UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
 
 FORM
10-Q
 
 (Mark
One)
 
 x QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
  For the
Quarterly Period Ended December 31, 2009
   ̈ TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
  For the
transition period from _____ to _____.
  Commission File No.
001-15975
 
 REMEDENT,
INC.
 (Exact
Name of Registrant as Specified in Its Charter)
 
 Nevada
                        
                        86-0837251(State
      or Other Jurisdiction
                          Of
      Incorporation or Organization)
                        
                        (I.R.S.
      Employer Identification
                          Number)Xavier
      De Cocklaan 42, 9831 Deurle, Belgium
                        
                        N/A(Address
      of Principal Executive Offices)
                        
                        (Zip
      Code)
 
 Registrant’s
telephone number, including area code 011 32 9
321 70 80
 
 Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports); and (2) has been subject to such filing requirements for
the past 90 days.
 Yesx        No ̈
 
 Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T ( § 232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).
 Yes ̈        No ̈
  Indicate
by checkmark whether the registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer or a smaller reporting company.  See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-3 of the Exchange Act.  (Check
one):
 
 Large
      accelerated filer
                 ̈
                Accelerated
      filer
                 ̈Non-accelerated
      filer
                 ̈
                Smaller
      reporting company
                x(Do
      not check if a smaller reporting
company)
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act.
 Yes ̈        Nox
 
 As of
February 11, 2010, there were 19,995,969outstanding
shares of the registrant’s common stock, includes  723,000 shares of
treasury stock.
  
 
 
  REMEDENT,
INC.
 
 FORM
10-Q INDEX
 
 Page NumberPART
      I – FINANCIAL INFORMATIONItem
      1.  Financial StatementsCondensed
      Consolidated Balance Sheets as of December 31, 2009 (Unaudited) and March
      31, 2009
                      1Condensed
      Consolidated Statements of Operations for the Three Months and Nine Months
      Ended December 31, 2009 and December 31, 2008 (Unaudited)
                      2Condensed
      Consolidated Statements of Comprehensive Income (Loss) for the Three
      Months and Nine Months Ended December 31, 2009 and December 31, 2008
      (Unaudited)
                      3Condensed
      Consolidated Statements of Cash Flows for the Nine Months Ended December
      31, 2009 and December 31, 2008 (Unaudited)
                      4Notes
      to Interim Condensed Consolidated Financial Statements
      (Unaudited)
                      5Item
      2.  Management’s Discussion and Analysis of Financial Condition
      and Results of Operations
                      20Item
      3.  Quantitative and Qualitative Disclosures About Market
      Risk
                      26Item
      4T.  Controls and Procedures
                      26PART
      II – OTHER INFORMATIONItem
      1.     Legal Proceedings
                      26Item
      1A.  Risk Factors
                      26Item
      2.     Unregistered Sales of Equity Securities
      and Use of Proceeds
                      26Item
      3.     Defaults Upon Senior
      Securities
                      26Item
      4.     Submission of Matters to a Vote of
      Security Holders
                      27Item
      5.     Other Information
                      27Item
      6.     Exhibits
                      27Signature
      Page
                      29
  
  PART
I – FINANCIAL INFORMATION
 REMEDENT,
INC. AND SUBSIDIARIES
 CONDENSED
CONSOLIDATED BALANCE SHEETS
 December 31,
                      2009
                    
                    
                    March 31, 2009(unaudited)ASSETSCURRENT
      ASSETS:Cash
      and cash equivalents
                    
                    $
                    1,386,231
                    
                    
                    $
                    1,807,271Accounts
      receivable, net of allowance for doubtful accounts of $36,982 at December
      31, 2009 and $33,966 at March 31, 2009
                    
                    
                    1,146,859
                    
                    
                    
                    3,208,120Inventories,
      net
                    
                    
                    2,415,977
                    
                    
                    
                    1,937,946Prepaid
      expenses
                    
                    
                    1,512,581
                    
                    
                    
                    1,310,900Total
      current assets
                    
                    
                    6,461,648
                    
                    
                    
                    8,264,237PROPERTY
      AND EQUIPMENT, NET
                    
                    
                    1,320,352
                    
                    
                    
                    1,024,999OTHER
      ASSETSLong
      term investments and advances
                    
                    
                    750,000
                    
                    
                    
                    750,000Patents,
      net
                    
                    
                    200,304
                    
                    
                    
                    163,106Total
      assets
                    
                    $
                    8,732,304
                    
                    
                    $
                    10,202,342LIABILITIES
      AND STOCKHOLDERS’ EQUITYCURRENT
      LIABILITIES:Current
      portion, long term debt
                    
                    $
                    39,797
                    
                    
                    $
                    78,798Line
      of Credit
                    
                    
                    1,186,103
                    
                    
                    
                    660,200Accounts
      payable
                    
                    
                    2,204,277
                    
                    
                    
                    1,398,420Accrued
      liabilities
                    
                    
                    721,087
                    
                    
                    
                    1,590,360Income
      taxes payable
                    
                    
                    37,466
                    
                    
                    
                    39,339Total
      current liabilities
                    
                    
                    4,188,730
                    
                    
                    
                    3,767,117Long
      term debt less current portion
                    
                    
                    303,173
                    
                    
                    
                    100,542Total
      liabilities
                    
                    
                    4,491,903
                    
                    
                    
                    3,867,659EQUITY:REMEDENT,
      INC. STOCKHOLDERS’ EQUITYPreferred
      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 December 31, 2009 and March 31,
      2009)
                    
                    
                    19,996
                    
                    
                    
                    19,996Treasury
      stock, at cost; 723,000 shares at December 31, 2009 and March 31,
      2009
                    
                    
                    (831,450
                    )
                    
                    
                    (831,450
                    )Additional
      paid-in capital
                    
                    
                    24,578,643
                    
                    
                    
                    24,106,055Accumulated
      deficit
                    
                    
                    (19,440,363
                    )
                    
                    
                    (17,216,028
                    )Accumulated
      other comprehensive (loss) (foreign currency translation
      adjustment)
                    
                    
                    (547,110
                    )
                    
                    
                    (640,595
                    )Total
      Remedent, Inc. stockholders’ equity
                    
                    
                    3,779,716
                    
                    
                    
                    5,437,978Non-controlling
      interest (Note 3)
                    
                    
                    460,685
                    
                    
                    
                    896,705Total
      stockholders’ equity
                    
                    
                    4,240,401
                    
                    
                    
                    6,334,683Total
      liabilities and equity
                    
                    $
                    8,732,304
                    
                    
                    $
                    10,202,342
 COMMITMENTS
(Note 19)
 The
accompanying notes are an integral part of these consolidated financial
statements.
  1
  REMEDENT,
INC. AND SUBSIDIARIES
 CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
 (unaudited)
 
 For the three months ended
                    December 31,
                  
                  
                  For the nine months ended
                    December 31,2009
                  
                  
                  2008
                  
                  
                  2009
                  
                  
                  2008Net
      sales
                  
                  $
                  1,834,021
                  
                  
                  $
                  4,842,628
                  
                  
                  $
                  5,775,125
                  
                  
                  $
                  11,249,186Cost
      of sales
                  
                  
                  972,247
                  
                  
                  
                  2,909,531
                  
                  
                  
                  3,370,491
                  
                  
                  
                  4,964,408Gross
      profit
                  
                  
                  861,774
                  
                  
                  
                  1,933,097
                  
                  
                  
                  2,404,634
                  
                  
                  
                  6,284,778Operating
      ExpensesResearch
      and development
                  
                  
                  150,225
                  
                  
                  
                  52,006
                  
                  
                  
                  231,345
                  
                  
                  
                  224,379Sales
      and marketing
                  
                  
                  403,171
                  
                  
                  
                  912,422
                  
                  
                  
                  891,182
                  
                  
                  
                  2,423,928General
      and administrative
                  
                  
                  1,065,114
                  
                  
                  
                  1,268,500
                  
                  
                  
                  3,210,512
                  
                  
                  
                  3,672,536Depreciation
      and amortization
                  
                  
                  206,923
                  
                  
                  
                  167,399
                  
                  
                  
                  558,281
                  
                  
                  
                  441,771TOTAL
      OPERATING EXPENSES
                  
                  
                  1,825,433
                  
                  
                  
                  2,400,327
                  
                  
                  
                  4,891,320
                  
                  
                  
                  6,762,614INCOME
      (LOSS) FROM OPERATIONS
                  
                  
                  (963,659
                  )
                  
                  
                  (467,230
                  )
                  
                  
                  (2,486,686
                  )
                  
                  
                  (477,836
                  )OTHER
      INCOME (EXPENSES)Warrants
      issued
                  
                  
                  (8,350
                  )
                  
                  
                  -
                  
                  
                  
                  (168,238
                  )
                  
                  
                  (4,323,207
                  )Gain
      on disposition of OTC (Note 3)
                  
                  
                  -
                  
                  
                  
                  2,830,953
                  
                  
                  
                  -
                  
                  
                  
                  2,830,953Interest
      expense
                  
                  
                  (56,915
                  )
                  
                  
                  (168,659
                  )
                  
                  
                  (120,768
                  )
                  
                  
                  (250,175
                  )Interest
      income
                  
                  
                  24,179
                  
                  
                  
                  289,646
                  
                  
                  
                  115,337
                  
                  
                  
                  347,113TOTAL
      OTHER INCOME (EXPENSES)
                  
                  
                  (41,086
                  )
                  
                  
                  2,951,940
                  
                  
                  
                  (173,669
                  )
                  
                  
                  (1,395,316
                  )NET
      (LOSS) INCOME
                  
                  
                  (1,004,745
                  )
                  
                  
                  2,484,710
                  
                  
                  
                  (2,660,355
                  )
                  
                  
                  (1,873,152
                  )LESS:
      NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTEREST
                  
                  
                  (168,624
                  )
                  
                  
                  -
                  
                  
                  
                  (436,020
                  )
                  
                  
                  -NET
      (LOSS) INCOME ATTRIBUTABLE TO REMEDENT, INC. Common
      Stockholders
                  
                  $
                  (836,121
                  )
                  
                  $
                  2,484,710
                  
                  
                  $
                  (2,224,335
                  )
                  
                  $
                  (1,873,152
                  )(LOSS)
      INCOME PER SHAREBasic
                  
                  $
                  (0.04
                  )
                  
                  $
                  0.13
                  
                  
                  $
                  (0.11
                  )
                  
                  $
                  (0.10
                  )Fully
      diluted
                  
                  $
                  (0.04
                  )
                  
                  $
                  0.08
                  
                  
                  $
                  (0.11
                  )
                  
                  $
                  (0.10
                  )WEIGHTED
      AVERAGE SHARES OUTSTANDINGBasic
                  
                  
                  19,995,969
                  
                  
                  
                  19,332,760
                  
                  
                  
                  19,995,969
                  
                  
                  
                  19,045,368Fully
      diluted
                  
                  
                  33,789,738
                  
                  
                  
                  31,371,629
                  
                  
                  
                  33,789,738
                  
                  
                  
                  31,084,237
 
 The
accompanying notes are an integral part of these consolidated financial
statements.
  2
  REMEDENT,
INC. AND SUBSIDIARIES
 CONDENSED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
 (Unaudited)
 
