
|
|
—
|
|
Warrants
outstanding September 30, 2009
|
|
|
11,848,305
|
|
|
|
1.52
|
|
Warrants
exercisable September 30, 2009
|
|
|
11,068,305
|
|
|
$
|
1.56
|
|
Exercise
price range
|
|
$
|
1.00 to $3.00
|
|
|
|
|
|
Weighted
average remaining life
|
|
2.57 Years
|
|
|
|
|
|
During
the period ended September 30, 2009 as consideration for certain services the
Company granted our investor relations consultants, warrants to purchase up to
1,210,000 shares of our common stock, at an exercise price of $1.00 per share,
subject to certain vesting restrictions. A total of 370,000 of the
warrants vested on the July 15, 2009 grant date and an additional 60,000 vested
during the period ended September 30, 2009. The balance vest as
follows:
Warrants
|
|
Vesting Schedule
|
|
|
|
240,000
|
|
1/12
(20,000) shall vest and become exercisable on July 30, 2009, and on the
30th day of each month thereafter until fully vested on June 30,
2010;
|
|
|
|
100,000
|
|
if
the Company’s Common Stock trades above $1.00 for ten (10) consecutive
trading days during the term of the Financial Public Relations
Agreement;
|
|
|
|
200,000
|
|
if
the Company’s Common Stock trades above $2.00 for ten (10) consecutive
trading days during the term of the Financial Public Relations Agreement;
and
|
|
|
|
300,000
|
|
if
the Company’s Common Stock trades above $3.00 for ten (10) consecutive
trading days during the term of the Financial Public Relations
Agreement.
|
The
Company valued the above noted 430,000 warrants that vested during the period
ended September 30, 2009 at $159,888, using the Black Scholes option pricing
model using the following assumptions: no dividend yield; expected volatility
rate of 110 - 112%; risk free interest rate of 1.30% and an average life of 3
years resulting in a value of $0.22 - $0.39 per option granted. A
total of $159,888 has been recognized as other expense in the period ended
September 30, 2009 with respect to these warrants. This was a non-cash
expense.
During
the year ended March 31, 2009 the Company granted 3,378,379 warrants pursuant to
a Distribution Agreement (Note 4) which were valued at $4,323,207 based upon the
Black-Scholes option pricing model utilizing a market price on the date of grant
of $1.48 per share, an annualized volatility of 131%, a risk free interest rate
of 3.07% and an expected life of five years.
The
Company’s only operating segment consists of dental products and oral hygiene
products sold by Remedent Inc., Remedent N.V., Sylphar N.V. 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,
2009
|
|
|
September 30,
2008
|
|
U.S. sales
|
|
$
|
1,231,062
|
|
|
$
|
3,904,368
|
|
Foreign
sales
|
|
|
2,710,042
|
|
|
|
2,502,189
|
|
|
|
$
|
3,941,104
|
|
|
$
|
6,406,557
|
|
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 ($10,585 per month at
September 30, 2009).
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 at a
base rent of €2,527 per month ($3,681 per month at September 30,
2009).
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,
2009:
March
31, 2010
|
|
$
|
334,299
|
|
March
31, 2011
|
|
|
332,548
|
|
March
31, 2012
|
|
|
155,844
|
|
March
31, 2013
|
|
|
79,065
|
|
March
31, 2014
|
|
|
40,046
|
|
After
five years
|
|
|
40,046
|
|
Total:
|
|
$
|
981,148
|
|
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.
Subsequent
events have been evaluated through November 14, 2009, the date these financial
statements were issued. No events required
disclosure.
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,
2009 and 2008. 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,
2009. 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 June
29, 2009 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, 2009. The
information contained in this Quarterly Report on Form 10-Q for the quarterly
period ended September 30, 2009 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.
