Part I [Business](index=5&type=section&id=Item%201.%20Business) BIOLASE, Inc. is a leading global provider of advanced dental laser systems, including Waterlase and diode products, consistently facing recurring net losses despite revenue growth - Key Financial Performance (2020-2022) | Metric | 2022 (in millions) | 2021 (in millions) | 2020 (in millions) | | :--- | :--- | :--- | :--- | | Net Revenue | $48.5 | $39.2 | $22.8 | | Net Loss | $28.6 | $16.2 | $16.8 | | Total Assets (Year-End) | $38.2 | $55.3 | N/A | - The company operates in a single reportable business segment focused on advanced laser systems for the dental industry[35](index=35&type=chunk) - As of December 31, 2022, BIOLASE has sold over **45,500 laser systems** in more than **80 countries** and holds approximately **259 active and 24 pending patents**, primarily for its Waterlase technology[34](index=34&type=chunk) - In 2022, laser system sales accounted for about **65% of total sales**, with consumables, accessories, and services making up the remaining **35%**[17](index=17&type=chunk) [Overview](index=5&type=section&id=Item%201.%20Business-Overview) BIOLASE offers minimally invasive Waterlase and diode dental laser systems, providing clinical benefits over traditional instruments, despite a history of net losses - The company's proprietary systems are designed for a broad range of minimally invasive dental procedures, aiming to offer superior clinical results with benefits like less pain, faster healing, and fewer appointments for patients[27](index=27&type=chunk) - BIOLASE offers two main categories of laser systems: Waterlase for all-tissue procedures and diode systems for soft tissue, pain therapy, and cosmetic applications[34](index=34&type=chunk) [Our Products and Solutions](index=6&type=section&id=Item%201.%20Business-Our%20Products%20and%20Solutions) The company's core product portfolio includes Waterlase all-tissue and Epic diode soft-tissue laser systems, alongside the EdgePro endodontic irrigation device developed via an OEM partnership - **Waterlase All-Tissue Systems:** These flagship products (Waterlase iPlus, Express, MDX) use proprietary technology combining laser and water to cut hard and soft tissue, often eliminating the need for anesthesia and improving healing times[22](index=22&type=chunk) - **Diode Soft-Tissue Systems:** The Epic series (Epic X, Epic Hygiene, Epic 10) are designed for soft tissue procedures, pain relief, and cosmetic applications like teeth whitening. The Epic Hygiene is specifically cleared for Laser Bacterial Reduction (LBR)[40](index=40&type=chunk) - BIOLASE developed the EdgePro, a microfluidic irrigation device for root canals, in its first exclusive OEM agreement with EdgeEndo, a leading endodontic company[6](index=6&type=chunk) [Business Strategy](index=9&type=section&id=Item%201.%20Business-Business%20Strategy) BIOLASE's strategy focuses on increasing market penetration and adoption of its laser technologies through enhanced awareness, strengthened sales channels, improved product quality, and expanded offerings via OEM partnerships - Key strategic elements include: * Increasing awareness and education through webinars, tradeshows, and trial programs * Strengthening customer training, with plans for a new world-class training facility * Improving product quality, including ramping up in-house manufacturing of key components * Strengthening global sales and distribution capabilities, particularly in the U.S * Expanding the product portfolio and leveraging technology for adjacent medical applications through OEM partnerships[690](index=690&type=chunk)[718](index=718&type=chunk)[722](index=722&type=chunk) [Marketing and Sales](index=11&type=section&id=Item%201.%20Business-Marketing%20and%20Sales) The company markets globally via a direct U.S. sales force and international distributors, focusing on clinical benefits and educational programs, with international sales at **30.1%** in 2022 and a **12%** customer concentration risk - Net Revenue by Geographic Location (in thousands) | Region | 2022 (in thousands) | 2021 (in thousands) | 2020 (in thousands) | | :--- | :--- | :--- | :--- | | United States | $33,876 | $25,384 | $16,195 | | International | $14,586 | $13,804 | $6,585 | | **Total Net Revenue** | **$48,462** | **$39,188** | **$22,780** | - In the U.S., sales are primarily direct through a field sales force and an in-house team. Internationally, the company relies on a network of distributors[52](index=52&type=chunk)[701](index=701&type=chunk) - As of December 31, 2022, one customer accounted for approximately **12% of total gross accounts receivable**[762](index=762&type=chunk) [Government Regulations](index=14&type=section&id=Item%201.%20Business-Government%20Regulations) BIOLASE's products are extensively regulated by the FDA and international agencies, requiring compliance with manufacturing, marketing clearance, and post-market surveillance, alongside healthcare fraud, privacy, and anti-bribery laws - Products are subject to extensive regulation by the FDA, including premarket clearance (510(k)) or approval (PMA), and compliance with Quality System Regulation (QSR) for manufacturing[57](index=57&type=chunk) - For sales in the European Union, the company must comply with the Medical Device Regulation (MDR) and affix a CE mark to its products, with different requirements based on device classification (Class I, IIa, IIb)[62](index=62&type=chunk)[737](index=737&type=chunk) - The company is subject to federal and state anti-kickback statutes, which prohibit remuneration to induce referrals for items or services reimbursable by federal healthcare programs. Violations can lead to criminal fines, civil penalties, and exclusion from programs like Medicare and Medicaid[66](index=66&type=chunk) - As an international operator, BIOLASE is subject to the Foreign Corrupt Practices Act (FCPA), which prohibits bribery of non-U.S. officials[68](index=68&type=chunk) [Information about Our Executive Officers](index=21&type=section&id=Item%201.%20Business-Information%20about%20Our%20Executive%20Officers) As of March 28, 2023, BIOLASE's executive leadership team comprises the President and CEO, CFO, and COO, bringing diverse experience from medical device, finance, and commercial sectors - Executive Officers (as of March 28, 2023) | Name | Age | Title | | :--- | :-: | :--- | | John R. Beaver | 61 | President and Chief Executive Officer | | Jennifer Bright | 52 | Chief Financial Officer | | Steven Sandor | 42 | Chief Operating Officer | [Risk Factors](index=23&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks including going concern doubts, capital needs, NASDAQ delisting risk, reliance on third-party suppliers, regulatory compliance, and debt covenant adherence - **Going Concern:** Recurring losses, negative cash flow, and the need for additional capital raise substantial doubt about the company's ability to continue as a going concern[106](index=106&type=chunk) - **Financial Performance:** The company has a history of net losses, with an accumulated deficit of **$296.2 million** as of December 31, 2022[107](index=107&type=chunk) - **Capital Needs:** The company may need to raise additional capital, and there is no guarantee that funds will be available on acceptable terms, if at all[82](index=82&type=chunk) - **NASDAQ Listing:** The company received a deficiency letter from NASDAQ in January 2023 for its stock price closing below the **$1.00 minimum bid price requirement**, posing a risk of delisting[190](index=190&type=chunk) - **Operational Risks:** The company relies on third-party distributors for a significant portion of its sales and depends on single-source suppliers for key components of its Waterlase systems[83](index=83&type=chunk)[800](index=800&type=chunk) - **Debt Covenants:** Failure to comply with financial covenants in its Credit Agreement with SWK could result in an event of default and acceleration of debt repayment[98](index=98&type=chunk)[122](index=122&type=chunk) [Unresolved Staff Comments](index=37&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved comments from the SEC staff - There are no unresolved staff comments[237](index=237&type=chunk) [Properties](index=37&type=section&id=Item%202.