Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2018 | Aug. 06, 2018 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q2 | |
Trading Symbol | BIOL | |
Entity Registrant Name | BIOLASE, INC | |
Entity Central Index Key | 811,240 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 20,596,901 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 2,895 | $ 11,645 |
Restricted cash equivalent | 251 | 251 |
Accounts receivable, less allowance of $1,004 in 2018 and $802 in 2017 | 10,399 | 10,124 |
Inventory, net | 14,008 | 12,298 |
Prepaid expenses and other current assets | 1,602 | 1,732 |
Total current assets | 29,155 | 36,050 |
Property, plant, and equipment, net | 3,164 | 3,674 |
Goodwill | 2,926 | 2,926 |
Other assets | 404 | 334 |
Total assets | 35,649 | 42,984 |
Current liabilities: | ||
Accounts payable | 6,932 | 5,109 |
Accrued liabilities | 5,575 | 5,609 |
Customer deposits | 15 | 27 |
Deferred revenue, current portion | 2,212 | 2,625 |
Total current liabilities | 14,734 | 13,370 |
Deferred income taxes, net | 106 | 104 |
Deferred revenue, long-term | 6 | 11 |
Loan payable, long-term | 80 | |
Warranty accrual, long-term | 221 | 70 |
Other liabilities, long-term | 112 | 169 |
Total liabilities | 15,259 | 13,724 |
Commitments and contingencies (Note 10) | ||
Stockholders' equity: | ||
Preferred stock, par value $0.001 per share; 1,000,000 shares authorized; 0 shares issued and outstanding as of June 30, 2018 and December 31, 2017, respectively | ||
Common stock, par value $0.001 per share; 40,000,000 shares authorized, 20,596,901 and 20,467,936 shares issued and outstanding as of June 30, 2018 and December 31, 2017, respectively | 20 | 20 |
Additional paid-in-capital | 226,089 | 224,992 |
Accumulated other comprehensive loss | (610) | (576) |
Accumulated deficit | (205,109) | (195,176) |
Total stockholders' equity | 20,390 | 29,260 |
Total liabilities and stockholders' equity | $ 35,649 | $ 42,984 |
Consolidated Balance Sheets (U3
Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Statement Of Financial Position [Abstract] | ||
Allowance for accounts receivable | $ 1,004 | $ 802 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 40,000,000 | 40,000,000 |
Common stock, shares issued | 20,596,901 | 20,467,936 |
Common stock, shares outstanding | 20,596,901 | 20,467,936 |
Consolidated Statements Of Oper
Consolidated Statements Of Operations And Comprehensive Loss (Unaudited) - USD ($) shares in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Income Statement [Abstract] | ||||
Products and services revenue | $ 12,151,000 | $ 12,580,000 | $ 22,168,000 | $ 23,422,000 |
License fees and royalty revenue | 3,000 | 32,000 | 6,000 | 64,000 |
Net revenue | 12,154,000 | 12,612,000 | 22,174,000 | 23,486,000 |
Cost of revenue | 7,846,000 | 7,908,000 | 14,833,000 | 14,829,000 |
Gross profit | 4,308,000 | 4,704,000 | 7,341,000 | 8,657,000 |
Operating expenses: | ||||
Sales and marketing | 4,657,000 | 4,534,000 | 8,548,000 | 8,718,000 |
General and administrative | 2,969,000 | 2,840,000 | 6,006,000 | 5,256,000 |
Engineering and development | 1,361,000 | 1,810,000 | 2,650,000 | 3,239,000 |
Total operating expenses | 8,987,000 | 9,184,000 | 17,204,000 | 17,213,000 |
Loss from operations | (4,679,000) | (4,480,000) | (9,863,000) | (8,556,000) |
Gain (loss) on foreign currency transactions | (187,000) | 217,000 | 20,000 | 216,000 |
Interest expense (income), net | (35,000) | 10,000 | (47,000) | 19,000 |
Non-operating income (loss), net | (222,000) | 227,000 | (27,000) | 235,000 |
Loss before income tax provision | (4,901,000) | (4,253,000) | (9,890,000) | (8,321,000) |
Income tax provision | 10,000 | 36,000 | 42,000 | 76,000 |
Net loss | (4,911,000) | (4,289,000) | (9,932,000) | (8,397,000) |
Other comprehensive income item: | ||||
Foreign currency translation adjustment | (118,000) | 157,000 | (34,000) | 187,000 |
Comprehensive loss | (5,029,000) | (4,132,000) | (9,966,000) | (8,210,000) |
Net loss | (4,911,000) | (4,289,000) | (9,932,000) | (8,397,000) |
Deemed dividend on convertible preferred stock | (3,978,000) | (3,978,000) | ||
Net loss attributable to common stockholders | $ (4,911,000) | $ (8,267,000) | $ (9,932,000) | $ (12,375,000) |
Net loss per share: | ||||
Basic | $ (0.24) | $ (0.61) | $ (0.48) | $ (0.91) |
Diluted | $ (0.24) | $ (0.61) | $ (0.48) | $ (0.91) |
Shares used in the calculation of net loss per share: | ||||
Basic | 20,538 | 13,561 | 20,504 | 13,539 |
Diluted | 20,538 | 13,561 | 20,504 | 13,539 |
Consolidated Statements Of Cash
Consolidated Statements Of Cash Flows (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Cash Flows from Operating Activities: | ||
Net loss | $ (9,932) | $ (8,397) |
Adjustments to reconcile net loss to net cash and cash equivalents used in operating activities: | ||
Depreciation and amortization | 509 | 577 |
Provision for bad debts, net | 230 | 55 |
Provision for inventory excess and obsolescence | 59 | 225 |
Amortization of discounts on lines of credit | 17 | |
Amortization of debt issuance costs | 25 | |
Stock-based compensation | 1,258 | 1,140 |
Deferred income taxes | 2 | 30 |
Earned interest income, net | (1) | (19) |
Changes in operating assets and liabilities: | ||
Accounts receivable | (504) | (55) |
Inventory | (1,769) | (1,894) |
Prepaid expenses and other current assets | 105 | 433 |
Customer deposits | (12) | 24 |
Accounts payable and accrued liabilities | 2,086 | (2,673) |
Deferred revenue | (418) | (353) |
Net cash and cash equivalents used in operating activities | (8,345) | (10,907) |
Cash Flows from Investing Activities: | ||
Purchases of property, plant, and equipment | (110) | (637) |
Net cash and cash equivalents used in investing activities | (110) | (637) |
Cash Flows from Financing Activities: | ||
Principal payments under capital lease obligation | (46) | (86) |
Borrowings under lines of credit | 1,823 | |
Payments under lines of credit | (1,823) | |
Payments of debt issuance costs | (87) | |
Proceeds from equity offering, net of expenses | 10,457 | |
Payments of equity offering costs | (138) | |
Proceeds from exercise of stock options | 2 | 3 |
Net cash and cash equivalents (used in) provided by financing activities | (269) | 10,374 |
Effect of exchange rate changes | (26) | 162 |
Decrease in cash, cash equivalents and restricted cash | (8,750) | (1,008) |
Cash, cash equivalents and restricted cash, beginning of period | 11,896 | 9,175 |
Cash, cash equivalents and restricted cash, end of period | 3,146 | 8,167 |
Supplemental cash flow disclosure - Cash Paid: | ||
Interest paid | 1 | |
Income taxes paid | $ 15 | 137 |
Supplemental cash flow disclosure - Non-cash: | ||
Accrued capital expenditures and tenant improvement allowance | $ 158 |
Description of Business and Bas
Description of Business and Basis of Presentation | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Description of Business and Basis of Presentation | NOTE 1—DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION The Company BIOLASE, Inc. (“BIOLASE” and, together with its consolidated subsidiaries, the “Company”), incorporated in Delaware in 1987, is a medical device company that develops, manufactures, markets, and sells laser systems in dentistry and medicine and also markets, sells, and distributes dental imaging equipment, including three-dimensional CAD/CAM intra-oral scanners and digital dentistry software. Basis of Presentation The unaudited consolidated financial statements include the accounts of BIOLASE and its wholly-owned subsidiaries and have been prepared on a basis consistent with the December 31, 2017 audited consolidated financial statements and include all material adjustments, consisting of normal recurring adjustments and the elimination of all material intercompany transactions and balances, necessary to fairly present the information set forth therein. These unaudited, interim, consolidated financial statements do not include all the footnotes, presentations, and disclosures normally required by accounting principles generally accepted in the United States of America (“GAAP”) for complete consolidated financial statements. Certain amounts have been reclassified to conform to current period presentations. The consolidated results of operations for the three and six months ended June 30, 2018 are not necessarily indicative of the results for the full year. The accompanying consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2017, included in BIOLASE’s Annual Report on Form 10-K for the year ended December 31, 2017 filed with the Securities and Exchange Commission (the “SEC”) on March 14, 2018 (the “2017 Form 10-K”). Liquidity and Management’s Plans The Company incurred a loss from operations and a net loss, and used cash in operating activities for the three and six months ended June 30, 2018. The Company’s recurring losses, level of cash used in operations, and potential need for additional capital, along with uncertainties surrounding the Company’s ability to raise additional capital, raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. On March 6, 2018, BIOLASE and two of its wholly-owned subsidiaries entered into a Business Financing Agreement (the “Business Financing Agreement”) with Western Alliance Bank (“Western Alliance”), which provides for borrowings of up to $6.0 million. The Company had no borrowings outstanding under these lines of credit as of June 30, 2018. See Note 9 – Lines of Credit for additional information. As of June 30, 2018, the Company had working capital of approximately $14.4 million. The Company’s principal sources of liquidity as of June 30, 2018 consisted of approximately $3.1 million in cash and cash equivalents and restricted cash, $10.4 million of accounts receivable and $3.9 million available under the Business Financing Agreement. In order for the Company to continue operations beyond the next 12 months and be able to discharge its liabilities and commitments in the normal course of business, the Company must increase sales of its products directly to end-users and through distributors, establish profitable operations through the combination of increased sales and decreased expenses, generate cash from operations or obtain additional funds when needed. The Company intends to improve its financial condition and ultimately improve its financial results by increasing revenues through expansion of its product offerings, continuing to expand and develop its field sales force and distributor relationships, both domestically and internationally, forming strategic arrangements within the dental and medical industries, educating dental and medical patients as to the benefits of its advanced medical technologies, and reducing expenses. Additional capital requirements may depend on many factors, including, among other things, continued losses, the rate at which the Company’s business grows, demands for working capital, manufacturing capacity, and any acquisitions that the Company may pursue. From time to time, the Company could be required, or may otherwise attempt, to raise capital, through either equity or debt offerings, or enter into an additional line of credit facility. As discussed in Note 9, on March 6, 2018, BIOLASE entered into the Business Financing Agreement, providing for a secured line of credit. The Company cannot provide assurance that it will be able to successfully consummate any equity or debt financings or enter into any other line of credit facility in the future. The Company also cannot provide assurance that the required capital would be available on acceptable terms, if at all, or that any such financing activity would not be dilutive to the Company’s stockholders. Reverse Stock Split Except as the context otherwise requires, all share numbers and share price amounts (including exercise prices and closing market prices) contained in the unaudited financial statements and notes thereto reflect the reverse stock split effectuated by the Company on May 10, 2018. See Note 4 – Stockholders’ Equity |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Use of Estimates The preparation of these consolidated financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect amounts reported in the consolidated financial statements and the accompanying notes. Significant estimates in these consolidated financial statements include allowances on accounts receivable, inventory, and deferred taxes, as well as estimates for accrued warranty expenses, the ability of goodwill to be realized, revenue deferrals, effects of stock-based compensation and warrants, contingent liabilities, and the provision or benefit for income taxes. Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may differ materially from those estimates. Critical Accounting Policies Information with respect to the Company’s critical accounting policies, which management believes could have the most significant effect on the Company’s reported results and require subjective or complex judgments by management is contained in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” of the 2017 Form 10-K. Management believes that there have been no significant changes during the six months ended June 30, 2018 in the Company’s critical accounting policies from those disclosed in Item 7 of the 2017 Form 10-K. Fair Value of Financial Instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the principal market (or, if none exists, the most advantageous market) for the specific asset or liability at the measurement date (referred to as the “exit price”). The fair value is based on assumptions that market participants would use, including a consideration of nonperformance risk. Under the accounting guidance for fair value hierarchy there are three levels of measurement inputs. Level 1 inputs are quoted prices in active markets for identical assets or liabilities. Level 2 inputs reflect input other than quoted prices included in Level 1 that are observable, either directly or through collaboration with observable market data, other than Level 1. Level 3 inputs are unobservable due to little or no corroborating market data. The Company’s financial instruments, consisting of cash, cash equivalents and restricted cash, accounts receivable, accounts payable, and accrued liabilities, approximate fair value because of the short maturity of these items. Recent Accounting Pronouncements Changes to GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of accounting standards updates (“ASUs”) to the FASB’s Accounting Standards Codification. The Company considers the applicability and impact of all ASUs. ASUs not listed below were assessed and determined not to be applicable or are expected to have minimal impact on the Company’s consolidated financial position and results of operations. Adopted Accounting Pronouncements In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”). The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. The standard is effective for annual periods beginning after December 15, 2017, and interim periods therein. ASU 2014-09 supersedes existing guidance on revenue recognition with a five-step model for recognizing and measuring revenue from contracts with customers. The objective of the new standard is to provide a single, comprehensive revenue recognition model for all contracts with customers to improve comparability within industries, across industries, and across capital markets. The underlying principle is that an entity will recognize revenue to depict the transfer of goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods or services. The guidance also requires a number of disclosures regarding the nature, amount, timing, and uncertainty of revenue and the related cash flows. The guidance can be applied retrospectively to each prior reporting period presented (full retrospective method) or retrospectively with a cumulative effect adjustment to retained earnings for initial application of the guidance at the date of initial adoption (modified retrospective method). The Company adopted the new standard effective January 1, 2018 using the modified retrospective method applied to those contracts that were not completed or substantially completed as of January 1, 2018. The timing and measurement of revenue recognition under the new standard is not materially different than under the old standard. The adoption of the new standard did not have an impact on the Company’s consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230) (“ASU 2016-15”). The updated standard addresses eight specific cash flow issues with the objective of reducing diversity in practice. ASU 2016-15 is effective for public business entities for annual reporting periods beginning after December 15, 2017, including interim periods within those annual reporting periods. Early adoption is permitted. The Company adopted ASU 2016-15 as of January 1, 2018. The adoption of ASU 2016-15 did not have an impact on the Company’s consolidated financial statements. