Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Sep. 30, 2014 | Oct. 31, 2014 | |
Document And Entity Information [Abstract] | ' | ' |
Document Type | '10-Q | ' |
Amendment Flag | 'false | ' |
Document Period End Date | 30-Sep-14 | ' |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q3 | ' |
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 | ' | 43,952,119 |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Current assets: | ' | ' |
Cash and cash equivalents | $2,759 | $1,440 |
Accounts receivable, less allowance of $1,227 in 2014 and $573 in 2013 | 9,264 | 11,127 |
Inventory, net | 11,799 | 11,378 |
Prepaid expenses and other current assets | 1,288 | 1,909 |
Total current assets | 25,110 | 25,854 |
Property, plant, and equipment, net | 1,467 | 1,826 |
Intangible assets, net | 131 | 183 |
Goodwill | 2,926 | 2,926 |
Other assets | 268 | 249 |
Total assets | 29,902 | 31,038 |
Current liabilities: | ' | ' |
Lines of credit | ' | 4,633 |
Accounts payable | 9,535 | 8,560 |
Accrued liabilities | 5,697 | 4,997 |
Customer deposits | 111 | 285 |
Deferred revenue, current portion | 2,431 | 3,464 |
Total current liabilities | 17,774 | 21,939 |
Deferred income taxes | 662 | 617 |
Deferred revenue, long-term | ' | 1 |
Warranty accrual, long-term | 367 | ' |
Total liabilities | 18,803 | 22,557 |
Commitments, contingencies and subsequent event (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; 100,000 and 50,000 shares authorized in 2014 and 2013, respectively; 43,952 and 37,336 shares issued in 2014 and 2013, respectively; 43,952 and 35,372 shares outstanding in 2014 and 2013, respectively | 44 | 38 |
Additional paid-in-capital | 150,081 | 148,866 |
Accumulated other comprehensive loss | -455 | -274 |
Accumulated deficit | -138,571 | -123,750 |
Stockholders' Equity before Treasury Stock | 11,099 | 24,880 |
Treasury stock (Note 3) | ' | -16,399 |
Total stockholders' equity | 11,099 | 8,481 |
Total liabilities and stockholders' equity | $29,902 | $31,038 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, except Share data, unless otherwise specified | ||
Statement Of Financial Position [Abstract] | ' | ' |
Allowance for accounts receivable | $1,227 | $573 |
Preferred stock, par value | $0.00 | $0.00 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $0.00 | $0.00 |
Common stock, shares authorized | 100,000,000 | 50,000,000 |
Common stock, shares issued | 43,952,000 | 37,336,000 |
Common stock, shares outstanding | 43,952,000 | 35,372,000 |
Consolidated_Statements_Of_Ope
Consolidated Statements Of Operations And Comprehensive Loss (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Statement Consolidated Statements Of Operations And Comprehensive Loss [Abstract] | ' | ' | ' | ' |
Products and services revenue | $12,673 | $12,311 | $34,292 | $41,008 |
License fees and royalty revenue | 41 | 34 | 126 | 181 |
Net revenue | 12,714 | 12,345 | 34,418 | 41,189 |
Cost of revenue | 7,321 | 8,516 | 21,355 | 26,005 |
Gross profit | 5,393 | 3,829 | 13,063 | 15,184 |
Operating expenses: | ' | ' | ' | ' |
Sales and marketing | 3,862 | 4,164 | 11,886 | 13,554 |
General and administrative | 3,474 | 2,460 | 11,867 | 7,305 |
Engineering and development | 1,276 | 977 | 3,227 | 2,987 |
Excise tax | 76 | 89 | 205 | 308 |
Total operating expenses | 8,688 | 7,690 | 27,185 | 24,154 |
Loss from operations | -3,295 | -3,861 | -14,122 | -8,970 |
(Loss) gain on foreign currency transactions | -135 | 16 | -166 | -74 |
Interest expense, net | -37 | -182 | -452 | -386 |
Non-operating loss, net | -172 | -166 | -618 | -460 |
Loss before income tax provision (benefit) | -3,467 | -4,027 | -14,740 | -9,430 |
Income tax provision (benefit) | 28 | 22 | 81 | -182 |
Net loss | -3,495 | -4,049 | -14,821 | -9,248 |
Other comprehensive (loss) income items: | ' | ' | ' | ' |
Foreign currency translation adjustment | -173 | 88 | -181 | 23 |
Comprehensive loss | ($3,668) | ($3,961) | ($15,002) | ($9,225) |
Net loss per share: | ' | ' | ' | ' |
Basic | ($0.08) | ($0.12) | ($0.38) | ($0.29) |
Diluted | ($0.08) | ($0.12) | ($0.38) | ($0.29) |
Shares used in the calculation of net loss per share: | ' | ' | ' | ' |
Basic | 42,403 | 32,734 | 38,851 | 32,429 |
Diluted | 42,403 | 32,734 | 38,851 | 32,429 |
Consolidated_Statements_Of_Cas
Consolidated Statements Of Cash Flows (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
Cash Flows from Operating Activities: | ' | ' |
Net loss | ($14,821) | ($9,248) |
Adjustments to reconcile net loss to net cash and cash equivalents used in operating activities: | ' | ' |
Depreciation and amortization | 529 | 439 |
Loss on disposal of property, plant, and equipment, net | -1 | ' |
Provision for bad debts | 796 | 270 |
Provision for inventory excess and obsolescence | 261 | 1,000 |
Amortization of discounts on lines of credit | 200 | 79 |
Amortization of debt issuance costs | 128 | 152 |
Stock-based compensation | 887 | 1,239 |
Other equity instruments compensation | ' | 64 |
Other non-cash compensation | 123 | 187 |
Deferred income taxes | 45 | -61 |
Changes in operating assets and liabilities: | ' | ' |
Accounts receivable | 1,065 | 608 |
Inventory | -682 | -1,671 |
Prepaid expenses and other assets | -19 | 59 |
Customer deposits | -174 | -408 |
Accounts payable and accrued liabilities | 2,423 | 240 |
Deferred revenue | -1,034 | -43 |
Net cash and cash equivalents used in operating activities | -10,274 | -7,094 |
Cash Flows from Investing Activities: | ' | ' |
Additions to property, plant, and equipment | -194 | -464 |
Proceeds from disposal of property, plant, and equipment | 1 | ' |
Purchases of other intangible assets | ' | -10 |
Net cash and cash equivalents used in investing activities | -193 | -474 |
Cash Flows from Financing Activities: | ' | ' |
Borrowings under lines of credit | 16,875 | 27,300 |
Payments under lines of credit | -21,508 | -23,403 |
Payments of debt issue costs | -45 | -34 |
Proceeds from equity offering, net of expenses | 16,302 | 4,592 |
Proceeds from exercise of stock options and warrants | 310 | 707 |
Net cash and cash equivalents provided by financing activities | 11,934 | 9,162 |
Effect of exchange rate changes | -148 | 14 |
Change in cash and cash equivalents | 1,319 | 1,608 |
Cash and cash equivalents, beginning of period | 1,440 | 2,543 |
Cash and cash equivalents, end of period | 2,759 | 4,151 |
Supplemental cash flow disclosure: | ' | ' |
Interest paid | 143 | 165 |
Income taxes paid | $45 | $51 |
Description_of_Business_and_Ba
Description of Business and Basis of Presentation | 9 Months Ended |
Sep. 30, 2014 | |
Accounting Policies [Abstract] | ' |
Description of Business and Basis of Presentation | ' |
NOTE 1—DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION | |
The Company | |
Biolase, Inc., (the “Company”) is a biomedical device 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 and offer benefits and value to healthcare professionals and their patients. | |
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 and nine months ended September 30, 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 incurred a loss from operations, a net loss, and used cash in operating activities for the three and nine months ended September 30, 2014. The Company has also suffered recurring losses from operations during the three years ended December 31, 2013. During the three and nine months ended September 30, 2014, the principle sources of liquidity for the Company have been its available borrowing capacity on the lines of credit with Comerica Bank and the net proceeds from the February 10, 2014 and July 22, 2014 sale by the Company of $4.8 million and $11.5 million, respectively, of unregistered shares of common stock discussed below. | |
As of September 30, 2014, the Company had working capital of approximately $7.3 million. The Company’s principal sources of liquidity at September 30, 2014 consisted of approximately $2.8 million in cash and cash equivalents and $9.3 million of net accounts receivable. | |
On November 3, 2014, the Company entered into a securities purchase agreement with several institutional and individual investors, and certain of its directors and officers, under which the Company agreed to sell an aggregate of 14,162,873 unregistered shares of its common stock at the price of $2.39 per share, the closing price of the Company’s common stock on November 3, 2014, and warrants to purchase up to an aggregate of 9,205,862 unregistered shares of its common stock at an exercise price of $4.00 per share. Gross proceeds from the sale were $35 million. The warrants become exercisable on May 7, 2015, six months after the closing of the private placement, and have a term of three years from the date of issuance. In connection with the transaction, the Company agreed to use commercially reasonable efforts to file within 30 days of the closing a registration statement with the SEC to register the resale of both the shares and the shares underlying the warrants issued at the closing. The proceeds will be used for working capital and general corporate purposes. | |
The Company completed a private placement on July 22, 2014 with several institutional and individual investors, and several of our directors and officers, wherein the Company sold 6,250,000 unregistered shares of its common stock at a price of $1.92 per share (the closing price of the Company’s common stock on July 18, 2014). Gross proceeds from the sale totaled $12 million, and net proceeds, after offering expenses of approximately $491,000, were approximately $11.5 million. The Company used the proceeds to repay the Company’s lines of credit with Comerica Bank and for working capital and general corporate purposes. | |
On July 28, 2014, the Company repaid all amounts outstanding under its revolving credit facilities with Comerica Bank, including principal, accrued interest, and fees which totaled approximately $2.9 million and the credit facilities were terminated. | |
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 were $5.0 million, and net proceeds, after offering expenses of approximately $0.2 million, were 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. | |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2014 | |
Accounting Policies [Abstract] | ' |
Summary of Significant Accounting Policies | ' |
NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Use of Estimates | |
