UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
REMEDENT USA, INC.
(Name of Small Business Issuer in its charter)
Nevada 86-0837251
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1220 Birch Way
Escondido, California, 92027
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (760)781-3333
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be registered each class of stock is to be registered
Common Stock, par value $.001 per share OTC:BB Symbol: REMM
Securities to be registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
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TABLE OF CONTENTS
PART I Page
ITEM 1. Description of Business ........................................ 3
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations............................. 10
ITEM 3. Description of Properties....................................... 21
ITEM 4. Security Ownership of Certain Beneficial Owners
and Management ................................................. 23
ITEM 5. Directors, Executive Officers, Promoters and
Control Persons ................................................ 24
ITEM 6. Executive Compensation.......................................... 31
ITEM 7. Certain Relationships and Related Transactions.................. 32
ITEM 8. Description of Securities....................................... 33
PART II
ITEM 1. Market Price of and Dividends on the Registrant's
Common Equity and Other Shareholder Matters..................... 34
ITEM 2. Legal Proceedings............................................... 37
ITEM 3. Changes in and Disagreements with Accountants................... 37
ITEM 4. Recent Sales of Unregistered Securities......................... 37
ITEM 5. Indemnification of Directors and Officers ...................... 38
PART F/S ................................................................ 39
PART III
ITEM 1 Index to Exhibits............................................... 71
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FORWARD LOOKING STATEMENTS
IN ADDITION TO HISTORICAL INFORMATION, THIS FORM 10-SB CONTAINS CERTAIN
FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995, AND THE COMPANY DESIRES TO FALL WITHIN THE "SAFE
HARBOR" PROVISIONS THEREOF. THIS STATEMENT IS INCLUDED HEREIN FOR THE EXPRESS
PURPOSE OF AVAILING THE COMPANY OF THE PROTECTIONS OF SUCH SAFE HARBOR WITH
RESPECT TO ALL OF THE FORWARD-LOOKING STATEMENTS CONTAINED HEREIN. SUCH
FORWARD-LOOKING STATEMENTS REFLECT THE CURRENT VIEWS OF THE COMPANY AND ITS
MANAGEMENT WITH RESPECT TO FUTURE EVENTS AND FINANCIAL PERFORMANCE, AND ARE
SUBJECT TO CERTAIN RISKS AND UNCERTAINTIES, WHICH COULD CAUSE ACTUAL RESULTS TO
DIFFER SUBSTANTIALLY FROM HISTORICAL RESULTS OR ANTICIPATED RESULTS. THE WORDS
"ANTICIPATES," "BELIEVES," "EXPECTS," "INTENDS," "FUTURE," "PROJECTED," "PLANS,"
"PLANNED," "OBJECTIVE" AND SIMILAR EXPRESSIONS IDENTIFY FORWARD-LOOKING
STATEMENTS. READERS ARE CAUTIONED TO CONSIDER SPECIFIC RISK FACTORS DESCRIBED
HEREIN AND NOT TO PLACE UNDUE RELIANCE ON THE FORWARD-LOOKING STATEMENTS
CONTAINED HEREIN, WHICH ARE APPLICABLE ONLY AS OF THE DATE HEREOF. THE COMPANY
UNDERTAKES NO OBLIGATION TO PUBLICLY REVISE THESE FORWARD-LOOKING STATEMENTS TO
REFLECT EVENTS OR CIRCUMSTANCES THAT MAY ARISE AFTER THE DATE HEREOF.
PART I
ITEM 1. DESCRIPTION OF BUSINESS
(a) BUSINESS DEVELOPMENT
(1) Form and Year of Organization
-----------------------------
Remedent USA, Inc. (the Company) was incorporated under the laws of
Arizona in September 1996 for development and marketing of a new single-handle
toothbrush, gumbrush and tongue cleaner that would significantly improve oral
care at an affordable price. The Company has begun marketing the Remedent
Toothbrush in a limited number of markets.
Since its inception the Company, nor its successor has been a party to
any bankruptcy, receivership or similar proceeding.
(2) Stock Exchange Agreement
------------------------
On October 2, 1998, the Company entered into a stock exchange ("Stock
Exchange Agreement") with Resort World Enterprises, Inc., a Nevada corporation
("RWE"), whereby all of the issued and outstanding shares of common stock of the
Company were exchanged for approximately 79% of the issued and outstanding
shares of common stock of RWE. RWE was a "public company" whose stock is traded
on the over-the-counter bulletin board ("OTC") market. Under the terms of the
Stock Exchange Agreement, the Company became a wholly owned subsidiary of RWE.
The Stock Exchange Agreement further required: (i) that all of the officers and
directors of RWE resign and that the officers and directors of Company prior to
the merger be appointed as the officers and directors of surviving company; and
(ii) that the name of the RWE be changed to Remedent USA, Inc. Consequently, the
parent company is now known as Remedent USA, Inc. and all business is conducted
through the parent company.
This Disclosure Statement is being filed for the purpose of allowing
Remedent USA, Inc., to maintain its listing on the Over-The-Counter Bulletin
Market exchange.
(b) BUSINESS OF THE ISSUER
(1) Principal Products or Services and their Markets
------------------------------------------------
The Company's primary product is the Remedent Toothbrush. This
combination toothbrush, gumbrush and tongue cleaner are considered by the
Company to be unique. The Remedent Toothbrush consists of a twin-headed brush at
one end and a toothbrush with an underside tongue cleaner at the other. Its
price point is within the premium toothbrush segment. The triple action of
Remedent Toothbrush targets the gums, teeth and tongue, improving the odds for
better overall oral hygiene.
The Company considers the toothbrush portion of the Remedent Toothbrush
to be equal to or better than other high premium toothbrushes. The Company
incorporated the best features of all other high quality brushes into the
toothbrush. The comfortable wide design provides a greater number of tufts for
more effective plaque removal in less time. This toothbrush has three
applications:
1. To clean facial teeth and chewing surfaces (used like a regular
toothbrush).
2. To loosen gum plaque by brushing.
3. The tongue scraper used to scrape loosened plaque from the tongue.
Plaque continuously builds up on the tongue. The Remedent Toothbrush
helps to loosen and pull away this plaque for a fresher breath and eliminates
the plaque from returning to the teeth. Several tongue cleaners have recently
been introduced in the marketplace. In most drug stores, as many as four tongue
cleaners are available ranging in price from $2.99 to $30.00 each. The Company
believes that Remedent Toothbrush has an equivalent tongue cleaner built right
into the underside of the toothbrush end of the handle. Moreover, Remedent
Toothbrush's tongue cleaner has one great advantage over all other tongue
cleaners -- plaque can be removed from the tongue faster, easier, and more
effectively if the tongue is brushed before the tongue cleaner is used. Only
Remedent Toothbrush has a brush along with the tongue cleaner.
The gum brush portion of the Remedent Toothbrush consists of twin
brushes that face each other. The bristle configuration of the twin headed
gumbrush ensures the user of a thorough cleaning. It automatically and
simultaneously brushes teeth and gums inside and outside, with easy access to
back teeth, where gums have the highest incidence of gum disease. The Remedent
Toothbrush uses real nylon bristles in its gumbrush. This assures that the
gumbrush is absolutely safe and comfortable to use due to the gentle massage it
delivers.
The Company believes that consumers of the Remedent Toothbrush receive
exceptional value because they are purchasing a toothbrush, a gum brush and a
tongue cleaner for the price of a premium toothbrush.
(2) Distribution Methods:
--------------------
The products are sold via retail, mass merchandisers, drug store
distribution and food and drug wholesalers. We also sell to dental
professionals, wholesale distributors, multi-level marketing companies and
private individuals. Our current primary distributors and their correlating
percentage of market share from April 1, 1999 until to the present date consists
of CVS with 47% of the sales, Consolidated Stores, 10%; Bergan Brunswig Drug
Company, 9%; Nutrition For Life, 6%; and McKesson Distributors with 4% of sales.
We currently sell to two Japanese companies; Trendy Corporation and Sun Dental
totaling 5% of sales. The remaining nineteen percent (19%) of the distributors
include numerous dentists and smaller retail companies such as Longs Drug Stores
on the West coast and Minyards Stores in Texas.
All products are shipped from Hong Kong to Long Beach and delivered to
a "bonded" warehouse (Charles Schayer) in Phoenix, Arizona (the "Warehouse").
The Warehouse stores the product until such time as the Company needs delivery.
The Company pays an import tax when the product is shipped. The compensation
paid to the Warehouse varies depending on the amount of the inventory stored at
the Warehouse. Current compensation averages $300 per month to Charles Schayer.
The Company leases approximately fifteen hundred (1,500) square feet of
office and warehouse space in Scottsdale, Arizona. When product is required,
Schayer ships to our warehouse in Scottsdale and order fulfillment is provided
by this facility. In September 1999, the Company entered into a lease agreement
with DEK Enterprises for the use of warehouse space in Phoenix, AZ., effective
January 1, 2000. This new facility is 3300 square feet with a base rent of
$2,064.60 per month. This should eliminate the need for additional warehousing
with Schayer.
(3) Status of any Publicly Announced or New Product or Service
----------------------------------------------------------
The Company is currently working on the development of eight (8)
additional products that fall within the oral hygiene category. Details
regarding future products cannot be set forth in this document to maintain
proprietary safeguard of the Company's new product development. The Company has
not secured patent protection for new products and must protect these products
as a trade secret.
(4) Competitive Business Conditions
-------------------------------
Currently, there are more than 200 competitors sharing the oral hygiene
market. Broader ranges of companies are active in the toothbrush category than
in other categories of the oral hygiene market. The top two marketers
responsible for 41% of toothbrush retail sales in 1996 relied on a single
expanded brand line: Colgate-Palmolive's Colgate (19%) and Gillette's Oral B
(22%). Johnson & Johnson (Reach) 15% and Procter & Gamble (Crest) 10% occupy the
middle echelon. SmithKline Beecham and its Aquafresh maintained 5%. Mentadent (a
product of the Unilever Group) has 6% of these segment sales. Private label
marketers are relatively strong in the toothbrush category. They reached a
combined share of 7% of toothbrush retail dollar sales. The Company operates in
the oral care industry in which leading marketers have done an outstanding job
of creating public awareness of the need for better gum care. Ironically, none
of them have offered consumers a viable product that effectively addresses gum
disease.
In the USA, only one company (Dentrust) has emerged with a brush that
offers a solution to gum disease. They launched the product in 1992 and within
four years captured a share of the high premium market. Unfortunately, the
product has numerous design flaws, outstanding among them the use of molded
bristles as opposed to the very soft bristles that are recommended by dental
professionals. This has hurt their ability to keep the consumers who acted upon
the impulse to try their product. This competitor is of virtually no threat to
Remedent Toothbrush, as evidenced by the fact that many stores are replacing the
competitor product with Remedent Toothbrush.
The primary advantage these competitors have over Remedent is capital
and the ability to make consumers aware of their products. Remedent plans to
raise $5 million in capital through a private placement. (See Change of Control-
page 24)
(5) Principal Suppliers
-------------------
The Company currently sources equipment and inventory from multiple
vendors, but there is no assurance that it will be able to continue. Although
multiple manufacturers currently produce or are developing equipment which the
Company believes will enable it to meet its current and anticipated operational
requirements, no assurance can be given that such equipment will always be
readily available on commercially reasonable terms. Further, the Company does
not manufacture, does not have the capability to manufacture, and does not
anticipate establishing the capacity to manufacture its products.
The Company's founders developed and built all of the tooling necessary
to produce Remedent Toothbrush. The tooling and production machinery has been
and is located at the Shummi-Asia production plant, located in Shen Zhen, China.
They have the capacity to assemble the entire requirement for packaged
individual toothbrushes.
Existing production tooling is capable of processing and packaging
35,000 Remedent Toothbrushes per day. This production plant acts as the
Company's major subcontractor. This subcontractor's current production capacity
is 1,000,000 units per month, with the ability to increase the productivity to
any level with a 3-month advance notification. There are approximately 15
additional subcontractors throughout the world that have the same production
capacity as the current subcontractor. The Company is working to establish
contingency manufacturing capacity in the event that there arises a problem with
the current subcontractor. Our tooling can be moved on very short notice to any
other subcontractor of our choosing. This would assure that any break in
production needs would be minimal. Contingency tooling is also in our control in
the case of any problem with the current subcontractor, and can be placed into
production in any country in the world upon relatively short notice
All raw materials for our product are of USA origin. Shummi-Asia orders
all raw materials directly from Eastman for the propionate used in the plastic
injection process of the handles. The bristles are made of Dupont Tynex and
ordered from Dupont. All product delivered from China is store ready. All
shipping and display units are from Tharco in Phoenix, AZ. All raw materials are
readily available and the Company does not anticipate any significant setbacks
in the event that Dupont or Eastman were to become unable to provide the raw
materials.
(6) Major Customers
---------------
The Company is not currently dependent on a small number of major
customers but depends upon a large customer base. The Company's major customer
are CVS Drug Stores (4400 stores), Fred Meyer (336), Longs Drug (350). As we
expand our distribution and implement the full marking plan, the number of major
customers will continue to grow.
(7) Intellectual Property
---------------------
The Company relies upon a combination of patents and patents pending,
proprietary technology and know-how, trademarks, confidentiality agreements and
other contractual covenants to establish and protect its technology and other
intellectual property rights. There can be no assurance the steps taken by the
Company to protect its intellectual property will be adequate to prevent
misappropriation of that intellectual property, or that the Company's
competitors will not independently develop products substantially equivalent or
superior to the Company's products. The Company believes its business as
currently conducted does not infringe upon the valid proprietary rights of
others, but there can be no assurance third parties will not assert infringement
claims against the Company and that, in the event of an unfavorable ruling on
any such claim, a license or similar agreement to utilize the technology relied
upon by the Company in the conduct of its business will be available to the
Company on reasonable terms, if at all. The loss of such rights (or the failure
by the Company to obtain similar licenses or agreements) could have a material
adverse effect on the Company's business, financial condition and results of
operations
Eight (8) United States Patents have been issued and one patent
application has been allowed and is expected to be issued for the Remedent
Toothbrush (collectively, the "Patents"). Patents issued:
Patent Number Date of Patent
------------- --------------
5,934,762 August 10, 1999
5,758,380 June 2, 1998
Des. 386,315 November 18, 1997
Des. 401,414 November 24, 1998
Des. 401,415 November 24, 1998
Des. 401,416 November 24, 1998
Des. 401,417 November 24, 1998
Des. 401,418 November 24, 1998
Japan 1024644 Date Unidentifiable (in Japanese)
Korea Number unknown at this time
Patents have also been granted in Korea and Japan. Other patents are
pending on a worldwide basis. The Company has also filed trademark applications
on the names "Remedent" and "Remedent Jr." (Collectively, the "Trademarks"). On
November 1, 1999, Trademarks were applied for "The only toothbrush officially
endorsed by the tooth fairy" and "Three heads are definitely better than one".
The Patents, Patent Pending, and Trademarks are all intellectual property assets
of the Company.
While Jean Louis Vrignaud was the registered owner of the Patents and
Patents Pending, he has assigned the Patents and Patents Pending to the Company
and such assignment have been filed with the United States Patent and Trademark
Office. The Patents and Patents Pending were assigned to the Company pursuant to
the terms of the Marketing Agreement. The Company is obligated to pay to Mr.
Vrignaud a royalty equal to four and one-half percent (4 1/2%) of the Company's
sales based upon the wholesale price. Total royalties payable under the Royalty
Agreement is limited to a maximum of $2,000,000.
(8) Governmental Approval
---------------------
The Company has approval from the FDA under Owner/Operator Information
Number 9028776 and Registered Establishment Information Number 2030888 and the
Establishment Type is Initial Distribution and Specification Developer. This
annual registration of device establishment with the Department of Health and
Human Services, Public Health Service will expire 12-31-2001.
(9) Probable Governmental Regulation
--------------------------------
The Company does not anticipate any further requirements or any future
government regulations concerning our product.
(10) Research and Development
------------------------
R & D costs have been minimal. For our first three fiscal years the
Company spent a total of $6,186. Because the patented design of the Remedent
Toothbrush was developed under the direction of Mr. Vrignaud, the Company has
not incurred substantial research and development costs for its current product
due to Mr. Vrignaud's efforts. Therefore, no R & D costs at this time have been
passed onto the customers. The Company, however, has established a R & D team
that will work along with outside consultants to develop and adopt new products,
whereupon the Company anticipates that it will allocate three percent (3%) of
its gross revenues to research and development. From April 1, 1999 to December
31, 1999, the Company has spent approximately $83,238 on research and
development.
(11) Costs and Effects of Compliance with Environmental Laws
-------------------------------------------------------
The Company anticipates that it will have no material costs associated
with compliance with either federal, state or local environmental law because
such regulations are inapplicable to our products and their manufacturing.
(12) Employees
---------
The Company is a development stage company and currently has four
employees in addition to executive officers who are compensated for their time
contributed to the Company. At such time as the Company enters into active
contracts with additional joint ventures, the number of employees is expected to
increase to at least 6 full-time employees, as is the compensation of executive
officers. Management of the Company expects to use consultants, attorneys, and
accountants as necessary. The need for employees and their availability will be
addressed in connection with a decision whether or not to expand into various
markets.
The Company is therefore dependent on the efforts and abilities of its
senior management. Senior management is composed of Ms. Rebecca Inzunza,
President, Chief Executive Officer, and Director; Robert E. Hegemann, Treasurer,
Director and Senior Vice President, and Stephen J. Grassbaugh, Chief Financial
Officer, Kenneth J. Hegemann, Vice President, Research and Development. The loss
of any of these key employees could have a material adverse effect on the
business and prospects of the Company. The members of the Board of Directors of
the Company believe that all commercially reasonable efforts have been made to
minimize the risks attendant with the departure of any key personnel from the
service of the Company. There can be no assurance, however, that upon the
departure of any key personnel from the service of the Company that replacement
personnel will cause the Company to operate profitably. The Company currently
carries a life insurance policy for Kenneth Hegemann. Other than Mr. Hegemann's
policy, The company has no key man life insurance with respect to any of its
executive employees.
Currently the Company has not entered into employment agreements with
any executive officers or key employees. The Company anticipates that it will
negotiate employment contracts with executive officers and key personnel in the
near future.
(c) REPORTS TO SECURITY HOLDERS
---------------------------
Prior to filing this Form 10-SB, the Company has not been required to
deliver annual reports. We anticipate being deemed a reporting company 60 days
after the Company's filing of this Form 10-SB. To the extent that the Company is
required in the future to deliver annual reports to security holders through its
status as a reporting company, the Company intends to deliver annual reports.
Also, to the extent the Company is required in the future to deliver annual
reports by the rules or regulations of any exchange upon which the Company's
shares are traded, the Company intends to deliver annual reports. If the Company
is not required to deliver annual reports in the future for any reason, the
Company does not intend to go to the expense of producing and delivering such
reports. If the Company is required to deliver annual reports, they will contain
audited financial statements as required.
Prior to the filing of this Form 10-SB, the Company has not filed
reports with the Securities and Exchange Commission. Once the Company becomes a
reporting company, management anticipates that Forms 3, 4, 5, 10-KSB, 10-QSB,
8-K and Schedules 13D along with appropriate proxy materials will have to be
filed as they come due. If the Company issues additional shares, the Company may
file additional registration statements for those shares.
The public may read and copy materials contained in the Company's files
with the Securities and Exchange Commission at the Commission's Public Reference
Room at 450 Fifth Street, N.W., Washington, D.C. 20549. The public may obtain
information on the operation of the Public Reference Room by calling the
Commission at 1-800-SEC-0330. The Commission maintains an Internet site that
contains reports, proxy and information statements, and other information
regarding issuers that file electronically with the Commission. The Internet
address of the Commission's site is (http://www.sec.gov).
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Remedent USA, Inc. is a development stage company with a limited
operating history upon which an evaluation of the Company's prospects can be
made. The "Management's Discussion and Analysis of Financial Condition and
Results of Operations" included herein should be read in conjunction with the
financial statements and the related notes to each statement appearing elsewhere
in this Form 10-SB. In addition to historical information, the following
discussion and other parts of this Form 10-SB contains forward-looking
information that involves risks and uncertainties. The company's future could
differ materially from that discussed here. Factors that could cause or
contribute to such differences include, but are not specially limited to,
failure to satisfy performance obligations, timely product manufacturing,
changes in various markets the company serves, as well as the other risks
detailed in this section. The Company does not undertake to update the results
discussed herein as a result of changes in risks or operating results.
The Company has limited operating history upon which an evaluation of
the Company's prospects can be made. The Company has had only limited revenue
from its operations through March 31, 1999 and there can be no assurances as to
when the Company will commence generating substantial revenues, or that it will
be profitable once substantial revenues are generated. The Company's prospects
must be considered keeping in mind the risks, expenses, and difficulties
frequently encountered in the establishment of a new business in an ever
changing industry and the research, development, manufacture, commercialization,
distribution, procedures, and products and related technologies. There can be no
assurance that unanticipated technical or other problems will not occur which
would result in material delays in product commercialization or that the
Company's efforts will result in successful product commercialization. There can
be no assurance that the Company will be able to achieve profitable operations.
(a) PLAN OF OPERATION
(1) Overview.
---------
Our double-ended toothbrushes allow people to brush their teeth,
massage gums and clean the tongue in one easy effective session. In addition,
Remedent's gumbrush is the first brush designed specifically for the gums. In
the first quarter of 2000, Remedent intends to focus on expanding primarily into
the Pacific Northwest. This geographic area was decided based on management's
research in which management sought to select markets with high Infoscan indices
of toothbrush buyers and users, and implement, on an expanding regional basis,
an integrated marketing plan, which will focus on Remedent's new marketing
position and advertising program aimed at creating trial and consumer awareness.
In August of 1999, Remedent began developing the new packaging, which was
completed in October of 1999. The new marketing slogan, "Three heads are
definitely better than one", will position our product with a major point of
difference in comparison to our competitors; that it is the only complete oral
care system today.
Remedent USA, Inc. is a developmental stage company and has created
very little revenue thus far. As of December 31,1999, the Company had
accumulated a loss of approximately $1,569,530, an amount which accrued during
the development of the toothbrush and various packaging and test markets.
Remedent expects our operating losses to continue until the Company can
establish sufficient sales base and enter into sufficient retail markets to
cover the operating expenses.
(2) Reverse merger treatment.
------------------------
Remedent was incorporated in the state of Arizona on September 30,
1996, as Remedent USA, Inc. On October 2, 1998, Remedent USA completed a merger
with Resort Word Enterprises, a Nevada corporation. Resort World Enterprises was
the surviving entity in that transaction and, as part of the transaction Resort
World Enterprises changed their name to Remedent USA, Inc. At the time of the
merger, Remedent owned all of the intellectual property, currently in use. As a
result of the merger, the former shareholders of Resort World obtained all of
the issued and outstanding stock of Remedent USA in exchange for 9,666,120
shares (79%) of newly issued and restricted stock of Resort World Enterprises.
Accordingly, in conformance with generally accepted accounting principles, the
merger has been accounted for as a "reverse merger" and the accounting survivor
is Remedent USA, Inc. The audited financial statements for the fiscal year ended
March 31, 1999 are those of Remedent USA, Inc. This discussion will rely on the
proforma-audited financials for the year ended March 31, 1999.
Previously, Resort World Enterprises Inc. had signed a non-binding
Letter of Intent (LOI) with the public company of Dino Minichiello Fashions
Inc., (a public company trading on the OTC:BB as DMFI) detailing the stock
exchange (merger) process between the two companies. Resort World's management
hired its own consultants and attorneys to execute the required steps to merge
the two companies together prior to signing the actual agreements. Also, the
NASD permitted the trading to begin, using the new symbol and a few trades were
executed under the new symbol "RERT". However, the terms of LOI were not met by
Resort World and the negotiations were terminated. It was decided that although
the merger was terminated and shares were traded under the symbol RERT (even
though Dino Minichiello Fashions Inc., name and symbol had not officially
changed), that DMFI should change its name and symbol to Resort World
Enterprises Inc. and RERT. Therefore all corporate records pertaining to DMFI
applied to RERT.
(3) Financial Conditions
--------------------
During 1997, the Company expanded distribution of its products to
retail stores on a limited basis. For the fiscal year ending March 31, 1999, the
Company reported a Profit/Loss of ($554,965). The accumulated losses are a
result of product sales and marketing costs, new customer slotting fees,
operations, promotions, and selling expenses. To date, the Company has funded
product development, tooling and operations with internal and private funding.
Before the merger, dentists, owners and other private investors, for the
purchase of common stock, had injected a total of $1.2 million. Subsequent to
the merger, $200,000 was attained through a 504 private placement. In addition,
the company has one $50,000 loan with Union Bank and has begun seeking capital
through both a private placement memorandum and/or convertible debenture. The
Company is seeking to raise $5,000,000 through this private placement and plans
to expand the product nationally according to the marketing plan. Funding will
be used primarily for product placement fees, introductory allowances for new
stores, marketing, promotion and selling expenses, inventory, and R & D. The
Company reasonably believes that the net proceeds from this effort, assuming the
maximum amount is raised, plus cash generated from operations will be sufficient
to fund its operations through year four of its financial projection.
(4) Future Projections
------------------
After the phased national expansion plan is implemented on a regional
basis over a four-year period, the Company projects gaining a 10% - 15% share
the premium toothbrush category by mid 2004. The premium category accounts for
42% of what will reach $867 million dollar retails sales in the year 2001. The
Remedent Toothbrush & Gumbrush is sold via a number of marketing channels, the
most important being food, mass merchandisers and drug stores. A significant
element of the Company's marketing plan is the blueprint for reaching and
placing our product in retail stores. The Company has established a national
commissioned broker organization for this purpose. Within the broker
organization, individual brokers with well-established relationships with buyers
make the actual sales. The Remedent broker organization has access to 65,000+
stores in the United States that currently sell toothbrushes.
The Company's brokers are working aggressively toward placing REMEDENT
in a large number of stores as quickly as possible.
Externally, the toothbrush market is expanding and there is a demand
for more "high-tech" products. To take advantage of this demand, the Company is
planning an aggressive campaign of "awareness" aiming in three directions --
retailers, consumers, and dentists.
The volume projection for REMEDENT in its fourth year is 22.3 million
toothbrushes, which represents less than 1% of the current world market. The
Company also projects that its products will be selling in 65,000+ stores in the
USA by its fourth year, and in several foreign countries.
(5) Change of Accounting System
---------------------------
Accounting methods and systems have not been changed since inception.
The Company has thoroughly reviewed and revamped accounting procedures as of
August of 1998. From October of 1997 through last quarter of 1998, the
accounting firm had allocated various expenses incorrectly. As an example, a
portion of the Sales and Marketing expenditures for 1998 were included in Cost
of Goods Sold, thus, not reflecting the true sales and marketing expenses and
increasing the Cost of Goods Sold and decreasing the gross margin. All incorrect
entries have been taken into consideration for the finalizing of all financials
for this report.
Remedent has always and still operates in two states. The Company
headquarters in California controls the majority of the accounting functions,
while accounts receivable and inventory is managed from the warehouse in
Arizona. Using one system for both locations was expensive and difficult. At the
end of each month, totals for accounts receivable was entered through journal
entries into the California system for reconciling and financial totals. As of
November of 1998, we have merged both locations, which allows up to date
information and provides for easier management decision-making and analysis. As
of August of 1999, the Company feels that the accounting system is current and
correct and believes the existing accounting software is adequate for the next
two years before new software is mandatory.
(b) Analysis of Financial Condition and Results of Operations
(1) Results of Operations
---------------------
The following table summarizes the results of our operations for the
years ended March 31, 1997, 1998 and 1999 and for the interim periods of June
30, September 30, and ended December 31, 1999.
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Remedent USA, Inc.
