UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended March 31, 2015
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File Number 001-15975
REMEDENT, INC.
(Name of small business issuer as specified
in its charter)
Nevada |
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86-0837251 |
(State or other jurisdiction of |
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(I.R.S. Employer |
incorporation or organization) |
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Identification Number) |
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Zuiderlaan 1-3, bus 8, 9000 Gent, Belgium |
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(Address of principal executive offices) |
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(Zip code) |
011-329-241-58-80
(Issuer’s telephone number, including
area code)
Securities registered pursuant to Section
12(b) of the Act: None
Securities registered pursuant to Section
12(g) of the Act:
Common Stock, no par value per share
(Title of Class)
Indicate by check mark if the registrant is a well-known seasoned
issuer, as defined in Rule 405 of the Securities Act.
Yes
¨ No
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Indicate by check mark if the registrant is not required to
file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes
¨ No
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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 issuer was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes
þ No
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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
þ No
¨
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405) is not contained
herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated
by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
¨
Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large
accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange
Act. (Check one):
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Large accelerated filer |
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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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(Do not check if a smaller reporting company) |
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Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act).
Yes
¨ No þ
The aggregate market value of voting stock held by non-affiliates
computed by reference to the price at which the common equity was last sold as of the last business day of the registrant’s
most recently completed third fiscal quarter, December 31, 2014, was approximately $1,999,597. For purposes of this
computation, it has been assumed that the shares beneficially held by directors and officers of registrant were “held by
affiliates” and this assumption is not to be deemed to be an admission by such persons that they are affiliates of registrant.
The number of shares of registrant’s common stock outstanding
as of June 29, 2015 was 19,995,969.
Documents incorporated by reference:
None.
Transitional
Small Business Disclosure Format (Check one): Yes ¨
No þ
FORM 10-K INDEX
Forward-Looking Statement
In addition to historical information, this Annual Report
on Form 10-K (“Annual Report”) for Remedent, Inc. (“Remedent” the “Company,” “we,”
“our” or “us”) contains “forward-looking” statements within the meaning of Section
21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), 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 listed in the section of this Annual Report entitled “Risk Factors”
and from time to time in our Securities and Exchange Commission filings under “risk factors” and elsewhere.
Each forward-looking statement should
be read in context with, and with an understanding of, the various disclosures concerning our business made elsewhere
in this Annual Report, as well as other public reports filed by us with the United States Securities and Exchange Commission.
Readers should not place undue reliance on any forward-looking statement as a prediction of actual results of developments.
Except as required by applicable law or regulation, we undertake no obligation to update or revise any forward-looking statement
contained in this Annual Report.
PART I
ITEM 1 — BUSINESS
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, Middle East and the United
States.
In 2006 we developed a revolutionary system
for manufacturing and installing dental veneers which we branded as GlamSmile ® veneers revolutionize the traditional one-at-a-time
method of applying porcelain dental veneers. GlamSmile veneers are attached to the front of the patient’s teeth
using a patent pending single motion placement tray which replaces the traditional one at a time trial and error method of applying
porcelain veneers, making the application less traumatic for the patient, much easier for the dentist and perhaps most important,
far less costly than traditional dental veneers. Currently, the GlamSmile veneers are our primary products in the professional
oral care and cosmetic dentistry product. Our veneers are supported by a line of professional veneer whitening
and teeth sensitivity solutions. Our products are sold to professionals by distributors and sold directly to consumers
by our GlamSmile Studios.
Corporate History
We were originally incorporated under the
laws of Arizona in September 1996 under the name Remedent USA, Inc. In October 1998, we were acquired by Resort World
Enterprises, Inc., a Nevada corporation in a share exchange, and we immediately changed our name to Remedent USA, Inc. and later
to Remedent, Inc.
In the latter part of 2008, our Board of
Directors approved a strategic plan to separate our OTC business from our professional business, allowing us to focus on the development,
marketing and distribution of our products for the professional dental market. In December 2008, we completed a restructuring
in the form of a management-led buyout of 50% of our OTC retail business (“2008 Restructuring”). The buyout
was led by Mr. Robin List, our former director and Chief Executive Officer, with financing provided by a non-affiliated foreign
investment fund. In connection with the strategic plan, we effected our OTC restructuring through a series of transactions
involving subsidiary formations, contributions of subsidiary(ies) interests and sales of stock interests through subsidiary transactions. As
a result of the series of transactions related to the sale, Remedent Inc. retained 50% of Remedent OTC BV, a Dutch company
(“Remedent OTC”) with Mr. List owning the other 50%. Remedent OTC owned and held a 75% ownership interest in Sylphar
Holding BV, a Dutch holding company which owned and held the OTC operating subsidiaries (“Sylphar Holding”),
together with Concordia Fund B.V. who owned 25% of Sylphar Holding. As a result of Remedent, Inc.’s ownership
interest in Remedent OTC, Remedent, Inc. held an ownership interest equal to 37.5% interest in Sylphar Holding. As
a result of the sale, all of the OTC business previously directly operated by us was operated and held by Sylphar Holding. In
addition, following the restructuring we have focused our business primarily on the marketing and distribution of our GlamSmile
Veneers.
Effective July 13, 2012 and as amended February
7, 2013 the Company sold 100% of its interest in Remedent OTC BV.
In January, 2010 we formed a joint venture
with Gallant Network Limited (“Gallant”) to formalize our GlamSmile operations in China. In order
to sell our products into the Chinese market, an approval by Chinese authorities is required, in the form of licenses. Since GlamSmile
Asia Ltd., a private Hong Kong company (“GlamSmile Asia”), was already the owner of such licenses prior to the acquisition,
this was an important advantage. We obtained control of GlamSmile Asia through the acquisition of a 50.98% interest
in exchange for (i) 325,000 Euro (US $466,725), of which 50,000 Euro was payable as of March 31, 2010, (ii) 250,000 shares
of common stock was originally agreed to be issued during the fiscal year ended March 31, 2011 and then subsequently amended to
be issued during fiscal year ended March 31, 2016 and (iii) option grants of up to 300,000 shares of our common
stock, of which 200,000 shares were granted as of March 31, 2011.
On January 28, 2012, we entered into a Preference
A Shares and Preference A-1 Shares Purchase Agreement (“Share Purchase Agreement”) with Glamsmile Dental Technology
Ltd., a Cayman Islands company and a subsidiary of Company (“Glamsmile Dental”), Glamsmile (Asia) Limited, a company
organized and existing under the laws of Hong Kong and a substantially owned subsidiary of Glamsmile Dental, Beijing Glamsmile
Technology Development Ltd., Beijing Glamsmile Trading Co., Ltd., Beijing Glamsmile Dental Clinic Co., Ltd., and Shanghai Glamsmile
Dental Clinic Co., Ltd., Gallant Network Limited, a shareholder of Glamsmile Dental (“Gallant”), and IDG-Accel China
Growth Fund III L.P. (“IDG Growth”), IDG-Accel China III Investors L.P.(“IDG Investors”) and Crown Link
Group Limited (“Crown”)(“IDG Growth, IDG Investors and Crown collectively referred to as the “Investors”),
pursuant to which the Investors agreed to (i) purchase from the Company an aggregate of 2,857,143 shares of Preference A-1 Shares
of Glamsmile Dental, which represents all of the issued and outstanding Preference A-1 Shares of Glamsmile Dental, for an aggregate
purchase price of $2,000,000, and (ii) purchase from Glamsmile Dental an aggregate of 5,000,000 shares of Preference A Shares for
an aggregate purchase price of $5,000,000.
On February 10, 2012, the sale of the Preference
A-1 Shares and the Preference A Shares was completed. As a result of the closing, the equity ownership of Glamsmile Dental, on
an as converted basis, is as follows: 31.4% by the Investors, 39.2 % by Gallant, and 29.4% by the Company. Mr. De Vreese, our chairman,
will remain as a director of Glamsmile Dental along with Mr. David Lok, who is the Chief Executive Officer and director of Glamsmile
Dental and principal of Gallant. In addition, at the closing, the Investors have a right to appoint one director of Glamsmile Dental,
and as such it is contemplated that after the closing the Board of Directors of Glamsmile Dental will consist of Mr. De Vreese,
Mr. Lok and a director appointed by the Investors.
Under the terms of the Share Purchase Agreement,
we agreed to transfer 500,000 shares of Glamsmile Dental owned by the Company to the Investors in the event of breach of certain
covenants by the Company. In connection with the Share Purchase Agreement, we also entered into an Investor’s Rights Agreement,
Right of First Refusal and Co-Sale Agreement, and Voting Agreement with the parties. In addition, in connection with the contemplated
transactions in the Share Purchase Agreement on January 20, 2012, we entered into a Distribution, License and Manufacturing Agreement
with Glamsmile Dental pursuant to which we appointed Glamsmile Dental as the exclusive distributor and licensee of Glamsmile Veneer
Products bearing the “Glamsmile” name and mark in the B2C Market in the People’s Republic of China (including
Hong Kong and Macau) and Republic of China (Taiwan) and granted related manufacturing rights and licenses in exchange for the original
issuance of 2,857,143 shares of Preference A-1 Shares of Glamsmile Dental and $250,000 (the receipt of which was acknowledged as
an off set to payment of certain invoices of Glamsmile (Asia) Limited).
On January 30, 2014, we sold a total of
2,500,000 ordinary shares of our investment in Glamsmile Dental Technology Ltd. for an aggregate consideration of $3,000,000 to
Glamsmile Dental Technology Ltd. As a result of the Sales of Shares, the equity ownership of Glamsmile Dental, on an as converted
basis, was before the sale of shares as follows: 31.4% by the Investors, 39.2 % by Gallant, and 29.4% by the Company, and after
the sale as follows: 34.9% by the Investors, 43.6% by Gallant, and 21.5% by the Company. Mr. De Vreese, our chairman, will remain
as a director of Glamsmile Dental along with Mr. David Lok, who is the Chief Executive Officer and director of Glamsmile Dental
and principal of Gallant.
On January 16, 2014, the Company invested
in the start-up capital of Biotech Dental Benelux N.V., a Belgium corporation in exchange for 50% of its Shares. Biotech Dental
Benelux has been founded to market and sell dental implants for the Territory of Belgium, The Netherlands and Luxemburg which allows
the company to enlarge its product range.
We have the following wholly owned subsidiaries: (1)
Remedent N.V., a Belgium corporation; (2) Remedent Professional Holdings, Inc., a California corporation; (3) Remedent Professional,
Inc., a California corporation (a subsidiary of Remedent Professional Holdings, Inc.), and (4) Glamtech-USA, Inc., a Delaware corporation. In
addition, Remedent N.V., our wholly-owned subsidiary, has (A) a 51% ownership interest in GlamSmile Deutschland GmbH,
a German private company, (B) a 80% ownership interest in GlamSmile Rome SRL (an Italian private Company) and a 50% ownership interest
in Biotech Dental Benelux N.V. (a Belgium private Company). In addition, Remedent, N.V. owns a 21,51% ownership interest in Glamsmile
Dental Technology Ltd., a Cayman Islands company (“Glamsmile Dental”) and its subsidiaries, Glamsmile (Asia) Limited,
a company organized and existing under the laws of Hong Kong and a substantially 100 % owned subsidiary of Glamsmile Dental, Beijing
Glamsmile Technology Development Ltd., a 100 % owned subsidiary or GlamSmile Asia, its 80% owned subsidiary Beijing Glamsmile Trading
Co., Ltd. and its 98% owned subsidiary Beijing Glamsmile Dental Clinic Co., Ltd., including its 100% Shanghai Glamsmile Dental
Clinic Co., Ltd., its 100% Guangzhou Dental Clinic Co., Ltd., its 100% Wuhan Dental Clinic Co., Ltd and its 50 % owned Whenzhou
GlamSmile Dental Clinic Ltd.
Past Product Development
We have been a manufacturer and distributor
of cosmetic dentistry products, including a full line of professional dental and retail OTC tooth whitening products which are
distributed in Europe, Asia, Middle East and the United States. We have distributed our products using both our own
internal sales force and through the use of third party distributors. Prior to our 2008 restructuring, our products
were generally classified into the following categories: professional dental products and OTC tooth whitening products. Our OTC
division included products targeted for retail such as iWhite, Cleverwhite and Remesense. However as a result of the
2008 Restructuring and sale, all of our prior OTC operations, including the marketing and distribution of the OTC products
are being conducted by Sylphar Holding and its wholly owned subsidiaries. We developed the following products for our
professional dental segment:
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Remewhite in Office Whitening System. One of our first dental products that we developed for the professional dental community was the RemeCure™ plasma curing light (described below). Leveraging on our early success with the RemeCure light, we introduced the RemeWhite™ In Office Whitening System. Based upon the initial RemeCure light, a new light, called the RemeCure CL-15, was developed featuring new enhancements to the hardware and software enabling this light to be fully automated thereby eliminating the need for the dentist to hold the light during whitening treatments. In addition, a proprietary gel was formulated to be used with the system as well as a time saving method to apply the gel. |
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Remewhite Home Maintenance Kit. In 2004, the RemeWhite Home Maintenance Kit was introduced and sold by dentists to their patients, featuring 16 pre-filled trays with a level of whitening agent safe for home use yet stronger than most OTC products. |
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Metatray. In August 2005, we introduced MetaTray®, our next generation of products targeted for the professional dentist market. The MetaTray kit consists of a proprietary, reusable mouthpiece that has embedded in the mouthpiece both a heating element and an electroluminescent mesh that are powered by a rechargeable 9 volt power source providing heat and light similar to that which is delivered to the teeth by conventional dental lights. The system also introduced a proprietary foam strip that is unique in the manner in which it releases peroxide to the tooth surface without dripping or running. |
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RemeCure. The RemeCure plasma curing light uses plasma arc technology instead of LED and laser technology which provides high-energy power over the complete spectrum. |
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FirstFit. We developed the FirstFit™ System, a proprietary, patent-pending system for the creation and placement of dental bridges and crowns. Effective as of March 29, 2010 the intellectual property used and related to FirstFit product was sold to Den-Mat Holdings LLC (“Den-Mat”). |
Current Business Strategy
Our current business strategy is to
focus our resources on vertically integrating our development, manufacturing and marketing resources on selling our GlamSmile veneers
directly to consumers by using all forms of direct response media including the internet, print, radio, television and social network
media, to expand our presence in Asia, with a primary focus on China, and Europe, as well as to establish a direct to
consumer presence in United States.
Current Products
We currently have three primary products:
‘River 8’, a ‘prefab’ veneer; our custom-made GlamSmile Veneers and the SmileMe mirror.
River8
For an instant smile make-over in just one
visit, we developed in 2012 an impressive spectrum of prefabricated, ready-to-use veneers that we have branded as River8.
River8 veneers come in 33 stylish Smile
Boxes, each containing a set of 8 veneers to cover the smile zone of an upper or lower arch. With three different shapes, sizes
and shades for the upper arch and one shape, two sizes and three shades for the lower arch, River8 has the largest instant veneer
assortment worldwide.
With this full range of 264 veneer options
to perfectly match the patient's expectations in just one visit, the dentist has an optimal selection at hand of the most attractive
natural teeth based on extensive research. This enormous diversity enables the dentist to find the right combination of teeth for
virtually every patient with whom only minor reshaping is required.
Fitting the River8 veneers is fast and easy.
There’s no need for ‘free hand technique’ as with direct composite bonding; impressions and therefore lab intervention
and communication are eliminated. Compared to the customized GlamSmile veneers, the ready-to-use River8 veneers are equally strong,
ultrathin, CAD/CAM designed and also fabricated from the same IPS E-max material from Ivoclar to ensure consistent high quality.
GlamSmile Veneers
In connection with the 2008 Restructuring,
we shifted our focus to professional products targeted for the professional sector. Our key product in the professional oral care
and cosmetic dentistry product is the GlamSmile veneer.
In 2006 we developed a revolutionary system
for manufacturing and installing dental veneers which we branded as GlamSmile. GlamSmile veneers revolutionize the traditional
one-at-a-time method of applying porcelain dental veneers. GlamSmile veneers are attached to the front of the patient’s
teeth using a patent pending single motion placement tray which replaces the traditional one at a time trial and error method of
applying porcelain veneers, making the application less traumatic for the patient, much easier for the dentist and perhaps most
important, far less costly than traditional dental veneers. The entire process is painless and takes only about an hour of the
patient’s and the dentist’s time. GlamSmile veneers are so thin that the dentist does not need to remove healthy tooth
structure which results in a process that is reversible. In the fall of 2006, we opened our initial GlamSmile Lab in Ghent.
Our GlamSmile involves a proprietary veneer
fabrication technique and a patented single-motion veneer placement tray which are both guided by a proprietary computer imaging,
design and digital preview system. The unique tray delivery system lets dentists expertly seat 10 ultra-thin, custom veneers in
less than an hour while preserving tooth structure. All the features of GlamSmile, together with the CAD/CAM technology, digital
preview for dentists to evaluate the design and a unique full arch tray delivery system used in conjunction with minimally or no
preparation ultrathin veneers, have revolutionized the art of veneering.
Our GlamSmile veneers are ultra-thin claddings
made from a mixture of a hybrid composite and porcelain materials which are attached to the front of the patient’s teeth. GlamSmile
veneers are ultra-thin and can best be compared to contact lenses in terms of thickness. Because GlamSmile veneers are so thin,
the dentist does not need to remove healthy tooth structure. Leaving the patient’s healthy tooth structure intact results
in several important benefits:
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no local anesthesia is required to prepare the teeth; |
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reduced (if any) tooth sensitivity post-procedure; and |
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the process is reversible. |
Our veneers are custom-made for each individual’s
personal features, taking into account numerous factors including the shape of a person’s face, the shape of their lips and
more. At the initial doctor visit, an impression is made of the patient’s teeth. During the second visit, the
hybrid composite veneers, which are computer generated as a single unit, are then ready to be installed. The single-unit
feature enables dentists with minimal training to apply up to ten teeth in one 30 – 45 minute visit. This minimizes
the risk of failure and allows more dentists to offer GlamSmile veneers as part of their dental practice. With traditional bonding,
a dentist adheres a composite material directly on the tooth which lasts about 3 to 6 years and tends to discolor. Porcelain
veneers, though a more lasting solution (ten years or more), require a significantly more invasive procedure to install, which
is irreversible, requires a very high level of training and skill from the dentist and can cost from $700 to $2,000 per tooth.
SmileMe Mirror
The SmileMe Mirror is an integrated comprehensive
marketing concept for the dental practice as if it were a plug-and-play tool. In fact, the Mirror enables the dentist to offer
his patients a complete Smile Consultation in under 10 minutes. The SmileMe Mirror has a range of apps to assist the dentist with
every step of Smile Consultancy: use SmileSketch to visualize the potential of smile makeover, discover what the patient actually
desires with Smile Analysis, or explain the benefits of certain treatments with our various Treatment Pages.
Dental animations are not new, but we understood
how to visualize dentistry in a way that makes patients feel comfortable. What on first glance might look like 13 simple questions
is in fact a carefully crafted Smile Analysis. This list has been fine- tuned over the years by dental marketing experts and was
specifically designed to make patients express their feelings and desires regarding their smiles. It’s the quickest way to
understand what the patient actually expects from the dentist.
Perhaps the most distinct functionality
of the SmileMe Mirror is SmileSketch, a quick and easy simulation software. By using the latest wireless and touch-screen technologies,
the dentist needs no more than 30 seconds to make an attractive sketch of what the patient could look like. Very much like an artist’s
initial sketch.
Marketing and Distribution
We market our products to the dental professional
using our business to business strategies (“B2B”), and we also market our products directly to the consumers in Asia,
Europe and the Middle East using our direct to consumer model (“B2C”). Our products are sold to dental
professionals in 28 countries through distributors. We previously sold our GlamSmile product in the United States and throughout
the world with the exception of certain excluded territories and certain B2C markets pursuant to a distribution agreement. However,
on March 27, 2012, the distribution agreements with Den-Mat were terminated pursuant to a certain Termination and Distribution
Agreement with Den-Mat (“Den-Mat Distribution Agreement”). Pursuant to the Den-Mat Distribution Agreement, we granted
Den-Mat a non-exclusive, irrevocable, perpetual, royalty free, license to use within certain territory, which among other territories
excludes China, Macau, Hong Kong, and Taiwan, the intellectual property that was the subject of the license to Den-Mat under the
Amended and Restated Distribution, License and Manufacturing Agreement dated June 3, 2009, as amended from time to time (“Prior
Agreements”), as such intellectual property relates to the products which were the subject of the Prior Agreements. In connection
with the termination of the Prior Agreements, under the Den-Mat Distribution Agreement, Den-Mat paid us $200,000. We currently
sell our products in Asia, Europe and the Middle East directly to consumers using our direct to consumer model, which includes
our GlamSmile Smile Design-Virtual Studio, and GlamSmile Studios.
B2C Market and Distribution
In 2008 we opened, through a third party,
our first GlamSmile center in Beijing China, marketing GlamSmile directly to consumers. In 2009 we began direct to consumer
tests in Belgium using internet advertising to acquire potential leads and our own dedicated “Smile Consultants” to
manage the sales process from lead acquisition through final sale with successful results. Our direct to consumer model, has been
developed around a one to one relationship with our Smile Consultants. This process also results in the dentists being relieved
of the sales responsibilities allowing them to better focus on patient satisfaction. In both China and Belgium, with the aid of
our own “Smile Consultant” working direct with the customer throughout the entire sales process, we have seen positive
results in our partner retail centers.
Our Smile Consultancy Program is predominantly
marketed on the internet through our website, GlamSmile Smile Design. We focus on intensive campaign and advertisement
aimed to generate large traffic to our website that promotes GlamSmile Whitening, Veneers and Free Smile Advice. Visitors can apply
for a free personalized Smile Consultation by a Smile Consultant. The latter guides the consumer to the right GlamSmile Studio
or with one of our GlamSmile partner dentists and to the solution that meets best his or her Smile expectations. The
Smile Consultancy Program requires us to develop close partnerships with dedicated GlamSmile dentists and the establishment of
GlamSmile Studios. The GlamSmile Studio is a concept studio with a focus on aesthetic and cosmetic dentistry. Unlike a traditional
dentist office, our GlamSmile Studio are designed and managed as a dental spa.
We have begun to market our products through
our Smile Consultancy Concept and through the establishment of our GlamSmile Studios in Asia, with a primary focus on China, and
Europe. We currently have an ownership interest in the following Glamsmile Studios:
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Beijing Glamsmile Studio. Through Glamsmile Asia and its subsidiaries we opened a GlamSmile clinic in Beijing, China, during the third calendar quarter of 2009. The Beijing GlamSmile clinic was the first dental spa to offer pain free cosmetic dentistry in Beijing. |
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Hong Kong Dental Spa. In April 2010, through GlamSmile Asia Ltd. we expanded our business to consumer model in the Asian market by opening a dental spa in Hong Kong. |
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Shanghai Studio. In February 2011, we opened the Shanghai Studio through GlamSmile Asia. |
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Wenzhou Studio. In February 2012, we opened the Wenzhou Studio through GlamSmile Asia. |
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Guangzhou Studio. In October 2013; we opened the Guangzhou Studio throught GlamSmile Asia; the third largest city in Mainland China, with a population of 13 million. |
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Wuhan Studio. In August 2014, we opened the Wuhan Studio through GlamSmile Asia. |
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We started negotiations and plan to open new studios by the end of the next fiscal year in the following cities = Shenzen, Chengdu and Hangzhou. |
In connection with the contemplated transactions
in the Share Purchase Agreement on January 20, 2012, we entered into a Distribution, License and Manufacturing Agreement with Glamsmile
Dental pursuant to which we appointed Glamsmile Dental as the exclusive distributor and licensee of Glamsmile Veneer Products bearing
the “Glamsmile” name and mark in the B2C Market in the People’s Republic of China (including Hong Kong and Macau)
and Republic of China (Taiwan) and granted related manufacturing rights and licenses in exchange for the original issuance of 2,857,143
shares of Preference A-1 Shares of Glamsmile Dental and $250,000 (the receipt of which was acknowledged as an off set to payment
of certain invoices of Glamsmile (Asia) Limited).
In February 2013, Remedent signed an exclusive
agreement with France’s Biotech Medical Aesthetic SAS for distributing its River8 veneers worldwide. Biotech International
is active in over 40 countries as a market leader in dental and orthopedic surgery implants. Both partners have agreed upon a renewable
3 year contract with a first order of 1 million euros ($1.29 million USD).
