UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-K





R
            ANNUAL REPORT PURSUANT TO
      SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF
      1934





For
the fiscal year ended March 31, 2010





£
            TRANSITION REPORT PURSUANT TO
      SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF
      1934





Commission
File Number 001-15975





REMEDENT,
INC.





(Name of
small business issuer as specified in its charter)





Nevada
              
              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)





011-329-321-70-80
 (Issuer’s
telephone number, including area code)





Securities
registered pursuant to Section 12(b) of the Act: None





Securities
registered pursuant to Section 12(g) of the Act:





Common Stock, no par value
per share


(Title of
Class)





Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.


Yes  ̈ No þ





Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.


Yes  ̈ No þ





Indicate
by check mark whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the issuer
was required to file such reports), and (2) has been subject to such filing
requirements for the past
90 days.                    
Yes þ No  ̈







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 check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§ 229.405) is not contained herein, and will not be
contained, to the best of registrant’s knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form
10-K.           ̈





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting
company.  See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.  (Check one):





Large
      accelerated filer
                     ̈
                    Accelerated
      filer
                     ̈Non-accelerated
      filer
                     ̈
                    Smaller
      reporting
                      company
                    þ(Do
      not check if a smaller reporting company)





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).


Yes  ̈No þ





The
aggregate market value of voting stock held by non-affiliates computed by
reference to the price at which the common equity was last sold as of the last
business day of the registrant’s most recently completed second fiscal quarter,
September 30, 2009, was $6,657,135.75.   For purposes of this
computation, it has been assumed that the shares beneficially held by directors
and officers of registrant were “held by affiliates” and this assumption is not
to be deemed to be an admission by such persons that they are affiliates of
registrant.





The
number of shares of registrant’s common stock outstanding as of  June
21, 2010  was 19,995,969.





Documents incorporated by reference:None.


Transitional Small Business
Disclosure Format(Check one): Yes  ̈     No
R










FORM
10-K INDEX


PART
      IITEM
      1.
                                                                  BUSINESS
                                                                  
                                                                  1ITEM
      1A.
                                                                  RISK
      FACTORS
                                                                  
                                                                  17ITEM
      1B.
                                                                  UNRESOLVED
      STAFF COMMENTS
                                                                  
                                                                  27ITEM
      2.
                                                                  PROPERTIES
                                                                  
                                                                  27ITEM
      3.
                                                                  LEGAL
      PROCEEDINGS
                                                                  
                                                                  27ITEM
      4.
                                                                  [REMOVED
      AND RESERVED]
                                                                  
                                                                  27PART
      IIITEM
      5.
                                                                  MARKET
      FOR REGISTRANT’S COMMON EQUITY,  RELATED STOCKHOLDER MATTERS AND
      ISSUER PURCHASES OF EQUITY SECURITIES
                                                                  
                                                                  28ITEM
      6.
                                                                  SELECTED
      FINANCIAL DATA
                                                                  
                                                                  29ITEM
      7.
                                                                  MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS
                                                                  
                                                                  30ITEM
      7A.
                                                                  QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
                                                                  
                                                                  38ITEM
      8.
                                                                  FINANCIAL
      STATEMENTS AND SUPPLEMENTARY DATA
                                                                  
                                                                  38ITEM
      9.
                                                                  CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE
                                                                  
                                                                  38ITEM
      9A(T)
                                                                  CONTROLS
      AND PROCEDURES.
                                                                  
                                                                  38ITEM
      9B.
                                                                  OTHER
      INFORMATION
                                                                  
                                                                  39PART
      IIIITEM
      10.
                                                                  DIRECTORS,
      EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
                                                                  
                                                                  40ITEM
      11.
                                                                  EXECUTIVE
      COMPENSATION
                                                                  
                                                                  42ITEM
      12.
                                                                  SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS
                                                                  
                                                                  44ITEM
      13.
                                                                  CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
      INDEPENDENCE
                                                                  
                                                                  47ITEM
      14.
                                                                  PRINCIPAL
      ACCOUNTANT FEES AND SERVICES
                                                                  
                                                                  50PART
      IVITEM
      15.
                                                                  EXHIBITS
      AND FINANCIAL STATEMENT SCHEDULES
                                                                  
                                                                  52SIGNATURES
                                                                  
                                                                  53





In addition to historical
information, this Annual Report on Form 10-K (“Annual Report”) for Remedent, Inc.
(“Remedent” the “Company,” “we,” “our” or “us”) contains “forward-looking”
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), including statements regarding the growth of product
lines, optimism regarding the business, expanding sales and other
statements. Words such as expects, anticipates, intends, plans, believes, sees,
estimates and variations of such words and similar expressions are intended to
identify such forward-looking statements. These statements are not guarantees
of future performance and involve certain risks and uncertainties that are
difficult to predict. Actual results could vary materially from the description
contained herein due to many factors including continued market
acceptance of our products. In addition, actual results could vary materially based
on changes or slower growth in the oral care and cosmetic dentistry products
market; the potential inability to realize expected benefits and synergies;
domestic and international business and economic conditions; changes in the
dental industry; unexpected difficulties in penetrating the oral care and
cosmetic dentistry products market; changes in customer demand or ordering
patterns; changes in the competitive environment including pricing pressures or
technological changes; technological advances; shortages of manufacturing capacity;
future production variables impacting excess inventory and other risk
factors listed in the section of this Annual Report entitled “Risk Factors” and
from time to time in our Securities and Exchange Commission filings under
“risk factors” and elsewhere.





Each forward-looking statement
should be read in context with, and with an understanding of, the various
disclosures concerning our business made elsewhere in this Annual Report, as
well as other public reports filed by us with the United States Securities
and Exchange Commission. Readers should not place undue reliance on any
forward-looking statement as a prediction of actual results of developments. Except as
required by applicable law or regulation, we undertake no obligation to update or
revise any forward-looking statement contained in this Annual
Report.





PART
I





ITEM 1 — BUSINESS





Overview





We
specialize in the research, development, and manufacturing of oral care and
cosmetic dentistry products.  We are one of the leading manufacturers
of cosmetic dentistry products in Europe.  Leveraging our knowledge of
regulatory requirements regarding dental products and management’s experience in
the needs of the professional dental community, we design, develop, manufacture
and distribute our cosmetic dentistry products, including a full line of
professional dental products that are distributed in Europe, Asia and the United
States.





In 2006 we developed a revolutionary
system for manufacturing and installing dental veneers which we branded as
GlamSmileTM. GlamSmile veneers revolutionize the traditional one-at-a-time method
of applying porcelain dental veneers.GlamSmile veneers are attached to the front
of the patient’s teeth using a patent pending single motion placement tray which
replaces the traditional one at a time trial and error method of applying
porcelain veneers, making the application less traumatic for the patient, much
easier for the dentist and perhaps most important, far less costly than
traditional dental veneers. Currently, the GlamSmileTM veneers are our primary
products in the professional oral care and cosmetic dentistry
product.  Our veneers are supported by a line of professional
veneer  whitening and teeth sensitivity solutions.  Our
products are sold to professionals by distributors and sold directly to the
consumers by our GlamSmile Studios.





Corporate
History





We were
originally incorporated under the laws of Arizona in September 1996 under the
name Remedent USA, Inc.  In October 1998, we were acquired by Resort
World Enterprises, Inc., a Nevada corporation in a share exchange, and we
immediately changed our name to Remedent USA, Inc. and later to Remedent,
Inc.  Until recently,  we targeted our dental products to
the professional dental market and the over-the-counter (OTC) retail
business.





In the
latter part of 2008, our Board of Directors approved a strategic plan to
separate our OTC business from our professional business, allowing us to focus
on the development, marketing and distribution of our products for the
professional dental market.  In December 2008, we completed a
restructuring in the form of a management-led buyout of 50% of our OTC retail
business (2008 Restructuring”).  The buyout was led by Mr. Robin List,
our former director and Chief Executive Officer, with financing provided by a
non-affiliated foreign investment fund.  In connection with the
strategic plan, we effected our OTC restructuring through a series of
transactions involving subsidiary formations, contributions of subsidiary(ies)
interests and sales of stock interests through subsidiary
transactions.  As a result of the series of transactions related to
the sale, we now own 50% of our subsidiary, Remedent OTC BV, a Dutch corporation
(“Remedent OTC”) with Mr. List owning the other 50%, and maintain control of
Remedent OTC as a result of our current control of the board.  In
addition, we now own an interest in Sylphar Holding, BV, a Dutch holding company
and subsidiary of Remedent OTC (“Sylphar Holding”), which owns and holds the OTC
operating subsidiaries, through Remedent OTC’s 75% ownership interest in Sylphar
Holding, which interest is subject to dilution of up to 24% upon exercise of a
call option held by Concordia Fund B.V. (“Concordia”), who currently owns the
remaining 25%.  As a result of the sale, all of the OTC business
previously directly operated by us is now operated and held by Sylphar
Holding.


1


In January, 2010 we formed a joint
venture with Gallant Network Limited (“Gallant”)  to formalize our
GlamSmile operations in China.  We acquired 50.98% of the issued and
outstanding shares of Glamsmile Asia Ltd., a private Hong Kong company, in
exchange  (i) 325,000 Euro (US$466,725), of which 50,000 Euro was
payable as of March 31, 2010, (ii) 250,000 shares of common stock agreed to be
issued during the fiscal year ended March 31, 2011 and (iii) option grants of up
to 300,000 shares of our common stock, of which 200,000 shares were granted as
of March 31, 2010.





We have
the following wholly owned subsidiaries:  (1) Remedent N.V., a Belgium
corporation; (2) Remedent Professional Holdings, Inc., a California corporation;
(3) Remedent Professional, Inc., a California corporation (a subsidiary of
Remedent Professional Holdings, Inc.), and (4) Glamtech-USA, Inc., a Delaware
corporation.  On  January 1, 2010,  we
acquired  a 50.98% of  Glamsmile Asia Ltd.a Hong Kong Private company
which has the following subsidiaries: GlamSmile Studio in Hong
Kong,  GlamSmile Studio in Mainland China (Beijing) and the GlamSmile
Production Lab, also located in China (Beijing).  In addition, we have
a 50% ownership interest in Remedent OTC (which is the holding company of the
OTC division), and thereby have a partial ownership interest in the following
wholly owned subsidiaries of Sylphar Holding: (i) Sylphar N.V., a Belgium
corporation; (ii) Sylphar USA, Inc., a Nevada corporation; and (iii) Remedent
Asia Pte Ltd, a Singapore company.





Past
Product Development





We have
been a manufacturer and distributor of cosmetic dentistry products, including a
full line of professional dental and retail OTC tooth whitening products which
are distributed in Europe,  Asia and the United States.  We
have distributed our products using both our own internal sales force and
through the use of third party distributors.  Prior to our 2008
Restructuring, our products were generally classified into the following
categories: professional dental products and OTC tooth whitening products. Our
OTC division included products targeted for retail such as iWhite, Cleverwhite
and Remesense.  However as a result of the 2008 Restructuring and
sale, all of our prior OTC operations, including the marketing and
distribution of the OTC products are being conducted by Sylphar Holding and its
wholly owned subsidiaries.  We developed the following products for
our professional dental segment:




·
            Remewhite in Office Whitening
      System. One of our first dental products that we developed for the
      professional dental community was the RemeCureTM plasma curing light
      (described below).  Leveraging on our early success with the
      RemeCure light, we introduced the RemeWhiteTM In Office Whitening
      System.  Based upon the initial RemeCure light, a new light,
      called the RemeCure CL-15, was developed featuring new enhancements to the
      hardware and software enabling this light to be fully automated thereby
      eliminating the need for the dentist to hold the light during whitening
      treatments.  In addition, a proprietary gel was formulated to be
      used with the system as well as a time saving method to apply the
      gel.





·
            Remewhite Home Maintenance
      Kit.  In 2004, the RemeWhite Home Maintenance Kit was
      introduced and sold by dentists to their patients, featuring 16 pre-filled
      trays with a level of whitening agent safe for home use yet stronger than
      most OTC products.





·
            Metatray.  In
      August 2005, we introduced MetaTray®, our next generation of products
      targeted for the professional dentist market.  The MetaTray kit
      consists of a proprietary, reusable mouthpiece that has embedded in the
      mouthpiece both a heating element and an electroluminescent mesh that are
      powered by a rechargeable 9 volt power source providing heat and light
      similar to that which is delivered to the teeth by conventional dental
      lights. The system also introduced a proprietary foam strip that is unique
      in the manner in which it releases peroxide to the tooth surface without
      dripping or running.


2


·
            RemeCure. The RemeCure
      plasma curing light uses plasma arc technology instead of
      LED  and laser technology which provides high-energy power over
      the complete spectrum





Current
Products  and Business Strategy





We currently have two primary products:
GlamSmile Veneers  and Whitening Products.  Until recently,
our products included the FirstFitTM System, a proprietary, patent-pending system
for the creation and placement of dental bridges and crowns.  As
further described under section “B2B Market” effective March 29, 2010 the
intellectual property used and related to FirstFit product  was sold
to Den-Mat Holdings LLC (“Den-Mat”), for purchase price of  $2,850,000
in cash and an ongoing percentage on Den-Mat’s net revenues generated by the
sale of the First Fit products. The sale of the FirstFit system will generate
ongoing cash flow for us while eliminating any expenses relating to the
marketing, manufacturing and distribution of the FirstFit
products.  In addition, it will allow us to focus our resources on the
development of new products and the expansion of our GlamSmile
business.





Whitening
Products





We initially started in the whitening
business, by developing and marketing whitening products in combination with the
worldwide appreciated high speed curing lamp RemeCure. The RemeCure plasma
curing light uses plasma arc technology instead of LED and laser technology
which provides high-energy power over the complete spectrum.  This
allows RemeCure plasma curing light to be used in various applications such as:
(1) curing dental composite materials in only seconds; and (2) for single
appointment, in-office whitening in less than forty minutes.





·
            Remewhite Formulation+
      by GlamSmile.   Formulation+was the
      first available in-office power whitening gel featuring Remedent’s
      proprietary CRM-Technology. The Continuous Release Matrix assures a
      prolonged and continuous release of Hydrogen Peroxide throughout the
      entire session, thus improving the exposure time of the whitening agent to
      the enamel. Still today Formulation+ for in-office use by dentists is one
      of the top products giving consumers whitening results up to 10 shades
      whiter without sensitivity.





·
            WHITE Boost & WHITE
      Finishing. Other than Formulation+, Remedent created and sells the
      White Boost & White Finishingthrough dentists
      for home use. It is an oxygen-induced whitening system using a
      revolutionary and comfortable tray and 2 thin, flexible foam strips
      impregnated with super tooth whitening gel. The foam strips’ unique
      formula guarantees a steady release of oxygen that first triggers and then
      speeds up the whitening process. Our ergonomic delivery tray means
      ease-of-use and superb whitening results in just 10
    minutes.





GlamSmile
Veneers





In connection with the 2008
Restructuring, we shifted our focus to professional products targeted for the
professional sector. Our key product in the professional oral care and cosmetic
dentistry product is the GlamSmileTM veneer.





In 2006 we developed a revolutionary
system for manufacturing and installing dental veneers which we branded as
GlamSmile. GlamSmile veneers revolutionize the traditional one-at-a-time method
of applying porcelain dental veneers.  GlamSmile veneers are attached
to the front of the patient’s teeth using a patent pending single motion
placement tray which replaces the traditional one at a time trial and error
method of applying porcelain veneers, making the application less traumatic for
the patient, much easier for the dentist and perhaps most important, far less
costly than traditional dental veneers. The entire process is painless and takes
only about an hour of the patient’s and the dentist’s time. GlamSmile veneers
are so thin that the dentist does not need to remove healthy tooth structure
which results in a process that is reversible.


3


In the fall of 2006, we opened our
initial GlamSmile Lab in Ghent. Since 2006, we have refined and improved the
GlamSmile product through internally developed improvements and licensed
technologies making them even easier to install by the dentist, more tailored to
each patients physical characteristics, less costly to manufacture by developing
manufacturing capabilities in China and faster manufacturing turnaround
resulting in higher patient satisfaction.  After initial testing of
the GlamSmile product, in June 2008, we entered into an OEM Agreement with
SensAble Technologies, Inc, a leading provider of 3D touch-enabled modeling and
dental CAD/CAM solutions, to integrate SensAble technology into our GlamSmile
system. The agreement with SensAble is exclusive with regard to dental veneers
for a period of two years. The technology provided by SensAble replaces the
creation of hand-crafted wax models previously required in designing GlamSmile
veneers for patients.  The Company is currently in negotiation with
SensAble for the development of new enhanced software.








Our
GlamSmile involves a proprietary veneer fabrication technique and a patented
single-motion veneer placement tray which are both guided by a proprietary
computer imaging, design and digital preview system. The unique tray delivery
system lets dentists expertly seat 10 ultra-thin, custom veneers in less than an
hour while preserving tooth structure. All the features of GlamSmile, together
with the CAD/CAM technology, digital preview for dentists to evaluate the design
and a unique full arch tray delivery system used in conjunction with minimally
or no preparation ultra thin veneers,  have revolutionized the art of
veneering.





Our
GlamSmile veneers are ultra thin claddings made from a mixture of a hybrid
composite and porcelain materials which are attached to the front of the
patient’s teeth.  GlamSmile veneers are ultra-thin and can best be
compared to contact lenses in terms of thickness. Because GlamSmile veneers are
so thin, the dentist does not need to remove healthy tooth structure leaving the
patient’s healthy tooth structure intact results in several important
benefits:





•
            no
      local anesthesia is required to prepare the
  teeth;





•
            reduced
      (if any) tooth sensitivity post-procedure;
and





•
            the
      process is reversible.





Our
veneers are  custom-made for each individual’s personal features,
taking into account numerous factors including the shape of a person’s face, the
shape of their lips and more. At the initial doctor visit, an impression is made
of the patient’s teeth.  During the second visit, the hybrid composite
veneers, which are computer generated as a single unit, are then ready to be
installed.  The single-unit feature enables dentists with minimal
training to apply up to ten teeth in one 30 – 45 minute visit.  This
minimizes the risk of failure and allows more dentists to offer GlamSmile
veneers as part of their dental practice. With traditional bonding, a dentist
adheres a composite material directly on the tooth which lasts about 3 to 6
years and tends to discolor.  Porcelain veneers, though a more lasting
solution (ten years or more), require a significantly more invasive procedure to
install, which is irreversible, requires a very high level of training and skill
from the dentist and can cost from $700 to $2,000 per tooth.


4


The entire production process currently
takes place at our own GlamSmile lab in China. The production process uses a
high-tech CAD/CAM technology which we have developed in conjunction with
SensAble Technologies as discussed above. This technology enables ultimate
precision so that the shape, thickness and length of each individual veneer is
unique. Upon completion, the customized GlamSmile veneers are shipped to the
dentist via overnight couriers. In our continuing effort to improve our product
and processes and in response to feedback from our dentists, we have recently
developed a new tray system that allows for better visibility of the finished
veneers prior to their application as well as easier handling by the dentist.
This second generation patent pending tray will further reduce the chair time
required for each application and broaden appeal within the dental community.
Also currently in development, is a new technology using a fully digital milling
machine that will be capable of fabricating our veneers on site at our GlamSmile
centers. This technology in conjunction with current technologies developed with
SensAble will enable images to be captured one day, electronically transmitted
to our lab in China for final design, and transmitted back to the onsite milling
machine for next day application by our dentist to the patient.











Marketing
and Distribution





We market our products to the dental
professional using our business to business strategies (“B2B”), and we also
market our products directly to the consumers in China and Belgium using our
direct to consumer model (“B2C”).  Our products are sold to dental
professionals in 18 countries through distributors.  In addition,
pursuant to our distribution agreement with Den-Mat, the GlamSmile product is
also sold in the United States and throughout the world with the exception of
certain excluded territories as further described under “Distribution
Agreements.”   We currently sell our products in China and
Belgium directly to consumers using our direct to consumer model, which includes
our GlamSmile Smile Design-Virtual Studio, and GlamSmile Studios.





B2C
Market and Distribution





In 2008 we opened, through a
third party, our first GlamSmile center in Beijing China, marketing GlamSmile
directly to consumers.  In 2009 we began direct to consumer tests in
Belgium using internet advertising to acquire potential leads and our own
dedicated “Smile Consultants” to manage the sales process from lead acquisition
through final sale with successful results. Our direct to consumer model, has
been developed around a one to one relationship with our Smile Consultants. This
process also results in the dentists being relieved of the sales
responsibilities allowing them to better focus on patient satisfaction. In both
China and Belgium, with the aid of our
own “Smile Consultant” working direct with the customer throughout the entire
sales process, we have seen positive results in our partner retail
centers.





Our Smile Consultancy Program is
predominantly marketed on the internet through our website, GlamSmile Smile
Design.  We focus on intensive campaign and advertisement aimed to
generate large traffic to our website that promotes GlamSmile Whitening, Veneers
and Free Smile Advice. Visitors can apply for a free personalized Smile
Consultation by a Smile Consultant. The latter guides the consumer to the right
GlamSmile Studio or with one of our GlamSmile partner dentists and to the
solution that meets best his or her Smile expectations.  The Smile
Consultancy Program requires us to develop close partnerships with dedicated
GlamSmile dentists and the establishment of GlamSmile Studios. The GlamSmile
Studio is a concept studio with a focus on aesthetic and cosmetic dentistry.
Unlike a traditional dentist office, our GlamSmile Studio are designed and
managed as a dental spa.


5


We have
begun to market our products through our Smile Consultancy Concept and the
GlamSmile Studios in China and plan to expand the number of GlamSmile Spas in
China and Europe and enter the United States market.  Through
Glamsmile Asia Ltd. and its subsidiaries we opened a GlamSmile clinic in
Beijing, China, during the third calendar quarter of 2009.  The
Beijing GlamSmile clinic was the first dental spa to offer pain free cosmetic
dentistry in Beijing.  In April 2010, we partnered with a local
Chinese company and expanded our  business to consumer model in the
Asian market by opening a dental spa  in Hong
Kong.  Additionally, a first GlamSmile Studio was opened in Taiwan at
the end of the first quarter of the current year, through a strategic alliance
with an unrelated distributor.











Cosmetic
Dentistry Industry





The cosmetic dental industry has
expanded into a multi-billion industry as a result of increased awareness of the
importance of oral health, high aesthetics, improved dental treatments, and
reduced patient discomfort.  An increasingly aging population and
rising disposable income have also positively impacted the growth of cosmetic
dentistry. Demand for dental products and services are forecasted to remain
healthy due to growing incidences of cosmetic treatments and dental
implants.  According to a recent report published by Koncepts
Analytics, the dental industry worldwide was estimated at about $18.8 billion in
2008, dominated by the US, Europe and Japan, which collectively accounted for
more than 84% of the global revenue in 2007. The United States Dental Market was
nearly $7.6 billion in 2007, projected to grow to almost $8 billion in 2008 and
nearly $10 billion by 2013, representing a compound annual growth rate of 4.7%.
The American Academy of Cosmetic Dentistry estimates that Americans spend about
$2.75 billion each year on cosmetic dentistry. The growth of this market is
expected to be highest in the United States and EU where the generation of aging
baby boomers can afford these quality but expensive dental procedures. Also
expected to be a catalyst for the growth and popularity of cosmetic treatments
and implants is the younger generation. Further, emerging technologies will
reduce the overall turnaround time for dental procedures while improving
efficiency of the dental practitioners. For example, introduction of CAD/CAM has
reduced designing time and 3D imaging techniques have improved patient diagnosis
and procedure planning. Changing consumer needs and a shift towards cosmetic
dentistry will drive the market for high end dental solutions.


6


In China and other parts of Asia there
has been a rapid growth in living standards. China’s young, emerging middle
class is beginning to equate accumulation of possessions and leisure
opportunities with quality of life. An estimated 415,000 Chinese had more than
$1 million in disposable assets in 2007, more than any other country, according
to the Merrill-Lynch Asia-Pacific Wealth Report. Up to 170 million people, or
13% of the population, can afford luxury brands and the number will reach 250
million next year, according to the China Association of Branding Strategy.
These regions have a huge potential for growth in cosmetic dentistry due to low
market penetration. Consequently, these countries are exhibiting high demand for
modern and sophisticated technology and equipment in the dental market. Overall
demand for
dental products in China is expected to climb to 11% annually through 2012. In a
report published by Millennium Research Group with regard to Chinese markets for
Dental Implants, a similar target market as that for our GlamSmile products,
finds that this emerging market is growing quickly at a compound annual growth
rate of more than 35%. A strong driver of this growth is the deregulation of
dental services in China. Dental services in China are generally provided in
government-managed facilities; however, ongoing deregulation of dental services
is resulting in the emergence of an increased number of private dental practices
and increasing accessibility to dental services. Another major driver in the
Chinese market is the frequency of teeth stained by Tetracycline. For decades,
Tetracycline was one of the most prescribed antibiotics in China causing many
individuals to suffer from stained teeth. Excessive use of fluoride in drinking
water causes a similar problem. When tetracycline exposure occurs while teeth
are forming, it creates a permanent gray or brown stain, causing either uniform
discoloration of the entire tooth or forming horizontal bands of stain of
varying intensity that can range from mild to very dark. Veneers are the
treatment of choice for this condition. In 2008, the Asia-Pacific market for
dental prosthetics (crowns, bridges and dentures) was valued at over $6 billion.
The Asia-Pacific market includes Australia, Japan and South Korea. The aging
population and greater demand for aesthetic dentistry are driving forces in the
prosthetics market. The global economic crisis, which began in 2008, has led to
a slowdown in the overall market; however, the market is expected to grow over
the forecast period, reaching $7.2 billion by 2015.





In Europe, despite significantly slowed
economic conditions due to the worldwide economic recession, the four largest
European markets reported the following growth rates for total sales of dental
products – Germany minus 2%; Italy plus 1.6%; France plus 1.6%; UK plus 10%.
Like the United States, aging baby boomers, improving technologies, as well as a
growing desire for that “celebrity” smile combined with pent up demand created
by the global economic slowdown should all contribute to growth in the cosmetic
industry sector in Europe.





We believe that our GlamSmile products
which are affordable in comparison to traditional veneers, pain free, easy to
apply, and provide instant results make us uniquely positioned to capitalize on
the market trends in Asia, Europe and the United States.





Growth
Strategy





Today, our strategic plan is to focus
our vertically integrated development, manufacturing and marketing resources on
selling our GlamSmile veneers direct to consumers by using all forms of direct
response media including the internet, print, radio, television and social
network media, to expand our presence in China and Europe, as well as to
establish a direct to consumer presence in United States.  In our
marketing efforts we intend to emphasize the ease, convenience, affordability
and dramatic, instant results as demonstrated by before and after photos that
are attained as a result of GlamSmile veneers. We will also feature our “Until
You Smile” satisfaction guarantee. Using the success formula we experienced in
China and Belgium using a "Smile Consultant" to help maintain control of the
sales process and close the sale, our distribution will be through both owned
and operated clinics as well as affiliations with existing dental practices and
partner retail centers in Asia, Europe and the United States
markets.


7


Our
current strategic marketing and distribution plan includes a combination of
owned and licensed GlamSmile centers depending upon the size and location of the
market, with us managing the marketing efforts, patient communications and sales
process. We intend to establish three geographic divisions, Asia,
Europe and North America, each of which will promote GlamSmile veneer
treatments in their respective territories. We plan to establish three types of
GlamSmile Centers depending upon market factors and government
regulation.





·
            Owned Centers.These are
      centers in which the Company will own, control and/or manage all aspects
      of the operation including the facilities, equipment, personnel,
      marketing, insurance risk and other operating costs and will either employ
      or contract with dentists to perform the necessary dental services. In
      China, we will continue to principally rely on our owned and operated
      dental GlamSmile clinics or
centers.





·
            Licensed Centers.  In many
      markets we will seek to identify and recruit cosmetic dentists that have
      existing practices and who endorse the GlamSmile veneer products. In these
      markets, we will contract with dentist practices and the Company will
      recognize revenue through the sale of veneer trays plus marketing and
      other service fees to be charged to the dentist for services performed by
      the Company.





·
            Distributors.In markets where we
      lack the expertise with respect to managing marketing and where local
      regulationand/or custom may
      make it impractical to deploy an owned or licensed center approach we will
      look toappoint
      distributors who will be granted exclusive rights to market and distribute
      our GlamSmile productsdirectly to
      consumers subject to minimum performance criteria and/or initial territory
      fees. In this model the distributor will be expected to invest in all
      marketing and sales conversion costs in their market. Ourrevenues will be
      derived principally from sales of our GlamSmile veneer products to the
      distributor.





In order to support and facilitate our
growth strategy, it is our intention to restructure our subsidiary companies to
better manage our GlamSmile related operations. In conjunction with this
restructuring, we intend to have the intellectual property and other assets
related to GlamSmile contributed to a new entity to be formed to be called
GlamSmile Worldwide. New entities would also be created called GlamSmile Asia,
GlamSmile North America and GlamSmile Europe, each with licensed rights to use
and exploit the GlamSmile technology in their respective territories. We
anticipate that we will continue to own 50% of the Asia operations either as a
result of maintaining the status quo structure or through a transaction with
Gallant exchanging their interest in the Asian operations for our common stock
in conjunction with a direct equity investment by a third party in our Asian
operations.





B2B
Market and Distribution





Until
recently, our priority has been to focus on product development and marketing
and to rely on our distributor network assisted by our internally developed
marketing programs for servicing our customers in our target market in the B2B
Market.





