Milestone Scientific Inc (MLSS) 2009 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the Milestone Scientific Inc. third quarter 2009 conference call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will be given at that time. (Operator Instructions). This conference is being recorded today, Monday, November 16, 2009.

I would now like to turn the conference over to our host, Dodi Handy, please go ahead.

Thank you, and good afternoon everyone. I'd like to formally welcome you to today's conference call. We're going to be discussing Milestone Scientific's financial and operational results for the three and nine months ending September 30, 2009.

My name is Dodi Handy and I am the President and CEO of Elite Financial Communications Group. My firm has the pleasure of managing investor and public relations for Milestone. Following my reading the Safe Harbor statement we are going joined first by Joseph D'Agostino, the Company's Chief Financial Officer, who will review the financial results with you. Afterwards Milestone's Chief Executive Officer, Leonard Osser, will assume the floor to comment on the Company's business operations and more notably the recently announced blanket purchase order received from China National Medicines Corporation. Then before moving to the question-and-answer period, Leslie Bernhard, the Company's new Chairman of the Board, will share a few remarks with you.

Please allow me to remind you 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, expected revenues and 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 and 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 our operating expenses, adverse patent ruling, STA or legal, competitive pressures, changes in customer and market requirements and standards, and the risk factors detailed from time to time in Milestone's periodic filings with the Securities and Exchange Commission, including without limitation, Milestone's annual report on 10-K for the year ending December 31, 2008. The forward-looking statements made during today's call are based upon management's reasonable belief as of today's date, November 16, 2009. 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 is now my pleasure to introduce Milestone's Chief Financial Officer, Mr. Joseph D'Agostino. Good afternoon, Joseph.

Thank you, Dodi, and good afternoon to all of you. As you are likely already aware, we filed our Form 10-Q for the three and nine months ending September 30, 2009, on Thursday of last week. Please note that Milestone SEC filings including the 10-Qs and 10-Ks provide a detailed analysis for financial condition and operation and generally are informative documents. So I encourage you to thoroughly review them.

I'd like to begin my review of the results by focusing on our performance for the three month comparable periods. Milestone's total revenues for the third quarter of this year were $1.91 million, a 5% increase over revenues of $1.82 million in the same three months in 2008. International sales represented approximately 40% of our overall sales, totaling $758,000, which was up 54% from $490,000 in the prior year's third quarter period. Our international sales results were positively impacted by our new distributor relationship in China with China National Medicines Corporation, also known as (inaudible). During the third quarter we shipped an additional order of 100 STA systems.

US sales which comprise 60% of our third quarter 2009 sales, declined 13% to $1.15 million from 1.32 million. This decrease was due to slower sell-through of the STA system by our domestic distributors to US dentists during the summer months. The summer has historically proven to be a period of slow or down sales which typically affects the entire dental industry. In looking at our total revenues based on product mix on a comparable quarter over quarter basis, we saw sales of our instruments rise 3% to $512,000 from $499,000. And hand piece sales increase 6% to $1.37 million from $1.30 million.

Moving on, our gross profit margin on sales increased to 63% for the three months ending September 30th, 2009, which compared to 59% in the third quarter of last year. We attribute this improvement to the fact that we recently changed Milestone's international sales model. As of July 1st, we are now recording a higher price for products sold directly by our international distributors and then book commissions paid to our former mass distributor as a G&A expense. In the third quarter of this year we paid $118,000 in sales commission to this former mass distributor. On a quarter-over-quarter basis our total SG&A expenses were $1.48 million and $1.20 million, respectively. The 23% increase was primarily due to higher marketing and promotional costs, higher royalty payments, and non-cash stock payments made to consultants that engaged to support our new business development and sales growth.

Research and development expenses for the three months ended September 30th, 2009, totalled $58,000, reflecting an increase from $35,000 in the prior year's comparable quarter. This increase related to the R&D or a new medical device prototype utilizing our CompuFlo technology. After factoring the aforementioned SG&A and R&D expenses, our loss from operations increased to $336,000 from $157,000, quarter-over-quarter. Our net loss for the three months ended September 30th of this year, was $373,000 or $0.03 lost for basic and filly diluted share which compared to $187,000 or $0.02 loss for basic and diluted share.