Statement of
Operations
Three Months Six Months Nine Months Year Ended March 31,
Ended Ended Ended Audited Unaudited Unaudited
June 30, 1999 Sep 31, 1999 Dec 31, 1999 1999 1998 1997
<S> <C> <C> <C> <C> <C> <C>
Revenues 188,860 280,037 373,628 323,262 291,441 30,694
Cost of Goods Sold 77,384 105,537 146,690 110,240 171,286 144,653
Gross Margin 111,476 174,501 226,938 213,027 120,155 (113,959)
General & Administrative 116,021 299,432 528,533 555,563 225,599 52,186
Sales 44,221 107,513 226,485 248,846 103,671 24,224
Research and Development 10,131 28,711 44,396 0 2,873 3,313
Total Operating Expense 170,373 435,656 799,414 804,409 333,143 79,723
Operating Income/Loss (58,897) (261,155) (572,476) (591,382) (211,988) (193,684)
Interest Expense (1,694) (3,043) (4,872) 3,668 (3,054) (556)
Other Income (2,182) (2,121) (2,113) (4,709) (17,236) 0
Estimated Taxes 0 0 (1900) 0 0 0
Net Income (Loss) (62,774) (266,318) (581,361) (590,341) (232,277) (194,238)
Net Income (Loss Per ($0.005) ($0.02) ($0.05) ($0.47) ($0.59) ($1.45)
Share)
</TABLE>
Our expenses have exceeded our revenues for each fiscal period since
our inception. Remedent has generated $373,628 in revenue from product sales
during the last three quarters of 1999. The Company expects that its revenues
will increase as a result of our efforts to build a larger retail market during
the expansion phase beginning first quarter of 2000. The Company expects that as
it implements the business plan revenues will grow.
From period to period there have been fluctuations in revenues and
expenses. This is due to the fact that from 1997 to 1998 there was increased
retail distribution. From 1998 to 1999, revenues did not increase significantly
due to the marketing company's lack of an integrated marketing plan to support
the product with a retail distributor and their inability to saturate any given
market. All that was accomplished during these twelve months was a constant
replacement of one unsatisfied retail distributor with a new retail distributor.
The lack of increase in revenues from March of 1999 through December of 1999 was
due to a change in marketing companies. This was a slow transition due to the
prior marketing company's unwillingness to cooperate, the time required for the
new company to conduct an initial market research, and packaging improvements.
During this same time period, the main objective was to protect the existing
base business during this transition.
In light of the time Remedent USA, Inc has been in business and the
fact that neither Resort World Enterprises Inc. nor Dino Minichiello Fashions,
Inc. engaged in the type of business which Remedent USA participates, the
Company believes that comparisons with subsequent periods would neither be
particularly informative nor helpful. Furthermore, since Resort World had no
assets or liabilities prior to the merger, the total assets and liabilities of
the new Remedent USA, did not change. Based upon our recent financial statements
and the campaign to expand and implement an integrated marketing plan, the
Company feels it may be necessary to pursue bridge financing or a Private
Placement Memorandum (506) for the company's survival. Remedent is currently
investigating a $1 million dollar convertible debenture, which could fund the
company's ability to expand into the Pacific Northwest. With the PPM or bridge
financing, in addition to continuing revenues, the company could maintain
operations and expansion without doubt through the year 2000. The second year
expansion into the rest of the country would require additional funding of
approximately $4 million dollars. The Company believes the sales will continue
to increase once the new marketing begins distribution and as brand name
awareness for Remedent Tooth & Gumbrush grows and improves.
General and administrative costs for 1998 were $225,599and for 1999,
$555,563; an increase of $329,964. This reflects the increased personnel,
payroll tax, advertising, and accounting, as well as the hiring of an investor
relations company to create awareness for REMM stock and the implementation of
key person life insurance. As of December 31, 1999, general and administrative
costs totaled $528,533. These expenses included increased advertising, two new
investor relation firms, and the hiring of a CFO. Due to minimal sales in the
last three quarters of 1999 and increased expenses, the majority of financing
was derived from funds on a 504 private placement, a loan from Ms. Inzunza, and
a loan from Union Bank of Arizona, in addition to revenues received from sales
and deferring payments on accounts payable. Remedent expects sales to increase
by second quarter of 2000.
Sales and Marketing costs for 1998 were $103,671 and for 1999,
$226,485, an increase of $122,814. A portion of the Sales and Marketing
expenditures for 1998 were included in Cost of Goods Sold, thus, not reflecting
the true sales and marketing expenses. Because of this accounting error, our
Gross margin was decreased according to the financials. The increased portion of
the sales and marketing expenses for 1999 and all interim periods are due to
product sampling, traveling, salaries, discounts to retailers, outbound freight,
and the rectification of sales and marketing expenses
Research and Development expenses have increased due to new products
that the Company is developing. These costs reflect salaries and prototype
materials. The Company did not incur significant research and development costs
prior to May of 1999, since these costs were incurred prior to the acquisition
of the patents. The Company anticipates allocating three percent (3%) of sales
to research and development budget. The Company is currently working on the
development of eight additional products that fall in the oral hygiene category.
(2) Quarterly Trends
----------------
The Company does not anticipate significant "seasonal" changes in its
operation. The Company's product is a toothbrush people use on a daily basis for
oral hygiene and as such we predict that sales will generally remain unchanged
throughout the year. The Company projects that sales will increase gradually
throughout the year, as distribution increases and awareness of the product
grows. The Company believes that revenues will grow consistently over the next
five years. The Company believes that increases in its revenues should be
reasonably steady from quarter to quarter based on the fact that the initial
product development and packaging is completed and that Remedent currently
maintains fairly steady and identifiable growth and expenditure rates. Remedent
believes our revenues will come from product sales with retailers.
(3) Liquidity and Capital Resources
-------------------------------
Since its inception, the Company has funded its cash requirements
through issuance of common stock. The Company has used the funds from those
transactions to fund its operations, sales and marketing, advertising, general
and administrative expenses and general corporate expenses. In January of 1999,
Ms. Inzunza loaned the Company $50,000 at 7% interest which has been paid back
throughout the year, and as of December 31, 1999 the amount owed, including
interest, was $2,114. In December of 1998, Remedent received a loan from the
Bank of Arizona for $50,000 for a period of one year at 10%. Remedent is
currently applying to extend the loan, which is in default. The two potential
areas of capital could also come from a private placement memorandum and a
convertible debenture.
A summary of our audited balance sheet for year ended March 31, 1999
and unaudited balance sheets for years ending March 31, 1998 and March 1997 and
our interim statements for June 30, 1999, September 30, 1999 and December 31,
1999 are shown below.
<PAGE>
<TABLE>
<CAPTION>
Remedent USA. Inc.
Balance Sheets
Three Months Six Months Nine Months Year Ended March 31,
Ended Ended Ended Audited Unaudited Unaudited
June 30, 1999 Sep 31, 1999 Dec 31, 1999 1999 1998 1997
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Cash/Cash Equivalents 14,439 63,961 19,707 89,382 101,166 2,877
Current Assets 288,154 266,121 229,156 302,474 426,949 89,979
Total Assets 355,475 333,600 300,216 360,486 481,320 108,424
Current Liabilities 235,461 362,645 603,355 191,330 107,363 92,537
Total Liabilities 238,239 364,914 605,126 191,330 107,363 218,408
Total Stockholder Equity 117,236 (31,315) (304,910) 167,527 373,956 (109,984)
Total Liabilities &
Stockholder Equity 355,476 333,599 300,216 360,486 481,320 108,424
</TABLE>
Liabilities as of the end of fiscal year 1998 totaled $107,363 and
increased to $191,330 by the end of fiscal year 1999. This increase of $83,967
reflects the $50,000 from Union Bank of Arizona, accrued royalties, loan from
Ms. Inzunza,, and accrued expenses. Liabilities for the interim period beginning
April 1, 1999 and ending December of 1999 totaled $ 605,126 an increase of
$412,025 from year ending 1998. This is due to an increase in accounts payable
during the last quarter of 1999, for approximately $150,000 in expenses for the
development of new packaging. This also reflects an accrual of deferred payments
to our vendors, and accumulated salaries for officers. Remedent currently has no
material long-term debt. The Company does not have any gains or losses from
foreign currency transactions, nor does it have any unrealized gains or losses
from investments.
Our actual expenses and revenues could vary materially from the amounts
the Company anticipates or budgets, and such variations may affect financing
needed for our operations. Accordingly, there can be no assurances that the
Company will be able to obtain the capital that Remedent will require.
The Company currently estimates that it will initially require
$1,000,000 for the first year and $4,000,000 within the following year to fully
develop its products and services in accordance with its business plan. To the
extent that the Company will require the amounts necessary to fund its business
plan through the issuance of equity securities, the then-current shareholders
may experience dilution in the value per share of their equity securities. The
acquisition of funding through the issuance of debt could result in a
substantial portion of our cash flows from operations being dedicated to the
payment of principal and interest on that indebtedness, and could render the
Company vulnerable to competition or economic downturns.
(4) Risk Factors
------------
Development Stage Company. The Company is a development stage company
and has recently begun commercially marketing its products. The Company's
long-term viability, profitability and growth will depend upon successful
commercialization of its products. As a development-stage company, the Company
has no relevant operating history upon which an evaluation of its prospects can
be made. Such prospects must be considered in light of the risks, expenses and
difficulties frequently encountered in establishing a new product in the
evolving, highly competitive dental care industry, which is characterized by an
increasing number of market entrants, and intense competition. In addition,
significant challenges are often encountered in shifting from development to
commercialization of new products.
Need to Manage Expanding Operations and Key Employees. If the Company
is successful in achieving market acceptance of its products, it will be
required to expand its operations quickly, requiring the establishment of
technical operations, system administration, and sales and marketing in each
target market. This will likely result in new and increased responsibilities for
management and place significant strain on the Company's management, operating
and financial systems and other resources. To accommodate such growth and
compete effectively, the Company will be required to implement and improve
information systems, procedures and controls, and to expand, train, motivate and
manage its work force. The Company's future success will depend to a significant
extent on the ability of its current and future management personnel to operate
effectively. There can be no assurance the Company's personnel, systems,
procedures and controls will be adequate to support the Company's future
operations.
The Company is dependent on its ability to continue to attract and
retain qualified technical, managerial and marketing personnel. There is intense
competition for qualified personnel in the retail industry, and there can be no
assurance the Company will be able to continue to attract and retain the
qualified personnel necessary for the development of its business. Loss of the
services of (or the failure to recruit) qualified technical, managerial or
marketing personnel could have a material adverse effect on the Company's
business, financial condition and results of operations. See "Management."
Limited Intellectual Property Protection. The Company relies upon a
combination of patents and patents pending, proprietary technology and know-how,
trademarks, confidentiality agreements and other contractual covenants to
establish and protect its technology and other intellectual property rights.
There can be no assurance the steps taken by the Company to protect its
intellectual property will be adequate to prevent misappropriation of that
intellectual property, or that the Company's competitors will not independently
develop products substantially equivalent or superior to the Company's products.
The Company believes its business as currently conducted does not infringe upon
the valid proprietary rights of others, but there can be no assurance third
parties will not assert infringement claims against the Company and that, in the
event of an unfavorable ruling on any such claim, a license or similar agreement
to utilize the technology in question relied upon by the Company in the conduct
of its business will be available to the Company or reasonable terms, if at all.
The loss of such rights (or the failure by the Company to obtain similar
licenses or agreements) could have a material adverse effect on the Company's
business, financial condition and results of operations.
Potential Fluctuations in Quarterly Operating Results The Company's
quarterly operating results may fluctuate significantly in the future as a
result of a variety of factors, many of which may be outside the Company's
control. Factors that could affect the Company's quarterly operating results
include the timing of the development and launch of the Company's products in
the various target markets, the rate of acceptance of the Company's products,
the effectiveness of the Company's marketing and other operations and potential
competition from other entities operating in the dental care industry.
Additional factors that may affect the Company's quarterly operating results
generally include the amount and timing of capital expenditures and other costs
relating to the expansion of the Company's operations, the introduction of new
products by the Company or its competitors, price competition or pricing changes
in those services, technical difficulties, general economic conditions and
economic conditions specific to the Company's operations, changes in
governmental regulations or control and changes in the Company's management.
Uncertain Acceptance and Maintenance of Company Brand. The Company
believes that establishing and maintaining a brand identified with the Company's
products is critical to attracting and expanding its customer base. While the
Company is confident that its toothbrush and the name Remedent will provide an
excellent foundation for developing brand awareness, no assurance can be given
that such branding will be successful. Promotion of brand awareness among users
will depend, among other things, on the Company's success in its marketing
efforts and the usability of its products and services, none of which can be
assured.
Significant Control by Officers and Directors. Following this offering,
the Company's directors, executives and principal shareholders will beneficially
own approximately 31.28% of the outstanding Securities. While this amount does
not constitute a majority, if such persons act in concert, they will have
significant power to elect the Company's directors and, subject to certain
limitations, effect or preclude fundamental corporate transactions involving the
Company. See "Principal Shareholders" and "Description of Capital Shares."
Dependence on Single Retailing Concept; Limited Marketing Capability
and Experience. Since its inception, the Company has devoted its efforts almost
entirely to the development and marketing of its toothbrush and is currently
dependent exclusively on revenues, if any, to be generated therefrom. It is not
anticipated that the revenues generated by the sale of toothbrushes will result
in meaningful revenue for the Company until a successful retail and consumer
market for products is established. The failure of the toothbrushes to achieve
sustained commercial viability would have an immediate material adverse effect
on the Company. This will require substantial marketing efforts and the
expenditure of significant funds by the Company and its strategic marketing
partners, if any. There can be no assurance that the efforts of the Company or
its strategic partners will be successful or that the Company's toothbrush will
ever achieve acceptance of any level in the market. Moreover, the Company has
limited independent marketing capabilities and experience. See "Business."
Competition. Competition in the retail sale of toothbrushes is intense.
The Company expects significant competition with existing and new competitors.
See "Business -- Competition."
Uncertain History of RWE. The Company does not have a lot of
information about Resort World Enterprises, Inc., a Nevada corporation ("RWE")
prior to the share exchange that occurred in October 1998. As the successor
company to RWE, the Company may have inherited liability for securities law
violations committed by RWE. However, the Company is not aware of any such
violations.
(5) OTC Bulletin Board Eligibility Rule
-----------------------------------
In January of 1999, the SEC granted approval to the NASD OTC Bulletin
Board Eligibility Rule 6530 which requires a company listed on the OTC Bulletin
Board to be a reporting company and current in its reports filed with the SEC.
As a result of this rule change we have filed this registration statement in
order to become a fully reporting company and list our common stock on the OTC
Bulletin Board. The SEC reporting requirements will add additional expenses to
our operations, including the expense of filing this registration statement and
preparing annual and quarterly reports. If the SEC does not reach a position of
no comment with regard to this registration statement prior to March 2000, we
will lose our listing on the OTC Bulletin Board, which may have an adverse
impact upon the market for our common stock. We anticipate trading on the OTC
Bulletin Board soon after this registration statement is declared effective.
(6) Year 2000 Compliance
--------------------
The Company does not anticipate any problem in dealing with computer
entries in the year 2000 or thereafter, with any computers currently used at any
of its facilities. The Company has been working on a due diligence testing of
its year 2000 compliance. The year 2000 issue is grounded in that many computer
systems process transactions based on storing two digits for the year of a
transaction (for example, "96" for 1996), rather than a full four digits.
Systems that process year 2000 transactions with the year "00" may encounter
significant processing inaccuracies and even inoperability. Many companies will
incur significant costs to make the needed software changes.
The Company has completed a due diligence testing of its year 2000
compliance and has not found any problems to date. The testing included
information technology and non-information technology systems, as well as
inquiries to third parties with which the Company have material relationships
(vendors and customers), regarding their state of readiness. The cost of any
further year 2000 initiatives is not expected to be material to the Company's
results of operation or financial position.
The Company has identified major suppliers and other third party
vendors integral to the operations of the Company's business. The Company will
initiate communications with those suppliers and third party vendors to assess
their readiness to handle Year 2000 problems. However, the Company has no
control over and cannot predict the corrective actions of these third party
vendors and suppliers. The Company intends to arrange, to the extent available,
alternate supplier arrangements in the event that it considers a third party
vendor to have material Year 2000 issues. Although the Company expects that it
will be able to resolve any significant Year 2000 problems related to third
party products and services, there can be no assurance that it will be
successful in resolving any such problems. Any failure of these third party
vendors and suppliers to resolve Year 2000 problems with their systems in a
timely manner could have a material adverse effect on the Company's business,
financial condition, and results of operations.
The discussions of the Company's efforts relating to Year 2000
compliance are forward-looking statements. The Company's ability to achieve Year
2000 compliance and the associated level of incremental costs could be adversely
affected by, among other things, the availability and cost of programming and
testing resources, vendors' ability to modify proprietary software and other
unanticipated problems. The failure to correct a material Year 2000 problem
could result in an interruption of certain normal business activities or
operations. Such failures could materially affect the Company's results of
operations, liquidity and financial condition. Because of the general
uncertainty inherent in the Year 2000 problem, the Company is unable at this
time to determine those consequences.
ITEM 3. DESCRIPTION OF PROPERTIES
(a) PROPERTIES
Remedent currently leases 3,330 square feet of commercial warehouse and
office space in the Deer Valley Northwest Airpark Business Center in Phoenix,
Arizona, 85027. The building has a total of 25,000 square feet of office and
common space and serves as our warehouse and fulfillment center. Remedent pays a
base rent of $2,064.60 each month for our lease and an additional $ .05 per
square foot for 13.87% of the common area that the Company occupies, which
Remedent believes it is typical for similar premises in the area currently
available for lease. This lease is for a three-year term and will expire on
January 1, 2003. Remedent also leases 1,500 square feet of office space at 1220
Birch Way, Escondido, California. This single-family dwelling belongs to Ms.
Inzunza consisting of 4,400 square feet and acts as the Company's main
headquarters. Since January of 1998, Remedent has paid $300 per month directly
to Ms. Inzunza for this office space. As of January 1, 2000, the lease amount
was increased to $655. This lease is opened ended and the Company believes that
with funding in place Remedent will be able to move offices to a more
appropriate business center.
(b) INVESTMENT POLICIES
The Company currently does not have an investment policy. The Company
does not have investment policies with respect to real estate or real estate
interests, real estate mortgages, or securities.
(c) REAL ESTATE AND OPERATING DATA
(1) Materially Important Properties
-------------------------------
The Company does not own any real estate. All properties used
in conjunction with the business of the Company is leased. These properties are
leased solely for the purposes of conducting the business of the Company and are
not subleased to any party.
<PAGE>
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) Security Ownership of Certain Beneficial Owners and Management
The following table sets forth the shareholdings of those persons who
own more than five percent of the Company's common stock of the date hereof with
the number of outstanding shares at 12,433,780.
Shares
Beneficially Percent of
Title of Class Name/Address of Owner Owned Class
- ---------------- -------------------------------- ------------- ----------
Common Rebecca M. Inzunza (President/ 2,679,495 21.29%
(Restricted) CEO, Director)
1220 Birch Way
Escondido California, 92097
Common Robert E. Hegemann (SAP, 991,900 7.88%
(Restricted) Treasurer, Director)
6522 East Sharon Rd.
Scottsdale, AZ 85254
Common Jay W. Hegemann 743,925 5.91%
(Restricted) 748 Vinewood, Suite C&D
Escondido, CA 92029
Common Jean Louis Vrignaud 910,000 7.23%
(Restricted) 108 Rue Due Cherche Midi
Paris France 75006
Common All Officers and Directors and 5,325,320 42.8%
(Restricted) owners of more than 5%
(b) Security Ownership of Management
Shares
Beneficially Percent of
Title of Class Name/Address of Owner Owned Class
- ----------------- --------------------------------- ------------ ----------
Common Rebecca M. Inzunza (President/ 2,679,495 21.29%
(Restricted) CEO, Director)
1220 Birch Way
Escondido California, 92097
Common Robert E. Hegemann (SAP, 991,900 7.88%
(Restricted) Treasurer, Director)
6522 East Sharon Rd.
Scottsdale, AZ 85254
Common Edward E. Quincy, DDS (Director) 598,780 4.75%
(Restricted) 314 N. 14th Box 87
Newman Grove, NE 68758
Common Earl Moore (Director) 5,460 .04%
(Restricted)
Common William Robbins 82,737 .65%
(Restricted)
Common All Directors and Officers as a 4,358,372 34.61%
group
(1) All percentages are calculated based upon 12,433,780 shares of
common stock of Remedent USA issued and outstanding as of the date of filing
this Form 10-SB.
(c) Changes in Control
On November 15, 1999 the Company began an effort to raise capital
through a private placement of securities under the Securities Act of 1933, as
amended (the "1933 Act") and Rule 506 of Regulation D promulgated thereunder.
For the first traunch of the offering, the Company will issue new Common Shares
totaling 2,000,000, $0.001 par value per share, at $.75 per Share. This total
offering price of $1,500,000 will include one Warrant to buy one share of Common
Stock of the Company at $1.50 for each Common Share at $.75 purchased. While
this will not result in a change in control, the offering will reduce the
percentage of ownership of the officers, directors, beneficial shareholders and
all other shareholders in the company. This second traunch to fulfill the
remaining $3,500,000 required, will be consistent with the basic proposal of the
above offering , but differ in all prices according to stock market price at the
time of the offering.
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS
(a) Identity of Directors and Executive Officers
The Company's directors, executive officers and key employees, as of
December 1, 1999, and their respective ages and positions with the Company are
set forth below in tabular form. Biographical information on each person is set
forth following the tabular information. Except as set forth in the biographical
information below, there are no family relationships between or among any of the
Company's directors or executive officers:
Person Age Position
- ------------------------ ----- -----------------------------------------------
Rebecca M. Inzunza 43 President, CEO and Director
Robert E. Hegemann 31 Senior Vice President, Treasurer and Director
J. Stephen Grassbaugh 46 Chief Financial Officer
Kenneth J. Hegemann 51 Vice President, Research and Development
Viviana Sempertegui 30 Vice President, International Marketing,
Secretary
Norman N. Broadhurst 52 Chairman/CEO, Double Eagle Market Development
Co.
Paul E. Griffith 58 President/COO, Double Eagle Market Development
Co.
Jim Place 60 Vice President, Business Development
Randy Besel 57 Vice President, Director of Sales
Earl Moore, DDS,M.S.D., 63 Director
F.A.C.D., F.I.C.D.
Edward E. Quincy, DDS 51 Director
William Robbins 55 Director
(b) BUSINESS EXPERIENCE
(1) Officers:
--------
Rebecca M. Inzunza, President, CEO and Director -
Ms. Inzunza co-founded Remedent USA, Inc. in September 1996. She serves
as President and Chief Executive Officer. Under the direction of Ms. Inzunza,
the company specializes in development, manufacturing, and worldwide marketing
of oral hygiene related personal care products. Before launching this endeavor,
Ms. Inzunza was President and CEO of Curvex Corporation from 1990 to 1996. Under
the leadership of Ms. Inzunza, Curvex developed worldwide distribution for
personal care products including the Perfect Curves women's disposable shaver.
In a position prior to Curvex, she served as a department manager with Sears
Savings Bank with a budget of $500,000 per year to ensure computer networking
and compatibility bank wide. Ms. Inzunza is a member of the Phi Theta Kappa
Society and graduated from Mira Costa College with honors.
Robert E. Hegemann, Senior Vice President, Treasurer, Director -
Mr. Hegemann co-founded the company along with Ms. Inzunza and Mr.
Vrignaud in September of 1996. Prior to joining the company, Mr. Hegemann gained
extensive management experience as director of operations at Pro Care
Laboratories and Curvex Corporation from 1986 to 1996. He was also instrumental
in development of the Brushrite Automatic Toothbrush and other oral care
products during his tenure with Pro Care Laboratories and Curvex Corporation.
Mr. Hegemann studied Advertising at Northern Arizona University and
Organizational Communication at University of Nebraska.
J. Stephen Grassbaugh, Chief Financial Officer
Mr. Grassbaugh has over 20 years experience in finance and accounting
and concurrently serves as Chief Financial Officer for Double Eagle Holdings,
Inc. He served as corporate controller for Kerr Group, Inc., a NYSE
manufacturing company from 1979 until 1996 and continued employment until 1997
when Kerr was purchased by the Fremont Financial Group. Mr. Grassbaugh has a
bachelor's degree from Harvard University and an MBA in Finance and Accounting
from the University of California, Irvine.
Viviana Sempertegui, Vice President, International Marketing, Secretary
Mrs. Sempertegui's prior position was Project Manager at the Export
Small Business Development Center, under the direction of the Department of
Commerce from January 1995. Under her management, the center successfully opened
the services to the Hispanic Community and opened a new branch in cooperation
with the Chamber of Commerce and First State Bank. Viviana graduated from Pan
American School with a degree in Agriculture and California State Polytechnic
University, Pomona, earning a degree in Business Management. Viviana began her
employment with Remedent in March 1998.
(2) Directors:
----------
All Directors commenced their service in the capacity of a director on
December 1, 1998. As of December 1, 1999, the Company's board of directors is
comprised of 5 members, each of whom is elected for a term of one year.
Executive officers are chosen by, and serve at the discretion of, the board of
directors
Rebecca M. Inzunza, President, CEO and Director
See Officers section above.
Robert E. Hegemann, Senior Vice President, Treasurer, Director
See Officers section above.
William L. Robbins, Director
Mr. Robbins served as the Vice President of Sales for American Safety
Razor Co., the second largest Razor Company in the world and largest private
label razor manufacturing and Distribution Company in the world. At American
Safety Razor, Mr. Robbins maintained relations with major retailers in the
country such as Kroger, Safeway, Walgreen, Rite-Aid, CVS, Target and K-Mart. His
extensive experience in the health and beauty care industry started over thirty
five years ago and has included positions at Johnson & Johnson and Chesebrough
Pond. In addition, Mr. Robbins is a past Chairman of the Private Label
Manufacturers Association and currently is a member of the Board of Directors of
that Association.
Edward E. Quincy DDS, Director
Dr. Quincy is currently President of Tri-State Dental, P.C., a company
that he founded, which has twenty-one Dental offices in three states. He also
owns Dental Rental, LLC, a business that manages the rental of twelve
Dental-related buildings. Dr. Quincy previously served as President for Quality
Kare Dental, Crofton Dental Partnership, Henderson Family Dentistry and owned a
successful dental practice in Nebraska. Dr. Quincy graduated from Kearny State
College in 1970 with BS Degree from the University of Nebraska-College of
Dentistry in 1976 with a Doctor of Dental Surgery Degree.
Earl Moore, DDS, M.S.D., F.A.C.D., F.I.C.D., Director
Dr. Moore founded and has maintained a successful private dental
practice since 1959, specializing in Periodontology. Dr. Moore is a member of
the American Academy of Periodontology and the Southwest Society of
Periodontology. He is a member and has served as President of the Southwest
Society of Dental Medicine. Dr Moore is also a member and past President of the
Dallas County Dental Society. He is an active member of the Texas Dental
Association and the American Dental Association. Dr. Moore's extensive
experience and impressive credentials in the field of Periodontology complement
the eclectic talent of the Company's Board of Directors. Dr. Moore began to
voice strong endorsement for Remedent Toothbrush after testing the product on
his patients for 2 years, witnessing a marked improvement in gum tissue health
in as little as 60 days. Dr. Moore's national acclaim as a prominent
Periodontist coupled with his staunch endorsement of Remedent Toothbrush's
benefits lends strong credibility to the company. He is welcomed both as an
advisor, and as a professional spokesman.
(3) Board of Directors and Other Information
----------------------------------------
The Company's Articles of Incorporation provide for a Board of
Directors consisting of a minimum of 3 and a maximum of 11 directors. The Board
of Directors is currently comprised of five (5) board members. The Company is
currently seeking additional qualified individuals to serve on the Board of
Directors.
(4) Board of Directors Committees.
-----------------------------
The Board of Directors currently has no special committees. However,
the Company believes that it will add special committees in the near future.
(c) IDENTITY OF SIGNIFICANT EMPLOYEES
Name Age Position
------------------- ----- ------------------------------------------
Kenneth Hegemann 51 Vice President Research and Development
Kenneth J. Hegemann, Vice President, Research and Development
Mr. Hegemann currently has approximately 8 new products to add to the
Company's product line. He has developed numerous products, which have been in
use since 1971, and holds more than 20 US and foreign patents for products
ranging from irrigation system tools and personal care products. Mr. Hegemann
was the sole owner of Hegemann Research and Development since June 1986 to his
hiring in 1998 with Remedent USA. Products developed by Mr. Hegemann are now
sold in over 20 countries around the world. Mr. Hegemann graduated from Lier
Siegler School with a degree in Engineering Technology.
