10-Q

4

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, 2021

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)

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)

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 ☒

As of November 4, 2021, the registrant had 153,279,540 shares of common stock, $0.001 par value per share, outstanding.

BIOLASE, INC.

INDEX

		Page
PART I.	FINANCIAL INFORMATION	2
Item 1.	Financial Statements (Unaudited):	2
	Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020	2
	Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2021 and September 30, 2020	3
	Consolidated Statements of Redeemable Preferred Stock and Stockholders’ Equity for the three and nine months ended September 30, 2021 and September 30, 2020	4
	Consolidated Statements of Cash Flows for the nine months ended September 30, 2021 and September 30, 2020	6
	Notes to Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35
Item 4.	Controls and Procedures	35
PART II	OTHER INFORMATION	36
Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	36
Item 5	Other Information	36
Item 6.	Exhibits	37
Signatures		40

1

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

BIOLASE, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands, except per share data)

	September 30,			December 31,
	2021			2020
ASSETS
Current assets:
Cash and cash equivalents	$	33,385		$	17,564
Restricted cash		204			312
Accounts receivable, less allowance of $2,871 and $4,017 as of September 30, 2021 and December 31, 2020, respectively		3,637			3,059
Inventory		14,062			11,157
Prepaid expenses and other current assets		1,366			3,018
Total current assets		52,654			35,110
Property, plant, and equipment, net		889			782
Goodwill		2,926			2,926
Right of use asset		1,823			1,976
Other assets		222			231
Total assets	$	58,514		$	41,025
LIABILITIES, REDEEMABLE PREFERRED STOCK AND    STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	3,597		$	2,651
Accrued liabilities		6,182			6,667
Deferred revenue, current portion		2,278			1,905
Current portion of term loans, net of discount		1,400			—
Total current liabilities		13,457			11,223
Deferred revenue		294			374
Warranty accrual		472			384
Non current term loans, net of discount		12,114			16,186
Non current operating lease liability		1,557			1,774
Other liabilities		298			1,056
Total liabilities		28,192			30,997
Commitments and contingencies — Note 11
Stockholders' equity:
Series F Preferred stock, par value $0.001 per share; 18 shares    authorized, 0 and 1 shares issued and outstanding as of September 30,    2021 and December 31, 2020, respectively		34			118
Common stock, par value $0.001 per share; 180,000 shares    authorized, 153,322 and 97,709 shares issued and 153,277 and 97,663    outstanding as of September 30, 2021 and December 31, 2020, respectively		153			98
Additional paid-in capital		292,948			261,573
Accumulated other comprehensive loss		(558	)		(385	)
Accumulated deficit		(262,255	)		(251,376	)
Total stockholders' equity		30,322			10,028
Total liabilities, redeemable preferred stock and stockholders' equity	$	58,514		$	41,025

See accompanying notes to unaudited consolidated financial statements.

2

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,
	2021			2020			2021			2020
Net revenue	$	9,531		$	6,539		$	26,780		$	14,260
Cost of revenue		4,689			4,265			15,157			9,692
Gross profit		4,842			2,274			11,623			4,568
Operating expenses:
Sales and marketing		3,451			2,678			10,315			7,475
General and administrative		2,479			2,300			8,613			7,446
Engineering and development		1,540			963			4,506			2,644
Loss on patent litigation settlement		29			—			190			—
Total operating expenses		7,499			5,941			23,624			17,565
Loss from operations		(2,657	)		(3,667	)		(12,001	)		(12,997	)
Gain (Loss) on foreign currency transactions		(36	)		53			(172	)		(68	)
Interest expense, net		(569	)		(568	)		(1,727	)		(1,782	)
Gain on debt forgiveness		—			—			3,014			—
Other income, net		—			4,209			—			4,209
Non-operating gain (loss), net		(605	)		3,694			1,115			2,359
Loss before income tax (provision) benefit		(3,262	)		27			(10,886	)		(10,638	)
Income tax (provision) benefit		(14	)		(15	)		7			(49	)
Net income (loss)		(3,276	)		12			(10,879	)		(10,687	)
Other comprehensive loss items:
Foreign currency translation adjustments		(90	)		111			(173	)		167
Comprehensive income (loss)	$	(3,366	)	$	123		$	(11,052	)	$	(10,520	)
Net income (loss)	$	(3,276	)	$	12		$	(10,879	)	$	(10,687	)
Deemed dividend on convertible preferred stock		(9	)		(17,378	)		(546	)		(17,378	)
Net loss attributable to common stockholders	$	(3,285	)	$	(17,366	)	$	(11,425	)	$	(28,065	)
Net loss per share attributable to common stockholders:
Basic	$	(0.02	)	$	(0.21	)	$	(0.08	)	$	(0.56	)
Diluted	$	(0.02	)	$	(0.21	)	$	(0.08	)	$	(0.56	)
Shares used in the calculation of net loss per share:
Basic		151,941			81,341			145,809			50,366
Diluted		151,941			81,341			145,809			50,366

See accompanying notes to unaudited consolidated financial statements.

3

BIOLASE, INC.

CONSOLIDATED STATEMENTS OF REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY

(Unaudited, in thousands)

	Mezzanine Equity				Stockholders' Equity
	Series E Convertible Preferred Stock				Common Stock				Additional  Paid-in Capital			Series F Convertible Preferred Stock						Accumulated Other Comprehensive			Accumulated			Total Stockholders'
	Shares		Amount		Shares		Amount		Amount			Shares			Amount			Loss			Deficit			Equity
Balances, June 30, 2021		—	$	—		151,236	$	151	$	292,517			—		$	35		$	(468	)	$	(258,979	)	$	33,256
Sale of common stock		—		—		—		—		—			—			—			—			—			—
Exercise of stock option		—		—		176		—		66			—			—			—			—			66
Issuance of restricted shares		—		—		260		—		164			—			—			—			—			164
Conversion of Series F    Convertible Preferred    Stock		—		—		25		—		10			—			(10	)		—			—			—
Deemed dividend on Series F    Convertible Preferred Stock		—		—		—		—		(9	)		—			9			—			—			—
Issuance of stock from    RSUs, net		—		—		1,600		2		(2	)		—			—			—			—			—
Stock-based compensation		—		—		—		—		192			—			—			—			—			192
Exercise of common stock    warrants		—		—		25		—		10			—			—			—			—			10
Net loss		—		—		—		—		—			—			—			—			(3,276	)		(3,276	)
Foreign currency    translation adjustment		—		—		—		—		—			—			—			(90	)		—			(90	)
Balances, September 30, 2021		—	$	—		153,322	$	153	$	292,948			—		$	34		$	(558	)	$	(262,255	)	$	30,322
Balances, December 31, 2020		—	$	—		97,709	$	98	$	261,573			1		$	118		$	(385	)	$	(251,376	)	$	10,028
Sale of common stock		—		—		14,000		14		13,277			—			—			—			—			13,291
Exercise of stock option		—		—		176		—		66			—			—			—			—			66
Issuance of common stock    for settlement of liability		—		—		500		1		509			—			—			—			—			510
Issuance of restricted shares		—		—		260		—		164			—			—			—			—			164
Conversion of Series F    Convertible Preferred    Stock		—		—		1,577		2		628			(1	)		(630	)		—			—			—
Deemed dividend on Series F    Convertible Preferred Stock		—		—		—		—		(546	)		—			546			—			—			—
Issuance of stock from    RSUs, net		—		—		3,381		3		(3	)		—			—			—			—			—
Stock-based compensation		—		—		—		—		2,253			—			—			—			—			2,253
Exercise of common stock    warrants		—		—		35,719		35		15,027			—			—			—			—			15,062
Net loss		—		—		—		—		—			—			—			—			(10,879	)		(10,879	)
Foreign currency    translation adjustment		—		—		—		—		—			—			—			(173	)		—			(173	)
Balances, September 30, 2021		—	$	—		153,322	$	153	$	292,948			—		$	34		$	(558	)	$	(262,255	)	$	30,322

See accompanying notes to unaudited consolidated financial statements.

4

BIOLASE, INC.

CONSOLIDATED STATEMENTS OF REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY

(Unaudited, in thousands)

	Mezzanine Equity						Stockholders' Equity
	Series E Convertible Preferred Stock						Common Stock				Additional  Paid-in Capital			Series F Convertible Preferred Stock						Accumulated Other Comprehensive			Accumulated			Total Stockholders'
	Shares			Amount			Shares		Amount		Amount			Shares			Amount			Loss			Deficit			Equity
Balances, June 30, 2020		—		$	—			50,322	$	50	$	247,149			—		$	—		$	(645	)	$	(245,246	)	$	1,308
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 Participating    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 loss		—			—			—		—		—			—			—			—			12			12
Foreign currency translation adjustment		—			—			—		—		—			—			—			111			—			111
Balances, 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		—		$	—			6,957	$	7	$	3,958			—		$	—		$	—		$	—			3,965
Sale of common stock		—			—			10,800		11		3,861			—			—			—			—			3,872
Sale of common stock warrants		—			—			—		—		3,031			—			—			—			—			3,031
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 Participating    Convertible Preferred Stock		(70	)		(3,965	)		42,370		43		16,905			(17	)		(16,948	)		—			—			—
Reclassification of July 2020 Warrants		—			—			—		—		9,450			—			—			—			—			9,450
Stock offering costs		—			—			—		—		(856	)		—			—			—			—			(856	)
Stock-based compensation		—			—			—		—		1,846			—			—			—			—			1,846
Warrants issued in connection    with debt instruments		—			—			—		—		67			—			—			—			—			67
Issuance of stock from RSUs, net		—			—			1,297		1		161			—			—			—			—			162
Exercise of June 2020 Warrants		—			—			116		—		46			—			—			—			—			46
Net loss		—			—			—		—		—			—			—			—			(10,687	)		(10,687	)
Foreign currency translation adjustment		—			—			—		—		—			—			—			167			—			167
Balances, September 30, 2020		—		$	—			92,999	$	93	$	259,385			1		$	141		$	(534	)	$	(245,234	)	$	13,851

See accompanying notes to unaudited consolidated financial statements.