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,
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
SALES
|
|
|
100.00
|
%
|
|
|
100.00
|
%
|
|
|
100.00
|
%
|
|
|
100.00
|
%
|
COST
OF SALES
|
|
|
73.15
|
%
|
|
|
28.34
|
%
|
|
|
60.85
|
%
|
|
|
32.07
|
%
|
GROSS
PROFIT
|
|
|
26.85
|
%
|
|
|
71.66
|
%
|
|
|
39.15
|
%
|
|
|
67.93
|
%
|
OPERATING
EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research
and development
|
|
|
3.06
|
%
|
|
|
1.71
|
%
|
|
|
2.06
|
%
|
|
|
2.69
|
%
|
Sales
and marketing
|
|
|
7.70
|
%
|
|
|
30.32
|
%
|
|
|
12.38
|
%
|
|
|
23.59
|
%
|
General
and administrative
|
|
|
61.94
|
%
|
|
|
45.96
|
%
|
|
|
54.44
|
%
|
|
|
37.52
|
%
|
Depreciation
and amortization
|
|
|
9.99
|
%
|
|
|
6.61
|
%
|
|
|
8.92
|
%
|
|
|
4.28
|
%
|
TOTAL
OPERATING EXPENSES
|
|
|
82.69
|
%
|
|
|
84.60
|
%
|
|
|
77.79
|
%
|
|
|
68.09
|
%
|
LOSS
FROM OPERATIONS
|
|
|
(55.84
|
)%
|
|
|
(12.95
|
)%
|
|
|
(38.64
|
)%
|
|
|
(0.17
|
)%
|
Other
income (expense)
|
|
|
(9.77
|
)%
|
|
|
(156.19
|
)%
|
|
|
(3.36
|
)%
|
|
|
(67.86
|
)%
|
NET
LOSS
|
|
|
(65.61
|
)%
|
|
|
(169.14
|
)%
|
|
|
(42.01
|
)%
|
|
|
(68.02
|
)%
|
Non-controlling
interest
|
|
|
(18.49
|
)%
|
|
|
-
|
|
|
|
(6.78
|
)%
|
|
|
-
|
|
LOSS
ATTRIBUTABLE TO REMEDENT SHAREHOLDERS
|
|
|
(47.11
|
)%
|
|
|
(169.14
|
)%
|
|
|
(35.22
|
)%
|
|
|
(68.02
|
)%
|
Net Sales
Net sales decreased for the three
months ended September 30, 2009 by $990,778 or 35.8%, to $1,780,301 as compared
to $2,771,079 for the three months ended September 30, 2008. We experienced a
sales decrease for the six months ended September 30, 2009 of $2,465,454 or
38.48%, to $3,941,104 as compared to $6,406,558 for the six months ended
September 30, 2008. The decrease in sales is primarily due to the
non-recurrence of a $2,425,000 license fee to DenMat that was invoiced during
the three months ending September 30, 2008. For the six months ended September
30, 2008, we invoiced a total of $3,675,000 in non-recurring license fee to
DenMat.
Cost
of Sales
Cost of sales increased for the three
months ended September 30, 2009 by $516,784, or 65.8% to $1,302,237 as compared
to $785,453 for the three months ended September 30, 2008. Accordingly, cost of
sales, as a percentage of net sales, increased from 28.34% for the quarter ended
September 30, 2008 to 73.15% for the quarter ended September 30, 2009. Cost of
sales as a percentage of sales has increased because of the non-recurring
license fees discussed above and the settlement with a large OTC customer, which
included a partial payment and return of goods in the amount of
$409,541.
Our cost of sales increased for the six
months ended September 30, 2009 by $343,367, or 16.71%, to $2,398,244 as
compared to $2,054,877 for the six months ended September 30, 2008. Cost of
sales, as a percentage of net sales, has increased to 60.85% in the six month
period ended September 30, 2009 as opposed to 32.07% in the six month period
ended September 30, 2008. Cost of sales as a percentage of net sales
increased mainly because of the non-recurring license fees and the settlement
and return of goods from a large OTC customer.