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230) (“ASU 2016-18”). The updated standard requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. ASU 2016-18 is effective for public business entities for annual reporting periods beginning after December 15, 2017, including interim periods within those annual reporting periods. The Company adopted ASU 2016-18 as of January 1, 2018. The adoption of ASU 2016-18 did not have a material effect on the Company’s consolidated financial statements. In May 2017, the FASB issued ASU 2017-09, Compensation – Stock Compensation (Topic 718) (“ASU 2017-09”). The updated standard clarifies when an entity must apply modification accounting to changes in the terms or conditions of a share-based payment award. ASU 2017-09 is effective for public business entities for annual reporting periods beginning after December 15, 2017, including interim periods within those annual reporting periods. Early adoption is permitted. The Company adopted ASU 2017-09 as of January 1, 2018. The adoption of ASU 2017-09 did not have a material effect on the Company’s consolidated financial statements. Recently Issued Accounting Standards In February 2016, FASB issued ASU 2016-02, Leases (“ASU 2016-02”). The new standard establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is currently evaluating the impact of its pending adoption of ASU 2016-02 on its consolidated financial statements. In July 2017, FASB issued ASU 2017-11 (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception (“ASU 2017-11”). The new standard simplifies the accounting for certain financial instruments with down round features. Part I of ASU 2017-11 changes the classification analysis of certain equity-linked financial instruments, such as warrants and embedded conversion features, such that a down round feature is disregarded when assessing whether the instrument is indexed to an entity’s own stock under Subtopic 815-40, Contracts in Entity’s Own Equity. As a result, a down round feature, by itself, no longer requires an instrument to be remeasured at fair value through earnings each period, although all other aspects of the indexation guidance under Subtopic 815-40 continue to apply. Part II of ASU 2017-11 recharacterizes the indefinite deferral of certain provisions of Topic 480, Distinguishing Liabilities from Equity, (currently presented as pending content in the Codification) as a scope exception. No change in the Company’s practice is expected as a result of these amendments. The new standard is effective for fiscal years beginning after December 15, 2018, Early adoption is permitted. The amendments in Part II have no accounting impact and therefore do not have an associated effective date. The Company is currently evaluating the impact of its pending adoption of ASU 2017-11 on its consolidated financial statements. |
Revenue Recognition
Revenue Recognition | 6 Months Ended |
Jun. 30, 2018 | |
Revenue Recognition [Abstract] | |
Revenue Recognition | NOTE 3 – REVENUE RECOGNITION Contracts with Customers Revenue for sales of products and services is derived from contracts with customers. The products and services promised in contracts include delivery of laser systems, imaging systems, and consumables as well as certain ancillary services such as training and extended warranties. Contracts with each customer generally state the terms of the sale, including the description, quantity and price of each product or services. Payment terms are stated in the contract and vary according to the arrangement. Because the customer typically agrees to a stated rate and price in the contract that does not vary over the life of the contract, the Company’s contracts do not contain variable consideration. The Company establishes a provision for estimated warranty reserves. For further information on warranty, see Note 8 – Accrued Liabilities Performance Obligations At contract inception, the Company assesses the products and services promised in its contracts with customers. The Company then identifies performance obligations to transfer distinct products or services to the customers. In order to identify performance obligations, the Company considers all of the products or services promised in contracts regardless of whether they are explicitly stated or are implied by customary business practices. Revenue from products and services transferred to customers at a single point in time accounted for 87% and 85% of net revenue for the three and six months ended June 30, 2018, respectively. The majority of the Company’s revenue recognized at a point in time is for the sale laser systems, imaging systems, and consumables. Revenue from these contracts is recognized when the customer is able to direct the use of and obtain substantially all of the benefits from the product which generally coincides with title transfer during the shipping process. Revenue from services transferred to customers over time accounted for 13% and 15% of net revenue for the three and six months ended June 30, 2018, respectively. The majority of the Company’s revenue that is recognized over time relates to training and extended warranties. Transaction Price Allocation The transaction price for a contract is allocated to each distinct performance obligation and recognized as revenue when, or as, each performance obligation is satisfied. For contracts with multiple performance obligations, the Company allocates the contract’s transaction price to each performance obligation using the best estimate of the standalone selling price of each distinct good or service in a contract. The primary method used to estimate standalone selling price is the observable price when the good or service is sold separately in similar circumstances and to similar customers. Significant Judgments Revenue is recorded for extended warranty over time as the customer benefits from the warranty coverage. This revenue will be recognized equally throughout the contract period as the customer receives benefits from the Company's promise to provide such services. Revenue is recorded for training as the customer attends a training program or upon the expiration of the obligation. The Company also has contracts that include both the product sales and training as performance obligations. In those cases, the Company records revenue for product at the point in time when the product has been shipped. The customer obtains control of the product when it is shipped, as all shipments are made FOB shipping point, and after the customer selects its shipping method and pays all shipping costs and insurance. The Company has concluded that control is transferred to the customer upon shipment. Accounts Receivable Accounts receivable are stated at estimated net realizable value. The allowance for doubtful accounts is based on an analysis of customer accounts and the Company’s historical experience with accounts receivable write-offs. Contract Liabilities The Company performs its obligations under a contract with a customer by transferring products and/or services in exchange for consideration from the customer. The Company typically invoices its customers as soon as control of an asset is transferred and a receivable for the Company is established. The Company, however, recognizes a contract liability when a customer prepays for goods and/or services and the Company has not transferred control of the goods and/or services. The opening and closing balances of the Company’s contract liabilities are as follows (in thousands): June 30, December 31, 2018 2017 Undelivered elements (training and product and support services; installation for 2017) $ 624 $ 980 Extended warranty contracts 1,577 1,634 Deferred royalties 17 22 Total deferred revenue 2,218 2,636 Less long-term amounts: Deferred royalties 6 11 Total deferred revenue - long-term 6 11 Total deferred revenue - current $ 2,212 $ 2,625 The balance of contract assets was immaterial as the Company did not have a significant amount of uninvoiced receivables in the periods ended June 30, 2018 and December 31, 2017. The amount of revenue recognized during the period that was included in the opening contract liability balance related to undelivered elements was $0.6 million, related to extended warranty contracts was $0.7 million and deferred royalties was $6,000. Disaggregation of Revenue The Company disaggregates revenue from contracts with customers into geographical regions and by the timing of when goods and services are transferred. The Company determined that disaggregating revenue into these categories depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by regional economic factors. The Company’s revenues related to the following geographic areas were as follows for the periods indicated (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 United States $ 7,164 $ 8,194 $ 12,857 $ 15,037 International 4,990 4,418 9,317 8,449 $ 12,154 $ 12,612 $ 22,174 $ 23,486 Information regarding revenues disaggregated by the timing of when goods and services are transferred is as follows (in thousands): Three Months Ended Six Months Ended June 30, 2018 June 30, 2018 Revenue recognized over time $ 1,557 $ 3,254 Revenue recognized at a point in time 10,597 18,920 Total $ 12,154 $ 22,174 The Company’s sales by end market were as follows for the periods indicated (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 End-customer $ 7,675 $ 8,651 $ 13,712 $ 15,796 Distributors 4,479 3,961 8,462 7,690 $ 12,154 $ 12,612 $ 22,174 $ 23,486 The Company acts as the principal in all its imaging equipment distribution sales. The Company takes possession and control of the equipment before they are sold and transferred to the customer. The Company provides the equipment and any related services directly to the customer. The Company has inventory risk before the equipment is transferred to a customer. The Company purchases and obtains the goods before obtaining a contract with a customer. The Company also has discretion in establishing the price sold to the customer for the equipment. The percentages of the Company’s sales by product line were as follows for the periods indicated: Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Waterlase (laser systems) 42.9 % 42.4 % 39.2 % 41.3 % Diodes (laser systems) 22.3 % 20.7 % 22.2 % 21.3 % Imaging systems 3.1 % 7.5 % 4.3 % 6.7 % Consumables and other 18.9 % 16.3 % 19.6 % 15.9 % Services 12.8 % 12.8 % 14.7 % 14.5 % License fees and royalties — % 0.3 % — % 0.3 % 100.0 % 100.0 % 100.0 % 100.0 % Shipping and Freight Costs Shipping and freight costs are treated as fulfillment costs. For shipments to end-customers, the customer bears the shipping and freight costs and has control of the product upon shipment. For shipments to distributors, the distributor bears the shipping and freight costs, including insurance, tariffs and other import/export costs. Practical Expedients For the period ended June 30, 2018, the Company elected the following practical expedients: In accordance with Subtopic 340-40 "Other Assets and Deferred Costs - Contracts with Customers,” the Company elected to expense the incremental costs of obtaining a contract when the amortization period for such contracts would have been one year or less. The Company has made an accounting policy election to exclude all taxes by governmental authorities from the measurement of the transaction price. |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jun. 30, 2018 | |
Equity [Abstract] | |