(d) SIGNIFICANT CONSULTANTS
(1) Advisory Board:
--------------
Ray Noel, M.D., Advisory Board Member
Dr. Noel has been appointed to direct the Chronic Nonmalignant Pain
Board, a division of Kaiser-Permanente that services the entire
Portland/Vancouver WA region with about 450,000 members. He is closely involved
with all studies conducted at Kaiser-Permanente Center for Health Research, a
world-class research facility. Dr. Noel has been serving for the last eight
years as a family physician and addiction specialist at Kaiser-Permanente
Washington. Prior to this, he served as Medical Director and Administrator at
Pomona Valley Community Hospital Alcohol/Drug Treatment Center, a new
state-of-the-art addiction treatment center. Under his Direction, the center
reached a peak income of $4 million. For 12 years, Dr. Noel served as Family
Physician at Kaiser-Permanente, Oregon Region. During this period, he directed a
4-year research project on Alcoholism Treatment, which led to establishing a
very successful Addiction Treatment Program. Dr. Noel served the US Navy in the
Medical Corps for seven years when he received Honorable discharge upon
resigning with the rank of Commander, USNR. Dr Noel graduated from Oklahoma
Baptist University in 1963 with a BS degree, and Wake Forest University in 1969
with a M.D. degree. He did a Medical/Pediatrics/Surgery Internship at St. Mary's
Long Beach Hospital. He is Board Certified with the American Board of Family
Practice and Certified in Addiction Medicine by the American Society of
Addiction Medicine.
(2) Outside Marketing Consultants:
-----------------------------
Double Eagle Market Develop Company
On March 10, 1999, the Company entered into any agreement with Double
Eagle Market Development Company. Double Eagle is to work on a consultant basis,
providing sales and marketing management services and to use their best efforts
to solicit wholesale orders from customers in their territory which includes the
United States of America and all U.S. military installations worldwide and
Canada. The customers in the territory include but are not limited to grocery,
club stores, mass merchandisers, convenience, liquor, health food, military,
drug, hardware and food service.
An initial consultant fee of $10,000 was paid and each month and Double
Eagle receives a minimum guarantee of $4000 which is offset partially or
entirely by the 6% fee commission earned on net invoiced wholesale orders placed
with the Company by Double Eagle. Double Eagle has hired outside brokers to
solicit and serve the customers in the territory in a manner to maximize the
Company `s sales and will compensated with 5% fee commission for all net
invoiced sales generated directly by their firm. The contract is automatically
extended for successive periods of 6 months and can be cancelled in writing no
later than 60 days prior to the end of any 6 month period.
Double Eagle specializes in developing marketing plans and strategic
business development plans to generate sales growth and product profitability.
The senior management team has a multi-year history of creating and developing
creative and effective business plans that strike at the heart of the business
opportunity. These plans have produced over 50 brands that generate over $5
billion in sales in today's consumer market. They are seasoned top managers with
operational expertise from leading Fortune 500 companies including Procter &
Gamble, Coca-Cola, Colgate, Hunt-Wesson, Del Monte, and Carnation.
Double Eagle has restructured the advertising program and has assumed
general management duties for sales and marketing. The current and most
important objective is protecting existing customer base. They have completed a
coordinated market expansion plan to build consumer awareness by creating trial.
In addition, we have modified all sales materials to focus on Remedent
Toothbrush's new market positioning. Double Eagle has partially restructured the
broker network to cover all market areas and establish field sales management
accountability.
Double Eagle has extensive experience in successfully launching oral
care products. Double Eagle spent 60 days reviewing the entire oral care
industry along with the existing market and has assisted in restructuring the
advertising program and have assumed general management duties for sales and
marketing.
One of Double Eagle Officers, Mr. Stephen Grassbaugh serves as
Remedent's Chief Financial Officer and concurrently serves as Chief Financial
Officer for Double Eagle Holdings, Inc.
(e) FAMILY RELATIONSHIPS
Kenneth Hegemann is the husband of Rebecca Inzunza. Robert Hegemann is
the son of Kenneth Hegemann.
(f) INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
None of the officers, directors, promoters or control persons of the
Company have been involved in the past five (5) years in any of the following:
(1) Any bankruptcy petition filed by or against any business of which
such person was a general partner or executive officer either at
the time of the bankruptcy or within two years prior to that time;
(2) Any conviction in a criminal proceedings or being subject to a
pending criminal proceeding (excluding traffic violations and
other minor offenses);
(3) Being subject to any order, judgment or decree, not subsequently
reversed, suspended or vacated, or any Court of competent
jurisdiction, permanently or temporarily enjoining, barring,
suspending or otherwise limiting his involvement in any type of
business, securities or banking activities; or
(4) Being found by a court of competent jurisdiction (in a civil
action), the Commission or the Commodity Futures Trading
Commission to have violated a federal or state securities laws or
commodities law, and the judgment has not been reversed,
suspended, or vacated.
<PAGE>
ITEM 6. EXECUTIVE COMPENSATION
The following table sets forth the compensation paid by the Company
since inception to its Chief Executive Officer and President and the next
highest paid executive officers. This information includes the dollar value of
base salaries and bonus awards if any. There was no other form of compensation
paid to such individuals.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term Compensation
Annual Compensation Awards Payouts
- ------------------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
- ------------------------------------------------------------------------------------------------------------------------------------
Name and Restricted Securities
Principle Other Annual Stock Underlying LTIP All Other
Position Salary Bonus Compensation Award(s) Options/SARs Payouts Compensation
Year ($) ($) ($) ($) (#) ($) ($)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CEO
Rebecca Inzunza* 1997 0 0 0 0 0 0 0
1998 67,000 0 0 0 0 0 0
1999 79,060 0 0 0 0 0 0
SVP - Operations
Robert Hegemann 1997 6,930 0 0 0 0 0 0
1998 39,028 1,683 0 0 0 0 0
1999 40,800 0 0 0 0 0 0
CFO Hired 4/1999
J. Stephen Grassbaugh** 1999 6,000 0 39,000 0 0 0 0
VP R & D Hired 9/1998
Kenneth J. Hegemann* 1998 30,366 0 0 0 0 0 0
1999 65,262 0 0 0 0 0 0
VP - International
Viviana Sempertegui 1999 26,216 4,663 0 0 0 0 0
</TABLE>
* Since May of 1999, no compensation has been paid to Ms. Inzunza or
Mr. Hegemann. Salaries for Ms. Inzunza and Mr. Hegemann will be deferred until
additional funding has been completed. The per month salary of Ms. Inzunza is
$6700 and of Mr. Hegemann is $5025 per month. Salaries for Ms. Inzunza, Mr.
Hegemann and Mr. Grassbaugh have been placed in a salary accrual general ledger
each month and will be paid when the Company can adequately do so. A bonus
amount of $4663 payable to Viviana Sempertegui for 1999 was also placed into the
officers accrual general ledger account. At the time of payment 10% interest
will be calculated on a compound basis on the amount due for each month for both
Ms. Inzunza and Mr. Hegemann.
** No salary has been paid to Mr. Grassbaugh since April 1999. Mr.
Grassbaugh's salary is $5,000 per month. Compensation from April 1999 through
September 1999 is payable in equivalent shares of the Company's common stock at
the average price per share for the month. For each month thereafter,
compensation is $2000 payable in cash and $3000 in equivalent shares at the
average price per share for the month.
(1) Director Compensation
---------------------
Directors currently do not receive any cash compensation for serving on
the Board of Directors, or for any other services rendered to the Company in
their capacity as director of the Company, but are reimbursed for expenses they
incur in connection with their attendance. The Company anticipates adopting a
director stock plan under which non-employee directors will be entitled to
receive stock options. The Company has not yet adopted a director's stock plan.
(2) Employment Agreements
---------------------
The Company has not entered into employment agreements with any
executive officers or key employees. The Company anticipates that it will
negotiate employment contracts with executive officers and key personnel in the
near future.
(3) Long Term Incentive or Option Plans
-----------------------------------
The Company currently does not have a long term incentive plan or any
option plan in place.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(a) Related Party Transactions
Remedent leases 1,500 square feet of office space at 1220 Birch Way,
Escondido, California. This single-family dwelling belongs to Ms. Inzunza
consisting of 4,400 square feet and acts as the Company's main headquarters.
Since January of 1998, Remedent has paid $300 per month directly to Ms. Inzunza
for this office space. As of January 1, 2000, the lease amount was increased to
$655. This lease is opened ended and the Company believes that with funding in
place Remedent will be able to move offices to a more appropriate business
center.
A total of $50,000 at seven percent interest was loaned to Remedent
USA, Inc., from Ms. Inzunza. As of December 31, 1999, Remedent owed a balance of
$ 2,114 on the original loan, which includes accrued interest.
As of May 3, 1998, Famcare, Inc. owed Remedent a total of $1300. The
amount increased since May of 1998 and Remedent is charging 5.5% interest on the
total amount due each month. As of December 31, 1999, Famcare owes a total of
$4,683 which includes accrued interest since May 1998. Kenneth Hegemann is an
employee of Remedent and owns 100% of Famcare, Inc.
On October 5, 1996, the Company entered into a royalty agreement with
Jean Louis Vrignaud under which Mr. Vrignaud is to receive a 4.5% royalty of the
net sales with a cap of $2 million dollars as compensation for the assignment of
all Remedent patents to the Company. No royalties have been paid and the balance
owed has been accruing in the Company's royalty general ledger and as of
December 31, 1999 the total due is $37,343.78.
Except for the Royalty Agreement, the Company has not entered into any
transactions involving its executive officers, directors, 5% stockholders and
immediate family members of those persons.
There is not a parent company which controls an interest in the
Company.
(b) Transactions with Promoters
On December 4, 1998, the Company entered into an agreement with
Continental Capital, 195 Wekiva Springs Road, Suite 200, Longwood, FL 32779. In
exchange for $25,000.00 and 150,000 shares of unrestricted common stock issued
in a single transaction on March 2, 1999 to Continental Capital under Section
3(b) of the Securities Act of 1933 and Rule 504 of Regulation D. Continental
Capital would purchase print media, purchase more aggressive direct marketing on
the Internet, sub-contract out to aggressive direct marketing on the Internet,
design/implement a minimum of banner ads on the Internet and produce and mail
50,000 mailers and use its best efforts to obtain exposure and further promote
the Company.
The Company entered into a six (6) month contract with In-Touch
Communications, 2990 Quebec Street, Suite 305, Vancouver, Canada V5T 4P7 on June
7, 1999. Under the terms of the contract, In-Touch is to provide increased
visibility and investor awareness through cost effective methods. In exchange,
the Company will pay expenses up to $500 per month and issue in a single
transaction 60,000 shares of restricted (for one year) common stock to In-Touch
provided for by Section 3(b) of the Securities Act of 1933 and Rule 504 of
Regulation D. As of December 1, 1999, a total of $929.12 has been paid.
On August 17, 1999, the Company entered into an agreement with Rubicon
GNK Partners, Inc., 4275 Executive Square, Suite 1100, La Jolla, CA 92037 for
the purpose of raising substantial investment funds and creating investor
awareness. As of December 1, 1999 we have paid $8,000.00. Should the entire
funding be placed with the Company, finder's fees and issuance of stock would be
executed.
ITEM 8...DESCRIPTION OF SECURITIES
As of September 30, 1999, the authorized capital of the Company
consists of 50,000,000 Common Shares, $0.001 par value. There are currently
12,433,780 Common Shares outstanding. As of September 30, 1999, there is
believed to be more than 400 shareholders of record.
(a) Common Shares
Subject to preferences that may be applicable to any then outstanding
Preferred Shares, holders of Common Shares are entitled to receive, ratably,
such dividends as may be declared by the Board of Directors out of funds legally
available therefore. In the event of a liquidation, dissolution or winding up of
the Company, holders of the Common Shares are entitled to share ratably in all
assets remaining after the payment of liabilities and the liquidation preference
of any then outstanding Preferred Shares. Holders of Common Shares have no
preemptive rights and no right to convert their Common Shares into any other
securities. There are no redemption or sinking fund provisions applicable to the
Common Shares. All outstanding Common Shares are, and all Common Shares to be
outstanding upon completion of the Offering will be, fully paid and
nonassessable. The holders of Common Shares are entitled to one vote for each
share held of record on all matters submitted to a vote of shareholders. The
Company has not paid, and does not intend to pay, cash dividends on the Common
Shares in the foreseeable future.
(b) Warrants
The Company has not issued any warrants to date.
(c) Debt and other Securities
The Company has not issued any outstanding debt securities. There is
currently no other issued and outstanding securities which require registration.
PART II.
ITEM 1 MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
(a) MARKET INFORMATION
The Company's securities are traded on the National Association of
Securities Dealers (NASD) over-the-counter Bulletin Board under the trading
symbol REMM. The quotations reflect inter-dealer prices, without retail mark-up,
markdown or commission and may not represent actual transactions. The Company
has approximately 400 common stock holders. The Company has paid no dividends on
its common stock for the past two fiscal years and does not expect to pay any
dividends for at least the next five fiscal years.
(1) Restricted Securities
---------------------
As of October 2, 1998, except for 1,895,530 free trading shares, all
shares issued by Remedent USA are "Restricted Securities" within the meaning of
Rule 144 under the Securities Act of 1933. Ordinarily, under Rule 144, a person
holding restricted shares for a period of one year may, every three months, sell
in ordinary brokerage transactions or in transactions directly with a market
maker an amount equal to the greater of one percent of Remedent's
then-outstanding Common Stock or the average weekly trading volume during the
four calendar weeks prior to such sale. Future sales of such shares could have
an adverse effect on the market price of the Common Stock. All of the holders of
the above mentioned "restricted securities" have voluntarily chosen to hold
shares for another year expiring October 2, 2000, in order to alleviate the
adverse effect in the early stages of the market exposure for the Common Shares
of Remedent. The high and low prices by quarter since the inception of trading
on October 2, 1998 are as follows.
<PAGE>
<TABLE>
<CAPTION>
Remedent USA Inc. OTC:BB REMM
1998 - 1999 - 2000 Bid Prices Ask Prices
- -------------------------------- -----------------------------------------------------------------------
High Low High Low
-----------------------------------------------------------------------
<S> <C> <C> <C> <C>
October 1 - October 31 3 1/2 2 15/16 3 1/2 3
November 1 - November 30 3 1/2 2 3/8 3 1/2 2 5/8
December 1 - December 31 3 2 11/16 3 1/4 2 11/16
January 1 - January 31 2 1/2 2 2 1/2 2
February 1 - February 28 2 1/8 1 7/8 2 1/8 1 15/16
March 1 - March 31 1 3/4 1/2 1 7/8 7/8
April 1- April 31 1 3/8 1 1 3/8 1
May 1 - May 31 1 1/4 3/4 1 1/4 1 1/16
June 1 - June 30 1 3/16 7/8 1 1/4 1 1/16
July 1 - July 31 1.29 13/16 1 7/16 13/16
August 1 - August 31 1 1/2 1 3/16 2 1.30
September 1 - September 30 2 5/16 1 3/8 2 1/2 1 1/2
October 1 - October 31 1 1/2 7/8 1 15/16 1 1/8
November 1 - November 30 1 1/4 5/8 1 1/2 1
December 1 - December 31 15/16 9/16 1 1/16 11/16
January 1 - January 7 7/8 7/8 7/8 7/8
Predecessor: Resort World Enterprise, Inc OTC:BB RERT
Bid Prices Ask Prices
-------------------------------------------------------------------------
1998 High Low High Low
-------------------------------------------------------------------------
June 1 - June 30 3 3 3 5/8 3 5/8
July 1 - July 31 2 5/8 2 5/8 3 1/2 3 1/2
August 1 - August 31 2 1/4 2 1/4 3 5/16 3 5/16
September 1 - September 30 2 7/16 2 7/16 3 3
Predecessor: Global Golf Holding, Inc. OTC:BB DMFI.
1997 - 1998 Bid Prices Ask Prices
--------------------------------------------------------------------------
High Low High Low
--------------------------------------------------------------------------
April 1- April 31 1/8 1/8 1/8 1/8
May 1 - May 31 1/8 1/8 1/8 1/8
June 1 - June 30 1/8 1/16 1/8 1/16
July 1 - July 31 1/16 1/16 1/16 1/16
August 1 - August 31 1/16 1/16 1/16 1/16
September 1 - September 30 1/16 1/16 1/16 1/16
October 1 - October 31 1/16 1/16 1/16 1/16
November 1 - November 30 .07 1/16 .07 1/16
December 1 - December 31 5 1/2 .06 5 3/4 1/8
January 1 - January 31 3 7/8 3 7/8 3 15/16 3 7/8
February 1 - February 28 3 3/4 3 3/4 3 3/4 3 3/4
March 1 - March 31 3 3/8 3 3/8 3 3/8 3 7/16
April 1- April 31 3 3/8 3 3/8 3 3/8 3 3/8
May 1 - May 31 3 3 3 3
June 1 - June 30 3 5/8 3 1/8 3 5/8 3 1/8
</TABLE>
<PAGE>
The above quotations are inter-dealer quotations, and the actual retail
transactions may involve dealer retail markups, markdowns or commissions for
market makers of Remedent USA stock. The prices are quoted on the then stock
outstanding and Remedent has not executed any mergers, exchanges, splits or
reverse splits. There can be no assurances that an active public market for the
Common Stock will be sustained. In addition, the shares of Common Stock are
subject to various governmental or regulatory body rules, which affect the
liquidity of the shares.
(b) HOLDERS
The number of record holders of the Company's securities as of the date
of this registration statement is approximately 384.
(c) DIVIDENDS
The Company has not declared any cash dividends with respect to its
common stock, and does not intend to declare dividends in the foreseeable
future. The future dividend policy of the Company cannot be ascertained with any
certainty, no such policy will be formulated. There are no material restrictions
limiting, or that are likely to limit, the Company's ability to pay dividends on
its securities.
The Securities and Exchange Commission has adopted rules that regulate
broker-dealer practices in connection with transactions in "penny stocks." Penny
stocks generally are equity securities with a price of less than $5.00 (other
than securities registered on certain national securities exchanges or quoted on
the NASDAQ system, provided that current price and volume information with
respect to transactions in such securities is provided by the exchange or
system). The penny stock rules require a broker-dealer, prior to a transaction
in a penny stock not otherwise exempt from those rules, deliver a standardized
risk disclosure document prepared by the Securities and Exchange Commission,
which specifies information about penny stocks and the nature and significance
of risks of the penny stock market. The broker-dealer also must provide the
customer with bid and offer quotations for the penny stock, the compensation of
the broker-dealer and its salesperson in the transaction, and monthly account
statements showing the market value of each penny stock held in the customer's
account. In addition, the penny stock rules require that prior to a transaction
in a penny stock not otherwise exempt from those rules the broker-dealer must
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. These disclosure requirements may have the effect of reducing
the trading activity in the secondary market for a stock that becomes subject to
the penny stock rules. The Company's Common Stock is subject to the penny stock
rules. Consequently, Company stockholders may find it more difficult to sell
their shares.
ITEM 2. LEGAL PROCEEDINGS
The Company is not a party to, and none of the Company's property is
subject to any pending or threatened legal, governmental, administrative or
judicial proceedings.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
As of November 9, 1999, the Company has retained the following
independent auditing firm to audit its financial statements:
Mr. David Smith
Siegel & Smith
2120 Jimmy Durante Blvd.
Del Mar, CA 92014
858-792-8606
No consultation was held with Seigel & Smith concerning the type of
opinion to be rendered, or written or oral advice. At the time of the retention
of this firm, no issues or views were discussed or mentioned. Based upon this,
no contact was initiated by the Company with the prior accountant. The prior
accountant was located in Encinitas, CA., but does not work with public
companies. For this reason, Management made the decision to retain a firm who
handles public companies. The prior accountant was Grice, Lund, and Tarkington.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
On March 2, 1999, the Company conducted an offering of unregistered
securities provided for by Section 3(b) of the Securities Act of 1933 and Rule
504 of Regulation D. In that offering, the Company issued 133,333 shares of
unrestricted common stock to 11 private investors in exchange for $200,000.
These proceeds were used for operating expenses. The table below details the
breakdown of shares and cash received.
<TABLE>
<CAPTION>
VESTING ADDRESS AMOUNT NO. SHARES
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Timothy J. Pieper 112 Holly Drive, Torrington, WY 82240 $30,000 20,000
Joan M. Pieper " $30,000 20,000
Jeffery D. Pieper " $10,000 6,667
Ann M. Pieper " $10,000 6,667
Brian A. Pieper " $10,000 6,667
Holly E. Pieper " $10,000 6,666
Luke E. & Pamela K. Lionberger 6019 Franklin Street, Lincoln, NE 68506 $3,000 2,000
Leon F. & Lois Grothe 565 Tompkins Drive, S. Sioux City, NE 68776 $10,000 6,666
Lee A. & Kayleen L. Dahl 401 Alma Box 97, Laurel, NE 68745 $9,000 6,000
Edward E. & Betty J. Quincy Box 87, Newman Grove, NE 68758 $75,750 50,500
Mark & Cynthia Lionberger 7521 South Downing Street, Littleton, CO 80122 $2,250 1,500
----------------------------------------
Totals $200,000 133,333
</TABLE>
On the above date, the Company offered and issued in a single
transaction 150,000 shares of restricted common stock to one entity, Continental
Capital provided for by Section 3(b) of the Securities Act of 1933 and Rule 504
of Regulation D.
As of December 2, 1999, the Company had a total of 12,433,780 issued
and outstanding shares of common stock, 10,538,250 restricted shares and
1,895,530free trading shares. As of November 2, 1999 there were a total of 384
stockholders.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under the terms of the Company's Bylaws, the Company has the power to
indemnify any person who was or is a party to any proceeding (other than an
action by, or in the right of, the corporation), by reason of the fact that he
is or was a director, officer, employee, or agent of the corporation or is or
was serving at the request of the corporation as a director, officer, employee,
or agent of another corporation, partnership, joint venture, trust, or other
enterprise against liability incurred in connection with such proceeding,
including any appeal thereof, if he acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
proceeding by judgment, order, settlement, or conviction or upon a plea of nolo
contendere or its equivalent does not, of itself, create a presumption that the
person did not act in good faith and in a manner, which he reasonably believed
to be in, or not opposed to, the best interests of the corporation or, with
respect to any criminal action or proceeding, had reasonable cause to believe
that his conduct was unlawful.
IN THE OPINION OF THE SECURITIES AND EXCHANGE COMMISSION,
INDEMNIFICATION FOR LIABILITIES ARISING PURSUANT TO THE SECURITIES ACT OF 1933
IS CONTRARY TO PUBLIC POLICY AND, THEREFORE, UNENFORCEABLE
<PAGE>
Remedent USA, Inc.
Financial Statements
March 31, 1999
(Audited)
INDEX TO FINANCIAL STATEMENTS
PAGE
----
Independent Auditors' Report F-1
Financial Statements:
Balance Sheet as of March 31, 1999 F-2
Statements of Income for the year ended March 31, 1999
and since inception F-3
Statements of Equity for the year ended March 31,
1999 and since inception F-4
Statements of Cash Flows for the year ended March 31, 1999
and since inception F-5
Notes to Financial Statements F-6 - F-11
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of
REMEDENT USA, INC.
We have audited the accompanying balance sheet of Remedent USA, Inc. (an Arizona
corporation) as of March 31, 1999, and the related statements of operations,
statements of changes in stockholders' equity and cash flows for the year ended
March 31, 1999. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit 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. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Remedent USA, Inc. as of March
31, 1999, and the results of its operations and its cash flows for the year
ended March 31, 1999, in conformity with generally accepted accounting
principles.
Del Mar, California
December 10, 1999
<PAGE>
REMEDENT USA, INC
(A Development State Company)
Balance Sheet
Marcy 31, 1999
ASSETS
Current Assets
Cash $ 89,382
Accounts receivable, net 35,374
Due from related parties 5,944
Inventory 171,136
Prepaid insurance 638
---------------------------------------------------------------------------
Total current assets 302,474
Property and Equipment, net 26,277
Other Assets
Deposits 1,180
Patents, net of accumulated amortization of $3,645 30,555
---------------------------------------------------------------------------
Total other assets 31,735
---------------------------------------------------------------------------
Total Assets $ 360,486
===========================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Note payable $ 50,000
Accounts payable 57,504
Accrued liabilities 36,186
Note payable-officer 22,202
Royalty payable-officer 23,792
Current portion capital lease 1,646
---------------------------------------------------------------------------
Total current liabilities 191,330
Capital Lease Obligation, net of current portion 1,629
Stockholders' Equity
Common stock 12,434
Additional paid in capital 1,187,332
Accumulated deficit - during development stage (1,032,239)
---------------------------------------------------------------------------
Total stockholders' equity 167,527
---------------------------------------------------------------------------
Total Liabilities and Stockholders' Equity $ 360,486
===========================================================================
The Accompanying Notes are an Integral Part of the Financial Statements
<PAGE>
REMEDENT USA, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
From Inception,
September 30,
For the Year 1999 Through
Ended March 31, 1999
March 31, 1999 (Unaudited)
-------------- --------------
NET SALES $323,267 $644,812
COST OF SALES 110,240 486,122
------- -------
GROSS PROFIT 213,027 158,690
------- -------
OPERATING EXPENSES
Sales and marketing 248,846 277,563
General and administrative 544,840 892,765
Depreciation and amortization 10,723 19,626
------ ------
TOTAL OPERATING EXPENSES 804,409 1,189,954
------- ---------
INCOME (LOSS) FROM OPERATIONS (591,382) (1,031,264)
--------- -----------
OTHER INCOME (EXPENSES)
Interest income 4,709 7,099
Interest expense (3,668) (7,274)
Other 0 0
- -
TOTAL OTHER INCOME (EXPENSES) 1,041 (175)
----- -----
INCOME BEFORE INCOME TAXES (590,341) (1,031,439)
Income tax benefit (expense) (Note G) 800 800
--- ---
NET INCOME $(591,141) $(1,032,239)
========== ============
LOSS PER SHARE (Note I) $(0.09) $(0.14)
======= =======
WEIGHTED AVERAGE SHARES OUTSTANDING 6,310,352 7,232,117
========= =========
The Accompanying Notes are an Integral Part of the Financial Statements
<PAGE>
<TABLE>
<CAPTION>
REMEDENT USA, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Common Stock
------------- Additional
Shares Paid-in Accumulated
(Note I) Amounts Capital Deficit Total
----------- ------- ---------- ------------ --------
<S> <C> <C> <C> <C> <C>
(Initial Balance, September 30,
1996 Capitalization) $440,603 $4,254 $ - $ - $4,254
Shares issued 2,273 25,000 - - 25,000
Net Loss - - - (193,418) (193,418)
----------- ------- ---------- ------------ --------
Balance, March 31, 1997 442,876 29,254 - (193,418) (164,164)
Shares issued 68,593 754,527 - - 754,527
Net Loss - - - (247,680) (247,680)
----------- ------- ---------- ------------ --------
Balance, March 31, 1998 511,469 783,781 - (441,098) 342,683
April-September 1998 39,150 215,985 - - 215,985
Merger-October 2, 1998 11,616,498 (987,599) 987,599 - -
Shares Issued March 1999 133,330 133 199,867 00 200,000
Net Loss for Year Ended
March 31, 1999 - - - (591,141) (591,141)
----------- ------- ---------- ------------ --------
Balance, March 31, 1999 $12,300,447 $12,300 $1,187,466 $(1,032,239) $167,527
=========== ======= ========== ============ ========
The Accompanying Notes are an Integral Part of the Financial Statements
</TABLE>
<PAGE>
REMEDENT USA, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
From Inception,
For the Year September 4,
Ended 1996 Through
March 31, 1999 March 31, 1999
-------------- ---------------
FLOWS FROM OPERATING ACTIVITIES $(1,032,239)
Net Loss $(59,141) $(1,032,239)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 10,723 19,626
Write off of organization costs 0 12,389
Changes in operating assets and liabilities:
Accounts receivable 10,706 (35,374)
Due from officer 98,146 (5,944)
Inventories (15,002) (86,029)
Prepaid expenses (194) (638)
Accounts payable 27,071 33,409
Accrued liabilities 13,882 36,186
Royalties payable 7,508 23,792
Accrued expenses (655) (1,180)
----- -------
NET CASH USED IN OPERATING ACTIVITIES (438,956) (1,036,002)
--------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of equipment (12,037) (30,825)
Patent costs (5,651) (34,199
------- -------
NET CASH USED BY INVESTING ACTIVITIES (17,688) (65,024)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Note payable (Note F) 50,000 15,021
Payments on capital lease obligations (1,645) (1,645)
Loans from officers 50,000 50,000
Repayments of loans to officers (27,798) (27,798)
Payments on notes (41,682) (41,682)
Sale of common stock 415,985 1,196,512
------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 444,860 1,190,408
NET INCREASE (DECREASE) IN CASH (11,784) 89,382
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 101,166 0
------- -
CASH AND CASH EQUIVALENTS, END OF YEAR $89,382 $89,382
======= =======
Supplemental Non Cash Investing and Financing Activities:
The Company acquired equipment with a $1,500 down payment and recorded
a lease obligation of $4,920 during the year ended March 31, 1999. At inception
the Company acquired $105,010 of inventory and other assets by assumption of
$100,756 of debt and issuing stock valued at $4,254.
