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,
2009





£
            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, $0.001 par value





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 o 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 o 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 o




§ o o




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.  o





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-3 of the
Exchange Act.  (Check one):





Large
      accelerated filer
            o
            Accelerated
      filer
            oNon-accelerated
      filer
            o
            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.


o 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, 2008, was $18,492,731.25.   For purposes of this
computation, it has been assumed that the shares beneficially held by directors
and officers of registrant were “held by affiliates”; 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 ofJune 25, 2009was
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
                11ITEM
      1B.
                UNRESOLVED
      STAFF COMMENTS
                21ITEM
      2.
                PROPERTIES
                21ITEM
      3.
                LEGAL
      PROCEEDINGS
                22ITEM
      4.
                SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY HOLDERS
                22PART
      IIITEM
      5.
                MARKET
      FOR REGISTRANT’S COMMON EQUITY,  RELATED STOCKHOLDER MATTERS AND
      ISSUER PURCHASES OF EQUITY SECURITIES
                22ITEM
      6.
                SELECTED
      FINANCIAL DATA
                23ITEM
      7.
                MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS
                23ITEM
      7A.
                QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
                32ITEM
      8.
                FINANCIAL
      STATEMENTS AND SUPPLEMENTARY DATA
                32ITEM
      9.
                CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE
                32ITEM
      9A(T)
                CONTROLS
      AND PROCEDURES
                32ITEM
      9B.
                OTHER
      INFORMATION
                33PART
      IIIITEM
      10.
                DIRECTORS,
      EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE
      GOVERNANCE
                34ITEM
      11.
                EXECUTIVE
      COMPENSATION
                36ITEM
      12.
                SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS
                38ITEM
      13.
                CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
      INDEPENDENCE
                41ITEM
      14.
                PRINCIPAL
      ACCOUNTANT FEES AND SERVICES
                46PART
      IVITEM
      15.
                EXHIBITS
      AND FINANCIAL STATEMENT SCHEDULES
                47SIGNATURES
                48









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





Introduction





We
specialize in the research, development, and manufacturing of oral care and
cosmetic dentistry products.  We are one of the leading manufacturers
of cosmetic dentistry products in Europe.  Leveraging our knowledge of
regulatory requirements regarding dental products and management’s experience in
the needs of the professional dental community, we design, develop, manufacture
and distribute our cosmetic dentistry products, including a full line of
professional dental products that are distributed in Europe, Asia and the United
States.  We manufacture many of our products at our facility in
Deurle, Belgium as well as outsourced manufacturing in China.  We
distribute our products using both our own internal sales force and through the
use of third party distributors.





Development
of Business





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.





We have
the following wholly owned subsidiaries:  (1) Remedent N.V., a Belgium
corporation; (2) Remedent Professional Holdings, Inc., a California corporation;
(3) Remedent Professional, Inc., a California corporation (a subsidiary of
Remedent Professional Holdings, Inc.), and (4) Glamtech-USA, Inc., a Delaware
corporation.  In addition, we have a 50% ownership interest in
Remedent OTC, 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.




1





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,  in Asia and theUnited
States.  We
distribute our products using both our own internal sales force and through the
use of third party distributors.Until recently, 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.





Prior to the launch of our
GlamsmileTMproducts and
FirstFitTMSystem our professional
products for our professional dental segment consisted of the
following:




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.  MetaTray is a completely self-contained
whitening system that can be administered by dentists that:





•
            Does
      not require chair time.





•
            Incorporates
      all the benefits of heat and light for activating
  gel.





•
            Introduces
      a proprietary gel delivery system that eliminates dripping and running
      while enhancing protection for surrounding gums and
  tissue.





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.  The MetaTray kit is easy to handle, to store, and to
discard.  It works by a gradual release.  As the mouth is
producing more saliva – the saliva is absorbed by the foam and is pushing the
peroxide out of the foam in a chemical reaction.  This also prolongs
the release of peroxide allowing for a more gradual treatment thus minimizing
irritation to the gums and surrounding tissue.  Most importantly,
since the MetaTray kit can be used at home by the patient, foam strips with the
appropriate concentration of peroxide can be provided by the dentist thereby
generating a continuing revenue stream for the dentist while achieving high
levels of patient satisfaction.




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.  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.





Current
Professional Dental Product and Business Strategy





GlamSmile





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 GlamSmileTM
veneers.  In the fall of 2006, we launched our proprietary veneer
technology, GlamSmile.  Cosmetic dentistry is a rapidly growing
segment of dental practices within the United States and Europe, with increasing
demand for veneers and bonding procedures.  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.  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.












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.





In the
fall of 2006, we opened our initial GlamSmile Lab in Ghent.  As a
temporary solution, the lab was integrated at the same address as the office of
Evelyne Jacquemyns, a dentist in Ghent who is a related person to Guy De Vreese,
our Chairman and CEO.  It was agreed that we could use the office of
Ms.  Jacquemyns from time to time for demonstration purposes in
relation to our GlamSmile veneers, at no cost.  At current, we are in
negotiations to finalize renting a larger location at the same address of the
current dental practice, where the initial GlamSmile Lab will be
moved.  We incurred $63,835 in cost related to the build out of the
initial GlamSmile Lab.  Additional investments are planned to support
the growth of sales of our GlamSmile veneers.




3





The
GlamSmile veneers were previously only offered in Europe but pursuant to our
distribution agreement with Den-Mat during 2008, we have begin to market the
GlamSmile product in the United States and throughout the world with the
exception of certain excluded territories as further described under
“Distribution.”





On June 30, 2008, we entered into an
OEM Agreement (“Agreement”) with SensAble Technologies, Inc., a corporation
under the laws of Delaware (“SensAble”) pursuant to which we intend to integrate
SensAble products and technology into our 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.  We have the option and right to extend the initial twelve
month exclusivity period for another twelve months.  The term of the
Agreement is for two years and began on June 30, 2008.





First-Fit
System





In June 2009, the Company introduced
FirstFitTM, a proprietary, patent-pending system for the creation and placement
of dental bridges and crowns.  The FirstFit system requires no
temporary placements, creates less mouth trauma and takes fewer office visits to
complete. With economic benefits for both patients and dentists, the new
technology addresses an expanding U.S. market for dental crowns and bridges, and
has the potential to change the way modern dentistry is practiced.





The Company’s method and computer aided
design (“CAD”) process requires no temporary placements like traditional
methods. That unique feature plus other elements of the design results in less
mouth trauma and fewer office visits to complete. With economic benefits for
both patients and dentists, the new technology addresses an expanding global
market for all dental restorations at retail, while promising to change the way
dentistry is practiced today. Similar to Company’s increasingly popular GlamSmileprocess for dental veneers (now marketed in the US as LUMINEERS® by
Den-Mat), the FirstFit system involves a simple creation and precision-guided
installation process made possible by Remedent’s new proprietary computerized
dental laboratory workstation.





FirstFit reduces the typical 10-step
process by more than half, decreases typical office visits from four to two, and
requires only one dental impression versus two. Using a standard dental
impression, no investment in equipment or significant additional training is
required by the dentist. All production is done offsite by highly-trained dental
technicians at an authorized Company facility.





To create a bridge or crown, the
dentist simply ships a single patient dental impression to a regional Company
dental laboratory where it is digitally scanned into the Company’s FirstFit
CAD/CAM 3D modeling program. This state-of-the-art system replaces the
traditional, hand-crafted wax model methods, and allows technicians to work
faster and more intuitively to produce dental crowns or bridges with exceptional
quality and precision.





A complete turn-key installation kit is
returned to the dentist containing a customized preparation guide and drilling
template overlay. Even the necessary drill burs are included to virtually
eliminate all guesswork and ensure the highest quality placement. This
highly-efficient process reduces the time required to install a typical crown or
bridge by at least one hour, which is quite significant given that an average
dentist performs 1-3 crowns per day.




4





FirstFit offers a number of unique
benefits to patients as well as the dentist when compared to traditional
methods. Since no temporary crown or bridge is required, only the final
installation session requires anesthesia. This makes the process substantially
less painful and time consuming to the patient, reduces a number of risks, like
potential infections and error, while offering significant cost savings. For the
dentist, the reduction in patient hours and more precise placement translates
into higher revenues per chair hour, fewer complications, and better results for
their patients.





Developed by our dental research
laboratories in Deurle, Belgium, we plan to offer FirstFit on a worldwide basis,
directly and through exclusive distributors, beginning September
2009.





Distribution





Our
strategy 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.





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.





Consistent with our strategic
dealer-assisted marketing approach, 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.




5





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.




6





On June 3, 2009, we 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, we appointed Den-Mat to be the its sole and
exclusive distributor to market, license and sell certain products relating to
our proprietary First Fit technology (the “First Fit Products”), in the United
States, Canada and Mexico (the “First Fit Territory”).  In connection
therewith, we 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
our  intellectual property rights relating to the First Fit Products
to perform its obligations as a distributor (provided we  retain 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).  Under the First Fit Distribution Agreement, we granted such
distribution rights, licensing rights and manufacturing rights, in consideration
for the following:  (i) a non-refundable development fee of Four
Hundred Thousand Dollars ($400,000) (the “Development Payment”) payable in two
installments as follows: (a) Fifty Thousand Dollars ($50,000) within seven (7)
days after the effective date of the First Fit Distribution Agreement (the
“Effective Date”), and (b) Three Hundred Fifty Thousand Dollars ($350,000)
within twenty one (21) days after the Effective Date; (ii) a non-refundable
license fee of Six Hundred Thousand Dollars ($600,000) payable in three (3)
equal installments of $200,000 each, with the first installment payable on the
closing date contemplated in the First Fit Distribution Agreement (the “Closing
Date”), and with the second and third installments payable on the 30th and
60th
day, respectively, after the Closing Date; (iii) certain royalty payments based
on the sales of the First Fit Products by Den-Mat or its sublicensees; and (iv)
certain minimum royalty payment to maintain exclusivity, as
such  terms are more particularly described in the First Fit
Distribution Agreement.





Den-Mat’s rights as an exclusive
distributor and licensee continue at least through the first Contract Period
(which is defined below) and continues 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 (18) 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 (60) days after the Closing Date,
the first Contract Period will be extended by one day for each day after the
60th
day until Den-Mat becomes fully operational; (B) the subsequent twelve (12)
months; and (C) each subsequent twelve (12) month period thereafter, in each
case during which the First Fit Distribution Agreement is in
effect.





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.




7





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.  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
decreased $84,306 to $248,652 for the year ended March 31, 2009 as compared to
$332,958 for the year ended March 31, 2008, a decrease of 25.3%.  Our
current levels of research and development expenditures are reflective of an
average year.  In 2008 we were able to bring some products to the
production phase and as a result were able to begin investing in new
projects.  Research and development expenditures have decreased
because most of the investment in the development of new products occurred in
2007.  The release of these new products is scheduled for the balance
of 2009.





Intellectual
Property





In October 2004, we acquired from the
inventor the exclusive, perpetual license to two issued United States patents
which are applicable to the MetaTray® kit.  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
$29,500 of accumulated amortization for this patent as of March 31, 2009. We
will accrue this royalty when it becomes payable to inventory therefore no
provision has been made for this obligation as of March 31, 2009.





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 us. 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 the 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
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 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 exercises the option, all future payments, other than the reimbursement of
costs would be paid directly to the original inventors and not to
Lident.




8





On
December 12, 2005, we 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 had been paid by the Company in
September 2005 and the remaining €25,000 to be paid upon our first shipment of a
product covered by the patent.





As of
March 31, 2009 we have not yet received the final Product. The patent is being
amortized over five (5) years and accordingly, we have recorded $79,240 of
accumulated amortization for this patent as of March 31, 2009.





We have
filed two patent applications in the European Union, United States and Australia
related to the GlamSmile product.  We currently are in the process of
preparing  trademark application and have a pending patent application
for FirstFit.  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.





Major
Customers





For the year ended March 31, 2009 we
had one customer that accounted for 45% of total revenues.  For the
year ended March 31, 2008, we had one customer whose sales accounted for 16% of
total revenue.





Competition





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.




9




•
            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.





Regulatory
Issues





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.




10





We
believe that the GlamSmile products will not require a 510(k) submission because
the products fall within an exemption under the 510(k) regulation.





International
sales of medical devices are also subject to the regulatory requirements of each
country.  In Europe, the regulations of the European Union require
that a device have a CE Mark, a mark that indicates conformance with European
Union laws and regulations before it can be sold in that market.  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).





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 21 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 entered into an employment agreement with Roger
Leddington on August 15, 2007, appointing Mr. Leddington as Senior Vice
President and Head of U.S. Marketing.  This agreement was subsequently
terminated in the beginning of May 2008, when Mr. Leddington resigned and in
connection with the Glamtech distribution agreement and accepted the position as
Glamtech’s president.





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 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.




11





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 $1,963,806 on revenue of $733,853 for the
fiscal year ended March 31, 2002; $1,006,374 on revenue of $1,969,144 for the
fiscal year ended March 31, 2003; $103,428 on revenues of $7,072,300 for the
fiscal year ended March 31, 2005; $3,887,302 on revenues of $7,393,948 for the
year ended March 31, 2006;  $1,496,049 on revenues of $6,676,365 for
the fiscal year ended March 31, 2007; $3,115,513 on revenues of $7,482,261 for
the fiscal year ended March 31, 2008 and $2,952,915 on revenues of $14,639,541
for the year ended March 31, 2009.





Although
we have experienced significant growth in our revenues since 2002, we cannot
assure you that we will attain sustainable profitability on a quarterly or
annual basis in the future.  We expect to continue to incur increasing
cost of revenues, research and development expenses, sales and marketing and
general and administrative expenses commensurate with our growth in
revenue.  In order to achieve and sustain profitability, we will need
to generate and sustain increased revenues.





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 N.V.  Each line of credit carries
its own interest rates and fees as provided in the Facility. As of March 31,
2009 and March 31, 2008, there were $660,200 and $779,718 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.





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.




12





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 distributors in Europe, the Middle East, South America and
Asia.  A significant portion of our revenue is in currencies other
than United States dollars, primarily in Euros.  Because our financial
statements are reported in United States dollars, fluctuations in Euros 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.  During the
years ended March 31, 2009 and March 31, 2008, we recognized an
increase/(decrease) in cash and cash equivalents of $174,196 and $(66,463),
respectively, from the effect of exchange rates between the Euro and the US
Dollar.




13





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 Belgium and 43% of our sales for the fiscal year end
March 31, 2009 were generated from customers outside of the United States,
compared to 79% of our sales for the fiscal year ended March 31, 2008. 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,





•
            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;




14




•
            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.





In addition,
our research and development expenses for the year ended March 31, 2009 were
$248,652 compared to $332,958 for the year ended March 31, 2008,which is a
decrease of $84,306, or 25.32%, over the prior fiscal year.   The
principal reason for this decrease is that the majority of investments in
relation to the development of new products took place during
2007.





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





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





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




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





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





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




15




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.





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.




16





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.




17





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;





•
            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 and the
number of our employees.  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, 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.




18





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





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





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





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





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





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





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




19





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





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





Risks
Relating To Our Common Stock





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





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





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





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





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





As of
June 4, 2009, 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 of June 4, 2009.  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.