And now looking at our financial performance for the first nine months of 2009 compared to the same nine months last year, our total revenue increased 29%, rising to $6.15 million from $4.77 million. International sales were up 38% to $2.11 million from $1.53 million, and US sales rose 26% to $4.04 million from $3.29 million. By product category, instrument sales climbed 150% to $2.11 million from $847,000, while sales of disposable hand pieces increased 3% to $3.97 million from $3.84 million. The first nine months of this year we achieved a gross margin of total sales of 60% which was down from 62% last year.

Loss from operations totalled $1.46 million, which compared to $1.19 million. The increase was due largely to higher SG&A expenses relating to the second annual C-CLAD symposium held in May of this year, higher trade show participation in marketing and promotion costs, and approximately $787,000 in non-cash stock compensation issued for compensation, consulting and vendor services. Our net loss for the first nine months of 2009 was $1.59 million or $0.12 per basic and fully diluted share compared to a net loss of $1.28 million, or $0.10 per basic and diluted share.

Referring to our balance sheet, as of September 30th, 2009, we had cash and cash equivalents of approximately $500,000 and negative working capital of $407 million. Negative working capital is due to the classification of a $1.3 million line of credit as a current liability as of the end of September, 2009. The line is scheduled for repayment by June 30th, 2010. The Company's actual cash position for June 30th, 2009, as compared to September 30th, decreased approximately $1,000 leaving the Company to a cash-neutral position.

With that said, that concludes my review of the results. However, if you require further details about any specific financial-related matter, I'll be happy to address your questions during the Q&A forum that will follow Len's and Leslie's prepared remarks. Now I would like to introduce Leonard Osser, Milestone's Chief Executive Officer.

Thank you, Joseph, and good afternoon to everyone joining our call today. As I've noted before, we greatly appreciate your taking the time to join us when we host these quarterly calls and value the questions, comments and suggestions you share with us during the question-and-answer period.

Today I'd like to keep my comments relatively brief and focus primarily on one area of Milestone's operations where I have been concentrating the lion's share of my time -- international sales. Two weeks ago Milestone announced we received a blanket purchase order for 12,000 STA systems from China National Medicines Corporation, providing for the shipment of our award-winning computer-controlled dental injection system to China over a three-year period. As I noted in the press release, we view this order as significant validation of our technology, and it speaks directly to growing global market acceptance of the STA system as the new standard of care for dental injections. What's more, this order, the single largest in our Company's history, coupled with recurring sales of hand pieces, will help Milestone achieve notable revenue growth, positive cash flow and sustainable profitability in the year ahead.

To fully appreciate what our new relationship with China National Medicines represents for Milestone, it is critically important to understand one underpinning fact. Unlike the dental industry in North America or Western Europe, China's dental industry is just now emerging. Thanks in large measure to the Chinese government's recent investment in comprehensive educational programs, which emphasize the importance of good dental hygiene, as well as the fact that personal income level are rising in the country, dentistry as an industry, is experiencing explosive growth. In just the last five years the number of dental schools in China has grown from 20 to more than 50. Moreover, in addition to government sponsored dental clinics, there are now more than 5,000 private dental clinics in operation throughout China. Bear in mind that 50% of all adults and 70% of all children, comprising China's 1.3 billion population, are currently estimated to suffer from tooth decay problems, and over 90% of the population suffers from periodontal disease. Our new distribution agreement with China National Medicines is a major coup for Milestones and one we expect to benefit from for many years to come.

Attention to oral health is not just fueling growth of dentistry in China. It is also occurring in other major major emerging markets including India and Russia, two global regions of interest to Milestone. Russia, for example, the largest country in the world, covering 17 million square kilometers of land, mass has an estimated 80,000 practicing dentists and 20,000 dental technicians. According to Dental Expo, the Russian dental market has experienced double-digit growth over the past several years, a trend that is expected to continue for at least the next five years. Penetrating these other emerging dental markets will invariably allow Milestone to ultimately succeed in establishing the STA system as the preferred global standard of care for dental injections. That is one of our core missions and one that we remain fully intent on achieving. We're making very positive strides towards that aim and will continue to work very hard to get us there.

Before we open for questions, we have asked Leslie Bernhard, Milestone's newly appointed Chairman of the Board, to say a few words. Leslie?

