Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2015 | Apr. 27, 2015 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | FALSE | |
Document Period End Date | 31-Mar-15 | |
Document Fiscal Year Focus | 2015 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | BIOL | |
Entity Registrant Name | BIOLASE, INC | |
Entity Central Index Key | 811240 | |
Current Fiscal Year End Date | -19 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 58,152,792 |
Consolidated_Balance_Sheets_Un
Consolidated Balance Sheets (Unaudited) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash and cash equivalents | $23,739,000 | $31,560,000 |
Restricted cash equivalent | 200,000 | 0 |
Accounts receivable, less allowance of $1,764 in 2015 and $1,711 in 2014 | 9,811,000 | 9,004,000 |
Inventory, net | 13,172,000 | 12,508,000 |
Prepaid expenses and other current assets | 2,045,000 | 1,726,000 |
Total current assets | 48,967,000 | 54,798,000 |
Property, plant, and equipment, net | 1,747,000 | 1,295,000 |
Intangible assets, net | 96,000 | 114,000 |
Goodwill | 2,926,000 | 2,926,000 |
Other assets | 958,000 | 270,000 |
Total assets | 54,694,000 | 59,403,000 |
Current liabilities: | ||
Accounts payable | 7,645,000 | 8,357,000 |
Accrued liabilities | 5,144,000 | 5,188,000 |
Customer deposits | 176,000 | 112,000 |
Deferred revenue, current portion | 2,798,000 | 2,494,000 |
Total current liabilities | 15,763,000 | 16,151,000 |
Deferred income taxes | 692,000 | 677,000 |
Deferred revenue, long-term | 231,000 | |
Capital lease obligation | 240,000 | |
Warranty accrual, long-term | 640,000 | 519,000 |
Total liabilities | 17,566,000 | 17,347,000 |
Commitments, contingencies, and subsequent events (Notes 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 shares authorized in 2015 and 2014, respectively; 58,153 and 58,115 shares issued and outstanding in 2015 and 2014, respectively | 58,000 | 58,000 |
Additional paid-in-capital | 185,972,000 | 185,231,000 |
Accumulated other comprehensive loss | -790,000 | -557,000 |
Accumulated deficit | -148,112,000 | -142,676,000 |
Total stockholders' equity | 37,128,000 | 42,056,000 |
Total liabilities and stockholders' equity | $54,694,000 | $59,403,000 |
Consolidated_Balance_Sheets_Un1
Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, except Share data, unless otherwise specified | ||
Statement Of Financial Position [Abstract] | ||
Allowance for accounts receivable | $1,764 | $1,711 |
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 | 100,000,000 |
Common stock, shares issued | 58,153,000 | 58,115,000 |
Common stock, shares outstanding | 58,153,000 | 58,115,000 |
Consolidated_Statements_Of_Ope
Consolidated Statements Of Operations And Comprehensive Loss (Unaudited) (USD $) | 3 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Statement Consolidated Statements Of Operations And Comprehensive Loss [Abstract] | ||
Products and services revenue | $10,751 | $11,479 |
License fees and royalty revenue | 104 | 39 |
Net revenue | 10,855 | 11,518 |
Cost of revenue | 7,645 | 7,577 |
Gross profit | 3,210 | 3,941 |
Operating expenses: | ||
Sales and marketing | 4,754 | 4,455 |
General and administrative | 2,587 | 3,083 |
Engineering and development | 1,803 | 973 |
Excise tax | 56 | 65 |
Legal settlement | -731 | 0 |
Total operating expenses | 8,469 | 8,576 |
Loss from operations | -5,259 | -4,635 |
(Loss) gain on foreign currency transactions | -130 | 2 |
Interest expense, net | 230 | |
Non-operating loss, net | -130 | -228 |
Loss before income tax provision | -5,389 | -4,863 |
Income tax provision | 47 | 24 |
Net loss | -5,436 | -4,887 |
Other comprehensive (loss) income items: | ||
Foreign currency translation adjustment | -233 | 1 |
Comprehensive loss | ($5,669) | ($4,886) |
Net loss per share: | ||
Basic | ($0.09) | ($0.13) |
Diluted | ($0.09) | ($0.13) |
Shares used in the calculation of net loss per share: | ||
Basic | 58,145 | 36,455 |
Diluted | 58,145 | 36,455 |
Consolidated_Statements_Of_Cas
Consolidated Statements Of Cash Flows (Unaudited) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Cash Flows from Operating Activities: | ||
Net loss | ($5,436) | ($4,887) |
Adjustments to reconcile net loss to net cash and cash equivalents used in operating activities: | ||
Depreciation and amortization | 158 | 175 |
Loss on disposal of property, plant, and equipment, net | -1 | |
Provision for bad debts | 53 | 268 |
Provision for inventory excess and obsolescence | 261 | |
Amortization of discounts on lines of credit | 120 | |
Amortization of debt issuance costs | 57 | |
Stock-based compensation | 700 | 310 |
Other non-cash compensation | 61 | |
Deferred income taxes | 15 | 15 |
Incurred but unpaid interest expense | 12 | |
Changes in operating assets and liabilities: | ||
Restricted cash | -200 | |
Accounts receivable | -860 | 2,301 |
Inventory | -664 | -774 |
Prepaid expenses and other assets | -677 | 2 |
Customer deposits | 64 | -135 |
Accounts payable and accrued liabilities | -1,090 | -392 |
Deferred revenue | 535 | -190 |
Net cash and cash equivalents used in operating activities | -7,402 | -2,797 |
Cash Flows from Investing Activities: | ||
Additions to property, plant, and equipment | -228 | -86 |
Proceeds from disposal of property, plant, and equipment | 1 | |
Net cash and cash equivalents used in investing activities | -228 | -85 |
Cash Flows from Financing Activities: | ||
Borrowings under lines of credit | 7,570 | |
Payments under lines of credit | -9,325 | |
Payments of debt issue costs | -10 | |
Proceeds from equity offering, net of expenses | 4,793 | |
Deposit on capital lease | -42 | |
Proceeds from exercise of stock options and warrants | 44 | 248 |
Net cash and cash equivalents provided by financing activities | 2 | 3,276 |
Effect of exchange rate changes | -193 | 1 |
Change in cash and cash equivalents | -7,821 | 395 |
Cash and cash equivalents, beginning of period | 31,560 | 1,440 |
Cash and cash equivalents, end of period | 23,739 | 1,835 |
Supplemental cash flow disclosure - Cash Paid: | ||
Interest paid | 67 | |
Income taxes paid | 37 | 5 |
Supplemental cash flow disclosure - Non-cash: | ||
Assets acquired under capital lease | $383 |
Description_of_Business_and_Ba
Description of Business and Basis of Presentation | 3 Months Ended |
Mar. 31, 2015 | |
Accounting Policies [Abstract] | |
Description of Business and Basis of Presentation | NOTE 1—DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION |
The Company | |
BIOLASE, Inc. (“BIOLASE” and, together with its consolidated subsidiaries, the “Company,” “we,” “our,” or “us”) incorporated in Delaware in 1987, is a medical device company that develops, manufactures, markets, and sells laser systems in dentistry and medicine and also markets, sells, and distributes dental imaging equipment, including cone beam digital x-rays and CAD/CAM intra-oral scanners, in-office, chair-side milling machines and three dimensional printers. | |
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, 2014 audited consolidated financial statements and include all material adjustments, consisting of normal recurring adjustments and the elimination of all material intercompany transactions and balances, necessary to fairly present the information set forth therein. These unaudited, interim, consolidated financial statements do not include all the footnotes, presentations, and disclosures normally required by accounting principles generally accepted in the United States of America (“GAAP”) for complete consolidated financial statements. Certain amounts have been reclassified to conform to current period presentations. | |
The consolidated results of operations for the three months ended March 31, 2015 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, 2014, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 filed with the Securities and Exchange Commission (the “SEC”) on March 6, 2015, as amended on April 29, 2015 (the “2014 Form 10-K”). | |
Liquidity and Management’s Plans | |
The Company incurred a loss from operations, a net loss, and used cash in operating activities for the three months ended March 31, 2015. The Company has also suffered recurring losses from operations during the three years ended December 31, 2014. | |
As of March 31, 2015, the Company had working capital of approximately $33.2 million. The Company’s principal sources of liquidity at March 31, 2015 consisted of approximately $23.7 million in cash and cash equivalents and $9.8 million of net accounts receivable. | |
Additional capital requirements may depend on many factors, including, among other things, the rate at which the Company’s business grows, demands for working capital, manufacturing capacity, and any acquisitions that the Company may pursue. From time to time, the Company could be required, or may otherwise attempt, to raise capital through either equity or debt offerings. The Company cannot provide assurance that it will be able to successfully enter into any such equity or debt financings in the future or that the required capital would be available on acceptable terms, if at all, or that any such financing activity would not be dilutive to its stockholders. |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2015 | |