Gross
Profit
Our gross profit decreased by
$1,507,562 or 76%, to $478,064 for the three month period ended
September 30, 2009 as compared to $1,985,626 for the three month period
ended September 30, 2008. Our gross profit as a percentage of sales decreased
from 71.66% in the three months ended September 30, 2008 to 26.85% for the three
months ended September 30, 2009. The decrease in gross profit is the result of
the non-recurring license fee and the agreed settlement with a large OTC
customer.
Our gross profit decreased by
$2,808,821 or 64.5%, to $1,542,860 for the six month period ended
September 30, 2009 as compared to $4,351,681 for the six month period ended
September 30, 2008. Our gross profit as a percentage of sales decreased to
39.15% in the six months ended September 30, 2009 as compared to 67.93% for the
six months ended September 30, 2008. The decrease in gross profit is the
result of the licensee fees which where invoiced during last year’s quarter
ending September 30, 2008, as noted above and the agreed settlement with a large
OTC customer.
Operating
Expenses
Research
and Development
Research and development expenses
increased by $7,107 or 14.99%, to $54,522 for the three months ended September
30, 2009 as compared to $47,415 for the three months ended September 30,
2008.
Our research and development expenses
decreased by $91,253 to $81,120 or 52.9%, for the six months ended September 30,
2009 as compared to $172,373 for the six months ended September 30,
2008. Research and development has decreased mainly because last
year’s research and development activity included additional costs incurred in
developing new products. This year we are selling the products that
were developed last year and thus our research and development costs have
decreased.
Sales
and marketing costs
Sales and marketing costs decreased by
$703,131, or 83.7%, to $137,076 for the three months ended September 30, 2009 as
compared to $840,207 for the three months ended September 30, 2008. The decrease
is largely due to decreased provisions for commissions in relation to our sales
people in reference to the named settlement and the non-recurring costs of a
direct US veneer sales office that was included in the quarter ending September
30, 2008.
Our sales and marketing costs decreased
by $1,023,495 or 67.7%, to $488,011 for the six months ended September 30, 2009
as compared to $1,511,506 for the six months ended September 30, 2008. The
decrease is largely due to the Company’s USA sales
reorganization. Rather than funding a direct sales office in the USA,
the Company has chosen to sell into the USA via a distributor, thereby
significantly reducing sales and marketing costs including sales
commissions.
General
and administrative costs
General and administrative costs for
the three months ended September 30, 2009 and 2008 were $1,102,634 and
$1,273,723 respectively, representing a decrease of $171,089 or 13.4%. The
decrease in general and administrative costs as compared to the prior year is
the result of our USA reorganization.
Our general and administrative costs
for the six months ended September 30, 2009 and 2008 were $2,145,398 and
$2,404,036 respectively, representing a decrease of $258,638 or 10.7%. The
Company’s general and administrative costs have also decreased as a result of
the Company’s USA sales reorganization, as noted above.
Depreciation and amortization
Our depreciation and amortization
expense decreased from $183,111 to $177,914 for the three months ended September
30, 2009 compared to the three months ended September 30, 2008, a decrease of
2.84%.
Our depreciation and amortization
increased $76,986 or 28.1%, to $351,358 for the six months ended September 30,
2009 as compared to $274,372 for the six months ended September 30,
2008. 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.
Other
income (expense)
Net interest expense decreased by
$5,629 to $39,207 from $44,836 during the three months ended September 30, 2009
over the comparable three months ended September 30, 2008. For the six months
ended September 30, 2009 and 2008, the net interest expense decreased by $16,327
from $80,180 to $63,853.The decrease is mainly the result of decreased
utilization of our bank credit facility.
Our other income (expense) for the
three months ended September 30, 2009 and 2008 decreased by $4,154,263, from
($4,328,198) to ($173,935). Our other income (expense) was ($132,583)
for the six months ended September 30, 2009 as compared to ($4,347,256) for the
six months ended September 30, 2008, a decrease of $4,214,673, or 96.9%. The
main reason for this decrease is the non-recurring cost of the warrants that
were issued to DenMat.
