Milestone Scientific Inc (MLSS) 2008 Q2 法說會逐字稿

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the Milestone Scientific Inc. second quarter 2008 results conference call. During today's presentation all parties will be in a listen-only mode. Following the presentation the conference will be open for questions. (Operator Instructions). This conference is being recorded today, Monday, August 18 of 2008.

I would now like to turn the conference over to Dodi Handy. Please go ahead, ma'am.

Thank you, Brittany, and good afternoon everyone. I would like to welcome everyone to today's conference call and webcast. We are going to be discussing Milestone Scientific's financial and operational results for the three and six months ended June 30, 2008.

My name is Dodi Handy and I am President and CEO of Elite Financial Communications Group. We have the pleasure of managing investor and media relations for Milestone. Please note that today's conference call is also being webcasted. You may access the webcast on Milestone's website found at www.milessci.com and a replay will be available on the site for the next 90 days.

Following my reading of the Safe Harbor statement, Joe Martin, the Chief Executive Officer, and Joseph D'Agostino, the Company's Chief Financial Officer, will be sharing their prepared comments with you. Immediately thereafter we will be opening the floor for some questions.

Allow me to first remind you, however, that during this conference call we may make forward-looking statements regarding the timing and financial impact of Milestone's ability to implement its business plan, its expected revenues, and its future success. These statements involve a number of risks and uncertainties and are based on assumptions involving judgments with respect to future economic competitive and market conditions, as well as future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond Milestone's control.

Some of the important factors that could cause actual results to differ materially from those indicated by the forward-looking statements are general economic conditions; failure to achieve expected revenue growth; changes in the Company's operating expenses; adverse patent rulings; FDA or legal developments; competitive pressures; changes in customer and market requirements and standards; and other risk factors detailed from time to time in Milestone's periodic filings with the Securities and Exchange Commission, including without limitation its annual report on Form 10-K for the year ended December 31, 2007.

The forward-looking statements made during today's call are based upon management's reasonable belief as of today's date, August 18, 2008. Milestone undertakes no obligation to revise or update publicly any forward-looking statements for any reason.

So with that, we will begin the discussion of the results. Ladies and gentlemen, it's now my pleasure to turn the floor over to Mr. Joe Martin, Chief Executive Officer of Milestone Scientific. Welcome, Joe.

Thank you, Dodi. Good afternoon to all of you who have joined us today. The format for our call will provide for Joseph D'Agostino to first summarize our comparative second-quarter results. I will then comment briefly on the headway that Milestone is making on our sales and marketing efforts for our new STA delivery system and, just as important, critical progress we are making on our efforts to penetrate the medical marketplace with new applications for our CompuFlo technology. After that we will take some questions. So with that, Joe, I turn it over to you.

Thank you, Joe. I will start by confirming that we filed our 10-Q for the second quarter and the year-to-date results late last week on Thursday, August 14. Milestone's SEC filings, including the 10-Qs and 10-Ks, include a detailed analysis of our financial condition and operations, and generally are informative documents, so I encourage you to thoroughly review them.

As reported revenue for the three months ended June 30, 2008, declined 14% to $1.54 million compared to revenue of $1.81 million reported for the same three months in 2007. The decrease is largely due to the fact that the second quarter of last year we engaged in the initial launch of the STA and our revenues benefited from certain required minimum orders from Henry Schein, who was our exclusive U.S. and Canadian distributor at that time.

International sales for 2008 three-month period represented 36% of total sales, which was up from 18% of total sales for the same period in 2007. Domestic sales represented 64% of total sales, which was down from 82% for the three months ended June 30, 2007. Gross profit margins improved for the current three-month period rising to 62% from 48% posted in the comparable three-month period in 2007.

Due to continued strict discipline -- expense discipline we continue to further -- see further reductions of our operating costs in the second quarter. Specifically, total operating expenses declined 27% to $1.4 million from $1.93 million in the prior year's second quarter. I would like to also point out that our total operating expenses for the second quarter were also down when compared to the first quarter of 2008 expenses declining 8% from $1.52 million.