The preparation of these consolidated financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect amounts reported in the consolidated financial statements and the accompanying notes. Significant estimates in these consolidated financial statements include allowances on accounts receivable, inventory, and deferred taxes, as well as estimates for accrued warranty expenses, 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 Issued Accounting Standards | |
In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (ASU 2014-09), which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP. | |
The standard is effective for annual periods beginning after December 15, 2016, and interim periods therein, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption (which includes additional footnote disclosures). The Company is currently evaluating the impact of the pending adoption of ASU 2014-09 on its consolidated financial statements and has not yet determined the method by which it will adopt the standard during the year ending December 31, 2017. | |
In August 2014, the FASB issued ASU No. 2014-15, Disclosure of Uncertainties About an Entity’s Ability to Continue as a Going Concern. The standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued and provides guidance on determining when and how to disclose going concern uncertainties in the financial statements. Certain disclosures will be required if conditions give rise to substantial doubt about an entity’s ability to continue as a going concern. ASU 2014-15 applies to all entities and is effective for annual and interim reporting periods ending after December 15, 2016, with early adoption permitted. The Company does not expect that the adoption of this standard will have a material effect on its financial statements. | |
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 | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | ' | |||||||||||||||
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 (as amended effective as of May 26, 2004, November 15, 2005, May 16, 2007, May 5, 2011, June 6, 2013, and October 30, 2014) (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, 9,250,000 shares of common stock have been authorized for issuance. As of September 30, 2014, 2,993,000 shares of common stock have been issued pursuant to options that were exercised, 3,815,000 shares of common stock have been reserved for options that are outstanding, and 2,442,000 shares of common stock remain available for future grant. | ||||||||||||||||
Stock-Based compensation cost recognized in operating results totaled approximately $301,000 and $491,000 for the three months ended September 30, 2014 and 2013, respectively; and $887,000 and $1.2 million for the nine months ended September 30, 2014 and 2013, respectively. The net impact to earnings for the three months ended September 30, 2014 and 2013 was $(0.01) and $(0.02) per basic and diluted share, respectively, and $(0.02) and $(0.04) per basic and diluted share for the nine months ended September 30, 2014 and 2013, respectively. At September 30, 2014, the Company had approximately $2.0 million of total unrecognized compensation cost, net of estimated forfeitures, related to unvested share-based compensation arrangements. The Company expects that cost to be recognized over a weighted-average period of 1.1 years. | ||||||||||||||||
The following table summarizes the income statement classification of compensation expense associated with share-based payments (in thousands): | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Cost of revenue | $ | 29 | $ | 73 | $ | 116 | $ | 227 | ||||||||
Sales and marketing | 91 | 154 | 328 | 443 | ||||||||||||
General and administrative | 162 | 225 | 378 | 459 | ||||||||||||
Engineering and development | 19 | 39 | 65 | 110 | ||||||||||||
$ | 301 | $ | 491 | $ | 887 | $ | 1,239 | |||||||||
The stock option fair values, under the Company’s stock option plan, were estimated using the Black-Scholes option-pricing model with the following assumptions: | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Expected term | 4.00 years | 3.70 years | 3.82 years | 3.66 years | ||||||||||||
Volatility | 85.65 | % | 83 | % | 94.41 | % | 83 | % | ||||||||
Annual dividend per share | $ | — | $ | — | $ | — | $ | — | ||||||||
Risk-free interest rate | 1.65 | % | 1.54 | % | 1.66 | % | 0.99 | % | ||||||||
A summary of option activity under the Company’s stock option plan for the nine months ended September 30, 2014 is as follows: | ||||||||||||||||
Weighted Average | ||||||||||||||||
Weighted | Remaining | Aggregate | ||||||||||||||
Average | Contractual | Intrinsic | ||||||||||||||
Shares | Exercise Price | Term (Years) | Value(1) | |||||||||||||
Options outstanding at December 31, 2013 | 4,441,000 | $ | 3.51 | 3.83 | $ | 1,574,000 | ||||||||||
Granted at fair market value | 212,000 | $ | 2.24 | |||||||||||||
Granted at above fair market value | 369,000 | $ | 3.05 | |||||||||||||
Exercised | (152,000 | ) | $ | 2.03 | ||||||||||||
Forfeited, cancelled, or expired | (1,055,000 | ) | $ | 4.57 | ||||||||||||
Options outstanding at September 30, 2014 | 3,815,000 | $ | 3.16 | 3.35 | $ | 815,000 | ||||||||||
Options exercisable at September 30, 2014 | 2,485,000 | $ | 3.07 | 2.43 | $ | 733,000 | ||||||||||
Vested options expired during the quarter | 190,000 | $ | 5.62 | |||||||||||||
ended September 30, 2014 | ||||||||||||||||
(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 | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Proceeds from stock options exercised | $ | 54 | $ | 10 | $ | 310 | $ | 707 | ||||||||
Tax benefit related to stock options | N/A | N/A | N/A | N/A | ||||||||||||
exercised (1) | ||||||||||||||||
Intrinsic value of stock options exercised (2) | $ | 13 | $ | 6 | $ | 108 | $ | 860 | ||||||||
Weighted-average fair value of options granted | $ | 1.35 | $ | 3.31 | $ | 1.62 | $ | 3.9 | ||||||||
during period | ||||||||||||||||
Total fair value of shares vested during | $ | 273 | $ | 437 | $ | 921 | $ | 1,155 | ||||||||
the period | ||||||||||||||||
(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”). | ||||||||||||||||
A summary of warrant activity for the nine months ended September 30, 2014 is as follows: | ||||||||||||||||
Weighted | ||||||||||||||||
Average | ||||||||||||||||
Shares | Exercise Price | |||||||||||||||
Warrants outstanding at December 31, 2013 | 1,698,000 | $ | 5.44 | |||||||||||||
Granted | — | |||||||||||||||
Exercised | (200,000 | ) | $ | 2 | ||||||||||||
Forfeited, cancelled, or expired | (610,000 | ) | $ | 5.71 | ||||||||||||
Warrants outstanding at September 30, 2014 | 888,000 | $ | 6.04 | |||||||||||||
Warrants exercisable at September 30, 2014 | 753,000 | $ | 6.4 | |||||||||||||
Vested warrants expired during the quarter | — | N/A | ||||||||||||||
ended September 30, 2014 | ||||||||||||||||
During the nine months ended September 30, 2014 and 2013, Comerica Bank exercised warrants issued in connection with the lines of credit on a cashless basis pursuant to the Notice of Exercise resulting in a net issuance of 38,708 shares and 40,465 shares, respectively, of common stock. | ||||||||||||||||
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 4,703,000 shares were not included in the computation of diluted loss per share for the three and nine months ended September 30, 2014 as a result of their anti-dilutive effect. For the same 2013 periods, anti-dilutive outstanding stock options and warrants to purchase 6,022,000 shares were not included in the computation of diluted loss per share. | ||||||||||||||||
Other Stock-Based Awards | ||||||||||||||||
On July 13, 2014, the Compensation Committee of the Board of Directors (the “Board”) of the Company approved the Chief Executive Officer’s stock-based compensation consisting of non-qualified stock options to purchase 172,282 shares of the Company’s common stock at an exercise price of $1.98 per share and 37,879 restricted stock units ("RSUs") valued at $1.98 per share. One-sixth of the stock options and one-sixth of the RSUs vested immediately, with the remaining five-sixths vesting ratably on a monthly basis over the twelve-month period ending on July 13, 2015. The fair value of the stock options of $1.31 per share was estimated using the Black-Scholes option-pricing model with assumptions of 3.6 years for expected term, 98.37% volatility and 1.65% risk-free interest rate. | ||||||||||||||||
On August 27, 2014, each of the independent directors was granted 9,217 RSUs, totaling 36,868 RSUs valued at $2.17 per share, which vest over a 12-month period. | ||||||||||||||||
Retirement of Treasury Stock | ||||||||||||||||
On July 18, 2014, the Company retired all 1,963,500 shares of stock held in treasury at that date. The Company recorded the cost of the treasury stock retired as a $2,000 reduction to common stock and a $16,397,000 reduction in additional paid in capital. | ||||||||||||||||
Stock Dividend | ||||||||||||||||
In February 2014, the Board declared a one-half percent stock dividend payable March 28, 2014, to stockholders of record on March 14, 2014. There is no assurance, with respect to the amount or frequency, that any stock dividend will be declared in the future. |
Inventory
Inventory | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Inventory Disclosure [Abstract] | ' | |||||||
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): | ||||||||
September 30, | December 31, | |||||||
2014 | 2013 | |||||||
Raw materials | $ | 3,263 | $ | 3,094 | ||||
Work-in-process | 1,688 | 1,727 | ||||||
Finished goods | 6,848 | 6,557 | ||||||
Inventory, net | $ | 11,799 | $ | 11,378 | ||||
Inventory is net of a provision for excess and obsolete inventory totaling $2.9 million and $2.8 million as of September 30, 2014 and December 31, 2013, respectively. |
Property_Plant_and_Equipment
Property, Plant, and Equipment | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Property Plant And Equipment [Abstract] | ' | |||||||
Property, Plant, and Equipment | ' | |||||||
NOTE 5—PROPERTY, PLANT, AND EQUIPMENT | ||||||||
Property, plant, and equipment, net is comprised of the following (in thousands): | ||||||||
September 30, | December 31, | |||||||
2014 | 2013 | |||||||
Building | $ | 236 | $ | 256 | ||||
Leasehold improvements | 1,216 | 1,207 | ||||||
Equipment and computers | 6,206 | 6,078 | ||||||
Furniture and fixtures | 1,055 | 1,049 | ||||||
Construction in progress | — | 8 | ||||||
8,713 | 8,598 | |||||||
Accumulated depreciation and amortization | (7,430 | ) | (6,971 | ) | ||||
1,283 | 1,627 | |||||||
Land | 184 | 199 | ||||||
Property, plant, and equipment, net | $ | 1,467 | $ | 1,826 | ||||
