Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2014 | Apr. 30, 2014 | |
Document And Entity Information [Line Items] | ' | ' |
Document Type | '10-Q | ' |
Amendment Flag | 'false | ' |
Document Period End Date | 31-Mar-14 | ' |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q1 | ' |
Trading Symbol | 'BIOL | ' |
Entity Registrant Name | 'BIOLASE, INC | ' |
Entity Central Index Key | '0000811240 | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Filer Category | 'Accelerated Filer | ' |
Entity Common Stock, Shares Outstanding | ' | 37,626,535 |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Current assets: | ' | ' |
Cash and cash equivalents | $1,835 | $1,440 |
Accounts receivable, less allowance of $807 in 2014 and $573 in 2013 | 8,556 | 11,127 |
Inventory, net | 11,891 | 11,378 |
Prepaid expenses and other current assets | 1,288 | 1,909 |
Total current assets | 23,570 | 25,854 |
Property, plant, and equipment, net | 1,749 | 1,826 |
Intangible assets, net | 165 | 183 |
Goodwill | 2,926 | 2,926 |
Other assets | 247 | 249 |
Total assets | 28,657 | 31,038 |
Current liabilities: | ' | ' |
Lines of credit | 2,878 | 4,633 |
Accounts payable | 7,776 | 8,560 |
Accrued liabilities | 4,941 | 4,997 |
Customer deposits | 150 | 285 |
Deferred revenue, current portion | 3,275 | 3,464 |
Total current liabilities | 19,020 | 21,939 |
Deferred income taxes | 632 | 617 |
Deferred revenue, long-term | ' | 1 |
Total liabilities | 19,652 | 22,557 |
Commitments and contingencies, and subsequent events (Notes 8, 9, and 13) | ' | ' |
Stockholders’ equity: | ' | ' |
Preferred stock, par value $0.001; 1,000 shares authorized, no shares issued and outstanding | ' | ' |
Common stock, par value $0.001; 50,000 shares authorized, 39,590 and 37,336 shares issued in 2014 and 2013, respectively; 37,626 and 35,372 shares outstanding in 2014 and 2013, respectively. | 40 | 38 |
Additional paid-in capital | 154,274 | 148,866 |
Accumulated other comprehensive loss | -273 | -274 |
Accumulated deficit | -128,637 | -123,750 |
Stockholders' equity excluding treasury stock | 25,404 | 24,880 |
Treasury stock (cost of 1,964 shares repurchased) | -16,399 | -16,399 |
Total Stockholders’ equity | 9,005 | 8,481 |
Total liabilities and stockholders’ equity | $28,657 | $31,038 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, except Per Share data, unless otherwise specified | ||
Allowance for accounts receivable | $807 | $573 |
Preferred stock, par value | $0.00 | $0.00 |
Preferred stock, shares authorized | 1,000 | 1,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $0.00 | $0.00 |
Common stock, shares authorized | 50,000 | 50,000 |
Common stock, shares issued | 39,590 | 37,336 |
Common stock, shares outstanding | 37,626 | 35,372 |
Treasury stock, shares repurchased | 1,964 | 1,964 |
Consolidated_Statements_Of_Ope
Consolidated Statements Of Operations And Comprehensive Loss (USD $) | 3 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Product and services revenue | $11,479 | $14,489 |
License fees and royalty revenue | 39 | 108 |
Net revenue | 11,518 | 14,597 |
Cost of revenue | 7,577 | 8,803 |
Gross profit | 3,941 | 5,794 |
Operating expenses: | ' | ' |
Sales and marketing | 4,455 | 5,252 |
General and administrative | 3,083 | 2,247 |
Engineering and development | 973 | 1,005 |
Excise tax | 65 | 107 |
Total operating expenses | 8,576 | 8,611 |
Loss from operations | -4,635 | -2,817 |
Gain (loss) on foreign currency transactions | 2 | -99 |
Interest expense, net | -230 | -87 |
Non-operating loss, net | -228 | -186 |
Loss before income tax provision (benefit) | -4,863 | -3,003 |
Income tax provision (benefit) | 24 | -372 |
Net loss | -4,887 | -2,631 |
Other comprehensive (loss) income items: | ' | ' |
Foreign currency translation adjustment | 1 | -56 |
Comprehensive loss | ($4,886) | ($2,687) |
Net loss per share: | ' | ' |
Basic | ($0.13) | ($0.08) |
Diluted | ($0.13) | ($0.08) |
Shares used in the calculation of net loss per share: | ' | ' |
Basic | 36,455 | 32,167 |
Diluted | 36,455 | 32,167 |
Consolidated_Statements_Of_Cas
Consolidated Statements Of Cash Flows (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Cash Flows from Operating Activities: | ' | ' |
Net loss | ($4,887) | ($2,631) |
Adjustments to reconcile net loss to net cash and cash equivalents used in operating activities: | ' | ' |
Depreciation and amortization | 175 | 145 |
(Gain) loss on disposal of property, plant, and equipment, net | -1 | ' |
Provision for bad debts | 268 | -11 |
Provision for inventory excess and obsolescence | 261 | ' |
Amortization of discounts on lines of credit | 120 | 18 |
Amortization of debt issuance costs | 57 | 38 |
Stock-based compensation | 310 | 368 |
Other equity instruments compensation | ' | 64 |
Other non-cash compensation | 61 | 62 |
Deferred income taxes | 15 | -107 |
Incurred but unpaid interest expense | 12 | ' |
Changes in operating assets and liabilities: | ' | ' |
Accounts receivable | 2,301 | 1,047 |
Inventory | -774 | -779 |
Prepaid expenses and other assets | 2 | 23 |
Customer deposits | -135 | -304 |
Accounts payable and accrued liabilities | -392 | -659 |
Deferred revenue | -190 | -96 |
Net cash and cash equivalents used in operating activities | -2,797 | -2,822 |
Cash Flows from Investing Activities: | ' | ' |
Additions to property, plant, and equipment | -86 | -139 |
Proceeds from disposal of property, plant, and equipment | 1 | ' |
Purchased other intangible assets | ' | -10 |
Net cash and cash equivalents used in investing activities | -85 | -149 |
Cash Flows from Financing Activities: | ' | ' |
Borrowings under lines of credit | 7,570 | 8,350 |
Payments under lines of credit | -9,325 | -6,726 |
Payment of debt issue costs | -10 | ' |
Proceeds from equity offering, net of expenses | 4,793 | ' |
Proceeds from exercise of stock options | 248 | 76 |
Net cash and cash equivalents provided by financing activities | 3,276 | 1,700 |
Effect of exchange rate changes | 1 | -43 |
Change in cash and cash equivalents | 395 | -1,314 |
Cash and cash equivalents, beginning of period | 1,440 | 2,543 |
Cash and cash equivalents, end of period | 1,835 | 1,229 |
Supplemental cash flow disclosure: | ' | ' |
Interest Paid | 67 | 31 |
Income taxes paid | $5 | $45 |
Description_of_Business_and_Ba
Description of Business and Basis of Presentation | 3 Months Ended |
Mar. 31, 2014 | |
Description of Business and Basis of Presentation | ' |
NOTE 1—DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION | |
The Company | |
BIOLASE, Inc., (the “Company”) incorporated in Delaware in 1987, is a biomedical company that develops, manufactures, and markets lasers in dentistry and medicine and also markets and distributes two-dimensional (“2-D”) and three-dimensional (“3-D”) dental imaging equipment, including cone beam digital x-rays and CAD/CAM intra-oral scanners, and in-office, chair-side milling machines and 3-D printers. The Company’s products are focused on technologies that advance the practice of dentistry and medicine. | |
Basis of Presentation | |
The unaudited consolidated financial statements include the accounts of BIOLASE, Inc. and its wholly-owned subsidiaries and have been prepared on a basis consistent with the December 31, 2013 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 months ended March 31, 2014 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, 2013, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 (“2013 Form 10-K”) filed with the Securities and Exchange Commission (the “SEC”) on March 17, 2014. | |
Liquidity and Management’s Plans | |
The Company suffered recurring losses from operations during the three years ended December 31, 2013. The Company also incurred a loss from operations, a net loss, and used cash in operating activities for the three months ended March 31, 2014. The available borrowing capacity on the lines of credit with Comerica Bank and the net proceeds from the below mentioned equity offering have been the principal sources of liquidity during the three months ended March 31, 2014. The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates that the Company will continue in operation for the next twelve months and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business. The financial statements do not include any adjustments to reflect the possible future effects of recoverability and classifications of assets or the amounts and classifications of liabilities that may result from the Company’s inability to continue as a going concern. | |
At March 31, 2014, the Company had approximately $4.6 million in working capital. The Company’s principal sources of liquidity at March 31, 2014 consisted of approximately $1.8 million in cash and cash equivalents, $8.6 million of net accounts receivable, and approximately $2.1 million of available borrowings under two revolving credit facility agreements with Comerica Bank. The credit facilities expired May 1, 2014, and the Company is considering alternative solutions, including potentially entering a new line of credit arrangement and/or issuing equity or debt securities, to mitigate any future liquidity constraints these covenants, restrictions, and maturities may impose on it. | |
The Company has two revolving credit facility agreements with Comerica Bank that require the Company to maintain compliance with certain monthly financial and non-financial covenants, as defined therein. Any noncompliance with these covenants may result in default interest rates and penalties, and Comerica Bank could declare the amounts outstanding immediately due and payable. On March 4, 2014, the Company received a waiver from Comerica Bank (the “March Waiver”) to waive noncompliance with certain financial and nonfinancial covenants as of January 31, 2014 and December 31, 2013. In connection with the March Waiver, Comerica Bank reduced the total aggregate available borrowings on the lines of credit to $ 5.0 million. On April 10, 2014, the Company and Comerica Bank finalized a forbearance agreement which addressed the Company’s non-compliance with a financial covenant at February 28, 2014 and reduced the total aggregate available borrowings on the lines of credit to $4 million. The Company was not in compliance with a financial covenant at March 31, 2014 and did not repay the lines of credit in full on May 1, 2014, at which date any remaining borrowings and accrued interest under the lines of credit became due and payable. As a result, on May 5, 2014, the Company and Comerica Bank agreed to Amendment No. 1 to Forbearance Agreement (“Amendment No. 1”) which extended the end of the forbearance period from May 1, 2014 to June 1, 2014. In connection with Amendment No. 1, the maturity date of the revolving lines of credit was extended to June 1, 2014 and the Company paid a fee of $10,000. | |