Cosmetic Dentistry Industry
The cosmetic dental industry has expanded
into a multi-billion industry as a result of increased awareness of the importance of oral health, high aesthetics, improved dental
treatments, and reduced patient discomfort. An increasingly aging population and rising disposable income have also
positively impacted the growth of cosmetic dentistry. Demand for dental products and services are forecasted to remain healthy
due to growing incidences of cosmetic treatments and dental implants. According to a report published by
Koncepts Analytics, the dental industry worldwide was estimated at about $18.8 billion in 2008, dominated by the US, Europe and
Japan, which collectively accounted for more than 84% of the global revenue in 2007. The United States Dental Market was nearly
$7.6 billion in 2007, projected to grow to almost $8 billion in 2008 and nearly $10 billion by 2013, representing a compound annual
growth rate of 4.7%. In 2012 a new estimation was brought forward in a study announcing that the growth rate would rise to a yearly
6,8%, representing a market at the end of 2014 of nearly $ 20 billion. The American Academy of Cosmetic Dentistry estimates that
Americans spend about $2.75 billion each year on cosmetic dentistry. The growth of this market is expected to be highest in the
United States and EU where the generation of aging baby boomers can afford these quality but expensive dental procedures. Also
expected to be a catalyst for the growth and popularity of cosmetic treatments and implants is the younger generation. Further,
emerging technologies will reduce the overall turnaround time for dental procedures while improving efficiency of the dental practitioners.
For example, introduction of CAD/CAM has reduced designing time and 3D imaging techniques have improved patient diagnosis and procedure
planning. Changing consumer needs and a shift towards cosmetic dentistry will drive the market for high end dental solutions.
In China and other parts of Asia there has been a rapid growth
in living standards. China’s young, emerging middle class is beginning to equate accumulation of possessions and leisure
opportunities with quality of life. An estimated 415,000 Chinese had more than $1 million in disposable assets in 2007, more than
any other country, according to the Merrill-Lynch Asia-Pacific Wealth Report. Up to 170 million people, or 13% of the population,
can afford luxury brands and the number will increase in the years to come. These regions have a huge potential for growth in cosmetic
dentistry due to low market penetration. Consequently, these countries are exhibiting high demand for modern and sophisticated
technology and equipment in the dental market.
Overall demand for dental products in China
is expected to climb to 11% annually through 2012. In a report published by Millennium Research Group with regard to Chinese markets
for Dental Implants, a similar target market as that for our GlamSmile products, finds that this emerging market is growing quickly
at a compound annual growth rate of more than 35%. A strong driver of this growth is the deregulation of dental services in China.
Dental services in China are generally provided in government-managed facilities; however, ongoing deregulation of dental services
is resulting in the emergence of an increased number of private dental practices and increasing accessibility to dental services.
Another major driver in the Chinese market is the frequency of teeth stained by Tetracycline. For decades, Tetracycline was one
of the most prescribed antibiotics in China causing many individuals to suffer from stained teeth. Excessive use of fluoride in
drinking water causes a similar problem. When tetracycline exposure occurs while teeth are forming, it creates a permanent gray
or brown stain, causing either uniform discoloration of the entire tooth or forming horizontal bands of stain of varying intensity
that can range from mild to very dark. Veneers are the treatment of choice for this condition. In 2008, the Asia-Pacific market
for dental prosthetics (crowns, bridges and dentures) was valued at over $6 billion. The Asia-Pacific market includes Australia,
Japan and South Korea. The aging population and greater demand for aesthetic dentistry are driving forces in the prosthetics market.
The global economic crisis, which began in 2008, has led to a slowdown in the overall market; however, the market is expected to
grow over the forecast period, reaching $7.2 billion by 2015.
We believe that our GlamSmile products which
are affordable in comparison to traditional veneers, pain free, easy to apply, and provide instant results make us uniquely positioned
to capitalize on the market trends in Asia, Europe, Middle East and the United States.
Growth Strategy
Today, our strategic plan is to focus our
vertically integrated development, manufacturing and marketing resources on selling our GlamSmile veneers direct to consumers by
using all forms of direct response media including the internet, print, radio, television and social network media, to expand our
presence in China and Europe. In our marketing efforts we intend to emphasize the ease, convenience, affordability and
dramatic, instant results as demonstrated by before and after photos that are attained as a result of GlamSmile veneers. We will
also feature our “Until You Smile” satisfaction guarantee. Using the success formula we experienced in China and Belgium
using a "Smile Consultant" to help maintain control of the sales process and close the sale, our distribution will be
through both owned and operated Glamsmile Studios as well as affiliations with existing dental practices and partner retail centers
in Asia, Middle East and Europe.
Our current strategic marketing and distribution
plan includes a combination of owned and licensed GlamSmile centers depending upon the size and location of the market, with us
managing the marketing efforts, patient communications and sales process. We established two geographic divisions, Asia and
Europe, each of which will promote GlamSmile veneer treatments in their respective territories. We plan to establish three types
of GlamSmile Centers depending upon market factors and government regulation.
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Owned Centers. These are centers in which the Company will own, control and/or manage all aspects of the operation including the facilities, equipment, personnel, marketing, insurance risk and other operating costs and will either employ or contract with dentists to perform the necessary dental services. In China, we will continue to principally rely on our owned and operated dental GlamSmile clinics or centers. |
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Licensed Centers. In many markets we will seek to identify and recruit cosmetic dentists that have existing practices and who endorse the GlamSmile veneer products. In these markets, we will contract with dental practices and the Company will recognize revenue through the sale of veneer trays plus marketing and other service fees to be charged to the dentist for services performed by the Company. |
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Distributors. In markets where we lack the expertise with respect to managing marketing and where local regulation and/or custom may make it impractical to deploy an owned or licensed center approach we will look to appoint distributors who will be granted exclusive rights to market and distribute our GlamSmile products directly to consumers subject to minimum performance criteria and/or initial territory fees. In this model the distributor will be expected to invest in all marketing and sales conversion costs in their market. Our revenues will be derived principally from sales of our GlamSmile veneer products to the distributor. |
In order to support and facilitate our growth
strategy, it is our intention to restructure our subsidiary companies to better manage our GlamSmile related operations. In conjunction
with this restructuring, we intend to have the intellectual property and other assets related to GlamSmile contributed to a new
entity to be formed to be called GlamSmile Worldwide. New entities would also be created called GlamSmile Asia and GlamSmile Europe,
each with licensed rights to use and exploit the GlamSmile technology in their respective territories.
B2B Market and Distribution
Starting in Belgium and the Netherlands,
our products have been introduced utilizing our Distributor Assisted Marketing programs. We implement our program by
first identifying an established dealer in each market with a well-developed sales force familiar with sales of capital equipment
to the professional dentist community. Second, we develop aggressive lead generation programs and other marketing techniques
which served as a blue print for the dealers to implement. The combination of a well-trained dealer force and dealer-assisted
marketing and lead generation programs has proven to be far more effective than utilizing a direct sales approach, which is much
slower and more costly to establish. This process has been repeated for both the professional dentist and retail, over-the-counter
markets in each country. As a result of this approach, we have been able to establish dealers in 28 countries encompassing,
Europe, Asia, Latin America, the Pacific Rim and the Middle East.
We previously sold our GlamSmile product
in the United States and throughout the world with the exception of certain excluded territories and certain B2C markets pursuant
to a distribution agreement. However, on March 27, 2012, the distribution agreements with Den-Mat were terminated pursuant to a
certain Termination and Distribution Agreement with Den-Mat (“Den-Mat Distribution Agreement”). Pursuant to the Den-Mat
Distribution Agreement, we granted Den-Mat a non-exclusive, irrevocable, perpetual, royalty free, license to use within certain
territory, which among other territories excludes China, Macau, Hong Kong, and Taiwan, the intellectual property that was the subject
of the license to Den-Mat under the Amended and Restated Distribution, License and Manufacturing Agreement dated June 3, 2009,
as amended from time to time (“Prior Agreements”), as such intellectual property relates the products which was the
subject of the Prior Agreements. In connection with the termination of the Prior Agreements, under the Den-Mat Distribution Agreement,
Den-Mat paid us $200,000. We currently sell our products in Asia, Europe and the Middle East directly to consumers using our
direct to consumer model, which includes our GlamSmile Smile Design-Virtual Studio, and GlamSmile Studios.
In September
2010, we entered into a license agreement with Excelsior Medical (“EM”) (the “EM license agreement”). Under
the EM license agreement, we granted EM an exclusive license to certain Asian territories in exchange for $500,000 which was received
during the year ended March 31, 2011. The Company received a further $500,000 from EM as an advance payment for veneers. The
$500,000 advance, less taxes withheld, was recorded as deferred revenue of $475,250 as of March 31, 2011. Effective as of
January 11, 2012, the Company entered into a Rescission Agreement with EM and Asia Best Healthcare Co., Ltd. Under the Rescission
Agreement, the Company agreed to repay a total of $1,000,000 received under the Distribution Agreement, plus a simple interest
rate of 5%, beginning on June 30, 2012, according to the following payment schedule: (i) $250,000 to be paid no later than June
30, 2012, (ii) $250,000 plus interest on June 30, 2012, (iii) $250,000 plus interest on December 31, 2012, and (iv) $250,000
plus interest on June 30, 2013. The Company also agreed to secure such obligations owed to EM with certain collateral of the Company.
During the period ended December 31, 2012 a partial payment of $20,000 in interest has been made. The Company is currently in the
process of re-negotiating the terms of repayment.
Locations
The Company leases
an office facility of 5,187 square feet in Gent, Belgium from an unrelated party pursuant to a nine year lease commencing September
1, 2008 at a base rent of €5,712 per month for the total location ($6,433 per month at March 31, 2015).
Secondly, the Company
leases an office facility of 1,991 square feet in Rome, Italy to support the sales and marketing division of our veneer business,
from an unrelated party pursuant a six year lease commencing July 1, 2011, at a base rent of € 6,500 per month for the total
location ($8,969 per month at March 31, 2014).Due to an internal re-organization and in mutual agreement with the unrelated party,
the rent agreement was stopped at March 31, 2014.
Thirdly, the Company leases an office facility
of 635 square feet in Brussels, Belgium from an unrelated party pursuant to a nine year lease commencing July 1, 2012 at a base
rent of €969 per month for the total location ($1,050 per month at March 31, 2015).
Manufacturing
Prior to 2003, all of the manufacturing
related to our dental products were conducted through third party manufacturers under our supervision thereby minimizing demands
on capital resources. Beginning in 2003, parts of the manufacturing and the majority of the final assembly of our products
were brought in-house, thereby improving control over product quality while significantly reducing product costs. These
efforts were expanded significantly during the fiscal year ended March 31, 2006, in particular with regard to the expansion of
in-house manufacturing capabilities for our gel products and foam strips. The Company still manufactures products in its facility
in Ghent, Belgium, as well as through outsourced manufacturing in Ghent and China.
Research and Development
Our research and development expenses decreased
$16,229 to $61,246 for the year ended March 31, 2015 as compared to $77,475 for the year ended March 31, 2014, an decrease of 20.9%. Research
and development expenses have decreased primarily because of our final phase in the development of our veneer matching software.
Intellectual Property
GlamSmile. We have international
trademark registration for GlamSmile in the United States until August 16, 2017 and in the European Union until April 6, 2017.
We have also secured the domain name www.glamsmile.com as well as other related internet domains in our targeted markets. We are
continuing our ongoing research and development efforts to improve and expand our current technology and to develop new dental
products. We intend to apply for patents when we believe it is in our interest to do so and as advised by patent
counsel. We rely and will continue to rely on trade secrets, know-how and other unpatented proprietary information in
our business. Certain of our key employees and consultants are required to enter into confidentiality and/or non-competition
agreements to protect our confidential information.
Major Customers
At March 31, 2015 five customers accounted
for a total of 66.18% of the Company’s trade accounts receivable and one of those customers accounted for 35.34% of total
accounts receivable. At March 31, 2014 five customers accounted for a total of 82.08% of the Company’s trade accounts
receivable and one of those customers accounted for 40.80% of total accounts receivable. The Company performs ongoing
credit evaluations of its customers and normally does not require collateral to support accounts receivable.
Competition
GlamSmile. Our competition
consists of both alternative procedures that can be performed to achieve in part the results that would be achieved through a GlamSmile
procedure, as well as competition from dentists not within the GlamSmile network who provide veneer procedures. With regard to
alternative procedures, options available to the consumer include various whitening procedures, dental implants, dental bonding
and dental caps. With the exception of whitening procedures, which for the most part cannot address many of the dental issues solved
by GlamSmile veneers, the remaining alternatives all involve more cost, more patient discomfort and more time to complete. There
are many dental practitioners that perform traditional veneer procedures. In most cases, traditional veneers will also be significantly
more costly then GlamSmile veneers and require the dentist to remove more of the existing tooth material as well as requiring multiple
patient visits to complete. That said, there will be existing practitioners that believe they can attain more customized results
with the individual veneer approach as opposed to the GlamSmile tray approach and may be reluctant to offer our less costly procedure.
To the best of our knowledge, GlamSmile will be “first to market” with respect to a direct to consumer advertising
and promotion campaign for veneers anywhere which should enable us to capture market share in what we believe will be a rapidly
growing market. Further, we have filed for patents on our proprietary tray delivery systems and have developed years of knowhow
relating to treating patients with the multiple veneer approach. However, new technologies are continue to be developed and new
processes could be designed that would not violate our patents and result in similar solutions that could compete with GlamSmile
products. Because we are uniquely positioned to have the ability to control the entire process from manufacturing to marketing
to distribution, we believe it is feasible for us to have complete control and flexibility to maximize margins and respond
aggressively to any competitive situation.
Regulatory Issues
Medical Device
As we market dental products which are legally
defined to be medical devices, we are considered to be a medical device manufacturer and as such we are subject to the regulations
of, among other governmental entities, the United States Food and Drug Administration (the “FDA”) and the corresponding
agencies of the states and foreign countries in which we sell our products. These regulations govern the introduction
of new medical devices, the observance of certain standards with respect to the manufacture and labeling of medical devices, the
maintenance of certain records and the reporting of potential product problems and other matters. A failure to comply
with such regulations could have material adverse effects on our business.
The Federal Food, Drug and Cosmetic Act
(“FDC Act”) regulates medical devices in the United States by classifying them into one of three classes based on the
extent of regulation believed necessary to ensure safety and effectiveness. Class I devices are those devices for which
safety and effectiveness can reasonably be ensured through general controls, such as device listing, adequate labeling, pre-market
notification and adherence to the Quality System Regulation (“QSR”) as well as medical device reporting, labeling and
other regulatory requirements. Some Class I medical devices are exempt from the requirement of pre-market approval or
clearance. Class II devices are those devices for which safety and effectiveness can reasonably be ensured through the
use of special controls, such as performance standards, post-market surveillance and patient registries, as well as adherence to
the general controls provisions applicable to Class I devices. Class III devices are devices that generally must receive
pre-market approval by the FDA pursuant to a pre-market approval application (“PMA”) to ensure their safety and effectiveness. Generally,
Class III devices are limited to life sustaining, life supporting or implantable devices; however, this classification can also
apply to novel technology or new intended uses or applications for existing devices.
Before most medical devices can be marketed
in the United States, they are required by the FDA to secure either clearance of a pre-market notification pursuant to Section
510(k) of the FDC Act (a “510(k) Clearance”) or approval of a PMA. Obtaining approval of a PMA can take
several years. In contrast, the process of obtaining 510(k) Clearance generally requires a submission of substantially
less data and generally involves a shorter review period. Most Class I and Class II devices enter the market via the
510(k) Clearance procedure, while new Class III devices ordinarily enter the market via the more rigorous PMA procedure. In
general, approval of a 510(k) Clearance may be obtained if a manufacturer or seller of medical devices can establish that a new
device is “substantially equivalent” to a predicate device other than one that has an approved PMA. The
claim for substantial equivalence may have to be supported by various types of information, including clinical data, indicating
that the device is as safe and effective for its intended use as its legally marketed equivalent device. The 510(k)
Clearance is required to be filed and cleared by the FDA prior to introducing a device into commercial distribution. Market
clearance for a 510(k) Notification submission may take 3 to 12 months or longer. If the FDA finds that the device is
not substantially equivalent to a predicate device, the device is deemed a Class III device, and a manufacturer or seller is required
to file a PMA. Approval of a PMA for a new medical device usually requires, among other things, extensive clinical data
on the safety and effectiveness of the device. PMA applications may take years to be approved after they are filed. In
addition to requiring clearance or approval for new medical devices, FDA rules also require a new 510(k) filing and review period
prior to marketing a changed or modified version of an existing legally marketed device if such changes or modifications could
significantly affect the safety or effectiveness of that device. The FDA prohibits the advertisement or promotion of
any approved or cleared device for uses other than those that are stated in the device’s approved or cleared application.
We believe that the GlamSmile products will not require a 510(k) submission because the products fall within an exemption under
the 510(k) regulation.
International sales of medical devices are
also subject to the regulatory requirements of each country. In Europe, the regulations of the European Union require
that a device have a CE Mark, a mark that indicates conformance with European Union laws and regulations before it can be sold
in that market. In China, the State Food and Drug Administration (“SFDA”) is the agency primarily
responsible for regulating medical devices. The regulatory international review process varies from country to country. We
rely upon our distributors and sales representatives in the foreign countries in which we market our products to ensure we comply
with the regulatory laws of such countries; In China, we continue to rely on our distributors and strategic partners to ensure
compliance with regulatory laws of China.
Fee Splitting and Arrangements with Health Professionals
Many states in the United States and countries
worldwide have laws that prohibit business corporations like us from practicing medicine, employing dentists to practice medicine,
exercising control over medical decisions by dentists, or engaging in certain arrangements, such as fee splitting, with dentists.
In light of these restrictions, in certain markets where permissible we intend to operate by maintaining management contracts with
dentists owned corporations or other business entities that employ or contract with dentists to provide the GlamSmile and other
dental services. Under these arrangements we will perform under contract only nonmedical administrative services, will not offer
medical services and will not exercise influence or control over the practice of medicine by the dentists employed by such business
entities. In markets where fee splitting with a business corporation is prohibited, the fees that will be received by us will have
been established on a basis that we believe complies with the applicable laws. However, regulatory authorities or other parties
may assert that, despite these arrangements, we are engaged in the corporate practice of medicine or that the contractual arrangements
with the affiliated professional contractors constitute unlawful fee splitting, in which case we could be subject to civil or criminal
penalties, the contracts could be found legally invalid and unenforceable (in whole or in part) or we could be required to restructure
our contractual arrangements.
Dental Practice
Dental practices are subject to local and
national regulations worldwide. Although the laws and regulations for operating a dental practice and engaging in dental
services vary from country to country, in general our dental studios require a health license and a business license. In
addition, the dentists providing services in the dental studios are also required to be licensed to practice.
While the Company believes it is in substantial
compliance with the laws and regulations which regulate its business, and that it possesses all the licenses required in the conduct
of its business, the failure to comply with any of those laws or regulations, or the imposition of new laws or regulations could
negatively impact the Company’s business.
Costs and Effects of Compliance with Environmental Laws and
Regulations
We are not in a business that involves the
use of materials in a manufacturing stage where such materials are likely to result in the violation of any existing environmental
rules and/or regulations. Further, we do not own any real property that could lead to liability as a landowner. Therefore,
we do not anticipate that there will be any substantial costs associated with the compliance of environmental laws and regulations.
Employees
We currently retain 7 full-time employees
in Belgium. Our subsidiary, Remedent, N.V., has an employment agreement with Mr. Philippe Van Acker our Chief Financial and
Accounting Officer. We have no employment agreements with our Chief Executive Officer, Mr. Guy De Vreese.
Financial Information About Geographic Areas
Refer to Note 17, “Segment Reporting,”
to our Consolidated Financial Statements included under Item 8, “Financial Statements and Supplementary Data”
for financial information about our geographic areas.
Other Information
Our Internet address is www.remedent.com.
We make available free of charge on our website our annual reports on Form 10-K, quarterly reports on Form 10-Q, current
reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange
Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange
Commission (“SEC”). Other than the information expressly set forth in this annual report, the information contained,
or referred to, on our website is not part of this annual report.
The public may also read and copy any materials
we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. The public may
obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains a
website at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers,
such as us, that file electronically with the SEC.
ITEM 1A — RISK FACTORS
RISK FACTORS
Investment in our common stock involves
risk. You should carefully consider the risks we describe below before deciding to invest. The market
price of our common stock could decline due to any of these risks, in which case you could lose all or part of your investment. In
assessing these risks, you should also refer to the other information included in this Annual Report, including our
consolidated financial statements and the accompanying notes. You should pay particular attention to the fact
that we are a holding company with substantial operations in Belgium and China and are subject to legal and regulatory
environments that in many respects differ from that of the United States. Our business, financial condition
or results of operations could be affected materially and adversely by any of the risks discussed below and any others not
foreseen. This discussion contains forward-looking statements.
Risks Relating To Our Business
We have a history of losses and we could suffer losses in
the future.
Although we have earned a profit of $105,159
on revenue of $3,616,355 in fiscal 2015; a profit of $16,149,on revenue of $5,234,855 for the fiscal year ended March 31, 2004;
a profit of $490,483 on revenue of $9,687,292 for the fiscal year ended March 31, 2012 , and a profit of $524,508 on revenue of
$2,592,596 for the fiscal year ended March 31, 2014, we have a history of incurring substantial losses. Our losses were $981,936
on revenue of $2,937,276 for the fiscal year ended March 31, 2013; $1,547,175 on revenue of $12,581,708 for the fiscal year ended
March 31, 2011 and $2,349,915 on revenue of $8,247,960 for the fiscal year ended March 31, 2010. We expect to continue to incur
increasing cost of revenues, sales and marketing and general and administrative expenses in connection with our business strategy. However,
despite our efforts, there is no assurance that we will be able to achieve or sustain profitability.
We depend on strategic relationships with third parties for
sales and marketing performance and revenues in the People’s Republic of China and certain territories in North America,
and failure to maintain these relationships, poor performance by these companies or disputes with these companies could negatively
impact our business.
We rely on significant strategic relationships
with third parties, for our sales and marketing performance in certain territories. These include collaborations with strategic
partners in China for our dental studios. Reliance on collaborative relationships poses a number of risks, including
the risk that:
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We are unable to control the resources our corporate partners devote to our programs or products; |
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disagreements with our corporate partners could cause delays in, or termination of, the research, development or commercialization of product candidates or result in litigation or arbitration; |
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contracts with our corporate partners may fail to provide significant protection or may fail to be effectively enforced if one of these partners fails to perform; |
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our corporate partners with marketing rights may choose to pursue competing technologies or to devote fewer resources to the marketing of our products; and |
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our distributors and our corporate partners may be unable to pay us, particularly in light of current economic conditions. |
Given these risks, there is a great deal
of uncertainty regarding the success of our current and future collaborative efforts. If these efforts fail, our product development
or commercialization of new products could be delayed or revenues from products will most likely decline.
We may not have access to capital in the future as a result
of disruptions in capital and credit markets.
We may not be able to access our funds in
the future. Our access to the funds under our current credit facility with BNP Paribas Fortis Bank is dependent on the
ability of the financial institution that is party to the facility to meet its funding commitments. BNP Paribas Fortis Bank may
not be able to meet its funding commitments if it experiences shortages of capital and liquidity or if it experiences excessive
volumes of borrowing requests within a short period of time. Moreover, longer term volatility and continued disruptions in the
capital and credit markets as a result of uncertainty, changing or increased regulation of financial institutions, reduced alternatives
or failures of significant financial institutions could affect adversely our access to the liquidity needed for our business in
the longer term. Such disruptions could require us to take measures to conserve cash until the markets stabilize or until alternative
credit arrangements or other funding for our business needs can be arranged. The disruptions in the capital and credit markets
have also resulted in higher interest rates on publicly issued debt securities and increased costs under credit facilities. The
continuation of these disruptions would increase our interest expense and capital costs and could affect adversely our results
of operations and financial position including our ability to grow our business through acquisitions.
We have obtained loans from third parties recently and anticipate
that we will need additional capital during the next twelve months. In addition, if we are unable to secure additional
financing to meet our future capital this will have adverse effects on our financial condition.
We obtained on June 3, 2011, a long term
loan for $1,000,000 from an unrelated party in order to support and finance the expansion of new GlamSmile Studios in Mainland
China. This loan is secured by certain assets we own and in the event of default, the lenders will have a right to the collateral
granted to them under the loan agreements and we will lose our ownership interest in the assets. A loss of our collateral
will have material adverse effect on our Asia operations, our business and financial condition.
Effective January 11,
2012, the Company entered into a Rescission Agreement with EM and Asia Best Healthcare Co., Ltd. Under the Rescission Agreement,
the Company agreed to repay a total of $1,000,000 received under the Distribution Agreement, plus a simple interest rate of 5%,
beginning on June 30, 2012, according to the following payment schedule: (i) $250,000 to be paid no later than June 30, 2012, (ii)
$250,000 plus interest on June 30, 2012, (iii) $250,000 plus interest on December 31, 2012, and (iv) $250,000 plus interest
on June 30, 2013. The Company also agreed to secure such obligations owed to EM with certain collateral of the Company. During
the period ended December 31, 2012 a partial payment of $20,000 in interest has been made. The Company is currently in the process
of re-negotiating the terms of repayment.