Drilling down to our expenses, selling, general, and administrative expenses for the three months ended June 30, 2008, totaled $1.37 million, or 24.4% below the $1.81 million reported for the three months ended June 30, 2007. This near half-million dollar improvement can be attributable to various areas, including dismantling of our telemarketing in-house expense which we converted to the exclusive distributor arrangement.

Professional fees also declined by approximately $149,000 in 2008 over 2007 because we completed the documentation and testing of internal controls pursuant to complying with the prevailing Sarbanes-Oxley requirements for the first quarter of this year. Legal costs dropped approximately $189,000 due to less litigation and legal patent costs. Decline in SG&A costs was offset by an increase in royalty and commission expenses of $70,000, which was due to an increase in commissions, aid, and sales of our products in 2008.

R&D expenses for the three months ended June 30, 2008, dropped $85,000 to $36,000 compared to $121,000 mainly due to the fact that we completed the development of the FTA system last year. Consequently, loss from operations for the second quarter of this year dropped 58.2% to $448,000 from $1.07 million in the same three months in 2007. Our net loss decreased 56% to $473,000, or $0.04 loss per basic and diluted share, compared to $1.07 million, or $0.09 loss per basic and diluted share, posted for the three months ended June 30, 2007.

Now looking at our six-month results, total revenues decreased 28% to $2.93 million from $4.03 million. Similar to the three-month results, international sales were 36% of our total sales for the first six months of this year compared to 18% last year. Domestic sales were 64% of total sales, down from 82% in 2007. Gross profit margins improved, rising to 64% for the first six months of this year from 57% last year.

Total operating expenses declined 26% to $2.92 million, $3.95 million which resulted in our loss from operations improving 36% decreasing from $1.62 million in 2007 to $1.03 million in 2008. More specifically, selling, general, and administrative expenses fell 22% to $2.84 million from $3.65 million. New product launch expenses were down $303,000 and professional fees were down $510,000. Lastly, research and development costs also declined dropping to $84,000 from $300,000.

Consequently, our net loss for the first six months of the year improved 32% to $1.09 million, or $0.09 loss per basic and diluted share, compared to 1.61 -- $1.6 million, or $0.13 loss per basic and diluted share, reported for the first half of 2007.

Now moving to our balance sheet, as of June 30, 2008, Milestone had approximately $834,000 in cash and receivables; $1.49 million of working capital, which includes a $600,000 reduction in inventory during the first six months of this year; and $1.26 million in stockholders equity.

Now that completes my review of the results. Should anyone have a question related to the financial or accounting matters, I will be pleased to attempt to answer them during the question-and-answer period on this call. So with that I would like now to return a call back to Joe.

Okay, and thank you very much, Joseph. During the second quarter our focus has remained largely centered on accelerating and expanding efforts to increase sales of the STA system to dentists worldwide and in the process of establishing the instrument as the new standard of care for all dental injections.

I am proud to say that we have achieved our internal sales and profit targets for the first six months of 2008. Bob Presutti, Vice President of Sales and Marketing, and his team have done a terrific job in training and motivating our distribution partners. They have also worked diligently to disseminate the revised positioning and advertising messages for the STA system. Our expense control and reductions in inventory are due to the leadership of Joe D'Agostino, our acting CFO.

In April 2008, the STA system was distinguished as the winner of the 2008 Medical Design Excellence Award in the dental instruments equipment and supplies product category. Of the 33 products that received an excellence award this year, the STA system was only one of two winning products that serve the dental industry. We are very proud to have received this recognition for the STA, which provides invaluable industry validation of the engineering excellence and advanced capabilities of the STA system.

In June, we have culminated a series of key negotiations relating to the expansion of our U.S. and Canadian sales networks. Specifically, we elected to forego renewing the exclusive marketing and distribution agreement we originally signed with Henry Schein in early 2007. Instead, we agreed to a non-exclusive relationship with Schein and welcomed Patterson Dental Supply as an additional non-exclusive distributor partner to promote sales of the STA system in the U.S. and Canada.