Starting
in Belgium and the Netherlands, our products have been introduced utilizing our
Distributor Assisted Marketing programs.  We implement our program by
first identifying an established dealer in each market with a well developed
sales force familiar with sales of capital equipment to the professional dentist
community.  Second, we develop aggressive lead generation programs and
other marketing techniques which served as a blue print for the dealers to
implement.  The combination of a well-trained dealer force and
dealer-assisted marketing and lead generation programs has proven to be far more
effective than utilizing a direct sales approach, which is much slower and more
costly to establish.  This process has been repeated for both the
professional dentist and retail, over-the-counter markets in each
country.  As a result of this approach, we have been able to establish
dealers in 35 countries encompassing, Europe, Asia, Latin America, the Pacific
Rim and the Middle East.


8


Consistent with our strategic
dealer-assisted marketing approach, in August 2008, we appointed Den-Mat, a
global aesthetic dental industry leader since 1974, to be the sole and exclusive
distributor to market, license and sell our GlamSmile tray technology for their
Lumineers product line throughout the world excluding China, most of Western
Europe, parts the Middle East and other parts of Asia and licensed our
technology for use by Den-Mat in their own manufacturing
processes.  In June 2009, we amended our agreement with Den-Mat which,
among other technical modifications, clarified our right to market GlamSmile
direct to consumers (as opposed to marketing to dentists). The agreement with
Den-Mat was again modified in March 2010 wherein various terms regarding our
rights to manufacture, the royalties due us and Den-Mat and other issues were
amended or restated, the end result of which was to remove any obstacles to our
implementing our strategy to market GlamSmile direct to consumers on a worldwide
basis while continuing to receive royalties on sales by Den-Mat of products
which include our GlamSmile and other technologies. Below are the specific terms
and related transactions:





On August 24, 2008, we entered
into a distribution agreement Den-Mat (“Distribution
Agreement”).   Under the terms of the Distribution Agreement, we
appointed Den-Mat to be the sole and exclusive distributor to market, license
and sell certain products relating to our  GlamSmile tray technology,
including, but not limited to, our GlamSmile veneer products and other related
veneer products (the “Products”), throughout the world, with the exception of
Australia, Austria, Belgium, Brazil, France (including 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; andgranted Den-Mat a sole
and exclusive, transferable and sublicensable right and license to use all
intellectual property related to the Products throughout specified territory, as
well as certain rights in the excluded markets and rights in future intellectual
property.  Such rights include the right to manufacture the Products
upon payment of royalties for the initial three year guaranty period (“Guaranty
Period”).  Upon the expiration of the Guaranty Period, as detailed in
the Distribution Agreement, the sole and exclusive distribution rights and
licenses granted under the Agreement automatically become non-exclusive
distribution rights and licenses, and all rights to use the “GlamSmile” name and
mark shall cease unless the Guaranty Period is extended by Den-Mat under the
terms of the Distribution Agreement.  Upon termination of the
Distribution Agreement, all of Den-Mat’s rights in our intellectual property,
including the right to manufacture the Products will terminate.





As consideration for such distribution,
licensing and manufacturing rights, Den-Mat agreed to pay us: (i) an
initial payment of $2,425,000 (received in the period ended September 30,
2008); (ii) a payment of $250,000 for each of the first three contract
periods in the initial Guaranty Period, subject to certain terms and conditions;
(iii) certain periodic payments as additional paid-up royalties in the
aggregate amount of $500,000; (iv) a payment of $1,000,000 promptly after
Den-Mat manufactures a limited quantity of Products at a facility owned or
leased by Den-Mat; (v) a payment of $1,000,000 promptly upon completion of
certain training of Den-Mat’s personnel; (vi) a payment of $ 1,000,000 upon
the first to occur of (a) February 1, 2009 of (b) the date thirty
(30) days after den-Mat sells GlamSmile Products incorporating twenty
thousand (20,000) Units/Teeth to customers regardless of whether Den-Mat has
manufactured such Units/Teeth in a Den-Mat facility or has purchased such
Units/Teeth from us; (vii) certain milestone payments; and
(viii) certain royalty payments.  Further, as consideration for
Den-Mat’s obligations under the Distribution Agreement, we 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 our 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 (issued in the period ended
September 30, 2008); (ii) execute and deliver to Den-Mat a
registration rights agreement covering the registration of the Warrant Shares;
and (iii) cause our Chairman of the Board, Guy De Vreese, to execute and
deliver to Den-Mat a non-competition agreement.


9


In connection with the distribution
agreement with Den-Mat, we purchased all of the outstanding capital stock of
Glamtech from the two shareholders of Glamtech, in exchange for the rescission
of the previously existing distribution agreements with Glamtech, certain
limited royalty payments allocated to sales of the specified veneer products in
the United States, Canada and the United Kingdom during the term of the
agreement with Den-Mat, and an aggregate of one million (1,000,000) restricted
shares of the our common stock.  The primary assets of Glamtech were
those certain distribution agreements which granted Glamtech the exclusive right
to distribute the relevant veneer products in the United States, Canada and the
United Kingdom.





On June 3, 2009, we entered into an
Amended and Restated Distribution, License and Manufacturing Agreement (“Amended
Agreement”) with Den-Mat, pursuant to which certain provisions of the
Distribution Agreement discussed above were amended and
restated.  Under the terms of the Distribution and Amended Agreements,
Den-Mat is appointed to be the sole and exclusive distributor to market, license
and sell certain products relating to the Company’s GlamSmile tray technology,
including, but not limited to, its GlamSmile veneer products and other related
veneer products (the “Products”), throughout the world, with the exception of
Australia, Austria, Belgium, Brazil, France (including Dom-Tom), Germany, Italy,
New Zealand, Oman, Poland, Qatar, Saudi Arabia, Singapore, Switzerland,
Thailand, and United Arab Emirates (collectively the “Excluded Markets”) and the
China Market (the “Territory”).  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) acknowledgment that the Guaranty Period has commenced as of
April 1, 2009,  all as such terms are more specifically detailed in
the Amended Agreement.  More specifically, under the Amended
Agreement, 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 our 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 until for twelve (12) or such longer period that would be necessary in
order for Den-Mat to meet its Minimum Purchase Requirement in the event that our
manufacturing capacity falls below a certain threshold.


10


On August
11, 2009, the Company and Den-Mat entered into Amendment No. 1 to Amended and
Restated Distribution, License and Manufacturing Agreement (“Amendment No. 1”)
pursuant to which certain provisions of a certain Amended and Restated
Distribution, License and Manufacturing Agreement previously entered into by the
Company and Den-Mat on June 3, 2009 (the “Distribution Agreement”) were
amended.  Among other things, the 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 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.





On March 29, 2010, concurrently with
the execution of the First Fit Amendment (as described below), the Company and
Den-Mat entered into Amendment No. 2 to the Amended and Restated Distribution,
License and Manufacturing Agreement (“Glamsmile Amendment”) with Den-Mat
pursuant to which certain provisions of a certain Amended and Restated
Distribution, License and Manufacturing Agreement previously entered into by the
Company and Den-Mat on June 3, 2009 and subsequently amended on August 11, 2009,
were amended.  The Glamsmile Amendment became effective concurrently
with the effectiveness of the First Fit Amendment.  Among other
things, the Glamsmile Amendment (1) permits the Company to purchase its
requirements for GlamSmile Products from another party, other than
Den-Mat,  provided Company pays De-Mat a royalty payment on net
revenues received by Company per unit/tooth, (2) decreases the percentage of
securities to be covered in a warrant to purchase securities of B2C Market
Subsidiary and the exercise price of such warrant to be issued to
Den-Mat  in the event a B2C Market Subsidiary is formed under the
terms set forth in such agreement, (3) expands the definition of “Excluded
Market” to include Australia, Belgium, France and United Arab Emirates, and (4)
provides a consulting fee, equal to a percentage of net revenues received by
Den-Mat from the Sale of Unit/Teeth and trays, to the Company for its services,
support  and certain additional consideration, (5) terminates certain
provisions relating to minimum requirement obligations and rights, and (6)
amends the formula for calculation a certain exit fee in the event of a change
of control.





On March 29, 2010, a certain Amendment
No. 1 to First Fit Crown Distribution and  License Agreement (“First
Fit Amendment”) between the Company and Den-Mat, pursuant to which the Company
agreed to sell to Den-Mat all of the intellectual property or used by Company
related to the First Fit product (“First Fit IP”) became effectuated upon
Company’s receipt of Den-Mat’s countersignatures to the First Fit
Amendment.  The First Fit Amendment amends the First Fit-Crown
Distribution  and License Agreement dated June 3, 2009 between the
Company and Den-Mat, pursuant to which Den-Mat was granted certain license and
distribution rights relating to the First Fit IP and First Fit
products.  The total purchase price for the First Fit IP consists of
installment payments and royalty payments.  The  cash
component of the purchase price of the First Fit IP is $2,850,000 to be paid in
the form of cash in the following installments: (a) $50,000 upon delivery by
Remedent to Den-Mat of a working prototype of the First Fit crown, (b) $525,000
on or before March 15, 2010 (c) $700,000 on June 30, 2010, and (d) $500,000
on December 31, 2010, June 30, 2011 and December 31, 2011. In connection with
the execution of the First Fit Agreement, Den-Mat also agreed to make an advance
cash payment of $75,000 to the Company towards the purchase price.  In
addition to the cash component, Den-Mat agreed to pay Remedent a capital payment
equal to a certain percent of Den-Mat’s net revenues generated by the sale of
the First Fit products.


11


Locations





We lease our 26,915 square feet office
and warehouse facility in Deurle, Belgium.  Our operations take place
primarily at our office space and warehouse in Deurle, Belgium.  We also lease a
smaller office facility of 2,045 square feet in Gent, Belgium to support the
sales and marketing division of our veneer business. To house our Research and
Development Division, we also lease an additional office facility of
approximately 2,290 square feet.  The facility is located next to our
sales and marketing division.





Manufacturing





Prior to
2003, all of the manufacturing related to our dental products were conducted
through third party manufacturers under our supervision thereby minimizing
demands on capital resources.  Beginning in 2003, parts of the
manufacturing and the majority of the final assembly of our products were
brought in-house, thereby improving control over product quality while
significantly reducing product costs.  These efforts were expanded
significantly during the fiscal year ended March 31, 2006, in particular with
regard to the expansion of in-house manufacturing capabilities for our gel
products and foam strips. The Company still manufactures many of its products in
its facility in Deurle, Belgium, as well as through outsourced manufacturing in
China and France.  In December 2005, our manufacturing facility became
ISO 9001:2000 certified and ISO 13485:2003 certified which includes the
certification for the manufacture of medical devices.





Research
and Development





Our research and development expenses
increased $22,543 to $271,195 for the year ended March 31, 2010 as compared to
$248,652 for the year ended March 31, 2009, a 9.1 %.  Our current
levels of research and development expenditures are reflective of an average
year. Research and Development expenses have increased primarily because of our
work with respect to the ‘First-Fit Concept’.





Intellectual
Property





GlamSmile.         We
have filed two patent applications in the European Union, United States and
Australia related to both the design and manufacturing process of the GlamSmile
product.  We have also applied for international trademark
registration for GlamSmile in the United States and European Union. In addition,
we have secured the domain name www.glamsmile.com as well as other related
internet domains in our targeted markets. We also have ongoing research and
development efforts to improve and expand our current technology and to develop
new dental products.  We intend to continue to apply for patents when
we believe it is in our interest to do so and as advised by patent
counsel.  We rely and will continue to rely on trade secrets, know-how
and other unpatented proprietary information in our business.  Certain
of our key employees and consultants are required to enter into confidentiality
and/or non-competition agreements to protect our confidential
information.


12




Teeth Whitening
Patents.    In October 2004, we 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 us.
Pursuant to the terms of the license agreement, we were 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. We are
amortizing the initial cost of $65,000 for these patents over a ten year period
and accordingly has recorded $35,750 of accumulated amortization for this patent
as of March 31, 2010.  We will  accrue this royalty when it
becomes payable to inventory therefore no provision has been made for this
obligation as of March 31, 2010 (March 31, 2009-Nil).





Universal Applicator
Patent.   In September 2004, we 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. We have filed to have the patent approved throughout Europe.
The agreement required us to advance to the inventors through Lident a fully
refundable deposit of €100,000 subject to our due diligence regarding the
enforceability of the patent and marketability of the product, which, if viable,
would be assigned to us 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 we 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 our 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 us in exchange for the
reimbursement of Lident’s actual costs incurred relating to the intellectual
property. Consequently, when we exercise 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, we exercised the
option and we and the patent holder agreed to revise the assignment agreement
whereby we 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 us in September 2005 and the remaining €25,000 is to be paid upon our first
shipment of a product covered by the patent. As of March 31, 2010 we have not
yet received the final Product. The patent is being amortized over five (5)
years and accordingly, the Company has recorded $103,012 of accumulated
amortization for this patent as of March 31, 2010.





Major
Customers





For the
year ended March 31, 2010 the Company had two customers that accounted for 45.2%
and 11.4% respectively of total revenues. For the year ended March 31, 2009 the
Company had one customer that accounted for 45.5% of total
revenues.


13





Competition





GlamSmile.  Our
competition consists of both alternative procedures that can be performed to
achieve in part the results that would be achieved through a GlamSmile
procedure, as well as competition from dentists not within the GlamSmile network
who provide veneer procedures. With regard to alternative procedures, options
available to the consumer include various whitening procedures, dental implants,
dental bonding and dental caps. With the exception of whitening procedures,
which for the most part cannot address many of the dental issues solved by
GlamSmile veneers, the remaining alternatives all involve more cost, more
patient discomfort and more time to complete. There are many dental
practitioners that perform traditional veneer procedures. In most cases,
traditional veneers will also be significantly more costly then GlamSmile
veneers and require the dentist to remove more of the existing tooth material as
well as requiring multiple patient visits to complete. That said, there will be
existing practitioners that believe they can attain more customized results with
the individual veneer approach as opposed to the GlamSmile tray approach and may
be reluctant to offer our less costly procedure. To the best of our knowledge,
GlamSmile will be “first to market” with respect to a direct to consumer
advertising and promotion campaign for veneers anywhere which should enable us
to capture market share in what we believe will be a rapidly growing market.
Further, we have filed for patents on our proprietary tray delivery systems and
have developed years of knowhow relating to treating patients with the multiple
veneer approach. However, new technologies are continue to be developed and new
processes could be designed that would not violate our patents and result in
similar solutions that could compete with GlamSmile products. Because we are
uniquely positioned to have the ability tocontrol the entire process from
manufacturing to marketing to distribution, we believe it is feasible for us
to  have complete control and flexibility to maximize margins and
respond aggressively to any competitive situation.





Teeth
Whitening.  International markets including Europe, Asia and
Latin America have followed the United States’ lead in expanding offerings in
the areas of teeth whitening.  Leading the way in both the
professional dentist segment has been United States based companies seeking to
expand their distribution.  Impeding these efforts has been the
inability of many of these companies to fully understand the differences from
both a distribution and a regulatory standpoint that apply in each of the
European and Asian markets.  Notwithstanding the formation of the
European Union and its efforts to standardize regulatory and business practices
throughout Europe, these practices in reality vary widely from country to
country.  Competition in the professional dentistry product lines
comes primarily from the larger United States based competitors including
Brite-Smile, Rembrandt (now a subsidiary of Gillette Company, Inc.), Discuss
Dental, Inc. and Zoom.  All of these companies offer light and
whitening solutions to the professional dentist community.  Despite
our competition’s advantage with respect to size, resources and name
recognition, we have continued to maintain market share in this highly
competitive segment for the following reasons:





•
            Better
      combined pricing strategy than the competition when considering net cost
      for whitening materials and initial cost of
  light.





•
            Dual
      purpose light to maximize value of initial
  investment.





•
            Ease
      of use from automated functionality of light, speed and gel application
      method.





•
            Superior
      gel formulation which maximizes performance while minimizing
      sensitivity.





•
            Home
      maintenance kit for improved patient
  satisfaction.


14





Regulatory
Issues





Medical
Device





As we market dental products which are
legally defined to be medical devices, we are considered to be a medical device
manufacturer and as such we are subject to the regulations of, among other
governmental entities, the United States Food and Drug Administration (the
“FDA”) and the corresponding agencies of the states and foreign countries in
which we sell our products.  These regulations govern the introduction
of new medical devices, the observance of certain standards with respect to the
manufacture and labeling of medical devices, the maintenance of certain records
and the reporting of potential product problems and other matters.  A
failure to comply with such regulations could have material adverse effects on
our business.





The Federal Food, Drug and Cosmetic
Act (“FDC Act”) regulates medical devices in the United States by classifying
them into one of three classes based on the extent of regulation believed
necessary to ensure safety and effectiveness.  Class I devices are
those devices for which safety and effectiveness can reasonably be ensured
through general controls, such as device listing, adequate labeling, pre-market
notification and adherence to the Quality System Regulation (“QSR”) as well as
medical device reporting, labeling and other regulatory
requirements.  Some Class I medical devices are exempt from the
requirement of pre-market approval or clearance.  Class II devices are
those devices for which safety and effectiveness can reasonably be ensured
through the use of special controls, such as performance standards, post-market
surveillance and patient registries, as well as adherence to the general
controls provisions applicable to Class I devices.  Class III devices
are devices that generally must receive pre-market approval by the FDA pursuant
to a pre-market approval application (“PMA”) to ensure their safety and
effectiveness.  Generally, Class III devices are limited to life
sustaining, life supporting or implantable devices; however, this classification
can also apply to novel technology or new intended uses or applications for
existing devices.





Before most medical devices can be
marketed in the United States, they are required by the FDA to secure either
clearance of a pre-market notification pursuant to Section 510(k) of the FDC Act
(a “510(k) Clearance”) or approval of a PMA.  Obtaining approval of a
PMA can take several years.  In contrast, the process of obtaining
510(k) Clearance generally requires a submission of substantially less data and
generally involves a shorter review period.  Most Class I and Class II
devices enter the market via the 510(k) Clearance procedure, while new Class III
devices ordinarily enter the market via the more rigorous PMA
procedure.  In general, approval of a 510(k) Clearance may be obtained
if a manufacturer or seller of medical devices can establish that a new device
is “substantially equivalent” to a predicate device other than one that has an
approved PMA.  The claim for substantial equivalence may have to be
supported by various types of information, including clinical data, indicating
that the device is as safe and effective for its intended use as its legally
marketed equivalent device.  The 510(k) Clearance is required to be
filed and cleared by the FDA prior to introducing a device into commercial
distribution.  Market clearance for a 510(k) Notification submission
may take 3 to 12 months or longer.  If the FDA finds that the device
is not substantially equivalent to a predicate device, the device is deemed a
Class III device, and a manufacturer or seller is required to file a
PMA.  Approval of a PMA for a new medical device usually requires,
among other things, extensive clinical data on the safety and effectiveness of
the device.  PMA applications may take years to be approved after they
are filed.  In addition to requiring clearance or approval for new
medical devices, FDA rules also require a new 510(k) filing and review period
prior to marketing a changed or modified version of an existing legally marketed
device if such changes or modifications could significantly affect the safety or
effectiveness of that device.  The FDA prohibits the advertisement or
promotion of any approved or cleared device for uses other than those that are
stated in the device’s approved or cleared application. We believe that the
GlamSmile products will not require a 510(k) submission because the products
fall within an exemption under the 510(k) regulation.


15





International sales of medical
devices are also subject to the regulatory requirements of each
country.  In Europe, the regulations of the European Union require
that a device have a CE Mark, a mark that indicates conformance with European
Union laws and regulations before it can be sold in that market.  The
regulatory international review process varies from country to
country.  We previously relied upon our distributors and sales
representatives in the foreign countries in which we market our products to
ensure we comply with the regulatory laws of such countries; however, during the
year ended March 31, 2006 we expanded our own Research and Development personnel
to enable us to provide greater assistance and play a more proactive role in
obtaining local regulatory approvals, especially in Europe.  We
currently have an in-office regulatory affairs representative who is responsible
for coordinating local and international approvals as well as our ISO:9001 and
ISO:13485 (medical device).





Fee
Splitting and Arrangements with Health Professionals





Many states in the United States and
countries worldwide have laws that prohibit business corporations like us from
practicing medicine, employing dentists to practice medicine, exercising control
over medical decisions by dentists, or engaging in certain arrangements, such as
fee splitting, with dentists. In light of these restrictions, in certain markets
where permissible we intend to operate by maintaining management contracts with
dentists owned corporations or other business entities that employ or contract
with dentists to provide the GlamSmile and other dental services. Under these
arrangements we will perform under contract only nonmedical administrative
services, will not offer medical services and will not exercise influence or
control over the practice of medicine by the dentists employed by such business
entities. In markets where fee splitting with a business corporation is
prohibited, the fees that will be received by us will have been established on a
basis that we believe complies with the applicable laws. However, regulatory
authorities or other parties may assert that, despite these arrangements, we are
engaged in the corporate practice of medicine or that the contractual
arrangements with the affiliated professional contractors constitute unlawful
fee splitting, in which case we could be subject to civil or criminal penalties,
the contracts could be found legally invalid and unenforceable (in whole or in
part) or we could be required to restructure our contractual
arrangements.





Costs
and Effects of Compliance with Environmental Laws and Regulations





We are not in a business that
involves the use of materials in a manufacturing stage where such materials are
likely to result in the violation of any existing environmental rules and/or
regulations.  Further, we do not own any real property that could lead
to liability as a landowner.  Therefore, we do not anticipate that
there will be any substantial costs associated with the compliance of
environmental laws and regulations.





Employees





We currently retain 24 full-time
employees in Belgium.  We currently have one employee,
Mr. Stephen Ross, our Chief Financial Officer, located in the United
States.  Our subsidiary, Remedent, N.V., has an employment agreement
with Mr. Philippe Van Acker our Chief Accounting Officer.  We have no
other employment agreements with our executive officers.





Financial
Information About Geographic Areas





Refer to
Note 22, “Segment Reporting,” to our Consolidated Financial Statements included
under Item 8, “Financial Statements and Supplementary Data” for financial
information about our geographic areas.


16





ITEM
1A — RISK FACTORS





RISK
FACTORS





Investment in our common stock
involves risk.  You should carefully consider the risks we describe below
before deciding to invest.  The market price of our common stock could
decline due to any of these risks, in which case you could lose all or part of
your investment.  In assessing these risks, you should also refer to the other
information included in this Annual Report, including our consolidated financial
statements and the accompanying notes.  You should pay particular attention to
the fact that we are a holding company with substantial operations in Belgium
and China and are subject to legal and regulatory environments that in many respects
differ from that of the United States.  Our business, financial condition or
results of operations could be affected materially and adversely by any of
the risks discussed below and any others not foreseen.  This discussion
contains forward-looking statements.





Risks
Relating To Our Business





We
have a history of losses and we could suffer losses in the future.





With the
exception of a small profit of $16,149 on revenue of $5,234,855 for the fiscal
year ended March 31, 2004, we have had a history of substantial
losses.  Our losses were $2,952,915 on revenues of $14,639,541 for the
year ended March 31, 2009, and $2,349,915 on revenues of $8,247,940 for the year
ended March 31, 2010.  We expect to continue to incur increasing cost
of revenues, research and development expenses, sales and marketing and general
and administrative expenses in connection with our business
strategy.  However, despite our efforts, there  is no
assurance that we will be able to achieve or sustain profitability





Substantially all of our assets are
secured under a credit facility with Fortis Bank, a bank located outside of the
United States, and in the event of default under the credit facility we may lose
all of our assets.





On October 8, 2004, our wholly owned
subsidiary, Remedent N.V., obtained a mixed-use line of credit facility with
Fortis Bank, a Belgian bank (“Fortis Bank”), for €1,070,000 (the
“Facility”).  The Facility is secured by a first lien on the assets of
Remedent N.V.  The purpose of the Facility is to provide working
capital to grow our business and to finance certain accounts receivable as
necessary.  Since opening the Facility in 2004, Remedent N.V. and
Fortis Bank have subsequently amended the Facility several times to increase or
decrease the line of credit.  On May 3, 2005 the Facility was amended
to decrease the line of credit to €1,050,000.  On March 13, 2006, the
Facility was amended to increase the mixed-use line of credit to €2,300,000,
consisting of a €1,800,000 credit line based on the eligible accounts receivable
and a €500,000 general line of credit.  The Facility was further
amended September 1, 2006, to decrease the mixed-use line of credit to
€2,050,000.  The latest amendment to the Facility, dated January 3,
2008, amended and decreased the mixed-use line of credit to €2,050,000, to be
used by Remedent N.V. and/or Sylphar NV.  Each line of credit carries
its own interest rates and fees as provided in the Facility. The latest
amendment to the Facility, dated June 7, 2010, amended and split the line of
credit to €1,250,000 for Remedent N.V. and € 1,000,000 to be used by Sylphar
NV.  Each line of credit carries its own interest rates and fees as
provided in the Facility and vary from the current prevailing bank rate of
approximately 2.9% for draws on the credit line, to 8.4% for advances on
accounts receivable concerning Remedent N.V. and similar for Sylphar N.V.
Remedent N.V. and Sylphar N.V. are currently only utilizing two lines of credit,
advances based on accounts receivables and the straight loan. As of March 31,
2010 and March 31, 2009, there were $ 674,600 and $660,200 in advances
outstanding, respectively, under this mixed-use line of credit facility.
Although we are current in our obligations under this Facility, in the event of
a default under this Facility we may lose our assets.


17





We
depend on strategic relationships with third parties  for sales and
marketing performance and revenues in the People’s Republic of China and certain
territories in North America,   and failure to maintain these
relationships, poor performance by these companies or disputes with these
companies could negatively impact our business.




We rely on significant
strategic  relationships with third parties, for our sales and
marketing performance in certain territories. These include collaborations with
Den-Mat and strategic partners in China for our dental spas.  Reliance
on collaborative relationships poses a number of risks, including the risk
that:




•
            we
      are unable to control the resources our corporate partners devote to our
      programs or products;




•
            disagreements
      with our corporate partners could cause delays in, or termination of, the
      research, development or commercialization of product candidates or result
      in litigation or arbitration;




•
            contracts
      with our corporate partners may fail to provide significant protection or
      may fail to be effectively enforced if one of these partners fails to
      perform;




•
            our
      corporate partners with marketing rights may choose to pursue competing
      technologies or to devote fewer resources to the marketing of our
      products; and




•
            our
      distributors and our corporate partners may be unable to pay us,
      particularly in light of current economic
  conditions.




Given these risks, there is a great
deal of uncertainty regarding the success of our current and future
collaborative efforts. If these efforts fail, our product development or
commercialization of new products could be delayed or revenues from products
could decline.




We
may not have access to capital in the future as a result of disruptions in
capital and credit markets.





Although we currently have additional
credit available under our Facility with Fortis Bank, we may not be able to
access our funds in the future.  Our access to the funds under our
current credit facility with Fortis Bank is dependent on the ability of the
financial institution that is party to the facility to meet its funding
commitments. Fortis Bank may not be able to meet its funding commitments if it
experiences shortages of capital and liquidity or if it experiences excessive
volumes of borrowing requests within a short period of time. Moreover, longer
term volatility and continued disruptions in the capital and credit markets as a
result of uncertainty, changing or increased regulation of financial
institutions, reduced alternatives or failures of significant financial
institutions could affect adversely our access to the liquidity needed for our
business in the longer term. Such disruptions could require us to take measures
to conserve cash until the markets stabilize or until alternative credit
arrangements or other funding for our business needs can be arranged. The
disruptions in the capital and credit markets have also resulted in higher
interest rates on publicly issued debt securities and increased costs under
credit facilities. The continuation of these disruptions would increase our
interest expense and capital costs and could affect adversely our results of
operations and financial position including our ability to grow our business
through acquisitions.


18





We may not be able to secure
additional financing to meet our future capital needs due to changes in general
economic conditions.





We anticipate needing significant
capital to introduce new products, further develop our existing products,
increase awareness of our brand names and expand our operating and management
infrastructure as we grow sales in Europe, Asia and South America
and  launch sales and distribution activities in the United
States.  We may use capital more rapidly than currently anticipated
and incur higher operating expenses and generate lower revenue than currently
expected, and we may be required to depend on external financing to satisfy our
operating and capital needs.  We may need new or additional financing
in the future to conduct our operations or expand our business. Any sustained
weakness in the general economic conditions and/or financial markets in the
United States or globally could affect adversely our ability to raise capital on
favorable terms or at all. From time to time we have relied, and may also rely
in the future, on access to financial markets as a source of liquidity to
satisfy working capital requirements and for general corporate purposes. We may
be unable to secure additional debt or equity financing on terms acceptable to
us, or at all, at the time when we need such funding.  If we do raise
funds by issuing additional equity or convertible debt securities, the ownership
percentages of existing stockholders would be reduced, and the securities that
we issue may have rights, preferences or privileges senior to those of the
holders of our common stock or may be issued at a discount to the market price
of our common stock which would result in dilution to our existing
stockholders.  If we raise additional funds by issuing debt, we may be
subject to debt covenants, such as the debt covenants under our secured credit
facility, which could place limitations on our operations including our ability
to declare and pay dividends.  Our inability to raise additional funds
on a timely basis would make it difficult for us to achieve our business
objectives and would have a negative impact on our business, financial condition
and results of operations.





Our
results of operations may be adversely impacted by currency
fluctuations.