Thank you, Leonard. And speaking on behalf of the Board, we are, needless to say, very pleased with the positive developments that have occurred at Milestone since you re-assumed the post of Chief Executive Officer earlier this year. The significant progress you have made on the international front in only a matter of months is a testament to your leadership and we applaud your efforts and the results you are indeed achieving. Because Leonard is committing his time to executing key strategies to aggressively build the fundamentals of the Company and establish Milestone as the de facto industry leader in advanced technologies, the board has asked me to play a much more active role in supporting management's efforts.

In this regard, and in addition to my board governance responsibilities, I have agreed to oversee shareholder and investor relations to help keep the Wall Street community well informed of all developments at our Company. In fact, Milestone has launched a multi-city financial road show that provides for Joseph D'Agostino and I to meet with Wall Street professionals every week from now until the end of the year. Last week we were in San Francisco. This week we will spend three days in New York City. Other scheduled stops on our national tour will include Atlanta, Dallas, Boston, Denver, Southern California and South Florida. If there is anyone on this call that would like to take advantage of meeting with us personally and are not already confirmed on our schedule, please give Dodi's office a call. For any of you who may not be based in one of those areas but has an interest in meeting with us, Dodi and her team will gladly coordinate for us to teleconference with you as soon as it can be arranged. Again, just give a call. With that, Dodi, why don't we open the floor for some questions.

Okay, Leslie. Maritsa, would you now kindly provide instructions for our listeners on how they may direct a question to Management.

(Operator Instructions). Our first question comes from the line of Kevin Ciavarra with Ciavarra Financial Services, please go ahead.

I actually have a few questions. One is in regard to the relatively large increase in SG&A relative to sales. This is directed to Joe. With this large order, SG&A is going to decrease as a percent of revenue no matter what, but overall could you be a little more specific about the cause of the increase in the SG&A, and your thoughts on those expenses moving forward?

Okay. Good question. I think that, Kevin, as I identified in the management discussion analysis, we identified a couple of issues, one of which was the second annual C-CLAD conference, which was a considerable expense. That expense will obviously not be the same in the future and will not be dependent specifically on international business. Other expenses in that category was a significant increase in promotions in marketing, advertising, in this year, which again we have reviewed. Interestingly to note is that those expenses, although as a percentage of sales are relatively high, will not continue to be at that percentage, nor in that dollar amount going forward. We have reviewed our internal focus and redirected our expenses in the category to make sure that those expenses will be on an absolute dollar value less than they were in 2009 so far. And we have been, again, directing our focus to get more participation with the end users and less in press and publications. There are some other expenses in there including some costs related to consultants that we hired, which, again, were one-time costs. We don't expect to incur those going forward. So, in general, the answer is, yes, as a percentage they will be less, but not only in the percentage, but also in a total dollar volume.

Okay. My second question, and just comment, it sounds like, Len, you played a significant part in this order. If that's so, then kudos to you. That's a pretty amazing order.

Thank you very much, Kevin.

And my questions are really regarding that order. Based on your pricing here in the States, one could extrapolate that the value of this contract in terms of STA units would be in the $12 million or more range, at least on a wholesale level. Can you give us any guidance as to at this margin level, whatever it is, what kind of dollars per unit we're making, and can you let us know what the value of the contract is for the actual machines?

We don't go into those specifics, but I think that your guess is a very accurate one. I think that if you look at that number we'll be there. I think that clearly, being that we will be ordering in much greater volumes when you couple that kind of order over the next three years with our own usage for the rest of the world, I think that we'll be able to not only plan better, but our cost of sales will come down. Now, I don't know if that will be considerable, but it will certainly help the Company with its cost of sales. As far as hand pieces go, I think that thus far the Chinese team has been thoroughly trained both here and in China. Dr. Hochman has been there lecturing in a number of cities about two months ago, and played a role in training. The China medical team is now fully trained. Dr. Hochman is going there again, and China Medicine has arranged for the world guru (inaudible) in dental anesthesia to lecture alongside Dr. Hochman in the coming months.