 For the three months ended
                      December 31,
                    
                    
                    For the nine months ended
                      December 31,2009
                    
                    
                    2008
                    
                    
                    2009
                    
                    
                    2008Net
      (Loss) Income Attributable to Remedent Common Stockholders
                    
                    $
                    (836,l21
                    )
                    
                    $
                    2,484,710
                    
                    
                    $
                    (2,224,335
                    )
                    
                    $
                    (1,873,152
                    )OTHER
      COMPREHENSIVE INCOME (LOSS):Foreign
      currency translation adjustment
                    
                    
                    (24,844
                    )
                    
                    
                    (409,200
                    )
                    
                    
                    93,485
                    
                    
                    
                    (622,874
                    )Total
      Other Comprehensive income (loss)
                    
                    
                    (860,965
                    )
                    
                    
                    2,075,510
                    
                    
                    
                    (2,130,850
                    )
                    
                    
                    (2,496,026
                    )LESS:
      COMPREHENSIVE INCOME ATTRIBUTABLE TO NON-CONTROLLING
    INTEREST
                    
                    
                    (6,331
                    )
                    
                    
                    -
                    
                    
                    
                    49,753
                    
                    
                    
                    -COMPREHENSIVE
      (LOSS) ATTRIBUTABLE TO REMEDENT Common Stockholders
                    
                    $
                    (867,296
                    )
                    
                    $
                    2,075,510
                    
                    
                    $
                    (2,081,097
                    )
                    
                    $
                    (2,496,026
                    )
 
 The
accompanying notes are an integral part of these consolidated financial
statements.
  3
  REMEDENT,
INC. AND SUBSIDIARIES
 CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
 (unaudited)
 For the nine
      months ended
                          December
      31,2009
                        
                        
                        2008CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      (loss) income
                        
                        $
                        (2,660,335
                        )
                        
                        $
                        (1,873,152
                        )Adjustments
      to reconcile net income (loss) to net cash used by operating
      activitiesDepreciation
      and amortization
                        
                        
                        558,281
                        
                        
                        
                        441,771Inventory
      reserve
                        
                        
                        190
                        
                        
                        
                        394Allowance
      for doubtful accounts
                        
                        
                        3,016
                        
                        
                        
                        (3,871
                        )Value
      of stock options issued to employees and consultants
                        
                        
                        304,350
                        
                        
                        
                        265,275Gain
      on disposition of OTC
                        
                        
                        -
                        
                        
                        
                        (2,830,953
                        )Warrants
      issued
                        
                        
                        168,238
                        
                        
                        
                        4,323,207Changes
      in operating assets and liabilities:Accounts
      receivable
                        
                        
                        2,061,261
                        
                        
                        
                        (709,731
                        )Inventories
                        
                        
                        (478,031
                        )
                        
                        
                        (575,894
                        )Prepaid
      expenses
                        
                        
                        (201,681
                        )
                        
                        
                        (612,329
                        )Accounts
      payable
                        
                        
                        463,136
                        
                        
                        
                        (558,352
                        )Accrued
      liabilities
                        
                        
                        (869,273
                        )
                        
                        
                        261,764Income
      taxes payable
                        
                        
                        (1,873
                        )
                        
                        
                        (4,132
                        )Net
      cash used by operating activities
                        
                        
                        (651,757
                        )
                        
                        
                        (1,876,003
                        )CASH
      FLOWS FROM INVESTING ACTIVITIESPurchases
      of equipment
                        
                        
                        (550,974
                        )
                        
                        
                        (455,694
                        )Net
      cash used by investing activities
                        
                        
                        (550,974
                        )
                        
                        
                        (455,694
                        )CASH
      FLOWS FROM FINANCING ACTIVITIESProceeds
      on sale of minority interest in Sylphar NV
                        
                        
                        -
                        
                        
                        
                        2,782,000Net
      proceeds from capital lease note payable
                        
                        
                        163,630
                        
                        
                        
                        45,127Proceeds
      from line of credit
                        
                        
                        525,903
                        
                        
                        
                        127,840Net
      cash provided by financing activities
                        
                        
                        689,533
                        
                        
                        
                        2,954,967NET
      (DECREASE) INCREASE IN CASH
                        
                        
                        (513,198
                        )
                        
                        
                        623,270Effect
      of exchange rate changes on cash and cash equivalents
                        
                        
                        92,158
                        
                        
                        
                        218,337CASH
      AND CASH EQUIVALENTS, BEGINNING
                        
                        
                        1,807,271
                        
                        
                        
                        1,728,281CASH
      AND CASH EQUIVALENTS, ENDING
                        
                        $
                        1,386,231
                        
                        
                        $
                        2,569,888Supplemental
      Information:Interest
      paid
                        
                        $
                        50,413
                        
                        
                        $
                        98,493Income
      taxes paid
                        
                        $
                        -
                        
                        
                        $
                        -Schedule
      of non-cash financing and investing activities:Restricted
      shares returned to treasury in exchange for 50% of OTC
      Business
                        
                        $
                        —
                        
                        
                        $
                        831,450Warrants
      issued pursuant to Distribution Agreement
                        
                        $
                        —
                        
                        
                        $
                        4,323,207Shares
      issued for purchase of GlamTech
                        
                        $
                        —
                        
                        
                        $
                        625,000Shares
      issued as prepayment for goods
                        
                        $
                        —
                        
                        
                        $
                        250,000Shares
      issued for license
                        
                        $
                        —
                        
                        
                        $
                        319,483
 The
accompanying notes are an integral part of these consolidated financial
statements.
  4
  REMEDENT,
INC. AND SUBSIDIARIES
 NOTES
TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 
 1.
              BACKGROUND
      AND ORGANIZATION
 
 The
Company is a manufacturer and distributor of cosmetic dentistry products,
including a full line of professional dental and retail “Over-The-Counter” tooth
whitening products which are distributed in Europe, in Asia and the United
States. The Company manufactures many of its products in its facility in Deurle,
Belgium as well as outsourced manufacturing in China. The Company distributes
its products using both its own internal sales force and through the use of
third party distributors.
 
 2.
              SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES
 
 Organization
and Principles of Consolidation
 
 The
accompanying consolidated financial statements include the accounts of: Remedent
N.V. (incorporated in Belgium) located in Deurle, Belgium, Remedent
Professional, Inc. (incorporated in California), Glamtech-USA, Inc. (a Delaware
corporation acquired effective August 24, 2008), Remedent OTC B.V., a Dutch
Holding company and a 50% owned subsidiary, Sylphar Holding B.V., a Dutch
holding company, a 37.50% owned and controlled subsidiary by Remedent Inc.,
Sylphar N.V., a 100% owned company by Sylphar Holding BV, Sylphar USA, a 100%
owned Nevada corporation by Sylphar Holding BV. And Sylphar Asia Pte, a 100%
owned Asian company owned by Sylphar Holding BV (collectively, the
“Company”).
 
 Remedent,
Inc. is a holding company with headquarters in Deurle, Belgium. Remedent
Professional, Inc. and Remedent Professional Holdings, Inc. have been dormant
since inception. The rebranded Sylphar Asia Pte. Ltd. (former Remedent Asia Pte.
Ltd.), commenced operations as of July 2005.
 
 Interim
Financial Information
 
 The
interim consolidated financial statements of Remedent, Inc. and Subsidiaries
(the “Company”) are condensed and do not include some of the information
necessary to obtain a complete understanding of the financial data. Management
believes that all adjustments necessary for a fair presentation of results have
been included in the unaudited consolidated financial statements for the interim
periods presented. Operating results for the nine months ended December 31,
2009, are not necessarily indicative of the results that may be expected for the
year ending March 31, 2010. Accordingly, your attention is directed to
footnote disclosures found in the Annual Report on Form 10-K for the year ended
March 31, 2009, and particularly to Note 2, which includes a summary of
significant accounting policies.
 
 Pervasiveness
of Estimates
  The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires the Company to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. On an on-going basis, the Company evaluates estimates and
judgments, including those related to revenue, bad debts, inventories, fixed
assets, intangible assets, stock based compensation, income taxes, and
contingencies. Estimates are based on historical experience and on various other
assumptions that the Company believes reasonable in the circumstances. The
results form the basis for making judgments about the carrying values of assets
and liabilities that are not readily apparent from other sources. Actual results
could differ from those estimates.
 
 Basis
of Presentation
 
 The
Company’s financial statements have been prepared on an accrual basis of
accounting, in conformity with accounting principles generally accepted in the
United States of America.
  5
  Revenue
Recognition
 
 The
Company recognizes revenue from product sales when persuasive evidence of a sale
exists: that is, a product is shipped under an agreement with a customer; risk
of loss and title has passed to the customer; the fee is fixed or determinable;
and collection of the resulting receivable is reasonably assured. Sales
allowances are estimated based upon historical experience of sales
returns.
 
 Non-controlling
Interest
 
 The
Company adopted ASC Topic 810 (formerly SFAS 160) Noncontrolling Interests in
Consolidated Financial Statements — an Amendment of Accounting
Research Bulletin No. 51 as of April 1, 2009. SFAS 160 establishes
accounting and reporting standards for ownership interests in subsidiaries held
by parties other than the parent, the amount of consolidated net income
attributable to the parent and to the noncontrolling interest, changes in a
parent’s ownership interest and the valuation of retained noncontrolling equity
investments when a subsidiary is deconsolidated. ASC Topic 810 also establishes
reporting requirements that provide sufficient disclosures that clearly identify
and distinguish between the interest of the parent and the interests of the
noncontrolling owner. The adoption of ASC Topic 810 impacted the presentation of
our consolidated financial position, results of operations and cash
flows.
 
 Fair
Value of Financial Instruments
 
 The
Company’s financial instruments consist of cash and cash equivalents, accounts
receivable, accounts payable, accrued liabilities, line of credit and long-term
debt. The carrying amounts of cash and cash equivalents, accounts receivable,
accounts payable and accrued liabilities approximate their respective fair
values because of the short maturities of those instruments. The Company’s
long-term debt consists of its revolving credit facility and long-term capital
lease obligations. The carrying value of the revolving credit facility
approximates fair value because of its variable short-term interest
rates.  The fair value of the Company’s long-term capital lease
obligations is based on current rates for similar financing.
 
 Comparative
Figures
 
 Certain
comparative figures have been reclassified in order to conform to the current
year’s financial statement presentation.  The reclassifications
included the retrospective adoption of ASC Topic 810 as described in Note 2
under “Non-controlling Interest”.  The reclassification had no impact
upon previously reported net income available to common stockholders or earnings
per share.
 
 Computation
of Earnings (Loss) per Share
 
 The
Company computes net income (loss) per share as follows:  Basic
earnings per share (“EPS”) is computed by dividing net income (loss) available
to common shareholders (numerator) by the weighted average number of common
shares outstanding (denominator) during the period. Diluted EPS gives effect to
all dilutive potential common shares outstanding during the period including
stock options, using the treasury stock method, and convertible notes, using the
if-converted method. In computing diluted EPS, the average stock price for the
period is used in determining the number of shares assumed to be purchased from
the exercise of stock options or warrants. Diluted EPS excludes all dilutive
potential common shares if their effect is anti-dilutive.
 