We currently have operations in Belgium
and have product sales in Europe, the Middle East, South America and
Asia.  A significant portion of our revenue is in currencies other
than United States dollars, including Euros, Hong Kong dollar and the Chinese
Remimbi (“RMB”).  Because our financial statements are reported in
United States dollars, fluctuations in Euros, Hong Kong dollar and RMB against
the United States dollar may cause us to recognize foreign currency transaction
gains and losses, which may be material to our operations and impact our
reported financial condition and results of operations





Substantially all of our assets and
our operations are located outside of the United States, a significant number of
sales  are generated outside of the United States subjecting us to
risks associated with international operations.





Our operations are primarily in
Europe and Asia and 64 % of our sales for the fiscal year ended March 31, 2010
were generated from customers outside of the United States, compared to 43% of
our sales for the fiscal year ended March 31, 2009. The international nature of
our business subjects us to the laws and regulations of the jurisdictions in
which we operate and sell our products.  In addition, we are subject
to risks inherent in international business activities, including:





•
            difficulties
      in collecting accounts receivable and longer collection
      periods,





•
            changes
      in overseas economic conditions,





•
            fluctuations
      in currency exchange rates,


19





•
            potentially
      weaker intellectual property
protections,





•
            changing
      and conflicting local laws and other regulatory
    requirements,





•
            political
      and economic instability,





•
            war,
      acts of terrorism or other
hostilities,





•
            potentially
      adverse tax consequences,





•
            difficulties
      in staffing and managing foreign operations,
or





•
            tariffs
      or other trade regulations and
restrictions.





Our quarterly sales and operating
results have fluctuated and may continue to fluctuate in future periods which may
cause the price of our common stock to decline.





Our
quarterly sales and operating results have fluctuated and are likely to continue
to vary from quarter to quarter due to a number of factors, many of which are
not within our control.  Factors that might cause quarterly
fluctuations in our sales and operating results include, but are not limited by
the following:





•
            Variation
      in demand for our products, including variation due to
      seasonality;





•
            Our
      ability to research, develop, introduce, market and gain market acceptance
      of new products and product enhancements in a timely
    manner;





•
            Our
      ability to control costs;





•
            The
      size, timing, rescheduling or cancellation of orders from
      distributors;





•
            The
      introduction of new products by
competitors;





•
            Long
      sales cycles and fluctuations in sales
cycles;





•
            The
      availability and reliability of components used to manufacture our
      products;





•
            Changes
      in our pricing policies or those of our suppliers and competitors, as well
      as increased price competition in
general;





•
            The
      risks and uncertainties associated with our international
      business;





•
            Costs
      associated with any future acquisitions of technologies and
      businesses;





•
            Developments
      concerning the protection of our proprietary rights;
  and





•
            General
      global economic, political, international conflicts, and acts of
      terrorism.


20





We are economically sensitive
to general economic conditions, including continued weakening of the economy,
therefore the sale of our products couldbe adversely
affected.





Our industry is sensitive to
recessions in the general economy and future economic outlook. Our results may
be dependent on a number of factors impacting consumer spending, including
general economic and business conditions; and consumer confidence. The demand
for our dental products may decline during recessionary periods and at other
times when disposable income is lower. A downturn or an uncertain outlook in the
economy may materially adversely affect our business.





An
unsuccessful material strategic transaction or relationship could result in
operating difficulties and other harmful consequences to our
business.





We have evaluated, and expect to
continue to evaluate, a wide array of potential strategic transactions and
relationships with third parties.   From time to time, we may
engage in discussions regarding potential acquisitions or joint ventures. Any of
these transactions could be material to our financial condition and results of
operations, and the failure of any of these material relationships and
transactions may have a negative financial impact on our business.





Our products may be subject to
government regulation and failure to comply with applicable regulations could result
in fines, suspensions, seizure actions, product recalls, injunctions and
criminal prosecutions.





Before most medical devices can be
marketed in the United States, they are required by the United States Food and
Drug Administration (“FDA”) to secure either clearance of a pre-market
notification pursuant to Section 510(k) of the Federal Food, Drug and Cosmetic
Act (“FDC Act”) (a “510(k) Clearance”) or approval of a pre-market approval
application (“PMA”).  Obtaining approval of a PMA application can take
several years.  In contrast, the process of obtaining 510(k) Clearance
generally requires a submission of substantially less data and generally
involves a shorter review period.  As discussed more specifically
under the subsection title “Regulatory Issue,” most Class I and Class II devices
enter the market via the 510(k) Clearance procedure, while new Class III devices
ordinarily enter the market via the more rigorous PMA
procedure.  Approval of a PMA application for a new medical device
usually requires, among other things, extensive clinical data on the safety and
effectiveness of the device.  PMA applications may take years to be
approved after they are filed.  In addition to requiring clearance or
approval for new medical devices, FDA rules also require a new 510(k) filing and
review period, prior to marketing a changed or modified version of an existing
legally marketed device, if such changes or modifications could significantly
affect the safety or effectiveness of that device.  The FDA prohibits
the advertisement or promotion of any approved or cleared device for uses other
than those that are stated in the device’s approved or cleared
application.





We have received approval from the
FDA to market our RemeCure dental curing lamp in the United
States.  We submitted our application for approval on FDA Form 510(k)
on October 30, 2002 and received FDA approval for this product on January 9,
2003.  None of our other products have FDA approval for marketing in
the United States.  However, we believe that our products, including
for example, GlamSmile, do not require a 510(k) submission because the products
fall within an exemption under the 510(k) regulation.





International sales of medical
devices are also subject to the regulatory requirements of each
country.  In Europe, the regulations of the European Union require
that a device have a CE Mark, a mark that indicates conformance with European
Union laws and regulations before it can be sold in that market.  The
regulatory international review process varies from country to
country.  We rely upon our distributors and sales representatives in
the foreign countries in which we market our products to ensure we comply with
the regulatory laws of such countries.  Failure to comply with the
laws of such country could have a material adverse effect on our operations and,
at the very least, could prevent us from continuing to sell products in such
countries.


21




We may not have effective internal
controls if we fail to remedy any deficiencies we may identify in our
system of internal controls.





In connection with Section 404 of the
Sarbanes-Oxley Act of 2002, we need to assess the adequacy of our internal
control, remediate any weaknesses that may be identified, validate that controls
are functioning as documented and implement a continuous reporting and
improvement process for internal controls.  We may discover
deficiencies that require us to improve our procedures, processes and systems in
order to ensure that our internal controls are adequate and effective and that
we are in compliance with the requirements of Section 404 of the Sarbanes-Oxley
Act.  If the deficiencies are not adequately addressed, or if we are
unable to complete all of our testing and any remediation in time for compliance
with the requirements of Section 404 of the Sarbanes-Oxley Act and the SEC rules
under it, we would be unable to conclude that our internal controls over
financial reporting are designed and operating effectively, which could
adversely affect our investor confidence in our internal controls over financial
reporting.





The loss of or a substantial
reduction in, or change in the size or timing of, orders from distributors could harm
our business.





Our international sales are
principally comprised of sales through independent distributors, although we
sell products in certain European countries through direct sales
representatives.  A significant amount of our sales may consist of
sales through distributors.  The loss of a substantial number of our
distributors or a substantial reduction in, cancellation of or change in the
size or timing of orders from our current distributors could harm our business,
financial condition and results of operations.  The loss of a key
distributor would affect our operating results due to the potential length of
time that might be required to locate and qualify a new distributor or to retain
direct sales representatives for the territory.





We
do not have long term commitments from our suppliers and
manufacturers.





We may experience shortages of
supplies and inventory because we do not have long-term agreements with our
suppliers or manufacturers.  Our success is dependent on our ability
to provide our customers with our products.  Although we manufacture
most of our products, we are dependent on our suppliers for component parts
which are necessary for our manufacturing operations.  In addition,
certain of our present and future products and product components are (or will
be) manufactured by third party manufacturers.  Since we have no
long-term contracts or other contractual assurances with these manufacturers for
continued supply, pricing or access to component parts, no assurance can be
given that such manufacturers will continue to supply us with adequate
quantities of products at acceptable levels of quality and
price.  While we believe that we have good relationships with our
suppliers and our manufacturers, if we are unable to extend or secure
manufacturing services or to obtain component parts or finished products from
one or more manufacturers on a timely basis and on acceptable terms, our results
of operations could be adversely affected.


22





We face intense competition, and many
of our competitors have substantially greater resources than we
do.





We operate in a highly competitive
environment.  In addition, the competition in the market for teeth
whitening and cosmetic dental products and services may intensify as we enter
into the United States market.  There are numerous well-established
companies and smaller entrepreneurial companies based in the United States with
significant resources who are developing and marketing products and services
that will compete with our products.  In addition, many of our current
and potential competitors have greater financial, technical, operational and
marketing resources.  These resources may make it difficult for us to
compete with them in the development and marketing of our products, which could
harm our business.





Our success will depend on our
ability to update our technology to remain competitive.





The dental device and supply industry
is subject to technological change.  As technological changes occur in
the marketplace, we may have to modify our products in order to become or remain
competitive.  While we are continuing our research and development in
new products in efforts to strengthen our competitive advantage, no assurances
can be given that we will successfully implement technological improvements to
our products on a timely basis, or at all.  If we fail to anticipate
or respond in a cost-effective and timely manner to government requirements,
market trends or customer demands, or if there are any significant delays in
product development or introduction, our revenues and profit margins may decline
which could adversely affect our cash flows, liquidity and operating
results.





We depend on market acceptance of the
products of our customers.  If our products do not gain market
acceptance, our ability to compete will be adversely
affected.





Our success will depend in large part
on our ability to successfully market our line of products and our ability to
receive all regulatory approvals.  Although we intend to differentiate
our products from our competitors by targeting different channels of
distribution, no assurances can be given that we will be able to successfully
market our products or achieve consumer acceptance.  Moreover, failure
to successfully develop, manufacture and commercialize our products on a timely
and cost-effective basis will have a material adverse effect on our ability to
compete in our targeted market segments.  In addition, medical and
dental insurance policies generally do not cover teeth whitening or other
cosmetic dental procedures, including our products, which may have an adverse
impact upon the market acceptance of our products.





Failure to meet customers’
expectations or deliver expected performance of our products could result in losses and
negative publicity, which will harm our business.





If our products fail to perform in
the manner expected by our customers, then our revenues may be delayed or lost
due to adverse customer reaction, negative publicity about us and our products,
which could adversely affect our ability to attract or retain
customers.  Furthermore, disappointed customers may initiate claims
for substantial damages against us, regardless of our responsibility for such
failure.





If product liability lawsuits are
successfully brought against us, we may incur substantial liabilities and may be
required to limit commercialization of our products.





Although we have not been a party to
any product liability lawsuits and are currently not aware of any anticipated
product liability claims with respect to our products, the nature of our
business exposes us to product liability lawsuits arising out of the
commercialization of our products.  In the future, an individual may
bring a liability claim against us if one of our products causes, or merely
appears to have caused, an injury.  If we cannot successfully defend
ourselves against the product liability claim, we may incur substantial
liabilities.  Regardless of merit or eventual outcome, liability
claims may result in:





•
            decreased
      demand for our products;





•
            injury
      to our reputation;


23




•
            costs
      of related litigation;





•
            substantial
      monetary awards to customers;





•
            product
      recalls;





•
            loss
      of revenue; and





•
            the
      inability to commercialize our
products.





We
may have difficulty managing our growth.





We have been experiencing significant
growth in the scope of our operations, including the launch of our direct to
consumer business model in Asia through strategic partnerships.  This
growth has placed significant demands on our management as well as our financial
and operational resources.  In order to achieve our business
objectives, we anticipate that we will need to continue to grow.  If
this growth occurs, it will continue to place additional significant demands on
our management and our financial and operational resources, and will require
that we continue to develop and improve our operational, financial and other
internal controls.  We have been distributing our products primarily
in Europe and we have recently launched sales and distribution in the United
States and Asia, this expansion could further increase the challenges involved
in implementing appropriate operational and financial systems, expanding
manufacturing capacity and scaling up production, expanding our sales and
marketing infrastructure and capabilities and providing adequate training and
supervision to maintain high quality standards.  The main challenge
associated with our growth has been, and we believe will continue to be, our
ability to recruit and integrate skilled sales, manufacturing and management
personnel.  Our inability to scale our business appropriately or
otherwise adapt to growth would cause our business, financial condition and
results of operations to suffer.





It may be difficult to enforce a
United States judgment against us, our officers and directors, or to assert
United States securities laws claims in Belgium and to serve process on
substantially all of our directors and officers and these
experts.





A majority of our directors and our
chief executive officer are nonresidents of the United States.  A
substantial portion of our assets and all or a substantial portion of the assets
of these officers and directors and experts are located outside of the United
States.  As a result, it may be difficult to effect service of process
within the United States with respect to matters arising under the United States
securities laws or to enforce, in the United States courts, judgments predicated
upon civil liability under the United States securities laws.  It also
may be difficult to enforce in Belgium, in original actions or in actions for
enforcement of judgment of United States courts, civil liabilities predicated
upon United States securities laws.





If we are unable to protect our
intellectual property rights or our intellectual property rights are
inadequate, our competitive position could be harmed or we could be required to
incur expenses to enforce our rights.





Our future success will depend, in
part, on our ability to obtain and maintain patent protection for our products
and technology, to preserve our trade secrets and to operate without infringing
the intellectual property of others.  In part, we rely on patents to
establish and maintain proprietary rights in our technology and
products.  While we hold licenses to a number of issued patents and
have other patent applications pending on our products and technology, we cannot
assure you that any additional patents will be issued, that the scope of any
patent protection will be effective in helping us address our competition or
that any of our patents will be held valid if subsequently
challenged.  Other companies also may independently develop similar
products, duplicate our products or design products that circumvent our
patents.


24




In addition, if our intellectual
property rights are inadequate, we may be exposed to third-party infringement
claims against us.  Although we have not been a party to any
infringement claims and are currently not aware of any anticipated infringement
claim, we cannot predict whether third parties will assert claims of
infringement against us, or whether any future claims will prevent us from
operating our business as planned.  If we are forced to defend against
third-party infringement claims, whether they are with or without merit or are
determined in our favor, we could face expensive and time-consuming
litigation.  If an infringement claim is determined against us, we may
be required to pay monetary damages or ongoing royalties.  In
addition, if a third party successfully asserts an infringement claim against us
and we are unable to develop suitable non-infringing alternatives or license the
infringed or similar intellectual property on reasonable terms on a timely
basis, then our business could suffer.





If we are unable to meet customer
demand or comply with quality regulations, our sales will suffer.





We manufacture many of our products
at our Deurle, Belgium production facilities.  In order to achieve our
business objectives, we will need to significantly expand our manufacturing
capabilities to produce the systems and accessories necessary to meet
demand.  We may encounter difficulties in scaling-up production of our
products, including problems involving production capacity and yields, quality
control and assurance, component supply and shortages of qualified
personnel.  In addition, our manufacturing facilities are subject to
periodic inspections by foreign regulatory agencies.  Our success will
depend in part upon our ability to manufacture our products in compliance with
regulatory requirements.  Our business will suffer if we do not
succeed in manufacturing our products on a timely basis and with acceptable
manufacturing costs while at the same time maintaining good quality control and
complying with applicable regulatory requirements.





We are dependent on Guy De Vreese,
our Chairman and Chief Executive Officer, and any loss of
such key personnel could result in the loss of a significant portion of our
business.





Our success is highly dependent upon
the key business relations and expertise of Guy De Vreese, our Chairman and
Chief Executive Officer.  Unlike larger companies, we rely heavily on
a small number of officers to conduct a large portion of our
business.  The loss of service of our Chairman and Chief Executive
Officer along with the loss of his numerous contacts and relationships in the
industry would have a material adverse effect on our business.  We do
not have an employment agreement with Guy De Vreese.





If
we cannot build and maintain strong brand loyalty our business may
suffer.





We believe that the importance of
brand recognition will increase as more companies produce competing
products.  Development and awareness of our brands will depend largely
on our ability to advertise and market successfully.  If we are
unsuccessful, our brands may not be able to gain widespread acceptance among
consumers.  Our failure to develop our brands sufficiently would have
a material adverse effect on our business, results of operations and financial
condition.


25





Risks
Relating To Our Common Stock





There
is a limited public trading market for our common stock.





Our Common Stock presently trades on
the Over-the-Counter Bulletin Board under the symbol “REMI.” We cannot assure
you, however, that such market will continue or that you will be able to
liquidate your shares acquired in this offering at the price you paid or
otherwise.  We also cannot assure you that any other market will be
established in the future.  The price of our common stock may be
highly volatile and your liquidity may be adversely affected in the
future.





Our
common stock is thinly traded, so you may be unable to sell at or near ask
prices or at all if you need to sell your shares to raise money or otherwise
desire to liquidate your shares.





There is limited market activity in our
stock and we are too small to attract the interest of many brokerage firms and
analysts. We cannot give you any assurance that a broader or more active public
trading market for our common stock will develop or be sustained. While we are
trading on the Over-The-Counter Bulletin Board, our trading volume may be
limited by the fact that many major institutional investment funds, including
mutual funds, as well as individual investors follow a policy of not investing
in Over- the–Counter Bulletin Board stocks and certain major brokerage firms
restrict their brokers from recommending Over-the-Counter Bulletin Board stocks
because they are considered speculative, volatile, thinly traded and the market
price of the common stock may not accurately reflect our underlying value. The
market price of our common stock could be subject to wide fluctuations in
response to quarterly variations in our revenues and operating expenses,
announcements of new products or services by us, significant sales of our common
stock, the operating and stock price performance of other companies that
investors may deem comparable to us, and news reports relating to trends in our
markets or general economic conditions.





The
ownership of our stock is highly concentrated in our management.





As of  June
21,  2010, our present directors and executive officers, and their
respective affiliates beneficially owned approximately 29 % of our outstanding
common stock, including underlying options that were exercisable or which would
become exercisable within 60 days.  As a result of their ownership,
our directors and executive officers and their respective affiliates
collectively are able to significantly influence all matters requiring
shareholder approval, including the election of directors and approval of
significant corporate transactions.  This concentration of ownership
may also have the effect of delaying or preventing a change in
control.





We
have a substantial number of shares authorized but not yet issued.





Our Articles of Incorporation
authorize the issuance of up to 50,000,000 shares of common stock and 10,000,000
shares of preferred stock.  Our Board of Directors has the authority
to issue additional shares of common stock and preferred stock and to issue
options and warrants to purchase shares of our common stock and preferred stock
without stockholder approval.  Future issuance of common stock and
preferred stock could be at values substantially below current market prices and
therefore could represent further substantial dilution to our
stockholders.  In addition, the Board could issue large blocks of
voting stock to fend off unwanted tender offers or hostile takeovers without
further shareholder approval.


26





We
have historically not paid dividends and do not intend to pay
dividends.





We have historically not paid
dividends to our stockholders and management does not anticipate paying any cash
dividends on our common stock to our stockholders for the foreseeable
future.  We intend to retain future earnings, if any, for use in the
operation and expansion of our business.





Our stock may be governed by the
“penny stock rules,” which impose additional requirements on broker-dealers who
make transactions in our stock.





SEC rules require a broker-dealer to
provide certain information to purchasers of securities traded at less than
$5.00, which are not traded on a national securities exchange.  Since
our common stock is not currently traded on an exchange, our common stock is
considered a “penny stock,” and trading in our common stock is subject to the
requirements of Rules 15g-1 through 15g-9 under the Securities Exchange Act of
1934 (the “Penny Stock Rules”).  The Penny Stock Rules require a
broker-dealer to deliver a standardized risk disclosure document prepared by the
SEC that provides information about penny stocks and the nature and level of
risks in the penny stock market.  The broker-dealer must also give bid
and offer quotations and broker and salesperson compensation information to the
prospective investor orally or in writing before or with the confirmation of the
transaction.  In addition, the Penny Stock Rules require a
broker-dealer to make a special written determination that the penny stock is a
suitable investment for the purchaser and receive the purchaser’s written
agreement to the transaction before a transaction in a penny
stock.  These requirements may severely limit the liquidity of
securities in the secondary market because few broker-dealers may be likely to
undertake these compliance activities.  Therefore, the disclosure
requirements under the Penny Stock Rules may have the effect of reducing trading
activity in our common stock, which may make it more difficult for investors to
sell their shares.





ITEM
1B — UNRESOLVED STAFF COMMENTS





Not Applicable.





ITEM
2 — PROPERTIES





We lease our 26,915 square feet
office and warehouse facility in Deurle, Belgium from an unrelated party
pursuant to a nine year lease commencing December 20, 2001 at a base rent of
€7,266 per month ($9,803 per month at March 31, 2010).





We lease
a smaller office facility of 2,045 square feet in Gent, Belgium to support the
sales and marketing division of our veneer business, from an unrelated party
pursuant to a nine year lease commencing September 1, 2008. Additionally, to
support and house our Research and Development Division, as of October 15, 2009,
an additional 2,290 square feet are being leased from the same unrelated party
from which we lease out sales and marketing division, at  a base rent
of €4,930 per month for the total location($6,656 per month at March 31,
2010).





ITEM
3 — LEGAL PROCEEDINGS





To the best knowledge of management,
there are no material legal proceedings pending against the
Company.





ITEM
4 — [RESERVED AND REMOVED]


27




PART
II





ITEM
5 — MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES





Market
Information





Our common stock is quoted on the
Over the Counter Bulletin Board under the symbol “REMI.”  The
following table shows the range of the high and low bid for our common stock as
reported by the Over-The-Counter Bulletin Board for the time periods
indicated:





Bid PricesHigh
                  
                  
                  LowQuarter
      ended March 31, 2008
                  
                  $
                  1.75
                  
                  
                  $
                  0.90Quarter
      ended June 30, 2008
                  
                  $
                  1.85
                  
                  
                  $
                  0.73Quarter
      ended September 30, 2008
                  
                  $
                  1.90
                  
                  
                  $
                  1.10Quarter
      ended December 31, 2008
                  
                  $
                  1.25
                  
                  
                  $
                  0.30Quarter
      ended March 31, 2009
                  
                  $
                  1.01
                  
                  
                  $
                  0.30Quarter
      ended June 30, 2009
                  
                  $
                  0.94
                  
                  
                  $
                  0.40Quarter
      ended September 30, 2009
                  
                  $
                  0.65
                  
                  
                  $
                  0.42Quarter
      ended December 31, 2009
                  
                  $
                  0.55
                  
                  
                  $
                  0.20Quarter
      ended March 31, 2010
                  
                  $
                  0.51
                  
                  
                  $
                  0.25





Bid
quotations represent interdealer prices without adjustment for retail markup,
markdown and/or commissions and may not necessarily represent actual
transactions.





Stockholders





As of June 21, 2010, the number of
stockholders of record was 194, not including beneficial owners whose shares are
held by banks, brokers and other nominees.





Dividends





We have not paid any dividends on our
common stock, and we do not anticipate paying any dividends in the foreseeable
future. Our Board of Directors intends to follow a policy of retaining earnings,
if any, to finance the growth of the company. The declaration and payment of
dividends in the future will be determined by our Board of Directors in light of
conditions then existing, including our  earnings, financial
condition, capital requirements and other factors.





Securities
Authorized for Issuance under Equity Compensation Plans





As of
March 31, 2010,  we had three equity compensation plans approved by
our stockholders (1) our Incentive and Nonstatutory Stock Option Plan enacted in
2001 (the “2001 Plan”), (2) our 2004 Incentive and Nonstatutory Stock Option
Plan (the “2004 Plan”); and (3) our 2007 Equity Incentive Plan (the “2007
Plan”). Our stockholders approved the 2001 Plan reserving 250,000 shares of
common stock of the Company pursuant an Information Statement on Schedule 14C
filed with the Commission on August 15, 2001. In addition, our 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, our 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.


28




In
addition to the equity compensation plans approved by our stockholders, we have
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 us.





The
following table provides aggregate information as of March 31, 2010 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
                              outstanding
                              options,
                              warrants
                              and rights
                            
                            
                            Weighted-average
                              exercise price of
                              outstanding
      options
                              warrants and
      rights
                            
                            
                            Number of
                              securitiesremaining
                              available for
      future
                              issuance
      under
                              equity
                              compensationplans
                              (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
                            
                            
                            967,298
                            
                            
                            $
                            1.58
                            
                            
                            NATotal
                            
                            
                            2,885,464
                            
                            
                            $
                            .96
                            
                            
                            
                            131,834





Recent
Sales Of Unregistered Securities





As described elsewhere in this
Annual Report, in connection with our acquisition of partial ownership interest
in GlamSmile Asia Ltd., in January 2010, as part of the consideration for the
purchase price of our ownership interest in GlamSmile Asia Ltd., we agreed to
issue Gallant 250,000 shares of common stock of our Company during the fiscal
year ended March 31, 2011, and 300,000 options to purchase shares of our commons
stock,  of which 200,000 options were granted as of March 31, 2010 and
valued at $62,108 based upon the Black-Scholes option pricing model utilizing a
market price on the date of grant of $.39 per share.  The options are
exercisable at $0.39 each, for a period of five years. All of the securities
issued to Gallant are exempt from the registration requirements of the
Securities Act of 1933, as amended, pursuant to Sections 4(2) of the Securities
Act of 1933, as amended.




The sale of all other equity securities
of the Company during the fiscal year ended March 31, 2010, have been previously
disclosed in the Company’s Quarterly Report on Form 10-Q and in the Current
Report on Form 8-K.





ITEM
6 — SELECTED FINANCIAL DATA





Not Applicable.




29




ITEM
7 — MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS


In addition to historical
information, this section contains “forward-looking” statements,
including statements regarding the growth of product lines, optimism regarding
the business, expanding sales and other statements. Words such as expects,
anticipates, intends, plans, believes, sees, estimates and variations of such
words and similar expressions are intended to identify such forward-looking
statements. These statements are not guarantees of future performance and involve
certain risks and uncertainties that are difficult to predict. Actual results
could vary materially from the description contained herein due to many factors
including continued market acceptance of our products. In addition, actual
results could vary materially based on changes or slower growth in the oral
care and cosmetic dentistry products market; the potential inability to
realize expected benefits and synergies; domestic and international business
and economic conditions; changes in the dental industry; unexpected
difficulties in penetrating the oral care and cosmetic dentistry products market;
changes in customer demand or ordering patterns; changes in the competitive
environment including pricing pressures or technological changes; technological
advances; shortages of manufacturing capacity; future production
variables impacting excess inventory and other risk factors listed in the section of
this Annual Report entitled “Risk Factors” and from time to time in our
Securities and Exchange Commission filings under “risk factors” and
elsewhere.





Each forward-looking statement
should be read in context with, and with an understanding of, the various
disclosures concerning our business made elsewhere in this Annual Report, as
well as other public reports filed by us with the Securities and Exchange
Commission. Readers should not place undue reliance on any forward-looking
statement as a prediction of actual results of developments. Except as required by
applicable law or regulation, we undertake no obligation to update or revise
any forward-looking statement contained in this Annual Report. This section
should be read in conjunction with our consolidated financial
statements.





Overview





We
design, develop, manufacture and distribute cosmetic dentistry
products.  Leveraging our knowledge of regulatory requirements
regarding dental products and management’s experience in the needs of the
professional dental community, we have developed a line of professional veneers
as well as a family of teeth whitening products for both professional and
“Over-The-Counter” (“OTC”) use, that are distributed in Europe, Asia and the
United States.  We manufacture many of our products in our facility in
Deurle, Belgium as well as outsourced manufacturing in China and France. We
distribute our products using both our own internal sales force and through the
use of third party distributors.  We have established dealers in 35
countries encompassing, Europe, Asia, Latin America, the Pacific Rim and the
Middle East.





SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES





Basis
for Presentation





Our financial statements have been
prepared on an accrual basis of accounting, in conformity with accounting
principles generally accepted in the United States of America.





Pervasiveness
of Estimates





The preparation of financial statements
in conformity with accounting principles generally accepted in the United States
requires us 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, we
evaluate 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 we believe 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.


30





Revenue
Recognition





We recognize 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.





Impairment
of Long-Lived Assets





Long-lived assets consist primarily of
property and equipment and patents.  The recoverability of long-lived
assets is evaluated by an analysis of operating results and consideration of
other significant events or changes in the business environment.  If
impairment exists, the carrying amount of the long-lived assets is reduced to
its estimated fair value, less any costs associated with the final
settlement.   To date, management has not identified any impairment of
property and equipment.  There can be no assurance, however, that
market conditions or demands for the Company’s services will not change which
could result in future long-lived asset impairment.





Accounts
Receivable and Allowance for Doubtful Accounts





We sell professional dental equipment
to various companies, primarily to distributors located in Western
Europe,  the United States of America and Asia.  The terms
of sales vary by customer, however, generally are 2% 10 days, net 30
days.  Accounts receivable is reported at net realizable value and net
of allowance for doubtful accounts.  We use the allowance method to
account for uncollectible accounts receivable.  Our estimate is based
on historical collection experience and a review of the current status of trade
accounts receivable.





Research
and Development Costs





We expense research and development
costs as incurred.




Inventories





We purchase certain of our products in
components that require assembly prior to shipment to customers.  All
other products are purchased as finished goods ready to ship to
customers.





We write down inventories for estimated
obsolescence to estimated market value based upon assumptions about future
demand and market conditions.  If actual market conditions are less
favorable than those projected, then additional inventory write-downs may be
required.