Patterson has the largest direct sales force in the industry totaling approximately 1,400 sales representatives and equipment software sales specialist focused on the needs of dentists in both the U.S. and Canadian markets. Then shortly after the end of the second quarter, we announced the addition of three additional leading independent distributors to our growing domestic sales network. They include Benco Dental, one of the largest independently owned dental supply companies in the U.S. and one of the nation's fastest-growing dental distributors.

In addition, we signed another non-exclusive distribution agreement with Burkhart Dental, a family owned and managed dental supply company serving over 5,000 dental customers in the western region of the United States. Burkhart has been in business for over 120 years and enjoys long-standing relationships with dentists across the western United States. We are also very proud to welcome Goetze Dental, another well-established family owned and managed independent dental supplier that since 1884 has built a valued client base of over 10,000 dental profession professionals primarily in the U.S. Midwest.

Now in partnership with Henry Schein, Patterson, Benco, Burkhart and Goetze, Milestone has more than 2,300 independent sales representatives being trained on the new numerous user benefits of the STA system. Led by Bob Presutti, our internal sales support team has been training with sales trainers from Core Strength providing our domestic distributors with extensive training on the STA and the various marketing programs we have implemented in both marketing the awareness and acceptance of the instrument.

Milestone has made material progress in expanding our distribution network in the international markets. In June we granted exclusive marketing and distribution rights to two foreign distributors, Istrodent, a leading South African dental supplier, and Unident, a leading dental distributor in the Scandinavian countries of Denmark, Sweden, Norway, and Iceland. It should be noted that both Istrodent and Unident have proven to be among Milestone's strongest international marketing allies having achieved a notable sales on our behalf with the Wand.

As we progress through 2008, we look forward to realizing much stronger sales growth as a result of the cumulative marketing efforts of our expanding worldwide distribution network. We are committed to aiding in its success through creative sales incentive programs, ongoing training and support, trade show participation, and Milestone-sponsored advertising and marketing initiatives that emphasize the many features and user benefits of the STA system.

The STA has been highlighted through advertisements and in articles in most of the dental publications during the last several months. In an article for the July edition of Dental Economics, Dr. Joe Blais of St. Louis Missouri writes, 'I urge you to contact Milestone and try this system that will replace the patient-dreaded syringe forever. This state-of-the-art technology is a great source of patient referrals and a tremendous practice builder.'

Our primary challenge going forward will be centered on spreading the right messages about the STA, like those written by Dr. Blais, helping to successfully position the instrument as the new standard of care for dental anesthesia. Our other key objective for 2008 is of course leveraging our patented CompuFlo technology in new medical applications by pursuing collaborative development projects with leading companies in the medical and pharmaceutical fields.

In this regard, we have completed the initial study with a major global diversified health care company that we told you about earlier this year and are now working through their channels and processes to leverage the findings of the successful study to progress in strategic marketing a partnering and product development opportunities with them. We are also actively engaged in discussions with other groups, although I cannot comment further on them at this time. Nonetheless, please know that we are relentlessly pursuing CompuFlo-based product development prospects that we believe will yield promising and commercially viable products and solutions to the medical industry.

In the mean time, Milestone will continue to maintain very strict expense discipline, controlling costs while we achieve increased sales of the STA. As I said earlier, we are particularly proud of the success we have achieved during the first six months of this year in reducing our costs, which are down 26% so far this year. This is allowing us to extend our working capital while we continue to explore viable capital raising opportunities that meet our needs while protecting the interests of our shareholders.

That concludes my prepared remarks, so Dodi if you are ready, perhaps we can take some questions.

All right, Joe. Britney, if you would be so kind, please provide instructions to our call participants on how they may direct a question to Joe or Joseph.

Absolutely. (Operator Instructions). Steve Kleeman, Kleeman Capital Management.

I was just curious about -- it appears that you are going to need to raise additional capital. Maybe you could be a little bit more specific on how you plan on doing it?

This is Joseph. That is a very good question. We have been exploring various alternatives, and we are still working on a concept that would protect the shareholders without taking any outrageous or wild deals (technical difficulty) marketplace today. We have not found any definitive plans or proposals at this time. We are focusing our attention on the distribution system that we have in place, although we are cognizant of the need and the interest on finding the proper financing arrangement for shareholders and for the Company.

