BIOLASE Inc (BIOL) 2007 Q1 法說會逐字稿

Good morning. My name is Rich, and I'll be your conference operator today. At this time, I would like to welcome everyone to the BIOLASE 2007 first quarter results conference call. [OPERATOR INSTRUCTIONS]

It is now my pleasure to turn the floor over to your host, Matt Clawson of Allen & Caron. Sir, you may begin your conference.

Thank you, Rich.

Good morning, everyone, and thank you for joining us for the BIOLASE 2007 first quarter results conference call. You should have all receive a copy by e-mail this morning of the release announcing the company's results for its first quarter ended March 31, 2007. If you did not receive a copy of the news release, you can call our office after the conference call at 949 474 4300, and we will be happy to e-mail you a copy.

Before we get under way, I've been asked to make the following statement. The words or phrases can, be, expect, may affect, may depend, believes, estimates, projects and similar words and phrases are intended to identify forward-looking statements. Forward-looking statements are subject to various known and unknown risks and uncertainties, and BIOLASE cautions you that any forward-looking information provided is not a guarantee of future performance. Actual results could differ materially from those anticipated in these forward-looking statements due to a number of factors, some of which are beyond BIOLASE's control, and may be discussed in BIOLASE's filings with the Securities and Exchange Commission. All such forward-looking statements are current only as of the day on which those statements were made. BIOLASE does not undertake any obligation to publicly update any forward-looking statement to reflect events or circumstances after the date on which any such statement was made, or to reflect the occurrence of unanticipated events.

As a quick reminder, the earnings release and replay of this conference call are available on the BIOLASE website at www.BIOLASE.com. The company's 2007 results can also be found in the company's quarterly report on Form 10 Q, which is expected to be filed later this week with the Securities and Exchange Commission.

With me on the call are Jeffrey Jones, BIOLASE president and CEO, and Richard Harrison, its Chief Financial Officer. To begin, Jeff will provide an update on the business operational performance and outlook, and he will review management's strategies and visions for realizing the full potential of BIOLASE. Rich will then provide a review of the financial results. Management will then conduct a Q&A session, and end the call with closing remarks. And just as a reminder, we will be making some forward-looking statements on the call.

Now, with that said, I'd like to turn the call over to CEO, Jeff Jones. Good morning, Jeff.

Good morning, Matt, and good morning everyone. It is a pleasure to host this call today.

I believe it is very important to characterize our first quarter ended March 31 as one of change and important and substantial investment to benefit our company's future. During the quarter, we were highly focused throughout our business on strategies that we believe are essential not only to achieving but exceeding the significant revenue and profitability goals that we have established for 2007 and future years.

Simply stated, these strategies can be summarized as follows: One, insure the success of our landmark distribution agreement with dental industry powerhouse Henry Schein; two, new strongholds for our international revenues, and three, develop multiple revenue streams with more consumable products, and do this by new and more offerings of accessories and optional equipment to expand what Waterlase and Waterlase MD options are in capabilities and performance, serious participation in the soft tissue laser category, development of powerful dental applications, homerun procedures that specifically require our photon-based technology and incorporate unique and key consumable products, and pursuit of potential markets outside of dentistry, where we can capitalize on our advanced technology through strategic partnering.

Before I address our Q1 activities in more detail, let me briefly speak to revenue for the first quarter. Net revenue results of $15.1 million versus $16.9 million were below expectation, and this shortfall occurred primarily in the domestic business. There is almost always a decline in revenue from the fourth to the first quarter, and this year's decline was amplified by the change in the relationship-building activities of our sales representatives engaged with the Schein sales representatives, Schein managers and their territories, and related turnover in the BIOLASE sales ranks. I will come back and address this activity in more detail shortly, but let me state our strong belief that we have not lost market share to our competitors, that we remain by a wide margin the market leader, and that we believe this first quarter just ended will be our lowest revenue quarter in 2007.

On the operational side, we made continued progress in key areas, especially in our ongoing cost-containment programs, which we believe will yield significant benefits as revenue trends improve in the coming periods. We maintained a healthy gross margin on comparatively lower sales, and our operating expenses decreased by 9%. We believe our current infrastructure and cost structure positions us well for bottom-line improvements this year.