Patents





Patents consist of the costs incurred
to purchase patent rights and are reported net of accumulated amortization.
Patents are amortized using the straight-line method over a period based on
their contractual lives.


31





Conversion
of Foreign Currencies





The reporting currency for the
consolidated financial statements of the Company is the U.S. dollar. The
functional currency for the Company’s European subsidiaries, Remedent N.V. and
Sylphar N.V., is the Euro, for Remedent Asia the Singapore Dollar and for
Glamsmile Asia Ltd. and its subsidiaries, is the Hong Kong dollar and the
Chinese RMB for China Mainland.. Finally, the functional currency for Remedent Professional, Inc. is the
U.S. dollar. The assets and liabilities of companies whose functional currency
is other that the U.S. dollar are included in the consolidation by translating
the assets and liabilities at the exchange rates applicable at the end of the
reporting period. The statements of income of such companies are translated at
the average exchange rates during the applicable period. Translation gains or
losses are accumulated as a separate component of stockholders’
equity.





Stock
Based Compensation





We account for stock options using a
fair-value-based method statement and recognize the resulting compensation
expense in our financial statements. We use the Black-Scholes option valuation
model in estimating the fair value of the stock option awards issued. We measure
the compensation cost of stock options and other stock-based awards to employees
and directors at fair value at the grant date and recognizes compensation
expense over the requisite service period for awards expected to
vest.





Except for transactions with employees
and directors, all transactions in which goods or services are the consideration
received for the issuance of equity instruments are accounted for based on the
fair value of the consideration received or the fair value of the equity
instruments issued, whichever is more reliably measurable. Additionally, the
Company has determined that the dates used to value the transaction are
either:





(1) The date at which a commitment for
performance by the counter party to earn the equity instruments is established;
or





(2) The date at which the counter
party’s performance is complete.





For the year ended March 31, 2010,
equity compensation in the form of stock options and grants of restricted stock
totaled $467,908. For the year ended March 31, 2009, equity compensation in the
form of stock options and grants of restricted stock totaled $670,455.





Adoption
of New Accounting Standards





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.


32





·
            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 year ended March 31, 2010 has resulted in
increased disclosures in our consolidated financial statements.





In April 2009, the FASB issued updated
guidance of ASC 820, "Fair
Value Measurements." The updated guidance is effective for interim and
annual periods ending after June 15, 2009 and provides guidance on how to
determine the fair value of assets and liabilities in the current economic
environment and reemphasizes that the objective of a fair value measurement
remains an exit price. If the Company were to conclude that there has been a
significant decrease in the volume and level of activity of the asset or
liability in relation to normal market activities, quoted market values may not
be representative of fair value and the Company may conclude that a change in
valuation technique or the use of multiple valuation techniques may be
appropriate. The updated guidance modifies the requirements for recognizing
other-than-temporarily impaired debt securities and revises the existing
impairment model for such securities by modifying the current intent and ability
indicator in determining whether a debt security is other-than-temporarily
impaired. The updated guidance also enhances the disclosure of instruments for
both interim and annual periods. The Company adopted this updated guidance with
no impact on its consolidated financial position or results of operations. See
Note 24— Financial Instruments, for disclosure regarding the fair value of
financial instruments





In May 2009, the FASB issued ASC 855,
"Subsequent Events"
("ASC 855"). This should not result in significant changes in the subsequent
events that an entity reports. Rather, ASC 855 introduces the concept of
financial statements being available to be issued. Financial statements are
considered available to be issued when they are complete in a form and format
that complies with GAAP and all approvals necessary for issuance have been
obtained. The Company adopted ASC 855 with no impact on its consolidated
financial position or results of operations. See Note 1— Description of the
Company and Basis of Presentation, for further discussion.





In August 2009, the FASB issued ASU
2009-05, "Fair Value
Measurements and Disclosures (Topic 820)—Measuring Liabilities at Fair
Value an Update 2009-05" ("ASU 2009-05"). ASU 2009-05 amends subtopic
820-10, "Fair Value Measurements and Disclosures—Overall" and provides
clarification for the fair value measurement of liabilities in circumstances
where quoted prices for an identical liability in an active market are not
available. ASU 2009-05 is effective for the first reporting period beginning
after issuance. The Company adopted ASU 2009-05 with no impact on its
consolidated financial position or results of operations.


33





In January 2010, the FASB issued ASU
2010-06, "Fair Value
Measurements and Disclosures (Topic 820)—Improving
Disclosures about Fair Value Measurements" ("ASU 2010-06"). ASU 2010-06
provides amended disclosure requirements related to fair value measurements. ASU
2010-06 is effective for interim and annual reporting periods beginning after
December 15, 2009, except for the disclosures about purchases, sales,
issuances, and settlements in the roll forward of activity in Level 3 fair
value measurements. Those disclosures are effective for fiscal years beginning
after December 15, 2010, and for interim periods within those fiscal years.
Early adoption is permitted. The Company adopted ASU 2010-06 with no impact
on disclosures. See Note 24—Financial Instruments, for disclosure regarding the
fair value of financial instruments.





Recently
Issued Accounting Pronouncements





In April 2008, the FASB issued updated
guidance of ASC 350, "Intangibles—Goodwill and
Other," removing the requirement for an entity to consider, when
determining the useful life of an acquired intangible asset, whether the
intangible asset can be renewed without substantial cost or material
modifications to the existing terms and conditions associated with the
intangible asset. The intent of the updated guidance is to improve the
consistency between the useful life of a recognized intangible asset and the
period of expected cash flows used to measure the fair value of the asset under
ASC 805, "Business
Combinations," and other U.S. generally accepted accounting principles.
The updated guidance replaces the previous useful-life assessment criteria with
a requirement that an entity considers its own experience in renewing similar
arrangements. This updated guidance applies to all intangible assets, whether
acquired in a business combination or otherwise and shall be effective for our
financial statements commencing April 1, 2010. The adoption of these changes is
not expected to have an impact on our consolidated financial
statements.





In June 2009, the FASB issued ASC topic
860-20 for changes to the
accounting for transfers of financial assets. These changes remove the
concept of a qualifying special-purpose entity and remove the exception from the
application of variable interest accounting to variable interest entities that
are qualifying special-purpose entities; limits the circumstances in which a
transferor derecognizes a portion or component of a financial asset; defines a
participating interest; requires a transferor to recognize and initially measure
at fair value all assets obtained and liabilities incurred as a result of a
transfer accounted for as a sale; and requires enhanced disclosure; among
others. These changes become effective for us on April 1, 2010. The adoption of
these changes is not expected to have an impact on our consolidated financial
statements.





In June 2009, the FASB issued changes to the accounting for
variable interest entities. These changes require an enterprise to
perform an analysis to determine whether the enterprise’s variable interest or
interests give it a controlling financial interest in a variable interest
entity; to require ongoing reassessments of whether an enterprise is the primary
beneficiary of a variable interest entity; to eliminate the quantitative
approach previously required for determining the primary beneficiary of a
variable interest entity; to add an additional reconsideration event for
determining whether an entity is a variable interest entity when any changes in
facts and circumstances occur such that holders of the equity investment at
risk, as a group, lose the power from voting rights or similar rights of those
investments to direct the activities of the entity that most significantly
impact the entity’s economic performance; and to require enhanced disclosures
that will provide users of financial statements with more transparent
information about an enterprise’s involvement in a variable interest entity.
These changes become effective for us on April 1, 2010. The adoption of these
changes is not expected to have an impact on our consolidated financial
statements.


34





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.





In February 2010, the Financial
Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU")
2010-09, "Subsequent Events
(Topic 855)—Amendments to Certain Recognition and Disclosure
Requirements" ("ASU 2010-09"). ASU 2010-09 was issued to change certain
guidance in the original codification and to clarify other portions. All of the
amendments in ASU 2010-09 are effective upon issuance of the final ASU 2010-09,
except for the use of the issued date for conduit debt obligors. That amendment
is effective for interim or annual periods ending after June 15, 2010. The
Company determined that this updated guidance has no impact on its consolidated
financial position or results of operations.





RESULTS
OF OPERATIONS





For
the Fiscal Years Ending March 31, 2010 and 2009





Comparative details of results of
operations for the years ended March 31, 2010 and 2009 as a percentage of sales
are as follows:





2010
                  
                  
                  2009NET
      SALES
                  
                  
                  100.00
                  %
                  
                  
                  100.00
                  %COST
      OF SALES
                  
                  
                  52.41
                  %
                  
                  
                  45.18
                  %GROSS
      PROFIT
                  
                  
                  47.59
                  %
                  
                  
                  54.82
                  %OPERATING
      EXPENSESResearch
      and development
                  
                  
                  3.29
                  %
                  
                  
                  1.70
                  %Sales
      and marketing
                  
                  
                  16.40
                  %
                  
                  
                  19.09
                  %General
      and administrative
                  
                  
                  54.85
                  %
                  
                  
                  36.29
                  %Depreciation
      and amortization
                  
                  
                  8.81
                  %
                  
                  
                  4.21
                  %TOTAL
      OPERATING EXPENSES
                  
                  
                  83.35
                  %
                  
                  
                  61.28
                  %INCOME
      (LOSS) FROM OPERATIONS
                  
                  
                  (35.76
                  )%
                  
                  
                  (6.46
                  )%Other
      income (expense)
                  
                  
                  (2.05
                  )%
                  
                  
                  (12.71
                  )%LOSS
      BEFORE INCOME TAXES & MINORITY INTEREST
                  
                  
                  (37.81
                  )%
                  
                  
                  (19.17
                  )%Income
      tax expense
                  
                  
                  (0.17
                  )%
                  
                  
                  (0.22
                  )%NET
      LOSS BEFORE MINORITY INTEREST
                  
                  
                  (37.98
                  )%
                  
                  
                  (19.39
                  )%MINORITY
      INTEREST
                  
                  
                  (9.49
                  )%
                  
                  
                  (0.78
                  )%NET
      LOSS
                  
                  
                  (28.49
                  )%
                  
                  
                  (20.17
                  )%





Net
Sales





Net sales decreased by approximately
43.7% to $8,247,940 in the year ended March 31, 2010 as compared to $14,639,541
in the year ended March 31, 2009.  The decrease in sales is primarily
due to the non-recurrence of license fees received from Den-Mat, 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.


35





Cost
of Sales





Cost of
sales decreased approximately 34.7% to $4,322,680 in the year ended March 31,
2010 as compared to $6,614,723 in the year ended March 31, 2009.  Cost
of sales as a percentage of sales has decreased because of reduced production
costs of our veneer product.





Cost of
sales as a percentage of net sales has increased from 45% for the year ended
March 31, 2009 to 52% for the year ended March 31, 2010 mainly because of the
non-recurring license fees and the settlement and return of goods from a large
OTC customer.





Gross
Profit





Our gross
profit decreased by $4,099,558 or 51.1%, to $3,925,260 for the fiscal year ended
March 31, 2010 as compared to $8,024,818 for the year ended March 31, 2009 as a
result of decreased sales.  Our gross profit as a percentage of sales
decreased from approximately 54.8% in the year ended March 31, 2009 to 47.6% for
the year ended March 31, 2010. 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.  Our research and development expenses increased
$22,543 to $271,195 for the year ended March 31, 2010 as compared to $248,652
for the year ended March 31, 2009, an increase of 9.1%.  Our current
levels of research and development expenditures are reflective of an average
year.  Research and Development expenses have increased primarily
because of our work with respect to the ‘First-Fit Concept’.





Sales and marketing
costs.  Our sales and marketing costs decreased $1,441,710 or
51.6%, to $1,352,260 for the year ended March 31, 2010 as compared to $2,793,970
for the year ended March 31, 2009.   The decrease is largely due
to the internal reorganization of the GlamSmile US sales force. The option was
taken to sell in the US through a distributor instead of selling directly.
Secondly, a reverse of a  provision for sales commissions was booked
due to the return of OTC goods by a large customer.





General and administrative
costs.  Our general and administrative costs for the year ended
March 31, 2010 and 2009 were $4,524,324 and $5,312,192 respectively,
representing a decrease of $787,868 or 14.8%.  The decrease in general
and administrative costs as compared to the prior year is the result of the
internal reorganization of the GlamSmile US organization where the option was
taken, instead of going directly into the market, to work via a large
Distributor.





Depreciation and
amortization.  Our depreciation and amortization increased
$110,825 or 18%, to $726,499 for the year ended March 31, 2010 as compared to
$615,674 for the year ended March 31, 2009.  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.





Net interest
expense.Our net interest expense was $1,120 for the year
ended March 31, 2010 as compared to $68,150 for the year ended March 31, 2009, a
decrease of $67,030 or 98%.  Interest expense has decreased primarily
because of decreased utilization of our available bank credit
line.


36





Liquidity and Capital
Resources





Cash
and Cash Equivalents





Our
balance sheet at March 31, 2010 reflects cash and cash equivalents of $613,466
as compared to $1,807,271 as of March 31, 2009, a decrease of
$1,193,805.  Net cash provided by operations was $232,885 for the year
ended March 31, 2010 as compared to net cash used by operations of $880,579 for
the year ended March 31, 2009, a decrease year over year of $1,113,464 in cash
used by operations.  The decrease in net cash used by operations was
primarily attributable to the internal reorganization of our business, primarily
in the US where the option was taken to sell via a distributer instead of having
a direct sales organization. Secondly, positive results of increased credit and
collection efforts have also contributed to positive cashflow from
operations.





As of
March 31, 2010, there has been no indication of a trend of increased doubtful
accounts or slower payments.  As a result, at this time, we do not
anticipate increased reserves.





Investing
Activities





Net cash
used by investing activities was $1,476,287 for the year ended March 31, 2010 as
compared to net cash used by investing activities of $977,578 for the year ended
March 31, 2009. Cash used in investing activities in the year ended March 31,
2010 was for manufacturing equipment.





Cash used
in investing activities in the year ended March 31, 2009 was for equipment
purchases attributable to the investment in our production facility (new
electric cabling, upgraded compressors and related costs); investments made to
full file ISO 9001 and 13485 Medical Device Certificate demands (air conditioned
warehouse capability, chemical resistant floor in production facility and
related costs); initial investments in a basic Dental Lab; additional
investments for molding and office equipment; and construction works in our
newly leased offices.  All of our investing activities have been
undertaken to improve our support to the sales and marketing division in
reference to the veneer market.





Financing
Activities





Net cash
provided by financing activities totaled $14,400 for the year ended March 31,
2010 as compared to net cash provided by financing activities of $2,662,482 for
the year ended March 31, 2009. Net cash provided from financing activities in
the year ended March 31, 2010 was lower than in the year ended March 31, 2009
primarily because we received $2,782,000 in proceeds from the sale of Sylphar in
2009.  We did not complete any private placements in either 2010 or
2009.





The
latest amendment to our line of credit, dated June 7, 2010, amended and split
the line of credit to €1,250,000, to be used by Remedent NV and € 1,000,000 to
be used Sylphar NV. Each line of credit carries its own interest rates and fees
as provided in the Facility and vary from the current prevailing bank rate of
approximately 2.9%, for draws on the credit line, to 8.4% for advances on
accounts receivable concerning Remedent N.V. and similar for Sylphar N.V.
Remedent N.V. and Sylphar NV are currently only utilizing two lines of credit,
advances based on account receivables and the straight loan. As of March 31,
2010 and March 31, 2009, Remedent N.V. and Sylphar N.V. had in aggregate,
$674,600 and $660,200 in advances outstanding, respectively, under the mixed-use
line of credit facilities.


37





During the years ended March 31, 2010
and March 31, 2009, we recognized an increase/ (decrease) in cash and cash
equivalents of $35,197 and ($725,335), respectively, from the effect of exchange
rates between the Euro and the US Dollar.





Internal
and External Sources of Liquidity





As of March 31, 2010, we had current
assets of $4,502,576 compared to $8,264,237 at March 31, 2009. This decrease of
$3,761,661 was due to a decrease in accounts receivable of $2,401,189 and a
decrease in prepaid expenses of $390,413, offset by an increase in inventories
of $223,746. Current liabilities at March 31, 2010 of $3,582,792 were $184,325
less than current liabilities as at March 31, 2009 which was
$3,767,117.  The decrease was as result of a decrease in accrued
liabilities of $1,098,824 offset by an increase in accounts payable of $534,264
and amounts due to related parties of $268,484.





As discussed in this Report, we
anticipate that will need to raise additional funds to satisfy our work capital
requirements and implement our business strategy for out direct to consumer
business model.  In the event we are unable to raise additional funds,
we may draw funds from the balance remaining on our credit
facility.





At this time, we do not expect to
purchase or sell any property or equipment over the next 12 months. The Company
does not currently expect a significant change in the number of its
employees over the next 12 months.





Off-Balance
Sheet Arrangements





At March 31, 2010, we were not a party
to any transactions, obligations or relationships that could be considered
off-balance sheet arrangements.





ITEM 7A — QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK





Not Applicable





ITEM
8 — FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA





The
Financial Statements that constitute Item 8 are included at the end of this
report beginning on Page F-1.





ITEM 9 — CHANGES IN AND DISAGREEMENTS
WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE





None.





ITEM 9A (T)- CONTROLS AND
PROCEDURES





Evaluation
of Disclosure Controls and Procedures





Under the
supervision and with the participation of our management, including our Chief
Executive Officer and our Chief Financial Officer, we evaluated the
effectiveness of our disclosure controls and procedures, as such term is defined
under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as
amended as of the end of the period covered by this Annual Report on
Form 10-K. Based upon that evaluation, our principal executive officer and
principal financial officer concluded that our disclosure controls and
procedures were effective as of the end of the period covered by this Annual
Report.


38





Management’s
Annual Report on Internal Control Over Financial Reporting.





Management
of the Company is responsible for establishing and maintaining adequate internal
control over financial reporting.  We maintain disclosure controls and
procedures designed to ensure that information required to be disclosed in our
reports filed under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), is recorded, processed, summarized, and reported within the
required time periods and that such information is accumulated and communicated
to our management, including our Chief Executive Officer and our Chief Financial
Officer (our Principal Accounting Officer), as appropriate, to allow for timely
decisions regarding required disclosure. The Company’s internal control system
was designed to provide reasonable assurance to the Company’s management and
board of directors regarding the preparation and fair presentation of published
financial statements.





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 March 31,
2010.  Based on this evaluation, the Chief Executive Officer and the
Chief Financial Officer have concluded that our disclosure controls and
procedures were effective as of March 31, 2010.





This Annual Report does not include an
attestation report of the Company’s registered public accounting firm regarding
internal control over financial reporting.  The Company’s internal
control over financial reporting was not subject to attestation by the Company’s
registered public accounting firm pursuant to temporary rules of the Securities
and Exchange Commission that permit the Company to provide only management’s
report in this Annual Report.





Change
in Internal Control Over Financial Reporting





There have been no changes in the
Company’s internal controls over financial reporting identified in connection
with the evaluation of disclosure controls and procedures discussed above that
occurred during the quarter ended March 31, 2010 that have materially affected,
or are reasonably likely to materially affect, the Company’s internal control
over financial reporting.





ITEM 9B— OTHER
INFORMATION





None.


39


PART
III





ITEM
10 — DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE





Directors,
Executive Officers and Significant Employees





The following table sets forth the
names and ages of our current directors and executive officers, the principal
offices and positions with us held by each person and the date such person
became our director or executive officer.  Our executive officers are
elected annually by the Board of Directors.  Each year the
stockholders elect the board of directors.  The executive officers
serve terms of one year or until their death, resignation or removal by the
Board of Directors.  There was no arrangement or understanding between
any executive officer or director and any other person pursuant to which any
person was elected as an executive officer or director.  There are no
family relationships between any of our directors, executive officers, director
nominees or significant employees.  Mr. Kolsteeg is independent as
determined by the NASDAQ rules.





Person
              
              Age
              
              PositionGuy
      De Vreese
              
              55
              
              Chairman,
      Chief Executive OfficerStephen
      Ross
              
              51
              
              Chief
      Financial Officer, Director, SecretaryFred
      Kolsteeg
              
              67
              
              DirectorPhilippe
      Van Acker
              
              45
              
              Director,
      Chief Accounting Officer





Biographies





Guy De Vreese,
Chairman.  From April 1, 2002, Mr. De Vreese has served as our
Chairman of the Board.  Effective upon Mr. List’s resignation as Chief
Executive Officer, on December 10, 2008 Mr. De Vreese became our Chief Executive
Officer.  From June 2001 Mr. De Vreese has also served as President of
Remedent N.V. and he has served as President of DMDS, Ltd., a European
subsidiary of Dental & Medical Systems, Inc. DMDS, Ltd. developed and
marketed high-tech dental equipment.  In August 1996, Mr. De Vreese
founded DMD N.V., a Belgian company that was the independent European
distributor for DMDS products and was its Chief Executive Officer until DMD
purchased its distribution rights in April 1998.  Mr. De Vreese later
worked as CEO from 1996 through February 1999 for Lident, N.V., a Belgian
company that merged with DMD and specialized in digital photography and
developer of imaging software.  Mr. De Vreese also served as a
consultant providing services to DMDS, Ltd. from February 1999 to June
2001.  Mr. De Vreese resides in Belgium.





Stephen Ross,
Director, Chief Financial Officer, Secretary.  Mr. Ross has
served as our director since August 2001 and as our Secretary since April
2002.  He also served as our Chief Financial Officer from August 2001
until March 2005.  He was recently reappointed as Chief Financial
Officer, effective December 18, 2008.  From February 1998 through
January 2001, Mr. Ross was CFO of Dental & Medical Diagnostic Systems, Inc.,
a company that developed and marketed high-tech dental equipment and declared
bankruptcy in July 2001.  Commencing in 1996 and terminating February
1998, Mr. Ross served as a senior management consultant with Kibel and Green, a
corporate restructuring and management firm.  Prior to working for
Kibel and Green, Mr. Ross served as CFO and co-founder of a personal care
company, and as tax manager with an accounting firm.  Mr. Ross resides
in Los Angeles, California.





Fred Kolsteeg,
Director.  Mr. Kolsteeg has served as a director of the Company
since April 2002.  Since 1996, Mr. Kolsteeg has served as the
president of WAVE Communications, a Dutch based advertising
agency.  Prior to founding WAVE in 1996, he founded several other
advertising agencies such as ARA, Team and Team Saatchi.  Mr. Kolsteeg
has also worked at Phillips and Intermarco Publicis.  Mr. Kolsteeg
resides in Holland.


40





Philippe Van
Acker, Director, Chief Accounting Officer.  Mr. Van Acker was
appointed as our Chief Financial Officer as of March 30,
2005.  Effective December 18, 2008, Mr. Van Acker resigned as Chief
Financial Officer and became our Chief Accounting Officer as well as assuming a
position on the Board of Directors.  From July 2001 to March 30, 2005,
Mr. Van Acker has served as a director of our subsidiary, Remedent N.V. where he
has also served as financial controller.  From 1999 to 2001, Mr. Van
Acker served as Director of Finance for DMDS, Ltd., a European subsidiary of
Dental & Medical Diagnostic Systems, Inc., a company that developed and
marketed high-tech dental equipment.  From 1992 to 1999, Mr. Van Acker
held various positions with Pfizer Medical Technology Group.  Mr. Van
Acker resides in Belgium.





Legal
Proceedings





None of our directors or executive
officers were involved in a legal proceeding during the past ten years which are
material to an evaluation of the ability or integrity of any director, person
nominated to become a director or executive officer of the Company and required
to be disclosed under Item 401(f) of Regulation S-K.





Audit
Committee Financial Expert





Our Board
of Directors has not established a separate audit committee within the meaning
of Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”). Instead, our entire Board of Directors acts as the audit
committee within the meaning of Section 3(a)(58)(B) of the Exchange Act. In
addition, no director on our Board of Directors currently meets the definition
of an “audit committee financial expert” within the meaning of Item 407(d)(5) of
Regulation S-K. We are currently seeking candidates for outside directors and
for a financial expert to serve on a separate audit committee when we establish
one. Due to our small size and limited resources, it has been difficult to
recruit outside directors and financial experts, especially due to the fact that
we do not have directors and officer’s liability insurance to offer suitable
candidates.





In
fulfilling its oversight responsibilities, the Board has reviewed and discussed
the audited financial statements with management and discussed with the
independent auditors the matters required to be discussed by SAS 61. Management
is responsible for the financial statements and the reporting process, including
the system of internal controls. The independent auditors are responsible for
expressing an opinion on the conformity of those audited financial statements
with generally accepted accounting principles.





The Board
discussed with the independent auditors, the auditors’ independence from the
management of the Company and received written disclosures and the letter from
the independent accountants required by Independence Standards Board Standard
No. 1.





After
Board review and discussions, as mentioned above, the Board recommended that the
audited financial statements be included in the Company’s Annual Report on Form
10-K.





Governance
Committee and Nominations to the Board of Directors





There were no material changes to the
procedures by which security holders may recommend nominees to our Board of
Directors.


41





Code
of Ethics





We have adopted a written Code of
Ethics that applies to our senior management. A copy of our Code of Ethics,
executed by the Chief Executive Officer and Chief Financial Officer, has been
filed as an exhibit to our Annual Report on Form 10-K for the fiscal year ended
March 31, 2003. A copy of our Code of Ethics is available to any shareholder by
addressing a request to the attention of the Secretary of the Company and
mailing such request to the Company’s corporate offices. Any amendment to the
Code of Ethics or any waiver of the Code of Ethics will be disclosed promptly
following the date of such amendment or waiver pursuant to a Form 8-K filing
with the Securities and Exchange Commission.





Compliance
with Section 16 of the Securities Exchange Act of 1934





Section
16(a) of the Securities Exchange Act of 1934, as amended, requires our executive
officers and directors and persons who own more than 10% of a registered class
of our equity securities, to file with the Securities and Exchange Commission
(hereinafter referred to as the “Commission”) initial statements of beneficial
ownership, reports of changes in ownership and Annual Reports concerning their
ownership, of Common Stock and other of our equity securities on Forms 3, 4, and
5, respectively. Executive officers, directors and greater than 10% shareholders
are required by Commission regulations to furnish us with copies of all Section
16(a) reports they file. Except for the late filings by Mr. Ross for open market
stock purchases during May 2009 through July 2009, we believe that all reports
required by Section 16(a) for transactions in the year ended March 31, 2010,
were timely filed.





ITEM 11 — EXECUTIVE
COMPENSATION





Summary
Compensation





Our Board of Directors has not
established a separate compensation committee nor any other committee that acts
as such a committee. Instead, the entire Board of Directors reviews and approves
executive compensation policies and practices, reviews, salaries and bonuses for
our officers, administers our benefit plans, and considers other matters as may,
from time to time, be referred to it. We do not currently have a Compensation
Committee Charter.  Our Board continues to emphasize the important link
between our performance, which ultimately benefits all shareholders, and the
compensation of our executives. Therefore, the primary goal of our executive
compensation policy is to closely align the interests of the shareholders with
the interests of the executive officers. In order to achieve this goal, we
attempt to (i) offer compensation opportunities that attract and retain
executives whose abilities and skills are critical to our long-term success and
reward them for their efforts in ensuring our success and (ii) encourage
executives to manage from the perspective of owners with an equity stake in the
Company.





The following table sets forth
information regarding all forms of compensation received by the named executive
officers during the fiscal years ended March 31, 2010 and March 31, 2009,
respectively:


42





SUMMARY
      COMPENSATION TABLEName and
                              Principal Position
                              (a)
                            
                            Year
                              (b)
                            
                            Salary
                              ($)
                              (c)
                            
                            
                            Bonus
                              ($)
                              (d)
                            
                            
                            Stock
                              Awards($)
                              (e)
                            
                            
                            Option
                              Awards
                              ($)
                              (f)
                            
                            
                            Non-Equity
                              Incentive
                              Plan
                              Compensation
                              ($)
                              (g)
                            
                            
                            Nonqualified
                              Deferred
                              Compensation
                              Earnings
                              ($)
                              (h)
                            
                            
                            All Other
                              Compensation
                              ($)
                              (i)
                            
                            
                            Total
                              ($)
                              (j)Guy
      De Vreese, CEO and Chairman
                            
                            2010
                            
                            $
                            -0-
                            
                            
                            $
                            -0-
                            
                            
                            $
                            -0-
                            
                            
                            $
                            -0-
                            
                            
                            $
                            -0-
                            
                            
                            $
                            -0-
                            
                            
                            $
                            340,000
                            (1)
                            
                            $
                            340,000
                            (1)2009
                            
                            $
                            -0-
                            
                            
                            $
                            -0-
                            
                            
                            $
                            -0-
                            
                            
                            $
                            -0-
                            
                            
                            $
                            -0-
                            
                            
                            $
                            -0-
                            
                            
                            $
                            318,490
                            (1)
                            
                            $
                            318,490
                            (1)Robin List, (2)former
      CEO
                            
                            2009
                            
                            $
                            231,746
                            
                            
                            $
                            -0-
                            
                            
                            $
                            -0-
                            
                            
                            $
                            -0-
                            
                            
                            $
                            -0-
                            
                            
                            $
                            -0-
                            
                            
                            $
                            -0-
                            
                            
                            $
                            231,746Philippe
      Van Acker,
                            
                            2010
                            
                            $
                            175,760
                            
                            
                            $
                            -0-
                            
                            
                            $
                            -0-
                            
                            
                            $
                            -0-
                            (4)
                            
                            $
                            -0-
                            
                            
                            $
                            -0-
                            
                            
                            $
                            -0-
                            
                            
                            $
                            175,760Chief Accounting
      Officer, Director (3)
                            
                            2009
                            
                            $
                            163,120
                            
                            
                            $
                            -0-
                            
                            
                            $
                            -0-
                            
                            
                            $
                            48,844
                            (4)
                            
                            $
                            -0-
                            
                            
                            $
                            -0-
                            
                            
                            $
                            -0-
                            
                            
                            $
                            211,964Stephen
      Ross
                            
                            2010
                            
                            $
                            160,000
                            
                            
                            $
                            -0-
                            
                            
                            $
                            -0-
                            
                            
                            $
                            -0-
                            
                            
                            $
                            -0-
                            
                            
                            $
                            -0-
                            
                            
                            $
                            -0-
                            
                            
                            $
                            160,000CFO, Director(5)
                            
                            2009
                            
                            $
                            50,000
                            
                            
                            $
                            -0-
                            
                            
                            $
                            -0-
                            
                            
                            $
                            48,844
                            (6)
                            
                            $
                            -0-
                            
                            
                            $
                            -0-
                            
                            
                            $
                            -0-
                            
                            
                            $
                            98,844





(1)
            These
      amounts are consulting fees,  including a car allowance paid by
      Remedent N.V. to Lausha, N.V., a company controlled by Mr. De Vreese,
      pursuant to an oral consulting agreement between Lausha N.V. and Remedent
      N.V.  Mr. De Vreese was also appointed CEO effective December
      10, 2008, upon Mr. List’s
resignation.