And let me just add to that, Joe, that we are looking for right now an equity investment, but we are, as Joe said, we are cautious about what we do. But we have got a couple of discussions that we are involved in right now.

Well, at the current time with the revenues you are generating, I mean, aren't you going to have to do something during the second half of the year?

Certainly, we announced sometime ago that we were looking for the right investment opportunity, and we are absolutely going to have to do something. But that is why we have worked so hard on reducing our cost and looking at our expenses and managing our money so that we can find the right deal. We hope to find that sometime soon. You are absolutely right; we are going to need some additional cash.

Okay, thank you.

(Operator Instructions). [John Korb], private investor.

Yes, hello. I would like you to comment on the article that I read by Dr. Blais where he did note that 10 years ago the situation was entirely different and there was great enthusiasm from the dentist at that time for what was then an untried product. Today I am somewhat baffled by the reticence of the dentist to adopt your product. What do you think accounts for this and how does it affect your view going forward?

It's a great question and one that we talk about a great deal here, John, in that the -- we did have a very positive response when we first introduced the first generation of the product, the Wand, now called the CompuDent, on a number of years back. We met with some manufacturing issues early on and struggled to get back our momentum at some period in time. Next generation, which is the STA system, which has significantly more features in it and more utility allowing them to do PDL injections, which no other system can actually do, provides them with significant benefits.

We are just now starting to realize that some of our positioning on painless perhaps was not right. We have talked about it in a couple of our meetings here where we have tried to revise some of our messaging and our positioning, and trying to overcome that primary issue that dentist think that they do okay and that they don't need any help. We are slow to get patients and other dentists to catch on.

Dr. Blais is one of those who now sees the advantages, not only to the patient, but also to the dentist. It just takes a while one dentist at a time to get that message across. That is the primary reason why we expanded our distribution network to include now Patterson and Benco and Goetze and Burkhart in that it's still a face-to-face, one-on-one convincing of each dentist that he needs to -- that he can benefit from the advantages of this system.

So it has been slow, but we are continuing to make progress. If you haven't told your dentist yet, John, that he should have this system then you need to go do that.

Okay. Do you perceive that there is a critical mass of dentist that would lend itself to word-of-mouth selling? You know there is no -- nothing better than a referral from a one dentist to another, say you have got to try this. It would help your cause and the shareholder cause immensely. I mean are we anywhere close to where that might -- you might get referrals orders from dentists that are really happy with the product?

Let me answer that in two ways, John. It's a great point and that is one of the reasons why you are starting to see these articles from Dr. Blais. There is no better referral or reference of our system than another dentist to another dentist saying, yes, I have tried it, I use it, and here is the advantages that I find in that. So a lot of our advertising messaging now has shifted towards this using a dentist to talk about our product to other dentists.

We have some other things that we are working on where dentists in smaller groups are providing some training and some user meetings and a variety of different communication vehicles where dentists talk to dentists.

Okay.

So that is the one thing. There is a tipping point, too, I believe. Once you get to maybe -- I am thinking that number, and we debate that number here a lot, at 12% or 15% penetration of dentists across the United States. You start to get to a point to where it does become the standard of care, and you will see the sales accelerate even faster.

Okay. 12% to 15%. Where are we now? What penetration rate do we have now?

About 2.5% or 3% penetration.

Okay. One more question. The feeling that I got was when you first -- before you took over -- when you were talking about the CompuFlo product in 700 different applications, I think you had a study done that there were many, many applications, and that that eventually might dwarf dentistry and sales of the product. Do you still feel that way?

Could this be somewhat of a blockbuster product given the right company promoting it or using it that would lend itself to dramatic sales increases in the next couple of years? Is that a possibility?

Absolutely. That is the reason why we are pursuing the CompuFlo technology, John. You said it exactly as I would say it. The areas of self-administered drugs where you have systems that can help people with rheumatoid arthritis or other chronic disease states like that. These are billion-dollar drugs that where people have to inject themselves one, two, three, four, five times a week. These are some huge opportunities that would certainly be much larger than the dental business that we are in in terms of just the anesthetic business that we participate in.

