BIOLASE(BIOL) - 2021 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Unaudited consolidated financial statements for June 30, 2021, show increased assets and equity from financing, substantial revenue growth, and a reduced net loss Consolidated Balance Sheets Consolidated balance sheets as of June 30, 2021, reflect strengthened financial position with increased assets and equity | Balance Sheet Items (in thousands) | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $37,081 | $17,564 | | Total current assets | $55,340 | $35,110 | | Total assets | $61,249 | $41,025 | | Liabilities & Equity | | | | Total current liabilities | $12,719 | $11,223 | | Total liabilities | $27,993 | $30,997 | | Total stockholders' equity | $33,256 | $10,028 | Consolidated Statements of Operations and Comprehensive Loss Consolidated statements of operations for Q2 2021 show significant revenue growth and a narrowed net loss | Metric (in thousands, except EPS) | Q2 2021 | Q2 2020 | Six Months 2021 | Six Months 2020 | | :--- | :--- | :--- | :--- | :--- | | Net revenue | $9,134 | $2,938 | $17,250 | $7,721 | | Gross profit | $4,041 | $941 | $6,781 | $2,294 | | Loss from operations | $(3,283) | $(3,979) | $(9,344) | $(9,330) | | Gain on debt forgiveness | $3,014 | $0 | $3,014 | $0 | | Net loss | $(702) | $(4,697) | $(7,603) | $(10,704) | | Net loss per share (Basic) | $(0.00) | $(0.12) | $(0.06) | $(0.31) | Consolidated Statements of Cash Flows Consolidated cash flows for H1 2021 show net cash used in operations offset by substantial financing inflows | Cash Flow Activity (in thousands) | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | $(10,008) | $(9,339) | | Net cash used in investing activities | $(311) | $(81) | | Net cash provided by financing activities | $29,811 | $9,011 | | Net increase (decrease) in cash | $19,409 | $(352) | Notes to Consolidated Financial Statements Notes detail accounting policies, highlighting increased working capital from equity financing, and PPP loan forgiveness - As of June 30, 2021, the company's working capital was approximately $42.6 million, a significant increase from $23.9 million at year-end 2020, primarily due to $14.4 million from common stock issuance and $16.6 million from warrant exercises[18] - Revenue from products transferred at a single point in time accounted for 88% of net revenue for the six months ended June 30, 2021, up from 71% in the prior-year period[37] - In June 2021, the company's Paycheck Protection Program (PPP) loan of approximately $3.0 million, along with accrued interest, was fully forgiven by the SBA and recognized as a non-operating gain[95] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses significant revenue recovery, improved gross margin, and strengthened liquidity from equity financing Results of Operations Q2 2021 results show significant net revenue increase, improved gross margin, and narrowed net loss due to PPP loan forgiveness | Revenue by Category (Q2, in thousands) | 2021 | 2020 | % Change | | :--- | :--- | :--- | :--- | | Laser systems | $5,720 | $1,091 | 424.3% | | Consumables and other | $2,358 | $862 | 173.5% | | Services | $1,056 | $985 | 7.2% | | Total net revenue | $9,134 | $2,938 | 210.9% | - Gross profit for Q2 2021 was $4.0 million (44% of net revenue), a 329% increase from $0.9 million (32% of net revenue) in Q2 2020, driven by higher revenue, increased average selling prices, and an Employee Retention Credit[153] - Total operating expenses for Q2 2021 increased by $2.4 million (48.9%) compared to Q2 2020, driven by higher compensation, sales commissions, advertising, and R&D project costs as business activity recovered[154] Liquidity and Capital Resources Liquidity significantly improved in Q2 2021, driven by substantial financing activities and increased working capital - The company raised significant capital in the first half of 2021, receiving proceeds of $14.4 million from a common stock issuance and $16.6 million from warrant exercises[173] | Change in Cash (H1 2021 vs H1 2020, in thousands) | 2021 | 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | $(10,008) | $(9,339) | | Net cash provided by financing activities | $29,811 | $9,011 | | Net change in cash | $19,409 | $(352) | - As of June 30, 2021, the company had working capital of approximately $42.6 million and principal liquidity sources consisting of $37.3 million in cash and $3.8 million in net accounts receivable[176] Quantitative and Qualitative Disclosures About Market Risk The company reported no new or significant quantitative and qualitative disclosures about market risk for the period - The report states "None" for this item, indicating no material changes to market risk disclosures[185] Controls and Procedures Management evaluated the company's disclosure controls and procedures, concluding they were effective as of June 30, 2021 - Based on an evaluation as of the end of the period, the President and Chief Executive Officer concluded that the company's disclosure controls and procedures were effective[186] - No changes occurred in the company's internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[187] PART II. OTHER INFORMATION Legal Proceedings The company states it is not subject to any legal proceedings that would materially adversely affect its financial position or results - As of June 30, 2021, management believes there are no legal matters that will have a material adverse effect on the company's financial position or results[187] Risk Factors Key risk factors include potential NASDAQ delisting, SBA review of forgiven PPP loan, and a history of net losses - On May 24, 2021, the company received a deficiency letter from NASDAQ for failing to maintain a minimum bid price of $1.00 per share, with a compliance deadline of November 22, 2021[191] - The company's forgiven PPP loan of $2.98 million is subject to a full review by the SBA for up to six years, with potential repayment and penalties if deemed ineligible[193][195] - The company has a history of net losses, with an accumulated deficit of approximately $259.0 million as of June 30, 2021, and may face difficulty achieving future profitability[197] Other Information Significant changes to the Board of Directors occurred on August 12, 2021, with new directors elected and others resigning - On August 12, 2021, the Board of Directors elected three new members: Drs. Kathleen T. O'Loughlin, Carol Gomez Summerhays, and Martha Somerman[198] - On the same date, Dr. Michael DiTolla and Garrett Sato resigned as members of the Board of Directors[200] Exhibits This section lists all exhibits filed with the Form 10-Q, including corporate governance documents and officer certifications - This section provides a list of all exhibits filed as part of the quarterly report, incorporating by reference previously filed documents and including new certifications[202][203][204]