Depreciation and amortization expense related to property, plant, and equipment totaled $160,000 and $477,000 for the three and nine months ended September 30, 2014, respectively, and $124,000 and $339,000 for the three and nine months ended September 30, 2013, respectively. |
Intangible_Assets_and_Goodwill
Intangible Assets and Goodwill | 9 Months Ended | |||||||||||||||||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||||||||||||||||
Goodwill And Intangible Assets Disclosure [Abstract] | ' | |||||||||||||||||||||||||||||||
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, 2014, 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, 2014, that would trigger further impairment testing of the Company’s intangible assets and goodwill. | ||||||||||||||||||||||||||||||||
Amortization expense for the three and nine months ended September 30, 2014 totaled $17,000 and $52,000, respectively, and $17,000 and $100,000, respectively, for the same periods in 2013. 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 September 30, 2014 | As of December 31, 2013 | |||||||||||||||||||||||||||||||
Accumulated | Accumulated | |||||||||||||||||||||||||||||||
Gross | Amortization | Impairment | Net | Gross | Amortization | Impairment | Net | |||||||||||||||||||||||||
Patents (4-10 years) | $ | 1,914 | $ | (1,904 | ) | $ | — | $ | 10 | $ | 1,914 | $ | (1,895 | ) | $ | — | $ | 19 | ||||||||||||||
Trademarks (6 years) | 69 | (69 | ) | — | — | 69 | (69 | ) | — | — | ||||||||||||||||||||||
Other (4 to 6 years) | 817 | (696 | ) | — | 121 | 817 | (653 | ) | — | 164 | ||||||||||||||||||||||
Total | $ | 2,800 | $ | (2,669 | ) | $ | — | $ | 131 | $ | 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 | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Payables And Accruals [Abstract] | ' | |||||||||||||||
Accrued Liabilities and Deferred Revenue | ' | |||||||||||||||
NOTE 7—ACCRUED LIABILITIES AND DEFERRED REVENUE | ||||||||||||||||
Accrued liabilities are comprised of the following (in thousands): | ||||||||||||||||
September 30, | December 31, | |||||||||||||||
2014 | 2013 | |||||||||||||||
Payroll and benefits | $ | 1,852 | $ | 1,898 | ||||||||||||
Warranty accrual, current portion | 999 | 1,096 | ||||||||||||||
Sales and excise tax | 410 | 527 | ||||||||||||||
Accrued professional services | 2,004 | 912 | ||||||||||||||
Accrued insurance premium | — | 428 | ||||||||||||||
Other | 432 | 136 | ||||||||||||||
Total accrued liabilities | $ | 5,697 | $ | 4,997 | ||||||||||||
Changes in the initial product warranty accrual, and the expenses incurred under the Company’s initial and extended warranties, for the three and nine months ended September 30, 2014 and 2013 were as follows (in thousands): | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Initial warranty accrual, beginning balance | $ | 1,255 | $ | 1,518 | $ | 1,096 | $ | 1,699 | ||||||||
Provision for estimated warranty cost | 310 | 69 | 919 | 429 | ||||||||||||
Warranty expenditures | (199 | ) | (257 | ) | (649 | ) | (798 | ) | ||||||||
1,366 | 1,330 | 1,366 | 1,330 | |||||||||||||
Less warranty accrual, long-term | 367 | — | 367 | — | ||||||||||||
Total warranty accrual, current portion | $ | 999 | $ | 1,330 | $ | 999 | $ | 1,330 | ||||||||
In June 2014, the Company extended the warranty for WaterLase systems from one year to two years for systems purchased after January 1, 2014. | ||||||||||||||||
Deferred revenue is comprised of the following (in thousands): | ||||||||||||||||
September 30, | December 31, | |||||||||||||||
2014 | 2013 | |||||||||||||||
Undelivered elements (training, installation and | $ | 892 | $ | 1,823 | ||||||||||||
product and support services) | ||||||||||||||||
Extended warranty contracts | 1,539 | 1,642 | ||||||||||||||
Total deferred revenue | 2,431 | 3,465 | ||||||||||||||
Less long-term amounts: | ||||||||||||||||
Extended warranty contracts | — | 1 | ||||||||||||||
Total deferred revenue, long-term | — | 1 | ||||||||||||||
Total deferred revenue, current portion | $ | 2,431 | $ | 3,464 | ||||||||||||
In connection with its initiative to measure and improve customer satisfaction, which was initiated during the three months ended September 30, 2014, the Company performed a review of its training service policies and procedures and determined that substantially all of the training service for new customers was used within nine months of the related sale transaction. Accordingly, the Company changed the period over which deferred training service revenue is being recognized from an estimated period of 24 months to nine months. | ||||||||||||||||
The Company accounted for this change as a change in accounting estimate which, pursuant to GAAP, was accounted for on a prospective basis effective July 1, 2014. The change resulted in a reduction of deferred revenue and a corresponding recognition of revenue totaling approximately $708,000 for the three and nine months ended September 30, 2014. Revenue recognized for training is included in product and services revenue in the accompanying consolidated statements of operations. | ||||||||||||||||
Lines_Of_Credit_and_Other_Borr
Lines Of Credit and Other Borrowings | 9 Months Ended |
Sep. 30, 2014 | |
Debt Disclosure [Abstract] | ' |
Lines of Credit and Other Borrowings | ' |
NOTE 8—LINES OF CREDIT AND OTHER BORROWINGS | |
Lines of Credit | |
The Company entered into two revolving credit facility agreements with Comerica Bank (the “Credit Agreements”) on May 24, 2012. The revolving lines of credit provided for borrowings against certain domestic accounts receivable and inventory (the “Domestic Revolver”) and certain export related accounts receivable and inventory (the “Ex-Im Revolver”). | |
On July 28, 2014, the Company repaid all amounts outstanding under the revolving lines of credit, including principal, accrued interest, and fees which totaled, in the aggregate, approximately $2.9 million, and the Credit Agreements were terminated. | |
The Credit Agreements required the Company to maintain compliance with certain monthly financial and non-financial covenants, as defined therein. Any noncompliance with these covenants could have resulted in default interest rates and penalties, and Comerica Bank could have declared the amounts outstanding immediately due and payable. On March 4, 2014, the Company received a waiver of 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 original 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. On June 3, 2014 the Company and Comerica Bank agreed to Amendment No. 2 to Forbearance Agreement (“Amendment No. 2”) which extended the maturity date of the revolving lines of credit to August 1, 2014. In connection with Amendment No. 2, Comerica Bank increased the interest rates on the lines of credit by 0.50% and the Company paid an administrative fee of $15,000. The Company was not in compliance with certain financial covenants as of May 31, 2014 and, as a result, agreed to Amendment No. 3 to Forbearance Agreement with Comerica Bank whereby the forbearance period was continued to August 1, 2014 and the Company paid an administrative fee of $10,000. | |
The outstanding principal balances of the Credit Agreements, as amended June 3, 2014, bore interest at annual percentage rates equal to the daily prime rate, plus 2.50% for the Domestic Revolver and 2.00% for the Ex-Im Revolver. The daily prime rate was subject to a floor of the daily adjusting LIBOR rate plus 2.50% per annum, or if LIBOR was undeterminable, 2.50% per annum. The Company was 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 and nine months ended September 30, 2014, the Company incurred $37,000 and $451,000, respectively, of interest expense associated with the credit facilities, including $0 and $128,000, respectively, of amortization of deferred debt issuance costs and $0 and $200,000, respectively, of amortization of the discount on lines of credit. During the three and nine months ended September 30, 2013, the Company incurred interest expense associated with the credit facilities of $181,000 and $381,000, respectively, including $71,000 and $152,000 of amortization of deferred debt issuance costs and $43,000 and $79,000 of amortization of the discount on lines of credit, respectively. Interest expense payable totaled approximately $0 and $20,000 at September 30, 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 provided that substantially all of the income generated was deposited directly into lockbox accounts and then swept into cash management accounts for the benefit of Comerica Bank. Cash was disbursed from Comerica Bank to the Company only after payment of the applicable debt service and principal. At September 30, 2014 and December 31, 2013, there were no restricted cash amounts. The Company’s obligations were generally secured by substantially all of the Company’s assets now owned or hereinafter acquired. | |
During the three and nine months ended September 30, 2014, the Company incurred $10,000 and $55,000, respectively, of Comerica Bank commitment fees and legal costs associated with the various waivers and amendments. For the three and nine months ended September 30, 2013, the Company incurred $10,000 and $44,000, respectively, of Comerica Bank 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 were 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 September 30, 2014, $0 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 $0 and $2,000 during the three and nine months ended September 30, 2014, respectively, and approximately $1,000 and $5,000 during the three and nine months ended September 30, 2013, respectively. |
Commitments_and_Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2014 | |
Commitments And Contingencies Disclosure [Abstract] | ' |
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, totaled $166,000 and $333,000, 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 $503,000, in the aggregate, at September 30, 2014. The Company also has agreements with certain employees to pay bonuses based on targeted performance criteria. As of September 30, 2014, approximately $125,000 was accrued for performance bonuses, which is included in accrued liabilities in the consolidated balance sheets. | |
Purchase commitments | |