Epidurals alone -- there is 3.2 million epidurals given just for women in births. It's a very large marketplace. The whole area of osteo arthritis and injections for pain management -- you know some 65% of the people over the ages of 60-years-old struggle with some form of arthritis. So these numbers become huge numbers in a very short period of time and some small penetration of those marketplaces leaves you with some very big sales numbers in a very short period of time.

Well, I will continue to be a patient and very hopeful shareholder. It just doesn't seem to be happening at the pace that I would have liked, but you probably feel the same way. I guess my only concern is -- refers back to the first question that we do have some capital funding concerns here. If we get through that the world is Milestone's oyster in the years ahead. Do you feel that way? That that might be your biggest concern, that is getting the capital to continue?

That is not a major concern for me, John, because I think raising the capital, finding the money we need here, making the right decision is not going to be all that difficult.

Okay.

It's just going to take time to find the right one for instance. My focus right now is still, as I have said all along, is trying to drive and accelerate the sales of the STA system. It's a good product, it has a great opportunity in the marketplace, and we should be making lots of money and profit on that. The second area of where I spend most of my time and energy is trying to find one of these opportunities for us to expand into the medical side of the business.

Great. One final question. Do I understand it correctly that Henry Schein has products not only for dentists by for doctors, too. The sales reps who might be calling on dentists also call on doctors? And Patterson dental strictly focuses on the dental industry. Is that correct? If that is, wouldn't Patterson Dental be the one that you might expect the most results from?

Well, certainly at -- Henry Schein has about 800 sales representatives who do nothing but call on dentists.

Oh, okay.

They do sell some medical products, John, but that is a different division and a different sales organization. The guys who are selling our product on the Henry Schein side, just like in Patterson, Goetze, Benco, and the other distributors are devoted to and dedicated to the dental industry.

Okay. That is my only question. Thank you so much.

You are very welcome, John.

Good questions, John. Okay, Britney do we have any other questions?

Steve Kleeman, Kleeman Capital Management.

Yes, I was just curious. You have cut your expenses substantially. With those reductions, what do you look at as your breakeven on an annualized basis?

Steve, this is Joseph. Yes, we are looking forward on those expense cuts and we are focusing our attention into a sales volume of somewhere between $750,000 to $800,000 on a monthly basis to breakeven.

Okay, thank you.

There are no further questions at this time.

Okay, Britney. Actually, I have got a couple of follow-up because there are some questions that we are getting here at Elite that I did not hear addressed during Q&A. I think it's important that we get them on record.

Okay. Pardon me, we did just have somebody queue up. Do you want to take their question now?

Yes, go.

Joseph [Uri], Wachovia Securities.

Hi. My question is -- I guess I have been following this company now for a few years and I have owned some shares myself. I thought the idea of the epidural and all that sounded like a great thing, but again this is going back probably sometime around early 2005, so we are talking over three years.

The question I have right now is, even though I thought this was a great idea, and you guys and everybody seems to think it's a great idea why isn't -- I guess my question is simply why isn't anybody else -- why isn't there somebody else out there that thinks it's a good enough idea to make a deal with you guys? That is really my question. I need that question answered.

It's a good question, Joseph. Let me try to put a little bit of perspective on it. While we talked about some of these opportunities as a company, for the last several years the entire focus of the Company has been primarily on trying to drive the dental business. Mr. Leonard Osser, the Chairman of the Board, brought me in just a year ago actually to really to start to really go after some of these partnerships or relationships.

So the Company really was not -- while they wanted to do that and that was their intention and their strategy, they were still struggling with the dental side of the business to get the STA product developed, to the marketplace, develop some relationships in the marketplace. So that we have only actually been pursuing, really actively pursuing I would say probably within the last year, these opportunities at a let's go sit down in front of people and talk face-to-face and make a deal.

These relationships, while they are, I think, and have been received well by some of the people that we are talking to, they are very big relationships. They constitute often times significant changes in strategy and business development activities on these big companies. It takes them a while to come around and the deals to be made.

I mean, can you put any kind of timeframe on -- at what point do you think that -- do you say, all right, this isn't going to happen and let's move on or let's focus our attention elsewhere? I mean it just -- the timing on this just seems like it's --. You are saying it's about a year, but I don't know, somehow I am getting more and more skeptical as time goes on that this is going to happen. I just -- I mean you can understand that I guess.