Let's turn now to some of our Q1 activities and discuss what they will mean for the rest of the year, and I'll start by coming back to our activities vis-à-vis Henry Schein. First, I cannot overemphasize how important it is for us to invest the time and resources today and the next few quarters in education and relationship building between our own direct sales representatives and the Schein field sales consultants, or FSCs. Each Schein FSC has strong personal relationships with 80 to 120 dentists in his or her territory, and they carefully protect and nurture each and every one of these relationships. It is critical that we continue to build the FSC's relationship with us, with BIOLASE, and properly educate and train them regarding the advantages of Waterlase and BIOLASE technology. Each FSC will refer more and more quality leads to our reps as we continue down this road. This model can dramatically extend our reach, but it does take time to cultivate.

We believe the Schein large distribution power is the correct way, mid and long term, for us to accelerate the penetration rate of Waterlase dentistry. We have been highly engaged with the Sullivan-Schein management team, and they have kicked off strategic, leveraged, cooperative programs which we believe are generating traction and will have strong impact on sales growth.

Internationally, in the international sales arena, we are taking action to establish strong sales in more countries. This will strength and diversify our customer base, with the goal of not only accelerating our international growth but also helping to reduce quarterly fluctuations in the future. Toward that end, we are finalizing a new distribution agreement for the U.K., and we have just entered an agreement to expand our footprint in Australia and New Zealand. We will have more announcements regarding several parts of the world as the year progresses.

Regarding the multiple revenue streams, a critical initiative of ours is to develop multiple revenue streams with more consumable products. To date, a vast majority of our sales have come from the sale of Waterlase and Waterlase MD systems. This initiative includes developing significant procedure-based products to enhance our offering of accessories and optional equipment that will be very attractive to the Waterlase dentist because he or she will be able to expand their capabilities and do more for their patients. This includes new complimentary systems. We believe this will also help reduce quarter-to-quarter fluctuations in sales and is an attractive and fundamental way to help us draw our consumable revenue.

I'm pleased to report that we are now launching our new, disposable Zip Tips and the new Waterlase MD Gold handpiece. Both of these products are for use with the Waterlase MD. With our new Zip Tips, the dentist will enjoy a low-cost, single-patient use tip that increases efficiency and patient comfort, while offering the dentist and patient a fast, user-friendly advancement. We have combined these two new products in a new product that we call our one-year supply agreement. You'll hear more about this as time progresses. Both of these products made their debut at the California Dental Association, the meeting just ended this weekend.

With respect to soft tissue diode lasers, we plan to take advantage of our brand leadership and our Schein partnership to become the leader in this category. Many of you are aware that we just launched our new ezLase 940 Soft Tissue Dental Diode Laser System. The award-winning ezLaze 940 has everyone's attention, and enjoyed very strong order volume in a very short timeframe since lunch. In fact, we are also proud to announce that the ezLase has just won the Medical Design Excellence Award, which is published in MD&DI.

Before the year is out, we intend to commercialize our efforts to develop powerful dental applications that specifically require our photon-based technology and incorporate unique, associated consumable products. If you follow the dental trade journals, you will soon begin seeing advertisements which start laying the groundwork for this project.

Well outside of dentistry, in concert with our strategy to develop multiple revenue streams, we cannot ignore the potential for our proven photon-based technology outside of the dental office. Our license agreement with P&G corroborates this concept. Rest assured that any opportunities here will be pursued with strategic partnering in mind, and we do not intend for our efforts in the dental marketplace to be significantly diverted. We believe the market opportunity for photon products in dentistry is still the greatest of the combined markets for other medical lasers.

At this time, I would like to turn the call over to Rich Harrison, our CFO, who will provide more details on our financial results for the quarter.

Thanks, Jeff, and good morning everybody.

Total net review for the quarter ended March 31, 2007 was $15.1 million, compared with $16.9 million a year ago. Net domestic revenue was $8.7 million, compared with $10.4 million in Q1 of '06, and net international revenue was $6.4 million and $6.5 million in the first quarters of '07 and '06, respectively. 2007 net revenue benefited from $917,000 in amortization to revenue of license fees and related payments received from Henry Schein and from Procter & Gamble.

In Q1 this year, sales of our Waterlase systems -- which includes both the original Waterlase and the Waterlase MD -- represented 74% of our total net revenues, and sales of our diode laser systems represented 6%. In the first quarter of 2006, these percentages were 75% for Waterlase and 7% for diodes.