5

BIOLASE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)

	Nine Months Ended
	September 30,
	2021			2020
Cash Flows from Operating Activities:
Net loss	$	(10,879	)	$	(10,687	)
Adjustments to reconcile net loss to net cash and cash equivalents used in operating activities:
Depreciation and amortization		281			527
Provision for bad debts		(162	)		1,263
Provision for sales returns		—			87
Inventory write-offs and disposals		(117	)		—
Amortization of discount on lines of credit		126			123
Amortization of debt issuance costs		290			240
Patent litigation mark-to-market		190			—
Change in fair value of warrants		—			(5,850	)
Issuance of restricted shares		164			—
Issuance costs for common stock warrants		—			1,640
Stock-based compensation		1,488			2,367
Gain on debt forgiveness		(3,014	)		—
Changes in operating assets and liabilities:
Accounts receivable		(417	)		4,017
Inventory		(2,788	)		(1,597	)
Prepaid expenses and other current assets		235			430
Accounts payable and accrued liabilities		705			(3,445	)
Deferred revenue		292			(562	)
Net cash and cash equivalents used in operating activities		(13,606	)		(11,447	)
Cash Flows from Investing Activities:
Purchases of property, plant, and equipment		(396	)		(78	)
Net cash and cash equivalents used in investing activities		(396	)		(78	)
Cash Flows from Financing Activities:
Proceeds from the sale of common stock		13,291			6,912
Proceeds from the sale of common stock warrants		—			15,300
Proceeds from the issuance of Series F Convertible Preferred Stock		—			2,700
Payments of equity offering costs		(6	)		(1,281	)
Payment of July 2020 Warrant issuance costs		—			(1,640	)
Borrowings on other long-term loans		—			3,140
Principal payment on loan		—			(700	)
Borrowings on credit facility		—			3,000
Repayment of credit facility		—			(3,000	)
Proceeds from the exercise of common stock warrants		16,560			46
Payment of debt issuance costs		(25	)		(75	)
Proceeds from exercise of stock options		66			—
Net cash and cash equivalents provided by financing activities		29,886			24,402
Effect of exchange rate changes		(171	)		181
Increase in cash, cash equivalents and restricted cash		15,713			13,058
Cash, cash equivalents and restricted cash, beginning of period		17,876			6,101
Cash, cash equivalents and restricted cash, end of period	$	33,589		$	19,159
Supplemental cash flow disclosure:
Cash paid for interest	$	1,328		$	1,438
Cash received for interest	$	44		$	—
Cash paid for income taxes	$	154		$	21
Cash paid for operating leases	$	185		$	417
Non-cash settlement of liability	$	510		$	151
Non-cash right-of-use assets obtained in exchange for lease obligation	$	48		$	2,037
Deemed dividend on preferred stock	$	546		$	17,378
Warrants issued in connection with debt instruments	$	—		$	67

See accompanying notes to unaudited consolidated financial statements.

6

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1—DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

The Company

BIOLASE, Inc. (“BIOLASE” and, together with its consolidated subsidiaries, the “Company”) is a leading provider of advanced laser systems for the dental industry. The Company develops, manufactures, markets, and sells laser systems that provide significant benefits for dental practitioners and their patients. The Company’s proprietary systems allow dentists, periodontists, endodontists, pediatric dentists, oral surgeons, and other dental specialists to perform a broad range of minimally invasive dental procedures, including cosmetic, restorative, and complex surgical applications. The Company’s laser systems are designed to provide clinically superior results for many types of dental procedures compared to those achieved with drills, scalpels, and other conventional instruments. Potential patient benefits include less pain, fewer shots, faster healing, decreased fear and anxiety, and fewer appointments. Potential practitioner benefits include improved patient care and the ability to perform a higher volume and wider variety of procedures and generate more patient referrals.

Basis of Presentation

The unaudited consolidated financial statements include the accounts of BIOLASE and its wholly-owned subsidiaries and have been prepared on a basis consistent with the December 31, 2020 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. The unaudited 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.

The consolidated results of operations for the three and nine months ended September 30, 2021 are not necessarily indicative of the results for the full year. The accompanying consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the fiscal year ended December 31, 2020, included in BIOLASE’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020 filed with the Securities and Exchange Commission (the “SEC”) on March 31, 2021 (the “2020 Form 10-K”).

Liquidity and Management’s Plans

The Company incurred losses from operations and used cash in operating activities for the three and nine months ended September 30, 2021 and for the years ended December 31, 2020, 2019, and 2018.

As of September 30, 2021, the Company had working capital of approximately $39.2 million. The Company’s principal sources of liquidity as of September 30, 2021 consisted of approximately $33.6 million in cash, cash equivalents, and restricted cash, $3.6 million of net accounts receivable, and unused availability under the PMB Loan (as defined below) of approximately $2.8 million. As of December 31, 2020, the Company had working capital of approximately $23.9 million, $17.9 million in cash, cash equivalents and restricted cash and $3.1 million of net accounts receivable. The increase in cash, cash equivalents, and restricted cash since December 31, 2020 was primarily due to gross proceeds of $14.4 million from the issuance of common stock and $16.6 million from warrants exercised in the nine months ended September 30, 2021. See Note 4 to the consolidated financial statements for additional information on these common stock issuances and warrant exercises.

Additional capital requirements may depend on many factors, including, among other things, the rate at which the Company’s business grows, the COVID-19 pandemic and the actions taken to contain it, 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.

COVID-19 Risk and Uncertainties and CARES Act

The COVID-19 pandemic severely impacted global economic activity, and many countries and many states in the United States reacted to the COVID-19 pandemic by instituting quarantines, mandating business and school closures and restricting travel. These mandated business closures included dental office closures worldwide, in large part, for all but emergency procedures. The ability of the Company’s salespeople to call on dental customers during these closures was greatly limited. In addition, most dental shows and workshops scheduled in 2020 were canceled. As a result of reduced sales due to the COVID-19 pandemic and actions taken to contain it, cash generated from the Company’s operations during 2020 were less than anticipated. Given the uncertainties regarding the

7

ongoing and future effects of COVID-19, there is no assurance that sales will return to normal levels during the remainder of 2021 or at any time thereafter.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act") was signed into law. The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer-side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations, increased limitations on qualified charitable contributions, and technical corrections to tax depreciation methods for qualified improvement property.

The Company analyzed the provisions of the CARES Act and determined that it will not have a material impact on its future financial condition, results of operations, or liquidity, other than approximately $1.8 million received as part of the Employee Retention Credit.

NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of these consolidated financial statements in conformity with generally accepted accounting principles in the United States of America (“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, goodwill and the ability of goodwill to be realized, revenue deferrals, 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 as discussed in the Company’s 2020 audited financial statements included in the 2020 Form 10-K. Management believes that there have been no significant changes during the nine months ended September 30, 2021 in the Company’s critical accounting policies from those disclosed in the Company’s 2020 audited financial statements included in the 2020 Form 10-K.

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 non-performance 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. Level 3 inputs are unobservable due to little or no corroborating market data.

The Company’s financial instruments, consisting of cash, cash equivalents, restricted cash, accounts receivable, accounts payable, accrued liabilities, and the SWK Loan (as defined below) as discussed in Note 9, approximate fair value because of the nature of these items.

Concentration of Credit Risk, Interest Rate Risk and Foreign Currency Exchange Rate

Financial instruments which potentially expose the Company to a concentration of credit risk consist principally of cash and cash equivalents, restricted cash, and trade accounts receivable. The Company maintains its cash and cash equivalents and restricted cash with established commercial banks. At times, balances may exceed federally insured limits. To minimize the risk associated with trade accounts receivable, management performs ongoing credit evaluations of customers’ financial condition and maintains relationships with the Company’s customers that allow management to monitor current changes in business operations so the Company can respond as needed. The Company does not, generally, require customers to provide collateral before it sells them its products. However, the Company has required certain distributors to make prepayments for significant purchases of products.

Substantially all of the Company’s revenue is denominated in U.S. dollars, including sales to international distributors. Only a small portion of its revenue and expenses is denominated in foreign currencies, principally the Euro and Indian Rupee. The Company’s foreign currency expenditures primarily consist of the cost of maintaining offices, consulting services, and employee-related costs. During the three and nine months ended September 30, 2021 and 2020, respectively, the Company did not enter into any

8

hedging contracts. Future fluctuations in the value of the U.S. dollar may affect the price competitiveness of the Company’s products outside the U.S.

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 (“ASC”).

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 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. This ASU clarifies the accounting for modifications or exchanges of freestanding equity-classified written call options (i.e. warrants) so that the transaction should be treated as an exchange of the original instrument for a new instrument. This standard is effective for fiscal years beginning after December 15, 2021 on a prospective basis, with early adoption permitted. The adoption of this update is not expected to have a material impact on the Company's consolidated financial position and results of operations.

In December 2019, the FASB issued ASU 2019-12, Income Taxes – Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes by clarifying and amending existing guidance related to the recognition of franchise tax, the evaluation of a step-up in the tax basis of goodwill and the effects of enacted changes in tax laws or rates in the effective tax rate computation, among other clarifications. ASU 2019-12 is effective for annual periods beginning after December 15, 2020, including interim periods within those fiscal years, and early adoption is permitted. The Company adopted this guidance effective January 1, 2021, and the adoption of this standard did not have a material impact on its consolidated financial statements.

In August 2020, the FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40). This ASU reduces the number of accounting models for convertible debt instruments and convertible preferred stock and amends the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions. In addition, this ASU improves and amends the related earnings per share guidance. This standard is effective for the Company beginning on January 1, 2022, with early adoption permitted only in the first quarter of 2021. Adoption is either a modified retrospective method or a fully retrospective method of transition. The Company is currently assessing the impact the new guidance will have on its consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The standard’s main goal is to improve financial reporting by requiring earlier recognition of credit losses on financing receivables and other financial assets in scope and to replace the incurred loss impairment methodology under current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The Company will be required to use a forward-looking expected credit loss model for accounts receivables, loans, and other financial instruments. Credit losses relating to available-for-sale debt securities will also be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. The standard will be effective for the Company beginning January 1, 2023, with early adoption permitted beginning January 1, 2019. The Company is currently assessing the impact that adopting this new accounting standard will have on its consolidated financial statements. 

NOTE 3—REVENUE RECOGNITION

Contracts with Customers

Revenue for sales of products and services is derived from contracts with customers. The products and services promised in customer contracts include delivery of laser systems, imaging systems, and consumables as well as certain ancillary services such as training and extended warranties. Contracts with each customer generally state the terms of the sale, including the description, quantity and price of each product or service. Payment terms are stated in the contract and vary according to the arrangement. Because the customer typically agrees to a stated rate and price in the contract that does not vary over the life of the contract, the Company’s contracts do not contain variable consideration. The Company establishes a provision for estimated warranty expense.

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Performance Obligations

At contract inception, the Company assesses the products and services promised in its contracts with customers. The Company then identifies performance obligations to transfer distinct products or services to the customers. In order to identify performance obligations, the Company considers all of the products or services promised in contracts regardless of whether they are explicitly stated or are implied by customary business practices.

Revenue from products and services transferred to customers at a single point in time accounted for 88% of net revenue for the three and nine months ended September 30, 2021 and 86% and 78% of net revenue for the three and nine months ended September 30, 2020, respectively. The majority of the Company’s revenue recognized at a point in time is for the sale of laser systems and consumables. Revenue from these contracts is recognized when the customer is able to direct the use of and obtain substantially all of the benefits from the product which generally coincides with title transfer during the shipping process.

Revenue from services transferred to customers over time accounted for 12% of net revenue for the three and nine months ended September 30, 2021 and 14% and 22% of net revenue for the three and nine months ended September 30, 2020, respectively. The majority of the Company’s revenue that is recognized over time relates to product training and extended warranties. Deferred revenue attributable to undelivered elements, which primarily consists of product training, totaled approximately $1.0 million and $0.7 million as of September 30, 2021 and December 31, 2020, respectively.