In order for the Company to continue operations and be able to discharge its liabilities and commitments in the normal course of business, the Company must sell its products directly to end-users and through distributors, establish profitable operations through increased sales, decrease expenses, and 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 direct 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. | |
On February 10, 2014, the Company entered into a Subscription Agreement with Oracle Partners L.P., Oracle Institutional Partners, L.P., and Oracle Ten Fund Master L.P., under which the Company offered an aggregate of 1,945,525 unregistered shares of common stock in a private placement at a price of $2.57 per share. Gross proceeds from the sale totaled $5 million, and net proceeds, after offering expenses of approximately $208,000, totaled approximately $4.8 million. The Company used the proceeds to repay the Company’s lines of credit and for working capital and general corporate purposes. | |
In February 2014, the Company streamlined operations and reduced payroll and payroll related expenses by approximately $1.3 million, net, on an annualized basis.The Company is also working on rationalizing certain of its marketing and advertising activities. We expect that we will begin to realize the impact of these cost saving measures in the quarter ending June 30, 2014. | |
On January 17, 2014, the Company filed a universal shelf registration statement (the “January 2014 Registration Statement”) with the SEC to register an indeterminate number of shares of common stock, preferred stock, and warrants with a total offering price not to exceed $12.5 million. The January 2014 Registration Statement was declared effective by the SEC on January 29, 2014. | |
Additional capital requirements may depend on many factors, including, among other things, 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. The Company cannot provide assurance that it will enter into any such equity, debt, or hybrid financings in the future or that the required capital would be available on acceptable terms, if at all, or that any such financing activity would not be dilutive to its stockholders. | |
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 develop its direct 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 continuing cost reduction initiatives. | |
The Company cannot guarantee that it will be able to increase sales, reduce expenses, or obtain additional funds when needed. If the Company is unable to increase sales, reduce expenses, or raise sufficient additional capital, it may be unable to continue to fund its operations, develop its products, or realize value from its assets and discharge its liabilities in the normal course of business. These uncertainties raise substantial doubt about the Company’s ability to continue as a going concern. |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2014 | |
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, indefinite-lived intangible assets, and the ability of goodwill to be realized, revenue deferrals for multiple element arrangements, 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. | |
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 are observable, either directly or indirectly, 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 and cash equivalents, and accounts receivable, accounts payable, and accrued liabilities, approximate fair value because of the short maturity of these items. Financial instruments consisting of lines of credit approximate fair value, as the interest rates associated with the lines of credit approximates the market rates for debt securities with similar terms and risk characteristics. | |
Recent Accounting Pronouncements | |
Changes to U.S. GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of accounting standards updates (“ASU’s”) to the FASB’s Accounting Standards Codification (“ASC”). | |
The Company considers the applicability and impact of all ASU’s. ASU’s not listed below were assessed and determined to not be applicable or are expected to have minimal impact on the Company’s consolidated financial position and results of operations. | |
Recently Adopted Accounting Standards | |
In March 2013, the FASB issued guidance on a parent’s accounting for the cumulative translation adjustment upon de-recognition of certain subsidiaries or groups of assets within a foreign entity or of an investment in a foreign entity. The revised guidance requires that the parent release any related cumulative translation adjustment into net income only if the sale or transfer results in the complete or substantially complete liquidation of the foreign entity in which the subsidiary or group of assets had resided. The guidance is effective prospectively for reporting periods beginning after December 15, 2013. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements. |
StockBased_Awards_and_Per_Shar
Stock-Based Awards and Per Share Information | 3 Months Ended | |||||||||||||||
Mar. 31, 2014 | ||||||||||||||||
Stock-Based Awards and Per Share Information | ' | |||||||||||||||
NOTE 3—STOCK-BASED AWARDS AND PER SHARE INFORMATION | ||||||||||||||||
Stock-Based Compensation | ||||||||||||||||
The Company currently has one stock-based compensation plan, the 2002 Stock Incentive Plan (the “2002 Plan”) which will expire on May 5, 2019. Eligible persons under the 2002 Plan include certain officers and employees of the Company, and directors of the Company, as well as consultants. Under the 2002 Plan, 7,750,000 shares of common stock have been authorized for issuance. As of March 31, 2014, 2,957,000 shares of common stock have been issued pursuant to options that were exercised, 4,400,000 shares of common stock have been reserved for options that are outstanding, and 393,000 shares of common stock remain available for future grant. | ||||||||||||||||
Compensation cost related to stock options recognized in operating results totaled approximately $310,000 and $368,000 for the three months ended March 31, 2014 and 2013, respectively. The net impact to earnings for those periods was $(0.01) and $(0.01) per basic and diluted share, respectively. At March 31, 2014, the Company had approximately $2.2 million of total unrecognized compensation cost, net of estimated forfeitures, related to unvested share-based compensation arrangements granted under the 2002 Plan. The Company expects that cost to be recognized over a weighted-average period of 1.5 years. | ||||||||||||||||
The following table summarizes the income statement classification of compensation expense associated with share-based payments (in thousands): | ||||||||||||||||
Three Months Ended | ||||||||||||||||
March 31, | ||||||||||||||||
2014 | 2013 | |||||||||||||||
Cost of revenue | $ | 46 | $ | 80 | ||||||||||||
Sales and marketing | 125 | 139 | ||||||||||||||
General and administrative | 115 | 115 | ||||||||||||||
Engineering and development | 24 | 34 | ||||||||||||||
$ | 310 | $ | 368 | |||||||||||||
The stock option fair values were estimated using the Black-Scholes option-pricing model with the following assumptions: | ||||||||||||||||
Three Months Ended | ||||||||||||||||
March 31, | ||||||||||||||||
2014 | 2013 | |||||||||||||||
Expected term | 3.6 years | 3.7 years | ||||||||||||||
Volatility | 98.37 | % | 92.7 | % | ||||||||||||
Annual dividend per share | $ | 0 | $ | 0 | ||||||||||||
Risk-free interest rate | 1.65 | % | 0.8 | % | ||||||||||||
A summary of option activity under the Company’s stock option plan for the three months ended March 31, 2014 is as follows: | ||||||||||||||||
Shares | Weighted | Weighted Average | Aggregate | |||||||||||||
Average | Remaining | Intrinsic | ||||||||||||||
Exercise Price | Contractual | Value(1) | ||||||||||||||
Term (Years) | ||||||||||||||||
Options outstanding at December 31, 2013 | 4,441,000 | $ | 3.51 | 3.83 | $ | 1,574,000 | ||||||||||
Granted at fair market value | 23,000 | $ | 2.99 | |||||||||||||
Granted at above fair market value | 290,000 | $ | 3.06 | |||||||||||||
Exercised | (116,000 | ) | $ | 2.14 | ||||||||||||
Forfeited, cancelled, or expired | (244,000 | ) | $ | 3.71 | ||||||||||||
Options outstanding at March 31, 2014 | 4,394,000 | $ | 3.5 | 3.62 | $ | 717,000 | ||||||||||
Options exercisable at March 31, 2014 | 2,666 ,000 | $ | 3.5 | 2.91 | $ | 678,000 | ||||||||||
Vested options expired during the quarter ended March 31, 2014 | 85,000 | $ | 5.13 | |||||||||||||
(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. | ||||||||||||||||
Cash proceeds along with fair value disclosures related to grants, exercises, and vesting options are provided in the following table (in thousands, except per share amounts): | ||||||||||||||||
Three Months Ended | ||||||||||||||||
March 31, | ||||||||||||||||
2014 | 2013 | |||||||||||||||
Proceeds from stock options exercised | $ | 248 | $ | 76 | ||||||||||||
Tax benefit related to stock options exercised (1) | N/A | N/A | ||||||||||||||
Intrinsic value of stock options exercised (2) | $ | 82 | $ | 23 | ||||||||||||
Weighted-average fair value of options granted during period | $ | 1.86 | $ | 1.84 | ||||||||||||
Total fair value of shares vested during the period | $ | 346 | $ | 314 | ||||||||||||
(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. | ||||||||||||||||
Warrants | ||||||||||||||||
The Company issues warrants to acquire shares of its common stock underlying such warrants as approved by its Board of Directors (the “Board”). | ||||||||||||||||
No warrants were exercised during the three months ended March 31, 2014. Warrants issued in connection with the lines of credit with Comerica Bank were exercised during the three months ended March 31, 2013. See Note 8 – Lines of Credit and Other Borrowings for further discussion. | ||||||||||||||||
Net Loss Per Share – Basic and Diluted | ||||||||||||||||
Basic net loss per share is computed by dividing loss available to common stockholders by the weighted-average number of common shares outstanding for the period. In computing diluted net loss per share, the weighted average number of shares outstanding is adjusted to reflect the effect of potentially dilutive securities. | ||||||||||||||||
Outstanding stock options and warrants to purchase 5,998,000 shares were not included in the computation of diluted loss per share for the three months ended March 31, 2014 as a result of their anti-dilutive effect. For the same 2013 period, anti-dilutive outstanding stock options and warrants to purchase 5,060,000 shares were not included in the computation of diluted loss per share. | ||||||||||||||||