20





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
out 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 ($9,594 per month at March 31, 2009). In addition,
we are responsible for the payment of annual real estate taxes for the property
which totaled €4,120 ($5,440 for calendar year 2009).  The minimum
aggregate rent to be paid over the remaining lease term based upon the
conversion rate for the € at March 31, 2009 is $201,475.





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 at a base rent of
€2,527 per month ($3,336 per month at March 31, 2009). The minimum aggregate
rent to be paid over the remaining lease term based upon the conversion rate for
the € at March 31, 2009 is $337,051.




21





ITEM 3 — LEGAL
PROCEEDINGS





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





ITEM 4 — SUBMISSION OF MATTERS TO A
VOTE OF SECURITY HOLDERS





No
matters were submitted for shareholders vote during the fourth
quarter.





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 June 30, 2007
            
            $
            1.85
            
            
            $
            1.40Quarter
      ended September 30, 2007
            
            $
            1.95
            
            
            $
            1.40Quarter
      ended December 31, 2007
            
            $
            3.15
            
            
            $
            1.45Quarter
      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
            
            
            $
            0.30





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 4, 2009, the number of stockholders of record was 196, 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 the company’s
earnings, financial condition, capital requirements and other
factors.




22





Securities
Authorized for Issuance under Equity Compensation Plans





As of
March 31, 2009, 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.





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, 2009 with respect
to all compensation plans (including individual compensation arrangements) under
which equity securities are authorized for issuance.





Plan
      Category
            
            Number
      of securities to be
              issued
      upon
              exercise
      of
              of
      outstanding
              options,
      warrants
              and
      right
            
            
            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
            
            
            447,298
            
            
            $
            1.64
            
            
            
            NATotal
            
            
            2,365,464
            
            
            $
            1.24
            
            
            
            131,834





Recent
Sales Of Unregistered Securities





The sale of all equity securities of
the Company during the fiscal year ended March 31, 2009, 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.





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.




23





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.  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.





In the
fall of 2006, we launched a proprietary veneer technology product line called
GlamSmileTM.  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.  Because GlamSmile veneers are so thin,
the dentist does not need to remove healthy tooth structure leaving the
patient’s healthy tooth structure intact, which results in several important
benefits: (i) no local anesthesia is required to prepare the teeth; (ii) reduced
(if any) tooth sensitivity post-procedure; and (iii) the process is
reversible.  In addition, in March 31, 2006, a variation of our
MetaTray® product named iWhite® was introduced to our global retail distribution
network.  We introduced MetaTray in August 2005, our next generation
of products targeted for the professional dentist market.  MetaTray is
a completely self-contained whitening system that can be administered by
dentists.





As a
result of the 2008 Restructuring, our primary business focus is on our full line
of professional dental products for the professional market which includes
Glamsmile veneer product lines and products relating to our First Fit
technology. In connection with the 2008 Restructuring we continue to share an
ownership interest in the OTC business.





For the
year ending March 31, 2009, 87.90% of our revenue has been generated by our
Belgian subsidiaries (Remedent N.V. and Sylphar N.V.); 10.25% by our U.S.
entities and 1.85% by our Asian subsidiary.




24





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.





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.  As of March 31, 2009, we believed there was no impairment
of our long-lived assets.





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.





Accounts
Receivable and Allowance for Doubtful Accounts





We sell professional dental equipment
to various companies, primarily to distributors located in Western Europe and in
the United States of America.  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.




25





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.





Conversion
of Foreign Currencies





The reporting currency for our
consolidated financial statements is the U.S.  dollar.  The
functional currency for our European subsidiaries, Remedent N.V. and Sylphar
N.V. is the Euro.  The functional currency for Remedent Professional,
Inc. is the U.S.  dollar.  The functional currency for
Remedent Asia Pte Ltd is the Singapore dollar.  We translate foreign
currency statements to the reporting currency in accordance with FASB
52.  The assets and liabilities 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 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 follow the guidance provided by SFAS
No. 123R, “Share-Based Payment” (“SFAS 123R”) as issued by the Financial
Accounting Standards Board (“FASB”). SFAS 123R requires accounting for stock
options using a fair-value-based method as described in such 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 under SFAS No.
123R.  For the year ended March 31, 2009, equity compensation in the
form of stock options and grants of restricted stock totaled
$670,455.  For the year ended March 31, 2008, equity compensation in
the form of stock options totaled $189,696.





Recent
Accounting Pronouncements





In May 2009, the FASB issued Statement
of Financial Accounting Standard (“SFAS”) No. 165, Subsequent Events(“SFAS
165”). This Statement establishes general standards of accounting for and
disclosures of events that occur after the balance sheet date but before
financial statements are issued or are available to be issued.  It requires
the disclosure of the date through which an entity has evaluated subsequent
events and the basis for that date. This Statement is effective for interim and
annual periods ending after June 15, 2009 and as such, the Company will adopt
this standard in the first quarter of fiscal year 2010. The Company is currently
assessing the impact of the adoption of SFAS 165, if any, on its financial
position, results of operations or cash flows.





In May 2008, the FASB issued SFAS
No. 162, The Hierarchy of
Generally Accepted Accounting Principles (“SFAS 162”). SFAS 162
identifies a consistent framework, or hierarchy, for selecting accounting
principles to be used in preparing financial statements that are presented in
conformity with U.S. generally accepted accounting principles (GAAP) for
non-governmental entities. SFAS 162 is effective for interim and annual periods
ending after September 15, 2009 and as such the Company will adopt this standard
in the third quarter of fiscal year 2010.The Company is currently
assessing the impact of the adoption of SFAS 162 on its financial position,
results of operations, or cash flows.




26





In April 2008, the FASB issued
FASB staff position (“FSP”) FAS 142-3, Determination of the Useful Life of
Intangible Assets(“FSP 142-3”). FSP FAS 142-3 amends the factors an
entity should consider in developing renewal or extension assumptions used in
determining the useful life of recognized intangible assets under FASB Statement
No. 142, “Goodwill and
Other Intangible Assets”. This new guidance applies prospectively to
intangible assets that are acquired individually or with a group of other assets
in business combinations and asset acquisitions. FSP FAS 142-3 is effective for
financial statements issued for fiscal years and interim periods beginning after
December 15, 2008, and as such, the Company will adopt FSP FAS 142-3 in the
first quarter of fiscal year 2010. Early adoption is prohibited. The Company is
currently evaluating the impact, if any, that FSP FAS 142-3 will have on its
financial position, results of operations, or cashflows.





In March 2008, the FASB issued SFAS No.
161,Disclosures about
Derivative Instruments and Hedging Activities, which amends the
disclosure requirements of SFAS 133. SFAS 161 provides
an enhanced understanding about how and why derivative instruments are used, how
they are accounted for and their effect on an entity’s financial condition,
performance and cash flows. SFAS 161, which is effective for the first interim
period beginning after November 15, 2008, will require additional disclosure in
future filings. The Company adopted this standard in the fourth quarter of
fiscal year 2009 and the adoption did not have any material impact on the
Company’s consolidated financial position, results of operations or cash
flows.





In December 2007, the FASB issued
SFAS No. 160,  Noncontrolling Interests in
Consolidated Financial Statements — an Amendment of ARB No. 51(“FAS
160”). FAS 160 amends ARB No. 51 to establish accounting and reporting
standards for the noncontrolling interest in a subsidiary and for the
deconsolidation of a subsidiary. FAS 160 also clarifies that a noncontrolling
interest in a subsidiary is an ownership interest in the consolidated entity
that should be reported as equity in the consolidated financial statements. FAS
160 is effective for fiscal years beginning on or after December 15, 2008
and as such the Company will adopt this standard in the first quarter of fiscal
year 2010. Based on its current operations, the Company does not believe that
FAS 160 will have a significant impact on its financial position, results of
operations or cash flows.





In December 2007, the FASB issued
SFAS No. 141(revised 2007), Business Combinations(“SFAS 141R”). SFAS 141R will significantly change the
accounting for business combinations in a number of areas including the
treatment of contingent consideration, contingencies, acquisition costs,
IPR&D and restructuring costs. In addition, under SFAS 141R, changes in
deferred tax asset valuation allowances and acquired income tax uncertainties in
a business combination after the measurement period will impact income taxes.
SFAS 141R is effective for fiscal years beginning after December 15,
2008 and, as such, the Company will adopt this standard in the first quarter of
fiscal year 2010. The provisions are effective for the Company for business
combinations on or after March 30, 2009.





In February 2007, the FASB issued
SFAS No. 159, The Fair
Value Option for Financial Assets and Financial Liabilities — Including an
Amendment of FASB Statement No. 115 (“SFAS 159”). SFAS No. 159
permits entities to choose to measure many financial instruments and certain
other items at fair value. This provides entities with the opportunity to
mitigate volatility in reported earnings caused by measuring related assets and
liabilities differently without being required to apply complex hedge accounting
provisions. The provisions of SFAS No. 159 are effective as of the
beginning of fiscal years that start after November 15, 2007 (for the
Company, March 31, 2008). The Company adopted SFAS No. 159 on
March 31, 2008 and the adoption did not have any material impact on
its financial position, results of operations or cash flows.




27





Effective March 26, 2007, the
Company adopted FASB Interpretation No. 48, Accounting for Uncertainty in Income
Taxes—an Interpretation of FASB Statement 109(“FIN 48”). FIN 48 requires
that a position taken or expected to be taken in a tax return be recognized in
the financial statements when it is more likely than not (i.e. a likelihood of
more than fifty percent) that the position would be sustained upon examination
by tax authorities. A recognized tax position is then measured at the largest
amount of benefit that is greater than fifty percent likely of being realized
upon ultimate settlements. Upon adoption, the Company did not have any material
uncertain tax positions to account for as an adjustment to its opening balance
of retained earnings on March 26, 2007. In addition, as of March 31, 2009,
the Company did not have any material unrecognized tax benefits.





In September 2006, the FASB issued
SFAS No. 157, Fair Value
Measurements(“SFAS 157”). SFAS 157 defines fair value, establishes a
framework for measuring fair value under generally accepted accounting
principles, and expands disclosures about fair value measurements. SFAS 157
emphasizes that fair value is a market-based measurement, not an entity-specific
measurement, and states that a fair value measurement should be determined based
on the assumptions that market participants would use in pricing the asset or
liability. SFAS 157 applies under other accounting pronouncements that require
or permit fair value measurements.





SFAS 157, among other things, requires
companies to maximize the use of observable inputs and minimize the use of
unobservable inputs when measuring fair value, and specifies a hierarchy of
valuation techniques based on whether the inputs to those valuation techniques
are observable or unobservable. Observable inputs reflect market data obtained
from independent sources, while unobservable inputs reflect the company’s market
assumptions. The effective date was for fiscal years beginning after
November 15, 2007.





SFAS No. 157 establishes a
three-tiered hierarchy to prioritize inputs used to measure fair value. Those
tiers are defined as follows:





-
            
            Level
      1 inputs are quoted prices (unadjusted) in active markets for
      identical assets or liabilities that the reporting entity has the ability
      to access at the measurement date.-
            
            Level
      2 inputs are inputs, other than quoted prices included within Level 1,
      that are observable for the asset or liability, either directly or
      indirectly. If the asset or liability has a specified
      (contractual) term, a Level 2 input must be observable for
      substantially the full term of the asset or liability.-
            
            Level
      3 inputs are unobservable inputs for the asset or
    liability.





The highest priority in measuring
assets and liabilities at fair value is placed on the use of Level 1 inputs,
while the lowest priority is placed on the use of Level 3 inputs.





This statement also expands the related
disclosure requirements in an effort to provide greater transparency around fair
value measures.





In February 2008, the FASB issued
FSP FAS 157-2, which delays the effective date of SFAS No. 157 to fiscal years
beginning after November 15, 2008, and interim periods within those fiscal
years, for all nonfinancial assets and nonfinancial liabilities, except those
that are recognized or disclosed at fair value in the financial statements on a
recurring basis (at least annually).




28





As of March 31, 2008, the Company
adopted SFAS No. 157, and the adoption did not have a material impact on
its financial condition, results of operations, or cash flows. The Company is
still evaluating the impact of the items deferred by FSP FAS 157-2.





RESULTS
OF OPERATIONS





For
the Fiscal Years Ending March 31, 2009 and 2008





Comparative details of results of
operations for the years ended March 31, 2009 and 2008 as a percentage of sales
are as follows:





2009
            
            
            2008NET
      SALES
            
            
            100.00
            %
            
            
            100.00
            %COST
      OF SALES
            
            
            45.18
            %
            
            
            53.14
            %GROSS
      PROFIT
            
            
            54.82
            %
            
            
            46.86
            %OPERATING
      EXPENSESResearch
      and development
            
            
            1.70
            %
            
            
            4.45
            %Sales
      and marketing
            
            
            19.09
            %
            
            
            25.21
            %General
      and administrative
            
            
            36.29
            %
            
            
            54.22
            %Depreciation
      and amortization
            
            
            4.21
            %
            
            
            4.03
            %TOTAL
      OPERATING EXPENSES
            
            
            61.28
            %
            
            
            87.91
            %INCOME
      (LOSS) FROM OPERATIONS
            
            
            (6.46
            )%
            
            
            (41.05
            )%Other
      income (expense)
            
            
            (12.71
            )%
            
            
            (0.23
            )%LOSS
      BEFORE INCOME TAXES & MINORITY INTEREST
            
            
            (19.17
            )%
            
            
            (41.27
            )%Income
      tax expense
            
            
            (0.22
            )%
            
            
            (0.36
            )%NET
      LOSS BEFORE MINORITY INTEREST
            
            
            (19.39
            )%
            
            
            (41.64
            )%MINORITY
      INTEREST
            
            
            (0.78
            )%
            
            
            —NET
      LOSS
            
            
            (20.17
            )%
            
            
            (41.64
            )%





Net
Sales





Net sales increased by approximately
96% to $14,639,541 in the year ended March 31, 2009 as compared to $7,482,261 in
the year ended March 31, 2008.  The increase in sales was primarily due to the increased sales of the GlamSmile Product Group as well as
the Den-Mat distribution agreement.





Net sales of the veneer product,
GlamSmile, increased for the year ended March 31, 2009 by $6,730,038, or 563.69
% to $7,923,957, compared to $1,193,919 for the year ended March 31,
2008.





Cost
of Sales





Cost of
sales increased approximately 66.4% to $6,614,723 in the year ended March 31,
2009 as compared to $3,975,777 in the year ended March 31, 2008.  Cost
of sales has increased because of increased sales of higher margin products and
improved cost efficiencies.





We have
re-organized our production process and have increased our in-house
manufacturing resulting in lower costs than our previously outsourced third
party manufacturing.  We continue to closely monitor and look for new
strategies to optimize and improve our current processes in order to decrease
our costs.




29





Cost of
sales as a percentage of net sales has decreased from 53% for the year ended
March 31, 2008 to 45% for the year ended March 31, 2009 primarily for the same
reasons discussed.





Gross
Profit





Our gross
profit increased by $4,518,334 or 128.9%, to $8,024,818 for the fiscal year
ended March 31, 2009 as compared to $3,506,484 for the year ended March 31, 2008
as a result of increased sales.  Also, our gross profit as a
percentage increased  by 8% from 47% to 55% comparing the year ended
March 31, 2008 to the year ended March 31, 2009.  The increase in
gross profit is the result of the increased sales of higher margin products and
the decrease in cost of sales as discussed above.