Transaction Price Allocation

The transaction price for a contract is allocated to each distinct performance obligation and recognized as revenue when, or as, each performance obligation is satisfied. For contracts with multiple performance obligations, the Company allocates the contract’s transaction price to each performance obligation using the best estimate of the standalone selling price of each distinct good or service in a contract. The primary method used to estimate standalone selling price is the observable price when the good or service is sold separately in similar circumstances and to similar customers.

Significant Judgments

Revenue is recorded for extended warranties over time as the customer benefits from the warranty coverage. This revenue will be recognized equally throughout the contract period as the customer receives benefits from the Company's promise to provide such services. Revenue is recorded for product training as the customer attends a training program or upon the expiration of the obligation, which is generally after nine months.

The Company also has contracts that include both the product sales and product training as performance obligations. In those cases, the Company records revenue for product sales at the point in time when the product has been shipped. The customer obtains control of the product when it is shipped, as all shipments are made FOB shipping point, and after the customer selects its shipping method and pays all shipping costs and insurance. The Company has concluded that control is transferred to the customer upon shipment.

Accounts Receivable

Accounts receivable are stated at estimated net realizable value. The allowance for doubtful accounts is based on an analysis of customer accounts and the Company’s historical experience with accounts receivable write-offs.

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Contract Liabilities

The Company performs its obligations under a contract with a customer by transferring products and/or services in exchange for consideration from the customer. The Company typically invoices its customers as soon as control of an asset is transferred and a receivable for the Company is established. The Company, however, recognizes a contract liability when a customer prepays for goods and/or services and the Company has not transferred control of the goods and/or services. The opening and closing balances of the Company’s contract liabilities are as follows (in thousands):

	September 30,			December 31,
	2021			2020
Undelivered elements (training, installation, product    and support services)	$	1,015		$	670
Extended warranty contracts		1,557			1,609
Total deferred revenue		2,572			2,279
Less: long-term portion of deferred revenue		(294	)		(374	)
Deferred revenue — current	$	2,278		$	1,905

The balance of contract assets was immaterial as the Company did not have a significant amount of uninvoiced receivables at September 30, 2021 and December 31, 2020.

The amount of revenue recognized during the nine months ended September 30, 2021 and 2020 that was included in the opening contract liability balance related to undelivered elements was $0.2 million and $0.3 million, respectively. The amounts related to extended warranty contracts was $1.1 million and $2.0 million, for the nine months ended September 30, 2021 and 2020, respectively.

Disaggregation of Revenue

The Company disaggregates revenue from contracts with customers into geographical regions and by the timing of when goods and services are transferred. The Company determined that disaggregating revenue into these categories depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by regional economic factors.

The Company’s revenues related to the following geographic areas were as follows (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
United States	$	5,939	$	4,755	$	17,024	$	10,079
International		3,592		1,784		9,756		4,181
Total net revenue	$	9,531	$	6,539	$	26,780	$	14,260

Information regarding revenues disaggregated by the timing of when goods and services are transferred is as follows (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
Revenue recognized over time	$	1,116	$	898	$	3,269	$	3,143
Revenue recognized at a point in time		8,415		5,641		23,511		11,117
Net revenue	$	9,531	$	6,539	$	26,780	$	14,260

The Company’s sales by end market were as follows (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
End-customer	$	5,939	$	5,087	$	17,024	$	9,845
Distributors		3,592		1,452		9,756		4,415
Net revenue	$	9,531	$	6,539	$	26,780	$	14,260

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Shipping and Handling Costs and Revenues

Shipping and freight costs are treated as fulfillment costs. For shipments to end-customers, the customer bears the shipping and freight costs and has control of the product upon shipment. For shipments to distributors, the distributor bears the shipping and freight costs, including insurance, tariffs and other import/export costs.

NOTE 4—REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY

BIOLASE's board of directors (the "Board"), without further stockholder authorization, may issue from time to time up to 1,000,000 shares of the Company’s preferred stock. Of the 1,000,000 shares of preferred stock, 69,565 shares are designated as Series E Participating Convertible Preferred Stock, par value $0.001 per share (“Series E Preferred Stock”), and 18,000 shares are designated as Series F Convertible Preferred Stock, par value $0.001 per share (“Series F Preferred Stock”).

Common Stock

On February 10, 2021, BIOLASE issued and sold in an underwritten bought deal offering an aggregate of 14,000,000 shares of common stock at a price of $1.03 per share less underwriting discounts and commissions (the "Equity Offering"). The Company received gross proceeds of approximately $14.4 million before deducting underwriting discounts and commissions and estimated offering expenses of $1.1 million.

Preferred Stock

Series F Convertible Preferred Stock

On July 23, 2020, the Company consummated the sale of an aggregate of 18,000 shares of Series F Preferred Stock and 45,000,000 warrants (the “July 2020 Warrants”), with each warrant exercisable for one share of BIOLASE common stock, through a registered rights offering the Company completed on July 22, 2020 (the “Rights Offering”). Each share of Series F Preferred Stock is convertible at the Company’s option at any time on or after July 22, 2021 or at the option of the holder at any time, into the number of shares of BIOLASE common stock determined by dividing the $1,000 stated value per share of the Series F Preferred Stock by a conversion price of $0.40 per share. Each share of Series F Preferred Stock is convertible into 2,500 shares of common stock, and each July 2020 Warrant entitles the holder thereof to purchase one share BIOLASE common stock at a conversion price of $0.40 per share.

In accordance with applicable accounting standards, the $18.0 million gross proceeds from the Rights Offering were allocated to the Series F Preferred Stock and the July 2020 Warrants in the amount of $2.7 million and $15.3 million, respectively. The allocation was based on the fair value of the July 2020 Warrants of $15.3 million as of the commitment date, with the residual proceeds of $2.7 million allocated to the Series F Preferred Stock.

The Series F Preferred Stock contained a beneficial conversion feature which resulted in a deemed dividend to preferred stockholders of approximately $2.7 million, upon immediate accretion. Additionally, the July 2020 Warrants were recognized as a discount to the Series F Preferred Stock, with the conversion of approximately 18,000 and 17,000 Series F Preferred Stock to common stock as of September 30, 2021 and December 31, 2020 respectively. Upon conversion, this discount was accreted and also recognized as a deemed dividend to preferred stockholders in the amount of $0.5 million and $14.7 million for the nine months ended September 30, 2021 and the year ended December 31, 2020, respectively.

Approximately 251 and 882 shares of Series F Preferred Stock remained outstanding as of September 30, 2021 and December 31, 2020, respectively.

Redeemable Preferred Stock

Series E Participating Convertible Preferred Stock

As of September 30, 2021 and December 31, 2020, there were no shares of Series E Preferred Stock issued and outstanding.

Stock-Based Compensation

2002 Stock Incentive 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, October 30, 2014, April 27, 2015, and May 6, 2017, the “2002 Plan”) was replaced by the 2018 Plan (as defined below) with respect to future equity awards. Persons eligible to receive awards under the 2002 Plan included officers, employees, directors of the Company, and consultants. As of September 30, 2021, a total of 3,110,000 shares have been authorized for issuance under the

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2002 Plan, of which approximately 1,036,00 shares of common stock have been issued pursuant to options that were exercised and restricted stock units ("RSUs") that were vested, approximately 879,000 shares of common stock have been reserved for options that are outstanding, and no shares of common stock remain available for future grants.

2018 Stock Incentive Plan

At the 2018 annual meeting of stockholders, the Company’s stockholders approved the 2018 Long-Term Incentive Plan (as amended, the “2018 Plan”) which was amended by Amendment No. 1 to the 2018 Plan, approved by the Company’s stockholders at a special meeting on September 21, 2018, Amendment No. 2 to the 2018 Plan, as approved by the Company’s stockholders on May 15, 2019, Amendment No. 3 to the 2018 Plan, as approved by the Company’s stockholders on May 13, 2020, and Amendment No. 4 to the 2018 Plan, as approved by the Company's stockholders on June 11, 2021. Although the increase of 24,700,000 in the number of shares of BIOLASE common stock available for issuance under the 2018 Plan was approved by the stockholders on June 11, 2021, the proposal to amend BIOLASE's certificate of incorporation to increase the number of authorized shares of BIOLASE common stock was not approved by stockholders at the meeting. Therefore, the shares available for issuance under the 2018 Plan only increased by the number of remaining shares authorized for issuance. The purposes of the 2018 Plan are (i) to align the interests of the Company’s stockholders and recipients of awards under the 2018 Plan by increasing the proprietary interest of such recipients in the Company’s growth and success; (ii) to advance the interests of the Company by attracting and retaining non-employee directors, officers, other employees, consultants, independent contractors, and agents; and (iii) to motivate such persons to act in the long-term best interests of the Company and its stockholders.

Under the terms of the 2018 Plan, approximately 36,921,000 shares of BIOLASE common stock are available for issuance; however, because the increase in the number of authorized shares under the certificate of incorporation was not approved by stockholders at the 2021 annual meeting, only approximately 2.4 million shares are available for future grants as of the date of these unaudited consolidated financial statements. As of September 30, 2021, a total of approximately 4,744,000 shares of the Company’s common stock have been reserved for issuance upon the exercise of outstanding options and or settlement of unvested RSUs under the 2018 Plan.

The Company recognized stock-based compensation expense of $0.2 million and $1.5 million for the three and nine months ended September 30, 2021, respectively, and $0.8 million and $2.4 million for the three and nine months ended September 30, 2020, respectively. As of September 30, 2021 and 2020, the Company had approximately $0.8 million and $1.4 million, respectively, of total unrecognized compensation expense, net of estimated forfeitures, related to unvested share-based compensation arrangements. The Company expects that expense to be recognized over a weighted-average period of 1.5 years. As of September 30, 2021 and December 31, 2020, $0.0 million and $0.9 million of the total stock compensation cost related to performance-based awards was recognized as a liability.

The following table summarizes the income statement classification of compensation expense associated with share-based payments (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
Cost of revenue	$	25	$	79	$	138	$	208
Sales and marketing		62		183		291		571
General and administrative		61		517		777		1,424
Engineering and development		44		68		282		164
Total	$	192	$	847	$	1,488	$	2,367

The stock option fair values were estimated using the Black-Scholes option-pricing model with the following assumptions:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2021			2020			2021			2020
Expected term (years)		6.1		N/A				6.1			5.5
Volatility		111	%		—	%		111	%		103	%
Annual dividend per share	N/A			N/A			N/A			N/A
Risk-free interest rate		0.98	%		—	%		0.86	%		0.37	%

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A summary of option activity for the nine months ended September 30, 2021 is as follows (in thousands, except per share data):

				Weighted		Weighted Average Remaining
				Average		Contractual		Aggregate
	Shares			Exercise Price		Term (Years)		Intrinsic Value(1)
Options outstanding at December 31, 2020		2,398		$	2.96		7.2	$	53
Granted at fair market value		50		$	0.87
Exercised		(176	)	$	0.38
Forfeited, cancelled, or expired		(102	)	$	7.78
Options outstanding at September 30, 2021		2,170		$	2.89		6.6	$	286
Options exercisable at September 30, 2021		2,052		$	3.00		6.5	$	277
Vested options expired during the period    ended September 30, 2021		91		$	8.48

(1)The intrinsic value calculation does not include negative values, which can occur when the fair market value on the reporting date is less than the exercise price of the award.

