You folks need to pay attention to what Milestone is telling you.
2/19/98 Press Release - "Milestone Scientific Announces Exhibition of "The Wand" at Chicago Dental Show". In this release they inform you "To date, Milestone has received orders for over 11,000 units of The Wand of which over 2,700 have been shipped".
4/30/98 Interview with Dow Jones - "The company has received orders for about 12,000 units, and Martin said it expects to complete filling about 5,000 backorders by May."
So Milestone has informed you that over the past 2 1/2 months they have received additional orders for only about 1,000 units. They have informed you that the early order rates for their product have dropped dramatically. Taking the $650 average selling price times 12,000 units gives you $7.8mil in revenues. To reach Montgomery's 1998 revenue target of $28.5mil in revenues they will need to sell over 28,000 additional units over the remaining 8 months of the year. At the rate of 1,000 units every 2 1/2 months it will take them 5 years and 10 months to sell that many. Doesn't look like that target is very doable from where I sit. I expect the order rate to continue to decline and the stock to retreat to single digits very soon.
In addition, if what Mr. Gintel tells us about the 10% reserve for returns is accurate they would have booked a reserve of approx. $476k this qtr. If you add the $476k to their net receivable balance of $3,750,273 you get a gross receivable amount of $4,226,273. After subtracting out the $318k for receivables from their other lines of business you end up with $3.9 mil in gross receivables relating to The Wand. This means that they have only received payment for 18% of the 7,311 units recorded as revenue. A very dangerous sign.
Good Luck |
