SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c)
of the Securities Exchange Act of 1934
Check the appropriate box:
[X] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14c-5(d)2))
[ ] Definitive Information Statement
Remedent USA, Inc.
(Name of Registrant as Specified in Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11
1. Title of each class of securities to which transaction applies:
2. Aggregate number of securities to which transaction applies:
3. Per unit price or other underlying value of transaction, computed
pursuant to Exchange Act Rule O-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4. Proposed maximum aggregate value of transaction:
5. Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule O-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:
2. Form Schedule or Registration Statement No.:
3. Filing Party:
4. Date Filed:
Remedent USA, Inc.
17555 Ventura Blvd. Suite 200
Encino, CA 91316
To the Stockholders of Remedent USA, Inc.
Schedule 14C Information Statement
Notice is hereby given to you as a stockholder of record of Remedent USA, Inc.
("Remedent" or the "Company") that we will be selling certain of our assets and
liabilities which constitute our toothbrush business not less than twenty days
following the mailing of this Information Statement to you.
On March 27, 2002, the Company's Board of Directors approved an Asset
Purchase Agreement for the sale of our toothbrush business to Famcare 2000, LLC.
(the "Asset Sale").
Eleven shareholders own a majority of the Company's voting stock, and on July 1,
2002, they executed a written consent as majority stockholders approving this
asset sale. This Written Consent assures that the asset sale will occur without
your vote. Therefore the Board of Directors believes that it would not be in the
best interest of our stockholders to incur the costs of holding a formal meeting
and soliciting proxies from all of our stockholders.
The entire cost of furnishing this Information Statement will be borne by the
Company. The Company will request brokerage houses, nominees, custodians,
fiduciaries and other like parties to forward this Information Statement to the
beneficial owners of Common Stock held of record by them.
The Board of Directors has fixed the close of business on July 1, 2002 as the
record date (the "Record Date") for the determination of stockholders who are
entitled to receive this Information Statement. This Information Statement is
being mailed on or about July 25, 2002 to all stockholders of record as of the
Record Date. Under Nevada law, stockholders are not entitled to dissenter's
rights of appraisal with respect to any of the matters being authorized herein.
PLEASE NOTE THAT THIS IS NOT A REQUEST FOR YOUR VOTE OR A PROXY STATEMENT, BUT
RATHER AN INFORMATION STATEMENT DESIGNED TO INFORM YOU OF THE SALE OF THE
TOOTHBRUSH BUSINESS ASSETS AND LIABILITIES. WE ARE NOT ASKING YOU FOR A PROXY
AND YOU ARE REQUESTED NOT TO SEND US A PROXY. PLEASE NOTE THAT THIS IS NOT AN
OFFER TO PURCHASE YOUR SHARES.
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SCHEDULE 14C INFORMATION STATEMENT
PURSUANT TO REGULATION 14C OF THE SECURITIES EXCHANGE ACT
OF 1934
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
Robert Hegemann was a Director of the Company and its Senior Vice
President and Secretary from the Company's inception to April 1, 2002. Robert
Hegemann is the manager and 100% owner of Famcare 2000, LLC, the purchaser of
the Company's Toothbrush business. Robert Hegemann owns 991,900 shares of
Company Common Stock . On the consummation of Asset Sale, Famcare 2000, LLC will
receive 750,000 shares of Company common stock in consideration for assuming the
liabilities of the Company relating to its Toothbrush business.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
(a) Voting Securities
The Company has 33,528,360 shares of Common Stock outstanding as of
July 5, 2002.
(b) Principal Stockholders and Security Ownership of Management
The following table sets forth as of July 5, 2002 certain information
relating to the ownership of our common stock by (i) each person known by us to
be the beneficial owner of more than 5% of the outstanding shares of the class
of equity security, (ii) each of our Directors, (iii) each of the our executive
officers, and (iv) all of our executive officers and directors as a group.
Except as may be indicated in the footnotes to the table and subject to
applicable community property laws, each of such persons has the sole voting and
investment power with respect to the shares owned.
- ------------------------------------------- --------------------------- ----------------------
Name and address of beneficial owner Amount and nature of Percent of class
beneficial owner
- ------------------------------------------- --------------------------- ----------------------
Guy De Vreese (2) 1,060,000 3.1%
(Chairman)
Xavier de Cocklaan 42
9831 Deurle, Belgium
- ------------------------------------------- --------------------------- ----------------------
Robin List (3) 2,212,500 6.4%
(Director, CEO)
Xavier de Cocklaan 42
9831 Deurle, Belgium
- ------------------------------------------- --------------------------- ----------------------
Stephen Ross (4) 1,029,610 2.9%
(Director, CFO)
1921 Malcolm #101
Los Angeles, CA 90025
- ------------------------------------------- --------------------------- ----------------------
Fred Kolsteeg (5) 1,000,000 3.0%
(Director)
Managelaantje 10
3062 CV Rotterdan
The Netherlands
- ------------------------------------------- --------------------------- ----------------------
Kenneth Hegemann (7) 1,045,000 3.1%
(Director)
1220 Birch Way
Escondido, CA 92097
- ------------------------------------------- --------------------------- ----------------------
All Officers and Directors as a group (5 6,347,110 18.5%
persons)
- ------------------------------------------- --------------------------- ----------------------
KolsteegBeleggingsmaatschappij B.V.(6) 1,200,000 3.6%
Managelaantje 10
3062 CV Rotterdan
The Netherlands
- ------------------------------------------- --------------------------- ----------------------
New BitSnap N.V.(10) 5,949,971 17.8%
Xavier de Cocklaan 42
9831 Deurle, Belgium
- ------------------------------------------- --------------------------- ----------------------
Lausha N.V.(11) 1,258,600 3.7%
Xavier de Cocklaan 42
9831 Deurle, Belgium
- ------------------------------------------- --------------------------- ----------------------
Rebecca Inzunza 2,679,495 8.0%
1220 Birch Way
Escondido, CA 92027
- ------------------------------------------- --------------------------- ----------------------
Jonathan J. Marine (9) 2,200,000 6.5%
448 21st Street
Manhattan Beach, CA 90266
- ------------------------------------------- --------------------------- ----------------------
Dental Advisors, Inc. (8) 3,388,000 9.6%
1220 Birch Way
Escondido, CA 92027
- ------------------------------------------- --------------------------- ----------------------
* Less than 1%
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(1) Beneficial ownership has been determined in accordance with Rule 13d-3
under the Exchange Act. Pursuant to the rules of the Securities and
Exchange Commission, shares of Common Stock which an individual or group
has a right to acquire within 60 days pursuant to the exercise of options
or warrants are deemed to be outstanding for the purpose of computing the
percentage ownership of such individual or group, but are not deemed to be
beneficially owned and outstanding for the purpose of computing the
percentage ownership of any other person shown in the table.
(2) Includes 1,000,000 shares of Common Stock underlying options.
(3) Includes 1,000,000 shares of Common Stock underlying options.
(4) Includes 1,000,000 shares of Common Stock underlying options.
(5) Includes 100,000 shares of Common Stock underlying options.
(6) Includes 200,000 shares of Common Stock underlying warrants. Company was
co-founded by Fred Kolsteeg.
(7) Includes 100,000 shares of Common Stock underlying options.
(8) Includes 1,694,000 shares of Common Stock underlying warrants.
(9) Includes 250,000 shares of Common Stock underlying warrants.
(10) Includes 26,400 shares of Common Stock underlying warrants. Guy De
Vreese is the President of New BitSnap N.V.
(11) Includes 173,600 shares of Common Stock underlying warrants. Guy De
Vreese is the President of Lausha N.V.
DESCRIPTION OF SECURITIES
The authorized capital of the Company consists of 50,000,000 shares of
common stock, $0.001 par value. There are currently 33,289,058 shares of common
stock outstanding. As of July 5, 2002, we have approximately 425 shareholders.