Supplemental Information:
Interest paid $641 $4,247
Taxes paid $ - $ -
The Accompanying Notes are an Integral Part of the Financial Statements
<PAGE>
A. Organization and Summary of Significant Accounting Policies:
Organization and Nature of Operations
Remedent USA, Inc. (the "Company") is engaged in the distribution of a
product that combines a toothbrush, gum brush and tongue cleaner on one handle.
Credit sales are made to the Company's customers, primarily retail store chains,
who are located throughout the United States, as well as a minor amount of
international sales. The Company was incorporated on September 30, 1996 in the
state of Arizona, and has offices in Escondido, California and Scottsdale,
Arizona.
On October 2, 1998 the Company entered into a stock exchange with
Resort World Enterprises, Inc., a Nevada corporation ("RWE"), whereby all the
issued and outstanding shares of the Company was exchanged for approximately 79%
of the issued and outstanding shares of common stock of RWE. RWE was a public
company whose stock is traded on the over-the-counter bulletin board ("OTC")
market. The stock exchange agreement required: (i) that all officers and
directors of RWE resign and that the officers and directors of Remedent USA
,prior to the merger, be appointed as officers and directors of the surviving
company; and (ii) that the name of RWE be changed to Remedent USA, Inc.
The exchange was accounted for as a purchase, however RWE had no assets
or liabilities prior to the merger and therefore, the total assets and
liabilities of the new Remedent USA did not change. In exchange of the 550,619
of the former Remedent's outstanding shares the shareholders received stock of
the public company and Remedent USA, Inc. became a public company.
Basis of Accounting
The Company's financial statements have been prepared on the accrual
basis of accounting in conformity generally accepted accounting principles
applicable to a going concern. These principles contemplate the realization of
assets and liquidation of liabilities in the normal course of business. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management 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
reported amounts of revenues and expenses during the reporting periods. Actual
results could differ from those estimates. The financial statements do not
include any adjustments that might be necessary if the Company is unable to
continue as a going concern.
Cash and Cash Equivalents
The Company considers all highly liquid investments with maturities of
three months or less to be cash equivalents.
Accounts Receivable
The Company sells premium toothbrushes to various companies, primarily
to retail chains located throughout the United States. The terms of sale are 2%
10 days, net 30 days. Accounts receivable is reported at net realizable value
and net of allowance for doubtful accounts. As of March 31, 1999 the allowance
for doubtful accounts was $3,000. During the fiscal year ended March 31, 1999
the Company had written off $632.
Inventories
Inventories are stated at the lower of cost (weighted average) or
market. Inventory costs include material, labor and manufacturing overhead.
Patents
Patent costs are amortized using the straight-line method over 15
years.
Property and Equipment
Property and equipment are recorded at cost. Depreciation is provided
using accelerated methods over the estimated useful lives of five to 39 years.
Advertising
Advertising costs are expensed in the year incurred and totaled $76,218
for the year ended March 31, 1999.
Research and Development
Research and development costs, consisting principally of design and
development costs devoted to creating new products or improving existing
products, are expensed as incurred. During the fiscal year ended March 31, 1999
total research and development costs were $460.
Income Taxes
Income taxes, including pro forma computations, 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 basis of assets and liabilities for financial statement and
income tax reporting. 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 be realized. Deferred tax assets and liabilities
are adjusted for the effects of changes in tax laws and rates on the date of
enactment.
Earnings Per Share
Earnings per share are provided in accordance with Statement of
Financial Accounting Standard No. 128 (FAS No. 128) "Earnings Per Share". Basic
earnings per share are computed by dividing earnings (loss) available to common
stockholders by the weighted average number of common shares outstanding during
the period.
B. Development Stage Operations:
The Company is currently developing markets as well as raising working
capital to sustain operations. Since inception, September 30, 1996, the
Company's efforts have been focused on designing and patenting the Company's
product. During this development stage the Company has accumulated a deficit in
excess of $1 million and subsequent to the balance sheet date current
liabilities exceed current assets. The Company continues to seek new capital
through a private placement of its common stock. The ability of the Company to
continue as a going concern is dependent on the Company obtaining adequate
capital funding to carry out its business plan.
C. Inventory:
Inventory at March 31, 1999 are summarized as follows:
Raw materials $ 43,275
Finished goods 127,861
-------
Total inventory $171,136
========
D. Property and Equipment:
Property and equipment at March 31, 1999 are
summarized as follows:
Machinery and equipment $ 33,883
Furniture and fixtures 7,596
Leasehold improvements 779
Sub total 42,258
Less accumulated depreciation (15,981)
--------
Property and equipment, net $ 26,277
========
Capital Leases
The Company leases equipment under a capital lease expiring March 17,
2001. The asset and liability under the capital lease were recorded at the fair
value of the asset of $6,420. The equipment is depreciated over its useful life.
Lease payments were $2,127 for the 12 months ended March 31, 1999.
Minimum future lease payments under this capital lease at March 31,
1999 are as follows:
Twelve Months
Ending
March 31,
-------------
2000 $1,646
2001 1,629
Thereafter 0
E. Other Assets:
Other assets at March 31, 1999 are summarized as follows:
Refundable Deposits $1,180
======
F. Notes Payable:
The Company currently has a $50,000 note payable to Union Bank of
Arizona N.A dated December 11, 1998. The loan bears interest at 10.25% per annum
and is secured by UCC1 filing on the Company's assets. The loan matures December
11, 1999.
The Company is indebted to an officer in the amount of $22,202, as of
March 31, 1999. The loan is unsecured and bears interest at a rate of 7%
annually. The loan does have a maturity date and is therefore recorded as a
current liability. Accrued and unpaid interest of $641 is due the officer.
G. Income Taxes:
For the period ended March 31, 1999 the Company had available
approximately $1,013,000 of unused net operating loss carryforwards for federal
tax purposes and approximately $506,500 for the State of California. These loss
carryforwards begin to expire in the year 2011 if not previously utilized.
The net deferred tax asset consists of the following:
Deferred tax assets Current Year Cumulative
------------------- ------------ ----------
Net operating loss $ 88,500 $ 152,000
-------- ---------
Net deferred assets $ 88,500 $ 152,000
Less valuation allowance $ 88,500 $ 152,000
-------- ---------
Total deferred tax assets $ 0 $ 0
H. Compensated Absences:
The Company has no formal vacation, sick or personal time policies.
There is, therefore, no accrual for compensated balances.
I. Shareholders' Equity:
Common Stock
The Company has 50,000,000 shares of $0.001 par value common stock
authorized. At March 31, 1999, 12,433,777 shares were issued and outstanding.
J. Related Party Transactions:
Remedent headquarters in California occupies approximately 1000 square
feet of Rebecca M. Inzunza's primary residence that totals 4,000 square feet.
Rent paid directly to Ms. Inzunza each month is $300.00. As of December 1, 1999,
Remedent owed $2,100.00 for rent to Ms. Inzunza.
Monies loaned to Remedent USA, Inc., from Ms. Inzunza totaled $ 50,000
in January, 1999. As of March 31, 1999 the Company owed a balance of $22,202 and
at December 1, 1999, the balance of $ 664.82 was owed on the original loan.
Seven percent interest has accrued and will be payable upon full payment of
loan.
Kenneth Hegemann is an officer and employee of Remedent and owns 100%
of Famcare, Inc. As of December 1, 1999, Famcare, Inc. owed Remedent a total of
$4,500.00. In addition Mr. Hegemann ownes 60% of Oral 2000 Limited. Oral 2000
Limited is a supplier of the Company's tooth and gum brushes, however the price
and terms provided by Oral 2000 Limited are no less favorable then those
provided by other suppliers.
The Company has a royalty agreement with Jean Louie Vrignaud which
provides 4.5% royalty of the net sales with a cap of $2 million dollars as
compensation for the assignment of all Remedent patents to the Company. As of
March 31, 1999 accrued and unpaid royalties totaled $23,792.
Except for the Royalty Agreement, the Company has not entered into any
transactions involving its executive officers, directors, 5% stockholders and
immediate family members of those persons.
K. Subsequent Events:
Facilities Lease
On September 28, 1999 the Company entered into a three year lease with
D. E. K. Enterprises, Inc. for 3,330 square feet in Phoenix, Arizona, to be used
for shipping and warehousing operations. The minimum lease payments are $2,065
per month. This new leased warehousing facility will allow the Company to
consolidate current warehousing operations and reduce warehousing and shipping
costs.
Market Expansion
The Company hired Double Eagle Market Development Company on March 10,
1999 to develop and implement a national marketing plan. The Company approved
and recently began implementation of the first phase of a two-year plan to
achieve national distribution. The targeted markets for the first phase are
Washington, Oregon, Idaho, Montana, Utah and Arizona. In November, 1999 the
Company achieved distribution at Kroger-owned Fred Meyer Stores, Smith's Food
and Drug and Quality Food Centers (QFC) with 337 stores in the targeted markets.
The Company expects to achieve its distribution goals in the targeted markets by
March, 2000, at which time the Company plans to launch a comprehensive 32-week
radio ad campaign in these markets.
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use of our report included in the Registration
Statement on Form 10-KSB dated February 25, 1998 relating to the financial
statements of Remedent USA, Inc.
Siegel & Smith
Del Mar, California
December 10, 1999
<PAGE>
Remedent USA, Inc
Financial Statements
March 31, 1998
March 31, 1997
<PAGE>
Statements Remedent USA, Inc.
Balance Sheets
Assets
Year Ended March 31,
1998 1997
---- ----
Current assets:
Cash 101,166 2,877
Accounts Receivable 175,114 14,191
Inventory 150,669 72,911
Total Current Assets 426,949 89,979
Property and Equipment 12,589 5,735
Other Assets:
Patents 28,548 0
Other Assets 13,234 12,710
Total Other Assets 41,782 0
Total Assets 481,320 108,424
I. Liabilities and Stockholders' Equity
1998 1997
Current Liabilities:
Accounts Payable 48,640 68,313
Accrued Expenses 577 5
Notes Payable 58,146 0
Notes Payable - Related Party 0 24,224
Total Current Liabilities 107,363 92,537
Total Long Term Liabilities 0 125,866
Total Liabilities 107,363 218,408
Stockholders' Equity:
Common Stock (1) 800,471 84,254
Common Stock to be issued 0 0
Additional Paid-in Capital 0 0
Retained Deficit (194,238)
Current Profit (Loss) (232,277) (194,238)
Total Stockholders' Equity 373,956 (109,984)
Total Liabilities and Stockholders'
Equity 481,320 108,424
(1) Common Stock, authorized 50,000,000 shares of $ .001 par value,
issued and outstanding 12,433,780 shares.
The Accompanying Notes are an Integral Part of the Financial Statements
<PAGE>
Remedent USA, Inc.
Statement of Operations
Year Ended March 31,
1998 1997
---- ----
Revenues 291,441 30,694
Cost of Goods Sold 171,286 144,653
Gross Margin 120,155 (113,959)
Expenses:
General & Administrative 225,599 52,186
Sales 103,671 24,224
Research and Development 2,873 3,313
Total Expense 333,143 79,723
Income (Loss) from Operations (211,988) (193,684)
Other income (Expenses)
Interest Expense (3,054) (556)
Other Income (17,236) 0
Net Income (Loss) (232,277) (194,238)
Net Income (Loss Per Share) ($0.59) ($1.45)
The Accompanying Notes are an Integral Part of the Financial Statements
<PAGE>
REMEDENT USA, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
For the For the
Year Ended Year Ended
March 31, March 31,
1997 1998
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss ($194,238) ($232,277)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 3,258 9,447
Changes in operating assets and liabilities:
Accounts receivable (14,077) (47,411)
Due from related parties (115) (113,511)
Inventories (72,910) (77,758)
Prepaid expenses 0 (525)
Accounts payable 64,469 (15,829)
Accrued liabilities 3,849 1,120
Royalties payable 0 12,074
------------ ------------
Accrued expenses 0 0
------------ ------------
NET CASH USED IN OPERATING ACTIVITIES ($209,764) ($464,670)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of equipment (21,703) (16,301)
Patent costs 0 (28,548)
------------ ------------
NET CASH USED BY INVESTING ACTIVITIES ($21,703) ($44,849)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Notes payable 125,866 0
Payments on capital lease obligations 0 0
Loans from officers 24,224 0
Repayments of loans to officers 0 (24,224)
Payments on notes 0 (84,185)
Sale of common stock 84,254 716,217
------------ ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES $234,344 $607,808
------------ ------------
NET INCREASE (DECREASE) IN CASH 2,877 98,289
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 0 2,877
------------ ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $2,877 $101,166
============ ============
The Accompanying Notes are an Integral Part of the Financial Statements
<PAGE>
REMEDENT USA, Inc.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998
MARCH 31, 1997
A. Organization and Summary of Significant Accounting Policies:
Nature of Activities and Going Concern Assumptions
Remedent USA, Inc (the Company) is engaged in the distribution of a
product, which combines a toothbrush, gum brush, and tongue cleaner on one
handle. Credit sales are made to the Company's customers, primarily retail store
chains, who are located throughout the United States. The Company was
incorporated on September 30, 1996 on the state of Arizona, and has offices in
Escondido, California and Scottsdale, Arizona.
The Company's financial statements have been prepared on the accrual
basis of accounting in conformity with principles of accounting applicable to a
going concern. These principles contemplate the realization of assets and
liquidation of liabilities in the normal course of business. The preparation of
financial statements in conformity with generally accepted accounting principles
requires management 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 reported amounts of
revenues and expenses during the reporting periods. 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 equivalent.
Accounts Receivable
The Company sells premium toothbrushes to various companies, primarily
to retail chains located throughout the United States. The terms of sale are 2%
30 days, net 31 days. Accounts receivable is reported at net realizable value.
During the fiscal year ended March 31, 1998 the Company had written off $
19,634.
Inventories
Inventories are stated at the lower of cost (weighted average) or
market. Inventory costs include material, labor and manufacturing overhead.
Patents
Patent costs are amortized using the straight-line method over 15
years.
Property and Equipment
Property and Equipment are recorded at cost. Depreciation is provided
using accelerated methods over the estimated useful lives of five to thirty nine
years.
Advertising
The cost of Advertising is expensed as it takes place.
Research and Development
Research and development costs, consisting principally of design and
development costs devoted to creating new products or improving existing
products, are expensed as incurred. During the fiscal year ended March 31, 1998
total research and development costs were $2,873
Income Taxes
Income Taxes are provided for the tax effect of transactions reported
in the financial statements and consist of taxes currently due plus deferred
taxes. Deferred taxes are recognized for the temporary differences between the
basis of start-up cost for financial statements and income tax purposes.
Deferred taxes are also recognized for operating losses that are available to
offset future taxable income. A deferred tax asset represents the future tax
consequences of those items, which will be deductible, net of valuation
allowance for the estimated tax benefits, which may not be realized.
Earnings Per Share
Basis earnings per share are computed by dividing earnings (loss)
available to common stockholders by the weighted average number of common shares
outstanding during the period.
B. Development Stage Operations
The Company is currently developing markets as well as raising working
capital to sustain operations. Since inception, September 30, 1996 the Company's
efforts have been focused on designing and patenting the Company's product.
During its year and a half of existence the Company has sustained net losses of
approximately $426,515. Financing obtained from sale of stock of approximately
$800,500 however, has more than offset those losses resulting in stockholder's
equity of approximately $373,956 at March 31. 1998. The company has no debt
except for normal operating payables and a capitalize lease obligations. In
addition, management has instituted measures to mitigate future losses and is in
the process of obtaining additional capital and new customers for its customers
for its products. The financial statements do not include any adjustments that
might be necessary if the Company is unable to continue as going concern
C. Inventory
Inventory consist of the following at March 31, 1998:
March 31,
1997 1998
---- ----
Raw Materials $ 21,655 59,683
Finished Goods 51,256 90,986
Total Inventory 72,911 150,986
D. Property and Equipment
Property and equipment is summarized as follows:
March 31,
1997 1998
---- ----
Machinery and equipment $ 8,993 19,093
Furniture and fixtures 397 6,202
Sub total 9,390 25,295
Less accumulated depreciation (3,655) (12,706)
Property and equipment, net 5,735 12,589
E. Capitalized Lease Obligation
On March 17, 1998 the Company entered into a three-year lease agreement
with Toyota for a Forklift. The lease expires March 17, 2001. The asset and
liability under the capital have been recorded at the fair value of the asset
for $6,420. The equipment is depreciated over its estimated useful life.
Minimum future lease payments under this capital lease at March 31,
1998 are as follows:
Twelve Months
Ending
March 31,
---------
1999 $2,131
2000 2,131
2001 2,132
Thereafter 0
F. Operating Leases
Building Lease
The Company leases its Arizona business facility under a noncancelable
operating lease, which expires September 30, 1999.
Lease expense for this operating lease was $ 35,483 for the period
ended March 31, 1998.
The following is a schedule of noncancelable future minimum lease
payments under this operating lease:
Twelve Months
Ending
March 31,
---------
1999 $36.070
Thereafter 18,035
------
54,105
Vehicle Lease
The Company leases two vehicles under noncancelable operating leases
with terms of 36 months. The leases provide for monthly payments, which total
$444 through January 2001. Lease expense for these operating leases was $888 for
the period ended March 31, 1998.
The following is a schedule of noncancelable future minimum lease
payments under this operating lease:
Twelve Months
Ending
March 31,
-------------
1999 $ 5,328
2000 5,328
2001 4,440
Thereafter --
G. Notes Payable
The Company has a note payable in the amount of $ 41, 681 payable to
Curvex Corporation. The loan is unsecured and bears no interest. The loan does
have a maturity date and is therefore recorded as a liability.
H. Income Taxes
For the period ended March 31, 1998 the Company had available
approximately $423,000 of unused net operating loss carry-forward for both
federal and Arizona purposes that expire in various years through 2012. The
carry-forwards may be offset against future taxable income.
The net deferred tax asset consists of the following:
Deferred tax assets
Start-up costs $ 3,000
Net operating losses 256,000
Less valuation allowance (259,000)
Total deferred tax assets 0
I. Compensated Assets
The Company has no formal vacation, sick or personal time policies.
There is, therefore, no accrual for compensated absences.
J. Shareholders' Equity
Common Stock
The Company had 1,000,000 of no par value common stock authorized. At
March 31, 1998 501,712 shares are owned by the Stockholders. Ownership of shares
is documented in a stock ledger. However, no certificates have been issued.
K. Related Party Transactions
Remedent headquarters in California occupies approximately 1000 square
feet of Rebecca M. Inzunza's primary residence that totals 4,400 square feet.
Rent paid directly to Ms. Inzunza each month is $300.00.
The Company has a royalty agreement with Jean Louis Vrignaud, which
provides 3.5% royalty of the net sales with a cap of $2 million dollars as
compensation for the assignment of all Remedent patents to the Company. As of
March 31, 1998 accrued and unpaid royalties totaled $ 12,074..
Except for the Royalty Agreement, the Company had not entered into any
transactions involving its executive officers, directors, 5% stockholders and
immediate family of those persons.
<PAGE>
Remedent USA, Inc.
Financial Statements
June 30, 1999
September 30, 1999
December 31, 1999
<PAGE>
<TABLE>
<CAPTION>
Remedent USA, Inc.
Balance Sheets
Assets
Three Months Six Months Nine Months
Ended Ended Ended
June 30, 1999 Sep 30, 1999 Dec 31, 1999
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current as sets:
Cash 14,439 63,961 19,707
Accounts Receivable 122,815 74,521 49,553
Inventory 150,900 127,639 159,896
Total Current Assets 288,154 266,121 229,156
Property and Equipment 19,896 27,452 36,332
Other Assets:
Patents 34,199 34,199 29,444
Other Assets 13,226 5,828 5,284
Total Other Assets 47,425 40,027 34,728
Total Assets 355,475 333,600 300,216
Liabilities and Stockholders' Equity
Three Months Six Months Nine Months
Ended Ended Ended
June 30, 1999 Sep 30, 1999 Dec 31, 1999
Current Liabilities:
Accounts Payable 112,299 170,491 367,206
Accrued Expenses 41,176 111,390 163,729
Notes Payable 80,224 71,596 70,306
Notes Payable - Related Party 1,762 9,168 2,114
Total Current Liabilities 1235,461 362,645 603,355
Total Long Term Liabilities 2,778 2,269 1,771
Total Liabilities 238,239 364,914 605,126
Stockholders' Equity:
Common Stock (1) 12,434 12,434 12,434
Common Stock to be issued 12,482 67,476 108,923
Additional Paid-in Capital 1,187,332 1,187,332 1,187,332
Retained Deficit (1,032,238) (1,032,238) (1,032,238)
Current Profit (Loss) (62,773) (266,319) (581,361)
Total Stockholders' Equity 117,236 (31,315) (304,910)
Total Liabilities and Stockholders'
Equity 355,476 333,599 300,216
(1) Common Stock, authorized 50,000,000 shares of $ .001 par value, issued and outstanding 12,433,780 shares.
The Accompanying Notes are an Integral Part of the Financial Statements
</TABLE>
<PAGE>
Remedent USA, Inc.
Statement of Operations
Assets
Three Months Six Months Nine Months
Ended Ended Ended
June 30, 1999 Sep 31, 1999 Dec 31, 1999
- --------------------------------------------------------------------------------
Revenues 188,860 280,037 373,628
Cost of Goods Sold 77,384 105,537 146,690
Gross Margin 111,476 174,501 226,938
Expenses:
General & Administrative 116,021 299,432 528,533
Sales 44,221 107,513 226,485
Research and Development 10,131 28,711 44,396
Total Expense 170,373 435,656 799,414
Income (Loss) from Operations (58,897) (261,155) (572,476)
Other income (Expenses)
Interest Expense (1,694) (3,043) (4,872)
Other Income (2,182) (2,121) (2,113)
Estimated Tax 0 0 (1,900)
Net Income (Loss) (62,774) (266,318) (581,361)
Net Income (Loss Per Share) ($ 0.005) ($0.02) ($0.05)
The Accompanying Notes are an Integral Part of the Financial Statements
<PAGE>
<TABLE>
<CAPTION>
REMEDENT USA, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
For the 3 For the 3 For the 3
Months Months Months
Ended Ended Ended
June 30, September 30, December 31,
1999 1999 1999
------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss ($62,774) ($203,545) ($315,042)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 2,736 2,736 2,736
Changes in operating assets and liabilities:
Accounts receivable (78,610) 58,132 25,033
Due from related parties 1,567 (9,838) (65)
Inventories 20,236 23,261 (32,257)
Prepaid expenses (11,407) 7,398 544
Accounts payable 51,245 58,192 196,715
Accrued liabilities 4,728 36,426 48,783
Royalties payable 6,432 3,564 3,556
------------------------------------------
NET CASH USED IN OPERATING ACTIVITIES ($65,847) ($23,674) ($69,997)
------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of equipment 0 (10,292) (6,261)
Patent costs 0 0 (600)
------------------------------------------
NET CASH USED BY INVESTING ACTIVITIES $0 ($10,292) ($6,861)
------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Notes payable 0 0 0
Payments on capital lease obligations (497) (509) (498)
Loans from officers 0 29,003 0
Repayments of loans to officers (21,081) 0 (7,054)
Payments on notes 0 0 (1,291)
Sale of common stock 12,482 54,994 41,447
------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES ($9,096) $83,488 $32,604
------------------------------------------
NET INCREASE (DECREASE) IN CASH (74,943) 49,522 (44,254)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 89,382 14,439 63,961
----------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $14,439 $63,961 $19,707
==========================================
The Accompanying Notes are an Integral Part of the Financial Statements
</TABLE>
<PAGE>
REMEDENT USA, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
A. Organization and Summary of Significant Accounting Policies:
Nature of Activities and Going Concern Assumptions
Remedent USA, Inc (the Company) is engaged in the distribution of a
product, which combines a toothbrush, gum brush, and tongue cleaner on one
handle. Credit sales are made to the Company's customers, primarily retail store
chains, who are located throughout the United States. The Company was
incorporated on September 30, 1996 on the state of Arizona, and has offices in
Escondido, California and Scottsdale, Arizona.
The Company's financial statements have been prepared on the accrual
basis of accounting in conformity with principles of accounting applicable to a
going concern. These principles contemplate the realization of assets and
liquidation of liabilities in the normal course of business. The preparation of
financial statements in conformity with generally accepted accounting principles
requires management 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 reported amounts of
revenues and expenses during the reporting periods. 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 equivalent.
Accounts Receivable
The Company sells premium toothbrushes to various companies, primarily to
retail chains located throughout the United States. The terms of sale are 2% 30
days, net 31 days. Accounts receivable is reported at net realizable value.
During the nine month period ended December 31, 1999 the Company had written off
$ 2,326
Inventories
Inventories are stated at the lower of cost (weighted average) or market.
Inventory costs include material, labor and manufacturing overhead.
Patents
Patent costs are amortized using the straight-line method over 15 years.
Property and Equipment
Property and Equipment are recorded at cost. Depreciation is provided
using accelerated methods over the estimated useful lives of five to thirty nine
years.
Advertising
The cost of Advertising is expensed as it takes place.
Research and Development
Research and development costs, consisting principally of design and
development costs devoted to creating new products or improving existing
products are expensed as incurred. During the nine month period ended March 31,
1998 total research and development costs were $44,396
Income Taxes
Income Taxes are provided for the tax effect of transactions reported in
the financial statements and consist of taxes currently due plus deferred taxes.
Deferred taxes are recognized for the temporary differences between the basis of
start-up cost for financial statements and income tax purposes. Deferred taxes
are also recognized for operating losses that are available to offset future
taxable income. A deferred tax asset represents the future tax consequences of
those items, which will be deductible, net of valuation allowance for the
estimated tax benefits, which may not be realized.
Earnings Per Share
Basic earnings per share are computed by dividing earnings (loss)
available to common stockholders by the weighted average number of common shares
outstanding during the period.
B. Development Stage Operations
The Company is currently developing markets as well as raising working
capital to sustain operations. Since inception, September 30, 1996 the Company's
efforts have been focused on designing, patenting and test marketing the
Company's product. During this development stage the Company has accumulated a
deficit of approximately $1,569,530 and subsequent to the balance sheet date
current liabilities exceed current assets. The Company continues to seek new
capital through a private placement of its common stock. In addition, management
has instituted measures to mitigate future losses and is in the process of
obtaining new customers for its products. The ability of the Company to continue
as a going concern is dependent on the Company obtaining adequate capital
funding to carry out its business plan. The financial statements do not include
any adjustments that might be necessary if the Company is unable to continue as
going concern
C. Inventory
Inventory consist of the following at December 31, 1999:
Raw Materials $ 112,574
Finished Goods 47,322
------------------
Total Inventory $ 159,896
D. Property and Equipment
Property and equipment as of December 31, 1999 is summarized as follows:
Machinery and equipment $ 50,436
Furniture and fixtures 7,596
Leasehold improvements 779
Sub total 58,811
Less accumulated depreciation (22,479)
Property and equipment, net $ 36,332
E. Capitalized Lease Obligation
The Company lease equipment under a capital lease signed on March 17,
1998 and expiring March 17, 2001. The asset and liability under the capital were
recorded at the fair value of the asset for $6,420. The equipment is depreciated
over its estimated useful life. Depreciation of this asset of $683.10 for the
nine-month period ending December 31, 1999 is included in depreciation expense.
Lease payments were $1,595.31 for the nine months ended December 31, 1999.
