Forward Looking Statements

The discussion contained herein is for the three months ended June 30, 2009 and 2008. The following discussion should be read in conjunction with the Company's condensed consolidated financial statements and the notes to the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2009. In addition to historical information, this section contains "forward-looking" statements, including statements regarding the growth of product lines, optimism regarding the business, expanding sales and other statements. Words such as expects, anticipates, intends, plans, believes, sees, estimates and variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks and uncertainties that are difficult to predict. Actual results could vary materially from the description contained herein due to many factors including continued market acceptance of our products. In addition, actual results could vary materially based on changes or slower growth in the oral care and cosmetic dentistry products market; the potential inability to realize expected benefits and synergies; domestic and international business and economic conditions; changes in the dental industry; unexpected difficulties in penetrating the oral care and cosmetic dentistry products market; changes in customer demand or ordering patterns; changes in the competitive environment including pricing pressures or technological changes; technological advances; shortages of manufacturing capacity; future production variables impacting excess inventory and other risk factors. Factors that could cause or contribute to any differences are discussed in "Risk Factors" and elsewhere in the Company's annual report on Form 10-K filed on June 29, 2009 with the Securities and Exchange Commission. Except as required by applicable law or regulation, the Company undertakes no obligation to revise or update any forward-looking statements contained in this Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2009. The information contained in this Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2009 is not a complete description of the Company's business or the risks associated with an investment in the Company's common stock. Each reader should carefully review and consider the various disclosures made by the Company in this Quarterly Report on Form 10-Q and in the Company's other filings with the Securities and Exchange Commission.

Overview

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

Result of Operations

Comparative detail of results as a percentage of sales, is as follows:

                                             For the three months ended
                                                      June 30,
                                               2009                2008

           NET SALES                              100.00 %          100.00 %
           COST OF SALES                           50.72 %           34.92 %
           GROSS PROFIT                            49.28 %           65.08 %
           OPERATING EXPENSES
           Research and development                 1.23 %            3.44 %
           Sales and marketing                     16.24 %           18.47 %
           General and administrative              48.26 %           31.09 %
           Depreciation and amortization            8.03 %            2.51 %
           TOTAL OPERATING EXPENSES                73.76 %           55.50 %
           INCOME (LOSS) FROM OPERATIONS          (24.48 )%           9.58 %
           Other income (expense)                   1.91 %           (0.49 )%
           (LOSS) INCOME                          (22.57 )%           9.09 %
           Non-controlling interest                (2.86 )%              -
           NET INCOME (LOSS)                      (25.43 )%           9.09 %

Net Sales

We experienced a sales decrease for the three months ended June 30, 2009 of $1,474,676, or 40.6%, to $2,160,803 as compared to $3,635,479 for the three months ended June 30, 2008. The decrease in sales was mainly due to the non-recurrence of two exclusive license fees that were invoiced during the quarter ending June 30, 2008. The exclusive license fees were for the territories of the United States of America and the United Kingdom, and amounted to $1,250,000. Also, during the quarter ended June 30, 2009, we experienced a delay in the set up of our production facility, which resulted in reduced sales.

Cost of Sales

Our cost of sales decreased for the three months ended June 30, 2009 by $173,417, or 13.7%, to $1,096,007 as compared to $1,269,424 for the three months ended June 30, 2008. Cost of sales, as a percentage of net sales, has increased to 50.7% in the quarter ended June 30, 2009 as opposed to 34.9% in the quarter ended June 30, 2008. Cost of sales as a percentage of net sales has increased mainly because June 30, 2008 net sales were higher than net sales for the period ended June 30, 2009, as noted above.

We continue to closely monitor and look for new strategies to optimize and improve our current processes in order to decrease our costs.

Gross Profit

Our gross profit decreased by $1,301,259 or 55%, to $1,064,796 for the three month period ended June 30, 2009 as compared to $2,366,055 for the three month period ended June 30, 2008. Our gross profit as a percentage of sales decreased to 49.3% in the three months ended June 30, 2009 as compared to 65.1% for the three months ended June 30, 2008. The decrease in gross profit is the result of the licensee fees which where invoiced during last year's quarter ending June 30, 2008, as noted above.

Operating Expenses

Research and Development. Our research and development expenses decreased by $98,350 to $26,598, 78.7%, for the three months ended June 30, 2009 as compared to $124,948 for the three months ended June 30, 2008. The principal reason for this decrease is that the new products, in which we invested in R&D last year, are now products that are brought up to new saleable products which are being sold currently.

Sales and marketing costs. Our sales and marketing costs decreased by $320,364 or 47.7%, to $350,935 for the three months ended June 30, 2009 as compared to $671,299 for the three months ended June 30, 2008. The decrease is largely due to the Company's USA sales reorganization. Rather than funding a direct sales office in the USA, the Company has chosen to sell into the USA via a distributor, thereby enabling a significant reduction in sales and marketing costs.