(a) Shares of Common Stock
We are authorized to issue 50,000,000 shares of common stock with $.001
par value. The holders of the common stock are entitled to one vote per each
share held and have the sole right and power to vote on all matters on which a
vote of stockholders is taken. Voting rights are non-cumulative. The holders of
shares of common stock are entitled to receive dividends when, as and if
declared by our Board of Directors, out of funds legally available therefore and
to share pro-rata in any distribution to stockholders. We anticipate that any
earnings will be retained for use in our business for the foreseeable future.
Upon liquidation, dissolution, or winding up of the company, the holders of our
common stock are entitled to receive the net assets held by the company after
distributions to the creditors. The holders of common stock do not have any
preemptive right to subscribe for or purchase any shares of any class of stock.
The outstanding shares of common stock are not subject to call or redemption and
are fully paid and non-assessable.
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(b) Warrants & Debt Securities
We have a total of 4,595,900 options outstanding; 145,900 options
outstanding exercisable at $0.26 until July 2011, 100,000 options outstanding
exercisable at $0.20 until September 2003, 200,000 options outstanding
exercisable at $0.15 until September 2011, 350,000 options outstanding
exercisable at $0.10 until September 2011, and 3,800,000 options outstanding
exercisable at $0.05 until March 2012.
We have a total of 2,444,000 warrants outstanding; 1,252,000 warrants
outstanding exercisable at $0.25 until April 2006, 442,000 warrants outstanding
exercisable at $0.25 until September 2006, 675,000 warrants outstanding
exercisable at $0.50 until January 2007, 75,000 warrants outstanding exercisable
at $0.50 until May 2007.
We have $147,580 worth of convertible debentures outstanding,
convertible into 9,118,640 shares of common stock.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
OVERVIEW
Remedent USA, Inc. is engaged in the distribution of high technology
professional dental equipment. We were originally incorporated on September 30,
1996 in the state of Arizona, and have offices in Encino, California and Ghent,
Belgium.
The following discussion and analysis should be read in conjunction
with a discussion about risk factors and the consolidated financial statements
of the company, included elsewhere in this report.
The discussion and financial statements contained herein are as of
March 31, 2002 and for the fiscal years ended March 31, 2002 and 2001. The
following discussion regarding the financial statements of the Company should be
read in conjunction with the financial statements of the Company included
herewith.
Revenues
For the fiscal year ending March 31, 2002, net sales increased by
$508,249 from $225,604 in 2001 to $733,853 in 2002. This represents a 225%
increase over the comparable period ending March 31, 2001. The increase was due
to the commencement of dental equipment sales in our European subsidiary,
partially offset by the continued reduction in sales within the oral hygiene
market throughout the year, and complete termination of these sales as of
December 31, 2001. As the Company has initiated its presence within the
professional dental equipment market, our European subsidiary has begun sales of
our initial technology, a high-speed dental curing light, as well as
after-market products, including accessories and repair services. These revenues
were partially offset by the continued reduction in oral hygiene revenues
throughout the year, consistent with our reorganization plan, as we reposition
assets and resources to the professional dental equipment market, and finalize
the sale of the oral hygiene division.
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Cost of Goods Sold
Cost of goods sold increased by $347,165 or 224% for the year ending
March 31, 2002 over the comparable period ended March 31, 2001. This represents
a corresponding increase to the increase in sales during the current fiscal year
end.
Gross Profit
Gross profit increased by $161,084 or 228% for the year ended on March
31, 2002 over the comparable period ended March 31, 2001. Gross profit
percentage increased to 32% for the fiscal year ended March 31, 2002 compared to
31% for the comparable period ended March 31, 2001. The increase is the result
of our shift to the higher-margin professional dental equipment market during
the current fiscal year. There were no sales of these products during the fiscal
year ended March 31, 2001. Additionally, excluding one-time write-offs of
obsolete marketing and promotional material within the oral hygiene division of
$69,000 and obsolete raw materials, due to design changes, within the
professional dental equipment division of $14,000, the recurring gross profit
percentage was 43%.
Research and Development Expenses
Research and development expenses as of March 31, 2002 increased by
$189,900 over the prior fiscal year, due primarily to the research and
development costs incurred during the start-up phase of the Company's
high-technology dental equipment segment. These expenditures relate primarily to
the labor and materials to design and manufacture our new curing light
technology, in addition to the completion of 15 prototypes. We expect we will
continue to invest in research and development, and anticipate significant costs
in the near future as we continue to develop products for the dental equipment
markets. These products include the introduction of two new intraoral cameras
for use within this market. These products are currently in development and we
expect to introduce these into market during the fourth quarter of 2002.
Sales and Marketing Costs
Sales and marketing costs as of March 31, 2002 and 2001 were $49,582
and $228,029 respectively, which represents a decrease of $178,447 or 78%. The
reduction is a result of the shift in business focus from the retail selling of
oral hygiene products to the wholesale selling of professional dental products.
In connection with our reorganization plan implemented during the current fiscal
year, we began downsizing the marketing-intensive retail selling of oral hygiene
products, and formally ceased these operations on December 31, 2001, in
anticipation of the sale of the division. We have shifted into the professional
dental equipment market, whereby we focus on the less capital-intensive sale of
units to large distributors. This marketing and distribution method allows for
significantly less marketing and provides more predictable revenue flow.
General and Administrative Costs
General and administrative costs for 2002 and 2001 were $1,793,362 and
$320,038 respectively, an increase of $1,473,324 or 460%. This increase is due
to the overhead, primarily payroll and rent, associated with our professional
dental equipment business operating in both Europe and the United States, which
commenced on July 1, 2001. Additionally, in connection with the reorganization
plan, the
5
Company has begun intensifying fund-raising and investor relation activities,
with the resulting increase in such expenses.
Interest Expense
Net interest expense decreased by $86,227 during the year ended March
31, 2002 over the comparable period ending March 31, 2001. The decrease in
interest expense was largely due to the conversion feature of the convertible
debentures entered into with shareholders during the prior fiscal year. No such
debentures were entered into during the current fiscal year. This decrease was
partially offset by the interest accrued on working capital loans entered into
during the current fiscal year.
Inflation
Inflation has not had a material effect on our revenue and income from
continuing operations in the past three years. We do not expect inflation to
have a material future effect.
Liquidity and Capital Resources
On March 31, 2002, our current liabilities exceeded our current assets
by $1,121,304. Our business operations will require substantial capital
financing on a continuing basis. The availability of that financing will be
essential to our continued operation and expansion. In addition, cash flow and
liquidity is contingent upon the success of our restructuring plan. The
inability to continue to develop and market high-technology dental equipment or
operate our newly acquired dental outsourcing business will force us to raise
additional capital to support operations by selling equity securities or
incurring additional debt.
Since our inception in 1996, we have sustained net losses and negative
cash flow, due largely to start-up costs, general and administration expenses,
inventory, marketing and other expenses related to market development and new
product launch. As a result, we have financed our working capital requirements
principally through loans and the private placement of our common stock.
In February 2002, we entered into a line of credit facility with the
Bank Brussels Lambert ("BBL") consisting of a accounts receivable factoring line
for (euro)991,000 and a general line of credit for (euro)250,000 ($1,082,648 at
March 31, 2002). As of March 31, 2002, we had drawn $137,866 from this facility.
During the fiscal year ended March 31, 2002, we received advances of
$150,799 from officers and directors in the form of working capital loans. These
loans bear no interest and allow for repayment terms to be agreed upon at a
future date. We repaid $11,314 of these advances with cash and settled $88,308
of these advances with the issuance of common stock valued at $0.50 a share.