Minimum future lease payments under this capital lease at December 31,
1999 are as follows
Twelve Months
Ending
December 31,
-------------
2000 $2,132
Thereafter 533
--------
2,665
E. Operating Leases
Building Lease
The Company leases its Arizona business facility under a noncancelable
operating lease, which expired September 30, 1999. This lease was amended and
extended to December 31, 1999.
Lease expense for this operating lease was $22,827 for the nine months
ended December 31, 1999.
On September 28, 1999 the Company entered into a three-year lease with
D.E.K. Enterprises, Inc. for 3,300 square feet in Phoenix, Arizona, to be used
for shipping and warehousing operations. The minimum lease payments are $2,065
per month for the first year. During the second year the monthly payments will
be $2,131,20 and for the third year $2,197.80. This new leased warehousing
facilities will allow the Company to consolidate current warehousing operations
and reduce warehousing and shipping costs.
The following is a schedule of noncancelable future minimum lease payments under
this operating lease:
Twelve Months
Ending
December 31
-----------
2000 $ 22,715
2001 25,574
2002 26,374
Thereafter --------
$74,663
F. Other Assets
Other assets at December 31, 1999 are summarized as follows:
Refundable Deposits $ 5,284
G. Notes Payable
The Company currently has a $50,000 note payable to Union Bank of Arizona
N.A. dated December 11, 1998. The loan bears interest at 10.25% per annum and is
secured by UCC1 filing on the Company's assets. The maturity date is December
11, 1999 thus is currently in default.
The Company is endebted to an officer in the amount of $2,114.43, as of
December 31, 1999. The loan is unsecured and bears interest at a rate of 7%
annually. The loan does have a maturity date and is therefore recorded as a
current liability. Accrued and unpaid interest of $307.10 is due to the officer.
H. Compensated Assets
The Company has no formal vacation, sick or personal time policies.
There is, therefore, no accrual for compensated absences.
I. Shareholders' Equity
Common Stock
The Company has 50,000,000 shares of $0.001 par value common stock
authorized. At December 31, 1999, 12,433,780 shares were issued and outstanding
J. Related Party Transactions
Remedent headquarters in California occupies approximately 1000 square
feet of Rebecca M. Inzunza's primary residence that totals 4,400 square feet.
Rent paid directly to Ms. Inzunza each month is $300.00.
The Company has a royalty agreement with Jean Louis Vrignaud which
provides 4.5% royalty of the net sales with a cap of $2 million dollars as
compensation for the assignment of all Remedent patents to the Company. As of
December 31, 1999 accrued and unpaid royalties totaled $37,344.
Except for the Royalty Agreement, the Company had not entered into any
transactions involving its executive officers, directors, 5% stockholders and
immediate family of those persons.
<PAGE>
PART III. EXHIBITS
ITEM 1. INDEX TO EXHIBITS
The following exhibits are filed with this Form 10-SB
Number Description Page Number Tab
-------- --------------------------------- ----------- -----
2.1 Articles of Incorporation 73 A
2.2 By-laws 77 B
6.1 Stock Exchange Agreement 99 C
6.2 Marketing Agreement with 121 D
Jean Louis Vrignaud
6.3 Sales and Marketing 130 E
Agreement with Double Eagle
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the Registrant has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized.
REMEDENT USA, INC.
Date:
By: /s/
-------------------------------
Rebecca M. Inzunza, President/CEO
ARTICLES OF INCORPORATION
OF
JOFRAN CONFECTIONERS INTERNATIONAL, INC.
The undersigned natural persons of the age of twenty one or
more, acting as incorporators under the general corporation law (Chapter 78 of
the Nevada revised Statutes) of the State of Nevada, do hereby certify:
ARTICLE I
NAME
The name of the Corporation is: JOFRAN CONFECTIONERS
INTERNATIONAL, INC.
ARTICLE II
DURATION
The duration of this Corporation is to be perpetual.
ARTICLE III
PURPOSE
The purpose for which this Corporation is organized is as
follows: Printing and typography and to engage in any legitimate business it
feels has potential; and may enter any other lawful business.
ARTICLE IV
STOCK
The aggregate number of shares which this Corporation shall
have the authority to issue is Fifty Million (50,000,000) shares with a par
value of One Mill ($0.001) per share.
ARTICLE V
COMMENCEMENT OF BUSINESS
This Corporation will not commence business until at least One
Thousand Dollars ($1,000.00) has been received as consideration for the issuance
of shares.
ARTICLE VI
PREEMPTIVE RIGHTS
No shareholder of the Corporation shall have any preemptive or
other rights to purchase, subscribe for, or take all or part of any shares of
all or part of any notes, debentures, bonds or securities convertible into or
carrying options for warrants to purchase shares of the Corporation issued,
optioned or sold by it after its incorporation. Such shares may be sold or
disposed of by the Corporation pursuant to resolution of its Board of Directors
to such persons and upon such terms as may, to such Board of Directors, seem
proper without first offering such shares or securities or any part thereof to
existing shareholders.
Section 2. Shares of this Corporation shall not be issued for
consideration other than money or in payment of a debt of the corporation
without the unanimous consent of all shareholders.
ARTICLE VII
INTERNAL AFFAIRS
Section 1. Meetings of Shareholders and Directors. Meetings of
the shareholders and directors of this Corporation may be held in or without the
State of Nevada, at such place or places as may from time to time be designated
in the Code of By-Laws or by resolution of the Board of Directors.
Section 2. Code of By-Laws. The initial Code of By-Laws of the
Corporation shall be adopted by its Board of Directors. The power to amend or
repeal the By-Laws and to adopt a new Code of By-Laws shall be in the Board of
Directors, but the affirmative vote of all directors shall be necessary to
exercise that power. The Code of By-Laws may contain any provisions for the
regulation and management of this Corporation which are consistent with (Chapter
78, Nevada revised Statutes) and these Articles of Incorporation.
ARTICLE VIII
REGISTERED AGENT
The name of the registered agent of this Corporation is
Gateway Enterprises.
The address of the initial registered office of this
Corporation is:
2030 Ellis Way
Elko, Nevada 89801
ARTICLE IX
DIRECTORS
The initial Board of Directors shall consist of three (3)
members. The names and addresses of the persons who are to serve as directors
until the first annual meeting of the shareholders or until their successors be
elected and qualified are as follows:
Gene T. Leo
1620 South State
Orem, Utah 84057
Stan Dixon
4635 North 650 East
Provo, Utah 84604
Don T. Wilson
86 South 800 West
Provo, Utah 84601
ARTICLE X
CONTRACTS WITH INTERESTED DIRECTORS OR OFFICERS
No contract or transaction entered into by the Corporation
shall be affected by the fact that any director, officer, employee or
shareholder of the Corporation may in any way be interested in or connected with
any party to such contract or transaction, provided that this interest be first
disclosed or have been known to the Board of Directors or by a majority of such
members thereof and that the contract or transaction be approved by a majority
of the directors or shareholders present at the meeting where such contract or
transaction is authorized or confirmed; nor shall any director or shareholder be
incapacitated from having his vote be counted in determining the existence of
the quorum at any meeting of the Board of Directors or shareholders which shall
authorize any such contract or transaction and any interested director or
shareholder may vote there at to authorize any such contract or transaction.
ARTICLE XI
INCORPORATORS
The names and addresses of the incorporators of this
Corporation are as follows:
Gene T. Leo
1620 South State
Orem, Utah 84057
Stan Dixon
4635 North 650 East
Provo, Utah 84604
Don T. Wilson
86 South 800 West
Provo, Utah 84601
IN WITNESS WHEREOF the undersigned, being the incorporators,
executed these Articles of Incorporation and certify to the truth of the facts
herein stated this 31st day of July, 1986.
/s/
- ----------------------------
Gene T. Leo
/s/
- ----------------------------
Stan Dixon
/s/
- ----------------------------
Don T. Wilson
STATE OF UTAH
ss:
COUNTY OF SALT LAKE
Personally appeared before me, Gene T. Leo, Stan Dixon and Don T. Wilson
signers of the foregoing Articles of Incorporation who stated the same.
/s/
---------------------------
NOTARY PUBLIC Residing at:
Salt Lake City, Utah
My Commission Expires:
12/1/89
[SEAL]
[state of Nevada certificate]
BYLAWS
OF
REMEDENT USA, INC.
a Nevada corporation
These are Bylaws of Remedent USA, Inc., a Nevada corporation (the
"corporation").
ARTICLE 1
OFFICES
1.1 Registered Office. The registered office of REMEDENT USA, INC. (the
"corporation") shall be located at 7301 E. Evans Road, Scottsdale, AZ 85260.
1.2 Locations of Offices. The corporation may also have offices at such
other places both within and without the states of Nevada, Arizona and
California as the board of directors may from time to time determine or the
business of the corporation may require.
ARTICLE 2
STOCKHOLDERS
2.1 Annual Meeting. The annual meeting of the stockholders shall be held
within 180 days after the end of the corporation's fiscal year at such time as
is designated by the board of directors and as is provided for in the notice of
the meeting. If the election of directors shall not be held on the day
designated herein for the annual meeting of the stockholders or at any
adjournment thereof, the board of directors shall cause the election to be held
at a special meeting of the stockholders as soon thereafter as may be
convenient.
2.2 Special Meeting. Special meeting of the stockholders may be called at
any time in the manner provided in the Articles of Incorporation. At any time
special meeting of the stockholders, only such business shall be conducted as
shall have been stated in the notice of such special meeting.
2.3 Place of Meetings. The board of directors may designate any place,
either within or without the state of incorporation, as the place of meeting for
any annual meeting or for any special meeting called by the board of director. A
waiver of notice signed by all stockholders entitled to vote at a meeting may
designate any place, either within or without the state of incorporation, as the
place for the holding of such meeting. If no designation is made or if a special
meeting be otherwise called, the place of meeting shall be at the principal
office of the corporation.
2.4 Notice of Meetings. The secretary or assistant secretary, if any, shall
cause notice of the time, place, and purpose or purpose of all meetings of the
stockholders (whether annual or special), to be mailed at least 10 but not more
than 60 days prior to the meeting, to each stockholder of record entitled to
vote.
2.5 Waiver of Notice. Any stockholder may waive notice of any meeting of
stockholders (however called or noticed, whether or not called or noticed, and
whether before, during, or after the meeting) by signing a written waiver of
notice or a consent to the holding of such meeting or any approval of the
minutes thereof. Attendance at a meeting, in person or by proxy, shall
constitute waiver of all defects of notice regardless of whether waiver,
consent, or approval is signed or any objections are made, unless attendance is
solely for the purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. All such waivers, consents, or approvals shall be made a part of the
minutes of the meeting.
2.6 Fixing Records Date. For the purpose of (i) determining stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting; (ii) stockholders entitled to receive payment of any dividend
or other distribution or allotment of any rights or entitled to exercise any
rights in respect to any change, conversion, or exchange of stock; or (iii) for
the purpose of any other lawful action, the board of directors may fix in
advance a date as the record date for any such determination of stockholders,
such date in any case to be not more than 60 days and, in case of a meeting of
stockholders, not less than 10 days prior to the date on which the particular
action requiring such determination of stockholders is to be taken. If no record
date is fixed for the determination of stockholders entitled to notice of or to
vote as a meeting, the day preceding the date on which notice of meeting is
mailed shall be the record date. For any other purpose, the record date shall be
the close of business on the date on which the resolution of the board of
directors pertaining thereto is adopted. When a determination of stockholders
entitled to vote at any meeting of stockholders has been made as provided in
this section, such determination shall apply to any adjournment thereof. Failure
to comply with this section shall not affect the validity of any action taken at
a meeting of stockholders.
2.7 Voting Lists. The officers of the corporation shall cause to be
prepared from the stock ledger at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at such
meeting or any adjournment thereof, arranged in alphabetical order, and showing
the address of each stockholder and the number of shares registered in the name
of each stockholder. Such list shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary business
hours, for a period of at least ten days prior to the meeting, either at a place
within the city where the meeting is to be held, which place shall be specified
in the notice of the meeting, or, if not so specified, at the principal
executive office of the corporation. The list shall also be produced and kept at
the time and place of the meeting during the whole time thereof and may be
inspected by any stockholder who is present. The original stock ledger shall be
the only evidence as to who are the stockholders entitled to examine the stock
ledger, the list required by this section, or the books of the corporation, or
to vote in person or by proxy at any meeting of stockholders.
2.8 Quorum. Unless otherwise provided in the Articles of Incorporation,
stock representing a majority of the voting power of all outstanding stock of
the corporation entitled to vote, present in person or represented by proxy,
shall constitute a quorum at all meetings of the stockholders for the
transaction of business, except as otherwise provided by statute or by the
certificate of incorporation. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present or represented. At such reconvened
meeting at which a quorum is present or represented, any business may be
transacted which might have been transacted at the meeting as originally
notified. If the adjournment is for more than 30 days or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
2.9 Vote Required. When a quorum is present at any meeting, the vote of the
holders of stock having a majority of the voting power present in person or
represented by proxy shall decide any question brought before such meeting,
unless the question is one on which by express provision of the statutes of the
state of Nevada or of the Articles of Incorporation a different vote is
required, in which case such express provision shall govern and control the
decision of such question.
2.10 Voting of Stock. Unless otherwise provided in the Articles of
Incorporation, each stockholder shall at every meeting of the stockholders be
entitled to one vote in person or by proxy for each share of the capital stock
having voting power held by such stockholder, subject to the modification of
such voting rights of any class or classes of the corporation's capital stock by
the certificate or incorporation.
2.11 Proxies. At each meeting of the stockholders, each stockholder
entitled to vote shall be entitled to vote in person or by proxy; provided,
however, that the right to vote by proxy shall exist only in case the instrument
authorizing such proxy to act shall have been executed in writing by the
registered holder or holders of such stock, as the case may be, as shown on the
stock ledger of the corporation or by his attorney thereunto duly authorized in
writing. Such instrument authorizing a proxy to act shall be delivered at the
beginning of such meeting to the secretary of the corporation or to such other
officer or person who may, in the absence of the secretary, be acting as
secretary of the meeting. In the event that any such instrument shall designate
two or more persons to act as proxy, a majority of such persons present at the
meeting, or if only one be present, that one shall (unless the instrument shall
otherwise provide) have all of the powers conferred by the instrument on all
persons so designated. Persons holding stock in a fiduciary capacity shall be
entitled to vote the stock so held, and the persons whose shares are pledged
shall be entitled to vote, unless the transfer by the pledgor in the books and
records of the corporation shall have expressly empowered the pledgee to vote
thereon, in which case the pledgee, or his proxy, may represent such stock and
vote thereon. No proxy shall be voted or acted on after three years from its
date, unless the proxy provides for a longer period.
2.12 Nomination of Directors. Only persons who are nominated in accordance
with the procedures set forth in this section shall be eligible for election as
directors. Nominations of persons for election to the board of directors of the
corporation may be made at a meeting of stockholders at which directors are to
be elected only (a) by or at the direction of the board of directors or (b) by
any stockholder of the corporation entitled to vote for the election of
directors at a meeting who complies with the notice procedures set forth in this
section. Such nominations, other than those made by or at the direction of the
board of directors, shall be made by timely notice in writing to the secretary
of the corporation. To be timely, a stockholder's notice must be delivered or
mailed to and received at the principal executive offices of the corporation not
less than 30 days prior to the date of the meeting; provided, in the event that
less than 40 days' notice of the date of the meeting is given or made to
stockholders, to be timely, a stockholder's notice must be so received not later
than the close of business on the 10th day following the day on which such
notice of the date of the meeting was mailed. Such stockholder's notice shall
set forth (a) as to each person whom such stockholder proposed to nominate for
election or reelection as a director, all information relating to such person
that is required to be disclosed in solicitations of proxies for election of
directors, or is otherwise required, in each case pursuant to regulation 14A
under the Securities Exchange Act of 1934, as amended (including each such
person's written consent to serve as a director if elected); and (b) as to the
stockholder giving the notice (i) the name and address of such stockholder as it
appears on the corporation's books, and (ii) the class and number of shares of
the corporation's capital stock that are beneficially owned by such stockholder.
At the request of the board of directors, any person nominated by the board of
directors for election as a director shall furnish to the secretary of the
corporation that information required to be set forth in a stockholder's notice
of nomination which pertains to the nominee. No person shall be eligible for
election as a director of the corporation unless nominated in accordance with
the provisions of this section. The officer of the corporation or other person
presiding at the meeting shall, if the facts so warrant, determine and declare
to the meeting that a nomination was not made in accordance with such
provisions, and if such officer should so determine, such officer shall so
declare to the meeting, and the defective nomination shall be disregarded.
2.13 Inspectors of Election. There shall be appointed two inspectors of the
vote. Such inspectors shall first take and subscribe an oath or affirmation
faithfully to execute the duties of inspector at such meeting with strict
impartiality and according to the best of their ability. Unless appointed in
advance of any such meeting by the board of directors, such inspectors shall be
appointed for the meeting by the presiding officer. No director or candidate for
the officer of director shall be appointed as such inspector. Such inspectors
shall be responsible for tallying and certifying each vote required to be
tallied and certified by them as provided in the resolution of the board of
directors appointing them or in their appointment by the person presiding at
such meeting, as the case may be.
2.14 Election of Directors. At all meetings of the stockholders at which
directors are to be elected, except as otherwise set forth in any preferred
stock designation (as defined in the Articles of Incorporation) with respect to
the right of the holders of any class or series of preferred stock to elect
additional directors under specified circumstances, directors shall be elected
by a plurality of the votes cast at the meeting. The election need not be by
ballot unless any stockholder so demands before the voting begins. Except as
otherwise provided by law, the Articles of Incorporation, any preferred stock
designation, or these bylaws, all matters other than the election of directors
submitted to the stockholders at any meeting shall be decided by a majority of
the votes cast with respect thereto.
2.15 Business at Annual Meeting. At any annual meeting of the stockholders,
only such business shall be conducted as shall have been brought before the
meeting (a) by or at the direction of the board of directors or (b) by any
stockholder of the corporation who is entitled to vote with respect thereto and
who complies with the notice procedures set forth in this section. For business
to be properly brought before an annual meeting by a stockholder, the
stockholder must have given timely notice thereof in writing to the secretary of
the corporation. To be timely, a stockholder's notice shall be delivered or
mailed to and received at the principal executive offices of the corporation not
less than 30 days prior to the date of the annual meeting; provided, in the
event that less than 40 days' notice of the date of the meeting is given or made
to stockholders, to be timely, a stockholder's notice shall be so received not
later than the close of business on the 10th day following the day on which such
notice of the date of the annual meeting was mailed. A stockholder's notice to
the secretary shall set forth as to each matter such stockholder proposes to
bring before the annual meeting (a) a brief description of the business desired
to be brought before the annual meeting and the reasons for conducting such
business at the annual meeting, (b) the name and address, as they appear on the
corporation's books, of the stockholder proposing such business, (c) the class
and number of shares of the corporation's capital stock that are beneficially
owned by such stockholder, and (d) any material interest of such stockholder in
such business. Notwithstanding anything in these bylaws to the contrary, no
business shall be brought before or conducted at an annual meeting except in
accordance with the provisions of this section. The officer of the corporation
or other person presiding at the annual meeting shall, if the facts so warrant,
determine and declare to the meeting that business was not properly brought
before the meeting in accordance with such provisions, and if such presiding
officer should so determine and declare to the meeting that business was not
properly brought before the meeting in accordance with such provisions and if
such presiding officer should so determine, such presiding officer shall so
declare to the meeting, and any such business so determined to be not properly
brought before the meeting shall not be transacted.
2.16 Business at Special Meeting. At any special meeting of the
stockholders, only such business shall be conducted as shall have been stated in
the notice of such special meeting.
2.17 Written Consent to Action by Stockholders. Unless otherwise provided
in the Articles of Incorporation, any action required to be taken at any annual
or special meeting of stockholders of the corporation, or any action which may
be taken at any annual or special meeting of such stockholders may be taken
without a meeting, without prior notice, and without a vote, if a consent in
writing, setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. Prompt notice of the taking of
the corporation action without a meeting by less than unanimous written consent
shall be given to those stockholders who have not consented in writing.
2.18 Procedure for Meetings. Meeting of the stockholders shall be conducted
pursuant to such reasonable rules of conduct and protocol as the board of
directors may prescribe or, if no such rules are prescribed, in accordance with
the most recent published edition of ROBERT'S RULES OF ORDER.
ARTICLE 3
DIRECTORS
3.1 General Powers. The business of the corporation shall be managed under
the direction of its board of directors, which may exercise all such powers of
the corporation and do all such lawful acts and things as are not by statute or
by the Articles of Incorporation or by these bylaws directed or required to be
exercised or done by the stockholders.
3.2 Number, Term, and Qualifications. The number of directors which shall
constitute the board, subject to the limitations set forth in the Articles of
Incorporation, shall be determined by resolution of a majority of the total
number of directors if there were no vacancies (the "Whole Board") or by the
stockholders at the annual meeting of the stockholders or a special meeting
called for such purpose, except as provided in section 3.3 of this article, and
each director elected shall hold office until his successor is elected and
qualified. Directors need not be residents of the state of incorporation or
stockholders of the corporation. Initially the corporation shall have seven
directors.
3.3 Vacancies and Newly Created Directorships. Vacancies and newly created
directorships resulting from any increase in the authorized number of directors
may be filled by a majority of the directors then in office, though less than a
quorum of the Whole Board, or by a sole remaining director, and the directors so
chosen shall hold office until the next annual election and until their
successors are duly elected and qualified. If there are no directors in office,
then an election of directors may be held in the manner provided by statute.
3.4 Regular Meetings. A regular meeting of the board of directors shall be
held without other notice than this bylaw immediately following and at the same
place as the annual meeting of stockholders. The board of directors may provide
by resolution the time and place, either within or without the state of
incorporation, for the holding of additional regular meetings without other
notice than such resolution.
3.5 Special Meetings. special meetings of the board of directors may be
called by or at the request of the president, vice president, or any two
directors. The person or persons authorized to call special meetings of the
board of directors may fix any place, either within or without the state of
incorporation, as the place for holding any special meeting of the board of
directors called by them.
3.6 Meetings by Telephone Conference Call. Members of the board of
directors may participate in a meeting of the board of directors or a committee
of the board of directors by means of conference telephone or similar
communication equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting pursuant to this
section shall constitute presence in person at such meeting.
3.7 Notice. Notice of any special meeting shall be given at least 72 hours
prior thereto by written notice delivered personally or sent by facsimile
transmission confirmed by registered mail or certified mail, postage prepaid, or
by overnight courier to each director. Each director shall register his or her
address and telephone number(s) with the secretary for purpose of receiving
notices. Any such notice shall be deemed to have been given as of the date so
personally delivered or sent by facsimile transmission or as of the day
following dispatch by overnight courier. Any director may waive notice of any
meting. Attendance of a director at a meeting shall constitute a waiver of
notice of such meeting, except where a director attends a meeting solely for the
express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened. An entry of the service of notice
given in the manner and at the time provided for in this section may be made in
the minutes of the proceedings of the board of directors, and such entry, if
read and approved at a subsequent meeting of the board of directors, shall be
conclusive on the issue of notice.
3.8 Quorum. A majority of the Whole Board shall constitute a quorum for the
transaction of business at any meeting of the board of directors, provided, that
the directors present at a meeting at which a quorum is initially present may
continue to transact business notwithstanding the withdrawal of directors if any
action taken is approved by a majority of the required quorum for such meeting.
If less than a majority is present at a meeting, a majority of the directors
present may adjourn the meeting from time to time without further notice.
3.9 Manner of Acting. The act of a majority of the directors present at a
meeting at which a quorum is present shall be the act of the board of directors,
and individual directors shall have no power as such.
3.10 Compensation. By resolution of the board of directors, the directors
may be paid their expenses, if any, of attendance at each meeting of the board
of directors and may be paid a fixed sum for attendance at each meeting of the
board of directors or a stated salary as director. No such payment shall
preclude any director from serving the corporation in any other capacity and
receiving compensation therefor.
3.11 Presumption of Assent. A director of the corporation who is present at
a meeting of the board of directors at which action on any corporate matter is
taken shall be presumed to have assented to the action taken unless his dissent
shall be entered in the minutes of the meeting, unless he shall file his written
dissent to such action with the person acting as the secretary of the meeting
before the adjournment thereof, or unless he shall forward such dissent by
registered or certified mail to the secretary of the corporation immediately
after the adjournment of the meeting. Such right to dissent shall not apply to a
director who voted in favor of such action.
3.12 Resignations. A director may resign at any time by delivering a
written resignation to either the president, a vice president, the secretary, or
assistant secretary, if any. The resignation shall become effective on giving of
such notice, unless such notice specifies a later time for the effectiveness of
such resignation.
3.13 Written Consent to Action by Directors. Any action required to be
taken at a meeting of the directors of the corporation or any other action which
may be taken at a meeting of the directors or of a committee, may be taken
without a meeting, if a consent in writing, setting forth the action so taken,
shall be signed by all of the directors, or all of the members of the committee,
as the case may be. Such consent shall have the same legal effect as a unanimous
vote of all the directors or members of the committee.
Removal. Subject to any limitations set forth in the Articles of
Incorporation, at meeting expressly called for that purpose, one or more
directors may be removed by a vote of a majority of the shares of outstanding
stock of the corporation entitled to vote at an election of directors.
ARTICLE 4
OFFICERS
4.1 Number. The officers of the corporation shall be a president, one or
more vice presidents, as shall be determined by resolution of the board of
directors, a secretary, a treasurer, and such other officers as may be appointed
by the board of directors. The board of directors may elect, but shall not be
required to elect, a chairman of the board, and the board of directors may
appoint a general manager.
4.2 Election, Term of Office, and Qualifications. The officers shall be
chosen by the board of directors annually at its annual meeting. In the event of
failure to choose officers at an annual meeting of the board of directors,
officers may be chosen at any regular or special meeting of the board of
directors. Each such officer (whether chosen at an annual meeting of the board
of directors to fill a vacancy or otherwise) shall hold his office until the
next ensuing annual meeting of the board of directors and until his successor
shall have been chosen and qualified, or until his death until his resignation
or removal in the manner provided in these bylaws. Any one person may hold any
two or more of such offices, except that the president shall not also be the
secretary. No person holding two or more offices shall execute any instrument in
the capacity of more than one office. The chairman of the board, if any, shall
be and remain director of the corporation during the term of his office. No
other officer need be a director.
4.3 Subordinate Officers, Etc. The board of directors from time to time may
appoint such other officers or agents as it may deem advisable, each of whom
shall have such title, hold office for such period, have such authority, and
perform such duties as the board of directors from time to time may determine.
The board of directors from time to time may delegate to any officer or agent
the power to appoint any such subordinate officer or agents and to prescribe
their respective titles, terms of office, authorities, and duties. Subordinate
officers need not be stockholders or directors.
4.4 Resignations. Any officer may resign at any time by delivering a
written resignation to the board of directors, the president, or the secretary.
Unless otherwise specified therein, such resignation shall take effect on
delivery.
4.5 Removal. Any officer may be removed from office at any special meeting
of the board of directors called for that purpose or at a regular meeting, by
the vote of a majority of the directors, with or without cause. Any officer or
agent appointed in accordance with the provisions of section 4.3 hereof may also
be removed, either with or without cause, by any officer on whom such power of
removal shall have been conferred by the board of directors.
4.6 Vacancies and Newly Created Offices. If any vacancy shall occur in any
office by reason of death, resignation, removal, disqualification, or any other
cause or if a new office shall be created, then such vacancies or newly created
offices may be filled by the board of directors at any regular of special
meeting.
4.7 The Chairman of the Board. The chairman of the board, if there be such
an officer, shall have the following powers and duties:
He shall preside at all stockholders' meetings;
He shall preside at all meetings of the board of directors; and
He shall be a member of the executive committee, if any.
4.8 The Chief Executive Officer. The chief executive officer of the
corporation shall have the same powers and duties as the president, as described
below, and, in addition, shall have such powers and duties as may be directed by
the board of directors of the corporation from time to time.