General and administrative costs. Our general and administrative costs for the three months ended June 30, 2009 and 2008 were $1,042,764 and $1,130,313, respectively, representing a decrease of $87,549 or 7.7%. The Company's general and administrative costs have also decreased as a result of the Company's USA sales reorganization, as noted above.

Depreciation and amortization. Our depreciation and amortization increased $82,183 or 90.1%, to $173,444 for the three months ended June 30, 2009 as compared to $91,261 for the three months ended June 30, 2008. The increase is mostly due to the investment in a semi-automatic production machine for the production of our foam strips, which will allow us to significantly increase our production capacity. This investment allowed us to streamline and improve production significantly with resultant increases in capacity and quality as well as decreased costs. Secondly, investments are being made in software and related hardware to bring the design of veneers to the next level which will allow the dentist to modify the design of the final product, gaining substantial time in the production process.

Other income (expense). Our other income (expense) was $41,351 for the three months ended June 30, 2009 as compared to ($17,723) for the three months ended June 30, 2008, a decrease of $59,074, or 333%. Interest expense has decreased primarily because of decreased utilization of our available bank credit line, offset by interest revenue earned on outstanding bank balances.

Liquidity and Capital Resources

Liquidity

We believe we currently possess sufficient resources to meet the cash requirements of our operations for at least the next year. Our basis for this is the following.

· During December 2008, we implemented cost reduction measures, including the reorganisation of our direct sales office in the United States of America.

· During December 2008, we restructured our over-the-counter business

· During August 2008, and as amended during June 2009, we entered into distribution agreements. As a result of these developments, we have begun the process of reducing our operations in the United States, thereby enabling considerable cost savings.

· We continue to review our inventory and plan to reduce the levels.

· We do not expect to purchase or sell any property or equipment over the next 12 months.

· We do not expect a significant change in the number of our employees over the next 12 months.

We believe that we will have sufficient resources to meet our obligations and sustain our operations for the remainder of fiscal year 2010. However, we are substantially dependent on our major distributor and the continued performance of this distributor to make committed purchases of our products and associated consumables under the distribution agreement and the receipt of cash in connection with those purchases, is essential to our liquidity.

During the past three months, the balance on our line of credit has increased by $816,940, from $660,200 at March 31, 2009 to $1,477,140 at June 30, 2009. The increase in our use of the line of credit is approximately equal to the decrease in our accounts payable and the combined increase in our accounts receivable and inventories. At June 30, 2009 we believe we have approximately $1,522,860 available under our line of credit. We believe that the combination of the above factors, the availability of the balance of our line of credit and our effective management of our use of cash will minimize our requirement to seek additional financing. However, in the event that we are required to seek additional funding through public or private equity or debt, there can be no assurance that we will be able to obtain requisite financing to fund existing obligations and operating requirements on acceptable terms or at all.

Cash and Cash equivalents

Our balance sheet at June 30, 2009 reflects cash and cash equivalents of $1,598,294 as compared to $1,807,271 as of March 31, 2009, a decrease of $208,977. The decrease of cash and cash equivalents is primarily as a result of the payment of accrued liabilities, increased accounts receivable and inventories.

Operations

Net cash used by operations was $997,567 for the three months ended June 30, 2009 as compared to net cash used by operations of $142,152 for the three months ended June 30, 2008. The increase in net cash used by operations for the three months ended June 30, 2009 as compared to the three months ended June 30, 2008 is primarily as a result of net operating loss for the period, a reduction of accrued liabilities of $603,000, and increases in inventory and accounts receivable.

Investing activities

Net cash used in investing activities totalled $68,144 for the three months ended June 30, 2009 as compared to net cash used in investing activities of $205,002 for the three months ended June 30, 2008. Cash used in the three months ended June 30, 2009 was mainly for machinery and related software to support our increasing number of veneer designers.

Cash used in investing activities in the three months ended June 30, 2008 was mainly for equipment to be used in the production process of Veneers, additional hardware equipment in relation to support our GlamSmile product line in combination with our new designed software, enabling the dentist to interfere in the production process, investments made for moldings concerning the GlamSmile product group and moldings for new OTC products.

Financing activities

Net cash provided by financing activities totaled $797,556 for the three months ended June 30, 2009, as compared to $116,897 for the three months ended June 30, 2008. Net cash provided by financing activities in the three month period ended June 30, 2009 was higher than in the three months ended June 30, 2008 because of increased use of our credit line.

During the three months ended June 30, 2009 and June 30, 2008, we recognized an increase in cash and cash equivalents of $59,178 and $52,279, respectively, from the effect of exchange rates between the Euro and the US Dollar.

Off-Balance Sheet Arrangements

At June 30, 2009, we did not have any transactions, obligations or relationships that could be considered off-balance sheet arrangements.