In January 2002, we completed a $270,000 private placement, selling an
aggregate of 3,375,000 shares of common stock at $0.08 a share. $76,876 of the
private placement was received during April 2002.
In September 2001, we received $120,000 in the form of working capital
loans, $20,000 to mature in November 2001 and $100,000 to mature in December
2001. Through May 2002, we had made $22,222 in principal payments on the
$100,000 loan and agreed to repayment of the balance with the
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issuance of 972,225 shares of common stock. Additionally, in May 2002, we
agreed to the repayment of the $20,000 loan with the issuance of 375,000 shares
of common stock.
In September 2001, we completed a $110,500 private placement, selling
an aggregate of 442,000 shares of common stock at $0.25 a share.
In April 2001, we completed a $313,000 private placement, selling an
aggregate of 1,252,000 shares of common stock at $0.25 a share.
In January 1999, Rebecca Inzunza, former President of the Company,
loaned the Company $50,000 at 7% interest which was paid throughout the year and
as of March 31, 2001 the principal balance was paid in full. On December 11,
1998, Remedent received a $50,000 line of credit from Union Bank of Arizona. We
have drawn upon the full amount. The interest rate was 10.25% with a maturity
date of December 31, 1999. On April 26, 2000, the loan balance of $49,970.55 was
converted to a five-year loan with an interest rate of prime + 2.5% (7.25% at
March 31, 2002), monthly payments of $1,099, and a maturity date of April 26,
2005. Monthly payments include payments towards both principal and interest.
During the fiscal year ended March 31, 2001, the Company borrowed
$149,002 from shareholders and a director in the form of convertible debentures.
These debentures are unsecured, due on demand and bear interest at 10% per
annum. In addition, at the sole discretion of the holder, can be converted to
stock at 37.5% of the average trading price 30 days prior to maturity.
Kenneth J. Hegemann, an officer, operates CRA Labs, Inc., a related
business that advanced $11,500 during the fiscal year ended March 31, 2001. We
repaid $4,000 of these advances during the fiscal year ended March 31, 2001, and
were advanced an additional $8,000 during the fiscal year ended March 31, 2002.
These advances were repaid on January 24, 2002 through the issuance of common
stock valued at $0.50 a share.
We expect to continue to experience negative cash flow through at least
the second quarter of 2002, and may continue to do so thereafter while we fully
implement our restructuring plan. Unless we are able to generate sufficient
revenue or acquire additional debt or equity financing to cover our present and
ongoing operation costs and liabilities, we may not be able to continue as a
going concern. Our auditors note that we have sustained substantial net losses
since our inception in September 1996. In addition, as of March 31, 2002, we had
a working capital deficit totaling $1,121,304 and a shareholders deficit of
$728,292.
For the year ending March 31, 2002, liabilities totaled $1,516,336 and
$1,092,220 for the year ending March 31, 2001, which represents an increase of
$424,116. This was largely due to the draws on the line of credit facility, the
working capital loans entered into and the additional advances received from
related parties.
Frequently we have been unable to make timely payments to our trade and
service vendors. As of March 31, 2002, we had past due payables in the amount of
$141,538, representing a 66% decrease from the prior fiscal year. This reduction
is due primarily to our upcoming sale of the oral hygiene division, including
its related payables, and our gradual reduction in existing payables through the
payments and reduction in the occurrence of additional indebtedness. Deferred
payment terms have been negotiated
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with most of the vendors, which has allowed us to continue to make shipments
on time and no orders have been cancelled to date.
For the years ending March 31, 2002 and 2001, net cash used for
operating activities was $790,109 and $194,283, respectively. As of March 31,
2002 we had a working capital deficiency of $1,121,304, as compared to a working
capital deficiency of $976,945 at March 31, 2001. Our business operations will
require substantial capital financing on a continuing basis.
We have taken several actions, which we believe will improve our
short-term and long-term liquidity and cash flow. For the short term, we have
improved liquidity and cash flow by negotiating extended payment terms with
vendors and converting various obligations into common stock. For the long term,
we have negotiated for the sale of the oral hygiene division, with its related
liabilities, and restructured the business to lower overhead and eliminate
indirect manufacturing costs.
Our business operations will require substantial capital financing
on a continuing basis. Based upon our cash flow projections, significant capital
infusion is necessary to fully implement our restructuring plan and pay existing
delinquent payables. We plan to finance such through loans, equity investments
and other transactions. We reasonably believe that the net proceeds from our
efforts, assuming the maximum amount is raised and loans are obtained, plus
revenues generated from operations, will be sufficient to fund our operations.
However, there can be no assurance that we will be able secure the necessary
financing. In the event that we are unsuccessful in completing financing
arrangements, we would have difficulty meeting our operation expenses,
satisfying our existing or future debt obligations, or succeeding in
implementing our restructuring plan. Without sufficient cash flow we are unable
to satisfy our debt obligations, our ongoing growth and operations are, and will
continue to be, restricted and there is substantial doubt as to our ability to
continue as a going concern.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Effective May 1, 2002, the Board of Directors of the Company dismissed
Siegel Smith LLP ("Siegel Smith") as its independent auditors for the fiscal
year ended March 31, 2002 and approved the engagement of Farber & Hass LLP
("Farber & Hass") as Siegel Smith's replacement. Siegel Smith had previously
been the Company's independent auditors. The decision to change auditors was
approved by the Company's Board of Directors.
Since the date of their engagement on November 5, 1999, there have been
no disagreements with Siegel Smith on any matters of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure which,
if not resolved to the satisfaction of Siegel Smith would have caused Siegel
Smith to make reference to the matter in their report.
THE SALE OF THE REMEDENT TOOTHBRUSH BUSINESS
On March 27, 2002, the Board of Directors approved an Asset Purchase
Agreement (the "Agreement") dated March 14, 2002 between the Company and Famcare
2000, LLC, a Nevada limited liability company, ("Famcare") to purchase our
toothbrush business (the "Toothbrush Business") which accounted for
approximately $50,000 in revenues for the fiscal year ended March 31, 2002.
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The Toothbrush Business, which engaged in the worldwide distribution of
the Remedent Tooth & Gumbrush, had been our sole activity since 1996. However,
due to recurring net losses and increasing working capital and shareholder
deficits, in July 2001, we implemented a complete corporate reorganization plan.
This plan included the ceasing of direct sales and marketing of the Remedent
Tooth & Gumbrush, and acquisition of and expansion into diversified business
ventures.
We have been developing technologies for introduction within the
professional dental equipment market, and initiated shipments of our first
product, a high-speed dental curing light, in the first quarter 2002.
Additionally, during the first quarter of 2002, we completed the acquisition of
a dental employee outsourcing firm in Belgium.
In connection with our shift in focus to high technology professional
dental equipment, we discontinued operations of the Toothbrush Business on
December 31, 2001, in anticipation of the sale. We felt continued dedication to
this business would not be in our shareholders' best interest. Additionally,
with the business generating recurring net losses and raising deficits, our
resources can be more effectively utilized within these new markets. Throughout
the fiscal year ended March 31, 2002, as we had been experiencing significant
working capital shortages, we had been downsizing this business in anticipation
of a sale or license of these operations. As such, the volume of the business,
revenues and expenses, had been significantly reduced from previous fiscal
years. Further, with the cost reduction measures taken, aside from the cost of
the toothbrush, the overhead of the entire business include solely related party
expenses of the salary of the sole employee, Rob Hegemann, and the allocated
cost of the use of his personal residence as the primary place of operation for
this business. As a result, there have been no expenses for the business to
accrue subsequent to its discontinuance on December 31, 2001.
The Agreement obligates the Buyer to assume primary liability for all
of the liabilities relating to the Toothbrush Business. In reference to
individual creditors which maintain the contractual ability to block the
assignment of their indebtedness, we will remain contingently liable until full
satisfaction of the liabilities by the Buyer. Additionally, even if all of the
contractual liabilities of the Company relating to the Toothbrush Business are
discharged, we will still remain liable for tort liabilities or any regulatory
liabilities relating to the Toothbrush Business until the time of the sale.