(2)
            Robin
      List resigned as CEO and from his position as a director of the Company,
      effective December 10, 2008.


(3)
            Philippe
      Van Acker resigned from his position as CFO and was appointed as the
      Company’s Chief Accounting Officer effective December 18, 2008, as well as
      a member of the Board of Directors.


(4)
            The
      Company valued the 100,000 options granted to Mr. Van Acker on March 19,
      2009, using the Black Scholes option pricing model using the following
      assumptions:  no dividend yield; expected volatility rate of
      141%; risk free interest rate of 2.17% and an average life of 10 years
      resulting in a value of $0.49 per option granted in the period ended March
      31, 2009.  The options vested immediately and accordingly a
      value of $48,844 has been recorded in the period ended March 31,
      2009.


(5)
            Stephen
      Ross, a director of the Company, was appointed CFO effective December 18,
      2008, upon Mr. Van Acker’s
resignation.


(6)
            The
      Company valued the 100,000 options granted to Mr. Ross on March 19, 2009,
      using the Black Scholes option pricing model using the following
      assumptions:  no dividend yield; expected volatility rate of
      141%; risk free interest rate of 2.17% and an average life of 10 years
      resulting in a value of $0.49 per option granted in the period ended March
      31, 2009.  The options vested immediately and accordingly a
      value of $48,844 has been recorded in the period ended March 31,
      2009.





Outstanding
Equity Awards at Fiscal Year End





The
following table provides information with respect to the named executive
officers concerning unexercised stock options held by them at March 31,
2010.  As of March 31, 2010, there were no outstanding stock awards
and columns (g) through (j) have been omitted.


43





OPTION
      AWARDSName
                      (a)
                    
                    Number
      of
                      Securities
                      Underlying
                      Unexercised
                      Options
                      (#)
                      Exercisable
                      (b)
                    
                    
                    Number
      of
                      Securities
                      Underlying
                      Unexercised
                      Options
                      (#)
                      Unexercisable
                      (c)
                    
                    Equity
                      Incentive
                      Plan
                      Awards:
                      Number
      of
                      Securities
                      Underlying
                      Unexercised
                      Unearned
                      Options
                      (#)
                      (d)
                    
                    Option
                      Exercise
                      Price
                      ($)
                      (e)
                    
                    Option
                      Expiration
                      Date
                      (f)Guy
      De Vreese
                    
                    
                    50,000
                    
                    
                    
                    -0-
                    
                    
                    
                    $
                    1.00
                    
                    28-Mar-2012Guy
      De Vreese
                    
                    
                    100,000
                    
                    
                    
                    -0-
                    
                    
                    
                    $
                    1.75
                    
                    20-Sept-2017Philippe
      Van Acker
                    
                    
                    75,000
                    
                    
                    
                    -0-
                    
                    
                    
                    $
                    2.46
                    
                    23-Dec-2015Philippe
      Van Acker
                    
                    
                    10,000
                    
                    
                    
                    -0-
                    
                    
                    
                    $
                    1.00
                    
                    28-Mar-2012Philippe
      Van Acker
                    
                    
                    33,333
                    
                    
                    
                    16,667
                    
                    
                    
                    $
                    1.75
                    
                    20-Sept-2017Philippe
      Van Acker
                    
                    
                    100,000
                    
                    
                    
                    -0-
                    
                    
                    
                    $
                    0.50
                    
                    19-Mar-2019Stephen
      Ross
                    
                    
                    50,000
                    
                    
                    
                    -0-
                    
                    
                    
                    $
                    1.00
                    
                    28-Mar-2012Stephen
      Ross
                    
                    
                    12,500
                    
                    
                    
                    -0-
                    
                    
                    
                    $
                    2.00
                    
                    8-Apr-2014Stephen
      Ross
                    
                    
                    100,000
                    
                    
                    
                    -0-
                    
                    
                    
                    $
                    0.50
                    
                    19-Mar-2019





Director
Compensation Table





Generally, our directors do not
receive any cash compensation, but are entitled to reimbursement of their
reasonable expenses incurred in attending directors’
meetings.  However, at the discretion of our Board of Directors, we
may periodically issue stock options under our stock option plan to
directors.





Our directors did not receive any
compensation for board services during the fiscal year ended March 31,
2010.





Employment
Agreements





Our subsidiary, Remedent, N.V., has
an employment agreement with Mr. Philippe Van Acker,   our Chief
Accounting Officer.  We do not currently have any other employment
agreements with our executive officers.However, we anticipate
having employment contracts with executive officers and key personnel as
necessary, in the future.





Long-Term
Incentive Plans-Awards in Last Fiscal Year





We do not currently have any
long-term incentive plans.





ITEM 12 — SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS





The
following table sets forth information regarding the beneficial ownership of our
common stock as of  June 21, 2010.  The information in this
table provides the ownership information for:





a.
            each
      person known by us to be the beneficial owner of more than 5% of our
      common stock;





b.
            each
      of our directors;


44





c.
            each
      of our executive officers; and




d.
            our
      executive officers, directors and director nominees as a
      group.




Beneficial ownership has been
determined in accordance with Rule 13d-3 of the 1934 Exchange Act and includes
voting or investment power with respect to the shares.  Unless
otherwise indicated, the persons named in the table below have sole voting and
investment power with respect to the number of shares indicated as beneficially
owned by them.  Common stock beneficially owned and percentage
ownership is based on 19,995,969 shares outstanding as of June 21,
2010.




Name of Beneficial owner(1)
                                              
                                              Shares
                                                Beneficially
                                                Owned
                                              
                                              
                                              Percentage
                                                Beneficially
                                                OwnedGuy
      De Vreese, CEO, Chairman(2)Xavier
      de Cocklaan 429831
      Deurle, Belgium
                                              
                                              
                                              4,783,680
                                              
                                              
                                              
                                              23.75
                                              %Philippe
      Van Acker, Director(3)Xavier
      de Cocklaan 429831
      Deurle, Belgium
                                              
                                              
                                              218,333
                                              
                                              
                                              
                                              1.08
                                              %Stephen
      Ross, CFO, Secretary, Director(4)1921
      Malcolm #101Los
      Angeles, CA 90025
                                              
                                              
                                              626,327
                                              
                                              
                                              
                                              3.11
                                              %Fred
      Kolsteeg, Director (5)Managelaantje
      103062
      CV RotterdamThe
      Netherlands
                                              
                                              
                                              300,000
                                              
                                              
                                              
                                              1.49
                                              %All
      Officers and Directors as a Group (4 persons)
                                              
                                              
                                              5,928,340
                                              
                                              
                                              
                                              29.43
                                              %5%
      or Greater ShareholdersAustin W. Marxe and David M. Greenhouse(6)153
      East 53rd
      Street, 55th
      FloorNew
      York, NY 10022
                                              
                                              
                                              7,814,816
                                              
                                              
                                              
                                              33.50
                                              %Paul J. Solit(7)825
      Third Avenue, 33rd
      FloorNew
      York, NY 10020
                                              
                                              
                                              1,275,384
                                              
                                              
                                              
                                              6.07
                                              %Lagunitas Partners LP(8)
                                              
                                              
                                              1,377,400
                                              
                                              
                                              
                                              6.69
                                              %Jon
      D. Gruber, J. Patterson McBaine andEric Swergold (9)50
      Osgood Place, PenthouseSan
      Francisco, CA 94133
                                              
                                              
                                              2,230,000
                                              
                                              
                                              
                                              10.64
                                              %Den-Mat Holdings, LLC(10)2727
      Skyway DriveSanta
      Maria, CA 93455
                                              
                                              
                                              3,378,379
                                              
                                              
                                              
                                              14.45
                                              %




45







*
            Less
      than one percent




1.
            Beneficial
      ownership has been determined in accordance with Rule 13d-3 under the
      Exchange Act.  Pursuant to the rules of the Securities and
      Exchange Commission, shares of common stock which an individual or group
      has a right to acquire within 60 days pursuant to the exercise of options
      or warrants are deemed to be outstanding for the purpose of computing the
      percentage ownership of such individual or group, but are not deemed to be
      beneficially owned and outstanding for the purpose of computing the
      percentage ownership of any other person shown in the
    table.




2.
            Guy
      De Vreese holds 3,304,426 shares in his own name, which such amount
      includes 50,000 shares of common stock underlying options which vested on
      March 29, 2002 and have an exercise price of $1.00 per share; 100,000
      shares of common stock underlying options which vested on September 17,
      2007 and have an exercise price of $1.75 per share; 72,787 shares of
      common stock held in the name of Lausha N.V., a Belgian company controlled
      by Guy De Vreese; 6,467 shares of common stock held in the name of Lident
      N.V., a Belgian company controlled by Guy De Vreese; and 1,400,000 shares
      of common stock held in the name of Lausha HK, a Hong Kong company
      controlled by Guy De Vreese.




3.
            Includes
      10,000 shares of common stock underlying options which vested on March 29,
      2002 and have an exercise price of $1.00 per share; 75,000 shares of
      common stock underlying options which vested on December 2005 and have an
      exercise price of $2.46 per share; 33,333 shares of common stock
      underlying options which have vested as of September 17, 2009 (of which
      16,667 vested on September 17, 2008) and have an exercise price of $1.75
      per share; and 100,000 shares of common stock underlying options which
      were fully vested on March 19, 2009 and have an exercise price of $0.50
      per share.




4.
            Includes
      50,000 shares of common stock underlying options which vested on March 29,
      2002 and have an exercise price of $1.00 per share; 12,500 shares of
      common stock underlying options which vested on April 8, 2004 and have an
      exercise price of $2.00 per share; and 100,000 shares of common stock
      underlying options which were fully vested on March 19, 2009 and have an
      exercise price of $0.50 per share.




5.
            Includes
      5,000 shares of common stock underlying options which vested on March 29,
      2002 and have an exercise price of $1.00 per share and 200,000 shares of
      common stock underlying options which were fully vested on March 19, 2009
      and have an exercise price of $0.50 per
share.




6.
            Consists
      of 3,010,667 shares of common stock held by Special Situations Private
      Equity Fund, L.P.  (“SSF Private Equity”) and warrants to
      purchase 2,842,382 shares of common stock held by SSF Private Equity;
      529,700 shares of common stock held by Special Situations Fund III QP,
      L.P.  (“SSF QP”) and warrants to purchase 177,000 shares of
      common stock held by SSF QP; 940,067 shares of common stock held by
      Special Situations Cayman Fund, L.P.  (“SSF Cayman”) and
      warrants to purchase 315,000 shares of common stock held by SSF
      Cayman.  MGP Advisors Limited (“MGP”) is the general partner of
      SSF QP.  AWM Investment Company, Inc. (“AWM”) is the general
      partner of MGP, the general partner of and investment adviser to SSF
      Cayman and the investment adviser to SSF Private Equity.  Austin
      W.  Marxe and David M.  Greenhouse are the principal
      owners of MGP and AWM.  Through their control of MGP and AWM,
      Messrs. Marxe and Greenhouse share voting and investment control over the
      portfolio securities of each of the funds listed
  above.




7.
            Consists
      of 404,370 shares of common stock and warrants to purchase 424,365 shares
      of common stock held by Potomac Capital Partners LP; 212,122 shares of
      common stock held by Potomac Capital International Ltd (“Potomac
      International”); and 234,527 shares of common stock held by Pleiades
      Investment Partners-R LP (“Pleiades”).  Paul J. Solit is the
      Managing Member of Potomac Capital Management LLC (“Management LLC”),
      which is the General Partner of Potomac Capital Partners
      LP.  Mr. Solit is also the President and sole owner of Potomac
      Capital Management Inc. (“Management Inc.”), which is the Investment
      Manager of both Potomac International and Pleiades.  As a
      director of Potomac International and through his control of Management
      LLC and Management Inc. Mr. Solit has disposition and voting control over
      the securities of Potomac Capital Partners LP, Potomac International and
      Pleiades.


46




8.
            Consists
      of 784,000 shares of common stock and warrants to purchase 593,400 shares
      of common stock.  Such securities are also included and
      reflected in the disclosure for Jon D. Gruber, J. Patterson McBaine and
      Eric Swergold per footnote 9 below.




9.
            Consists
      of 784,000 shares of common stock and warrants to purchase up to 593,400
      shares of common stock held by Lagunitas Partners LP (“Lagunitas”);
      181,600 shares of common stock and warrants to purchase up to 136,200
      shares of common stock held by Gruber & McBaine International
      (“G&M International”); 152,200 shares of common stock and warrants to
      purchase up to 115,200 shares of common stock held by the Jon
      D.  and Linda W.  Gruber Trust; and 152,200 shares of
      common stock and warrants to purchase up to 115,200 shares of common stock
      held by J. Patterson McBaine.  Gruber & McBaine Capital
      Management, LLC (“GMCM”) is a registered investment adviser and general
      partner to Lagunitas and G&M International.  Messrs. Gruber
      and McBaine are Managers, members and portfolio managers of GMCM and Mr.
      Swergold is a member and portfolio manager of GMCM.  GMCM and
      Messrs. Gruber, McBaine and Swergold constitute a group within the meaning
      of Rule 13d-5(b).  Through control of GMCM, Messrs. Gruber,
      McBaine and Swergold share voting and disposition control over the
      portfolio securities of Lagunitas and G&M International. Jon
      D.  Gruber and Linda W.  Gruber have disposition and
      voting control for the securities held by the Jon D.  and Linda
      W.  Gruber Trust.  J. Patterson McBaine has
      disposition and voting control for the securities held in his
      name.




10.
            Consists
      of warrants to purchase 3,378,379 shares of common
  stock.


ITEM
13 — CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
INDEPENDENCE


Related
Transactions




During
the years ended March 31, 2010 and 2009 respectively, the Company incurred
$675,760 and $861,044 respectively, as compensation for all directors and
officers.




On June 3, 2009, the Company entered
into the First Fit-Crown Distribution and License Agreement (the “First Fit
Distribution Agreement”) with Den-Mat.  Under the terms of the First
Fit Distribution Agreement, the Company appointed Den-Mat to be the its sole and
exclusive distributor to market, license and sell certain products relating to
the Company’s proprietary First Fit technology (the “First Fit Products”), in
the United States, Canada and Mexico (the “First Fit Territory”).  In
connection therewith, the Company also granted Den-Mat certain non-exclusive
rights to manufacture and produce the First Fit Products in the First-Fit
Territory; and a sole and exclusive transferable and sublicensable right and
license to use the Company’s intellectual property rights relating to the First
Fit Products to perform its obligations as a distributor (provided the Company
retains the right to use and license related intellectual property in connection
with the manufacture of the First Fit Products for sale outside of
the  First Fit Territory), as the terms and transactions are further
detailed in the First Fit Distribution Agreement.  The consummation of
the transactions described herein and contemplated in the First Fit Distribution
Agreement are subject to certain closing conditions which includes, in addition
to customary closing conditions: the completion of Den-Mat’s due diligence with
respect to the First Fit Products to its satisfaction; execution and delivery
of  Non-Competition Agreements by Guy De Vreese and Evelyne
Jacquemyns; and the delivery of the Development Payment and first installment of
the License Payment (the “Development Payment” and License Payment” are defined
below).  The First Fit Distribution Agreement provides that the
consummation of the transactions contemplated therein will occur upon the
performance or waiver of such closing conditions.  Under the First Fit
Distribution Agreement, the Company granted such distribution rights, licensing
rights and manufacturing rights, in consideration for the
following:  (i) anon-refundable development fee of Four
Hundred Thousand Dollars ($400,000) (the “Development Payment”) payable in two
installments as follows: (a) Fifty Thousand Dollars ($50,000) within seven (7)
days after the effective date of the First Fit Distribution Agreement (the
“Effective Date”), and (b) Three Hundred Fifty Thousand Dollars ($350,000)
within twenty one (21) days after the Effective Date; (ii) a non-refundable license fee of
Six Hundred Thousand Dollars ($600,000) payable in three (3) equal installments
of $200,000 each, with the first installment payable on the closing date
contemplated in the First Fit Distribution Agreement (the “Closing Date”), and
with the second and third installments payable on the 30thand 60thday, respectively, after the Closing
Date; (iii) certain royalty payments based on the sales of the First Fit
Products by Den-Mat or its sublicensees; and (iv) certain minimum royalty
payment to maintain exclusivity, as such  terms are more particularly
described in the First Fit Distribution Agreement.


47




On March 29, 2010, a certain Amendment
No. 1 to First Fit Crown Distribution and License Agreement (“First Fit
Amendment”) between the Company and Den-Mat, pursuant to which the Company
agreed to sell to Den-Mat all of the intellectual property or used by Company
related to the First Fit product (“First Fit IP”) became effectuated upon
Company’s receipt of Den-Mat’s countersignatures to the First Fit
Amendment.  The First Fit Amendment amends the First Fit-Crown
Distribution and License Agreement dated June 3, 2009 between the Company
and Den-Mat, pursuant to which Den-Mat was granted certain license and
distribution rights relating to the First Fit IP and First Fit
products.  The total purchase price for the First Fit IP consists of
installment payments and royalty payments.  The cash component of
the purchase price of the First Fit IP is $2,850,000 to be paid in the form of
cash in the following installments: (a) $50,000 upon delivery by Remedent to
Den-Mat of a working prototype of the First Fit crown, (b) $525,000 on or before
March 15, 2010 (c) $700,000 on June 30, 2010, and (d) $500,000 on December
31, 2010, June 30, 2011 and December 31, 2011. In connection with the execution
of the First Fit Agreement, Den-Mat also agreed to make an advance cash payment
of $75,000 to the Company towards the purchase price.  In addition to
the cash component, Den-Mat agreed to pay Remedent a capital payment equal to a
certain percent of Den-Mat’s net revenues generated by the sale of the First Fit
products.




In
connection with our Distribution, License & Manufacturing Agreement with
Den-Mat (the “Distribution Agreement”) dated as August 2008, as amended and
restated by the parties on June 3, 2009 pursuant to the Amended and Restated
Distribution, License and Manufacturing Agreement, and as consideration for
Den-Mat’s obligations under the Distribution Agreement, we agreed, among other
things, to issue Den-Mat or an entity to be designated by Den-Mat, warrants to
purchase up to three million three hundred seventy-eight thousand three hundred
seventy-nine (3,378,379) shares of our common stock, par value $0.001 per share
at an exercise price of $1.48 per share. During the three months ended December
31, 2008 we granted 3,738,379 warrants to purchase our common stock to
Den-Mat.  We valued the warrants at $4,323,207, using the Black
Scholes option pricing model using the following assumptions: no dividend yield;
expected volatility rate of 131%; risk free interest rate of 3.07% and an
average life of 5 years resulting in a value of $1.28 per option
granted.




Further,
as a condition to the Den-Mat transaction, on August 24, 2008, we entered into a
Rescission Agreement with Glamtech (the “Rescission Agreement”).  As
part of the consideration for the rescission and release under the Rescission
Agreement, the Company entered into a Stock Purchase Agreement with each of the
two Glamtech shareholders (the “Glamtech Shareholders”), for the purchase of all
of Glamtech’s outstanding common stock in exchange for: (i) at the election of
the Glamtech Shareholders at any time within 6 months, to receive either, but
not both, (a) an aggregate of one million (1,000,000) restricted shares of our
common stock, or (b) five (5) year warrants, valued by our Board of Directors at
$1.48 per warrant, to purchase an aggregate of one million two hundred and
forty-seven thousand two hundred and sixteen (1,247,216) restricted shares of
the registrant’s common stock at a exercise price of $1.30 per
share.  At the election of the Glamtech Shareholders, we issued
500,000 common shares to each of the previous Glamtech shareholders and were
recorded at a fair value of $625,000.


48




On March
29, 2010, concurrently with the execution of the First Fit Amendment (as
described above), the Company and Den-Mat entered into Amendment No. 2 to the
Amended and Restated Distribution, License and Manufacturing Agreement
(“Glamsmile Amendment”) with Den-Mat pursuant to which certain provisions of a
certain Amended and Restated Distribution, License and Manufacturing Agreement
previously entered into by the Company and Den-Mat on June 3, 2009 and
subsequently amended on August 11, 2009, were amended.  The Glamsmile
Amendment became effective concurrently with the effectiveness of the First Fit
Amendment.  Among other things, the Glamsmile Amendment (1) permits
the Company to purchase its requirements for GlamSmile Products from another
party, other than Den-Mat,  provided Company pays De-Mat a royalty
payment on net revenues received by Company per unit/tooth, (2) decreases the
percentage of securities to be covered in a warrant to purchase securities of
B2C Market Subsidiary and the exercise price of such warrant to be issued to
Den-Mat  in the event a B2C Market Subsidiary is formed under the
terms set forth in such agreement, (3) expands the definition of “Excluded
Market” to include Australia, Belgium, France and United Arab Emirates, and (4)
provides a consulting fee, equal to a percentage of net revenues received by
Den-Mat from the Sale of Unit/Teeth and trays, to the Company for its services,
support and certain additional consideration, (5) terminates certain
provisions relating to minimum requirement obligations and rights, and (6)
amends the formula for calculation a certain exit fee in the event of a change
of control.




On
December 10, 2008, we completed a restructuring in the form of a management-led
buyout of 50% of our over-the-counter (“OTC”) retail business (the
“Restructuring”).  The Restructuring was led by Mr. Robin List, our
former director and Chief Executive Officer, with financing provided by a
non-affiliated foreign investment fund.  We sold fifty percent (50%)
of our interest in a new subsidiary formed as part of the transaction to Mr.
List in exchange for 723,000 restricted shares of our common stock held by Mr.
List (“Exchanged Shares”), pursuant to a Share Purchase Agreement on December
10, 2008.  The Exchanged Shares were valued at $1.15 per share, based
on the average of the 52 week high and low bid, for an aggregate value of
$831,450.  As a result, Mr. List and the Company equally own 50% of
the newly formed subsidiary, Remedent OTC, with the Company currently
controlling Remedent OTC through its board representations pursuant to the terms
of a certain Voting Agreement entered into by the Company and Mr. List
concurrently with the Share Purchase Agreement.  The Voting Agreement
provides that, the Company will initially have 2 board representation and Mr.
List will have 1 board representation.  However upon the occurrence of
a “Triggering Event” (as defined in the Voting Agreement), the Company will have
1 board representation and Mr. List will have 2 board
representations.  On December 8, 2008 a total of 723,000 restricted
common shares were returned to treasury.




Guy De
Vreese, our Chairman of the Board and Chief Executive Officer, is the managing
director of our subsidiary, Remedent N.V.  Mr. De Vreese provides his
services as Remedent N.V.’s Managing Director through two companies, Lausha,
N.V. and Lident N.V. Lausha, N.V. and Lident N.V. have oral consulting
arrangements with Remedent N.V. that provide Mr. De Vreese’s services and are
both companies controlled by Mr. De Vreese.  On March 20, 2006, Lausha
N.V. and Lident N.V. merged into Lausha N.V., controlled by Mr. De
Vreese.   Lausha N.V. received a total of $340,000 and $318,490
as compensation for services for the years ending March 31, 2010 and March 31,
2009, respectively.


49




In September 2004, we entered into an
agreement with Lident N.V., a company controlled by Mr. De Vreese, our
Chairman, to obtain an option, exercisable through December 31, 2005, to license
a patent and worldwide manufacturing and distribution rights for a potential new
product for which Lident had been assigned certain rights by the inventors of
the products, who are unrelated parties, prior to Mr. De Vreese’s association
with us.  The agreement required us to advance to the inventors
through Lident a fully refundable deposit of  €100,000 ($129,650)
subject to our due diligence regarding the enforceability of the patent and
marketability of the product, which, if viable, will be assigned to us for
additional consideration to the inventors of €100,000 ($129,650) and an ongoing
royalty from sales of products related to the patent equal to 3% of net sales
and, if not viable, the deposit will be repaid in full to us by
Lident.  The consideration we 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 will not profit from
the exercise of the option.  Furthermore, at a meeting of our Board of
Directors on July 13, 2005, we accepted Lident’s offer to facilitate an
assignment of Lident’s intellectual property rights to the technology to us in
exchange for the reimbursement of Lident’s actual costs incurred relating to the
intellectual property.  On December 12, 2005, we exercised the option
and mutually agreed with the patent holder to revise the assignment agreement
whereby we agreed to pay €50,000 additional compensation in the form of prepaid
royalties instead of the €100,000 previously agreed, €25,000 of which had been
paid by us in September 2005 and the remaining €25,000 to be paid upon the first
shipment of a product covered by the patent.  The patent is being
amortized over five (5) years and accordingly, we recorded $103,012 of
accumulated amortization for this patent as of March 31, 2010 (2009 -
$79,240).  As of March 31, 2010, we have not yet received the final
product.




Since the
inception of IMDS, Inc. (“IMDS”) in April 2003, IMDS, a distributor of our
products, has purchased inventory valued at approximately $721,459 from
us.  All inventory was purchased at standard pricing.  One
of our directors owns a minority interest in IMDS, to which goods were sold
during the years ended March 31, 2010 and 2009 totaling $Nil and $79,459
respectively, and the accounts receivable at year end with this customer totaled
$31,895 and $31,895  at March 31, 2010 and 2009
respectively.  As of March 31, 2010 we  had recorded a 100%
allowance against our  investment in IMDS because IMDS financial
information is unavailable.


Director
Independence




The
Company does not have a separate compensation, nominating or audit
committee.  The Board has determined that Mr. Kolsteeg is independent
based on the definition provided under the NASDAQ rule.


ITEM
14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.




Audit Fees. The aggregate fees
paid for the annual audit of financial statements included in our Annual Report
for the year ended March 31, 2010 and the review of our quarterly reports for
such years amounted to $53,880. The aggregate fees paid for the annual audit of
financial statements included in our Annual Report for the year ended March 31,
2009 and the review of our quarterly reports for such year, amounted to
$62,019.


Audit Related Fees. For the
years ended March 31, 2010 and March 31, 2009, we paid $20,282, and $17,619,
respectively, to PKF for other audit related fees.




Tax Fees. For the years ended
March 31, 2010 and March 31, 2009, we paid $4,048, and $10,777, respectively, to
PKF for fees associated with tax return preparation.


The
above-mentioned fees are set forth as follows in tabular form:




2010
                    
                    
                    2009Audit
      Fees
                    
                    $
                    53,880
                    
                    
                    $
                    62,019Audit
      Related Fees
                    
                    $
                    20,282
                    
                    
                    $
                    17,619Tax
      Fees
                    
                    $
                    4,048
                    
                    
                    $
                    10,777All
      Other Fees
                    
                    
                    -
                    
                    
                    
                    -




50




The
Company’s Board of Directors serves as the Audit Committee and has unanimously
approved all audit and non-audit services provided by the independent auditors.
The independent accountants and management are required to periodically report
to the Board of Directors regarding the extent of services provided by the
independent accountants, and the fees for the services performed to
date.




There
have been no non-audit services provided by our independent accountant for the
year ended March 31, 2010.


51


ITEM
15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES




(a)(1)
                  Financial
      Statements.
                    Consolidated
      balance sheet as of March 31, 2010 and March  31, 2009, and the
      related consolidated statements of operations, stockholders’ equity, cash
      flows, and comprehensive loss for each of the years in the 2 year period
      ended March 31, 2010.(a)(2)
                  Schedules.
                    All
      schedule have been omitted because they are not required, not applicable,
      or the information is otherwise set forth in the consolidated financial
      statements or the notes thereto.(a)(3)
                  Exhibits.The
      information required by this Item is set forth in the section of this
      Annual Report entitled “EXHIBIT INDEX” and is incorporated herein by
      reference.


52


SIGNATURES




In
accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”) the Registrant caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.


REMEDENT,
      INC.Dated:
      July 12, 2010
              /s/ Guy De VreeseBy:
      Guy De VreeseIts:
      Chief Executive Officer (Principal ExecutiveOfficer)
      and DirectorDated:
      July 12, 2010
              /s/ Stephen RossBy:
      Stephen RossIts:
      Chief Financial Officer (Principal FinancialOfficer
      and Principal Accounting Officer) andDirector




In
accordance with the Exchange Act, this report has been signed by the following
persons on behalf of the registrant and in the capacities and on the dates
indicated.