Stock Dividends | ||||||||||||||||
In February 2014, the Board announced a 2% annual stock dividend policy for 2014, payable in quarterly installments, and declared a one-half percent stock dividend payable March 28, 2014, to stockholders of record on March 14, 2014. | ||||||||||||||||
Stock dividends are discussed quarterly by the Board and management. The actual declaration of future stock dividends and the establishment of the record and payment dates are subject to final determination by the Board after its review of the Company’s financial performance, the expected results of future operations, availability of shares, and other factors that the Board may deem relevant. The Company’s dividend policy may be changed at any time by the Board, and there is no assurance, with respect to the amount or frequency, that any stock dividend will be declared in the future. |
Inventory
Inventory | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Inventory | ' | |||||||
NOTE 4—INVENTORY | ||||||||
Inventory is valued at the lower of cost or market (determined by the first-in, first-out method) and is comprised of the following (in thousands): | ||||||||
March 31, | December 31, | |||||||
2014 | 2013 | |||||||
Raw materials | $ | 2,850 | $ | 3,094 | ||||
Work-in-process | 1,759 | 1,727 | ||||||
Finished goods | 7,282 | 6,557 | ||||||
Inventory, net | $ | 11,891 | $ | 11,378 | ||||
Inventory is net of a provision for excess and obsolete inventory totaling $3.0 million and $2.8 million as of March 31, 2014 and December 31, 2013, respectively. |
Property_Plant_and_Equipment
Property, Plant, and Equipment | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Property, Plant, and Equipment | ' | |||||||
NOTE 5—PROPERTY, PLANT, AND EQUIPMENT | ||||||||
Property, plant, and equipment, net is comprised of the following (in thousands): | ||||||||
March 31, | December 31, | |||||||
2014 | 2013 | |||||||
Building | $ | 256 | $ | 256 | ||||
Leasehold improvements | 1,207 | 1,207 | ||||||
Equipment and computers | 6,075 | 6,078 | ||||||
Furniture and fixtures | 1,049 | 1,049 | ||||||
Construction in progress | 83 | 8 | ||||||
8,670 | 8,598 | |||||||
Accumulated depreciation and amortization | (7,120 | ) | (6,971 | ) | ||||
1,550 | 1,627 | |||||||
Land | 199 | 199 | ||||||
Property, plant, and equipment, net | $ | 1,749 | $ | 1,826 | ||||
Depreciation and amortization expense related to property, plant, and equipment totaled $157,000 and $99,000 for the three months ended March 31, 2014 and 2013, respectively. |
Intangible_Assets_and_Goodwill
Intangible Assets and Goodwill | 3 Months Ended | |||||||||||||||||||||||||||||||
Mar. 31, 2014 | ||||||||||||||||||||||||||||||||
Intangible Assets and Goodwill | ' | |||||||||||||||||||||||||||||||
NOTE 6—INTANGIBLE ASSETS AND GOODWILL | ||||||||||||||||||||||||||||||||
The Company conducted its annual impairment test of intangible assets and goodwill as of June 30, 2013, and determined that there was no impairment. The Company also tests its intangible assets and goodwill between the annual impairment test 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. No events have occurred since June 30, 2013, that would trigger further impairment testing of the Company’s intangible assets and goodwill. | ||||||||||||||||||||||||||||||||
Amortization expense for the three months ended March 31, 2014 and 2013 totaled $18,000 and $46,000, respectively. Other intangible assets primarily include acquired customer lists and non-compete agreements. | ||||||||||||||||||||||||||||||||
The following table presents details of the Company’s intangible assets, related accumulated amortization, and goodwill (in thousands): | ||||||||||||||||||||||||||||||||
As of March 31, 2014 | As of December 31, 2013 | |||||||||||||||||||||||||||||||
Gross | Accumulated | Impairment | Net | Gross | Accumulated | Impairment | Net | |||||||||||||||||||||||||
Amortization | Amortization | |||||||||||||||||||||||||||||||
Patents (4-10 years) | $ | 1,914 | $ | (1,898 | ) | $ | — | $ | 16 | $ | 1,914 | $ | (1,895 | ) | $ | — | $ | 19 | ||||||||||||||
Trademarks (6 years) | 69 | (69 | ) | — | — | 69 | (69 | ) | — | — | ||||||||||||||||||||||
Other (4 to 6 years) | 817 | (668 | ) | — | 149 | 817 | (653 | ) | — | 164 | ||||||||||||||||||||||
Total | $ | 2,800 | $ | (2,635 | ) | $ | — | $ | 165 | $ | 2,800 | $ | (2,617 | ) | $ | — | $ | 183 | ||||||||||||||
Goodwill (Indefinite life) | $ | 2,926 | $ | 2,926 | $ | 2,926 | $ | 2,926 | ||||||||||||||||||||||||
Accrued_Liabilities_and_Deferr
Accrued Liabilities and Deferred Revenue | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Accrued Liabilities and Deferred Revenue | ' | |||||||
NOTE 7—ACCRUED LIABILITIES AND DEFERRED REVENUE | ||||||||
Accrued liabilities are comprised of the following (in thousands): | ||||||||
March 31, | December 31, | |||||||
2014 | 2013 | |||||||
Payroll and benefits | $ | 1,594 | $ | 1,898 | ||||
Warranty accrual, current portion | 1,025 | 1,096 | ||||||
Sales and excise tax | 163 | 322 | ||||||
Accrued professional services | 1,366 | 912 | ||||||
Accrued insurance premium | 276 | 428 | ||||||
Other | 517 | 341 | ||||||
Total accrued liabilities | $ | 4,941 | $ | 4,997 | ||||
Changes in the initial product warranty accrual, and the expenses incurred under the Company’s initial and extended warranties, for the three months ended March 31, 2014 and 2013 were as follows (in thousands): | ||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2014 | 2013 | |||||||
Initial warranty accrual, beginning balance | $ | 1,096 | $ | 1,699 | ||||
Provision for estimated warranty cost | 148 | 337 | ||||||
Warranty expenditures | (219 | ) | (281 | ) | ||||
1,025 | 1,755 | |||||||
Total warranty accrual, long-term | — | — | ||||||
Total warranty accrual, current portion | $ | 1,025 | $ | 1,755 | ||||
Deferred revenue is comprised of the following (in thousands): | ||||||||
31-Mar-14 | 31-Dec-13 | |||||||
Undelivered elements (training, installation and product and support services) | $ | 1,645 | $ | 1,823 | ||||
Extended warranty contracts | 1,630 | 1,642 | ||||||
Total deferred revenue | 3,275 | 3,465 | ||||||
Less long-term amounts: | ||||||||
Extended warranty contracts | — | (1 | ) | |||||
Total deferred revenue, long-term | — | (1 | ) | |||||
Total deferred revenue, current portion | $ | 3,275 | $ | 3,464 | ||||
Lines_Of_Credit_and_Other_Borr
Lines Of Credit and Other Borrowings | 3 Months Ended |
Mar. 31, 2014 | |
Lines of Credit and Other Borrowings | ' |
NOTE 8—LINES OF CREDIT AND OTHER BORROWINGS | |
Lines of Credit | |
On May 24, 2012, the Company entered into two revolving credit facility agreements with Comerica Bank (the “Credit Agreements”), as amended, which provide for borrowings against certain domestic accounts receivable and inventory (the “Domestic Revolver”) and certain export related accounts receivable and inventory (the “Ex-Im Revolver”). | |
The Credit Agreements require the Company to maintain compliance with certain monthly financial and non-financial covenants, as defined therein. Any noncompliance with these covenants may result in default interest rates and penalties, and Comerica Bank could declare the amounts outstanding immediately due and payable. On March 4, 2014, the Company received a waiver from Comerica Bank to waive noncompliance with certain financial and nonfinancial covenants as of January 31, 2014 and December 31, 2013. In connection with this waiver, the Company incurred a fee of $10,000 and Comerica Bank reduced the total aggregate available borrowings on the lines of credit to $5.0 million. The Company was not in compliance with a financial covenant as of February 28, 2014 and, as such, entered into a forbearance agreement (the “Forbearance Agreement”) with Comerica Bank on April 10, 2014. The Company paid a fee of $10,000 in connection with the Forbearance Agreement and Comerica Bank reduced the total aggregate available borrowings to $4.0 million. | |
The Company was not in compliance with a financial covenant at March 31, 2014 and did not repay the lines of credit in full on the maturity date of May 1, 2014. As a result, on May 5, 2014, the Company and Comerica Bank agreed to Amendment No. 1 to the Forbearance Agreement (“Amendment No. 1”) which extended the end of the forbearance period from May 1, 2014 to June 1, 2014. In connection with Amendment No. 1, the maturity date of the revolving lines of credit was extended to June 1, 2014 and the Company paid an administrative fee of $10,000. As of March 31, 2014, the Company had outstanding borrowings totaling approximately $2.9 million, which included $0.8 million under the Domestic Revolver and $2.1 million under the Ex-Im Revolver. | |
The outstanding principal balances of the Credit Agreements bear interest at annual percentage rates equal to the daily prime rate, plus 2.00% for the Domestic Revolver and 1.50% for the Ex-Im Revolver. The daily prime rate is subject to a floor of the daily adjusting LIBOR rate plus 2.50% per annum, or if LIBOR is undeterminable, 2.50% per annum. The Company is also required to pay an unused commitment fee of 0.25% based on a portion of the undrawn lines of credit, payable quarterly in arrears. During the three months ended March 31, 2014 and 2013, the Company incurred $229,000 and $84,000, respectively, of interest expense associated with the credit facilities, including $57,000 and $38,000, respectively, of amortization of deferred debt issuance costs and $120,000 and $18,000, respectively, of amortization of the discount on lines of credit. Interest expense payable totaled approximately $12,000 and $20,000 at March 31, 2014 and December 31, 2013, respectively, and was included in accrued liabilities in the accompanying consolidated financial statements. | |
Lockbox arrangements under the revolving bank facilities provide that substantially all of the income generated is deposited directly into lockbox accounts and then swept into cash management accounts for the benefit of Comerica Bank. Cash is disbursed from Comerica Bank to the Company only after payment of the applicable debt service and principal. At March 31, 2014 and December 31, 2013, there were no restricted cash amounts. The Company’s obligations are generally secured by substantially all of the Company’s assets now owned or hereinafter acquired. | |