A summary of unvested stock option activity for the nine months ended September 30, 2021 is as follows (in thousands, except per share data):

				Weighted
				Average Grant
	Shares			Date Fair Value
Unvested options at December 31, 2020		1,323		$	0.34
Granted		50		$	0.72
Vested		(1,256	)	$	0.31
Unvested options at September 30, 2021		117		$	0.73

Fair value disclosures related to grants, exercises and vested options are as follows (in thousands, except per share amounts):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
Proceeds from stock options exercised	$	66	$	—	$	66	$	—
Tax benefit related to stock options exercised (1)	N/A		N/A		N/A		N/A
Intrinsic value of stock options exercised (2)	$	42	$	—	$	42	$	—
Weighted-average fair value of options granted    during period	$	0.49	$	—	$	0.72	$	0.29
Total fair value of stock options vested during the period	$	8	$	34	$	395	$	188

(1)Excess tax benefits received related to stock option exercises are presented as operating 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 exercise price of the options.

Restricted Stock Units

During the nine months ended September 30, 2021, the Company granted approximately 2.8 million RSUs and the Company canceled approximately 0.1 million RSUs with performance-based vesting due to non-achievement of the performance targets.

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A summary of unvested RSU activity for the nine months ended September 30, 2021 is as follows (in thousands, except per share amounts):

				Weighted
				Average Grant
	Shares			Date Fair Value
Unvested RSUs at December 31, 2020		3,672		$	0.66
Granted		2,808		$	0.83
Vested		(3,772	)	$	0.69
Forfeited or cancelled		(601	)	$	1.33
Unvested RSUs at September 30, 2021		2,107		$	0.63

Warrants

The Company issues warrants to acquire shares of BIOLASE common stock as approved by the Board. During the first quarter of 2021, the Company received proceeds of $15.0 million from warrants exercised in 2021 and $1.5 million from warrants exercised at the end of the fourth quarter of 2020, which was a receivable included in other current assets as of December 31, 2020.

A summary of warrant activity for the nine months ended September 30, 2021 is as follows (in thousands, except exercise price amounts):

				Weighted
				Average
	Shares			Exercise Price
Warrants outstanding, December 31, 2020		54,052		$	0.62
Exercised		(35,790	)	$	0.43
Forfeited, cancelled, or expired		(407	)	$	10.00
Warrants outstanding at September 30, 2021		17,855		$	0.80
Warrants exercisable at September 30, 2021		17,855		$	0.80
Vested warrants expired during the period    ended September 30, 2021		(407	)	$	10.00

See Note 9 for information on the Western Alliance Warrants, the SWK Warrants, and the DPG Warrants (each as defined below).

Phantom Awards and Stock Appreciation Rights

During the nine months ended September 30, 2021, the Company issued 10.1 million phantom RSUs in lieu of stock-settled RSUs historically granted for leadership bonuses and non-employee director service. The phantom RSUs have either time-based or performance-based vesting conditions and will be settled in cash in 2024 with the Company's option to settle the award in BIOLASE common stock at the sole discretion of the Board. These phantom RSUs are included as a component of long-term liability on the consolidated balance sheet and are not considered stock-based compensation due to the cash-settlement feature of the award. If at any time the determination is made to settle the phantom RSUs in BIOLASE common stock, the awards will be included as a component of additional paid-in capital on the consolidated balance sheet. The expense recognized during the three and nine months ended September 30, 2021 was $0.2 million.

During the nine months ended September 30, 2021, the Company issued 0.7 million stock appreciation rights ("SARs") in lieu of stock-settled RSUs historically granted for non-employee director service. Upon exercise, the SARs will be settled in cash with the Company's option to settle in BIOLASE common stock at the sole discretion of the Board. These SARS are included in accrued liabilities on the consolidated balance sheet and are not considered stock-based compensation due to the cash-settlement feature of the award. If at any time the determination is made to settle in BIOLASE common stock, the awards will be included as a component of additional paid-in capital on the consolidated balance sheet. The expense recognized during the three and nine months ended September 30, 2021 was $0.1 million and $0.2 million, respectively.

Net Loss Per Share – Basic and Diluted

Basic net loss per share is computed by dividing net loss attributable to common stockholders by the weighted-average number of shares of BIOLASE common stock outstanding for the period. In computing diluted net loss per share, the weighted average

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number of shares of common stock outstanding is adjusted to reflect the effect of potentially dilutive securities. Net income (loss) is adjusted for any deemed dividends to preferred stockholders to compute net income attributable to common stockholders.

Outstanding stock options, RSUs, and warrants to purchase approximately 24.0 million and 67.2 million shares were not included in the calculation of diluted loss per share amounts for the periods ended September 30, 2021 and September 30, 2020, respectively, as their effect would have been anti-dilutive. Also excluded in the calculation of diluted loss per share amount for the three and nine months ended September 30, 2021 are the 627,500 shares of BIOLASE common stock issuable upon conversion of the 251 shares of Series F Preferred Stock outstanding as of September 30, 2021.

NOTE 5—INVENTORY

Inventory is valued at the lower of cost or net realizable value and is comprised of the following (in thousands):

	September 30,		December 31,
	2021		2020
Raw materials	$	5,122	$	3,721
Work-in-process		1,784		1,158
Finished goods		7,156		6,278
Inventory	$	14,062	$	11,157

Inventory has been reduced by estimates for excess and obsolete amounts totaling $0.7 million as of September 30, 2021 and December 31, 2020.

NOTE 6—PROPERTY, PLANT, AND EQUIPMENT

Property, plant, and equipment, net is comprised of the following (in thousands):

	September 30,			December 31,
	2021			2020
Building	$	215		$	229
Leasehold improvements		90			52
Equipment and computers		7,876			7,477
Furniture and fixtures		471			465
Construction in progress		—			46
Total		8,652			8,269
Accumulated depreciation and amortization		(7,931	)		(7,664	)
Property, plant, and equipment, net before land		721			605
Land		168			177
Property, plant, and equipment, net	$	889		$	782

Depreciation and amortization expense related to property, plant, and equipment totaled $0.1 million and $0.3 million for the three and nine months ended September 30, 2021 and $0.1 million and $0.5 million for the three and nine months ended September 30, 2020, respectively.

NOTE 7—INTANGIBLE ASSETS AND GOODWILL

The Company conducted its annual impairment test of goodwill as of December 31, 2020 and determined that there was no impairment. The Company also tests its intangible assets and goodwill between the annual impairment tests 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 or significant economic slowdowns, are present. No events have occurred since December 31, 2020 through the date of these unaudited consolidated financial statements that would trigger further impairment testing of the Company’s intangible assets and goodwill.

As of September 30, 2021 and December 31, 2020, the Company had goodwill of $2.9 million. As of September 30, 2021 and December 31, 2020, all intangible assets have been fully amortized and no amortization expense was recognized during the three and nine months ended September 30, 2021 and 2020.

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NOTE 8—ACCRUED LIABILITIES

Accrued liabilities are comprised of the following (in thousands):

	September 30,		December 31,
	2021		2020
Payroll and benefits	$	3,017	$	3,552
Settlement accrual		680		—
Warranty accrual, current portion		545		748
Lease liability		404		305
Taxes		357		165
Accrued professional services		283		281
Accrued insurance premium		—		885
Other		896		731
Accrued liabilities	$	6,182	$	6,667

The CARES Act allows employers to defer the deposit and payment of the employer's share of Social Security taxes through December 31, 2020. Under the CARES Act, the Company deferred $0.4 million as of September 30, 2021. The deferred liability is included in accrued payroll and benefits.

As of September 30, 2021, a settlement accrual liability of $0.7 million related to the CAO Settlement Agreement (as defined below) was included in current accrued liabilities. See Note 11 for additional information.

Changes in the initial product warranty accrual and the expenses incurred under the Company’s initial and extended warranties are included within accrued liabilities and were as follows (in thousands):

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2021			2020			2021			2020
Balance, beginning of period	$	551		$	853		$	1,132		$	1,110
Provision for estimated warranty cost		832			345			1,129			575
Warranty expenditures		(366	)		(344	)		(1,244	)		(831	)
Balance, end of period		1,017			854			1,017			854
Less: long-term portion of warranty accrual		472			204			472			204
Current portion of warranty accrual	$	545		$	650		$	545		$	650

The Company's Waterlase laser systems sold domestically are covered by a warranty against defects in material and workmanship for a period of up to one year from the date of sale to the end-user by the Company or a distributor. The Company's diode systems sold domestically are covered by a warranty against defects in material and workmanship for a period of up to two years from the date of sale to the end-user by the Company or a distributor. Waterlase systems and diode systems sold internationally are covered by a warranty against defects in material and workmanship for a period of up to 28 months from date of sale to the international distributor. The Company's laser systems warranty covers parts and service for sales in its North American territories and parts only for international distributor sales.

In North America and select international locations, the Company sells extended warranty contracts to its laser systems end users that cover the period after the expiration of the Company's standard warranty coverage for its laser systems. Extended warranty coverage provided under the Company's service contracts varies by the type of system and the level of service desired by the customer. Products or accessories remanufactured, refurbished, or sold by unauthorized parties, voids all warranties in place for such products and exempts the Company from liability issues relating to the use of such products. The Company distributes extended warranties on certain imaging products, including its digital radiography products. However, all imaging products that the Company distributes are initially covered by manufacturer’s warranties.

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NOTE 9—DEBT

The following table presents the details of the principal outstanding and unamortized discount (in thousands):

	September 30,			December 31,
	2021			2020
SWK Loan	$	14,300		$	14,300
PPP Loan		—			2,980
EIDL Loan		150			150
Discount and debt issuance costs on SWK Loan		(936	)		(1,244	)
Total		13,514			16,186
Current term loans, net of discount		(1,400	)		—
Non current term loans, net of discount	$	12,114		$	16,186

The Company recognized approximately $0.6 million and $1.7 million in interest expense for the three and nine months ended September 30, 2021 and $0.6 million and $1.8 million in interest expense for the three and nine months ended September 30, 2020, respectively. The weighted-average interest rate as of September 30, 2021 was 12.25%.

The future minimum principal and interest payments as of September 30, 2021 are as follows (in thousands):

	Principal		Interest (1)
Remainder of 2021	$	—	$	443
2022		2,100		1,716
2023		2,800		1,393
2024		9,400		1,899
2025		1		8
2026 and thereafter		149		88
Total future payments	$	14,450	$	5,547
(1) Estimated using London Interbank Bank Offered Rate (“LIBOR”) as of September 30, 2021

Lines of Credit

Pacific Mercantile Bank

On October 28, 2019, the Company entered into a loan and security agreement (the “Loan Agreement”) with Pacific Mercantile Bank, as lender (“PMB”), which provides for a revolving line of credit (the “PMB Loan”) in a maximum principal amount not to exceed the lesser of (i) $3 million or (ii) the sum of 90% of the Eligible Accounts (as defined in the Loan Agreement) plus 75% of the Eligible Inventory (as defined in the Loan Agreement, and subject to certain limitations set forth therein); provided that the maximum principal amount of the PMB Loan may be reduced from time to time in PMB’s good faith business judgment as set forth in the Loan Agreement. Borrowings under the PMB Loan may be used for working capital. The PMB Loan matures on October 28, 2021, unless earlier terminated.