4.9 The President. The president shall have the following powers and
duties:
He shall be the chief executive officer of the corporation
and, subject to the direction of the board of directors, shall have
general charge of the business, affairs, and property of the
corporation and general supervision over its officers, employees, and
agents;
If no chairman of the board has been chosen or if such officer
is absent or disabled, he shall preside at meetings of the stockholders
and board of directors;
He shall be a member of the executive committee, if any;
He shall be empowered to sign certificates representing stock
of the corporation, the issuance of which shall have been authorized by
the board of directors; and
He shall have all power and perform all duties normally
incident to the office of a president of a corporation and shall
exercise such other powers and perform such other duties as from time
to time may be assigned to him by the board of directors.
4.10 The Vice-Presidents. The board of directors may, from time to time,
designate and elect one or more vice-presidents, one of whom may be designated
to serve as executive vice-president. Each vice-president shall have such powers
and perform such duties as from time to time may be assigned to him by the board
of directors or the president. At the request or in the absence or disability of
the president, the executive-vice president or, in the absence or disability of
the executive vice-president, the vice-president designated by the board of
directors or (in the absence of such designation by the board of directors) by
the president, as senior vice-president, may perform all the duties of the
president, and when so acting, shall have all the powers of, and be subject to
all the restrictions on, the president.
4.11 The Secretary. The secretary shall have the following powers and
duties:
He shall keep or cause to be kept a record of all of the
proceedings of the meetings of the stockholders and of the board of
directors in books provided for that purpose;
He shall cause all notices to be duly given in accordance with
the provisions of these bylaws and as required by statute;
He shall be the custodian of the records and of the seal of
the corporation, and shall cause such seal (or a facsimile thereof) to
be affixed to all certificates representing stock of the corporation
prior to the issuance thereof and to all instruments, the execution of
which on behalf of the corporation under its seal shall have been duly
authorized in accordance with these bylaws, and when so affixed, he may
attest the same;
He shall see that the books, reports, statements,
certificates, and other documents and records required by statute are
properly kept and filed;
He shall have charge of the stock ledger and books of the
corporation and cause such books to be kept in such manner as to show
at any time the amount of the stock of the corporation of each class
issued and outstanding, the manner in which and the time when such
stock was paid for, the names alphabetically arranged and the addresses
of the holders of record thereof, the amount of stock held by each
older and time when each became such holder of record; and he shall
exhibit at all reasonable times to any director, on application, the
original or duplicate stock ledger. He shall cause the stock ledger
referred to in section 6.4 hereof to be kept and exhibited at the
principal office of the corporation, or at such other place as the
board of directors shall determine, in the manner and for the purpose
provided in such section;
He shall be empowered to sign certificates representing stock
of the corporation, the issuance of which shall have been authorized by
the board of directors; and
He shall perform in general all duties incident to the office
of secretary and such other duties as are given to him by these bylaws
or as from time to time may be assigned to him by the board of
directors or the president.
4.12 The Treasurer. The treasurer shall have the following powers and
duties:
He shall have charge and supervision over and be responsible
for the monies, securities, receipts, and disbursements of the
corporation;
He shall cause the monies and other valuable effects of the
corporation to be deposited in the name and to the credit of the
corporation in such banks or trust companies or with such banks or
other depositories as shall be selected in accordance with section 4.3
hereof;
He shall cause the monies of the corporation to be disbursed
by checks or drafts (signed as provided in section 5.4 hereof) drawn on
the authorized depositories of the corporation, and cause to be taken
and preserved property vouchers for all monies disbursed;
He shall render to the board of directors or the president,
whenever requested, a statement of the financial condition of the
corporation and of all of his transactions as treasurer, and render a
full financial report at the annual meeting of the stockholders, if
called on to do so;
He shall cause to be kept correct books of account of all the
business and transactions of the corporation and exhibit such books to
any directors on request during business hours;
He shall be empowered from time to time to require from all
officers or agents of the corporation reports or statements giving such
information as he may desire with respect to any and all financial
transactions of the corporation;
He shall perform in general all duties incident to the office
of treasurer ad such other duties as are give to him by these bylaws or
as from time to time may be assigned to him by the board of directors
or the president; and
He shall, in the absence of the designation to the contrary by
the board of directors, act as the chief financial officer and/or
principal accounting officer of the corporation.
4.13 Salaries. The salaries or other compensation of the officers of the
corporation shall be fixed from time to time by the board of directors, except
that the board of directors may delegate to any person or group of persons the
power to fix the salaries or other compensation of any subordinate officers or
agents appointed in accordance with the provisions of section 4.3 hereof. no
officer shall be prevented from receiving any such salary or compensation by
reason of the fact that he is also a director of the corporation.
4.14 Surety Bonds. In case the board of directors shall so require, any
officer or agent of the corporation shall execute to the corporation a bond in
such sums and with such surety or sureties as the board of directors may direct,
conditioned on the faithful performance of his duties to the corporation,
including responsibility for negligence and for the accounting of all property,
monies, or securities of the corporation which may come into his hands.
ARTICLE 5
EXECUTION OF INSTRUMENTS, BORROWING OF MONEY,
AND DEPOSIT OF CORPORATE FUNDS
5.1 Execution of Instruments. Subject to any limitation contained in the
Articles of Incorporation or these bylaws, the president or any vice-president
may, in the name and on behalf of the corporation, execute and deliver any
contract or other instrument authorized in writing by the board of directors.
The board of directors may, subject to any limitation contained in the Articles
of Incorporation or in these bylaws, authorize in writing any officer or agent
to execute and deliver any contract or other instrument in the name and on
behalf of the corporation; any such authorization may be general or confined to
specific instances.
5.2 Loans. No loan or advance shall be contracted on behalf of the
corporation, no negotiable paper or other evidence of its obligation under any
loan or advance shall be issued in its name, and no property of the corporation
shall be mortgaged, pledged, hypothecated, transferred, or conveyed as security
for the payment of any loan, advance, indebtedness, or liability of the
corporation, unless and except as authorized by the board of directors. Any such
authorization may be general or confined to specific instances.
5.3 Deposits. All monies of the corporation not otherwise employed shall be
deposited form time to time to its credit in such banks or trust companies or
with such bankers or other depositories as the board of directors may select or
as from time to time may be selected by any officer or agent authorized to do so
by the board of directors.
5.4 Checks, Drafts, Etc. All notes, drafts, acceptances, checks,
endorsements, and, subject to the provisions of these bylaws, evidences of
indebtedness of the corporation shall be signed by such officer or officers or
such agent or agents of the corporation and in such manner as the board of
directors from time to time may determine. Endorsements for deposits to the
credit of the corporation in any of its duly authorized depositories shall be in
such manner as the board of directors from time to time may determine.
5.5 Bonds and Debentures. Every bond or debenture issued by the corporation
shall be evidenced by an appropriate instrument which shall be signed by the
president or a vice president and by the secretary and sealed with the seal of
the corporation. The seal may be a facsimile, engraved or printed. Where such
bond or debenture is authenticated with the manual signature of an authorized
officer of the corporation or other trustee designated by the indenture of trust
or other agreement under which such security is issued, the signature of any of
the corporation's officers named thereon may be a facsimile. in case any officer
who signed or whose facsimile signature has been used on any such bond or
debenture shall cease to e an officer of the corporation for any reason before
the same has been delivered by the corporation, such bond or debenture may
nevertheless be adopted by the corporation and issued and delivered as through
the person who signed it or whose facsimile signature has been used thereon had
not ceased to be such officer.
5.6 Sale, Transfer, Etc. of Securities. Sales, transfers, endorsements, and
assignments of stocks, bonds, and other securities owned by or standing in the
name of the corporation and the execution and delivery on behalf of the
corporation of any and all instruments in writing incident to any such sale,
transfer, endorsement, or assignment shall be effected by the president or by
any vice-president and the secretary or assistant secretary, or by any officer
or agent thereunto authorized by the board of directors.
5.7 Proxies. proxies to vote with respect to stock of other corporations
owned by or standing in the name of the corporation shall be executed and
delivered on behalf of the corporation or by any officer or agent thereunder
authorized by the board of directors.
ARTICLE 6
CAPITAL STOCK
6.1 Stock Certificates. Every holder of stock in the corporation shall be
entitled to have a certificate, signed by the president or any vice-president
and the secretary or assistant secretary, and sealed with the seal (which may be
a facsimile, engraved or printed) of the corporation, certifying the number and
kind, class, or series of stock owned by him in the corporation; provided,
however, that where such a certificate is countersigned by (a) a transfer agent
or an assistant transfer agent, or (b) registered by a registrar, the signature
of any such president, vice-president, secretary, or assistant secretary may be
a facsimile. In case any officer who shall have signed or whose facsimile
signature or signatures shall have been used on any such certificate shall cease
to be such officer of the corporation, for any reason, before the delivery of
such certificate by the corporation, such certificate may nevertheless be
adopted by the corporation and be issued and delivered as though the person who
signed it or whose facsimile signature or signatures shall have been used
thereon has not ceased to be such officer. Certificates representing stock of
the corporation shall be in such form as provided by the statutes of the state
of incorporation. There shall be entered on the stock books of the corporation
at the time of issuance of each share, the number of the certificate issued, the
name and address of the person owning the stock represented thereby, the number
and kind, class, or series of such stock, and the date of issuance thereof.
Every certificate exchanged or returned to the corporation shall be marked
"canceled" with the date of cancellation.
6.2 Transfer of Stock. Transfers of stock of the corporation shall be made
on the books of the corporation by the holder of record thereof or by his
attorney thereunto duly authorized by a power of attorney duly executed in
writing and filed with the secretary of the corporation or any of its transfer
agents, and on surrender of the certificate or certificates, properly endorsed
or accompanied by proper instruments or transfer, representing such stock.
Except as provided by law, the corporation and transfer agents and registrars,
if any, shall be entitled to treat the holder of record of any stock as the
absolute owner thereof for all purposes, and accordingly shall not be bound to
recognize any legal, equitable, or other claim to or interest in such stock on
the part of any other person whether or not it or they shall have express or
other notice thereof.
6.3 Regulations. Subject to the provisions of the Articles of
Incorporation, the board of directors may make such rules and regulations as
they may deem expedient concerning the issuance, transfer, redemption, and
registration of certificates for stock of the corporation.
6.4 Maintenance of Stock Ledger at Principal Place of Business. A stock
ledger (or ledgers where more than one kind, class, or series of stock is
outstanding) shall be kept at the principal place of business of the
corporation, or at such other place as the board of directors shall determine,
containing the names alphabetically arranged of original stock holders of the
corporation, their addresses, their interest, the amount paid on their shares,
and all transfers thereof and the number and class of stock held by each. Such
stock ledgers shall at all reasonable hours be subject to inspection by persons
entitled by law to inspect the same.
6.5 Transfer Agents and Registrars. The board of directors may appoint one
or more transfer agents and one or more registrars with respect to the
certificates representing stock of the corporation and may require all such
certificates to bear the signature of either or both. The board of directors may
from time to time define the respective duties of such transfer agents and
registrars. No certificate for stock shall be valid until countersigned by a
transfer agent, if at the date appearing thereon the corporation had a transfer
agent for such stock, and until registered by a registrar, if at such date the
corporation had a registrar for such stock.
6.6 Closing of Transfer Books and Fixing of Record Date.
The board of directors shall have power to close the stock
ledgers of the corporation for a period of not to exceed 60 days
preceding the date of any meeting of stockholders, the date for payment
of any dividend, the date for the allotment of rights, or the date when
any change or conversion or exchange of capital stock shall go into
effect, or a date in connection with obtaining the consent of
stockholders for any purpose.
In lieu of closing the stock ledgers as aforesaid, the board
of directors may fix in advance a date, not less than 10 days and not
exceeding 60 days preceding the date of any meeting of stockholders,
the date for the payment of any dividend, the date for the allotment of
rights, the date when any change or conversion or exchange of capital
stock shall go into effect, a date in connection with obtaining any
such consent, as a record date for the determination of the
stockholders entitled to a notice of, and to vote at, any such meeting
and any adjournment thereof, entitled to receive payment of any such
dividend, to any such allotment of rights, to exercise the rights in
respect of any such change, conversion or exchange of capital stock, or
to give such consent.
If the stock ledgers shall be closed or a record date set for
the purpose of determining stockholders entitled to notice of, or to
vote at, a meeting of stockholders, such books shall be closed for or
such record date shall be at least ten days immediately preceding such
meeting.
6.7 Lot or Destroyed Certificates. The corporation may issue a new
certificate for stock of the corporation in place of any certificate theretofore
issued by it, alleged to have been lost or destroyed, and the board of directors
may, in its discretion, require the owner of the lost or destroyed certificate
or his legal representatives to give the corporation a bond in such form and
amount as the board of directors may direct and with such surety or sureties as
may be satisfactory to the board, and to indemnify the corporation and its
transfer agents and registrars, if any, against any claims that may be made
against it or any such transfer agents and registrars, if any, against any
claims that may be made against it or any such transfer agent or registrar on
account of the issuance of such new certificate. A new certificate may be issued
without requiring any bond when, in the judgment of the board of directors, it
is proper to do so.
ARTICLE 7
EXECUTIVE COMMITTEE AND OTHER COMMITTEES
7.1 Executive Committee. the board of directors, by resolution adopted by a
majority of the Whole Board, may appoint from its membership an executive
committee of not less than three members (whose members shall include the
chairman of the board if any, and the president, one of whom shall act as
chairman of the executive committee, as the board may designate). The board of
directors shall have the power at any time to dissolve the executive committee,
to change the membership thereof, and to fill vacancies thereon. When the board
of directors is not in session, the executive committee shall have and may
exercise all of the powers vested in the board of directors, except the
following powers: to fill vacancies in the board of directors; to declare
dividends or other distributions to stockholders; to adopt, amend, or repeal the
Articles of Incorporation or these bylaws' to approve any action that also
requires stockholder approval; to amend or repeal any resolution of the board of
directors which by its express terms is not so amendable or repealable; to fix
the compensation of directors for serving on the board of directors or on any
committee; to adopt an agreement of merger or consolidation under any provision
of applicable law, to recommend to the stockholders the sale, lease, or exchange
of all or substantially all of the Corporation's property and assets; to
recommend to stockholders a dissolution of the Corporation or a revocation of a
dissolution; to recommend to stockholders an amendment of bylaws; to authorize
the issuance of stock (provided that the executive committee may determine the
number of shares of stock not in excess of the number of authorized to be issued
by the board of directors and the amount of consideration for which such shares
shall be issued); and to enter into any merger into or with another entity as
permitted by applicable law.
7.2 Other Committees. The board of directors, by resolution adopted by a
majority of the Whole Board, may appoint such other committees as it may, from
time to time, deem proper and may determine the number of member, frequency of
meetings, and duties thereof.
7.3 Proceedings. The executive committee and such other committees as may
be designated hereunder by the board of directors may fix their own presiding
and recording officer or officers and may meet at such place or places, at such
time or times, and on such notice (or without notice) as it shall determine from
time to time. Each committee may make rules for the conduct of its business as
it shall from time to time deem necessary. It will keep a record of its
proceedings and shall report such proceedings to the board of directors at the
meeting of the board of directors next following.
7.4 Quorum and Manner of Acting. At all meetings of the executive committee
and of such other committees as may be designated hereunder by the board of
directors, the presence of members constituting a majority of the total
authorized membership of the committee shall be necessary and sufficient to
constitute a quorum for the transaction of business, and the act of a majority
of the members present at any meeting at which a quorum is present shall be the
act of such committee. The members of the executive committee and of such other
committees as may be designated hereunder by the board of directors shall act
only as a committee, and the individual members thereof shall have no powers as
such.
7.5 Resignations. Any member of the executive committee and of such other
committees as may be designated hereunder by the board of directors may resign
at any time by delivering a written resignation to either the president, the
secretary, or assistant secretary, or to the presiding officer of the committee
of which he is a member, if any shall have been appointed and shall be in
office. Unless otherwise specified therein, such registration shall take effect
on delivery.
7.6 Removal. The board of directors may, by resolution adopted by a
majority of the Whole Board, at any time remove any member of the executive
committee or of any other committee designated by it hereunder either for or
without cause.
7.7 Vacancies. If any vacancy shall occur in the executive committee or of
any other committee designated by the board of directors hereunder, by reason of
disqualification, death, resignation, removal, or otherwise, the remaining
members shall, until the filling of such vacancy, constitute the then total
authorized membership of the committee and continue to act, unless such
committee consisted of more than one member prior to the vacancy or vacancies
and is left with only one member as a result thereof. Such vacancy may be filled
at any meeting of the Whole Board.
7.8 Compensation. The Whole Board may allow a fixed sum and expenses of
attendance to any member of the executive committee, or of any other committee
designated by it hereunder, who is not an active salaried employee of the
corporation for attendance at each meeting of the said committee.
ARTICLE 8
INSURANCE AND OFFICER AND DIRECTOR CONTRACTS
8.1 Indemnification: Third-Party Actions. The corporation shall indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending, or completed action, suit, or proceeding, whether civil,
criminal, administrative, or investigative (other than an action by or in the
right of the corporation), by reason of the fact that he is or was a director or
officer of the corporation (and, in the discretion of the board of directors,
may so indemnify a person by reason of the fact that he is or was an employee,
or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee, or agent of another corporation,
partnership, joint venture, trust, or other enterprise), against expenses
(including attorneys' fees), judgments, fines, and amounts paid in settlement
actually and reasonably incurred by him in connection with any such action,
suit, or proceeding, if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the corporation, and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful. The termination of any action, suit, or
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
the person did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the corporation, ad
with respect to any criminal action or proceeding, he had reasonable cause to
believe that his conduct was unlawful.
8.2 Indemnification: Corporate Actions. The corporation shall indemnify any
persons who was or is a party or is threatened to be made a party to any
threatened, pending, or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that he is
or was a director, officer, employee, or agent of the corporation, or is or was
serving at the request of the corporation as a director or officer of the
corporation (and, in the discretion of the board of directors, may so indemnify
a person by reason of the fact that he is or was an employee or agent of another
corporation, partnership, joint venture, trust, or other enterprise), against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit, if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation, except that no indemnification shall be made
in respect of any claim, issue, or matter as to which such person shall have
been adjudged to be liable to the corporation unless and only to the extent that
the court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses as the court deems proper.
8.3 Determination. To the extent that a director, officer, employee, or
agent of the corporation has been successful on the merits or otherwise in
defense of any action, suit, or proceeding referred to in sections 8.1 and 8.2
hereof, or in defense of any claim, issue, or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith. Any other indemnification under
sections 8.1 or 8.2 hereof, unless ordered by a court, shall be made by the
corporation only in the specific case on a determination that indemnification of
the director, officer, employee, or agent is proper in the circumstances because
he has met the applicable standard or conduct set forth in sections 8.1 or 8.2
hereof. Such determination shall be made either (i) by the board of directors by
a majority vote of a quorum consisting of directors who were not parties to such
action, suit, or proceeding, (ii) if such a quorum is not obtainable, or, even
if obtainable a quorum of disinterested directors so directs, by independent
legal counsel in written opinion, or (iii) by the stockholders by a majority
vote of a quorum of stockholders at any meeting duly called for such purpose.
8.4 Advances. Expenses incurred by an officer or director in defending a
civil or criminal action, suit or proceeding may be paid by the corporation in
advance of the final disposition of such action, suit, or proceeding on receipt
of an undertaking by or on behalf of such director or officers to repay such
amount if it shall ultimately be determined that he is not entitled to be
indemnified by the corporation as authorized by this section. Such expenses
incurred by other employees and agents may be so paid on such terms and
conditions, if any, as the board of directors deems appropriate.
8.5 Scope of Indemnification. The indemnification and advancement of
expenses provided by, or granted pursuant to, sections 8.1, 8.2 and 8.4:
Shall not be deemed exclusive of any other rights to which
those seeking indemnification or advancement of expenses may be
entitled, under any bylaw, agreement, vote of stockholders or
disinterested directors, or otherwise, both as to action in his
official capacity and as to action in another capacity while holding
such office; and
Shall, unless otherwise provided when authorized or ratified,
continue as to a person who ceased to be a director, officer, employee,
or agent of the corporation and shall inure to the benefit of the
heirs, executors, and administrators of such a person.
8.6 Insurance. The corporation may purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee, or agent of
the corporation or is or was serving at the request of the corporation as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise against any liability asserted against him
and incurred by him in any such capacity or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against any
such liability.
8.7 Officer and Director Contracts. No contract or other transaction
between the corporation and one or more of its directors or officers or between
the corporation and any corporation, partnership, association, or other
organization in which one or more of the corporation's directors or officers are
directors, officers, or have a financial interest, is either void or voidable
solely on the basis of such relationship or solely because any such director or
officer is present at or participates in the meeting of the board of directors
or a committee thereof which authorizes the contract or transaction or solely
because the vote or votes of each director or officer are counted for such
purpose, if:
The material facts of the relationship or interest are
disclosed or known to the board of directors or committee and the board
or committee in good faith authorizes the contract or transaction by
the affirmative votes of a majority of the disinterested directors even
though the disinterested directors be less than a quorum;
The material facts of the relationship or interest is
disclosed or known to the stockholders and they approve or ratify the
contract or transactions in good faith by a majority vote of the shares
voted at a meeting of stockholders called for such purpose or written
consent of stockholders holding a majority of the shares entitled to
vote (the votes of the common or interested directors or officers shall
be counted in any such vote of stockholders); or
The contract or transaction is fair as to the corporation at
the time it is authorized, approved, or ratified by the board of
directors, a committee thereof, or the stockholders.
ARTICLE 9
FISCAL YEAR
The fiscal year of the corporation shall be determined by the board of
directors of the corporation.
ARTICLE 10
DIVIDENDS
The board of directors may from time to time declare, and the corporation
may pay, dividends on its outstanding stock in the manner and on the terms and
conditions provided by the Articles of Incorporation and bylaws.
ARTICLE 11
AMENDMENTS
All bylaws of the corporation, whether adopted by the board of directors or
the stockholders, shall be subject to amendment, alteration, or repeal, and new
bylaws may be made, except that:
No bylaw adopted or amended by the stockholders shall be altered
or repealed by the board of directors; and
No bylaw shall be adopted by the board of directors which shall
require more than the stock representing a majority of the voting
power for a quorum at a meeting of stockholders or more than a
majority of the votes cast to constitute action by the stockholders,
except where higher percentages are required by law; provided,
however, that
If any bylaw regulating an impending election of
directors is adopted or amended or repealed by the board of
directors, there shall be set forth in the notice of the next
meeting of the stockholders for the election of directors, the
bylaws so adopted or amended or repealed, together with a
concise statement of the changes made; and
No amendment, alteration, or repeal of this article
XI shall be made except by the stockholders.
CERTIFICATE OF SECRETARY
The undersigned does hereby certify that he is the secretary of REMEDENT
USA, INC., a corporation duly organized and existing under and virtue of the
laws of the state of Nevada; that the above and foregoing bylaws of said
corporation were duly and regularly adopted as such by the board of directors of
said corporation at a duly convened meeting of the board of directors of the
corporation held on January 19, 1999, and that the above and foregoing bylaws
are now in full force and effect and supersede ad replace any prior bylaws of
the corporation.
DATED this ___ day of January, 1999.
/s/
---------------------------------
Jean Louis Vrignaud, Chairman and
Secretary
STOCK EXCHANGE AGREEMENT
This STOCK EXCHANGE AGREEMENT (this "Agreement") is made and entered
into on the dates set forth below, to be effective as of October 2, 1998, by and
between RESORT WORLD ENTERPRISES, INC., a Nevada corporation ("RWEI"), REMEDENT
USA, INC., an Arizona corporation ("REME").
The persons listed in Exhibit A are all of the shareholders of REME.
Such persons are referred to herein as the "Acquired Company's Shareholders."
REME is sometimes referred to herein as the "Acquired Company" because the
transactions described below will result in the acquisition of REME by RWEI.
RWEI, the Acquired Company and the Acquired Company's Shareholders are referred
to collectively herein as the "Parties" and sometimes individually as a "Party."
Recitals
A. On August 31, 1998, RWEI and the Acquired Company signed a letter of
intent (the "Letter of Intent").
B. The Letter of Intent provides for RWEI (and its shareholders, as
required) (a) to change the corporate name of RWEI to Remedent USA, Inc., (b) to
approve and elect a new board of directors selected by REME, (c) to acquire all
of the issued and outstanding stock of REME in exchange for 9,666,120 shares of
newly issued and restricted common stock (the "Acquisition Stock") of RWEI that
will be issued to the Acquired Company Shareholders, (d) to obtain and to accept
the resignation of all existing RWEI officers and directors, (e) to complete any
and all delinquent regulatory filings for RWEI, (f) to provide due diligence
materials to REME, and (g) at Closing (defined below), for Paul Minichiello and
his son, major shareholders of RWEI, to allow their existing stock in RWEI,
consisting of 7,341,400 shares, to be redeemed in exchange for the stock of the
two operating subsidiaries of RWEI. The Acquisition Stock will be issued in
exchange for all of the issued and outstanding stock of the Acquired Company
(the "Acquired Company's Stock").
C. The Letter of Intent provides for the Acquired Company's
Shareholders to transfer to RWEI, in exchange for the Acquisition Stock, all of
the Acquired Company's Stock.
D. The Parties wish to enter into this Agreement to confirm and
definitively provide for transactions that are contemplated in the Letter of
Intent. When executed and delivered by the Parties as provided below, this
Agreement shall supersede and replace the Letter of Intent so far as the
transactions provided for in this Agreement are concerned. Other provisions of
the Letter of Intent, if any, that are not otherwise provided for in this
Agreement, shall survive execution of this Agreement by the Parties unless
superseded by any other agreements.
Agreement
THEREFORE, in consideration of the mutual covenants and conditions
herein contained, and for other good and valuable consideration, the sufficiency
and receipt of which are hereby acknowledged, the Parties, intending to be
legally bound, hereby agree as follows.
ARTICLE 1
SHARE EXCHANGES
1.1 Stock Exchanges. RWEI hereby agrees to sell, convey, assign and
transfer the Acquisition Stock to the Acquired Company's Shareholders in
exchange for their sale, conveyance, assignment and transfer to RWEI of the
Acquired Company's Stock. The Acquired Company's Shareholders and the Acquired
Company hereby agree to sell, convey, assign and transfer the Acquired Company's
Stock to RWEI in exchange for sale, conveyance, assignment and transfer to the
Acquired Company's Shareholders of the Acquisition Stock. Unless the Acquired
Company's Shareholders otherwise direct, the Acquisition Stock shall be
transferred to them in the same proportions as the Acquired Company's
Shareholders currently own the Acquired Company's Stock, as shown in Exhibit A.
1.2 Closing. Consummation of the transactions described in this
Agreement (the "Closing") will occur at 9:00 a.m. on or before October 2, 1998
(the "Closing Date") at the offices of Corporate Architects, Inc. in Scottsdale,
Arizona or at such other location as is mutually agreeable to the Parties.
1.3 Restrictions on Transferability of the Acquisition Stock. At the
Closing, RWEI shall convey to the Acquired Company's Shareholders good, valid
and marketable title to the Acquisition Stock, free and clear of any and all
encumbrances, claims, liens, security interests, pledges or mortgages of any
kind. The Parties hereby agree that the Acquisition Stock, once acquired by the
Acquired Company's Shareholders, will be subject to the restrictions of SEC Rule
144. Unless and until the Acquisition Stock is registered under the Securities
Act of 1933 or the Securities Exchange Act of 1934, or until the restrictions
under Rule 144 lapse, no Acquired Company's Shareholder shall be entitled to
transfer all or any share of the Acquisition Stock to any person or party,
unless the Acquired Company's Shareholder first provides RWEI with an acceptable
opinion of counsel that the proposed transfer will not violate any applicable
law, rule or regulation or any provision of this Agreement. RWEI shall be
entitled to place a restrictive legend on all certificates evidencing ownership
of the Acquisition Stock that provides notice of the provisions of this
paragraph and other applicable provisions of this Agreement.
1.4 Stock Conveyed by the Acquired Company's Shareholders. At the
Closing the Acquired Company's Shareholders shall convey to RWEI good, valid and
marketable title to the Acquired Company's Stock, free and clear of any and all
encumbrances, claims, liens, security interests, pledges or mortgages of any
kind. Following delivery to RWEI of the Acquired Company's Stock, the Acquired
Company shall deliver a new stock certificate to RWEI that replaces the Acquired
Company's Stock certificate delivered to RWEI as delivered above. The new
certificate shall be issued in the name of RWEI.