During the quarters ended March 31, 2014 and 2013, the Company incurred $10,000 and $0, respectively, of commitment fees and legal costs associated with the various waivers and amendments. Commitment fees and legal costs associated with acquiring and maintaining the credit facilities are capitalized and amortized on a straight-line basis as interest expense over the remaining term of the Credit Agreements. | |
Other Borrowings | |
The Company finances a portion of its annual insurance premiums which it pays in installments over nine months. As of March 31, 2014, $123,000 was outstanding under this arrangement at an annual interest rate of 2.85%, and was included in accrued liabilities in the accompanying consolidated financial statements. The Company incurred interest expense associated with the financed insurance premiums of approximately $1,000 and $2,000 during the three months ended March 31, 2014 and 2013, respectively. |
Commitments_and_Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2014 | |
Commitments and Contingencies | ' |
NOTE 9—COMMITMENTS AND CONTINGENCIES | |
Leases | |
The Company leases its corporate headquarters and manufacturing facility in Irvine, California and also leases certain other facilities, office equipment, and automobiles under various operating lease arrangements. Future minimum rental commitments under operating lease agreements with non-cancelable terms greater than one year for the years ending December 31, 2014 and 2015, is $516,000 and $204,000, respectively. | |
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 $567,000 at March 31, 2014. The Company also has agreements with certain employees to pay bonuses based on targeted performance criteria. No amount was required to be accrued at March 31, 2014. | |
Purchase commitments | |
The Company generally purchases components and subassemblies for its products from a limited group of third party suppliers through purchase orders. The Company had $12.2 million of purchase commitments as of March 31, 2014, for which the Company has not received the goods or services and which is 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. | |
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. | |
Class Action Lawsuits | |
On August 23, 2013, a purported class action lawsuit entitled Brady Adams v. Biolase, Inc., et al., Case No. 13-CV-1300 JST (FFMx) was filed in the United States District Court for the Central District of California against BIOLASE and its current executive officers Federico Pignatelli and Frederick D. Furry. On August 26, 2013, a purported class action lawsuit entitled Ralph Divizio v. Biolase, Inc., et al., Case No. 13-CV-1317 DMG (MRWx) was filed in the same court against BIOLASE, Messrs. Pignatelli and Furry, and current executive officer Alexander K. Arrow. Each of the lawsuits alleges violations of the federal securities laws and asserts causes of action against the defendants under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. In accordance with the Private Securities Litigation Reform Act of 1995, on December 10, 2013, the court entered an order consolidating the lawsuits, appointing a lead plaintiff and approving lead plaintiff’s selection of lead counsel. On February 24, 2014, lead plaintiff filed a consolidated complaint against BIOLASE and Messrs. Pignatelli, Furry, and Arrow, alleging violations of the federal securities laws and asserting causes of action against the defendants under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. | |
On November 19, 2013, BIOLASE’s Board received a letter from attorneys for purported shareholder David T. Long, demanding that the Board investigate, institute litigation, and take measures to redress and prevent alleged wrongdoing concerning the dissemination of certain allegedly false and misleading public disclosures made by the Company between January 2013 and August 2013. | |
The Company paid $250,000 for legal costs expected to be incurred in connection with these matters during the year ended December 31, 2013. The Company believes that the claims contained in the lawsuits are without merit and intends to vigorously defend against the claims. | |
Shareholder Litigation | |
On March 3 and 6, 2014, the Company disclosed that the Board had appointed Paul N. Clark and Jeffrey M. Nugent to the Board and Dr. Alexander K. Arrow and Dr. Samuel B. Low had tendered their resignations. Subsequent to these disclosures, questions were raised as to whether these changes were effected. | |
On March 11, 2014, Oracle Partners L.P. (“Oracle”) filed a lawsuit in the Delaware Court of Chancery seeking a determination of the composition of the Company’s Board and a temporary restraining order that would preclude the Board from taking any action without the approval of the four purported directors whose directorships Oracle and the Company claim to be undisputed. On March 20, 2014, the Court of Chancery issued a Status Quo Order which fixed the Board at four members, consisting of Messrs. Federico Pignatelli and James R. Talevich and Drs. Norman J. Nemoy and Frederic H. Moll, pending further decision in the litigation. | |
A trial was held on April 24 and 25, 2014 and the Company is currently awaiting the Court of Chancery’s decision. | |
Intellectual Property Litigation | |
On April 24, 2012, CAO Group, Inc. (“CAO”) filed a lawsuit against the Company in the District of Utah for patent infringement of U.S. Patent No. 7,485,116 (the “116 Patent”) regarding the Company’s ezlase dental laser. On September 9, 2012, CAO filed its First Amended Complaint, which added 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 the Company issued on April 30, 2012, which CAO claims contained false statements that are disparaging to CAO and its diode product. The First Amended Complaint seeks injunctive relief, treble damages, attorneys’ fees, punitive damages, and interest. On November 13, 2012, the Court stayed the lawsuit for 120 days to allow the United States Patent and Trademark Office (“USPTO”) to consider the Company’s request for reexamination of the patent-in-suit. The USPTO granted the request to reexamine the asserted claims of the patent-in-suit and, on February 28, 2013, the Court stayed the lawsuit until the termination of the reexamination proceedings. On April 23, 2013, the USPTO issued an office action rejecting all of the asserted claims over the prior art, and CAO responded to the office action. On August 28, 2013, the USPTO issued an Action Closing Procedure, rejecting all of CAO’s patent claims. CAO responded to the USPTO’s ruling and on December 10, 2013, the USPTO issued a Right of Appeal Notice, finally rejecting some claims of the 116 Patent while finding that other claims appeared to be patentable. Both parties are permitted to appeal the USPTO’s findings to the Patent Trial and Appeal Board (the “PTAB”). The Company appealed the USPTO’s findings on January 9, 2014 and on January 27, 2014, the USPTO declined to reconsider the finding of certain claims as patentable and instructed the parties to proceed to appeal to the PTAB. On March 17, 2014, the Company filed its brief in support of its appeal of the USPTO’s decision not to reject certain claims of the 116 Patent. On March 24, 2014, CAO filed its brief in support of its appeal of the USPTO’s decision to reject certain claims of the 116 patent. On April 18, 2014, the Company filed a respondent brief in opposition to the CAO’s appeal arguments. | |
The Company filed a patent infringement lawsuit against Fotona dd. (“Fotona”) in Düsseldorf District Court (the “Düsseldorf Court”) on April 12, 2012 alleging infringement with respect to the Fotona Fidelis dental laser system. Fotona denies liability and seeks the reimbursement of statutory fees from the Company. Together with its response brief, Fotona also filed a nullity action against the patent in dispute, patent number EP 1 560 470. The nullity action is pending at the German Federal Patent Court (the “Patent Court”), Docket No. 1 Ni 58/13 (EP). On September 2, 2013, the Company filed its counterplea in the infringement proceedings and phrased its arguments defending the validity of the patent. These arguments were also the subject of the defense brief to the Patent Court in the parallel nullity action proceedings. On September 9, 2013, the Company filed its response to the Patent Court. Fotona filed a rejoinder on February 3, 2014, including its counterplea on nullity. | |
On April 29, 2014, the Düsseldorf Court rendered a first instance decision whereby Fotona must cease and desist from selling its Fidelis and Lightwalker dental laser systems, render accounts on past sales, recall respective products, and pay damages on infringement. Additionally, the Company was awarded statutory fees, court costs, and attorney’s fees. Preliminary enforcement against Fotona is possible if the Company posts a bond totaling €500,000, which is designed to cover a portion of the potential damages, before a final instance decision is available. In Germany, damages can be calculated based on the profits made by the infringer after the formal announcement of the granting of a patent, in this case beginning January 1, 2009, without considering direct labor or any other operational costs. This could amount to several million euros; however, Fotona has yet to provide the details of its profits in order to allow the Company to calculate the damages. In the two additional first instance cases following the extension of the initial lawsuit against Fotona, the Düsseldorf Court will also require the Company to provide a statutory bond totaling €146,000. Such bonds are traditionally imposed on foreign plaintiffs to cover all statutory, court, and attorney’s fees. | |
False Advertising Lawsuit | |
The Company filed a false advertising lawsuit against Fotona and Technology4Medicine L.L.C., two of its competitors (together "the Defendants") in United States District Court for the Central District of California. The lawsuit alleges six causes of action, and claims that the Defendants have made false and misleading statements regarding the Company's products, technology, and management. The lawsuit, filed on February 20, 2014, seeks both cash damages and injunctive relief. | |
Other Matters | |
In the normal course of business, the Company may be subject to other legal proceedings, lawsuits and other claims. Although the ultimate aggregate amount of probable monetary liability or financial impact with respect to these matters is subject to many uncertainties and is therefore not predictable with assurance, the Company’s management believes that any monetary liability or financial impact to the Company from these other matters, individually and in the aggregate, would not be material to the Company’s financial condition, results of operations or cash flows. However, there can be no assurance with respect to such result, and monetary liability or financial impact to the Company from these other matters could differ materially from those projected. |