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. | |
Critical Accounting Policies | |
Information with respect to the Company’s critical accounting policies which management believes could have the most significant effect on the Company’s reported results and require subjective or complex judgments by management is contained on pages 41 to 43 in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of the 2014 Form 10-K. Management believes that there have been no significant changes during the three months ended March 31, 2015 in the Company’s critical accounting policies from those disclosed in Item 7 of the 2014 Form 10-K, except with regard to restricted cash equivalent as set forth below. | |
Restricted Cash Equivalent | |
The restricted cash equivalent represents a revolving 90-day certificate of deposit maintained by the Company as collateral in connection with corporate credit cards. At March 31, 2015, the restricted cash equivalent balance was $200,000. | |
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 GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of accounting standards updates (“ASUs”) to the FASB’s Accounting Standards Codification. | |
The Company considers the applicability and impact of all ASUs. ASUs not listed below were assessed and determined not to be applicable or are expected to have minimal impact on the Company’s consolidated financial position and results of operations. | |
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 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 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. |
StockBased_Awards_and_Per_Shar
Stock-Based Awards and Per Share Information | 3 Months Ended | |||||||||||||||
Mar. 31, 2015 | ||||||||||||||||
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. Persons eligible to receive awards under the 2002 Plan include certain officers, employees, and directors of the Company, as well as its consultants. As of March 31, 2015, a total of 9,250,000 shares have been authorized for issuance under the 2002 Plan (see Note 13 – Subsequent Events), of which 3,031,000 shares of Company common stock have been issued pursuant to options that were exercised, 5,469,000 shares of Company common stock have been reserved for options and restricted stock units that are outstanding, and 750,000 shares of Company common stock remain available for future grants. | ||||||||||||||||
Stock-based compensation cost recognized in operating results totaled approximately $700,000 and $310,000 for the three months ended March 31, 2015 and 2014, respectively. The net impact to earnings for the three months ended March 31, 2015 and 2014 was $(0.01) and $(0.01) per basic and diluted share, respectively. At March 31, 2015, the Company had approximately $5.0 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 3.4 years. | ||||||||||||||||
The following table summarizes the income statement classification of compensation expense associated with share-based payments (in thousands): | ||||||||||||||||
Three Months Ended | ||||||||||||||||
March 31, | ||||||||||||||||
2015 | 2014 | |||||||||||||||
Cost of revenue | $ | 76 | $ | 46 | ||||||||||||
Sales and marketing | 293 | 125 | ||||||||||||||
General and administrative | 236 | 115 | ||||||||||||||
Engineering and development | 95 | 24 | ||||||||||||||
$ | 700 | $ | 310 | |||||||||||||
The stock option fair values, under the 2002 Plan, were estimated using the Black-Scholes option-pricing model with the following assumptions: | ||||||||||||||||
Three Months Ended | ||||||||||||||||
March 31, | ||||||||||||||||
2015 | 2014 | |||||||||||||||
Expected term | 7.2 years | 3.6 years | ||||||||||||||
Volatility | 89.90% | 98.37% | ||||||||||||||
Annual dividend per share | $ | — | $ | — | ||||||||||||
Risk-free interest rate | 1.78% | 1.65% | ||||||||||||||
A summary of option activity under the 2002 Plan for the three months ended March 31, 2015 is as follows: | ||||||||||||||||
Weighted Average | ||||||||||||||||
Weighted | Remaining | Aggregate | ||||||||||||||
Average | Contractual | Intrinsic | ||||||||||||||
Shares | Exercise Price | Term (Years) | Value(1) | |||||||||||||
Options outstanding at December 31, 2014 | 3,391,000 | $ | 3.11 | 2.97 | $ | 1,063,000 | ||||||||||
Granted at fair market value | 2,232,000 | $ | 2.44 | |||||||||||||
Exercised | (38,000 | ) | $ | 1.15 | ||||||||||||
Forfeited, cancelled, or expired | (153,000 | ) | $ | 3.44 | ||||||||||||
Options outstanding at March 31, 2015 | 5,432,000 | $ | 2.84 | 5.46 | $ | 186,000 | ||||||||||
Options exercisable at March 31, 2015 | 2,680,000 | $ | 3.11 | 2.31 | $ | 183,000 | ||||||||||
Vested options expired during the quarter | 25,000 | $ | 3.96 | |||||||||||||
ended March 31, 2015 | ||||||||||||||||
(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 vested options under the 2002 Plan are provided in the following table (in thousands, except per share amounts): | ||||||||||||||||
Three Months Ended | ||||||||||||||||
March 31, | ||||||||||||||||
2015 | 2014 | |||||||||||||||
Proceeds from stock options exercised | $ | 44 | $ | 248 | ||||||||||||
Tax benefit related to stock options | N/A | N/A | ||||||||||||||
exercised (1) | ||||||||||||||||
Intrinsic value of stock options exercised (2) | $ | 52 | $ | 82 | ||||||||||||
Weighted-average fair value of options granted | $ | 2.44 | $ | 1.86 | ||||||||||||
during period | ||||||||||||||||
Total fair value of shares vested during | $ | 293 | $ | 346 | ||||||||||||
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. | ||||||||||||||||
Restricted Stock Units | ||||||||||||||||
The Company issues restricted stock units (“RSUs”) to acquire shares of Company common stock as approved by its board of directors (the “Board”). For the three months ended March 31, 2015 and 2014, the Board did not grant any RSUs. As of March 31, 2015, 37,000 shares of Company common stock have been reserved for RSUs that are outstanding. | ||||||||||||||||
Warrants | ||||||||||||||||
The Company issues warrants to acquire shares of its common stock underlying such warrants as approved by the Board. | ||||||||||||||||
A summary of warrant activity for the three months ended March 31, 2015 is as follows: | ||||||||||||||||
Weighted | ||||||||||||||||
Average | ||||||||||||||||
Shares | Exercise Price | |||||||||||||||
Warrants outstanding at December 31, 2014 | 888,000 | $ | 6.04 | |||||||||||||
Granted | — | |||||||||||||||
Exercised | — | |||||||||||||||
Forfeited, cancelled, or expired | — | |||||||||||||||
Warrants outstanding at March 31, 2015 | 888,000 | $ | 6.04 | |||||||||||||
Warrants exercisable at March 31, 2015 | 753,000 | $ | 6.4 | |||||||||||||
Vested warrants expired during the quarter | — | N/A | ||||||||||||||
ended March 31, 2015 | ||||||||||||||||
No warrants were exercised during the three months ended March 31, 2015 and 2014. | ||||||||||||||||
Other Stock-Based Awards | ||||||||||||||||
Effective March 9, 2015, the Compensation Committee of the Board granted non-qualified stock options to purchase up to 871,710 shares of Company common stock to its Chief Financial Officer in connection with his employment agreement with the Company. These options were granted at an exercise price of $1.99 per share, the closing price of Company common stock on the grant date. These options expire ten years from the grant date and vest in two tranches as follows: (i) as to options to purchase 523,026 shares (the “First Tranche”), options to purchase 130,757 shares vest and become exercisable on the first anniversary of March 9, 2015, and options to purchase 10,896 shares vest and become exercisable each month following March 9, 2016 for a period of 35 consecutive months, and options to purchase 10,909 shares vest and become exercisable on March 9, 2019, and (ii) as to options to purchase 348,684 shares (the “Second Tranche”), all such shares vest and become exercisable on March 9, 2025 or based on the Company’s achievement of certain enumerated financial performance targets or other milestones, at the discretion of the Compensation Committee. The fair value of the First Tranche of $1.48 per share was estimated using the Black-Scholes option-pricing model with assumptions of 6.1 years for expected term, 88.79% volatility and 1.83% risk-free interest rate. The fair value of the Second Tranche of $1.70 per share was estimated using the Black-Scholes option-pricing model with assumptions of 10.0 years for expected term, 87.87% volatility and 2.19% risk-free interest rate. | ||||||||||||||||