The Company generally purchases components and subassemblies for its products from a limited group of third party suppliers through purchase orders. As of September 30, 2014, the Company had $12.9 million of purchase commitments 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 then Chief Executive Officer, Federico Pignatelli, and its Chief Financial Officer, 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 its then President and Chief Operating 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 the lead plaintiff’s selection of lead counsel. On February 24, 2014, the lead plaintiff filed a consolidated complaint against the Company 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, the Company’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 believes that the claims contained in the lawsuits are without merit and intends to vigorously defend against the claims. During the year ended December 31, 2013, the Company paid $250,000 for legal costs incurred in connection with these matters. No legal costs were incurred by the Company in connection with these matters during the nine months ended September 30, 2014. | |
The parties have since reached an agreement in principle to settle the consolidated securities class action lawsuit, which is subject to the negotiation of a definitive settlement agreement and preliminary and final approval of the court. Although there can be no assurance that such agreement will be finalized, as of the date of these financial statements, management does not expect the Company to incur additional expenses related to this matter due to certain insurance coverage in place. | |
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 by Federico Pignatelli, the Company’s former Chairman of the Board and former Chief Executive Officer (“CEO”) 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 Company’s Board from taking any action without the approval of the four directors whose directorships Oracle and the Company agreed to be undisputed. On March 20, 2014, the Court of Chancery issued a Status Quo Order which fixed the Company’s Board at four members, consisting of Messrs. 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 on May 28, 2014 the Court of Chancery determined that the Company’s Board was comprised of five members, consisting of Messrs. Clark, Pignatelli, and Talevich and Drs. Moll and Nemoy. Subsequent to the Court of Chancery decision, the Company obtained a temporary stay pending appeal to the Delaware Supreme Court. | |
The Delaware Supreme Court heard the case on June 11, 2014. On June 12, 2014, the Delaware Supreme Court upheld the Court of Chancery’s decision and Mr. Pignatelli resigned from his roles as Chairman of the Board and CEO. On June 17, 2014, Mr. Clark was named Chairman of the Board and Mr. Nugent was added as the sixth member of the Board and also named Acting CEO. | |
On July 21, 2014, Mr. Pignatelli filed a complaint in the Court of Chancery of the State of Delaware, naming the Company, Messrs. Clark, Nugent and Talevich and Dr. Moll as defendants. The complaint alleged, among other things, that (a) a slate of director nominees proposed by Mr. Pignatelli was valid, (b) certain members of the Company’s Board breached their fiduciary duties by rejecting Mr. Pignatelli’s slate, (c) the Company breached an agreement between Mr. Pignatelli and one current and several former Board members to nominate him for election, and (d) the Company’s recently enacted bylaw amendments, including a fee-shifting bylaw provision, were invalid. Mr. Pignatelli sought expedited proceedings with respect to all of his claims other than the claims relating to the recently enacted bylaw amendments. | |
On July 24, 2014, the Chancery Court denied Mr. Pignatelli’s motion for expedited proceedings on all but one of his claims (the rejection of Mr. Pignatelli’s slate). | |
On July 29, 2014, Mr. Pignatelli filed a notice of voluntary dismissal of his July 21, 2014 complaint and withdrew his lawsuit. | |
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. On May 30, 2014, both parties filed rebuttal briefs in support of their appeals. On June 30, 2014, the Company requested an oral hearing before the Board. On July 1, 2014, the Board noted that request and docketed the case for consideration. A hearing has been scheduled for November 19, 2014. | |
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 also required 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. Fotona submitted its responses to the action and filed respective invalidation actions against the rights of the Company, which are now pending at the Patent Court and the Federal Patent and Trademark Office. | |
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 | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Segment Reporting [Abstract] | ' | |||||||||||||||
Segment Information | ' | |||||||||||||||
NOTE 10—SEGMENT INFORMATION | ||||||||||||||||
The Company currently operates in a single reportable segment. For the three and nine months ended September 30, 2014, sales in the United States accounted for approximately 66% and 62% of net revenue, respectively, and international sales accounted for approximately 34% and 38% of net revenue, respectively. For both the three and nine months ended September 30, 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 | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
United States | $ | 8,367 | $ | 7,602 | $ | 21,404 | $ | 25,735 | ||||||||
International | 4,347 | 4,743 | 13,014 | 15,454 | ||||||||||||
$ | 12,714 | $ | 12,345 | $ | 34,418 | $ | 41,189 | |||||||||
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 $390,000 and $430,000 as of September 30, 2014 and December 31, 2013, respectively. |
Concentrations
Concentrations | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Risks And Uncertainties [Abstract] | ' | |||||||||||||||
Concentrations | ' | |||||||||||||||
NOTE 11—CONCENTRATIONS | ||||||||||||||||
Revenue from the Company’s products for the three and nine months ended September 30, 2014 and 2013 are as follows: | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Laser systems | 57.9 | % | 65.8 | % | 60.2 | % | 67.9 | % | ||||||||
Imaging systems | 11 | % | 7.8 | % | 9.5 | % | 8.1 | % | ||||||||
Consumables and other | 12.6 | % | 13.2 | % | 13.6 | % | 11.9 | % | ||||||||
Services | 18.2 | % | 12.9 | % | 16.3 | % | 11.7 | % | ||||||||
License fees and royalties | 0.3 | % | 0.3 | % | 0.4 | % | 0.4 | % | ||||||||
Total revenue | 100 | % | 100 | % | 100 | % | 100 | % | ||||||||
No individual customer represented more than 10% of the Company’s revenue for the three and nine months ended September 30, 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 September 30, 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 | 9 Months Ended |
Sep. 30, 2014 | |
Components Of Income Tax Expense Benefit Continuing Operations [Abstract] | ' |
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 and nine months ended September 30, 2014. With respect to the liability for unrecognized tax benefits, including related estimates of penalties and interest, the Company recorded increases of $0 and $1,000 for the three and nine months ended September 30, 2013. 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 and nine months ended September 30, 2014, the Company recorded an income tax provision of $28,000 and $81,000, respectively, resulting in an effective tax rate of (0.80)% and (0.55)%, respectively. During the three and nine months ended September 30, 2013 the Company recorded an income tax provision of $22,000 and benefit of $182,000, respectively, resulting in an effective tax rate of (0.54)% and 1.97%, respectively. During the nine months ended September 30, 2013, the Company reversed certain deferred tax liabilities associated with unrecognized tax benefits related to international operations due to expiring statutes and recognized tax benefits of $107,000 and recognized deferred tax assets related to certain indefinite lived assets (federal alternative minimum tax credits and California R&D credits) that were used to offset deferred tax liabilities related to indefinite-lived intangible assets of $107,000 resulting in an overall tax benefit of $214,000. 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 provisions for the three and nine months ended September 30, 2014 and 2013 were 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 | 9 Months Ended |
Sep. 30, 2014 | |
Subsequent Events [Abstract] | ' |
Subsequent Event | ' |
NOTE 13—SUBSEQUENT EVENT | |
November 2014 Private Placement | |
On November 3, 2014, the Company entered into a securities purchase agreement with several institutional and individual investors, and certain of its directors and officers, under which the Company agreed to sell an aggregate of 14,162,873 unregistered shares of its common stock at the price of $2.39 per share, the closing price of the Company’s common stock on November 3, 2014, and warrants to purchase up to an aggregate of 9,205,862 unregistered shares of its common stock at an exercise price of $4.00 per share. Gross proceeds from the sale were $35 million. The warrants become exercisable on May 7, 2015, six months after the closing of the private placement, and have a term of three years from the date of issuance. | |
In connection with the transaction, the Company agreed to use commercially reasonable efforts to file within 30 days of the closing a registration statement with the SEC to register the resale of both the shares and the shares underlying the warrants issued at the closing. The proceeds will be used for working capital and general corporate purposes. |
Accounting_Policies_Policies
Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2014 | |
Accounting Policies [Abstract] | ' |
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 and nine months ended September 30, 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 incurred a loss from operations, a net loss, and used cash in operating activities for the three and nine months ended September 30, 2014. The Company has also suffered recurring losses from operations during the three years ended December 31, 2013. During the three and nine months ended September 30, 2014, the principle sources of liquidity for the Company have been its available borrowing capacity on the lines of credit with Comerica Bank and the net proceeds from the February 10, 2014 and July 22, 2014 sale by the Company of $4.8 million and $11.5 million, respectively, of unregistered shares of common stock discussed below. | |
As of September 30, 2014, the Company had working capital of approximately $7.3 million. The Company’s principal sources of liquidity at September 30, 2014 consisted of approximately $2.8 million in cash and cash equivalents and $9.3 million of net accounts receivable. | |