 Adoption
of New Accounting Standards
 
 Effective
April 1, 2009, we adopted Financial Accounting Standards Board (FASB) Statement
of Financial Accounting Standards (SFAS) ASC Topic 855 (formerly FASB 165) “
Subsequent Events .”
This Statement establishes the accounting for, and disclosure of, material
events that occur after the balance sheet date, but before the financial
statements are issued. In general, these events will be recognized if the
condition existed at the date of the balance sheet, and will not be recognized
if the condition did not exist at the balance sheet date. Disclosure is required
for non-recognized events if required to keep the financial statements from
being misleading. The guidance in this Statement is very similar to current
guidance provided in auditing literature and, therefore, will not result in
significant changes in practice. Subsequent events have been evaluated through
the date our interim financial statements were issued—the filing time and date
of our third quarter in 2009 on Quarterly Report on Form 10-Q.
  6
  In
April 2009, the FASB issued three FASB Staff Positions (FSP’s) (now superseded
by the FASB Accounting Standards Codification) that are intended to provide
additional application guidance and enhance   disclosures about
fair value measurements and impairments of securities.
 
 ·
              ASC
      Topic 820-10-65 (formerly FSP No. 157-4), “ Determining Fair Value When
      the Volume and Level of Activity for the Asset or Liability Have
      Significantly Decreased and   Identifying Transactions That
      Are Not Orderly ” (FSP 157-4), clarifies the objective and method
      of fair value measurement even when there has   been a
      significant decrease in market activity for the asset
      being  measured.
 
 ·
              ASC
      Topic 320 (ASC 320-10-65) (formerly FSP No. 115-2 and FSP No. 124-2) “
      Recognition and
      Presentation   of Other-Than-Temporary Impairments
      ”, (FSP 115-2 and FSP 124-2),   establish a new model for
      measuring other-than-temporary impairments for   debt
      securities, including criteria for when to recognize a
      write-down   through earnings versus other comprehensive
      income.
 
 ·
              ASC
      Topic 825 (ASC 825-10-65) (formerly FSP No. 107-1 and   APB
      28-1) “ Interim
      Disclosures About Fair Value of
      Financial   Instruments ”, expand the fair value
      disclosures required for all   financial instruments within
      the scope of SFAS, No. 107, “Disclosures   about Fair Value
      of Financial Instruments” (FSP 107-1 and APB 28-1)
      to   interim periods. This guidance increases the frequency
      of fair value disclosures from annual only to quarterly. FSP
      No. 107-1 is effective for interim and annual periods ending after
      June 15, 2009. The adoption of FSP No. 107-1 did not have a
      material effect on the Company’s results of operations or consolidated
      financial position, but will enhance required
  disclosures.
 
 All of
these FSP’s are effective for interim and annual   periods ending
after June 15, 2009, our quarter ended June 30, 2009.   The
adoption of these FSP’s has not had a material impact on our consolidated
results of operations and financial condition. However, adoption of FSP 107-1
and APB 28-1 during the nine months ended December 31, 2009 has resulted in
increased disclosures in our consolidated
financial statements.
 
 Recently
Issued Accounting Pronouncements
 
 In June
2009, the Financial Accounting Standard Board (“FASB”) issued Accounting
Standards Update (“ASU”) No. 2009-01 “Generally Accepted Accounting
Principles” (ASC Topic 105) which establishes the FASB Accounting
Standards Codification (“the Codification” or “ASC”) as the official single
source of authoritative GAAP. All existing accounting standards are superseded.
All other accounting guidance not included in the Codification will be
considered non-authoritative. The Codification also includes all relevant SEC
guidance organized using the same topical structure in separate sections within
the Codification.
 
 Following
the Codification, the Board will not issue new standards in the form of
Statements, FASB Staff Positions or Emerging Issues Task Force (“EITF”)
Abstracts. Instead, it will issue ASU which will serve to update the
Codification, provide background information about the guidance and provide the
basis for conclusions on the changes to the Codification.
 
 The
Codification is not intended to change GAAP, but it will change the way GAAP is
organized and presented. The Codification is effective for our second-quarter
2009 financial statements and the principal impact on our financial statements
is limited to disclosures as all future references to authoritative accounting
literature will be referenced in accordance with the Codification. In order to
ease the transition to the Codification, we are providing the Codification
cross-reference alongside the references to the standards issued and adopted
prior to the adoption of the Codification.
  7
  In August
2009, the FASB issued ASU No. 2009-05 “Measuring Liabilities at Fair
Value” (amendments to ASC Topic 820, Fair Value Measurements and
Disclosures)” (“ASU 2009-05”)which amends Fair Value Measurements and
Disclosures – Overall (ASC Topic 820-10) to provide guidance on the fair value
measurement of liabilities. This update requires clarification for circumstances
in which a quoted price in an active market for the identical liability is not
available, a reporting entity is required to measure fair value using one or
more of the following techniques: 1) a valuation technique that uses either the
quoted price of the identical liability when traded as an asset or quoted prices
for similar liabilities or similar liabilities when traded as an asset; or 2)
another valuation technique that is consistent with the principles in ASC Topic
820 such as the income and market approach to valuation. The amendments in this
update also clarify that when estimating the fair value of a liability, a
reporting entity is not required to include a separate input or adjustment to
other inputs relating to the existence of a restriction that prevents the
transfer of the liability. This update further clarifies that if the fair value
of a liability is determined by reference to a quoted price in an active market
for an identical liability, that price would be considered a Level 1 measurement
in the fair value hierarchy. Similarly, if the identical liability has a quoted
price when traded as an asset in an active market, it is also a Level 1 fair
value measurement if no adjustments to the quoted price of the asset are
required. This update is effective for our third quarter 2009. Management is
currently evaluating the potential impact of ASU No. 2009-05 on our financial
statements.
 
 In
October 2009, the FASB issued ASU 2009-13, “Multiple-Deliverable Revenue
Arrangements, (amendments to ASC Topic 605, Revenue Recognition)” (“ASU
2009-13”). ASU 2009-13 requires entities to allocate revenue in an arrangement
using estimated selling prices of the delivered goods and services based on a
selling price hierarchy. The amendments eliminate the residual method of revenue
allocation and require revenue to be allocated using the relative selling price
method. The standard also expands the disclosure requirements for multiple
deliverable revenue arrangements. ASU 2009-13 should be applied on a prospective
basis for revenue arrangements entered into or materially modified in fiscal
years beginning on or after June 15, 2010, with early adoption permitted. We
expect to apply this standard on a prospective basis for revenue arrangements
entered into or materially modified beginning April 1, 2010.  We are
currently evaluating the potential impact these standards may have on our
financial position and results of operations.
 
 3.
              RESTRUCTURING
      OF OTC BUSINESS
 
 To
effectuate the restructuring Plan relating to the management led buyout of the
Over-The-Counter (“OTC”) business the Company entered into the following series
of related agreements:
 
 On
December 10, 2008, the Company entered into a Contribution Agreement with
Sylphar USA, Inc., a newly incorporated Nevada corporation and wholly owned
subsidiary of the Company (“Sylphar USA”), pursuant to which the Company made a
capital contribution of certain assets and liabilities relating to the OTC
business which was valued at $460,568 to Sylphar USA in exchange for 460,568
shares of common stock, par value $1.00, of Sylphar USA.
 
 On
December 10, 2008, the Company entered into a Share Purchase Agreement with
Remedent, NV, a wholly owned subsidiary of the Company formed under the laws of
Belgium (“Remedent NV”), pursuant to which the Company purchased a 99% ownership
interest in Sylphar, NV, a subsidiary of the Company formed under the laws of
Belgium, from Remedent NV.  As a result of the Sylphar Purchase
Agreement, Sylphar NV became a wholly owned subsidiary of the Company. As
consideration for the 99 shares (“Sylphar Shares”), the Company agreed to pay
Remedent NV €1,881,000, which was based on the valuations provided by an
independent assessor, by executing an unsecured non-interest bearing promissory
note (the “Promissory Note”) on behalf of Remedent NV for the principal amount
of €1,000,160 (the “Debt”) and having the remainder balance of €880,840
reflected on the existing intercompany account between Remedent NV and the
Company.
 
 Then
pursuant to a Deed of Contribution, the Company transferred all of the Company’s
ownership interest in its OTC operating subsidiaries, consisting of Sylphar USA,
Remedent Asia PTE, Sylphar NV (“OTC Subsidiaries”), into Remedent OTC BV, a
Dutch holding company and a wholly owned subsidiary of the Company (“Remedent
OTC”) in exchange for €1,000,160.
 
 Subsequent
to the contribution of the OTC Subsidiaries to Remedent OTC, the Company sold
fifty percent (50%) of its interest in Remedent OTC to Robin List, a former
Chief Executive Officer, President and Director of the Company, in exchange for
723,000 restricted shares of common stock of the Company held by Mr. List
(“Exchanged Shares”), pursuant to a Share Purchase Agreement on December 10,
2008.  The Exchanged Shares were returned to treasury.  The
Exchanged Shares were valued at $1.15 per share, based on the average of the 52
week high and low bid, for an aggregate value of $831,450.   As a
result, Mr. List and the Company equally own 50% of Remedent OTC with the
Company currently controlling Remedent OTC through its board representations
pursuant to the terms of a certain Voting Agreement entered into by the Company
and Mr. List concurrently with the Share Purchase Agreement.  The
Voting Agreement provides that, the Company will initially have 2 board
representations and Mr. List will have 1 board
representation.  However upon the occurrence of a “Triggering Event”
(as defined in the Voting Agreement), the Company will have 1 board
representation and Mr. List will have 2 board representations.
  8
  On
December 11, 2008, the Company entered into an Investment and Shareholders’
Agreement with Remedent OTC, Concordia Fund V.C., a non-affiliated Dutch private
equity fund (“Concordia”), Mr. List, Sylphar Holding, BV, a Dutch holding
company and wholly owned subsidiary of Remedent OTC (“Sylphar Holding”) and the
OTC Subsidiaries pursuant to which Concordia agreed to purchase shares of
Sylphar Holding from Remedent OTC representing a 12.5% ownership interest in
Sylphar Holding for €1,000,000 and invest an additional €1,000,000 in Sylphar
Holding for an additional 12.5% ownership interest in Sylphar Holding,
representing an aggregate ownership interest of 25% in Sylphar Holding.
Furthermore, Concordia was granted a call option exercisable from January 1,
2009 until December 31, 2010, unless otherwise extended to September 30,
2011 pursuant to the terms of such agreement, to purchase an additional 24%
ownership interest in Sylphar Holding for €2,000,000 or any pro rata portion
thereof.  The shares of Sylphar Holding are subject to certain drag
along rights in the event there is an offer to purchase such
shares.  It was further agreed upon that the €1,000,000 received from
Concordia would be used to pay off the Debt.  Such funds were received
from Concordia and used to pay off the Debt in December
2008.  Subsequently, all of the OTC Subsidiaries were transferred and
are currently held and operated by Sylphar Holding.
 