I can understand that, Joseph, for sure. It does take a while to find the right partner. These opportunities are substantial and they are real. The whole area of epidurals, the whole area of pain management, the whole area of self-administered drugs, these are not going away. But they are significant changes in the technology and the way to deliver those. Big companies have -- either have systems or processes, so they are significant investments on their part and they are not to be made lightly. But it will take us some time.

Will these materialize? They will. People will find better ways to do things that they are doing today. The syringe has been around for 150 years. At some point in time, somebody will step up and be the first one to say, yes, I am going to now take this computer-controlled delivery systems and use them in my system. Once that first one comes then a lot of them will come after that.

All right. Well, I wish you guys a lot of luck.

Thank you very much, Joseph.

Thank you. Ms. Handy, there are no further questions at this time.

Okay, great. Kind of going back to my earlier comment, I know Steve Kleeman was asking some good questions regarding the need for capital and the Company's strategy for raising it. But a couple of related questions that we have been getting that I would appreciate if you guys could address, number one is you have done a terrific job at increasing the gross profit margins, which certainly is helping I would imagine in perpetuating the working capital right now. Can you comment on whether or not we can expect to see additional improvement in gross profit margins on the products sold or do you expect it to flatten out here?

This is Joseph speaking. I think if you look at this year, first and second quarter, our GP is averaging about 63%, which is about the right percentage that we should be achieving. And that is a composite of both STA as well as hand pieces, compared to the previous year. That should basically stay about the same provided that the unit sales and the handpiece sales stay in the same format.

It's important to realize that the handpiece business is really a value-added and a big plus for this company. As we move forward, I think we are in that range approximately 62% to 64%/65%, which is realistic, and it's a considerable leap ahead of the prior year.

Okay. On the sales front, we have been talking a lot about the training of the new distributors that have joined the Company. How is that going? I mean, have we completed the training process or are we seeing any sales traction as a result of that training process? What are you seeing?

We are in the middle of that training program. As you know, we have got some 1,300 salespeople that we are adding. We are -- been attending regional and district sales meetings where we train eight, 12, 15 of them at a time. We are seeing a very good enthusiasm and motivation from the sales organizations. We are probably -- have trained maybe 500 or so of those already in the last 30, 45 days.

We are starting to see reorders from those companies -- Benco and Patterson and Goetze and those guys. What happens is we -- they get information from their organizations specifically about the product and the pricing and all the information that they need. We then conduct these hands-on, small-group training programs one group at a time. Then we field travel with them, our sales organization, the core training organization -- Core Strength organization travels with them.

They then continue to get some information from us about features and benefits and selling scenarios and situations and advantages and disadvantages. So it probably takes around 60 or 90 days for the sales rep to actually get totally up to speed. But we will continue to work on this, I would say, probably until probably late in the year before we get everybody actually up to the level they need to be. But nonetheless, we are seeing traction right now from all of the new distributors.

Can you quantify that at all? I mean like how did June, July, you know, how is August looking? Can you give us some perspective on that traction?

As we have said, we have made our sales targets for the first half of the year. We are going to make our targets in July, and we will probably make our numbers in August as well. So certainly we are seeing the sales numbers that we hoped to see from those guys.

Great. Then one last question on the financial side to Joseph. Joseph, it's terrific to see the drop in expenses. Clearly, you guys have been looking for opportunities to cut costs coming and going, but is that something that we should expect to continue seeing? I mean, additional reductions in expenses? Or do you believe those are going to flatten out at this point?

I think that through the second quarter we have realized significant and majority of our cost savings for this year. Putting up numbers in the right position, putting detailed expenses in the right position and emphasizing where we need to spend the money, spend it wisely. Smart money, smart spending. So I think it is leveled out and should not see any significant reductions in the third and fourth quarter.