I believe their marketing plan based on their financial wherewithal, is excellent. They have some of the most important things with the product, which is proper training, as we know here. If the dentist is properly trained, if you take the simple number of the amount of hand pieces which they can use, which we know that amount per year, if you look at the amount of years that the average dentist practices dentistry, which is about 35 years, and you take that middle number, if you do the proper training, that sale in the United States is worth more than $50,000. And the beauty of it is you don't have to keep selling it. They keep ordering the hand pieces. Those numbers in China could be more significant because of the way that dentistry works in China both in the public and private facilities. The clout that China Medical has and the strength of their team, and their financial backing, I think will allow them to move very quickly with these units. So we're very optimistic on what they can do. Obviously we're thrilled with the size of the order, but more importantly than that, I believe that the usage in China will be very significant, and we'll start seeing significant hand-piece sales from China, starting the middle of the year.

I don't know if it's even possible to gauge this, yet, but currently in the United States, when a doctor orders one of your machines, they may not use the machine for every single injection they give. They may use them for a small percent of injections. And I really don't know. Please fill me in on that. But do you believe that the usage in terms of percent of injections the dentists give, could be higher because of where dentistry is in terms of penetration and the lack of resistance to a new technology, because there are so many new doctors?

Yes, in part, there are dentists that are now using the STA in China because we already delivered quite a few instruments to them that never used a syringe. So you're correct. What it all comes down to is the training. You're absolutely right. We're not getting the usage in the United States which we should. We're nowhere close. But when we analyze, which I've done, with the team, and I've traveled to Europe twice now since coming back as CEO, when the doctor is properly trained with not only the instrument, but how to give particularly the new injections -- we don't have to teach them anatomy, they know that -- they use it for all the injections. We know that.

So it's up to Milestone and the distributors to properly train the dentists. If we properly train them, they'll use it for all of the injections. There is no reason not to. The cost space is low and the efficiency is significant for the business of dentistry. So it falls on us to make sure that both we in the United States properly train and motivate the distributors to train and to work out a system which allows them to do that, and to be sure that all of the distributors throughout the world themselves are properly trained in training. And understand that it's not just selling an instrument, it's selling the knowledge of how to use the instrument, selling the benefits and having the doctor use the hand pieces. It is as simple as that, Kevin.

You talked about that when you sell a machine that the potential is I think $50,000, I don't know if you had said in revenue or in--

Revenue.

Revenue per user over their lifetime. So, doing a little math, you're saying that each unit can generate around $1,200, $1,500 per year in hand piece sales. What does that translate to?

It is more than that. What it is -- and I'm giving you industry data having that Milestone did not create - but basically you're looking at, around the world, in the first world there were approximately 550,000 dentists. In the United States, of that, there are about 130,000 dentists. In the United States, the average dentist sees 2,000 patients a year that they inject. That would be 2,000 hand pieces. The average dentist in the United States practices for 35 years. Those are the numbers.

And so how much do you make per hand set then? How much of annuity cash flow?

We don't do it that way. But as you saw in the Q, we're at about 62% blended margin.

And that's a similar margin with the Chinese contract?

I can't really comment on that, but I think at the end of the day, as Milestone goes forward, we'll continue to see those kind of margins company-wide. It can change. It depends on a lot of different things. It depends on what happens in different countries, different modes of distribution. But I think that if you look at in the range of those margins, you can be comfortable with that. I'm being somewhat accurate but not exactly precise.

I appreciate that, and again congratulations on that monster order. It sounds like it is a company changer, taking a little company profitable, is just an historic day for the company to do that.

It all happened so fast, right? Only, what, 12 years?

I've only owned the stock now for four.

Everyone's on the line. I'm sure we have some veterans on the line with you.

Can you just give us an update on the medical. Joe I think mentioned something about margins being affected by development of a medical delivery system for other types of injections. Just give us a little bit of an update on what type of progress the Company is making towards finding another revenue stream, and maybe you could let us know your thoughts about other future orders from the emerging markets.

What we're looking at, as you know from our releases, we're looking at approximately 700 discrete injections, according to an outside group that analyze the CompuFlo technology that Milestone can make instruments for. So if you take that down to a reasonable number, there is perhaps the opportunity for Milestone with partnerships or some kind of joint venture or licensing, with pharmaceutical companies that are having difficulty with drug delivery of their drugs and difficulty with patient compliance, with perhaps as many as 70 different instruments with some amount of hand pieces, which would be more than that by definition. And those pricings would be determined by the pharmaceutical company selling the product.