In addition, we anticipate needing significant
capital to introduce new products, further develop our existing products, increase awareness of our brand names and expand our
operating and management infrastructure as we grow sales in Europe, Asia and South America and launch sales and distribution
activities in the United States. We may use capital more rapidly than currently anticipated and incur higher operating
expenses and generate lower revenue than currently expected, and we may be required to depend on external financing to satisfy
our operating and capital needs. We may need new or additional financing in the future to conduct our operations or
expand our business. Any sustained weakness in the general economic conditions and/or financial markets in the United States or
globally could affect adversely our ability to raise capital on favorable terms or at all. From time to time we have relied, and
may also rely in the future, on access to financial markets as a source of liquidity to satisfy working capital requirements and
for general corporate purposes. We may be unable to secure additional debt or equity financing on terms acceptable to us, or at
all, at the time when we need such funding. If we do raise funds by issuing additional equity or convertible debt securities,
the ownership percentages of existing stockholders would be reduced, and the securities that we issue may have rights, preferences
or privileges senior to those of the holders of our common stock or may be issued at a discount to the market price of our common
stock which would result in dilution to our existing stockholders. If we raise additional funds by issuing debt, we
may be subject to debt covenants, such as the debt covenants under our secured credit facility, which could place limitations on
our operations including our ability to declare and pay dividends. Our inability to raise additional funds on a timely
basis would make it difficult for us to achieve our business objectives and would have a negative impact on our business, financial
condition and results of operations.
Our results of operations may be adversely impacted by currency
fluctuations.
We currently have operations in Belgium
and have product sales in Europe, the Middle East and Asia. A significant portion of our revenue is in currencies other
than United States dollars, including Euros, Hong Kong dollar and the Chinese Renminbi (“RMB”). Because
our financial statements are reported in United States dollars, fluctuations in Euros, Hong Kong dollar and RMB against the United
States dollar may cause us to recognize foreign currency transaction gains and losses, which may be material to our operations
and impact our reported financial condition and results of operations
Substantially all of our assets and our operations are located
outside of the United States, a significant number of sales are generated outside of the United States subjecting
us to risks associated with international operations.
Our operations are primarily in Europe and
Asia and 100% of our sales for the fiscal years ended March 31, 2015 and 2014 were generated from customers outside of the United
States. The international nature of our business subjects us to the laws and regulations of the jurisdictions in which we operate
and sell our products. In addition, we are subject to risks inherent in international business activities, including:
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difficulties in collecting accounts receivable and longer collection periods, |
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Changes in overseas economic conditions, |
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fluctuations in currency exchange rates, |
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potentially weaker intellectual property protections, |
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changing and conflicting local laws and other regulatory requirements, |
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Political and economic instability,
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war, acts of terrorism or other hostilities, |
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potentially adverse tax consequences, |
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difficulties in staffing and managing foreign operations, or |
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tariffs or other trade regulations and restrictions. |
Our quarterly sales and operating results have fluctuated
and may continue to fluctuate in future periods which may cause the price of our common stock to decline.
Our quarterly sales and operating results
have fluctuated and are likely to continue to vary from quarter to quarter due to a number of factors, many of which are not within
our control. Factors that might cause quarterly fluctuations in our sales and operating results include, but are not
limited by the following:
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Variation in demand for our products, including variation due to seasonality; |
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Our ability to research, develop, introduce, market and gain market acceptance of new products and product enhancements in a timely manner; |
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Our ability to control costs; |
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The size, timing, rescheduling or cancellation of orders from distributors; |
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The introduction of new products by competitors; |
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Long sales cycles and fluctuations in sales cycles; |
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The availability and reliability of components used to manufacture our products; |
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Changes in our pricing policies or those of our suppliers and competitors, as well as increased price competition in general; |
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The risks and uncertainties associated with our international business; |
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Costs associated with any future acquisitions of technologies and businesses; |
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Developments concerning the protection of our proprietary rights; and |
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General global economic, political, international conflicts, and acts of terrorism. |
We are economically sensitive to general economic conditions,
including continued weakening of the economy, therefore the sale of our products could be adversely affected.
Our industry is sensitive to recessions
in the general economy and future economic outlook. Our results may be dependent on a number of factors impacting consumer spending,
including general economic and business conditions; and consumer confidence. The demand for our dental products may decline during
recessionary periods and at other times when disposable income is lower. A downturn or an uncertain outlook in the economy may
materially adversely affect our business.
An unsuccessful material strategic transaction or relationship
could result in operating difficulties and other harmful consequences to our business.
We have evaluated, and expect to continue
to evaluate, a wide array of potential strategic transactions and relationships with third parties. From time to time,
we may engage in discussions regarding potential acquisitions or joint ventures. Any of these transactions could be material to
our financial condition and results of operations, and the failure of any of these material relationships and transactions may
have a negative financial impact on our business.
Our products may be subject to government regulation and
failure to comply with applicable regulations could result in fines, suspensions, seizure actions, product recalls,
injunctions and criminal prosecutions.
Before most medical devices can be marketed
in the United States, they are required by the United States Food and Drug Administration (“FDA”) to secure either
clearance of a pre-market notification pursuant to Section 510(k) of the Federal Food, Drug and Cosmetic Act (“FDC Act”)
(a “510(k) Clearance”) or approval of a pre-market approval application (“PMA”). Obtaining approval
of a PMA application can take several years. In contrast, the process of obtaining 510(k) Clearance generally requires
a submission of substantially less data and generally involves a shorter review period. As discussed more specifically
under the subsection title “Regulatory Issue,” most Class I and Class II devices enter the market via the 510(k) Clearance
procedure, while new Class III devices ordinarily enter the market via the more rigorous PMA procedure. Approval of
a PMA application for a new medical device usually requires, among other things, extensive clinical data on the safety and effectiveness
of the device. PMA applications may take years to be approved after they are filed. In addition to requiring
clearance or approval for new medical devices, FDA rules also require a new 510(k) filing and review period, prior to marketing
a changed or modified version of an existing legally marketed device, if such changes or modifications could significantly affect
the safety or effectiveness of that device. The FDA prohibits the advertisement or promotion of any approved or cleared
device for uses other than those that are stated in the device’s approved or cleared application.
We have received approval from the FDA to
market our RemeCure dental curing lamp in the United States. We submitted our application for approval on FDA Form 510(k)
on October 30, 2002 and received FDA approval for this product on January 9, 2003. None of our other products have FDA
approval for marketing in the United States. However, we believe that our products, including for example, GlamSmile,
do not require a 510(k) submission because the products fall within an exemption under the 510(k) regulation.
International sales of medical devices are
also subject to the regulatory requirements of each country. In Europe, the regulations of the European Union require that a device
have a CE Mark, a mark that indicates conformance with European Union laws and regulations before it can be sold in that market.
In China, the SFDA requires registration of medical devices. The regulatory international review process varies from country to
country. We rely upon our distributors, sales representatives and strategic partners in the foreign countries in which we market
our products to ensure we comply with the regulatory laws of such countries. Failure to comply with the laws of such country will
have a material adverse effect on our operations and, at the very least, could prevent us from continuing to sell products in such
countries.
We may not have effective internal controls if we fail to
remedy any deficiencies we may identify in our system of internal controls.
In connection with Section 404 of the Sarbanes-Oxley
Act of 2002, we need to assess the adequacy of our internal control, remediate any weaknesses that may be identified, validate
that controls are functioning as documented and implement a continuous reporting and improvement process for internal controls.
We may discover deficiencies that require us to improve our procedures, processes and systems in order to ensure that our internal
controls are adequate and effective and that we are in compliance with the requirements of Section 404 of the Sarbanes-Oxley Act.
If the deficiencies are not adequately addressed, or if we are unable to complete all of our testing and any remediation in time
for compliance with the requirements of Section 404 of the Sarbanes-Oxley Act and the SEC rules under it, we would be unable to
conclude that our internal controls over financial reporting are designed and operating effectively, which could adversely affect
our investor confidence in our internal controls over financial reporting.
The loss of or a substantial reduction in, or change in the
size or timing of, orders from distributors could harm our business.
Our international sales are principally
comprised of sales through independent distributors, although we sell products in certain European countries through direct sales
representatives. A significant amount of our sales may consist of sales through distributors. The loss of
a substantial number of our distributors or a substantial reduction in, cancellation of or change in the size or timing of orders
from our current distributors could harm our business, financial condition and results of operations. The loss of a
key distributor would affect our operating results due to the potential length of time that might be required to locate and qualify
a new distributor or to retain direct sales representatives for the territory.
We do not have long term commitments from our suppliers and
manufacturers.
We may experience shortages of supplies
and inventory because we do not have long-term agreements with our suppliers or manufacturers. Our success is dependent
on our ability to provide our customers with our products. Although we manufacture most of our products, we are dependent
on our suppliers for component parts which are necessary for our manufacturing operations. In addition, certain of our
present and future products and product components are (or will be) manufactured by third party manufacturers. Since
we have no long-term contracts or other contractual assurances with these manufacturers for continued supply, pricing or access
to component parts, no assurance can be given that such manufacturers will continue to supply us with adequate quantities of products
at acceptable levels of quality and price. While we believe that we have good relationships with our suppliers and our
manufacturers, if we are unable to extend or secure manufacturing services or to obtain component parts or finished products from
one or more manufacturers on a timely basis and on acceptable terms, our results of operations could be adversely affected.
We face intense competition, and many of our competitors
have substantially greater resources than we do.
We operate in a highly competitive environment.
There are numerous well-established companies and smaller entrepreneurial companies with significant resources who are developing
and marketing products and services that will compete with our products. In addition, many of our current and potential
competitors have greater financial, technical, operational and marketing resources. These resources may make it difficult
for us to compete with them in the development and marketing of our products, which could harm our business.
Our success will depend on our ability to update our technology
to remain competitive.
The dental device and supply industry is
subject to technological change. As technological changes occur in the marketplace, we may have to modify our products
in order to become or remain competitive. While we are continuing our research and development in new products in efforts
to strengthen our competitive advantage, no assurances can be given that we will successfully implement technological improvements
to our products on a timely basis, or at all. If we fail to anticipate or respond in a cost-effective and timely manner
to government requirements, market trends or customer demands, or if there are any significant delays in product development or
introduction, our revenues and profit margins may decline which could adversely affect our cash flows, liquidity and operating
results.
We depend on market acceptance of the products of our customers. If
our products do not gain market acceptance, our ability to compete will be adversely affected.
Our success will depend in large part on
our ability to successfully market our line of products. Although we intend to differentiate our products from our competitors
by targeting different channels of distribution, no assurances can be given that we will be able to successfully market our products
or achieve consumer acceptance. Moreover, failure to successfully develop, manufacture and commercialize our products
on a timely and cost-effective basis will have a material adverse effect on our ability to compete in our targeted market segments. In
addition, medical and dental insurance policies generally do not cover teeth whitening or other cosmetic dental procedures, including
our products, which may have an adverse impact upon the market acceptance of our products.
We may be exposed to liabilities under the Foreign Corrupt
Practices Act, and any determination that we violated the Foreign Corrupt Practices Act could have a material adverse effect on
our business.
To the extent that we operate outside the
United States, we are subject to the Foreign Corrupt Practices Act (the “FCPA”) which generally prohibits U.S. companies
and their intermediaries from bribing foreign officials for the purpose of obtaining or keeping business or otherwise obtaining
favorable treatment. In particular, we may be held liable for actions taken by our strategic or local partners even though such
partners are foreign companies that are not subject to the FCPA. Any determination that we violated the FCPA could result in sanctions
that could have a material adverse effect on our business.
Failure to meet customers’ expectations or deliver
expected performance of our products could result in losses and negative publicity, which will harm our business.
If our products fail to perform in the manner
expected by our customers, then our revenues may be delayed or lost due to adverse customer reaction, negative publicity about
us and our products, which could adversely affect our ability to attract or retain customers. Furthermore, disappointed
customers may initiate claims for substantial damages against us, regardless of our responsibility for such failure.
If product liability lawsuits are successfully brought against
us, we may incur substantial liabilities and may be required to limit commercialization of our products.
Although we have not been a party to any
product liability lawsuits and are currently not aware of any anticipated product liability claims with respect to our products,
the nature of our business exposes us to product liability lawsuits arising out of the commercialization of our products. In
the future, an individual may bring a liability claim against us if one of our products causes, or merely appears to have caused,
an injury. If we cannot successfully defend ourselves against the product liability claim, we may incur substantial
liabilities. Regardless of merit or eventual outcome, liability claims may result in:
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decreased demand for our products; |
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injury to our reputation; |
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costs of related litigation; |
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substantial monetary awards to customers; |
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product recalls; |
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loss of revenue; and |
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the inability to commercialize our products. |
We may have difficulty managing our growth.
We have been experiencing significant growth
in the scope of our operations, including the launch of our retail direct to consumer business model in Asia through strategic
partnerships. This growth has placed significant demands on our management as well as our financial and operational
resources. In order to achieve our business objectives, we anticipate that we will need to continue to grow. If
this growth occurs, it will continue to place additional significant demands on our management and our financial and operational
resources, and will require that we continue to develop and improve our operational, financial and other internal controls. We
have been distributing our products primarily in Europe and we have recently launched sales and distribution in the United States
and Asia, this expansion could further increase the challenges involved in implementing appropriate operational and financial systems,
expanding manufacturing capacity and scaling up production, expanding our sales and marketing infrastructure and capabilities and
providing adequate training and supervision to maintain high quality standards. The main challenge associated with our
growth has been, and we believe will continue to be, our ability to recruit and integrate skilled sales, manufacturing and management
personnel. Our inability to scale our business appropriately or otherwise adapt to growth would cause our business,
financial condition and results of operations to suffer.
It may be difficult to enforce a United States judgment against
us, our officers and directors, or to assert United States securities laws claims in Belgium and to serve process
on substantially all of our directors and officers and these experts.
Our directors, our Chief Executive Officer
and our Chief Financial Officer are nonresidents of the United States. A substantial portion of our assets and all or
a substantial portion of the assets of these officers and directors and experts are located outside of the United States. As
a result, it may be difficult to effect service of process within the United States with respect to matters arising under the United
States securities laws or to enforce, in the United States courts, judgments predicated upon civil liability under the United States
securities laws. It also may be difficult to enforce in Belgium, in original actions or in actions for enforcement of
judgment of United States courts, civil liabilities predicated upon United States securities laws.
If we are unable to protect our intellectual property rights
or our intellectual property rights are inadequate, our competitive position could be harmed or we could be required
to incur expenses to enforce our rights.
Our future success will depend, in part,
on our ability to obtain and maintain patent protection for our products and technology, to preserve our trade secrets and to operate
without infringing the intellectual property of others. In part, we rely on patents to establish and maintain proprietary
rights in our technology and products. While we hold licenses to a number of issued patents and have other patent applications
pending on our products and technology, we cannot assure you that any additional patents will be issued, that the scope of any
patent protection will be effective in helping us address our competition or that any of our patents will be held valid if subsequently
challenged. Other companies also may independently develop similar products, duplicate our products or design products
that circumvent our patents.
In addition, if our intellectual property
rights are inadequate, we may be exposed to third-party infringement claims against us. Although we have not been a
party to any infringement claims and are currently not aware of any anticipated infringement claim, we cannot predict whether third
parties will assert claims of infringement against us, or whether any future claims will prevent us from operating our business
as planned. If we are forced to defend against third-party infringement claims, whether they are with or without merit
or are determined in our favor, we could face expensive and time-consuming litigation. If an infringement claim is determined
against us, we may be required to pay monetary damages or ongoing royalties. In addition, if a third party successfully
asserts an infringement claim against us and we are unable to develop suitable non-infringing alternatives or license the infringed
or similar intellectual property on reasonable terms on a timely basis, then our business could suffer.
If we are unable to meet customer demand or comply with quality
regulations, our sales will suffer.
We manufacture many of our products at our
Deurle, Belgium production facilities. In order to achieve our business objectives, we will need to significantly expand
our manufacturing capabilities to produce the systems and accessories necessary to meet demand. We may encounter difficulties
in scaling-up production of our products, including problems involving production capacity and yields, quality control and assurance,
component supply and shortages of qualified personnel. In addition, our manufacturing facilities are subject to periodic
inspections by foreign regulatory agencies. Our success will depend in part upon our ability to manufacture our products
in compliance with regulatory requirements. Our business will suffer if we do not succeed in manufacturing our products
on a timely basis and with acceptable manufacturing costs while at the same time maintaining good quality control and complying
with applicable regulatory requirements.
We are dependent on Guy De Vreese, our Chairman and Chief
Executive Officer, and any loss of such key personnel could result in the loss of a significant portion of our business.
Our success is highly dependent upon the
key business relations and expertise of Guy De Vreese, our Chairman and Chief Executive Officer. Unlike larger companies,
we rely heavily on a small number of officers to conduct a large portion of our business. The loss of service of our
Chairman and Chief Executive Officer along with the loss of his numerous contacts and relationships in the industry would have
a material adverse effect on our business. We do not have an employment agreement with Mr. Guy De Vreese.
If we cannot build and maintain strong brand loyalty our
business may suffer.
We believe that the importance of brand
recognition will increase as more companies produce competing products. Development and awareness of our brands will
depend largely on our ability to advertise and market successfully. If we are unsuccessful, our brands may not be able
to gain widespread acceptance among consumers. Our failure to develop our brands sufficiently would have a material
adverse effect on our business, results of operations and financial condition.
Risks Relating To Our Common Stock
There is a limited public trading market for our common stock.
Our Common Stock presently trades on the
Over-the-Counter Bulletin Board under the symbol “REMI.” We cannot assure you, however, that such market will continue
or that you will be able to liquidate your shares acquired in this offering at the price you paid or otherwise. We also
cannot assure you that any other market will be established in the future. The price of our common stock may be highly
volatile and your liquidity may be adversely affected in the future.
Our common stock is thinly traded, so you may be unable to
sell at or near ask prices or at all if you need to sell your shares to raise money or otherwise desire to liquidate your shares.
There is limited market activity in our
stock and we are too small to attract the interest of many brokerage firms and analysts. We cannot give you any assurance that
a broader or more active public trading market for our common stock will develop or be sustained. While we are trading on the Over-The-Counter
Bulletin Board, our trading volume may be limited by the fact that many major institutional investment funds, including mutual
funds, as well as individual investors follow a policy of not investing in Over- the–Counter Bulletin Board stocks and certain
major brokerage firms restrict their brokers from recommending Over-the-Counter Bulletin Board stocks because they are considered
speculative, volatile, thinly traded and the market price of the common stock may not accurately reflect our underlying value.
The market price of our common stock could be subject to wide fluctuations in response to quarterly variations in our revenues
and operating expenses, announcements of new products or services by us, significant sales of our common stock, the operating and
stock price performance of other companies that investors may deem comparable to us, and news reports relating to trends in our
markets or general economic conditions.
The ownership of our stock is highly concentrated in our
management.
Our present directors and executive officers,
and their respective affiliates beneficially owned approximately 26% of our outstanding common stock, including underlying options
that were exercisable or which would become exercisable within 60 days. As a result of their ownership, our directors
and executive officers and their respective affiliates collectively are able to significantly influence all matters requiring stockholder
approval, including the election of directors and approval of significant corporate transactions. This concentration
of ownership may also have the effect of delaying or preventing a change in control.
We have a substantial number of shares authorized but not
yet issued.
Our Articles of Incorporation authorize the issuance of up to
50,000,000 shares of common stock and 10,000,000 shares of preferred stock. Our Board of Directors has the authority
to issue additional shares of common stock and preferred stock and to issue options and warrants to purchase shares of our common
stock and preferred stock without stockholder approval. Future issuance of common stock and preferred stock could be
at values substantially below current market prices and therefore could represent further substantial dilution to our stockholders. In
addition, the Board could issue large blocks of voting stock to fend off unwanted tender offers or hostile takeovers without further
stockholder approval
Our stock may be governed by the “penny stock rules,”
which impose additional requirements on broker-dealers who make transactions in our stock.
SEC rules require a broker-dealer to provide
certain information to purchasers of securities traded at less than $5.00, which are not traded on a national securities exchange. Since
our common stock is not currently traded on an exchange, our common stock is considered a “penny stock,” and trading
in our common stock is subject to the requirements of Rules 15g-1 through 15g-9 under the Securities Exchange Act of 1934 (the
“Penny Stock Rules”). The Penny Stock Rules require a broker-dealer to deliver a standardized risk disclosure
document prepared by the SEC that provides information about penny stocks and the nature and level of risks in the penny stock
market. The broker-dealer must also give bid and offer quotations and broker and salesperson compensation information
to the prospective investor orally or in writing before or with the confirmation of the transaction. In addition, the
Penny Stock Rules require a broker-dealer to make a special written determination that the penny stock is a suitable investment
for the purchaser and receive the purchaser’s written agreement to the transaction before a transaction in a penny stock. These
requirements may severely limit the liquidity of securities in the secondary market because few broker-dealers may be likely to
undertake these compliance activities. Therefore, the disclosure requirements under the Penny Stock Rules may have the
effect of reducing trading activity in our common stock, which may make it more difficult for investors to sell their shares.
We have historically not paid dividends and do not intend
to pay dividends.
We have historically not paid dividends
to our stockholders and management does not anticipate paying any cash dividends on our common stock to our stockholders for the
foreseeable future. We intend to retain future earnings, if any, for use in the operation and expansion of our business.
The Public Company Accounting Oversight Board, or PCAOB,
is currently unable to inspect the audit work and practices of auditors operating in Belgium, including our auditor.
Our auditors, Vandelanotte Bedrijfsrevisoren
CVBA, are registered with the Public Company Accounting Oversight Board (PCAOB). Our auditors, like any other independent registered
public accounting firms operating in Belgium, are not permitted, because of Belgian law restrictions, to be subject to inspections
by the PCAOB that assess their compliance with U.S. law and professional standards in connection with performance of audits of
financial statements filed with the SEC. As a result, our investors may not realize the potential benefits of such inspections.
ITEM 1B — UNRESOLVED STAFF COMMENTS
Not Applicable.
ITEM 2 — PROPERTIES
The Company leases
an office facility of 5,187 square feet in Gent, Belgium from an unrelated party pursuant to a nine year lease commencing September
1, 2008. at a base rent of €5,712 per month for the total location ($6,192 per month at March 31, 2015).
The Company leased
an office facility of 1,991 square feet in Rome, Italy to support the sales and marketing division of our veneer business, from
an unrelated party pursuant a six year lease commencing July 1, 2011, at a base rent of € 6,500 per month for the total location
($8,969 per month at March 31, 2014).Due to an internal re-organization and in mutual agreement with the unrelated party, the rent
agreement was terminated at March 31, 2014.
The Company leases
an office facility of 635 square feet in Brussels, Belgium from an unrelated party pursuant to a nine year lease commencing July
1, 2012 at a base rent of €969 per month for the total location ($1,050 per month at March 31, 2015).
ITEM 3 — LEGAL PROCEEDINGS
To the best knowledge of management, there
are no material legal proceedings pending against the Company.
ITEM 4 — [RESERVED AND REMOVED]
PART II
ITEM 5 — MARKET FOR REGISTRANT’S COMMON EQUITY,
RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
Our common stock is quoted on the Over the
Counter Bulletin Board under the symbol “REMI.” The following table shows the range of the high and low
bid for our common stock as reported by the Over-The-Counter Bulletin Board for the time periods indicated:
| |
Bid Prices | |
| |
High | | |
Low | |
Quarter ended June 30, 2013 | |
$ | 0.15 | | |
$ | 0.08 | |
Quarter ended September 30, 2013 | |
$ | 0.20 | | |
$ | 0.09 | |
Quarter ended December 31, 2013 | |
$ | 0.18 | | |
$ | 0.15 | |
Quarter ended March 31, 2014 | |
$ | 0.23 | | |
$ | 0.17 | |
Quarter ended June 30, 2014 | |
$ | 0.49 | | |
$ | 0.26 | |
Quarter ended September 30, 2014 | |
$ | 0.50 | | |
$ | 0.30 | |
Quarter ended December 31, 2014 | |
$ | 0.34 | | |
$ | 0.26 | |
Quarter ended March 31, 2015 | |
$ | 0.34 | | |
$ | 0.26 | |
Bid quotations represent interdealer prices
without adjustment for retail markup, markdown and/or commissions and may not necessarily represent actual transactions.
Stockholders
As of June 18, 2015, the number of stockholders
of record was approximately 184, not including beneficial owners whose shares are held by banks, brokers and other nominees.
Dividends
We have not paid any dividends on our common
stock, and we do not anticipate paying any dividends in the foreseeable future. Our Board of Directors intends to follow a policy
of retaining earnings, if any, to finance the growth of the company. The declaration and payment of dividends in the future will
be determined by our Board of Directors in light of conditions then existing, including our earnings, financial condition,
capital requirements and other factors.
