Item 1.01. Entry into a Material Definitive Agreement
On May 22, 2020, Biolase, Inc. (the “Company”), executed the standard loan documents required for securing a loan (the “EIDL Loan”) from the United States Small Business Administration (the “SBA”) under its Economic Injury Disaster Loan (“EIDL”) assistance program in light of the impact of theCOVID-19 pandemic on the Company’s business. The principal amount of the EIDL Loan is $150,000.00, with proceeds to be used for working capital purposes. Interest on the EIDL Loan accrues at the rate of 3.75% per annum and installment payments, including principal and interest, are due monthly beginning twelve months from the date of the EIDL Loan in the amount of $731.00. The balance of principal and interest is payable thirty years from the date of the promissory note. In connection with the EIDL Loan, the Company executed the EIDL Loan documents, which include the SBA Secured Disaster Loan Note, dated May 22, 2020, the Loan Authorization and Agreement, dated May 22, 2020, and the Security Agreement, dated May 22, 2020, each between the SBA and the Company.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under anOff-Balance Sheet Arrangement of a Registrant.
Reference is made to the disclosure under Item 1.01 above which is hereby incorporated in this Item 2.03 by reference.
Item 7.01 Regulation FD Disclosure
On April 8, 2020, the Company announced that it had teamed up with MEKICS Co. Ltd., an intensive care unit (ICU) equipment manufacturer based in the Republic of Korea (“MEKICS”), to supply MEKICS’sMTV-1000ICU-grade portable ventilator (the“MTV-1000 Ventilator”) through the Company’s manufacturing facility in Irvine, California. TheMTV-1000 Ventilator received U.S. Food and Drug Administration (“FDA”) authorization for emergency use in connection with theCOVID-19 pandemic. Since the commencement of this relationship, the Company received over $10 million in multiple purchase orders and received authorization to manufacture and supply theMTV-1000 Ventilator under FDA Emergency Use Authorization authority, and an exemption from the State of California to operate, market and produce theMTV-1000 Ventilator, which was a critically needed product at that time.
Subsequent to the above-referenced authorizations, MEKICS experienced supply chain disruptions for certain critical parts and was delayed in shipping ventilators to the Company. Although MEKICS is ready to ship ventilators at this time, the United States market for ventilator products has rapidly changed since early April, due to the effect and level of spread ofCOVID-19 infection throughout the nation, and went from products of undersupply to products of oversupply. As an example, certain state governments are now cancellingpre-paid orders for ventilators.
Due to the foregoing, the Company’s customers that had placed orders with the Company currently no longer need this supply. As a result, the Company has determined not to purchase anyMTV-1000 Ventilators from MEKICS at this time for resale to customers.
However, if there is a second wave ofCOVID-19, the Company expects there may be a return to peak demand for this product. If that occurs, the Company expects to be in position to be able to address this demand through its collaboration with MEKICS.
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