Stockholders' Equity | NOTE 4—STOCKHOLDERS’ EQUITY Reverse Stock Split At BIOLASE’s annual meeting of stockholders on May 9, 2018 (the “Annual Meeting”), BIOLASE stockholders approved an amendment to BIOLASE’s Restated Certificate of Incorporation, as amended, to effect a reverse stock split of BIOLASE common stock, at a ratio ranging from one-for-five (1:5) to one-for-fifteen (1:15), with the final ratio to be determined by the BIOLASE board of directors (the “Board”). Immediately after the Annual Meeting, the Board approved a one-for-five (1:5) reverse stock split of the outstanding shares of BIOLASE common stock (the “Reverse Stock Split”). On May 10, 2018, the Company filed an amendment (the “Amendment”) to its Restated Certificate of Incorporation, as amended, with the Secretary of State of the State of Delaware to effect the Reverse Stock Split, effective as of 11:59 p.m. on May 10, 2018. The Amendment also reduced the authorized shares of common stock from 200,000,000 shares to 40,000,000 shares. Stock-Based Compensation 2002 Stock Incentive Plan The 2002 Stock Incentive Plan (as amended effective as of May 26, 2004, November 15, 2005, May 16, 2007, May 5, 2011, June 6, 2013, October 30, 2014, April 27, 2015, and May 6, 2016) (the “2002 Plan”), which was replaced by the 2018 Plan (as defined below) with respect to future equity awards. Persons eligible to receive awards under the 2002 Plan included officers, employees, and directors of the Company, as well as consultants. As of June 30, 2018, a total of 3.1 million shares of BIOLASE common stock have been authorized for issuance under the 2002 Plan, of which 0.9 million shares of BIOLASE common stock have been issued pursuant to options that were exercised and restricted stock units (“RSUs”) that were settled in common stock and 1.9 million shares of BIOLASE common stock have been reserved for outstanding options and unvested RSUs. 2018 Stock Incentive Plan At the Annual Meeting, BIOLASE stockholders approved the BIOLASE, Inc. 2018 Long-Term Incentive Plan (the “2018 Plan”). The purposes of the 2018 Plan are (i) to align the interests of the Company’s stockholders and recipients of awards under the 2018 Plan by increasing the proprietary interest of such recipients in the Company’s growth and success; (ii) to advance the interests of the Company by attracting and retaining non-employee directors, officers, other employees, consultants, independent contractors and agents; and (iii) to motivate such persons to act in the long-term best interests of the Company and its stockholders. Subject to the terms and conditions of the 2018 Plan, the number of shares authorized for grants under the 2018 Plan is 2,035,287, which is equal to 2,120,547, reduced by 85,260 shares, which is the number of shares subject to awards granted under the 2002 Plan on or after March 1, 2018, as adjusted for the Reverse Stock Split. As of June 30, 2018, a total of 2.0 million shares of BIOLASE common stock have been authorized for issuance under the 2018 Plan, of which 1.6 million shares of BIOLASE common stock have been reserved for outstanding options and unvested RSUs, and 0.4 million shares of BIOLASE common stock remain available for future grants. The Company recognized stock-based compensation expense of $0.6 million and $0.8 million, for the three months ended June 30, 2018 and 2017, respectively, and $1.3 million and $1.1 million, for the six months ended June 30, 2018 and 2017, respectively, based on the grant-date fair value. Stock-based compensation expense for the six months ended June 30, 2018 and 2017 includes the reversal of $0.1 million and $0.5 million, respectively, resulting from the reassessment of certain performance-based equity awards. The net impact of stock-based compensation expense to earnings was $(0.03), and $(0.06) per basic and diluted share for the three months ended June 30, 2018 and 2017, respectively, and $(0.06) and $(0.08) per basic and diluted share for the six months ended June 30, 2018 and 2017, respectively. At June 30, 2018, the Company had approximately $3.6 million of total unrecognized compensation expense, net of estimated forfeitures, related to unvested share-based compensation arrangements. The Company expects that expense to be recognized over a weighted-average period of 2.0 years. The following table summarizes the income statement classification of compensation expense associated with share-based payments (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Cost of revenue $ 105 $ 67 $ 162 $ 107 Sales and marketing 154 93 234 166 General and administrative 207 506 674 699 Engineering and development 91 95 188 168 $ 557 $ 761 $ 1,258 $ 1,140 The stock option fair values were estimated using the Black-Scholes option-pricing model with the following assumptions: Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Expected term 5.7 years 5.4 years 5.9 years 5.6 years Volatility 81.2 % 77.6 % 81.4 % 78.5 % Annual dividend per share $ — $ — $ — $ — Risk-free interest rate 2.71 % 1.98 % 2.46 % 1.98 % A summary of option activity for the six months ended June 30, 2018 is as follows (in thousands, except per share data): Weighted Average Weighted Remaining Aggregate Average Contractual Intrinsic Shares Exercise Price Term (Years) Value(1) Options outstanding, December 31, 2017 1,924 $ 8.62 7.21 $ — Granted at fair market value 402 2.09 Exercised (1 ) 2.10 Forfeited, cancelled, or expired (322 ) 11.12 Options outstanding at June 30, 2018 2,003 $ 6.91 6.14 $ — Options exercisable at June 30, 2018 1,095 $ 8.75 4.97 $ — Vested options expired during the quarter ended June 30, 2018 191 $ 14.29 (1) The intrinsic value calculation does not include negative values. This can occur when the fair market value on the reporting date is less than the exercise price of the grant. A summary of unvested stock option activity for the six months ended June 30, 2018 is as follows (in thousands, except per share data): Weighted Average Grant Shares Date Fair Value Unvested options at December 31, 2017 846 $ 3.14 Granted 402 $ 1.46 Vested (240 ) $ 3.59 Forfeited or cancelled (99 ) $ 2.55 Unvested options at June 30, 2018 909 $ 2.34 Cash proceeds, along with fair value disclosures related to grants, exercises, and vested options are as follows (in thousands, except per share amounts): Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Proceeds from stock options exercised $ — $ 3 $ 2 $ 3 Tax benefit related to stock options exercised (1) N/A N/A N/A N/A Intrinsic value of stock options exercised (2) $ — $ 1 $ — $ 1 Weighted-average fair value of options granted during period $ 1.27 $ 3.94 $ 1.46 $ 4.60 Total fair value of shares vested during the period $ 843 $ 364 $ 245 $ 698 (1) Excess tax benefits received related to stock option exercises are presented as financing cash inflows. The Company currently does not receive a tax benefit related to the exercise of stock options due to the Company’s net operating losses. (2) The intrinsic value of stock options exercised is the amount by which the market price of the stock on the date of exercise exceeded the market price of the stock on the date of grant. Effective January 25, 2018, the Compensation Committee of the Board awarded 360,000 non-qualified stock options to purchase shares of BIOLASE common stock to certain employees of the Company. These awards were valued at $2.11 per share, the Reverse Stock Split-adjusted closing market price of BIOLASE common stock on the grant date, and expire 10 years from the grant date. The options vest ratably over the 36-month period, commencing on February 25, 2018. Restricted Stock Units Under the 2002 Plan, effective January 26, 2018, the Board issued 40,000 RSUs to the Company’s President and Chief Executive Officer. This award was valued at $2.00 per share, the Reverse Stock Split-adjusted closing market price of BIOLASE common stock on the grant date, and will vest upon the achievement of specific annual Company performance criteria. Under the 2018 Plan, effective May 14, 2018, the Compensation Committee of the Board granted the following: • 1,193,850 shares to certain Board members, employees and consultants of the Company. These awards were valued at $1.45 per share, the closing price of BIOLASE common stock on the grant date, and vest 40% on December 31, 2018 and 60% on December 31, 2019, subject to continued service through the applicable vesting date. • 398,275 shares to certain Board members of the Company. These awards were valued at $1.45 per share, the closing price of BIOLASE common stock on the grant date, and fully vest on the first anniversary of the grant date, subject to continued service through the applicable vesting date. • 10,127 shares to certain employees of the Company. These awards were valued at $1.45 per share, the closing price of BIOLASE common stock on the grant date, and were fully vested on the grant date., subject to continued service through the applicable vesting date. Under the 2018 Plan, effective June 15, 2018, the Board granted 155,000 RSUs to the new Board members. These awards were valued at $1.25 per share, the closing price of BIOLASE common stock on the grant date, and vest fully on May 9, 2019. A summary of unvested RSU activity for the six months ended June 30, 2018 is as follows (in thousands, except per share amounts): Weighted Average Grant Shares Date Fair Value Unvested restricted stock units at December 31, 2017 358 $ 4.84 Granted 2,456 $ 1.44 Vested (212 ) $ 2.38 Forfeited or cancelled (208 ) $ 4.48 Unvested restricted stock units at June 30, 2018 2,394 $ 1.51 Warrants The Company issues warrants to acquire shares of BIOLASE common stock as approved by the Board. A summary of warrant activity for the six months ended June 30, 2018 is as follows (in thousands, except exercise price amounts): Weighted Average Shares Exercise Price Warrants outstanding, December 31, 2017 1,225 $ 9.63 Granted or Issued 52 $ 2.35 Exercised — $ — Forfeited, cancelled, or expired $ — Warrants outstanding at June 30, 2018 1,277 $ 9.33 Warrants exercisable at June 30, 2018 1,250 $ 9.10 Vested warrants expired during the quarter ended June 30, 2018 — $ — On March 6, 2018, in connection with the execution of the Business Financing Agreement, the Company issued to Western Alliance warrants (the “Western Alliance Warrants”) to purchase up that number of shares of BIOLASE common stock equal to $120,000 divided by the applicable exercise price at the time such warrants are exercised. The Western Alliance Warrants are fully vested and exercisable. The initial exercise price of the warrants was $2.35 per share, which was the Reverse Stock Split-adjusted closing market price of BIOLASE common stock on March 6, 2018. See Note 9 – Lines of Credit for further discussion. Net Loss Per Share – Basic and Diluted Basic net income (loss) per share is computed by dividing income (loss) available to common stockholders by the weighted-average number of shares of BIOLASE common stock outstanding for the period. In computing diluted net income (loss) per share, the weighted average number of shares outstanding is adjusted to reflect the effect of potentially dilutive securities. Outstanding stock options, RSUs and warrants to purchase approximately 5.1 million shares were not included in the calculation of diluted loss per share for the three and six months ended June 30, 2018, as their effect would have been anti-dilutive. For the same 2017 periods, anti-dilutive outstanding stock options and warrants to purchase 5.4 million shares were not included in the computation of diluted loss per share. |
Inventory
Inventory | 6 Months Ended |
Jun. 30, 2018 | |
Inventory Disclosure [Abstract] | |
Inventory | NOTE 5—INVENTORY Inventory is valued at the lower of cost or net realizable value and is comprised of the following (in thousands): June 30, December 31, 2018 2017 Raw materials $ 4,301 $ 3,953 Work-in-process 1,776 1,162 Finished goods 7,931 7,183 Inventory, net $ 14,008 $ 12,298 Inventory is net of a provision for excess and obsolete inventory totaling $1.8 million and $1.9 million as of June 30, 2018 and December 31, 2017, respectively. |
Property, Plant, and Equipment
Property, Plant, and Equipment | 6 Months Ended |
Jun. 30, 2018 | |
Property Plant And Equipment [Abstract] | |
Property, Plant, and Equipment | NOTE 6—PROPERTY, PLANT, AND EQUIPMENT Property, plant, and equipment, net is comprised of the following (in thousands): June 30, December 31, 2018 2017 Building $ 217 $ 220 Leasehold improvements 2,005 2,005 Equipment and computers 6,884 6,883 Furniture and fixtures 634 634 Construction in progress 1,190 1,182 10,930 10,924 Accumulated depreciation and amortization (7,935 ) (7,426 ) 2,995 3,498 Land 169 176 Property, plant, and equipment, net $ 3,164 $ 3,674 Depreciation and amortization expense related to property, plant, and equipment totaled $0.2 million and $0.5 million for the three and six months ended June 30, 2018, respectively, and $0.3 million and $0.6 million for the three and six months ended June 30, 2017, respectively. |
Intangible Assets and Goodwill
Intangible Assets and Goodwill | 6 Months Ended |
Jun. 30, 2018 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Intangible Assets And Goodwill | NOTE 7—INTANGIBLE ASSETS AND GOODWILL The Company conducted its annual impairment test of goodwill as of June 30, 2018 and determined that there was no impairment. The Company also tests its intangible assets and goodwill between the annual impairment tests if events occur or circumstances change that would more likely than not reduce the fair value of the Company or its assets below their carrying amounts. For intangible assets subject to amortization, the Company performs its impairment test when indicators, such as reductions in demand or significant economic slowdowns, are present. No events have occurred since June 30, 2018 through the date of these consolidated financial statements that would trigger further impairment testing of the Company’s intangible assets and goodwill. As of June 30, 2018 and December 31, 2017, the Company had goodwill (indefinite life) of $2.9 million. As of June 30, 2018 and December 31, 2017, all intangible assets have been fully amortized. There was no amortization expense for the three and six months ended June 30, 2018 or 2017. |
Accrued Liabilities
Accrued Liabilities | 6 Months Ended |
Jun. 30, 2018 | |
Payables And Accruals [Abstract] | |
Accrued Liabilities and Deferred Revenue | NOTE 8—ACCRUED LIABILITIES Accrued liabilities are comprised of the following (in thousands): June 30, December 31, 2018 2017 Payroll and benefits $ 2,301 $ 2,115 Warranty accrual, current portion 1,138 1,120 Taxes 487 544 Accrued professional services 1,041 584 Accrued insurance premium 59 870 Other 549 376 Total accrued liabilities $ 5,575 $ 5,609 Changes in the initial product warranty accrual and the expenses incurred under the Company’s initial and extended warranties for the three and six months ended June 30, 2018 and 2017 are included within accrued liabilities on the Consolidated Balance Sheets and were as follows (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Initial warranty accrual, beginning balance $ 1,214 $ 1,460 $ 1,190 $ 1,706 Provision for estimated warranty cost 378 25 624 2 Warranty expenditures (233 ) (200 ) (455 ) (423 ) 1,359 1,285 1,359 1,285 Less warranty accrual, long-term 221 296 221 296 Total warranty accrual, current portion $ 1,138 $ 989 $ 1,138 $ 989 The Company’s Waterlase laser systems sold worldwide are covered by a warranty against defects in material and workmanship for a period of up to 16 months from the date of sale by the Company or a distributor to the end-user. The Company’s Diode systems sold worldwide are covered by a warranty against defects in material and workmanship for a period of up to 28 months from the date of sale by the Company or a distributor to the end-user. |
Lines of Credit
Lines of Credit | 6 Months Ended |
Jun. 30, 2018 | |
Line Of Credit Facility [Abstract] | |