%20Properties) As of December 31, 2022, BIOLASE leased approximately **52,000 square feet** globally, including its Lake Forest headquarters and Corona manufacturing facility, deemed sufficient for current operations - The company leases its corporate headquarters in Lake Forest, CA (approx. **12,000 sq. ft.**) and its manufacturing facility in Corona, CA (approx. **26,000 sq. ft.**)[238](index=238&type=chunk) [Legal Proceedings](index=37&type=section&id=Item%203.%20Legal%20Proceedings) BIOLASE is involved in ongoing legal proceedings, notably a January 2023 patent infringement lawsuit filed by PIPStek, LLC concerning its Waterlase product, which the company intends to defend - On January 4, 2023, PIPStek, LLC (a Sonendo, Inc. subsidiary) filed a lawsuit against BIOLASE alleging patent infringement by the Waterlase dental laser product[213](index=213&type=chunk) - The company establishes reserves for legal actions deemed probable and estimable, but notes that the ultimate outcomes are uncertain[239](index=239&type=chunk) [Mine Safety Disclosures](index=38&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[241](index=241&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=39&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) BIOLASE's common stock trades on NASDAQ under "BIOL", with no anticipated cash dividends due to growth retention and credit agreement restrictions - The company's common stock trades on the NASDAQ Capital Market under the symbol **"BIOL"**[216](index=216&type=chunk) - The company does not expect to pay cash dividends in the foreseeable future and is restricted from doing so by its credit agreement[216](index=216&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=40&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's discussion highlights a **24%** revenue increase to **$48.5 million** in 2022, but a widened net loss of **$28.6 million** due to higher expenses and inventory charges, raising substantial doubt about the company's going concern ability - The company's financial condition, including recurring losses and negative cash flow, raises substantial doubt about its ability to continue as a going concern[311](index=311&type=chunk) - As of December 31, 2022, the company had **$4.2 million** in cash and cash equivalents, a significant decrease from **$29.97 million** at the end of 2021[336](index=336&type=chunk)[427](index=427&type=chunk) - Recent developments include the acquisition of Med-Fiber LLC in September 2022 and a public equity raise of approximately **$9.9 million** in January 2023[220](index=220&type=chunk)[672](index=672&type=chunk) [Results of Operations](index=45&type=section&id=Item%207.%20MD%26A-Results%20of%20Operations) Net revenue grew **24%** in 2022 and **72%** in 2021, but gross profit decreased in 2022 due to an inventory charge, leading to a significantly widened net loss of **$28.6 million** - Comparison of Results: 2022 vs. 2021 (in millions) | Metric | 2022 (in millions) | 2021 (in millions) | Change (in millions) | % Change | | :--- | :--- | :--- | :--- | :--- | | Net Revenue | $48.5 | $39.2 | +$9.3 | +24% | | Gross Profit | $15.9 | $16.5 | -$0.6 | -4% | | Operating Expenses | $41.2 | $33.0 | +$8.2 | +25% | | Net Loss | ($28.6) | ($16.2) | ($12.4) | +77% | - **2022 vs 2021:** The **24% revenue increase** was driven by higher adoption and a new OEM product. The net loss widened due to a **$2.7 million inventory charge**, higher sales & marketing expenses (**$6.3 million increase**), and increased interest expense[295](index=295&type=chunk)[296](index=296&type=chunk)[324](index=324&type=chunk)[326](index=326&type=chunk) - **2021 vs 2020:** The **72% revenue increase** was primarily due to the recovery from COVID-19 pandemic restrictions. Gross profit margin improved from **27% to 42%** due to higher sales volume, better absorption of fixed costs, and a CARES Act employee retention credit[276](index=276&type=chunk)[329](index=329&type=chunk) [Liquidity and Capital Resources](index=49&type=section&id=Item%207.%20MD%26A-Liquidity%20and%20Capital%20Resources) The company's liquidity is a major concern, with cash and cash equivalents decreasing to **$4.2 million** by year-end 2022 due to **$26.8 million** in operating cash outflow, raising substantial doubt about its going concern ability - Consolidated Cash Flows (in thousands) | Activity | 2022 (in thousands) | 2021 (in thousands) | 2020 (in thousands) | | :--- | :--- | :--- | :--- | | Operating Activities | ($26,761) | ($16,710) | ($12,795) | | Investing Activities | ($3,727) | ($707) | ($96) | | Financing Activities | $4,603 | $29,954 | $24,349 | - Cash used in operating activities in 2022 was **$26.8 million**, primarily driven by the net loss of **$28.6 million** and a **$5.8 million increase in inventory**[346](index=346&type=chunk) - Cash provided by financing activities in 2022 was **$4.6 million**, mainly from a **$5.6 million direct offering**, offset by a **$1.0 million loan repayment**[347](index=347&type=chunk) - Contractual Obligations as of Dec 31, 2022 (in thousands) | Obligation | Total (in thousands) | Less Than 1 Year (in thousands) | 1 to 3 Years (in thousands) | 3 to 5 Years (in thousands) | More Than 5 Years (in thousands) | | :--- | :--- | :--- | :--- | :--- | :--- | | Operating lease obligations | $2,239 | $833 | $1,406 | $— | $— | | Purchase obligations | $29,079 | $28,165 | $914 | $— | $— | | Loan principal & interest | $19,096 | $2,563 | $16,285 | $18 | $230 | | **Total** | **$50,414** | **$31,561** | **$18,605** | **$18** | **$230** | [Financial Statements and Supplementary Data](index=53&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section incorporates by reference the company's consolidated financial statements and the independent registered public accounting firm's report, located at the end of the Form 10-K - All required financial statements are listed in Part IV, Item 15 and begin on page F-1 of the report[323](index=323&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=53&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reported no changes in or disagreements with its accountants regarding accounting and financial disclosure - None reported[376](index=376&type=chunk) [Controls and Procedures](index=53&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures, along with internal control over financial reporting, were effective as of December 31, 2022, with no material changes during the fourth quarter - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2022[353](index=353&type=chunk) - Management concluded that internal control over financial reporting was effective as of December 31, 2022, based on the COSO Framework (2013)[354](index=354&type=chunk) [Other Information](index=54&type=section&id=Item%209B.