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 15,563,000 shares (including 9,206,000 shares issued in connection with the private placement completed by the Company on November 7, 2014) were not included in the computation of diluted loss per share for the three months ended March 31, 2015 as a result of their anti-dilutive effect. For the same 2014 period, anti-dilutive outstanding stock options and warrants to purchase 5,998,000 shares were not included in the computation of diluted loss per share. | ||||||||||||||||
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 | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
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): | ||||||||
March 31, | December 31, | |||||||
2015 | 2014 | |||||||
Raw materials | $ | 2,951 | $ | 2,857 | ||||
Work-in-process | 1,528 | 1,348 | ||||||
Finished goods | 8,693 | 8,303 | ||||||
Inventory, net | $ | 13,172 | $ | 12,508 | ||||
Inventory is net of a provision for excess and obsolete inventory totaling $2.4 million and $2.4 million as of March 31, 2015 and December 31, 2014, respectively. |
Property_Plant_and_Equipment
Property, Plant, and Equipment | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
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): | ||||||||
March 31, | December 31, | |||||||
2015 | 2014 | |||||||
Building | $ | 202 | $ | 226 | ||||
Leasehold improvements | 1,200 | 1,197 | ||||||
Equipment and computers | 5,035 | 4,948 | ||||||
Furniture and fixtures | 413 | 413 | ||||||
Construction in progress | 536 | 4 | ||||||
7,386 | 6,788 | |||||||
Accumulated depreciation and amortization | (5,796 | ) | (5,669 | ) | ||||
1,590 | 1,119 | |||||||
Land | 157 | 176 | ||||||
Property, plant, and equipment, net | $ | 1,747 | $ | 1,295 | ||||
The cost of fixed assets acquired under the capital lease of $383,000 is included in the above as part of construction in progress. For additional information on the capital lease, see Note 9 – Commitments and Contingencies. Depreciation and amortization expense related to property, plant, and equipment totaled $140,000 and $157,000 for the three months ended March 31, 2015 and 2014, respectively. |
Intangible_Assets_and_Goodwill
Intangible Assets and Goodwill | 3 Months Ended | |||||||||||||||||||||||||||||||
Mar. 31, 2015 | ||||||||||||||||||||||||||||||||
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 each 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. For intangible assets subject to amortization, the Company performs its impairment test when indicators, such as reductions in demand for its products or significant economic slowdowns, are present. 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 months ended March 31, 2015 and 2014 totaled $18,000 and $18,000, respectively. Other intangible assets primarily include acquired customer lists and non-compete agreements. | ||||||||||||||||||||||||||||||||
The following table presents details of the Company’s intangible assets, related accumulated amortization, and goodwill (in thousands): | ||||||||||||||||||||||||||||||||
As of March 31, 2015 | As of December 31, 2014 | |||||||||||||||||||||||||||||||
Accumulated | Accumulated | |||||||||||||||||||||||||||||||
Gross | Amortization | Impairment | Net | Gross | Amortization | Impairment | Net | |||||||||||||||||||||||||
Patents (4-10 years) | $ | 1,914 | $ | (1,911 | ) | $ | — | $ | 3 | $ | 1,914 | $ | (1,907 | ) | $ | — | $ | 7 | ||||||||||||||
Trademarks (6 years) | 69 | (69 | ) | — | — | 69 | (69 | ) | — | — | ||||||||||||||||||||||
Other (4 to 6 years) | 817 | (724 | ) | — | 93 | 817 | (710 | ) | — | 107 | ||||||||||||||||||||||
Total | $ | 2,800 | $ | (2,704 | ) | $ | — | $ | 96 | $ | 2,800 | $ | (2,686 | ) | $ | — | $ | 114 | ||||||||||||||
Goodwill (Indefinite life) | $ | 2,926 | $ | 2,926 | $ | 2,926 | $ | 2,926 | ||||||||||||||||||||||||
Accrued_Liabilities_and_Deferr
Accrued Liabilities and Deferred Revenue | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
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): | |||||||||
March 31, | December 31, | ||||||||
2015 | 2014 | ||||||||
Payroll and benefits | $ | 2,177 | $ | 1,905 | |||||
Warranty accrual, current portion | 1,027 | 930 | |||||||
Taxes | 38 | 139 | |||||||
Accrued professional services | 1,566 | 1,581 | |||||||
Accrued capital lease payments | 143 | — | |||||||
Accrued insurance premium | 104 | 450 | |||||||
Other | 89 | 183 | |||||||
Total accrued liabilities | $ | 5,144 | $ | 5,188 | |||||
Changes in the initial product warranty accrual, and the expenses incurred under the Company’s initial and extended warranties, for the three months ended March 31, 2015 and 2014 were as follows (in thousands): | |||||||||
Three Months Ended | |||||||||
March 31, | |||||||||
2015 | 2014 | ||||||||
Initial warranty accrual, beginning balance | $ | 930 | $ | 1,096 | |||||
Provision for estimated warranty cost | 970 | 148 | |||||||
Warranty expenditures | (233 | ) | (219 | ) | |||||
1,667 | 1,025 | ||||||||
Less warranty accrual, long-term | 640 | — | |||||||
Total warranty accrual, current portion | $ | 1,027 | $ | 1,025 | |||||
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): | |||||||||
March 31, | December 31, | ||||||||
2015 | 2014 | ||||||||
Undelivered elements (training, installation, and | $ | 1,293 | $ | 952 | |||||
product and support services) | |||||||||
Extended warranty contracts | 1,505 | 1,542 | |||||||
Deferred revenue, current portion | $ | 2,798 | $ | 2,494 | |||||
In connection with the Company’s initiatives to measure and improve customer satisfaction and concurrent with the launch of WaterLase iPlus 2.0 in February 2015, the Company introduced its exclusive Practice Growth Guarantee, which is a program that essentially guarantees growth in the Company’s clients’ dental practices through training on a select number of clinical procedures and with billing and marketing support for dentists included. Consistent with the Company’s standard terms and conditions applicable to all of its products, the Practice Growth Guarantee does not give the customer the right to return purchased laser systems or receive a refund of any amount of the purchase price. However, the Practice Growth Guarantee does provide for additional training opportunities and certain billing and marketing support activities to the customer. The Company has estimated deferred revenue related to the Practice Growth Guarantee for all WaterLase iPlus 2.0 system sales during the three months ended March 31, 2015 to be approximately $31,000. |
Lines_Of_Credit_and_Other_Borr
Lines Of Credit and Other Borrowings | 3 Months Ended |
Mar. 31, 2015 | |
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 Credit Agreements, 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, pursuant to which 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 months ended March 31, 2014, the Company incurred $229,000 of interest expense associated with the credit facilities, including $57,000 of amortization of deferred debt issuance costs and $120,000 of amortization of the discount on lines of credit. There was no interest expense payable at December 31, 2014. | |
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 December 31, 2014, there were no restricted cash amounts. The Company’s obligations were generally secured by substantially all of the Company’s assets now owned or thereafter acquired. | |
During the three months ended March 31, 2014, the Company incurred $10,000 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 financed a portion of its annual insurance premiums which it pays in installments over nine months. As of March 31, 2015, no amounts were outstanding under this arrangement. As of March 31, 2014, $123,000 was outstanding under this arrangement at an annual interest rate of 2.85%, and was included in accrued liabilities in the accompanying consolidated financial statements. The Company incurred interest expense associated with the financed insurance premiums of approximately $1,000 during the three months ended March 31, 2014. |
Commitments_and_Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2015 | |
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 or capital lease arrangements. In February 2015, the Company entered into a 30-month capital lease agreement for information technology equipment. Future minimum lease payments under the capital lease, together with the present value of the net minimum lease payments, for the years ending December 31, 2015, 2016 and 2017 are $129,000, $172,000, and $128,000, respectively. The amount necessary to reduce net minimum lease payments to present value calculated at the Company's incremental borrowing rate of 8.83% at the inception of the lease totaled $46,000. The present value of net minimum lease payments are reflected on the Consolidated Balance Sheets as current and noncurrent obligations of $143,000 within accrued liabilities and $240,000 within capital lease obligation, respectively. | |