Lines of Credit | NOTE 9—LINES OF CREDIT On March 6, 2018, BIOLASE and two of its wholly-owned subsidiaries (such subsidiaries, together with BIOLASE, the “Borrower”) entered into the Business Financing Agreement. As of June 30, 2018, the Company had no outstanding borrowings under the Domestic Revolver or the EXIM Revolver. There were no restricted cash balances required by the Domestic Revolver or the EXIM Revolver as of June 30, 2018. The Company’s obligations are generally secured by substantially all of the Company’s assets. The total amount available under the Business Financing Agreement as of June 30, 2018 was $3.9 million. The Company received a notice of non-compliance with certain non-financial covenants, and on August 13, 2018, the Company entered into a waiver agreement (the “Waiver Agreement”) with Western Alliance, which waived the non-compliance with these non-financial covenants, specifically the Company’s failure to transfer bank accounts to Western Alliance and to dissolve certain non-operating subsidiaries. The Company paid fees of $5,000 in connection with the Forbearance Agreement, pursuant to which WAB set the total aggregate available borrowings to $1.5 million. The Business Financing Agreement requires the Company to maintain compliance with certain financial and non-financial covenants, as defined therein. If a default occurs, Western Alliance may declare the amounts outstanding under the Business Financing Agreement immediately due and payable. As of June 30, 2018, the Company was in compliance with these covenants. Amounts outstanding under the Business Financing Agreement bear interest at a per annum floating rate equal to the greater of 4.5% or the “Prime Rate” published in the Money Rates section of the Western Edition of The Wall Street Journal (or such other rate of interest publicly announced from time to time by Western Alliance as its “Prime Rate”), plus 1.5% with respect to advances made under the line of credit, plus an additional 5.0% during any period that an event of default has occurred and is continuing. The commitment fee under the Business Financing Agreement is 0.25% of the domestic credit limit and 1.75% of the EXIM credit limit and is payable on March 6, 2018 and each anniversary thereof. As of June 30, 2018, the interest rate on both the Domestic Revolver and EXIM Revolver was 6.5%. Pursuant to the Business Financing Agreement, the Company paid the first of two annual commitment fees totaling $67,500, being 0.25% of the aggregate $6.0 million commitment for the Domestic Revolver and 1.75% of the aggregate $3.0 million commitment for the EXIM Revolver. The commitment fees and the legal costs associated with acquiring the credit facilities were capitalized and are being amortized on a straight-line basis as interest expense over the term of the Business Financing Agreement. As additional consideration for the lines of credit, the Company also issued the Western Alliance Warrants. For additional information on the Western Alliance Warrants, see Note 4 – Stockholders’ Equity |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2018 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 10—COMMITMENTS AND CONTINGENCIES Leases The Company leases its 57,000 square foot corporate headquarters and manufacturing facility located at 4 Cromwell, Irvine, California. In March 2015, the corporate headquarters and manufacturing facility lease was amended to extend the term through April 30, 2020, modify provisions for a tenant improvement allowance of up to $0.4 million, and adjust the basic rent terms. Future minimum rental commitments under operating lease agreements with non-cancelable terms greater than one year for the years ending December 31 are listed below. The Company also leases certain office equipment and automobiles under various operating lease arrangements. In February 2015, the Company entered into a 30-month capital lease agreement for information technology equipment. In February 2018, the Company extended the agreement for information technology equipment for an additional lease term of 18 months. In accordance with relevant accounting guidance, the renewal of this lease constituted a new lease and is classified by the Company as an operating lease. Future minimum rental commitments under lease agreements, including both operating and capital leases (principle and interest), with non-cancelable terms greater than one year for each of the years ending December 31 are as follows (in thousands): 2018 $ 524 2019 899 2020 300 2021 12 Thereafter — Total future minimum lease obligations $ 1,735 Employee arrangements and other compensation Certain members of management are entitled to severance benefits payable upon termination following a change in control, which would approximate $2.1 million, in the aggregate, at June 30, 2018. The Company also has agreements with certain employees to pay bonuses based on targeted performance criteria. As of June 30, 2018, approximately $0.2 million was accrued for performance bonuses, which is included in accrued liabilities in the Consolidated Balance Sheets. Effective April 10, 2018, Harold C. Flynn, Jr. resigned from the Board and as the Company’s President and Chief Executive Officer. The Company and Mr. Flynn entered into a Separation Agreement, dated as of April 30, 2018 (the “Separation Agreement”). Mr. Flynn is entitled to receive severance in an amount of $365,000, payable through December 28, 2018, along with certain other benefits, including the continued vesting of all of Mr. Flynn’s time-based stock options through April 9, 2020 and an extension of the time to exercise such options through December 31, 2021, subject to immediate vesting upon a change of control, and continued vesting of the time-based RSUs granted to Mr. Flynn on February 6, 2017 through February 6, 2019, subject to immediate vesting upon a change of control. Any unvested stock options following April 9, 2020 will be cancelled and will not vest, and any RSUs that are unvested following February 6, 2019 will be canceled and will not vest. Due to the modification of Mr. Flynn’s equity awards, the Company recognized a net reduction of stock-based compensation expense of approximately $0.3 million, primarily due to the fluctuation in stock prices from the time the awards were granted to when Mr. Flynn resigned and the awards were re-evaluated. Purchase commitments The Company generally purchases components and subassemblies for its products from a limited group of third-party suppliers through purchase orders. As of June 30, 2018, the Company had $11.9 million of purchase commitments for which the Company has not received certain goods or services that are expected to be purchased within one year. These purchase commitments were made to secure better pricing and to ensure the Company will have the necessary parts to meet anticipated near-term demand. Although open purchase orders are considered enforceable and legally binding, the Company may be able to cancel, reschedule or adjust requirements prior to supplier fulfillment. Litigation The Company discloses material loss contingencies deemed to be reasonably possible and accrues for loss contingencies when, in consultation with its legal advisors, management concludes that a loss is probable and reasonably estimable. The ability to predict the ultimate outcome of such matters involves judgments, estimates, and inherent uncertainties. The actual outcome of such matters could differ materially from management’s estimates. Intellectual Property Litigation On April 24, 2012, CAO Group, Inc. (“CAO”) filed a lawsuit against BIOLASE in the District of Utah alleging that BIOLASE’s ezlase dental laser infringes on U.S. Patent No. 7,485,116 (the “116 Patent”). On September 9, 2012, CAO amended its complaint, adding claims for (1) business disparagement/injurious falsehood under common law and (2) unfair competition under 15 U.S.C. Section 1125(a). The additional claims stem from a press release that BIOLASE issued on April 30, 2012, which CAO claims contained false statements that are disparaging to CAO and its diode product. The amended complaint seeks injunctive relief, treble damages, attorneys’ fees, punitive damages, and interest. Until January 24, 2018, this lawsuit was stayed in connection with United States Patent and Trademark Office proceedings relating to the 116 Patent, which proceedings ultimately culminated in a January 27, 2017 decision by the United States Court of Appeals for the Federal Circuit, affirming the findings of the Patent Trial and Appeal Board. On January 25, 2018, CAO moved for leave to file a second amended complaint to add certain claims, which filing the Company did not oppose. The Utah matter has since been transferred to the Central District of California and the two matters have been consolidated with the matter described below. On January 23, 2018, CAO filed a lawsuit against BIOLASE in the Central District of California alleging that BIOLASE’s diode lasers infringe on U.S. Patent Nos. 8,337,097, 8,834,497, 8,961,040 |
Segment Information
Segment Information | 6 Months Ended |
Jun. 30, 2018 | |
Segment Reporting [Abstract] | |
Segment Information | NOTE 11—SEGMENT INFORMATION The Company currently operates in a single business segment. Management uses one measurement of profitability and does not segregate its business for internal reporting. For the three and six months ended June 30, 2018, sales to customers in the United States accounted for approximately 59% and 58% of net revenue, respectively, and international sales accounted for approximately 41% and 42% of net revenue, respectively. For the three and six months ended June 30, 2017, sales to customers in the United States accounted for approximately 65% and 64% of net revenue, respectively, and international sales accounted for approximately 35% and 36% of net revenue, respectively. No individual country, other than the United States, represented more than 10% of total net revenue during the three and six months ended June 30, 2018 or 2017. Net revenue by geographic location based on the location of customers was as follows (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 United States $ 7,164 $ 8,194 $ 12,857 $ 15,037 International 4,990 4,418 9,317 8,449 $ 12,154 $ 12,612 $ 22,174 $ 23,486 Property, plant, and equipment by geographic location was as follows (in thousands): June 30, December 31, 2018 2017 United States $ 2,849 $ 3,347 International 315 327 $ 3,164 $ 3,674 |
Concentrations
Concentrations | 6 Months Ended |
Jun. 30, 2018 | |
Risks And Uncertainties [Abstract] | |
Concentrations | NOTE 12—CONCENTRATIONS Revenue from the Company’s products for the three and six months ended June 30, 2018 and 2017 are as follows (dollars in thousands): Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Laser systems $ 7,920 65.2 % $ 7,961 63.1 % $ 13,623 61.4 % $ 14,690 62.6 % Imaging systems 371 3.1 % 954 7.5 % 954 4.3 % 1,580 6.7 % Consumables and other 2,303 18.9 % 2,051 16.3 % 4,337 19.6 % 3,743 15.9 % Services 1,557 12.8 % 1,614 12.8 % 3,254 14.7 % 3,409 14.5 % License fees and royalties 3 0.0 % 32 0.3 % 6 0.0 % 64 0.3 % Total revenue $ 12,154 100.0 % $ 12,612 100.0 % $ 22,174 100.0 % $ 23,486 100.0 % No individual customer represented more than 10% of the Company’s revenue for the three and six months ended June 30, 2018 or 2017. The Company maintains its cash and cash equivalent accounts with established commercial banks. Such cash deposits periodically exceed the Federal Deposit Insurance Corporation insured limit. No individual customer represented more than 10% of the Company’s accounts receivable at June 30, 2018 or December 31, 2017. The Company currently purchases certain key components of its products from single suppliers. Although there are a limited number of manufacturers of these key components, management believes that other suppliers could provide similar key components on comparable terms. A change in suppliers, however, could cause delays in manufacturing and a possible loss of sales, which could adversely affect the Company’s business, results of operations and financial condition. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE 13—INCOME TAXES The Company accounts for income taxes under the asset and liability method, whereby deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Management evaluates the need to establish a valuation allowance for deferred tax assets based upon the amount of existing temporary differences, the period in which they are expected to be recovered, and expected levels of taxable income. A valuation allowance to reduce deferred tax assets is established when it is “more likely than not” that some or all of the deferred tax assets will not be realized. Based on the Company’s net losses in prior years, management has determined that a full valuation allowance against the Company’s net deferred tax assets is appropriate. Accounting for uncertainty in income taxes prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return and provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The Company has elected to classify interest and penalties as a component of its income tax provision. With respect to the liability for unrecognized tax benefits, including related estimates of penalties and interest, the Company did not record a liability for unrecognized tax benefits for the three and six months ended June 30, 2018 and 2017. The Company does not expect any changes to its unrecognized tax benefit for the next 12 months that would materially impact its consolidated financial statements. During the three and six months ended June 30, 2018, the Company recorded an income tax provision of $10,000 and $42,000, respectively, resulting in an effective tax rate of (10.0)% and 0.8%, respectively. During the three and six months ended June 30, 2017, the Company recorded an income tax provision of $36,000 and $76,000 respectively, resulting in an effective tax rate of 0.9% and 0.9%, respectively. The income tax provisions for the three and six months ended June 30, 2018 and 2017 were calculated using the discrete year-to-date method. The effective tax rate differs from the statutory tax rate of 21% for 2018 and 34% for 2017 primarily due to the existence of valuation allowances against net deferred tax assets and current liabilities resulting from the estimated state income tax liabilities and foreign tax liability. On December 22, 2017, the U.S. federal government enacted the Tax Cuts and Jobs Act (the “2017 Tax Act”), which enacts a broad range of changes to the Internal Revenue Code of 1986, as amended. Many of the provisions of the 2017 Tax Act take effect for tax years beginning after December 31, 2017, including changes to the U.S. federal corporate tax rate to a flat 21%, significant additional limitations on the deductibility of interest and net operating losses, the allowance for the expensing of certain capital expenditures, and a number of changes impacting operations outside of the United States. The Company’s deferred tax assets and liabilities have been revalued at newly enacted rate in the year of enactment, the impact of which was mostly absorbed by the existing valuation allowance. The 2017 Tax Act also includes provisions for Global Intangible Low-Taxed Income (“GILTI”) wherein taxes on foreign income are imposed in excess of a deemed return on tangible assets of foreign corporations. This provision is effective for taxable years beginning after December 31, 2017. Because of the complexity of the new GILTI tax rules, the Company continues to evaluate this provision of the 2017 Tax Act including the associated forecast of GILTI and the application of ASC 740, Income Taxes. Under GAAP, the Company is allowed to make an accounting policy choice of either (1) treating taxes due on future U.S. inclusions in taxable income related to GILTI as a current-period expense when incurred or (2) factoring such amounts into the Company’s measurement of its deferred taxes. The Company’s selection of an accounting policy with respect to the new GILTI tax rules will depend, in part, on analyzing its global income to determine whether the Company expects to have future U.S. inclusions in taxable income related to GILTI and, if so, what the impact is expected to be. Whether the Company expects to have future U.S. inclusions in taxable income related to GILTI depends on not only the Company’s current structure and estimated future results of global operations, but also the Company’s intent and ability to modify its structure. The Company is not yet able to reasonably estimate the effect of this provision of the 2017 Tax Act. However, due to the Company’s current net operating loss (“NOL”) position and NOL carryforward balance, the Company does not believe this provision will have a material impact on the provision. |
