Hello team:

After speaking with Barry Berman, running the numbers on the "significant" recurring revenue thread, researching the AAP (American Academy of Periodontology), FDA guidelines/fast-track alternatives and of course contacting various members of my data base, I am please to suggest that teaming with Perio-Imagining is an outstanding move by LLSR as each company's strengths combined significantly outweigh the upstart warts as individual companies:

1. Perio-Imaging (PI) already has beta units built (LLSR needs at least another board spin before they could move forward to tool beta units) and ready to launch their FDA testing. Look at PI's web site (although a boring site and not updated, the meat is grade A).... they have members that are directly associated with the FDA (LLSR does not). It is my understanding that FDA has already approved of the testing guidelines/parameters presented by PI and they will be on a fast track program. These existing relationships with the FDA will greatly benefit LLSR when it is their turn to pursue FDA testing. My sources suggest that the testing site is OSU using some kind of cadaver study with agreed upon testing protocols. Note the link between OSU and Dr. Mariotti (Dept. Chair of OSU's Periodontology Academy)

2. PI's cost to getting to production is significantly less and much faster than LLSR's cost. Just start with the fact that LLSR still needs another board spin, build beta units, fund FDA testing and then build a batch of pre-production units (at a much higher cost when the selling price for LLSR is ~ $25K verses PI's ~ $3K). I think PI will get to market at least 1 year before LLSR.... this also implies that the dental distributor relationships will already be in place at least 1 year before LLSR would have been in position to start this process. I can't see how this does anything but benefit LLSR.... kind of like the Turtle and the Hare.... PI will jump out fast and get the ball rolling while LLSR will lumber through their perspective milestones. When they both are in volume production (my estimate assumes 3 years worth of both companies being in volume production), their individual revenue streams will be about equal with the recurring revenue growing it's own legs as they reach 40,50 and 60% penetration rates.... the gross profit margins on the recurring revenue will be astronomical.

3. It is my understanding that PI's device is capable of identifying the early stages of periodontal disease a bit earlier than LLSR. However, once the disease is identified and because of the resolution of the OCT, LLSR's equipment will be the diagnostic tool of choice to monitor the disease. Here is the real benefit, PI's equipment AND software is ready now! One thing that is not mentioned is that LLSR will launch their OCT/NIR based systems to initially deal with hard tissue issues.... on the back burner is the time it will take to tool the software necessary to address soft tissue issues. Have you ever seen a press release discussing the evolution of the software for addressing soft tissue issues?.... NO... only mentioning that the OCT system is capable of identifying soft tissue issues.

I would naturally assume that over the next 12-24 months, LLSR will focus on getting their product to market ASAP to address the hard tissue issues only.... and within a year later, software upgrades will be introduce to address the soft tissue issues. So.... PI goes to market much faster offering the only equipment that can detect and document soft tissue issues (like periodontal disease) taking the pressure off LLSR to wait for their soft tissue piece to evolve. Again.... PI's time to market and revenue stream greatly benefits LLSR.

4. Take a moment to review PI's web site.... they are staffed with outstanding resources linked to the ADA, APP, FDA (which only helps LLSR's team).... significant experience in developing advanced computer imaging tools and systems (which only helps LLSR's team)....advance health care information systems (which only helps LLSR), additional legal resources and don't you dare miss this one....the former president and CEO of Cigna Dental Health Insurance (already in a strong position to start working the insurance arm of this equation as both company's product will be able to obtain new insurance codes to address the unique properties of their diagnostic equipment).

So as I continue to try and piece things together, my assumption is that the new company will pursue funding in the range of $3M to $4M. The majority of these funds will be applied to PI to help them get into volume production and LLSR will get the remaining portion to address at least 1 year of milestone tasks. About 1 year from now, the new company will have been able to get the PI piece into production (finally generating revenue) and LLSR should have achieved at least FDA approval (which also implies the beat units have been approved).

I can't see why the dentist won't flock to the PI device as I mentioned in an earlier post that the dentist have no diagnostic tool available that can detect and document periodontal disease ( a must for getting new dental insurance reimbursement codes), inexpensive at less than $3K (equipment pays for itself within 5 months), generates a minimum of $6.5K dollars in annual revenue (and that is a very conservative number... once I'm better up to speed, I'll update my model to expect about $10K/year additional NET revenue).

So... 1 year after getting the next funding pop, the new company will be generating revenue (with the distribution channels established.... which is for some reason always important to the funding channels) with the LLSR piece in a much stronger position (shorter time and significantly less risk to get to the finish line compared to today). They will be in a much... I mean a MUCH... stronger position to get a final round of funding (my estimate is $6M to $8M for LLSR to complete their journey) with much better terms behind a stream of press releases keeping us abreast of the product development of all the new company's products.... and then may I fantasize...... a big boy comes down and takes them off the table because the recurring and non-recurring revenue potential will be way too big to ignore...... do you think the companies that depend on x-ray and/or digital x-ray sales are going to just sit on the sidelines and watch their revenue stream slow down to a trickle while the new company has the brightest future in their market segment?.... No... I don't think so....

That is why they call me,

Enlightened