Our gross margin as a percentage of total net revenue increased from 51.9% in the first quarter of 2006 to 54% in this year's first quarter. The improvement resulted from the $917,000 in license fee revenue that I just described, which is all at 100 percent margin. So if you look at the gross margin on just products and services revenue this year, excluding the license fees, it was 50.9% and in last year's first quarter, was 51.6%. So considering the comparative decrease in sales in this year's first quarter, this demonstrates the progress we have made containing costs in this category.

Turning now to operating expenses, sales and marketing expenses increased by $313,000. This was primarily the result of expenses for our direct sales operations in Australia and New Zealand. Expenses there were minimal in the first quarter of last year because we commenced those operations on March 1 of last year.

However, more than offsetting the increase in sales and marketing expenses was the $912,000 or 28% decrease in general and administrative expenses, which came from reduced legal, compliance and consulting fees, and also lower payroll costs. This was our lowest quarter for G&A spending since Q2 of 2004, and engineering costs were about the same from quarter to quarter.

So overall, operating expenses in the first quarter were 9% lower than in the first quarter of 2006.

At the bottom line, we narrowed our net loss from $2.3 million a year ago, or $.10 per share in the first quarter of '06, to $1.7 million, or $.07 per diluted share this year in the first quarter.

I now have a few brief comments regarding our balance sheet.

At March 31, 2007, we had $12.8 million in cash, and we continue to have no outstanding balance on our available $10 million line of credit with Comerica Bank. The quarter-end cash balance was down just under $2 million from year-end cash of $14.7 million, and the decrease was almost entirely the result of cash used in operating activities and roughly correlates with our net loss for the quarter of $1.7 million.

The nearly $3 million in cash generated by the reduction in accounts receivable was essentially used to reduce outstanding payables and accruals, and to build inventory for growth and also, our inventory requirements for the new, ezLase Soft Tissue Diode Dental System.

We remain in solid financial condition, with the cash and credit resources we need to run and grow our business, and we continue to have no current plans to raise additional capital.

This concludes the financial review, and I would now like to turn the call over to the operator for our question-and-answer period, after which Jeff will have closing remarks.

[OPERATOR INSTRUCTIONS]

Your first question comes from Dalton Chandler of Needham & Company.

Good morning.

Good morning, Dalton.

Good morning, Dalton.

So let's start with the international sales. You know I think, because of your previous comments about Schein, there was an expectation domestic would be down, but international's down a little bit as well. Could you talk about what happened in the quarter there? On a year-over-year basis it was down.

Well, international is basically flat year-over-year, and actually last year's Q1 was unusually strong for international. The international revenues, or total revenues last year, benefited from a few unusual events. It was the first quarter that we were able to offer any kind of a trade-up or trade-in program regarding our MD, and that gave us quite a boost. And that impacted our business worldwide.

Okay. You mentioned in the prepared remarks some changes you were making in international distribution, going direct in Australia and New Zealand. You mentioned the U.K. Could you just talk about how you're shifting your strategy there and what's driving that?

Well, the main shift is simply applying more resources and focus now to markets that have potential that we're not really realizing any significant revenue from, and the U.K. is showing more and more potential. We've identified what we believe to be a strong partner and we're finalizing an agreement to start some major penetration into that market. We have always sold a few systems there, but very trivial numbers.

And what about continental Europe? I think at one point you were selling direct there and then you went to a distributor channel. What's going on there?

We still have a combination, Dalton, of distributors in Europe, as well as direct. For the most part we sell direct in Germany, Spain and Portugal, and on a limited basis we reach into a few other countries on a direct basis. But pretty much outside of those countries, we sell through the distributor model, and that's the model that we'll be using in the U.K.

Okay. And I think historically Korea had been an especially strong international market for you. How is that going?

Korea continues to be a very good market for us. No significant change there.

And what additional detail can you give us about the new products that you mentioned in the press release -- the Waterlase MD Gold handpiece, how's that different than the existing handpiece? And then the Zip Tips you mentioned are single-patient; how is that different than single use?