Operating
Expenses





Research and
Development.  Our research and development expenses decreased
$84,306 to $248,652 for the year ended March 31, 2009 as compared to $332,958
for the year ended March 31, 2008, a decrease of 25.3%.  Our current
levels of research and development expenditures are reflective of an average
year.  In 2008 we were able to bring some products to the production
phase and as a result were able to begin investing in new
projects.  Research and development expenditures have decreased
because most of the investment in the development of new products occurred in
2007.  The release of these new products is scheduled for the balance
of 2009.





Sales and marketing
costs.  Our sales and marketing costs increased $907,581 or
48.1%, to $2,793,970 for the year ended March 31, 2009 as compared to $1,886,389
for the year ended March 31, 2008.   The increase is largely due
to increased provisions for commissions in relation to our sales people and
increased marketing costs to promote our products in new acquired markets in
different countries.





General and administrative
costs.  Our general and administrative costs for the year ended
March 31, 2009 and 2008 were $5,312,192 and $4,057,007 respectively,
representing an increase of $1,255,185 or 30.9%.  The increase in
general and administrative costs as compared to the prior year is the result of
our investments made to increase customer support concurrent with the launch of
our GlamSmile veneers product line.





Depreciation and
amortization.  Our depreciation and amortization increased
$314,414 or 104.4%, to $615,674 for the year ended March 31, 2009 as compared to
$301,260 for the year ended March 31, 2008.  The increase is mostly
due to the investment in a semi-automatic production machine for the production
of our foam strips, which will allow us to significantly increase our production
capacity.  This investment allowed us to streamline and improve
production significantly with resultant increases in capacity and quality as
well as decreased costs.  Secondly, investments are being made in
software and related hardware to bring the design of veneers to the next level
which will allow the dentist to modify the design of the final product, gaining
substantial time in the production process.





Net interest
expense.Our net interest expense  was $114,505 for
the year ended March 31, 2009 as compared to $138,168 for the year ended March
31, 2008, an decrease of $23,663 or 17.12%.  Interest expense has
decreased primarily because of decreased utilization of our available bank
credit line.




30





Liquidity and Capital
Resources





Cash
and Cash Equivalents





Our
balance sheet at March 31, 2009 reflects cash and cash equivalents of $1,807,271
as compared to $1,728,281 as of March 31, 2008, an increase of
$78,990.  Net cash used by operations was $880,489 for the year ended
March 31, 2009 as compared to net cash used by operations of $2,445,011 for the
year ended March 31, 2008, a decrease year to year of $1,564,522 in cash used by
operations.  The decrease in net cash used by operations was primarily
attributable to the net loss, offset by two significant non-cash items (1) the
$4,323,207 value of the Den-Mat warrants; and (2) the $2,830,953 gain on the
disposition of Sylphar.  Also, there was a total change in non-cash
assets and liabilities which used cash of approximately $2,000,000 in 2009 as
opposed to a provision of cash of approximately $225,000 in
2008.  During the year ended March 31, 2009 accounts receivable and
inventory used $1,305,200 and $577,237 respectively in cash. While during the
year ended March 31, 2008 both accounts receivable and inventory used
$406,567 in operating cash as a result of increases in inventory and accounts
receivable as of both March 31, 2009 and March 31, 2008. Management has
attributed the increased use of cash for accounts receivable and inventories
primarily due to increased sales but, also somewhat to the slowdown in the
general economy.





As of
March 31, 2009, 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 $1,003,581 for the year ended March 31, 2009 as
compared to net cash used by investing activities of $885,550 for the year ended
March 31, 2008. 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 new leased offices 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 $2,688,485 for the year ended March 31,
2009 as compared to net cash provided by financing activities of $4,998,339 for
the year ended March 31, 2008. Net cash provided from financing activities in
the year ended March 31, 2009 was lower than in the year ended March 31, 2008
primarily because we did not complete any private placements in
2009.  In the year ended March 31, 2008 we completed a private
placement of $5,791,402.  In the year ended March 31, 2009 we received
$2,782,000 in net cash on the sale of Sylphar N.V.   There have
been no recent changes to our line of credit.





During the years ended March 31, 2009
and March 31, 2008, we recognized an decrease in cash and cash equivalents of
$725,425 and $66,463, respectively, from the effect of exchange rates between
the Euro and the US Dollar.




31





Internal and External Sources of
Liquidity





As of March 31, 2009, we had current
assets of $8,264,237 compared to $ 5,962,083 at March 31, 2008. This increase of
$2,302,154 was due to an increase in accounts receivable of $1,305,200 and a
combined increase in inventories and prepaids of $917,964. Current liabilities
at March 31, 2009 of $3,767,117 were $129,519 greater than current liabilities
as at March 31, 2008 which was $3,637,598.  The increase was a result
of an increase in accrued liabilities.  Due to the sale of shares of
our Common Stock, we were able to generate cash that was used to partially meet
our working capital needs. As a result of the additional issuances of our shares
of Common Stock, any net income per share would be lower in future
periods.




As discussed in this Report, for the
remainder of the fiscal year 2009 we will need to raise additional funds to
satisfy our work capital requirements.  In the event we are unable to
raise additional funds we will 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, 2009, 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.




32





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,
2009.  Based on this evaluation, the Chief Executive Officer and the
Chief Financial Officer have concluded that our disclosure controls and
procedures were effective as of March 31, 2009.





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, 2009 that have materially affected,
or are reasonably likely to materially affect, the Company’s internal control
over financial reporting.





ITEM 9B.-OTHER
INFORMATION





None.




33





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
            54
            Chairman,
      Chief Executive OfficerStephen
      Ross
            50
            Chief
      Financial Officer, Director, SecretaryFred
      Kolsteeg
            66
            DirectorPhilippe
      Van Acker
            44
            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.





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.




34





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





Governance
Committee and Nominations to the Board of Directors





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





Code
of Ethics





We have
adopted a written Code of Ethics that applies to our senior management. A copy
of our Code of Ethics, executed by the Chief Executive Officer and Chief
Financial Officer, has been filed as an exhibit to our Annual Report on Form
10-K for the fiscal year ended March 31, 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. Kolsteeg, Mr. Van
Acker and Mr. Ross for stock option grants in March 2009 and late filings by Mr.
List relating to his disposition of shares in connection with the 2008
Restructuring, and Mr. Ross for an open market purchase in December 2008, we
believe that all reports required by Section 16(a) for transactions in the year
ended March 31, 2009, were timely filed.




35





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, 2009 and March 31, 2008,
respectively:





Name and Principal Position
            Year
            
            Salary
            
            
            Bonus
            
            
            Stock
              Awards
            
            
            Option
              Awards
            
            
            All
      Other
              Compensation
            
            
            TotalGuy
      De Vreese, CEO
            2009
            
            $
            -0-
            
            
            $
            -0-
            
            
            $
            -0-
            
            
            $
            -0-
            
            
            $
            318,490
            (1)
            
            $
            318,490
            (1)Chairman,
      CEO of Remedent N.V.
            2008
            
            $
            -0-
            
            
            $
            -0-
            
            
            $
            -0-
            
            
            $
            -0-
            
            
            $
            315,442
            (1)
            
            $
            315,442
            (1)Robin
      List, (2)
            2009
            
            $
            231,746
            
            
            $
            -0-
            
            
            $
            -0-
            
            
            $
            -0-
            
            
            $
            -0-
            
            
            $
            231,746CEO
            2008
            
            $
            252,567
            
            
            $
            -0-
            
            
            $
            -0-
            
            
            $
            -0-
            
            
            $
            -0-
            
            
            $
            252,567Philippe
      Van Acker,
            2009
            
            $
            163,120
            
            
            $
            -0-
            
            
            $
            -0-
            
            
            $
            48,844
            (4)
            
            $
            -0-
            
            
            $
            211,964CFO,
      Director (3)
            2008
            
            $
            162,658
            
            
            $
            -0-
            
            
            $
            -0-
            
            
            $
            -0-
            
            
            $
            -0-
            
            
            $
            162,658Stephen
      Ross
            2009
            
            $
            50,000
            
            
            $
            -0-
            
            
            $
            -0-
            
            
            $
            48,844
            (6)
            
            $
            -0-
            
            
            $
            98,844CFO,
      Director(5)
            2008
            
            
            N/A
            
            
            
            N/A
            
            
            
            N/A
            
            
            
            N/A
            
            
            
            N/A
            
            
            
            N/A


____________


(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.




36




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,
2009:





Name
            
            Number
      of Securities
              underlying
      Unexercised
              Options (Exercisable)
            
            
            Number
      of Securities
              underlying
              Unexercised
      Options
              (Unexercisable)
            
            
            Exercise
              Price
      per
              Share
            
            Expiration DateGuy
      De Vreese
            
            
            50,000
            
            
            
            -0-
            
            
            $
            1.00
            
            28-Mar-2012Guy
      De Vreese
            
            
            100,000
            
            
            
            -0-
            
            
            $
            1.75
            
            20-Sept-2017Robin
      List
            
            
            50,000
            
            
            
            -0-
            
            
            $
            1.00
            
            28-Mar-2012Robin
      List
            
            
            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
            
            
            50,000
            
            
            
            -0-
            
            
            $
            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
            
            4-Apr-2014Stephen
      Ross
            
            
            100,000
            
            
            
            -0-
            
            
            $
            0.50
            
            19-Mar-2019





As of
March 31, 2009, there were no outstanding stock awards.





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.





The
following table sets forth information regarding all forms of compensation
received by all non-executive directors of the Company during the fiscal year
ended March 31, 2009:





Name
            
            Directors
      Fees
              Earned
      or Paid in
              Cash
            
            
            Stock
              Awards
            
            
            Option
              Awards
            
            
            All
      Other
              Compensation
            
            
            TotalFred
      Kolsteeg
            
            $
            19,806
            (1)
            
            $
            -0-
            
            
            $
            97,688
            (2)
            
            $
            -0-
            
            
            $
            117,494





(1)
            Represents
      amounts paid to Mr. Kolsteeg as reimbursement of his out-of-pocket
      expenses incurred in traveling to and attending Board
      meetings.





(2)
            The
      Company valued the 200,000 options granted to Mr. Kolsteeg 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.  The options
      vested immediately and accordingly a value of $97,688 has been recorded in
      the period ended March 31,2009.  The options granted to Mr.
      Kolsteeg represent additional compensation paid to Mr. Kolsteeg as
      compensation for his extra efforts and assistance with the Company’s sale
      of its Over-the-Counter retail business during the fiscal year ended March
      31, 2009.




37




Employment
Agreements





Our
subsidiary, Remedent, N.V., has an employment agreement with Mr. Philippe Van
Acker,   our Chief Accounting Officer.  We entered into
an employment agreement with Roger Leddington on August 15, 2007, appointing Mr.
Leddington Senior Vice President and Head of
U.S.  Marketing.  This agreement was subsequently terminated
in the beginning of May 2008, when Mr. Leddington resigned and in connection
with the Glamtech distribution agreement, accepted the position as Glamtech’s
president.  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 4, 2009.  The information in this table
provides the ownership information for:





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





b.
            each
      of our directors;





c.
            each
      of our executive officers; and





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




38




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 4,
2009.





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
            %Robin
      List, Former CEO, Former Director(3)Xavier
      de Cocklaan 429831
      Deurle, Belgium
            
            
            93,160
            
            
            
            *Philippe
      Van Acker, Director(4)Xavier
      de Cocklaan 429831
      Deurle, Belgium
            
            
            201,667
            
            
            
            1.00
            %Stephen
      Ross, CFO, Secretary, Director(5)1921
      Malcolm #101Los
      Angeles, CA 90025
            
            
            625,777
            
            
            
            3.16
            %Fred
      Kolsteeg, Director (6)Managelaantje
      103062
      CV RotterdamThe
      Netherlands
            
            
            300,000
            
            
            
            1.50
            %All
      Officers and Directors as a Group (5 persons)
            
            
            6,004,284
            
            
            
            28.87
            %




5%
      or Greater ShareholdersAustin
      W. Marxe and David M. Greenhouse(7)153
      East 53rd Street, 55th FloorNew
      York, NY 10022
            
            
            7,814,816
            
            
            
            33.50
            %Paul
      J. Solit(8)
            
            
            1,871,019
            
            
            
            8.9
            %825
      Third Avenue, 33rd FloorNew
      York, NY 10020Lagunitas
      Partners LP(9)
            
            
            1,384,600
            
            
            
            6.72
            %Jon
      D. Gruber, J. Patterson McBaine and
              Eric
      Swergold (10)
            
            
            2,240,000
            
            
            
            10.69
            %50
      Osgood Place, PenthouseSan
      Francisco, CA 94133Den-Mat
      Holdings, LLC(11)
            
            
            3,378,379
            
            
            
            14.45
            %2727
      Skyway DriveSanta
      Maria, CA 93455





____________


*
            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.




39




(3)
            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, and 33,333 shares of
      common stock underlying options which vested on September 17, 2008 and
      have an exercise price of $1.75 per
share.





(4)
            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; 16,667 shares of common stock
      underlying options which 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.





(5)
            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.





(6)
            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.





(7)
            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.





(8)
            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 and warrants to purchase 293,976 shares of common stock held
      by Potomac Capital International Ltd (“Potomac International”); and
      234,527 shares of common stock and warrants to purchase 301,659 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.





(9)
            Consists
      of 791,200 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 10
below.





(10)
            Consists
      of 791,200 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”); 153,600 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 153,600 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.





(11)
            Consists
      of warrants to purchase 3,378,379 shares of common
  stock.




40




ITEM
13 — CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
INDEPENDENCE





Related
Transactions





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





Den-Mat’s rights as an exclusive
distributor and licensee continue at least through the first Contract Period
(which is defined below) and continues 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 (18) 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 (60) days after the Closing Date,
the first Contract Period will be extended by one day for each day after the
60th
day until Den-Mat becomes fully operational; (B) the subsequent twelve (12)
months; and (C) each subsequent twelve (12) month period thereafter, in each
case during which the First Fit Distribution Agreement is in
effect.




41





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.





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.




42





On July 11, 2008, we issued 358,166
shares of restricted common stock to SensAble Technologies, Inc. as partial
payment of products and certain exclusivity rights pursuant to the terms of that
certain OEM Agreement dated as of June 30, 2008.  The value of the
shares issued was $569,483.