On November 3, 2014, the Company entered into a securities purchase agreement with several institutional and individual investors, and certain of its directors and officers, under which the Company agreed to sell an aggregate of 14,162,873 unregistered shares of its common stock at the price of $2.39 per share, the closing price of the Company’s common stock on November 3, 2014, and warrants to purchase up to an aggregate of 9,205,862 unregistered shares of its common stock at an exercise price of $4.00 per share. Gross proceeds from the sale were $35 million. The warrants become exercisable on May 7, 2015, six months after the closing of the private placement, and have a term of three years from the date of issuance. In connection with the transaction, the Company agreed to use commercially reasonable efforts to file within 30 days of the closing a registration statement with the SEC to register the resale of both the shares and the shares underlying the warrants issued at the closing. The proceeds will be used for working capital and general corporate purposes. | |
The Company completed a private placement on July 22, 2014 with several institutional and individual investors, and several of our directors and officers, wherein the Company sold 6,250,000 unregistered shares of its common stock at a price of $1.92 per share (the closing price of the Company’s common stock on July 18, 2014). Gross proceeds from the sale totaled $12 million, and net proceeds, after offering expenses of approximately $491,000, were approximately $11.5 million. The Company used the proceeds to repay the Company’s lines of credit with Comerica Bank and for working capital and general corporate purposes. | |
On July 28, 2014, the Company repaid all amounts outstanding under its revolving credit facilities with Comerica Bank, including principal, accrued interest, and fees which totaled approximately $2.9 million and the credit facilities were terminated. | |
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 were $5.0 million, and net proceeds, after offering expenses of approximately $0.2 million, were 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. | |
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 Issued Accounting Standards | |
In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (ASU 2014-09), which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP. | |
The standard is effective for annual periods beginning after December 15, 2016, and interim periods therein, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption (which includes additional footnote disclosures). The Company is currently evaluating the impact of the pending adoption of ASU 2014-09 on its consolidated financial statements and has not yet determined the method by which it will adopt the standard during the year ending December 31, 2017. | |
In August 2014, the FASB issued ASU No. 2014-15, Disclosure of Uncertainties About an Entity’s Ability to Continue as a Going Concern. The standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued and provides guidance on determining when and how to disclose going concern uncertainties in the financial statements. Certain disclosures will be required if conditions give rise to substantial doubt about an entity’s ability to continue as a going concern. ASU 2014-15 applies to all entities and is effective for annual and interim reporting periods ending after December 15, 2016, with early adoption permitted. The Company does not expect that the adoption of this standard will have a material effect on its financial statements. | |
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. | |
Commitments And Contingencies Disclosure [Abstract] | ' |
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. | |
Components Of Income Tax Expense Benefit Continuing Operations [Abstract] | ' |
Income Tax Uncertainties | ' |
Accounting for uncertainty in income taxes prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return and provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The Company has elected to classify interest and penalties as a component of its income tax provision. With respect to the liability for unrecognized tax benefits, including related estimates of penalties and interest, the Company did not record a liability for unrecognized tax benefits for the three and nine months ended September 30, 2014. With respect to the liability for unrecognized tax benefits, including related estimates of penalties and interest, the Company recorded increases of $0 and $1,000 for the three and nine months ended September 30, 2013. 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) | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | ' | |||||||||||||||
Summary of Income Statement Classification of Compensation Expense | ' | |||||||||||||||
The following table summarizes the income statement classification of compensation expense associated with share-based payments (in thousands): | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Cost of revenue | $ | 29 | $ | 73 | $ | 116 | $ | 227 | ||||||||
Sales and marketing | 91 | 154 | 328 | 443 | ||||||||||||
General and administrative | 162 | 225 | 378 | 459 | ||||||||||||
Engineering and development | 19 | 39 | 65 | 110 | ||||||||||||
$ | 301 | $ | 491 | $ | 887 | $ | 1,239 | |||||||||
Assumptions on Estimation of Stock Option Fair Values | ' | |||||||||||||||
The stock option fair values, under the Company’s stock option plan, were estimated using the Black-Scholes option-pricing model with the following assumptions: | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Expected term | 4.00 years | 3.70 years | 3.82 years | 3.66 years | ||||||||||||
Volatility | 85.65 | % | 83 | % | 94.41 | % | 83 | % | ||||||||
Annual dividend per share | $ | — | $ | — | $ | — | $ | — | ||||||||
Risk-free interest rate | 1.65 | % | 1.54 | % | 1.66 | % | 0.99 | % | ||||||||
Summary of Option Activity Under Stock Option Plan | ' | |||||||||||||||
A summary of option activity under the Company’s stock option plan for the nine months ended September 30, 2014 is as follows: | ||||||||||||||||
Weighted Average | ||||||||||||||||
Weighted | Remaining | Aggregate | ||||||||||||||
Average | Contractual | Intrinsic | ||||||||||||||
Shares | Exercise Price | Term (Years) | Value(1) | |||||||||||||
Options outstanding at December 31, 2013 | 4,441,000 | $ | 3.51 | 3.83 | $ | 1,574,000 | ||||||||||
Granted at fair market value | 212,000 | $ | 2.24 | |||||||||||||
Granted at above fair market value | 369,000 | $ | 3.05 | |||||||||||||
Exercised | (152,000 | ) | $ | 2.03 | ||||||||||||
Forfeited, cancelled, or expired | (1,055,000 | ) | $ | 4.57 | ||||||||||||
Options outstanding at September 30, 2014 | 3,815,000 | $ | 3.16 | 3.35 | $ | 815,000 | ||||||||||
Options exercisable at September 30, 2014 | 2,485,000 | $ | 3.07 | 2.43 | $ | 733,000 | ||||||||||
Vested options expired during the quarter | 190,000 | $ | 5.62 | |||||||||||||
ended September 30, 2014 | ||||||||||||||||
(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 | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Proceeds from stock options exercised | $ | 54 | $ | 10 | $ | 310 | $ | 707 | ||||||||
Tax benefit related to stock options | N/A | N/A | N/A | N/A | ||||||||||||
exercised (1) | ||||||||||||||||
Intrinsic value of stock options exercised (2) | $ | 13 | $ | 6 | $ | 108 | $ | 860 | ||||||||
Weighted-average fair value of options granted | $ | 1.35 | $ | 3.31 | $ | 1.62 | $ | 3.9 | ||||||||
during period | ||||||||||||||||
Total fair value of shares vested during | $ | 273 | $ | 437 | $ | 921 | $ | 1,155 | ||||||||
the period | ||||||||||||||||
(1) Excess tax benefits received related to stock option exercises are presented as financing cash inflows. The Company currently does not receive a tax benefit related to the exercise of stock options due to the Company’s net operating losses. | ||||||||||||||||
(2) The intrinsic value of stock options exercised is the amount by which the market price of the stock on the date of exercise exceeded the market price of the stock on the date of grant. | ||||||||||||||||
Summary of Warrant Activity | ' | |||||||||||||||
A summary of warrant activity for the nine months ended September 30, 2014 is as follows: | ||||||||||||||||
Weighted | ||||||||||||||||
Average | ||||||||||||||||
Shares | Exercise Price | |||||||||||||||
Warrants outstanding at December 31, 2013 | 1,698,000 | $ | 5.44 | |||||||||||||
Granted | — | |||||||||||||||
Exercised | (200,000 | ) | $ | 2 | ||||||||||||
Forfeited, cancelled, or expired | (610,000 | ) | $ | 5.71 | ||||||||||||
Warrants outstanding at September 30, 2014 | 888,000 | $ | 6.04 | |||||||||||||
Warrants exercisable at September 30, 2014 | 753,000 | $ | 6.4 | |||||||||||||
Vested warrants expired during the quarter | — | N/A | ||||||||||||||
ended September 30, 2014 | ||||||||||||||||
Inventory_Tables
Inventory (Tables) | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Inventory Disclosure [Abstract] | ' | |||||||
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): | ||||||||
September 30, | December 31, | |||||||
2014 | 2013 | |||||||
Raw materials | $ | 3,263 | $ | 3,094 | ||||
Work-in-process | 1,688 | 1,727 | ||||||
Finished goods | 6,848 | 6,557 | ||||||
Inventory, net | $ | 11,799 | $ | 11,378 | ||||
Property_Plant_and_Equipment_T
Property, Plant, and Equipment (Tables) | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Property Plant And Equipment [Abstract] | ' | |||||||
Components of Property, Plant, and Equipment | ' | |||||||
Property, plant, and equipment, net is comprised of the following (in thousands): | ||||||||
September 30, | December 31, | |||||||
2014 | 2013 | |||||||
Building | $ | 236 | $ | 256 | ||||
Leasehold improvements | 1,216 | 1,207 | ||||||
Equipment and computers | 6,206 | 6,078 | ||||||
Furniture and fixtures | 1,055 | 1,049 | ||||||
Construction in progress | — | 8 | ||||||
8,713 | 8,598 | |||||||
Accumulated depreciation and amortization | (7,430 | ) | (6,971 | ) | ||||
1,283 | 1,627 | |||||||
Land | 184 | 199 | ||||||
Property, plant, and equipment, net | $ | 1,467 | $ | 1,826 | ||||
Intangible_Assets_and_Goodwill1
Intangible Assets and Goodwill (Tables) | 9 Months Ended | |||||||||||||||||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||||||||||||||||
Goodwill And Intangible Assets Disclosure [Abstract] | ' | |||||||||||||||||||||||||||||||