In March 2015, the corporate headquarters and manufacturing facility lease was amended to extend the term through April 30, 2020, modify provisions for tenant improvement allowance of up to $398,000, and adjust the basic rent terms. Future minimum rental commitments under operating lease agreements with non-cancelable terms greater than one year for the years ending December 31, 2015, 2016, 2017 and 2018 and thereafter totaled $483,000, $694,000, $652,000 and $1.5 million, 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 $994,000, in the aggregate, at March 31, 2015. The Company also has agreements with certain employees to pay bonuses based on targeted performance criteria. As of March 31, 2015, approximately $409,000 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 March 31, 2015, the Company had $18.2 million of purchase commitments for which the Company has not received certain goods or services that are expected to be purchased within one year. These purchase commitments were made to secure better pricing and to ensure the Company will have the necessary parts to meet anticipated near-term demand. | |
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, its then Chief Executive Officer, Federico Pignatelli, and its then 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, as amended (the “Exchange Act”). 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 Exchange Act. | |
On November 19, 2013, the 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. | |
Subsequent to December 31, 2014, the parties have 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. | |
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 (the “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. 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 Patent Trial and Appeal Board. 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 on reconsideration was held in November 2014. | |
The Company filed a patent infringement lawsuit against Fotona Proizvodnja Optoelektronskih Naprav D.D. and Fotona LLC (collectively, “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 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. 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. | |
Subsequent to the foregoing responses, on March 24, 2015 the parties reached an agreement to settle the foregoing litigation and to dismiss the litigation with prejudice. As part of the settlement, Fotona agreed to pay the Company a total of $1.4 million, with $550,000 payable within 10 days of March 24, 2015 and the remaining, $825,000 payable in three increments of $275,000 each to be paid no later than the first, second and third anniversary of the effective date of the agreement. Pursuant to the settlement agreement, the Company (i) granted Fotona a three-year, non-exclusive, paid-up license in the United States market and a five–year, non-exclusive, paid-up license in markets outside of the United States and (ii) agreed to grant Fotona a non-exclusive, royalty-based license following the expiration of the paid-up licenses. The Company calculated the present value of the settlement amount to be $1.2 million and allocated such amount to each significant element of the settlement on a relative fair value basis. $731,000 and $68,000 was allocated towards the recovery of the Company’s legal expenses and as settlement for the dismissal of the patent infringement lawsuit and are reflected as legal settlement and license fees and royalty revenue, respectively, on the Consolidated Statements of Operations and Comprehensive Loss. The remaining amount of $379,000 was allocated towards the three-year, non-exclusive, paid-up license in the United States market and the five –year, non-exclusive, paid-up license in markets outside of the United States which was reflected within other assets and long-term deferred revenue on the Consolidated Balance Sheets. The deferred revenue is being recognized as license revenue over the terms of the paid-up licenses. | |
Other Matters | |
In the normal course of business, the Company may be subject to other legal proceedings, lawsuits and other claims. Although the ultimate aggregate amount of probable monetary liability or financial impact with respect to these matters is subject to many uncertainties and is therefore not predictable with assurance, the Company’s management believes that any monetary liability or financial impact to the Company from these other matters, individually and in the aggregate, would not be material to the Company’s financial condition, results of operations or cash flows. However, there can be no assurance with respect to such result, and monetary liability or financial impact to the Company from these other matters could differ materially from those projected. |
Segment_Information
Segment Information | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Segment Reporting [Abstract] | |||||||||
Segment Information | NOTE 10—SEGMENT INFORMATION | ||||||||
The Company currently operates in a single reportable segment. For the three months ended March 31, 2015, sales in the United States accounted for approximately 55% of net revenue and international sales accounted for approximately 45% of net revenue. For the three months ended March 31, 2014, sales in the United States accounted for approximately 58% of net revenue and international sales accounted for approximately 42% of net revenue. | |||||||||
Net revenue by geographic location based on the location of customers was as follows (in thousands): | |||||||||
Three Months Ended | |||||||||
March 31, | |||||||||
2015 | 2014 | ||||||||
United States | $ | 5,930 | $ | 6,709 | |||||
International | 4,925 | 4,809 | |||||||
$ | 10,855 | $ | 11,518 | ||||||
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 $334,000 and $374,000 as of March 31, 2015 and December 31, 2014, respectively. |
Concentrations
Concentrations | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Risks And Uncertainties [Abstract] | ||||||||
Concentrations | NOTE 11—CONCENTRATIONS | |||||||
Revenue from the Company’s products for the three months ended March 31, 2015 and 2014 are as follows: | ||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2015 | 2014 | |||||||
Laser systems | 64.6 | % | 60.4 | % | ||||
Imaging systems | 3.1 | % | 10.4 | % | ||||
Consumables and other | 17.5 | % | 13.9 | % | ||||
Services | 13.8 | % | 15 | % | ||||
License fees and royalties | 1 | % | 0.3 | % | ||||
Total revenue | 100 | % | 100 | % | ||||
No individual customer represented more than 10% of the Company’s revenue for the three months ended March 31, 2015 or 2014. | ||||||||
The Company maintains its cash and cash equivalent accounts with established commercial banks. Such cash deposits periodically exceed the Federal Deposit Insurance Corporation insured limit. | ||||||||
No individual customer represented more than 10% of the Company’s accounts receivable at March 31, 2015 or December 31, 2014. | ||||||||
The Company currently purchases certain key components of its products from single suppliers. Although there are a limited number of manufacturers of these key components, management believes that other suppliers could provide similar key components on comparable terms. A change in suppliers, however, could cause delays in manufacturing and a possible loss of sales, which could adversely affect the Company’s business, results of operations, and financial condition. |
Income_Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2015 | |
Income Tax Disclosure [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. Based on the Company’s net losses in prior years, management has determined that a full valuation allowance against the Company’s net deferred tax assets is appropriate. | |
Accounting for uncertainty in income taxes prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return and provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The Company has elected to classify interest and penalties as a component of its income tax provision. With respect to the liability for unrecognized tax benefits, including related estimates of penalties and interest, the Company did not record a liability for unrecognized tax benefits for the three months ended March 31, 2015 and 2014, respectively. The Company does not expect any changes to its unrecognized tax benefit for the next twelve months that would materially impact its consolidated financial statements. | |
During the three months ended March 31, 2015, the Company recorded an income tax provision of $47,000, resulting in an effective tax rate of (0.9)%. During the three months ended March 31, 2014, the Company recorded an income tax provision of $24,000, resulting in an effective tax rate of (0.5)%. The income tax provisions for the three months ended March 31, 2015 and 2014 were calculated using the discrete year-to-date method. 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. | |
Subsequent_Event
Subsequent Event | 3 Months Ended |
Mar. 31, 2015 | |
Disclosure Subsequent Events Additional Information [Abstract] | |
