10-Q 1 biol-10q_20200930.htm 10-Q biol-10q_20200930.htm

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended

September 30, 2020

or

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from                      to                     

Commission File Number: 001-36385

 

BIOLASE, INC.

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

87-0442441

(State or other jurisdiction

of incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

27042 Towne Centre Drive, Suite 270

Lake Forest, California 92610

(Address of principal executive offices) (Zip Code)

(949) 361-1200

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

 

Accelerated filer

 

Non-accelerated filer

 

 

Smaller reporting company

 

 

 

 

 

Emerging growth company

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.):    Yes      No  

Securities registered pursuant to Section 12(b) of the Act

 

Title of each class

 

Trading

symbol(s)

 

Name of each exchange on which registered

Common stock at par value $0.001 per share

 

BIOL

 

The Nasdaq Stock Market LLC

(Nasdaq Capital Market)

 

As of November 10, 2020, the registrant had 93,014,195 shares of common stock, $0.001 par value per share, outstanding.

 

 

 

 


BIOLASE, INC.

INDEX

 

 

  

 

  

Page

PART I.

  

FINANCIAL INFORMATION

  

3

Item 1.

  

Financial Statements (Unaudited):

  

3

 

  

Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019

  

3

 

  

Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2020 and September 30, 2019

  

4

 

 

Consolidated Statements of Redeemable Preferred Stock and Stockholders’ Equity for the three and nine months ended September 30, 2020 and September 30, 2019

 

5

 

  

Consolidated Statements of Cash Flows for the nine months ended September 30, 2020 and September 30, 2019

  

6

 

  

Notes to Consolidated Financial Statements

  

7

Item 2.

  

Management’s Discussion and Analysis of Financial Condition and Results of Operations

  

30

Item 3.

  

Quantitative and Qualitative Disclosures About Market Risk

  

47

Item 4.

  

Controls and Procedures

  

47

PART II

  

OTHER INFORMATION

  

49

Item 1.

  

Legal Proceedings

  

49

Item 1A.

  

Risk Factors

  

49

Item 5

 

Other Information

 

52

Item 6.

  

Exhibits

  

53

Signatures

 

57

 

 

 

2


PART I. FINANCIAL INFORMATION

 

ITEM  1.

FINANCIAL STATEMENTS

 

BIOLASE, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

 

 

 

 

September 30,

 

 

December 31,

 

 

 

2020

 

 

2019

 

 

 

(unaudited)

 

 

(audited)

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

18,847

 

 

$

5,789

 

Restricted cash

 

 

312

 

 

 

312

 

Accounts receivable, less allowance of $3,837 and $2,531 in 2020 and 2019,

   respectively

 

 

3,393

 

 

 

8,760

 

Inventory

 

 

12,592

 

 

 

10,995

 

Prepaid expenses and other current assets

 

 

903

 

 

 

1,163

 

Total current assets

 

 

36,047

 

 

 

27,019

 

Property, plant, and equipment, net

 

 

742

 

 

 

1,193

 

Goodwill

 

 

2,926

 

 

 

2,926

 

Right of use asset

 

 

2,061

 

 

 

276

 

Other assets

 

 

220

 

 

 

433

 

Total assets

 

$

41,996

 

 

$

31,847

 

LIABILITIES, REDEEMABLE PREFERRED STOCK AND

   STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

2,592

 

 

$

5,332

 

Accrued liabilities

 

 

4,279

 

 

 

4,744

 

Deferred revenue, current portion

 

 

1,616

 

 

 

2,237

 

Term loan (net of discount)

 

 

12,946

 

 

 

13,466

 

Total current liabilities

 

 

21,433

 

 

 

25,779

 

Deferred revenue

 

 

412

 

 

 

358

 

Warranty accrual

 

 

204

 

 

 

245

 

Non current term loans

 

 

3,140

 

 

 

 

Non current operating lease liability

 

 

1,859

 

 

 

4

 

Other liabilities

 

 

1,097

 

 

 

1,119

 

Total liabilities

 

 

28,145

 

 

 

27,505

 

Commitments and contingencies Note 11

 

 

 

 

 

 

 

 

Redeemable preferred stock:

 

 

 

 

 

 

 

 

Series E Preferred stock, par value $0.001 per share; 1,000 shares

   authorized, 0 and 70 shares issued and outstanding as of September 30,

   2020 and December 31, 2019, respectively

 

$

 

 

$

3,965

 

Total redeemable preferred stock

 

 

 

 

 