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 September 30, 2014 | As of December 31, 2013 | |||||||||||||||||||||||||||||||
Accumulated | Accumulated | |||||||||||||||||||||||||||||||
Gross | Amortization | Impairment | Net | Gross | Amortization | Impairment | Net | |||||||||||||||||||||||||
Patents (4-10 years) | $ | 1,914 | $ | (1,904 | ) | $ | — | $ | 10 | $ | 1,914 | $ | (1,895 | ) | $ | — | $ | 19 | ||||||||||||||
Trademarks (6 years) | 69 | (69 | ) | — | — | 69 | (69 | ) | — | — | ||||||||||||||||||||||
Other (4 to 6 years) | 817 | (696 | ) | — | 121 | 817 | (653 | ) | — | 164 | ||||||||||||||||||||||
Total | $ | 2,800 | $ | (2,669 | ) | $ | — | $ | 131 | $ | 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) | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Payables And Accruals [Abstract] | ' | |||||||||||||||
Components of Accrued Liabilities | ' | |||||||||||||||
Accrued liabilities are comprised of the following (in thousands): | ||||||||||||||||
September 30, | December 31, | |||||||||||||||
2014 | 2013 | |||||||||||||||
Payroll and benefits | $ | 1,852 | $ | 1,898 | ||||||||||||
Warranty accrual, current portion | 999 | 1,096 | ||||||||||||||
Sales and excise tax | 410 | 527 | ||||||||||||||
Accrued professional services | 2,004 | 912 | ||||||||||||||
Accrued insurance premium | — | 428 | ||||||||||||||
Other | 432 | 136 | ||||||||||||||
Total accrued liabilities | $ | 5,697 | $ | 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 and nine months ended September 30, 2014 and 2013 were as follows (in thousands): | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Initial warranty accrual, beginning balance | $ | 1,255 | $ | 1,518 | $ | 1,096 | $ | 1,699 | ||||||||
Provision for estimated warranty cost | 310 | 69 | 919 | 429 | ||||||||||||
Warranty expenditures | (199 | ) | (257 | ) | (649 | ) | (798 | ) | ||||||||
1,366 | 1,330 | 1,366 | 1,330 | |||||||||||||
Less warranty accrual, long-term | 367 | — | 367 | — | ||||||||||||
Total warranty accrual, current portion | $ | 999 | $ | 1,330 | $ | 999 | $ | 1,330 | ||||||||
In June 2014, the Company extended the warranty for WaterLase systems from one year to two years for systems purchased after January 1, 2014. | ||||||||||||||||
Summary of Deferred Revenue | ' | |||||||||||||||
Deferred revenue is comprised of the following (in thousands): | ||||||||||||||||
September 30, | December 31, | |||||||||||||||
2014 | 2013 | |||||||||||||||
Undelivered elements (training, installation and | $ | 892 | $ | 1,823 | ||||||||||||
product and support services) | ||||||||||||||||
Extended warranty contracts | 1,539 | 1,642 | ||||||||||||||
Total deferred revenue | 2,431 | 3,465 | ||||||||||||||
Less long-term amounts: | ||||||||||||||||
Extended warranty contracts | — | 1 | ||||||||||||||
Total deferred revenue, long-term | — | 1 | ||||||||||||||
Total deferred revenue, current portion | $ | 2,431 | $ | 3,464 | ||||||||||||
In connection with its initiative to measure and improve customer satisfaction, which was initiated during the three months ended September 30, 2014, the Company performed a review of its training service policies and procedures and determined that substantially all of the training service for new customers was used within nine months of the related sale transaction. Accordingly, the Company changed the period over which deferred training service revenue is being recognized from an estimated period of 24 months to nine months. | ||||||||||||||||
The Company accounted for this change as a change in accounting estimate which, pursuant to GAAP, was accounted for on a prospective basis effective July 1, 2014. The change resulted in a reduction of deferred revenue and a corresponding recognition of revenue totaling approximately $708,000 for the three and nine months ended September 30, 2014. Revenue recognized for training is included in product and services revenue in the accompanying consolidated statements of operations. | ||||||||||||||||
Segment_Information_Tables
Segment Information (Tables) | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Segment Reporting [Abstract] | ' | |||||||||||||||
Summary of Net Revenue by Geographic Location | ' | |||||||||||||||
Net revenue by geographic location based on the location of customers was as follows (in thousands): | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
United States | $ | 8,367 | $ | 7,602 | $ | 21,404 | $ | 25,735 | ||||||||
International | 4,347 | 4,743 | 13,014 | 15,454 | ||||||||||||
$ | 12,714 | $ | 12,345 | $ | 34,418 | $ | 41,189 | |||||||||
Concentrations_Tables
Concentrations (Tables) | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Risks And Uncertainties [Abstract] | ' | |||||||||||||||
Summary of Net Revenue from Various Products | ' | |||||||||||||||
Revenue from the Company’s products for the three and nine months ended September 30, 2014 and 2013 are as follows: | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Laser systems | 57.9 | % | 65.8 | % | 60.2 | % | 67.9 | % | ||||||||
Imaging systems | 11 | % | 7.8 | % | 9.5 | % | 8.1 | % | ||||||||
Consumables and other | 12.6 | % | 13.2 | % | 13.6 | % | 11.9 | % | ||||||||
Services | 18.2 | % | 12.9 | % | 16.3 | % | 11.7 | % | ||||||||
License fees and royalties | 0.3 | % | 0.3 | % | 0.4 | % | 0.4 | % | ||||||||
Total revenue | 100 | % | 100 | % | 100 | % | 100 | % | ||||||||
Description_of_Business_and_Ba1
Description of Business and Basis of Presentation - Additional Information (Detail) (USD $) | 0 Months Ended | 9 Months Ended | ||||||
Nov. 03, 2014 | Jul. 28, 2014 | Jul. 22, 2014 | Feb. 10, 2014 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | |
Basis Of Presentation [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' |
Proceeds from equity offering, gross | ' | ' | $12,000,000 | $5,000,000 | ' | ' | ' | ' |
Working capital | ' | ' | ' | ' | 7,300,000 | ' | ' | ' |
Cash and cash equivalents | ' | ' | ' | ' | 2,759,000 | 4,151,000 | 1,440,000 | 2,543,000 |
Net accounts receivable | ' | ' | ' | ' | 9,264,000 | ' | 11,127,000 | ' |
Common stock shares issued | ' | ' | 6,250,000 | 1,945,525 | ' | ' | ' | ' |
Common stock issued, price per share | ' | ' | $1.92 | $2.57 | ' | ' | ' | ' |
Proceeds from equity offering, net of expenses | ' | ' | 11,500,000 | 4,800,000 | 16,302,000 | 4,592,000 | ' | ' |
Payments of stock issuance costs | ' | ' | 491,000 | 200,000 | ' | ' | ' | ' |
Payments under revolving lines of credit | ' | 2,900,000 | ' | ' | ' | ' | ' | ' |
Term of agreement | '3 years | ' | ' | ' | ' | ' | ' | ' |
Subsequent Event | ' | ' | ' | ' | ' | ' | ' | ' |
Basis Of Presentation [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' |
Proceeds from equity offering, gross | 35,000,000 | ' | ' | ' | ' | ' | ' | ' |
Common stock shares issued | 14,162,873 | ' | ' | ' | ' | ' | ' | ' |
Common stock issued, price per share | 2.39 | ' | ' | ' | ' | ' | ' | ' |
Warrants to purchase common stock | 9,205,862 | ' | ' | ' | ' | ' | ' | ' |
Class of Warrant or Right, Exercise Price of Warrants or Rights | 4 | ' | ' | ' | ' | ' | ' | ' |
Term of agreement | '3 years | ' | ' | ' | ' | ' | ' | ' |
StockBased_Awards_and_Per_Shar2
Stock-Based Awards and Per Share Information - Additional Information (Detail) (USD $) | 0 Months Ended | 3 Months Ended | 9 Months Ended | 0 Months Ended | 9 Months Ended | 0 Months Ended | 9 Months Ended | 0 Months Ended | 9 Months Ended | |||||||||||||||
Jul. 22, 2014 | Jul. 18, 2014 | Jul. 13, 2014 | Feb. 10, 2014 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Jul. 18, 2014 | Jul. 18, 2014 | Jul. 13, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Jul. 13, 2014 | Sep. 30, 2014 | Aug. 27, 2014 | Aug. 27, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | |
Common Stock | Additional Paid In Capital | Non-qualified Stock Options | Non-qualified Stock Options | Non-qualified Stock Options | Non-qualified Stock Options | Restricted stock units (RSUs) | Restricted stock units (RSUs) | Restricted stock units (RSUs) | Restricted stock units (RSUs) | Restricted stock units (RSUs) | Restricted stock units (RSUs) | Comerica Bank | Comerica Bank | 2002 Stock Incentive Plan | ||||||||||
Share-based Compensation Award, Tranche One | Share-based Compensation Award, Tranche Two | One Independent Directors | Four Independent Director | Share-based Compensation Award, Tranche One | Share-based Compensation Award, Tranche Two | |||||||||||||||||||
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 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 9,250,000 |
Common stock issued pursuant to options exercised | ' | ' | ' | ' | 2,993,000 | ' | 2,993,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Common stock shares reserved for future issuance | ' | ' | ' | ' | 3,815,000 | ' | 3,815,000 | ' | 4,441,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Options available for future grant | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 172,282 | ' | ' | ' | 37,879 | ' | ' | ' | ' | ' | ' | ' | 2,442,000 |
Compensation cost recognized | ' | ' | ' | ' | $301,000 | $491,000 | $887,000 | $1,239,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net impact of share based compensation expense to earnings per basic share | ' | ' | ' | ' | ($0.01) | ($0.02) | ($0.02) | ($0.04) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net impact of share based compensation expense to earnings per diluted share | ' | ' | ' | ' | ($0.01) | ($0.02) | ($0.02) | ($0.04) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total unrecognized compensation cost | ' | ' | ' | ' | 2,000,000 | ' | 2,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Unrecognized share based compensation cost to be recognized over weighted-average period | ' | ' | ' | ' | ' | ' | '1 year 1 month 6 days | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Common stock shares issued | 6,250,000 | ' | ' | 1,945,525 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 38,708 | 40,465 | ' |
Outstanding stock options and warrants excluded from diluted loss per share | ' | ' | ' | ' | 4,703,000 | 6,022,000 | 4,703,000 | 6,022,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Stock options, exercise price | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $1.98 | ' | ' | ' | $1.98 | ' | ' | ' | ' | ' | ' | ' | ' |