The Company’s obligations under the PMB Loan are secured by a security interest in substantially all of the Company’s property. No borrowings may be made under the PMB Loan Agreement unless and until Exim Bank agrees to guarantee the PMB Loan and the Company has entered into a borrower agreement with Exim Bank.

Borrowings under the PMB Loan bear interest at a daily rate equal to the prime rate published in the Wall Street Journal, plus 1.5% per annum; provided, that the interest rate in effect on any day shall not be less than 6.0% per annum. Additionally, the Company is required to pay an initial and annual fee of $52,500 to Exim Bank.

The PMB Loan Agreement requires the Company to maintain unrestricted cash at PMB plus unused availability under the PMB Loan in an amount equal to at least the Burn Rate. “Burn Rate” means the Company’s net profit/net loss plus depreciation plus amortization plus stock-based compensation plus the change in the accounts receivable reserve, measured on a trailing three-month basis. In addition, the PMB Loan Agreement contains customary affirmative and negative covenants for financings of its type (subject to customary exceptions).

As of September 30, 2021 and December 31, 2020, the Company had no borrowings outstanding and unused availability under the PMB Loan of approximately $2.8 million and $2.3 million, respectively.

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Term Loan

On November 9, 2018, the Company entered into a five-year secured Credit Agreement (the “Credit Agreement”) with SWK Funding LLC (“SWK”), pursuant to which the Company has borrowed $14.3 million (“SWK Loan”) as of September 30, 2021. The Company’s obligations under the Credit Agreement are secured by substantially all of the Company’s assets. Under the terms of the Credit Agreement and subsequent amendments as discussed in the Company’s 2020 Form 10-K, repayment of the SWK Loan is interest-only through the second quarter of 2022, paid quarterly with the option to extend the interest-only period. Principal repayments begin in the second quarter of 2022 and will be approximately $0.7 million quarterly until the SWK Loan matures in the second quarter of 2024. The loan bears interest of 10% plus LIBOR floor of 2.25% or another index that approximates LIBOR as close as possible if and when LIBOR no longer exists.

In light of the Company's increase in working capital from the Equity Offering and cash received from warrants exercised, the Company entered into the Seventh Amendment to the Credit Agreement (the “Seventh Amendment”) with SWK on February 24, 2021, which provides for adjusted minimum aggregate revenue and EBITDA requirements at the end of certain periods, to the extent that the Company's liquid assets are less than $15 million. While the Company's liquid assets are at or above $15 million, no financial maintenance covenants are applicable.

For the Seventh Amendment, the Company paid an incremental amendment fee of $25,000, which is being amortized over the remaining life of the loan as of the date of the amendment.

As of September 30, 2021, the Company was in compliance with debt covenants of the Credit Agreement.

Paycheck Protection Program Loan

On April 14, 2020, the Company was granted a loan (the “PPP Loan”) under the Paycheck Protection Program from PMB in the aggregate amount of $2,980,000, pursuant to the Paycheck Protection Program under the CARES Act.

The PPP Loan, which was in the form of a note dated April 13, 2020 issued by BIOLASE, matures on April 13, 2022 and bears interest at a rate of 1.0% per annum. Interest is payable monthly commencing on November 1, 2020. The note may be prepaid at any time prior to maturity with no prepayment penalties. Funds from the PPP Loan may only be used for payroll costs, costs used to continue group health care benefits, mortgage payments, rent, utilities, and interest on other debt obligations incurred before February 15, 2020. The Company recorded the principal amount of approximately $3.0 million due on the PPP Loan in non-current term loans in the consolidated balance sheet as of December 31, 2020. Interest on the PPP Loan was not material. The Company believes it used the entire PPP Loan amount for qualifying expenses. Under the terms of the PPP, certain amounts of the PPP Loan may be forgiven if they are used for qualifying expenses as described in the CARES Act.

In July 2020, the Company amended the provisions of the PPP Loan. The amendment modifies the original payment deferment period from six months to the date that the United States Small Business Administration (“SBA") remits the Company’s loan forgiveness to PMB or if no forgiveness is requested to ten months after the end of the 24-week measurement period. The amendment also increased the amount of non-payroll costs eligible for loan forgiveness from 25% to 40%. During 2020, the Company requested forgiveness in accordance with the application requirements.

In June 2021, the Company received a reply to its request, and the PPP Loan along with all accrued interest was forgiven by the SBA. The amount of loan forgiveness is presented as a component of non-operating (gain) loss on the Company's consolidated statement of operations. The SBA may undertake a review of a loan of any size during the six-year period following forgiveness of the loan. The review may include the loan forgiveness application, as well as whether the Company received the proper loan amount. There can be no assurance as to the result of any such SBA review.

EIDL Loan

On May 22, 2020, the Company executed the standard loan documents required for securing a loan (the “EIDL Loan”) from the SBA under its Economic Injury Disaster Loan assistance program in light of the impact of the COVID-19 pandemic on the Company’s business. The principal amount of the EIDL Loan is $150,000, with proceeds to be used for working capital purposes. Interest on the EIDL Loan accrues at the rate of 3.75%, per annum and installment payments, including principal and interest, are due monthly beginning in July 2021 and are payable through July 2050. In April 2021, the SBA announced that it was extending the first payment due date for all loans until 2022, or 24 months from the loan execution date. The Company is obligated to begin making payments on this EIDL Loan starting in May 2022.

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Western Alliance Warrants

On March 6, 2018, the Company issued to Western Alliance warrants (the “Original Western Alliance Warrants”) to purchase up to the number of shares of common stock equal to $120,000 divided by the applicable exercise price at the time such warrants are exercised. The Original Western Alliance Warrants are fully vested and exercisable. The Original Western Alliance Warrants may be exercised with a cash payment from Western Alliance, or, in lieu of a cash payment, Western Alliance may convert the warrants into a number of shares, in whole or in part. The initial exercise price of the warrants was $2.35 per share. On September 27, 2018, the Company entered into the Second Modification Agreement to amend the Original Business Financing Agreement. In connection with the Second Modification Agreement, the Original Western Alliance Warrants were terminated, and the Company issued new warrants (the “Western Alliance Warrants”) to purchase up to the number of shares of common stock equal to $120,000 divided by the exercise price of $2.13, which was the closing price of the Company’s common stock on September 27, 2018. The Western Alliance Warrants are immediately exercisable and expire on September 27, 2028. These warrants contain down-round features that require the Company to adjust the exercise price proportionately should the Company issue shares at a price per share less than the exercise price. The sale of common stock in the second quarter of 2020 triggered an adjustment to the exercise price to approximately $0.60 per share. The impact of the adjustment to the exercise price was not material.

SWK Warrants

In connection with the Credit Agreement, on November 9, 2018, the Company issued to SWK warrants (the “SWK Warrants”) to purchase up to 372,023 shares of BIOLASE common stock. The SWK Warrants were immediately exercisable and expire on November 9, 2026. The initial exercise price of the SWK Warrants was $1.34, which was the average closing price of BIOLASE common stock for the ten trading days immediately preceding November 9, 2018. These warrants contain down-round features that require the Company to adjust the exercise price proportionately should the Company issue shares at a price per share less than the exercise price. The fair value of the SWK Warrants was estimated using the Black-Scholes option-pricing model with the following assumptions: expected term of 8 years; volatility of 81.79%; annual dividend per share of $0.00; and risk-free interest rate of 3.13%; and resulted in an estimated fair value of $0.4 million.

In November 2019, these warrants were consolidated and the exercise price was adjusted to $1.00, and in March 2020, the exercise price was adjusted a second time to $0.49. The impact of both reprice events was de minimis to the consolidated financial statements. In connection with the Fifth Amendment, the Company entered into a Third Amendment to the SWK Warrant Agreement. Under this amendment, the Company granted to SWK 63,779 additional common stock warrants at an exercise price of approximately $0.39. All other terms and conditions to the additional warrants were the same as those previously granted. The Company also revised the exercise price of the 487,198 common stock warrants held by SWK to $0.39. The Company measured the fair value of the 63,779 warrants granted using the Black-Scholes. The fair value of the additional warrants and the aggregate impact of the exercise price adjustments in previous amendments to the Warrant Agreement were less than $0.1 million and not material to the consolidated financial statements. Due to the repricing that occurred in the second quarter of 2020, the down round features of these warrants was not triggered by the Company’s June 2020 sale of common stock.

DPG Warrants

In connection with the SWK Loan, the Company paid a finder’s fee to Deal Partners Group ("DPG") of $0.4 million cash and issued warrants to purchase up to 279,851 shares of common stock (the “DPG Warrants”). The DPG Warrants were issued on November 14, 2018, were exercisable immediately, and expire on November 9, 2026. The initial exercise price of the DPG Warrants was $1.34 which was the average closing price of the Company’s common stock for the ten trading days immediately preceding November 9, 2018. These warrants contain down-round features that require the Company to adjust the exercise price proportionately should the Company issue shares at a price per share less than the exercise price. The fair value of the DPG Warrants of $0.3 million was estimated using the Black-Scholes option pricing model with the following assumptions: expected term of 8 years; volatility of 81.79%; annual dividend per share of $0.00; and risk-free interest rate of 3.13%. In May 2019 the Company issued 149,727 warrants to purchase common stock at a weighted average exercise price of $2.17 to SWK and DPG.

In November 2019, the exercise price of the DPG Warrants issued on November 14, 2018 was adjusted from $1.34 per share to $0.88 per share and the exercise price of the DPG Warrants issued on May 7, 2019 was adjusted from $2.17 per share to $1.42 per share. The impact of the reprice was de minimis to the unaudited consolidated financial statements. The June 2020 sale of common stock triggered the down round features of these warrants, and in August 2020, the Company adjusted the exercise price of these warrants to $0.62 and $0.38 per share. The impact of this reprice was not material.

The value of both the SWK Warrants and the DPG Warrants was recognized as a discount on the SWK Loan and is being amortized on a straight-line basis which approximates the effective-interest method, over the loan term of five years. Additionally, based on the adoption of ASU 2017-11 in the fourth quarter of 2018, these warrants are classified as equity in the consolidated balance sheet as of September 30, 2021 and December 31, 2020.

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NOTE 10—LEASES

The Company enters into operating leases primarily for real estate, office equipment, and fleet vehicles. Lease terms generally range from one to five years, and often include options to renew for one year. The Company leases its 11,000 square foot corporate headquarters pursuant to a lease that expires on December 31, 2025 and leases a manufacturing facility located in Corona, California, which expires on June 30, 2025. The Company also leases additional office space and certain office equipment under various operating lease arrangements.