Subsequent Event | NOTE 13—SUBSEQUENT EVENT |
Stock-Based Compensation | |
On April 27, 2015, an additional 2.3 million shares of Company common stock were authorized for issuance under the 2002 Plan. | |
Also on April 27, 2015, non-employee directors of the Company were granted non-qualified stock options to purchase a combined total of 657,489 shares of Company common stock, as annual compensation for serving on the Board. These options were granted at an exercise price of $2.27, the average closing market price of the Company’s stock for the trailing 12 months prior to grant date, and vest over a 12-month period. |
Accounting_Policies_Policies
Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2015 | |
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, 2014 audited consolidated financial statements and include all material adjustments, consisting of normal recurring adjustments and the elimination of all material intercompany transactions and balances, necessary to fairly present the information set forth therein. These unaudited, interim, consolidated financial statements do not include all the footnotes, presentations, and disclosures normally required by accounting principles generally accepted in the United States of America (“GAAP”) for complete consolidated financial statements. Certain amounts have been reclassified to conform to current period presentations. | |
The consolidated results of operations for the three months ended March 31, 2015 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, 2014, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 filed with the Securities and Exchange Commission (the “SEC”) on March 6, 2015, as amended on April 29, 2015 (the “2014 Form 10-K”). | |
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 months ended March 31, 2015. The Company has also suffered recurring losses from operations during the three years ended December 31, 2014. | |
As of March 31, 2015, the Company had working capital of approximately $33.2 million. The Company’s principal sources of liquidity at March 31, 2015 consisted of approximately $23.7 million in cash and cash equivalents and $9.8 million of net accounts receivable. | |
Additional capital requirements may depend on many factors, including, among other things, the rate at which the Company’s business grows, demands for working capital, manufacturing capacity, and any acquisitions that the Company may pursue. From time to time, the Company could be required, or may otherwise attempt, to raise capital through either equity or debt offerings. The Company cannot provide assurance that it will be able to successfully enter into any such equity or debt financings in the future or that the required capital would be available on acceptable terms, if at all, or that any such financing activity would not be dilutive to its stockholders. | |
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. | |
Critical Accounting Policy | Critical Accounting Policies |
Information with respect to the Company’s critical accounting policies which management believes could have the most significant effect on the Company’s reported results and require subjective or complex judgments by management is contained on pages 41 to 43 in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of the 2014 Form 10-K. Management believes that there have been no significant changes during the three months ended March 31, 2015 in the Company’s critical accounting policies from those disclosed in Item 7 of the 2014 Form 10-K, except with regard to restricted cash equivalent as set forth below. | |
Restricted Cash Equivalent | |
The restricted cash equivalent represents a revolving 90-day certificate of deposit maintained by the Company as collateral in connection with corporate credit cards. At March 31, 2015, the restricted cash equivalent balance was $200,000. | |
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 GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of accounting standards updates (“ASUs”) to the FASB’s Accounting Standards Codification. | |
The Company considers the applicability and impact of all ASUs. ASUs not listed below were assessed and determined not to be applicable or are expected to have minimal impact on the Company’s consolidated financial position and results of operations. | |
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 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 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. | |
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. |
Income Tax Disclosure [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 months ended March 31, 2015 and 2014, respectively. The Company does not expect any changes to its unrecognized tax benefit for the next twelve months that would materially impact its consolidated financial statements. |
StockBased_Awards_and_Per_Shar1
Stock-Based Awards and Per Share Information (Tables) | 3 Months Ended | |||||||||||||||
Mar. 31, 2015 | ||||||||||||||||
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 | ||||||||||||||||
March 31, | ||||||||||||||||
2015 | 2014 | |||||||||||||||
Cost of revenue | $ | 76 | $ | 46 | ||||||||||||
Sales and marketing | 293 | 125 | ||||||||||||||
General and administrative | 236 | 115 | ||||||||||||||
Engineering and development | 95 | 24 | ||||||||||||||
$ | 700 | $ | 310 | |||||||||||||
Assumptions on Estimation of Stock Option Fair Values | The stock option fair values, under the 2002 Plan, were estimated using the Black-Scholes option-pricing model with the following assumptions: | |||||||||||||||
Three Months Ended | ||||||||||||||||
March 31, | ||||||||||||||||
2015 | 2014 | |||||||||||||||
Expected term | 7.2 years | 3.6 years | ||||||||||||||
Volatility | 89.90% | 98.37% | ||||||||||||||
Annual dividend per share | $ | — | $ | — | ||||||||||||
Risk-free interest rate | 1.78% | 1.65% | ||||||||||||||
Summary of Option Activity | A summary of option activity under the 2002 Plan for the three months ended March 31, 2015 is as follows: | |||||||||||||||
Weighted Average | ||||||||||||||||
Weighted | Remaining | Aggregate | ||||||||||||||
Average | Contractual | Intrinsic | ||||||||||||||
Shares | Exercise Price | Term (Years) | Value(1) | |||||||||||||
Options outstanding at December 31, 2014 | 3,391,000 | $ | 3.11 | 2.97 | $ | 1,063,000 | ||||||||||
Granted at fair market value | 2,232,000 | $ | 2.44 | |||||||||||||
Exercised | (38,000 | ) | $ | 1.15 | ||||||||||||
Forfeited, cancelled, or expired | (153,000 | ) | $ | 3.44 | ||||||||||||
Options outstanding at March 31, 2015 | 5,432,000 | $ | 2.84 | 5.46 | $ | 186,000 | ||||||||||
Options exercisable at March 31, 2015 | 2,680,000 | $ | 3.11 | 2.31 | $ | 183,000 | ||||||||||
Vested options expired during the quarter | 25,000 | $ | 3.96 | |||||||||||||
ended March 31, 2015 | ||||||||||||||||
(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 Vested Options | Cash proceeds along with fair value disclosures related to grants, exercises, and vested options under the 2002 Plan are provided in the following table (in thousands, except per share amounts): | |||||||||||||||
Three Months Ended | ||||||||||||||||
March 31, | ||||||||||||||||
2015 | 2014 | |||||||||||||||
Proceeds from stock options exercised | $ | 44 | $ | 248 | ||||||||||||
Tax benefit related to stock options | N/A | N/A | ||||||||||||||
exercised (1) | ||||||||||||||||
Intrinsic value of stock options exercised (2) | $ | 52 | $ | 82 | ||||||||||||
Weighted-average fair value of options granted | $ | 2.44 | $ | 1.86 | ||||||||||||
during period | ||||||||||||||||
Total fair value of shares vested during | $ | 293 | $ | 346 | ||||||||||||
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 three months ended March 31, 2015 is as follows: | |||||||||||||||
Weighted | ||||||||||||||||
Average | ||||||||||||||||
Shares | Exercise Price | |||||||||||||||
Warrants outstanding at December 31, 2014 | 888,000 | $ | 6.04 | |||||||||||||
Granted | — | |||||||||||||||
Exercised | — | |||||||||||||||
Forfeited, cancelled, or expired | — | |||||||||||||||
Warrants outstanding at March 31, 2015 | 888,000 | $ | 6.04 | |||||||||||||
Warrants exercisable at March 31, 2015 | 753,000 | $ | 6.4 | |||||||||||||
Vested warrants expired during the quarter | — | N/A | ||||||||||||||
ended March 31, 2015 | ||||||||||||||||
Inventory_Tables
Inventory (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
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): | |||||||
March 31, | December 31, | |||||||
2015 | 2014 | |||||||
Raw materials | $ | 2,951 | $ | 2,857 | ||||
Work-in-process | 1,528 | 1,348 | ||||||
Finished goods | 8,693 | 8,303 | ||||||
Inventory, net | $ | 13,172 | $ | 12,508 | ||||
Property_Plant_and_Equipment_T
Property, Plant, and Equipment (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Property Plant And Equipment [Abstract] | ||||||||
Summary of Property, Plant, and Equipment | Property, plant, and equipment, net is comprised of the following (in thousands): | |||||||