ARTICLE 2
DELIVERIES BY RWEI AT THE CLOSING
2.1 Deliveries by RWEI. In addition to all other items required to be
delivered by RWEI at the Closing under this Agreement, RWEI shall deliver all of
the following items to the Acquired Company Shareholders, unless an item
described below is to be delivered to a single Party. RWEI shall deliver:
(a) the Acquisition Stock to the Acquired Company's Shareholders,
by delivery to the Acquired Company's Shareholders of one or more
share certificates evidencing ownership of the Acquisition Stock,
issued by RWEI in the name of the Acquired Company's Shareholders;
(b) a certified copy of RWEI's articles of incorporation, amended
as necessary to authorize issuance of the Acquisition Stock, together
with a certificate of RWEI's Secretary, confirming that the
Acquisition Stock has been duly issued as required in this Agreement;
(c) a current Certificate of Good Standing of RWEI, issued by the
Secretary of State of the State of Nevada;
(d) corporate records of RWEI consisting of at least the
following: certified copies of RWEI's bylaws, complete minute books
and a copy of RWEI's stock transfer ledger;
(e) a balance sheet of RWEI dated as of December 31, 1997,
prepared by RWEI's controller or accountant in accordance with
generally accepted accounting principles consistently applied;
(f) certificates of the Secretary and the Vice President or the
President of RWEI verifying the accuracy and authenticity of all
corporate records, other materials, disclosures or documents of RWEI
delivered or provided by RWEI at the Closing, and confirming the
accuracy on the Closing Date of all representations and warranties of
RWEI contained herein;
(g) resignations of all officers and members of the board of
directors of RWEI, effective as of or prior to the Closing Date;
(h) certified copies of resolutions of the board of directors of
RWEI authorizing execution and delivery of this Agreement by RWEI and
consummation by RWEI of all of the transactions that are contemplated
herein;
(i) a legal opinion of RWEI's counsel addressed to the Acquired
Company in form that is mutually agreeable to the Parties; and
(j) copies of all contracts, loan agreements, memoranda and other
documents or instruments (in an amount of $5,000 or more) to which
RWEI is a party or by which it is bound or to which it or any of its
assets is subject.
2.2 Other Documents and Instruments. RWEI shall also deliver any and
all such other documents and instruments of conveyance, assignment and transfer,
and such other items, as may be reasonably requested or necessary in order to
vest good and marketable title to the Acquisition Stock in the Acquired
Company's Shareholders, on or prior to the date of the Closing. All instruments
and other documents or instruments exchanged by the Parties shall be in form as
needed to effectuate the transactions contemplated by this Agreement or to
evidence the same, and shall include any third party consents to the
transactions contemplated herein that may be required by the provisions of any
contracts, agreements or obligations to which RWEI is a party or pursuant to
which a change in the stock ownership of RWEI is deemed to constitute an
assignment or transfer requiring such consent or approval. These additional
conveyances and transfers shall be made by RWEI with a view toward placing the
Acquired Company's Shareholders, on or prior to the date of the Closing in
actual possession and full and complete ownership of the Acquisition Stock as
provided herein.
ARTICLE 3
DELIVERIES BY THE ACQUIRED COMPANY'S SHAREHOLDERS
AT THE CLOSING
3.1 Deliveries by the Acquired Company's Shareholders. In addition to
all other items required to be delivered by the Acquired Company's Shareholders
at the Closing under this Agreement, at the Closing the Acquired Company's
Shareholders shall deliver all of the following items to RWEI. The Acquired
Company's Shareholders shall deliver:
(a) the Acquired Company's Stock, by delivery to RWEI of one or more
share certificates evidencing ownership of the Acquired Company's Stock,
endorsed in blank by the Acquired Company's Shareholders in the name of
RWEI;
(b) certified copies of the Acquired Company's articles of
incorporation, together with certificates of the Acquired Company's
confirming that the Acquired Company's Stock has been duly transferred on
the books and records, and in the stock transfer ledgers of the Acquired
Company, as required in this Agreement;
(c) a current Certificate of Good Standing of the Acquired Company,
issued by the Secretary of State of the State of Arizona.
(d) corporate records of the Acquired Company's Shareholders
consisting of at least the following: certified copies of the Acquired
Company Shareholders' bylaws, complete minute books and a copy of the
Acquired Company's Shareholders' stock transfer ledger;
(e) a balance sheet of the Acquired Company dated as of June 30, 1998,
prepared by the controller or accountant of the Acquired Company in
accordance with generally accepted accounting principles consistently
applied;
(f) certificates of the Secretary and the Vice President or the
President of the Acquired Company verifying the accuracy and authenticity
of all corporate records, other materials, disclosures or documents
pertaining to the Acquired Company delivered or provided by the Acquired
Company's Shareholders at the Closing, and confirming the accuracy on the
Closing Date of all representations and warranties of the Acquired
Company's Shareholders and the Acquired Company as contained herein;
(g) certified copies of resolutions of the board of directors of the
Acquired Company authorizing execution and delivery of this Agreement by
the Acquired Company and consummation by the Acquired Company of all of the
transactions that are contemplated herein;
(h) copies of all contracts of $5,000 (U.S.) or more, loan agreements,
memoranda and other documents or instruments to which the Acquired Company
is a party or by which it is bound or to which it or any of its assets is
subject.
(i) In addition, the Acquired Company shall provide RWEI with
evidence, reasonably satisfactory to RWEI, that the shares of Paul
Minichiello and his son have been redeemed, by exchange of the stock of the
two operating subsidiaries of RWEI for all of the shares of RWEI that are
currently owned by Paul Minichiello and his son, except for 215,000 shares
that they shall be entitled to continue to own after the closing. At a
minimum, such evidence shall include copies of the share certificates owned
by Paul Minichiello and his son, marked "canceled" and evidence of issuance
to Paul Minichiello and his son of the stock of RWEI's two operating
subsidiaries.
3.2 Other Documents and Instruments. The Acquired Company shall also
deliver to RWEI any and all such other documents and instruments of conveyance,
assignment and transfer, and such other items, as may be reasonably requested or
necessary in order to vest good and marketable title to the Acquired Company's
Stock in RWEI on or prior to the date of the Closing. All instruments and other
documents or instruments exchanged by the Parties shall be in form as needed to
effectuate the transactions contemplated by this Agreement or to evidence the
same, and shall include any third party consents to the transactions
contemplated herein that may be required by the provisions of any contracts,
agreements or obligations to which the Acquired Company is a party or pursuant
to which a change in the stock ownership of the Acquired Company is deemed to
constitute an assignment or transfer requiring such consent or approval. These
additional conveyances and transfers shall be made by the Acquired Company with
a view toward placing RWEI on, or prior to, the date of the Closing in actual
possession and ownership of all of the Acquired Company's Stock as provided
herein.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF RWEI
RWEI hereby represents and warrants to, and covenants with, the
Acquired Company Shareholders that the representations and warranties provided
below are true, correct, accurate and complete in any and all respects as of the
effective date of this Agreement, and that the same will be true, correct,
accurate and complete on and as of the date of the Closing (as though made then
and as though the Closing were substituted for the date of this Agreement
throughout the following), except as may be set forth in the Disclosure Schedule
attached hereto (the "RWEI Disclosure Schedule"). The RWEI Disclosure Schedule
will be arranged in paragraphs and subparagraphs that correspond to the
designation of subparagraphs below.
4.1 Organization of RWEI. RWEI is a corporation that is duly organized,
validly existing, and in good standing in all material respects under the laws
of the State of Nevada.
4.2 Authorization of Transaction. RWEI has full actual and legal
corporate power and corporate authority to execute and deliver this Agreement
and to perform its obligations hereunder.
4.3 Enforceable Obligation. This Agreement constitutes the valid and
legally binding obligation of RWEI, enforceable against RWEI in accordance with
this Agreement's terms.
4.4 Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby by RWEI
will (i) to RWEI's knowledge, violate any statute, law, regulation, rule,
judgment, order, decree, stipulation, injunction, charge, or other restriction
of any government, governmental agency, or state or federal court to which RWEI
or the Acquisition Stock are subject or any provision of the articles of
incorporation or bylaws or similar governing rules or documents of RWEI, (ii)
conflict with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify
or cancel, or require any notice under any governmental rule, law or regulation
of any state or federal court or under any contract, lease, sublease, license,
sublicense, franchise, permit, indenture, agreement or mortgage or instrument of
indebtedness or under any other arrangement to which RWEI is a party or by which
it or the Acquisition Stock are bound or to which it or any of the Acquisition
Stock is subject, (iii) nor result in the imposition of any lien, encumbrance,
claim or security interest in, to or affecting any of the Acquisition Stock. To
its knowledge, RWEI does not need to give any notice to, make any filing with,
or obtain any authorization, consent, or approval of any state or federal
government or governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement, except those that will be obtained
or made prior to Closing or those which would fail to have a material adverse
effect on the ability of RWEI to consummate the transactions contemplated by
this Agreement.
4.5 The Acquisition Stock. As of the date of Closing, the Acquisition
Stock will constitute, in the aggregate, 78.6 percent of all of the issued and
outstanding common stock of RWEI, with the rights, privileges and preferences
that are described in RWEI's articles of incorporation. As of the date of
Closing the Acquisition Stock will have been duly and validly issued and is and
will be nonassessable. The Acquisition Stock will be restricted stock,
consistent with Section 1.3 of this Agreement. Title to the Acquisition Stock
will be in the name of the Acquired Company's Shareholders in the official
records of RWEI and in the records of RWEI's stock transfer agent, if any.
4.6 Litigation. To RWEI's knowledge, RWEI is not subject to any
unsatisfied judgment, order, decree, stipulation, injunction, or charge nor is
it a party or threatened to be made a party to any charge, complaint, action,
suit, proceeding, hearing, or investigation of or in any court or quasi-judicial
or administrative agency of any federal, state or local jurisdiction or before
any arbitrator that relates in any way, directly or indirectly, to the
transactions contemplated in this Agreement. RWEI has no actual reason to
believe that any charge, complaint, action, suit, proceeding, hearing, or
investigation will or may be brought or threatened against RWEI in connection
with the transactions contemplated in this Agreement.
4.7 Material Information. As of the Closing, no representation or
warranty by RWEI, nor any statement or certificate furnished or to be furnished
to the Acquired Company's Shareholders pursuant hereto or in connection with the
transactions contemplated hereby, contains or will contain any untrue statement
of a material fact, or omits or will omit to state any material fact necessary
to make the representation, warranty, statement or certificate not misleading.
At or prior to the Closing RWEI will deliver to the Acquired Company's
Shareholders a Disclosure Document (the "RWEI Disclosure Document") that
provides the Acquired Company's Shareholders with all material information
concerning RWEI and the Acquisition Stock, as required by Rule 10b-5 of the
Securities and Exchange Commission, and RWEI and the Acquired Company's
Shareholders will take all actions and steps that are necessary to cause the
Acquired Company's Shareholders' acquisition of the Acquisition Stock to be
qualified under Regulation D of the Securities and Exchange Commission as a
private placement of securities and to be similarly qualified under applicable
provisions of state laws. The Parties will cooperate with each other in signing
documents and forms to be filed with federal and state regulatory agencies to
accomplish the results contemplated in this paragraph.
4.8 Documentation. Prior to the Closing RWEI will deliver to the
Acquired Company's Shareholders, materially correct, accurate and complete
copies of all of the contracts in an amount of $5,000 or more, and agreements
and documents that comprise or relate to RWEI or the Acquisition Stock in any
way. As to each such contract, agreement, or document (collectively, each
"Contract"):
(a) the Contract is the legal, valid, binding, and enforceable
obligation of the parties thereto as of the Closing Date, and is in
full force and effect as of the Closing Date;
(b) to the extent permitted by applicable law, after the Closing,
to the best of RWEI's knowledge, each Contract will continue to be
legal, valid, binding, enforceable, and in full force and effect on
identical terms following the Closing;
(c) to the knowledge of RWEI, no party to the Contract is in
breach or default, and no event has occurred which, with notice or
lapse of time, would constitute a breach or default or permit
termination, modification, or acceleration of the Contract;
(d) to the knowledge of RWEI, no party to the Contract has
repudiated, breached or anticipatorily breached any provision thereof,
nor is there any reason to think that any such is likely to occur or
may occur in the future;
(e) to the knowledge of RWEI, there are no disputes, oral
agreements, or forbearance programs in effect as to the Contract; and
(f) to the knowledge of RWEI, RWEI has not assigned, transferred,
conveyed, mortgaged, deeded in trust, or encumbered any interest in
the Contract.
4.9 Legal Compliance.
(a) To its knowledge, RWEI has complied in all material respects
with all laws (including rules and regulations thereunder) of federal,
state and local governments (and all agencies thereof), and no charge,
complaint, action, suit, proceeding, hearing, investigation, claim,
demand, or notice has been filed or commenced against any of RWEI
alleging any failure to comply with any such law or regulation.
(b) RWEI has complied in all material respects with all
applicable laws (including rules and regulations thereunder) relating
to the employment of labor, employee civil rights, and equal
employment opportunities.
4.10 Receipt of Disclosure Schedule. Prior to Closing, RWEI received
and reviewed a copy of the Acquired Company's Disclosure Schedule described in
Section 5.10 below, had discussions with representatives of the Acquired Company
and the Acquired Company's Shareholders, and received from such representatives
all such additional documents and information as RWEI requested.
4.11 Restricted Stock. RWEI understands that the Acquired Company's
Stock will not be registered with the Securities and Exchange Commission, and
that transferability of the Acquired Company's Stock will be subject to the
provisions and restrictions of state and federal securities laws.
4.12 Registration Representations. RWEI is the sole party in interest
agreeing to purchase the Acquired Company's Stock by entering into this
Agreement. RWEI is acquiring the Acquired Company's Stock for investment
purposes only and not with a view to the resale or other distribution thereof,
in whole or in part. As stated in the previous paragraph, RWEI is aware that as
of the date of Closing the Acquired Company's Stock has not been and will not be
registered under the 1933 Act.
4.13 Third Party Consents. All third parties whose consent to the
transactions contemplated in this Agreement are listed in the Disclosure
Schedule. The Disclosure Schedule also indicates the contract, agreement, permit
or other relationship to the third party that gives rise to the need for the
third party's consent.
4.14 Due Diligence Period. During the time period from the effective
date of this Agreement until the Closing date (the "Due Diligence Period"), RWEI
shall be entitled to investigate the Acquired Company, review its files, visit
the Acquired Company's business premises and to talk with officers and employees
of the Acquired Company and to meet with any and all other third parties, public
and private, and to perform such other due diligence reviews and investigations
pertaining to the transactions contemplated in this Agreement as RWEI determines
is necessary or proper.
ARTICLE 5
REPRESENTATIONS, WARRANTIES AND COVENANTS OF
THE ACQUIRED COMPANY'S SHAREHOLDERS
The Acquired Company's Shareholders represent and warrant to, and
covenant with, RWEI that the representations and warranties provided below are
true, correct, accurate and complete in all respects as of the effective date of
this Agreement, and that the same will be true, correct, accurate and complete
on and as of the date of the Closing (as though made then and as though the
Closing were substituted for the date of this Agreement throughout the
following), except as may be set forth in the Disclosure Schedule attached
hereto (the "Acquired Company's Shareholders' Disclosure Schedule"). The
Acquired Company's Shareholders' Disclosure Schedule will be arranged in
paragraphs and subparagraphs that correspond to the designation of subparagraphs
below.
5.1 Organization of the Acquired Company. The Acquired Company is a
corporation that is duly organized, validly existing, and in good standing in
all material respects under the laws of the State of Arizona. The description of
the Acquired Company's Stock that is contained in Exhibit A attached is a true,
correct, complete and accurate description. The Acquired Company's Shareholders
own 100% of all of the issued and outstanding stock of the Acquired Company's
Stock. There are no warrants, options, convertible securities or other interests
or rights to acquire the Acquired Company's Stock.
5.2 Authorization of Transaction. The Acquired Company has full actual
and legal corporate power and corporate authority to execute and deliver this
Agreement and to perform its obligations hereunder.
5.3 Enforceable Obligation. This Agreement constitutes the valid and
legally binding obligation of the Acquired Company and the Acquired Company's
Shareholders, enforceable against each of them in accordance with this
Agreement's terms.
5.4 Noncontravention. Neither the execution and delivery of this
Agreement by the Acquired Company and the Acquired Company's Shareholders, nor
the consummation by any of them of the transactions contemplated hereby, will
(i) violate any statute, law, regulation, rule, judgment, order, decree,
stipulation, injunction, charge, or other restriction of any government,
governmental agency, or court to which the Acquired Company or the Acquired
Company's Shareholders or the Acquired Company's Stock are subject, or any
provision of the articles of incorporation or bylaws or similar governing rules
or documents of the Acquired Company, (ii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify or cancel, or require any notice
under any governmental rule, law or regulation or under any contract, lease,
sublease, license, sublicense, franchise, permit, indenture, agreement or
mortgage or instrument of indebtedness or under any other arrangement to which
the Acquired Company or the Acquired Company's Shareholders is a party or by
which any of them is bound or to which any of them is subject, (iii) nor result
in the imposition of any lien, encumbrance, claim or security interest in, to or
affecting any assets of the Acquired Company or the Acquired Company's Stock. No
Acquired Company or Acquired Company Shareholder needs to give any notice to,
make any filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement.
5.5 Documentation. Prior to the Closing, the Acquired Company and/or
the Acquired Company's Shareholders will deliver to RWEI true, correct, accurate
and complete copies of all of the contracts, agreements and documents that
comprise or relate to the Acquired Company or the Acquired Company's Stock in
any way. As to each such contract, agreement, or document (collectively, each
"Contract"):
(a) the Contract is the legal, valid, binding, and enforceable
obligation of the parties thereto as of the Closing Date, and is in
full force and effect as of the Closing Date;
(b) to the extent permitted by applicable law, after the Closing,
each Contract will continue to be legal, valid, binding, enforceable,
and in full force and effect on identical terms following the Closing;
(c) no party to the Contract is in breach or default, and no
event has occurred which, with notice or lapse of time, would
constitute a breach or default or permit termination, modification, or
acceleration of the Contract;
(d) no party to the Contract has repudiated, breached or
anticipatorily breached any provision thereof, nor is there any reason
to think that any such is likely to occur or may occur in the future;
(e) there are no disputes, oral agreements, or forbearance
programs in effect as to the Contract; and
(f) no Acquired Company nor Acquired Company's Shareholders have
assigned, transferred, conveyed, mortgaged, deeded in trust, or
encumbered any interest in the Contract.
5.6 Litigation. Neither the Acquired Company nor any of the Acquired
Company's Shareholders is subject to any unsatisfied judgment, order, decree,
stipulation, injunction, or charge nor is it a party or threatened to be made a
party to any charge, complaint, action, suit, proceeding, hearing, or
investigation of or in any court or quasi-judicial or administrative agency of
any federal, state or local jurisdiction or before any arbitrator that relates
in any way, directly or indirectly, to the transactions contemplated in this
Agreement. No Acquired Company or Acquired Company's Shareholder has any reason
to believe that any charge, complaint, action, suit, proceeding, hearing, or
investigation will or may be brought or threatened against any Acquired Company
in connection with the transactions contemplated in this Agreement.
5.7 Legal Compliance.
(a) The Acquired Company has complied with all laws (including
rules and regulations thereunder) of federal, state and local
governments (and all agencies thereof), and no charge, complaint,
action, suit, proceeding, hearing, investigation, claim, demand, or
notice has been filed or commenced against the Acquired Company
alleging any failure to comply with any such law or regulation.
(b) The Acquired Company has complied in all material respects
with all applicable laws (including rules and regulations thereunder)
relating to the employment of labor, employee civil rights, and equal
employment opportunities.
5.8 Material Information. As of the Closing, no representation or
warranty by the Acquired Company or the Acquired Company's Shareholders, nor any
statement or certificate furnished or to be furnished to any person or Party
pursuant hereto or in connection with the transactions contemplated hereby,
contains or will contain any untrue statement of a material fact, or omits or
will omit to state any material fact necessary to make the representation,
warranty, statement or certificate not misleading. At or prior to the Closing
the Acquired Company's Shareholders will deliver to RWEI a Disclosure Document
(the "Acquired Company's Disclosure Document") that provides RWEI with all
material information concerning the Acquired Company, as required by Rule 10b-5
of the Securities and Exchange Commission, and the Acquired Company's
Shareholders and RWEI will take all actions and steps that are necessary to
cause the Acquired Company's Shareholders' acquisition of the Acquisition Stock
to be qualified under Regulation D of the Securities and Exchange Commission as
a private placement of securities and to be similarly qualified under applicable
provisions of state laws. The Parties will cooperate with each other in signing
documents and forms to be filed with federal and state regulatory agencies to
accomplish the results contemplated in this paragraph.
5.9 Receipt of Disclosure Schedule. Prior to making the decision to
acquire the Acquisition Stock as provided herein, the Acquired Company and the
Acquired Company's Shareholders received and reviewed a copy of the Disclosure
Schedule described in Section 4.10, had discussions with representatives of RWEI
and received from such representatives such additional documents and information
as the Acquired Company's Shareholder requested. Each of the Acquired Company's
Shareholders acknowledges that he or she is sophisticated and experienced in
matters relating to RWEI and its planned business activities as described in the
Disclosure Schedule.
5. 10 Restricted Stock. Each of the Acquired Company's Shareholders
understands that the Acquisition Stock will be restricted stock, not registered
with the Securities and Exchange Commission. Unless and until the Acquisition
Stock is registered under the Securities Exchange Act of 1934, no Acquired
Company's Shareholder shall be entitled to transfer all or any share of the
Acquisition Stock unless the Acquired Company's Shareholder first provides RWEI
with an acceptable opinion of counsel that the proposed transfer will not
violate any applicable law, rule or regulation or any provision of this
Agreement. RWEI shall be entitled to place a restrictive legend on all
certificates evidencing ownership of the Acquisition Stock that provides notice
of the provisions of this paragraph and other applicable provisions of this
Agreement. Unless otherwise provided in this Agreement, each of the Acquired
Company's Shareholders shall be prohibited from trading the Acquisition Stock
for a period of two years after the date of the Closing.
5.11 Registration Representations. Each of the Acquired Company
Shareholders is the sole party in interest agreeing to purchase the Acquisition
Stock by entering into this Agreement. The Acquired Company's Shareholders are
acquiring the Acquisition Stock for the Acquired Company's Shareholders' own
account, for investment purposes only and not with a view to the resale or other
distribution thereof, in whole or in part. As stated above, the Acquired
Company's Shareholders is aware that as of the date of Closing the Acquisition
Stock has not been and will not be registered under the 1933 Act and that RWEI
provides no assurance that the Acquisition Stock will ever be registered under
such act. Each of the Acquired Company's Shareholders is willing and able and
agrees to bear the economic risk of investment in the Acquisition Stock for an
indefinite period of time, and each is capable of bearing that risk. Each of the
Acquired Company's Shareholders is knowledgeable with respect to the financial,
tax and business aspects of ownership of the Acquisition Stock and of the
business operations conducted by RWEI, or the Acquired Company has been
represented by a person with such knowledge and expertise in connection with
acquisition of the Acquisition Stock.
5.12 Third Party Consents. All third parties, if any, whose consent to
the transactions contemplated in this Agreement are listed in the Disclosure
Schedule. The Disclosure Schedule also indicates the contract, agreement, permit
or other relationship to the third party that gives rise to the need for the
third party's consent.
5.13 Due Diligence Period. During the time period from the effective
date of this Agreement until the Closing date (the "Due Diligence Period"), the
Acquired Company's Shareholders shall be entitled to investigate RWEI, review
its files, to visit RWEI's business premises and to talk with officers and
employees of RWEI and to meet with any and all other third parties, public and
private, and to perform such other due diligence reviews and investigations
pertaining to the transactions contemplated in this Agreement as any Acquired
Company's Shareholder determines is necessary or proper. The Acquired Company's
Shareholders have received the financial statements of RWEI dated through
December 31, 1997, and deems them sufficient for purposes of entering into this
transaction.
5.14Financial Statements. Attached to this Agreement as Exhibit B are
balance sheets (the "Financial Statements") of the Acquired Company. The
Financial Statements have been prepared in accordance with generally accepted
accounting principles consistently applied, and are true and accurate. Since the
date of the Financial Statements, there has been no change in the financial
condition of the Acquired Company. The Acquired Company have no liabilities,
commitments or obligations, contingent or otherwise, not shown on the Financial
Statements. The most recent balance of the Acquired Company shows it to own
unencumbered assets with a value of at least $400,000.
ARTICLE 6
CONDITIONS PRECEDENT
6.1 Conditions Precedent to the Obligations of RWEI. The following are
conditions precedent to the obligation of RWEI to sell and convey the
Acquisition Stock to the Acquired Company's Shareholders and to receive an
assignment of the Acquired Company's Stock at the Closing. Any condition listed
below may be waived by RWEI at or prior to the Closing Date.
(a) Delivery to RWEI of all information and materials required to
be delivered under any provision of this Agreement;
(b) Receipt of all necessary third party consents;
(c) Performance by each Acquired Company Shareholder of all of
his or her or its obligations under this Agreement that are required
to be performed prior to Closing;
(d) True and correct representations and warranties by the
Acquired Company and the Acquired Company's Shareholders in connection
with this Agreement; and
(d) Discovery of no materially adverse information at or prior to
the Closing concerning the Acquired Company.
6.2 Conditions Precedent to the Obligations of the Acquired Company's
Shareholders. The following are conditions precedent to the obligations of
Acquired Company's Shareholders to sell and transfer the Acquired Company Stock
to RWEI, and to acquire the Acquisition Stock from RWEI, at the Closing. Any
condition listed below may be waived by the Acquired Company's Shareholders at
or prior to the Closing.
(a) Delivery to the Acquired Company's Shareholders of all
information and materials required to be delivered by RWEI under any
provision of this Agreement;
(b) Receipt of all necessary third party consents;
(c) Performance by RWEI of all of its obligations under this
Agreement that are required to be performed prior to Closing;
(d) Receipt of evidence of satisfactory completion of the
transactions involving Paul Minichiello and his son that are described
above; and
(e) Discovery of no materially adverse information at or prior to
the Closing concerning RWEI.
6.3 Survival of Representations and Warranties. The representations and
warranties of the Parties contained in this Agreement shall survive the Closing
and shall continue to be the obligations of the Parties for a period of two
years after the date of the Closing.
ARTICLE7
GENERAL PROVISIONS
7.1 Costs and Fees. If any Party breaches any term of this Agreement,
the breaching Party agrees to pay the non-breaching Party all reasonable
attorneys' fees, expert witness fees, investigation costs, costs of tests and
analysis, travel and accommodation expenses, deposition and trial transcript
costs, court costs and other costs and expenses incurred by the non-breaching
Party in enforcing this Agreement or preparing for legal or other proceedings,
at the trial or appellate level, whether or not such proceedings are instituted.
If any legal or other proceedings are instituted, the Party prevailing in any
such proceeding shall be paid all of the aforementioned costs, expenses and fees
by the other Party, and if any judgment is secured by such prevailing Party, all
such costs, expenses, and fees shall be included in such judgment, attorneys'
fees to be set by the court and not by the jury. References in this paragraph to
"legal proceedings" refer to litigation as well as arbitration proceedings and
any other similar or related proceedings.
7.2 Waiver. No delay by a Party in exercising any right or remedy shall
constitute a waiver of a Party's rights under this Agreement, and no waiver by
any Party of the breach of any covenant of this Agreement by the other shall be
construed as a waiver of any preceding or succeeding breach of the same or any
other covenant or condition of this Agreement.
7.3 Indemnification. Each Party (the "Indemnifying Party") shall
protect, indemnify and hold harmless the other Party and its directors,
officers, employees, agents, affiliates and representatives (each an
"Indemnified Party") against any and all costs, expenses, damages (whether such
damages are general, special, consequential, limited, direct or indirect or
incidental), liabilities or losses, including attorneys' fees, caused by, for or
on account of the Indemnifying Party's negligence, gross negligence or willful
misconduct or failure to perform its obligations under this Agreement or the
negligence, gross negligence or willful misconduct of the Indemnifying Party's
directors, officers, employees, agents affiliates or representatives.