Stock option and Restricted stock units vesting description | ' | ' | 'One-sixth of the stock options and one-sixth of the RSUs vested immediately, with the remaining five-sixths vesting ratably on a monthly basis over the twelve-month period ending on July 13, 2015. | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 16.67% | 83.33% | ' | ' | ' | ' | 16.67% | 83.33% | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '12 months | ' | ' | ' | '12 months | ' | '12 months | ' | ' | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Exercise Price | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $1.31 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Expected term | ' | ' | ' | ' | '4 years | '3 years 8 months 12 days | '3 years 9 months 26 days | '3 years 7 months 28 days | ' | ' | ' | '3 years 7 months 6 days | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Volatility | ' | ' | ' | ' | 85.65% | 83.00% | 94.41% | 83.00% | ' | ' | ' | 98.37% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Risk-free interest rate | ' | ' | ' | ' | 1.65% | 1.54% | 1.66% | 0.99% | ' | ' | ' | 1.65% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Share-based compensation arrangement by share-based payment award, equity instruments other than options, grants in period | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 9,217 | 36,868 | ' | ' | ' | ' | ' |
Share-based compensation arrangement by share-based payment award, equity instruments other than options, value per share | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $2.17 | ' | ' | ' | ' | ' |
Retired Shares of stock held in treasury | ' | 1,963,500 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Treasury stock retired | ' | ' | ' | ' | ' | ' | ' | ' | ' | $2,000 | $16,397,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Annual stock dividend policy for 2014 | ' | ' | ' | ' | ' | ' | 0.50% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Dividends declared, date of record | ' | ' | ' | ' | ' | ' | 14-Mar-14 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Classification_of_Compensation
Classification of Compensation Expense Associated with Share-Based Payments (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ' | ' | ' | ' |
Stock-based compensation | $301 | $491 | $887 | $1,239 |
Cost of Revenue | ' | ' | ' | ' |
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ' | ' | ' | ' |
Stock-based compensation | 29 | 73 | 116 | 227 |
Sales and Marketing | ' | ' | ' | ' |
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ' | ' | ' | ' |
Stock-based compensation | 91 | 154 | 328 | 443 |
General and Administrative | ' | ' | ' | ' |
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ' | ' | ' | ' |
Stock-based compensation | 162 | 225 | 378 | 459 |
Engineering and Development | ' | ' | ' | ' |
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ' | ' | ' | ' |
Stock-based compensation | $19 | $39 | $65 | $110 |
Assumptions_Used_in_Estimating
Assumptions Used in Estimating Fair Value of Stock Options Granted (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | ' | ' | ' | ' |
Expected term | '4 years | '3 years 8 months 12 days | '3 years 9 months 26 days | '3 years 7 months 28 days |
Volatility | 85.65% | 83.00% | 94.41% | 83.00% |
Annual dividend per share | $0 | $0 | $0 | $0 |
Risk-free interest rate | 1.65% | 1.54% | 1.66% | 0.99% |
Summary_of_Option_Activity_Det
Summary of Option Activity (Detail) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | ||||
Number of Shares | ' | ' | ' | |||
Beginning Balance | ' | 4,441,000 | ' | |||
Exercised | ' | -152,000 | ' | |||
Forfeited, cancelled, or expired | ' | -1,055,000 | ' | |||
Ending Balance | 3,815,000 | 3,815,000 | 4,441,000 | |||
Options exercisable at September 30, 2014 | 2,485,000 | 2,485,000 | ' | |||
Vested options expired during the quarter ended September 30, 2014 | 190,000 | ' | ' | |||
Weighted Average Exercise Price | ' | ' | ' | |||
Beginning Balance | ' | $3.51 | ' | |||
Exercised | ' | $2.03 | ' | |||
Forfeited, cancelled, or expired | ' | $4.57 | ' | |||
Ending Balance | $3.16 | $3.16 | $3.51 | |||
Options exercisable at September 30, 2014 | $3.07 | $3.07 | ' | |||
Vested options expired during the quarter ended September 30, 2014 | $5.62 | ' | ' | |||
Weighted Average Remaining Contractual Term (Years) | ' | ' | ' | |||
Options outstanding | ' | '3 years 4 months 6 days | '3 years 9 months 29 days | |||
Options exercisable | ' | '2 years 5 months 5 days | ' | |||
Aggregate Intrinsic Value | ' | ' | ' | |||
Options outstanding | $815,000 | [1] | $815,000 | [1] | $1,574,000 | [1] |
Options exercisable | $733,000 | [1] | $733,000 | [1] | ' | |
Granted at fair market value | ' | ' | ' | |||
Number of Shares | ' | ' | ' | |||
Granted | ' | 212,000 | ' | |||
Weighted Average Exercise Price | ' | ' | ' | |||
Granted | ' | $2.24 | ' | |||
Granted at above fair market value | ' | ' | ' | |||
Number of Shares | ' | ' | ' | |||
Granted | ' | 369,000 | ' | |||
Weighted Average Exercise Price | ' | ' | ' | |||
Granted | ' | $3.05 | ' | |||
[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 | 9 Months Ended | ||||||
In Thousands, except Per Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | ||||
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | ' | ' | ' | ' | ||||
Proceeds from stock options exercised | $54 | $10 | $310 | $707 | ||||
Intrinsic value of stock options exercised | 13 | [1] | 6 | [1] | 108 | [1] | 860 | [1] |
Weighted-average fair value of options granted during period | $1.35 | $3.31 | $1.62 | $3.90 | ||||
Total fair value of shares vested during the period | $273 | $437 | $921 | $1,155 | ||||
[1] | The intrinsic value of stock options exercised is the amount by which the market price of the stock on the date of exercise exceeded the market price of the stock on the date of grant. |
Summary_of_Warrant_Activity_De
Summary of Warrant Activity (Detail) (Warrants, USD $) | 9 Months Ended |
Sep. 30, 2014 | |
Warrants | ' |
Shares | ' |
Warrants outstanding at December 31, 2013 | 1,698,000 |
Granted | 0 |
Exercised | -200,000 |
Forfeited, cancelled, or expired | -610,000 |
Warrants outstanding at September 30, 2014 | 888,000 |
Warrants exercisable at September 30, 2014 | 753,000 |
Vested warrants expired during the quarter ended September 30, 2014 | 0 |
Weighted Average Exercise Price | ' |
Warrants outstanding at December 31, 2013 | $5.44 |
Granted | ' |
Exercised | $2 |
Forfeited, cancelled, or expired | $5.71 |
Warrants outstanding at September 30, 2014 | $6.04 |
Warrants exercisable at September 30, 2014 | $6.40 |
Vested warrants expired during the quarter ended September 30, 2014 | ' |
Components_of_Inventory_Detail
Components of Inventory (Detail) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Components of inventory, net of allowances | ' | ' |
Raw materials | $3,263 | $3,094 |
Work-in-process | 1,688 | 1,727 |
Finished goods | 6,848 | 6,557 |
Inventory, net | $11,799 | $11,378 |
Inventory_Additional_Informati
Inventory - Additional Information (Detail) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Inventory Disclosure [Abstract] | ' | ' |
Provision for excess and obsolete inventory | $2.90 | $2.80 |
Components_of_Property_Plant_a
Components of Property, Plant, and Equipment (Detail) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Property Plant And Equipment [Line Items] | ' | ' |
Property, plant, and equipment gross, excluding land | $8,713 | $8,598 |
Accumulated depreciation and amortization | -7,430 | -6,971 |
Property, plant, and equipment net, excluding land | 1,283 | 1,627 |
Land | 184 | 199 |
Property, plant, and equipment, net | 1,467 | 1,826 |
Building | ' | ' |
Property Plant And Equipment [Line Items] | ' | ' |
Property, plant and equipment, gross | 236 | 256 |
Leasehold Improvements | ' | ' |
Property Plant And Equipment [Line Items] | ' | ' |
Property, plant and equipment, gross | 1,216 | 1,207 |
Equipment and Computers | ' | ' |
Property Plant And Equipment [Line Items] | ' | ' |
Property, plant and equipment, gross | 6,206 | 6,078 |
Furniture and Fixtures | ' | ' |
Property Plant And Equipment [Line Items] | ' | ' |
Property, plant and equipment, gross | 1,055 | 1,049 |
Construction in Progress | ' | ' |
Property Plant And Equipment [Line Items] | ' | ' |
Property, plant and equipment, gross | $0 | $8 |
Property_Plant_and_Equipment_A
Property, Plant, and Equipment - Additional Information (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Property Plant And Equipment [Abstract] | ' | ' | ' | ' |
Depreciation and amortization | $160 | $124 | $477 | $339 |
Intangible_Assets_and_Goodwill2
Intangible Assets and Goodwill - Additional Information (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Goodwill And Intangible Assets Disclosure [Abstract] | ' | ' | ' | ' |
Amortization expense | $17 | $17 | $52 | $100 |
Summary_of_Intangible_Assets_R
Summary of Intangible Assets, Related Accumulated Amortization and Goodwill (Detail) (USD $) | 9 Months Ended | 12 Months Ended |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Dec. 31, 2013 |
Intangible Assets And Goodwill [Line Items] | ' | ' |
Intangible assets, gross | $2,800 | $2,800 |
Intangible assets, accumulated amortization | -2,669 | -2,617 |
Intangible assets, Impairment | 0 | 0 |
Intangible assets, net | 131 | 183 |
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 | -1,904 | -1,895 |
Intangible assets, Impairment | 0 | 0 |
Intangible assets, net | 10 | 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 | 0 | 0 |
Other Intangible Assets | ' | ' |
Intangible Assets And Goodwill [Line Items] | ' | ' |
Intangible assets, gross | 817 | 817 |
Intangible assets, accumulated amortization | -696 | -653 |
Intangible assets, Impairment | 0 | 0 |
Intangible assets, net | $121 | $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 $) | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2013 |
In Thousands, unless otherwise specified | |||
Components of accrued liabilities | ' | ' | ' |
Payroll and benefits | $1,852 | $1,898 | ' |
Warranty accrual, current portion | 999 | 1,096 | 1,330 |
Sales and excise tax | 410 | 527 | ' |
Accrued professional services | 2,004 | 912 | ' |
Accrued insurance premium | ' | 428 | ' |
Other | 432 | 136 | ' |
Total accrued liabilities | $5,697 | $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 | 9 Months Ended | |||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 |
Movement In Standard And Extended Product Warranty Increase Decrease Roll Forward | ' | ' | ' | ' | ' |
Initial warranty accrual, beginning balance | $1,255 | $1,518 | $1,096 | $1,699 | ' |
Provision for estimated warranty cost | 310 | 69 | 919 | 429 | ' |
Warranty expenditures | -199 | -257 | -649 | -798 | ' |
Initial warranty accrual, ending balance | 1,366 | 1,330 | 1,366 | 1,330 | ' |