On January 22, 2020, the Company entered into a five-year real property lease agreement for an approximately 11,000 square foot facility in Corona, California and moved its manufacturing operations. The lease commenced on July 1, 2020.

On February 4, 2020, the Company also entered into a 66-month real property lease agreement for office space of approximately 11,000 square feet of office space in Foothill Ranch, California. The lease commenced on July 1, 2020.

Information related to the Company’s right-of-use assets and related liabilities were as follows (in thousands):

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2021			2020			2021			2020
Cash paid for operating lease liabilities	$	62		$	87		$	185		$	417
Right-of-use assets obtained in exchange for new operating    lease obligations	$	-		$	1,440			48		$	2,037
Weighted-average remaining lease term	3.8 years			4.9 years			3.8 years			5.2 years
Weighted-average discount rate		12.3	%		12.3	%		12.3	%		12.3	%

Lease expense consists of payments for real property, office copiers, and IT equipment. The Company recognizes payments for non-lease components such as common area maintenance in the period incurred. As of September 30, 2021, the Company had no significant leases that had not commenced.

The Company allocates lease cost amongst lease and non-lease components. The Company excludes short-term leases (those with lease terms of less than one year at inception) from the measurement of lease liabilities or right-of-use assets.

Maturities of lease liabilities as of September 30, 2021 for leases that have commenced are as follows (in thousands):

	September 30,
2022	$	624
2023		621
2024		613
2025		519
2026 and thereafter		121
Total future minimum lease obligations		2,498
Less imputed interest		(537	)
Total lease liabilities	$	1,961
Current operating lease liabilities, included in    accrued liabilities	$	404
Non current lease liabilities		1,557
Total lease liabilities	$	1,961

As of September 30, 2021, right-of-use assets were $1.8 million and lease liabilities were $2.0 million.

Rent expense totaled $0.2 million and $0.6 million for the three and nine months ended September 30, 2021 and $0.1 million and $0.5 million for the three and nine months ended September 30, 2020.

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Future minimum rental commitments under lease agreements, as of September 30, 2021, with non-cancelable terms greater than one year for each of the years ending December 31 are as follows (in thousands):

	Year Ended
	December 31,
Remainder of 2021	$	166
2022		610
2023		624
2024		609
2025 and thereafter		489
Total future minimum lease obligations		2,498
Less imputed interest		(537	)
Total lease liabilities	$	1,961

NOTE 11—COMMITMENTS AND CONTINGENCIES

On April 24, 2012, CAO Group, Inc. (“CAO”) filed a lawsuit against BIOLASE in the District of Utah alleging that BIOLASE’s ezlase dental laser infringes on U.S. Patent No. 7,485,116 (the “116 Patent”). On September 9, 2012, CAO amended its complaint, adding 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 BIOLASE issued on April 30, 2012, which CAO claims contained false statements that are disparaging to CAO and its diode product. The amended complaint sought injunctive relief, treble damages, attorneys’ fees, punitive damages, and interest. Until January 24, 2018, this lawsuit was stayed in connection with United States Patent and Trademark Office proceedings relating to the 116 Patent, which proceedings ultimately culminated in a January 27, 2017 decision by the United States Court of Appeals for the Federal Circuit, affirming the findings of the Patent Trial and Appeal Board, which were generally favorable to the Company. On January 25, 2018, CAO moved for leave to file a second amended complaint to add certain claims, which filing the Company did not oppose.

On January 23, 2018, CAO filed a lawsuit against BIOLASE in the Central District of California alleging that BIOLASE’s diode lasers infringe on U.S. Patent Nos. 8,337,097, 8,834,497, 8,961,040 and 8,967,883. The complaint sought injunctive relief, treble damages, attorneys’ fees, punitive damages, and interest.

On January 25, 2019 (the “Effective Date”), BIOLASE entered into a settlement agreement (the “CAO Settlement Agreement”) with CAO. Pursuant to the CAO Settlement Agreement, CAO agreed to dismiss with prejudice the lawsuits filed by CAO against the Company in April 2012 and January 2018. In addition, CAO granted to the Company and its affiliates a non-exclusive, non-transferable (except as provided in the CAO Settlement Agreement), royalty-free, fully-paid, worldwide license to the licensed patents for use in the licensed products and agreed not to sue the Company, its affiliates or any of its manufacturers, distributors, suppliers or customers for use of the licensed patents in the licensed products, and the parties agreed to a mutual release of claims. The Company agreed (i) to pay to CAO, within five days of the Effective Date, $500,000 in cash, (ii) to issue to CAO, within 30 days of the Effective Date, 500,000 restricted shares of common stock of the Company (the “Stock Consideration”), and (iii) to pay to CAO, within 30 days of December 31, 2021, an amount in cash equal to the difference (if positive) between $1,000,000 and the value of the Stock Consideration on December 31, 2021. The Stock Consideration vests and becomes transferrable on December 31, 2021, subject to the terms of a restricted stock agreement entered into between the parties. The Company considered this a Type I subsequent event and recognized a $1.5 million contingent loss on patent litigation settlement in its consolidated statement of operations for the year ended December 31, 2018. In January 2019, the Company paid CAO $500,000 in cash. On January 31, 2019, the case was dismissed with prejudice. During the three-month period ended March 31, 2019, the Company recorded an additional loss on patent litigation of $0.2 million which represented the change in fair value of the restricted stock to be issued to CAO at March 31, 2019. Subsequent to March 31, 2019, the Company reversed the additional loss commensurate with the fluctuations in the Company’s share price. In August 2020, the Company signed a Letter Agreement to terminate the Manufacturing Agreement and purchase from CAO raw materials and other inventory held by CAO as part of the original CAO Settlement Agreement.

In February 2021, the Company issued 500,000 restricted shares of common stock in satisfaction of its obligation to issue the Stock Consideration to CAO under the CAO Settlement Agreement and reduced the accrued liability to $0.6 million. As of September 30, 2021, the remaining accrued liability related to the CAO Settlement Agreement was included in current accrued liabilities in the amount of $0.7 million. As of December 31, 2020, the accrued liability related to the CAO Settlement Agreement was $1.0 million and was included in non-current other liabilities.

NOTE 12—SEGMENT INFORMATION

The Company currently operates in a single business segment. Management uses one measurement of profitability and does not segregate its business for internal reporting. For the three and nine months ended September 30, 2021, sales to customers in the United

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States accounted for approximately 62% and 64% of net revenue and international sales accounted for approximately 38% and 36% of net revenue, respectively. For the three and nine months ended September 30, 2020, sales to customers in the United States accounted for approximately 73% and 71% of net revenue and international sales accounted for approximately 27% and 29% of net revenue, respectively. No individual country, other than the United States, represented more than 10% of total net revenue during the three and nine months ended September 30, 2021 or 2020.

Net revenue by geographic location based on the location of customers was as follows (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
United States	$	5,939	$	4,755	$	17,024	$	10,079
International		3,592		1,784		9,756		4,181
Total net revenue	$	9,531	$	6,539	$	26,780	$	14,260

Property, plant, and equipment by geographic location was as follows (in thousands):

	September 30,		December 31,
	2021		2020
United States	$	618	$	486
International		271		296
Total	$	889	$	782

NOTE 13—CONCENTRATIONS

Revenue from the Company’s products are as follows (dollars in thousands):

	Three Months Ended								Nine Months Ended
	September 30,								September 30,
	2021				2020				2021				2020
Laser systems	$	6,084	63.8	%	$	3,712	56.7	%	$	16,588	61.9	%	$	6,854	48.1	%
Consumables and other	$	2,331	24.5	%		1,929	29.5	%		6,923	25.9	%		4,263	29.9	%
Services	$	1,116	11.7	%		898	13.8	%		3,269	12.2	%		3,143	22.0	%
Total net revenue	$	9,531	100.0	%	$	6,539	100.0	%	$	26,780	100.0	%	$	14,260	100.0	%

No individual customer represented more than 10% of the Company’s revenue for the three and nine months ended September 30, 2021 or 2020.

The Company maintains its cash and cash equivalents in money market investment accounts with established commercial banks. Such cash deposits periodically exceed the Federal Deposit Insurance Corporation insured limit.

No individual customer represented more than 10% of the Company’s accounts receivable at September 30, 2021 and December 31, 2020.

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.

NOTE 14—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

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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 and nine months ended September 30, 2021 and 2020. The Company does not expect any changes to its unrecognized tax benefit for the next 12 months that would materially impact its consolidated financial statements.

During the three and nine months ended September 30, 2021, the Company recorded an income tax provision of $14,000 and income tax benefit of $7,000, respectively, resulting in an effective tax rate of 0.4% and 0.1%, respectively. During the three and nine months ended September 30, 2020, the Company recorded an income tax provision of $15,000 and $49,000, respectively, resulting in an effective tax rate of 55.6% and 0.5%, respectively. The income tax provisions and benefit for the three and nine months ended September 30, 2021 and 2020 were calculated using the discrete year-to-date method. The effective tax rate differs from the statutory tax rate of 21% 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 foreign tax liability.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following information should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q (this “Form 10-Q”) and our audited consolidated financial statements and related notes included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2020, filed with the Securities and Exchange Commission (the “SEC”) on March 31, 2021 (the “2020 Form 10-K”).

In addition to historical information, this discussion and analysis contains “forward-looking statements” as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that involve risks, uncertainties, and assumptions, which could cause actual results to differ materially from management's expectations. Such forward-looking statements include statements, predictions, or expectations regarding expected revenue, sales and marketing expenses, general and administrative expenses, investments in engineering and development and other investment activities, interest rate fluctuations, future liquidity, potential collaborations, market opportunities, plans with respect to a new device being developed for endodontists, our use of proceeds from the PPP Loan (as defined below), COVID-19, seasonality and the reasons therefor, operating and other expenses, anticipated cash needs, our strategy and any other statement that is not historical fact. Forward-looking statements are identified by the use of words such as “may,” “might,” “will,” “intend,” “should,” “could,” “can,” “would,” “continue,” “expect,” “believe,” “anticipate,” “estimate,” “predict,” “outlook,” “potential,” “plan,” “seek,” "forecast," and similar expressions and variations or the negatives of these terms or other comparable terminology.