March 31, | December 31, | |||||||
2015 | 2014 | |||||||
Building | $ | 202 | $ | 226 | ||||
Leasehold improvements | 1,200 | 1,197 | ||||||
Equipment and computers | 5,035 | 4,948 | ||||||
Furniture and fixtures | 413 | 413 | ||||||
Construction in progress | 536 | 4 | ||||||
7,386 | 6,788 | |||||||
Accumulated depreciation and amortization | (5,796 | ) | (5,669 | ) | ||||
1,590 | 1,119 | |||||||
Land | 157 | 176 | ||||||
Property, plant, and equipment, net | $ | 1,747 | $ | 1,295 | ||||
Intangible_Assets_and_Goodwill1
Intangible Assets and Goodwill (Tables) | 3 Months Ended | |||||||||||||||||||||||||||||||
Mar. 31, 2015 | ||||||||||||||||||||||||||||||||
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 March 31, 2015 | As of December 31, 2014 | |||||||||||||||||||||||||||||||
Accumulated | Accumulated | |||||||||||||||||||||||||||||||
Gross | Amortization | Impairment | Net | Gross | Amortization | Impairment | Net | |||||||||||||||||||||||||
Patents (4-10 years) | $ | 1,914 | $ | (1,911 | ) | $ | — | $ | 3 | $ | 1,914 | $ | (1,907 | ) | $ | — | $ | 7 | ||||||||||||||
Trademarks (6 years) | 69 | (69 | ) | — | — | 69 | (69 | ) | — | — | ||||||||||||||||||||||
Other (4 to 6 years) | 817 | (724 | ) | — | 93 | 817 | (710 | ) | — | 107 | ||||||||||||||||||||||
Total | $ | 2,800 | $ | (2,704 | ) | $ | — | $ | 96 | $ | 2,800 | $ | (2,686 | ) | $ | — | $ | 114 | ||||||||||||||
Goodwill (Indefinite life) | $ | 2,926 | $ | 2,926 | $ | 2,926 | $ | 2,926 | ||||||||||||||||||||||||
Accrued_Liabilities_and_Deferr1
Accrued Liabilities and Deferred Revenue (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Payables And Accruals [Abstract] | |||||||||
Components of Accrued Liabilities | Accrued liabilities are comprised of the following (in thousands): | ||||||||
March 31, | December 31, | ||||||||
2015 | 2014 | ||||||||
Payroll and benefits | $ | 2,177 | $ | 1,905 | |||||
Warranty accrual, current portion | 1,027 | 930 | |||||||
Taxes | 38 | 139 | |||||||
Accrued professional services | 1,566 | 1,581 | |||||||
Accrued capital lease payments | 143 | — | |||||||
Accrued insurance premium | 104 | 450 | |||||||
Other | 89 | 183 | |||||||
Total accrued liabilities | $ | 5,144 | $ | 5,188 | |||||
Changes in Initial Product Warranty Accrual and Expenses Under Initial and Extended Warranties | Changes in the initial product warranty accrual, and the expenses incurred under the Company’s initial and extended warranties, for the three months ended March 31, 2015 and 2014 were as follows (in thousands): | ||||||||
Three Months Ended | |||||||||
March 31, | |||||||||
2015 | 2014 | ||||||||
Initial warranty accrual, beginning balance | $ | 930 | $ | 1,096 | |||||
Provision for estimated warranty cost | 970 | 148 | |||||||
Warranty expenditures | (233 | ) | (219 | ) | |||||
1,667 | 1,025 | ||||||||
Less warranty accrual, long-term | 640 | — | |||||||
Total warranty accrual, current portion | $ | 1,027 | $ | 1,025 | |||||
Components of Deferred Revenue | Deferred revenue is comprised of the following (in thousands): | ||||||||
March 31, | December 31, | ||||||||
2015 | 2014 | ||||||||
Undelivered elements (training, installation, and | $ | 1,293 | $ | 952 | |||||
product and support services) | |||||||||
Extended warranty contracts | 1,505 | 1,542 | |||||||
Deferred revenue, current portion | $ | 2,798 | $ | 2,494 | |||||
Segment_Information_Tables
Segment Information (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
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 | |||||||||
March 31, | |||||||||
2015 | 2014 | ||||||||
United States | $ | 5,930 | $ | 6,709 | |||||
International | 4,925 | 4,809 | |||||||
$ | 10,855 | $ | 11,518 | ||||||
Concentrations_Tables
Concentrations (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Risks And Uncertainties [Abstract] | ||||||||
Summary of Net Revenue from Various Products | Revenue from the Company’s products for the three months ended March 31, 2015 and 2014 are as follows: | |||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2015 | 2014 | |||||||
Laser systems | 64.6 | % | 60.4 | % | ||||
Imaging systems | 3.1 | % | 10.4 | % | ||||
Consumables and other | 17.5 | % | 13.9 | % | ||||
Services | 13.8 | % | 15 | % | ||||
License fees and royalties | 1 | % | 0.3 | % | ||||
Total revenue | 100 | % | 100 | % | ||||
Description_of_Business_and_Ba1
Description of Business and Basis of Presentation - Additional Information (Detail) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 | Mar. 31, 2014 | Dec. 31, 2013 |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | ||||
Working capital | $33,200,000 | |||
Cash and cash equivalents | 23,739,000 | 31,560,000 | 1,835,000 | 1,440,000 |
Net accounts receivable | $9,811,000 | $9,004,000 |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies - Additional Information (Detail) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Accounting Policies [Abstract] | ||
Restricted cash equivalent | $200,000 | $0 |
StockBased_Awards_and_Per_Shar2
Stock-Based Awards and Per Share Information - Additional Information (Detail) (USD $) | 1 Months Ended | 3 Months Ended | 0 Months Ended | |||
Feb. 28, 2014 | Mar. 31, 2015 | Mar. 31, 2014 | Nov. 07, 2014 | Mar. 09, 2015 | Dec. 31, 2014 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Common stock issued pursuant to options exercised | 38,000 | |||||
Compensation cost related to stock options | $700,000 | $310,000 | ||||
Net impact of share based compensation expense to earnings per basic share | ($0.01) | ($0.01) | ||||
Net impact of share based compensation expense to earnings per diluted share | ($0.01) | ($0.01) | ||||
Total unrecognized compensation cost | $5,000,000 | |||||
Unrecognized share based compensation cost to be recognized over weighted-average period | 3 years 4 months 24 days | |||||
Granted | 2,232,000 | |||||
Expected term | 7 years 2 months 12 days | 3 years 7 months 6 days | ||||
Volatility | 89.90% | 98.37% | ||||
Risk-free interest rate | 1.78% | 1.65% | ||||
Outstanding stock options and warrants excluded from diluted loss per share | 15,563,000 | 5,998,000 | ||||
Annual Stock Dividend Payable Rate | 0.50% | |||||
Dividends Payable, Date of Record | 14-Mar-14 | |||||
Private Placement | ||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Outstanding stock options and warrants included in connection with November 2014 | 9,206,000 | |||||
CFO Grant Award Tranche One | ||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Granted | 523,026 | |||||
Share based compensation arrangement by share Based payment award fair value price | $1.48 | |||||
Expected term | 6 years 1 month 6 days | |||||
Volatility | 88.79% | |||||
Risk-free interest rate | 1.83% | |||||
CFO Grant Award Tranche Two | ||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Share based compensation arrangement by share Based payment award fair value price | $1.70 | |||||
Expected term | 10 years | |||||
Volatility | 87.87% | |||||
Risk-free interest rate | 2.19% | |||||
Warrants | ||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Restricted stock units outstanding | 888,000 | 888,000 | ||||
Warrants exercised | 0 | 0 | ||||
Restricted Stock Units (RSUs) | ||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Restricted stock units outstanding | 37,000 | |||||
Non Qualified Stock Options | Chief Financial Officer | ||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Granted | 871,710 | |||||
Exercise Price of Stock Options | $1.99 | |||||
Options expiration period | 10 years | |||||
One Year Anniversary | CFO Grant Award Tranche One | ||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Option shares vested and exercised | 130,757 | |||||
Shares vested and exercised consecutive term | 35 months | |||||
Shares vested and exercisable date | 9-Mar-16 | |||||
One Month Anniversary | CFO Grant Award Tranche One | ||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Option shares vested and exercised | 10,896 | |||||
Thirty Six Month Anniversary | CFO Grant Award Tranche One | ||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Option shares vested and exercised | 10,909 | |||||
Shares vested and exercisable date | 9-Mar-19 | |||||
Ten Year Anniversary | CFO Grant Award Tranche Two | ||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Granted | 348,684 | |||||
Shares vested and exercisable date | 9-Mar-25 | |||||
2002 Stock Incentive Plan | ||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Plan expiration date | 5-May-19 | |||||
Common stock authorized for issuance under the 2002 Plan | 9,250,000 | |||||
Common stock issued pursuant to options exercised | 3,031,000 | |||||
Options and restricted stock units outstanding | 5,469,000 | |||||
Options available for future grants | 750,000 |
Classification_of_Compensation
Classification of Compensation Expense Associated with Share-Based Payments (Detail) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Allocated Share-based Compensation Expense | $700 | $310 |