The margins in those areas would clearly be greater than the margins we're experiencing now in dental, except for one area. Perhaps podiatry, where the podiatrist makes less money than the dentist. But when you start moving into epidurals, the anesthesiologists, intra articular injections, we imagine would be far more expensive instruments, far more expensive disposables, and more disposables. As you know, we have one disposable for our dental device, a device giving intra articular injections would perhaps yield four different disposables. So they're very different markets. The margins should be greater. I can't speak to how close or how close we're not, to making a deal. We are actively in discussions, as we've indicated, to do our first medical deal. We'll announce that as soon as that happens. It will be another wonderful day for Milestone.

My last question, and I'll stop monopolizing the phone wires, can you give us some type of conservative guidance just based on this contract, and what you currently have, without anything wonderful happening, 12 months out? Where do you think we could see the Company revenue, and earnings wise?

We all feel that our projections are always conservative. As you know, sometimes almost conservative projections are not that. What I'm looking for, and what the Company is looking for, is, in the first instance, becoming cash flow positive, which is the most important, because none of us want to be dilutive either in our stock, and we don't want the efforts of management diluted in traveling around raising capital. I believe we have accomplished that. Our use of capital in the third quarter was significantly down. We used about $1,000. As you know, we've used hundreds of thousands of dollars per quarter in the past. So we're down to about $1,000 in the worst quarter, the summer quarter, when basically our industry shuts down.

So I think I can safely, conservatively say, that the Company will do better in the fourth quarter than the third quarter, so I will say that we will be cash flow positive in the fourth quarter. I believe that I can say that we will be profitable starting the first quarter and we will remain profitable. I think that the China order will play a big role in that, but I also think that we will start seeing, and we have started to see in the fourth quarter the result of a big effort on the part of the Milestone team in cutting a lot of expenses down, and changing the way in which we do business in two important areas of the Company.

So I can't speak to exact numbers, but I believe that as we look out in the first, second, third, fourth year, what we're looking at here, I think that what we're going to see is significant revenue growth and very good profits from that. Leslie, would you like to comment on that?

The one thing, if we look at the hand piece sales from this order alone, based on the metrics that have already been established by China Medicines, which is essentially the order that we received for a half a million hand pieces on the 500 units, and assuming a thousand hand pieces per year per unit, and given the fact that this is a three-year deal, in year four it's not too difficult to figure out that the annuity revenue from the hand pieces would be very significant, certainly in excess of $10 million, if that holds. And, again, we're moving forward in other areas in the Company. We're sharing with you there is not a great deal of incremental expense along with this Chinese order, so I think it really should speak for itself in terms of the power of the financial implications.

Sounds awesome. As a major shareholder. Thank you very much for answering the questions and let's see if anyone else wants to ask any other questions.

Thank you. (Operator Instructions). Our next question comes from the line of Thomas Brady, a private investor. Please go ahead.

Leonard Osser, I have a question regarding this STA. Is this order with China, are we assuming that it is just an even, like 333 units per month or is this back loaded or front loaded, or is this going to be an even order system? And how many of those orders have already been shipped and paid for?

We've shipped none. We have shipped prior to this arrangement, China Medical has purchased approximately 500 instruments from us. These instruments, we will start shipping these orders in the first quarter. They will be so far -- now this can change -- but the minimum program for this would be 1,000 instruments per shipment per quarter. And it's going to take a couple of months to start shipping because we've made, at the request of our Chinese partners, we've made two changes to the equipment for the Chinese market. So I think we can safely assume at a minimum that it will be 4,000 instruments per year. So if you're looking at how the hand pieces will fall in, if you go by that matrix, you can figure that out.

All right. The other question I have is, is -- actually maybe Leslie can handle this or maybe you can put something into it -- I know you guys have borrowed money from other people along the past couple of years. You have had some cash infusions. With those debts coming due shortly, and with this new contract, the repayment process, is that going to be coming in a timely fashion or is that going to have to be delayed or is that going to be moved up?

Actually to correct you, we borrowed money over the decade from only one person who would lend us money who has been a very close friend of the company. And we will look to do that. The terms that were laid out, because he's a major investor, were very, very favorable to the Company. And those monies are due in June, and it's $1.3 million. We don't look at that as an issue either way. That will be something that the Company will be able to take care of according to the contract, one way or another.

All right. The final question I have for either Leslie or yourself, is you guys used to be on the American Stock Exchange, you got delisted, you're on a bulletin board now. Is somebody actively pursuing getting listed again or is it just going to end up being where it's at and you think it's going to continue this way?