Subsequent Event
Subsequent Event | 6 Months Ended |
Jun. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Event | NOTE 14—SUBSEQUENT EVENT Effective August 7, 2018, the Company entered into an employment agreement (the “Employment Agreement”) with Todd Norbe to serve as President and Chief Executive Officer of BIOLASE. Under the terms of the Employment Agreement, Mr. Norbe will receive an annual base salary of $400,000. In addition, Mr. Norbe is eligible to receive an annual performance bonus of up to one hundred percent (100.0%) or Mr. Norbe’s base salary, which is determined by the achievement of certain criteria as established by the Compensation Committee of the Board. For the partial 2018 employment year, Mr. Norbe is eligible to receive a performance bonus of up to $170,000 at target performance and up to $210,000 at “outperform” performance, with a minimum non-discretionary performance bonus of $100,000. Mr. Norbe will be awarded (i) 350,000 stock-settled time-based RSUs, which shall vest as to one-fourth of the number of shares of BIOLASE common stock subject to the time-based RSUs, on the one-year anniversary of the Mr. Norbe’s first date of employment, and as to the remaining three-fourths of the number of shares of BIOLASE common stock subject to the time-based RSUs, in four installments on a semi-annual basis commencing on the 18-month anniversary of Mr. Norbe’s first date of employment, subject to continued employment through each such vesting date, and (ii) 300,000 stock settled performance-based RSUs, which shall vest in one-third annual increments, subject to performance criteria established by the Compensation Committee of the Board and continued employment through each such vesting date. The forgoing RSUs are subject to approval by the Company’s stockholders of an increase in the number of shares available under the 2018 Plan. |
Summary of Significant Accoun20
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The unaudited consolidated financial statements include the accounts of BIOLASE and its wholly-owned subsidiaries and have been prepared on a basis consistent with the December 31, 2017 audited consolidated financial statements and include all material adjustments, consisting of normal recurring adjustments and the elimination of all material intercompany transactions and balances, necessary to fairly present the information set forth therein. These unaudited, interim, consolidated financial statements do not include all the footnotes, presentations, and disclosures normally required by accounting principles generally accepted in the United States of America (“GAAP”) for complete consolidated financial statements. Certain amounts have been reclassified to conform to current period presentations. The consolidated results of operations for the three and six months ended June 30, 2018 are not necessarily indicative of the results for the full year. The accompanying consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2017, included in BIOLASE’s Annual Report on Form 10-K for the year ended December 31, 2017 filed with the Securities and Exchange Commission (the “SEC”) on March 14, 2018 (the “2017 Form 10-K”). |
Liquidity and Management's Plans | Liquidity and Management’s Plans The Company incurred a loss from operations and a net loss, and used cash in operating activities for the three and six months ended June 30, 2018. The Company’s recurring losses, level of cash used in operations, and potential need for additional capital, along with uncertainties surrounding the Company’s ability to raise additional capital, raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. On March 6, 2018, BIOLASE and two of its wholly-owned subsidiaries entered into a Business Financing Agreement (the “Business Financing Agreement”) with Western Alliance Bank (“Western Alliance”), which provides for borrowings of up to $6.0 million. The Company had no borrowings outstanding under these lines of credit as of June 30, 2018. See Note 9 – Lines of Credit for additional information. As of June 30, 2018, the Company had working capital of approximately $14.4 million. The Company’s principal sources of liquidity as of June 30, 2018 consisted of approximately $3.1 million in cash and cash equivalents and restricted cash, $10.4 million of accounts receivable and $3.9 million available under the Business Financing Agreement. In order for the Company to continue operations beyond the next 12 months and be able to discharge its liabilities and commitments in the normal course of business, the Company must increase sales of its products directly to end-users and through distributors, establish profitable operations through the combination of increased sales and decreased expenses, generate cash from operations or obtain additional funds when needed. The Company intends to improve its financial condition and ultimately improve its financial results by increasing revenues through expansion of its product offerings, continuing to expand and develop its field sales force and distributor relationships, both domestically and internationally, forming strategic arrangements within the dental and medical industries, educating dental and medical patients as to the benefits of its advanced medical technologies, and reducing expenses. Additional capital requirements may depend on many factors, including, among other things, continued losses, the rate at which the Company’s business grows, demands for working capital, manufacturing capacity, and any acquisitions that the Company may pursue. From time to time, the Company could be required, or may otherwise attempt, to raise capital, through either equity or debt offerings, or enter into an additional line of credit facility. As discussed in Note 9, on March 6, 2018, BIOLASE entered into the Business Financing Agreement, providing for a secured line of credit. The Company cannot provide assurance that it will be able to successfully consummate any equity or debt financings or enter into any other line of credit facility in the future. The Company also cannot provide assurance that the required capital would be available on acceptable terms, if at all, or that any such financing activity would not be dilutive to the Company’s stockholders. |
Reverse Stock Split | Reverse Stock Split Except as the context otherwise requires, all share numbers and share price amounts (including exercise prices and closing market prices) contained in the unaudited financial statements and notes thereto reflect the reverse stock split effectuated by the Company on May 10, 2018. See Note 4 – Stockholders’ Equity |
Use of Estimates | Use of Estimates The preparation of these consolidated financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect amounts reported in the consolidated financial statements and the accompanying notes. Significant estimates in these consolidated financial statements include allowances on accounts receivable, inventory, and deferred taxes, as well as estimates for accrued warranty expenses, the ability of goodwill to be realized, revenue deferrals, effects of stock-based compensation and warrants, contingent liabilities, and the provision or benefit for income taxes. Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may differ materially from those estimates. |
Critical Accounting Policies | Critical Accounting Policies Information with respect to the Company’s critical accounting policies, which management believes could have the most significant effect on the Company’s reported results and require subjective or complex judgments by management is contained in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” of the 2017 Form 10-K. Management believes that there have been no significant changes during the six months ended June 30, 2018 in the Company’s critical accounting policies from those disclosed in Item 7 of the 2017 Form 10-K. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the principal market (or, if none exists, the most advantageous market) for the specific asset or liability at the measurement date (referred to as the “exit price”). The fair value is based on assumptions that market participants would use, including a consideration of nonperformance risk. Under the accounting guidance for fair value hierarchy there are three levels of measurement inputs. Level 1 inputs are quoted prices in active markets for identical assets or liabilities. Level 2 inputs reflect input other than quoted prices included in Level 1 that are observable, either directly or through collaboration with observable market data, other than Level 1. Level 3 inputs are unobservable due to little or no corroborating market data. The Company’s financial instruments, consisting of cash, cash equivalents and restricted cash, accounts receivable, accounts payable, and accrued liabilities, approximate fair value because of the short maturity of these items. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Changes to GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of accounting standards updates (“ASUs”) to the FASB’s Accounting Standards Codification. The Company considers the applicability and impact of all ASUs. ASUs not listed below were assessed and determined not to be applicable or are expected to have minimal impact on the Company’s consolidated financial position and results of operations. Adopted Accounting Pronouncements In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”). The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. The standard is effective for annual periods beginning after December 15, 2017, and interim periods therein. ASU 2014-09 supersedes existing guidance on revenue recognition with a five-step model for recognizing and measuring revenue from contracts with customers. The objective of the new standard is to provide a single, comprehensive revenue recognition model for all contracts with customers to improve comparability within industries, across industries, and across capital markets. The underlying principle is that an entity will recognize revenue to depict the transfer of goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods or services. The guidance also requires a number of disclosures regarding the nature, amount, timing, and uncertainty of revenue and the related cash flows. The guidance can be applied retrospectively to each prior reporting period presented (full retrospective method) or retrospectively with a cumulative effect adjustment to retained earnings for initial application of the guidance at the date of initial adoption (modified retrospective method). The Company adopted the new standard effective January 1, 2018 using the modified retrospective method applied to those contracts that were not completed or substantially completed as of January 1, 2018. The timing and measurement of revenue recognition under the new standard is not materially different than under the old standard. The adoption of the new standard did not have an impact on the Company’s consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230) (“ASU 2016-15”). The updated standard addresses eight specific cash flow issues with the objective of reducing diversity in practice. ASU 2016-15 is effective for public business entities for annual reporting periods beginning after December 15, 2017, including interim periods within those annual reporting periods. Early adoption is permitted. The Company adopted ASU 2016-15 as of January 1, 2018. The adoption of ASU 2016-15 did not have an impact on the Company’s consolidated financial statements. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230) (“ASU 2016-18”). The updated standard requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. ASU 2016-18 is effective for public business entities for annual reporting periods beginning after December 15, 2017, including interim periods within those annual reporting periods. The Company adopted ASU 2016-18 as of January 1, 2018. The adoption of ASU 2016-18 did not have a material effect on the Company’s consolidated financial statements. In May 2017, the FASB issued ASU 2017-09, Compensation – Stock Compensation (Topic 718) (“ASU 2017-09”). The updated standard clarifies when an entity must apply modification accounting to changes in the terms or conditions of a share-based payment award. ASU 2017-09 is effective for public business entities for annual reporting periods beginning after December 15, 2017, including interim periods within those annual reporting periods. Early adoption is permitted. The Company adopted ASU 2017-09 as of January 1, 2018. The adoption of ASU 2017-09 did not have a material effect on the Company’s consolidated financial statements. Recently Issued Accounting Standards In February 2016, FASB issued ASU 2016-02, Leases (“ASU 2016-02”). The new standard establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is currently evaluating the impact of its pending adoption of ASU 2016-02 on its consolidated financial statements. In July 2017, FASB issued ASU 2017-11 (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception (“ASU 2017-11”). The new standard simplifies the accounting for certain financial instruments with down round features. Part I of ASU 2017-11 changes the classification analysis of certain equity-linked financial instruments, such as warrants and embedded conversion features, such that a down round feature is disregarded when assessing whether the instrument is indexed to an entity’s own stock under Subtopic 815-40, Contracts in Entity’s Own Equity. As a result, a down round feature, by itself, no longer requires an instrument to be remeasured at fair value through earnings each period, although all other aspects of the indexation guidance under Subtopic 815-40 continue to apply. Part II of ASU 2017-11 recharacterizes the indefinite deferral of certain provisions of Topic 480, Distinguishing Liabilities from Equity, (currently presented as pending content in the Codification) as a scope exception. No change in the Company’s practice is expected as a result of these amendments. The new standard is effective for fiscal years beginning after December 15, 2018, Early adoption is permitted. The amendments in Part II have no accounting impact and therefore do not have an associated effective date. The Company is currently evaluating the impact of its pending adoption of ASU 2017-11 on its consolidated financial statements. |
