Biolase (BIOLQ) 8-K Biolase Announces Filing of Its Forms 10-Q and First Half 2005 Results

EXHIBIT 99.1

BIOLASE ANNOUNCES FILING OF ITS FORMS 10-Q AND FIRST HALF 2005 RESULTS

BIOLASE Reports First Half 2005 Revenue of $31.4 Million

SAN CLEMENTE, Calif., September 30 — BIOLASE Technology, Inc. (NASDAQ: BLTIE—News), a medical technology company that develops, manufactures and markets lasers and related products focused on technologies for improved applications and procedures in dentistry and medicine, announced today the filing of its Forms 10-Q, which includes results for the first half of 2005 as well as the quarterly periods ended March 31, 2005 and June 30, 2005.

Net revenue for the first quarter ended March 31, 2005 was $16.9 million as compared to net revenue of $14.5 million for the same period of 2004. Net revenue for the second quarter and first half ended June 30, 2005 was $14.5 million and $31.4 million, respectively. This compares to net revenue of $14.8 million and $29.3 million for the second quarter and first half ended June 30, 2004, respectively.

Gross margin during the first half of 2005 was 50% as compared to 61% for the same period in 2004. Gross margin was primarily impacted in the first half of 2005 by higher production costs, costs of component design changes and related scrap, and the costs of customer training. Training negatively impacted the gross margin for the first half of 2005 by 4%, compared to the impact on gross margin in the first half of 2004 of 3%. In addition, as compared to the first half of 2004, the Company has increased the costs of its fixed manufacturing infrastructure, including quality control, materials management and other support activities. The Company also increased its reserve for excess and obsolete inventory by approximately $0.4 million during the first half of 2005 for unusable raw materials resulting from the aforementioned design changes.

Operating expenses were $26.5 million for the first half of 2005 as compared to $15.7 million for the first half of 2004.

Sales and marketing expense was $12.4 million or 40% of net revenue for the first half of 2005 as compared to $11.0 million or 38% of net revenue for the same period last year. The increase in sales and marketing expense from the prior year is due to increased marketing expenses for advertising, direct mailing fees, trade show and seminar activities, as well as overall infrastructure support costs related to the sales and marketing functions.

General and administrative expense was $10.0 million or 32% of net revenue for the first half of 2005 as compared to $3.2 million or 11% of net revenue for the same period in 2004. Increases in general and administrative expense in the first half of 2005 are related to professional fees totaling $2.7 million associated with the audit of 2004 and the restated financial statements, and costs of approximately $1.7 million related to compliance with the Sarbanes-Oxley Act, which included professional fees as well as temporary labor. Additionally, in the first half of 2005, the Company expanded its administrative infrastructure related to finance, information technology and human resources by approximately $2.4 million, both in response to the Company’s growth as well as to meet the ongoing compliance requirements related to the Sarbanes-Oxley Act. The Company expects general and administrative expense to decrease in absolute dollars in the second half of 2005 and in 2006, primarily due to a reduction in professional fees.

Engineering and development expense was $4.1 million or 13% of net revenue for the first half of 2005 as compared to $1.5 million or 5% of net revenue for the same period last year. Increases in engineering and development expense are due primarily to the purchase of licensed technology from SurgiLight, Inc. in the field of presbyopia and related expenses totaling $2.0 million. The entire consideration was expensed as in-process research and development.

Revenue from the Company’s principal product category, the Waterlase^® system, comprised approximately 84% of net revenue for the first half of 2005. This compares with Waterlase revenue of 82% for the first half of 2004. Approximately 69% of the Waterlase category revenue in the first half of 2005 was comprised of the new Waterlase MD product.

Net loss was $4.3 million or $0.19 per diluted share for the first quarter ended March 31, 2005 as compared to net income of $0.6 million or $0.03 per diluted share for the same period of 2004. Net loss for the second quarter and first half ended June 30, 2005 was $6.8 million or $0.30 per diluted share and $11.1 million or $0.48 per diluted share, respectively. This compares with net income of $0.9 million or $0.03 per diluted share and $1.5 million or $0.06 per diluted share for the second quarter and first half ended June 30, 2004, respectively.

Cash flow used in operating activities for the first half of 2005 was $12.5 million compared to $0.5 million for the same period last year. A portion of the $12.5 million used in operating activities is related to the cash payment of $3.0 million for the litigation settlement of the patent infringement suit with Diodem and the $2.0 million payment for the aforementioned purchase of the SurgiLight licensing rights.

“The combination of the restatement and extended delay in filing our periodic SEC reports has been a substantial disruption to our business activities. Also, the transition to the Waterlase MD and associated component design changes has significantly affected our operating performance. These design changes, though costly, are important in order to properly serve our customers. To note, the professional service costs and other related expenses associated with the audit and Sarbanes-Oxley heavily impacted our financial performance during the first half of the year. We can now focus on moving the company toward profitability. We look forward to hosting an earnings conference call to talk about these items as well as the many positive activities underway at the Company,” commented Robert E. Grant, President and CEO.