The forward-looking statements contained in this Form 10-Q are based on the expectations, estimates, projections, beliefs, and assumptions of our management based on information available to management as of the date on which this Form 10-Q was filed with the SEC, or as of the date on which the information incorporated by reference was filed with the SEC, as applicable, all of which are subject to change. Forward-looking statements are subject to risks, uncertainties, and other factors that are difficult to predict and could cause actual results to differ materially from those stated or implied by our forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to:

the effects of the COVID-19 pandemic and the actions taken to contain it;

losses that we have experienced for each of the past three years;

global economic uncertainty and volatility in financial markets;

inability to raise additional capital on terms acceptable to us;

our relationships with, and the efforts of, third-party distributors;

failure in our efforts to train dental practitioners or to overcome the hesitation of dentists and patients to adopt laser technologies;

inconsistencies between future data and our clinical results;

competition from other companies, including those with greater resources;

our inability to successfully develop and commercialize enhanced or new products that remain competitive with products or alternative technologies developed by others;

the inability of our customers to obtain third-party reimbursement for their use of our products;

limitations on our ability to use net operating loss carryforwards;

problems in manufacturing our products;

warranty obligations if our products are defective;

adverse publicity regarding our technology or products;

adverse events to our patients during the use of our products, regardless of whether caused by our products;

issues with our suppliers, including the failure of our suppliers to supply us with a sufficient amount or adequate quality of materials;

rapidly changing standards and competing technologies;

our inability to effectively manage and implement our growth strategies;

risks associated with operating in international markets, including potential liabilities under the Foreign Corrupt Practices Act;

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breaches of our information technology systems;

seasonality;

litigation, including the failure of our insurance policies to cover certain expenses relating to litigation;

disruptions to our operations at our primary facility;

loss of our key management personnel or our inability to attract or retain qualified personnel;

risks and uncertainties relating to acquisitions, including difficulties integrating acquired businesses successfully into our existing operations and risks of discovering previously undisclosed liabilities;

failure to meet covenants in the Credit Agreement dated as of November 9, 2018 (as amended from time to time, the “Credit Agreement”), by and between BIOLASE and SWK Funding LLC and related risks of foreclosure triggered by an event of default under the Credit Agreement;

interest rate risk, which could result in higher expense in the event of interest rate increases;

failure to comply with the reporting obligations of the Exchange Act and Section 404 of the Sarbanes-Oxley Act of 2002, as amended or maintain adequate internal control over financial reporting;

climate change initiatives;

failure of our intellectual property rights to adequately protect our technologies and potential third-party claims that our products infringe their intellectual property rights;

changes in government regulation or the inability to obtain or maintain necessary governmental approvals;

our failure to comply with existing or new laws and regulations, including fraud and abuse and health information privacy and securities laws;

changes in the regulatory requirements of the Food and Drug Administration (“FDA”) applicable to laser products, dental devices, or both;

recall or other regulatory action concerning our products after receiving FDA clearance or approval;

our failure to comply with continued listing requirements of the NASDAQ Capital Market; and

risks relating to ownership of our common stock, including low liquidity, low trading volume, high volatility, and dilution.

Further information about factors that could materially affect the Company, including our results of operations and financial condition, is contained under “Risk Factors” in Item 1A in the 2020 Form 10-K and under "Risk Factors" in Part II, Item 1A of the Form 10-Q for the quarter ended June 30, 2021 (the "Second Quarter Form 10-Q"). Except as required by law, we undertake no obligation to revise or update any forward-looking statements to reflect changed assumptions, the occurrence of anticipated or unanticipated events, new information or changes to future results over time or otherwise.

Overview

We are a leading provider of advanced laser systems for the dental industry. We develop, manufacture, market, and sell laser systems that provide significant benefits for dental practitioners and their patients. Our proprietary systems allow dentists, periodontists, endodontists, oral surgeons, and other dental specialists to perform a broad range of minimally invasive dental procedures, including cosmetic, restorative, and complex surgical applications. Our laser systems are designed to provide clinically superior results for many types of dental procedures compared to those achieved with drills, scalpels, and other conventional instruments. Potential patient benefits include less pain, fewer shots, faster healing, decreased fear and anxiety, and fewer appointments. Potential practitioner benefits include improved patient care and the ability to perform a higher volume and wider variety of procedures and generate more patient referrals.

We offer two categories of laser system products: Waterlase (all-tissue) systems and diode (soft-tissue) systems. Our flagship brand, Waterlase, uses a patented combination of water and laser energy and is FDA cleared for over 80 clinical indications to perform most procedures currently performed using drills, scalpels, and other traditional dental instruments for cutting soft and hard tissue. For example, Waterlase safely debrides implants without damaging or significantly affecting surface temperature and is the only effective, safe solution to preserving sick implants. In addition, Waterlase disinfects root canals more efficiently than some traditional chemical methods. We also offer our diode laser systems to perform soft tissue, pain therapy, and cosmetic procedures, including teeth whitening. As of September 30, 2021 we had approximately 300 issued and 35 pending United States and international patents, the majority of which are related to Waterlase technology. From 1998 through December 31, 2020, we sold over 41,200 laser systems in

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over 80 countries around the world. Contained in this total are approximately 13,600 Waterlase systems, including over 9,100 Waterlase MD, MDX, Express and iPlus systems.

Business and Outlook

Our Waterlase systems precisely cut hard tissue, bone, and soft tissue with minimal or no damage to surrounding tissue and dental structures. Our diode systems, which include the Epic system, are designed to complement our Waterlase systems, and are used only in soft tissue procedures, pain therapy, hygiene, and cosmetic applications, including teeth whitening. The diode systems, together with our Waterlase systems, offer practitioners a broad product line with a range of features and price points.

We also manufacture and sell consumable products and accessories for our laser systems. Our Waterlase and diode systems use disposable laser tips of differing sizes and shapes depending on the procedure being performed. We also market flexible fibers and hand pieces that dental practitioners replace at some point after initially purchasing laser systems. For our Epic systems, we sell teeth whitening gel kits.

Due to the limitations associated with traditional and alternative dental instruments, we believe there is a large market opportunity for all-tissue dental laser systems that provide superior clinical outcomes, reduce the need to use anesthesia, help reduce trauma, pain, and discomfort associated with dental procedures, and increase patient acceptance for treatment protocols.

Our strategy is to increase awareness and demand for (i) our products among dental practitioners by educating dental practitioners and patients about the clinical benefits of our product suite and (ii) our laser systems among patients by educating patients about the clinical benefits of the Waterlase and diode systems. An important goal of ours is to increase consumables revenue by selling more single-use accessories used by dental practitioners when performing procedures using our dental laser systems. In the short term, we are striving for operating excellence through lean enterprise initiatives, with a specific focus on our sales strategy and cash flow management, coupled with optimizing our engineering capabilities to develop innovative new products.

We also seek to create value through innovation and leveraging existing technologies into adjacent medical applications. We plan to expand our product line and clinical applications by developing enhancements and transformational innovations, including new clinical solutions for dental applications and for other adjacent medical applications. In particular, we believe that our existing technologies can provide significant improvements over existing standards of care in fields including ophthalmology, otolaryngology, orthopedics, podiatry, pain management, aesthetics/dermatology, veterinary, and consumer products. We plan to continue to explore potential collaborations to apply our proprietary laser technologies with expanded FDA-cleared indications to other medical applications in the future.

The Company experienced revenue growth of 46% and 88% for the three and nine months ended September 30, 2021, compared to the same periods in 2020, primarily due to the negative impact of COVID-19 during 2020 and high demand from new users for the Company's dental lasers. The Company is currently forecasting revenue for fiscal year 2021 to be significantly above fiscal year 2020, which was significantly impacted by COVID-19. Although there are signs of recovery from the impact of COVID-19 both domestically and internationally, given the uncertainties regarding the ongoing and future effects of COVID-19, no assurance can be provided that the recovery will continue.

To educate providers and increase patient access to our products, over the past year, we have formed specialist training programs focused on expanding awareness of the benefits of our dental lasers among dental specialists. For example, during the second quarter of 2021, we launched the Waterlase Pediatric Dental Academy (the "WPDA") for pediatric dentists. This program provides clinicians with an immersive training experience through peer-led learning and best practice sharing to help ensure appropriate use of Waterlase technology in clinical practices. During the first quarter of 2021, we also launched an innovative and first-of-its-kind training program in the periodontal community. This program fosters peer-led learning about dental lasers from leading clinicians, featuring online meetings and case reviews by experts in the field. Additionally, during the fourth quarter of 2020, we launched the Waterlase Endo Academy, a community of leading endodontists dedicated to improving patient outcomes with new technology, and announced a collaboration with Einstein Healthcare Network’s Residency in Endodontics to train endodontics residents in the use of Waterlase dental lasers. In the fourth quarter of 2021, we launched the Epic Hygiene Academy which seeks to bring together leaders in the dental hygiene profession to provide improved continuing education in delivering superior patient care through laser technology.

In April 2021, we also announced plans to develop a new EdgePRO laser-assisted microfluidic irrigation device for endodontists with EdgeEndo, a global leader in commercializing endodontic products. The new microfluidic irrigation device is being developed to offer a solution to endodontists seeking more from their current cleaning and disinfecting techniques. The EdgePRO will be built upon BIOLASE’s patented and proven platform that has been shown to significantly improve debridement, cleaning, and disinfection by up to 99% using the most advanced laser light sound technology.

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Recent Developments

Impact of Coronavirus (COVID-19) on Our Operations

In December 2019, a novel strain of coronavirus was reported to have surfaced in Wuhan, China. The novel coronavirus spread to over 100 countries, including every state in the United States. On March 11, 2020, the World Health Organization declared COVID-19, the disease caused by the novel coronavirus, a pandemic, and on March 13, 2020, the United States declared a national emergency with respect to the coronavirus outbreak. This outbreak severely impacted global economic activity, and many countries and many states in the United States have reacted to the outbreak by instituting quarantines, mandating business and school closures and restricting travel. These mandated business closures included dental office closures in Europe and the United States for all but emergency procedures. Our salespeople were unable to call on dental customers during these closures. In addition, most dental shows and workshops scheduled in 2020 were canceled. Given the uncertain status of COVID-19 cases, there is no assurance that the Company’s sales will return to normal levels during 2021 or at any time thereafter. See Item 1A — “Risk Factors” for additional information regarding the potential impact of the COVID-19 pandemic on our business, results of operations and financial condition.

Critical Accounting Policies

The unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) which require us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and revenues and expenses reported during the period. Information with respect to our critical accounting policies that we believe could have the most significant effect on our reported results and require subjective or complex judgments by management is contained in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” of the 2020 Form 10-K. There have been no significant changes during the nine months ended September 30, 2021 in our critical accounting policies from those disclosed in Item 7 of the 2020 Form 10-K.