Income Tax Uncertainties | Accounting for uncertainty in income taxes prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return and provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The Company has elected to classify interest and penalties as a component of its income tax provision. With respect to the liability for unrecognized tax benefits, including related estimates of penalties and interest, the Company did not record a liability for unrecognized tax benefits for the three and six months ended June 30, 2018 and 2017. The Company does not expect any changes to its unrecognized tax benefit for the next 12 months that would materially impact its consolidated financial statements. |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Revenue Recognition [Abstract] | |
Summary of Opening and Closing Balances of Contract Liabilities | The Company performs its obligations under a contract with a customer by transferring products and/or services in exchange for consideration from the customer. The Company typically invoices its customers as soon as control of an asset is transferred and a receivable for the Company is established. The Company, however, recognizes a contract liability when a customer prepays for goods and/or services and the Company has not transferred control of the goods and/or services. The opening and closing balances of the Company’s contract liabilities are as follows (in thousands): June 30, December 31, 2018 2017 Undelivered elements (training and product and support services; installation for 2017) $ 624 $ 980 Extended warranty contracts 1,577 1,634 Deferred royalties 17 22 Total deferred revenue 2,218 2,636 Less long-term amounts: Deferred royalties 6 11 Total deferred revenue - long-term 6 11 Total deferred revenue - current $ 2,212 $ 2,625 |
Summary of Disaggregation of Revenues Related to Geographic Areas | The Company’s revenues related to the following geographic areas were as follows for the periods indicated (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 United States $ 7,164 $ 8,194 $ 12,857 $ 15,037 International 4,990 4,418 9,317 8,449 $ 12,154 $ 12,612 $ 22,174 $ 23,486 |
Summary of Revenues Disaggregated by Timing of Goods and Services Transferred | Information regarding revenues disaggregated by the timing of when goods and services are transferred is as follows (in thousands): Three Months Ended Six Months Ended June 30, 2018 June 30, 2018 Revenue recognized over time $ 1,557 $ 3,254 Revenue recognized at a point in time 10,597 18,920 Total $ 12,154 $ 22,174 |
Summary of Sales by End Market | The Company’s sales by end market were as follows for the periods indicated (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 End-customer $ 7,675 $ 8,651 $ 13,712 $ 15,796 Distributors 4,479 3,961 8,462 7,690 $ 12,154 $ 12,612 $ 22,174 $ 23,486 |
Summary of Percentages of Sales by Product line | The percentages of the Company’s sales by product line were as follows for the periods indicated: Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Waterlase (laser systems) 42.9 % 42.4 % 39.2 % 41.3 % Diodes (laser systems) 22.3 % 20.7 % 22.2 % 21.3 % Imaging systems 3.1 % 7.5 % 4.3 % 6.7 % Consumables and other 18.9 % 16.3 % 19.6 % 15.9 % Services 12.8 % 12.8 % 14.7 % 14.5 % License fees and royalties — % 0.3 % — % 0.3 % 100.0 % 100.0 % 100.0 % 100.0 % |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Equity [Abstract] | |
Summary of Income Statement Classification of Compensation Expense | The following table summarizes the income statement classification of compensation expense associated with share-based payments (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Cost of revenue $ 105 $ 67 $ 162 $ 107 Sales and marketing 154 93 234 166 General and administrative 207 506 674 699 Engineering and development 91 95 188 168 $ 557 $ 761 $ 1,258 $ 1,140 |
Assumptions on Estimation of Stock Option Fair Values | The stock option fair values were estimated using the Black-Scholes option-pricing model with the following assumptions: Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Expected term 5.7 years 5.4 years 5.9 years 5.6 years Volatility 81.2 % 77.6 % 81.4 % 78.5 % Annual dividend per share $ — $ — $ — $ — Risk-free interest rate 2.71 % 1.98 % 2.46 % 1.98 % |
Summary of Option Activity | A summary of option activity for the six months ended June 30, 2018 is as follows (in thousands, except per share data): Weighted Average Weighted Remaining Aggregate Average Contractual Intrinsic Shares Exercise Price Term (Years) Value(1) Options outstanding, December 31, 2017 1,924 $ 8.62 7.21 $ — Granted at fair market value 402 2.09 Exercised (1 ) 2.10 Forfeited, cancelled, or expired (322 ) 11.12 Options outstanding at June 30, 2018 2,003 $ 6.91 6.14 $ — Options exercisable at June 30, 2018 1,095 $ 8.75 4.97 $ — Vested options expired during the quarter ended June 30, 2018 191 $ 14.29 (1) The intrinsic value calculation does not include negative values. This can occur when the fair market value on the reporting date is less than the exercise price of the grant. |
Summary of Unvested Stock Option Activity | A summary of unvested stock option activity for the six months ended June 30, 2018 is as follows (in thousands, except per share data): Weighted Average Grant Shares Date Fair Value Unvested options at December 31, 2017 846 $ 3.14 Granted 402 $ 1.46 Vested (240 ) $ 3.59 Forfeited or cancelled (99 ) $ 2.55 Unvested options at June 30, 2018 909 $ 2.34 |
Cash Proceeds, Along With Fair Value Disclosures Related to Grants, Exercises, and Vesting Options | Cash proceeds, along with fair value disclosures related to grants, exercises, and vested options are as follows (in thousands, except per share amounts): Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Proceeds from stock options exercised $ — $ 3 $ 2 $ 3 Tax benefit related to stock options exercised (1) N/A N/A N/A N/A Intrinsic value of stock options exercised (2) $ — $ 1 $ — $ 1 Weighted-average fair value of options granted during period $ 1.27 $ 3.94 $ 1.46 $ 4.60 Total fair value of shares vested during the period $ 843 $ 364 $ 245 $ 698 (1) Excess tax benefits received related to stock option exercises are presented as financing cash inflows. The Company currently does not receive a tax benefit related to the exercise of stock options due to the Company’s net operating losses. (2) The intrinsic value of stock options exercised is the amount by which the market price of the stock on the date of exercise exceeded the market price of the stock on the date of grant. |
Summary of Unvested Restricted Stock Units | A summary of unvested RSU activity for the six months ended June 30, 2018 is as follows (in thousands, except per share amounts): Weighted Average Grant Shares Date Fair Value Unvested restricted stock units at December 31, 2017 358 $ 4.84 Granted 2,456 $ 1.44 Vested (212 ) $ 2.38 Forfeited or cancelled (208 ) $ 4.48 Unvested restricted stock units at June 30, 2018 2,394 $ 1.51 |
Summary of Warrant Activity | The Company issues warrants to acquire shares of BIOLASE common stock as approved by the Board. A summary of warrant activity for the six months ended June 30, 2018 is as follows (in thousands, except exercise price amounts): Weighted Average Shares Exercise Price Warrants outstanding, December 31, 2017 1,225 $ 9.63 Granted or Issued 52 $ 2.35 Exercised — $ — Forfeited, cancelled, or expired $ — Warrants outstanding at June 30, 2018 1,277 $ 9.33 Warrants exercisable at June 30, 2018 1,250 $ 9.10 Vested warrants expired during the quarter ended June 30, 2018 — $ — |
Inventory (Tables)
Inventory (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Inventory Disclosure [Abstract] | |
Components of Inventory | Inventory is valued at the lower of cost or net realizable value and is comprised of the following (in thousands): June 30, December 31, 2018 2017 Raw materials $ 4,301 $ 3,953 Work-in-process 1,776 1,162 Finished goods 7,931 7,183 Inventory, net $ 14,008 $ 12,298 |
Property, Plant, and Equipment
Property, Plant, and Equipment (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Property Plant And Equipment [Abstract] | |
Summary of Property, Plant, and Equipment | Property, plant, and equipment, net is comprised of the following (in thousands): June 30, December 31, 2018 2017 Building $ 217 $ 220 Leasehold improvements 2,005 2,005 Equipment and computers 6,884 6,883 Furniture and fixtures 634 634 Construction in progress 1,190 1,182 10,930 10,924 Accumulated depreciation and amortization (7,935 ) (7,426 ) 2,995 3,498 Land 169 176 Property, plant, and equipment, net $ 3,164 $ 3,674 |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Payables And Accruals [Abstract] | |
Components of Accrued Liabilities | Accrued liabilities are comprised of the following (in thousands): June 30, December 31, 2018 2017 Payroll and benefits $ 2,301 $ 2,115 Warranty accrual, current portion 1,138 1,120 Taxes 487 544 Accrued professional services 1,041 584 Accrued insurance premium 59 870 Other 549 376 Total accrued liabilities $ 5,575 $ 5,609 |
Changes in Initial Product Warranty Accrual and Expenses Under Initial and Extended Warranties | Changes in the initial product warranty accrual and the expenses incurred under the Company’s initial and extended warranties for the three and six months ended June 30, 2018 and 2017 are included within accrued liabilities on the Consolidated Balance Sheets and were as follows (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Initial warranty accrual, beginning balance $ 1,214 $ 1,460 $ 1,190 $ 1,706 Provision for estimated warranty cost 378 25 624 2 Warranty expenditures (233 ) (200 ) (455 ) (423 ) 1,359 1,285 1,359 1,285 Less warranty accrual, long-term 221 296 221 296 Total warranty accrual, current portion $ 1,138 $ 989 $ 1,138 $ 989 |
Commitments and Contingencies
Commitments and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Commitments And Contingencies Disclosure [Abstract] | |
Future minimum rental commitments under non-cancelable Operating and Capital Leases | Future minimum rental commitments under lease agreements, including both operating and capital leases (principle and interest), with non-cancelable terms greater than one year for each of the years ending December 31 are as follows (in thousands): 2018 $ 524 2019 899 2020 300 2021 12 Thereafter — Total future minimum lease obligations $ 1,735 |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Segment Reporting [Abstract] | |
Summary of Net Revenue by Geographic Location | Net revenue by geographic location based on the location of customers was as follows (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 United States $ 7,164 $ 8,194 $ 12,857 $ 15,037 International 4,990 4,418 9,317 8,449 $ 12,154 $ 12,612 $ 22,174 $ 23,486 |
Summary of Property, Plant and Equipment by Geographic Location | Property, plant, and equipment by geographic location was as follows (in thousands): June 30, December 31, 2018 2017 United States $ 2,849 $ 3,347 International 315 327 $ 3,164 $ 3,674 |
Concentrations (Tables)
Concentrations (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Risks And Uncertainties [Abstract] | |
Summary of Net Revenue from Various Products | Revenue from the Company’s products for the three and six months ended June 30, 2018 and 2017 are as follows (dollars in thousands): Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Laser systems $ 7,920 65.2 % $ 7,961 63.1 % $ 13,623 61.4 % $ 14,690 62.6 % Imaging systems 371 3.1 % 954 7.5 % 954 4.3 % 1,580 6.7 % Consumables and other 2,303 18.9 % 2,051 16.3 % 4,337 19.6 % 3,743 15.9 % Services 1,557 12.8 % 1,614 12.8 % 3,254 14.7 % 3,409 14.5 % License fees and royalties 3 0.0 % 32 0.3 % 6 0.0 % 64 0.3 % Total revenue $ 12,154 100.0 % $ 12,612 100.0 % $ 22,174 100.0 % $ 23,486 100.0 % |
Description of Business and B29
Description of Business and Basis of Presentation - Additional Information (Detail) - USD ($) | Jun. 30, 2018 | Mar. 06, 2018 | Dec. 31, 2017 | Jun. 30, 2017 | Dec. 31, 2016 |
Description Of Business And Basis Of Presentation [Line Items] | |||||
Working capital | $ 14,400,000 | ||||
Cash and cash equivalents, including restricted cash | 3,146,000 | $ 11,896,000 | $ 8,167,000 | $ 9,175,000 | |
Accounts receivable | 10,399,000 | $ 10,124,000 | |||
Business Financing Agreement | |||||
Description Of Business And Basis Of Presentation [Line Items] | |||||
Line of credit facility, maximum borrowing capacity | $ 6,000,000 | ||||
Total amount available | 3,900,000 | ||||
Western Alliance | Business Financing Agreement | |||||
Description Of Business And Basis Of Presentation [Line Items] | |||||
Line of credit, outstanding borrowings | $ 0 |
Revenue Recognition - Additiona
Revenue Recognition - Additional Information (Detail) - USD ($) | 3 Months Ended | 6 Months Ended |
Jun. 30, 2018 | Jun. 30, 2018 | |
Disaggregation Of Revenue [Line Items] | ||
Revenue from products and services transferred to customers, percentage | 87.00% | 85.00% |
Revenue from services transferred to customers over time, percentage | 13.00% | 15.00% |
Revenue recognized from contract liability | $ 600,000 | |
Extended warranties recognized | 700,000 | |
Deferred royalties recognized | $ 6,000 | |
Maximum | ||
Disaggregation Of Revenue [Line Items] | ||
Amortization period to expense incremental costs | 1 year |
Summary of Opening and Closing
Summary of Opening and Closing Balances of Contract Liabilities (Detail) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Revenue Recognition [Abstract] | ||
Undelivered elements (training and product and support services; installation for 2017) | $ 624 | $ 980 |
Extended warranty contracts | 1,577 | 1,634 |
Deferred royalties | 17 | 22 |
Total deferred revenue | 2,218 | 2,636 |
Less long-term amounts: | ||
Deferred royalties | 6 | 11 |
Total deferred revenue - long-term | 6 | 11 |
Total deferred revenue - current | $ 2,212 | $ 2,625 |
Summary of Disaggregation of Re
Summary of Disaggregation of Revenues Related to Geographic Areas (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Disaggregation Of Revenue [Line Items] | ||||
Revenue | $ 12,154 | $ 12,612 | $ 22,174 | $ 23,486 |
United States | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenue | 7,164 | 8,194 | 12,857 | 15,037 |
International | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenue | $ 4,990 | $ 4,418 | $ 9,317 | $ 8,449 |
Summary of Revenues Disaggregat
Summary of Revenues Disaggregated by Timing of Goods and Services Transferred (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Disaggregation Of Revenue [Line Items] | ||||
Net revenue | $ 12,154 | $ 12,612 | $ 22,174 | $ 23,486 |
Revenue Recognized Over Time | ||||
Disaggregation Of Revenue [Line Items] | ||||
Net revenue | 1,557 | 3,254 | ||
Revenue Recognized at a Point in Time | ||||
Disaggregation Of Revenue [Line Items] | ||||
Net revenue | $ 10,597 | $ 18,920 |
Summary of Sales by End Market
Summary of Sales by End Market (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Disaggregation Of Revenue [Line Items] | ||||
Revenue | $ 12,154 | $ 12,612 | $ 22,174 | $ 23,486 |
End-customer | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenue | 7,675 | 8,651 | 13,712 | 15,796 |
Distributors | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenue | $ 4,479 | $ 3,961 | $ 8,462 | $ 7,690 |
Summary of Percentages of Sales