%20Other%20Information) The company reported no other information for this item - None[356](index=356&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=55&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) This section incorporates by reference information on directors, executive officers, and corporate governance from the 2023 Proxy Statement, with the Code of Business Conduct and Ethics available online - Information regarding directors and corporate governance is incorporated by reference from the 2023 Proxy Statement[359](index=359&type=chunk) - The company's Code of Business Conduct and Ethics applies to all employees, officers, and directors[382](index=382&type=chunk) [Executive Compensation](index=55&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive and director compensation is incorporated by reference from the company's 2023 Proxy Statement - Details on executive compensation are incorporated by reference from the 2023 Proxy Statement[383](index=383&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=55&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) This section incorporates security ownership information from the 2023 Proxy Statement and details equity compensation plans, including the 2018 Long-Term Incentive Plan, with **994,000** securities to be issued as of December 31, 2022 - Equity Compensation Plan Information as of December 31, 2022 | Plan Category | Securities to be Issued Upon Exercise/Vesting | Weighted-Average Exercise Price of Options | Securities Remaining for Future Issuance | | :--- | :--- | :--- | :--- | | Approved by Stockholders | 994,000 | $15.36 | 55,000 | | Not Approved by Stockholders | — | — | — | | **Total** | **994,000** | **$15.36** | **55,000** | - The company's stockholders approved the 2018 Long-Term Incentive Plan, which replaced the 2002 Stock Incentive Plan for future equity awards[385](index=385&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=56&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information regarding certain relationships, related-party transactions, and director independence is incorporated by reference from the company's 2023 Proxy Statement - Details on related transactions and director independence are incorporated by reference from the 2023 Proxy Statement[387](index=387&type=chunk) [Principal Accountant Fees and Services](index=56&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information regarding fees paid to the principal accountant and services rendered is incorporated by reference from the company's 2023 Proxy Statement - Information on principal accountant fees and services is incorporated by reference from the 2023 Proxy Statement[388](index=388&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=57&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section provides an index of financial statements, schedules, and exhibits filed with the Annual Report on Form 10-K, including various corporate and debt agreements - This section provides an index of all financial statements, schedules, and exhibits filed with the 10-K[402](index=402&type=chunk) [Form 10-K Summary](index=58&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company indicates no Form 10-K summary is provided in this report - None provided[391](index=391&type=chunk)

BIOLASE, Inc. (NASDAQ:BIOL) Q3 2022 Earnings Conference Call November 10, 2022 4:30 PM ET Company Participants Todd Kehrli - Investor Relations John Beaver - President and Chief Executive Officer Jennifer Bright - Chief Financial Officer Conference Call Participants Kyle Bauser - Lake Street Capital Markets Anthony Vendetti - the Maxim Group Bruce Jackson - The Benchmark Company Operator Good day and welcome to the BIOLASE Third Quarter 2022 Financial Results Conference Call. Please note, this call is being ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 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) 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, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transiti ...

BIOLASE, Inc. (OTCQB:BIOL) Q2 2022 Earnings Conference Call August 11, 2022 4:30 PM ET Company Participants Todd Kehrli - EVC Group John Beaver - President, CEO & Director Jennifer Bright - CFO Conference Call Participants Kyle Bauser - Lake Street Capital Markets Anthony Vendetti - Maxim Group Ed Woo - Ascendiant Capital Markets Operator Good day, and welcome to the BIOLASE Second Quarter 2022 Financial Results Conference Call. [Operator Instructions]. Please note, this event is being recorded. I would now ...

PART I. FINANCIAL INFORMATION This section presents the unaudited consolidated financial statements and management's discussion and analysis for the periods ended June 30, 2022 [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited consolidated financial statements of BIOLASE, Inc. for the periods ended June 30, 2022, and December 31, 2021, including balance sheets, statements of operations and comprehensive loss, statements of redeemable preferred stock and stockholders' equity, and statements of cash flows, along with detailed notes to these financial statements [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets%20as%20of%20June%2030%2C%202022%20and%20December%2031%2C%202021) This table presents the company's financial position, including assets, liabilities, and equity, as of June 30, 2022, and December 31, 2021 | Metric | June 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :-------------------------------- | :------------ | :---------------- | | Total Assets | $50,854 | $55,284 | | Total Current Assets | $44,267 | $49,354 | | Cash and Cash Equivalents | $19,549 | $29,972 | | Inventory | $16,573 | $12,929 | | Total Liabilities | $29,239 | $30,076 | | Total Stockholders' Equity | $21,615 | $25,208 | [Consolidated Statements of Operations and Comprehensive Loss](index=4&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss%20for%20the%20three%20and%20six%20months%20ended%20June%2030%2C%202022%20and%20June%2030%2C%202021) This table details the company's financial performance, including revenue, gross profit, and net loss, for the three and six months ended June 30, 2022 and 2021 | Metric | 3 Months Ended June 30, 2022 (in thousands) | 3 Months Ended June 30, 2021 (in thousands) | 6 Months Ended June 30, 2022 (in thousands) | 6 Months Ended June 30, 2021 (in thousands) | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net Revenue | $12,235 | $9,134 | $22,401 | $17,250 | | Gross Profit | $5,141 | $4,041 | $9,870 | $6,781 | | Loss from Operations | ($5,055) | ($3,283) | ($9,260) | ($9,344) | | Net Loss | ($5,611) | ($702) | ($10,386) | ($7,603) | | Net Loss per Share (Basic & Diluted) | ($0.91) | ($0.12) | ($1.72) | ($1.43) | [Consolidated Statements of Redeemable Preferred Stock and Stockholders' Equity](index=5&type=section&id=Consolidated%20Statements%20of%20Redeemable%20Preferred%20Stock%20and%20Stockholders'%20Equity%20for%20the%20three%20and%20six%20months%20ended%20June%2030%2C%202022%20and%20June%2030%2C%202021) This section outlines changes in redeemable preferred stock and stockholders' equity for the periods ended June 30, 2022 and 2021 | Metric | Balances, December 31, 2021 (in thousands) | Balances, June 30, 2022 (in thousands) | | :-------------------------------- | :-------------------------- | :------------------------ | | Common Stock Shares | 6,149 | 6,857 | | Common Stock Amount | $6 | $7 | | Additional Paid-in Capital | $293,325 | $300,414 | | Accumulated Deficit | ($267,534) | ($277,920) | | Total