Less warranty accrual, long-term | 367 | ' | 367 | ' | ' |
Total warranty accrual, current portion | $999 | $1,330 | $999 | $1,330 | $1,096 |
Accrued_Liabilities_and_Deferr2
Accrued Liabilities and Deferred Revenue - Additional Information (Detail) (USD $) | 3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended |
Sep. 30, 2014 | Jun. 30, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | |
Payables And Accruals [Abstract] | ' | ' | ' | ' |
WaterLase systems warranty period | ' | '2 years | ' | '1 year |
Deferred revenue recognized | $708,000 | ' | $708,000 | ' |
Summary_of_Deferred_Revenue_De
Summary of Deferred Revenue (Detail) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Components of deferred revenue | ' | ' |
Undelivered elements (training, installation and product and support services) | $892 | $1,823 |
Extended warranty contracts | 1,539 | 1,642 |
Total deferred revenue | 2,431 | 3,465 |
Less long-term amounts: | ' | ' |
Extended warranty contracts | ' | 1 |
Total deferred revenue, long-term | ' | 1 |
Total deferred revenue, current portion | $2,431 | $3,464 |
Recovered_Sheet1
Lines of Credit and Other Borrowings - Additional Information (Detail) (USD $) | 0 Months Ended | 3 Months Ended | 9 Months Ended | ||||||||
Jul. 28, 2014 | Jun. 03, 2014 | 31-May-14 | 5-May-14 | Apr. 10, 2014 | Mar. 04, 2014 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | |
Agreement | |||||||||||
Line Of Credit Facility [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Payments under lines of credit | ' | ' | ' | ' | ' | ' | ' | ' | $21,508,000 | $23,403,000 | ' |
Amortization of discount on lines of credit | ' | ' | ' | ' | ' | ' | ' | ' | 200,000 | 79,000 | ' |
Amortization of debt issuance costs | ' | ' | ' | ' | ' | ' | ' | ' | 128,000 | 152,000 | ' |
Financed insurance premium | ' | ' | ' | ' | ' | ' | 0 | ' | 0 | ' | ' |
Number of monthly insurance premium installments payable | ' | ' | ' | ' | ' | ' | ' | ' | 'Nine | ' | ' |
Financial insurance premiums interest rate | ' | ' | ' | ' | ' | ' | 2.85% | ' | 2.85% | ' | ' |
Interest expense incurred for financed insurance premiums | ' | ' | ' | ' | ' | ' | 0 | 1,000 | 2,000 | 5,000 | ' |
Comerica Bank Credit Agreements | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Line Of Credit Facility [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number revolving credit facility agreements | ' | ' | ' | ' | ' | ' | ' | ' | 2 | ' | ' |
Credit agreements amendment fee | ' | ' | ' | ' | 10,000 | 10,000 | ' | ' | ' | ' | ' |
Lines of credit maximum borrowing capacity | ' | ' | ' | ' | 4,000,000 | 5,000,000 | ' | ' | ' | ' | ' |
Payments under lines of credit | 2,900,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Line of credit facility, expiration date | ' | 1-Aug-14 | 1-Aug-14 | 1-Jun-14 | 1-May-14 | ' | ' | ' | ' | ' | ' |
Revolving lines of credit fee paid | ' | 15,000 | 10,000 | 10,000 | ' | ' | ' | ' | ' | ' | ' |
Increase decrease in interest rate of lines of credit facility | ' | 0.50% | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Unused capacity commitment fee percentage | ' | ' | ' | ' | ' | ' | ' | ' | 0.25% | ' | ' |
Interest expense incurred for lines of credit and loan and security agreement | ' | ' | ' | ' | ' | ' | 37,000 | 181,000 | 451,000 | 381,000 | ' |
Accrued interest payable | ' | ' | ' | ' | ' | ' | 0 | ' | 0 | ' | 20,000 |
Amortization of discount on lines of credit | ' | ' | ' | ' | ' | ' | 0 | 43,000 | 200,000 | 79,000 | ' |
Amortization of debt issuance costs | ' | ' | ' | ' | ' | ' | 0 | 71,000 | 128,000 | 152,000 | ' |
Restricted cash amounts | ' | ' | ' | ' | ' | ' | 0 | ' | 0 | ' | 0 |
Aggregate agreements amendment fee. | ' | ' | ' | ' | ' | ' | $10,000 | $10,000 | $55,000 | $44,000 | ' |
Comerica Bank Credit Agreements | Prime Rate | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Line Of Credit Facility [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Prime floor, daily prime plus LIBOR | ' | ' | ' | ' | ' | ' | ' | 2.50% | ' | 2.50% | ' |
Comerica Bank Credit Agreements | Domestic Revolver Credit Facility | Prime Rate | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Line Of Credit Facility [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Interest on principal balance rate plus | ' | 2.50% | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Comerica Bank Credit Agreements | Ex-Im Revolver | London Interbank Offered Rate (LIBOR) | Minimum | Prime Rate | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Line Of Credit Facility [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Interest on principal balance rate plus | ' | 2.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Commitments_and_Contingencies_
Commitments and Contingencies - Additional Information (Detail) | 12 Months Ended | ||||
Dec. 31, 2013 | Sep. 30, 2014 | Sep. 30, 2014 | Apr. 29, 2014 | Sep. 30, 2014 | |
USD ($) | USD ($) | Employee Arrangements and Other Compensation | Preliminary Enforcement | Statutory Bond | |
USD ($) | EUR (€) | EUR (€) | |||
Commitment And Contingencies [Line Items] | ' | ' | ' | ' | ' |
Future minimum lease obligations, for the year ended December 31, 2014 | ' | $166,000 | ' | ' | ' |
Future minimum lease obligations, for the year ended December 31, 2015 | ' | 333,000 | ' | ' | ' |
Change in control, if occurs, may require severance benefits payable | ' | ' | 503,000 | ' | ' |
Accrued for performance bonuses | ' | ' | 125,000 | ' | ' |
Purchase commitments pending | ' | 12,900,000 | ' | ' | ' |
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 | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | ||||||||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
International | International | Revenue | Revenue | Revenue | Revenue | Revenue | Revenue | Revenue | Revenue | |||||
United States | United States | United States | United States | International | International | International | International | |||||||
Customer | Customer | Customer | Customer | |||||||||||
Segment Reporting Information [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Percentage of net sales | ' | ' | ' | ' | ' | ' | 66.00% | 62.00% | 62.00% | 38.00% | 34.00% | 62.00% | 38.00% | 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. | '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 | ' | ' | ' | ' | $390 | $430 | ' | ' | ' | ' | ' | ' | ' | ' |
Number of customers which represented more than 10% of the Company's revenue | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0 | 0 | 0 | 0 |
Summary_of_Net_Revenue_by_Geog
Summary of Net Revenue by Geographic Location (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Segment Reporting Information [Line Items] | ' | ' | ' | ' |
Net revenue | $12,714 | $12,345 | $34,418 | $41,189 |
United States | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' |
Net revenue | 8,367 | 7,602 | 21,404 | 25,735 |
International | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' |
Net revenue | $4,347 | $4,743 | $13,014 | $15,454 |
Concentrations_Summary_of_Net_
Concentrations - Summary of Net Revenue from Various Products (Detail) (Product Concentration Risk, Revenue) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Concentration Risk [Line Items] | ' | ' | ' | ' |
Percentage of net revenue | 100.00% | 100.00% | 100.00% | 100.00% |
Laser systems | ' | ' | ' | ' |
Concentration Risk [Line Items] | ' | ' | ' | ' |
Percentage of net revenue | 57.90% | 65.80% | 60.20% | 67.90% |
Imaging systems | ' | ' | ' | ' |
Concentration Risk [Line Items] | ' | ' | ' | ' |
Percentage of net revenue | 11.00% | 7.80% | 9.50% | 8.10% |
Consumables and other | ' | ' | ' | ' |
Concentration Risk [Line Items] | ' | ' | ' | ' |
Percentage of net revenue | 12.60% | 13.20% | 13.60% | 11.90% |
Services | ' | ' | ' | ' |
Concentration Risk [Line Items] | ' | ' | ' | ' |
Percentage of net revenue | 18.20% | 12.90% | 16.30% | 11.70% |
License fees and royalties | ' | ' | ' | ' |
Concentration Risk [Line Items] | ' | ' | ' | ' |
Percentage of net revenue | 0.30% | 0.30% | 0.40% | 0.40% |
Concentrations_Additional_Info
Concentrations - Additional Information (Detail) | 9 Months Ended | 12 Months Ended | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Account Receivable | Account Receivable | Customer Concentration Risk | Customer Concentration Risk | Customer Concentration Risk | Customer Concentration Risk | |
Revenue | Revenue | Revenue | Revenue | |||
Concentration Risk [Line Items] | ' | ' | ' | ' | ' | ' |
Maximum revenue and account receivable with individual customer | 'Less than 10% | 'Less than 10% | 'Less than 10% | 'Less than 10% | 'Less than 10% | 'Less than 10% |
Income_Taxes_Additional_Inform
Income Taxes - Additional Information (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Income Tax Disclosure | ' | ' | ' | ' |
Liability for unrecognized tax benefit, including related estimates of penalties and interest | $0 | $0 | $0 | $1,000 |
Income tax provision (benefit) | 28,000 | 22,000 | 81,000 | -182,000 |
Projected annual effective tax rate | -0.80% | -0.54% | -0.55% | 1.97% |
Tax benefit for federal alternative minimum tax credits and California R&D credits | ' | ' | ' | 107,000 |
Tax benefit on reversed deferred tax liabilities and recognized AMT and R&D credits | ' | ' | ' | 214,000 |
Statutory tax rate | 34.00% | 34.00% | 34.00% | 34.00% |
Other Tax Benefits | ' | ' | ' | ' |
Income Tax Disclosure | ' | ' | ' | ' |
Tax benefit on reversed certain deferred tax liabilities associated with international operations | ' | ' | ' | $107,000 |
Subsequent_Event_Additional_In
Subsequent Event - Additional Information (Detail) (USD $) | 0 Months Ended | ||
In Millions, except Share data, unless otherwise specified | Nov. 03, 2014 | Jul. 22, 2014 | Feb. 10, 2014 |
Subsequent Event [Line Items] | ' | ' | ' |
Common stock shares issued | ' | 6,250,000 | 1,945,525 |
Common stock issued, price per share | ' | $1.92 | $2.57 |
Proceeds from equity offering, gross | ' | $12 | $5 |
Term of agreement | '3 years | ' | ' |
Subsequent Event | ' | ' | ' |
Subsequent Event [Line Items] | ' | ' | ' |
Common stock shares issued | 14,162,873 | ' | ' |
Common stock issued, price per share | 2.39 | ' | ' |
Warrants to purchase common stock | 9,205,862 | ' | ' |
Class of Warrant or Right, Exercise Price of Warrants or Rights | 4 | ' | ' |
Proceeds from equity offering, gross | 35 | ' | ' |
Warrant exercisable period after closing of private placement | '6 months | ' | ' |
Term of agreement | '3 years | ' | ' |