As of December 31, 2001, the net liability of the business was
approximately $310,000, and the market value of our common stock has fluctuated
within the range of $0.05 to $0.08 during 2002. The Toothbrush Business,
however, is being sold to the Buyer for the receipt of 750,000 shares of the
Company's common stock, an effective price of $0.41 per share. This represents
an approximate 400% premium over the current market value. As such, the Company
is anticipating the recognition of a gain from the sale of this business. As the
prospect of future profitability of this business is highly uncertain, the gain
of the sale is primarily derived from the premium recognized on the value of the
common stock.
When the sale becomes effective, 20 days after the mailing of this
Information Statement to all of our shareholders, we will incur a reduction of
approximately $310,000 in current liabilities and a gain of approximately
$250,000.
The sale of the Toothbrush Business will be treated as an asset
purchase where a private marketer and distributor will receive shares of common
stock in the Company at closing, in consideration for accepting the net
liability of the business.
9
Up until the date of discontinuance, Robert Hegemann was the only
employee in the Toothbrush Business. This Agreement is being entered into with
Famcare 2000, LLC, a limited liability company, ("Famcare") which is controlled
by Robert Hegemann (See "Interest of Certain Persons in Matters to be Acted
Upon").
All of the Company's existing service contracts will be honored by
Famcare subsequent to the consummation of the sale.
The terms of the sale are as follows:
THE BUYER: Famcare 2000, LLC, a limited liability company ("Buyer"), will be
purchasing the Toothbrush Business. Famcare 2000, LLC is located at PMB 103,
6501 E. Greenway Pkwy, Suite 102, Scottsdale, AZ 85254. The manager of
Famcare 2000, LLC is Robert Hegemann.
CONSIDERATION: In consideration of the transfer of assets, Famcare 2000 is
agreeing to assume primary liability for all the liabilities of the Company
relating to the Toothbrush Business. As these liabilities exceed the total value
of the assets in the amount of approximately $335,000, the Company will issue
additional consideration of 750,000 shares of Common stock to Famcare.
ASSETS BEING ACQUIRED: Famcare will acquire the assets of the Remedent
Toothbrush Business, consisting of the following:
(a) Cash in the amount of $2,092.32
(b) Accounts Receivable in the amount of $7,728.86.
(c) Furniture, fixtures, and equipment: All of the furniture, fixtures,
equipment and leasehold improvements relating to the Toothbrush Business,
consisting primarily of office furniture and computer equipment maintained
within the Arizona facility. As the sole place of operation of this
business was the personal residence of Rob Hegemann, there are no leases
requiring specific disclosure within the agreement.
(d) Inventory: All of the inventory of the Toothbrush Business, consisting
primarily of a stock of finished product and various marketing and display
materials. All such inventory is maintained at the Arizona facility.
(e) Deposits: $3,654.60 of a security deposit with the Toothbrush Business'
contract manufacturer.
(f) Patents: All of the patents in relation to the Remedent Tooth & Gumbrush
(g) Trademarks: All trademarks in relation to the Remedent name and all
rights to market the Tooth & Gumbrush under the Remedent name will be
transferred to Buyer
LIABILITIES BEING ACQUIRED: Buyer will acquire the liabilities of the
Toothbrush Business, consisting of the following:
(a) Accounts payable in the amount of $343,197.52
(b) Royalty payable in the amount of $52,420.61
(c) Other Liabilities: All of the other liabilities existing as of December
31, 2001, including accrued payroll and other miscellaneous accruals.
ADDITIONAL TERMS OF ACQUISITION.
The following conditions are additional material terms of the sale:
10
Although the Company is selling Famcare the Remedent trademark, the Company, is
retaining the right to operate and utilize the Remedent trademark through its
normal course of business, at no ongoing cost. Additionally, any changes to this
provision must be mutually agreed upon by the Company and Buyer prior to such
change.
REGULATORY APPROVALS: The Company is not aware of any federal or regulatory
requirements that must be complied with or approvals which must be obtained in
connection with the transaction, other than by the Information Statement.
PRO-FORMA FINANCIAL INFORMATION
In accordance with Article 210.11-02(a) of Regulation S-X, the following
narrative description of the pro-forma adjustments related to the sale of the
Toothbrush Business is made a part of this Information Statement. Pro-forma
five-year information required by Item 301 of Regulation S-K is, in the opinion
of management, is not applicable as prior to April 1, 2001, the Company's sole
business was the Toothbrush Business. Effective April 1, 2000, the Company began
operating a professional high-technology dental equipment business and during
the fourth fiscal quarter of 2002, entered into the dental employee leasing
business. During the fiscal years ended March 31, 2001, 2000 and 1999, which
represent the entirety of the fiscal years publicly reported by the Company, the
sole operating business was the Toothbrush Business.
The preparation of pro-forma financial disclosures requires management to make
estimates and assumptions that affect the reported amounts of assets,
liabilities and results of operations during the reporting period. Actual
results could differ from those estimates. The sale of the Toothbrush Business
positions the Company to operate on a going-forward basis as a developer and
marketer of high-technology dental equipment.
The transaction proposed will effectively sell all of the assets of the
Toothbrush Business as well as obligate the Buyer to be responsible for all
liabilities relating to the Toothbrush Business. The Toothbrush Business
accounted for approximately $50,000 in revenues, from unit sales, for the fiscal
year ended March 31, 2002 and approximately $440,000 for the fiscal year ended
March 31, 2001.
The following table reports pro-forma adjusted balance sheet accounts and results of operations when compared to March 31, 2002.
03/31/02 Pro-Forma 03/31/02
As Reported Adjustments Pro-Forma
Total Sales 733,853 50,270(a) 683,583
Cost of Sales 502,013 99,152(b) 402,861
Gross Profit 231,840 (48,882)(c) 280,722
Operating Expenses 2,126,049 76,128(d) 2,049,921
Operating Loss (1,894,209) (125,010)(e) (1,769,199)
Current Assets 395,032 25,303(f) 369,729
Total Assets 788,044 69,065(g) 718,979
Current Liabilities 1,516,336 404,778(h) 1,111,558
Total Liabilities 1,516,336 404,778(I) 1,111,558
Basic EPS (0.11) (0.01) (0.10)
Weighted Shares 18,009,722 18,009,722 18,009,722
11
a) Elimination of revenues reported for the nine months ended December 31,
2001, that related to Tooth & Gumbrush revenue being sold in this
transaction.
b) Elimination of the associated cost of sales related to the sale of Tooth
& Gumbrush units
c) Effect on gross profit on a pro-forma basis
d) Elimination of associated general and administrative expenses related to
the sale.
e) Net effect of the transaction on operating results
f) Current assets being sold are primarily inventory and accounts receivable
g) Total assets being sold are primarily inventory, accounts receivable,
furniture, fixtures and equipment, and patents.
h) Current liabilities being sold are primarily accounts payable and
royalties payable.
i) Total liabilities being sold are primarily accounts payable and
royalties payable
Net liabilities to be sold, representing the assets and liabilities of the
business upon its discontinuance on December 31, 2001, are summarized as
follows:
Cash $ 2,092
Accounts receivable 7,729
Due from related parties 9,952
Inventory 5,530
Property & equipment, net 14,580
Patents, net 25,527
Other assets 3,655
Accounts payable (343,198)
Accrued liabilities (61,580)
--------
Net liabilities to be sold $(335,713)
==========
The following table discloses the registrant's financial highlights for the years ended March 31,
2001 2000 1999
---- ---- ----
Operating Data
Total Sales 436,448 448,459 323,267
Loss from Operations (571,059) (878,502) (591,382)
Net Loss (771,854) (902,697) (591,141)
Basic and Diluted EPS (0.06) (0.07) (0.09)
Balance Sheet Data
Working Capital (Deficit) (976,945) (554,067) 111,144
Total Assets 166,919 285,040 360,486
Total Liabilities 1,092,220 774,256 192,959
Shareholders' Equity (Deficit) (925,301) (489,216) 167,527
12
FINANCIAL AND OTHER INFORMATION
For more detailed information on the Company, including financial statements,
you may refer to the Company's Form 10-KSB and Forms 10-QSB, filed with the SEC.