Segment_Information
Segment Information | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Segment Information | ' | |||||||
NOTE 10—SEGMENT INFORMATION | ||||||||
The Company currently operates in a single reportable segment. For the three months ended March 31, 2014, sales in the United States accounted for approximately 58% of net revenue and international sales accounted for approximately 42% of net revenue. For the three months ended March 31, 2013, sales in the United States accounted for approximately 62% of net revenue and international sales accounted for approximately 38% of net revenue. | ||||||||
Net revenue by geographic location based on the location of customers was as follows (in thousands): | ||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2014 | 2013 | |||||||
United States | $ | 6,709 | $ | 9,048 | ||||
International | 4,809 | 5,549 | ||||||
$ | 11,518 | $ | 14,597 | |||||
No individual country, other than the United States, represented more than 10% of total net revenue. | ||||||||
Long-lived assets located outside of the United States at our foreign subsidiaries totaled $426,000 and $430,000 as of March 31, 2014 and December 31, 2013, respectively. |
Concentrations
Concentrations | 3 Months Ended |
Mar. 31, 2014 | |
Concentrations | ' |
NOTE 11—CONCENTRATIONS | |
Revenue from laser systems, the Company’s core products which include the iPlus, MD Turbo, and Epic, comprised 61% and 70% of total net revenues for the three months ended March 31, 2014 and 2013, respectively. Revenue from consumables and other comprised 14% and 11% of total revenue for the three months ended March 31, 2014 and 2013, respectively. Revenue from imaging systems comprised 10% and 7% of total net revenue for the three months ended March 31, 2014 and 2013, respectively. Revenue from services comprised 15% and 11% of total net revenue for the three months ended March 31, 2014 and 2013, respectively. Revenue from license fees and royalties comprised 0% and 1% of total net revenue for the three months ended March 31, 2014 and 2013, respectively. | |
No individual customer represented more than 10% of the Company’s revenue for the three months ended March 31, 2014 and 2013. | |
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 March 31, 2014 and December 31, 2013. | |
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 results of operations. |
Income_Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2014 | |
Income Taxes | ' |
NOTE 12—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. 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 months ended March 31, 2014 and 2013, respectively. The Company does not expect any changes to its unrecognized tax benefit for the next twelve months that would materially impact its consolidated financial statements. | |
During the three months ended March 31, 2014, the Company recorded an income tax provision of $24,000 resulting in an effective tax rate of (0.54)%. The effective tax rate differs from the statutory tax rate of 34% 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 federal alternative minimum tax liability. | |
The income tax provision for the three months ended March 31, 2014 was calculated using the discrete year-to-date method, which management determined to be more appropriate than the annual effective rate method which was used to calculate the income tax provision for the quarter ended March 31, 2013. |
Subsequent_Event
Subsequent Event | 3 Months Ended |
Mar. 31, 2014 | |
Subsequent Event | ' |
NOTE 13—SUBSEQUENT EVENT | |
Credit Agreements | |
On April 10, 2014, the Company and Comerica Bank finalized a Forbearance Agreement which addressed the Company’s non-compliance with a financial covenant at February 28, 2014 and resulting default and reduced the total aggregate available borrowings on the lines of credit to $4 million. The Company was not in compliance with a financial covenant at March 31, 2014 and did not repay the lines of credit in full on the maturity date of May 1, 2014. As a result, on May 5, 2014, the Company and Comerica Bank entered into Amendment No. 1 to Forbearance Agreement and agreed to extend the forbearance period on the Company’s two revolving credit facility agreements from May 1, 2014 to June 1, 2014. In connection with Amendment No. 1, the maturity date of the revolving lines of credit was extended to June 1, 2014 and the Company paid a fee of $10,000. | |
See Note 8 – Lines of Credit and Other Borrowings for further discussion. | |
Class Action Lawsuits | |
On May 9, 2014, the Company filed a motion to dismiss the consolidated complaint for the purported class action lawsuits pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, which is pending. | |
See Note 9 – Commitments and Contingencies for further discussion. | |
Shareholder Litigation | |
The Company is currently awaiting the Delaware Court of Chancery’s decision for the trial held on April 24 and 25, 2014 regarding the shareholder lawsuit filed by Oracle. | |
See Note 9 – Commitments and Contingencies for further discussion. | |
Intellectual Property Litigation | |
On April 29, 2014, the Düsseldorf Court rendered a first instance decision whereby Fotona must cease and desist from selling its Fidelis and Lightwalker dental laser systems, render accounts on past sales, recall respective products, and pay damages on infringement. Additionally, the Company was awarded statutory fees, court costs, and attorney’s fees. Preliminary enforcement against Fotona is possible if the Company posts a bond totaling €500,000, which is designed to cover a portion of the potential damages, before a final instance decision is available. | |
See Note 9 – Commitments and Contingencies for further discussion. | |
Accounting_Policies_Policies
Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2014 | |
Basis of Presentation | ' |
Basis of Presentation | |
The unaudited consolidated financial statements include the accounts of BIOLASE, Inc. and its wholly-owned subsidiaries and have been prepared on a basis consistent with the December 31, 2013 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 months ended March 31, 2014 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, 2013, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 (“2013 Form 10-K”) filed with the Securities and Exchange Commission (the “SEC”) on March 17, 2014. | |
Liquidity and Management's Plans | ' |
Liquidity and Management’s Plans | |
The Company suffered recurring losses from operations during the three years ended December 31, 2013. The Company also incurred a loss from operations, a net loss, and used cash in operating activities for the three months ended March 31, 2014. The available borrowing capacity on the lines of credit with Comerica Bank and the net proceeds from the below mentioned equity offering have been the principal sources of liquidity during the three months ended March 31, 2014. The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates that the Company will continue in operation for the next twelve months and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business. The financial statements do not include any adjustments to reflect the possible future effects of recoverability and classifications of assets or the amounts and classifications of liabilities that may result from the Company’s inability to continue as a going concern. | |
At March 31, 2014, the Company had approximately $4.6 million in working capital. The Company’s principal sources of liquidity at March 31, 2014 consisted of approximately $1.8 million in cash and cash equivalents, $8.6 million of net accounts receivable, and approximately $2.1 million of available borrowings under two revolving credit facility agreements with Comerica Bank. The credit facilities expired May 1, 2014, and the Company is considering alternative solutions, including potentially entering a new line of credit arrangement and/or issuing equity or debt securities, to mitigate any future liquidity constraints these covenants, restrictions, and maturities may impose on it. | |
The Company has two revolving credit facility agreements with Comerica Bank that require the Company to maintain compliance with certain monthly financial and non-financial covenants, as defined therein. Any noncompliance with these covenants may result in default interest rates and penalties, and Comerica Bank could declare the amounts outstanding immediately due and payable. On March 4, 2014, the Company received a waiver from Comerica Bank (the “March Waiver”) to waive noncompliance with certain financial and nonfinancial covenants as of January 31, 2014 and December 31, 2013. In connection with the March Waiver, Comerica Bank reduced the total aggregate available borrowings on the lines of credit to $ 5.0 million. On April 10, 2014, the Company and Comerica Bank finalized a forbearance agreement which addressed the Company’s non-compliance with a financial covenant at February 28, 2014 and reduced the total aggregate available borrowings on the lines of credit to $4 million. The Company was not in compliance with a financial covenant at March 31, 2014 and did not repay the lines of credit in full on May 1, 2014, at which date any remaining borrowings and accrued interest under the lines of credit became due and payable. As a result, on May 5, 2014, the Company and Comerica Bank agreed to Amendment No. 1 to Forbearance Agreement (“Amendment No. 1”) which extended the end of the forbearance period from May 1, 2014 to June 1, 2014. In connection with Amendment No. 1, the maturity date of the revolving lines of credit was extended to June 1, 2014 and the Company paid a fee of $10,000. | |
In order for the Company to continue operations and be able to discharge its liabilities and commitments in the normal course of business, the Company must sell its products directly to end-users and through distributors, establish profitable operations through increased sales, decrease expenses, and 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 direct 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. | |