Summary of Percentages of Sales by Product line (Detail) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Disaggregation Of Revenue [Line Items] | ||||
Percentage of sales | 100.00% | 100.00% | 100.00% | 100.00% |
Waterlase (laser systems) | ||||
Disaggregation Of Revenue [Line Items] | ||||
Percentage of sales | 42.90% | 42.40% | 39.20% | 41.30% |
Diodes (laser systems) | ||||
Disaggregation Of Revenue [Line Items] | ||||
Percentage of sales | 22.30% | 20.70% | 22.20% | 21.30% |
Imaging systems | ||||
Disaggregation Of Revenue [Line Items] | ||||
Percentage of sales | 3.10% | 7.50% | 4.30% | 6.70% |
Consumables and Other | ||||
Disaggregation Of Revenue [Line Items] | ||||
Percentage of sales | 18.90% | 16.30% | 19.60% | 15.90% |
Services | ||||
Disaggregation Of Revenue [Line Items] | ||||
Percentage of sales | 12.80% | 12.80% | 14.70% | 14.50% |
License fees and royalties | ||||
Disaggregation Of Revenue [Line Items] | ||||
Percentage of sales | 0.30% | 0.30% |
Stockholders' Equity - Addition
Stockholders' Equity - Additional Information (Detail) | Jun. 15, 2018$ / sharesshares | May 14, 2018$ / sharesshares | May 10, 2018shares | May 09, 2018shares | Mar. 01, 2018shares | Jan. 26, 2018$ / sharesshares | Jan. 25, 2018$ / sharesshares | Jun. 30, 2018USD ($)$ / sharesshares | Jun. 30, 2017USD ($)$ / sharesshares | Jun. 30, 2018USD ($)$ / sharesshares | Jun. 30, 2017USD ($)$ / sharesshares | Mar. 06, 2018USD ($)$ / shares | Dec. 31, 2017shares |
Stockholders Equity [Line Items] | |||||||||||||
Reverse stock split ratio | 0.2 | ||||||||||||
Description of reverse stock split | At BIOLASE’s annual meeting of stockholders on May 9, 2018 (the “Annual Meeting”), BIOLASE stockholders approved an amendment to BIOLASE’s Restated Certificate of Incorporation, as amended, to effect a reverse stock split of BIOLASE common stock, at a ratio ranging from one-for-five (1:5) to one-for-fifteen (1:15), with the final ratio to be determined by the BIOLASE board of directors (the “Board”). Immediately after the Annual Meeting, the Board approved a one-for-five (1:5) reverse stock split of the outstanding shares of BIOLASE common stock (the “Reverse Stock Split”). On May 10, 2018, the Company filed an amendment (the “Amendment”) to its Restated Certificate of Incorporation, as amended, with the Secretary of State of the State of Delaware to effect the Reverse Stock Split, effective as of 11:59 p.m. on May 10, 2018. The Amendment also reduced the authorized shares of common stock from 200,000,000 shares to 40,000,000 shares. | ||||||||||||
Common stock, shares authorized | 40,000,000 | 200,000,000 | 40,000,000 | 40,000,000 | 40,000,000 | ||||||||
Compensation expense related to stock options | $ | $ 600,000 | $ 800,000 | $ 1,300,000 | $ 1,100,000 | |||||||||
Net impact of stock-based compensation expense to earnings per basic share | $ / shares | $ (0.03) | $ (0.06) | $ (0.06) | $ (0.08) | |||||||||
Net impact of stock-based compensation expense to earnings per diluted share | $ / shares | $ (0.03) | $ (0.06) | $ (0.06) | $ (0.08) | |||||||||
Total unrecognized compensation expense | $ | $ 3,600,000 | $ 3,600,000 | |||||||||||
Unrecognized share based compensation expense to be recognized over weighted-average period | 2 years | ||||||||||||
Reversal of share based compensation expense | $ | $ 100,000 | $ 500,000 | |||||||||||
Outstanding stock options, RSUs and warrants excluded from diluted loss per share | 5,100,000 | 5,400,000 | 5,100,000 | 5,400,000 | |||||||||
Western Alliance Warrant | |||||||||||||
Stockholders Equity [Line Items] | |||||||||||||
Initial exercise price of warrants | $ / shares | $ 2.35 | ||||||||||||
Stock Options | |||||||||||||
Stockholders Equity [Line Items] | |||||||||||||
Number of shares subject to awards granted | 402,000 | ||||||||||||
Stock Options | Employees | |||||||||||||
Stockholders Equity [Line Items] | |||||||||||||
Stock options granted | 360,000 | ||||||||||||
Awards valued per share | $ / shares | $ 2.11 | ||||||||||||
Options expiration period | 10 years | ||||||||||||
Options vesting description | The options vest ratably over the 36-month period, commencing on February 25, 2018. | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Monthly Ratable Award Vesting Period | 36 months | ||||||||||||
Share Based Compensation Arrangement By Share Based Payment Award, Vesting Commencement Date | Feb. 25, 2018 | ||||||||||||
Restricted Stock Units (RSUs) | |||||||||||||
Stockholders Equity [Line Items] | |||||||||||||
Granted | 2,456,000 | ||||||||||||
Restricted Stock Units (RSUs) | Employees | |||||||||||||
Stockholders Equity [Line Items] | |||||||||||||
Awards valued per share | $ / shares | $ 1.45 | ||||||||||||
Options vesting description | These awards were valued at $1.45 per share, the closing price of BIOLASE common stock on the grant date, and were fully vested on the grant date. | ||||||||||||
Granted | 10,127 | ||||||||||||
Restricted Stock Units (RSUs) | Board Members | |||||||||||||
Stockholders Equity [Line Items] | |||||||||||||
Awards valued per share | $ / shares | $ 1.45 | ||||||||||||
Options vesting description | 398,275 shares to certain Board members of the Company. These awards were valued at $1.45 per share, the closing price of BIOLASE common stock on the grant date, and fully vest on the first anniversary of the grant date | ||||||||||||
Granted | 398,275 | ||||||||||||
Restricted Stock Units (RSUs) | New Board Members | |||||||||||||
Stockholders Equity [Line Items] | |||||||||||||
Awards valued per share | $ / shares | $ 1.25 | ||||||||||||
Options vesting description | These awards were valued at $1.25 per share, the closing price of BIOLASE common stock on the grant date, and vest fully on May 9, 2019. | ||||||||||||
Granted | 155,000 | ||||||||||||
Award vesting date | May 9, 2019 | ||||||||||||
2002 Stock Incentive Plan | |||||||||||||
Stockholders Equity [Line Items] | |||||||||||||
Common stock authorized for issuance | 3,100,000 | 3,100,000 | |||||||||||
Common stock issued pursuant to options exercised | 900,000 | ||||||||||||
Options and restricted stock units outstanding | 1,900,000 | 1,900,000 | |||||||||||
2002 Stock Incentive Plan | Restricted Stock Units (RSUs) | President And Chief Executive Officer | |||||||||||||
Stockholders Equity [Line Items] | |||||||||||||
Awards valued per share | $ / shares | $ 2 | ||||||||||||
Granted | 40,000 | ||||||||||||
2018 Long-Term Incentive Plan | |||||||||||||
Stockholders Equity [Line Items] | |||||||||||||
Common stock authorized for issuance | 2,120,547 | 2,035,287 | 2,035,287 | ||||||||||
Options and restricted stock units outstanding | 1,600,000 | 1,600,000 | |||||||||||
Number of shares subject to awards granted | 85,260 | ||||||||||||
Options available for future grants | 400,000 | 400,000 | |||||||||||
2018 Long-Term Incentive Plan | Restricted Stock Units (RSUs) | Board Members, Employees and Consultants | |||||||||||||
Stockholders Equity [Line Items] | |||||||||||||
Awards valued per share | $ / shares | $ 1.45 | ||||||||||||
Options vesting description | These awards were valued at $1.45 per share, the closing price of BIOLASE common stock on the grant date, and vest 40% on December 31, 2018 and 60% on December 31, 2019, subject to continued service through the applicable vesting date. | ||||||||||||
Granted | 1,193,850 | ||||||||||||
2018 Long-Term Incentive Plan | Restricted Stock Units (RSUs) | Board Members, Employees and Consultants | Vest on December 31, 2018 | |||||||||||||
Stockholders Equity [Line Items] | |||||||||||||
Vesting percentage | 40.00% | ||||||||||||
Award vesting date | Dec. 31, 2018 | ||||||||||||
2018 Long-Term Incentive Plan | Restricted Stock Units (RSUs) | Board Members, Employees and Consultants | Vest on December 31, 2019 | |||||||||||||
Stockholders Equity [Line Items] | |||||||||||||
Vesting percentage | 60.00% | ||||||||||||
Award vesting date | Dec. 31, 2019 | ||||||||||||
Minimum [Member] | |||||||||||||
Stockholders Equity [Line Items] | |||||||||||||
Reverse stock split ratio | 0.2 | ||||||||||||
Maximum | |||||||||||||
Stockholders Equity [Line Items] | |||||||||||||
Reverse stock split ratio | 0.067 | ||||||||||||
Maximum | Western Alliance Warrant | |||||||||||||
Stockholders Equity [Line Items] | |||||||||||||
Warrants issued to purchase shares of common stock equal value | $ | $ 120,000 |
Classification of Compensation
Classification of Compensation Expense Associated with Share-Based Payments (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Allocated Share-based Compensation Expense | $ 557 | $ 761 | $ 1,258 | $ 1,140 |
Cost Of Revenue | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Allocated Share-based Compensation Expense | 105 | 67 | 162 | 107 |
Sales and Marketing | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Allocated Share-based Compensation Expense | 154 | 93 | 234 | 166 |
General and Administrative | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Allocated Share-based Compensation Expense | 207 | 506 | 674 | 699 |
Engineering And Development | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Allocated Share-based Compensation Expense | $ 91 | $ 95 | $ 188 | $ 168 |
Assumptions Used in Estimating
Assumptions Used in Estimating Fair Value of Stock Options Granted (Detail) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Share Based Compensation Arrangement By Share Based Payment Award Fair Value Assumptions And Methodology [Abstract] | ||||
Expected term | 5 years 8 months 12 days | 5 years 4 months 24 days | 5 years 10 months 24 days | 5 years 7 months 6 days |
Volatility | 81.20% | 77.60% | 81.40% | 78.50% |
Risk-free interest rate | 2.71% | 1.98% | 2.46% | 1.98% |
Summary of Option Activity (Det
Summary of Option Activity (Detail) - $ / shares shares in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Shares | ||
Beginning Balance | 1,924 | |
Granted at fair market value | 402 | |
Exercised | (1) | |
Forfeited, cancelled, or expired | (322) | |
Ending Balance | 2,003 | 1,924 |
Options exercisable at June 30, 2018 | 1,095 | |
Vested options expired during the quarter ended June 30, 2018 | 191 | |
Weighted Average Exercise Price | ||
Beginning Balance | $ 8.62 | |
Granted at fair market value | 2.09 | |
Exercised | 2.10 | |
Forfeited, cancelled, or expired | 11.12 | |
Ending Balance | 6.91 | $ 8.62 |
Options exercisable at June 30, 2018 | 8.75 | |
Vested options expired during the quarter ended June 30, 2018 | $ 14.29 | |
Weighted Average Remaining Contractual Term (Years) | ||
Options outstanding | 6 years 1 month 20 days | 7 years 2 months 15 days |
Options exercisable | 4 years 11 months 19 days |
Summary of Unvested Stock Optio
Summary of Unvested Stock Option Activity (Detail) - $ / shares shares in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Weighted Average Grant Date Fair Value | ||||
Granted | $ 1.27 | $ 3.94 | $ 1.46 | $ 4.60 |
Stock Options | ||||
Shares | ||||
Beginning Balance | 846 | |||
Granted | 402 | |||
Vested | (240) | |||
Forfeited or cancelled | (99) | |||
Ending Balance | 909 | 909 | ||
Weighted Average Grant Date Fair Value | ||||
Beginning Balance | $ 3.14 | |||
Granted | 1.46 | |||
Vested | 3.59 | |||
Forfeited or cancelled | 2.55 | |||
Ending Balance | $ 2.34 | $ 2.34 |
Cash Proceeds Along with Fair V
Cash Proceeds Along with Fair Value Disclosures Related to Grants, Exercises, and Vested Options (Detail) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | ||
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |||||
Proceeds from stock options exercised | $ 3 | $ 2 | $ 3 | ||
Intrinsic value of stock options exercised | [1] | $ 1 | $ 1 | ||
Weighted-average fair value of options granted during period | $ 1.27 | $ 3.94 | $ 1.46 | $ 4.60 | |
Total fair value of shares vested during the period | $ 843 | $ 364 | $ 245 | $ 698 | |
[1] | The intrinsic value of stock options exercised is the amount by which the market price of the stock on the date of exercise exceeded the market price of the stock on the date of grant. |
Summary of Unvested Restricted
Summary of Unvested Restricted Stock Units (Detail) - Restricted Stock Units (RSUs) shares in Thousands | 6 Months Ended |
Jun. 30, 2018$ / sharesshares | |
Shares | |
Beginning Balance | shares | 358 |
Granted | shares | 2,456 |
Vested | shares | (212) |
Forfeited or cancelled | shares | (208) |
Ending Balance | shares | 2,394 |
Weighted Average Grant Date Fair Value | |
Beginning Balance | $ / shares | $ 4.84 |
Granted | $ / shares | 1.44 |
Vested | $ / shares | 2.38 |
Forfeited or cancelled | $ / shares | 4.48 |
Ending Balance | $ / shares | $ 1.51 |
Summary of Warrant Activity (De
Summary of Warrant Activity (Detail) - Warrants shares in Thousands | 6 Months Ended |
Jun. 30, 2018$ / sharesshares | |
Shares | |
Beginning Balance | shares | 1,225 |
Granted or Issued | shares | 52 |
Ending Balance | shares | 1,277 |
Warrants exercisable at June 30, 2018 | shares | 1,250 |
Weighted Average Exercise Price | |
Beginning Balance | $ / shares | $ 9.63 |
Granted or Issued | $ / shares | 2.35 |
Ending Balance | $ / shares | 9.33 |
Warrants exercisable at June 30, 2018 | $ / shares | $ 9.10 |
Components of Inventory (Detail
Components of Inventory (Detail) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Components of inventory, net of allowances | ||
Raw materials | $ 4,301 | $ 3,953 |
Work-in-process | 1,776 | 1,162 |
Finished goods | 7,931 | 7,183 |
Inventory, net | $ 14,008 | $ 12,298 |
Inventory - Additional Informat
Inventory - Additional Information (Detail) - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Inventory Disclosure [Abstract] | ||
Provision for excess and obsolete inventory | $ 1.8 | $ 1.9 |
Summary of Property, Plant, and
Summary of Property, Plant, and Equipment (Detail) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Property Plant And Equipment [Line Items] | ||
Property, plant, and equipment gross, excluding land | $ 10,930 | $ 10,924 |
Accumulated depreciation and amortization | (7,935) | (7,426) |
Property, plant, and equipment net, excluding land | 2,995 | 3,498 |
Land | 169 | 176 |
Property, plant, and equipment, net | 3,164 | 3,674 |
Building | ||
Property Plant And Equipment [Line Items] | ||
Property, plant, and equipment gross, excluding land | 217 | 220 |
Leasehold Improvements | ||
Property Plant And Equipment [Line Items] | ||
Property, plant, and equipment gross, excluding land | 2,005 | 2,005 |
Equipment and Computers | ||
Property Plant And Equipment [Line Items] | ||
Property, plant, and equipment gross, excluding land | 6,884 | 6,883 |
Furniture and Fixtures | ||
Property Plant And Equipment [Line Items] | ||
Property, plant, and equipment gross, excluding land | 634 | 634 |
Construction in Progress | ||
Property Plant And Equipment [Line Items] | ||
Property, plant, and equipment gross, excluding land | $ 1,190 | $ 1,182 |
Property, Plant, and Equipmen47
Property, Plant, and Equipment - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Property Plant And Equipment [Abstract] | ||||
Depreciation and amortization expenses | $ 0.2 | $ 0.3 | $ 0.5 | $ 0.6 |
Intangible Assets and Goodwill
Intangible Assets and Goodwill - Additional Information (Detail) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |||||