Dated:
      July 12, 2010
              /s/ Guy De VreeseGuy
      De Vreese,Chief
      Executive Officer,Chairman
      of the Board of DirectorsDated:
      July 12,  2010
              /s/ Stephen RossStephen
      Ross, Director and Chief FinancialOfficer  (Principal
      Financial Officer andPrincipal
      Accounting Officer)Dated:
      July 12, 2010
              /s/ Philippe Van AckerPhilippe
      Van Acker, Director and ChiefAccounting
      OfficerDated:
      July 12, 2010
              /s/ Fred KolsteegFred
      Kolsteeg, Director


53


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)4.1
                
                Specimen
      of Stock Certificate (3)4.2
                
                Form
      of Subscription Agreement (4)4.3
                
                Form
      of Warrant for Common Stock (4)4.4
                
                Form
      of Registration Rights Agreement (4)4.5
                
                Form
      of Warrant for Unit (5)4.6
                
                Form
      of Warrant for Common Stock (10)4.7
                
                Form
      of Warrant dated August 24, 2008 for Den-Mat Holdings, LLC (18)4.8
                
                Form
      of Stock Purchase Agreement dated August 24, 2008 (18)10.1
                
                Incentive
      and Nonstatutory Stock Option Plan, dated May 29, 2001 (1)10.2
                
                2004
      Incentive and Nonstatutory Stock Option Plan (5)10.3
                
                Amendment
      to Line of Credit Agreement by and Between Remedent, N.V. and Fortis Bank
      dated May 3, 2005, subject to General Terms and Conditions (6)




54




Exhibit No.
                
                Description10.4
                
                Warrant
      dated July 6, 2005 (4)10.5
                
                Amendment
      to Warrant (5)10.6
                
                Employment
      Agreement between Remedent N.V. and Philippe Van Acker (3)10.7
                
                Lease
      Agreement dated December 20, 2001 (3)10.8
                
                Fortis
      Bank General Lending Conditions for Corporate Customers (“General Terms
      and Conditions”) (7)10.9
                
                Line
      of Credit Agreement by and between Remedent, N.V. and Fortis Bank dated
      September 8, 2004, subject to the General Terms and Conditions (7)10.10
                
                Amendment
      to Line of Credit Agreement by and Between Remedent, N.V. and Fortis Bank
      dated March 13, 2006, subject to the General Terms and Conditions (8)10.11
                
                Amendment
      to Line of Credit Agreement by and Between Remedent, N.V. and Fortis Bank
      dated September 1, 2006, subject to the General Terms and Conditions (9)10.12
                
                Purchase
      Agreement between Remedent, Inc. and certain Investors, dated June 20,
      2007 (10)10.13
                
                Registration
      Rights Agreement between Remedent, Inc. and certain Investors, dated June
      20, 2007 (10)10.14
                
                Waiver
      Agreement between Remedent, Inc. and Consenting Holders, dated October 18,
      2007 (11)10.15
                
                Limited
      Liability Company Merger and Equity Reallocation Agreement between
      Remedent NV and IMDS, LLC, dated July 15, 2007  (12)10.16
                
                Distribution
      Agreement, dated April 10, 2008, by and between Remedent N.V. and Glamtech
      USA, Inc. (14)10.17
                
                Factoring
      Agreement between Remedent, Inc. and First Community Financial, a division
      of Pacific Western Bank, dated April 24, 2008  (15)10.18
                
                Validity
      Agreement between certain officers and directors of Remedent, Inc. and
      First Community Financial, a division of Pacific Western Bank, dated April
      24, 2008  (15)10.19
                
                Distribution
      Agreement, dated June 30, 2008, by and between Remedent, Inc. and SensAble
      Technologies, Inc. (16)10.20
                
                Distribution,
      License and Manufacturing Agreement, dated August 24, 2008, by and between
      Remedent, Inc., Remedent N.V. and Den-Mat Holdings, LLC  (17)10.21
                
                Form
      of Registration Rights Agreement dated August 24, 2008 between Remedent,
      Inc. and Den-Mat Holdings, LLC  (17)10.22
                
                Rescission
      Agreement, dated August 24, 2008, by and between Remedent, Inc., Remedent
      N.V. and Glamtech-USA, Inc. (17)10.23
                
                Contribution
      Agreement between Remedent, Inc., and Sylphar USA, Inc., dated December
      10, 2008  (18)10.24
                
                Share
      Purchase Agreement between Remedent Inc., and Remedent N.V., dated
      December 10, 2008  (18)10.25
                
                Deed
      of Contribution of Shares between Remedent Inc., and Remedent OTC B.V.,
      dated December 10, 2008  (18)


55




Exhibit No.
                
                Description10.26
                
                Share
      Purchase Agreement between Robin List and Remedent, Inc., dated December
      10, 2008  (18)10.27
                
                Investment
      and Shareholders Agreement, dated December 11, 2008, between Remedent OTC
      B.V., Concordia Fund B.V., Remedent, Inc., Robin List, Sylphar Holding
      B.V.  and The Existing OTC Subsidiaries  (18)10.28
                
                Unsecured
      Promissory Note between Sylphar N.V. and Remedent N.V., dated December 10,
      2008  (18)10.29
                
                Voting
      Agreement between Remedent, Inc., and Robin List, dated December 10,
      2008  (18)10.30
                
                Amended
      and Restated Distribution, License and Manufacturing Agreement dated June
      3, 2009 by and among Remedent, Inc., Remedent N.V. and Den-Mat Holdings,
      LLC(23)10.31
                
                First
      Fit-Crown Distribution and License Agreement dated June 3, 2009 by and
      among Remedent, Inc., Remedent N.V. and Den-Mat Holdings, LLC(23)10.32
                
                Amendment
      No. 1 to Amended and Restated Distribution, License and Manufacturing
      Agreement dated August 11, 2009(24)10.33
                
                Amendment
      No. 1 to First Fit Crown Distribution and  License
      Agreement*(CT)10.34
                
                Amendment
      No. 2 to the Amended and Restated Distribution, License and Manufacturing
      Agreement*(CT)14.1
                
                Code
      of Ethics, adopted March 25, 2003 (22)21.1
                
                List
      of Subsidiaries (21)23.1
                
                Consent
      of PKF Bedrijfsrevisoren, Antwerp, Belgium*31.1
                
                Certifications
      of the Chief Executive Officer under Section 302 of the Sarbanes-Oxley
      Act.*31.2
                
                Certifications
      of the Chief Financial Officer under Section 302 of the Sarbanes-Oxley
      Act.*32.1
                
                Certifications
      of the Chief Executive Officer under Section 906 of the Sarbanes-Oxley
      Act.*32.2
                
                Certifications
      of the Chief Financial Officer under Section 906 of the Sarbanes-Oxley
      Act.*







*
            Filed
      herewith




(CT)
            Application
      has been made to the Securities and Exchange Commission (“Commission”) to
      seek confidential treatment of certain portions of Exhibits 31.34 and
      31.35 under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
      Omitted material for which confidential treatment has been requested has
      been filed separately with the
Commission.




(1)
            Incorporated
      by reference from Registration Statement on Form SB-2 filed with the SEC
      on July 24, 2002.




(2)
            Incorporated
      by reference from Form 8-K filed with the SEC on June 8,
    2005.




(3)
            Incorporated
      by reference from Form SB-2 filed with the SEC on August 4,
      2005.




(4)
            Incorporated
      by reference from Form 8-K filed with the SEC on July 11,
      2005.




(5)
            Incorporated
      by reference from Form SB-2/A filed with the SEC on October 26,
      2005.


56




(6)
            Incorporated
      by reference from Form 10-KSB filed with the SEC on July 14,
      2005.




(7)
            Incorporated
      by reference from Form 10-KSB/A2 filed with the SEC on June 11,
      2007.




(8)
            Incorporated
      by reference from Form 10-KSB/A filed with the SEC on June 11,
      2007.




(9)
            Incorporated
      by reference from Form 10-QSB/A filed with the SEC on June 11,
      2007.




(10)
            Incorporated
      by reference from Form 8-K filed with the SEC on June 27,
      2007.




(11)
            Incorporated
      by reference from Form SB-2/A2 filed with the SEC on October 19,
      2007.




(12)
            Incorporated
      by reference from Form 10-QSB filed with the SEC on November 19,
      2007.




(13)
            Incorporated
      by reference from Form 8-K filed with the SEC on December 19,
      2007.




(14)
            Incorporated
      by reference from Form 8-K filed with the SEC on April 15,
      2008.




(15)
            Incorporated
      by reference from Form 8-K filed with the SEC on April 30,
      2008.




(16)
            Incorporated
      by reference from Form 8-K filed with the SEC on July 7,
    2008.




(17)
            Incorporated
      by reference from Form 8-K filed with the SEC on August 28,
      2008.




(18)
            Incorporated
      by reference from Form 8-K filed with the SEC on December 16,
      2008.




(19)
            Incorporated
      by reference from Form SB-2 filed with the SEC on July 20,
      2007.




(20)
            Incorporated
      by reference from Form SB-2/A filed with the SEC on October 26,
      2005.




(21)
            Incorporated
      by reference from Post Effective Amendment No. 1 to Form SB-2 on Form S-1
      filed with the SEC on April 22,
2009.




(22)
            Incorporated
      by reference from Form 10-KSB filed with the SEC on July 15,
      2003.




(23)
            Incorporated
      by reference from Form 10-K filed with the SEC on June 29,
      2009




(24)
            Incorporated
      by reference from Form 8-K filed with the SEC on August 16,
      2009




57




REMEDENT,
INC. AND SUBSIDIARIES




CONSOLIDATED
FINANCIAL STATEMENTS




MARCH
31, 2010




Index




REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
              F-1CONSOLIDATED
      BALANCE SHEETS
              F-2CONSOLIDATED
      STATEMENTS OF OPERATIONS
              F-3CONSOLIDATED
      STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)
              F-4CONSOLIDATED
      STATEMENTS OF CASH FLOWS
              F-5CONSOLIDATED
      STATEMENTS OF COMPREHENSIVE LOSS
              F-6NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS
              F-7







INDEPENDENT
AUDITORS’ REPORT




REPORT
OF INDEPENDENT REGISTERED ACCOUNTING FIRM




To the Board of Directors and
Stockholders of Remedent, Inc.


We have
audited the accompanying consolidated balance sheets of Remedent, Inc. as of
March 31, 2010 and March 31, 2009 and the related consolidated statements
of operations, stockholders’ equity, cash flows, and comprehensive loss for the
years then ended. These consolidated financial statements are the responsibility
of the Company’s management. Our responsibility is to express an opinion on
these consolidated financial statements based on our
audits.


We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform an audit to obtain reasonable assurance whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audits included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.




In our
opinion, the accompanying consolidated financial statements present fairly, in
all material respects, the financial position of the Company at March 31, 2010
and March 31, 2009 and the results of its operations and its cash flows for the
two years then ended in conformity with accounting principles generally accepted
in the United States of America.




Antwerp -
Belgium, July 8, 2010




PKF
bedrijfsrevisoren CVBA


Statutory
Auditors


Represented
by




/s/ Ria VerheyenRegistered
      Auditor


Tel +32
(0)3 235 66 66 / Fax +32 (0)3 235 22 22 / antwerpen@pkf.be /
www.pkf.be


PKF
bedrijfsrevisoren CVBA / burgerlijke vennootschap met handelsvorm


Potvlietlaan
6 / 2600 Antwerpen / BTW BE 0439 814 826 / RPR Antwerpen


The
PKF International Association is an association of legally independent
firms.


F-1


REMEDENT, INC. AND
SUBSIDIARIES


CONSOLIDATED
BALANCE SHEETS




March 31, 2010
                
                
                March 31, 2009ASSETSCURRENT
      ASSETS:Cash
      and cash equivalents
                
                $
                613,466
                
                
                $
                1,807,271Accounts
      receivable, net of allowance for doubtful accounts of $65,845 at March 31,
      2010 and $33,966 at March 31, 2009
                
                
                806,931
                
                
                
                3,208,120Inventories,
      net
                
                
                2,161,692
                
                
                
                1,937,946Prepaid
      expense
                
                
                920,487
                
                
                
                1,310,900Total
      current assets
                
                
                4,502,576
                
                
                
                8,264,237PROPERTY
      AND EQUIPMENT, NET
                
                
                1,735,719
                
                
                
                1,024,999OTHER
      ASSETSLong
      term investments and advances
                
                
                750,000
                
                
                
                750,000Patents,
      net
                
                
                246,992
                
                
                
                163,106Goodwill
      (Note 5)
                
                
                699,635
                
                
                
                —Total
      assets
                
                $
                7,934,922
                
                
                $
                10,202,342LIABILITIES
      AND STOCKHOLDERS’ EQUITY (DEFICIT)CURRENT
      LIABILITIES:Current
      portion, long term debt
                
                $
                215,489
                
                
                $
                78,798Line
      of Credit
                
                
                674,600
                
                
                
                660,200Accounts
      payable
                
                
                1,932,684
                
                
                
                1,398,420Accrued
      liabilities
                
                
                491,536
                
                
                
                1,590,360Due
      to related parties (Note 5)
                
                
                268,484
                
                
                
                —Income
      taxes payable
                
                
                —
                
                
                
                39,339Total
      current liabilities
                
                
                3,582,793
                
                
                
                3,767,117Long
      term debt less current portion
                
                
                425,882
                
                
                
                100,542Total
      liabilities
                
                
                4,008,675
                
                
                
                3,867,659EQUITY:Preferred
      Stock $0.001 par value (10,000,000 shares authorized, none issued and
      outstanding)
                
                
                —
                
                
                
                —Common
      stock, $0.001 par value; (50,000,000 shares authorized, 19,995,969shares issued and
      outstanding at March 31, 2010 and 19,995,969 shares issued and outstanding
      at March 31, 2009)
                
                
                19,996
                
                
                
                19,996Treasury
      stock, at cost; 723,000 and 723,000 shares at March 31, 2010 and March 31,
      2009 respectively
                
                
                (831,450
                )
                
                
                (831,450
                )Additional
      paid-in capital
                
                
                24,742,201
                
                
                
                24,106,055Accumulated
      deficit
                
                
                (19,565,943
                )
                
                
                (17,216,028
                )Accumulated
      other comprehensive income (loss) (foreign currency translation
      adjustment)
                
                
                (650,059
                )
                
                
                (640,595
                )Obligation
      to issue shares (Note 5)
                
                
                97,500
                
                
                
                —Total
      Remedent, Inc. stockholders’ equity
                
                
                3,812,245
                
                
                
                5,437,978Non-controlling
      interest
                
                
                114,002
                
                
                
                896,705Total
      stockholders’ equity
                
                
                3,926,247
                
                
                
                6,334,683Total
      liabilities and equity
                
                $
                7,934,922
                
                
                $
                10,202,342


COMMITMENTS
(Note 23)




The
accompanying notes are an integral part of these consolidated financial
statements.


F-2




REMEDENT, INC. AND
SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF OPERATIONS





For the years ended
                  March 31,2010
                
                
                2009Net
      sales
                
                $
                8,247,940
                
                
                $
                14,639,541Cost
      of sales
                
                
                4,322,680
                
                
                
                6,614,723Gross
      profit
                
                
                3,925,260
                
                
                
                8,024,818Operating
      ExpensesResearch
      and development
                
                
                271,195
                
                
                
                248,652Sales
      and marketing
                
                
                1,352,260
                
                
                
                2,793,970General
      and administrative
                
                
                4,524,324
                
                
                
                5,312,192Depreciation
      and amortization
                
                
                726,499
                
                
                
                615,674TOTAL
      OPERATING EXPENSES
                
                
                6,874,278
                
                
                
                8,970,488OPERATING
      LOSS
                
                
                (2,949,018
                )
                
                
                (945,670
                )NON-OPERATING
      (EXPENSE) INCOMEWarrants
      issued pursuant to Distribution Agreements
                
                
                (168,238
                )
                
                
                (4,323,207
                )Gain
      on disposition of OTC (Note 3)
                
                
                —
                
                
                
                2,830,953IMDS
      provision (Note 12)
                
                
                —
                
                
                
                (300,000
                )Interest
      expense
                
                
                (171,364
                )
                
                
                (417,147
                )Interest
      income
                
                
                170,244
                
                
                
                348,997TOTAL
      OTHER INCOME (EXPENSES)
                
                
                (169,358
                )
                
                
                (1,860,404
                )LOSS
      FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
                
                
                (3,118,376
                )
                
                
                (2,806,074
                )Income
      tax expense
                
                
                (14,242
                )
                
                
                (32,633
                )NET
      LOSS
                
                
                (3,132,618
                )
                
                
                (2,838,707
                )NET
      (LOSS) INCOME ATTRIBUTABLE TO NON-CONTROLLING INTERESTS
                
                
                (782,703
                )
                
                
                114,208NET
      LOSS ATTRIBUTABLE TO REMEDENT INC. Common Stockholders
                
                $
                (2,349,915
                )
                
                $
                (2,952,915
                )LOSS
      PER SHAREBasic
      and fully diluted
                
                $
                (0.12
                )
                
                $
                (0.15
                )WEIGHTED
      AVERAGE SHARES OUTSTANDINGBasic
      and fully diluted
                
                
                19,995,969
                
                
                
                19,559,653





The
accompanying notes are an integral part of these consolidated financial
statements.


F-3





REMEDENT, INC. AND
SUBSIDIARIES


CONSOLIDATED STATEMENT OF
STOCKHOLDERS’ EQUITY (DEFICIT)


FOR
THE YEARS ENDED MARCH 31, 2010 and 2009





Shares
                                  
                                  
                                  Amount
                                  
                                  
                                  Additional
                                    Paid in
                                    Capital
                                  
                                  
                                  Obligation to
                                    Issue
                                    Shares
                                  
                                  
                                  Accumulated
                                    Deficit
                                  
                                  
                                  Treasury
                                    Stock
                                  
                                  
                                  Other
                                  
                                  
                                  Total
                                  
                                  
                                  Non-
                                    controlling
                                    Interest
                                    (net of OCI)
                                  
                                  
                                  Total$
                                  
                                  
                                  $
                                  
                                  
                                  $
                                  
                                  
                                  $
                                  
                                  
                                  $
                                  
                                  
                                  $
                                  
                                  
                                  $
                                  
                                  
                                  $
                                  
                                  
                                  $Balance,
      March 31, 2008
                                  
                                  
                                  18,637,803
                                  
                                  
                                  
                                  18,638
                                  
                                  
                                  
                                  17,929,992
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  (14,263,113
                                  )
                                  
                                  
                                  —
                                  
                                  
                                  
                                  27,650
                                  
                                  
                                  
                                  3,713,167
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  3,713,167Common
      stock issued
                                  
                                  
                                  1,358,166
                                  
                                  
                                  
                                  1,358
                                  
                                  
                                  
                                  1,186,801
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  1,188,159
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  1,188,159Costs
      of private placement
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  (4,400
                                  )
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  (4,400
                                  )
                                  
                                  
                                  —
                                  
                                  
                                  
                                  (4,400
                                  )Treasury
      stock (723,000 shares)
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  (831,450
                                  )
                                  
                                  
                                  —
                                  
                                  
                                  
                                  (831,450
                                  )
                                  
                                  
                                  —
                                  
                                  
                                  
                                  (831,450
                                  )Non-controlling
      interest
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  782,497
                                  
                                  
                                  
                                  782,497Value
      of stock options issued to employees
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  670,455
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  670,455
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  670,455Den-Mat
      warrants
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  4,323,207
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  4,323,207
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  4,323,207Unrealized
      foreign exchange loss
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  (668,245
                                  )
                                  
                                  
                                  (668,245
                                  )
                                  
                                  
                                  —
                                  
                                  
                                  
                                  (668,245
                                  )Net
      loss for the year
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  (2,952,915
                                  )
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  (2,952,915
                                  )
                                  
                                  
                                  114,208
                                  
                                  
                                  
                                  (2,838,707
                                  )Balance,
      March 31, 2009
                                  
                                  
                                  19,995,969
                                  
                                  
                                  
                                  19,996
                                  
                                  
                                  
                                  24,106,055
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  (17,216,028
                                  )
                                  
                                  
                                  (831,450
                                  )
                                  
                                  
                                  (640,595
                                  )
                                  
                                  
                                  5,437,978
                                  
                                  
                                  
                                  896,705
                                  
                                  
                                  
                                  6,334,683Value
      of stock options issued to employees
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  405,800
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  405,800
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  405,800Value
      of shares to be issued for acquisition of Glamsmile Asia Ltd. (Note
      5)
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  97,500
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  97,500
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  97,500Value
      of stock options issued for acquisition of Glamsmile Asia Ltd. (Note
      5)
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  62,108
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  62,108
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  62,108Value
      of warrants issued for investor relations consultants
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  168,238
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  168,238
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  168,238Unrealized
      foreign exchange loss
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  (9,464
                                  )
                                  
                                  
                                  (9,464
                                  )
                                  
                                  
                                  —
                                  
                                  
                                  
                                  (9,464
                                  )Net
      loss for the year
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  (2,349,915
                                  )
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  (2,349,915
                                  )
                                  
                                  
                                  (782,703
                                  )
                                  
                                  
                                  (3,132,618
                                  )Balance,
      March 31, 2010
                                  
                                  
                                  19,995,969
                                  
                                  
                                  
                                  19,996
                                  
                                  
                                  
                                  24,742,201
                                  
                                  
                                  
                                  97,500
                                  
                                  
                                  
                                  (19,565,943
                                  )
                                  
                                  
                                  (831,450
                                  )
                                  
                                  
                                  (650,059
                                  )
                                  
                                  
                                  3,812,245
                                  
                                  
                                  
                                  114,002
                                  
                                  
                                  
                                  3,926,247


The
accompanying notes are an integral part of these consolidated financial
statements.


F-4


REMEDENT, INC. AND
SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF CASH FLOWS





For the year ended March 31,2010
                
                
                2009CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      loss
                
                $
                (3,132,618
                )
                
                $
                (2,838,707
                )Adjustments
      to reconcile net (loss) to net cash used by operating
      activitiesDepreciation
      and amortization
                
                
                726,499
                
                
                
                615,674Inventory
      reserve
                
                
                69,131
                
                
                
                (2,608
                )Allowance
      for doubtful accounts
                
                
                31,879
                
                
                
                1,785Stock
      based compensation
                
                
                405,800
                
                
                
                670,455IMDS
      provision
                
                
                —
                
                
                
                300,000Gain
      on disposition of OTC
                
                
                —
                
                
                
                (2,830,953
                )Warrants
      issued
                
                
                168,238
                
                
                
                4,323,207Acquisition
      of Glamtech-USA, Inc. (Note 4)
                
                
                —
                
                
                
                625,000Changes
      in operating assets and liabilities:Accounts
      receivable
                
                
                2,401,189
                
                
                
                (1,305,200
                )Inventories
                
                
                (223,746
                )
                
                
                (577,327
                )Prepaid
      expenses
                
                
                390,413
                
                
                
                (90,727
                )Accounts
      payable
                
                
                534,263
                
                
                
                (604,019
                )Accrued
      liabilities
                
                
                (1,098,824
                )
                
                
                808,623Income
      taxes payable
                
                
                (39,339
                )
                
                
                24,218Net
      cash used by operating activities
                
                
                232,885
                
                
                
                (880,579
                )CASH
      FLOWS FROM INVESTING ACTIVITIESLong
      term investments and advances
                
                
                —
                
                
                
                (375,000
                )Acquisition
      of Glamsmile Asia Ltd.
                
                
                (394,840
                )
                
                
                —Purchases
      of patents
                
                
                (347,373
                )
                
                
                —Purchases
      of equipment
                
                
                (734,074
                )
                
                
                (602,578
                )Net
      cash used by investing activities
                
                
                (1,476,287
                )
                
                
                (977,578
                )CASH
      FLOWS FROM FINANCING ACTIVITIESProceeds
      on sale of minority interest in Sylphar NV
                
                
                —
                
                
                
                2,782,000Advances
      (repayments) of line of credit
                
                
                14,400
                
                
                
                (119,518
                )Net
      cash provided by financing activities
                
                
                14,400
                
                
                
                2,662,482NET
      (DECREASE) INCREASE IN CASH
                
                
                (1,229,002
                )
                
                
                804,325Effect
      of exchange rate changes on cash and cash equivalents
                
                
                35,197
                
                
                
                (725,335
                )CASH
      AND CASH EQUIVALENTS, BEGINNING
                
                
                1,807,271
                
                
                
                1,728,281CASH
      AND CASH EQUIVALENTS, ENDING
                
                $
                613,466
                
                
                $
                1,807,271Supplemental Cash Flow
      Information:Interest
      paid
                
                $
                69,301
                
                
                $
                114,505Income
      taxes paid
                
                $
                —
                
                
                $
                —SUPPLEMENTAL
      NON-CASH FINANCING AND INVESTING ACTIVITIES:Options
      issued for purchase of Glamtech Asia Ltd.
                
                $
                62,108
                
                
                $
                —Accrued
      non-cash liability to related parties for purchase of Glamtech Asia
      Ltd.
                
                $
                268,484
                
                
                $
                —Accrued
      liability for common shares to be issued for Glamtech Asia
      Ltd.
                
                $
                97,500
                
                
                $
                —Proceeds
      from capital lease notes payable
                
                $
                462,031
                
                
                $
                26,003Restricted
      shares returned to treasury in exchange for 50% ofOTC
      Business
                
                $
                —
                
                
                $
                831,450Warrants
      issued pursuant to Distribution Agreement
                
                $
                —
                
                
                $
                4,323,207Shares
      issued for purchase of Glamtech-USA, Inc.
                
                $
                —
                
                
                $
                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.


F-5





REMEDENT, INC. AND
SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF COMPREHENSIVE LOSS





For the year ended
                    March 31,2010
                  
                  
                  2009Net
      Loss attributable to Remedent, Inc. common shareholders
                  
                  $
                  (2,349,915
                  )
                  
                  $
                  (2,952,915
                  )OTHER
      COMPREHENSIVE LOSS:Foreign
      currency translation adjustment
                  
                  
                  (9,464
                  )
                  
                  
                  (668,245
                  )Total
      Other Comprehensive loss
                  
                  
                  (2,359,379
                  )
                  
                  
                  (3,621,160
                  )LESS:
      COMPREHENSIVE INCOME (LOSS)  ATTRIBUTABLE TO NON-CONTROLLING
      INTEREST
                  
                  
                  7,130
                  
                  
                  
                  (54,700
                  )COMPREHENSIVE
      (LOSS) ATTRIBUTABLE TO REMEDENT, INC. common shareholders
                  
                  $
                  (2,366,509
                  )
                  
                  $
                  (3,566,460
                  )





The
accompanying notes are an integral part of these consolidated financial
statements.


F-6





REMEDENT, INC. AND
SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS





1. DESCRIPTION OF THE COMPANY AND BASIS
OF PRESENTATION





The
Company is a manufacturer and distributor of cosmetic dentistry products,
including a full line of professional dental and retail “Over-The-Counter” tooth
whitening products which are distributed in Europe, Asia and the United States.
The Company manufactures many of its products in its facility in Deurle, Belgium
as well as outsourced manufacturing in its facility in Beijing, China and in
France.  The Company distributes its products using both its own
internal sales force and through the use of third party
distributors.





The
Company’s financial statements have been prepared on an accrual basis of
accounting, in conformity with accounting principles generally accepted in the
United States of America.





In these
notes, the terms “Remedent”, “Company”, “we”, “us” or “our” mean Remedent, Inc.
and all of its subsidiaries, whose operations are included in these consolidated
financial statements.





The
Company has conducted a subsequent events review through the date the financial
statements were issued, and has concluded that there were no subsequent events
requiring adjustments or additional disclosures to the Company's financial
statements at March 31, 2010.





2. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES





Accounting
Standards Codification




On July
1, 2009, we adopted the changes issued by the FASB to the authoritative
hierarchy of GAAP. These changes establish the FASB Accounting Standards
CodificationTM (Codification) as the source of authoritative accounting
principles recognized by the FASB to be applied by nongovernmental entities in
the preparation of financial statements in conformity with GAAP. Rules and
interpretive releases of the Securities and Exchange Commission (SEC) under
authority of federal securities laws are also sources of authoritative GAAP for
SEC registrants. The FASB will no longer issue new standards in the form of
Statements, FASB Staff Positions, or Emerging Issues Task Force Abstracts;
instead the FASB will issue Accounting Standards Updates. Accounting Standards
Updates will not be authoritative in their own right as they will only serve to
update the Codification. These changes and the Codification itself do not change
GAAP. Other than the manner in which new accounting guidance is referenced, the
adoption of these changes had no impact on our consolidated financial
statements.




Organization
and Principles of Consolidation





The
accompanying consolidated financial statements include the accounts of: Remedent
N.V. (incorporated in Belgium) located in Deurle, Belgium, Remedent
Professional, Inc. (incorporated in California), Glamtech-USA, Inc. (a Delaware
corporation acquired effective August 24, 2008) and its 50.98% owned subsidiary,
Glamsmile Asia Ltd.(with its subsidiaries, a GlamSmile Studio in Hong Kong, a
GlamSmile Studio in Mainland China (Beijing) and our GlamSmile production Lab,
also located in China (Beijing)) , Remedent OTC B.V. (a Dutch Holding company)
and a 50% owned subsidiary, Sylphar Holding B.V. (a Dutch holding company), a
37.50% owned and controlled subsidiary of Remedent Inc., Sylphar N.V., a 100%
owned company by Sylphar Holding BV, Sylphar USA, a 100% owned Nevada
corporation by Sylphar Holding BV. And Sylphar Asia Pte, a 100% owned Asian
company owned by Sylphar Holding BV (collectively, the “Company”).