On February 10, 2014, the Company entered into a Subscription Agreement with Oracle Partners L.P., Oracle Institutional Partners, L.P., and Oracle Ten Fund Master L.P., under which the Company offered an aggregate of 1,945,525 unregistered shares of common stock in a private placement at a price of $2.57 per share. Gross proceeds from the sale totaled $5 million, and net proceeds, after offering expenses of approximately $208,000, totaled approximately $4.8 million. The Company used the proceeds to repay the Company’s lines of credit and for working capital and general corporate purposes. | |
In February 2014, the Company streamlined operations and reduced payroll and payroll related expenses by approximately $1.3 million, net, on an annualized basis.The Company is also working on rationalizing certain of its marketing and advertising activities. We expect that we will begin to realize the impact of these cost saving measures in the quarter ending June 30, 2014. | |
On January 17, 2014, the Company filed a universal shelf registration statement (the “January 2014 Registration Statement”) with the SEC to register an indeterminate number of shares of common stock, preferred stock, and warrants with a total offering price not to exceed $12.5 million. The January 2014 Registration Statement was declared effective by the SEC on January 29, 2014. | |
Additional capital requirements may depend on many factors, including, among other things, 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. The Company cannot provide assurance that it will enter into any such equity, debt, or hybrid financings in the future or that the required capital would be available on acceptable terms, if at all, or that any such financing activity would not be dilutive to its stockholders. | |
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 develop its direct 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 continuing cost reduction initiatives. | |
The Company cannot guarantee that it will be able to increase sales, reduce expenses, or obtain additional funds when needed. If the Company is unable to increase sales, reduce expenses, or raise sufficient additional capital, it may be unable to continue to fund its operations, develop its products, or realize value from its assets and discharge its liabilities in the normal course of business. These uncertainties raise substantial doubt about the Company’s ability to continue as a going concern. | |
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, indefinite-lived intangible assets, and the ability of goodwill to be realized, revenue deferrals for multiple element arrangements, 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. | |
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 are observable, either directly or indirectly, 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 and cash equivalents, and accounts receivable, accounts payable, and accrued liabilities, approximate fair value because of the short maturity of these items. Financial instruments consisting of lines of credit approximate fair value, as the interest rates associated with the lines of credit approximates the market rates for debt securities with similar terms and risk characteristics. | |
Recent Accounting Pronouncements | ' |
Recent Accounting Pronouncements | |
Changes to U.S. GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of accounting standards updates (“ASU’s”) to the FASB’s Accounting Standards Codification (“ASC”). | |
The Company considers the applicability and impact of all ASU’s. ASU’s not listed below were assessed and determined to not be applicable or are expected to have minimal impact on the Company’s consolidated financial position and results of operations. | |
Recently Adopted Accounting Standards | ' |
Recently Adopted Accounting Standards | |
In March 2013, the FASB issued guidance on a parent’s accounting for the cumulative translation adjustment upon de-recognition of certain subsidiaries or groups of assets within a foreign entity or of an investment in a foreign entity. The revised guidance requires that the parent release any related cumulative translation adjustment into net income only if the sale or transfer results in the complete or substantially complete liquidation of the foreign entity in which the subsidiary or group of assets had resided. The guidance is effective prospectively for reporting periods beginning after December 15, 2013. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements. | |
Inventory | ' |
Inventory is valued at the lower of cost or market (determined by the first-in, first-out method) | |
Intangible Assets and Goodwill | ' |
The Company conducted its annual impairment test of intangible assets and goodwill as of June 30, 2013, and determined that there was no impairment. The Company also tests its intangible assets and goodwill between the annual impairment test 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. No events have occurred since June 30, 2013, that would trigger further impairment testing of the Company’s intangible assets and goodwill. | |
Commitments and Contingencies | ' |
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. | |
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 months ended March 31, 2014 and 2013, respectively. The Company does not expect any changes to its unrecognized tax benefit for the next twelve months that would materially impact its consolidated financial statements. |
StockBased_Awards_and_Per_Shar1
Stock-Based Awards and Per Share Information (Tables) | 3 Months Ended | |||||||||||||||
Mar. 31, 2014 | ||||||||||||||||
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 | ||||||||||||||||
March 31, | ||||||||||||||||
2014 | 2013 | |||||||||||||||
Cost of revenue | $ | 46 | $ | 80 | ||||||||||||
Sales and marketing | 125 | 139 | ||||||||||||||
General and administrative | 115 | 115 | ||||||||||||||
Engineering and development | 24 | 34 | ||||||||||||||
$ | 310 | $ | 368 | |||||||||||||
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 | ||||||||||||||||
March 31, | ||||||||||||||||
2014 | 2013 | |||||||||||||||
Expected term | 3.6 years | 3.7 years | ||||||||||||||
Volatility | 98.37 | % | 92.7 | % | ||||||||||||
Annual dividend per share | $ | 0 | $ | 0 | ||||||||||||
Risk-free interest rate | 1.65 | % | 0.8 | % | ||||||||||||
Summary of Option Activity Under Stock Option Plan | ' | |||||||||||||||
A summary of option activity under the Company’s stock option plan for the three months ended March 31, 2014 is as follows: | ||||||||||||||||
Shares | Weighted | Weighted Average | Aggregate | |||||||||||||
Average | Remaining | Intrinsic | ||||||||||||||
Exercise Price | Contractual | Value(1) | ||||||||||||||
Term (Years) | ||||||||||||||||
Options outstanding at December 31, 2013 | 4,441,000 | $ | 3.51 | 3.83 | $ | 1,574,000 | ||||||||||
Granted at fair market value | 23,000 | $ | 2.99 | |||||||||||||
Granted at above fair market value | 290,000 | $ | 3.06 | |||||||||||||
Exercised | (116,000 | ) | $ | 2.14 | ||||||||||||
Forfeited, cancelled, or expired | (244,000 | ) | $ | 3.71 | ||||||||||||
Options outstanding at March 31, 2014 | 4,394,000 | $ | 3.5 | 3.62 | $ | 717,000 | ||||||||||
Options exercisable at March 31, 2014 | 2,666 ,000 | $ | 3.5 | 2.91 | $ | 678,000 | ||||||||||
Vested options expired during the quarter ended March 31, 2014 | 85,000 | $ | 5.13 | |||||||||||||
(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. | ||||||||||||||||
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 vesting options are provided in the following table (in thousands, except per share amounts): | ||||||||||||||||
Three Months Ended | ||||||||||||||||
March 31, | ||||||||||||||||
2014 | 2013 | |||||||||||||||
Proceeds from stock options exercised | $ | 248 | $ | 76 | ||||||||||||
Tax benefit related to stock options exercised (1) | N/A | N/A | ||||||||||||||
Intrinsic value of stock options exercised (2) | $ | 82 | $ | 23 | ||||||||||||
Weighted-average fair value of options granted during period | $ | 1.86 | $ | 1.84 | ||||||||||||
Total fair value of shares vested during the period | $ | 346 | $ | 314 | ||||||||||||
(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. | ||||||||||||||||
Inventory_Tables
Inventory (Tables) | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Components of Inventory | ' | |||||||
Inventory is valued at the lower of cost or market (determined by the first-in, first-out method) and is comprised of the following (in thousands): | ||||||||
March 31, | December 31, | |||||||
2014 | 2013 | |||||||
Raw materials | $ | 2,850 | $ | 3,094 | ||||
Work-in-process | 1,759 | 1,727 | ||||||
Finished goods | 7,282 | 6,557 | ||||||
Inventory, net | $ | 11,891 | $ | 11,378 | ||||
Property_Plant_and_Equipment_T
Property, Plant, and Equipment (Tables) | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Components of Property, Plant and Equipment | ' | |||||||
Property, plant, and equipment, net is comprised of the following (in thousands): | ||||||||
March 31, | December 31, | |||||||
2014 | 2013 | |||||||
Building | $ | 256 | $ | 256 | ||||
Leasehold improvements | 1,207 | 1,207 | ||||||
Equipment and computers | 6,075 | 6,078 | ||||||
Furniture and fixtures | 1,049 | 1,049 | ||||||
Construction in progress | 83 | 8 | ||||||
8,670 | 8,598 | |||||||
Accumulated depreciation and amortization | (7,120 | ) | (6,971 | ) | ||||
1,550 | 1,627 | |||||||
Land | 199 | 199 | ||||||
Property, plant, and equipment, net | $ | 1,749 | $ | 1,826 | ||||
Intangible_Assets_and_Goodwill1
Intangible Assets and Goodwill (Tables) | 3 Months Ended | |||||||||||||||||||||||||||||||
Mar. 31, 2014 | ||||||||||||||||||||||||||||||||
Summary of Intangible Assets, Related Accumulated Amortization and Goodwill | ' | |||||||||||||||||||||||||||||||
The following table presents details of the Company’s intangible assets, related accumulated amortization, and goodwill (in thousands): | ||||||||||||||||||||||||||||||||
As of March 31, 2014 | As of December 31, 2013 | |||||||||||||||||||||||||||||||
Gross | Accumulated | Impairment | Net | Gross | Accumulated | Impairment | Net | |||||||||||||||||||||||||
Amortization | Amortization | |||||||||||||||||||||||||||||||
Patents (4-10 years) | $ | 1,914 | $ | (1,898 | ) | $ | — | $ | 16 | $ | 1,914 | $ | (1,895 | ) | $ | — | $ | 19 | ||||||||||||||
Trademarks (6 years) | 69 | (69 | ) | — | — | 69 | (69 | ) | — | — | ||||||||||||||||||||||
Other (4 to 6 years) | 817 | (668 | ) | — | 149 | 817 | (653 | ) | — | 164 | ||||||||||||||||||||||
Total | $ | 2,800 | $ | (2,635 | ) | $ | — | $ | 165 | $ | 2,800 | $ | (2,617 | ) | $ | — | $ | 183 | ||||||||||||||
Goodwill (Indefinite life) | $ | 2,926 | $ | 2,926 | $ | 2,926 | $ | 2,926 | ||||||||||||||||||||||||
Accrued_Liabilities_and_Deferr1