Okay. Last question for you, Joe, really kind of going back to the sales thing. I mean, if we would to take a look at where we are today, six months behind us for the year, compared to where we were last year a great deal of the sales that were booked in '07 were attributable to the minimum sales requirements or the order requirements by Henry Schein pursuant to the exclusive agreement we had with them. That is not the case this year. So you must be pleased, or perhaps I am looking for some perspective on your reaction to the traction that you are getting on the STA and continue to get on the CompuDent for that matter.

We have said all along that it's not one single event. In the selling and success of any new product launch it is that the messaging, it is the advertising, it is the sales organization, it is the satisfaction of the customers that you get. All those things have to work in harmony and we are finally now putting all that in place. Scott Mencken and Bob Presutti have done a great job with the marketing messaging. We have expanded our sales organizations. We have got those people trained.

We certainly have seen a great number of positive comments back from our current customer base. We have seen the handpiece -- the sales of our instruments grow and the handpieces grow as well. Now I think that one of the things that probably goes unnoticed is that if you look at our CompuDent business, while we really only probably sell maybe eight or 10 CompuDents a month for the last year or so, our CompuDent handpieces have remained -- actually have grown just slightly in 2008.

So that is the beauty of our strategy, which has been from day one the instrument and then sell the annuity of the handpieces. So our CompuDent business continues to hang in there very well, even though all of our sales effort now is on the STA. We expect that with the effort we are putting on the STA we are going to seem that same handpiece growth as well on the STA business over time and for a long period of time. That is the positive part to me is that you put the instruments in place and they generate this handpiece business for a long period of time.

The final piece I will say to that is that our sell-through has been very consistent. What we sell actually to distributors, but what they are actually passing on to our customers, to their customers has been very consistent, continuing to grow. We have seen the reorders in Patterson and Goetze and Burkhart and those guys. So all those things to me are the things that tell you that you are doing the right things and that the business -- you are actually gaining the traction that you had hoped to have gained.

You know last quarter, Joe, you were kind of cautious about talking about really how you felt about the future of Milestone. Very, I guess, politically sensitive to the fact that you are hopeful, but a lot of hard work needs to be done. But you sound much more enthusiastic now. So is that a direct result of what you are seeing out there in terms of how all of this is coming together?

Yes, I don't know how cautious I was last time. We had a lot of work to do. There is no doubt about that. The fundamentals required to be successful in the dental market place are significant. The team, the leadership team here has worked very hard and smart, and we are starting to see the benefits of that. Those fundamentals are starting to fall into place and, yes, I do feel much better now about those things that we needed to get done and our ability to actually make them happen.

Thank you very much, Joe. Before we officially conclude for the day, I would like to ask the guys for some closing comments. Joseph, let's start with you.

I would like to thank everyone who participated in the call today. I believe that we are operating as we had planned, as Joe Martin described. And that even though we are making what seems to be slow improvement on the sales side, it is steady, it's moving forward, and our expenses are in control. The team here at the Company is working cohesively to get to that goal.

Thank you very much, Joseph. And Joe, how about you?

I would just like to maybe just say that -- give my sincere thanks to the leadership team here at Milestone, to our Board, and the Chairman of our Board, Leonard Osser, for their support. We have had our plan. We said we were going to focus on certain things, we said we were going to focus on driving sales and working on finding a partnership for the CompuFlo strategy. We have stayed there.

We said we were going to focus on the fundamentals of expanding distribution, changing our messages, training our sales organizations, and creating a greater awareness of the products in the marketplace. We said we were going to do those things. We are doing them. Some people were cautious in that we could achieve that and we knew how to achieve that and we have done those things.

So my sincere thanks to the leadership team and to all the employees at Milestone for all the work that they have done and all the things that they have promised me that there are going to get done in the second half of 2008.

All right, Joe. Thank you very much. I would like to remind everyone, if you would like to receive ongoing information about Milestone and you are not already on one of the Company's databases, please feel free to call the offices of Elite. Our phone number is 407-585-1080. Or of course you can reach us by e-mail at mlsf@efcg.net.

With that I would like to again thank Joe and Joseph, and Britney, you for handling the call itself, and to wish everyone a great afternoon. Thank you.

Thank you. Ladies and gentlemen, this does conclude the Milestone Scientific second quarter 2008 results conference call. You made now disconnect and thank you for using ACT teleconference.