I think it is imperative that we get listed again. We have to clean up our balance sheet. There are certain requirements required either on NASDAQ or on the American. It is something that is very important to us. Obviously as we move forward with these new revenues, and in looking at our balance sheet, as soon as we can possibly get on an exchange or NASDAQ, that is when we will be doing it.

And that is something that you're looking forward to doing next year or probably a year later?

Looking forward, obviously I'm an optimistic person, I'm hoping that it could be done by the end of 2010.

All right. Thank you very much. I like all of the news I've heard of late and I hope that everything continues to move forward in that fashion.

Thank you very much.

Thank you. (Operator Instructions). Our next question comes from the line of John Korb, a private investor. Please go ahead.

Good afternoon. I'd like to congratulate all of you, first of all, on that wonderful order from China Medical. As a long term shareholder I was gratified, as you were, to see that. In previous conversations, the way I understand it, the business model for Milestone is a razor and razor blade situation, where the hand pieces are going to be the catalyst for profitability. It's nice to have the sales of the STA units, because without that you are not going to get the hand pieces. But prior to the order from China Medical, I've noted in your releases that these hand pieces don't seem to be keeping pace. In the June 30th quarter, instrument sales up 533% disposable hand pieces declined 14%. And then the latest quarter the hand pieces are up only 3%. This is contrary to what I would expect. I would expect bigger growth from the hand pieces from existing STA units, as dentists become more comfortable with them, they would use more and more and more. Can you comment on this apparent discrepancy, please?

Yes. You're absolutely right to point this out. This is a major concern to all of us at the Company and we have been dealing with this for the last five months, and have come up with, I believe, something that can be very successful in turning that around. As I said earlier, the most important thing for Milestone is the training. If the dentist is trained, they're comfortable, and they'll use it for every injection. It has been very difficult to do the training as it should be done with a $2,000 instrument with an under capitalized company. We believe, and have tested a new way in which we're going to try to do this, and I believe we'll have a lot more to say on our next conference call regarding that.

Okay. Are you still doing that annual event with medical schools, there was a symposium where you get together with people in the medical and dental community?

What was instituted about a year and three-quarters ago was something called C-CLAD. And what that was, not the medical schools, but it was to bring together key opinion leaders for a weekend of symposiums. That has been very, very costly to the Company. It is something that is very difficult to measure the success of, and perhaps more suitable for a larger company with a larger budget. The expense this year for that was scheduled to be about a $250,000, I believe.

About $145,000.

We spent $145,000 on that, and then we were supposed to spend approximately another $100,000 on a monograph, which is a pamphlet which is sent out. We plan to do that in a very different way, to significantly cut costs. We are working on that now and we are hoping that that monograph goes out within 45 to 60 days. I don't know at this point. But to answer your question , we will not be spending that kind of money any more on that kind of event. We may do it in a different way, but it will be far less costly.

Okay. My concern is that, I think a lot of dentists are really set in their ways of how they do things and very reluctant to embrace new technology, expense notwithstanding. And maybe that's the reason that despite the distributorship, the traction in the United States hasn't been what it was hoped to be. You addressed that you are going to do things differently, but is there still hope for this country to embrace this technology? Are you now saying, look we got an order for 12,000 units from the Chinese, this is becoming the world standard? What tack are you using with dentists to reconsider how they make injections?

Obviously if they see it in Mozambique, they see it in South Africa, they see it in Scandinavia, they see it in China. It is the same human body. The advantages are enormous. It is a matter of dealing with the US dentists. There is an ego factor involved, where the dentist takes great pride in being able to use this device, this hypodermic syringe from the 1850s, that people fear. There are over 40 million dental phobics. Dental appointments are cancelled almost to the level of 25% because of the fear of the syringe. Dentists, as you probably know, have the highest alcohol abuse rate of any medical professional in the United States. They have the highest drug abuse rate. And they share the highest suicide rate as psychiatrists. It is from the stress of giving the injection. It is a matter of getting through to the dentist with education and explaining why it is better for their life to use our device, which is proven in clinical studies why it is better for the patient and why it is much better for their business as a dentist. So it is our job as Milestone to get through this, and convince them of it.