Securities Authorized for Issuance under Equity Compensation
Plans
As of March 31, 2015, the Company had two
equity compensation plans approved by its stockholders (1) the 2004 Incentive and Non-statutory Stock Option Plan (the “2004
Plan”); and (2) the 2007 Equity Incentive Plan (the “2007 Plan”). The Company’s 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 March 31, 2015 and March 31, 2014 with respect to all compensation plans (including individual
compensation arrangements) under which equity securities are authorized for issuance.
| |
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, 2013 and March 31, 2014 | |
| 12,500 | | |
| 2.00 | | |
| 432,500 | | |
| 0.96 | | |
| 1,000,000 | | |
| 1.21 | | |
| 350,000 | | |
| 0.97 | |
Expired | |
| (12,500 | ) | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (200,000 | ) | |
| — | |
Options outstanding and exercisable March
31, 2015 | |
| — | | |
| 1.20 | | |
| 432,500 | | |
| 0.96 | | |
| 1,000,000 | | |
| 1.21 | | |
| 150,000 | | |
| 0.97 | |
Options exercisable March 31, 2015 | |
| — | | |
| 1.20 | | |
| 432,500 | | |
| 0.96 | | |
| 1,000,000 | | |
| 1.21 | | |
| 150,000 | | |
| 0.97 | |
Exercise price range | |
$ | — | | |
| | | |
$ | 0.50
- $2.46 | | |
| | | |
$ | 1.21 | | |
| | | |
$ | 1.75 | | |
| | |
Weighted average remaining life | |
| — | | |
| | | |
| 3.00
years | | |
| | | |
| 3.12
years | | |
| | | |
| 1.56
years | | |
| | |
A summary of the Company’s equity compensation plans approved
and not approved by shareholders is as follows:
Plan Category | |
Number of securities to be issued upon exercise of of outstanding options, warrants and rights | | |
Weighted-average exercise price of outstanding options warrants and rights | | |
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | |
Equity Compensation Plans approved by security holders | |
| 1,445,000 | | |
$ | 1.17 | | |
| 605,000 | |
Equity Compensation Plans not approved by security holders | |
| 820,000 | | |
$ | 0.97 | | |
| NA | |
Total | |
| 2,265,000 | | |
$ | 1.10 | | |
| 605,000 | |
For the years ended March 31, 2015 and
March 31, 2014 the Company has not recognized any stock based compensation expense in the consolidated statement of operations.
ITEM 6 — SELECTED FINANCIAL DATA
Not Applicable.
ITEM 7 — MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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 listed in the section of this Annual Report entitled “Risk Factors” and from time to
time in our Securities and Exchange Commission filings under “risk factors” and elsewhere.
Each forward-looking statement should
be read in context with, and with an understanding of, the various disclosures concerning our business made elsewhere
in this Annual Report, as well as other public reports filed by us with the Securities and Exchange Commission. Readers
should not place undue reliance on any forward-looking statement as a prediction of actual results of developments.
Except as required by applicable law or regulation, we undertake no obligation to update or revise any forward-looking statement
contained in this Annual Report. This section should be read in conjunction with our consolidated financial statements.
Overview
We design, develop, manufacture and distribute
cosmetic dentistry products. Leveraging our knowledge of regulatory requirements regarding dental products and management’s
experience in the needs of the professional dental community, we have developed a line of professional veneers as well as a family
of teeth whitening products for both professional and “Over-The-Counter” (“OTC”) use, that are distributed
in Europe, Asia, Middle East and the United States. We manufacture many of our products in our facility in Ghent, Belgium
as well as outsourced manufacturing in Ghent, China and France. We distribute our products using both our own internal sales force
and through the use of third party distributors. We have established dealers in 20 countries encompassing, Europe, Asia,
Latin America, the Pacific Rim and the Middle East.
Recent Developments
On June 3, 2011, the Company obtained a
loan in the principal amount of $1,000,000 (the “Loan”) from an unrelated private company, Excelsior Medical (HK) (“EM”).
In connection with the Loan, the Company issued a promissory note, with a simple interest rate of 5% per annum, secured by certain
assets of the Company (the “Note”). The maturity date of the Loan is June 3, 2014. Interest of $50,000 per annum is
payable in cash on an annual basis. In September 2010, we entered into a license agreement with EM (the “EM license agreement”).
Under the EM license agreement, we granted EM an exclusive license to certain Asian territories in exchange for $500,000 which
was received during the year ended March 31, 2011. The Company received a further $500,000 from EM as an advance payment for veneers. The
$500,000 advance, less taxes withheld, was recorded as deferred revenue of $475,250 as of March 31, 2011. Effective as of
January 11, 2012, the Company entered into a Rescission Agreement with EM and Asia Best Healthcare Co., Ltd. Under the Rescission
Agreement, the Company agreed to repay a total of $1,000,000 received under the Distribution Agreement, plus a simple interest
rate of 5%, beginning on June 30, 2012, according to the following payment schedule: (i) $250,000 to be paid no later than June
30, 2012, (ii) $250,000 plus interest on June 30, 2012, (iii) $250,000 plus interest on December 31, 2012, and (iv) $250,000
plus interest on June 30, 2013. The Company also agreed to secure such obligations owed to EM with certain collateral of the Company.
During the period ended December 31, 2012 a partial payment of $20,000 in interest has been made. The Company is currently in the
process of re-negotiating the terms of repayment.
On January 28, 2012, we entered into
a Preference A Shares and Preference A-1 Shares Purchase Agreement (“Share Purchase Agreement”) with Glamsmile Dental
Technology Ltd., a Cayman Islands company and a subsidiary of Company (“Glamsmile Dental”), Glamsmile (Asia) Limited,
a company organized and existing under the laws of Hong Kong and a substantially owned subsidiary of Glamsmile Dental, Beijing
Glamsmile Technology Development Ltd., Beijing Glamsmile Trading Co., Ltd., Beijing Glamsmile Dental Clinic Co., Ltd., and Shanghai
Glamsmile Dental Clinic Co., Ltd., Gallant Network Limited, a shareholder of Glamsmile Dental (“Gallant”), and IDG-Accel
China Growth Fund III L.P. (“IDG Growth”), IDG-Accel China III Investors L.P.(“IDG Investors”) and Crown
Link Group Limited (“Crown”)(“IDG Growth, IDG Investors and Crown collectively referred to as the “Investors”),
pursuant to which the Investors agreed to (i) purchase from the Company an aggregate of 2,857,143 shares of Preference A-1 Shares
of Glamsmile Dental, which represents all of the issued and outstanding Preference A-1 Shares of Glamsmile Dental, for an aggregate
purchase price of $2,000,000, and (ii) purchase from Glamsmile Dental an aggregate of 5,000,000 shares of Preference A Shares for
an aggregate purchase price of $5,000,000.
On February 10, 2012, the sale of
the Preference A-1 Shares and the Preference A Shares was completed. As a result of the closing, the equity ownership of Glamsmile
Dental, on an as converted basis, is as follows: 31.4% by the Investors, 39.2 % by Gallant, and 29.4% by the Company. Mr. De Vreese,
our chairman, will remain as a director of Glamsmile Dental along with Mr. David Lok, who is the Chief Executive Officer and director
of Glamsmile Dental and principal of Gallant. In addition, at the closing, the Investors have a right to appoint one director of
Glamsmile Dental, and as such it is contemplated that after the closing the Board of Directors of Glamsmile Dental will consists
of Mr. De Vreese, Mr. Lok and a director appointed by the Investors.
Under the terms of the Share Purchase Agreement,
we agreed to transfer 500,000 shares of Glamsmile Dental owned by the Company to the Investors in the event of breach of certain
covenants by the Company. In connection with the Share Purchase Agreement, we also entered into an Investor’s Rights Agreement,
Right of First Refusal and Co-Sale Agreement, and Voting Agreement with the parties. In addition, in connection with the contemplated
transactions in the Share Purchase Agreement on January 20, 2012, we entered into a Distribution, License and Manufacturing Agreement
with Glamsmile Dental pursuant to which we appointed Glamsmile Dental as the exclusive distributor and licensee of Glamsmile Veneer
Products bearing the “Glamsmile” name and mark in the B2C Market in the People’s Republic of China (including
Hong Kong and Macau) and Republic of China (Taiwan) and granted related manufacturing rights and licenses in exchange for the original
issuance of 2,857,143 shares of Preference A-1 Shares of Glamsmile Dental and $250,000 (the receipt of which was acknowledged as
an off set to payment of certain invoices of Glamsmile (Asia) Limited).
On January 30, 2014, we sold a total of
2,500,000 ordinary shares of our investment in Glamsmile Dental Technology Ltd. for an aggregate consideration of $3,000,000 to
Glamsmile Dental Technology Ltd. As a result of the Sale of Shares, the equity ownership of Glamsmile Dental, on an as converted
basis, was before the Sales of shares as follows: 31.4% by the Investors, 39.2 % by Gallant, and 29.4% by the Company, and after
the sale as follows : 34.9% by the Investors, 43,6% by Gallant, and 21,51% by the Company. Mr. De Vreese, our chairman, will remain
as a director of Glamsmile Dental along with Mr. David Lok, who is the Chief Executive Officer and director of Glamsmile Dental
and principal of Gallant.
On January 16, 2014, the Company invested
in the start-up capital of Biotech Dental Benelux N.V., a Belgium corporation in exchange for 50% of its Shares. Biotech Dental
Benelux has been founded to market and sell dental implants for the Territory of Belgium, The Netherlands and Luxemburg. Our investment
has enabled us to enlarge our product range and increase our sales in the current year ended March 31, 2015.
Financial Results and Trends
Revenue increased by approximately 40.7%
to $3,616,355 in the year ended March 31, 2015 as compared to $2,592,596 in the year ended March 31, 2014. The increase
in sales is primarily due to increased sales of veneers and the sales results of our River 8 and associated software products.
In fiscal 2014, we experienced a decline in revenues as a result of an internal re-organization that took place in Europe and the
longer than expected time needed to finalize the SmileMe Mirror. The launch was forecasted for the end of the calendar year 2013
but was postponed to June 2014.
Our net income attributable to our stockholders was $0.01 for
fiscal 2015 and ($0.03) for fiscal 2014. During the year ended March 31, 2015 we recognized $106,663in equity income from our Asian
investment compared to $156,620 earned in the year ended March 31, 2014. Our net income for fiscal 2014 was positively impacted
by a gain of $1,582,597 on the sale of shares of our Glamsmile Asian Division (thereby reducing our participation from 29.4% to
21.51% at the end of January 31, 2014).
Critical Accounting Estimates
Basis for Presentation
Our financial statements have been prepared
on an accrual basis of accounting, in conformity with accounting principles generally accepted in the United States of America.
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.
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.
Revenues from product sales are recognized
when the product is shipped and title and risk of loss has passed to the customer, typically upon delivery and when the quantity
and price is fixed and determinable, and when collectability is reasonable assured.
Upfront fees are recognized upon the date
of the agreement (i.e. point of sale) because they relate solely to the sale of territories (that are sold in perpetuity), are
non-refundable, and are not contingent upon additional deliverables.
We have evaluated all deliverables in our
contracts (per ASC 605-25-5) ((a) territory & (b) manufacturing/marketing training & development fees) and determined that
they are separate, as follows:
|
· |
Both (a) & (b) have value to our customers on a standalone basis and can be sold by our customers separately. |
|
· |
Delivery or performance of the undelivered item or items is considered probable and substantially in our control. |
Our development fees/milestone payments
are recognized in accordance with the Milestone Method pursuant to FASB ASC 605. Revenues from milestones related to
an arrangement under which we have continuing performance obligations i.e. specifically scheduled training and development activities,
if deemed substantive, are recognized as revenue upon achievement of the milestone. Milestones are considered substantive if all
of the following conditions are met: (a) the milestone is non-refundable; (b) achievement of the milestone was not reasonably assured
at the inception of the arrangement; (c) substantive effort is involved to achieve the milestone; and (d) the amount of the milestone
appears reasonable in relation to the effort expended. If any of these conditions is not met, the milestone payment is deferred
and recognized as revenue as we complete our performance obligations.
We receive royalty revenues under license
agreements with third parties that sell products based on technology developed by us or to which we have rights. The license agreements
provide for the payment of royalties to us based on sales of the licensed product. We record these revenues as earned monthly,
based on reports from our licensees.
Business Combinations
On April 1, 2010, the Company adopted the
new accounting guidance for business combinations according to FASB Codification ASC 805, Business Combinations. This guidance
establishes principles and requirements for the reporting entity in a business combination, including recognition and measurement
in the financial statements of the identifiable assets acquired, the liabilities assumed, goodwill, and any noncontrolling interest
in the acquiree, as well as disclosure requirements to enable financial statement users to evaluate the nature and financial effects
of the business combination. Additionally, it provides guidance for identifying a business combination, measuring the acquisition
date, and defining the measurement period for adjusting provisional amounts recorded. The implementation of this standard did not
have an impact on the Company’s consolidated financial statements.
Cash and Cash Equivalents
The Company considers all highly liquid
investments with maturities of three months or less at the time of purchase to be cash or cash equivalents.
Non-Controlling Interest
The Company adopted ASC Topic 810 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, short term 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 investment in
MFI is classified as an available for sale investment and is initially measured at fair value with all subsequent gains and losses
recorded in other comprehensive income until realized. 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.
Accounts Receivable and Allowance for
Doubtful Accounts
The Company sells professional dental equipment to various companies,
primarily to distributors located in Western Europe, the Middle East and China. The terms of sales vary by customer, however, generally
are 2% 10 days, net 30 days. Accounts receivable is reported at net realizable value and net of allowance for doubtful accounts.
The Company uses the allowance method to account for uncollectible accounts receivable. The Company’s estimate is based on
historical collection experience and a review of the current status of trade accounts receivable.
Inventories
The Company purchases certain of its products in components
that require assembly prior to shipment to customers. All other products are purchased as finished goods ready to ship to customers.
The Company writes down inventories for estimated obsolescence
to estimated market value based upon assumptions about future demand and market conditions. If actual market conditions are less
favorable than those projected, then additional inventory write-downs may be required. Inventory reserves for obsolescence totaled
$394,932 at March 31, 2015 and $477,502 at March 31, 2014.
Prepaid Expense
The Company’s prepaid expense consists of prepayments
to suppliers for inventory purchases. Prepaid expenses also include VAT payments made for goods and services in excess of VAT payments
received from the sale of products as well as amounts for other prepaid operating expenses.
Property and Equipment
Property and equipment are stated at cost. Major renewals and
improvements are charged to the asset accounts while replacements, maintenance and repairs, which do not improve or extend the
lives of the respective assets, are expensed. At the time property and equipment are retired or otherwise disposed of, the asset
and related accumulated depreciation accounts are relieved of the applicable amounts. Gains or losses from retirements or sales
are credited or charged to income.
The Company depreciates its property and equipment for financial
reporting purposes using the straight-line method based upon the following useful lives of the assets:
Tooling |
3 Years |
Furniture and fixtures |
4 Years |
Machinery and Equipment |
4 Years |
Patents
Patents consist of the costs incurred to purchase patent rights
and are reported net of accumulated amortization. Patents are amortized using the straight-line method over a period based on their
contractual lives.
Research and Development Costs
The Company expenses research and development costs as incurred.
Advertising
Costs incurred for producing and communicating
advertising are expensed when incurred and included in sales and marketing and general and administrative expenses. For the years
ended March 31, 2015 and March 31, 2014, advertising expense was $386,337 and $309,076 respectively.
Income taxes
Income taxes are accounted for under the
asset and liability method as stipulated by Accounting Standards Codification (“ASC”) 740 formerly Statement of Financial
Accounting Standards (“SFAS”) No. 109, “Accounting for Income Taxes”. Deferred tax assets and liabilities
are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which those temporary differences
are expected to be recovered or settled. Under ASC 740, the effect on deferred tax assets and liabilities or a change in tax rate
is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced to estimated amounts to
be realized by the use of a valuation allowance. A valuation allowance is applied when in management’s view it is more likely
than not (50%) that such deferred tax will not be utilized.
Effective February 1, 2008, the Company
adopted certain provisions under ASC Topic 740, Income Taxes, (“ASC 740”), which provide interpretative guidance for
the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Effective
with the Company’s adoption of these provisions, interest related to the unrecognized tax benefits is recognized in the financial
statements as a component of income taxes. The adoption of ASC 740 did not have an impact on the Company’s financial position
and results of operations.
In the unlikely event that an uncertain
tax position exists in which the Company could incur income taxes, the Company would evaluate whether there is a probability that
the uncertain tax position taken would be sustained upon examination by the taxing authorities. Reserves for uncertain tax position
would then be recorded if the Company determined it is probable that a position would not be sustained upon examination or if a
payment would have to be made to a taxing authority and the amount is reasonably estimable. As of March 31, 2015, the Company does
not believe it has any uncertain tax positions that would result in the Company having a liability to the taxing authorities.
Warranties
The Company typically warrants its products
against defects in material and workmanship for a period of 24 months from shipment.
A tabular reconciliation of the Company’s
aggregate product warranty liability for the reporting period is as follows:
| |
Year ended March 31, 2015 | | |
Year ended March 31, 2014 | |
Product warranty liability: | |
| | | |
| | |
Opening balance | |
$ | 6,899 | | |
$ | 19,301 | |
Accruals for product warranties issued in the period | |
| (1,478 | ) | |
| (12,402 | ) |
Adjustments to liabilities for pre-existing warranties | |
| — | | |
| — | |
Ending liability | |
$ | 5,421 | | |
$ | 6,899 | |
Based upon historical sales trends and warranties
provided by the Company’s suppliers and sub-contractors, the Company has made a provision for warranty costs of $5,421 and
$6,899 as of March 31, 2015 and March 31, 2014, respectively.
Segment Reporting
“Disclosure About Segments of an Enterprise
and Related Information” requires use of the “management approach” model for segment reporting. The management
approach model is based on the way a company’s management organizes segments within the company for making operating decisions
and assessing performance. Reportable segments are based on products and services, geography, legal structure, management structure,
or any other manner in which management disaggregates a company. The Company’s management considers its business to comprise
one segment for reporting purposes.
Computation of Earnings (Loss) per Share
Basic net income (loss) per common share
is computed by dividing net income (loss) attributable to common stockholders by the weighted average number of shares of common
stock outstanding during the period. Net income (loss) per common share attributable to common stockholders assuming dilution is
computed by dividing net income by the weighted average number of shares of common stock outstanding plus the number of additional
common shares that would have been outstanding if all dilutive potential common shares had been issued.
On April 1, 2009, the Company adopted changes
issued by the FASB to the calculation of earnings per share. These changes state that unvested share-based payment awards that
contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall
be included in the computation of earnings per share pursuant to the two-class method for all periods presented. The adoption of
this change had no impact on the Company’s basic or diluted net loss per share because the Company has never issued any share-based
awards that contain non-forfeitable rights.
At each of March 31, 2015 and 2014, the
Company had 19,995,969, shares of common stock issued and outstanding. At March 31, 2015 and 2014, the Company
did not have any warrants outstanding, but had 1,582,500 and 1,795,000 options outstanding, respectively.
Pursuant to ASC 260-10-50-1(c),
if a fully diluted share calculation was computed for the years ended March 31, 2015 and 2014 respectively, it would have excluded
all options respectively since the Company’s average share trading price during the last two year period was less than the
exercise price of all options.
Conversion of Foreign Currencies
The reporting and functional currency for
the consolidated financial statements of the Company is the U.S. dollar. The home currency for the Company’s European subsidiaries,
Remedent N.V., Biotech Dental Benelux N.V., GlamSmile Rome and GlamSmile Deutschland GmbH, is the Euro, for Glamsmile Asia Ltd.,
and its subsidiaries, the Hong Kong dollar and the Chinese Renmimbi (“RMB”) for Mainland China. The assets and liabilities
of companies whose functional currency is other that the U.S. dollar are included in the consolidation by translating the assets
and liabilities at the exchange rates applicable at the end of the reporting period. The statements of income of such companies
are translated at the average exchange rates during the applicable period. Translation gains or losses are accumulated as a separate
component of stockholders’ equity.
Comprehensive Income (Loss)
Comprehensive income (loss) includes all
changes in equity except those resulting from investments by owners and distributions to owners, including accumulated foreign
currency translation, and unrealized gains or losses on marketable securities.
The Company’s other comprehensive
income for the year ended March 31, 2015 consisted of a loss on foreign currency translation of $261,891 and a foreign currency
translation loss on a fair value adjustment on AFS security in the amount of $129,824. The Company’s other comprehensive
income for the year ended March 31, 2014 consisted of a gain on foreign currency translation of $153,567 and a fair value adjustment
on AFS security in the amount of $171,313.
Stock Based Compensation
The Company has a stock-based compensation
plan. The Company measures the compensation cost of stock options and other stock-based awards to employees and directors at fair
value at the grant date and recognizes compensation expense over the requisite service period for awards expected to vest.
Except for transactions with employees and
directors, all transactions in which goods or services are the consideration received for the issuance of equity instruments are
accounted for based on the fair value of the consideration received or the fair value of the equity instruments issued, whichever
is more reliably measurable. Additionally, the Company has determined that the dates used to value the transaction are either:
(1) The date at which a commitment for performance
by the counter party to earn the equity instruments is established; or
(2) The date at which the counter party’s
performance is complete.
Recently Issued Accounting Pronouncements
Recent Accounting Pronouncements Not
Yet Adopted
The Financial Accounting Standards Board
(FASB) has updated U.S. Generally Accepted Accounting Principles (GAAP) to eliminate a critical gap in existing standards. The
new guidance, found in Accounting Standards Update (ASU) 2014-15, Presentation of Financial Statements — Going Concern (Subtopic
205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, clarifies the disclosures
management must make in the organization’s financial statement footnotes when management has substantial doubt about its
ability to continue as a “going concern.” The changes in ASU 2014-15 will take effect for the annual financial statement
period ending after December 15, 2016, and for annual periods and interim periods thereafter (with early application permitted)
which corresponds to the Company’s fiscal year beginning April 1, 2017. We are currently evaluating the impact of the new
guidance however we do not expect its application to have a significant impact upon our consolidated financial statements.
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts
with Customers, which provides updated guidance on revenue recognition principles that will supersede most current conceptual and
industry-specific revenue recognition guidance and thus enhance comparability of revenue recognition practices across entities,
industries, jurisdictions, and capital markets. The key principle of this updated guidance is that entities should recognize revenue
to depict the transfer of goods or services to customers at an amount reflecting the consideration to which an entity expects to
be entitled in exchange for those goods or services. The new guidance prescribes a five-step analysis of transactions to determine
how and when to recognize revenue. In addition, the new guidance provides for capitalization of certain costs of obtaining or fulfilling
a contract with a customer as well as enhanced disclosure requirements to enable a better understanding of the nature, amount,
timing, and uncertainty of revenue and cash flows arising from contracts with customers. ASU 2014-09 is effective for public entities
for fiscal years, and interim periods within those years beginning after December 15, 2016, which corresponds to the Company’s
fiscal year beginning April 1, 2017, with early adoption not permitted. The new guidance permits the use of either a retrospective
or cumulative effect transition method. We have not yet selected a transition method and are evaluating the expected impact of
adoption on our consolidated financial statements.
RESULTS OF OPERATIONS
For the Fiscal Years Ending March 31, 2015 and 2014
Comparative details of results of operations
for the years ended March 31, 2015 and 2014 as a percentage of sales are as follows:
| |
2015 | | |
2014 | |
NET SALES | |
| 100.00 | % | |
| 100.00 | % |
COST OF SALES | |
| 35.41 | % | |
| 37.22 | % |
GROSS PROFIT | |
| 64.59 | % | |
| 62.78 | % |
OPERATING EXPENSES | |
| | | |
| | |
Research and development | |
| 1.69 | % | |
| 2.99 | % |
Sales and marketing | |
| 20.91 | % | |
| 26.33 | % |
General and administrative | |
| 32.03 | % | |
| 52.64 | % |
Depreciation and amortization | |
| 7.05 | % | |
| 9.26 | % |
TOTAL OPERATING EXPENSES | |
| 61.68 | % | |
| 91.22 | % |
INCOME (LOSS) FROM OPERATIONS | |
| 2.91 | % | |
| (28.44 | )% |
Other income (expense) | |
| 1.62 | % | |
| 48.67 | % |
INCOME (LOSS) BEFORE INCOME TAXES & NON-CONTROLLING INTEREST | |
| 4.54 | % | |
| 20.23 | % |
Income tax expense | |
| (0.85 | )% | |
| — | % |
NET INCOME (LOSS) BEFORE NON-CONTROLLING INTEREST | |
| 3.69 | % | |
| 20.23 | % |
NON-CONTROLLING INTEREST | |
| 0.78 | % | |
| — | % |
NET INCOME | |
| 2.91 | % | |
| 20.23 | % |
Net Sales
Net sales increased by approximately 39.5%
to $3,616,355 in the year ended March 31, 2015 as compared to $2,592,596 in the year ended March 31, 2014. In fiscal
2015, we experienced an increase in revenues because of increased sales of veneers, sales results of our River 8 and associated
software products, and dental implants.