Liquidity and Capital
Resources
Liquidity
We believe we currently possess
sufficient resources to meet the cash requirements of our operations for at
least the next year. Our basis for this is the following.
|
·
|
During
December 2008, we implemented cost reduction measures, including the
re-organization of our direct sales office in the United States of
America.
|
|
·
|
During
December 2008, we restructured our over-the-counter (OTC)
business.
|
|
·
|
As
a result of our distribution agreements, we have begun the process of
reducing our operations in the United States, which will significantly
reduce our costs.
|
|
·
|
We
continue to review our inventory and plan to reduce levels
held.
|
|
·
|
We
do not expect to purchase or sell any property or equipment over the next
12 months.
|
|
·
|
We
do not expect a significant change in the number of our
employees over the next 12
months.
|
We believe that we will have sufficient
resources to meet our obligations and sustain our operations for the remainder
of fiscal year 2010. However, we are substantially dependent on our
major distributor and the continued performance of this distributor to make
committed purchases of our products and associated consumables under the
distribution agreement and the receipt of cash in connection with those
purchases, is essential to our liquidity.
During the past six months, the balance
on our line of credit has increased by $68,200 from $660,200 at March 31, 2009
to $728,400 at September 30, 2009. The increase in our use of the
line of credit is approximately equal to the decrease in our accounts
payable and the combined increase in our accounts receivable and
inventories. At September 30, 2009 we believe we have approximately
$2,185,200 available under our line of credit. We believe that
the combination of the above factors, the availability of the balance of our
line of credit, and our effective management of our use of cash will minimize
our requirement to seek additional financing. However, in the event
that we are required to seek additional funding through public or private equity
or debt, there can be no assurance that we will be able to obtain requisite
financing to fund existing obligations and operating requirements on acceptable
terms or at all.
Cash
and Cash equivalents
Our balance sheet at September 30, 2009
reflects cash and cash equivalents of $1,686,372 as compared to $1,807,271 as of
March 31, 2009, a decrease of $120,899. The decrease of cash and cash
equivalents is primarily as a result of an overall net decrease in cash of
approximately $239,000 during the period, offset by foreign exchange gains on
cash transactions of approximately $118,000. Operating cash
transactions of significance included the collection of approximately $2,300,000
of our accounts receivable and the payment of approximately $1,100,000 in
accounts payable and accrued liabilities.
Operations
Net cash provided by operations was
$26,127 for the six months ended September 30, 2009 as compared to net cash used
by operations of $613,289 for the six months ended September 30, 2008. The
decrease in net cash used by operations for the six months ended September 30,
2009 as compared to the six months ended September 30, 2008 is primarily as a
result of an approximate $2,700,000 decrease in net operating loss for the
period and collection of accounts receivables amounting to approximately
$2,300,000 offset by repayment of approximately $1,100,000 of accounts payable
and accrued liabilities.
Investing
activities
Net cash used in investing activities
totaled $543,513 for the six months ended September 30, 2009 as compared to net
cash used in investing activities of $329,755 for the six months ended September
30, 2008. 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.
Cash used in investing activities in
the six months ended September 30, 2008 was mainly for equipment to be used in
the production process of Veneers, additional hardware equipment in support of
our GlamSmile product line in combination with our new designed software which
allows the dentist to modify 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 $278,504 for the six months ended September 30, 2009, as
compared to $914,819 for the six months ended September 30, 2008. The
decrease in the net cash provided by financing activities in the six month
period ended September 30, 2008 was the result of decreased use of our line of
credit.
During the six months ended September
30, 2009 and September 30, 2008, we recognized an increase in cash and cash
equivalents of $117,983 and $11,164, respectively, from the effect of exchange
rates between the Euro and the US Dollar.
Off-Balance
Sheet Arrangements
At September 30, 2009, 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
.