Intangible assets and goodwill impairment | $ 0 | ||||
Amortization expense | $ 0 | $ 0 | 0 | $ 0 | |
Goodwill | $ 2,926,000 | $ 2,926,000 | $ 2,926,000 |
Components of Accrued Liabiliti
Components of Accrued Liabilities (Detail) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 | Jun. 30, 2017 |
Components of accrued liabilities | |||
Payroll and benefits | $ 2,301 | $ 2,115 | |
Warranty accrual, current portion | 1,138 | 1,120 | $ 989 |
Taxes | 487 | 544 | |
Accrued professional services | 1,041 | 584 | |
Accrued insurance premium | 59 | 870 | |
Other | 549 | 376 | |
Total accrued liabilities | $ 5,575 | $ 5,609 |
Changes in Initial Product Warr
Changes in Initial Product Warranty Accrual and Expenses Under Initial and Extended Warranties (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Movement in Standard Product Warranty Accrual | |||||
Initial warranty accrual, beginning balance | $ 1,214 | $ 1,460 | $ 1,190 | $ 1,706 | |
Provision for estimated warranty cost | 378 | 25 | 624 | 2 | |
Warranty expenditures | (233) | (200) | (455) | (423) | |
Initial warranty accrual, ending balance | 1,359 | 1,285 | 1,359 | 1,285 | |
Less warranty accrual, long-term | 221 | 296 | 221 | 296 | $ 70 |
Total warranty accrual, current portion | $ 1,138 | $ 989 | $ 1,138 | $ 989 | $ 1,120 |
Accrued Liabilities - Additiona
Accrued Liabilities - Additional Information (Detail) - Maximum | 6 Months Ended |
Jun. 30, 2018 | |
Waterlase Laser Systems | |
Accrued Liabilities [Line Items] | |
Product warrant period | 16 months |
Diode Systems | |
Accrued Liabilities [Line Items] | |
Product warrant period | 28 months |
Lines of Credit - Additional In
Lines of Credit - Additional Information (Detail) - USD ($) | Aug. 13, 2018 | Jun. 30, 2018 | Mar. 06, 2018 | Jun. 30, 2018 |
Western Alliance Warrant | ||||
Line Of Credit Facility [Line Items] | ||||
Warrants expiration period | 10 years | |||
Warrants fair value assumptions, expected volatility rate | 91.49% | |||
Warrants fair value assumptions annual dividend per share | $ 0 | |||
Warrants fair value assumptions, risk-free interest rate | 2.88% | |||
Warrants, estimated fair value | $ 100,000 | |||
Domestic Revolving Credit Facility | ||||
Line Of Credit Facility [Line Items] | ||||
Line of credit, outstanding borrowings | $ 0 | $ 0 | ||
Restricted cash balances | $ 0 | 0 | ||
Line of credit facility, interest rate | 6.50% | |||
Export Revolving Credit Facility | ||||
Line Of Credit Facility [Line Items] | ||||
Line of credit, outstanding borrowings | $ 0 | 0 | ||
Restricted cash balances | $ 0 | 0 | ||
Line of credit facility, interest rate | 6.50% | |||
Business Financing Agreement | ||||
Line Of Credit Facility [Line Items] | ||||
Line of credit facility, maximum borrowing capacity | $ 6,000,000 | |||
Line of credit facility expiration date | Mar. 6, 2020 | |||
Total amount available | $ 3,900,000 | $ 3,900,000 | ||
Line of credit facility, interest rate description | Amounts outstanding under the Business Financing Agreement bear interest at a per annum floating rate equal to the greater of 4.5% or the “Prime Rate” published in the Money Rates section of the Western Edition of The Wall Street Journal (or such other rate of interest publicly announced from time to time by Western Alliance as its “Prime Rate”), plus 1.5% with respect to advances made under the line of credit, plus an additional 5.0% during any period that an event of default has occurred and is continuing. | |||
Line of credit facility, commitment fee amount | $ 67,500 | |||
Line of credit facility, commitment fee description | the Company paid the first of two annual commitment fees totaling $67,500, being 0.25% of the aggregate $6.0 million commitment for the Domestic Revolver and 1.75% of the aggregate $3.0 million commitment for the EXIM Revolver. The commitment fees and the legal costs associated with acquiring the credit facilities were capitalized and are being amortized on a straight-line basis as interest expense over the term of the Business Financing Agreement. | |||
Business Financing Agreement | Western Alliance | ||||
Line Of Credit Facility [Line Items] | ||||
Line of credit, outstanding borrowings | $ 0 | $ 0 | ||
Business Financing Agreement | Domestic Revolving Credit Facility | ||||
Line Of Credit Facility [Line Items] | ||||
Line of credit facility, maximum borrowing capacity | $ 6,000,000 | |||
Maximum borrowing base percentage of eligible accounts receivable | 75.00% | |||
Line of credit facility commitment fee percentage | 0.25% | |||
Line of credit facility, commitment fee amount | $ 6,000,000 | |||
Business Financing Agreement | Export Revolving Credit Facility | ||||
Line Of Credit Facility [Line Items] | ||||
Line of credit facility, maximum borrowing capacity | $ 3,000,000 | |||
Maximum borrowing base percentage of eligible accounts receivable | 85.00% | |||
Line of credit facility commitment fee percentage | 1.75% | |||
Line of credit facility, commitment fee amount | $ 3,000,000 | |||
Business Financing Agreement | Line of Credit | ||||
Line Of Credit Facility [Line Items] | ||||
Variable interest Rate with respect to advances made | 1.50% | |||
Line of credit facility interest rate during period in event of default | 5.00% | |||
Business Financing Agreement | Line of Credit | Minimum [Member] | ||||
Line Of Credit Facility [Line Items] | ||||
Line of credit facility bearing floating interest rate per annum | 4.50% | |||
Forbearance Agreement | Western Alliance | Subsequent Event | ||||
Line Of Credit Facility [Line Items] | ||||
Line of credit facility, maximum borrowing capacity | $ 1,500,000 | |||
Line of credit fees paid for non compilance with non financial covenants | $ 5,000 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Detail) | Apr. 10, 2018USD ($) | Mar. 31, 2015USD ($) | Jun. 30, 2018USD ($)ft² | Feb. 28, 2018 | Feb. 28, 2015 |
Commitment And Contingencies [Line Items] | |||||
Area of corporate headquarters and manufacturing facility | ft² | 57,000 | ||||
Extended lease term | Apr. 30, 2020 | ||||
Provisions for tenant improvement allowance, maximum | $ 400,000 | ||||
Capital lease agreement term for information technology equipment | 30 months | ||||
Capital lease agreement extended additional lease term for information technology equipment | 18 months | ||||
Purchase commitments pending | $ 11,900,000 | ||||
Former President And Chief Executive Officer | |||||
Commitment And Contingencies [Line Items] | |||||
Severance payable | $ 365,000 | ||||
Net reduction of stock-based compensation expense | $ 300,000 | ||||
Description of post employment benefits | Mr. Flynn is entitled to receive severance in an amount of $365,000, payable through December 28, 2018, along with certain other benefits, including the continued vesting of all of Mr. Flynn’s time-based stock options through April 9, 2020 and an extension of the time to exercise such options through December 31, 2021, subject to immediate vesting upon a change of control, and continued vesting of the time-based RSUs granted to Mr. Flynn on February 6, 2017 through February 6, 2019, subject to immediate vesting upon a change of control. Any unvested stock options following April 9, 2020 will be cancelled and will not vest, and any RSUs that are unvested following February 6, 2019 will be canceled and will not vest. Due to the modification of Mr. Flynn’s equity awards, the Company recognized a net reduction of stock-based compensation expense of approximately $0.3 million, primarily due to the fluctuation in stock prices from the time the awards were granted to when Mr. Flynn resigned and the awards were re-evaluated. | ||||
Employee Arrangements and Other Compensation | |||||
Commitment And Contingencies [Line Items] | |||||
Change in control, if occurs, may require severance benefits payable | $ 2,100,000 | ||||
Accrued for performance bonuses | $ 200,000 |
Future Minimum Rental Commitmen
Future Minimum Rental Commitments Under Lease Agreements (Detail) $ in Thousands | Jun. 30, 2018USD ($) |
Commitments And Contingencies Disclosure [Abstract] | |
2,018 | $ 524 |
2,019 | 899 |
2,020 | 300 |
2,021 | 12 |
Total future minimum lease obligations | $ 1,735 |
Segment Information - Additiona
Segment Information - Additional Information (Detail) - Sales Revenue, Net - Customer | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Customer Concentration Risk | United States | ||||
Segment Reporting Information [Line Items] | ||||
Concentration Risk Percentage | 59.00% | 65.00% | 58.00% | 64.00% |
Customer Concentration Risk | International | ||||
Segment Reporting Information [Line Items] | ||||
Concentration Risk Percentage | 41.00% | 35.00% | 42.00% | 36.00% |
Geographic Concentration Risk | International | ||||
Segment Reporting Information [Line Items] | ||||
Number of customers which represented more than 10% of the Company's revenue | 0 | 0 | 0 | 0 |
Summary of Net Revenue by Geogr
Summary of Net Revenue by Geographic Location (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Segment Reporting Information [Line Items] | ||||
Net revenue | $ 12,154 | $ 12,612 | $ 22,174 | $ 23,486 |
United States | ||||
Segment Reporting Information [Line Items] | ||||
Net revenue | 7,164 | 8,194 | 12,857 | 15,037 |
International | ||||
Segment Reporting Information [Line Items] | ||||
Net revenue | $ 4,990 | $ 4,418 | $ 9,317 | $ 8,449 |
Summary of Property, Plant and
Summary of Property, Plant and Equipment by Geographic Location (Detail) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Segment Reporting Information [Line Items] | ||
Property, plant, and equipment, net | $ 3,164 | $ 3,674 |
United States | ||
Segment Reporting Information [Line Items] | ||
Property, plant, and equipment, net | 2,849 | 3,347 |
International | ||
Segment Reporting Information [Line Items] | ||
Property, plant, and equipment, net | $ 315 | $ 327 |
Concentrations - Summary of Net
Concentrations - Summary of Net Revenue from Various Products (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Concentration Risk [Line Items] | ||||
Net revenue | $ 12,154 | $ 12,612 | $ 22,174 | $ 23,486 |
Product Concentration Risk | Sales Revenue, Net | ||||
Concentration Risk [Line Items] | ||||
Concentration Risk Percentage | 100.00% | 100.00% | 100.00% | 100.00% |
Laser systems | ||||
Concentration Risk [Line Items] | ||||
Net revenue | $ 7,920 | $ 7,961 | $ 13,623 | $ 14,690 |
Laser systems | Product Concentration Risk | Sales Revenue, Net | ||||
Concentration Risk [Line Items] | ||||
Concentration Risk Percentage | 65.20% | 63.10% | 61.40% | 62.60% |
Imaging systems | ||||
Concentration Risk [Line Items] | ||||
Net revenue | $ 371 | $ 954 | $ 954 | $ 1,580 |
Imaging systems | Product Concentration Risk | Sales Revenue, Net | ||||
Concentration Risk [Line Items] | ||||
Concentration Risk Percentage | 3.10% | 7.50% | 4.30% | 6.70% |
Consumables and other | ||||
Concentration Risk [Line Items] | ||||
Net revenue | $ 2,303 | $ 2,051 | $ 4,337 | $ 3,743 |
Consumables and other | Product Concentration Risk | Sales Revenue, Net | ||||
Concentration Risk [Line Items] | ||||
Concentration Risk Percentage | 18.90% | 16.30% | 19.60% | 15.90% |
Services | ||||
Concentration Risk [Line Items] | ||||
Net revenue | $ 1,557 | $ 1,614 | $ 3,254 | $ 3,409 |
Services | Product Concentration Risk | Sales Revenue, Net | ||||
Concentration Risk [Line Items] | ||||
Concentration Risk Percentage | 12.80% | 12.80% | 14.70% | 14.50% |
License fees and royalties | ||||
Concentration Risk [Line Items] | ||||
Net revenue | $ 3 | $ 32 | $ 6 | $ 64 |
License fees and royalties | Product Concentration Risk | Sales Revenue, Net | ||||
Concentration Risk [Line Items] | ||||
Concentration Risk Percentage | 0.00% | 0.30% | 0.00% | 0.30% |
Concentrations - Additional Inf
Concentrations - Additional Information (Detail) - Product Concentration Risk - Customer | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Concentration Risk [Line Items] | |||||
Number of customers which represented more than 10% of the Company's accounts receivable | 0 | 0 | |||
Sales Revenue, Net | |||||
Concentration Risk [Line Items] | |||||
Number of customers which represented more than 10% of the Company's revenue | 0 | 0 | 0 | 0 | |
Concentration Risk Percentage | 100.00% | 100.00% | 100.00% | 100.00% | |
Account Receivable | |||||
Concentration Risk [Line Items] | |||||
Concentration Risk Percentage | 10.00% | 10.00% | |||
Minimum [Member] | Sales Revenue, Net | |||||
Concentration Risk [Line Items] | |||||
Concentration Risk Percentage | 10.00% | 10.00% | 10.00% | 10.00% |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |||||
Liability for unrecognized tax benefit, including related estimates of penalties and interest | $ 0 | $ 0 | $ 0 | $ 0 | |
Income tax provision (benefit) | $ 10,000 | $ 36,000 | $ 42,000 | $ 76,000 | |
Projected annual effective tax rate | (10.00%) | 0.90% | 0.80% | 0.90% | |
Statutory tax rate | 21.00% | 34.00% |
Subsequent Event - Additional I
Subsequent Event - Additional Information (Detail) - Subsequent Event - President And Chief Executive Officer | Aug. 07, 2018USD ($)shares |
Subsequent Event [Line Items] | |
Annual base salary | $ 400,000 |
Minimum non-discretionary performance bonus | $ 100,000 |
Maximum | |
Subsequent Event [Line Items] | |
Percentage of annual performance bonus | 100.00% |
Performance bonus based on target performance | $ 170,000 |
Performance bonus based on outperform performance | $ 210,000 |
Time-based RSUs | Tranche 1 | |
Subsequent Event [Line Items] | |
Share based compensation arrangement by share based payment award equity instruments other than options to be granted upon approval by stockholders for an increase in number of shares available under 2018 long-term incentive plan | shares | 350,000 |
Vesting percentage | 0.25% |
Restricted stock units vesting description | (i) 350,000 stock-settled time-based restricted stock units which shall vest as to one-fourth of the number of shares of Common Stock subject to the time-based restricted stock units on the one-year anniversary of the Mr. Norbe’s first date of employment. |
Time-based RSUs | Tranche 2 | |
Subsequent Event [Line Items] | |
Vesting percentage | 0.75% |
Restricted stock units vesting description | Remaining three-fourths of the number of shares of Common Stock subject to the time-based restricted stock units, in four installments on a semi-annual basis commencing on the 18-month anniversary of Mr. Norbe’s first date of employment, subject to continued employment through each such vesting date. |
Performance-based RSUs | |
Subsequent Event [Line Items] | |
Share based compensation arrangement by share based payment award equity instruments other than options to be granted upon approval by stockholders for an increase in number of shares available under 2018 long-term incentive plan | shares | 300,000 |
Vesting percentage | 0.33% |
Restricted stock units vesting description | (ii) 300,000 stock settled performance-based RSUs, which shall vest in one-third annual increments, subject to performance criteria established by the Compensation Committee of the Board and continued employment through each such vesting date. |