With these 10-Q filings, the Company believes that it is in compliance with all NASDAQ listing requirements; however, the “E” shall remain appended to the ticker symbol for up to 5 business days, pending final review by NASDAQ.

First Half 2005 Earnings Release and Conference Call

BIOLASE management will host a conference call on Monday, October 3 at 8:30 am EDT to discuss its business outlook and financial results for the first half of 2005. To listen to the conference call live via the Internet, visit BIOLASE’s web site at www.biolase.com. Please go to the web site 15 minutes prior to its start to register, download and install the necessary audio software. A replay will be available on BIOLASE’s web site. To listen to the conference call live via telephone, please dial (800) 291-5365 from the U.S. or, for international callers, please dial (617) 614-3922, approximately 10 minutes before the start time. Enter pass code number 51625429. A telephone replay will be available for two days by dialing (888) 286-8010 from the U.S., or (617) 801-6888 for international callers, and entering pass code number 15461994.

The following tables summarize selected results of operations and balance sheet data for the three and six months ended June 30, 2005 and the three months ended March 31, 2005 as indicated below:

BIOLASE TECHNOLOGY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

	THREE MONTHS ENDED JUNE 30,						SIX MONTHS ENDED JUNE 30,
	2005			2004			2005			2004
Net revenue	$	14,533,000		$	14,738,000		$	31,367,000		$	29,268,000
Cost of revenue		8,251,000			5,616,000			15,716,000			11,302,000
Gross profit		6,282,000			9,122,000			15,651,000			17,966,000
Other income, net		16,000			16,000			32,000			32,000
Operating expenses:
Sales and marketing		6,283,000			5,664,000			12,409,000			11,000,000
General and administrative		5,492,000			1,560,000			9,978,000			3,227,000
Engineering and development		1,055,000			706,000			4,093,000			1,478,000
Total operating expenses		12,830,000			7,930,000			26,480,000			15,705,000
(Loss) income from operations		(6,532,000	)		1,208,000			(10,797,000	)		2,293,000
Non-operating (loss) income, net		(182,000	)		210,000			(119,000	)		149,000
(Loss) income before income taxes		(6,714,000	)		1,418,000			(10,916,000	)		2,442,000
Provision for income taxes		(65,000	)		(565,000	)		(137,000	)		(973,000	)
Net (loss) income	$	(6,779,000	)	$	853,000		$	(11,053,000	)	$	1,469,000
Net (loss) income per share:
Basic	$	(0.30	)	$	0.04		$	(0.48	)	$	0.06
Diluted	$	(0.30	)	$	0.03		$	(0.48	)	$	0.06
Shares used in the calculation of net (loss) income per share:
Basic		22,969,000			24,274,000			22,900,000			23,365,000
Diluted		22,969,000			25,374,000			22,900,000			24,582,000

BIOLASE TECHNOLOGY, INC.

CONSOLIDATED BALANCE SHEETS (Unaudited)

	JUNE 30, 2005			DECEMBER 31, 2004
ASSETS
Current assets:
Cash and cash equivalents	$	10,977,000		$	6,140,000
Short-term investments		9,917,000			25,326,000
Accounts receivable, less allowance of $368,000 and $384,000 in 2005 and 2004, respectively		7,529,000			9,635,000
Inventory		10,289,000			8,180,000
Prepaid expenses and other current assets		1,170,000			1,814,000
Total current assets		39,882,000			51,095,000
Property, plant and equipment, net		3,255,000			3,025,000
Intangible assets, net		2,017,000			1,662,000
Goodwill		2,926,000			2,926,000
Other assets		80,000			38,000
Total assets	$	48,160,000		$	58,746,000
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Line of credit	$	2,675,000		$	—
Accounts payable		8,258,000			7,147,000
Accrued liabilities		7,335,000			8,467,000
Accrued legal settlement		—			3,000,000
Deferred revenue		2,747,000			2,468,000
Current portion of deferred gain		47,000			63,000
Total current liabilities		21,062,000			21,145,000
Deferred gain		—			16,000
Deferred tax liability		243,000			161,000
Accrued legal settlement-net of current portion		—			3,446,000
Total liabilities		21,305,000			24,768,000
Stockholders’ equity:
Preferred stock, par value $0.001, 1,000,000 shares authorized, no shares issued and outstanding		—			—
Common stock, par value $0.001, 50,000,000 shares authorized, 24,996,500 and 24,482,000 shares issued; 23,033,000 and 22,518,500 outstanding in 2005 and 2004, respectively		25,000			25,000
Additional paid-in capital		105,574,000			101,562,000
Accumulated other comprehensive loss		(307,000	)		(225,000	)
Accumulated deficit		(62,038,000	)		(50,985,000	)
		43,254,000			50,377,000
Treasury stock (cost of 1,963,500 shares repurchased)		(16,399,000	)		(16,399,000	)
Total stockholders’ equity		26,855,000			33,978,000
Total liabilities and stockholders’ equity	$	48,160,000		$	58,746,000