 4.
              DISTRIBUTION
      AGREEMENTS
 
 Den-Mat
Distribution Agreement
 
 On
August 24, 2008, the Company entered into a distribution agreement (the
“Distribution Agreement”) with Den-Mat Holdings, LLC, a Delaware limited
liability company (“Den-Mat”).   Under the Distribution, the
Company appointed Den-Mat to be the sole and exclusive distributor to market,
license and sell certain products relating to the Company’s GlamSmile tray
technology, including, but not limited to, its GlamSmile veneer products and
other related veneer products (the “Products”), throughout the world, with the
exception of Australia, Austria, Belgium, Brazil, France (including all French
overseas territories “Dom-Tom”), Germany, Italy, New Zealand, Oman, Poland,
Qatar, Saudi Arabia, Singapore, Switzerland, Thailand, and United Arab Emirates
(collectively the “Excluded Markets”) and the China Market (the
“Territory”).
 As
consideration for such distribution, licensing and manufacturing rights, Den-Mat
will pay the Company:
 
 (i)
              an
      initial payment of $2,425,000;
 (ii)
              a
      payment of $250,000 for each of the first three contract periods in the
      initial Guaranty Period, subject to certain terms and
      conditions;
 (iii)
              certain
      periodic payments as additional paid-up royalties in the aggregate amount
      of $500,000;
 (iv)
              a
      payment of $1,000,000 promptly after Den-Mat manufactures a limited
      quantity of products at a facility owned or leased by
    Den-Mat;
 (v)
              a
      payment of $1,000,000 promptly upon completion of certain training of
      Den-Mat’s personnel;
 (vi)
              a
      payment of $1,000,000 upon the first to occur of (a) February 1, 2009
      or (b) the date thirty (30) days after den-Mat sells GlamSmile
      Products incorporating twenty thousand (20,000) Units/Teeth to customers
      regardless of whether Den-Mat has manufactured such Units/Teeth in a
      Den-Mat facility or has purchased such Units/Teeth from the
      Company;
 (vii)
              certain
      milestone payments; and
 (viii)
              certain
      royalty payments.
 
 Further,
as consideration for Den-Mat’s obligations under the Distribution Agreement, the
Company agreed to, among other things:
 
 (i)
              issue
      to Den-Mat or an entity to be designated by Den-Mat, warrants to purchase
      up to 3,378,379 shares of the Corporation’s common stock, par value $0.001
      per share (the “Warrant Shares”) at an exercise price of $1.48 per share,
      exercisable for a period of five years (the “Den-Mat Warrant”) (issued in
      the period ended September 30,
2008);
  9
  (ii)
              execute
      and deliver to Den-Mat a registration rights agreement covering the
      registration of the Warrant Shares (the “Registration Rights Agreement”)
      which as of March 31, 2009 has not yet been filed;
  and
 (iii)
              cause
      its Chairman of the Board, Guy De Vreese, to execute and deliver to
      Den-Mat a non-competition
agreement.
 
 On June
3, 2009, the Distribution Agreement was amended and restated (the “Amended
Agreement”). The Amended Agreement modifies and clarifies certain terms and
provisions which among other things includes:
 
 (1) the
expansion of the list of Excluded Markets to include Spain, Japan, Portugal,
South Korea and South Africa for a period of time;
 (2)
clarification that Den-Mat’s distribution and license rights are non-exclusive
to market, sell and distribute the Products directly to consumers through retail
locations (“B2C Market”) in the Territory and an undertaking to form a separate
subsidiary to and to issue warrants to Den-Mat in the subsidiary in the event
that the Company decides to commercially exploit the B2C Market in North America
after January 1, 2010;
 (3)
subject to certain exceptions, a commitment from the Company to use Den-Mat as
its supplier to purchase all of its, and its licensee’s, GlamSmile products in
the B2C Market from Den-Mat, with reciprocal commitment from Den-Mat to sell
such products;
 (4)
modification of certain defined terms such as “Guaranty Period,” “Exclusivity
Period” and addition of the term “Contract Period”; and
 (5) the
“Guaranty Period” (as defined therein) is no longer a  three year
period but has been changed to the first three “Contract
Periods”.  The first Contract Period commences on the first day of the
Guaranty Period (which the Parties agreed has commenced as of April 1, 2009),
and continues for fifteen (15) months or such longer period that would be
necessary in order for Den-Mat to purchase a certain minimum number of
Units/Teeth as agreed upon in the Amended Agreement (“Minimum Purchase
Requirement”) in the event that the Company’s manufacturing capacity falls below
a certain threshold.  The second and each subsequent GlamSmile
Contract Period begins on the next day following the end of the preceding
“Contract Period” and continues for twelve (12) months or such longer period
that would be necessary in order for Den-Mat to meet its Minimum Purchase
Requirement in the event that the Company’s manufacturing capacity falls below a
certain threshold.
 
 In August
2009, the Distribution Agreement was further amended (the “August Amendment”).
The August Amendment expands the Company’s products covered under the
Distribution Agreement to include the Company’s new Prego System Technology
(“Prego System”), also commonly known as “Glamstrip”. Under the Amendment, the
$250,000 payment which was originally due upon the expiration of the first
Contract Period (as defined in the Distribution Agreement) is now due on the
earlier occurrence of (i) sixty days from August 11, 2009 or (ii) the
performance of the Company’s live patient clinical demonstration of the Prego
System to be performed at Den-Mat’s reasonable satisfaction.
 
 The
August Amendment also provides for (a) the royalty rate for products
manufactured and sold by Den-Mat using the Prego System after the Guaranty
Period (as defined in the Distribution Agreement), (b) Den-Mat’s right to elect
to manufacture or purchase from a third party manufacturer any or all portion of
the minimum purchase requirements under the Distribution Agreement provided
however, that if Den-Mat fails to purchase the minimum number of Units/Teeth as
required during any month, Den-Mat may cure such default by paying the Company a
certain royalty on the difference between the minimum purchase requirement and
the amount actual purchased by Den-Mat during such month, with such royalties
accruing and being due and payable upon the earlier occurrence of either (1) one
hundred twenty days from August 11, 2009 or (2) the successful performance
of the Company’s live patient demonstration of the First Fit
Technology licensed to Den-Mat pursuant to the First Fit-Crown Distribution
and License Agreement, to be performed at Den-Mat’s reasonable
satisfaction; and all shortfall payments thereafter being due and payable within
15 days after the end of the month in which shortfall occurred, and (c)
Den-Mat’s option to purchase a certain number of Prego Systems in lieu of Trays
during each of the first three Contract Periods pursuant to the terms, including
price and conditions, set forth in the Amendment so long as such option is
exercised during the period commencing on August 11, 2009 and ending on the
later of either 91 days or 31 days after the Company demonstrates to Den-Mat
that it has the capacity to produce a certain number of Prego System per
Contract Period. Furthermore under the Amendment, if Den-Mat fails to purchase
the required minimum Trays during any Contract Period, such failure may be cured
by payment equal to the difference between the aggregate purchase price that
would have been paid had Den-Mat purchased the required minimum and the
aggregate purchase price actually paid for such Contract Year within 30 days
after the end of such Contract Period. With the exception of the provisions
amended by the Amendment, the Distribution Agreement remains in full force and
effect.
  10
  First
Fit Distribution Agreement
 
 On June
3, 2009, the Company entered into the First Fit-Crown Distribution and License
Agreement (the “First Fit Distribution Agreement”) with
Den-Mat.  Under the terms of the First Fit Distribution Agreement, the
Company appointed Den-Mat to be its sole and exclusive distributor to market,
license and sell certain products relating to the Company’s proprietary First
Fit technology (the “First Fit Products”), in the United States, Canada and
Mexico (the “First Fit Territory”).  In connection therewith, the
Company also granted Den-Mat certain non-exclusive rights to manufacture and
produce the First Fit Products in the First-Fit Territory; and a sole and
exclusive transferable and sub-licensable right and license to use the Company’s
intellectual property rights relating to the First Fit Products to perform its
obligations as a distributor (provided the Company retains the right to use and
license related intellectual property in connection with the manufacture of the
First Fit Products for sale outside of the  First Fit
Territory).
 
 Consummation
of the First Fit Distribution Agreement is subject to: completion of Den-Mat’s
due diligence; execution and delivery of Non-Competition Agreements; and the
delivery of the Development Payment and first installment of the License Payment
(the “Development Payment” and License Payment” are defined below).
 
 Under the
First Fit Distribution Agreement, the Company granted such distribution rights,
licensing rights and manufacturing rights, in consideration for the
following:  (i) a non-refundable development fee of Four Hundred
Thousand Dollars ($400,000) (the “Development Payment”) payable in two
installments of $50,000 each, one within seven days after the effective date of
the First Fit Distribution Agreement, and another $350,000 payment within twenty
one days after the Effective Date ($400,000 received as at June 30, 2009); (ii)
a non-refundable license fee of $600,000 payable in three equal installments of
$200,000 each, with the first installment payable on the Closing Date, and with
the second and third installments payable on the 30th and
60th
day, respectively, after the Closing Date; (iii) certain royalty payments based
on the sales of the First Fit Products by Den-Mat or its sub-licensees; and (iv)
certain minimum royalty payments to maintain exclusivity.
 
 Den-Mat’s
rights as an exclusive distributor and licensee will continue at least through
the first Contract Period (defined below) and until the termination of the First
Fit Distribution Agreement.  Den-Mat’s exclusivity ends at the end of
any Contract Period in which Den-Mat fails to make certain minimum royalty
payments.  In the event that such exclusivity is terminated, Den-Mat
has the option to either terminate the First Fit Distribution Agreement upon
ninety (90) days written notice, or become a non-exclusive distributor and
licensee, in which event Den-Mat’s obligation to pay certain agreed upon
royalties would continue.  “Contract Period”  means the
following periods: (A) the first eighteen months beginning on the first day of
the month following the month in which the Closing occurs, provided that if
Den-Mat is not fully operational within sixty days after the Closing Date, the
first Contract Period will be extended by one day for each day after the
sixtieth day until Den-Mat becomes fully operational; (B) the subsequent twelve
months; and (C) each subsequent twelve month period thereafter, in each case
during which the First Fit Distribution Agreement is in effect.
 
 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 December 31, 2009, five customers
accounted for a total of 47% of the Company’s trade accounts
receivable.  At December 31, 2008, two customers accounted for a total
of 69% of the Company’s trade accounts receivable.  The Company
performs ongoing credit evaluations of its customers and normally does not
require collateral to support accounts receivable.
  11
  Purchases
— The Company has diversified its sources for product components and finished
goods and, as a result, the loss of a supplier would not have a material impact
on the Company’s operations. For the nine months ended December 31, 2009 the
Company had five suppliers who accounted for 34% of gross
purchases.  For the nine months ended December 31, 2008 the Company
had five suppliers who accounted for 29% of gross purchases.
 
 Revenues
— For the nine months ended December 31, 2009 the Company had five customers
that accounted for 51% of total revenues.  For the nine months ended
December 31, 2008 the Company had five customers that accounted for 55% of total
revenues.
 