In connection with our private
placement in June 2007 of $7,000,000, (the “2007 Private Offering”) we issued
warrants to purchase up to 4,200,000 shares of common stock at an exercise price
of $1.55 per share (the “Warrants”).  Under the terms of the 2007
Private Offering, the Warrants are exercisable for a period of five years and
entitle the holder to purchase one share of restricted common stock (the
“Warrant Shares”) for $1.55 per Warrant Share.  We also have the right
to redeem the Warrants for $0.001 per Warrant Share covered by the Warrants if
the Shares trade on the Over-The-Counter Electronic Bulletin Board or similar
market above $5.25 per share for 20 consecutive trading days following the
second anniversary of the initial effective date of the registration statement
covering the resale of the shares and Warrant Shares, based upon the closing bid
price for the shares for each trading day provided that certain conditions are
met (the “Redemption Right”).  Once the Redemption Right vests, we
have the right, but not the obligation, to redeem the Warrants for $0.001 per
Warrant Share covered by the Warrants upon 30 days written notice to the holders
of the Warrants.  The securities purchased in this offering was
purchase pursuant to this private placement.  The Company engaged Roth
Capital Partners, LLC, as its exclusive agent to offer the Shares and Warrants
(the “Placement Agent”).  The Placement Agent was entitled to a fee
equal to ten percent (10%) of the gross proceeds derived from the Offering, of
which the Placement Agent may, at its option, receive up to 2% of its 10% fee in
securities issued in the Offering.  Further, we agreed to pay the
Placement Agent 5% of the exercise price of the Warrants promptly following our
receipt thereof.  In addition, we agreed to reimburse the Placement
Agent for its out-of-pocket expenses related to the Offering, including an
upfront payment of $25,000 to cover such expenses, of which any unused amount
will be netted against the Placement Agent’s 10% fee.  As of March 31,
2009, the total costs of this private placement were $1,235,223, comprising of:
commissions of $762,505; out-of-pocket costs of $25,000; professional fees of
$375,738 and direct travel costs of $71,980; and have been recorded against
share capital as a cost of financing.





In the 2007 Private Offering, and
pursuant to the terms of the 2007 Private Offering discussed above, the
following funds controlled by significant shareholders Messrs. Austin W. Marxe
and David M. Greenhouse, purchased securities as follows:  Special
Situations Private Equity Fund, L.P. (“SSF Private Equity”) purchased 1,344,000
shares of common stock and warrants to purchase 1,008,000 shares for an
aggregate purchase price of $1,680,000; Special Situations Cayman Fund L.P.
purchased 420,000 shares of common stock and 315,000 warrants to purchase common
stock for an aggregate purchase price of $525,000; and Special Situations Fund
III QP L.P. purchased 236,000 shares of common stock and 177,000 warrants to
purchase common stock for an aggregate purchase price of
$295,000.  Further, pursuant to the terms of the 2005 Private Offering
discussed below, SSF Private Equity purchased 1,666,667 shares of common stock
and 1,666,667 warrants to purchase common stock for an aggregate purchase price
of $2,500,000.





Additionally, in the 2007 Private
Offering, significant shareholder Lagunitas Partners LP purchased 791,200 shares
of common stock and 593,400 warrants to purchase common stock for an aggregate
purchase price of $989,000.  Finally, in the 2007 Private Offering,
significant shareholder Paul J. Solit, through his dispositive and voting
control of the following entities purchased securities as
follows:  Potomac Capital Partners LP purchased 565,820 shares of
common stock and 424,365 warrants to purchase common stock for an aggregate
purchase price of $707,275; Potomac Capital International Ltd purchased 391,968
shares of common stock and 293,976 warrants to purchase common stock for an
aggregate purchase price of $489,960; and Pleiades Investment Partners-R Ltd
purchased 402,212 shares of common stock and 301,659 warrants to purchase common
stock for an aggregate purchase price of $502,765.




43





On April 10, 2007, in connection with
our engagement of Axelrod Weinberger Associates, LLC (“WAW”) as the Company’s
financial public relations firm, and in addition to the monthly retainer paid by
the Company to WAW, the Company granted to WAW or an entity to be designated by
WAW, a warrant to purchase a total of two hundred thousand (200,000) fully paid
and non-assessable shares of Company common stock at an exercise price of
$1.65.





On July 20, 2005, we completed a
private placement offering of 2,520,661 Units (the “2005 Private Offering”)
consisting of one share of common stock (the "2005 Shares") and one common stock
purchase warrant (the "2005 Warrants") at a price of $1.50 per Unit for a total
of $3,780,985 (the "Units").  The 2005 Warrants are exercisable for a
period of five years and shall entitle the holder to purchase one share of
common stock (the "2005 Warrant Shares") for $1.75 per 2005 Warrant
Share.  We have the right to redeem the 2005 Warrants for $0.01 per
2005 Warrant Share covered by the 2005 Warrants after July 6, 2007 if the 2005
Shares trade on the over-the-counter Bulletin Board above $3.50 per share for
thirty consecutive trading days provided that certain conditions are met (the
"Redemption Right").  Once the Redemption Right vests, we will have
the right, but not the obligation, to redeem the 2005 Warrants for $0.01 per
2005 Warrant Share covered by the 2005 Warrants upon thirty days written notice
to the holders of the 2005 Warrants.  We engaged MDB Capital Group,
LLC, as our exclusive agent to offer the Units (the “Placement Agent”). The
Placement Agent earned a fee equal to ten percent (10%) of the gross proceeds
derived from the sale of the Units, which totaled $378,099, together with a five
year warrant to purchase up to 252,067 of the Units sold in the offering at an
exercise price of $1.50 per Unit.





In the fall of 2006, we opened our
initial GlamSmile Lab in Ghent, Belgium.  As a temporary solution, the
lab was integrated at the same address as the office of Evelyne Jacquemyns, a
dentist in Ghent who is a related person to Guy De Vreese, our Chairman, by
virtue of sharing the same household.  We incurred $63,835 in costs
related to the build out of the initial GlamSmile Lab.  It was agreed
that we could use the office of Ms Jacquemyns from time to time for
demonstration purposes in relation to our GlamSmile veneers, at no
cost.  During the summer of 2007, our GlamSmile Lab was temporarily
moved to another location within the same building, to be able to facilitate our
growing group of Lab technicians.  We are currently negotiating to
rent a larger location., where the initial GlamSmile Lab will be moved together
with the GlamSmile Veneers Drawing team.  We incurred $63,835 and
$49,473 during the years ending March 31, 2007 and March 31, 2008, in costs
related to the build out of the initial GlamSmile Lab.  Additional
investments are planned to support the growth of sales of our GlamSmile
veneers.





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 $318,490 and $315,442 as compensation for services for the years
ending March 31, 2009 and March 31, 2008, respectively.




44





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 $79,240 of accumulated
amortization for this patent as of March 31, 2009 (2008 -
$55,468).  As of March 31, 2009, 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, 2009
and 2008 totaling $79,459 and $87,790 respectively, and the accounts receivable
at year end with this customer totaled $31,895 and $91,533  at March
31, 2009 and 2008 respectively.





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.




45





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, 2009 and the review of our quarterly reports for
such years amounted to $62,019. The aggregate fees paid for the annual audit of
financial statements included in our Annual Report for the year ended March 31,
2008 and the review of our quarterly reports for such year, amounted to
$46,626.





Audit Related Fees. For the
years ended March 31, 2009 and March 31, 2008, we paid $17,619 and $3,111,
respectively, to PKF for other audit related fees.





Tax Fees. For the years ended
March 31, 2009 and March 31, 2008, we paid $ 10,777 and $16,000, respectively,
to PKF for tax fees.





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





2009
            
            
            2008Audit
      Fees
            
            $
            62,019
            
            
            $
            46,626Audit
      Related Fees
            
            $
            17,619
            
            
            $
            3,111Tax
      Fees
            
            $
            10,777
            
            
            $
            16,000All
      Other Fees
            
            
            -
            
            
            
            -





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





There
have been no non-audit services provided by our independent accountant for the
year ended March 31, 2009.




46





ITEM
15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES





(a)(1)
            Financial
      Statements.
              Consolidated
      balance sheet as of March 31, 2009 and March  31, 2008, 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, 2009.(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.




47




SIGNATURES





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




REMEDENT,
      INC.Dated:
      June 29,
    2009
              /s/ Guy De VreeseBy:
      Guy De VreeseIts:
      Chief Executive Officer (Principal ExecutiveOfficer)
      and Director
  Dated:
      June 29,
    2009
              /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:
      June 29,
    2009
              /s/ Guy De VreeseGuy
      De Vreese,Chief
      Executive Officer,Chairman of the Board of
      Directors





Dated:
      June 29,
    2009
                /s/ Stephen RossStephen
      Ross, Director and Chief FinancialOfficer  (Principal
      Financial Officer andPrincipal Accounting
      Officer)
 Dated:
      June 29,
    2009
                  /s/ Philippe Van AckerPhilippe
      Van Acker, Director and ChiefAccounting Officer
  Dated:
      June 29,
    2009
                    /s/ Fred
    KolsteegFred
      Kolsteeg, Director
 
 48







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)10.4
            Exclusive
      License Agreement between Remedent, Inc. and Dan Darnell dated October 11,
      2004 (6)




49




Exhibit
      No.
            Description10.5
            Warrant
      dated July 6, 2005 (4)10.6
            Amendment
      to Warrant (5)10.7
            Employment
      Agreement between Remedent N.V. and Philippe Van Acker
  (3)10.8
            Lease
      Agreement dated December 20, 2001 (3)10.9
            Fortis
      Bank General Lending Conditions for Corporate Customers (“General Terms
      and Conditions”) (7)10.10
            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)10.11
            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)10.12
            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)10.13
            Purchase
      Agreement between Remedent, Inc. and certain Investors, dated June 20,
      2007 (10)10.14
            Registration
      Rights Agreement between Remedent, Inc. and certain Investors, dated June
      20, 2007 (10)10.15
            Employment
      Agreement between Remedent, Inc. and Roger Leddington
  (11)10.16
            Sales
      and Distribution Agreement between Remedent N.V. and Savant Distribution
      Limited, dated October 1, 2007 (12)10.17
            Waiver
      Agreement between Remedent, Inc. and Consenting Holders, dated October 18,
      2007 (12)10.18
            Limited
      Liability Company Merger and Equity Reallocation Agreement between
      Remedent NV and IMDS, LLC, dated July 15,
    2007  (13)10.19
            Distribution
      Agreement, dated November 29, 2007, by and between Remedent, Inc. and
      Vemedia N.V. (14)10.20
            Distribution
      Agreement, dated April 10, 2008, by and between Remedent N.V. and Glamtech
      USA, Inc. (15)10.21
            Factoring
      Agreement between Remedent, Inc. and First Community Financial, a division
      of Pacific Western Bank, dated April 24,
    2008  (16)10.22
            Validity
      Agreement between certain officers and directors of Remedent, Inc. and
      First Community Financial, a division of Pacific Western Bank, dated April
      24, 2008  (16)10.23
            Distribution
      Agreement, dated June 30, 2008, by and between Remedent, Inc. and SensAble
      Technologies, Inc. (17)10.24
            Distribution,
      License and Manufacturing Agreement, dated August 24, 2008, by and between
      Remedent, Inc., Remedent N.V. and Den-Mat Holdings,
      LLC  (18)10.25
            Form
      of Registration Rights Agreement dated August 24, 2008 between Remedent,
      Inc. and Den-Mat Holdings, LLC  (18)10.26
            Rescission
      Agreement, dated August 24, 2008, by and between Remedent, Inc., Remedent
      N.V. and Glamtech-USA, Inc. (18)




50




Exhibit
      No.
            Description10.27
            Contribution
      Agreement between Remedent, Inc., and Sylphar USA, Inc., dated December
      10, 2008  (19)10.28
            Share
      Purchase Agreement between Remedent Inc., and Remedent N.V., dated
      December 10, 2008  (19)10.29
            Deed
      of Contribution of Shares between Remedent Inc., and Remedent OTC B.V.,
      dated December 10, 2008  (19)10.30
            Share
      Purchase Agreement between Robin List and Remedent, Inc., dated December
      10, 2008  (19)10.31
            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  (19)10.32
            Unsecured
      Promissory Note between Sylphar N.V. and Remedent N.V., dated December 10,
      2008  (19)10.33
            Voting
      Agreement between Remedent, Inc., and Robin List, dated December 10,
      2008  (19)10.34
            First Fit-Crown Distribution and
      License Agreement dated June 3, 2009 by and among Remedent, Inc., Remedent
      N.V. and Den-Mat Holdings, LLC*(CT)10.35
            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*(CT)14.1
            Code
      of Ethics, adopted March 25, 2003 (23)21.1
            List
      of Subsidiaries (22)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.




51




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





(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 8-K filed with the SEC on August 15,
      2007.





(12)
            Incorporated
      by reference from Form SB-2/A2 filed with the SEC on October 19,
      2007.





(13)
            Incorporated
      by reference from Form 10-QSB filed with the SEC on November 19,
      2007.





(14)
            Incorporated
      by reference from Form 8-K filed with the SEC on December 19,
      2007.





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





(16)
            Incorporated
      by reference from Form 8-K filed with the SEC on April 30,
      2008.





(17)
            Incorporated
      by reference from Form 8-K filed with the SEC on July 7,
    2008.





(18)
            Incorporated
      by reference from Form 8-K filed with the SEC on August 28,
      2008.





(19)
            Incorporated
      by reference from Form 8-K filed with the SEC on December 16,
      2008.





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





(21)
            Incorporated
      by reference from Form SB-2/A filed with the SEC on October 26,
      2005.





(22)
              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.





(23)
              Incorporated
      by reference from Form 10-KSB filed with the SEC on July 15,
      2003.




