MTEN has traded nearly one million shares in just four days this short week, undoubtedly prompted by
the following feature recommendation in Yale Hirsch's SMART MONEY (reprinted with permission):
SMART MONEY -- VOL.24, NO.8 -- JANUARY 1997
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AMERICA'S MOST UNDISCOVERED COMPANIES
Medical Technology & Innovations is one of the most depressed stocks in the current market -- at least among
those that seem to have bright futures. The company's new PhotoScreener is a unique device that can detect
visual problems in very young children. That and other medical products are powering substantial sales growth
that should lead to impressive earnings next fiscal year.
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MEDICAL TECHNOLOGY & INNOVATIONS -- WITH THIS COMPANY IT'S BOTH
A NAME AND A COMMITMENT
There's still time to grab some year-end bargains. Recent market weakness has prolonged -- and
intensified -- the usual December dip. But this could actually be the stimulus for one of the best
Santa Claus seasons in a long time. Small-cap stocks have been drastically lagging behind the rest
of the market for two years. It's time for them to catch up. Even if they don't do so for the
longer term, they should have a big bounce. Many micro-stocks appear to be under climactic
selling right now for tax loss and other reasons. This almost always abates by Christmas if not
before, and small stocks enjoy a great rally in late December and January.
Medical Technolgy & Innovations (symbol MTEN) is one of the best bounce-back candidates we
have come across. The stock is down about 86% from this summer's high, though the company is
in better shape than ever. Some investors are still taking losses for tax purposes and most others
don't know about MTEN's recent progress.
The company makes and sells the MTI PhotoScreener, a hand-held photographic device used to
screen the eyes of young children for vision problems. If not caught early, vision deficits can lead
to developmental problems and difficulties in school. Even more important, a few of these
problems are impossible to correct adequately if not diagnosed at an early age. Permanent
damage and even blindness can result in rare cases.
While a thorough exam by a professional can uncover these defects, we understand that only a
small portion of young children undergo such examinations. The PhotoScreener is a quick, low-
cost means of screening large numbers of children. It does not require a physician but can be
operated by medical support staff. The device has been proved accurate in clinical trials and has
FDA clearance.
Essentially, the product is a sophisticated Polaroid-type camera that uses a special high-speed
Polaroid film. It takes instant photographs of a child's eyes -- actually two exposures on one
piece of film. Variations between the two exposures (taken with the flash in different positions)
help pinpoint vision problems.
Light is reflected from both the retina and the cornea, and observing this is part of standard
diagnostic tests. The PhotoScreener standardizes the procedure and makes it easier, particularly
with children who are not yet able to speak. The camera is easily aimed and focused with two
aiming lights that are projected onto the child's forehead. (This is one of the camera's patented
features.) To fix the child's attention, the operator can use either the flashing red lights on the
camera or an optional feature that plays recorded music.
The photographs of normal eyes look just as one would expect. Problems show up as crescents
of reflected light, spots or asymmetric corneal light reflection. The trained viewer can diagnose
nearsightedness, farsightedness, or astigmatism, and usually the degree of it. Astigmatism (and
other disorders that the system can detect) sometimes lead to amblyopia or "lazy eye" -- a
condition that can result in permanent damage.
According to the professional literature, only a quarter of this country's preschoolers receive any
kind of vision testing and half of all children with amblyopia are diagnosed after age five, when
treatment becomes less effective. The PhotoScreener can detect all the major causes of this
condition and seems to be the best single test for preverbal children.
Recently Medical Technology announced that it had received an initial order for five of its systems
from Sight Resource Corp., a major operator of optical stores, clinics and eye surgery centers.
Sight Resource intends to offer screening that at least initially will be free to parents of young
children. If the response is as positive as expected, the firm may offer the service at all its 72
locations.
This looks like a great way for such businesses or medical practices to build good will and attract
potential clients, and we expect that Sight Resource won't be alone if the service proves popular.
So there's potential demand among optical chains, clinics and hospitals as well as individual
physicians. The PhotoScreener costs a bit under $4,000 so it is easily affordable. Note that this is
a razor and blade situation. The user must buy special film, which is available from Polaroid
dealers but also from MTEN at a better price. The company, incidentally, has Polaroid's full
support technically and in marketing.
To diversify and secure a source of near-term cash flow, MTEN acquired Steridyne for $4.8
million in cash. That company manufactures and/or markets several lines of medical products.
The most important are thermometers and related items, including ordinary glass thermometers,
forehead fever strips, electronic units, sterile sheaths and probe covers for electronic
thermometers. The company is exclusive U.S. distributor of a new pacifier thermometer -- a two-
piece product that is dishwasher proof and thus can be sterilized. Products are marketed under
the company's own brands and under private labels sold by a dozen major chains.
Medical Technology introduced the PhotoScreener in 1994 and since then a good bit of time and
money has been spent promoting it and building up a substantial marketing organization. It
appears the effort is now paying off. Company sales for the September fiscal quarter were
$832,092, still small but well above the total for the entire previous fiscal year. The company is
still running losses, due mainly to the big buildup in marketing overhead plus some one-time
expenses relating to moving the corporate headquarters and other matters. But we think that the
next fiscal year MTEN could earn as much as $.20 a share on sales of over $10 million. In that
light the stock is very cheap.
There are about 12.8 million shares outstanding right now. We are using a higher figure to reflect
potential dilution. The exchange of all the preferred shares and exercise of all warrants and
options would result in a still greater number of shares. But most of these are set at prices that
are at least several times the current market price and so will not be exercised for some time if
ever. MTEN is traded on the OTC Bulletin Board. Like most very low-priced stocks, it may be
volatile. Use care in placing orders.
[Reprinted with Permission]
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SMART MONEY (c) Copyright 1996 by The Hirsch Organization Inc. / 184 Central Avenue, Old Tappan NJ 07675
Mailing address: PO Box 2069, River Vale NJ 07675 / Phone: (201) 767-4100 / E-mail: jahirsch@ix.netcom.com
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