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, 2009. 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, 2009.
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, 2009 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
During
the three months ended September 30, 2009, as compensation for services provided
to us, we granted our investor relations consultants warrants to purchase up to
1,210,000 shares of our common stock subject to certain vesting restrictions, at
an exercise price of $1.00 per share. A total of 370,000 of the
warrants vested on the July 15, 2009 grant date and 60,000 additional warrants
vested during the period to September 30, 2009. The balance vest
as follows:
Warrants
|
|
Vesting Schedule
|
|
|
|
240,000
|
|
1/12
(20,000) shall vest and become exercisable on July 30, 2009, and on the
30th day of each month thereafter until fully vested on June 30,
2010;
|
|
|
|
100,000
|
|
if
the Company’s Common Stock trades above $1.00 for ten (10) consecutive
trading days during the term of the Financial Public Relations
Agreement;
|
|
|
|
200,000
|
|
if
the Company’s Common Stock trades above $2.00 for ten (10) consecutive
trading days during the term of the Financial Public Relations Agreement;
and
|
|
|
|
300,000
|
|
if
the Company’s Common Stock trades above $3.00 for ten (10) consecutive
trading days during the term of the Financial Public Relations
Agreement.
|
The
Company valued the above noted 450,000 warrants that vested during the period
ended September 30, 2009 at $159,888, using the Black Scholes option pricing
model and the following assumptions: no dividend yield; expected volatility rate
of 110 - 112%; risk free interest rate of 1.30% and an average life of 3 years
resulting in a value of $0.22 - $0.39 per option granted. This was a
non-cash expense.
The
warrants were issued pursuant to exemption available under Section 4(2) of the
Securities Act of 1933, as amended.
Item
3. Defaults Upon Senior Securities
None.
Item
4. Submission Of Matters To A Vote Of Security Holders
No
matters were submitted to a vote of security holders during the quarter ended
September 30, 2009.
Item
5. Other Information
None
Exhibit No
|
|
Description
|
2.1
|
|
Stock
Exchange Agreement with Resort World Enterprises, Inc.
(1)
|
|
|
|
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)
|
|
|
|
Exhibit No
|
|
Description
|
3.9
|
|
Amended
and Restated Bylaws (2)
|
|
|
|
10.1
|
|
Amendment
No. 1 to Amended and Restated Distribution, License and Manufacturing
Agreement dated August 11, 2009(3)
|
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.*
|
(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 10-K filed with the SEC on August 17,
2009.
|
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
16, 2009
|
By:
|
/s/
Guy De Vreese
|
|
|
Name: Guy
De Vreese
|
|
|
Title: Chief
Executive Officer
(Principal
Executive Officer)
|
|
|
Date: November
16, 2009
|
By:
|
/s/
Stephen Ross
|
|
|
Name: Stephen
Ross
|
|
|
Title: Chief
Financial Officer
(Principal
Accounting Officer)
|
EXHIBIT 31.1
OFFICER’S CERTIFICATE
PURSUANT
TO SECTION 302
I, Guy De
Vreese, certify that:
|
1.
|
I
have reviewed this Quarterly Report on Form 10-Q of Remedent,
Inc.
|
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
Registrant as of, and for, the periods presented in this
report;
|
|
4.
|
The
Registrant’s other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the Registrant and
have:
|
|
a.
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the Registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
|
|
b.
|
Designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
|
c.
|
Evaluated
the effectiveness of the Registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures as of the end of the period covered
by this report based on such evaluation;
and
|
|
d.
|
Disclosed
in this report any change in the Registrant’s internal control over
financial reporting that occurred during the Registrant’s most recent
fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the Registrant’s internal control over financial
reporting; and
|
|
5.
|
The
Registrant’s other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to
the Registrant’s auditors and the audit committee of the Registrant’s
board of directors (or persons performing the equivalent
functions):
|
|
a.