 6.
              ACCOUNTS
      RECEIVABLE AND ALLOWANCE FOR DOUBTFUL
ACCOUNTS
 
 A summary
of accounts receivable and allowance for doubtful accounts as of December 31,
2009 and March 31, 2009 is as follows:
 
 December 31, 2009
                      
                      
                      March 31 2009Accounts
      receivable, gross
                      
                      $
                      1,183,841
                      
                      
                      $
                      3,242,086Less:
      allowance for doubtful accounts
                      
                      
                      (36,982
                      )
                      
                      
                      (33,966
                      )Accounts
      receivable, net
                      
                      $
                      1,146,859
                      
                      
                      $
                      3,208,120
 
 7.
              INVENTORIES
 
 Inventories
at December 31, 2009 and March 31, 2009 are stated at the lower of cost
(first-in, first-out) or net realizable value and consisted of the
following:
 
 December 31, 2009
                      
                      
                      March 31, 2009Raw
      materials
                      
                      $
                      28,388
                      
                      
                      $
                      20,941Components
                      
                      
                      1,129,647
                      
                      
                      
                      1,017,286Finished
      goods
                      
                      
                      1,272,320
                      
                      
                      
                      912,9232,430,355
                      
                      
                      
                      1,951,150Less:
      reserve for obsolescence
                      
                      
                      (14,378
                      )
                      
                      
                      (13,204
                      )Net
      inventory
                      
                      $
                      2,415,977
                      
                      
                      $
                      1,937,946
 
 8.
              PREPAID
      EXPENSES
 
 December 31, 2009
                      
                      
                      March 31, 2009Prepaid
      materials and components
                      
                      $
                      1,271,969
                      
                      
                      $
                      1,127,225Prepaid
      consulting
                      
                      
                      17,577
                      
                      
                      
                      18,119VAT
      payments in excess of VAT receipts
                      
                      
                      119,929
                      
                      
                      
                      99,315Royalties
                      
                      
                      42,523
                      
                      
                      
                      39,053Prepaid
      trade show expenses
                      
                      
                      5,128
                      
                      
                      
                      —Prepaid
      rent
                      
                      
                      —
                      
                      
                      
                      1,584Other
                      
                      
                      55,455
                      
                      
                      
                      25,604$
                      1,512,581
                      
                      
                      $
                      1,310,900
 
 9.
              PROPERTY
      AND EQUIPMENT
 
 Property
and equipment are summarized as follows:
 
 December 31, 2009
                    
                    
                    March 31, 2009Furniture
      and Fixtures
                    
                    $
                    433,086
                    
                    
                    $
                    350,662Machinery
      and Equipment
                    
                    
                    1,888,310
                    
                    
                    
                    1,351,870Tooling
                    
                    
                    188,450
                    
                    
                    
                    188,4502,509,846
                    
                    
                    
                    1,890,982Accumulated
      depreciation
                    
                    
                    (1,189,494
                    )
                    
                    
                    (865,983
                    )Property
      & equipment, net
                    
                    $
                    1,320,352
                    
                    
                    $
                    1,024,999
  12
 
 10.
              LONG
      TERM INVESTMENTS AND ADVANCES
 
 Innovative
Medical & Dental Solutions, LLC (“IMDS, LLC”)
 
 Effective
July 15, 2007 the Company entered into a Limited Liability Company Merger and
Equity Reallocation Agreement (the “Participation Agreement”) through its
subsidiary, Remedent N.V. Pursuant to the terms of the Participation Agreement,
the Company acquired a 10% equity interest in IMDS, LLC in consideration for
$300,000 which was converted against IMDS receivables.
 
 The
agreement stipulates certain exclusive worldwide rights to certain tooth
whitening technology, and the right to purchase at standard cost certain
whitening lights and accessories and to sell such lights in markets not served
by the LLC. The terms of the Participation Agreement also provide that Remedent
N.V. has the first right to purchase additional equity. Parties to the
Participation Agreement include two officers of IMDS, LLC, and an individual who
is both an officer and director of Remedent Inc., and certain unrelated
parties.
 
 IMDS, LLC
is registered with the Secretary of the State of Florida as a limited liability
company and with the Secretary of the State of California as a foreign
corporation authorized to operate in California. IMDS, LLC is merging with White
Science World Wide, LLC, a limited liability company organized under the laws of
the State of Georgia. The merged companies are operating as a single entity as
IMDS, LLC, a Florida limited liability company.
 
 As of
December 31, 2009 the Company had recorded a 100% allowance against its
investment in IMDS because IMDS financial information is
unavailable.  The provision will be re-evaluated as soon as
information becomes available.
 
 Soca
Networks Singapore (“Soca”)
 
 Pursuant
to the terms of a letter of intent dated December 17, 2007, the Company has
agreed to purchase 20% of Soca for a total purchase price of $750,000. Half of
the purchase price has been advanced $375,000 to Soca as a down payment, pending
completion of the agreement terms. The balance of $375,000 was paid through the
issuance of 220,588 common shares of the Company’s common stock. The final
agreement is currently being negotiated and management expects to close the
agreement, and issue the 220,588 common shares during the the first quarter of
2010.
 
 11.
              LICENSED
      PATENTS
 
 Teeth
Whitening Patents
 
 In
October 2004, the Company acquired from the inventor the exclusive, perpetual
license to two issued United States patents which are applicable to several
teeth whitening products currently being marketed by the Company. Pursuant to
the terms of the license agreement, the Company was granted an exclusive,
worldwide, perpetual license to manufacture, market, distribute and sell the
products contemplated by the patents subject to the payment of $65,000 as
reimbursement to the patent holder for legal and other costs associated with
obtaining the patents, which was paid in October 2004, and royalties for each
unit sold subject to an annual minimum royalty of $100,000 per year. The Company
is amortizing the initial cost of $65,000 for these patents over a ten year
period and accordingly has recorded $34,125 of accumulated amortization for this
patent as of December 31, 2009. The Company accrues this royalty when it becomes
payable to inventory therefore no provision has been made for this obligation as
of December 31, 2009 (March 31, 2009-Nil).
  13
  Universal
Applicator Patent
 
 In
September 2004, the Company entered into an agreement with Lident N.V.
(“Lident”), a company controlled by Mr. De Vreese, the Company’s Chairman, to
obtain an option, exercisable through December 31, 2005, to license an
international patent (excluding the US) and worldwide manufacturing and
distribution rights for a potential new product which Lident had been assigned
certain rights by the inventors of the products, who are unrelated parties,
prior to Mr. De Vreese association with the Company. The patent is an Italian
patent which relates to a single use universal applicator for dental pastes,
salves, creams, powders, liquids and other substances where manual application
could be relevant. The Company has filed to have the patent approved throughout
Europe. The agreement required the Company to advance to the inventors through
Lident a fully refundable deposit of €100,000 subject to the Company’s due
diligence regarding the enforceability of the patent and marketability of the
product, which, if viable, would be assigned to the Company for additional
consideration to the inventors of €100,000 and an ongoing royalty from sales of
products related to the patent equal to 3% of net sales and, if not viable, the
deposit would be repaid in full by Lident. The consideration the Company had
agreed to pay Lident upon the exercise of the option is the same as the
consideration Lident is obligated to pay the original inventors. Consequently,
Lident would not have profited from the exercise of the option. Furthermore, at
a meeting of the Company’s Board of Directors on July 13, 2005, the Board
accepted Lident’s offer to facilitate an assignment of Lident’s intellectual
property rights to the technology to the Company in exchange for the
reimbursement of Lident’s actual costs incurred relating to the intellectual
property. Consequently, when the Company exercises the option, all future
payments, other than the reimbursement of costs would be paid directly to the
original inventors and not to Lident.
 
 On
December 12, 2005, the Company exercised the option and the Company and the
patent holder agreed to revise the assignment agreement whereby the Company
agreed to pay €50,000 additional compensation in the form of prepaid royalties
instead of the €100,000 previously agreed, €25,000 of which was paid by the
Company in September 2005 and the remaining €25,000 is to be paid upon the
Company’s first shipment of a product covered by the patent. As of December 31,
2009 the Company has not yet received the final Product. The patent is being
amortized over five (5) years and accordingly, the Company has recorded $97,069
of accumulated amortization for this patent as of December 31,
2009.
 
 12.
              LINE
      OF CREDIT
 
 On
October 8, 2004, the Company’s wholly owned subsidiary, Remedent N.V., obtained
a mixed-use line of credit facility with Fortis Bank, a Belgian bank, for
€1,070,000 (the “Facility”). The Facility was secured by a first lien on the
assets of Remedent N.V. The purpose of the Facility is to provide working
capital and to finance certain accounts receivable as necessary. Since opening
the Facility in 2004, Remedent N.V. and Fortis Bank have subsequently amended
the Facility several times to increase or decrease the line of credit. On May 3,
2005 the Facility was amended to decrease the line of credit to €1,050,000. On
March 13, 2006 the Facility was amended to increase the mixed-use line of credit
to €2,300,000, consisting of a €1,800,000 credit line based on the eligible
accounts receivable and a €500,000 general line of credit. The latest amendment
to the Facility, dated January 3, 2008, amended and decreased the mixed-use line
of credit to €2,050,000, to be used by Remedent NV and/or Sylphar NV. Each line
of credit carries its own interest rates and fees as provided in the Facility
and vary from the current prevailing bank rate of approximately 2.9%, for draws
on the credit line, to 9.9% for advances on accounts receivable. Remedent N.V.
and Sylphar N.V. are currently only utilizing two lines of credit, advances
based on account receivables and the straight loan. As of December 31, 2009 and
March 31, 2009, Remedent N.V. and Sylphar N.V. had in aggregate, $1,186,103 and
$660,200 in advances outstanding, respectively, under this mixed-use line of
credit facility.
 
 13.
              LONG
      TERM DEBT
  On June
15, 2005, the Company entered into two five year capital lease agreements for
manufacturing equipment totaling €70,296 (US $101,065). On October 24, 2006, the
Company entered into another five year capital lease agreement for additional
manufacturing equipment totaling €123,367 (US $177,365). On May 15, 2008, the
Company entered into a third capital lease agreement over a three year period
for additional manufacturing equipment totaling €63,395 (US $91,143). On August
18, 2009, the Company entered into a fourth capital lease agreement over a three
year period for additional manufacturing equipment totaling € 170,756 (US
$245,496).
  The
leases require monthly payments of principal and interest at 7.43% of €1,172
(US$1,,685 at December 31, 2009) for the first two leases and 9.72% of €2,056
(US $2,956 at December 31, 2009) and provide for buyouts at the conclusion of
the five year term of €2,820 (US$4,054) or 4.0% of original value for the first
two contracts and €4,933 (US $7,092) or 4.0% of the original value for the
second contract. The third lease contract requires monthly payments of principal
and interest at 9.40% of €1,761 (US $2,532 at December 31, 2009) and provides
for buyout at the conclusion of the three year term of €634 (US $912) or 1% of
the original value of this contract.
  14
  The
fourth lease contract requires monthly payments of principal and interest at
8.18% of €5,052 (US $7,263 at December 31, 2009) and provides for buyout at the
conclusion of the three year term of €1,728 (US $2,484) or 1% of the original
value of this contract.
 
 The net
book value as of December 31, 2009 and March 31, 2009 of the equipment subject
to the foregoing leases are $342,971 and $179,339, respectively.
  14.
              RELATED
      PARTY TRANSACTIONS
 
 Transactions
with related parties, not disclosed elsewhere in these financial statements,
consisted of the following:
 
 Compensation:
 
 During
the nine months ended December 31, 2009 and 2008 the Company incurred $559,238
and $514,836 respectively, as compensation for all directors and
officers.
 