Stockholders' Equity | $25,208 | $21,615 | - The company completed a sale of common stock, net of fees, resulting in an increase of **$5,849 thousand** in additional paid-in capital and common stock shares during the six months ended June 30, 2022[10](index=10&type=chunk) - Series G Redeemable Preferred Stock was redeemed and eliminated by June 6, 2022, and Series F Convertible Preferred Stock was fully converted into common stock in Q1 2022, with none outstanding as of June 30, 2022[10](index=10&type=chunk)[51](index=51&type=chunk)[55](index=55&type=chunk) [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20six%20months%20ended%20June%2030%2C%202022%20and%20June%2030%2C%202021) This section details the cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2022 and 2021 | Metric | 6 Months Ended June 30, 2022 (in thousands) | 6 Months Ended June 30, 2021 (in thousands) | | :-------------------------------- | :--------------------------- | :--------------------------- | | Net Cash Used in Operating Activities | ($14,633) | ($10,008) | | Net Cash Used in Investing Activities | ($578) | ($311) | | Net Cash Provided by Financing Activities | $4,849 | $29,811 | | (Decrease) Increase in Cash, Cash Equivalents and Restricted Cash | ($10,626) | $19,409 | | Cash, Cash Equivalents and Restricted Cash, End of Period | $19,549 | $37,285 | - The increase in cash used in operating activities was primarily due to a net loss of **$10.4 million** and a net increase in operating assets and liabilities of **$5.8 million**, including a **$3.6 million** increase in inventory and a **$2.0 million** increase in accounts receivable[169](index=169&type=chunk) - Financing activities in 2022 were primarily driven by **$5.8 million** net proceeds from a June 2022 direct offering and private placement, significantly lower than the **$29.8 million** provided in 2021 which included proceeds from common stock sales and warrant exercises[172](index=172&type=chunk)[12](index=12&type=chunk) [Notes to Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the consolidated financial statements [NOTE 1—DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION](index=8&type=section&id=NOTE%201%E2%80%94DESCRIPTION%20OF%20BUSINESS%20AND%20BASIS%20OF%20PRESENTATION) This note describes BIOLASE's business, financial position, and the impact of a reverse stock split and cybersecurity incident - BIOLASE is a leading provider of advanced laser systems for the dental industry, developing, manufacturing, marketing, and selling proprietary systems for minimally invasive dental procedures[13](index=13&type=chunk) - The company had working capital of approximately **$30.3 million** and **$19.5 million** in cash and cash equivalents as of June 30, 2022, a decrease from **$35.5 million** working capital and **$30.0 million** cash as of December 31, 2021[18](index=18&type=chunk) - A one-for-twenty-five (1:25) reverse stock split was effective on April 28, 2022, approved by stockholders and the Board, without changing the number of authorized shares[22](index=22&type=chunk) - In December 2021, the company experienced a cybersecurity attack, which caused a brief network disruption. All liabilities were fully insured, and cash reimbursement was received in March 2022[23](index=23&type=chunk) [NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=9&type=section&id=NOTE%202%E2%80%94SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines the key accounting policies and significant estimates used in preparing the financial statements - Significant estimates in financial statements include allowances on accounts receivable, inventory, deferred taxes, warranty expenses, goodwill, revenue deferrals, stock-based compensation, contingent liabilities, and income tax provisions[24](index=24&type=chunk) - The company's financial instruments (cash, receivables, payables, SWK Loan) approximate fair value due to their short maturity or market interest rates[27](index=27&type=chunk) - Substantially all revenue is in U.S. dollars, with a small portion of revenue and expenses in foreign currencies (Euro, Indian Rupee). No hedging contracts were entered into during the reported periods[29](index=29&type=chunk) - The company adopted ASU 2020-06 (convertible debt/preferred stock) and ASU 2021-04 (equity-classified written call options) effective January 1, 2022, with no material impact on financial statements. ASU 2016-13 (Credit Losses) will be effective January 1, 2023, and the company is currently assessing its impact[31](index=31&type=chunk)[32](index=32&type=chunk)[33](index=33&type=chunk) [NOTE 3—REVENUE RECOGNITION](index=11&type=section&id=NOTE%203%E2%80%94REVENUE%20RECOGNITION) This note details the company's revenue recognition policies, disaggregated by geographic area and timing of transfer - Revenue from products and services transferred at a single point in time (primarily laser systems and consumables) accounted for **90% of net revenue** for the three and six months ended June 30, 2022, while services transferred over time accounted for **10%**[36](index=36&type=chunk)[37](index=37&type=chunk) | Geographic Area | 3 Months Ended June 30, 2022 (in thousands) | 3 Months Ended June 30, 2021 (in thousands) | 6 Months Ended June 30, 2022 (in thousands) | 6 Months Ended June 30, 2021 (in thousands) | | :---------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | United States | $8,899 | $5,865 | $15,877 | $11,086 | | International | $3,336 | $3,269 | $6,524 | $6,164 | | Total Net Revenue | $12,235 | $9,134 | $22,401 | $17,250 | | Timing of Transfer | 3 Months Ended June 30, 2022 (in thousands) | 3 Months Ended June 30, 2021 (in thousands) | 6 Months Ended June 30, 2022 (in thousands) | 6 Months Ended June 30, 2021 (in thousands) | | :------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Over Time | $1,210 | $1,056 | $2,331 | $2,115 | | At a Point in Time | $11,025 | $8,078 | $20,070 | $15,135 | | Total Net Revenue | $12,235 | $9,134 | $22,401 | $17,250 | [NOTE 4—REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY](index=13&type=section&id=NOTE%204%E2%80%94REDEEMABLE%20PREFERRED%20STOCK%20AND%20STOCKHOLDERS'%20EQUITY) This note provides details on changes in preferred stock, common stock, warrants, and stock-based compensation during the period - Series G Preferred Stock was eliminated on June 6, 2022, following its automatic redemption after the 2022 Annual Meeting and the Reverse Stock Split. The remaining Series F Preferred Stock was converted into common stock in Q1 2022, with no shares outstanding as of June 30, 2022[51](index=51&type=chunk)[55](index=55&type=chunk) | Category | 3 Months Ended June 30, 2022 (in thousands) | 3 Months Ended June 30, 2021 (in thousands) | 6 Months Ended June 30, 2022 (in thousands) | 6 Months Ended June 30, 2021 (in thousands) | | :-------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Cost of Revenue | $93 | $35 | $113 | $113 | | Sales and Marketing | $213 | $108 | $312 | $229 | | General and Administrative | $109 | $168 | $151 | $718 | | Engineering and Development | $475 | $55 | $524 | $237 | | Total | $890 | $366 | $1,100 | $1,297 | - In June 2022, the company issued **678,745 shares** of common stock and warrants to purchase **726,660 shares** (pre-funded) and **1,405,405 shares** (common) in a direct offering and private placement, generating approximately **$6.5 million** in gross proceeds[67](index=67&type=chunk) | Metric | Shares (thousands) | Weighted Average Exercise Price | | :-------------------------------- | :----------------- | :------------------------------ | | Warrants outstanding, Dec 31, 2021 | 720 | $19.98 | | Granted or Issued | 2,132 | $3.05 | | Forfeited, cancelled, or expired | (31) | $225.00 | | Warrants outstanding at June 30, 2022 | 2,821 | $4.90 | - Phantom RSUs and SARs were reclassed to equity (Additional Paid-In Capital) in Q2 2022 due to the Reverse Stock Split, with a portion remaining as long-term liability[80](index=80&type=chunk)[81](index=81&type=chunk) [NOTE 5—INVENTORY](index=19&type=section&id=NOTE%205%E2%80%94INVENTORY) This note presents the breakdown of inventory by category and the allowance for excess and obsolete amounts | Category | June 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :-------------- | :------------ | :---------------- | | Raw Materials | $5,454 | $4,444 | | Work-in-Process | $2,175 | $1,726 | | Finished Goods | $8,944 | $6,759 | | Total Inventory | $16,573 | $12,929 | - Inventory has been reduced by **$1.0 million** for estimated excess and obsolete amounts as of both June 30, 2022, and December 31, 2021[84](index=84&type=chunk) [NOTE 6—PROPERTY, PLANT, AND EQUIPMENT](index=19&type=section&id=NOTE%206%E2%80%94PROPERTY%2C%20PLANT%2C%20AND%20EQUIPMENT) This note details the company's property, plant, and equipment, net of accumulated depreciation and amortization | Category | June 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :-------------------------------- | :------------ | :---------------- | | Total (Gross) | $9,496 | $8,952 | | Accumulated Depreciation & Amortization | ($8,284) | ($8,049) | | Property, Plant, & Equipment, Net | $1,373 | $1,067 | - Depreciation and amortization expense for property, plant, and equipment totaled **$0.1 million** for the three months and **$0.3 million** for the six months ended June 30, 2022[85](index=85&type=chunk) [NOTE 7—INTANGIBLE ASSETS AND GOODWILL](index=19&type=section&id=NOTE%207%E2%80%94INTANGIBLE%20ASSETS%20AND%20GOODWILL) This note provides information on goodwill and fully amortized intangible assets, with no impairment identified - Goodwill remained at **$2.9 million** as of June 30, 2022, and December 31, 2021, with no impairment identified since the September 30, 2021 annual test[87](index=87&type=chunk) - All intangible assets have been fully amortized, and no amortization expense was recognized during the three and six months ended June 30, 2022 and 2021[87](index=87&type=chunk) [NOTE 8—ACCRUED LIABILITIES](index=19&type=section&id=NOTE%208%E2%80%94ACCRUED%20LIABILITIES) This note details the components of accrued liabilities, including payroll, warranty, and professional services, and changes in warranty accrual | Category | June 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :-------------------------- | :------------ | :---------------- | | Payroll and Benefits | $3,275 | $3,969 | | Warranty Accrual, Current | $802 | $565 | | Accrued Professional Services | $654 | $275 | | Lease Liability | $591 | $405 | | Settlement Accrual | $0 | $805 | | Total Accrued Liabilities | $6,498 | $8,276 | - The settlement accrual of **$805 thousand** as of December 31, 2021, was paid in January 2022, removing the liability[107](index=107&type=chunk) | Metric | 3 Months Ended June 30, 2022 (in thousands) | 3 Months Ended June 30, 2021 (in thousands) | 6 Months Ended June 30, 2022 (in thousands) | 6 Months Ended June 30, 2021 (in thousands) | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Balance, Beginning of Period | $1,138 | $1,396 | $1,086 | $1,132 | | Provision for Estimated Warranty Cost | $910 | $140 | $1,461 | $804 | | Warranty Expenditures | ($815) | ($478) | ($1,314) | ($878) | | Balance, End of Period | $1,233 | $1,058 | $1,233 | $1,058 | [NOTE 9—DEBT](index=20&type=section&id=NOTE%209%E2%80%94DEBT) This note outlines the company's debt obligations, including the SWK Loan and EIDL Loan, and recent amendments | Category | June 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :-------------------------------- | :------------ | :---------------- | | SWK Loan | $13,300 | $14,300 | | EIDL Loan | $150 | $150 | | Discount and Debt Issuance Costs | ($720) | ($847) | | Total Non-Current Term Loans, Net | $12,730 | $13,603 | - The SWK Loan's interest-only period was extended by two quarters to November 2023 via the Ninth Amendment, and the company prepaid **$1.0 million** of the loan balance[93](index=93&type=chunk) - The EIDL Loan's first payment due date was extended to November 2022. The Paycheck Protection Program (PPP) Loan, totaling **$2.98 million**, was fully forgiven by the SBA in June 2021[95](index=95&type=chunk)[98](index=98&type=chunk) [NOTE 10—LEASES](index=22&type=section&id=NOTE%2010%E2%80%94LEASES) This note describes the company's operating leases for facilities and presents related right-of-use assets and lease liabilities - The company leases its corporate headquarters (expires Dec 2025) and a manufacturing facility (expires June 2025), with an additional **15,000 sq ft** lease commencing Feb 2022[99](index=99&type=chunk)[100](index=100&type=chunk) | Metric | June 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :-------------------------------- | :------------ | :---------------- | | Right-of-Use Assets | $2,047 | $1,717 | | Total Lease Liabilities | $2,183 | $1,854 | | Current Operating Lease Liabilities | $591 | $405 | | Non-Current Lease Liabilities | $1,592 | $1,449 | - Rent expense totaled **$0.3 million** for the three months and **$0.5 million** for the six months ended June 30, 2022[103](index=103&type=chunk) [NOTE 11—COMMITMENTS AND CONTINGENCIES](index=23&type=section&id=NOTE%2011%E2%80%94COMMITMENTS%20AND%20CONTINGENCIES) This note discusses the settlement of patent litigation and the removal of associated liabilities - The company settled patent litigation with CAO Group, Inc. in January 2019, involving a cash payment, issuance of restricted common stock, and a future cash payment based on stock value. All remaining amounts due to CAO Group, Inc. were paid in January 2022, removing the associated liability[106](index=106&type=chunk)[107](index=107&type=chunk) [NOTE 12—SEGMENT INFORMATION](index=24&type=section&id=NOTE%2012%E2%80%94SEGMENT%20INFORMATION) This note confirms the company operates in a single business segment and provides revenue breakdown by geographic location - The company operates in a single business segment, with management using one measurement of profitability[108](index=108&type=chunk) | Geographic Location | 3 Months Ended June 30, 2022 | 3 Months Ended June 30, 2021 | 6 Months Ended June 30, 2022 | 6 Months Ended June 30, 2021 | | :------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | United States | $8,899 (73%) | $5,865 (64%) | $15,877 (71%) | $11,086 (64%) | | International | $3,336 (27%) | $3,269 (36%) | $6,524 (29%) | $6,164 (36%) | [NOTE 13—CONCENTRATIONS](index=24&type=section&id=NOTE%2013%E2%80%94CONCENTRATIONS) This note details revenue concentrations by product category and reliance on single suppliers for key components | Product Category | 3 Months Ended June 30, 2022 | 3 Months Ended June 30, 2021 | 6 Months Ended June 30, 2022 | 6 Months Ended June 30, 2021 | | :------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Laser Systems | $7,987 (65.3%) | $5,720 (62.6%) | $14,322 (63.9%) | $10,540 (61.1%) | | Consumables and Other | $3,038 (24.8%) | $2,358 (25.8%) | $5,748 (25.7%) | $4,595 (26.6%) | | Services | $1,210 (9.9%) | $1,056 (11.6%) | $2,331 (10.4%) | $2,115 (12.3%) | - No individual