52




REMEDENT,
INC. AND SUBSIDIARIES





CONSOLIDATED
FINANCIAL STATEMENTS





MARCH
31, 2009





Index





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









Bedrijfsrevisoren
            PKF
      Business Advisers






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, 2009 and March 31, 2008 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, 2009
and March 31, 2008 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, June 25, 2009





PKF
bedrijfsrevisoren CVBA


Statutory
Auditors


Represented
by





/s/ Ria
Verheyen


Ria
Verheyen


Registered
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, 2009
            
            
            March 31, 2008ASSETSCURRENT
      ASSETS:Cash
      and cash equivalents
            
            $
            1,807,271
            
            
            $
            1,728,281Accounts
      receivable, net of allowance for doubtful accounts of $33,966 at March 31,
      2009 and $32,181 at March 31, 2008
            
            
            3,208,120
            
            
            
            1,902,920Inventories,
      net
            
            
            1,937,946
            
            
            
            1,360,709Prepaid
      expense
            
            
            1,310,900
            
            
            
            970,173Total
      current assets
            
            
            8,264,237
            
            
            
            5,962,083PROPERTY
      AND EQUIPMENT, NET
            
            
            1,024,999
            
            
            
            692,609OTHER
      ASSETSLong
      term investments and advances
            
            
            750,000
            
            
            
            675,000Patents,
      net
            
            
            163,106
            
            
            
            115,827Total
      assets
            
            $
            10,202,342
            
            
            $
            7,445,519LIABILITIES
      AND STOCKHOLDERS’ EQUITY (DEFICIT)CURRENT
      LIABILITIES:Current
      portion, long term debt
            
            $
            78,798
            
            
            $
            58,583Line
      of Credit
            
            
            660,200
            
            
            
            779,718Accounts
      payable
            
            
            1,398,420
            
            
            
            2,002,439Accrued
      liabilities
            
            
            1,590,360
            
            
            
            781,737Income
      taxes payable
            
            
            39,339
            
            
            
            15,121Total
      current liabilities
            
            
            3,767,117
            
            
            
            3,637,598Long
      term debt less current portion
            
            
            100,542
            
            
            
            94,754Minority
      interest (Note 3)
            
            
            896,705
            
            
            
            —Total
      liabilities
            
            
            4,764,364
            
            
            
            3,732,352STOCKHOLDERS’
      EQUITY:Preferred
      Stock $0.001 par value (10,000,000 shares authorized, none issued and
      outstanding)
            
            
            —
            
            
            
            —Common
      stock, $0.001 par value; (50,000,000 shares authorized, 19,995,969 shares
      issued and outstanding at March 31, 2009 and 18,637,803 shares issued and
      outstanding at March 31, 2008)
            
            
            19,996
            
            
            
            18,638Treasury
      stock, at cost; 723,000 and 0 shares at March 31, 2009 andMarch
      31, 2008 respectively
            
            
            (831,450
            )
            
            
            —Additional
      paid-in capital
            
            
            24,106,055
            
            
            
            17,929,992Accumulated
      deficit
            
            
            (17,216,028
            )
            
            
            (14,263,113
            )Accumulated
      other comprehensive income (loss) (foreign currency translation
      adjustment)
            
            
            (640,595
            )
            
            
            27,650Total
      stockholders’ equity
            
            
            5,437,978
            
            
            
            3,713,167Total
      liabilities and stockholders’ equity
            
            $
            10,202,342
            
            
            $
            7,445,519





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 31,2009
            
            
            2008Net
      sales
            
            $
            14,639,541
            
            
            $
            7,482,261Cost
      of sales
            
            
            6,614,723
            
            
            
            3,975,777Gross
      profit
            
            
            8,024,818
            
            
            
            3,506,484Operating
      ExpensesResearch
      and development
            
            
            248,652
            
            
            
            332,958Sales
      and marketing
            
            
            2,793,970
            
            
            
            1,886,389General
      and administrative
            
            
            5,312,192
            
            
            
            4,057,007Depreciation
      and amortization
            
            
            615,674
            
            
            
            301,260TOTAL
      OPERATING EXPENSES
            
            
            8,970,488
            
            
            
            6,577,614OPERATING
      LOSS
            
            
            (945,670
            )
            
            
            (3,071,130
            )NON-OPERATING
      (EXPENSE) INCOMEWarrants
      issued pursuant to Distribution Agreement
            
            
            (4,323,207
            )
            
            
            —Gain
      on disposition of OTC (Note 3)
            
            
            2,830,953
            
            
            
            —IMDS
      provision (Note 12)
            
            
            (300,000
            )
            
            
            —Interest
      expense/other deductions
            
            
            (417,147
            )
            
            
            (138,168
            )Interest
      income/other income
            
            
            348,997
            
            
            
            —Other
      income
            
            
            —
            
            
            
            121,032TOTAL
      OTHER INCOME (EXPENSES)
            
            
            (1,860,404
            )
            
            
            (17,136
            )LOSS
      FROM CONTINUING OPERATIONS BEFOREINCOME
      TAXES AND MINORITY INTEREST
            
            
            (2,806,074
            )
            
            
            (3,088,266
            )Income
      tax expense
            
            
            (32,633
            )
            
            
            (27,247
            )LOSS
      FROM CONTINUING OPERATIONS BEFOREMINORITY
      INTEREST
            
            
            (2,838,707
            )
            
            
            (3,115,513
            )MINORITY
      INTEREST
            
            
            (114,208
            )
            
            
            —NET
      LOSS FROM CONTINUING OPERATIONS
            
            $
            (2,952,915
            )
            
            $
            (3,115,513
            )LOSS
      PER SHAREBasic
      and fully diluted
            
            $
            (0.15
            )
            
            $
            (0.17
            )WEIGHTED
      AVERAGE SHARES OUTSTANDINGBasic
      and fully diluted
            
            
            19,559,653
            
            
            
            17,823,012




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




F-3





REMEDENT, INC. AND
SUBSIDIARIES


CONSOLIDATED
STATEMENT OF STOCKHOLDERS’ EQUITY


FOR
THE YEARS ENDED MARCH 31, 2009 and 2008





Shares
            
            
            Amount
            
            
            Additional
              Paid
      in
              Capital
            
            
            Accumulated
              Deficit
            
            
            Treasury
              Stock
            
            
            Other
            
            
            Total$
            
            
            $
            
            
            $
            
            
            $
            
            
            $
            
            
            $Balance,
      March 31, 2007
            
            
            12,996,245
            
            
            
            12,996
            
            
            
            11,904,000
            
            
            
            (11,147,600
            )
            
            
            —
            
            
            
            (33,303
            )
            
            
            736,093Common
      stock issued by private placement
            
            
            5,600,000
            
            
            
            5,600
            
            
            
            6,994,400
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            7,000,000Commissions
      and other costs of private placement
            
            
            —
            
            
            
            —
            
            
            
            (1,224,498
            )
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            (1,224,498
            )Shares
      issued on exercise of warrants
            
            
            10,000
            
            
            
            10
            
            
            
            15,890
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            15,900Shares
      issued Debt Conversion
            
            
            31,558
            
            
            
            32
            
            
            
            50,504
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            50,536Value
      of stock options issued to employees
            
            
            —
            
            
            
            —
            
            
            
            189,696
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            189,696Cumulative
      translation adjustment
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            60,953
            
            
            
            60,953Net
      loss
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            (3,115,513
            )
            
            
            —
            
            
            
            —
            
            
            
            (3,115,513
            )Balance,
      March 31, 2008
            
            
            18,637,803
            
            
            
            18,638
            
            
            
            17,929,992
            
            
            
            (14,263,113
            )
            
            
            —
            
            
            
            27,650
            
            
            
            3,713,167Common
      stock issued
            
            
            1,358,166
            
            
            
            1,358
            
            
            
            1,186,801
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            1,188,159Treasury
      stock (723,000 shares)
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            (831,450
            )
            
            
            —
            
            
            
            (831,450
            )Value
      of stock options issued to employees
            
            
            —
            
            
            
            —
            
            
            
            670,455
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            670,455Den-Mat
      warrants
            
            
            —
            
            
            
            —
            
            
            
            4,323,207
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            4,323,207Cumulative
      translation adjustment
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            (668,245
            )
            
            
            (668,245
            )Net
      loss
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            (2,952,915
            )
            
            
            —
            
            
            
            —
            
            
            
            (2,952,915
            )Balance,
      March 31, 2009
            
            
            19,995,969
            
            
            
            19,996
            
            
            
            24,106,055
            
            
            
            (17,216,028
            )
            
            
            (831,450
            )
            
            
            (640,595
            )
            
            
            5,437,978




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 31,2009
            
            
            2008CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      loss
            
            $
            (2,952,915
            )
            
            $
            (3,115,513
            )Adjustments
      to reconcile net (loss) to net cash used by operating
      activitiesDepreciation
      and amortization
            
            
            615,674
            
            
            
            301,260Inventory
      reserve
            
            
            (2,608
            )
            
            
            2,446Allowance
      for doubtful accounts
            
            
            1,785
            
            
            
            (47,815
            )Stock
      based compensation
            
            
            670,455
            
            
            
            189,696IMDS
      provision
            
            
            300,000
            
            
            
            —Minority
      interest
            
            
            114,208
            
            
            
            —Gain
      on disposition of OTC
            
            
            (2,830,953
            )
            
            
            —Warrants
      issued pursuant to Distribution Agreement
            
            
            4,323,207
            
            
            
            —Acquisition
      of Glamtech-USA, Inc. (Note 5)
            
            
            625,000
            
            
            
            —Changes
      in operating assets and liabilities:Accounts
      receivable
            
            
            (1,305,200
            )
            
            
            (178,799
            )Inventories
            
            
            (577,327
            )
            
            
            (227,768
            )Prepaid
      expenses
            
            
            (90,727
            )
            
            
            (301,752
            )Accounts
      payable
            
            
            (604,019
            )
            
            
            548,811Accrued
      liabilities
            
            
            808,623
            
            
            
            369,302Income
      taxes payable
            
            
            24,218
            
            
            
            15,121Net
      cash used by operating activities
            
            
            (880,489
            )
            
            
            (2,445,011
            )CASH
      FLOWS FROM INVESTING ACTIVITIESLong
      term investments and advances
            
            
            (375,000
            )
            
            
            (675,000
            )Purchase
      of patent rights
            
            
            —
            
            
            
            (11,556
            )Purchases
      of equipment
            
            
            (628,581
            )
            
            
            (198,994
            )Net
      cash used by investing activities
            
            
            (1,003,581
            )
            
            
            (885,550
            )CASH
      FLOWS FROM FINANCING ACTIVITIESNet
      proceeds from share issuances
            
            
            —
            
            
            
            5,791,402Proceeds
      on sale of minority interest in Sylphar NV
            
            
            2,782,000
            
            
            
            —Proceeds
      from (principal payments on) capital lease note payable
            
            
            26,003
            
            
            
            (42,505
            )Repayments
      of line of credit
            
            
            (119,518
            )
            
            
            (750,558
            )Net
      cash provided by financing activities
            
            
            2,688,485
            
            
            
            4,998,339NET
      (DECREASE) INCREASE IN CASH
            
            
            804,415
            
            
            
            1,667,778Effect
      of exchange rate changes on cash and cash equivalents
            
            
            (725,425
            )
            
            
            (66,463
            )CASH
      AND CASH EQUIVALENTS, BEGINNING
            
            
            1,728,281
            
            
            
            126,966CASH
      AND CASH EQUIVALENTS, ENDING
            
            $
            1,807,271
            
            
            $
            1,728,281Supplemental Cash Flow
      Information:Interest
      paid
            
            $
            114,505
            
            
            $
            62,073Income
      taxes paid
            
            $
            —
            
            
            $
            —SUPPLEMENTAL
      NON-CASH FINANCING AND INVESTING ACTIVITIES:Common
      shares issued upon conversion of convertible debt
            
            $
            —
            
            
            $
            50,536Schedule
      of non-cash financing and investing activities:Restricted
      shares returned to treasury in exchange for 50% ofOTC
      Business
            
            $
            831,450
            
            
            $
            —Warrants
      issued pursuant to Distribution Agreement
            
            $
            4,323,207
            
            
            $
            —Shares
      issued for purchase of GlamTech
            
            $
            625,000
            
            
            $
            —Shares
      issued as prepayment for goods
            
            $
            250,000
            
            
            $
            —Shares
      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
      31,2009
            
            
            2008Net
      Loss
            
            $
            (2,952,915
            )
            
            $
            (3,115,513
            )OTHER
      COMPREHENSIVE LOSS:Foreign
      currency translation adjustment
            
            
            (668,245
            )
            
            
            60,953Comprehensive
      loss
            
            $
            (3,621,160
            )
            
            $
            (3,054,560
            )





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




F-6




NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS





1.
            BACKGROUND AND
      ORGANIZATION





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





The
Company was originally incorporated under the laws of Arizona in September 1996
under the name Remedent USA, Inc. In October 1998, the Company was acquired by
Resort World Enterprises, Inc., a Nevada corporation (“RWE”) in a share exchange
and RWE immediately changed its name to Remedent USA, Inc. The share exchange
was a “reverse acquisition” and accounted for as if the Company acquired RWE and
then recapitalized its capital structure. On July 1, 2001, the Company formed
three wholly-owned subsidiaries, Remedent Professional Holdings, Inc., Remedent
Professional, Inc. and Remedent N.V. (a Belgium corporation). Remedent
Professional, Inc. and Remedent Professional Holdings, Inc. are both
wholly-owned subsidiaries and have been inactive since inception. In June 2005,
the Company formed Remedent Asia Pte Ltd, a wholly-owned subsidiary formed under
the laws of Singapore. In October, 2005, the Company established a sales office
in Los Angeles, California in order to introduce its products to the United
States market.





During
the quarter ended March 31, 2002, through the Company’s Belgium based
subsidiary, Remedent N.V., the Company initiated its entrance into the high
technology dental equipment market. Since that time, the majority of the
Company’s operations have been conducted through its subsidiary, Remedent N.V.
For the fiscal years through March 31, 2009, substantially all of the Company’s
revenue has been generated by Remedent N.V., which has become a provider of
cosmetic dentistry products, including a full line of professional dental and
retail “over-the-counter” tooth whitening products in Europe. Because the
controlling stockholders of Remedent N.V. consisted of the Company’s executive
officers or companies owned by these executive officers, the Company has always
had effective “control” over Remedent N.V., as defined by APB 51 “Consolidated Financial
Statements,” even though it owned only twenty two percent (22%) of this
subsidiary.





On June
3, 2005, the Company consummated the acquisition of the remaining 78% of
Remedent N.V., and issued 7,715,703 shares of the Company’s common stock in
exchange for the 78% of the common stock of Remedent N.V. not owned by the
Company. As a result of this acquisition, Remedent N.V. is now our wholly-owned
subsidiary.





In
addition, on June 3, 2005, the Company amended its Articles of Incorporation
pursuant to the filing of the Amended and Restated Articles of Incorporation
with the Nevada Secretary of State. The Amended and Restated Articles of
Incorporation (i) changed the name of the Company from “Remedent USA, Inc.” to
“Remedent, Inc.” (ii) increased the number of authorized shares to 60,000,000
shares consisting of 50,000,000 shares of common stock and 10,000,000 shares of
Preferred Stock, and (iii) effected a one-for-twenty reverse stock split
(collectively, the “Amendments”). The consolidated financial statements and
accompanying notes have been retroactively adjusted to reflect the effects of
the reverse split and authorization of 10,000,000 shares of Preferred
Stock.





On
December 11, 2008 (the “OTC Restructuring Date”) the Company completed a
restructuring in the form of a management-led buyout of 50% of its OTC retail
business.  The buyout was led by Mr. List, the Company’s former
director and Chief Executive Officer, with financing provided by Concordia Fund
VC, a non-affiliated foreign investment fund.  Prior to the sale, the
Board approved a restructuring plan and strategy for transferring the Company’s
OTC business through a series of transactions involving subsidiary formations,
contributions of subsidiary(ies) interests and sales of stock interests through
subsidiary transactions, with particular emphasis focused on current OTC
business operations conducted through the Company’s subsidiaries, both
internationally and within the domestic U.S. (the “Plan”).




F-7





The total
consideration for the sale of OTC business was €4,654,736, which consists of (1)
€1,000,000  in cash, (2)  €654,736  based on the
exchange rate as of January 12, 2008 for the 723,000 restricted shares of the
Company previously held by Mr. List (valued at $1.15 per share for an aggregate
value of  $831,450), and (3) €3,000,000 which is the estimated value
of the ownership interest of 50 % of the shares of Remedent OTC held by the
Company.





Pursuant
to the agreements described in Note 3, the sale was conducted through a series
of transactions which included the consolidation of all of the ownership
interest of the Company’s subsidiaries operating the OTC business into Remedent
OTC; a sale of 50% of Remedent OTC to Mr. List; the  formation of
Sylphar Holding BV, a Dutch holding company, followed by
a  contribution of the OTC subsidiaries to Sylphar Holding by Remedent
OTC, and a subsequent investment by Concordia of  €2,000,000. Although
Mr. List resigned as director and Chief Executive Officer of the Company and
Remedent NV, Mr. List remains involved in the key management of the OTC
business.