 Sales
Transactions:
  One of
the Company’s directors owns a minority interest in a client company, IMDS Inc.,
to which goods were sold during the nine months ended December 31, 2009 and 2008
totaling $0 and $41,035 respectively. Accounts receivable at period end with
this customer totaled $34,729 and $31,895 as at December 31, 2009 and March 31,
2009 respectively.
 
 All
related party transactions involving provision of services or tangible assets
were recorded at the exchange amount, which is the value established and agreed
to by the related parties reflecting arms length consideration payable for
similar services or transfers.
 
 15.
              ACCRUED
      LIABILITIES
 
 Accrued
liabilities are summarized as follows:
 
 December 31,
                        2009
                      
                      
                      March 31,
                        2009Accrued
      employee benefit taxes and payroll
                      
                      $
                      196,731
                      
                      
                      $
                      246,925Accrued
      Travel
                      
                      
                      20,541
                      
                      
                      
                      13,170Advances
      and deposits
                      
                      
                      208,634
                      
                      
                      
                      298,809Commissions
                      
                      
                      16,025
                      
                      
                      
                      258,105Accrued
      audit and tax preparation fees
                      
                      
                      10,368
                      
                      
                      
                      8,947Reserve
      for warranty costs
                      
                      
                      21,566
                      
                      
                      
                      19,806Accrued
      interest
                      
                      
                      597
                      
                      
                      
                      1,279Accrued
      consulting fees
                      
                      
                      43,240
                      
                      
                      
                      37,308Other
      accrued expenses
                      
                      
                      203,385
                      
                      
                      
                      706,011$
                      721,087
                      
                      
                      $
                      1,590,360
 16.
                EQUITY
      COMPENSATION PLANS
  As of
December 31, 2009, the Company had three equity compensation plans approved by
its stockholders (1) the 2001 Incentive and Non-statutory Stock Option Plan (the
“2001 Plan”), (2) the 2004 Incentive and Non-statutory Stock Option Plan (the
“2004 Plan”); and (3) the 2007 Equity Incentive Plan (the “2007 Plan”). The
Company’s stockholders approved the 2001 Plan reserving 250,000 shares of common
stock of the Company pursuant to an Information Statement on Schedule 14C filed
with the Commission on August 15, 2001. In addition, the Company’s stockholders
approved the 2004 Plan reserving 800,000 shares of common stock of the Company
pursuant to an Information Statement on Schedule 14C filed with the Commission
on May 9, 2005.  Finally, the Company’s stockholders approved the 2007
Plan reserving 1,000,000 shares of common stock of the Company pursuant to a
Definitive Proxy Statement on Schedule 14A filed with the Commission on October
2, 2007.
  15
  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 December 31, 2009 with
respect to all compensation plans (including individual compensation
arrangements) under which equity securities are authorized for
issuance.
  Plan Category
                  
                  Number of
                    securities to
                    be
                    issued upon
                    exercise of
                    of
                    outstanding
                    options,
                    warrants
                    and rights
                  
                  
                  Weighted-average
                    exercise price of
                    outstanding
                    options
                    warrants and
                    rights
                  
                  
                  Number of
                    securities
                    remaining
                    available for
                    future
                    issuance
                    under
                    equity
                    compensation
                    plans
                    (excluding
                    securities
                    reflected
                    in column (a))Equity
      Compensation Plans approved by security holders
                  
                  
                  1,918,166
                  
                  
                  $
                  1.15
                  
                  
                  
                  131,834Equity
      Compensation Plans not approved by security holders
                  
                  
                  767,298
                  
                  
                  $
                  1.22
                  
                  
                  
                  NATotal
                  
                  
                  2,685,464
                  
                  
                  $
                  1.22
                  
                  
                  
                  131,834
  A summary
of the option activity for the nine month period ended December 31, 2009
pursuant to the terms of the plans is as follows:
  2001 Plan
                              
                              
                              2004 Plan
                              
                              
                              2007 Plan
                              
                              
                              OtherOutstanding
                                Options
                              
                              
                              Weighted
                                Average
                                Exercise
                                Price
                              
                              
                              Outstanding
                                Options
                              
                              
                              Weighted

Average

Exercise


Price
                              
                              
                              Outstanding


Options
                              
                              
                              Weighted

Average


Exercise


Price
                              
                              
                              Outstanding


Options
                              
                              
                              Weighted


Average


Exercise


Price$
                              
                              
                              
                              
                              
                              
                              
                              $
                              
                              
                              
                              
                              
                              
                              
                              $
                              
                              
                              
                              $Options
      outstanding, March 31, 2009
                              
                              
                              250,000
                              
                              
                              
                              1.20
                              
                              
                              
                              668,166
                              
                              
                              
                              0.89
                              
                              
                              
                              1,000,000
                              
                              
                              
                              1.15
                              
                              
                              
                              150,000
                              
                              
                              
                              1.75Granted
                              
                              
                              —
                              
                              
                              
                              —
                              
                              
                              
                              —
                              
                              
                              
                              —
                              
                              
                              
                              —
                              
                              
                              
                              —
                              
                              
                              
                              —
                              
                              
                              
                              —Exercised
                              
                              
                              —
                              
                              
                              
                              —
                              
                              
                              
                              —
                              
                              
                              
                              —
                              
                              
                              
                              —
                              
                              
                              
                              —
                              
                              
                              
                              —
                              
                              
                              
                              —Cancelled
      or expired
                              
                              
                              —
                              
                              
                              
                              —
                              
                              
                              
                              —
                              
                              
                              
                              —
                              
                              
                              
                              —
                              
                              
                              
                              —
                              
                              
                              
                              —
                              
                              
                              
                              —Options
      outstanding, December 31, 2009
                              
                              
                              250,000
                              
                              
                              
                              1.20
                              
                              
                              
                              668,166
                              
                              
                              
                              0.89
                              
                              
                              
                              1,000,000
                              
                              
                              
                              1.15
                              
                              
                              
                              150,000
                              
                              
                              
                              1.75Options
      exercisable December 31, 2009
                              
                              
                              231,667
                              
                              
                              
                              1.20
                              
                              
                              
                              555,666
                              
                              
                              
                              1.65
                              
                              
                              
                              863,331
                              
                              
                              
                              1.04
                              
                              
                              
                              100,000
                              
                              
                              
                              1.75Exercise
      price range
                              
                              $
                              0.50
      - $2.39
                              
                              
                              
                              
                              
                              
                              $
                              0.50
      - $4.00
                              
                              
                              
                              
                              
                              
                              $
                              0.50 - $1.75
                              
                              
                              
                              
                              
                              
                              $
                              1.75Weighted
      average remaining life
                              
                              3.
      years
                              
                              
                              
                              
                              
                              
                              5 years
                              
                              
                              
                              
                              
                              
                              8.4 years
                              
                              
                              
                              
                              
                              
                              7.7
      years
  16
  For the
nine month period ended December 31, 2009 the Company recognized $304,350 (2008
— $265,275) in stock based compensation expense in the consolidated statement of
operations with respect to vested options.
 
 17.
              COMMON
      STOCK WARRANTS AND OTHER OPTIONS
 
 As of
December 31, 2009, the Company has warrants to purchase the Company’s common
stock outstanding that were not granted under shareholder approved equity
compensation plans as follows:
 
 Outstanding
                        Warrants
                      
                      
                      Weighted
                        Average
                        Exercise
                        PriceWarrants
      and options outstanding, March 31, 2009
                      
                      
                      10,638,305
                      
                      
                      $
                      1.58Granted
                      
                      
                      1,210,000
                      
                      
                      
                      1.00Exercised
                      
                      
                      —
                      
                      
                      
                      —Cancelled
      or expired
                      
                      
                      (740,000
                      )
                      
                      
                      1.00Warrants
      outstanding December 31, 2009
                      
                      
                      11,108,305
                      
                      
                      
                      1.55Warrants
      exercisable December 31, 2009
                      
                      
                      11,108,305
                      
                      
                      $
                      1.55Exercise
      price range
                      
                      $
                      1.00 to $3.00Weighted
      average remaining life
                      
                      2.30 Years
  During
the period ended December 31, 2009 as consideration for certain services the
Company granted our investor relations consultants, warrants to purchase up to
1,210,000 shares of our common stock, at an exercise price of $1.00 per share,
subject to certain vesting restrictions.  A total of 370,000 of the
warrants vested on the July 15, 2009 grant date and an additional 100,000 vested
during the period ended December 31, 2009.  The balance of the
warrants were cancelled effective November 30, 2009.
 
 The
Company valued the above noted 470,000 warrants that vested during the period
ended December 31, 2009 at $168,238, using the Black Scholes option pricing
model using the following assumptions: no dividend yield; expected volatility
rate of 110 – 117%; risk free interest rate of 1.10% - 1.30% and an average life
of 2.6 - 3 years resulting in a value of $0.19 - $0.39 per option
granted.  This was a non-cash expense.
 
 During
the year ended March 31, 2009 the Company granted 3,378,379 warrants pursuant to
a Distribution Agreement (Note 4) which were valued at $4,323,207 based upon the
Black-Scholes option pricing model utilizing a market price on the date of grant
of $1.48 per share, an annualized volatility of 131%, a risk free interest rate
of 3.07% and an expected life of five years.
  17
 
 18.
              SEGMENT
      INFORMATION
 
 The
Company’s only operating segment consists of dental products and oral hygiene
products sold by Remedent Inc., Remedent N.V., Sylphar N.V. and Remedent Asia
Ltd. Since the Company only has one segment, no further segment information is
presented.
 
 Customers
Outside of the United States
 
 December 31,
                        2009
                      
                      
                      December 31,
                        2008U.S.
      sales
                      
                      $
                      1,881,142
                      
                      
                      $
                      7,045,496Foreign
      sales
                      
                      
                      3,893,983
                      
                      
                      
                      4,203,690$
                      5,775,125
                      
                      
                      $
                      11,249,186
  19.
              COMMITMENTS
 
 Real
Estate Lease
 
 The
Company leases its 26,915 square feet office and warehouse facility in Deurle,
Belgium from an unrelated party pursuant to a nine year lease commencing
December 20, 2001 at a base rent of €7,266 per month ($10,446 per month at
December 31, 2009).
 
 The
Company leases a smaller office facility of 2,045 square feet in Gent, Belgium
to support the sales and marketing division of our veneer business, from an
unrelated party pursuant to a nine year lease commencing September 1, 2008 at a
base rent of €4,930 per month ($7,088 per month at December 31,
2009).
 