Copies of these documents are available on the SEC's EDGAR database at
www.sec.gov or by calling the Company.
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act") the Registrant caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
REMEDENT USA, INC.
Dated: July 5, 2002 /s/ Robin List
------------------------------------------------
By: Robin List
Its: Chief Executive Officer (Principal
Executive Officer) and Director
Dated: July 5, 2002 /s/ Stephen F. Ross
------------------------------------------------
By: Stephen F. Ross
Its: Chief Financial Officer (Principal
Financial Officer and Principal Accounting
Officer) and Director
Dated: July 5, 2002 /s/ Guy DeVreese
------------------------------------------
By: Guy DeVreese
Its: Chairman (Director)
13
EXHIBIT A
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is entered into as of March 14th, 2002 by and
between Famcare 2000, LLC, a Limited Liability Company existing under the laws
of Nevada with its registered address at PMB 103, 6501 E. Greenway Pkwy Suite
102, Scottsdale, AZ 85254 (the "Purchaser") and Remedent USA, Inc., a Nevada
corporation ("Seller").
WITNESSETH:
WHEREAS, Seller, owns and operates an office facility located at 17555 Ventura
Blvd, Encino, CA 91316 (the "Facility"), where its division conducts a business
of selling the Remedent Toothbrush (the "Business");
WHEREAS, Purchaser is a corporation newly organized for the purpose of
marketing and distributing such products; and
WHEREAS, subject to the terms and conditions set forth in this Agreement, Seller
desires to sell to Purchaser (or its assignee), and Purchaser desires to
purchase from Seller, all of the Seller's assets and liabilities (as disclosed
in Exhibit 1) that are used in conduct of the Business.
NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree
as follows:
1. Purchase, Sale and Assumption
1.1. Agreement to Sell and to Purchase.
On the terms and subject to the conditions set forth herein, Seller agrees to
sell, assign, transfer, convey and deliver to Purchaser, and Purchaser agrees to
purchase and acquire from Seller, at the Closing (as defined herein), all right,
title and interest of Seller in and to the following assets, liabilities,
properties and rights as they shall exist as of the Closing Date (as defined
herein). Purchaser and Seller understand and agree that the business has been
discontinued as of December 31, 2001 by the Seller. Parties further understand
and agree that there has been no material change to the assets and liabilities
of the business from December 31, 2001 to Closing Date:
1.1.1. The inventions, copyrights, patents, trademarks, trade names and
applications, any related trademarks or logos and applications, including any
rights to the ownership and use of the trade names, trade secrets, proprietary
know-how and use and application know-how, product formulae, practices and
promotional literature, goodwill and other intellectual property and rights, in
each case used by Seller in connection with the Business, including, without
limitation, such intellectual property as is listed below (collectively, the
"Intellectual Property"):
>> All patents in relation to the Remedent Toothbrush
>> All rights to market the Toothbrush under the existing "Remedent" name
>> All trademarks in relation to the Remedent name;
14
However, Seller may retain the exclusive right to operate and utilize
the trademark Remedent through it course of business, at no ongoing cost to
Seller. Any changes to this provision must be mutually agreed upon by Purchaser
and Seller prior to such change.
1.1.2. The contracts in force and effect (including deposits
related thereto), leases, agreements and purchase and sale orders of Seller
related to the Business,
1.1.3. All computer applications and operating programs used at the
Facility in connection with the Business, ; provided, however, Seller shall
retain a non-exclusive license to use such applications and programs which are
currently used by Seller other than in connection with the Business, but that
Seller shall not be permitted to sub-license or assign such license;
1.1.4. All permits as used within the Business; and
1.1.5 All books, documents and records of Seller pertaining to the
Business, wherever located, including, without limitation, accounting, credit,
environmental and personnel records and customer lists; provided, however,
Seller may retain copies of such materials to the extent necessary for Seller to
fulfill its obligations under this Agreement or under other laws, regulations or
understandings by which it is bound.
All such assets, properties and rights, are referred to herein as the "Assets".
1.2. Excluded Assets.
Notwithstanding anything to the contrary set forth above, there shall be no such
excluded assets under this Agreement.
1.3. Liabilities Assumed.
On the Closing Date, Purchaser shall assume all liabilities of the Business, as
of the Closing Date, excluding, without limitation, (i) any claim, regardless of
when made or asserted, which arises out of or is based upon any express or
implied representation, warranty, agreement or guarantee made by the Seller, or
alleged to have been made by the Seller, or which is opposed or asserted to be
imposed by operation of law, in connection with any product manufactured,
shipped or installed by or on behalf of the Seller or for any service performed
by or on behalf of the Seller, including, without limitation, any claim relating
to the repair or replacement of any such product and any claim seeking recovery
for property damage, consequential damages, loss, lost revenue or income or
personal injury or (ii) any liability or obligation in respect of any federal,
state or local income or other tax payable with respect to the Business or the
Assets for any period prior to the Closing Date.
With regards to any individual accounts payable which are unable to be assigned
to Buyer, to be determined subsequent to the Closing Date, Buyer shall remain
primarily liable and exercise all attempts to satisfy the debt. Purchaser shall
remain contingently liable for such accounts until the full satisfaction of such
accounts by Buyer.
15
2. The Purchase Price; Closing
2.1. Purchase Price.
The purchase price shall be 750,000 shares of Seller's common stock (the
"Shares") payable to Purchaser in consideration of the excess of liabilities
assumed over assets acquired. The Shares will be issued to Purchaser within
three to five business days of Closing, with Seller filing a Registration
Statement within 60 days registering the Shares.
2.2. The Closing.
Subject to the terms and conditions set forth herein, the Closing of the
purchase and sale of the Business (the "Closing") shall take place at Seller's
Facility as soon as practicable after the conditions set forth herein have been
satisfied or waived, or at such other time and place as the parties hereto may
agree. (The time of the Closing being hereinafter called the "Closing Date".)
All transactions contemplated at the Closing shall be deemed to be effective
(the "Effective Time") as of midnight on the day preceding the Closing Date (the
Closing Date being deemed to commence at 12:01 a.m.), and events taking place,
and periods ending after the Effective Time shall be deemed to have taken place,
or ended, after the Closing Date.
2.3. Items to be Delivered at Closing.
At the Closing, and subject to the terms and conditions herein contained:
2.3.1. The Seller will deliver to the Purchaser the following:
a) Such full covenant, bills of sale, assignments,
endorsements, consents and other good and sufficient instruments and
documents of conveyance and transfer in a form satisfactory to the
Purchaser and its counsel, as shall be necessary and effective to
convey, transfer and assign to, and vest in, the Purchaser all of the
Seller's right, title and interest in and to the Assets, including,
without limitation all the Seller's rights under all agreements,
contracts, commitments, leases, plans, quotations, proposals, licenses,
permits, authorizations, software, know-how, instruments, and accounts
receivable documents which are included in the Assets;
b) A copy of all of the resolutions adopted by the Seller's
board of directors and, if necessary, stockholders relating to the
transactions contemplated by this Agreement, certified on the Closing
Date to be complete and correct by the Secretary or an Assistant
Secretary of the Seller;
c) All of the agreements, contracts, commitments, leases,
plans, bids, quotations, proposals, licenses, permits, authorizations,
instruments, computer programs and software, manuals and guidebooks,
price books and price lists, customer lists, supplier lists, sales
records, files, correspondence, and other documents, books, records,
papers, files and data belonging to the Seller which are part of the
Assets or relate to the Business; provided, however, that Seller may
retain copies of such materials to the extent necessary for Seller to
fulfill its obligations under this Agreement or under other agreements,
laws, regulations or understandings by which it is bound; and
d) Common stock certificate(s) for the Purchase Price as
determined pursuant to Section 2.1.