3,965

 

Stockholders' equity:

 

 

 

 

 

 

 

 

Series F Preferred stock, par value $0.001 per share; 1,000 shares

   authorized, 1 and 0 shares issued  and outstanding as of September 30,

   2020 and  December 31, 2019, respectively

 

$

141

 

 

$

 

Common stock, par value $0.001 per share; 180,000 and 40,000 shares

   authorized, 93,044 and 31,439 shares issued and 92,999 and 31,439

   outstanding as of September 30, 2020 and December 31, 2019, respectively

 

 

93

 

 

 

31

 

Additional paid-in-capital

 

 

259,385

 

 

 

235,594

 

Accumulated other comprehensive loss

 

 

(534

)

 

 

(701

)

Accumulated deficit

 

 

(245,234

)

 

 

(234,547

)

Total stockholders' equity

 

 

13,851

 

 

 

377

 

Total liabilities, redeemable preferred stock and stockholders' equity

 

$

41,996

 

 

$

31,847

 

 

See accompanying notes to unaudited consolidated financial statements.

3


BIOLASE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited, in thousands, except per share data)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net revenue

 

$

6,539

 

 

$

8,646

 

 

$

14,260

 

 

$

27,617

 

Cost of revenue

 

 

4,265

 

 

 

5,677

 

 

 

9,692

 

 

 

17,746

 

Gross profit

 

 

2,274

 

 

 

2,969

 

 

 

4,568

 

 

 

9,871

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

2,678

 

 

 

3,515

 

 

 

7,475

 

 

 

10,665

 

General and administrative

 

 

2,300

 

 

 

3,210

 

 

 

7,446

 

 

 

8,114

 

Engineering and development

 

 

963

 

 

 

1,126

 

 

 

2,644

 

 

 

3,665

 

Total operating expenses

 

 

5,941

 

 

 

7,851

 

 

 

17,565

 

 

 

22,444

 

Loss from operations

 

 

(3,667

)

 

 

(4,882

)

 

 

(12,997

)

 

 

(12,573

)

Loss (gain) on foreign currency transactions

 

 

(53

)

 

 

19

 

 

 

68

 

 

 

68

 

Interest expense

 

 

568

 

 

 

551

 

 

 

1,782

 

 

 

1,559

 

Other (income) expense, net

 

 

(4,209

)

 

 

 

 

 

(4,209

)

 

 

 

Non-operating (income) loss, net

 

 

(3,694

)

 

 

570

 

 

 

(2,359

)

 

 

1,627

 

Income (loss) before income tax provision

 

 

27

 

 

 

(5,452

)

 

 

(10,638

)

 

 

(14,200

)

Income tax provision

 

 

15

 

 

 

26

 

 

 

49

 

 

 

68

 

Net income (loss)

 

 

12

 

 

 

(5,478

)

 

 

(10,687

)

 

 

(14,268

)

Other comprehensive income item:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

111

 

 

 

(128

)

 

 

167

 

 

 

(170

)

Comprehensive income (loss)

 

$

123

 

 

$

(5,606

)

 

$

(10,520

)

 

$

(14,438

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

12

 

 

$

(5,478

)

 

$

(10,687

)

 

$

(14,268

)

Deemed dividend on convertible preferred stock

 

 

(17,378

)

 

 

 

 

 

(17,378

)

 

 

 

Net loss attributable to common stockholders:

 

$

(17,366

)

 

$

(5,478

)

 

$

(28,065

)

 

$

(14,268

)

Net loss per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.21

)

 

$

(0.25

)

 

$

(0.56

)

 

$

(0.66

)

Diluted

 

$

(0.21

)

 

$

(0.25

)

 

$

(0.56

)

 

$

(0.66

)

Shares used in the calculation of net loss per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

81,341

 

 

 

21,898

 

 

 

50,366

 

 

 

21,545

 

Diluted

 

 

81,341

 

 

 

21,898

 

 

 

50,366

 

 

 

21,545

 

 

See accompanying notes to unaudited consolidated financial statements.

 

 

 

4


 

BIOLASE, INC.