A total
of 50.98% of Glamsmile Asia Ltd., a Hong Kong private company, was acquired by
the Company effective January 1, 2010.  (See Note 5)


F-7





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. (formerly Remedent Asia
Pte. Ltd.), commenced operations as of July 2005.





For all
periods presented, all significant inter-company accounts and transactions have
been eliminated in the consolidated financial statements and corporate
administrative costs are not allocated to subsidiaries.





Pervasiveness
of Estimates




The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires the Company to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. On an on-going basis, the Company evaluates estimates and
judgments, including those related to revenue, bad debts, inventories, fixed
assets, intangible assets, stock based compensation, income taxes, and
contingencies. Estimates are based on historical experience and on various other
assumptions that the Company believes reasonable in the circumstances. The
results form the basis for making judgments about the carrying values of assets
and liabilities that are not readily apparent from other sources. Actual results
could differ from those estimates.





Revenue
Recognition





The
Company recognizes revenue from product sales when persuasive evidence of a sale
exists: that is, a product is shipped under an agreement with a customer; risk
of loss and title has passed to the customer; the fee is fixed or determinable;
and collection of the resulting receivable is reasonably assured. Sales
allowances are estimated based upon historical experience of sales
returns.





Impairment
of Long-Lived Assets





Long-lived
assets consist primarily of patents and property and equipment. The
recoverability of long-lived assets is evaluated by an analysis of operating
results and consideration of other significant events or changes in the business
environment. If impairment exists, the carrying amount of the long-lived assets
is reduced to its estimated fair value, less any costs associated with the final
settlement.  To date, management has not identified any impairment of
property and equipment.  There can be no assurance, however, that
market conditions or demands for the Company’s services will not change which
could result in future long-lived asset impairment.





Goodwill
impairment





The
Company performs impairment tests related to goodwill annually and whenever
events or changes in circumstances suggest that it is more likely than not that
the fair value of the reported unit is below its carrying value. To March 31,
2010, management has not identified any impairment of goodwill.





Cash and
Cash Equivalents





The
Company considers all highly liquid investments with maturities of three months
or less at the time of purchase to be cash or cash equivalents.





Non-controlling
Interest





The
Company adopted ASC Topic 810 Noncontrolling Interests in
Consolidated Financial Statements — an Amendment of Accounting
Research Bulletin No. 51 as of April 1, 2009. SFAS 160 establishes
accounting and reporting standards for ownership interests in subsidiaries held
by parties other than the parent, the amount of consolidated net income
attributable to the parent and to the noncontrolling interest, changes in a
parent’s ownership interest and the valuation of retained noncontrolling equity
investments when a subsidiary is deconsolidated. ASC Topic 810 also establishes
reporting requirements that provide sufficient disclosures that clearly identify
and distinguish between the interest of the parent and the interests of the
noncontrolling owner. The adoption of ASC Topic 810 impacted the presentation of
our consolidated financial position, results of operations and cash
flows.


F-8





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.





Accounts
Receivable and Allowance for Doubtful Accounts





The
Company sells professional dental equipment to various companies, primarily to
distributors located in Western Europe and the United States of America, and
China. The terms of sales vary by customer, however, generally are 2% 10 days,
net 30 days. Accounts receivable is reported at net realizable value and net of
allowance for doubtful accounts. The Company uses the allowance method to
account for uncollectible accounts receivable. The Company’s estimate is based
on historical collection experience and a review of the current status of trade
accounts receivable.





Inventories





The
Company purchases certain of its products in components that require assembly
prior to shipment to customers. All other products are purchased as finished
goods ready to ship to customers.





The
Company writes down inventories for estimated obsolescence to estimated market
value based upon assumptions about future demand and market conditions. If
actual market conditions are less favorable than those projected, then
additional inventory write-downs may be required. Inventory reserves for
obsolescence totaled $82,335 at March 31, 2010 and $13,204 at March 31,
2009.





Prepaid
Expense





The
Company’s prepaid expense consists of prepayments to suppliers for inventory
purchases and to the Belgium customs department, to obtain an exemption of
direct VAT payments for imported goods out of the European Union (“EU”). This
prepayment serves as a guarantee to obtain the facility to pay VAT at the moment
of sale and not at the moment of importing goods at the border. Prepaid expenses
also include VAT payments made for goods and services in excess of VAT payments
received from the sale of products as well as amounts for other prepaid
operating expenses.





Property
and Equipment





Property
and equipment are stated at cost. Major renewals and improvements are charged to
the asset accounts while replacements, maintenance and repairs, which do not
improve or extend the lives of the respective assets, are expensed. At the time
property and equipment are retired or otherwise disposed of, the asset and
related accumulated depreciation accounts are relieved of the applicable
amounts. Gains or losses from retirements or sales are credited or charged to
income.





The
Company depreciates its property and equipment for financial reporting purposes
using the straight-line method based upon the following useful lives of the
assets:





Tooling
              3 YearsFurniture
      and fixtures
              4 YearsMachinery
      and Equipment
              4 Years


F-9





Patents





Patents
consist of the costs incurred to purchase patent rights and are reported net of
accumulated amortization. Patents are amortized using the straight-line method
over a period based on their contractual lives.





Research
and Development Costs





The
Company expenses research and development costs as incurred.





Advertising





Costs
incurred for producing and communicating advertising are expensed when incurred
and included in sales and marketing and general and administrative expenses. For
the years ended March 31, 2010 and March 31, 2009, advertising expense was
$389,632 and $259,408, respectively.





Income
taxes





Income
taxes are accounted for under the asset and liability method as stipulated by
Accounting Standards Codification (“ASC”) 740 formerly Statement of Financial
Accounting Standards (“SFAS”) No. 109, “Accounting for Income Taxes”. Deferred
tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases and operating
loss and tax credit carry forwards. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the year
in which those temporary differences are expected to be recovered or settled.
Under ASC 740, the effect on deferred tax assets and liabilities or a change in
tax rate is recognized I income in the period that includes the enactment date.
Deferred tax assets are reduced to estimated amounts to be realized by the use
of a valuation allowance. A valuation allowance is applied when in management’s
view it is more likely than not (50%) that such deferred tax will not be
utilized.





Effective
February 1, 2008, the Company adopted certain provisions under ASC Topic 740,
Income Taxes, (“ASC 740”), which provide interpretative guidance for the
financial statement recognition and measurement of a tax position taken or
expected to be taken in a tax return. Effective with the Company’s adoption of
these provisions, interest related to the unrecognized tax benefits is
recognized in the financial statements as a component of income taxes. The
adoption of ASC 740 did not have an impact on the Company’s financial position
and results of operations.





In the
unlikely event that an uncertain tax position exists in which the Company could
incur income taxes, the Company would evaluate whether there is a probability
that the uncertain tax position taken would be sustained upon examination by the
taxing authorities. Reserves for uncertain tax position would then be recorded
if the Company determined it is probable that a position would not be sustained
upon examination or if a payment would have to be made to a taxing authority and
the amount is reasonably estimable. As of March 31, 2010, the Company does not
believe it has any uncertain tax positions that would result in the Company
having a liability to the taxing authorities.





Warranties





The
Company typically warrants its products against defects in material and
workmanship for a period of 18 months from shipment. Based upon historical
trends and warranties provided by the Company’s suppliers and sub-contractors,
the Company has made a provision for warranty costs of $20,238 and $19,806 as of
March 31, 2010 and March 31, 2009, respectively.


F-10





Segment
Reporting





“Disclosure
About Segments of an Enterprise and Related Information” requires use of the
“management approach” model for segment reporting. The management approach model
is based on the way a company’s management organizes segments within the company
for making operating decisions and assessing performance. Reportable segments
are based on products and services, geography, legal structure, management
structure, or any other manner in which management disaggregates a company. The
Company’s management considers its business to comprise one segment for
reporting purposes.





Computation
of Earnings (Loss) per Share





Basic net
income (loss) per common share is computed by dividing net income (loss)
attributable to common stockholders by the weighted average number of shares of
common stock outstanding during the period. Net income (loss) per common share
attributable to common stockholders assuming dilution is computed by dividing
net income by the weighted average number of shares of common stock outstanding
plus the number of additional common shares that would have been outstanding if
all dilutive potential common shares had been issued.





On April
1, 2009, the Company adopted changes issued by the FASB to the calculation of
earnings per share. These changes state that unvested share-based payment awards
that contain nonforfeitable rights to dividends or dividend equivalents (whether
paid or unpaid) are participating securities and shall be included in the
computation of earnings per share pursuant to the two-class method for all
periods presented. The adoption of this change had no impact on the Company’s
basic or diluted net loss per share because the Company has never issued any
share-based awards that contain nonforfeitable rights.





Potential
common shares related to stock options and stock warrants are excluded from the
computation in net loss periods because their effect would be
anti-dilutive.




At each
of March 31, 2010 and 2009, the Company had 19,995,969, shares of common stock
issued and outstanding.  At March 31, 2010 and 2009, the Company
had  11,108,305 and 10,638,305 warrants outstanding, respectively and
2,268,166 and 2,068,166 options outstanding, respectively.





Conversion
of Foreign Currencies





The
reporting currency for the consolidated financial statements of the Company is
the U.S. dollar. The functional currency for the Company’s European
subsidiaries, Remedent N.V. and Sylphar N.V., is the Euro, for Remedent Asia the
Singapore Dollar and for Glamsmile Asia Ltd., and its subsidiaries, the Hong
Kong dollar and the Chinese Remimbi (“RMB”) for Mainland China. Finally, the
functional currency for Remedent Professional, Inc. is the U.S. dollar. The
assets and liabilities of companies whose functional currency is other that the
U.S. dollar are included in the consolidation by translating the assets and
liabilities at the exchange rates applicable at the end of the reporting period.
The statements of income of such companies are translated at the average
exchange rates during the applicable period. Translation gains or losses are
accumulated as a separate component of stockholders’ equity.





Comprehensive
Income (Loss)





Comprehensive
income (loss) includes all changes in equity except those resulting from
investments by owners and distributions to owners, including adjustments to
minimum pension liabilities, accumulated foreign currency translation, and
unrealized gains or losses on marketable securities.





The
Company’s only component of other comprehensive income is the accumulated
foreign currency translation consisting of gains and (losses) of $(9,464) and
$(668,245) for the years ended March 31, 2010 and 2009, respectively. These
amounts have been recorded as a separate component of stockholders’ equity
(deficit).





Stock
Based Compensation




The
Company has a stock-based compensation plan which is described more fully in
Note 20. The Company measures the compensation cost of stock options and other
stock-based awards to employees and directors at fair value at the grant date
and recognizes compensation expense over the requisite service period for awards
expected to vest.


F-11




Except
for transactions with employees and directors, all transactions in which goods
or services are the consideration received for the issuance of equity
instruments are accounted for based on the fair value of the consideration
received or the fair value of the equity instruments issued, whichever is more
reliably measurable. Additionally, the Company has determined that the dates
used to value the transaction are either:




(1) The
date at which a commitment for performance by the counter party to earn the
equity instruments is established; or




(2) The
date at which the counter party’s performance is complete.




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”.  Also, proceeds from capital lease
notes payable have been reclassified as a deduction (net) from equipment
purchases. The reclassifications had no impact upon previously reported net
income available to common stockholders or earnings per share.





Adoption
of New Accounting Standards





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 year ended March 31, 2010 has resulted in increased
disclosures in our consolidated financial statements.





In April
2009, the FASB issued updated guidance of ASC 820, "Fair Value Measurements."
The updated guidance is effective for interim and annual periods ending after
June 15, 2009 and provides guidance on how to determine the fair value of
assets and liabilities in the current economic environment and reemphasizes that
the objective of a fair value measurement remains an exit price. If the Company
were to conclude that there has been a significant decrease in the volume and
level of activity of the asset or liability in relation to normal market
activities, quoted market values may not be representative of fair value and the
Company may conclude that a change in valuation technique or the use of multiple
valuation techniques may be appropriate. The updated guidance modifies the
requirements for recognizing other-than-temporarily impaired debt securities and
revises the existing impairment model for such securities by modifying the
current intent and ability indicator in determining whether a debt security is
other-than-temporarily impaired. The updated guidance also enhances the
disclosure of instruments for both interim and annual periods. The Company
adopted this updated guidance with no impact on its consolidated financial
position or results of operations. See Note 24— Financial Instruments, for
disclosure regarding the fair value of financial instruments


F-12




In May
2009, the FASB issued ASC 855, "Subsequent Events" ("ASC
855"). This should not result in significant changes in the subsequent events
that an entity reports. Rather, ASC 855 introduces the concept of financial
statements being available to be issued. Financial statements are considered
available to be issued when they are complete in a form and format that complies
with GAAP and all approvals necessary for issuance have been obtained. The
Company adopted ASC 855 with no impact on its consolidated financial position or
results of operations. See Note 1— Description of the Company and Basis of
Presentation, for further discussion.




In August
2009, the FASB issued ASU 2009-05, "Fair Value Measurements and
Disclosures (Topic 820)—Measuring Liabilities at Fair Value an Update
2009-05" ("ASU 2009-05"). ASU 2009-05 amends subtopic 820-10, "Fair Value
Measurements and Disclosures—Overall" and provides clarification for the fair
value measurement of liabilities in circumstances where quoted prices for an
identical liability in an active market are not available. ASU 2009-05 is
effective for the first reporting period beginning after issuance. The Company
adopted ASU 2009-05 with no impact on its consolidated financial position or
results of operations.





In
January 2010, the FASB issued ASU 2010-06, "Fair Value Measurements and
Disclosures (Topic 820)—Improving
Disclosures about Fair Value Measurements" ("ASU 2010-06"). ASU 2010-06
provides amended disclosure requirements related to fair value measurements. ASU
2010-06 is effective for interim and annual reporting periods beginning after
December 15, 2009, except for the disclosures about purchases, sales,
issuances, and settlements in the roll forward of activity in Level 3 fair
value measurements. Those disclosures are effective for fiscal years beginning
after December 15, 2010, and for interim periods within those fiscal years.
Early adoption is permitted. The Company adopted ASU 2010-06 with no impact
on disclosures. See Note 24—Financial Instruments, for disclosure regarding the
fair value of financial instruments.





Recently
Issued Accounting Pronouncements




In April
2008, the FASB issued updated guidance of ASC 350, "Intangibles—Goodwill and
Other," removing the requirement for an entity to consider, when
determining the useful life of an acquired intangible asset, whether the
intangible asset can be renewed without substantial cost or material
modifications to the existing terms and conditions associated with the
intangible asset. The intent of the updated guidance is to improve the
consistency between the useful life of a recognized intangible asset and the
period of expected cash flows used to measure the fair value of the asset under
ASC 805, "Business
Combinations," and other U.S. generally accepted accounting principles.
The updated guidance replaces the previous useful-life assessment criteria with
a requirement that an entity considers its own experience in renewing similar
arrangements. This updated guidance applies to all intangible assets, whether
acquired in a business combination or otherwise and shall be effective for our
financial statements commencing April 1, 2010. The adoption of these changes is
not expected to have an impact on our consolidated financial
statements.




In June
2009, the FASB issued ASC topic 860-20 for changes to the accounting for
transfers of financial assets. These changes remove the concept of a
qualifying special-purpose entity and remove the exception from the application
of variable interest accounting to variable interest entities that are
qualifying special-purpose entities; limits the circumstances in which a
transferor derecognizes a portion or component of a financial asset; defines a
participating interest; requires a transferor to recognize and initially measure
at fair value all assets obtained and liabilities incurred as a result of a
transfer accounted for as a sale; and requires enhanced disclosure; among
others. These changes become effective for us on April 1, 2010. The adoption of
these changes is not expected to have an impact on our consolidated financial
statements.


F-13




In June
2009, the FASB issued changes
to the accounting for variable interest entities. These changes require
an enterprise to perform an analysis to determine whether the enterprise’s
variable interest or interests give it a controlling financial interest in a
variable interest entity; to require ongoing reassessments of whether an
enterprise is the primary beneficiary of a variable interest entity; to
eliminate the quantitative approach previously required for determining the
primary beneficiary of a variable interest entity; to add an additional
reconsideration event for determining whether an entity is a variable interest
entity when any changes in facts and circumstances occur such that holders of
the equity investment at risk, as a group, lose the power from voting rights or
similar rights of those investments to direct the activities of the entity that
most significantly impact the entity’s economic performance; and to require
enhanced disclosures that will provide users of financial statements with more
transparent information about an enterprise’s involvement in a variable interest
entity. These changes become effective for us on April 1, 2010. The adoption of
these changes is not expected to have an impact on our consolidated 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.




In
February 2010, the Financial Accounting Standards Board ("FASB") issued
Accounting Standards Update ("ASU") 2010-09, "Subsequent Events (Topic
855)—Amendments to Certain Recognition and Disclosure Requirements" ("ASU
2010-09"). ASU 2010-09 was issued to change certain guidance in the original
codification and to clarify other portions. All of the amendments in ASU 2010-09
are effective upon issuance of the final ASU 2010-09, except for the use of the
issued date for conduit debt obligors. That amendment is effective for interim
or annual periods ending after June 15, 2010. The Company determined that
this updated guidance has no impact on its consolidated financial position or
results of operations.




3.
            RESTRUCTURING
      OF OTC BUSINESS





To
effectuate the restructuring Plan relating to the management led buyout of the
Over-The-Counter (“OTC”) business the Company entered into the following series
of related agreements:





On
December 10, 2008, the Company entered into a Contribution Agreement with
Sylphar USA, Inc., a newly incorporated Nevada corporation and wholly owned
subsidiary of the Company (“Sylphar USA”), pursuant to which the Company made a
capital contribution of certain assets and liabilities relating to the OTC
business which was valued at $460,568 to Sylphar USA in exchange for 460,568
shares of common stock, par value $1.00, of Sylphar USA.





On
December 10, 2008, the Company entered into a Share Purchase Agreement with
Remedent, 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.


F-14





Subsequent
to the contribution of the OTC Subsidiaries to Remedent OTC, the Company sold
fifty percent (50%) of its interest in Remedent OTC to Robin List, a former
Chief Executive Officer, President and Director of the Company, in exchange for
723,000 restricted shares of common stock of the Company held by Mr. List
(“Exchanged Shares”), pursuant to a Share Purchase Agreement on December 10,
2008.  The Exchanged Shares were returned to treasury.  The
Exchanged Shares were valued at $1.15 per share, based on the average of the 52
week high and low bid, for an aggregate value of $831,450.   As a
result, Mr. List and the Company equally own 50% of Remedent OTC with the
Company currently controlling Remedent OTC through its board representations
pursuant to the terms of a certain Voting Agreement entered into by the Company
and Mr. List concurrently with the Share Purchase Agreement.  The
Voting Agreement provides that, the Company will initially have 2 board
representations and Mr. List will have 1 board
representation.  However upon the occurrence of a “Triggering Event”
(as defined in the Voting Agreement), the Company will have 1 board
representation and Mr. List will have 2 board representations.





On
December 11, 2008, the Company entered into an Investment and Shareholders’
Agreement with Remedent OTC, Concordia Fund V.C., a non-affiliated Dutch private
equity fund (“Concordia”), Mr. List, Sylphar Holding, BV, a Dutch holding
company and wholly owned subsidiary of Remedent OTC (“Sylphar Holding”) and the
OTC Subsidiaries pursuant to which Concordia agreed to purchase shares of
Sylphar Holding from Remedent OTC representing a 12.5% ownership interest in
Sylphar Holding for €1,000,000 and invest an additional €1,000,000 in Sylphar
Holding for an additional 12.5% ownership interest in Sylphar Holding,
representing an aggregate ownership interest of 25% in Sylphar Holding.
Furthermore, Concordia was granted a call option exercisable from January 1,
2009 until December 31, 2010, unless otherwise extended to September 30,
2011 pursuant to the terms of such agreement, to purchase an additional 24%
ownership interest in Sylphar Holding for €2,000,000 or any pro rata portion
thereof.  The shares of Sylphar Holding are subject to certain drag
along rights in the event there is an offer to purchase such
shares.  It was further agreed upon that the €1,000,000 received from
Concordia would be used to pay off the Debt.  Such funds were received
from Concordia and used to pay off the Debt in December
2008.  Subsequently, all of the OTC Subsidiaries were transferred and
are currently held and operated by Sylphar Holding.





Further,
as consideration for Den-Mat’s obligations under the Distribution Agreement, the
Company agreed to, among other things:





(i)
            issue
      to Den-Mat or an entity to be designated by Den-Mat, warrants to purchase
      up to 3,378,379 shares of the Corporation’s common stock, par value $0.001
      per share (the “Warrant Shares”) at an exercise price of $1.48 per share,
      exercisable for a period of five years (the “Den-Mat Warrant”) (issued in
      the period ended September 30,
2008);


(ii)
            execute
      and deliver to Den-Mat a registration rights agreement covering the
      registration of the Warrant Shares (the “Registration Rights Agreement”);
      and


(iii)
            cause
      its Chairman of the Board, Guy De Vreese, to execute and deliver to
      Den-Mat a non-competition
agreement.





4.
              ACQUISITION
      OF GLAMTECH-USA, INC.





On August
24, 2008, as part of the consideration for the rescission and release under the
Rescission Agreement entered into between the Company, our wholly owned
subsidiary, Remedent N.V., and Glamtech-USA, Inc., a Delaware corporation
(“Glamtech”), the Company entered into a Stock Purchase Agreement (the “Stock
Purchase Agreement”) with each of the two Glamtech shareholders (the “Holders”),
for the purchase of 100% of Glamtech’s outstanding common stock in exchange for,
among certain other consideration:  at the election of the Holders at
any time within 6 months, to receive either, but not both, (a) an aggregate of
1,000,000 restricted shares of the registrant’s common stock (the “Shares”), or
(b) five year warrants valued by the registrant’s Board of Directors at $1.48
per warrant, to purchase an aggregate of 1,247,216 restricted shares of the
registrant’s common stock at a exercise price of $1.30 per share (the “Warrant
Shares”).




Further,
pursuant to the terms of the Stock Purchase Agreement, the Company agreed to
register the Shares or the Warrant Shares, as applicable, on a registration
statement with the U.S. Securities and Exchange Commission no later than thirty
(30) calendar days following the date of the Holder’s election, but no sooner
than seventy-five (75) days from the effective date of the Stock Purchase
Agreement.  All of the securities issued to the two Glamtech
shareholders will be exempt from the registration requirements of the Securities
Act of 1933, as amended, pursuant to Sections 4(2), and Rule 506 of Regulation D
of the Securities and Exchange Commission and from various similar state
exemptions.


F-15


During
the quarter ended December 31, 2008, both Holders elected to receive a total of
1,000,000 restricted shares.  The shares were issued prior to December
31, 2008 and were recorded at a fair value of $625,000.





5.
              ACQUISITION
      OF GLAMSMILE ASIA LTD.





Effective
January 1, 2010 the Company acquired 50.98% of the issued and outstanding shares
of Glamsmile Asia Ltd. (“Glamsmile Asia”), a private Hong Kong company, with
subsidiaries in Hong Kong and Mainland China, in exchange for the following
consideration:





1.
            325,000
      Euro (US$466,725).  As of March 31, 2010, the Company owed a
      balance of $71,885 on its purchase of the shares of Glamsmile Asia, which
      amount was recorded as due to related
parties;


2.
            250,000
      shares of common stock to be issued during the fiscal year ended March 31,
      2011($97,500 was recorded as an obligation to issue shares as at March 31,
      2010);


3.
            100,000
      options on closing (issued – see Note
21);


4.
            100,000
      options per opened store at closing (issued – see Note
  21);


5.
            100,000
      options for each additional store opened before the end of 2011 at the
      price of the opening date of the
store;


6.
            Assumption
      of Glamsmile’s January 1, 2010 deficit of $73,302. The non-controlling
      interest is non-participating until such time as the net profit from
      Glamsmile Asia. exceeds prior losses of $73,302;
  and


7.
            Repayment
      of the founding shareholder’s original advances in the amount of
      $196,599.  The balance of $196,599, recorded as due to related
      parties at March 31, 2010, is unsecured, non-interest bearing and has no
      specific terms of repayment other than it will be paid out of revenues
      from Glamsmile, as working capital
allows.





All
options reside under the Company’s option plan and are five year
options.





Also
pursuant to the agreement, the Company has granted irrevocable right to
Glamsmile Asia to use the Glamsmile trademark in Greater China.





In
connection with this acquisition the Company has recorded goodwill of
$699,635.  If new information is received by the Company during the
measurement period, the goodwill recorded may be subject to change.
..





6.
            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;


F-16


(iv)
            a payment of $1,000,000 promptly
      after Den-Mat manufactures a limited quantity of products at a facility
      owned or leased by
Den-Mat;


(v)
            a payment of $1,000,000 promptly
      upon completion of certain training of Den-Mat’s
      personnel;


(vi)
            a payment of $1,000,000 upon the
      first to occur of (a) February 1, 2009 or (b) the date thirty
      (30) days after den-Mat sells GlamSmile Products incorporating twenty
      thousand (20,000) Units/Teeth to customers regardless of whether Den-Mat
      has manufactured such Units/Teeth in a Den-Mat facility or has purchased
      such Units/Teeth from the
Company;


(vii)
            certain milestone payments;
      and


(viii)
            certain royalty
      payments.





Further,
as consideration for Den-Mat’s obligations under the Distribution Agreement, the
Company agreed to, among other things:





(i)
            issue to Den-Mat or an entity to
      be designated by Den-Mat, warrants to purchase up to 3,378,379 shares of
      the Corporation’s common stock, par value $0.001 per share (the “Warrant
      Shares”) at an exercise price of $1.48 per share, exercisable for a period
      of five years (the “Den-Mat Warrant”) (issued in the period ended
      September 30, 2008);





(ii)
            execute and deliver to Den-Mat a
      registration rights agreement covering the registration of the Warrant
      Shares (the “Registration Rights Agreement”) which as of March 31, 2009
      has not yet been filed;
and


(iii)
            cause its Chairman of the Board,
      Guy De Vreese, to execute and deliver to Den-Mat a non-competition
      agreement.





On June
3, 2009, the Distribution Agreement was amended and restated (the “Amended
Agreement”). The Amended Agreement modifies and clarifies certain terms and
provisions which among other things includes:





(1) the
expansion of the list of Excluded Markets to include Spain, Japan, Portugal,
South Korea and South Africa for a period of time;


(2)
clarification that Den-Mat’s distribution and license rights are non-exclusive
to market, sell and distribute the Products directly to consumers through retail
locations (“B2C Market”) in the Territory and an undertaking to form a separate
subsidiary to and to issue warrants to Den-Mat in the subsidiary in the event
that the Company decides to commercially exploit the B2C Market in North America
after January 1, 2010;


(3)
subject to certain exceptions, a commitment from the Company to use Den-Mat as
its supplier to purchase all of its, and its licensee’s, GlamSmile products in
the B2C Market from Den-Mat, with reciprocal commitment from Den-Mat to sell
such products;


(4)
modification of certain defined terms such as “Guaranty Period,” “Exclusivity
Period” and addition of the term “Contract Period”; and


(5) the
“Guaranty Period” (as defined therein) is no longer a  three year
period but has been changed to the first three “Contract
Periods”.  The first Contract Period commences on the first day of the
Guaranty Period (which the Parties agreed has commenced as of April 1, 2009),
and continues for fifteen (15) months or such longer period that would be
necessary in order for Den-Mat to purchase a certain minimum number of
Units/Teeth as agreed upon in the Amended Agreement (“Minimum Purchase
Requirement”) in the event that the Company’s manufacturing capacity falls below
a certain threshold.  The second and each subsequent GlamSmile
Contract Period begins on the next day following the end of the preceding
“Contract Period” and continues for twelve (12) months or such longer period
that would be necessary in order for Den-Mat to meet its Minimum Purchase
Requirement in the event that the Company’s manufacturing capacity falls below a
certain threshold.





In August
2009, the Distribution Agreement was further amended (the “August Amendment”).
The August Amendment expands the Company’s products covered under the
Distribution Agreement to include the Company’s new Prego System Technology
(“Prego System”), also commonly known as “Glamstrip”. Under the Amendment, the
$250,000 payment which was originally due upon the expiration of the first
Contract Period (as defined in the Distribution Agreement) is now due on the
earlier occurrence of (i) sixty days from August 11, 2009 or (ii) the
performance of the Company’s live patient clinical demonstration of the Prego
System to be performed at Den-Mat’s reasonable satisfaction.