 Minimum
monthly lease payments for real estate, and all other leased equipment are as
follows based upon the conversion rate for the (Euro) at December 31,
2009:
 
 March
      31, 2010
                    
                    $
                    352,023March
      31, 2011
                    
                    
                    380,523March
      31, 2012
                    
                    
                    200,549March
      31, 2013
                    
                    
                    124,069March
      31, 2014
                    
                    
                    85,050After
      five years
                    
                    
                    318,937Total:
                    
                    $
                    1,461,151
 
 OEM
Agreement
 
 On June
30, 2008, the Company entered into an OEM Agreement (“Agreement”) with SensAble
Technologies, Inc., a corporation under the laws of Delaware (“SensAble”)
whereby the Company will integrate SensAble products and technology into the
Company’s system. The Agreement provides the Company with the exclusive right to
distribute certain SensAble products throughout the world for a period of twelve
months from the date of the Agreement. The Company has the option and right to
extend the initial twelve month exclusivity period for another twelve months.
The term of the Agreement will be for two years and began on June 30, 2008. On
July 2009, the Company renewed the first half of the second
year.
  18
 
 20.
              FINANCIAL
      INSTRUMENTS
  The FASB
ASC topic 820 on fair value measurement and disclosures establishes three levels
of inputs that may be used to measure fair value: quoted prices in active
markets for identical assets or liabilities (referred to as Level 1), observable
inputs other than Level 1 that are observable for the asset or liability either
directly or indirectly (referred to as Level 2), and unobservable inputs to the
valuation methodology that are significant to the measurement of fair value of
assets or liabilities (referred to as Level 3).
  The
carrying values and fair values of our financial instruments are as
follows:
  December 31,
      2009
                      
                      
                      March 31,
      2009Carrying
                      
                      
                      Fair
                      
                      
                      Carrying
                      
                      
                      Fairvalue
                      
                      
                      value
                      
                      
                      value
                      
                      
                      valueCash
                      
                      $
                      1,386,231
                      
                      
                      $
                      1,386,231
                      
                      
                      $
                      1,807,271
                      
                      
                      $
                      1,807,271Accounts
      receivable
                      
                      $
                      1,146,859
                      
                      
                      $
                      1,146,859
                      
                      
                      $
                      3,208,120
                      
                      
                      $
                      3,208,120Long
      term investments and advances
                      
                      $
                      750,000
                      
                      
                      $
                      750,000
                      
                      
                      $
                      750,000
                      
                      
                      $
                      750,000Line
      of credit
                      
                      $
                      1,186,103
                      
                      
                      $
                      1,186,103
                      
                      
                      $
                      660,200
                      
                      
                      $
                      660,200Accounts
      payable
                      
                      $
                      2,204,277
                      
                      
                      $
                      2,204,277
                      
                      
                      $
                      1,398,420
                      
                      
                      $
                      1,398,420Accrued
      liabilities
                      
                      $
                      721,087
                      
                      
                      $
                      721,087
                      
                      
                      $
                      1,590,360
                      
                      
                      $
                      1,590,360Capital
      Lease
                      
                      $
                      342,970
                      
                      
                      $
                      342,970
                      
                      
                      $
                      179,340
                      
                      
                      $
                      179,340
  The
following method was used to estimate the fair values of our financial
instruments:
  The
carrying amount approximates fair value because of the short maturity of the
instruments.
  21.
              SUBSEQUENT
      EVENTS
 
 Subsequent events have been evaluated
through February 16, 2010, the date these financial statements were
issued.  No events required disclosure.
  19
  Item
      2.
                Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
 
 Forward Looking
Statements
 
 The
discussion contained herein is for the three and nine months ended December 31,
2009 and 2008. The following discussion should be read in conjunction with the
Company’s condensed consolidated financial statements and the notes to the
condensed consolidated financial statements included elsewhere in this Quarterly
Report on Form 10-Q for the quarterly period ended December 31,
2009.  In addition to historical information, this section contains
“forward-looking” statements, including statements regarding the growth of
product lines, optimism regarding the business, expanding sales and other
statements. Words such as expects, anticipates, intends, plans, believes, sees,
estimates and variations of such words and similar expressions are intended to
identify such forward-looking statements. These statements are not guarantees of
future performance and involve certain risks and uncertainties that are
difficult to predict. Actual results could vary materially from the description
contained herein due to many factors including continued market acceptance of
our products. In addition, actual results could vary materially based on changes
or slower growth in the oral care and cosmetic dentistry products market; the
potential inability to realize expected benefits and synergies; domestic and
international business and economic conditions; changes in the dental industry;
unexpected difficulties in penetrating the oral care and cosmetic dentistry
products market; changes in customer demand or ordering patterns; changes in the
competitive environment including pricing pressures or technological changes;
technological advances; shortages of manufacturing capacity; future production
variables impacting excess inventory and other risk factors.  Factors
that could cause or contribute to any differences are discussed in “Risk
Factors” and elsewhere in the Company’s annual report on Form 10-K filed on
June 29, 2009 with the Securities and Exchange
Commission.  Except as required by applicable law or regulation, the
Company undertakes no obligation to revise or update any forward-looking
statements contained in this Quarterly Report on Form 10-Q for the quarterly
period ended December 31, 2009. The information contained in this Quarterly
Report on Form 10-Q for the quarterly period ended December 31, 2009 is not
a complete description of the Company’s business or the risks associated with an
investment in the Company’s common stock. Each reader should carefully review
and consider the various disclosures made by the Company in this Quarterly
Report on Form 10-Q and in the Company’s other filings with the Securities and
Exchange Commission.
 
 Overview
 
 We
specialize in the research, development, and manufacturing of oral care and
cosmetic dentistry products.  We are one of the leading manufacturers
of cosmetic dentistry products in Europe.  Leveraging our knowledge of
regulatory requirements regarding dental products and management’s experience in
the needs of the professional dental community, we design, develop, manufacture
and distribute our cosmetic dentistry products, including a full line of
professional dental products that are distributed in Europe, Asia and the United
States.  We manufacture many of our products at our facility in
Deurle, Belgium as well as outsourced manufacturing in China.  We
distribute our products using both our own internal sales force and through the
use of third party distributors.
  20
  Result
of Operations
 
 Comparative detail of results as a
percentage of sales is as follows:
 
 For the three months ended
                    December 31,
                  
                  
                  For the nine months ended
                    December 31,2009
                  
                  
                  2008
                  
                  
                  2009
                  
                  
                  2008NET
      SALES
                  
                  
                  100.00
                  %
                  
                  
                  100.00
                  %
                  
                  
                  100.00
                  %
                  
                  
                  100.00
                  %COST
      OF SALES
                  
                  
                  53.01
                  %
                  
                  
                  60.08
                  %
                  
                  
                  58.36
                  %
                  
                  
                  44.13
                  %GROSS
      PROFIT
                  
                  
                  46.99
                  %
                  
                  
                  39.92
                  %
                  
                  
                  41.64
                  %
                  
                  
                  55.87
                  %OPERATING
      EXPENSESResearch
      and development
                  
                  
                  8.19
                  %
                  
                  
                  1.07
                  %
                  
                  
                  4.01
                  %
                  
                  
                  1.99
                  %Sales
      and marketing
                  
                  
                  21.98
                  %
                  
                  
                  18.84
                  %
                  
                  
                  15.43
                  %
                  
                  
                  21.55
                  %General
      and administrative
                  
                  
                  58.08
                  %
                  
                  
                  26.19
                  %
                  
                  
                  55.59
                  %
                  
                  
                  32.65
                  %Depreciation
      and amortization
                  
                  
                  11.28
                  %
                  
                  
                  3.46
                  %
                  
                  
                  9.67
                  %
                  
                  
                  3.93
                  %TOTAL
      OPERATING EXPENSES
                  
                  
                  99.53
                  %
                  
                  
                  49.57
                  %
                  
                  
                  84.70
                  %
                  
                  
                  60.12
                  %LOSS
      FROM OPERATIONS
                  
                  
                  (52.54
                  )%
                  
                  
                  (9.65
                  )%
                  
                  
                  (43.06
                  )%
                  
                  
                  (4.25
                  )%Other
      income (expense)
                  
                  
                  (2.24
                  )%
                  
                  
                  60.96
                  %
                  
                  
                  (3.01
                  )%
                  
                  
                  (12.40
                  )%NET
      LOSS
                  
                  
                  (54.78
                  )%
                  
                  
                  51.31
                  %
                  
                  
                  (46.07
                  )%
                  
                  
                  (16.65
                  )%Non-controlling
      interest
                  
                  
                  (9.19
                  )%
                  
                  
                  -
                  
                  
                  
                  (7.55
                  )%
                  
                  
                  -LOSS
      ATTRIBUTABLE TO REMEDENT SHAREHOLDERS
                  
                  
                  (45.59
                  )%
                  
                  
                  51.31
                  %
                  
                  
                  (38.52
                  )%
                  
                  
                  (16.65
                  )%
 
 Net
Sales
  Net sales decreased for the three
months ended December 31, 2009 by $3,008,607 or 62.1%, to $1,834,021 as compared
to $4,842,628 for the three months ended December 31, 2008. We experienced a
sales decrease for the nine months ended December 31, 2009 of $5,474,061 or
48.7%, to $5,775,125 as compared to $11,249,186 for the nine months ended
December 31, 2008.  The decrease in sales is primarily due to the
non-recurrence of license fees received from Denmat, specifically $2,500,000
during the three months ended December 31, 2008 and a total of $4,925,000 in the
nine months ended December 31, 2008.
  Cost
of Sales
  Cost of sales decreased for the three
months ended December 31, 2009 by $1,937,284, or 66.6% to $972,247 as compared
to $2,909,531 for the three months ended December 31, 2008. Accordingly, cost of
sales, as a percentage of net sales, decreased from 60% for the quarter ended
December 31, 2008 to 53% for the quarter ended December 31, 2009. Cost of sales
as a percentage of sales has decreased because of reduced production costs of
our veneer product.
 
 Our cost of sales decreased for the
nine months ended December 31, 2009 by $1,593,917, or 32.1%, to $3,370,491 as
compared to $4,964,408 for the nine months ended December 31, 2008. Cost of
sales, as a percentage of net sales, has increased to 58.36% in the nine month
period ended December 31, 2009 as opposed to 44.13% in the nine month period
ended December 31, 2008.  Cost of sales as a percentage of net sales
increased mainly because of the non-recurring license fees and the settlement
and return of goods from a large OTC customer.
  21
  Gross
Profit
  Our gross profit decreased by
$1,071,323 or 55.4%, to $861,774 for the three month period ended December 31,
2009 as compared to $1,933,097 for the three month period ended December 31,
2008. Our gross profit as a percentage of sales increased from approximately 40%
in the three months ended December 31, 2008 to 46.9% for the three months ended
December 31, 2009. The increase in gross profit as a percentage of sales was the
result of the realization of reduced production costs of our veneer products,
which are currently produced in Europe and China.
 
 Our gross profit decreased by
$3,880,144 or 61.7%, to $2,404,634 for the nine month period ended December 31,
2009 as compared to $6,284,778 for the nine month period ended December 31,
2008. Our gross profit as a percentage of sales decreased to 41.64% in the nine
months ended December 31, 2009 as compared to 55.87% for the nine months ended
December 31, 2008.
 
 The decrease in gross profit is
the result of the licensee fees as noted above and the agreed settlement with a
large OTC customer.
 
 Operating
Expenses
  Research
and Development
 
 Research and development expenses
increased by $98,219 or 188.9%, to $150,225 for the three months ended December
31, 2009 as compared to $52,006 for the three months ended December 31,
2008.
 
 Our research and development expenses
increased by $6,966 to $231,345 or 3.1%, for the nine months ended December 31,
2009 as compared to $224,379 for the nine months ended December 31,
2008.
 
 Research
and development has increased in both the three and nine month periods ended
December 31, 2009 primarily because of our work with respect to the “First-Fit
concept”.
 