BIOLASE TECHNOLOGY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

	THREE MONTHS ENDED MARCH 31,
	2005			2004
Net revenue	$	16,834,000		$	14,530,000
Cost of revenue		7,465,000			5,686,000
Gross profit		9,369,000			8,844,000
Other income, net		16,000			16,000
Operating expenses:
Sales and marketing		6,126,000			5,336,000
General and administrative		4,486,000			1,667,000
Engineering and development		3,038,000			772,000
Total operating expenses		13,650,000			7,775,000
(Loss) income from operations		(4,265,000	)		1,085,000
Non-operating income (loss), net		63,000			(61,000	)
(Loss) income before income taxes		(4,202,000	)		1,024,000
Provision for income taxes		(72,000	)		(408,000	)
Net (loss) income	$	(4,274,000	)	$	616,000
Net (loss) income per share:
Basic	$	(0.19	)	$	0.03
Diluted	$	(0.19	)	$	0.03
Shares used in the calculation of net (loss) income per share:
Basic		22,830,000			22,443,000
Diluted		22,830,000			23,777,000

BIOLASE TECHNOLOGY, INC.

CONSOLIDATED BALANCE SHEETS (Unaudited)

	MARCH 31, 2005			DECEMBER 31, 2004
ASSETS
Current assets:
Cash and cash equivalents	$	2,946,000		$	6,140,000
Short-term investments		9,903,000			25,326,000
Accounts receivable, less allowance of $635,000 and $384,000 in 2005 and 2004, respectively		12,551,000			9,635,000
Inventory		8,836,000			8,180,000
Prepaid expenses and other current assets		1,524,000			1,814,000
Total current assets		35,760,000			51,095,000
Long-term investments		9,948,000			—
Property, plant and equipment, net		3,035,000			3,025,000
Intangible assets, net		2,110,000			1,662,000
Goodwill		2,926,000			2,926,000
Other assets		43,000			38,000
Total assets	$	53,822,000		$	58,746,000
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Line of credit	$	1,850,000		$	—
Accounts payable		7,679,000			7,147,000
Accrued liabilities		8,155,000			8,467,000
Accrued legal settlement		—			3,000,000
Deferred revenue		2,535,000			2,468,000
Current portion of deferred gain		63,000			63,000
Total current liabilities		20,282,000			21,145,000
Deferred gain		—			16,000
Deferred tax liability		226,000			161,000
Accrued legal settlement-net of current portion		—			3,446,000
Total liabilities		20,508,000			24,768,000
Stockholders’ equity:
Preferred stock, par value $0.001, 1,000,000 shares authorized, no shares issued and outstanding		—			—
Common stock, par value $0.001, 50,000,000 shares authorized; issued and outstanding—24,919,000 shares and 24,482,000 shares issued; 22,955,500 and 22,518,500 outstanding in 2005 and 2004, respectively		25,000			25,000
Additional paid-in capital		105,481,000			101,562,000
Accumulated other comprehensive loss		(534,000	)		(225,000	)
Accumulated deficit		(55,259,000	)		(50,985,000	)
		49,713,000			50,377,000
Treasury stock (cost of 1,963,500 shares repurchased)		(16,399,000	)		(16,399,000	)
Total stockholders’ equity		33,314,000			33,978,000
Total liabilities and stockholders’ equity	$	53,822,000		$	58,746,000

About BIOLASE

BIOLASE Technology, Inc. (http://www.biolase.com) is a medical technology company that designs, manufactures and markets proprietary dental laser systems that allow dentists, oral surgeons and other specialists to perform a broad range of common dental procedures, including cosmetic applications. The Company’s products incorporate patented and patent pending technologies focused on reducing pain and improving clinical results. The Waterlase^® system uses a patented combination of water and laser to precisely cut hard tissue, such as bone and teeth, and soft tissue, such as gums, with minimal or no damage to surrounding tissue. The company also offers the LaserSmile™ system, which uses a laser to perform soft tissue and cosmetic procedures, including tooth whitening.

This press release may contain forward-looking statements within the meaning of safe harbor provided by the Securities Reform Act of 1995 that are based on the current expectations and estimates by our management. These forward-looking statements can be identified through the use of words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “may,” “will,” and variations of these words or similar expressions. Forward-looking statements are based on management’s current, preliminary expectations and are subject to risks, uncertainties and other factors which may cause the Company’s actual results to differ materially from the statements contained herein, and are described in the Company’s reports it files with the Securities and Exchange Commission, including its annual and quarterly reports. No undue reliance should be placed on forward-looking statements. Such information is subject to change, and we undertake no obligation to update such statements.

For further information, please contact: Robert E. Grant, President & CEO, John W. Hohener, Executive Vice President and CFO, Scott Jorgensen, Director of Finance & Investor Relations, of BIOLASE Technology, Inc., +1-949-361-1200.