Cost Of Revenue | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Allocated Share-based Compensation Expense | 76 | 46 |
Sales and Marketing | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Allocated Share-based Compensation Expense | 293 | 125 |
General and Administrative Expense | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Allocated Share-based Compensation Expense | 236 | 115 |
Engineering And Development | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Allocated Share-based Compensation Expense | $95 | $24 |
Assumptions_Used_in_Estimating
Assumptions Used in Estimating Fair Value of Stock Options Granted (Detail) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Share Based Compensation Arrangement By Share Based Payment Award Fair Value Assumptions And Methodology [Abstract] | ||
Expected term | 7 years 2 months 12 days | 3 years 7 months 6 days |
Volatility | 89.90% | 98.37% |
Risk-free interest rate | 1.78% | 1.65% |
Summary_of_Option_Activity_Det
Summary of Option Activity (Detail) (USD $) | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | |||
Number of Shares | |||||
Beginning Balance | 3,391,000 | ||||
Granted | 2,232,000 | ||||
Exercised | -38,000 | ||||
Forfeited, cancelled, or expired | -153,000 | ||||
Ending Balance | 5,432,000 | 3,391,000 | |||
Options exercisable, March 31, 2015 | 2,680,000 | ||||
Vested options expired during the twelve months ended March 31, 2015 | 25,000 | ||||
Weighted Average Exercise Price | |||||
Beginning Balance | $3.11 | ||||
Granted | $2.44 | $1.86 | |||
Exercised | $1.15 | ||||
Forfeited, cancelled, or expired | $3.44 | ||||
Ending Balance | $2.84 | $3.11 | |||
Options exercisable, March 31, 2015 | $3.11 | ||||
Vested options expired during the twelve months ended March 31, 2015 | $3.96 | ||||
Weighted Average Remaining Contractual Term (In Years) | |||||
Options outstanding | 5 years 5 months 16 days | 2 years 11 months 19 days | |||
Options exercisable | 2 years 3 months 22 days | ||||
Aggregate Intrinsic Value | |||||
Options outstanding | $1,063,000 | [1] | |||
Options outstanding | 186,000 | [1] | 1,063,000 | [1] | |
Options exercisable | $183,000 | [1] | |||
[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 Vested Options (Detail) (USD $) | 3 Months Ended | |||
In Thousands, except Per Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | ||
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | ||||
Proceeds from stock options exercised | $44 | $248 | ||
Tax benefit related to stock options exercised | [1] | [1] | ||
Intrinsic value of stock options exercised | 52 | [2] | 82 | [2] |
Weighted-average fair value of options granted | $2.44 | $1.86 | ||
Total fair value of shares vested during the period | $293 | $346 | ||
[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 Companybs 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_De
Summary of Warrant Activity (Detail) (Warrants, USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Warrants | ||
Shares | ||
Beginning Balance | 888,000 | |
Exercised | 0 | 0 |
Ending Balance | 888,000 | |
Warrants exercisable, March 31, 2015 | 753,000 | |
Weighted Average Exercise Price | ||
Beginning Balance | $6.04 | |
Ending Balance | $6.04 | |
Warrants exercisable at March 31, 2015 | $6.40 |
Components_of_Inventory_Detail
Components of Inventory (Detail) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Components of inventory, net of allowances | ||
Raw materials | $2,951 | $2,857 |
Work-in-process | 1,528 | 1,348 |
Finished goods | 8,693 | 8,303 |
Inventory, net | $13,172 | $12,508 |
Inventory_Additional_Informati
Inventory - Additional Information (Detail) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Millions, unless otherwise specified | ||
Inventory Disclosure [Abstract] | ||
Provision for excess and obsolete inventory | $2.40 | $2.40 |
Summary_of_Property_Plant_and_
Summary of Property, Plant, and Equipment (Detail) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Property Plant And Equipment [Line Items] | ||
Property, plant, and equipment gross, excluding land | $7,386 | $6,788 |
Accumulated depreciation and amortization | -5,796 | -5,669 |
Property, plant, and equipment net, excluding land | 1,590 | 1,119 |
Land | 157 | 176 |
Property, plant, and equipment, net | 1,747 | 1,295 |
Building | ||
Property Plant And Equipment [Line Items] | ||
Property, plant and equipment, gross | 202 | 226 |
Leasehold Improvements | ||
Property Plant And Equipment [Line Items] | ||
Property, plant and equipment, gross | 1,200 | 1,197 |
Equipment and Computers | ||
Property Plant And Equipment [Line Items] | ||
Property, plant and equipment, gross | 5,035 | 4,948 |
Furniture and Fixtures | ||
Property Plant And Equipment [Line Items] | ||
Property, plant and equipment, gross | 413 | 413 |
Construction in Progress | ||
Property Plant And Equipment [Line Items] | ||
Property, plant and equipment, gross | $536 | $4 |
Property_Plant_and_Equipment_A
Property, Plant, and Equipment - Additional Information (Detail) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Property Plant And Equipment [Abstract] | ||
Fixed assets acquired under capital lease | $383,000 | |
Depreciation and amortization | $140,000 | $157,000 |
Intangible_Assets_and_Goodwill2
Intangible Assets and Goodwill - Additional Information (Detail) (USD $) | 3 Months Ended | 6 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | Jun. 30, 2014 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |||
Intangible assets and goodwill impairment | $0 | ||
Amortization expense | $18,000 | $18,000 |
Intangible_Assets_and_Related_
Intangible Assets and Related Accumulated Amortization (Detail) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Dec. 31, 2014 |
Intangible Assets And Goodwill [Line Items] | ||
Intangible assets, gross | $2,800 | $2,800 |
Intangible assets, accumulated amortization | -2,704 | -2,686 |
Intangible assets, net | 96 | 114 |
Useful life | Indefinite life | |
Goodwill gross | 2,926 | 2,926 |
Goodwill | 2,926 | 2,926 |
Patents | ||
Intangible Assets And Goodwill [Line Items] | ||
Intangible assets, gross | 1,914 | 1,914 |
Intangible assets, accumulated amortization | -1,911 | -1,907 |
Intangible assets, net | 3 | 7 |
Patents | Minimum | ||
Intangible Assets And Goodwill [Line Items] | ||
Useful life | 4 years | |
Patents | Maximum | ||
Intangible Assets And Goodwill [Line Items] | ||
Useful life | 10 years | |
Trademarks | ||
Intangible Assets And Goodwill [Line Items] | ||
Useful life | 6 years | |
Intangible assets, gross | 69 | 69 |
Intangible assets, accumulated amortization | -69 | -69 |
Other Intangible Assets | ||
Intangible Assets And Goodwill [Line Items] | ||
Intangible assets, gross | 817 | 817 |
Intangible assets, accumulated amortization | -724 | -710 |
Intangible assets, net | $93 | $107 |
Other Intangible Assets | Minimum | ||
Intangible Assets And Goodwill [Line Items] | ||
Useful life | 4 years | |
Other Intangible Assets | Maximum | ||
Intangible Assets And Goodwill [Line Items] | ||
Useful life | 6 years |
Components_of_Accrued_Liabilit
Components of Accrued Liabilities (Detail) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 | Mar. 31, 2014 |
In Thousands, unless otherwise specified | |||
Components of accrued liabilities | |||
Payroll and benefits | $2,177 | $1,905 | |
Warranty accrual, current portion | 1,027 | 930 | 1,025 |
Taxes | 38 | 139 | |
Accrued professional services | 1,566 | 1,581 | |
Accrued capital lease payments | 143 | ||
Accrued insurance premium | 104 | 450 | |
Other | 89 | 183 | |
Total accrued liabilities | $5,144 | $5,188 |
Changes_in_Initial_Product_War
Changes in Initial Product Warranty Accrual and Expenses Under Initial and Extended Warranties (Detail) (USD $) | 3 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 |
Movement in Standard Product Warranty Accrual | |||
Initial warranty accrual, beginning balance | $930 | $1,096 | |
Provision for estimated warranty cost | 970 | 148 | |
Warranty expenditures | -233 | -219 | |
Initial warranty accrual, ending balance | 1,667 | 1,025 | |
Less warranty accrual, long-term | 640 | 0 | 519 |
Total warranty accrual, current portion | $1,027 | $1,025 | $930 |
Accrued_Liabilities_and_Deferr2
Accrued Liabilities and Deferred Revenue - Additional Information (Detail) (USD $) | 3 Months Ended | 6 Months Ended | 12 Months Ended |
Mar. 31, 2015 | Jun. 30, 2014 | Dec. 31, 2013 | |
Payables And Accruals [Abstract] | |||
WaterLase systems warranty period | 2 years | 1 year | |
Deferred revenue recognized | $31,000 |
Summary_of_Deferred_Revenue_De
Summary of Deferred Revenue (Detail) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Components of deferred revenue | ||
Undelivered elements (training, installation, and product and support services) | $1,293 | $952 |
Extended warranty contracts | 1,505 | 1,542 |
Deferred revenue, current portion | $2,798 | $2,494 |
Recovered_Sheet1