16
2.3.2. Simultaneously with such deliveries, all such steps will be
taken as may be required to put the Purchaser in actual possession and operating
control of the Business.
2.4. Third Party Consents.
The Seller, to be obtained subsequent to Closing, will obtain the proper consent
from Union Bank of Arizona, if required by Union Bank of Arizona, allowing for
the release of any and all assets utilized in the Business, currently being used
as security for the Union Bank of Arizona debt. The Seller will reach an
agreement with the Union Bank of Arizona for the use of assets within Seller's
existing Business as security for the debt.
In regards to the accounts payable for which Purchaser shall be assuming in
connection with this agreement, no third party consents shall be obtained as the
basis for assumption of liability will be as disclosed in Section 1.3
(Liabilities Assumed) above.
2.5. Further Assurances.
The Seller, from time to time after the Closing, at the Purchaser's request,
will execute, acknowledge and deliver to the Purchaser such other instruments of
conveyance and transfer and will take such other actions and execute and deliver
such other documents, certifications and further assurances as the Purchaser may
require in order to vest more effectively in the Purchaser, or to put the
Purchaser more fully in possession of any of the Assets, or to better enable the
Purchaser to complete, perform or discharge any of the liabilities or
obligations assumed by the Purchaser at the Closing.
3. Representations and Warranties of the Seller
The Seller hereby represents and warrants to the Purchaser as follows:
3.1. Corporate Existence.
Seller is a corporation duly organized, validly existing and in good standing
under the laws of Nevada and has all requisite power and authority and all
necessary licenses and permits to carry on its business as it has been and is
now being conducted and to own, lease and operate the properties used in
connection therewith.
3.2. Existing Condition.
To Seller's knowledge and belief, since March 14th, 2002, (the "Agreement
Date"), Seller, in relation to the Business, has not:
3.2.1. Sold, assigned or transferred any of the assets or other
interests in the Business except in the ordinary course of business consistent
with past practice;
3.2.2. Suffered any damage, destruction or loss, whether or not
covered by insurance, materially and adversely affecting the Assets; nor
3.2.3. Suffered any material adverse change to the condition of the
Assets.
17
3.3. Title to Properties; Leasehold Interests.
Seller has good, valid and marketable title to all of the Assets, real, personal
and mixed, including all of the properties and assets used by the Business as of
the Agreement Date and those acquired since the Agreement Date (except in each
case for Assets sold or otherwise disposed of since the Agreement Date in the
ordinary course of business consistent with past practice), free and clear of
all mortgages, liens, pledges, (upon release of assets by Union Bank of Arizona,
as discussed above), security interests, charges, claims, restrictions and other
encumbrances and defects of title of any nature whatsoever, except liens for
current taxes not yet due and payable. To Seller's knowledge and belief, all
leases, licenses, permits and authorizations in any manner related to the Assets
or the Business and all other instruments, documents and agreements pursuant to
which Seller has obtained the right to use any real or personal property in
connection with the Business are in good standing, valid and effective in
accordance with their respective terms, and there is not under any of such
instruments, documents or agreements any existing default or event which with
notice or lapse of time, or both, would constitute a default and in respect of
which Seller has not taken adequate steps to prevent a default from occurring.
3.4. Condition of Tangible Assets.
To Seller's knowledge and belief all structures, facilities, equipment and other
material items of Personal Property owned or used by Seller in the Business are
in good operating condition and repair, subject to normal wear and maintenance,
are usable in the regular and ordinary course of the Business and conform to all
applicable laws, ordinances, codes, rules and regulations relating to their
construction, use and operation.
3.5. Litigation.
Aside from any litigation currently threatened and/or pending relating to the
non-payment of existing liabilities as of the Closing Date, no litigation,
arbitration, investigation or other proceeding of or before any court,
arbitrator or governmental or regulatory official, body or authority is pending
or, to Seller's knowledge and belief, threatened against Seller (in connection
with the Business), the Assets, the Business, or the transactions contemplated
by this Agreement, and to Seller's knowledge and belief, there is not any basis
for any such litigation, arbitration, investigation or proceeding. To Seller's
knowledge and belief, Seller is not a party to or subject to the provisions of
any judgment, order, writ, injunction, decree or award of any court, arbitrator
or governmental or regulatory official, body or authority.
3.6. Compliance with Law.
To Seller's knowledge and belief, Seller, in connection with the Business, has
complied with each, and is not in violation of any law, ordinance, or
governmental rule or regulation to which it, the Business, or the Assets is
subject. To Seller's knowledge and belief, neither Seller nor any officer,
employee or agent of, nor any consultant to, Seller in connection with the
Business has unlawfully offered, paid, or agreed to pay, directly or indirectly,
any money or anything of value to, or for the benefit of, any individual who is
or was a candidate for public office, or an official or employee of any
governmental or regulatory body or authority or an officer or employee of any
client, customer or supplier of Seller. To Seller's knowledge and belief, Seller
has not engaged in any transaction, maintained any bank account or used any
corporate funds except for transactions, bank accounts and funds which have been
and are reflected in the normally maintained books and records of Seller.
18
3.7. Restrictions.
To Seller's knowledge and belief, Seller is not a party to any indenture,
agreement, contract, commitment, lease, plan, license, permit, authorization or
other instrument, document or understanding, oral or written, or subject to any
charter or other corporate restriction or any judgment, order, writ, injunction,
decree or award which materially adversely affects or materially restricts or,
so far as Seller can now reasonably foresee, may in the future materially
adversely affect or materially restrict, the prospects or condition (financial
or otherwise) of the Business or the Assets.
3.8. Conditions Affecting the Business.
To Seller's knowledge and belief, as of the Agreement Date, there are no
conditions existing with respect to the Business, its markets, products,
services, clients, customers, facilities, personnel or suppliers which are known
to Seller or which should be known to the prudent businessman in charge of
operations of the Business which would adversely affect the Business, considered
as a whole, other than such conditions as may affect as a whole the industry in
which the Business engages.
3.9. Contracts and Commitments.
To Seller's knowledge and belief, Seller, in relation to the Business, is not a
party to any written or oral:
3.9.1. Agreement, contract or commitment with any present or former
shareholder, director, officer, employee or consultant or for the employment
of any person, including any consultant;
3.9.2. Agreement, contract, commitment or arrangement with any
labor union or other representative of employees;
3.9.3. Agreements, contracts or commitments for the future purchase
of, or payment for, supplies or products, or for the performance of services
by a third party, involving the expenditures of $1,000, or more;
3.9.4. Agreements, contracts or commitments to sell or supply
products or to perform services, involving $1,000 in value;
3.9.5. Agreements, contracts or commitments continuing over a period
of more than six months from the date hereof or exceeding $1,000 in value;
3.9.6. Representative or sales agency agreement, contract or
commitment;
3.9.7. Lease under which Seller is either the lessor or lessee;
3.9.8. Agreement, contract or commitment for any charitable or
political contribution;
3.9.9. Agreements, contracts or commitments for any capital
expenditure in excess of $1,000;
3.9.10.Agreement, contract or commitment limiting or restraining it
from engaging or competing in any lines of business with any person, nor was any
officer or employee of the Business subject to any
19
such agreement, contract or commitment as of the Agreement Date nor is any
officer or employee of the Business subject to any such agreement, contract
or commitment;
3.9.11.License, franchise, distributorship or other agreement,
including those which relate in whole or in part to any patent, trademark, or
copyright or to any ideas, technical assistance or other know-how of or used by
the Business; or
3.9.12. Material agreement or contract not made in the ordinary course
of business. To Seller's knowledge and belief, each of the agreements,
contracts, commitments, leases and other instruments, documents and undertakings
is valid and enforceable in accordance with is terms, the parties thereto are in
compliance with the provisions thereof, no party is in default in the
performance, observance or fulfillment of any material obligation, covenant or
condition contained therein and no event has occurred which with or without the
giving of notice or lapse of time, or both, would constitute a default
thereunder, furthermore, no such agreement, contract, commitment, lease or other
instrument, document or undertaking, in the reasonable opinion of the Seller,
contains any contractual requirement with which there is a reasonable likelihood
Seller or any other thereto will be unable to comply.