Cost of Sales
Cost of sales increased approximately 32.7%
to $1,280,406 in the year ended March 31, 2015 as compared to $964,951 in the year ended March 31, 2014. The increase in cost of
sales and cost of sales as a percentage of sales is primarily because of increased sales and the incorporation of our dental implant
division.
Gross Profit
Our gross profit increased by $708,304 to
$2,335,949 for the fiscal year ended March 31, 2015 as compared to $1,627,645 for the year ended March 31, 2014. Our gross profit
increased primarily because of increased sales, increased pricing on veneers, and higher margins on associated software products.
Operating Expenses
Research and Development. Our
research and development expenses decreased $16,229 to $61,246 for the year ended March 31, 2015 as compared to $77,475 for
the year ended March 31, 2014, because of reduced costs in the final phase of development of our veneer matching software.
Sales and marketing costs. Our
sales and marketing costs increased $73,554 to $756,233 or 10.8% for the year ended March 31, 2015 as compared to $682,679 for
the year ended March 31, 2014. The increase is largely due to the integration of our implant division.
General and administrative costs.
Our general and administrative costs for the year ended March 31, 2015 and 2014 were $1,158,279 and $1,364,745 respectively,
representing a decrease of $206,466 or 15.1%. Our general and administrative costs have decreased because we have achieved
cost savings from the integration of our implant Division.
Depreciation and amortization. Our
depreciation and amortization increased $14,751 or 6.1%, to $254,776 for the year ended March 31,
2015 as compared to $240,025 for the year ended March 31, 2014. The increase is because of increased amortization on recently purchased
equipment including purchases for our newly incorporated implant division.
Net interest expense.
Our net interest expense was $75,060 for the year ended March 31, 2015 as compared to $129,985 for the year ended March 31, 2014,
a decrease of $54,925 or 42.3%. Interest expense has decreased primarily because of decreased utilization and full repayment
of our bank credit line.
Liquidity and Capital Resources
Cash and Cash Equivalents
Our balance sheet at March 31, 2015 reflects cash and cash equivalents
of $399,149 as compared to $775,286 as of March 31, 2014, a decrease of $376,137. Net cash provided by operations was
$300,568 for the year ended March 31, 2015 as compared to net cash used by operations of $103,939 for the year ended March 31,
2014, an increase year over year of cash provided by operations in the amount of $404,507 primarily because of increased income.
As of March 31, 2015, there has been no
indication of a trend of increased doubtful accounts. As a result, at this time, we do not anticipate major increased
reserves.
Investing Activities
Net cash (used by)/provided by investing
activities was $(240,529) for the year ended March 31, 2015 as compared to net cash used by investing activities of $(81,363) for
the year ended March 31, 2014. During the year ended March 31, 2015 we spent $240,529 on purchases
of equipment and on the further development of our Smile Me Software. During the year ended March 31, 2014 we spent $81,363 on
purchases of equipment.
Financing Activities
Net cash provided by/(used by) financing
activities totaled $(358,136) for the year ended March 31, 2015 as compared to 1,198,816 for the year ended March 31, 2014. Net
cash provided from financing activities in the year ended March 31, 2014 was higher than in the year ended March 31, 2015 primarily
because of the partial sale of our investment in Asia.
The Company has a mixed-use line of credit
facility with BNP Paribas Fortis Bank, a Belgian bank (the “Facility”). The Facility is secured by a first
lien on the assets of Remedent N.V.. On January 3, 2008, an amendment was made decreasing the mixed-use line of credit
to €2,050,000, to be used by Remedent NV and/or Sylphar NV. Each line of credit carries its own interest rates and fees as
provided in the Facility and varies from the current prevailing bank rate
The line of credit was completely repaid
during the year ended March 31, 2015. As of March 31, 2015 and March 31, 2014, Remedent N.V. had in aggregate, $Nil and $273,200
in advances outstanding, respectively, under the mixed-use line of credit facilities.
During the years ended March 31, 2015 and
March 31, 2014, we recognized an increase/(decrease) in cash and cash equivalents of $(237,953) and $(302,534), respectively, from
the effect of exchange rates between the Euro and the US Dollar.
Internal and External Sources of Liquidity
As of March 31, 2015, we had current assets
of $2,906,788 compared to $3,440,693 at March 31, 2014. This decrease of $533,905 was due to a decrease in cash of $376,137 and
an increase in accounts receivable of $59,566, offset by a decrease in inventories of $185,217, and a decrease in prepaid expenses
of $32,117.
Current liabilities at March 31, 2015 of
$3,441,735 were $407,889 less than current liabilities as at March 31, 2014 of $3,849,624. The decrease was primarily
a result of an increase in accounts payable of $248,216, offset by decreases in the current portion of long-term debt, line of
credit, accrued liabilities, deferred revenue and due to related parties in the amounts of $84,936, $273,200, $115,556, $36,504
and $145,909 respectively.
Our cash and cash equivalents of $399,149 as of March 31, 2015
is sufficient to support our operations through our current fiscal year but we may need additional financing. During the year ended
March 31, 2015, we have been able to generate cash flows sufficient to support our operations. The continuation of the Company
is dependent upon the Company’s ability to continue to generate profitable operations. We may remain dependent on outside
sources of funding until our results of operations provide consistent positive cash flows.
We have supported current operations
by raising additional operating cash through loans and strategic partnerships and through the sale of non-core divisions of our
business. During the year ended March 31, 2014 we sold 7.9% of our investment in GlamSmile Asia for $3,000,000 and realized $1,185,000
in cash. Proceeds of the sale were used to repay our existing bank facility and to reduce our long-term debt.
At this time, we do not expect to purchase
or sell any property or equipment over the next 12 months. The Company does not currently expect a significant change in the number
of its employees over the next 12 months.
Off-Balance Sheet Arrangements
At March 31, 2015, we were not a party to
any transactions, obligations or relationships that could be considered off-balance sheet arrangements.
ITEM 7A — QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK
Not Applicable
ITEM 8 — FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Financial Statements that constitute
Item 8 are included at the end of this report beginning on Page F-1.
ITEM 9 — CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A — CONTROLS AND PROCEDURES
(a) Evaluation
of Disclosure Controls and Procedures
Under the supervision and with the participation
of our management, including our principal executive officer and principal financial officer, as of the end of the period covered
by this report, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures,
as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Act of 1934. Our disclosure controls and procedures are designed
to provide reasonable assurance that the information required to be included in our Securities and Exchange Commission (“SEC”)
reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, relating to the
Company, including our consolidated subsidiaries, and was made known to them by others within those entities, particularly during
the period when this report was being prepared. Based on this evaluation, our principal executive officer and principal financial
officer concluded that, as of March 31, 2015, our disclosure controls and procedures are effective at these reasonable assurance
levels.
(b) Management’s
Report on Internal Control over Financial Reporting
The management of the Company is responsible
for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over
financial reporting is a process designed under the supervision of the Company’s principal executive officer and principal
financial officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s
financial statements for external purposes in accordance with generally accepted accounting principles. Because of its inherent
limitations, internal control over financial reporting may not prevent or detect misstatements. All internal control systems, no
matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only
reasonable assurances with respect to financial statement preparation and presentation. Additionally, projections of any evaluation
of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions,
or that the degree of compliance with the policies or procedures may deteriorate.
As of March 31, 2015, management assessed
the effectiveness of the Company’s internal control over financial reporting based on the criteria for effective internal
control over financial reporting established in “Internal Control — Integrated Framework,” issued by the Committee
of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Based on the assessment, management determined that
the Company maintained effective internal control over financial reporting as of March 31, 2015 based on the COSO criteria.
This annual report does not include an attestation
report of the Company’s independent registered public accounting firm regarding internal control over financial reporting.
Management’s report was not subject to attestation by the Company’s independent registered public accounting firm pursuant
to permanent rules of the Securities and Exchange Commission that permit the Company to provide only management’s
report in this annual report.
Change in Internal Control Over Financial Reporting
There have been no changes in the Company’s
internal controls over financial reporting during the quarter ended March 31, 2015 that have materially affected, or are reasonably
likely to materially affect, the Company’s internal control over financial reporting.
ITEM 9B— OTHER INFORMATION
None.
PART III
ITEM 10 — DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE
Directors, Executive Officers and Significant Employees
The following table sets forth the names
and ages of our current directors and executive officers, the principal offices and positions with us held by each person and the
date such person became our director or executive officer. Our executive officers are elected annually by the Board
of Directors. Each year the stockholders elect the board of directors. The executive officers serve terms
of one year or until their death, resignation or removal by the Board of Directors. There was no arrangement or understanding
between any executive officer or director and any other person pursuant to which any person was elected as an executive officer
or director. There are no family relationships between any of our directors, executive officers, director nominees or
significant employees. Mr. Kolsteeg is independent as determined by the NASDAQ rules.
Person |
|
Age |
|
Position |
Guy De Vreese |
|
60 |
|
Chairman, Chief Executive Officer |
Fred Kolsteeg |
|
72 |
|
Director |
Philippe Van Acker |
|
50 |
|
Director, Chief Financial Officer and Chief Accounting Officer |
Biographies
Guy De Vreese, Chairman. From
April 1, 2002, Mr. De Vreese has served as our Chairman of the Board. Effective upon Mr. List’s resignation as
Chief Executive Officer, on December 10, 2008 Mr. De Vreese became our Chief Executive Officer. From June 2001 Mr. De
Vreese has also served as President of Remedent N.V. and he has served as President of DMDS, Ltd., a European subsidiary of Dental
& Medical Systems, Inc. DMDS, Ltd. developed and marketed high-tech dental equipment. In August 1996, Mr. De Vreese
founded DMD N.V., a Belgian company that was the independent European distributor for DMDS products and was its Chief Executive
Officer until DMD purchased its distribution rights in April 1998. Mr. De Vreese later worked as CEO from 1996 through
February 1999 for Lident, N.V., a Belgian company that merged with DMD and specialized in digital photography and developer of
imaging software. Mr. De Vreese also served as a consultant providing services to DMDS, Ltd. from February 1999 to June
2001. Mr. De Vreese resides in Belgium. Mr. De Vreese’s years of experience in the dental industry provide
us with invaluable industry contacts and know-how, in addition to special insight into our customers’ needs and requirements.
In addition, Mr. De Vreese’s extensive experience in our industry, commitment to research and development of innovative dental
products, and in-depth knowledge of our company gained by serving as our CEO provide valuable insights for our Board. The
Board believes that Mr. De Vreese demonstrated leadership abilities and business judgment, provide an important leadership element
to our Board
Philippe Van Acker, Director, Chief
Accounting Officer. Mr. Van Acker was appointed as our Chief Financial Officer as of March 30, 2005. Effective
December 18, 2008, Mr. Van Acker resigned as Chief Financial Officer and became our Chief Accounting Officer as well as assuming
a position on the Board of Directors. Effective July 17, 2012, Mr. Van Acker was re-appointed as our Chief Financial
Officer.
From July 2001 to March 30, 2005, Mr. Van
Acker has served as a director of our subsidiary, Remedent N.V. where he has also served as financial controller. From
1999 to 2001, Mr. Van Acker served as Director of Finance for DMDS, Ltd., a European subsidiary of Dental & Medical Diagnostic
Systems, Inc., a company that developed and marketed high-tech dental equipment. From 1992 to 1999, Mr. Van Acker held
various positions with Pfizer Medical Technology Group. Mr. Van Acker resides in Belgium. Mr. Van Acker’s
executive management experience and extensive background in finance and investment matters provide important contributions and
critical insight to our Board. The Board believes that Mr. Van Acker’s financial background and understanding
of the dental industry and our business bring perspectives beneficial to the Board as the Company seeks to expand its presence
in Europe and China.
Fred Kolsteeg, Director. Mr. Kolsteeg
has served as a director of the Company since April 2002. Since 1996, Mr. Kolsteeg has served as the president of WAVE
Communications, a Dutch based advertising agency. Prior to founding WAVE in 1996, he founded several other advertising
agencies such as ARA, Team and Team Saatchi. Mr. Kolsteeg has also worked at Phillips and Intermarco Publicis. Mr. Kolsteeg
resides in Holland. Mr. Kolsteeg has experience managing operations and finance for multiple businesses. Our
Board believes that this experience, adds valuable perspectives and he is an “audit committee financial expert” as
defined in SEC rules.
Legal Proceedings
None of our directors or executive officers
were involved in a legal proceeding during the past ten years which are material to an evaluation of the ability or integrity of
any director, person nominated to become a director or executive officer of the Company and required to be disclosed under Item
401(f) of Regulation S-K.
Director Committees and Director Independence
The Company does not have a separate compensation,
nominating or audit committee. The Board of Directors has determined that Mr. Kolsteeg is “independent,”
as independence is defined in the listing standards for the Nasdaq Stock Market. Accordingly, we have one director who
is “independent.”
Board Leadership Structure and Role in Risk Oversight
The Board does not have a policy as to whether
the roles of our Chairman and Chief Executive Officer should be separate. Instead, the Board makes this determination based on
what best serves the our Company’s needs at any given time. Currently, Mr. De Vreese holds the positions
of Chairman and Chief Executive Officer of our Company, and the Board has one independent director. The Board may decide to separate
the positions of Chairman and Chief Executive Officer in the future if the Board believes it is in the best interest of the Company
and our stockholders.
The Board believes that effective board
leadership is highly dependent on the experience, skills and personal interaction between persons in leadership roles. The
Company believes that having one person, particularly Mr. De Vreese with his extensive knowledge of the industry and
executive management experience, his extensive knowledge of the operations of the Company and his own commitment to innovation
and strategic thinking, serve as both Chief Executive Officer and Chairman is the best leadership structure for the Company because
it demonstrates to our employees, customers and stockholders that the Company is under strong leadership, with a single person
setting the tone and having primary responsibility for managing the Company’s operations. Accordingly, with significant input
from our Board, Mr. De Vreese sets the strategic direction for our Company and provides daily leadership and guidance to our managements
and employees. In addition, this unity of leadership promotes strategy development and execution, timely decision-making
and effective management of Company resources. The Company believes that it has been well-served by this structure.
In its governance role, and particularly
in exercising its duty of care and diligence, the Board is responsible for ensuring that appropriate risk management policies and
procedures are in place to protect the company’s assets and business. Our Board has broad and ultimate oversight
responsibility for our risk management processes and programs and executive management is responsible for the day-to-day evaluation
and management of risks to the company.
Audit Committee Financial Expert
Our Board of Directors has not established
a separate audit committee within the meaning of Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”). Instead, our entire Board of Directors acts as the audit committee within the meaning of Section 3(a)(58)(B) of the
Exchange Act. In addition, our Board of Directors has not made a determination as to whether a director on the Board meets
the definition of an “audit committee financial expert” within the meaning of Item 407(d)(5) of Regulation S-K. We
continue to seek candidates for outside directors and for a financial expert to serve on a separate audit committee when we
establish one. Due to our small size and limited resources, it has been difficult to recruit outside directors and financial experts,
especially due to the fact that we do not have directors and officer’s liability insurance to offer suitable candidates.
In fulfilling its oversight responsibilities,
the Board has reviewed and discussed the audited financial statements with management and discussed with the independent auditors
the matters required to be discussed by SAS 61. Management is responsible for the financial statements and the reporting process,
including the system of internal controls. The independent auditors are responsible for expressing an opinion on the conformity
of those audited financial statements with generally accepted accounting principles.
The Board discussed with the independent
auditors, the auditors’ independence from the management of the Company and received written disclosures and the letter from
the independent accountants required by Independence Standards Board Standard No. 1.
After Board review and discussions, as mentioned
above, the Board recommended that the audited financial statements be included in the Company’s Annual Report on Form 10-K.
Governance Committee and Nominations to the Board of Directors
There were no material changes to the procedures
by which security holders may recommend nominees to our Board of Directors.
Code of Ethics
We have adopted a written Code of Ethics
that applies to our senior management. A copy of our Code of Ethics, executed by the Chief Executive Officer and Chief Financial
Officer, has been filed as an exhibit to our Annual Report on Form 10-K for the fiscal year ended March 31, 2015. A copy of
our Code of Ethics is available to any stockholder by addressing a request to the attention of the Secretary of the Company and
mailing such request to the Company’s corporate offices. Any amendment to the Code of Ethics or any waiver of the Code of
Ethics will be disclosed promptly following the date of such amendment or waiver pursuant to a Form 8-K filing with the Securities
and Exchange Commission.
Compliance with Section 16 of the Securities Exchange Act
of 1934
Section 16(a) of the Securities Exchange
Act of 1934, as amended, requires our executive officers and directors and persons who own more than 10% of a registered class
of our equity securities, to file with the Securities and Exchange Commission (hereinafter referred to as the “Commission”)
initial statements of beneficial ownership, reports of changes in ownership and Annual Reports concerning their ownership, of Common
Stock and other of our equity securities on Forms 3, 4, and 5, respectively. Executive officers, directors and greater than 10%
stockholders are required by Commission regulations to furnish us with copies of all Section 16(a) reports they file. Based solely
on information available to us in public filings, we believe that all reports required by Section 16(a) for transactions in
the year ended March 31, 2015, were timely filed.
ITEM 11 — EXECUTIVE COMPENSATION
Summary Compensation
Our Board of Directors has not established
a separate compensation committee nor any other committee that acts as such a committee. Instead, the entire Board of Directors
reviews and approves executive compensation policies and practices, reviews, salaries and bonuses for our officers, administers
our benefit plans, and considers other matters as may, from time to time, be referred to it. We do not currently have a Compensation
Committee Charter. Our Board continues to emphasize the important link between our performance, which ultimately benefits
all stockholders, and the compensation of our executives. Therefore, the primary goal of our executive compensation policy is to
closely align the interests of the stockholders with the interests of the executive officers. In order to achieve this goal, we
attempt to (i) offer compensation opportunities that attract and retain executives whose abilities and skills are critical to our
long-term success and reward them for their efforts in ensuring our success and (ii) encourage executives to manage from the perspective
of owners with an equity stake in the Company.
The following table sets forth information
regarding all forms of compensation received by the named executive officers during the fiscal years ended March 31, 2015 and March
31, 2014, respectively:
Name and
Principal Position (a) | |
Year
(b) | | |
Salary
($) (c) | | |
Bonus
($) (d) | | |
Stock
Awards ($)
(e) | | |
Option
Awards ($)
(f) | | |
Non-Equity
Incentive Plan
Compensation ($)
(g) | | |
Nonqualified
Deferred Compensation
Earnings ($)
(h) | | |
All Other
Compensation ($)
(i) | | |
Total
($) (j) | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Guy De Vreese, CEO and Chairman | |
| 2015 | | |
$ | -0- | | |
$ | -0- | | |
$ | -0- | | |
$ | -0- | | |
$ | -0- | | |
$ | -0- | | |
$ | nil | (1) | |
$ | Nil | (1) |
| |
| 2014 | | |
$ | -0- | | |
$ | -0- | | |
$ | -0- | | |
$ | -0- | | |
$ | -0- | | |
$ | -0- | | |
$ | nil | (1) | |
$ | Nil | (1) |
| |
| 2013 | | |
$ | -0- | | |
$ | -0- | | |
$ | -0- | | |
$ | -0- | | |
$ | -0- | | |
$ | -0- | | |
$ | 324,692 | (1) | |
$ | 324,692 | (1) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Philippe Van Acker, | |
| 2015 | | |
$ | 195,823 | | |
$ | -0- | | |
$ | -0- | | |
$ | -0- | | |
$ | -0- | | |
$ | -0- | | |
$ | -0- | | |
$ | 195,823 | |
Chief Accounting Officer,
Director | |
| 2014 | | |
$ | 185,666 | | |
$ | -0- | | |
$ | -0- | | |
$ | -0- | | |
$ | -0- | | |
$ | -0- | | |
$ | -0- | | |
$ | 185,666 | |
| |
| 2013 | | |
$ | 175,783 | | |
$ | -0- | | |
$ | -0- | | |
$ | -0- | | |
$ | -0- | | |
$ | -0- | | |
$ | -0- | | |
$ | 175,783 | |
|
(1) |
These amounts are consulting fees, including a car allowance paid by Remedent N.V. to Lausha, N.V., a company controlled by Mr. De Vreese, pursuant to an oral consulting agreement between Lausha N.V. and Remedent N.V. |
Outstanding Equity Awards at Fiscal Year End
The following table provides information
with respect to the named executive officers concerning unexercised stock options held by them at March 31, 2015. As
of March 31, 2015, there were no outstanding stock awards and columns (g) through (j) have been omitted.
OPTION AWARDS |
Name (a) | |
Number of Securities Underlying Unexercised Options (#) Exercisable (b) | | |
Number of Securities Underlying Unexercised Options (#) Unexercisable (c) | | |
Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) (d) | | |
Option Exercise Price ($) (e) | | |
Option Expiration Date (f) |
| |
| | |
| | |
| | |
| | |
|
Guy De Vreese | |
| 100,000 | | |
| -0- | | |
| | | |
$ | 1.75 | | |
20-Sept-2017 |
| |
| | | |
| | | |
| | | |
| | | |
|
Philippe Van Acker | |
| 75,000 | | |
| -0- | | |
| | | |
$ | 2.46 | | |
23-Dec-2015 |
Philippe Van Acker | |
| 50,000 | | |
| -0- | | |
| | | |
$ | 1.75 | | |
20-Sept-2017 |
Philippe Van Acker | |
| 100,000 | | |
| -0- | | |
| | | |
$ | 0.50 | | |
19-Mar-2019 |
Director Compensation Table
Generally, our directors do not receive
any cash compensation, but are entitled to reimbursement of their reasonable expenses incurred in attending directors’ meetings. However,
at the discretion of our Board of Directors, we may periodically issue stock options under our stock option plan to directors.
Our directors did not receive any compensation
for board services during the fiscal year ended March 31, 2015.
Employment Agreements
Our subsidiary, Remedent, N.V., has an employment agreement
with Mr. Philippe Van Acker, our Chief Financial Officer and Chief Accounting Officer. We do not currently have
any other employment agreement with our Chief Executive Officer.
Long-Term Incentive Plans-Awards in Last Fiscal Year
We do not currently have any long-term incentive
plans.
ITEM 12 — SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth information
regarding the beneficial ownership of our common stock as of June 30, 2015. The information in this table provides
the ownership information for:
|
a. |
each person known by us to be the beneficial owner of more than 5% of our common stock; |
|
b. |
each of our directors; |
|
c. |
each of our executive officers; and |
|
d. |
our executive officers, directors and director nominees as a group. |
Beneficial ownership has been determined
in accordance with Rule 13d-3 of the 1934 Exchange Act and includes voting or investment power with respect to the shares. Unless
otherwise indicated, the persons named in the table below have sole voting and investment power with respect to the number of shares
indicated as beneficially owned by them. Common stock beneficially owned and percentage ownership is based on 19,995,969
shares outstanding as of June 30, 2015.
Name of Beneficial Owner (1) | |
Shares Beneficially Owned | | |
Percentage Beneficially Owned | |
| |
| | |
| |
Guy De Vreese, CEO, Chairman (2) | |
| | | |
| | |
Zuiderlaan 1-3, bx 8 | |
| | | |
| | |
9000Ghent, Belgium | |
| 4,733,680 | | |
| 23.67 | % |
| |
| | | |
| | |
Philippe Van Acker, Chief Financial Officer, Chief Accounting Officer, Director (3) | |
| | | |
| | |
Zuiderlaan 1-3, bx 8 | |
| | | |
| | |
9000 Ghent, Belgium | |
| 225,000 | | |
| 1.13 | % |
| |
| | | |
| | |
Fred Kolsteeg, Director (4) | |
| | | |
| | |
Managelaantje 10 | |
| | | |
| | |
3062 CV Rotterdam | |
| | | |
| | |
The Netherlands | |
| 295,000 | | |
| 1.48 | % |
| |
| | | |
| | |
All
Officers and Directors as a Group (3 persons) | |
| 5,253,680 | | |
| 26.28 | % |
| |
| | | |
| | |
5% or Greater Stockholders | |
| | | |
| | |
| |
| | | |
| | |
Sternberg Stuart | |
| 2,533,793 | | |
| 12.67 | % |
|
1. |
Beneficial ownership has been determined in accordance with Rule 13d-3 under the Exchange Act. Pursuant to the rules of the Securities and Exchange Commission, shares of common stock which an individual or group has a right to acquire within 60 days pursuant to the exercise of options or warrants are deemed to be outstanding for the purpose of computing the percentage ownership of such individual or group, but are not deemed to be beneficially owned and outstanding for the purpose of computing the percentage ownership of any other person shown in the table. |
|
2. |
Guy De Vreese holds 3,304,426 shares in his own name, which such amount includes 100,000 shares of common stock underlying options which vested on September 17, 2007 and have an exercise price of $1.75 per share; 72,787 shares of common stock held in the name of Lausha N.V., a Belgian company controlled by Guy De Vreese; 6,467 shares of common stock held in the name of Lident N.V., a Belgian company controlled by Guy De Vreese; and 1,400,000 shares of common stock held in the name of Lausha HK, a Hong Kong company controlled by Guy De Vreese. |
|
3. |
Includes 75,000 shares of common stock underlying options which vested on December 2005 and have an exercise price of $2.46 per share; 50,000 shares of common stock underlying options which have vested as of September 17, 2009 and have an exercise price of $1.75 per share; and 100,000 shares of common stock underlying options which were fully vested on March 19, 2009 and have an exercise price of $0.50 per share. |
|
4. |
Includes 200,000 shares of common stock underlying options which were fully vested on March 19, 2009 and have an exercise price of $0.50 per share. |
ITEM 13 — CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
AND DIRECTOR INDEPENDENCE
Related Transactions
Compensation
During the years ended March 31, 2015 and
2014 respectively, the Company incurred $195,823 and $185,666 in compensation expense for all directors and officers.