CONSOLIDATED STATEMENTS OF REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY

(in thousands)

 

 

 

Mezzanine

Equity

 

 

 

Stockholders' Equity

 

 

 

Series E

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Convertible

Preferred

 

 

 

 

 

 

 

 

 

 

 

Paid-in

 

 

Series F

Convertible

 

 

Accumulated

Other

 

 

 

 

 

 

Total

 

 

 

Stock

 

 

 

Common Stock

 

 

Capital

 

 

Preferred Stock

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Loss

 

 

Deficit

 

 

Equity

 

Balance at June 30, 2020

 

 

 

 

 

 

 

 

 

50,322

 

 

 

50

 

 

 

247,149

 

 

 

 

 

 

 

 

 

(645

)

 

 

(245,246

)

 

 

1,309

 

Exercise of stock options, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of Series F Convertible

   Preferred Stock in Rights Offering,

   net of $0.3 million in offering costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

18

 

 

 

2,411

 

 

 

 

 

 

 

 

 

2,411

 

Beneficial conversion on Series F Convertible Preferred Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,700

 

 

 

 

 

 

 

(2,700

)

 

 

 

 

 

 

 

 

 

 

 

 

Deemed dividend on Series F

   Convertible Preferred Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(17,378

)

 

 

 

 

 

17,378

 

 

 

 

 

 

 

 

 

 

Conversion of Series F Convertible

   Preferred Stock

 

 

 

 

 

 

 

 

 

 

 

42,370

 

 

 

43

 

 

 

16,905

 

 

 

(17

)

 

 

(16,948

)

 

 

 

 

 

 

 

 

 

Reclassification of July 2020 Warrants

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9,450

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9,450

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

513

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

513

 

Issuance of stock from RSUs, net

 

 

 

 

 

 

 

 

 

191

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of June 2020 Warrants

 

 

 

 

 

 

 

 

 

116

 

 

 

 

 

 

46

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

46

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12

 

 

 

12

 

Foreign currency translation

   adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

111

 

 

 

 

 

 

111

 

Balance at September 30, 2020

 

 

 

 

 

 

 

 

 

92,999

 

 

 

93

 

 

 

259,385

 

 

 

1

 

 

 

141

 

 

 

(534

)

 

 

(245,234

)

 

 

13,851

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances, December 31, 2019

 

 

70

 

 

 

3,965

 

 

 

 

31,459

 

 

 

31

 

 

 

235,594

 

 

 

 

 

 

 

 

 

(701

)

 

 

(234,547

)

 

 

377

 

Conversion of Series E Convertible

   Preferred Stock

 

 

(70

)

 

 

(3,965

)

 

 

 

6,957

 

 

 

7

 

 

 

3,958

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,965

 

Sale of common stock

 

 

 

 

 

 

 

 

 

10,800

 

 

 

11

 

 

 

3,861

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,872

 

June 2020 Warrants

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,031

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,031

 

Reclassification of July 2020 Warrants

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9,450

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9,450

 

Stock offering costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(856

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(856

)

Warrant issued in connection with

   debt instruments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

67

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

67

 

Issuance of Series F Convertible

   Preferred Stock in Rights Offering,

   net of $0.3 million in offering costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

18

 

 

 

2,411

 

 

 

 

 

 

 

 

 

2,411

 

Beneficial conversion on Series F Convertible Preferred Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,700

 

 

 

 

 

 

 

(2,700

)

 

 

 

 

 

 

 

 

 

 

 

 

Deemed dividend on Series F

   Convertible Preferred Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(17,378

)

 

 

 

 

 

17,378

 

 

 

 

 

 

 

 

 

 

Conversion of Series F Convertible

   Preferred Stock

 

 

 

 

 

 

 

 

 

42,370

 

 

 

43

 

 

 

16,905

 

 

 

(17

)

 

 

(16,948

)

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,846

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,846

 

Issuance of stock from RSUs, net

 

 

 

 

 

 

 

 

 

1,297

 

 

 

1

 

 

 

161

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

161

 

Exercise of common stock warrants

 

 

 

 

 

 

 

 

 

116

 

 

 

 

 

 

46

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

46

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(10,687

)

 

 

(10,687

)

Foreign currency translation

   adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

167

 

 

 

 

 

 

167

 

Balances at September 30, 2020

 

 

 

 

 

 

 

 

 

92,999

 

 

 

93

 

 

 

259,385

 

 

 

1

 

 

 

141

 

 

 

(534

)

 

 

(245,234

)

 

 

13,851

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at June 30, 2019

 

 

 

 

 

 

 

 

 

21,866

 

 

 

22

 

 

 

229,972

 

 

 

 

 

 

 

 

 

(712

)

 

 

(225,482

)

 

 

3,800

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

659

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

659

 

Issuance of stock from RSUs, net

 

 

 

 

 

 

 

 

 

88

 

 

 

 

 

 

81

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

81