3.10. No Third Party Options.
There are no existing agreements, options, commitments or rights with, to or in
any person to acquire the Business, any of the Assets or any interest therein,
except for this Agreement and those contracts entered into in the normal course
of business consistent with past practice for the sale of Seller's products and
services.
3.11. Full Disclosure.
To Seller's knowledge and belief, no representation or warranty by Seller in
this Agreement or in any document delivered or to be delivered by Seller
pursuant hereto, and no statement, list, certificate or instrument furnished or
to be furnished to the Purchaser pursuant hereto or in connection with the
negotiation, execution or performance of this Agreement, contains or will
contain any untrue statement of a material fact or omits or will omit to state
any fact necessary to make any statement herein or therein not misleading.
4. Representations and Warranties of the Purchaser
The Purchaser hereby represents and warrants to the Seller as follows:
4.1. Corporate Existence.
The Purchaser is duly organized, validly existing and in good standing under the
laws of the State of Nevada.
4.2. Corporate Power and Authorization.
The Purchaser has the corporate power to execute, deliver and perform this
Agreement. The execution, delivery and performance of this Agreement by the
Purchaser has been duly authorized by all necessary corporate action. This
Agreement has been duly executed and delivered by the Purchaser and constitutes
20
the legal, valid and binding obligation of the Purchaser enforceable against it
in accordance with its terms.
4.3. Validity of Contemplated Transactions, etc.
The execution and delivery of this Agreement by the Purchaser does not, and, the
performance of this Agreement by the Purchaser will not, violate, conflict with
or result in the breach of any term, condition or provision of, or require the
consent of any other party to, (a) any existing law, ordinance, or governmental
rule or regulation to which the Purchaser is subject, (b) any judgment, order,
writ, injunction, decree or award of any court, arbitrator or governmental or
regulatory official, body or authority which is applicable to the Purchaser, (c)
the charter documents or By-Laws of the Purchaser, or (d) any mortgage,
indenture, agreement, contract, commitment, lease, plan or other instrument,
document or understanding, oral or written, to which the Purchaser is a party or
by which the Purchaser is bound. No authorization, approval or consent, and no
registration or filing with, any governmental or regulatory official, body or
authority is required in connection with the execution, delivery and performance
of this Agreement by the Purchaser.
5. Additional Covenants of the Parties
5.1. Cooperation and Access.
After the Closing, Purchaser will give Seller and/or its contractors full and
complete access to the Facility for purposes of performing any activities which
Seller is required to perform, and Purchaser will cooperate fully with Seller
and its contractors in preparing for and in performing such activities. In
connection therewith, Seller will use all commercially practicable efforts to
ensure that such activities do no unduly interfere with Purchaser's operation of
the Business. Seller will indemnify Purchaser for any damage to the Facility and
for any liability to third persons which damage or liability is caused by or in
connection with Seller's or its contractors' performance of such activities.
5.2. Interference with the Business.
After the Closing, Seller and each of its employees and affiliates shall not
take any action or engage in any practice which disparages Purchaser, its
products or its employees and which would impair the relationships of the
Purchaser with any customers, employees, suppliers or other persons having any
business dealings with the Purchaser.
5.3. In General.
As expressly provided within this Agreement, Purchaser shall be responsible for
any and all wages arising out of the employment of Rob Hegemann ("Employee") by
Seller which are earned prior to January 1, 2002. Purchaser shall also be
responsible for and assume all liability for any and all such amounts (or any
comparable amounts under Purchaser's plans) to Employees that are earned on or
after January 1, 2002.
21
5.4. Grievances.
Seller shall be responsible for (i) the resolution of all filed grievances
attributable to events occurring prior to the Closing Date and (ii) the payment
of any amounts in the nature of back pay or employee compensation in respect of
such grievances for periods before or after the Closing Date and all other
expenses incident thereto.
5.5. Misdirected payments.
The parties agree that any payments received by either of them that are
identified to invoices of the other or otherwise due the other shall promptly be
remitted to the other. Unless some other allocation or distribution of payment
is apparent on the face of the remittance, all payments shall be applied on a
first-in, first-out basis, thus being applied first to accounts receivable
generated on or after the Closing Date. Purchaser and Seller shall exchange
information concerning billings and payments at such intervals and for such
period of time as shall be necessary to facilitate the administration of this
agreement as to collection of accounts receivable.
6. Miscellaneous Provisions
6.1. Entire Agreement; Amendment; Assignment.
This Agreement and the exhibits and schedules appended hereto embody and
constitute the entire understanding between the parties with respect to the
transactions contemplated herein, and all prior agreements, understandings,
representations and statements, oral or written, are merged into this Agreement.
Neither this Agreement nor any provision hereof may be waived, modified,
amended, discharged or terminated except by an instrument signed by the party
against whom the enforcement of such waiver, modification, amendment, discharge
or termination is sought, and then only to the extent set forth in such
instrument
6.2. Notices.
All notices, demands, requests, or other communications which may be or are
required to be given, served or sent by either party to the other party pursuant
to this Agreement, shall be in writing and shall be hand delivered, sent by
guaranteed overnight parcel express service or mailed by registered or certified
mail, return receipt requested, postage prepaid, or transmitted by or telecopy
(with a confirming copy sent by another permitted means), addressed as follows:
6.2.1. If to Seller:
Remedent USA, Inc.
17555 Ventura Blvd. Suite 200
Encino, CA 91316
Telefax: 818.922.0584
6.2.2. If to Purchaser:
Famcare 2000, LLC
PMB 103
6501 East Greenway Pkwy, Suite 102
Scottsdale, AZ 85254
Telefax: 480.659.0300
22
6.2.3. With a copy (which shall not constitute notice) to Seller's
counsel:
Lynne Bolduc, Esq.
Oswald & Yap, APC
16148 Sand Canyon Avenue
Irvine, CA 92618
Telefax: 949.788.8980
Each party may designate by notice in writing a new address to which any notice,
demand, request or communication may thereafter be so given, served or sent.
Each notice, demand, request, or communication which shall be mailed or
telefaxed in the manner described above, or which shall be delivered to a
telegraph company, shall be deemed sufficiently given, served, sent or received
for all purposes at such time as it is delivered to the addressee (with the
return receipt, the delivery receipt or, with respect to a telefax, the answer
back being deemed conclusive evidence of such delivery) or at such time as
delivery is refused by the addressee upon presentation.
6.3. Governing Law.
This Agreement shall be governed by, and construed in accordance with, the laws
of California, without giving effect to the conflicts of laws provisions
thereof.
6.4. Captions.
The captions in this Agreement are inserted for convenience of reference only
and in no way define, describe or limit the scope or intent of this Agreement or
any of the provisions hereof.
6.5. Benefit.
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and permitted assigns.