Lines of Credit and Other Borrowings - Additional Information (Detail) (USD $) | 0 Months Ended | 3 Months Ended | 12 Months Ended | ||||||
Jul. 28, 2014 | Jun. 03, 2014 | 31-May-14 | 5-May-14 | Apr. 10, 2014 | Mar. 04, 2014 | Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | |
Agreement | |||||||||
Line Of Credit Facility [Line Items] | |||||||||
Number revolving credit facility agreements | 2 | ||||||||
Repayments under Credit Agreements | $2,900,000 | $9,325,000 | |||||||
Credit agreements amendment fee | 10,000 | 10,000 | |||||||
Lines of credit maximum borrowing capacity | 4,000,000 | 5,000,000 | |||||||
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% | ||||||||
Prime floor, daily prime plus LIBOR | 2.50% | 2.50% | |||||||
Unused capacity commitment fee percentage | 0.25% | ||||||||
Interest expense incurred for lines of credit and loan and security agreement | 229,000 | ||||||||
Accrued interest payable | 0 | ||||||||
Amortization of discounts on lines of credit | 120,000 | ||||||||
Amortization of debt issuance costs | 57,000 | ||||||||
Restricted cash equivalent | 200,000 | 0 | |||||||
Aggregate agreements amendment fee. | 10,000 | ||||||||
Financed insurance premium | 0 | 123,000 | |||||||
Number of monthly insurance premium installments payable | Nine | ||||||||
Financial insurance premiums interest rate | 2.85% | ||||||||
Interest expense incurred for financed insurance premiums | $1,000 | ||||||||
Domestic Revolver Credit Facility | Prime Rate | |||||||||
Line Of Credit Facility [Line Items] | |||||||||
Interest on principal balance rate plus | 2.50% | ||||||||
Ex-Im Revolver | Prime Rate | Minimum | |||||||||
Line Of Credit Facility [Line Items] | |||||||||
Interest on principal balance rate plus | 2.00% |
Commitments_and_Contingencies_
Commitments and Contingencies - Additional Information (Detail) | 1 Months Ended | 3 Months Ended | 3 Months Ended | 3 Months Ended | |||||
Feb. 28, 2015 | Mar. 31, 2015 | Mar. 31, 2014 | Apr. 29, 2014 | Mar. 31, 2015 | Mar. 31, 2015 | Mar. 31, 2015 | Apr. 29, 2014 | Mar. 31, 2015 | |
USD ($) | USD ($) | Surety Bond | Statutory Bond | Licensing Agreements United States | Licensing Agreements Outside Of United States | Settled Litigation | Employee Arrangements and Other Compensation | ||
EUR (€) | EUR (€) | USD ($) | USD ($) | ||||||
Commitment And Contingencies [Line Items] | |||||||||
Extended lease term | 30-Apr-20 | ||||||||
Provisions for tenant improvement allowance, maximum | $398,000 | ||||||||
Future minimum lease obligations, for the year ended December 31, 2015 | 483,000 | ||||||||
Future minimum lease obligations, for the year ended December 31, 2016 | 694,000 | ||||||||
Future minimum lease obligations, for the year ended December 31, 2017 | 652,000 | ||||||||
Future minimum lease obligations, for the year ended December 31, 2018 and thereafter | 1,500,000 | ||||||||
Capital lease agreement term for information technology equipment | 30 months | ||||||||
Future minimum lease payments under capital lease, net minimum lease payment for the year ended December 31, 2015 | 129,000 | ||||||||
Future minimum lease payments under capital lease, net minimum lease payment for the year ended December 31, 2016 | 172,000 | ||||||||
Future minimum lease payments under capital lease, net minimum lease payment for the year ended December 31, 2017 | 128,000 | ||||||||
Future minimum lease payments borrowing rate | 8.83% | ||||||||
Present Value Of Net Minimum Lease Payments At Inception Of Lease | 46,000 | ||||||||
Capital Lease Obligations, Current | 143,000 | ||||||||
Capital lease obligation | 240,000 | ||||||||
Change in control, if occurs, may require severance benefits payable | 994,000 | ||||||||
Accrued for performance bonuses | 409,000 | ||||||||
Purchase commitments pending | 18,200,000 | ||||||||
Amount of injunction bond to be posted | 500,000 | 146,000 | |||||||
Litigation Settlement Amount Receivable Non-Current | 825,000 | ||||||||
Receivable For Legal Settlements On First Anniversary | 275,000 | ||||||||
Receivable For Legal Settlements On Second Anniversary | 275,000 | ||||||||
Receivable For Legal Settlements On Third Anniversary | 275,000 | ||||||||
Litigation Settlement Amount Receivable Current | 550,000 | ||||||||
License period | 3 years | 5 years | |||||||
Litigation Settlement Receivable | 1,400,000 | ||||||||
Litigation Expense Recovered | 731,000 | 0 | |||||||
Settlement Expense For Dismissal of Patent Infringement Lawsuit Recovered | 68,000 | ||||||||
Legal settlement at present value | 1,200,000 | ||||||||
Deferred revenue | $379,000 | ||||||||
Foregoing litigation settlement, description | As part of the settlement, Fotona agreed to pay the Company a total of $1.4 million, with $550,000 payable within 10 days of March 24, 2015 and the remaining, $825,000 payable in three increments of $275,000 each to be paid no later than the first, second and third anniversary of the effective date of the agreement. |
Segment_Information_Additional
Segment Information - Additional Information (Detail) (USD $) | 3 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | |
Customer | Customer | ||
Segment Reporting Information [Line Items] | |||
Number of customers which represented more than 10% of the Company's revenue | 0 | 0 | |
International | |||
Segment Reporting Information [Line Items] | |||
Long-lived assets outside of the United States | 334,000 | $374,000 | |
Sales Revenue, Net | International | |||
Segment Reporting Information [Line Items] | |||
Number of customers which represented more than 10% of the Company's revenue | 0 | 0 | |
Customer Concentration Risk | Sales Revenue, Net | UNITED STATES | |||
Segment Reporting Information [Line Items] | |||
Concentration Risk Percentage | 55.00% | 58.00% | |
Customer Concentration Risk | Sales Revenue, Net | International | |||
Segment Reporting Information [Line Items] | |||
Concentration Risk Percentage | 45.00% | 42.00% |
Summary_of_Net_Revenue_by_Geog
Summary of Net Revenue by Geographic Location (Detail) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Segment Reporting Information [Line Items] | ||
Net revenue | $10,855 | $11,518 |
UNITED STATES | ||
Segment Reporting Information [Line Items] | ||
Net revenue | 5,930 | 6,709 |
International | ||
Segment Reporting Information [Line Items] | ||
Net revenue | $4,925 | $4,809 |
Concentrations_Summary_of_Net_
Concentrations - Summary of Net Revenue from Various Products (Detail) (Product Concentration Risk, Sales Revenue, Net) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Concentration Risk [Line Items] | ||
Concentration Risk Percentage | 100.00% | 100.00% |
Laser systems | ||
Concentration Risk [Line Items] | ||
Concentration Risk Percentage | 64.60% | 60.40% |
Imaging systems | ||
Concentration Risk [Line Items] | ||
Concentration Risk Percentage | 3.10% | 10.40% |
Consumables and other | ||
Concentration Risk [Line Items] | ||
Concentration Risk Percentage | 17.50% | 13.90% |
Services | ||
Concentration Risk [Line Items] | ||
Concentration Risk Percentage | 13.80% | 15.00% |
License fees and royalties | ||
Concentration Risk [Line Items] | ||
Concentration Risk Percentage | 1.00% | 0.30% |
Concentrations_Additional_Info
Concentrations - Additional Information (Detail) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | |
Customer | Customer | ||
Concentration Risk [Line Items] | |||
Number of customers which represented more than 10% of the Company's revenue | 0 | 0 | |
Number of customers which represented more than 10% of the Company's accounts receivable | 0 | 0 | |
Sales Revenue, Net | |||
Concentration Risk [Line Items] | |||
Maximum revenue and account receivable with individual customer | Less than 10% | Less than 10% | |
Account Receivable | |||
Concentration Risk [Line Items] | |||
Maximum revenue and account receivable with individual customer | Less than 10% | Less than 10% |
Income_Taxes_Additional_Inform
Income Taxes - Additional Information (Detail) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Income Tax Disclosure [Abstract] | ||
Liability for unrecognized tax benefit, including related estimates of penalties and interest | $0 | $0 |
Income tax provision (benefit) | $47,000 | $24,000 |
Projected annual effective tax rate | -0.90% | -0.50% |
Statutory tax rate | 34.00% | 34.00% |
Subsequent_Event_Additional_In
Subsequent Event - Additional Information (Detail) (USD $) | 3 Months Ended | 0 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | Apr. 27, 2015 | |
Subsequent Event [Line Items] | |||
Stock options granted | 2,232,000 | ||
Granted | $2.44 | $1.86 | |
Subsequent Event | Non Qualified Stock Options | Non Employee Directors | |||
Subsequent Event [Line Items] | |||
Stock options granted | 657,489 | ||
Granted | $2.27 | ||
Vesting period of grant | 12 months | ||
2002 Stock Incentive Plan | Subsequent Event | |||
Subsequent Event [Line Items] | |||
Common stock, additional shares authorized | 2,300,000 |