As a
result of the series of transactions related to the sale, the Company now owns
50% of Remedent OTC with Mr. List owning the other 50%, and maintains control of
Remedent OTC as a result of its current control of the Board.  In
addition, the Company now owns a partial interest in Sylphar Holding 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 VC, who currently owns the remaining 25%.   As a
result of the sale, all of the OTC business previously operated by the Company
directly is now operated and held by Sylphar Holding.




2.
            SUMMARY OF SIGNIFICANT
      ACCOUNTING POLICIES





Organization
and Principles of Consolidation





The
accompanying consolidated financial statements include the accounts
of:





(a)           Pre-OTC
Restructuring Date





Remedent,
Inc. (formerly Remedent USA, Inc.), a Nevada corporation, and its subsidiaries,
Remedent N.V. (incorporated in Belgium) located in Deurle, Belgium, Remedent
Professional, Inc. (incorporated in California) and a subsidiary of Remedent
Professional Holdings, Inc., Remedent Asia Pte. Ltd, a wholly-owned subsidiary
formed under the laws of Singapore, Sylphar N.V. (incorporated in Belgium as a
wholly owned subsidiary on September 24, 2007), and Glamtech-USA, Inc. (a
Delaware corporation acquired effective August 24, 2008) (collectively, the
“Company”).





(b)        Post-OTC
Restructuring Date





Remedent,
Inc. (formerly Remedent USA, Inc.), a Nevada corporation, and its subsidiaries,
Remedent N.V. (incorporated in Belgium)located in Deurle, Belgium, Remedent
Professional, Inc. (incorporated in California) ), Glamtech-USA, Inc. (a
Delaware corporation acquired effective August 24, 2008), Remedent OTC B.V., a
Dutch Holding company and a 50% owned subsidiary, Sylphar Holding B.V., a Dutch
holding company, a 37.50% owned and controlled subsidiary by Remedent Inc,
Sylphar N.V., a 100% owned company by Sylphar Holding BV, Sylphar USA, a 100%
owned Nevada corporation by Sylphar Holding BV. and Sylphar Asia Pte, a 100 %
owned Asian company owned by Sylphar Holding BV (collectively, the
“Company”).




Remedent,
Inc. is a holding company with headquarters in Deurle, Belgium. Remedent
Professional, Inc. and Remedent Professional Holdings, Inc. have been dormant
since inception. The rebranded Sylphar Asia Pte Ltd (former Remedent Asia Pte.
Ltd.), commenced operations as of July 2005.




F-8





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.





Basis of
Presentation





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





Revenue
Recognition





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





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. As of March 31, 2009, management believes there was no impairment of
the Company’s long-lived assets.





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 vales of assets
and liabilities that are not readily apparent from other sources. Actual results
could differ from those estimates.





Cash and
Cash Equivalents





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





Accounts
Receivable and Allowance for Doubtful Accounts





The
Company sells professional dental equipment to various companies, primarily to
distributors located in Western Europe and in the United States of America. 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 $13,204 at March 31, 2009 and $15,812 at March 31,
2008.




F-9





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





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, 2009 and March 31, 2008, advertising expense was
$259,408 and $395,964, respectively.





Income
taxes





Income
taxes are provided in accordance with Statement of Financial Accounting
Standards No. 109 (SFAS 109), “Accounting for Income Taxes.” Deferred taxes are
recognized for temporary differences in the bases of assets and liabilities for
financial statement and income tax reporting as well as for operating losses and
credit carry forwards. A provision has been made for income taxes due on taxable
income and for the deferred taxes on the temporary differences. The components
of the deferred tax asset and liability are individually classified as current
and non-current based on their characteristics.





Deferred
tax assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that some portion or all of the deferred
tax assets will not be realized. Deferred tax assets and liabilities are
adjusted for the effects of changes in tax laws and rates on the date of
enactment.




F-10





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 $19,806 and $23,718 as of
March 31, 2009 and March 31, 2008, respectively.





Segment
Reporting





Statement
of Financial Accounting Standards No. 131 (“SFAS 131”), “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. Potential common shares
related to stock options and stock warrants are excluded from the computation
when their effect is anti-dilutive.





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. Finally, the functional currency for Remedent Professional,
Inc. is the U.S. dollar. The Company translates foreign currency statements to
the reporting currency in accordance with FASB 52. 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)





The
Company has adopted the provisions of Statement of Financial Accounting
Standards No. 130, “Reporting
Comprehensive Income” (“SFAS No. 130”). SFAS No. 130 establishes
standards for the reporting and display of comprehensive income, its components
and accumulated balances in a full set of general purpose financial statements.
SFAS No. 130 defines comprehensive income (loss) to include 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 $(668,245) and
$60,953 for the years ended March 31, 2009 and 2008, respectively. These amounts
have been recorded as a separate component of stockholders’ equity
(deficit).





Stock
Based Compensation





The
Company follows the guidance provided by SFAS No. 123R, Share-Based Payment (“SFAS
123R”) as issued by the Financial Accounting Standards Board (“FASB”). SFAS 123R
requires accounting for stock options using a fair-value-based method as
described in such 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 under SFAS
No. 123R.  For the years ended March 31, 2009 and March 31, 2008,
equity compensation in the form of stock options and grants of restricted stock
totaled $670,455 and $189,696 respectively.




F-11





Recent
Accounting Pronouncements





In May
2009, The Financial Accounting Standards Board (“FASB”) issued Statement of
Financial Accounting Standard (“SFAS”) No. 165, Subsequent Events (“SFAS
165”). This Statement establishes general standards of accounting for and
disclosures of events that occur after the balance sheet date but before
financial statements are issued or are available to be issued.  It requires
the disclosure of the date through which an entity has evaluated subsequent
events and the basis for that date. This Statement is effective for interim and
annual periods ending after June 15, 2009 and as such, the Company will adopt
this standard in the first quarter of fiscal year 2010. The Company is currently
assessing the impact of the adoption of SFAS 165, if any, on its financial
position, results of operations or cash flows.





In
May 2008, the FASB issued SFAS No. 162, The Hierarchy of Generally Accepted
Accounting Principles (“SFAS 162”). SFAS 162 identifies a consistent
framework, or hierarchy, for selecting accounting principles to be used in
preparing financial statements that are presented in conformity with U.S.
generally accepted accounting principles (GAAP) for non-governmental
entities. SFAS 162 is effective for interim and annual periods ending after
September 15, 2009 and as such the Company will adopt this standard in the third
quarter of fiscal year 2010.The Company is currently assessing the impact of the adoption of SFAS 162
on its financial position, results of operations, or cash flows.





In
April 2008, the FASB issued FASB staff position (“FSP”) FAS 142-3, Determination of the Useful Life of
Intangible Assets(“FSP 142-3”). FSP FAS 142-3 amends the factors an
entity should consider in developing renewal or extension assumptions used in
determining the useful life of recognized intangible assets under FASB Statement
No. 142, “Goodwill and
Other Intangible Assets”. This new guidance applies prospectively to
intangible assets that are acquired individually or with a group of other assets
in business combinations and asset acquisitions. FSP FAS 142-3 is effective for
financial statements issued for fiscal years and interim periods beginning after
December 15, 2008, and as such, the Company will adopt FSP FAS 142-3 in the
first quarter of fiscal year 2010. Early adoption is prohibited. The Company is
currently evaluating the impact, if any, that FSP FAS 142-3 will have on its
financial position, results of operations, or cashflows.





In March
2008, the FASB issued SFAS No. 161, Disclosures about Derivative
Instruments and Hedging Activities, which amends the disclosure
requirements of SFAS
133. SFAS 161 provides an enhanced understanding about how and why
derivative instruments are used, how they are accounted for and their effect on
an entity’s financial condition, performance and cash flows. SFAS 161, which is
effective for the first interim period beginning after November 15, 2008, will
require additional disclosure in future filings. The Company adopted this
standard in the fourth quarter of fiscal year 2009 and the adoption did not have
any material impact on the Company’s consolidated financial position, results of
operations or cash flows.





In
December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements — an Amendment of ARB No. 51(“FAS
160”). FAS 160 amends ARB No. 51 to establish accounting and reporting
standards for the noncontrolling interest in a subsidiary and for the
deconsolidation of a subsidiary. FAS 160 also clarifies that a noncontrolling
interest in a subsidiary is an ownership interest in the consolidated entity
that should be reported as equity in the consolidated financial statements. FAS
160 is effective for fiscal years beginning on or after December 15, 2008
and as such the Company will adopt this standard in the first quarter of fiscal
year 2010. Based on its current operations, the Company does not believe that
FAS 160 will have a significant impact on its financial position, results of
operations or cash flows.





In
December 2007, the FASB issued SFAS No. 141(revised 2007), Business Combinations(“SFAS 141R”). SFAS 141R will significantly change the
accounting for business combinations in a number of areas including the
treatment of contingent consideration, contingencies, acquisition costs,
IPR&D and restructuring costs. In addition, under SFAS 141R, changes in
deferred tax asset valuation allowances and acquired income tax uncertainties in
a business combination after the measurement period will impact income taxes.
SFAS 141R is effective for fiscal years beginning after December 15,
2008 and, as such, the Company will adopt this standard in the first quarter of
fiscal year 2010. The provisions are effective for the Company for business
combinations on or after March 30, 2009.




F-12





In
February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities — Including an Amendment of FASB Statement
No. 115 (“SFAS 159”). SFAS No. 159 permits entities to choose
to measure many financial instruments and certain other items at fair value.
This provides entities with the opportunity to mitigate volatility in reported
earnings caused by measuring related assets and liabilities differently without
being required to apply complex hedge accounting provisions. The provisions of
SFAS No. 159 are effective as of the beginning of fiscal years that start
after November 15, 2007 (for the Company, March 31, 2008). The Company
adopted SFAS No. 159 on March 31, 2008 and the adoption did not
have any material impact on its financial position, results of operations or
cash flows.





Effective
March 26, 2007, the Company adopted FASB Interpretation No. 48, Accounting for Uncertainty in Income
Taxes—an Interpretation of FASB Statement 109(“FIN 48”). FIN 48 requires
that a position taken or expected to be taken in a tax return be recognized in
the financial statements when it is more likely than not (i.e. a likelihood of
more than fifty percent) that the position would be sustained upon examination
by tax authorities. A recognized tax position is then measured at the largest
amount of benefit that is greater than fifty percent likely of being realized
upon ultimate settlements. Upon adoption, the Company did not have any material
uncertain tax positions to account for as an adjustment to its opening balance
of retained earnings on March 26, 2007. In addition, as of March 31, 2009,
the Company did not have any material unrecognized tax benefits.





In
September 2006, the FASB issued SFAS No. 157, Fair Value Measurements(“SFAS 157”). SFAS 157 defines fair value, establishes a framework for
measuring fair value under generally accepted accounting principles, and expands
disclosures about fair value measurements. SFAS 157 emphasizes that fair value
is a market-based measurement, not an entity-specific measurement, and states
that a fair value measurement should be determined based on the assumptions that
market participants would use in pricing the asset or liability. SFAS 157
applies under other accounting pronouncements that require or permit fair value
measurements.





SFAS 157,
among other things, requires companies to maximize the use of observable inputs
and minimize the use of unobservable inputs when measuring fair value, and
specifies a hierarchy of valuation techniques based on whether the inputs to
those valuation techniques are observable or unobservable. Observable inputs
reflect market data obtained from independent sources, while unobservable inputs
reflect the company’s market assumptions. The effective date was for fiscal
years beginning after November 15, 2007.





SFAS
No. 157 establishes a three-tiered hierarchy to prioritize inputs used to
measure fair value. Those tiers are defined as follows:


-
            
            Level
      1 inputs are quoted prices (unadjusted) in active markets for
      identical assets or liabilities that the reporting entity has the ability
      to access at the measurement date.-
            
            Level
      2 inputs are inputs, other than quoted prices included within Level 1,
      that are observable for the asset or liability, either directly or
      indirectly. If the asset or liability has a specified
      (contractual) term, a Level 2 input must be observable for
      substantially the full term of the asset or liability.-
            
            Level
      3 inputs are unobservable inputs for the asset or
    liability.





The
highest priority in measuring assets and liabilities at fair value is placed on
the use of Level 1 inputs, while the lowest priority is placed on the use of
Level 3 inputs.





This
statement also expands the related disclosure requirements in an effort to
provide greater transparency around fair value measures.





In
February 2008, the FASB issued FSP FAS 157-2, which delays the effective
date of SFAS No. 157 to fiscal years beginning after November 15, 2008, and
interim periods within those fiscal years, for all nonfinancial assets and
nonfinancial liabilities, except those that are recognized or disclosed at fair
value in the financial statements on a recurring basis (at least
annually).




F-13





As of
March 31, 2008, the Company adopted SFAS No. 157, and the adoption did
not have a material impact on its financial condition, results of operations, or
cash flows. The Company is still evaluating the impact of the items deferred by
FSP FAS 157-2.




3.
            RESTRUCTURING
      OF OTC BUSINESS





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





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





On
December 10, 2008, the Company entered into a Share Purchase Agreement with
Remedent, NV, a wholly owned subsidiary of the Company formed under the laws of
Belgium (“Remedent NV”), pursuant to which the Company purchased a 99% ownership
interest in Sylphar, NV, a subsidiary of the Company formed under the laws of
Belgium, from Remedent NV.  As a result of the Sylphar Purchase
Agreement, Sylphar NV became a wholly owned subsidiary of the Company. As
consideration for the 99 shares (“Sylphar Shares”), the Company agreed to pay
Remedent NV €1,881,000, which was based on the valuations provided by an
independent assessor, by executing an unsecured non-interest bearing promissory
note (the “Promissory Note”) on behalf of Remedent NV for the principal amount
of €1,000,160 (the “Debt”) and having the remainder balance of €880,840
reflected on the existing intercompany account between Remedent NV and the
Company.





Then
pursuant to a Deed of Contribution, the Company transferred all of the Company’s
ownership interest in its OTC operating subsidiaries, consisting of Sylphar USA,
Remedent Asia PTE, Sylphar NV (“OTC Subsidiaries”), into Remedent OTC BV, a
Dutch holding company and a wholly owned subsidiary of the Company (“Remedent
OTC”) in exchange for €1,000,160.





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





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




F-14




4.
            DISTRIBUTION
      AGREEMENTS





Den-Mat
Distribution Agreement





On
August 24, 2008, and as amended June 3, 2009, the Company entered into a
distribution agreement (the “Distribution Agreement”) with Den-Mat Holdings,
LLC, a Delaware limited liability company (“Den-Mat”).   Under
the Distribution, the Company appointed Den-Mat to be the sole and exclusive
distributor to market, license and sell certain products relating to the
Company’s GlamSmile tray technology, including, but not limited to, its
GlamSmile veneer products and other related veneer products (the “Products”),
throughout the world, with the exception of Australia, Austria, Belgium, Brazil,
France (including all French overseas territories “Dom-Tom”), Germany, Italy,
New Zealand, Oman, Poland, Qatar, Saudi Arabia, Singapore, Switzerland,
Thailand, and United Arab Emirates (collectively the “Excluded Markets”) and the
China Market (the “Territory”).





As
consideration for such distribution, licensing and manufacturing rights, Den-Mat
will pay the Company:





(i)
            an
      initial payment of $2,425,000;


(ii)
            a
      payment of $250,000 for each of the first three contract periods in the
      initial Guaranty Period, subject to certain terms and
      conditions;


(iii)
            certain
      periodic payments as additional paid-up royalties in the aggregate amount
      of $500,000;


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


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


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


(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) (Note
  21);


(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;




F-15




(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.