(a) If an Indemnified Party intends to seek indemnification under
this paragraph from any Indemnifying Party with respect to any action
or claim, the Indemnified Party shall give the Indemnifying Party
notice of such claim or action upon the receipt of actual knowledge or
information by the Indemnified Party of any possible claim or of the
commencement of such claim or action, which period shall in no event
be later than the earlier of (i) fifteen business days prior to the
last day of responding to such claim or action or (ii) one half of the
period allowed for responding to such claim or action or, if no time
period for responding exists, as soon as reasonably possible. The
Indemnifying Party shall have no liability under this paragraph for
any claim or action for which such notice is not provided, unless the
failure to give such notice does not prejudice the Indemnifying Party.
(b) The Indemnifying Party shall have the right to assume the
defense of any such claim or action, at its sole cost and expense,
with counsel designated by the Indemnifying Party and reasonably
satisfactory to the Indemnified Party: provided, however, that if the
defendants in any such action include both the Indemnified Party and
the Indemnifying Party, and the Indemnified Party shall have
reasonably concluded that there may be legal defenses available to it
which are different from or additional to those available to the
Indemnifying party, the Indemnified Party shall have the right to
select separate counsel, at the Indemnifying Party's expense, to
assert such legal defenses and to otherwise participate in the defense
of such action on behalf of such Indemnified Party.
(c) Should any Indemnified Party be entitled to indemnification
under this Section as a result of a claim by a third party, and should
the Indemnifying Party fail to assume the defense of such claim or
action, the Indemnified Party may, at the expense of the Indemnifying
Party, contest or, (with the prior consent of the Indemnifying Party,
which consent shall not be unreasonably withheld) settle such claim or
action. Except to the extent expressly provided herein, no Indemnified
Party shall settle any claim or action with respect to which it has
sought or intends to seek indemnification pursuant to this Section
without the prior written consent of the Indemnifying Party, which
consent shall not be unreasonably withheld or delayed.
(d) If an Indemnifying Party is obligated to indemnify and hold
any Indemnified Party harmless under this Agreement, the amount owing
to the Indemnified Party shall be the amount of such Indemnified
Party's actual out-of-pocket loss, net of any insurance or other
recovery.
(d) The duty to indemnify under this Agreement will continue in
full force and effect for a period of two years with respect to any
loss, liability, damage or other expense based on facts or conditions
which occurred prior to such termination.
7.4 Notices. No notice, consent, approval or other communication
provided for herein or given in connection herewith shall be validly given,
made, delivered or served unless it is in writing and delivered personally, sent
by overnight courier, or sent by registered or certified United States mail,
postage prepaid, with return receipt requested, to the addresses for each Party
set forth below. Any Party hereto may from time to time change its address by
notice to the other Parties given in the manner provided herein. Notices,
consents, approvals, and communications by mail shall be deemed delivered upon
the earlier of forty-eight (48) hours after deposit in the United States mail in
the manner provided above or upon delivery to the respective addresses set forth
above if delivered personally or sent by overnight courier. Addresses of the
Parties are the following:
To RWEI:
PAUL'S OF THE NORTH SHORE
127 Esplanade
North Vancouver, British Columbia V7W 1A1
To the Acquired Company:
REMEDENT USA, INC.
7301 East Evans Road
Scottsdale, Arizona 85250
7.5 Interpretation and Time. The captions of the paragraphs of this
Agreement are for convenience only and shall not govern or influence the
interpretation hereof. This Agreement is the result of negotiations between the
Parties and, accordingly, shall not be construed for or against any Party
regardless of which Party drafted this Agreement or any portion thereof. Time is
of the essence under this Agreement.
7.6 Successors and Assigns. All of the provisions hereof shall inure to
the benefit of and be binding upon the successors and assigns of the Parties.
7.7 No Partnership. This Agreement is not intended to, and nothing
contained in this Agreement shall, create any partnership, joint venture or
other similar arrangement between the Parties.
7.8 Further Documents. Each of the Parties shall execute and deliver
all such other and additional documents and perform all such acts, in addition
to execution and delivery of this Agreement and performance of the Party's
obligations hereunder, as are reasonably required from time to time in order to
carry out the purposes, matters and transactions that are contemplated in this
Agreement.
7.9 Incorporation of Exhibits. All exhibits attached to this Agreement
are by this reference incorporated herein.
7.10 Governing Law. This Agreement shall be governed by the laws of the
State of Arizona, without giving effect to the conflict of law provisions or
principles of the State of Arizona.
7.11 Date of Performance. If the date of performance of any obligation
or the last day of any time period provided for herein should fall on a
Saturday, Sunday or legal holiday, then said obligation shall be due and owing,
and said time period shall expire, on the first day thereafter which is not a
Saturday, Sunday or legal holiday. Except as may otherwise be set forth herein,
any performance provided for herein shall be timely made if completed no later
than 5:00 p.m., Phoenix, Arizona time, on the day of performance.
7.12 Counterparts. This Agreement may be executed in any number of
counterparts. This Agreement may be signed by original signatures or by fax
signatures. Any set of counterparts of this Agreement, whether faxed or
originals or both, showing signatures by all Parties, taken together, shall
constitute a single copy of this Agreement.
7.13 Resolution of Disputes. In the event of any dispute between the
Parties as to their rights and obligations under this Agreement, including, but
not limited to, any question as to whether or not a Party has performed its
obligations fully or remedied an alleged breach, and any and all other disputes
arising under this Agreement, shall be resolved as follows.
(a) The Parties shall submit their dispute to at least four (4)
hours of mediation in accordance with the mediation procedures of
American Arbitration Association ("AAA").
(b) In the event the dispute does not then settle within 15
calendar days after the first mediation session, the Parties agree to
submit the dispute to binding arbitration in accordance with the
arbitration procedures of the AAA except as modified in this
Agreement. The arbitration hearing shall be conducted no later than 45
calendar days after the first mediation session.
(c) The arbitrator or arbitrators conducting the arbitration
hearing shall render the arbitration decision in writing, which
writing shall explain the reasoning and bases for the decision.
(d) The Parties agree to share equally the costs of mediation.
However, if the dispute is settled through arbitration, the prevailing
Party shall be entitled to recover all costs incurred, including
reasonable attorneys' fees, to enforce its rights hereunder, in
addition to any damages recovered, as provided in "Costs and Fees"
above.
7.14 Severability. If any term or provision of this Agreement shall, to
any extent, be determined by a court of competent jurisdiction to be invalid or
unenforceable, the remainder of this Agreement shall not be affected thereby,
and each term and provision of this Agreement shall be valid and be enforceable
to the fullest extent permitted by law.
7.15 Assignment. No Party shall assign this Agreement, nor any interest
arising herein, without the written consent of the other Parties.
7.16 Recitals. The recitals set forth above are a part of this
Agreement.
7.16 Jurisdiction and Venue. Venue for and jurisdiction over any legal
proceedings available to the Parties hereunder shall lie in the appropriate
courts of the State of California, located in Los Angeles, California.
IN WITNESS WHEREOF, the Parties hereto have hereunder affixed
their signatures on the dates set forth below to be effective as of the date
first set forth above.
RESORT WORLD ENTERPRISES, INC., a
Nevada corporation,
Date:__________________________ By:________________________________________
Name:______________________________________
Its:_______________________________________
REMEDENT USA, INC., an Arizona corporation,
Date: Sept. 30, 1998 By: /s/
-------------------------- -----------------------------------------
Rebecca M Inzunza, President
Date: Sept. 30, 1998 By: /s/
-------------------------- -----------------------------------------
Jean Louis Vrignaud, Secretary
MARKETING AGREEMENT
This Agreement is made and effective as of the 5th day of October, 1996,
by and among
Remedent USA Inc. or Assignee,
(hereinafter referred as "REM")
and
Jean Louis Vrignaud,
109 Rue du Cherche-Midi 75006 Paris France
(hereinafter referred as "JLV")
RECITALS
A.
"JLV" is the sole and rightful owner of certain double ended toothbrush
technology, Patents pending and other goodwill relating to said technology
collectively the "Intellectual Property", Products", or "Unit" as the context of
this "Agreement" requires.
B.
"REM" is in the business of marketing and distributing personal care
products.
C.
"JLV" will enter into a manufacturing agreement with ORAL 2000 or
Assignee in which "JLV" will provide ORAL 2000 or Assignee with the world-wide
exclusive manufacturing rights for the products.
D.
It is the intent of the parties to exploit the Intellectual Property
through the implementation of this Marketing Agreement by which "JLV" shall
grant "REM" the world-wide exclusive marketing rights to products derived from
said "Intellectual Property".
In witness whereof, the parties agree as follows:
1. GRANT OF LICENSE
1.1 Exclusive License
For receipt of 50,000 shares of Remedent USA, Inc., "JLV" hereby grants
and conveys to "REM", and "REM" hereby accepts from "JLV" , the world-wide
exclusive License to market the Products which are derived from the Intellectual
Property for the double ended toothbrush which is more clearly identified in the
attached drawing as "Exhibit 1".
1.2 Royalties
"JLV" is entitled to a royalty of 3.5% on invoiced amount. "JLV" shall
acquire the right to royalty after full payment by the customers of the invoiced
price. In case of partial payment made in compliance with the sales contract,
"JLV" shall be entitled to a proportional payment.
1.3 Term
The term of this Marketing Agreement is perpetual unless terminated
sooner in accordance with the terms of this Agreement.
2. OBLIGATIONS OF "REM"
2.1 Promotional Budget
As partial consideration to "JLV" for granting the world-wide exclusive
marketing rights for the products, "REM" does hereby agree to establish and
expend a Budget of not less than US$1.5 million during the first three (3) years
of this Agreement, to promote the products.
2.2 Product Testing
As additional partial consideration to "JLV", "REM" agrees to establish
and expend a budget of not less than US$150,000 during the first 36 months of
this Agreement to conduct clinical tests of the product for the purpose of
gaining recognized Institutional approvals such as ADA (USA) and equivalent ECC
Standards.
2.3 Promotional Samples
As additional partial consideration to "JLV" , "REM" agrees to provide
a significant volume of no-charge promotional samples to dentists, hygienists,
dental students, Institutions, Distributors and Consumers, for the purpose of
product exposure to enhance rapid growth of the business volume. Such
promotional samples shall be provided to REM in quantities as set forth in
attached Exhibit II.
2.4 Distribution Network
"REM" agrees to use its best efforts to establish as quickly as
possible, a world-wide network of Distributors for all the products, and in
doing so create to the greatest extent possible, a cohesive plan to distribute
the product throughout the world with minimum distribution over-lap problems.
3. OBLIGATIONS OF "JLV"
3.1 Patents & Trademarks
"JLV" agrees, at REM expense, to apply for Patents in as many countries
as financially feasible. "REM" further agrees to expand the present Trademarks
to other countries where such is financially practical.
3.2 World-wide Manufacturing License
"JLV" agrees to grant a world-wide manufacturing license to ORAL 2000
or Assignee; such license shall be world-wide. "JLV" further agrees to ORAL 2000
or Assignee to provide units to "REM" at the price as set forth in the attached
Exhibit IV.
3.3 Promotional Samples
"JLV" agrees to cause the manufacturer to provide promotional samples
to "REM" in such quantities as set forth in Exhibit II, and further agrees to
cause the manufacturer to provide such samples at actual manufacturing cost,
without profit margin.
4. QUOTA, PRICE, TERMS
4.1 Quotas
"REM" agrees to meet the minimum volume quotas as set forth in the
attached Exhibit III in order to maintain the exclusivity of this Agreement. If
quotas are not met according to the attached Exhibit III, "REM" shall have 210
days to correct the problem and if unable to meet the quota at that time, the
exclusive nature of this Agreement shall revert to non-exclusive.
4.2 Price
"JLV" agrees to cause ORAL 2000 or Assignee to provide brushes to "REM"
according to the price schedule as set forth in Exhibit IV. Since the product is
not yet in production, "JLV" cannot assure "REM" that the price as set forth
will be the final price and as such the parties agree that the price as set
forth in Exhibit IV is only a target price. "REM" agrees that the price may
increase to reflect increases in actual cost once the product is in production.
4.3 Terms
"REM" agrees that payment terms shall be by full letter of credit for
all orders above the amount US$75,000. For orders under the amount US$75,000
other terms of prepayment shall be negotiated.
5. GENERAL
5.1
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective legal successors but shall not otherwise be
assignable by either party without the written consent of the other.
5.2
No variation or amendment of this Agreement shall bind either party
unless made in writing in the English language and agreed to in writing by duly
authorized officers of both parties.
5.3
If any provisions of this Agreement is agreed by the parties to be
illegal, void or unenforceable under any law that is applicable hereto or if any
court of competent jurisdiction in a final decision so determines this Agreement
shall continue in force save that such provision shall be deemed to be excised
herefrom with effect from the date of such agreement or decision or such earlier
date as the parties may agree.
5.4
The heading in this Agreement are for convenience only and are not
intended to have any legal effect.
5.5
A failure by either party hereto exercise or enforce any rights
conferred upon it by this Agreement shall not be deemed to be a waiver of any
such rights or operate so as to bar the exercise or enforcement thereof at any
subsequent time or times.
6. NOTICES
6.1
Any notice required to be given hereunder by either party to the other
shall be in writing and shall be served by sending the same by registered or
recorded delivery post or facsimile to the address of the other party as given
herein or to such other address as that party may have previously notified to
the party giving notice as its address for such service.
6.2
All notices, documents, communications and any other data to be
provided under this Agreement shall be in the English language unless otherwise
agreed.
7. CONFIDENTIALITY
The existence of and all terms and conditions of this agreement shall
forever remain strictly confidential. Two masters are created and no copy shall
be permitted.
8. ARBITRATION - APPLICABLE LAW
8.1
Any dispute arising out of or in connection with the present contract
shall be finally settled in accordance with the Rules of Conciliation and
Arbitration of the International Chamber of commerce by one or more arbitrators
designated in accordance to said Rules.
8.2
The arbitrators shall apply the provisions contained in this contract
and the principles of law generally recognized in international trade as
applicable to international distribution contracts.
By: /s/ Rebecca M Inzunza Date: 10-5-96
-------------------------------
REMDENT USA INC.
By: /s/ Jean Louis Vrignaud Date: 10/7/96
--------------------------------
Jean Louis Vrignaud
EXHIBIT II
QUANTITY OF BRUSHES AT COST FOR PROMOTION
-----------------------------------------
The following quantity of brushes shall be provided to REM for giving
away to dental professional in a massive promotional effort.
YEAR QUANTITY
---- --------
1st 150,000
2nd 200,000
3rd 250,000
4th 200,000
5th 150,000
Each Year Thereafter 100,000
EXHIBIT III
PRODUCTION QUOTA
YEAR QUANTITY
---- --------
1st 0.2 Million
2nd 1 Million
3rd 5 Million
4th 10 Million
5th and each year thereafter 15 Million
EXHIBIT IV
BRUSH PRICE TO "REM" BY LETTERS OF CREDIT
-----------------------------------------
BRUSHES will be manufactured using two (2) choices of material.
1. Polypropylene - Less expensive and less attractive but functionally
equivalent
Price to JLV US$0.3397 each
F.O.B. China factory
2. Propionate - More expensive and more attractive
Price to JLV US$0.3970 each
F.O.B. China factory
Provided that the price for sale of Brushes to REM shall be subject to
increases from time to time to reflect increases in manufacturing costs as
notified in writing by the Company to REM.
ADDITION TO MARKETING AGREEMENT
This Addition is made and effective as of the 25th day of October, 1998,
by and among
Remedent USA Inc.
(hereinafter referred as "REM")
and
Jean Louis Vrignaud,
109 Rue du Cherche-Midi 75006 Paris France
(hereinafter referred as "JLV")
In witness whereof, the parties agree as follows:
1. LIMITS OF ROYALTIES
Both parties agree to increase the royalty to 4.5% (four and half
percent), beginning February 1, 1999, while at the same time limiting
the total payout of the royalty to $2,000,000 (two million).
2. QUOTAS
The parties agree that the non-attainment of the quotas as set in the
marketing contract is not considered as a breach of the marketing
contract.
3. AUTOMATIC INCLUSION UNDER MARKETING CONTRACT
This addition to the Marketing contract forms an integral part of the
Marketing contract.
By: /s/ Rebecca M Inzunza Date: 10-25-98
-------------------------------------------------
REMDENT USA INC.
By: /s/ Jean Louis Vrignaud Date: 10-25-98
-------------------------------------------------
Jean Louis Vrignaud
SALES AND MARKETING MANAGEMENT SERVICES AGREEMENT
THIS AGREEMENT dated March 11, 1999 between REMEDENT USA, INC., an Arizona
corporation, having its principal place of business at 1220 Birch Way,
Escondido, California ("Principal"), and DOUBLE EAGLE MARKET DEVELOPMENT
COMPANY, a California corporation, having its principal place of business at
4000 Long Beach Boulevard, Suite 228, Long Beach, California 90807 ("Double
Eagle").
Principal is in the business of manufacturing, marketing and distributing
Consumer Products and desires to secure the services of Double Eagle, as
described below, to provide sales and marketing management services and to
negotiate the sales of such products in Principal's name and for its account.
Accordingly, Principal and Double Eagle agree as follows:
1. Appointment. Subject to the terms and conditions of this Agreement,
a) Principal retains the services of Double Eagle and Double Eagle agrees to
provide sales material development and assessment (Stage 1), sales and marketing
management of the current brokers and accounts (Stage 2), and sales and
marketing management services (Stage 3) to support the Principal in the
development and expansion of Principal's sales beyond current accounts, as
described in the February 23, 1999 Proposal letter, attached hereto as Exhibit
"A", and b) Principal hereby appoints Double Eagle and Double Eagle agrees to
act as Principal's exclusive representative for soliciting wholesale orders for
the Products described in Exhibit "B" attached hereto ("Products") from existing
and prospective customers in the geographical area described in Exhibit "C"
attached hereto ("Territory").
2. Double Eagle's Efforts. Double Eagle shall use its best efforts to
solicit wholesale orders for the Products from the customers in the Territory.
Double Eagle shall employ, at its sole expense, a sufficient number of
salespersons to serve the customers in the Territory in a manner intended to
maximize Principal's sale of the Products to the customers in the Territory.
3. Double Eagle's Conduct. Double Eagle shall require its salespersons
to comply with Principal's standards for competency, business ethics, courtesy,
and service while soliciting wholesale orders for the Products from the
customers in the Territory. Double Eagle shall assure that its salespersons do
not engage in any conduct or participate in any activity which is offensive to
the standards of the general community for decency, morality, or social
propriety, likely to result in scandal, ridicule, or contempt for the applicable
salesperson, Double Eagle, Principal or its Products.
4. Wholesale Orders. All wholesale orders solicited by Double Eagle
shall be promptly submitted to Principal. The product descriptions, unit prices,
minimum order quantities, and other terms of sale applicable to each wholesale
order shall be set forth in writing by Principal. Each wholesale order taken by
Double Eagle shall be subject to Principal's confirmation in its sole
discretion.
5. Double Eagle's Management Fee and Sales Commissions. For Stage 1,
Principal shall provide Double Eagle a consultation fee of $10,000 plus
expenses. The consultation fee shall be paid 50% upon signing of this agreement
and 50% upon completion of Stage 1, as evidenced by the presentation of the
recommended sales material copy and account presentation. Out of pocket expenses
shall be pre-approved by Principal and paid as incurred. For Stage 2, Principal
shall pay to Double Eagle a commission of eleven percent (11%)--comprised of a
"Management Fee" of six percent (6%) and a five percent (5%) "Brokerage
Commission"--of Principal's net invoiced amount for all of the Products
delivered each month to the Customers in the Territory pursuant to wholesale
orders solicited by Double Eagle and accepted by Principal. For these purposes,
the term "net invoiced amount" shall mean the total invoiced amount less any and
all (a) sales taxes, (b) freight allowances and charges, (c) returned product
credits, (d) refunds, (e) rebates, (f) discounts, and (g) previously invoiced
amounts which have not bee paid in accordance with the terms of sale. Principal
shall guarantee a minimum management fee of $4,000 per month, offset either
partially or completely, by the 6% management fee commission earned on net
invoiced amount as described above. The minimum guarantee shall be due at the
beginning of the month, beginning with the month this agreement is signed.
Double Eagle's management fee commissions earned in excess of the minimum
guarantee and all brokerage commissions for each month shall be due and owing on
the 15th day of the following month. All travel expenses shall be pre-approved
by Principal and due and owing as incurred.
For Stage 3, Principal shall pay to Double Eagle a commission of eleven percent
(11%)--comprised of a "Management Fee" of six percent (6%) and a five percent
(5%) "Brokerage Commission"--of Principal's net invoiced amount for all of the
Products delivered each month to the Customers in the Territory pursuant to
wholesale orders solicited by Double Eagle and accepted by Principal. For these
purposes, the term "net invoiced amount" shall mean the total invoiced amount
less any and all (a) sales taxes, (b) freight allowances and charges, (c)
returned product credits, (d) refunds, (e) rebates, (f) discounts, and (g)
previously invoiced amounts which have not been paid in accordance with the
terms of sale. Principal shall guarantee a minimum management fee of $6,000 per
month, offset either partially or completely, by the 6% management fee
commission earned on net invoiced amount as described above. The minimum
guarantee shall be due at the beginning of the month, beginning with the month
this agreement is signed. Double Eagle's management fee commissions earned in
excess of the minimum guarantee and all brokerage commissions for each month
shall be due and owing on the 15th day of the following month. All travel
expenses shall be pre-approved by Principal and due and owing as incurred.
6. Double Eagle's Business Expenses. Double Eagle shall be solely
responsible for all of its expenses not previously covered in section 5 or
elsewhere in this Agreement for soliciting wholesale orders for the Products
from the customers in the Territory, including, without limitation, expenses for
employees, taxes, rent, telephone service, travel, entertainment, and office
supplies.
7. Principal's Reports. Principal shall provide to Double Eagle a
monthly report of all data and information used by Principal to calculate Double
Eagle's commission for the applicable month. The accuracy of each such report
shall be certified by Principal's Sales Manager-Products or his designee.
Principal shall provide to Double Eagle copies of all wholesale orders for the
Products solicited by Double Eagle and accepted by Principal.
8. Sales Materials and Advertising. Principal shall provide to Double
Eagle copies of brochures, flyers, promotional pieces pertaining to the Products
and other relevant selling materials which set forth Principal's product
descriptions, unit prices, minimum order quantities, and other terms of sale for
the Products ("Sales Materials") for distribution to the customers in the
Territory and use by Double Eagle during the term of this Agreement. From time
to time, Principal shall amend or revise the Sales Materials by delivery of such
new pages, replacement pages, addenda, or revised copies to Double Eagle as
Principal shall determine to be appropriate. Principal shall advertise and
promote the Products in such manner as it shall determine to be appropriate.
Double Eagle shall not advertise or promote the Products other than by the
distribution of such promotional pieces and by written correspondence, telephone
conversations, and personal meetings with the buyers and other employees of the
customers in the Territory.
9. Double Eagle's Incidental Duties. Double Eagle shall provide to
Principal written reports of the (a) efforts of Double Eagle to solicit
wholesale orders for the Products from the Customers in the Territory, (b)
creditworthiness of the Customers in the Territory, and (c) efforts of
competitors to solicit wholesale orders from the Customers in the Territory. The
form and frequency of such reports shall be as reasonably specified by
Principal. Double Eagle shall provide to Principal prompt written notice of any
and all complaints pertaining to the Products which come to the attention of
Double Eagle without expressing an oral or written opinion pertaining to such
complaints to any third party.
10. Relationship of Parties. Double Eagle shall not represent or hold
itself out as an agent, legal representative, partner, subsidiary, joint venture
partner, or employee of Principal. Double Eagle shall have no right or power to
bind or obligate Principal, and shall not bind or obligate Principal, in any
way, manner, or thing whatsoever, nor represent that he has any right to do so.
11. Term of Agreement. The term of this Agreement shall commence on the
date of its execution by Principal and shall expire at midnight six months
later, unless terminated sooner as provided elsewhere in this Agreement.
Thereafter, the term of this Agreement shall be automatically extended for
successive periods of six months each unless either party gives written notice
that it does not desire to have the term so extended not later than sixty (60)
days prior to the end of any specific six-month period.
12. Termination. Principal shall have the right to terminate the term
of this Agreement for cause by written notice to Double Eagle if Double Eagle
(a) is convicted of any felony or any misdemeanor involving fraud or moral
turpitude, or (b) defaults in the performance of any obligation pursuant to this
Agreement or violates any term or condition of this Agreement and fails to cure
such default or violation within the time set forth in Principal's written
notice to cure the same. In the case of termination, brokers established by
Double Eagle shall then report directly to the Principal and Double Eagle will
provide an easy transition.
13. Assignment. Double Eagle shall not assign, transfer, nor encumber
this Agreement, or any right or interest herein or hereunder, nor suffer or
permit any such assignment, transfer, or encumbrance to occur by operation of
law without prior written consent of Principal.
14. Covenant Not To Compete. During the term of this Agreement Double
Eagle shall not solicit wholesale orders for any competitive product which is
identical or substantially similar to any Consumer Product from any Customer in
the Territory. This covenant not to compete shall be construed separately and
independently of any other provisions of this Agreement and the existence of any
claim or cause of action which Double Eagle might have against Principal shall
not constitute a defense to its enforcement.
15. Waivers. The failure of Principal to exercise any right, power, or
option given to it hereunder or to insist upon strict compliance with the terms
hereof shall not constitute a waiver of the terms and conditions of this
Agreement with respect to any other subsequent breach thereof nor a waiver of
its right at any time thereafter to require exact and strict compliance with all
the terms and conditions hereof. Principal's rights and remedies pursuant to
this Agreement are cumulative to any other rights or remedies which may be
granted by law.
16. Applicable Law. This Agreement, and the rights and obligations of
the parties hereto, shall be construed under and in accordance with the laws of
the State of California.
17. Arbitration. Principal and Double Eagle shall attempt to resolve
any and all disputes arising out of or relating to this Agreement by amicable
negotiations. If any such dispute cannot be resolved within thirty (30) days
after either party gives a written notice to the other party initiating
negotiations pertaining to such dispute, the parties shall submit such dispute
to arbitration in Long Beach, CA in accordance with the Commercial Arbitration
Rules of the American Arbitration Association then in force. The award by the
arbitrators shall be binding on the parties and enforceable by any court having
jurisdiction.
18. Notices. Any notice required to be given hereunder shall be given
in writing by personal delivery, or by certified or registered mail, return
receipt requested, directed to the party at its last known address.
19. Severability. If any provision of this Agreement is declared
invalid or inoperable by any court or other governmental authority of competent
jurisdiction, such finding shall not invalidate the remainder of this Agreement.
20. Parties Bound. This Agreement shall be binding on and inure to the
benefit of Principal, including its successors and assigns, and Double Eagle,
including its successors and assigns.
21. Amendment, Entire Agreement. This Agreement constitutes the entire
agreement and understanding of the parties hereto with respect to the subject
matter hereof and supersedes all prior negotiations, commitments,
representations, and undertakings of the parties with respect to such subject
matter. This Agreement shall not be modified except by a writing signed by an
officer of Principal and by an officer of Double Eagle.
22. Sixty Day Addendum. The parties agree that the relationship between
the parties will be more clearly defined sixty days after signing this contract.
The duties of both parties will be added to this contract as an Addendum at that
time.
The parties hereto have duly executed, sealed and delivered this
Agreement in duplicate on the day and year first above written.
REMEDENT USA, INC.
By:
------------------------------------
Title:
--------------------------------
"Principal"
DOUBLE EAGLE MARKET DEVELOPMENT COMPANY
By:
------------------------------------
Title:
---------------------------------
"Double Eagle"
<PAGE>
EXHIBIT A
Proposal letter of February 23, 1999 from Norman Broadhurst to Rebecca Inzunza
EXHIBIT B
Principal authorizes Double Eagle to represent the following list of Products
for the purposes of soliciting wholesale orders:
Products
- ---------
Oral health care products
EXHIBIT C
Principal authorizes Double Eagle to represent Products in the following
Territory for Customers in the listed classes of trade:
Territory
- ---------
The United States of America and all U.S. military installations worldwide
Canada
Customers
- ---------
The Customers in the Territory include, but are not limited to, those designated
as follows:
Grocery, Club Store, Mass Merchandiser, Convenience, Liquor, Health Food,
Military, Drug, Hardware, and Food Service