customer represented more than **10% of revenue** for the reported periods. However, as of June 30, 2022, accounts receivable from one customer totaled approximately **12%** of total gross accounts receivable[112](index=112&type=chunk)[114](index=114&type=chunk) - The company relies on single suppliers for certain key components, which could cause manufacturing delays if suppliers change[115](index=115&type=chunk) [NOTE 14—INCOME TAXES](index=25&type=section&id=NOTE%2014%E2%80%94INCOME%20TAXES) This note explains the company's income tax position, including deferred tax assets and the effective tax rate - A full valuation allowance is maintained against net deferred tax assets due to prior net losses, indicating uncertainty about their realization[116](index=116&type=chunk) | Metric | 3 Months Ended June 30, 2022 (in thousands) | 3 Months Ended June 30, 2021 (in thousands) | 6 Months Ended June 30, 2022 (in thousands) | 6 Months Ended June 30, 2021 (in thousands) | | :-------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Income Tax (Provision) Benefit | ($23) | $80 | ($40) | $20 | | Effective Tax Rate | 0.4% | 10.2% | 0.4% | 0.3% | - The effective tax rate differs from the statutory **21%** primarily due to valuation allowances and current liabilities from estimated state and foreign income taxes[118](index=118&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations, including an overview of the business, strategic outlook, recent developments, critical accounting policies, and a detailed comparison of financial performance for the three and six months ended June 30, 2022, versus 2021. It also discusses liquidity and capital resources [Overview](index=27&type=section&id=Overview) This section provides an overview of BIOLASE's business as a leading provider of advanced dental laser systems and its patent portfolio - BIOLASE is a leading provider of advanced laser systems for the dental industry, offering minimally invasive procedures with benefits like less pain, faster healing, and improved patient care[124](index=124&type=chunk) - The company offers Waterlase (all-tissue) and diode (soft-tissue) systems, with Waterlase FDA cleared for over **80 clinical indications**[125](index=125&type=chunk) - As of June 30, 2022, BIOLASE held approximately **302 issued** and **31 pending** U.S. and international patents, mostly related to Waterlase technology[125](index=125&type=chunk) [Business and Outlook](index=28&type=section&id=Business%20and%20Outlook) This section outlines BIOLASE's strategic focus on increasing product demand, operational excellence, and expanding product lines and clinical applications - The company's strategy focuses on increasing awareness and demand for its products among dental practitioners and patients, and growing consumables revenue[129](index=129&type=chunk) - BIOLASE aims for operating excellence through lean initiatives, focusing on sales strategy, cash flow management, and optimizing engineering for innovative new products[129](index=129&type=chunk) - The company plans to expand its product line and clinical applications, leveraging existing technologies into adjacent medical fields like ophthalmology, orthopedics, and pain management[130](index=130&type=chunk) - Revenue grew by **34%** and **30%** for the three and six months ended June 30, 2022, respectively, driven by high demand from new users and recovery from COVID-19 impacts[131](index=131&type=chunk) - BIOLASE launched specialist training programs (Waterlase Pediatric Dental Academy, periodontal community program, Waterlase Endo Academy, Epic Hygiene Academy) to educate providers and increase patient access[132](index=132&type=chunk) - In 2021, the company partnered with EdgeEndo to develop and produce the EdgePro, a laser using proprietary Er,Cr:YSGG technology for root canal cleaning and disinfection[133](index=133&type=chunk) [Recent Developments](index=28&type=section&id=Recent%20Developments) This section highlights key corporate actions including a direct offering, reverse stock split, preferred stock elimination, and debt agreement amendment - On June 27, 2022, BIOLASE completed a direct offering and private placement, issuing common stock and warrants, generating approximately **$6.5 million** in gross proceeds[133](index=133&type=chunk) - A one-for-twenty-five (1:25) reverse stock split became effective on April 28, 2022, following stockholder and board approval[134](index=134&type=chunk) - Series G Preferred Stock was eliminated on June 6, 2022, after being redeemed following the 2022 Annual Meeting and the reverse stock split[135](index=135&type=chunk) - On June 30, 2022, the Ninth Amendment to the Credit Agreement with SWK extended the interest-only period to November 2023, reduced minimum liquid asset requirements, and included a **$1.0 million** loan prepayment[136](index=136&type=chunk) [Critical Accounting Policies](index=29&type=section&id=Critical%20Accounting%20Policies) This section confirms no significant changes to critical accounting policies from the prior fiscal year - No significant changes occurred in the company's critical accounting policies during the six months ended June 30, 2022, from those disclosed in the 2021 Form 10-K[137](index=137&type=chunk) [Results of Operations](index=30&type=section&id=Results%20of%20Operations) This section provides a detailed analysis of the company's financial performance for the reported periods [Non-GAAP Disclosure](index=30&type=section&id=Non-GAAP%20Disclosure) This section defines and reconciles Adjusted EBITDA as a non-GAAP financial measure used by management to evaluate core operating results - Management uses Adjusted EBITDA as a non-GAAP financial measure to evaluate core operating results and trends, believing it provides greater transparency for investors[139](index=139&type=chunk)[141](index=141&type=chunk) - Adjusted EBITDA is defined as net loss before interest, taxes, depreciation and amortization, patent litigation settlements, stock-based and other non-cash compensation, change in allowance for doubtful accounts, and gain on debt forgiveness[141](index=141&type=chunk) | Metric | 3 Months Ended June 30, 2022 (in thousands) | 3 Months Ended June 30, 2021 (in thousands) | 6 Months Ended June 30, 2022 (in thousands) | 6 Months Ended June 30, 2021 (in thousands) | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | GAAP Net Loss | ($5,611) | ($702) | ($10,386) | ($7,603) | | Interest Expense, Net | $430 | $582 | $863 | $1,157 | | Income Tax (Provision) Benefit | $23 | ($80) | $40 | ($20) | | Depreciation and Amortization | $130 | $91 | $247 | $176 | | Stock-based and other non-cash compensation | $890 | $369 | $1,100 | $1,297 | | Gain on Debt Forgiveness | $0 | ($3,014) | $0 | ($3,014) | | Adjusted EBITDA | ($4,079) | ($2,655) | ($7,993) | ($7,925) | [Comparison of Results of Operations (Three Months)](index=31&type=section&id=Comparison%20of%20Results%20of%20Operations%20Three%20Months%20Ended%20June%2030%2C%202022%20Compared%20with%20Three%20Months%20Ended%20June%2030%2C%202021) This section compares the company's financial performance for the three months ended June 30, 2022, versus 2021 | Category | June 30, 2022 (in thousands) | June 30, 2021 (in thousands) | Change (YoY) (in thousands) | % Change (YoY) | | :------------------ | :------------ | :------------ | :----------- | :------------- | | Laser Systems | $7,987 | $5,720 | +$2,267 | +39.6% | | Consumables and Other | $3,038 | $2,358 | +$680 | +28.8% | | Services | $1,210 | $1,056 | +$154 | +14.6% | | Total Net Revenue | $12,235 | $9,134 | +$3,101 | +34.0% | - Total net revenue increased by **34%** due to increased Waterlase sales to new U.S. customers and specialists. International revenue increased by **2%**[146](index=146&type=chunk) - Gross profit increased by **27%** to **$5.1 million** (**42% of net revenue**), driven by higher sales volumes and increased average selling prices in the U.S., partially offset by supply chain issues and lower-margin OEM products[147](index=147&type=chunk) | Expense Category | June 30, 2022 (in thousands) | June 30, 2021 (in thousands) | Change (YoY) (in thousands) | % Change (YoY) | | :-------------------------- | :------------ | :------------ | :----------- | :------------- | | Sales and Marketing | $5,402 | $3,311 | +$2,091 | +63.2% | | General and Administrative | $3,141 | $2,779 | +$362 | +13.0% | | Engineering and Development | $1,653 | $1,162 | +$491 | +42.3% | | Total Operating Expenses | $10,196 | $7,324 | +$2,872 | +39.2% | - Sales and marketing expenses increased by **$2.1 million** (**63%**) due to higher compensation, commissions, travel, and trade show expenses. Net loss increased to **$5.6 million** from **$0.7 million** in the prior year, primarily due to higher operating expenses and a foreign currency loss[150](index=150&type=chunk)[155](index=155&type=chunk) [Comparison of Results of Operations (Six Months)](index=33&type=section&id=Comparison%20of%20Results%20of%20Operations%20Six%20Months%20Ended%20June%2030%2C%202022%20Compared%20with%20Six%20Months%20Ended%20June%2030%2C%202021) This section compares the company's financial performance for the six months ended June 30, 2022, versus 2021 | Category | June 30, 2022 (in thousands) | June 30, 2021 (in thousands) | Change (YoY) (in thousands) | % Change (YoY) | | :------------------ | :------------ | :------------ | :----------- | :------------- | | Laser Systems | $14,322 | $10,540 | +$3,782 | +35.9% | | Consumables and Other | $5,748 | $4,595 | +$1,153 | +25.1% | | Services | $2,331 | $2,115 | +$216 | +10.2% | | Total Net Revenue | $22,401 | $17,250 | +$5,151 | +29.9% | - Total net revenue increased by **30%** to **$22.4 million**, driven by increased Waterlase sales to new U.S. customers and specialists. U.S. revenue increased by **43%**, while international revenue increased by **6%**[159](index=159&type=chunk) - Gross profit increased by **46%** to **$9.9 million** (**44% of net revenue**), reflecting higher sales volumes in the U.S. (higher margin), increased average selling prices, and favorable absorption of fixed expenses[160](index=160&type=chunk) | Expense Category | June 30, 2022 (in thousands) | June 30, 2021 (in thousands) | Change (YoY) (in thousands) | % Change (YoY) | | :-------------------------- | :------------ | :------------ | :----------- | :------------- | | Sales and Marketing | $10,216 | $6,864 | +$3,352 | +48.8% | | General and Administrative | $5,717 | $6,134 | ($417) | -6.8% | | Engineering and Development | $3,197 | $2,966 | +$231 | +7.8% | | Total Operating Expenses | $19,130 | $16,125 | +$3,005 | +18.6% | - Sales and marketing expenses increased by **$3.4 million** (**49%**) due to higher compensation, travel, trade show, and advertising expenses. General and administrative expenses decreased by **$0.4 million** (**7%**) due to lower compensation and severance expenses, partially offset by higher allowance for doubtful accounts and 2022 Annual Meeting expenses. Net loss increased to **$10.4 million** from **$7.6 million** in the prior year, primarily due to higher operating expenses and foreign currency losses[161](index=161&type=chunk)[162](index=162&type=chunk)[166](index=166&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's cash position, cash flow activities, and future capital needs and strategies - Cash and cash equivalents decreased from **$30.0 million** at December 31, 2021, to **$19.5 million** at June 30, 2022, primarily due to a net loss of **$10.4 million**, increased operating assets and liabilities (**$5.8 million**), and a **$1.0 million** loan payment, partially offset by **$5.8 million** from a June 2022 offering[167](index=167&type=chunk) | Metric | 6 Months Ended June 30, 2022 (in thousands) | 6 Months Ended June 30, 2021 (in thousands) | | :-------------------------------- | :--------------------------- | :--------------------------- | | Net Cash Flows Used in Operating Activities | ($14,633) | ($10,008) | | Net Cash Flows Used in Investing Activities | ($578) | ($311) | | Net Cash Flows Provided by Financing Activities | $4,849 | $29,811 | | Net Change in Cash, Cash Equivalents and Restricted Cash | ($10,626) | $19,409 | - The company expects to improve financial condition by increasing sales, expanding product offerings, developing sales force and distributor relationships, forming strategic arrangements, educating patients, and reducing expenses[176](index=176&type=chunk) - The company may need to raise additional capital through equity or debt offerings in the future, with no assurance of availability on acceptable terms or without dilution[174](index=174&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=37&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section states that there are no quantitative and qualitative disclosures about market risk - The company has no material quantitative and qualitative disclosures about market risk[181](index=181&type=chunk) [Item 4. Controls and Procedures](index=37&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures and reports no material changes in internal controls over financial reporting - Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2022[182](index=182&type=chunk) - There were no material changes in internal control over financial reporting during the period covered by the report[183](index=183&type=chunk) PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, other information, exhibits, and required signatures [Item 1. Legal Proceedings](index=38&type=section&id=Item%201.%20Legal%20Proceedings) This section states that while the company may be subject to legal proceedings in the ordinary course of business, there are no matters as of June 30, 2022, that management believes will have a material adverse effect on its financial position, results of operations, or cash flows - As of June 30, 2022, management believes there are no legal proceedings or claims that will have a material adverse effect on the company's financial position, results of operations, or cash flows[183](index=183&type=chunk) [Item 1A. Risk Factors](index=38&type=section&id=Item%201A.%20Risk%20Factors) This section indicates that there have been no material changes to the risk factors previously disclosed in the 2021 Form 10-K, and reminds readers that additional unknown or immaterial risks could still adversely affect the business - No material changes to risk factors have occurred since those disclosed in the 2021 Form 10-K[184](index=184&type=chunk) [Item 5. Other Information](index=38&type=section&id=Item%205.%20Other%20Information) This section states that there is no other information to report - This section states "None," indicating no other information to report[184](index=184&type=chunk) [Item 6. Exhibits](index=39&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including amendments to the Certificate of Incorporation, bylaws, warrant forms, and the Ninth Amendment to the Credit Agreement, along with certifications - Key exhibits include amendments to the Restated Certificate of Incorporation (e.g., Reverse Stock Split), Certificate of Elimination of Series G Preferred Stock, forms of warrants (Pre-Funded and Common), and the Ninth Amendment to the Credit Agreement[186](index=186&type=chunk) [Signatures](index=40&type=section&id=Signatures) This section contains the required signatures of the registrant's authorized officers, including the President and Chief Executive Officer and the Chief Financial Officer, certifying the report - The report is signed by John R. Beaver, President and Chief Executive Officer, and Jennifer Bright, Chief Financial Officer, on August 11, 2022[190](index=190&type=chunk)