Sales Transactions
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 arm’s length consideration payable for similar services or transfers.
Other Transactions
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 the 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 sublicensable 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), as the terms and transactions are further detailed in the First Fit Distribution Agreement. The
consummation of the transactions described herein and contemplated in the First Fit Distribution Agreement are subject to certain
closing conditions which includes, in addition to customary closing conditions: the completion of Den-Mat’s due diligence
with respect to the First Fit Products to its satisfaction; execution and delivery of Non-Competition Agreements by
Guy De Vreese and Evelyne Jacquemyns; and the delivery of the Development Payment and first installment of the License Payment
(the “Development Payment” and License Payment” are defined below). The First Fit Distribution Agreement
provides that the consummation of the transactions contemplated therein will occur upon the performance or waiver of such closing
conditions. 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 as follows: (a) Fifty Thousand Dollars ($50,000)
within seven (7) days after the effective date of the First Fit Distribution Agreement (the “Effective Date”), and
(b) Three Hundred Fifty Thousand Dollars ($350,000) within twenty one (21) days after the Effective Date ; (ii) a non-refundable
license fee of Six Hundred Thousand Dollars ($600,000) payable in three (3) equal installments of $200,000 each, with the first
installment payable on the closing date contemplated in the First Fit Distribution Agreement (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
payment to maintain exclusivity, as such terms are more particularly described in the First Fit Distribution Agreement.
On March 29, 2010, a certain Amendment No.
1 to First Fit Crown Distribution and License Agreement (“First Fit Amendment”) between the Company and Den-Mat,
pursuant to which the Company agreed to sell to Den-Mat all of the intellectual property or used by Company related to the First
Fit product (“First Fit IP”) became effectuated upon Company’s receipt of Den-Mat’s countersignatures to
the First Fit Amendment. The First Fit Amendment amends the First Fit-Crown Distribution and License Agreement
dated June 3, 2009 between the Company and Den-Mat, pursuant to which Den-Mat was granted certain license and distribution rights
relating to the First Fit IP and First Fit products. The total purchase price for the First Fit IP consists of installment
payments and royalty payments. The cash component of the purchase price of the First Fit IP is $2,850,000 to be
paid in the form of cash in the following installments: (a) $50,000 upon delivery by Remedent to Den-Mat of a working prototype
of the First Fit crown, (b) $525,000 on or before March 15, 2010 (c) $700,000 on June 30, 2010, and (d) $500,000 on December
31, 2010, June 30, 2011 and December 31, 2011. In connection with the execution of the First Fit Agreement, Den-Mat also agreed
to make an advance cash payment of $75,000 to the Company towards the purchase price. In addition to the cash component,
Den-Mat agreed to pay Remedent a capital payment equal to a certain percent of Den-Mat’s net revenues generated by the sale
of the First Fit products.
In connection with our Distribution, License
& Manufacturing Agreement with Den-Mat (the “Distribution Agreement”) dated as August 2008, as amended and restated
by the parties on June 3, 2009 pursuant to the Amended and Restated Distribution, License and Manufacturing Agreement, and as consideration
for Den-Mat’s obligations under the Distribution Agreement, we agreed, among other things, to issue Den-Mat or an entity
to be designated by Den-Mat, warrants to purchase up to three million three hundred seventy-eight thousand three hundred seventy-nine
(3,378,379) shares of our common stock, par value $0.001 per share at an exercise price of $1.48 per share, exercisable for a period
of five years. The warrants were issued in the period ended September 30, 2008 and 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 expense was originally classified as
a non-operating expense. However, we have subsequently reclassified the expense to operations since our agreement with Den-Mat
is in the normal course of our operations. The reclassification increased our operations expenses by $4,323,207, while reducing
our other expenses by the same amount, resulting in no net impact upon our consolidated net loss for the year ended March 31, 2009.
On March 29, 2010, concurrently with the
execution of the First Fit Amendment (as described above), the Company and Den-Mat entered into Amendment No. 2 to the Amended
and Restated Distribution, License and Manufacturing Agreement (“Glamsmile Amendment”) with Den-Mat pursuant to which
certain provisions of a certain Amended and Restated Distribution, License and Manufacturing Agreement previously entered into
by the Company and Den-Mat on June 3, 2009 and subsequently amended on August 11, 2009, were amended. The Glamsmile
Amendment became effective concurrently with the effectiveness of the First Fit Amendment. Among other things, the Glamsmile
Amendment (1) permits the Company to purchase its requirements for GlamSmile Products from another party, other than Den-Mat, provided
Company pays De-Mat a royalty payment on net revenues received by Company per unit/tooth, (2) decreases the percentage of securities
to be covered in a warrant to purchase securities of B2C Market Subsidiary and the exercise price of such warrant to be issued
to Den-Mat in the event a B2C Market Subsidiary is formed under the terms set forth in such agreement, (3) expands the
definition of “Excluded Market” to include Australia, Belgium, France and United Arab Emirates, and (4) provides a
consulting fee, equal to a percentage of net revenues received by Den-Mat from the Sale of Unit/Teeth and trays, to the Company
for its services, support and certain additional consideration, (5) terminates certain provisions relating to minimum requirement
obligations and rights, and (6) amends the formula for calculation a certain exit fee in the event of a change of control.
On March 27, 2012, the distribution agreements
with Den-Mat were terminated pursuant to a certain Termination and Distribution Agreement with Den-Mat (“Den-Mat Distribution
Agreement”). Pursuant to the Den-Mat Distribution Agreement, we granted Den-Mat a non-exclusive, irrevocable, perpetual,
royalty free, license to use within certain territory, which among other territories excludes China, Macau, Hong Kong, and Taiwan,
the intellectual property that was the subject of the license to Den-Mat under the Amended and Restated Distribution, License and
Manufacturing Agreement dated June 3, 2009, as amended from time to time (“Prior Agreements”), as such intellectual
property relates the products which was the subject of the Prior Agreements. In connection with the termination of the Prior Agreements,
under the Den-Mat Distribution Agreement, Den-Mat agreed to pay us $200,000.
Guy De Vreese, our Chairman of the Board
and Chief Executive Officer, is the managing director of our subsidiary, Remedent N.V. Mr. De Vreese provides his services
as Remedent N.V.’s Managing Director through his company, Lausha, N.V. Lausha, N.V. has an oral consulting
arrangements with Remedent N.V. that provide for Mr. De Vreese’s services and is a company controlled by Mr. De
Vreese. On March 20, 2006, Lausha N.V. and Lident N.V. merged into Lausha N.V., controlled by Mr. De Vreese. Lausha
N.V. received a total of $324,692 and $348,299 as compensation for services relating to his duties as Managing Director of Remedent
N.V. on a-day-to-day base for the years ending March 31, 2013 and March 31, 2012, respectively.
Director Independence
Due the Company’s size and limited
resources, the Company does not have a separate compensation, nominating or audit committee. The Board of Directors
has determined that Mr. Kolsteeg is “independent,” as independence is defined in the listing standards for
the Nasdaq Stock Market. Accordingly, we have one director who is “independent.”
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Audit Fees. The aggregate fees paid
for the annual audit of financial statements included in our Annual Report for the year ended March 31, 2015 and the review of
our quarterly reports for such year, amounted to $29,182. The aggregate fees paid for the annual audit of financial statements
included in our Annual Report for the year ended March 31, 2014 and the review of our quarterly reports for such years amounted
to $35,834.
Audit Related Fees. For the years
ended March 31, 2015 and March 31, 2014, we paid $7,500 and $7,500, respectively, to our auditors for other audit related fees.
Tax Fees. For the years ended March
31, 2015 and March 31, 2014, we paid $Nil and $Nil, respectively, to our auditor for fees associated with tax return preparation.
The above-mentioned
fees are set forth as follows in tabular form:
| |
2015 | | |
2014 | |
Audit Fees | |
$ | 29,182 | | |
$ | 35,834 | |
Audit Related Fees | |
$ | 7,500 | | |
$ | 7,500 | |
Tax Fees | |
$ | - | | |
$ | - | |
All Other Fees | |
$ | - | | |
$ | - | |
The Company’s Board of Directors serves
as the Audit Committee and has unanimously approved all audit and non-audit services provided by the independent auditors. The
independent accountants and management are required to periodically report to the Board of Directors regarding the extent of services
provided by the independent accountants, and the fees for the services performed to date.
There have been no non-audit services provided
by our independent accountant for the year ended March 31, 2015.
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)(1) |
Financial Statements. |
Consolidated balance sheet as of March 31, 2015 and
March 31, 2014, and the related consolidated statements of operations, stockholders’ equity, cash flows, and comprehensive
loss for each of the years in the 2 year period ended March 31, 2015.
All schedules have been omitted because they are not
required, not applicable, or the information is otherwise set forth in the consolidated financial statements or the notes thereto.
The information required by this Item is set forth in the section
of this Annual Report entitled “EXHIBIT INDEX” and is incorporated herein by reference.
SIGNATURES
In accordance with Section 13 or 15(d)
of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) the Registrant caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
|
REMEDENT, INC. |
|
|
Dated: June 29, 2015 |
/s/ Guy De Vreese |
|
By: Guy De Vreese |
|
Its: Chief Executive Officer (Principal Executive Officer) |
|
|
Dated: June 29, 2015 |
/s/ Philippe Van Acker |
|
By: Philippe Van Acker |
|
Its: Chief Financial Officer (Principal Financial |
|
Officer and Principal Accounting Officer) |
In accordance with
the Exchange Act, this report has been signed by the following persons on behalf of the registrant and in the capacities and on
the dates indicated.
Dated: June 29, 2015 |
/s/ Guy De Vreese |
|
Guy De Vreese, Chairman of the Board of Directors, and |
|
Chief Executive Officer (“Principal Executive Officer”) |
|
|
Dated: June 29, 2015 |
/s/ Philippe Van Acker |
|
Philippe Van Acker, Director and Chief Financial |
|
Officer (Principal Financial Officer and |
|
Principal Accounting Officer) |
|
|
Dated: June 29, 2015 |
/s/ Fred Kolsteeg |
|
Fred Kolsteeg, Director |
EXHIBIT INDEX
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) |
|
|
|
3.9 |
|
Amended and Restated Bylaws (2) |
|
|
|
4.1 |
|
Specimen of Stock Certificate (3) |
|
|
|
10.1 |
|
Incentive and Nonstatutory Stock Option Plan, dated May 29, 2001 (1) |
|
|
|
10.2 |
|
2004 Incentive and Nonstatutory Stock Option Plan (4) |
|
|
|
10.3 |
|
Voting Agreement between Remedent, Inc., and Robin List, dated December 10, 2008 (5) |
|
|
|
10.4 |
|
Distribution, License and Manufacturing Agreement dated as of January 20, 2012, (the “Effective Date”) by and among Remedent, Inc., a Nevada corporation (“Remedent Nevada”), Remedent N.V., a company incorporated under the laws of Belgium (“Remedent Belgium) and GlamSmile Dental Technology, Ltd., a company incorporated under the laws of the Cayman Islands (7) |
|
|
|
10.5 |
|
Termination and License Agreement dated March 27, 2012
(7) |
|
|
|
14.1 |
|
Code of Ethics, adopted March 25, 2003 (6) |
|
|
|
21.1 |
|
List of Subsidiaries* |
|
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.* |
|
|
|
|
|
101.INS |
|
XBRL Instance Document* |
|
101.SCH |
|
XBRL Taxonomy Extension Schema* |
|
101.CAL |
|
XBRL Taxonomy Extension Calculation Linkbase* |
|
101.DEF |
|
XBRL Taxonomy Extension Definition Linkbase* |
|
101.LAB |
|
XBRL Taxonomy Extension Label Linkbase* |
|
101.PRE |
|
XBRL Taxonomy Extension Presentation Linkbase* |
* |
Filed herewith |
|
|
(1) |
Incorporated by reference from Registration Statement on Form SB-2 filed with the SEC on July 24, 2002. |
|
|
(2) |
Incorporated by reference from Form 8-K filed with the SEC on June 8, 2005. |
|
|
(3) |
Incorporated by reference from Form SB-2 filed with the SEC on August 4, 2005. |
|
|
(4) |
Incorporated by reference from Form SB-2/A filed with the SEC on October 26, 2005. |
|
|
(5) |
Incorporated by reference from Form 8-K filed with the SEC on December 16, 2008. |
|
|
(6) |
Incorporated by reference from Form 10-KSB filed with the SEC on July 15, 2003. |
|
|
(7) |
Incorporated by reference from Form 10-K filed with the SEC on July 16, 2012. |
REMEDENT, INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2015
Index
INDEPENDENT AUDITORS’ REPORT
REPORT OF INDEPENDENT REGISTERED ACCOUNTING
FIRM
To the Board of Directors and Stockholders
of Remedent, Inc.
We have audited the accompanying consolidated
balance sheets of Remedent, Inc. and its subsidiaries (the “Company”) as of March 31, 2015 and March 31, 2014
and the related consolidated statements of operations, stockholders’ equity, cash flows, and comprehensive income (loss)
for the years then ended. These consolidated financial statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with
the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform
an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. The Company is not
required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included
consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over
financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable
basis for our opinion.
In our opinion, the accompanying consolidated
financial statements present fairly, in all material respects, the financial position of Remedent Inc. at March 31, 2015 and March
31, 2014 and the results of its operations and its cash flows for each of the two years then ended in conformity with accounting
principles generally accepted in the United States of America.
Brussels - Belgium, June 24, 2015
Vandelanotte Bedrijfsrevisoren CVBA
Statutory Auditors
Represented by
/s/ René Van Asbroeck |
|
Registered Auditor |
|
REMEDENT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| |
March 31, 2015 | | |
March 31, 2014 | |
ASSETS | |
| | | |
| | |
CURRENT ASSETS: | |
| | | |
| | |
Cash and cash equivalents | |
$ | 399,149 | | |
$ | 775,286 | |
Accounts receivable, net of allowance for doubtful accounts of $50,089 at March 31, 2015 and $47,469 at March 31, 2014 | |
| 847,144 | | |
| 787,578 | |
Other receivable | |
| 1,150,000 | | |
| 1,150,000 | |
Inventories, net | |
| 414,034 | | |
| 599,251 | |
Prepaid expense | |
| 96,461 | | |
| 128,578 | |
Total current assets | |
| 2,906,788 | | |
| 3,440,693 | |
PROPERTY AND EQUIPMENT, NET | |
| 435,268 | | |
| 489,420 | |
OTHER ASSETS | |
| | | |
| | |
Investment in GlamSmile Asia Ltd | |
| 1,366,813 | | |
| 1,260,150 | |
Investment in MFI (Note 3) | |
| 828,828 | | |
| 958,652 | |
Patents, net | |
| 7,099 | | |
| 19,579 | |
Total assets | |
$ | 5,544,796 | | |
$ | 6,168,494 | |
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | |
| | | |
| | |
CURRENT LIABILITIES: | |
| | | |
| | |
Current portion, long term debt | |
$ | 2,172,467 | | |
$ | 2,257,403 | |
Line of Credit | |
| — | | |
| 273,200 | |
Accounts payable | |
| 846,773 | | |
| 598,558 | |
Accrued liabilities | |
| 334,748 | | |
| 450,303 | |
Deferred revenue | |
| 87,747 | | |
| 124,251 | |
Due to related parties (Note 3) | |
| — | | |
| 145,909 | |
Total current liabilities | |
| 3,441,735 | | |
| 3,849,624 | |
| |
| | | |
| | |
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 March 31, 2015 and March 31, 2015 respectively) | |
| 19,996 | | |
| 19,996 | |
Treasury stock, at cost; 723,000 shares outstanding at March 31, 2015 and March 31, 2015 respectively | |
| (831,450 | ) | |
| (831,450 | ) |
Additional paid-in capital | |
| 24,906,269 | | |
| 24,906,269 | |
Accumulated deficit | |
| (20,974,904 | ) | |
| (21,080,063 | ) |
Accumulated other comprehensive income (loss) | |
| (1,185,097 | ) | |
| (793,382 | ) |
Obligation to issue shares (Note 3) | |
| 97,500 | | |
| 97,500 | |
Total Remedent, Inc. stockholders’ equity | |
| 2,032,314 | | |
| 2,318,870 | |
Non-controlling interest | |
| 70,747 | | |
| — | |
Total stockholders’ equity | |
| 2,103,061 | | |
| 2,318,870 | |
Total liabilities and equity | |
$ | 5,544,796 | | |
$ | 6,168,494 | |
COMMITMENTS (Note 18)
The accompanying notes are an integral
part of these consolidated financial statements.
REMEDENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
| |
For the years ended March 31, | |
| |
2015 | | |
2014 | |
Net sales | |
$ | 3,616,355 | | |
$ | 2,592,596 | |
Cost of sales | |
| 1,280,406 | | |
| 964,951 | |
Gross profit | |
| 2,335,949 | | |
| 1,627,645 | |
Operating Expenses | |
| | | |
| | |
Research and development | |
| 61,246 | | |
| 77,475 | |
Sales and marketing | |
| 756,233 | | |
| 682,679 | |
General and administrative | |
| 1,158,279 | | |
| 1,364,745 | |
Depreciation and amortization | |
| 254,776 | | |
| 240,025 | |
TOTAL OPERATING EXPENSES | |
| 2,230,534 | | |
| 2,364,924 | |
OPERATING INCOME (LOSS) | |
| 105,415 | | |
| (737,279 | ) |
NON-OPERATING INCOME (EXPENSE) | |
| | | |
| | |
Gain on sale of Investment in GlamSmile Asia Ltd. (Note 3) | |
| — | | |
| 1,582,597 | |
Equity income from investments | |
| 106,663 | | |
| 156,620 | |
Interest expense | |
| (75,060 | ) | |
| (129,985 | ) |
Other expense | |
| (35,975 | ) | |
| (449,363 | ) |
Other income | |
| 63,000 | | |
| 101,918 | |
TOTAL OTHER INCOME | |
| 58,628 | | |
| 1,261,787 | |
PROFIT (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | |
| 164,043 | | |
| 524,508 | |
Income tax expense | |
| 30,565 | | |
| — | |
NET INCOME BEFORE NON-CONTROLLING INTEREST | |
$ | 133,478 | | |
$ | 524,508 | |
NET INCOME ATTRIBUTABLE TO NON-CONTROLLING INTEREST | |
| (28,319 | ) | |
| — | |
NET INCOME ATTRIBUTABLE TO REMEDENT INC. COMMON SHAREHOLDERS | |
| 105,159 | | |
| 524,508 | |
PROFIT (LOSS) PER SHARE | |
| | | |
| | |
Basic | |
$ | 0.01 | | |
$ | 0.03 | |
Fully diluted | |
$ | 0.01 | | |
$ | 0.03 | |
WEIGHTED AVERAGE SHARES OUTSTANDING | |
| | | |
| | |
Basic | |
| 19,995,969 | | |
| 19,995,969 | |
Fully diluted | |
| 19,995,969 | | |
| 19,995,969 | |
The accompanying notes are an integral part
of these consolidated financial statements.
REMEDENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS’
EQUITY (DEFICIT)
FOR THE YEARS ENDED MARCH 31, 2015 AND 2014
| |
Shares | | |
Amount | | |
Additional
Paid in Capital | | |
Obligation to
Issue Shares | | |
Accumulated
Deficit | | |
Treasury
Stock | | |
Other
Comprehensive Income (Loss) | | |
Total | | |
Non-
controlling Interest
(net of OCI) | | |
Total | |
| |
| | |
$ | | |
$ | | |
$ | | |
$ | | |
$ | | |
$ | | |
$ | | |
$ | | |
$ | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Balance, March 31, 2013 | |
| 19,995,969 | | |
| 19,996 | | |
| 24,906,269 | | |
| 97,500 | | |
| (21,604,571 | ) | |
| (831,450 | ) | |
| (1,118,262 | ) | |
| 1,469,482 | | |
| 17,362 | | |
| 1,486,844 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Unrealized foreign exchange gain (loss) | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 153,567 | | |
| 153,567 | | |
| — | | |
| 153,567 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Fair value adjustment AFS investment | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 171,313 | | |
| 171,313 | | |
| — | | |
| 171,313 | |
Deconsolidation | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (17,362 | ) | |
| (17,362 | ) |
Net income for the year | |
| — | | |
| — | | |
| — | | |
| — | | |
| 524,508 | | |
| — | | |
| — | | |
| 524,508 | | |
| — | | |
| 524,508 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance, March 31, 2014 | |
| 19,995,969 | | |
| 19,996 | | |
| 24,906,269 | | |
| 97,500 | | |
| (21,080,063 | ) | |
| (831,450 | ) | |
| (793,382 | ) | |
| 2,318,870 | | |
| — | | |
| 2,318,870 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Unrealized foreign exchange gain (loss) | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (391,715 | ) | |
| (391,715 | ) | |
| 42,428 | | |
| (349,287 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Net income for the year | |
| — | | |
| — | | |
| — | | |
| — | | |
| 105,159 | | |
| — | | |
| — | | |
| 105,159 | | |
| 28,319 | | |
| 133,478 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance, March 31, 2015 | |
| 19,995,969 | | |
| 19,996 | | |
| 24,906,269 | | |
| 97,500 | | |
| (20,974,904 | ) | |
| (831,450 | ) | |
| (1,185,097 | ) | |
| 2,032,314 | | |
| 70,747 | | |
| 2,103,061 | |
The accompanying notes are an integral part
of these consolidated financial statements.
REMEDENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
| |
For the year ended March 31, | |
| |
2015 | | |
2014 | |
CASH FLOWS FROM OPERATING ACTIVITIES | |
| | | |
| | |
Net Profit (loss) | |
$ | 133,478 | | |
$ | 524,508 | |
Adjustments to reconcile net (loss) to net cash used by operating activities: | |
| | | |
| | |
Gain on Sale of Glamsmile Asia (note 3) | |
| — | | |
| (1,582,597 | ) |
Depreciation and amortization | |
| 254,776 | | |
| 240,025 | |
Inventory reserve | |
| (82,570 | ) | |
| 388,778 | |
Allowance for doubtful accounts | |
| 2,620 | | |
| 42,636 | |
Investment income | |
| (106,663 | ) | |
| (156,620 | ) |
Changes in operating assets and liabilities: | |
| | | |
| | |
Accounts receivable | |
| (59,566 | ) | |
| 160,393 | |
Inventories | |
| 185,217 | | |
| 392,556 | |
Prepaid expenses | |
| 32,117 | | |
| 437,922 | |
Accounts payable | |
| 239,128 | | |
| (385,808 | ) |
Accrued liabilities | |
| (115,556 | ) | |
| (286,761 | ) |
Due to related parties | |
| (145,909 | ) | |
| 145,907 | |
Deferred revenue | |
| (36,504 | ) | |
| (24,878 | ) |
Net cash used by operating activities | |
| 300,568 | | |
| (103,939 | ) |
CASH FLOWS FROM INVESTING ACTIVITIES | |
| | | |
| | |
Purchases of equipment | |
| (240,529 | ) | |
| (81,363 | ) |
Net cash used by investing activities | |
| (240,529 | ) | |
| (81,363 | ) |
CASH FLOWS FROM FINANCING ACTIVITIES | |
| | | |
| | |
Proceeds from sale of investment in GlamSmile Asia (Note 3) | |
| — | | |
| 1,850,000 | |
Repayments of capital lease note payable | |
| (84,936 | ) | |
| (88,227 | ) |
Advances (repayments) of line of credit | |
| (273,200 | ) | |
| (563,155 | ) |
Net cash provided by financing activities | |
| (358,136 | ) | |
| 1,198,618 | |
| |
| | | |
| | |
NET (DECREASE) INCREASE IN CASH | |
| (298,097 | ) | |
| 1,013,316 | |
Effect of exchange rate changes on cash and cash equivalents | |
| (78,040 | ) | |
| (302,534 | ) |
CASH AND CASH EQUIVALENTS, BEGINNING | |
| 775,286 | | |
| 64,504 | |
CASH AND CASH EQUIVALENTS, ENDING | |
$ | 399,149 | | |
$ | 775,286 | |
Supplemental Cash Flow Information : | |
| | | |
| | |
Interest paid | |
$ | 25,060 | | |
$ | 62,997 | |
Income taxes paid | |
$ | — | | |
$ | — | |
The accompanying notes are an integral part
of these consolidated financial statements.
REMEDENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOME (LOSS)
| |
For the year ended March 31, | |
| |
2015 | | |
2014 | |
Net Profit (loss) attributable to Remedent, Inc. common shareholders | |
$ | 105,159 | | |
$ | 524,508 | |
| |
| | | |
| | |
OTHER COMPREHENSIVE INCOME (LOSS): | |
| | | |
| | |
Fair value adjustment on AFS investment MFI | |
| (129,824 | ) | |
| 171,313 | |
Foreign currency translation adjustment | |
| (261,891 | ) | |
| 153,567 | |
COMPREHENSIVE PROFIT(LOSS) ATTRIBUTABLE TO REMEDENT, INC. common shareholders | |
$ | (286,556 | ) | |
$ | 849,388 | |
The accompanying notes are an integral part
of these consolidated financial statements.
REMEDENT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. DESCRIPTION OF THE COMPANY AND BASIS OF PRESENTATION
The Company is a manufacturer and distributor
of cosmetic dentistry products, including a full line of professional dental tooth whitening products which are distributed in
Europe, Asia and the United States. The Company manufactures many of its products in its facility in Ghent, Belgium as well as
outsourced manufacturing in Beijing, China. The Company distributes its products using both its own internal sales
force and through the use of third party distributors.
In these notes, the terms “Remedent”,
“Company”, “we”, “us” or “our” mean Remedent, Inc. and all of its subsidiaries,
whose operations are included in these consolidated financial statements.
The Company’s financial statements
have been prepared on an accrual basis of accounting, in conformity with accounting principles generally accepted in the United
States of America. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair
presentation of financial position and the results of operations for the periods presented have been reflected herein.
These financial statements of the Company
are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which
contemplates the realization of assets and liquidation of liabilities in the normal course of business. Despite the net profit
for the accounting years ending March 31, 2015 and March 31, 2014, the accumulated losses of the past affect the financial situation
of the Company. The continuation of the Company as a going concern is dependent upon the Company’s ability to continue
to generate profitable operations. As of March 31, 2015 the Company had a working capital deficit of $534,947, and an accumulated
deficit of $20,974,904. Additional funding may be required in order to support the Company’s operations and the execution
of its business plan.
There can be no assurance that the Company
will be successful in raising the required capital or that it will ultimately attain a successful level of operations. These risks,
among others, are also discussed in ITEM 1A – Risk Factors.
The Company has conducted a subsequent
events review through the date the financial statements were issued, and has concluded that there were no subsequent events requiring
adjustments or additional disclosures to the Company's financial statements at March 31, 2015.
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 Ghent, Belgium, Remedent Professional, Inc.
and Remedent Professional Holdings, Inc. (both incorporated in California and inactive), Glamtech-USA, Inc. (a Delaware corporation
acquired effective August 24, 2008), Remedent N.V.’s 50 % owned subsidiary, Biotech Dental Benelux N.V., a Belgium private
company located in Ghent, Remedent N.V.’s 51% owned subsidiary, GlamSmile Deutschland GmbH, a German private company
located in Munich (effective March 31, 2014 this subsidiary is inactive) and Remedent N.V.’s 80 % owned subsidiary, GlamSmile
Rome, an Italian private company located in Rome (effective March 31, 2014 this subsidiary is inactive).
Remedent N.V.’s 21.51 % investment
in Glamsmile Dental Technology Ltd., a Cayman Islands company (“Glamsmile Dental”) and its subsidiaries, Glamsmile
(Asia) Limited, a company organized and existing under the laws of Hong Kong and a substantially 100 % owned subsidiary of Glamsmile
Dental, Beijing Glamsmile Technology Development Ltd., a 100% owned subsidiary or GlamSmile Asia, its 80% owned subsidiary Beijing
Glamsmile Trading Co., Ltd. and its 98% owned subsidiary Beijing Glamsmile Dental Clinic Co., Ltd., including its 100% owned Shanghai
Glamsmile Dental Clinic Co., Ltd., its 100% owned Guangzhou Dental Clinic Co., Ltd. and its 50% owned Whenzhou GlamSmile Dental
Clinic Ltd., which are accounted for using the equity method after January 31, 2012 (see Note 3 – Long-term Investment)
Remedent, Inc. is a holding company with
headquarters in Ghent, Belgium. Remedent Professional, Inc. and Remedent Professional Holdings, Inc. have been dormant since inception.
For all periods presented, all significant
inter-company accounts and transactions have been eliminated in the consolidated financial statements and corporate administrative
costs are not allocated to subsidiaries.
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.
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.
Revenues from product sales are recognized
when the product is shipped and title and risk of loss has passed to the customer, typically upon delivery and when the quantity
and price is fixed and determinable, and when collectability is reasonable assured.
Upfront fees are recognized upon the date
of the agreement (i.e. point of sale) because they relate solely to the sale of territories (that are sold in perpetuity), are
non-refundable, and are not contingent upon additional deliverables.
We have evaluated all deliverables in our
contracts (per ASC 605-25-5) ((a) territory & (b) manufacturing/marketing training & development fees) and determined that
they are separate, as follows:
|
· |
Both (a) & (b) have value to our customers on a standalone basis and can be sold by our customers separately. |
|
· |
Delivery or performance of the undelivered item or items is considered probable and substantially in our control. |
Our development fees/milestone payments
are recognized in accordance with the Milestone Method pursuant to FASB ASC 605. Revenues from milestones related to
an arrangement under which we have continuing performance obligations i.e. specifically scheduled training and development activities,
if deemed substantive, are recognized as revenue upon achievement of the milestone. Milestones are considered substantive if all
of the following conditions are met: (a) the milestone is non-refundable; (b) achievement of the milestone was not reasonably assured
at the inception of the arrangement; (c) substantive effort is involved to achieve the milestone; and (d) the amount of the milestone
appears reasonable in relation to the effort expended. If any of these conditions is not met, the milestone payment is deferred
and recognized as revenue as we complete our performance obligations.
We receive royalty revenues under license
agreements with third parties that sell products based on technology developed by us or to which we have rights. The license agreements
provide for the payment of royalties to us based on sales of the licensed product. We record these revenues as earned monthly,
based on reports from our licensees.
Shipping and Handling
Shipping and handling costs are included
as a component of cost of sales. Shipping and handling costs billed to customers are included in sales.
Impairment of Long-Lived Assets
Long-lived assets consist primarily of
patents and property and equipment. The recoverability of long-lived assets is evaluated by an analysis of operating results and
consideration of other significant events or changes in the business environment. If impairment exists, the carrying amount of
the long-lived assets is reduced to its estimated fair value, less any costs associated with the final settlement. To
date, management has not identified any impairment of property and equipment. There can be no assurance, however, that
market conditions or demands for the Company’s services will not change which could result in future long-lived asset impairment.
Business Combinations
On April 1, 2010, the Company adopted the
new accounting guidance for business combinations according to FASB Codification ASC 805, Business Combinations . This guidance
establishes principles and requirements for the reporting entity in a business combination, including recognition and measurement
in the financial statements of the identifiable assets acquired, the liabilities assumed, goodwill, and any non-controlling interest
in the acquire, as well as disclosure requirements to enable financial statement users to evaluate the nature and financial effects
of the business combination. Additionally, it provides guidance for identifying a business combination, measuring the acquisition
date, and defining the measurement period for adjusting provisional amounts recorded. The implementation of this standard did not
have an impact on the Company’s consolidated financial statements.
Cash and Cash Equivalents
The Company considers all highly liquid
investments with maturities of three months or less at the time of purchase to be cash or cash equivalents.
Non-Controlling Interest
The Company adopted ASC Topic 810 Non-controlling
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 non-controlling interest, changes
in a parent’s ownership interest and the valuation of retained non-controlling 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 non-controlling 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, short term 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 investment in
MFI is classified as an available for sale investment with all subsequent gains and losses recorded in other comprehensive income
until realized. 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.
Accounts Receivable and Allowance for Doubtful
Accounts
The Company sells professional dental equipment
to various companies, primarily to distributors located in Western Europe, Middle East, the United States of America, Asia and
China. The terms of sales vary by customer, however, generally are 2% 10 days, net 30 days. Accounts receivable is reported at
net realizable value and net of allowance for doubtful accounts. The Company uses the allowance method to account for uncollectible
accounts receivable. The Company’s estimate is based on historical collection experience and a review of the current status
of trade accounts receivable.
Inventories
The Company purchases certain of its products
in components that require assembly prior to shipment to customers. All other products are purchased as finished goods ready to
ship to customers.
The Company writes down inventories for
estimated obsolescence to estimated market value based upon assumptions about future demand and market conditions. If actual market
conditions are less favorable than those projected, then additional inventory write-downs may be required. Inventory reserves for
obsolescence totaled $394,932 at March 31, 2015 and $477,502 at March 31, 2014.
Prepaid Expense
The Company’s prepaid expense consists
of prepayments to suppliers for inventory purchases and to the Belgium customs department, to obtain an exemption of direct VAT
payments for imported goods out of the European Union (“EU”). This prepayment serves as a guarantee to obtain the facility
to pay VAT at the moment of sale and not at the moment of importing goods at the border. Prepaid expenses also include VAT payments
made for goods and services in excess of VAT payments received from the sale of products as well as amounts for other prepaid operating
expenses.
Property and Equipment
Property and equipment are stated at cost.
Major renewals and improvements are charged to the asset accounts while replacements, maintenance and repairs, which do not improve
or extend the lives of the respective assets, are expensed. At the time property and equipment are retired or otherwise disposed
of, the asset and related accumulated depreciation accounts are relieved of the applicable amounts. Gains or losses from retirements
or sales are credited or charged to income.
The Company depreciates its property and
equipment for financial reporting purposes using the straight-line method based upon the following useful lives of the assets:
Tooling |
3 Years |
Furniture and fixtures |
4 Years |
Machinery and Equipment |
4 Years |
Patents
Patents consist of the costs incurred to
purchase patent rights and are reported net of accumulated amortization. Patents are amortized using the straight-line method over
a period based on their contractual lives.
Research and Development Costs
The Company expenses research and development
costs as incurred.
Advertising
Costs incurred for producing and communicating
advertising are expensed when incurred and included in sales and marketing and general and administrative expenses. For the years
ended March 31, 2015 and March 31, 2014, advertising expense was $386,337 and $309,076, respectively.
Income taxes
Income taxes are accounted for under the
asset and liability method as stipulated by Accounting Standards Codification (“ASC”) 740 formerly Statement of Financial
Accounting Standards (“SFAS”) No. 109, “Accounting for Income Taxes”. Deferred tax assets and liabilities
are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which those temporary differences
are expected to be recovered or settled. Under ASC 740, the effect on deferred tax assets and liabilities or a change in tax rate
is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced to estimated amounts to
be realized by the use of a valuation allowance. A valuation allowance is applied when in management’s view it is more likely
than not (50%) that such deferred tax will not be utilized.
Effective February 1, 2008, the Company
adopted certain provisions under ASC Topic 740, Income Taxes, (“ASC 740”), which provide interpretative guidance for
the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Effective
with the Company’s adoption of these provisions, interest related to the unrecognized tax benefits is recognized in the financial
statements as a component of income taxes. The adoption of ASC 740 did not have an impact on the Company’s financial position
and results of operations.
In the unlikely event that an uncertain
tax position exists in which the Company could incur income taxes, the Company would evaluate whether there is a probability that
the uncertain tax position taken would be sustained upon examination by the taxing authorities. Reserves for uncertain tax position
would then be recorded if the Company determined it is probable that a position would not be sustained upon examination or if a
payment would have to be made to a taxing authority and the amount is reasonably estimable. As of March 31, 2015, the Company does
not believe it has any uncertain tax positions that would result in the Company having a liability to the taxing authorities.
Warranties
The Company typically warrants its products
against defects in material and workmanship for a period of 24 months from shipment.
A tabular reconciliation of the Company’s
aggregate product warranty liability for the reporting period is as follows:
| |
Year ended March 31, 2015 | | |
Year ended March 31, 2014 | |
Product warranty liability: | |
| | | |
| | |
Opening balance | |
$ | 6,899 | | |
$ | 19,301 | |
Accruals for product warranties issued in the period | |
| (1,478 | ) | |
| (12,402 | ) |
Adjustments to liabilities for pre-existing warranties | |
| — | | |
| — | |
Ending liability | |
$ | 5,421 | | |
$ | 6,899 | |
Based upon historical trends and warranties
provided by the Company’s suppliers and sub-contractors, the Company has made a provision for warranty costs of $5,421 and
$6,899 as of March 31, 2015 and March 31, 2014, respectively.
Segment Reporting
“Disclosure About Segments of an
Enterprise and Related Information” requires use of the “management approach” model for segment reporting. The
management approach model is based on the way a company’s management organizes segments within the company for making operating
decisions and assessing performance. Reportable segments are based on products and services, geography, legal structure, management
structure, or any other manner in which management disaggregates a company. The Company’s management considers its business
to comprise one segment for reporting purposes.
Computation of Earnings (Loss) per Share
Basic net income (loss) per common share
is computed by dividing net income (loss) attributable to common stockholders by the weighted average number of shares of common
stock outstanding during the period. Net income (loss) per common share attributable to common stockholders assuming dilution is
computed by dividing net income by the weighted average number of shares of common stock outstanding plus the number of additional
common shares that would have been outstanding if all dilutive potential common shares had been issued.
On April 1, 2009, the Company adopted changes
issued by the FASB to the calculation of earnings per share. These changes state that unvested share-based payment awards that
contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall
be included in the computation of earnings per share pursuant to the two-class method for all periods presented. The adoption of
this change had no impact on the Company’s basic or diluted net loss per share because the Company has never issued any share-based
awards that contain non-forfeitable rights.
At each of March 31, 2015 and 2014, the Company had 19,995,969,
shares of common stock issued and outstanding. At March 31, 2015 and 2014, the Company did not have any warrants outstanding, but
had 1,582,500 and 1,795,000 options outstanding, respectively.
Pursuant to ASC 260-10-50-1(c), if a fully diluted share calculation
was computed for the years ended March 31, 2015 and 2014 respectively, it would have excluded all options respectively since the
Company’s average share trading price during the last two year period was less than the exercise price of all options.
Conversion of Foreign Currencies
The reporting and functional currency for
the consolidated financial statements of the Company is the U.S. dollar. The home currency for the Company’s European subsidiaries,
Remedent N.V., Biotech Dental Benelux N.V.,GlamSmile Rome and GlamSmile Deutschland GmbH, is the Euro, for Glamsmile Asia Ltd.,
and its subsidiaries, the Hong Kong dollar and the Chinese Renmimbi (“RMB”) for Mainland China. The assets and liabilities
of companies whose functional currency is other that the U.S. dollar are included in the consolidation by translating the assets
and liabilities at the exchange rates applicable at the end of the reporting period. The statements of income of such companies
are translated at the average exchange rates during the applicable period. Translation gains or losses are accumulated as a separate
component of stockholders’ equity.
Comprehensive Income (Loss)
Comprehensive income (loss) includes all
changes in equity except those resulting from investments by owners and distributions to owners, including accumulated foreign
currency translation, and unrealized gains or losses on ‘Available For Sale (AFS)’ securities.
Stock Based Compensation
The Company has a stock-based compensation
plan which is described more fully in Note 15. The Company measures the compensation cost of stock options and other stock-based
awards to employees and directors at fair value at the grant date and recognizes compensation expense over the requisite service
period for awards expected to vest.
Except for transactions with employees
and directors, all transactions in which goods or services are the consideration received for the issuance of equity instruments
are accounted for based on the fair value of the consideration received or the fair value of the equity instruments issued, whichever
is more reliably measurable. Additionally, the Company has determined that the dates used to value the transaction are either:
(1) The date at which a commitment for
performance by the counter party to earn the equity instruments is established; or
(2) The date at which the counter party’s
performance is complete.
New Accounting Pronouncements
Recent Accounting Pronouncements
Not Yet Adopted
The Financial Accounting Standards Board
(FASB) has updated U.S. Generally Accepted Accounting Principles (GAAP) to eliminate a critical gap in existing standards. The
new guidance, found in Accounting Standards Update (ASU) 2014-15, Presentation of Financial Statements — Going Concern (Subtopic
205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, clarifies the disclosures
management must make in the organization’s financial statement footnotes when management has substantial doubt about its
ability to continue as a “going concern.” The changes in ASU 2014-15 will take effect for the annual financial statement
period ending after December 15, 2016, and for annual periods and interim periods thereafter (with early application permitted)
which corresponds to the Company’s fiscal year beginning April 1, 2017. We are currently evaluating the impact of the new
guidance however we do not expect its application to have a significant impact upon our consolidated financial statements.
In May 2014, the FASB issued ASU 2014-09,
Revenue from Contracts with Customers, which provides updated guidance on revenue recognition principles that will supersede most
current conceptual and industry-specific revenue recognition guidance and thus enhance comparability of revenue recognition practices
across entities, industries, jurisdictions, and capital markets. The key principle of this updated guidance is that entities should
recognize revenue to depict the transfer of goods or services to customers at an amount reflecting the consideration to which an
entity expects to be entitled in exchange for those goods or services. The new guidance prescribes a five-step analysis of transactions
to determine how and when to recognize revenue. In addition, the new guidance provides for capitalization of certain costs of obtaining
or fulfilling a contract with a customer as well as enhanced disclosure requirements to enable a better understanding of the nature,
amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. ASU 2014-09 is effective for public
entities for fiscal years, and interim periods within those years beginning after December 15, 2016, which corresponds to the Company’s
fiscal year beginning April 1, 2017, with early adoption not permitted. The new guidance permits the use of either a retrospective
or cumulative effect transition method. We have not yet selected a transition method and are evaluating the expected impact of
adoption on our consolidated financial statements.
3 . LONG-TERM INVESTMENTS
GLAMSMILE ASIA LTD.
Acquisition
Effective January 1, 2010 the Company acquired
50.98% of the issued and outstanding shares of Glamsmile Asia Ltd. (“Glamsmile Asia” or “Glamsmile”), a
private Hong Kong company, with subsidiaries in Hong Kong and Mainland China, in exchange for the following consideration:
1. |
325,000 Euro (US$466,725). As of March 31, 2011 the full amount was paid. |
2. |
250,000 shares of common stock to be issued during the fiscal year ended March 31, 2011($97,500 was recorded as an obligation to issue shares as at March 31, 2010). The parties have agreed that the shares will be issued during fiscal year ended March 31, 2016. |
3. |
100,000 options on closing (issued); |
4. |
100,000 options per opened store at closing (issued); |
5. |
100,000 options for each additional store opened before the end of 2011 at the price of the opening date of the store; |
6. |
Assumption of Glamsmile’s January 1, 2010 deficit of $73,302.; and |
7. |
Repayment of the founding shareholder’s original advances in the amount of $196,599. The balance of $196,599, recorded as due to related parties at March 31, 2010, is unsecured, non-interest bearing and has no specific terms of repayment other than it will be paid out of revenues from Glamsmile, as working capital allows. During the year ended March 31, 2011 a total of $101,245 was paid to the founding shareholder, leaving a balance due of $95,354 on June 27, 2011. As at March 31, 2012 the full amount was paid. |
All options reside under the Company’s
option plan and are five year options.
Also pursuant to the agreement, the Company
granted irrevocable right to Glamsmile Asia to use the Glamsmile trademark in Greater China.
The Company acquired a 50.98% interest
in GlamSmile Asia Ltd. (“GlamSmile Asia”) in order to obtain a platform in the Chinese Market to expand and introduce
our GlamSmile Asia concept into the Chinese Market. In order to sell into the Chinese Market, an approval by Chinese Authorities
is required, in the form of licenses. As GlamSmile Asia was already the owner of such licenses prior to the acquisition, this was
an important advantage. We obtained control of GlamSmile Asia through the acquisition of the 50.98% interest and the appointment
of our CEO as a Board member of GlamSmile Asia.
On January 30, 2014, the Company has sold
a total of 2,500,000 ordinary shares of its investment in GlamSmile Dental Technology Ltd for $3,000,000 and recognized a gain
on the sale in the amount of $1,582,597. As of March 31, 2014 the Company has received $1,850,000 and has recorded the balance
of $1,150,000 as an amount receivable.
Effective March 31, 2014 the Company has
retained a 21.51% ownership in GlamSmile Asia Ltd.
Deconsolidation
On January 28, 2012, the Company entered
into a Preference A Shares and Preference A-1 Shares Purchase Agreement (“Share Purchase Agreement”) with Glamsmile
Dental Technology Ltd., a Cayman Islands company and a subsidiary of the Company (“Glamsmile Dental”), Glamsmile (Asia)
Limited, a company organized and existing under the laws of Hong Kong and a substantially owned subsidiary of Glamsmile Dental,
Beijing Glamsmile Technology Development Ltd., Beijing Glamsmile Trading Co., Ltd., Beijing Glamsmile Dental Clinic Co., Ltd.,
and Shanghai Glamsmile Dental Clinic Co., Ltd., Gallant Network Limited, a shareholder of Glamsmile Dental (“Gallant”),
and IDG-Accel China Growth Fund III L.P. (“IDG Growth”), IDG-Accel China III Investors L.P.(“IDG Investors”)
and Crown Link Group Limited (“Crown”)(“IDG Growth, IDG Investors and Crown collectively referred to as the “Investors”),
pursuant to which the Investors agreed to (i) purchase from the Company an aggregate of 2,857,143 shares of Preference A-1 Shares
of Glamsmile Dental, which represents all of the issued and outstanding Preference A-1 Shares of Glamsmile Dental, for an aggregate
purchase price of $2,000,000, and (ii) purchase from Glamsmile Dental an aggregate of 5,000,000 shares of Preference A Shares for
an aggregate purchase price of $5,000,000.
Under the terms of the Share Purchase Agreement,
the Company agreed (a) to indemnify the Investors and their respective affiliates for losses arising out of a breach, or inaccuracy
or misrepresentation in any representation or warranty made by the Company or a breach or violation of a covenant or agreement
made by the Company for up to $1,500,000, and (b) to transfer 500,000 shares of Glamsmile Dental owned by the Company to the Investors
in the event of breach of certain covenants by the Company. In connection with the Share Purchase Agreement, the Company also agreed
to enter into an Investor’s Rights Agreement, Right of First Refusal and Co-Sale Agreement, and Voting Agreement with the
parties.
In addition, in connection with the contemplated
transactions in the Share Purchase Agreement on January 20, 2012, the Company entered into a Distribution, License and Manufacturing
Agreement with Glamsmile Dental pursuant to which the Company appointed Glamsmile Dental as the exclusive distributor and licensee
of Glamsmile Veneer Products bearing the “Glamsmile” name and mark in the B2C Market in the People’s Republic
of China (including Hong Kong and Macau) and Republic of China (Taiwan) and granted related manufacturing rights and licenses in
exchange for the original issuance of 2,857,143 shares of Preference A-1 Shares of Glamsmile Dental and $250,000 (the receipt of
which was acknowledged as an offset to payment of certain invoices of Glamsmile (Asia) Limited).
On February 10, 2012, the sale of the Preference
A-1 Shares and the Preference A Shares was completed. As a result of the closing, the equity ownership of Glamsmile Dental, on
an as converted basis, is as follows: 31.4% by the Investors, 39.2 % by Gallant, and 29.4% by the Company. Mr. De Vreese, our chairman,
will remain as a director of Glamsmile Dental along with Mr. David Lok, who is the Chief Executive Officer and director of Glamsmile
Dental and principal of Gallant. The Investors have a right to appoint one director of Glamsmile Dental, and accordingly the Board
of Directors of Glamsmile Dental will consist of Mr. De Vreese, Mr. Lok and a director appointed by the Investors.
In conjunction with the transaction and
resulting deconsolidation of Glamsmile Dental, the Company recorded a gain of $1,470,776, calculated as follows:
Consideration received | |
$ | 2,000,000 | |
Fair value of 29.4% interest | |
| 2,055,884 | |
Carrying value of non-controlling interest | |
| 1,117,938 | |
Less: carrying value of former subsidiary’s net assets | |
| (2,002,329 | ) |
Goodwill | |
| (699,635 | ) |
Investment China & Hong Kong | |
| (1,082 | ) |
Rescission agreement Excelsior (Note 14) | |
| (1,000,000 | ) |
| |
$ | 1,470,776 | |
For the year ended March 31, 2015, the
Company recorded equity income of $106,663 (2014 - $156,620) in “Equity income from investments ” for its portion of
the net income recorded by GlamSmile Dental Technology Ltd.