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the Registrant’s ability to record,
process, summarize and report financial information;
and
|
|
b.
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the Registrant’s internal control
over financial reporting.
|
Date: November
16, 2009
|
By:
|
/s/
Guy De Vreese
|
|
|
Name: Guy
De Vreese
|
|
|
Title: Chief
Executive Officer
(Principal Executive
Officer)
|
EXHIBIT
31.2
OFFICER’S
CERTIFICATE
PURSUANT
TO SECTION 302
I,
Stephen Ross, certify that:
|
1.
|
I
have reviewed this Quarterly Report on Form 10-Q of Remedent,
Inc.
|
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
Registrant as of, and for, the periods presented in this
report;
|
|
4.
|
The
Registrant’s other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the Registrant and
have:
|
|
a.
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the Registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
|
|
b.
|
Designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
|
c.
|
Evaluated
the effectiveness of the Registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures as of the end of the period covered
by this report based on such evaluation;
and
|
|
d.
|
Disclosed
in this report any change in the Registrant’s internal control over
financial reporting that occurred during the Registrant’s most recent
fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the Registrant’s internal control over financial
reporting; and
|
|
5.
|
The
Registrant’s other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to
the Registrant’s auditors and the audit committee of the Registrant’s
board of directors (or persons performing the equivalent
functions):
|
|
a.
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the Registrant’s ability to record,
process, summarize and report financial information;
and
|
|
b.
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the Registrant’s internal control
over financial reporting.
|
Date: November
16, 2009
|
By:
|
/s/
Stephen Ross
|
|
|
Name:
Stephen Ross
|
|
|
Title: Chief
Financial Officer
(Principal Accounting
Officer)
|
EXHIBIT
32.1
CERTIFICATION
PURSUANT TO
18
U.S.C. SECTION 1350
AS
ADOPTED PURSUANT TO
SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002
In
connection with the Quarterly Report of Remedent, Inc. (the “Company”) on Form
10-Q for the period ended September 30, 2009 as filed with the Securities and
Exchange Commission on the date hereof (the “Report”), the undersigned, in the
capacities and on the date indicated below, hereby certifies pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that to his knowledge:
1. The
Report fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934; and
2. The
information contained in the Report fairly presents, in all material respects,
the financial condition and results of operation of the Company.
Date: November
16, 2009
|
By:
|
/s/
Guy De Vreese
|
|
|
Name: Guy
De Vreese
|
|
|
Title: Chief
Executive Officer
(Principal Executive Officer)
|
A signed
original of this written statement required by Section 906, or other document
authentications, acknowledging, or otherwise adopting the signature that appears
in typed form within the electronic version of this written statement required
by Section 906, has been provided to Remedent, Inc. and will be retained by
Remedent, Inc. and furnished to the Securities and Exchange Commission or its
staff upon request.
EXHIBIT
32.2
CERTIFICATION
PURSUANT TO
18
U.S.C. SECTION 1350
AS
ADOPTED PURSUANT TO
SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002
In
connection with the Quarterly Report of Remedent, Inc. (the “Company”) on Form
10-Q for the period ended September 30, 2009 as filed with the Securities and
Exchange Commission on the date hereof (the “Report”), the undersigned, in the
capacities and on the date indicated below, hereby certifies pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that to his knowledge:
1. The
Report fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934; and
2. The
information contained in the Report fairly presents, in all material respects,
the financial condition and results of operation of the Company.
Date: November
16, 2009
|
By:
|
/s/
Stephen Ross
|
|
|
Name: Stephen
Ross
|
|
|
Title: Chief
Financial Officer
(Principal Accounting
Officer)
|
A signed
original of this written statement required by Section 906, or other document
authentications, acknowledging, or otherwise adopting the signature that appears
in typed form within the electronic version of this written statement required
by Section 906, has been provided to Remedent, Inc. and will be retained by
Remedent, Inc. and furnished to the Securities and Exchange Commission or its
staff upon request.
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