The Zip Tips are very important to us because it's the first time that we've offered something in the category of a consumable, truly consumable -- or we label this thing single-patient use or single-use tip. The Zip Tip is a very easy to use tip. It has what we call a nice, sweet zone, kind of like where you'd hit the ball with your golf club. It's very easy to stay in an area to where it's very efficient and ablating quite rapidly. They're color coded, so you can tell just at a glance which one is 400 microns versus 500 versus 600, and packaged in a way, sold in a way, that I think will increase our sales substantially. We're selling these primarily in boxes of 30, and we're also offering these in a one-year supply agreement in a very attractive way that we come out ahead and I believe the dentist will, too. We believe we're going to make their life easier because they can put a nice fresh tip in for each patient, do their procedures, throw the tip away, not have to look at it, clean it, see if it's ready for the next patient -- simply get a fresh new tip for each patient.

Okay, what does a box of 30 cost? Or what's the list price?

It's $299 list and, if they sign up for a one-year supply agreement, which is only one box a month minimum, it's $249 so it'd be $3,000 for a one-year supply agreement.

Okay. And then on the Waterlase Gold handpiece, how is that different than the existing handpiece?

When you combine some of the comments I made regarding the tip, we're actually combining the tip and the new handpiece. It does have an advanced design of the way the beam exists the handpiece which improves efficiency and actually enhances the finesse of the tip to where you can do more minimally invasive dentistry. And I encourage you all to go to our website. We actually have a nice write up on it, technically and clinically, on the website.

But it's an increase in speed, depending on your procedure and tip you're using, but it's 30 to 50% more efficient, faster, than the prior tip and handpiece. So if you combine the new Zip Tips, i.e., the Z5, which will probably be the most popular, it's our estimation, and the MD Gold, the dentist can achieve a substantially higher level of performance.

Dalton, you know, that's pretty important because, in the past, you know we've talked about the comparative raw cutting speed of a drill versus the laser. And while we have the clinical work to show that many, many procedures can be done in a much shorter period of time using laser dentistry versus conventional, you still have some dentists who would look at raw cutting speed and say well, the laser's a little bit slower so, you know, I don't know. And this is a major advancement in cutting speed.

So is this an upgrade that can be sold into the existing installed base?

Absolutely. I think it's also important to note that we had a dramatic cost reduction as well as design advancements that allowed us to do this. But anybody with an MD can order this handpiece and use the Zip Tips immediately.

Okay. Do you have to have the Gold handpiece to use the Zip Tip?

No, you don't.

Okay. And then what's the list price on the new handpiece?

It's $1,499 -- $1,499.

Okay. And just a final question, can you give us an update on the Waterlase installed base?

Yeah, I think the number that we reported just a short while ago is probably the most level of detail we normally provide but, you know, we're at about almost 5,700 units sold in the Waterlase family as of the end of the third quarter.

The last September quarter, you mean?

As of the end of Q1 this year.

Okay. All right. Thanks very much.

Approximately 5,700.

Okay. Thank you.

You're welcome.

Thank you. Your next question comes from Alex Arrow of Lazard Capital Markets.

Hi and good morning, Rich, and --

Hi, Alex.

Hi, Alex.

Hi. Could you give us an update on the Occulase?

In ophthalmology, there is still, you know, exploration and development going on there, but there is not at this point anything imminent on commercialization.

Okay, but is it fair to say that the program is still alive and you plan to, once you are able to devote resources to it, want to reactivate it? Or should we sort of take it out of our models altogether?

Well, we've never asked anybody to put it in their revenue stream yet.

Well, no, I know. I know, that was our own decision. I just mean, like, how definitive is the decision to not be developing it? Is that a fairly asked question?

I'm not sure that that is really quite accurate. I think what we've been saying and what we're doing is that, while we've had some very good results in the presbyopia area, we wanted to go beyond that and look at all of ophthalmology because we think that, because of the broad approval that we got from the FDA, we can really begin exploring a lot of other procedures in ophthalmology beyond presbyopia.

The presbyopia project wasn't at the stage where we felt we were ready -- that we were close to commercialization. So we think the correct approach here is to really evaluate Waterlase MD overall in ophthalmology and once we get the feedback on that, then we'll be able to focus our efforts more significantly and then evaluate the best ways to commercialize the product.

If I remember correctly, you had a different strategy in the U.S. versus Europe. In the U.S., you were going to go for the specific indications such as presbyopia, and in Europe it was a more non-specific ophthalmology type approval and you could begin selling potentially sooner in Europe. Is that accurate?

Early on that was a consideration but, as you recall, we were fortunate in that we were able to receive a FDA 510(k) clearance in the U.S., so that changed our thinking strategically and that's what led to what Rich described as a broader-based review of the applications here in the U.S.