6.6. Construction.
As used in this Agreement, the masculine shall include the feminine and neuter,
the singular shall include the plural and the plural shall include the singular,
as the context may require.
6.7. Waiver.
Neither the waiver by either of the parties hereto of a breach of or a default
under any of the provisions of this Agreement, nor the failure of either of the
parties, on one or more occasions, to enforce any of the provisions of this
Agreement or to exercise any right or privilege hereunder shall thereafter be
construed as a waiver of any subsequent breach or default of a similar nature,
or as a waiver of any such provisions, rights, or privileges hereunder.
23
6.8. Non-Business Days.
If any obligation of a party hereto falls due on a Saturday, Sunday or legal
holiday recognized by the United States Government, then such obligation shall
automatically be postponed until the next day which is not a Saturday, Sunday or
legal holiday.
6.9. Cost and Expenses.
Except for costs and expenses specifically assumed by a party under this
Agreement, each party hereto shall pay its own expenses incident to this
Agreement and the transactions contemplated hereunder. Seller shall pay all
transfer and recording tax and fees associated with the transfer of the Real
Property.
6.10. Seller Indemnity.
To the extent not otherwise provided herein, Seller agrees to defend, indemnify
and hold harmless Purchaser from and against:
6.10.1. Events occurring prior to the Closing with respect to the
ownership, management, operation and maintenance of the Business;
6.10.2. Any actual loss, liability or damage suffered or incurred by
Purchaser because any representation or warranty contained in this Agreement, or
in any document furnished to Purchaser by Seller in connection with the Closing
hereunder, shall be false or misleading in any material respect; and all
reasonable costs and expenses (including reasonable attorneys' fees) incurred by
Purchaser in connection with any action, suit, proceeding, demand, assessment or
judgment incident to any of the matters indemnified against in this provision.
6.10.3 This transaction not being ratified by the Securities and
Exchange Commission and Company shareholder regulations.
6.11. Purchaser Indemnity.
To the extent not otherwise provided herein or not inconsistent with any other
provision hereof, Purchaser agrees to defend, indemnify and hold Seller harmless
from and against:
6.11.1. All debts, liabilities and obligations arising out of or in any
way relating to the operation of the Business accruing subsequent to the Closing
or from events occurring subsequent to the Closing with respect to the
ownership, management, operation, maintenance and repair of the Business;
6.11.2. Any actual loss, liability, or damage suffered or incurred by
Seller because of any representation or warranty contained in this Agreement, or
in any document furnished to Seller by Purchaser in connection with the Closing
hereunder, shall be false or misleading in any material respect; and
6.12. Notice Regarding Indemnities, Limitation of Indemnity, Etc.
Except to the extent expressly provided elsewhere in this Agreement, the
following procedures shall be followed with respect to all claims for
indemnification under this Agreement and all obligations of indemnification
hereunder shall be subject to compliance by the party to be indemnified with
such procedures:
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6.12.1. The indemnitee shall give prompt written notice to the
indemnitor of any claim that might give rise to a claim by the indemnitee
against the indemnitor pursuant to this Agreement, stating the nature and basis
of such claims and the estimated amounts thereof.
6.12.2. If any action, suit or proceeding is brought against an
indemnitee with respect to which an indemnitor may have liability pursuant to
this Agreement, the action, suit or proceeding shall, upon
a) The written acknowledgment by the indemnitor that it has
the obligation to indemnify the indemnitee under the indemnity
agreements contained herein and
b) The making of reasonably adequate provisions by the
indemnitor to ensure the indemnitee of the ability of the indemnitor to
satisfy its obligation hereunder, be defended (including all
proceedings on appeal or for review that counsel for the indemnitor
shall deem appropriate) by, and may be settled or compromised by, the
indemnitor. Prior to receipt by the indemnitee of the indemnitee of the
indemnitor's written acknowledgment and provision as required by
clauses (x) and (y) of the preceding sentence, the indemnitee shall
have the right to contest or defend (and, if the indemnitee has not
received such written acknowledgment and provision within twenty
business days after the indemnitee has provided written notice as
required by Section 7.2 above, to settle or compromise) such action,
suit or proceeding at the expense of the indemnitor. In addition to the
foregoing, the indemnitee may by written notice to the indemnitor
require the indemnitor to assume the defense of any action, suit or
proceeding with respect to which the indemnitor may have liability
pursuant to this Agreement. The indemnitee shall have the right to
employ its own counsel in connection with any action, suit or
proceeding being defended by the indemnitor pursuant hereto, but the
fees and expenses of such counsel shall be at the indemnitee's own
expense unless (i) the employment of such counsel and the payment of
such fees and expenses shall have been specifically authorized by the
indemnitor in connection with the defense of such action, suit or
proceeding or (ii) the indemnitee shall have reasonably concluded and
notified the indemnitor that there may be specific defenses available
to it that are different from or in addition to those available to the
indemnitor or that such action, suit or proceeding involves or could
have an effect upon matters beyond the scope of the indemnity
agreements contained herein, in either of which events (A) the
indemnitor, to the extent made necessary by such defenses, shall not
have the right to direct the defense of such action, suit or proceeding
on behalf of the indemnitee and (B) only that portion of such fees and
expenses reasonably related to matters covered by the indemnity
agreements contained herein shall be borne by the indemnitor. The
indemnitor shall keep the indemnitee fully informed of such action,
suit or proceeding at all stages thereof whether or not the indemnitee
is so represented. The indemnitor shall make available to the
indemnitee and its attorneys and accountants all books and records of
the indemnitor relating to such proceedings or litigation, and the
parties hereto agree to render to each other such assistance as they
may reasonably require to ensure the proper and adequate investigation,
and the defense or settlement, of any such action, suit or proceeding.
c) The indemnitee shall be entitled to compromise or settle
all actions, suits or proceedings as to which the indemnitor does not
have or does not exercise the right to assume the defense, without
consent of the indemnitor, provided, that it acts reasonably and in
good faith in doing so. The indemnitee shall keep the indemnitor fully
informed of such action, suit or proceeding at all stages thereof.
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d) No claim for indemnification shall be made pursuant to this
Agreement unless the amount of such claim exceeds $1,000, but each
claim paid pursuant to such provisions shall be the full amount of such
claim.
6.13. Survival of Representations.
Each of the representations and warranties made herein shall survive the
Closing, and for a period of three years thereafter. Any action to be brought
for breach of any representation or warranty shall be brought only during the
period in which it has survived.
6.14. Counterparts.
To facilitate execution, this Agreement may be executed in as many counterparts
as may be required; and it shall not be necessary that the signature of, or on
behalf of, each party, or that the signatures of all persons required to bind
any party, appear on each counterpart; but it shall be sufficient that the
signature of, or on behalf of, each party, or that the signatures of the persons
required to bind any party, appear on one or more such counterparts. All
counterparts shall collectively constitute a single agreement.
6.15. Exhibits and Schedules.
Each Exhibit and Schedule hereto is incorporated by reference and made a part of
this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
SELLER
Remedent USA, Inc.,
a Nevada corporation
/s/ Stephen F. Ross
- --------------------------------------------
BY: Stephen F. Ross
----------------------------------------
ITS: Chief Financial Officer
----------------------------------------
PURCHASER:
FamCare 2000, LLC
/s/ Rob Hegemann
- ------------------------------------
BY: Rob Hegemann
--------------------------------
>> ITS: V.P.
--------------------------------
26
EXHIBIT I
REMEDENT TOOTHBRUSH BUSINESS
ASSETS & LIABILITIES
Cash $ 2,092
Accounts receivable 7,729
Due from related parties 9,952
Inventory 5,530
Property & equipment, net 14,580
Patents, net 25,527
Other assets 3,655
Accounts payable (343,198)
Accrued liabilities (61,580)
--------
Net liabilities to be sold $(335,713)
==========