F-17





The
August Amendment also provides for (a) the royalty rate for products
manufactured and sold by Den-Mat using the Prego System after the Guaranty
Period (as defined in the Distribution Agreement), (b) Den-Mat’s right to elect
to manufacture or purchase from a third party manufacturer any or all portion of
the minimum purchase requirements under the Distribution Agreement provided
however, that if Den-Mat fails to purchase the minimum number of Units/Teeth as
required during any month, Den-Mat may cure such default by paying the Company a
certain royalty on the difference between the minimum purchase requirement and
the amount actual purchased by Den-Mat during such month, with such royalties
accruing and being due and payable upon the earlier occurrence of either (1) one
hundred twenty days from August 11, 2009 or (2) the successful performance
of the Company’s live patient demonstration of the First Fit
Technology licensed to Den-Mat pursuant to the First Fit-Crown Distribution
and License Agreement, to be performed at Den-Mat’s reasonable
satisfaction; and all shortfall payments thereafter being due and payable within
15 days after the end of the month in which shortfall occurred, and (c)
Den-Mat’s option to purchase a certain number of Prego Systems in lieu of Trays
during each of the first three Contract Periods pursuant to the terms, including
price and conditions, set forth in the Amendment so long as such option is
exercised during the period commencing on August 11, 2009 and ending on the
later of either 91 days or 31 days after the Company demonstrates to Den-Mat
that it has the capacity to produce a certain number of Prego System per
Contract Period. Furthermore under the Amendment, if Den-Mat fails to purchase
the required minimum Trays during any Contract Period, such failure may be cured
by payment equal to the difference between the aggregate purchase price that
would have been paid had Den-Mat purchased the required minimum and the
aggregate purchase price actually paid for such Contract Year within 30 days
after the end of such Contract Period. With the exception of the provisions
amended by the Amendment, the Distribution Agreement remains in full force and
effect.





First
Fit Distribution Agreement





On June
3, 2009, the Company entered into the First Fit-Crown Distribution and License
Agreement (the “First Fit Distribution Agreement”) with
Den-Mat.  Under the terms of the First Fit Distribution Agreement, the
Company appointed Den-Mat to be its sole and exclusive distributor to market,
license and sell certain products relating to the Company’s proprietary First
Fit technology (the “First Fit Products”), in the United States, Canada and
Mexico (the “First Fit Territory”).  In connection therewith, the
Company also granted Den-Mat certain non-exclusive rights to manufacture and
produce the First Fit Products in the First-Fit Territory; and a sole and
exclusive transferable and sub-licensable right and license to use the Company’s
intellectual property rights relating to the First Fit Products to perform its
obligations as a distributor (provided the Company retains the right to use and
license related intellectual property in connection with the manufacture of the
First Fit Products for sale outside of the  First Fit
Territory).





Consummation
of the First Fit Distribution Agreement is subject to: completion of Den-Mat’s
due diligence; execution and delivery of Non-Competition Agreements; and the
delivery of the Development Payment and first installment of the License Payment
(the “Development Payment” and License Payment” are defined below).





Under the
First Fit Distribution Agreement, the Company granted such distribution rights,
licensing rights and manufacturing rights, in consideration for the
following:  (i) a non-refundable development fee of Four Hundred
Thousand Dollars ($400,000) (the “Development Payment”) payable in two
installments of $50,000 each, one within seven days after the effective date of
the First Fit Distribution Agreement, and another $350,000 payment within twenty
one days after the Effective Date ($400,000 received as at June 30, 2009); (ii)
a non-refundable license fee of $600,000 payable in three equal installments of
$200,000 each, with the first installment payable on the Closing Date, and with
the second and third installments payable on the 30th and
60th
day, respectively, after the Closing Date (received); (iii) certain royalty
payments based on the sales of the First Fit Products by Den-Mat or its
sub-licensees; and (iv) certain minimum royalty payments to maintain
exclusivity.


F-18




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.





On March
29, 2010, a certain Amendment No. 1 was made to the First Fit Distribution
Agreement dated June 3, 2009.  The terms of Amendment No. 1 are as
follows:





The total
purchase price for the First Fit IP consists of installment payments and royalty
payments.  The cash component of the purchase price of the First
Fit IP is $2,850,000 to be paid in the form of cash in the following
installments: (a) $50,000 upon delivery by Remedent to Den-Mat of a working
prototype of the First Fit crown (received); (b) $525,000 on or before March 15,
2010 (received); (c) $700,000 on June 30, 2010; and (d) $500,000 on
December 31, 2010, June 30, 2011 and December 31, 2011. In connection with
the execution of the First Fit Agreement, Den-Mat also agreed to make an advance
cash payment of $75,000 to the Company towards the purchase price
(received).  In addition to the cash component, Den-Mat agreed to pay
Remedent a capital payment equal to a certain percent of Den-Mat’s net revenues
generated by the sale of the First Fit products.





Concurrently
with the execution of the First Fit Amendment, the Company and Den-Mat entered
into Amendment No. 2 to the Amended and Restated Distribution, License and
Manufacturing Agreement (“Glamsmile Amendment”) with Den-Mat pursuant to which
certain provisions of a certain Amended and Restated Distribution, License and
Manufacturing Agreement previously entered into by the Company and Den-Mat on
June 3, 2009 and subsequently amended on August 11, 2009, were
amended.  The Glamsmile Amendment became effective concurrently with
the effectiveness of the First Fit Amendment on February 16, 2010 (the
“Amendment No. 2 Effective Date”).  Among other things, the Glamsmile
Amendment (1) permits the Company to purchase its requirements for GlamSmile
Products from another party, other than Den-Mat,  provided the Company
pays Den-Mat a royalty payment on net revenues received by the Company per
unit/tooth, (2) decreases the percentage of securities to be covered in a
warrant to purchase securities of B2C Market Subsidiary and the exercise price
of such warrant to be issued to Den-Mat  in the event a B2C Market
Subsidiary is formed under the terms set forth in such agreement, (3) expands
the definition of “Excluded Market” to include Australia, Belgium, France and
United Arab Emirates, and (4) provides a consulting fee, equal to a percentage
of net revenues received by Den-Mat from the Sale of unit/teeth and trays, to
the Company for its services, support  and certain additional
consideration, (5) terminates certain provisions relating to minimum requirement
obligations and rights, and (6) amends the formula for calculation of a certain
exit fee in the event of a change of control.  The parties further
agreed that an advance of $25,000 against the Consulting Fees shall be paid to
Remedent upon execution of this Amendment, which amount shall be promptly
refunded to Den-Mat if this Amendment does not become binding on or before the
end of the 30 day period commencing February 16, 2010.





7.
              CONCENTRATION OF
      RISK





Financial
Instruments — Financial instruments, which potentially subject the Company to
concentrations of credit risk, consist principally of trade accounts
receivable.





Concentrations
of credit risk with respect to trade receivables are normally limited due to the
number of customers comprising the Company’s customer base and their dispersion
across different geographic areas. At March 31, 2010 four customers accounted
for a total of 12.2%, 10.6%, 9.4% and 6.7% of the Company’s trade accounts
receivable.  At March 31, 2009 four customers accounted for a total of
30%, 19%, 18% and 11% 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.


F-19


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 year ended March 31, 2010, the Company had
five suppliers who accounted for 20% of gross purchases.  For the year
ended March 31, 2009, the Company had five suppliers who accounted for 20% of
gross purchases.





Revenues
— For the year ended March 31, 2010 the Company had two customers that accounted
for 45.2% and 11.4% respectively of total revenues. For the year ended March 31,
2009 the Company had one customer that accounted for 45.5% of total
revenues.





8.
            ACCOUNTS RECEIVABLE AND
      ALLOWANCE FOR DOUBTFUL
ACCOUNTS





The
Company’s accounts receivable at year end were as follows:





March 31, 2010
                  
                  
                  March 31, 2009Accounts
      receivable, gross
                  
                  $
                  872,776
                  
                  
                  $
                  3,242,086Less:
      allowance for doubtful accounts
                  
                  
                  (65,845
                  )
                  
                  
                  (33,966
                  )Accounts
      receivable, net
                  
                  $
                  806,931
                  
                  
                  $
                  3,208,120





9.
              INVENTORIES





Inventories
at year end are stated at the lower of cost (first-in, first-out) or net
realizable value and consisted of the following:





March 31, 2010
                      
                      
                      March 31, 2009Raw
      materials
                      
                      $
                      20,641
                      
                      
                      $
                      20,941Components
                      
                      
                      1,024,908
                      
                      
                      
                      1,017,286Finished
      goods
                      
                      
                      1,198,478
                      
                      
                      
                      912,9232,244,027
                      
                      
                      
                      1,951,150Less:
      reserve for obsolescence
                      
                      
                      (82,335
                      )
                      
                      
                      (13,204
                      )Net
      inventory
                      
                      $
                      2,161,692
                      
                      
                      $
                      1,937,946





10.
              PREPAID
      EXPENSES





Prepaid
expenses are summarized as follows:





March 31, 2010
                  
                  
                  March 31, 2009Prepaid
      materials and components
                  
                  $
                  701,035
                  
                  
                  $
                  1,127,225Prepaid
      Belgium income taxes
                  
                  
                  4,332
                  
                  
                  
                  —Prepaid
      consulting
                  
                  
                  22,095
                  
                  
                  
                  18,119VAT
      payments in excess of VAT receipts
                  
                  
                  98,702
                  
                  
                  
                  99,315Royalties
                  
                  
                  39,905
                  
                  
                  
                  39,053Prepaid
      trade show expenses
                  
                  
                  10,000
                  
                  
                  
                  —Prepaid
      rent
                  
                  
                  1,409
                  
                  
                  
                  1,584Other
                  
                  
                  43,009
                  
                  
                  
                  25,604$
                  920,487
                  
                  
                  $
                  1,310,900





11.
              PROPERTY AND
      EQUIPMENT





Property
and equipment are summarized as follows:





March 31, 2010
                  
                  
                  March 31, 2009Furniture
      and Fixtures
                  
                  $
                  436,978
                  
                  
                  $
                  350,662Machinery
      and Equipment
                  
                  
                  2,461,659
                  
                  
                  
                  1,351,870Tooling
                  
                  
                  188,450
                  
                  
                  
                  188,4503,087,087
                  
                  
                  
                  1,890,982Accumulated
      depreciation
                  
                  
                  (1,351,368
                  )
                  
                  
                  (865,983
                  )Property
      & equipment, net
                  
                  $
                  1,735,719
                  
                  
                  $
                  1,024,999


F-20


Tooling
includes a payment made to a company called Sensable, in reference to the
development of a tailored veneer modeling solution, referred to as “GlamSmile
Design Software”.





12.
              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
March 31, 2010 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 fiscal year ended
March 31, 2011.





13.
              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 $35,750 of accumulated amortization for this
patent as of March 31, 2010. The Company accrues this royalty when it becomes
payable to inventory therefore no provision has been made for this obligation as
of March 31, 2010 (March 31, 2009-Nil).


F-21


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 March 31,
2010 the Company has not yet received the final Product. The patent is being
amortized over five (5) years and accordingly, the Company has recorded $103,012
of accumulated amortization for this patent as of March 31, 2010.





14.
            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. On January 3, 2008,
an amendment was made decreasing the mixed-use line of credit to €2,050,000, to
be used by Remedent NV and/or Sylphar NV. Each line of credit carries its own
interest rates and fees as provided in the Facility and varies from the current
prevailing bank rate.





The
latest amendment to the Facility, dated June 7, 2010, amended and split the line
of credit to €1,250,000, to be used by Remedent NV and € 1,000,000 to be used
Sylphar NV. Each line of credit carries its own interest rates and fees as
provided in the Facility and vary from the current prevailing bank rate of
approximately 2.9%, for draws on the credit line, to 8.4% for advances on
accounts receivable concerning Remedent N.V. and similar for Sylphar N.V.
Remedent N.V and Sylphar NV are currently only utilizing two lines of credit,
advances based on account receivables and the straight loan. As of March 31,
2010 and March 31, 2009, Remedent N.V. and Sylphar N.V. had in aggregate,
$674,600 and $660,200 in advances outstanding, respectively, under the mixed-use
line of credit facilities.


F-22


15.
              LONG TERM
      DEBT





On June
15, 2005, the Company entered into two five year capital lease agreements for
manufacturing equipment totaling €70,296 (US $94,843). On October 24, 2006, the
Company entered into another five year capital lease agreement for additional
manufacturing equipment totaling €123,367 (US $166,447). 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 $85,533). 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
$230,384). On January 15, 2010, the Company entered into a fifth capital lease
agreement over a 5 year period for veneer manufacturing equipment totaling €
251,903 (US $ 339,868).





The
leases require monthly payments of principal and interest at 7.43% of €1,172
(US$1,581 at March 31, 2010) for the first two leases and 9.72% of €2,056 (US
$2,774 at March 31, 2010) and provide for buyouts at the conclusion of the five
year term of €2,820 (US$3,805) or 4.0% of original value for the first two
contracts and €4,933 (US $6,656) 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 $2,376 at March 31, 2010) and provides for
buyout at the conclusion of the three year term of €634 (US $855) or 1% of the
original value of this contract.





The
fourth lease contract requires monthly payments of principal and interest at
8.18% of €5,052 (US $6,816 at March 31, 2010) and provides for buyout at the
conclusion of the three year term of €1,728 (US $2,331) or 1% of the original
value of this contract.





The fifth
lease contract requires monthly payments of principal and interest at 8.39% of
€4,551 (US $6,140 at March 31, 2010) and provides for buyout at the conclusion
of the five year term of €5,038 (US $6,797) or 2% of the original value of this
contract.





The net
book value as of March 31, 2010 and March 31, 2009 of the equipment subject to
the foregoing leases are $641,371 and $179,339 respectively.





16.
            DUE TO RELATED PARTIES AND
      RELATED PARTY TRANSACTIONS





Transactions
with related parties not disclosed elsewhere in these financial statements
consisted of the following:





Compensation:





During
the years ended March 31, 2010 and 2009 respectively, the Company incurred
$675,760 and $861,044 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 years ended March 31, 2010 and 2009 totaling
$Nil and $79,459 respectively. Accounts receivable at year end with this
customer totaled $31,895 and $31,895 as at March 31, 2010 and 2009
respectively.





As of
March 31, 2010 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





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. Other related party transactions are disclosed in
Notes 5, 20 and 21.


F-23


17.
            ACCRUED
      LIABILITIES





Accrued
liabilities are summarized as follows:





March 31, 2010
                    
                    
                    March 31, 2009Accrued
      employee benefit taxes and payroll
                    
                    $
                    182,137
                    
                    
                    $
                    246,925Accrued
      travel
                    
                    
                    31,891
                    
                    
                    
                    13,170Advances
      and deposits
                    
                    
                    116,687
                    
                    
                    
                    298,809Commissions
                    
                    
                    21,597
                    
                    
                    
                    258,105Accrued
      audit and tax preparation fees
                    
                    
                    11,152
                    
                    
                    
                    8,947Reserve
      for warranty costs
                    
                    
                    20,238
                    
                    
                    
                    19,806Accrued
      interest
                    
                    
                    168
                    
                    
                    
                    1,279Accrued
      consulting fees
                    
                    
                    47,382
                    
                    
                    
                    37,308Other
      accrued expenses
                    
                    
                    60,284
                    
                    
                    
                    706,011$
                    491,536
                    
                    
                    $
                    1,590,360





18.
            INCOME
    TAXES





The
domestic and foreign (“Belgium”, “Singapore”, Hong Kong and China) components of
income (loss) before income taxes and minority interest were comprised of the
following:





March 31, 2010
                  
                  
                  March 31, 2009Domestic
                  
                  $
                  (2,117,891
                  )
                  
                  $
                  (7,459,399
                  )Foreign
                  
                  
                  (1,000,485
                  )
                  
                  
                  4,653,325$
                  (3,118,376
                  )
                  
                  $
                  (2,806,074
                  )





The
Company’s domestic and foreign components of deferred income taxes are as
follows:





March 31, 2010
                  
                  
                  March 31, 2009Domestic
      — Net operating loss carryforward
                  
                  $
                  6,869,515
                  
                  
                  $
                  6,172,631Foreign
      — Net operating loss carryforward
                  
                  
                  917,951
                  
                  
                  
                  (838,728
                  )Total
                  
                  
                  7,787,466
                  
                  
                  
                  5,333,903Valuation
      allowance
                  
                  
                  (7,787,466
                  )
                  
                  
                  (5,333,903
                  )Net
      deferred tax assets
                  
                  $
                  —
                  
                  
                  $
                  —





Because
of the uncertainty surrounding the timing of realizing the benefits of favorable
tax attributes in future income tax returns, the Company has placed a valuation
allowance against its deferred income tax assets.





The
principal reasons for the difference between the income tax (benefit) and the
amounts computed by applying the statutory income tax rates to the income (loss)
for the year ended March 31, 2010 and March 31, 2009 are as
follows:





March 31, 2010
                  
                  
                  March 31, 2009DomesticPre
      tax income (loss)
                  
                  $
                  (2,117,891
                  )
                  
                  $
                  (7,459,399
                  )Statutory
      tax rate
                  
                  
                  35
                  %
                  
                  
                  35
                  %Tax
      benefit based upon statutory rate
                  
                  
                  (741,262
                  )
                  
                  
                  (2,610,790
                  )Valuation
      allowance
                  
                  
                  741,262
                  
                  
                  
                  2,610,790Net
      domestic income tax (benefit)
                  
                  
                  —
                  
                  
                  
                  —ForeignPre
      tax income (loss)
                  
                  
                  (1,000,485
                  )
                  
                  
                  4,653,325Statutory
      tax rate
                  
                  
                  32
                  %
                  
                  
                  32
                  %Tax
      expense (benefit) based upon statutory rate
                  
                  
                  (320,155
                  )
                  
                  
                  1,489,064Permanent
      differences
                  
                  
                  320,155
                  
                  
                  
                  (1,489,064
                  )Net
      operating loss
                  
                  
                  —
                  
                  
                  
                  —Net
      foreign income tax (benefit)
                  
                  
                  —
                  
                  
                  
                  —Total
      Income tax (benefit )
                  
                  $
                  —
                  
                  
                  $
                  —


F-24


19.
            CAPITAL
      STOCK





On
December 8, 2008 a total of 723,000 restricted common shares were returned to
treasury pursuant to the Company’s sale of 50% of its OTC
business.  (See Note 3.)





On each
of November 7, 2008 and December 23, 2008 the Company issued 500,000 common
shares to each of the previous Glamtech shareholders.  The 1,000,000
shares were valued at $625,000.  (See Note 4.)





On July
11, 2008, the Company issued 358,166 shares of restricted common stock as
partial payment of products and certain exclusivity rights  pursuant
to the terms of the Distribution Agreement dated as of  June 30, 2008,
which was filed on a Form 8-K on July 7, 2008.  The value of the
shares issued was $569,483. The securities issued are exempt from the
registration requirements of the Securities Act of 1933, as amended, pursuant to
Sections 4(2), and Rule 506 of Regulation D of the Securities and Exchange
Commission and from various similar state exemptions.





20.
            EQUITY COMPENSATION
      PLANS





As of March 31, 2010, the Company had three
equity compensation plans approved by its stockholders (1) the 2001 Incentive
and Non-statutory Stock Option Plan (the “2001 Plan”), (2) the 2004 Incentive
and Non-statutory Stock Option Plan (the “2004 Plan”); and (3) the 2007 Equity
Incentive Plan (the “2007 Plan”). The Company’s stockholders approved the 2001
Plan reserving 250,000 shares of common stock of the Company pursuant to an
Information Statement on Schedule 14C filed with the Commission on August 15,
2001. In addition, the Company’s stockholders approved the 2004 Plan reserving
800,000 shares of common stock of the Company pursuant to an Information
Statement on Schedule 14C filed with the Commission on May 9,
2005.  Finally, the Company’s stockholders approved the 2007 Plan
reserving 1,000,000 shares of common stock of the Company pursuant to a
Definitive Proxy Statement on Schedule 14A filed with the Commission on October
2, 2007.





In
addition to the equity compensation plans approved by the Company’s
stockholders, the Company has issued options and warrants to individuals
pursuant to individual compensation plans not approved by our
stockholders.  These options and warrants have been issued in exchange
for services or goods received by the Company.





The
following table provides aggregate information as of March 31, 2010 with respect
to all compensation plans (including individual compensation arrangements) under
which equity securities are authorized for issuance.





A summary
of the option activity for year ended March 31, 2010 pursuant to the terms of
the plans is as follows:




Exercise


Price


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
                    PriceOptions
      outstanding, March 31, 2009
                  
                  
                  250,000
                  
                  
                  
                  1.20
                  
                  
                  $
                  668,166
                  
                  
                  
                  0.89
                  
                  
                  $
                  1,000,000
                  
                  
                  
                  1.15
                  
                  
                  $
                  150,000
                  
                  
                  $
                  1.75Granted
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  200,000
                  
                  
                  
                  .39Exercised
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —Cancelled
      or expired
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —Options
      outstanding, March 31, 2010
                  
                  
                  250,000
                  
                  
                  
                  1.20
                  
                  
                  
                  668,166
                  
                  
                  
                  0.89
                  
                  
                  
                  1,000,000
                  
                  
                  
                  1.15
                  
                  
                  
                  350,000
                  
                  
                  
                  .87Options
      exercisable March 31, 2010
                  
                  
                  231,667
                  
                  
                  
                  1.20
                  
                  
                  
                  555,666
                  
                  
                  
                  1.65
                  
                  
                  
                  863,331
                  
                  
                  
                  1.04
                  
                  
                  
                  300,000
                  
                  
                  
                  .70Exercise
      price range
                  
                  $
                  0.50
      - $2.39
                  
                  
                  
                  
                  
                  
                  $
                  0.50
      - $4.00
                  
                  
                  
                  
                  
                  
                  $
                  0.50 - $1.75
                  
                  
                  
                  
                  
                  
                  $
                  .39
      - 1.75Weighted
      average remaining life
                  
                  2.7
      years
                  
                  
                  
                  
                  
                  
                  5 years
                  
                  
                  
                  
                  
                  
                  8.1 years
                  
                  
                  
                  
                  
                  
                  5
      years


F-25


A summary
of the Company’s equity compensation plans approved and not approved by
shareholders is as follows:





Plan Category
                  
                  Number of
                    securities to
                    be
                    issued upon
                    exercise of
                    of
                    outstanding
                    options,
                    warrants
                    and rights
                  
                  
                  Weighted-average
                    exercise price of
                    outstanding
                    options
                    warrants and
                    rights
                  
                  
                  Number of
                    securities
                    remaining
                    available for
                    future
                    issuance
                    under
                    equity
                    compensation
                    plans
                    (excluding
                    securities
                    reflected
                    in column (a))Equity
      Compensation Plans approved by security holders
                  
                  
                  1,918,166
                  
                  
                  $
                  1.15
                  
                  
                  
                  131,834Equity
      Compensation Plans not approved by security holders
                  
                  
                  967,298
                  
                  
                  $
                  1.58
                  
                  
                  
                  NATotal
                  
                  
                  2,885,464
                  
                  
                  $
                  .96
                  
                  
                  
                  131,834





Prior to
January 1, 2006, the Company accounted for employee stock-based compensation
under the recognition and measurement principles of Accounting Principles Board
Opinion (“APB”) No. 25, “Accounting for Stock Issued to Employees,” and related
Interpretations, as permitted by SFAS No. 123, “Accounting for Stock-Based
Compensation”. Under the recognition principles of APB No. 25, compensation
expense related to restricted stock and performance units was recognized in the
financial statements. However, APB No. 25 generally did not require the
recognition of compensation expense for stock options because the exercise price
of these instruments was generally equal to the fair value of the underlying
common stock on the date of grant, and the related number of shares granted were
fixed at that point in time.





During
the year ended March 31, 2010 the Company granted 200,000 options pursuant to a
Purchase and Sale Agreement (Note 5) which were valued at $62,108 based upon the
Black-Scholes option pricing model utilizing a market price on the date of grant
of $.39 per share, an annualized volatility of 112%, a risk free interest rate
of 1.3% and an expected life of five years.  The options are
exercisable at $0.39 each, for a period of five years.





For the
year ended March 31, 2010, the Company recognized $467,908 (2009 — $670,455) in
compensation expense in the consolidated statement of operations and $62,108 as
part of the cost of its acquisition of Glamsmile Asia (see Note 5).





21.
            COMMON STOCK WARRANTS AND OTHER
      OPTIONS





As of
March 31, 2010, the Company has warrants to purchase the Company’s common stock
outstanding that were not granted under shareholder approved equity compensation
plans as follows:


F-26


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 March 31, 2010
                  
                  
                  11,108,305
                  
                  
                  
                  1.55Warrants
      exercisable March 31, 2010
                  
                  
                  11,108,305
                  
                  
                  $
                  1.55Exercise
      price range
                  
                  $
                  1.00 to $3.00Weighted
      average remaining life
                  
                  2 Years




During
the year ended March 31, 2010 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.





22.
            SEGMENT
      INFORMATION





The
Company’s only operating segment consists of dental products and oral hygiene
products sold by Remedent Inc., Remedent N.V., Sylphar N.V., GlamSmile Beijing
Dental Clinic Co. Ltd.  and Remedent Asia Ltd. Since the Company only
has one segment, no further segment information is presented.





Customers
Outside of the United States





March 31, 2010
                    
                    
                    March 31, 2009U.S.
      sales
                    
                    $
                    2,909,901
                    
                    
                    $
                    8,362,058Foreign
      sales
                    
                    
                    5,338,039
                    
                    
                    
                    6,277,483$
                    8,247,940
                    
                    
                    $
                    14,639,541





23.
            COMMITMENTS





Real
Estate Lease





The
Company leases its 26,915 square feet office and warehouse facility in Deurle,
Belgium from an unrelated party pursuant to a nine year lease commencing
December 20, 2001 at a base rent of €7,266 per month ($9,803 per month at March
31, 2010).





The
Company leases a smaller office facility of 2,045 square feet in Gent, Belgium
to support the sales and marketing division of our veneer business, from an
unrelated party pursuant to a nine year lease commencing September 1, 2008.
Additionally, to support and house our Research and Development Division, as of
October 15, 2009, an additional 2,290 square feet are being leased from the same
unrelated party from which we lease out sales and marketing division,
at  a base rent of €4,930 per month for the total location($6,656 per
month at March 31, 2010).


F-27


Minimum
monthly lease payments for real estate, and all other leased equipment are as
follows based upon the conversion rate for the (Euro) at March 31,
2010:





March
      31, 2011
                  
                  
                  366,602March
      31, 2012
                  
                  
                  195,129March
      31, 2013
                  
                  
                  118,834March
      31, 2014
                  
                  
                  79,815March
      31, 2015
                  
                  
                  79,815After
      five years
                  
                  
                  219,490Total:
                  
                  $
                  1,059,685


OEM
Agreement





On June
30, 2008, the Company entered into an OEM Agreement (“Agreement”) with SensAble
Technologies, Inc., a corporation under the laws of Delaware (“SensAble”)
whereby the Company will integrate SensAble products and technology into the
Company’s system. The Agreement provides the Company with the exclusive right to
distribute certain SensAble products throughout the world for a period of twelve
months from the date of the Agreement. The Company has the option and right to
extend the initial twelve month exclusivity period for another twelve months.
The term of the Agreement will be for two years and began on June 30, 2008. On
July 2009, the Company renewed the first half of the second year.  The
Company is currently in negotiation with SensAble for the development of new
enhanced software.





24.
            FINANCIAL
      INSTRUMENTS





The FASB
ASC topic 820 on fair value measurement and disclosures establishes three levels
of inputs that may be used to measure fair value: quoted prices in active
markets for identical assets or liabilities (referred to as Level 1), observable
inputs other than Level 1 that are observable for the asset or liability either
directly or indirectly (referred to as Level 2), and unobservable inputs to the
valuation methodology that are significant to the measurement of fair value of
assets or liabilities (referred to as Level 3).




The
carrying values and fair values of our financial instruments are as
follows:





March 31, 2010
                                      
                                      
                                      March 31, 2009Carrying
                                      
                                      
                                      Fair
                                      
                                      
                                      Carrying
                                      
                                      
                                      FairLevel
                                      
                                      
                                      value
                                      
                                      
                                      value
                                      
                                      
                                      value
                                      
                                      
                                      valueCash
                                      
                                      1
                                      
                                      
                                      $
                                      613,466
                                      
                                      
                                      $
                                      613,466
                                      
                                      
                                      $
                                      1,807,271
                                      
                                      
                                      $
                                      1,807,271Accounts
      receivable
                                      
                                      2
                                      
                                      
                                      $
                                      811,009
                                      
                                      
                                      $
                                      811,009
                                      
                                      
                                      $
                                      3,208,120
                                      
                                      
                                      $
                                      3,208,120Long
      term investments and advances
                                      
                                      3
                                      
                                      
                                      $
                                      750,000
                                      
                                      
                                      $
                                      750,000
                                      
                                      
                                      $
                                      750,000
                                      
                                      
                                      $
                                      750,000Line
      of credit
                                      
                                      2
                                      
                                      
                                      $
                                      674,600
                                      
                                      
                                      $
                                      674,600
                                      
                                      
                                      $
                                      660,200
                                      
                                      
                                      $
                                      660,200Accounts
      payable
                                      
                                      2
                                      
                                      
                                      $
                                      1,932,683
                                      
                                      
                                      $
                                      1,932,683
                                      
                                      
                                      $
                                      1,398,420
                                      
                                      
                                      $
                                      1,398,420Accrued
      liabilities
                                      
                                      2
                                      
                                      
                                      $
                                      1,016,220
                                      
                                      
                                      $
                                      1,016,220
                                      
                                      
                                      $
                                      1,590,360
                                      
                                      
                                      $
                                      1,590,360Due
      to non-related parties
                                      
                                      2
                                      
                                      
                                      $
                                      268,484
                                      
                                      
                                      $
                                      268,484
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      -Capital
      Lease
                                      
                                      2
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      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.


F-28