 Sales
and marketing costs
 
 Sales and marketing costs decreased by
$509,251, or 55.8%, to $403,171 for the three months ended December 31, 2009 as
compared to $912,422 for the three months ended December 31, 2008. The decrease
is largely due to decreased provisions for commissions in relation to our sales
people in reference to the named settlement and the non-recurring costs of a
direct US veneer sales office that was included in the quarter ending December
31, 2008.
 
 Our sales and marketing costs decreased
by $1,532,746 or 63.2%, to $891,182 for the nine months ended December 31, 2009
as compared to $2,423,928 for the nine months ended December 31, 2008. The
decrease is largely due to the Company’s USA sales reorganization.  As
discussed above, rather than funding a direct sales office in the USA, the
Company has chosen to sell into the USA via a distributor, thereby significantly
reducing sales and marketing costs including sales commissions.
  General
and administrative costs
 
 General and administrative costs for
the three months ended December 31, 2009 and 2008 were $1,065,114 and $1,268,500
respectively, representing a decrease of $203,386 or 16%. The decrease in
general and administrative costs as compared to the prior year is the result of
our USA reorganization.
  22
  Our general and administrative costs
for the nine months ended December 31, 2009 and 2008 were $3,210,512 and
$3,672,536 respectively, representing a decrease of $462,024 or 12.6%.  The
Company’s general and administrative costs have also decreased as a result of
the Company’s USA sales reorganization, as noted above.
 
 Depreciation
and amortization
 
 Our depreciation and amortization
expense increased from $167,399  to $206,923 for the three months
ended December 31, 2009 compared to the three months ended December 31, 2008, an
increase of 23.6%.
 
 Our depreciation and amortization
increased $116,510 or 26.4%, to $558,281 for the nine months ended December 31,
2009 as compared to $441,771 for the nine months ended December 31,
2008.  The increase is mostly due to the investment in a
semi-automatic production machine for the production of our foam strips, which
will allow us to significantly increase our production capacity. This investment
allowed us to streamline and improve production significantly with resultant
increases in capacity and quality as well as decreased costs. Secondly,
investments are being made in software and related hardware to bring the design
of veneers to the next level which will allow the dentist to modify the design
of the final product, gaining substantial time in the production
process.
 
 Other
income (expense)
 
 Net interest expense decreased by
$111,744 to $56,915 from $168,659 during the three months ended December 31,
2009 over the comparable three months ended December 31, 2008. For the nine
months ended December 31, 2009 and 2008, the net interest expense decreased by
$129,407 from $250,175 to $120,768.The decrease is mainly the result of
decreased utilization of our bank credit facility.
 
 Our net other income (expense) for the
three months ended December 31, 2009 and 2008 decreased by $2,993,026, from
$2,951,940 to ($41,086).  Our net other income (expense) was
($173,669) for the nine months ended December 31, 2009 as compared to
($1,395,316) for the nine months ended December 31, 2008, an increase of
$1,221,647, or 87.55%. The main reason for this expense increase  is
the non-recurring cost of the warrants that were issued to DenMat, offset by the
gain on sale of the Company’s OTC division.
 
 Liquidity and Capital
Resources
 
 Liquidity
 
 We believe we currently possess
sufficient resources to meet the cash requirements of our operations for at
least the next year. Our basis for this is the following.
 
 ·
              During
      December 2008, we implemented cost reduction measures, including the
      re-organization of our direct sales office in the United States of
      America.
 ·
              During
      December 2008, we restructured our over-the-counter (OTC)
      business.
 ·
              As
      a result of our distribution agreements, we have begun the process of
      reducing our operations in the United States, which will significantly
      reduce our costs.
 ·
              We
      continue to review our inventory and plan to reduce levels
      held.
 ·
              We
      do not expect to purchase or sell any property or equipment over the next
      12 months.
 ·
              We
      do not expect a significant change in the number of our
      employees over the next 12
months.
  23
  We believe that we will have sufficient
resources to meet our obligations and sustain our operations for the remainder
of fiscal year 2010.  However, we are substantially dependent on our
major distributor and the continued performance of this distributor to make
committed purchases of our products and associated consumables under the
distribution agreement and the receipt of cash in connection with those
purchases, is essential to our liquidity.
 
 During the past nine months, the
balance on our line of credit has increased by $525,903 from $660,200 at March
31, 2009 to $1,186,103 at December 31, 2009.  The increase in our use
of the line of credit is approximately equal to the decrease in our
accounts payable and the combined increase in our accounts receivable and
inventories.  At December 31, 2009 we believe we have approximately
$1,761,183 available under our line of credit.   We believe that
the combination of the above factors, the availability of the balance of our
line of credit, and our effective management of our use of cash will minimize
our requirement to seek additional financing.  However, in the event
that we are required to seek additional funding through public or private equity
or debt, there can be no assurance that we will be able to obtain requisite
financing to fund existing obligations and operating requirements on acceptable
terms or at all.
 
 Cash
and Cash equivalents
 
 Our balance sheet at December 31, 2009
reflects cash and cash equivalents of $1,386,231 as compared to $1,807,271 as of
March 31, 2009, a decrease of $421,040. The decrease of cash and cash
equivalents is primarily as a result of an overall net decrease in cash of
approximately $513,198 during the period, reduced by foreign exchange gains on
cash transactions of approximately $92,158.  Operating cash
transactions of significance included the collection of approximately $2,060,000
of our accounts receivable and the payment of approximately $400,000 in accounts
payable and accrued liabilities.
 
 Operations
 
 Net cash
used by operations decreased by $1,224,246 resulting in net cash used by
operations of $651,757 for the nine months ended December 31, 2009 as compared
to net cash used by operations of $1,876,003 for the nine months ended December
31, 2008. The decrease in net cash used by operations for the nine months ended
December 31, 2009 as compared to the nine months ended December 31, 2008 is
attributable to several factors.
 
 The 2009
net loss of $2,660,335 is reduced by non-cash adjustments totaling $1,035,059
and further reduced primarily by the following use of cash for: (1) inventories
of $478,031, (2) prepaid expense of $201,681, and (3) accrued liabilities of
$869,273 and (4)  accounts payable and accrued liabilities of
$406,136.
 
 The 2008
net loss of $1,873,152 was offset by two significant non-cash items (1) the
$4,323,207 value of the Den-Mat warrants; and (2) the $2,830,953 gain on the
disposition of Sylphar, resulting in a net use of cash of
$380,898.  The use of cash was further increased by an increase of (1)
accounts receivable of $709,731; (2) inventories of $575,894; and (3) prepaid
expenses of $612,329, and (4) accounts payable of
$558,352.
 
 As of the
date of this filing, there has been no indication of a trend of increased
doubtful accounts or slower payments.  As a result, at this time, we
do not anticipate increased reserves.
  24
  Investing
activities
 
 Net cash used in investing activities
totaled $550,974 for the nine months ended December 31, 2009 as compared to net
cash used in investing activities of $455,694 for the nine months ended December
31, 2008. Cash used in the nine months ended December 31, 2009 was mainly for
machinery and related software to support our increasing number of veneer
designs.
  Cash used in investing activities in
the nine months ended December 31, 2008 was mainly for equipment to be used in
the production process of Veneers, additional hardware equipment in support of
our GlamSmile product line in combination with our new designed software which
allows the dentist to modify the production process, investments made for
moldings concerning the GlamSmile product group, and moldings for new OTC
products.
 
 Financing
activities
 
 Net cash provided by financing
activities totaled $689,533 for the nine months ended December 31, 2009, as
compared to $2,954,967 for the nine months ended December 31,
2008.  The decrease in the net cash provided by financing activities
in the nine month period ended December 31, 2008 was primarily because we
received a one time payment in 2008 of $2,782,000 with respect to the sale of
Sylphar.
 
 During the nine months ended December
31, 2009 and December 31, 2008, we recognized an increase in cash and cash
equivalents of $92,158 and $218,337, respectively, from the effect of exchange
rates between the Euro and the US Dollar.
  25
  Item
3.  Quantitative and Qualitative Disclosures About Market
Risk
 
 Not
Applicable.
 
 Item
4T.  Controls and Procedures
 
 Disclosure
Controls and Procedures
 
 We maintain disclosure controls and
procedures designed to ensure that information required to be disclosed in our
reports filed under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), is recorded, processed, summarized, and reported within the
required time periods and that such information is accumulated and communicated
to our management, including our Chief Executive Officer and our Chief Financial
Officer, as appropriate, to allow for timely decisions regarding required
disclosure.  In designing and evaluating the disclosure controls and
procedures, management recognizes that any controls and procedures, no matter
how well designed and operated, can only provide reasonable assurance of
achieving the desired control objective, and management is required to exercise
its judgment in evaluating the cost-benefit relationship of possible controls
and procedures.
 
 Management conducted an evaluation,
under the supervision and with the participation of the Chief Executive Officer
and the Chief Financial Officer, of the effectiveness of the design and
operation of our disclosure controls and procedures as of December 31,
2009.  Based on this evaluation, the Chief Executive Officer and the
Chief Financial Officer have concluded that our disclosure controls and
procedures were effective as of December 31, 2009.
 
 Changes
in Internal Control Over Financial Reporting
 
 There have been no material changes in
our  internal controls over financial reporting identified in
connection with the evaluation of disclosure controls and procedures discussed
above that occurred during the quarter ended December 31, 2009 or subsequent to
that date that have materially affected, or are reasonably likely to materially
affect, our  internal control over financial reporting.
 
 PART
II - OTHER INFORMATION
 
 Item
1.  Legal Proceedings
 
 To the
best knowledge of management, there are no material legal proceedings pending
against the Company.
 
 Item
1A.  Risk Factors
 
 Not
Applicable.
 
 Item
2.   Unregistered Sales of Equity Securities and Use of
Proceeds
 
 None.
 
 Item
3.  Defaults Upon Senior Securities
 
 None.
  26
  Item
4.  Submission Of Matters To A Vote Of Security Holders
 
 No
matters were submitted to a vote of security holders during the quarter ended
December 31, 2009.
 
 Item
5.  Other Information
 
 None
 
 Item
6.  Exhibits
 EXHIBIT
INDEX
 
 Exhibit No
                  
                  Description2.1
                  
                  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)31.1
                  
                  Certifications
      of the Chief Executive Officer under Section 302 of the Sarbanes-Oxley
      Act.*
  27
 
 Exhibit No
                  
                  Description31.2
                  
                  Certifications
      of the Chief Financial Officer under Section 302 of the Sarbanes-Oxley
      Act.*32.1
                  
                  Certifications
      of the Chief Executive Officer under Section 906 of the Sarbanes-Oxley
      Act.*32.2
                  
                  Certifications
      of the Chief Financial Officer under Section 906 of the Sarbanes-Oxley
      Act.*
 
 
 *
              Filed
      herewith.
 
 (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.
  28
  SIGNATURES
 
 Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934 the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
  REMEDENT,
      INC.Date:    February
      16, 2010
                    By:
                    /s/ Guy
      De VreeseName:  Guy
      De VreeseTitle:  Chief
      Executive Officer
                      (Principal
      Executive Officer)Date:    February
      16, 2010
                    By:
                    /s/ Stephen
      RossName:  Stephen
      RossTitle:  Chief
      Financial Officer
                      (Principal
      Accounting
Officer)
  29