Okay. And not to beat it to death, but can you foresee if you would be doing that with a partner or on your own?

Most likely with a partner.

Okay. Could I also ask have you or would you break out the domestic revenue between product sales versus royalties and licenses and service revenue?

We haven't done that in the past. We are breaking out the license fee and royalty now on the face of the income statement so that is one change from past reporting. Currently what we talk about in our management discussion and analysis in the 10-Q which will be filed later this week, probably on Thursday, is we break out a discussion of laser system revenues separately from non-laser system revenues, and that category is really what includes the consumables, the service fees, the education, et cetera. So that has been our reported breakdown of revenue.

Okay, thanks Rich. And in the past you've also given us an update on your sales force headcount. Can you give us another update on that?

Yes, we can. The sales force, we did have more than expected turnover related to some of the changes with our distribution. I do think that the sales force that has elected to be committed to this is strong and absolutely the better part of the sales force, but the count is in the low 20s right now. And we, of course, want that count to be between 30 and 32. And that was something that occurred, you know, primarily during -- some of it in Q4, but quite a bit in Q1.

Okay. And then one other sort of sales distribution question. In the past, you've pointed out certain areas of the country where you were doing particularly well, where your market penetration had approached, I think as high as 8% in certain U.S. states that you had singled out.

Would you be willing to give us sort of an update on what the best states are as of now, if you would, and what the ranges of U.S. market penetration from sort of the low end to the higher end is at this point?

It hasn't changed a lot, but the areas where we have been selling the most, where the percentages are the highest, they continue to be the areas producing the most. So I think the best news is the areas where the product is the best-known are still the areas that sell the most.

Okay. And if I can be specific about that, I think in the past you said California, Hawaii and one of the Southern states, I think, was particularly strong. Is that still true?

California's still very strong. You know, Hawaii's still a good market for us, obviously a much smaller market but proportionally, it's doing well. Outside of that, you know, across the U.S. it really varies from state to state.

You were pushing, like, 8 to 10%, I think, in Hawaii and I forget how high it was in California, but would you be willing to be quantitative with us in any of the best states?

Those percentages are not significantly higher. You know, it takes a lot of units to raise the points on percentage penetration.

All right. Well, thanks.

Thank you. Your next question comes from Larry Solow of CJS Securities.

Hi. Good morning, guys.

Hi, Larry.

You talk about refining allocation of time between selling and relationship building. Could you, maybe not quantify, but give a little more color on that? When you kind of started initiating these programs, and also a little more light on the sales turnover and how that affected the quarter, the sales force turnover.

Sure. With regards to balancing the time spent in developing the relationship with Schein and selling, we do believe that when you take people out of their normal routine, it can have consequences beyond what might be foreseeable or beyond what was intended. And in Q1, we did learn a few things there.

The Schein organization, they almost have like a milk route where the sales rep will see certain customers a certain time of the month, and we had our sales people in certain cases riding with them, in fact, spending a lot of time with this. They also have a variety of different activities within the Schein organization that are regional level, zone level, et cetera, and quite a few different activities than what we normally do. It was important for us to become integrated more with some of their professional sales training, some of their meetings that they have locally with their small groups. All of these things, it's quite a long list, but we wanted to get immersed in what the Schein world is and what they're doing to cultivate their relationships, and at the same time that cultivates our relationships with those reps.

What made it challenging and still makes it challenging is that there are 20 and maybe as high as 30 and 40 in some territories, Schein reps to every one of ours. So it's easy to see how somebody who is out there doing their best to cultivate those relationships could spend way too much time doing that instead of ensuring that their lead funnel is maximized to produce for the quarter. And I think we could have done some things better in that regard.

And we've looked at it closely, we strategized with Schein, and we're trying to balance those two activities -- our direct selling and developing the Schein relationships.

And then, Larry, from a program standpoint, we can't get into the specific details, I think, because it's somewhat confidential within the Schein organization, but we have been working very closely with them concerning the setting of sales targets at certain levels of the organization and also some activities that would reward, you know, would reward certain Schein personnel for specific performance specifically related to BIOLASE sales.

Okay. Is it fair to say that, as we stand today, are the BIOLASE sales reps at least going to focus more? Have they increased spending more time on doing actual selling? Have they kind of come back to some of their old roots, if you will?

They are, but we don't want to mislead you that they're not still going to be spending a substantial amount of time to continue with the integration with Schein, so we're simply attempting to balance this more.