First
Fit Distribution Agreement




Subsequent
to the Company’s year  ended March 31, 2009, 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 ts
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).





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; (ii) a non-refundable license fee of $600,000
payable in three equal installments of $200,000 each, with the first installment
payable on the Closing Date, and with the second and third installments payable
on the 30th and 60th day, respectively, after the Closing Date; (iii) certain
royalty payments based on the sales of the First Fit Products by Den-Mat or its
sublicensees; and (iv) certain minimum royalty payments to maintain
exclusivity.





Den-Mat’s
rights as an exclusive distributor and licensee will continue at least through
the first Contract Period (defined below) and until the termination of the First
Fit Distribution Agreement.  Den-Mat’s exclusivity ends at the end of
any Contract Period in which Den-Mat fails to make certain minimum royalty
payments.  In the event that such exclusivity is terminated, Den-Mat
has the option to either terminate the First Fit Distribution Agreement upon
ninety (90) days written notice, or become a non-exclusive distributor and
licensee, in which event Den-Mat’s obligation to pay certain agreed upon
royalties would continue.  “Contract Period”  means the
following periods: (A) the first eighteen months beginning on the first day of
the month following the month in which the Closing occurs, provided that if
Den-Mat is not fully operational within sixty days after the Closing Date, the
first Contract Period will be extended by one day for each day after the
sixtieth day until Den-Mat becomes fully operational; (B) the subsequent twelve
months; and (C) each subsequent twelve month period thereafter, in each case
during which the First Fit Distribution Agreement is in effect.




F-16





5.
              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 (5) 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.




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.








6.
            PRIVATE
      PLACEMENT





On June
25, 2007, the Company completed its private offering of 5,600,000 shares of its
common stock, par value $.001 per share at a purchase price of $1.25 per share
(the “Shares”) and warrants to purchase 4,200,000 shares of common stock, par
value $.001 per share, at an exercise price of $1.55 per share (the “Warrants”)
to certain institutional and accredited investors, for an aggregate purchase
price of $7,000,000 (the “Offering”).





Under the
terms of the Offering, the Warrants are exercisable for a period of five years
and entitle the holder to purchase one share of restricted common stock (the
“Warrant Shares”) for $1.55 per Warrant Share. The Company also has the right to
redeem the Warrants for $0.001 per Warrant Share covered by the Warrants if the
Shares trade on the OTC Electronic Bulletin Board or similar market above $5.25
per share for 20 consecutive trading days following the initial effective date
of the registration statement covering the resale of the Shares and Warrant
Shares, based upon the closing bid price for the Shares for each trading day
(the “Redemption Right”). Once the Redemption Right vests, the Company has the
right, but not the obligation, to redeem the Warrants for $0.001 per Warrant
Share covered by the Warrants upon 30 days written notice to the holders of the
Warrants.





Under the
terms of the Purchase Agreement and the Registration Rights Agreement, the
Company was required to prepare and file with the Securities and Exchange
Commission (the “Commission”) a registration statement covering the resale of
the Shares and the Warrant Shares. The Company agreed to prepare and file a
registration statement covering the resale no later than 30 days after the
Closing. The registration statement became effective October 23,
2007.





The
Company engaged Roth Capital Partners, LLC, as its exclusive agent to offer the
Shares and Warrants (the “Placement Agent”). The Placement Agent is entitled to
a fee equal to ten percent (10%) of the gross proceeds derived from the
Offering, of which the Placement Agent may, at its option, receive up to 2% of
its 10% fee in securities issued in the Offering. Further, the Company agreed to
pay the Placement Agent 5% of the exercise price of the Warrants promptly
following the Company’s receipt thereof. In addition, the Company agreed to
reimburse the Placement Agent for its out-of-pocket expenses related to the
Offering, including an up front payment of $25,000 to cover such expenses, of
which any unused amount will be netted against the Placement Agent’s 10%
fee.




F-17





As of
March 31, 2009, the total costs of this private placement were $1,235,223,
comprising of: commissions of $762,505; out-of-pocket costs of $25,000;
professional fees of $375,738 and direct travel costs of $71,980; and have been
recorded against share capital as a cost of financing.





The
Offering was conducted in reliance upon an exemption from registration under the
Securities Act of 1933, as amended (the “Securities Act”), including, without
limitation, that under Section 506 of Regulation D promulgated under the
Securities Act. The Units were offered and sold by the Company to accredited
investors in reliance on Section 506 of Regulation D of the Securities Act of
1933, as amended.





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, 2009 four customers accounted
for a total of 30%, 19%, 18% and 11% of the Company’s trade accounts
receivable.  At March 31, 2008 two customers accounted for 25% and 10%
of the Company’s trade accounts receivable. The Company performs ongoing credit
evaluations of its customers and normally does not require collateral to support
accounts receivable.





Purchases
— The Company has diversified its sources for product components and finished
goods and, as a result, the loss of a supplier would not have a material impact
on the Company’s operations. For the year ended March 31, 2009, the Company had
five suppliers who accounted for 20% of gross purchases.  For the year
ended March 31, 2008, the Company had one supplier who accounted for 33% of
gross purchases and four other suppliers who accounted for between 14% and 21%
of gross purchases each.





Revenues
— For the year ended March 31, 2009 the Company had one customer that accounted
for 45.5% of total revenues.  For the year ended March 31, 2008 the
Company had one customer that accounted for 16% of total revenues.





8.
            ACCOUNTS RECEIVABLE AND
      ALLOWANCE FOR DOUBTFUL
ACCOUNTS





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





March
      31, 2009
            
            
            March
      31, 2008Accounts
      receivable, gross
            
            $
            3,242,086
            
            
            $
            1,935,101Less:
      allowance for doubtful accounts
            
            
            (33,966
            )
            
            
            (32,181
            )Accounts
      receivable, net
            
            $
            3,208,120
            
            
            $
            1,902,920





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, 2009
            
            
            March
      31, 2008Raw
      materials
            
            $
            20,941
            
            
            $
            29,788Components
            
            
            1,017,286
            
            
            
            970,101Finished
      goods
            
            
            912,923
            
            
            
            376,6321,951,150
            
            
            
            1,376,521Less:
      reserve for obsolescence
            
            
            (13,204
            )
            
            
            (15,812
            )Net
      inventory
            
            $
            1,937,946
            
            
            $
            1,360,709




F-18





10.
              PREPAID
      EXPENSES





Prepaid
expenses are summarized as follows:





March
      31, 2009
            
            
            March
      31, 2008Prepaid
      materials and components
            
            $
            1,127,225
            
            
            $
            588,639Prepaid
      Belgium income taxes
            
            
            —
            
            
            
            79,060Prepaid
      consulting
            
            
            18,119
            
            
            
            62,237VAT
      payments in excess of VAT receipts
            
            
            99,315
            
            
            
            117,467Royalties
            
            
            39,053
            
            
            
            39,530Prepaid
      trade show expenses
            
            
            —
            
            
            
            25,276Prepaid
      rent
            
            
            1,584
            
            
            
            10,812Other
            
            
            25,604
            
            
            
            47,152$
            1,310,900
            
            
            $
            970,173





11.
              PROPERTY AND
      EQUIPMENT





Property
and equipment are summarized as follows:





March
      31, 2009
            
            
            March
      31, 2008Furniture
      and Fixtures
            
            $
            350,662
            
            
            $
            182,079Machinery
      and Equipment
            
            
            1,351,870
            
            
            
            801,251Tooling
            
            
            188,450
            
            
            
            254,4501,890,982
            
            
            
            1,237,780Accumulated
      depreciation
            
            
            (865,983
            )
            
            
            (545,171
            )Property
      & equipment, net
            
            $
            1,024,999
            
            
            $
            692,609




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 world wide 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, 2009 the Company has 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 is to be paid through
the issuance of 220,588 common shares of the Company’s common stock. The final
agreement is currently being negotiated and management expects to close the
agreement, and issue the 220,588 common shares during the
remainder  of calendar year 2009.




F-19





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 $29,250 of accumulated amortization for this
patent as of March 31, 2009. The Company accrues this royalty when it becomes
payable to inventory therefore no provision has been made for this obligation as
of March 31, 2009 (2008-Nil).





Universal
Applicator Patent





In
September 2004, the Company entered into an agreement with Lident N.V.
(“Lident”), a company controlled by Mr. De Vreese, the Company’s Chairman, to
obtain an option, exercisable through December 31, 2005, to license an
international patent (excluding the US) and worldwide manufacturing and
distribution rights for a potential new product which Lident had been assigned
certain rights by the inventors of the products, who are unrelated parties,
prior to Mr. De Vreese association with the Company. The patent is an Italian
patent which relates to a single use universal applicator for dental pastes,
salves, creams, powders, liquids and other substances where manual application
could be relevant. The Company has filed to have the patent approved throughout
Europe. The agreement required the Company to advance to the inventors through
Lident a fully refundable deposit of €100,000 subject to the Company’s due
diligence regarding the enforceability of the patent and marketability of the
product, which, if viable, would be assigned to the Company for additional
consideration to the inventors of €100,000 and an ongoing royalty from sales of
products related to the patent equal to 3% of net sales and, if not viable, the
deposit would be repaid in full by Lident. The consideration the Company had
agreed to pay Lident upon the exercise of the option is the same as the
consideration Lident is obligated to pay the original inventors. Consequently,
Lident would not have profited from the exercise of the option. Furthermore, at
a meeting of the Company’s Board of Directors on July 13, 2005, the Board
accepted Lident’s offer to facilitate an assignment of Lident’s intellectual
property rights to the technology to the Company in exchange for the
reimbursement of Lident’s actual costs incurred relating to the intellectual
property. Consequently, when the Company exercises the option, all future
payments, other than the reimbursement of costs would be paid directly to the
original inventors and not to Lident.





On
December 12, 2005, the Company exercised the option and the Company and the
patent holder agreed to revise the assignment agreement whereby the Company
agreed to pay €50,000 additional compensation in the form of prepaid royalties
instead of the €100,000 previously agreed, €25,000 of which had been paid by the
Company in September 2005 and the remaining €25,000 to be paid upon the
Company’s first shipment of a product covered by the patent. As of March 31,
2009 the Company has not yet received the final Product. The patent is being
amortized over five (5) years and accordingly, the Company has recorded $79,240
of accumulated amortization for this patent as of March 31, 2009.





14.
            LINE OF
      CREDIT





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, 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 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 latest amendment to the Facility, dated January 3, 2008, amended and
decreased the mixed-use line of credit to €2,050,000, to be used by Remedent NV
and/or Sylphar NV. Each line of credit carries its own interest rates and fees
as provided in the Facility. Remedent N.V. and Sylphar N.V. are currently only
utilizing two lines of credit, advances based on account receivables and the
straight loan. As of March 31, 2009 and March 31, 2008, Remedent N.V. and
Sylphar N.V. had in aggregate, $660,200 and $779,718 in advances outstanding,
respectively, under this mixed-use line of credit facility.




F-20





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 $92,819). On October 24, 2006, the
Company entered into another five year capital lease agreement for additional
manufacturing equipment totaling €123,367 (US $162,894). 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
$83,707).





The
leases require monthly payments of principal and interest at 7.43% of €1,172
(US$1,547 at March 31, 2009) for the first two leases and 9.72% of €2,056 (US
$2,715 at March 31, 2009) and provide for buyouts at the conclusion of the five
year term of €2,820 (US$3,724) or 4.0% of original value for the first two
contracts and €4,933 (US $6,514) 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 $2,325 at March 31, 2009) and provides for
buyout at the conclusion of the three year term of €634 (US $837) or 1% of the
original value of this contract.





The net
book value as of March 31, 2009 and March 31, 2008 of the equipment subject to
the foregoing leases are $179,339 and $251,854, respectively.





16.
              RELATED PARTY
      TRANSACTIONS





Transactions
with related parties consisted of the following:





Compensation:





During
the years ended March 31, 2009 and 2008 respectively, the Company incurred
$861,044 and $671,170 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, 2009 and 2008 totaling
$79,459 and $87,790 respectively. Accounts receivable at year end with this
customer totaled $31,895 and $91,533 as at March 31, 2009 and 2008
respectively.





All
related party transactions involving provision of services or tangible assets
were recorded at the exchange amount, which is the value established and agreed
to by the related parties reflecting arms length consideration payable for
similar services or transfers. Other related party transactions are disclosed in
Note 20.




F-21





17.
            ACCRUED
      LIABILITIES





Accrued
liabilities are summarized as follows:





March
      31, 2009
            
            
            March
      31, 2008Accrued
      employee benefit taxes and payroll
            
            $
            246,925
            
            
            $
            178,645Accrued
      Travel
            
            
            13,170
            
            
            
            17,667Advances
      and deposits
            
            
            298,809
            
            
            
            212,736Commissions
            
            
            258,105
            
            
            
            130,875Accrued
      audit and tax preparation fees
            
            
            8,947
            
            
            
            4,000Reserve
      for warranty costs
            
            
            19,806
            
            
            
            23,718Accrued
      interest
            
            
            1,279
            
            
            
            984Accrued
      consulting fees
            
            
            37,308
            
            
            
            35,204Other
      accrued expenses
            
            
            706,011
            
            
            
            177,908$
            1,590,360
            
            
            $
            781,737





18.
            INCOME
    TAXES





The
Company accounts for income taxes under Statement of Financial Accounting
Standards No. 109, “Accounting
for Income Taxes” (SFAS No. 109). Under the asset and liability method of
SFAS No. 109, deferred income tax assets and liabilities are recognized for the
future tax consequences attributable to differences between financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using tax rates expected to apply to taxable income in
the years in which those temporary differences are expected to be recovered or
settled. Under SFAS No. 109, the effect on deferred tax assets and liabilities
of a change in tax rates is recognized in income in the period that includes the
enactment date.





In
assessing the realizability of deferred tax assets, the Company considers
whether it is more likely than not that some portion or all of the deferred tax
assets will not be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the periods in
which those temporary differences become deductible. The Company considers the
scheduled reversals of deferred tax liabilities, projected future taxable income
and tax planning strategies in making this assessment.





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





March
      31, 2009
            
            
            March
      31, 2008Domestic
            
            $
            (7,459,399
            )
            
            $
            (1,722,134
            )Foreign
            
            
            4,653,325
            
            
            
            (1,366,132
            )$
            (2,806,074
            )
            
            $
            (3,088,266
            )





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





March
      31, 2009
            
            
            March
      31, 2008Domestic
      — Net operating loss carryforward
            
            $
            6,172,631
            
            
            $
            3,561,841Foreign
      — Net operating loss carryforward
            
            
            (838,728
            )
            
            
            639,893Total
            
            
            5,333,902
            
            
            
            4,201,734Valuation
      allowance
            
            
            (5,333,902
            )
            
            
            (4,201,734
            )Net
      deferred tax assets
            
            $
            —
            
            
            $
            —




F-22





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, 2009 and March 31, 2008 are as
follows:





March
      31, 2009
            
            
            March
      31, 2008DomesticPre
      tax income (loss)
            
            $
            (7,459,399
            )
            
            $
            (1,722,134
            )Statutory
      tax rate
            
            
            35
            %
            
            
            35
            %Tax
      benefit based upon statutory rate
            
            
            (2,610,790
            )
            
            
            (602,747
            )Valuation
      allowance
            
            
            2,610,790
            
            
            
            602,747Net
      domestic income tax (benefit)
            
            
            —
            
            
            
            —ForeignPre
      tax income (loss)
            
            
            4,653,325
            
            
            
            (1,366,132
            )Statutory
      tax rate
            
            
            35
            %
            
            
            32
            %Tax
      expense (benefit) based upon statutory rate
            
            
            1,478,621
            
            
            
            (437,162
            )Permanent
      differences
            
            
            (1,478,621
            )
            
            
            437,162Net
      operating loss
            
            
            —
            
            
            
            —Net
      foreign income tax (benefit)
            
            
            —
            
            
            
            —Total
      Income tax (benefit )
            
            $
            —
            
            
            $
            —





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 5.)