Accrued Liabilities and Deferred Revenue (Tables) | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Components of Accrued Liabilities | ' | |||||||
Accrued liabilities are comprised of the following (in thousands): | ||||||||
March 31, | December 31, | |||||||
2014 | 2013 | |||||||
Payroll and benefits | $ | 1,594 | $ | 1,898 | ||||
Warranty accrual, current portion | 1,025 | 1,096 | ||||||
Sales and excise tax | 163 | 322 | ||||||
Accrued professional services | 1,366 | 912 | ||||||
Accrued insurance premium | 276 | 428 | ||||||
Other | 517 | 341 | ||||||
Total accrued liabilities | $ | 4,941 | $ | 4,997 | ||||
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 months ended March 31, 2014 and 2013 were as follows (in thousands): | ||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2014 | 2013 | |||||||
Initial warranty accrual, beginning balance | $ | 1,096 | $ | 1,699 | ||||
Provision for estimated warranty cost | 148 | 337 | ||||||
Warranty expenditures | (219 | ) | (281 | ) | ||||
1,025 | 1,755 | |||||||
Total warranty accrual, long-term | — | — | ||||||
Total warranty accrual, current portion | $ | 1,025 | $ | 1,755 | ||||
Summary of Deferred Revenue | ' | |||||||
Deferred revenue is comprised of the following (in thousands): | ||||||||
31-Mar-14 | 31-Dec-13 | |||||||
Undelivered elements (training, installation and product and support services) | $ | 1,645 | $ | 1,823 | ||||
Extended warranty contracts | 1,630 | 1,642 | ||||||
Total deferred revenue | 3,275 | 3,465 | ||||||
Less long-term amounts: | ||||||||
Extended warranty contracts | — | (1 | ) | |||||
Total deferred revenue, long-term | — | (1 | ) | |||||
Total deferred revenue, current portion | $ | 3,275 | $ | 3,464 | ||||
Segment_Information_Tables
Segment Information (Tables) | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
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 | ||||||||
March 31, | ||||||||
2014 | 2013 | |||||||
United States | $ | 6,709 | $ | 9,048 | ||||
International | 4,809 | 5,549 | ||||||
$ | 11,518 | $ | 14,597 | |||||
Description_of_Business_and_Ba1
Description of Business and Basis of Presentation - Additional Information (Detail) (USD $) | 1 Months Ended | 3 Months Ended | 0 Months Ended | 1 Months Ended | |||||
Feb. 28, 2014 | Mar. 31, 2014 | Mar. 04, 2014 | Jan. 17, 2014 | Dec. 31, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Apr. 10, 2014 | 5-May-14 | |
Agreement | Subsequent Event | Subsequent Event | |||||||
Basis Of Presentation [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Working capital | ' | $4,600,000 | ' | ' | ' | ' | ' | ' | ' |
Cash and cash equivalents | ' | 1,835,000 | ' | ' | 1,440,000 | 1,229,000 | 2,543,000 | ' | ' |
Net accounts receivable | ' | 8,556,000 | ' | ' | 11,127,000 | ' | ' | ' | ' |
Lines of credit remaining borrowing capacity | ' | 2,100,000 | ' | ' | ' | ' | ' | ' | ' |
Number revolving credit facility agreements | ' | 2 | ' | ' | ' | ' | ' | ' | ' |
Line of credit maximum borrowing capacity | ' | ' | 5,000,000 | ' | ' | ' | ' | 4,000,000 | ' |
Line of credit facility, expiration date | ' | 1-May-14 | ' | ' | ' | ' | ' | ' | 1-Jun-14 |
Revolving lines of credit fee paid | ' | 10,000 | ' | ' | ' | ' | ' | 10,000 | 10,000 |
Common stock shares issued | ' | 1,945,525 | ' | ' | ' | ' | ' | ' | ' |
Common stock issued, price per share | ' | $2.57 | ' | ' | ' | ' | ' | ' | ' |
Proceeds from equity offering, gross | ' | 5,000,000 | ' | ' | ' | ' | ' | ' | ' |
Payments of stock issuance costs | ' | 208,000 | ' | ' | ' | ' | ' | ' | ' |
Proceeds from equity offering, net of expenses | ' | 4,793,000 | ' | ' | ' | ' | ' | ' | ' |
Annualized reduction in payroll and payroll related expenses | -1,300,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Maximum stock offering price | ' | ' | ' | $12,500,000 | ' | ' | ' | ' | ' |
StockBased_Awards_and_Per_Shar2
Stock-Based Awards and Per Share Information - Additional Information (Detail) (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ' | ' |
Compensation cost related to stock options | $310,000 | $368,000 |
Net impact of share based compensation expense to earnings per basic share | ($0.01) | ($0.01) |
Net impact of share based compensation expense to earnings per diluted share | ($0.01) | ($0.01) |
Total unrecognized compensation cost | $2,200,000 | ' |
Unrecognized share based compensation cost to be recognized over weighted-average period | '1 year 6 months | ' |
Outstanding stock options and warrants excluded from diluted loss per share | 5,998,000 | 5,060,000 |
Annual stock dividend policy for 2014 | 2.00% | ' |
Dividends declared, date of record | 14-Mar-14 | ' |
Two Thousand Two Stock Incentive Plan. | ' | ' |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ' | ' |
Plan expiration date | 5-May-19 | ' |
Common stock authorized for issuance under the 2002 Plan | 7,750,000 | ' |
Common stock issued pursuant to options exercised | 2,957,000 | ' |
Common stock shares reserved for future issuance | 4,400,000 | ' |
Options available for future grant | 393,000 | ' |
Classification_of_Compensation
Classification of Compensation Expense Associated with Share-Based Payments (Detail) (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ' | ' |
Allocated Share-based Compensation Expense | $310,000 | $368,000 |
Cost of Revenue | ' | ' |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ' | ' |
Allocated Share-based Compensation Expense | 46,000 | 80,000 |
Sales and Marketing | ' | ' |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ' | ' |
Allocated Share-based Compensation Expense | 125,000 | 139,000 |
General and Administrative Expense | ' | ' |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ' | ' |
Allocated Share-based Compensation Expense | 115,000 | 115,000 |
Engineering And Development | ' | ' |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ' | ' |
Allocated Share-based Compensation Expense | $24,000 | $34,000 |
Assumptions_Used_in_Estimating
Assumptions Used in Estimating Fair Value of Stock Options Granted (Detail) (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ' | ' |
Expected term | '3 years 7 months 6 days | '3 years 8 months 12 days |
Volatility | 98.37% | 92.70% |
Annual dividend per share | $0 | $0 |
Risk-free interest rate | 1.65% | 0.80% |
Summary_of_Option_Activity_Det
Summary of Option Activity (Detail) (USD $) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2014 | Dec. 31, 2013 | |||
Number of Shares | ' | ' | ||
Beginning Balance | 4,441,000 | ' | ||
Exercised | -116,000 | ' | ||
Forfeited, cancelled, or expired | -244,000 | ' | ||
Ending Balance | 4,394,000 | 4,441,000 | ||
Options exercisable at March 31, 2014 | 2,666,000 | ' | ||
Vested options expired during the quarter ended March 31, 2014 | 85,000 | ' | ||
Weighted Average Exercise Price | ' | ' | ||
Beginning Balance | $3.51 | ' | ||
Exercised | $2.14 | ' | ||
Forfeited, cancelled, or expired | $3.71 | ' | ||
Ending Balance | $3.50 | $3.51 | ||
Options exercisable at March 31, 2014 | $3.50 | ' | ||
Vested options expired during the quarter ended March 31, 2014 | $5.13 | ' | ||
Weighted Average Remaining Contractual Term (Years) | ' | ' | ||
Options outstanding | '3 years 7 months 13 days | '3 years 9 months 29 days | ||
Options exercisable | '2 years 10 months 28 days | ' | ||
Aggregate Intrinsic Value | ' | ' | ||
Options outstanding | $717,000 | [1] | $1,574,000 | [1] |
Options exercisable | $678,000 | [1] | ' | |
Granted at fair market value | ' | ' | ||
Number of Shares | ' | ' | ||
Granted | 23,000 | ' | ||
Weighted Average Exercise Price | ' | ' | ||
Granted | $2.99 | ' | ||
Granted at above fair market value | ' | ' | ||
Number of Shares | ' | ' | ||
Granted | 290,000 | ' | ||
Weighted Average Exercise Price | ' | ' | ||
Granted | $3.06 | ' | ||
[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. |
Cash_Proceeds_Along_with_Fair_
Cash Proceeds Along with Fair Value Disclosures Related to Grants, Exercises, and Vesting Options (Detail) (USD $) | 3 Months Ended | |||
In Thousands, except Per Share data, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | ||
Schedule Of Cash Proceeds And Weighted Average Fair Values Of Stock Options [Line Items] | ' | ' | ||
Proceeds from stock options exercised | $248 | $76 | ||
Tax benefit related to stock options exercised | ' | [1] | ' | [1] |
Intrinsic value of stock options exercised | 82 | [2] | 23 | [2] |
Weighted-average fair value of options granted during period | $1.86 | $1.84 | ||
Total fair value of shares vested during the period | $346 | $314 | ||
[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. |
Components_of_Inventory_Detail
Components of Inventory (Detail) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Components of inventory, net of allowances | ' | ' |
Raw materials | $2,850 | $3,094 |
Work-in-process | 1,759 | 1,727 |
Finished goods | 7,282 | 6,557 |
Inventory, net | $11,891 | $11,378 |
Inventory_Additional_Informati
Inventory - Additional Information (Detail) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Schedule Of Inventory [Line Items] | ' | ' |
Provision for excess and obsolete inventory | $3 | $2.80 |
Components_of_Property_Plant_a
Components of Property, Plant and Equipment (Detail) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Property Plant And Equipment [Line Items] | ' | ' |
Property, plant, and equipment gross, excluding land | $8,670 | $8,598 |
Accumulated depreciation and amortization | -7,120 | -6,971 |
Property, plant, and equipment net, excluding land | 1,550 | 1,627 |
Land | 199 | 199 |
Property, plant, and equipment, net | 1,749 | 1,826 |
Building | ' | ' |
Property Plant And Equipment [Line Items] | ' | ' |
Property, plant and equipment, gross | 256 | 256 |
Leasehold Improvements | ' | ' |
Property Plant And Equipment [Line Items] | ' | ' |
Property, plant and equipment, gross | 1,207 | 1,207 |
Equipment and Computers | ' | ' |
Property Plant And Equipment [Line Items] | ' | ' |
Property, plant and equipment, gross | 6,075 | 6,078 |
Furniture and Fixtures | ' | ' |
Property Plant And Equipment [Line Items] | ' | ' |
Property, plant and equipment, gross | 1,049 | 1,049 |
Construction in Progress | ' | ' |
Property Plant And Equipment [Line Items] | ' | ' |
Property, plant and equipment, gross | $83 | $8 |
Property_Plant_and_Equipment_A
Property, Plant, and Equipment - Additional Information (Detail) (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Property Plant And Equipment [Line Items] | ' | ' |
Depreciation and amortization | $157,000 | $99,000 |
Intangible_Assets_and_Goodwill2