Right. And do you think it could be a process that takes a few quarters? It seems like it could be, just looking at it, a pure numbers game and how many dentists these Schein reps are responsible for, so could it take a few quarters before you see considerable growth in domestic from that investment?

It'll take a few quarters to get this job done. In fact, there will always be some investment there, but I think that the lopsidedness of it will disappear over the next two or three quarters to where what we put in equals what we're getting out, and then I think what we put in, what we get back will be much more -- that our return on investment will be great down the road. But I think that each quarter we will see substantial improvement, and we expect to see a substantial improvement on this investment even in Q2.

Okay, great. And then one balance sheet question, Rich, on the accounts receivable. I know they had Schein, I believe you had said on the last call, made an $11 million payment, or approximately $11 million in the middle of January, about 15 days after the quarter.

Right.

But the absolute reduction is only like $3 million, so is the payment scheduled where they just pay 15 days after the quarter, or is it 15 days after delivery?

It's 15 days -- for the most part, there are some exceptions -- but the vast majority of the Schein invoices are paid within 15 days. And it ends up being a significant portion 15 days after the end of the quarter because as you and I think everyone knows, the capital equipment business is prone to having significant sales in the last month of the quarter, and even a concentration within the last few weeks of a quarter. It's typically the way the sales cycle works.

So because of that, you have a buildup in receivables at the end of the quarter, and a rather quick pay down as soon as the quarter ends.

Okay. So in other words, on each quarter you may be showing a high amount but in between the quarters, it's not as high?

Correct.

Okay.

That's absolutely correct.

Okay, great. Thanks a lot.

Thank you. We have a follow-up question from Dalton Chandler of Needham & Company.

Yeah, hi, again. I just wanted to ask about the diode laser revenue for the quarter. You launched the ezLase in the quarter, but the diode sales are actually down a bit year-over-year. Did the ezLase just launch to late to have an impact?

It did, Dalton. It was very, very late. We got some orders out basically within the last week of March and they did not have a significant impact on the quarter.

Okay.

But we think they will have a significant impact on Q2.

Okay. But it is shipping at this point?

Oh, absolutely. Yeah.

Okay. And then, with regard to Q2, that's traditionally been the second strongest quarter in terms of seasonality. Should we expect to see that continue, or would that change with the Schein relationship?

I don't know the seasonality necessarily changes with the Schein relationship but I think to some degree we have to recognize that we've kind of thrown the whole seasonality into change because of the efforts that we've been making that Jeff described in the out on the street level with our sales reps. So, and even last year, if you look at last year, we had an unusually high Q3, and that's not normally the case.

We do believe in Q3 we'll have more traction with Schein than we have in Q2. I think every quarter for the next few quarters there will be a marked improvement in integration and traction with our Schein relationship.

And not only because of Schein, but also because of all the new consumable products that we have coming out that we think will help us build momentum as well. So we may not see the normal seasonality pattern this year that we normally see, although I would still expect that Q4 would have the normal tailwinds that help us in Q4 because of the tax advantages for dentists to make their capital purchases before the end of the year, et cetera.

Okay. All right. Thanks a lot.

You're welcome.

Thank you. At this time, I would now like to turn the floor back to management for any closing remarks.

Thank you. As always, I would like to thank our customers, partners and investors for their continued support of BIOLASE, and, of course, all of our employees for their commitment and devotion. The employees of BIOLASE are extremely committed, they work hard and I think they're a very talented group.

We believe that this first quarter of investment, both in terms of our Schein relationship as well as our product and revenue stream development efforts which, as we have announced, has already produced results -- new products which we are launching -- but all of this is resulting in what will be more revenue growth and I think, very importantly, more revenue stability, and all this will add up to more bottom line improvement in 2007 and beyond.

We continue to keep our sights on the challenges of market expansion, market penetration and very much on a product pipeline that is both exciting and deliverable, and we think that the announcements forthcoming this year will bear that out.

To close, we will capitalize on the number one brand name in dental lasers. Our market-leading products, technology and our patent position. We will expand our revenue streams and thereby increase stability, develop and launch additional consumables products to expand recurring revenue streams, expand the reach and value of our technology via strategic partnerships and consumer products, accelerate sales growth with our new sales organization and Schein alliance, and capitalize on what we believe is the largest potential market ever embraced by medical lasers.

Thank you.