Fortunately, the dentists from around the world, whether it's China or various other countries throughout the world, don't seem to have this issue, and they're much easier in the first instance to acquire technology that can make a difference in their practice and their lives, and they're very able at reading a few pages of instructions and using the device. We have not had that kind of success in the United States with the US dentists. We continue to try hard and we're implementing a new program that we're testing, which I said earlier to Kevin, and so far it looks very promising and if we can do that program in the United States, which we can, I think that will make an enormous difference. It all comes down to education. And one of the things that the Company has been working on is bringing in more and more key opinion leaders in the United States, and as more dentists see who's using it, that the product is actually in the textbook by the world's guru on anesthesiology, we believe it's a matter of time. And we think that we're doing better and better. The major thing for the Company was to make the Company profitable. Now that we feel that we are very, very close to that, a couple of months away, I think that we can now turn our attention to this new program in the United States, which I believe will make a very big difference.

I'm very anxious to hear about that and to see the results of that. One last question. Are you targeting dental schools? Are you trying to get this STA unit used in dental schools before the dentists go out and practice on their own? They already know about it and have used it?

It's difficult. I'll tell you the difficulty in that. We did that about eight years ago, put a tremendous effort into it. Here's the problem. The first problem is, when the dentist graduates, they're in tremendous debt and they go to work for another dentist. And even if they love our product, they have to convince the other dentist to buy the product. That's one issue. Another issue is, if you don't put it in the curriculum, it's not going to be taught. And a lot of the dentists, it's far different than medical school -- the dentists usually are in private practice and teach part-time. And if they're not using the product, they're not going to teach it.

So there are a lot of drawbacks in doing that. It's something that we should definitely do. We're in schools throughout the world very successfully. But I think that our money has to be spent doing this in a different way at this point, and once we start seeing success with that, while maintaining the Company's profitability, quarter by quarter, going forward now, we will begin to work hard with various schools. We are in schools, some schools in the United States, but we will put a big effort into that, but it is not the first effort because it takes a lot longer to get your money back. One would think, well, there are 4,000 graduates a year. If you get those 4,000 graduates to love it, they'll buy it when they graduate. Unfortunately it doesn't work that way.

Okay. Little bit too simplistic. Thank you so much, thank you so much for providing this forum for questions and answers and information exchange. I think it is very helpful to me as a shareholder and I wish you all the best in the coming quarters and I'll stay tuned.

Thank you very much, John.

Thank you. At this time I don't show any further questions. I will now like to turn it back over to management for any closing remarks. Please go ahead.

Okay. Thank you very much, Maritsa. Before we do officially close for the day, let's take some closing comments. We'll start with you, Joseph.

Thank you, Dodi. I'd like to thank the people on the investor call today, as well as the management and group from Milestone who have worked hard, especially Mr. Osser, in bringing together this latest transaction with China. And I believe that the investors and the employees of the Company are looking forward to much brighter and much clearer days ahead.

Thank you very much, Joseph. And Leonard?

I'd like to thank the investors for their support, and their incredible patience over the years. We have one particular investor who doesn't like me to use his name, because he's afraid every other company that needs money might knock on his door, so I won't mention his name. But I want to thank him very much for the tremendous support he's given us over the years, and I'd like to thank the other investors for their patience. I feel with great confidence, as does the whole team here, that we finally broke through and we're well on our way to where we want to be. Thank you very much.

Thank you, Len. And Leslie, you get the final word today.

Thank you, Dodi. I just want to say that I've had the pleasure of serving on the Milestone board now for five years. I'm delighted to have assumed the position of Chairman, particularly based upon this very exciting juncture in the Company's history. And I am very much looking forward to getting out there and meeting with as many investors, or potential investors, as possible. And thank you, Dodi.

Thank you, Leslie. Before we do close, I would like to remind you, if you would like to be added to Milestone's e-mail, fax, mailing databases or would like to be put on one of the road show schedules with Leslie and Joseph, as Leslie mentioned she and Joseph will be in New York the end of this week. We do have a couple of spots open if you would like to take advantage of that. Give Elite's office a call. Our number is 407-585-1080. Or you can reach us via email at MLSS@EFCG.net.

With that, I'd like to expend my own personal congratulations to the management team at Milestone. And wish everyone a fantastic evening. Thank you.

Thank you, Dodi, bye, bye.

Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation. You may now disconnect.