Intangible Assets and Goodwill - Additional Information (Detail) (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Finite Lived Intangible Assets [Line Items] | ' | ' |
Amortization expense | $18,000 | $46,000 |
Summary_of_Intangible_Assets_R
Summary of Intangible Assets, Related Accumulated Amortization and Goodwill (Detail) (USD $) | 3 Months Ended | 12 Months Ended |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Dec. 31, 2013 |
Intangible Assets And Goodwill [Line Items] | ' | ' |
Intangible assets, gross | $2,800 | $2,800 |
Intangible assets, accumulated amortization | -2,635 | -2,617 |
Intangible assets, Impairment | ' | ' |
Intangible assets, net | 165 | 183 |
Indefinite lived intangible assets useful life | 'Indefinite life | ' |
Goodwill, gross | 2,926 | 2,926 |
Goodwill, net | 2,926 | 2,926 |
Patents | ' | ' |
Intangible Assets And Goodwill [Line Items] | ' | ' |
Intangible assets, gross | 1,914 | 1,914 |
Intangible assets, accumulated amortization | -1,898 | -1,895 |
Intangible assets, Impairment | ' | ' |
Intangible assets, net | 16 | 19 |
Patents | Minimum | ' | ' |
Intangible Assets And Goodwill [Line Items] | ' | ' |
Finite lived intangible asset useful life | '4 years | ' |
Patents | Maximum | ' | ' |
Intangible Assets And Goodwill [Line Items] | ' | ' |
Finite lived intangible asset useful life | '10 years | ' |
Trademarks | ' | ' |
Intangible Assets And Goodwill [Line Items] | ' | ' |
Finite lived intangible asset useful life | '6 years | ' |
Intangible assets, gross | 69 | 69 |
Intangible assets, accumulated amortization | -69 | -69 |
Intangible assets, Impairment | ' | ' |
Other Intangible Assets | ' | ' |
Intangible Assets And Goodwill [Line Items] | ' | ' |
Intangible assets, gross | 817 | 817 |
Intangible assets, accumulated amortization | -668 | -653 |
Intangible assets, Impairment | ' | ' |
Intangible assets, net | $149 | $164 |
Other Intangible Assets | Minimum | ' | ' |
Intangible Assets And Goodwill [Line Items] | ' | ' |
Finite lived intangible asset useful life | '4 years | ' |
Other Intangible Assets | Maximum | ' | ' |
Intangible Assets And Goodwill [Line Items] | ' | ' |
Finite lived intangible asset useful life | '6 years | ' |
Components_of_Accrued_Liabilit
Components of Accrued Liabilities (Detail) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2013 |
In Thousands, unless otherwise specified | |||
Components of accrued liabilities | ' | ' | ' |
Payroll and benefits | $1,594 | $1,898 | ' |
Warranty accrual, current portion | 1,025 | 1,096 | 1,755 |
Sales and excise tax | 163 | 322 | ' |
Accrued professional services | 1,366 | 912 | ' |
Accrued insurance premium | 276 | 428 | ' |
Other | 517 | 341 | ' |
Total accrued liabilities | $4,941 | $4,997 | ' |
Changes_in_Initial_Product_War
Changes in Initial Product Warranty Accrual and Expenses Under Initial and Extended Warranties (Detail) (USD $) | 3 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 |
Accrued Liabilities [Line Items] | ' | ' | ' |
Initial warranty accrual, beginning balance | $1,096 | $1,699 | ' |
Provision for estimated warranty cost | 148 | 337 | ' |
Warranty expenditures | -219 | -281 | ' |
Initial warranty accrual, ending balance | 1,025 | 1,755 | ' |
Total warranty accrual, long-term | ' | ' | ' |
Total warranty accrual, current portion | $1,025 | $1,755 | $1,096 |
Summary_of_Deferred_Revenue_De
Summary of Deferred Revenue (Detail) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Components of deferred revenue | ' | ' |
Undelivered elements (training, installation and product and support services) | $1,645 | $1,823 |
Extended warranty contracts | 1,630 | 1,642 |
Total deferred revenue | 3,275 | 3,465 |
Less long-term amounts: | ' | ' |
Extended warranty contracts | ' | -1 |
Total deferred revenue, long-term | ' | -1 |
Deferred revenue, current portion | $3,275 | $3,464 |
Recovered_Sheet1
Lines of Credit and Other Borrowings - Additional Information (Detail) (USD $) | 3 Months Ended | 3 Months Ended | 1 Months Ended | 1 Months Ended | 0 Months Ended | 1 Months Ended | |||||||
Mar. 31, 2014 | Mar. 31, 2013 | Mar. 04, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 | 7-May-13 | Mar. 31, 2014 | 7-May-13 | Mar. 31, 2014 | 7-May-13 | Apr. 10, 2014 | 5-May-14 | |
Line of Credit | Line of Credit | Prime Rate | Domestic Revolver Credit Facility | Domestic Revolver Credit Facility | Ex-Im Revolver | Ex-Im Revolver | Subsequent Event | Subsequent Event | |||||
Prime Rate | Prime Rate | ||||||||||||
Line Of Credit Facility [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Credit agreements amendment fee | $10,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Revolving lines of credit fee paid | 10,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 10,000 | 10,000 |
Line of credit maximum borrowing capacity | ' | ' | 5,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | 4,000,000 | ' |
Outstanding borrowings under lines of credit | 2,900,000 | ' | ' | ' | ' | ' | ' | 800,000 | ' | 2,100,000 | ' | ' | ' |
Line of credit facility, expiration date | 1-May-14 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1-Jun-14 |
Interest on principal balance rate plus | ' | ' | ' | ' | ' | ' | ' | ' | 2.00% | ' | 1.50% | ' | ' |
Prime floor, daily prime plus LIBOR | ' | ' | ' | ' | ' | ' | 2.50% | ' | ' | ' | ' | ' | ' |
Unused capacity commitment fee percentage | ' | ' | ' | ' | 0.25% | ' | ' | ' | ' | ' | ' | ' | ' |
Interest expense incurred for lines of credit and loan and security agreement | ' | ' | ' | ' | 229,000 | 84,000 | ' | ' | ' | ' | ' | ' | ' |
Accrued interest payable | 12,000 | ' | ' | 20,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Amortization of discount on lines of credit | 120,000 | 18,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Amortization of deferred debt issuance costs | 57,000 | 38,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Restricted cash amounts | 0 | ' | ' | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Commitment fees and legal costs incurred | 10,000 | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Financed insurance premium | 123,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of monthly insurance premium installments payable in 2013 | 'Nine | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Financial insurance premiums interest rate | 2.85% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Interest expense incurred for financed insurance premiums | $1,000 | $2,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Commitments_and_Contingencies_
Commitments and Contingencies - Additional Information (Detail) | 12 Months Ended | |||
Dec. 31, 2013 | Mar. 31, 2014 | Apr. 29, 2014 | Apr. 29, 2014 | |
USD ($) | USD ($) | Subsequent Event | Subsequent Event | |
EUR (€) | Two Additional First Instance Cases | |||
EUR (€) | ||||
Commitment And Contingencies [Line Items] | ' | ' | ' | ' |
Future minimum lease obligations, for the year ended December 31, 2014 | ' | $516,000 | ' | ' |
Future minimum lease obligations, for the year ended December 31, 2015 | ' | 204,000 | ' | ' |
Change in control, if occurs, may require severance benefits payable | ' | 567,000 | ' | ' |
Purchase commitments pending | ' | 12,200,000 | ' | ' |
Legal costs paid in connection with class action lawsuits | 250,000 | ' | ' | ' |
Amount of injunction bond to be posted | ' | ' | € 500,000 | € 146,000 |
Segment_Information_Additional
Segment Information - Additional Information (Detail) (USD $) | 3 Months Ended | |||
Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | |
International | International | |||
Segment Reporting Information [Line Items] | ' | ' | ' | ' |
Percentage of net sales in the United States | 58.00% | 62.00% | ' | ' |
Percentage of net sales outside the United States | 42.00% | 38.00% | ' | ' |
Countries representing > 10% of total net revenue | 'No individual country, other than the United States, represented more than 10% of total net revenue. | 'No individual country, other than the United States, represented more than 10% of total net revenue. | ' | ' |
Long-lived assets outside of the United States | ' | ' | $426,000 | $430,000 |
Summary_of_Net_Revenue_by_Geog
Summary of Net Revenue by Geographic Location (Detail) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Revenue From External Customers By Geographic Area [Line Items] | ' | ' |
Net revenue | $11,518 | $14,597 |
United States | ' | ' |
Revenue From External Customers By Geographic Area [Line Items] | ' | ' |
Net revenue | 6,709 | 9,048 |
International | ' | ' |
Revenue From External Customers By Geographic Area [Line Items] | ' | ' |
Net revenue | $4,809 | $5,549 |
Concentrations_Additional_Info
Concentrations - Additional Information (Detail) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Customer | Customer | |
Concentration Risk [Line Items] | ' | ' |
Number of customers which represented more than 10% of the Company's revenue | 0 | 0 |
Maximum account receivable with individual customer | 'Less than 10% | 'Less than 10% |
Laser Systems | ' | ' |
Concentration Risk [Line Items] | ' | ' |
Percentage of net revenue | 61.00% | 70.00% |
Consumable and Other | ' | ' |
Concentration Risk [Line Items] | ' | ' |
Percentage of net revenue | 14.00% | 11.00% |
Imaging Systems | ' | ' |
Concentration Risk [Line Items] | ' | ' |
Percentage of net revenue | 10.00% | 7.00% |
Services | ' | ' |
Concentration Risk [Line Items] | ' | ' |
Percentage of net revenue | 15.00% | 11.00% |
License Fees and Royalties | ' | ' |
Concentration Risk [Line Items] | ' | ' |
Percentage of net revenue | 0.00% | 1.00% |
Income_Taxes_Additional_Inform
Income Taxes - Additional Information (Detail) (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Income Tax Disclosure [Line Items] | ' | ' |
Liability for unrecognized tax benefit, including related estimates of penalties and interest | $0 | $0 |
Income tax provision (benefit) | $24,000 | ($372,000) |
Projected annual effective tax rate | -0.54% | ' |
Statutory tax rate | 34.00% | ' |
Subsequent_Event_Additional_In
Subsequent Event - Additional Information (Detail) | 3 Months Ended | 0 Months Ended | 1 Months Ended | ||
Mar. 31, 2014 | Mar. 04, 2014 | Apr. 10, 2014 | 5-May-14 | Apr. 29, 2014 | |
USD ($) | USD ($) | Subsequent Event | Subsequent Event | Subsequent Event | |
USD ($) | USD ($) | EUR (€) | |||
Subsequent Event [Line Items] | ' | ' | ' | ' | ' |
Line of credit facility, expiration date | 1-May-14 | ' | ' | 1-Jun-14 | ' |
Line of credit maximum borrowing capacity | ' | $5,000,000 | $4,000,000 | ' | ' |
Revolving lines of credit fee paid | 10,000 | ' | 10,000 | 10,000 | ' |
Amount of injunction bond to be posted | ' | ' | ' | ' | € 500,000 |