Company Overview - BIOLASE is a global leader in dental lasers, with over 43,000 laser systems sold in 80 countries[3,4] - The company possesses a large IP portfolio, including 301 issued and 32 pending patents, valued at $30 million[4,5] Market Opportunity & Growth Strategy - Only 7% to 8% of U.S dental practices currently incorporate all-tissue lasers, representing a significant growth opportunity[4,6] - Every additional 1% increase in U.S adoption of all-tissue lasers could generate over $50 million in new revenue for BIOLASE[4,10] - Targeted growth strategies focus on penetrating the DSO, pediatric, periodontics, endodontics, hygiene, and general practice markets[10] - Increased marketing, education, and training efforts are driving increased sales, with over 78% of U.S Waterlase sales in 2021 generated from new customers and over 40% coming from dental specialists[22] Clinical & Safety Advantages - Minimally invasive Waterlase REPAIR protocols achieve superior patient outcomes with equivalent clinical results to open flap techniques[12,16] - Waterlase dentistry uses 80% less water than traditional handpieces, reducing the risk of cross-contamination due to aerosol production[21] Financial Performance - Revenue increased 25% year-over-year to $10.2 million for the three months ended March 31, 2022[27,28] - Gross margin was 47%, up 12,700 basis points, due to higher revenue and average selling prices[27,28] - The company maintained a strong balance sheet with $22 million in cash and cash equivalents as of March 31, 2022[27,28]

BIOLASE, Inc. (OTCQB:BIOL) Q1 2022 Earnings Conference Call May 12, 2022 4:30 PM ET Company Participants Todd Kehrli - Investor Relations, EVC Group John Beaver - President and Chief Executive Officer Jennifer Bright - Vice President of Finance Conference Call Participants Bruce Jackson - The Benchmark Company Matt Bullock - Maxim Group Kyle Bauser - Lake Street Operator Good day, and welcome to the BIOLASE First Quarter 2022 Results Conference Call. All participants will be in a listen-only mode. [Operato ...

4 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading symbol(s) Name of each exchange on which registered FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022 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: ...

Financial Data and Key Metrics Changes - The company reported fourth quarter revenue of $12.4 million, representing 46% growth year-over-year, and finished 2021 with total revenue of $39.2 million, up 72% year-over-year [9][21] - Gross margin improved significantly to 40%, a 2,100 basis points expansion year-over-year, reflecting increased sales and favorable absorption of fixed expenses [24] - GAAP net loss for the quarter was $5.3 million or $0.03 per share, compared to a net loss of $6.1 million or $0.07 per share for the fourth quarter of 2020 [26] Business Line Data and Key Metrics Changes - US laser system sales increased 39% compared to 2020 and 61% compared to 2019, while US consumable sales increased 40% compared to 2020 and 75% compared to 2019 [22] - International laser system sales increased 87% compared to 2020 but were down 11% compared to 2019, and international consumable sales increased 29% compared to 2020 and 61% compared to 2019 [22] Market Data and Key Metrics Changes - BIOLASE owns approximately 60% of the all-tissue laser dental market, but the penetration rate of dental lasers in the overall dental market is only about 7% in the US and less than 2% worldwide [10] - Each 1% increase in adoption of all-tissue laser technology in the US could equal $50 million in additional revenue for BIOLASE, assuming the same 60% historical market share [10] Company Strategy and Development Direction - The company has a 3-pronged growth strategy focusing on dental specialists, general practitioners, and corporate dentists to drive market penetration [11][16] - The first prong involves forming specialist academies to increase awareness among dental specialists, which has resulted in at least a third of total US Waterlase revenue coming from specialists [12] - The second prong includes the Waterlase exclusive trial program, which allows general practitioners to trial the laser at no cost, with a goal of increasing the win rate for sales [16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to drive sustainable and profitable revenue growth in 2022 and beyond, citing a well-developed roadmap for growth [20][56] - The company is forecasting revenue for the first quarter of 2022 to exceed $9 million, representing growth of at least 11% year-over-year, and anticipates a minimum of 10% revenue increase for the full year [28] Other Important Information - The company plans to ask shareholders for approval of a reverse stock split to meet NASDAQ listing requirements and attract more institutional investors [30][31] - Management acknowledged inflationary pressures impacting costs but decided to hold pricing firm in 2022 to accelerate laser adoption in dentistry [46] Q&A Session Summary Question: Is the company still considering a reverse stock split? - Yes, the company plans to ask shareholders for approval of a reverse stock split to achieve the minimum stock price required by NASDAQ [30][31] Question: What are the company's plans for the next five years and strategy to increase revenue? - The company believes it has a large market opportunity and a well-developed roadmap for growth leveraging its product offerings, with a 3-pronged growth plan already generating positive results [32] Question: What is the plan to increase shareholder returns? - The company plans to execute its growth plan to increase penetration of laser technology in the dental market, expecting profitability by the end of 2023 [33] Question: How has access to dental offices been affected by the Omicron wave? - Access to dental offices has improved, and while there were some cancellations in January and February, the company is back on track [35] Question: How was the guidance for 2022 determined? - The guidance considers the potential contribution from EdgePRO and is somewhat conservative due to current global events and inflation [38] Question: What is the company's strategy regarding dental service organizations (DSOs)? - The company is working with several DSOs, focusing on retraining and identifying practices that previously used legacy lasers [50]

| --- | --- | --- | |-------|-------|-------| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Safe Harbor Statement Statements made in this presentation and during discussions with BIOLASE representative's that refer to BIOLASE's estimated or anticipated future results or other non-historical facts are forward-looking statements, as are any statements its representatives make concerning BIOLASE's strategic initiatives, anticipated financial performance and product lau ...