If you are looking for sales and earnings estimates, I direct you to the Montgomery Securities report, which estimates earnings in excess of $1.00 per share next year. This estimate includes nothing from foreign sales. However, I will be glad to summarize the reasons that led me to make the size investment I did in what is really a very small company.
1. I see this as an intriguing long term investment which over several years can sell at levels substantially higher than where they are today.
2. I believe the company is on the threshold of demonstrating to investors, despite all the naysayers, that it's product works, that dentists will buy it, that those dentists who take the time to learn how to use it properly will increase their useage over time, and, given enough time, a major portion of the practicing dentists will be weaned over to it. One dentist I spoke to already finds that his own patients are telling others about the Wand and new patients are coming to him because they too want painless injections.(As we all know, going to the dentist is not something any of us look foward to.)
3. I am also turned on by the "razor blade" aspects of the business. Milestone has a good margin of profit on its disposable wand. Those margins will increase as the volume increases and I expect their costs of procurment will decline further from current levels. Once in use, it is not likely that revenues will decline. What you end up is a recurring, non-cyclical stream of income that will command a premium price earnings multiple in the marketplace. We like these kinds of investments and have been successful in the past with companies like Checkfree and Checkpoint which have similar investment characteristics.
4. Penetration of the dental market is in the very early stages, but I am satisfied that it is going to happen. The company has the management team and the finances to make it happen. I think that growth trends in the dentistry market are firmly in place, but we must not expect overnight progress. After all we are asking dentists to stop using syringes, a way of giving injections that has been in use for over 100 years.
5. The markets for this technology outside the dental field, are even greater. You have already heard from a podiatrist, who posted here, and who is using the Wand on his patients. Unpaid by the company, he is conducting clinical trials with 5-10 other practicioners in his field. The early results are exceeding even his expectations. And yes, he is a stockholder in the company, as is the dentist I spoke to. They are stockholders because they believe in the product and they posted on this thread because they felt that much of what was being said here was contrary to what they were experiencing in their own practice. But the point is, there may be even larger orebodies to be mined in Podiatry, Dermatology, Cosmetic Surgery and other medical disciplines that the company is just beginning to explore.
6. The company is also in the process of developing foreign markets for the product and presently is working to set up the right distributor relationships. This is also down the road, but perhaps not that far off, given this management's record of accomplishment so far.
7. This is a very simple business for an investor to understand, and an easy one to manage. Consider that the company has no inventory, does no manufacturing, and has only four customers. (distributers). That's why the departure of the accounting officer, who undoubtedly will soon be replaced with a stronger person, was ridiculously overblown in the Street. There are no accounting problems, the books are clean, and I am told the audit committee just finished a special review confirming that.
8. There have been minimal returns to distributors of about 200 units, 50 of them in boxes that were unopened.
9. The company said it will report it's first profitable quarter in March on a sales base of $5 million. Until recently the company was backordered, but is expanding it's capacity to produce disposables, and is moving to just in time delivery, thus overcoming recent delivery problems. Also, the feed back from early users is producing design changes and product improvements, as is often the case with any new device.
10. The recent decline in the price of the shares by short sellers, momentum investors, (of which I am not one Mason), short term traders, and just plain frightened and uninformed participants have opened up a long term buying opportunity in Milestone, that would not otherwise have become available. I have't seen a buying opportunity like this since last January when I loaded up the wagon with Greentree Financial shares at $18 after the Chief financial Officer resigned. The stock is now $40. There were 15 million shares of GNT sold short at the last report
11. The shorts are a nuisance, but irrelevant in the long term. Some shorts in the past have been right, but after talking to medical practicioners, security analysts that follow the stock, other large investors in the company, the investment banker, various members of management and Board members, I can find no valid reason whatsoever for shorting this stock! The sooner they leave the scene and let management go back to running the business, the better off every one will be, including themselves.
With the usual caveat's about being wrong, these are my reasons. I hope they help.
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