MEDICAL FRANCHISES & INVESTMENTS
Effective March 31, 2013, the Company acquired
6.12 % of the issued and outstanding shares of Medical Franchises & Investments N.V., a Belgium corporation ("MFI NV")
in exchange for a cash prepayment of $314,778 that was made during the fiscal year ended March 31, 2012. The Company’s
investment in 70,334 shares of MFI NV has been recorded at the fair value of $787,339 which is the quoted market price of approximately
USD $11.19 (€8.70) per share. Because the investment is being recognized as an available-for-sale investment, an unrecognized
loss of $129,824 due to exchange differences (2014 - $17l,213) has been recorded in accumulated other comprehensive income. Future
unrealized gains and losses on the investment in MFI will also be recognized in other comprehensive income until realized.
Per ASC-320-10-25-1, investments in debt
and equity securities that have readily determinable fair values and are not classified as trading or held-to-maturity securities,
are classified as available-for-sale securities.
MFI NV has been founded to market an advance
in dental technology which has the potential to replace the process of making mechanical impressions of teeth and bite structures
with a digital/optical scan.
4. SHORT TERM LOAN
Effective December 3, 2012, the Company
entered into a Loan Agreement (the “Loan Agreement”) with BNP Paribas Fortis Bank, a Belgian Bank, pursuant to which
the Company borrowed $132,820 (€100.000). The loan bears interest of 3.68% per annum and is repayable in 24 equal monthly
installments of € 4,331 ($5,154 at the closing rate of December 31, 2014). No additional guaranties (see note 13) secured
debt agreements (2)) were required. As of December 17, 2014 the loan was fully repaid.
5. CONCENTRATION OF RISK
Financial Instruments — Financial
instruments, which potentially subject the Company to concentrations of credit risk, consist principally of trade accounts receivable.
Concentrations of credit risk with respect
to trade receivables are normally limited due to the number of customers comprising the Company’s customer base and their
dispersion across different geographic areas. At March 31, 2015 five customers accounted for a total of 66.18% of the Company’s
trade accounts receivable and one of those customers accounted for 35.34% of total accounts receivable. At March 31, 2014 five
customers accounted for a total of 82.08% of the Company’s trade accounts receivable and one of those customers accounted
for 42.08% of total 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. As at March 31, 2015, the Company had five suppliers who accounted for 47.93% of unpaid accounts
payable. As at March 31, 2014, the Company had five suppliers who accounted for 39.78% of unpaid accounts payable.
Revenues — For the year ended
March 31, 2015 the Company had five customers that accounted for 54.47 % of total revenues .For the year ended March 31, 2014 the Company had five customers that accounted for 81.07% of total revenues.
6. ACCOUNTS RECEIVABLE AND ALLOWANCE FOR
DOUBTFUL ACCOUNTS
The Company’s accounts receivable
at year end were as follows:
| |
March 31, 2015 | | |
March 31, 2014 | |
Accounts receivable, gross | |
$ | 897,233 | | |
$ | 835,047 | |
Less: allowance for doubtful accounts | |
| (50,089 | ) | |
| (47,469 | ) |
Accounts receivable, net | |
$ | 847,144 | | |
$ | 787,578 | |
7. INVENTORIES
Inventories at year end are stated at the
lower of cost (first-in, first-out) or net realizable value and consisted of the following:
| |
March 31, 2015 | | |
March 31, 2014 | |
Raw materials | |
$ | 17,683 | | |
$ | 23,760 | |
Components | |
| 169,855 | | |
| 228,884 | |
Finished goods | |
| 621,428 | | |
| 824,109 | |
| |
| 808,966 | | |
| 1,076,753 | |
Less: reserve for obsolescence | |
| (394,932 | ) | |
| (477,502 | ) |
Net inventory | |
$ | 414,034 | | |
$ | 599,251 | |
8. PREPAID EXPENSES
Prepaid expenses are summarized as follows:
| |
March 31, 2015 | | |
March 31, 2014 | |
Prepaid materials and components | |
$ | 23,849 | | |
$ | 45,546 | |
Prepaid consulting | |
| 28,163 | | |
| — | |
VAT payments in excess of VAT receipts | |
| 207 | | |
| 11,430 | |
Prepaid rent | |
| 29,813 | | |
| 48,293 | |
Other | |
| 14,429 | | |
| 23,309 | |
| |
$ | 96,461 | | |
$ | 128,578 | |
9. PROPERTY AND
EQUIPMENT
Property and equipment are summarized as
follows:
| |
March 31, 2015 | | |
March 31, 2014 | |
Furniture and Fixtures | |
$ | 466,374 | | |
$ | 461,260 | |
Machinery and Equipment | |
| 1,947,878 | | |
| 1,706,248 | |
| |
| 2,414,252 | | |
| 2,167,508 | |
Accumulated depreciation | |
| (1,978,984 | ) | |
| (1,678,088 | ) |
Property & equipment, net | |
$ | 435,268 | | |
$ | 489,420 | |
10. LINE OF CREDIT
The Company has a mixed-use line of credit facility
with BNP Paribas Fortis Bank, a Belgian bank (the “Facility”). The Facility is secured by a first lien on the assets
of Remedent N.V. and by personal guarantee of the Company’s CEO. Effective September 3, 2013 we have agreed to repay our
line of credit of € 495.000 (US $589,050) in 10 installments of € 49.500 (US $58,905) + an interest of 3.6 % per year
commencing November 1, 2013, with the last payment due on July 31, 2014. The loan was completely repaid in July 2014 and all securities
are released by the bank in January 2015.
11. LONG TERM DEBT
Capital Lease Agreements:
On January 15, 2010, the Company
entered into a capital lease agreement over a 5 year period for veneer manufacturing equipment totaling €251,903 (US $273,088).
The lease requires a monthly
payment of principal and interest at 9.72% and provide for a buyout at the conclusion of the lease terms of 4% of the original
value of the contract. Effective March 31, 2015 the capital lease was fully paid.
The net book value as of March
31, 2015 and March 31, 2014 of the equipment subject to the foregoing lease was $Nil and $77,943 respectively as the contract was
fully concluded at March 31, 2015
Secured Debt Agreements (1)
On June 3, 2011, the Company obtained a
loan in the principal amount of $1,000,000 (the “Loan”) from an unrelated private company, Excelsior Medical (HK) (“EM”).
In connection with the Loan, the Company issued a promissory note, with a simple interest rate of 5% per annum, secured by certain
assets of the Company (the “Note”). The maturity date of the Loan is June 3, 2014. Interest of $50,000 per annum is
payable in cash on an annual basis. The Company is currently in the process of renegotiating the terms of repayment.
Effective as of January 11, 2012, the Company
entered into a Rescission Agreement with EM and Asia Best Healthcare Co., Ltd. Under the Rescission Agreement, the Company agreed
to repay a total of $1,000,000 received under the Distribution Agreement, plus a simple interest rate of 5%, beginning on June
30, 2012, according to the following payment schedule: (i) $250,000 to be paid no later than June 30, 2012, (ii) $250,000 plus
interest on June 30, 2012, (iii) $250,000 plus interest on December 31, 2012, and (iv) $250,000 plus interest on June 30, 2013.
The Company also agreed to secure such obligations owed to EM with certain collateral of the Company. During the period ended December
31, 2012 a partial payment of $20,000 in interest has been made. The Company is currently in the process of re-negotiating the
terms of repayment.
Secured Debt Agreements (2)
On December 3, 2012, the Company obtained a loan in the principal
amount of € 100,000 (the “Loan”) from BNP Paribas Fortis bank, to be repaid over the next 24 months. The loan
is secured by a lien on the assets of Remedent N.V. as already granted for the use of our existing Credit Line Facility. The maturity
date of the Loan was December 17, 2014 at an interest rate of 3.68% to be repaid in monthly installments of € 4,331 ($5,154).
The loan was fully repaid as of December 17, 2014.
12. DUE TO RELATED PARTIES AND RELATED PARTY
TRANSACTIONS
Transactions with related parties not disclosed
elsewhere in these financial statements consisted of the following:
Compensation:
During the years ended March 31, 2015 and
2014 respectively, the Company incurred $195,823 and $185,666 respectively as compensation for all directors and officers.
All related party transactions involving
provision of services or tangible assets were recorded at the exchange amount, which is the value established and agreed to by
the related parties reflecting arm’s length consideration payable for similar services or transfers.
13. ACCRUED LIABILITIES
Accrued liabilities are summarized as follows:
| |
March 31, 2015 | | |
March 31, 2014 | |
Accrued employee benefit taxes and payroll | |
$ | 244,486 | | |
$ | 358,567 | |
Accrued travel | |
| 5,421 | | |
| 7,212 | |
Commissions | |
| 97 | | |
| 23,110 | |
Accrued audit and tax preparation fees | |
| 19,480 | | |
| 17,938 | |
Reserve for warranty costs | |
| 5,421 | | |
| 6,899 | |
Accrued advertising | |
| — | | |
| 10,153 | |
Accrued interest | |
| 6,554 | | |
| 381 | |
Accrued consulting fees | |
| 1,500 | | |
| 1,500 | |
Other accrued expenses | |
| 51,789 | | |
| 24,543 | |
| |
$ | 334,748 | | |
$ | 450,303 | |
14. INCOME TAXES
The domestic and foreign (“Belgium”,
“German”, “Italian”, Hong Kong and China) components of income (loss) before income taxes and minority
interest were comprised of the following:
| |
March 31, 2015 | | |
March 31, 2014 | |
Domestic | |
$ | (121,369 | ) | |
$ | (97,114 | ) |
Foreign | |
| 285,412 | | |
| 621,622 | |
| |
$ | 164,043 | | |
$ | 524,508 | |
The Company’s domestic and foreign
components of deferred income taxes are as follows:
| |
March 31, 2015 | | |
March 31, 2014 | |
Domestic — Net operating loss carryforward | |
$ | 7,940,847 | | |
$ | 7,898,368 | |
Foreign — Net operating loss carryforward | |
| 211,692 | | |
| 311,586 | |
Total | |
| 8,152,539 | | |
| 8,209,954 | |
Valuation allowance | |
| (8,152,539 | ) | |
| (8,209,954 | ) |
Net deferred tax assets | |
$ | — | | |
$ | — | |
Because of the uncertainty surrounding
the timing of realizing the benefits of favorable tax attributes in future income tax returns, the Company has placed a valuation
allowance against its deferred income tax assets.
The principal reasons for the difference
between the income tax (benefit) and the amounts computed by applying the statutory income tax rates to the income (loss) for the
year ended March 31, 2015 and March 31, 2014 are as follows:
| |
March 31, 2015 | | |
March 31, 2014 | |
Domestic | |
| | | |
| | |
Pre tax income (loss) | |
$ | (121,369 | ) | |
$ | (97,114 | ) |
Statutory tax rate | |
| 35 | % | |
| 35 | % |
Tax benefit based upon statutory rate | |
| (42,479 | ) | |
| (33,990 | ) |
Valuation allowance | |
| 42,479 | | |
| 33,990 | |
Net domestic income tax (benefit) | |
| — | | |
| — | |
Foreign | |
| | | |
| | |
Pre tax income (loss) | |
| 285,412 | | |
| 621,622 | |
Statutory tax rate | |
| 35 | % | |
| 35 | % |
Tax expense (benefit) based upon statutory rate | |
| 99,894 | | |
| 217,567 | |
Permanent differences | |
| (99,894 | ) | |
| (217,567 | ) |
| |
| — | | |
| — | |
Net foreign income tax expense | |
| 30,565 | | |
| — | |
Total Income tax | |
$ | 30,565 | | |
$ | — | |
15. EQUITY COMPENSATION PLANS
As of March 31, 2015, the Company had two equity compensation
plans approved by its stockholders (1) the 2004 Incentive and Non-statutory Stock Option Plan (the “2004 Plan”); and
(2) the 2007 Equity Incentive Plan (the “2007 Plan”). The Company’s 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 March 31, 2015 and March 31, 2014 with respect to all compensation plans (including individual compensation arrangements)
under which equity securities are authorized for issuance.
| |
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, 2013 and March 31, 2014 | |
| 12,500 | | |
| 1.20 | | |
| 432,500 | | |
| 0.96 | | |
| 1,000,000 | | |
| 1.21 | | |
| 350,000 | | |
| 0.97 | |
Expired | |
| (12,500 | ) | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (200,000 | ) | |
| — | |
Options outstanding and exercisable March 31, 2015 | |
| — | | |
| — | | |
| 432,500 | | |
| 0.96 | | |
| 1,000,000 | | |
| 1.21 | | |
| 150,000 | | |
| 0.97 | |
Options exercisable March 31, 2015 | |
| — | | |
| — | | |
| 432,500 | | |
| 0.96 | | |
| 1,000,000 | | |
| 1.21 | | |
| 150,000 | | |
| 0.97 | |
Exercise price range | |
$ | — | | |
| | | |
| $ 0.50 - $2.46 | | |
| | | |
$ | 1.21 | | |
| | | |
$ | 1.75 | | |
| | |
Weighted average remaining life | |
| — | | |
| | | |
| 3.00 years | | |
| | | |
| 3.12 years | | |
| | | |
| 1.56 years | | |
| | |
A summary of the Company’s equity compensation plans approved
and not approved by shareholders is as follows:
Plan Category | |
Number of securities to be issued upon exercise of of outstanding options, warrants and rights | | |
Weighted-average exercise price of outstanding options warrants and rights | | |
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | |
Equity Compensation Plans approved by security holders | |
| 1,445,000 | | |
$ | 1.17 | | |
| 605,000 | |
Equity Compensation Plans not approved by security holders | |
| 820,000 | | |
$ | 0.97 | | |
| NA | |
Total | |
| 2,265,000 | | |
$ | 1.10 | | |
| 605,000 | |
For the years ended March 31, 2015 and
March 31, 2014 the Company has not recognized any stock based compensation expense in the consolidated statement of operations.
16. COMMON STOCK WARRANTS AND OTHER OPTIONS
As of March 31, 2015 and March 31, 2014,
the Company had warrants to purchase the Company’s common stock outstanding that were 5not granted under shareholder approved
equity compensation plans as follows:
| |
Outstanding Warrants | | |
Weighted Average Exercise Price | |
Warrants and options outstanding March 31, 2013 | |
| 3,738,379 | | |
$ | 1.50 | |
Expired | |
| (3,738,379 | ) | |
| | |
Warrants outstanding March 31, 2014 and March 31, 2015 | |
| — | | |
| | |
17. SEGMENT INFORMATION
The Company’s only operating segment
consists of dental products and oral hygiene products sold by Remedent Inc., Remedent N.V., and Biotech Dental Bnelux N.V. in the
year ended March 31, 2015 and Remedent Inc., Remedent, N.V., GlamSmile Deutschland GmbH and GlamSmile Rome SRL in the year ended
March 31, 2014. Our operations are primarily in Europe and Asia and 100% of our sales for the fiscal years ended March 31, 2015
and March 31, 2014 were generated from customers outside of the United States.
18. COMMITMENTS
Real Estate Lease:
The Company leases an office facility of
5,187 square feet in Gent, Belgium from an unrelated party pursuant to a nine year lease commencing September 1, 2008. at a
base rent of €5,712 per month for the total location ($6,433 per month at March 31, 2015).
Secondly, the Company leases an office
facility of 635 square feet in Brussels, Belgium from an unrelated party pursuant to a nine year lease commencing July 1, 2012
at a base rent of €969 per month for the total location ($1,050 per month at March 31, 2015).
Thirdly, the Company leases an office
facility of 1,991 square feet in Rome, Italy to support the sales and marketing division of our veneer business, from an unrelated
party pursuant a six year lease commencing July 1, 2011, at a base rent of € 6,500 per month for the total location ($8,969
per month at March 31, 2014) Due to an internal re-organization and in mutual agreement with the unrelated party, the rent agreement
was stopped at March 31, 2014.
Real Estate Lease and All Other Leased
Equipment:
Minimum monthly lease payments for real
estate, and all other leased equipment are as follows based upon the conversion rate for the (Euro) at March 31, 2015:
March 31, 2015 | |
| 154,430 | |
March 31, 2016 | |
| 122,156 | |
March 31, 2017 | |
| 58,925 | |
March 31, 2018 | |
| 17,902 | |
After five years | |
| 34,241 | |
Total: | |
$ | 387,654 | |
19. FINANCIAL INSTRUMENTS
The FASB ASC topic 820 on fair value measurement
and disclosures establishes three levels of inputs that may be used to measure fair value: quoted prices in active markets for
identical assets or liabilities (referred to as Level 1), observable inputs other than Level 1 that are observable for the asset
or liability either directly or indirectly (referred to as Level 2), and unobservable inputs to the valuation methodology that
are significant to the measurement of fair value of assets or liabilities (referred to as Level 3).
The carrying values and fair values of our financial instruments
are as follows:
| |
| | |
March 31, 2015 | | |
March 31, 2014 | |
| |
| | |
Carrying | | |
Fair | | |
Carrying | | |
Fair | |
| |
Level | | |
value | | |
Value | | |
value | | |
value | |
Cash | |
| 1 | | |
$ | 399,149 | | |
$ | 399,149 | | |
$ | 775,286 | | |
$ | 775,286 | |
Accounts receivable | |
| 2 | | |
$ | 847,144 | | |
$ | 847,144 | | |
$ | 787,578 | | |
$ | 787,578 | |
Long Term investment and advance - GlamSmile Dental Technology Asia | |
| 2 | | |
$ | 1,366,813 | | |
$ | 1,366,813 | | |
$ | 1,260,150 | | |
$ | 1,260,150 | |
Long term investments and advances MFI | |
| 1 | | |
$ | 828,828 | | |
$ | 828,828 | | |
$ | 958,652 | | |
$ | 958,652 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Line of credit | |
| 2 | | |
$ | — | | |
$ | — | | |
$ | 273,200 | | |
$ | 273,200 | |
Short term debt | |
| 2 | | |
$ | 2,172,467 | | |
$ | 2,172,467 | | |
$ | 2,257,403 | | |
$ | 2,257,403 | |
Deferred revenue | |
| 2 | | |
$ | 87,747 | | |
$ | 87,747 | | |
$ | 124,251 | | |
$ | 124,251 | |
Accounts payable | |
| 2 | | |
$ | 846,773 | | |
$ | 846,773 | | |
$ | 598,558 | | |
$ | 598,558 | |
Accrued liabilities | |
| 2 | | |
$ | 334,748 | | |
$ | 334,748 | | |
$ | 450,303 | | |
$ | 450,303 | |
The following method was used to estimate
the fair values of our financial instruments:
The carrying amount of level 1 and level
2 financial instruments approximates fair value because of the short maturity of the instruments.
Financial assets are considered Level 3
when their fair values are determined using pricing models, discounted cash flow methodologies, or similar techniques, and at least
one significant model assumption or input is unobservable. Level 3 financial assets also include certain investment securities
for which there is limited market activity such that the determination of fair value requires significant judgment or estimation.
The Company reviews the fair value hierarchy
classification on a quarterly basis. Changes in the ability to observe valuation inputs may result in a reclassification of levels
for certain securities within the fair value hierarchy. The Company’s policy is to recognize transfers into and out of levels
within the fair value hierarchy at the end of the fiscal quarter in which the actual event or change in circumstances that caused
the transfer occurs. There were no significant transfers between Level 1, Level 2, or Level 3 during the fiscal years ended March
31, 2014 or March 31, 2013. When a determination is made to classify an asset or liability within Level 3, the determination is
based upon the significance of the unobservable inputs to the overall fair value measurement. The following table provides a reconciliation
of the beginning and ending balances of the item measured at fair value on a recurring basis in the table above that used significant
unobservable inputs (Level 3):
| |
Year ended March 31,
2015 | | |
Year ended
March 31, 2014 | |
Long term investments and advances: | |
| | | |
| | |
Beginning balance | |
$ | 1,260,150 | | |
$ | 2,441,572 | |
Gains (losses) included in net loss | |
| 106,663 | | |
| (1,338,042 | ) |
Transfers in (out of level 3) | |
| — | | |
| 156,620 | |
| |
| | | |
| | |
Ending balance | |
$ | 1,366,813 | | |
$ | 1,260,150 | |
Exhibit 21.1
List of Subsidiaries of Remedent, Inc.
We have the following wholly owned subsidiaries:
|
(1) |
Remedent N.V., a Belgium corporation (“Remedent NV”); |
|
|
|
|
(2) |
Remedent Professional Holdings, Inc., a California corporation; |
|
|
|
|
(3) |
Remedent Professional, Inc., a California corporation (a subsidiary of Remedent Professional Holdings, Inc.), and |
|
|
|
|
(4) |
Glamtech-USA, Inc., a Delaware corporation (“Glamtech”). |
Further, we have ownership interests in the following entities:
|
(i) |
GlamSmile Asia Ltd., a private Hong Kong
company –Remedent, N.V. has 21.51% ownership interest in GlamSmile Asia Ltd., which has the following subsidiaries:
GlamSmile Studio in Hong Kong, GlamSmile Studio’s in Mainland China (Beijing, Shanghai, Whenzhou, Guangzhou and Wuhan)
and the GlamSmile Production Lab, also located in China (Beijing) |
|
|
|
|
(ii) |
GlamSmile Deutschland GmbH, a German private company- Remedent N.V. has a 51% ownership interest in GlamSmile Deutschland GmbH. Effective March 31, 2014 this subsidiary is inactive. |
|
|
|
|
(iii) |
GlamSmile Rome SRL, an Italian private company-Remedent N.V.
has 80% ownership interest in GlamSmile Rome SRL. Effective March 31, 2014 this subsidiary is inactive.
|
|
(iv) |
MFI N.V., a Belgium corporation - Remedent N.V. has 6,12%
ownership interest in MFI N.V.
|
|
(v) |
GlamSmile Dental Technology Ltd., a Cayman Island company, -Remedent, N.V. owns 21.51% of Glamsmile Dental Technology Ltd. (“Glamsmile Dental”), which owns on its return 21.51% of GlamSmile Asia Ltd (i) |
|
|
|
|
(vi) |
Beijing Glamsmile Technology Development Ltd.- Glamsmile Dental owns 100% of Beijing Glamsmile Technology Development Ltd. (“Beijing Glamsmile”) |
|
|
|
|
(vii) |
Beijing Glamsmile Trading Co. Ltd- Beijing Glamsmile owns 80% of
Beijing Glamsmile Trading Co. Ltd., which has an 98% ownership interest in (A) Beijing Glamsmile Dental Clinic Co., Ltd., (B)
a 100% ownership interest in Shanghai Glamsmile Dental Clinic Co., Ltd., (C) a 100 % ownership interest in Guangzhou
Glamsmile Dental Clinic Co., Ltd. ., (D) a 100 % ownership interest in Wuhan Glamsmile Dental Clinic Co., Ltd. and (E) a 50 %
ownership interest in Wenzhou Glamsmile Dental Clinic Co., Ltd. |
|
|
|
|
(viii) |
Biotech Dental Benelux N.V., a Belgium corporation
– Remedent N.V. has 50% ownership interest in Biotech Dental Benelux N.V. |
Exhibit 31.1
CERTIFICATIONS OF THE CHIEF EXECUTIVE
OFFICER
PURSUANT TO SECTION 302
I, Guy De Vreese, certify that:
1. |
I have reviewed this Annual Report on Form 10-K 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; |
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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; |
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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: |
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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; |
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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; |
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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 |
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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 |
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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): |
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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 |
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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. |
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Date: June 29, 2015 |
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By: |
/s/ Guy De Vreese |
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Name: Guy De Vreese |
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Title: Chief Executive Officer (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION OF THE CHIEF FINANCIAL
OFFICER
PURSUANT TO SECTION 302
I, Philippe Van Acker, certify that:
1. |
I have reviewed this Annual Report on Form 10-K of Remedent, Inc. |
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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; |
|
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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 |
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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 |
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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 |
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|
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. |
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Date: June 29, 2015 |
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By: |
/s/ Philippe Van Acker |
|
|
Name: Philippe Van Acker |
|
|
Title: Chief Financial Officer (Principal Financial
and 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 Annual Report of
Remedent, Inc. (the “Company”) on Form 10-K for the period ended March 31, 2015 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: June 29, 2015 |
|
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|
By: |
/s/ Guy De Vreese |
|
|
Name: Guy De Vreese |
|
|
Title: Chief Executive Officer (Principal Executive
Officer) |
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 Annual Report of
Remedent, Inc. (the “Company”) on Form 10-K for the period ended March 31, 2015 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: June 29, 2015 |
|
|
|
By: |
/s/ Philippe Van Acker |
|
|
Name: Philippe Van Acker |
|
|
Title: Chief Financial Officer (Principal Financial
and Accounting Officer) |
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