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.





On
February 19, 2008, the Company entered into a formal debt conversion and
Registration Rights Agreement with a former investor of the Company. The debt
was in the amount of $50,536 and was for past services and obligations
attributable to the operations of the Company and its California subsidiaries.
In exchange for the debt the Company issued 31,558 common shares of its capital
stock.





During
the three months ended December 31, 2007 the Company received $15,900 on the
exercise of 10,000 common stock purchase warrants.





On June
25, 2007, the Company completed a private offering of 5,600,000 shares of its
common stock, par value $.001 per share at a purchase price of $1.25 per share
(the “Shares”) and five year warrants to purchase 4,200,000 shares of common
stock, par value $.001 per share, at an exercise price of $1.55 per share (the
“Warrants”) to certain institutional and accredited investors, for an aggregate
purchase price of $7,000,000 (the “Offering”).





Under the
terms of the Offering, the Company has the right to redeem the Warrants for
$0.001 per Warrant Share covered by the Warrants if the Shares trade on the OTC
Electronic Bulletin Board or similar market above $5.25 per share for 20
consecutive trading days following the initial effective date of the
registration statement covering the resale of the Shares and Warrant Shares,
based upon the closing bid price for the Shares for each trading day (the
“Redemption Right”). Once the Redemption Right vests, the Company has the right,
but not the obligation, to redeem the Warrants for $0.001 per Warrant Share
covered by the Warrants upon 30 days written notice to the holders of the
Warrants.





Under the
terms of the Purchase Agreement and the Registration Rights Agreement, the
Company is required to prepare and file with the SEC a registration statement
covering the resale of the Shares and the Warrant Shares. The Company has agreed
to prepare and file a registration statement covering the resale no later than
30 days after the Closing (the “Filing Deadline”). In the event the Company is
unable to file a registration statement by the Filing Deadline or the
registration statement is not declared effective on or before 90 days from the
Closing (120 days from the Closing if the registration statement is reviewed by
the SEC) (“Effective Deadline”), then the Company will have to pay liquidated
damages equal to 1.5% of the aggregate amount invested by each investor for each
30-day period, or pro rata portion thereof, following the date by which such
registration statement should have been effective, until the registration
statement has been declared effective by the SEC. All payments must be made in
cash.




F-23





The
Placement Agent is entitled to a fee equal to ten percent (10%) of the gross
proceeds derived from the Offering, of which the Placement Agent may, at its
option, receive up to 2% of its 10% fee in securities issued in the Offering.
The Company has agreed to pay the Placement Agent 5% of the exercise price of
the Warrants promptly following the Company’s receipt thereof. In addition, the
Company agreed to reimburse the Placement Agent for its out-of-pocket expenses
related to the Offering, including an up-front payment of $25,000 to cover such
expenses, of which any unused amount will be netted against the Placement
Agent’s 10% fee.





The Units
were offered and sold by the Company to accredited investors in reliance on
Section 506 of Regulation D of the Securities Act of 1933, as
amended.





20.
            EQUITY COMPENSATION
      PLANS





As of
March 31, 2009, the Company had three equity compensation plans approved by its
stockholders (1) the 2001 Incentive and Non-statutory Stock Option Plan (the
“2001 Plan”), (2) the 2004 Incentive and Non-statutory Stock Option Plan (the
“2004 Plan”); and (3) the 2007 Equity Incentive Plan (the “2007 Plan”). The
Company’s stockholders approved the 2001 Plan reserving 250,000 shares of common
stock of the Company pursuant to an Information Statement on Schedule 14C filed
with the Commission on August 15, 2001. In addition, the Company’s stockholders
approved the 2004 Plan reserving 800,000 shares of common stock of the Company
pursuant to an Information Statement on Schedule 14C filed with the Commission
on May 9, 2005.  Finally, the Company’s stockholders approved the 2007
Plan reserving 1,000,000 shares of common stock of the Company pursuant to a
Definitive Proxy Statement on Schedule 14A filed with the Commission on October
2, 2007.





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, 2009 with respect
to all compensation plans (including individual compensation arrangements) under
which equity securities are authorized for issuance.




Plan
      Category
            
            Number
      of securities to be
              issued
      upon
              exercise
      of
              of
      outstanding
              options,
      warrants
              and
      right
            
            
            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
            
            
            447,298
            
            
            $
            1.64
            
            
            
            NATotal
            
            
            2,365,464
            
            
            $
            1.24
            
            
            
            131,834




On March
19, 2009, the Company granted to its directors, officers and employees 965,000
ten year options to purchase the Company’s common stock at an exercise price of
$0.50, the market value of the Company’s stock on the date of grant. A total of
645,000 of the options were granted to officers and directors and were fully
vested upon issue and the balance of the options vest over three years. The
value of the foregoing option grants based upon the Black-Scholes option pricing
model utilizing a market price on the date of grant of $0.50 per share, an
annualized volatility of 141%, a risk free interest rate of 2.17% and an
expected life of ten years is $0.39 per option granted, for a total value of
approximately $471,342.




F-24





On
December 23, 2005, the Company granted to its Chief Financial Officer 75,000 ten
year options to purchase the Company’s common stock at an exercise price of
$2.46, the market value of the Company’s stock on the date of grant. The options
were fully vested upon issue. The value of the foregoing option grants based
upon the Black-Scholes option pricing model utilizing a market price on the date
of grant of $2.46 per share, an annualized volatility of 155%, a risk free
interest rate of 4.5% and an expected life of eight years is $2.40 per option
granted, for a total value of approximately $180,000.





On
September 21, 2007 the Company granted to employees and directors a total of
570,000 options to purchase the Company’s common stock at a price of $1.75 per
share. These options will vest over the next 3 years and are exercisable for a
period of 10 years. The Company valued the foregoing options using the Black
Scholes option pricing model using the following assumptions: no dividend yield;
expected volatility rate of 115%; risk free interest rate of 4.75% and an
average life of 7 years resulting in a value of $1.47 per option granted. The
value of these options will be recognized on a straight-line basis over the next
three years and accordingly a value of $308,104 has been recorded in the year
ended March 31, 2009 (2008 - $160,916).





On August
17, 2007, pursuant to the terms of the Company’s 2004 Plan, the Company granted
to an employee 100,000 options to purchase the Company’s common stock at a price
of $1.50 per share. These options will vest over the next 3 years and are
exercisable for a period of 5 years. The Company valued the foregoing options
using the Black Scholes option pricing model using the following assumptions: no
dividend yield; expected volatility rate of 115%; risk free interest rate of
4.75% and an average life of 5 years resulting in a value of $1.24 per option
granted. The value of these options will be recognized on a straight-line basis
over the next three years and accordingly a value of $45,596 has been recorded
in the year ended March 31, 2009 (2008 - $28,780).





On
October 12, 2005, the Company entered into an Employment Agreement with an
individual to render full-time employment to the Company as for an initial term
of three (3) years whose duties include managing worldwide sales for the
Company. The agreement automatically renews for an additional one (1) year
period at the end of each then existing term, unless one party gives to the
other written notice to terminate. The agreement provides for an annual salary
of $275,000 and quarterly bonuses in the amount of $25,000, subject to certain
conditions. The agreement also granted 400,000 options under the Company’s 2004
Incentive and Non-statutory Stock Option Plan (the “Stock Plan”). The options
were priced at $4.00. The options vest one third each on the last day of the
first, second and third years of employment. These options have a term of eight
(8) years from the date of grant and are subject to other standard terms and
conditions under the Stock Plan and contain standard anti-dilution language and
a provision for cashless exercise. The value of the foregoing option grant based
upon the Black-Scholes option pricing model utilizing a market price on the date
of grant of $3.50 per share, an annualized volatility of 155%, a risk free
interest rate of 4.5% and an expected life of eight years is $3.41 per option
granted, for a total value of approximately $1,364,490.





A summary
of the option activity for the years ended March 31, 2009 and 2008 pursuant to
the terms of the plans is as follows:





2001
      Plan
            
            
            2004
      Plan
            
            
            2007
      Plan
            
            
            OtherOutstanding
              Options
            
            
            Weighted
              Average
              Exercise
      Price
            
            
            Outstanding
              Options
            
            
            Weighted
              Average
              Exercise
      Price
            
            
            Outstanding
              Options
            
            
            Weighted
              Average
              Exercise
      Price
            
            
            Outstanding
              Options
            
            
            Weighted
              Average
              Exercise
      Price$
            
            
            
            
            
            $
            
            
            
            
            
            $
            
            
            
            
            
            $Options
      outstanding, March 31, 2007
            
            
            222,500
            
            
            
            1.29
            
            
            
            210,666
            
            
            
            3.19
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —Granted
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            520,000
            
            
            
            1.75
            
            
            
            150,000
            
            
            
            1.75Exercised
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —Cancelled
      or expired
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —Options
      outstanding, March 31, 2008
            
            
            222,500
            
            
            
            1.29
            
            
            
            210,666
            
            
            
            3.19
            
            
            
            520,000
            
            
            
            1.75
            
            
            
            150,000
            
            
            
            1.75Granted
            
            
            27,500
            
            
            
            0.50
            
            
            
            457,500
            
            
            
            0.50
            
            
            
            480,000
            
            
            
            0.50
            
            
            
            —
            
            
            
            —Exercised
            
            
            
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —Cancelled
      or expired
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —Options
      outstanding, March 31, 2009
            
            
            250,000
            
            
            
            1.29
            
            
            
            668,166
            
            
            
            0.89
            
            
            
            1,000,000
            
            
            
            1.15
            
            
            
            150,000
            
            
            
            1.75Options
      exercisable March 31, 2009
            
            
            222,500
            
            
            
            1.29
            
            
            
            455,666
            
            
            
            1.65
            
            
            
            706,666
            
            
            
            1.04
            
            
            
            100,000
            
            
            
            1.75Exercise
      price range
            
            $
            0.50 - $2.39
            
            
            
            
            
            
            $
            0.50 -
$4.00
            
            
            
            
            
            
            $
            0.50 - $1.75
            
            
            
            
            
            
            $
            1.75Weighted
      average remaining life
            
            4.0 years
            
            
            
            
            
            
            5.43 years
            
            
            
            
            
            
            9.20 years
            
            
            
            
            
            
            8.72 years




F-25




During
the year ended March 31, 2009 the Company granted 965,000 employee stock options
which were valued at $471,342 based upon the Black-scholes option pricing model
utilizing a market price on the date of grant of $0.50 per share, an annualized
volatility of 141%, a risk free interest rate of 2.17% and an expected life of
ten years.  A total of 845,000 of these options were granted to
officers and directors and vest as follows: 645,000 immediately and 120,000 over
three years.  The balance of 120,000 options vest over three
years.  The value of all options is recognized over their vesting
period.





During
the year ended March 31, 2008 the Company granted 670,000 employee stock options
which were valued at $958,667 based upon the Black-scholes option pricing model
utilizing a market price on the date of grant of $1.50 - $1.65 per share, an
annualized volatility of 115%, a risk free interest rate of 4.75% and an
expected life of 7 years.  A total of 300,000 of these options were
granted to officers and directors and vested as follows: 200,000 immediately and
100,000 over three years.  The balance of 370,000 options vest over
three years.  The value of all options is recognized over their
vesting period.





For the
year ended March 31, 2009, the Company recognized $670,455 (2008 — $189,696) in
compensation expense in the consolidated statement of operations





21.
            COMMON STOCK WARRANTS AND OTHER
      OPTIONS




As of
March 31, 2009, the Company has warrants to purchase the Company’s common stock
outstanding that were not granted under shareholder approved equity compensation
plans as follows:





Outstanding
              Warrants
            
            
            Weighted
              Average
      Exercise
              PriceWarrants
      and options outstanding, March 31, 2007
            
            
            3,105,651
            
            
            $
            1.72Granted
            
            
            4,200,000
            
            
            
            1.55Exercised
            
            
            (10,000
            )
            
            
            1.59Cancelled
      or expired
            
            
            (35,725
            )
            
            
            —Warrants
      exercisable March 31, 2008
            
            
            7,259,926
            
            
            
            1.67Granted
            
            
            3,378,379
            
            
            
            1.48Exercised
            
            
            —
            
            
            
            —Cancelled
      or expired
            
            
            —
            
            
            
            —Warrants
      exercisable March 31, 2009
            
            
            10,638,305
            
            
            $
            1.58Exercise
      price range
            
            $
            1.48 to $3.00Weighted
      average remaining life
            
            3.29
      Years








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.




F-26




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. 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, 2009
            
            
            March
      31, 2008U.S.
      sales
            
            $
            8,362,058
            
            
            $
            1,598,046Foreign
      sales
            
            
            6,277,483
            
            
            
            5,884,215$
            14,639,541
            
            
            $
            7,482,261





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 ($9,594 per month at March
31, 2009). The minimum aggregate rent to be paid over the remaining lease term
based upon the conversion rate for the € at March 31, 2009 is
$201,475.





The
Company leases a smaller office facility of 2,045 square feet  in
Gent, Belgium to support the sales and marketing  division of our
veneer business, from an unrelated party pursuant to a nine year lease
commencing September 1, 2008 at a base rent of €2,527 per month ($3,336 per
month at March 31, 2009). The minimum aggregate rent to be paid over the
remaining lease term based upon the conversion rate for the € at March 31, 2009
is $337,051.





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,
2009:





March
      31, 2010
            
            $
            288,245March
      31, 2011
            
            
            250,953March
      31, 2012
            
            
            70,780March
      31, 2013
            
            
            40,046March
      31, 2014
            
            
            40,046After
      five years
            
            
            150,171Total:
            
            $
            840,241





Factoring
Agreement





On April
24, 2008, the Company entered into a Factoring Agreement (“Agreement”) with
First Community Financial, a division of Pacific Western Bank (“First
Community”) whereby First Community may purchase, from time to time, on a
limited recourse basis such of the Company’s accounts now existing or hereafter
created and arising out of the sale of goods or service by the Company. The
factoring credit facility limit is $1,000,000 and amounts factored are subject
to an interest rate of prime plus 2%. Security for the factoring credit facility
is a first charge over all the assets of the Company. The Agreement shall remain
in effect until October 16, 2008 and may be renewed for successive nine month
periods.  At October 16, 2008 the Company decided not to renew the
Factoring Agreement.





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.




F-27