Results of Operations

The following table sets forth certain data from our unaudited operating results, expressed in thousands and as percentages of net revenue:

	Three Months Ended								Nine Months Ended
	September 30,								September 30,
	2021				2020					2021				2020
Net revenue	$	9,531	100.0	%	$	6,539	100.0	%		$	26,780	100.0	%	$	14,260	100.0	%
Cost of revenue		4,689	49.2	%		4,265	65.2	%			15,157	56.6	%		9,692	68.0	%
Gross profit		4,842	50.8	%		2,274	34.8	%			11,623	43.4	%		4,568	32.0	%
Operating expenses:
Sales and marketing		3,451	36.2	%		2,678	41.0	%			10,315	38.5	%		7,475	52.4	%
General and    administrative		2,479	26.0	%		2,300	35.2	%			8,613	32.2	%		7,446	52.2	%
Engineering and    development		1,540	16.2	%		963	14.7	%			4,506	16.8	%		2,644	18.5	%
Loss on patent litigation settlement		29	0.3	%		—	—	%			190	0.7	%		—	—	%
Total operating expenses		7,499	78.7	%		5,941	90.9	%			23,624	88.2	%		17,565	123.2	%
Loss from operations		(2,657)	(27.9)	%		(3,667)	(56.1)	%			(12,001)	(44.8)	%		(12,997)	(91.1)	%
Non-operating gain (loss), net		(605)	(6.3)	%		3,694	56.5	%			1,115	4.2	%		2,359	16.5	%
Loss before income tax (provision) benefit		(3,262)	(21.6)	%		27	0.4	%			(10,886)	(49.0)	%		(10,638)	(74.6)	%
Income tax (provision) benefit		(14)	(0.1)	%		(15)	(0.2)	%			7	0.0	%		(49)	-0.3	%
Net income (loss)	$	(3,276)	(21.5)	%	$	12	0.2	%		$	(10,879)	(49.0)	%	$	(10,687)	(74.9)	%

Non-GAAP Disclosure

In addition to the financial information prepared in conformity with GAAP, we provide certain historical non-GAAP financial information. Management believes that these non-GAAP financial measures assist investors in making comparisons of period-to-period operating results and that, in some respects, are indicative of our ongoing core performance.

Management believes that the presentation of this non-GAAP financial information provides investors with greater transparency and facilitates comparison of operating results across a broad spectrum of companies with varying capital structures, compensation strategies, derivative instruments, and amortization methods, which provides a more complete understanding of our financial

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performance, competitive position, and prospects for the future. However, the non-GAAP financial measures presented in this Form 10-Q have certain limitations in that they do not reflect all of the costs associated with the operations of our business as determined in accordance with GAAP. Therefore, investors should consider non-GAAP financial measures in addition to, and not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP. Further, the non-GAAP financial measures presented by us may be different from similarly named non-GAAP financial measures used by other companies.

Adjusted EBITDA

Management uses Adjusted EBITDA in its evaluation of our core results of operations and trends between fiscal periods and believes that these measures are important components of its internal performance measurement process. Adjusted EBITDA is defined as net loss before interest, taxes, depreciation and amortization, patent litigation settlements, stock-based compensation, debt forgiveness, and the change in allowance for doubtful accounts. Management uses adjusted EBITDA in its evaluation of our core results of operations and trends between fiscal periods and believes that these measures are important components of its internal performance measurement process. Therefore, investors should consider non-GAAP financial measures in addition to, and not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP. Further, the non-GAAP financial measures presented by us may be different from similarly named non-GAAP financial measures used by other companies.

The following table contains a reconciliation of non-GAAP Adjusted EBITDA to GAAP net loss attributable to common stockholders (in thousands):

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2021			2020			2021			2020
GAAP net loss attributable to common stockholders	$	(3,285	)	$	(17,366	)	$	(11,425	)	$	(28,065	)
Deemed dividend on convertible preferred stock		9			17,378			546			17,378
GAAP net income (loss)	$	(3,276	)	$	12		$	(10,879	)	$	(10,687	)
Adjustments:
Interest expense, net		569			568			1,727			1,782
Income tax provision (benefit)		14			15			(7	)		49
Depreciation and amortization		101			46			281			527
Change in allowance for doubtful accounts		(83	)		256			(162	)		1,263
Loss on patent litigation settlement		29			—			190			—
Stock-based and other non-cash compensation		192			847			1,488			2,367
Gain on debt forgiveness		—			—			(3,014	)		—
Other (income) expense, net		—			(4,209	)		—			(4,209	)
Adjusted EBITDA	$	(2,454	)	$	(2,465	)	$	(10,376	)	$	(8,908	)

Comparison of Results of Operations

Three Months Ended September 30, 2021 Compared with Three Months Ended September 30, 2020

Net Revenue: The following table summarizes our unaudited net revenue by category, including each category’s percentage of our total revenue, for the three months ended September 30, 2021 and 2020, as well as the amount of change and percentage of change in each revenue category (dollars in thousands):

	Three Months Ended
	September 30,								Amount		Percent
	2021				2020				Change		Change
Laser systems	$	6,084	63.8	%	$	3,712	56.7	%	$	2,372		63.9	%
Consumables and other		2,331	24.5	%		1,929	29.5	%		402		20.8	%
Services		1,116	11.7	%		898	13.8	%		218		24.3	%
Net revenue	$	9,531	100.0	%	$	6,539	100.0	%	$	2,992		45.8	%

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The following table summarizes our unaudited net revenue by geographic location based on the location of customers for the three months ended September 30, 2021 and 2020, as well as the amount of change and percentage of change in each geographic revenue category (dollars in thousands):

	Three Months Ended
	September 30,								Amount		Percent
	2021				2020				Change		Change
United States	$	5,939	62.3	%	$	4,755	72.7	%	$	1,184		24.9	%
International		3,592	37.7	%		1,784	27.3	%		1,808		101.3	%
Net revenue	$	9,531	100.0	%	$	6,539	100.0	%	$	2,992		45.8	%

Typically, we experience fluctuations in revenue from quarter to quarter due to seasonality. Revenue in the first quarter typically is lower than average, and revenue in the fourth quarter typically is higher than average, due to the buying patterns of dental practitioners. We believe that this trend exists because a significant number of dentists purchase their capital equipment towards the end of the calendar year in order to maximize their practice earnings while seeking to minimize their taxes. They often use certain tax incentives, such as accelerated depreciation methods for purchasing capital equipment, as part of their year-end tax planning. In addition, revenue in the third quarter may be affected by vacation patterns which can cause revenue to be flat or lower than in the second quarter of the year. Our historical seasonal fluctuations may also be impacted by sales promotions used by large dental distributors that encourage end-of-quarter and end-of-year buying in our industry.

Total net revenue increased by $3.0 million, or 46%, during the three months ended September 30, 2021 as compared to the same period in 2020 primarily due to worldwide dental office closures in 2020 as a result of the global COVID-19 pandemic. In the U.S., net revenue increased by $1.2 million, or 25%, for the three months ended September 30, 2021 as compared to the same period in 2020. Outside the U.S., net revenue increased by $1.8 million, or 101%, during the three months ended September 30, 2021 as compared to the same period in 2020. We believe dental offices in the U.S. have returned to prior patient volume resulting in better revenue results, while patient volume in many countries outside the U.S. are still lagging from their pre-COVID-19 levels.

Cost of Revenue and Gross Profit: The following table summarizes our unaudited cost of revenue and gross profit for the three months ended September 30, 2021 and 2020, as well as the amount of change and percentage of change (dollars in thousands):

	Three Months Ended
	September 30,								Amount		Percent
	2021				2020				Change		Change
Net revenue	$	9,531	100.0	%	$	6,539	100.0	%	$	2,992		45.8	%
Cost of revenue		4,689	49.2	%		4,265	65.2	%		424		9.9	%
Gross profit	$	4,842	50.8	%	$	2,274	34.8	%	$	2,568		112.9	%

Gross profit as a percentage of revenue typically fluctuates with product and regional mix, selling prices, product costs and revenue levels. Gross profit for the three months ended September 30, 2021, was $4.8 million, or 51% of net revenue, an increase of approximately $2.6 million, or 113%, as compared with gross profit of $2.3 million, or 35% of net revenue, for the same period in 2020. The increase in gross profit reflects the impact of the increase in revenues for the period combined with an increase in average selling prices for products sold in the U.S. during the third quarter of 2021 compared to the same period in 2020 and the effect of an Employee Retention Credit under the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") of $0.4 million received during the three months ended September 30, 2021.

Operating Expenses: The following table summarizes our unaudited operating expenses (including as a percentage of net revenue) for the three months ended September 30, 2021 and 2020, as well as the amount of change and percentage of change (dollars in thousands):

	Three Months Ended
	September 30,								Amount		Percent
	2021				2020				Change		Change
Sales and marketing	$	3,451	36.2	%	$	2,678	41.0	%	$	773		28.9	%
General and administrative		2,479	26.0	%		2,300	35.2	%		179		7.8	%
Engineering and development		1,540	16.2	%		963	14.7	%		577		59.9	%
Loss on patent litigation settlement		29	0.3	%		—	—	%		29		100.0	%
Total operating expenses	$	7,499	78.7	%	$	5,941	90.9	%	$	1,558		26.2	%

Sales and Marketing Expense. Sales and marketing expenses during the three months ended September 30, 2021 increased by $0.8 million, or 29%, as compared to the same period in 2020. This increase is primarily due to $0.4 million in sales commission, $0.3

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million in increased advertising expenses and related consulting costs, and $0.4 million in increased travel and trade show related expenses from the impact of the COVID-19 pandemic on our business operations in 2020. These increases were partially offset by $0.3 million favorable variance from the effect of an Employee Retention Credit under the CARES Act received during the three months ended September 30, 2021.

General and Administrative Expense. General and administrative expenses during the three months ended September 30, 2021 increased by $0.2 million, or 8%, compared to the same period in 2020, primarily due to $0.6 million related to legal and consulting fees incurred in connection with the special stockholders meeting to be held in the fourth quarter of 2021, partially offset by a $0.4 million change in the provision for doubtful accounts, which decreased $0.1 million during the three months ended September 30, 2021 compared to a $0.3 million increase during three months ended September 30, 2020.

Engineering and Development Expense. Engineering and development expenses during the three months ended September 30, 2021 increased by $0.6 million, or 60%, compared to the same period in 2020, primarily due to a $0.3 million increase in legal and consulting fees and a $0.2 million increase in payroll expenses driven by an increase in engineering projects for 2021 as compared to 2020. Although our primary focus will be on our sales and marketing efforts in the remainder of 2021, we expect to continue our investment in engineering and development activity during the period.

Loss on Patent Litigation Settlement. Loss on patent litigation settlement during the three months ended September 30, 2021 was consistent with the same period in 2020.

Non-Operating Income (Loss)

Gain (Loss) on Foreign Currency Transactions. We realized an approximately $36 thousand loss on foreign currency transactions during the three months ended September 30, 2021 compared to an approximately $53 thousand gain on foreign currency transactions during the three months ended September 30, 2020, primarily due to exchange rate fluctuations between the U.S. dollar and Euro, as well as other foreign currencies.

Interest Expense, Net. Interest expense was $0.6 million during the three months ended September 30, 2021 and was consistent with the same period in 2020.

Other Income, Net. Other income for the three months ended September 30, 2020, is comprised of a $5.8 million gain on the change in fair value of the July 2020 Warrants offset by the costs to issue the July 2020 warrants of approximately $1.6 million.

Income Tax (Provision) Benefit. We use a discrete year-to-date method in calculating quarterly provision for income taxes. Our provision for income taxes for the three months ended September 30, 2021 was consistent with the same period in 2020. For additional information regarding income taxes, see Part I, Item I, Note 14 – Income Taxes.

Net Income (Loss). For the reasons stated above, our net loss totaled approximately $3.3 million for the three months ended September 30, 2021 compared to a net income of $12 thousand for the three months ended September 30, 2020.

Comparison of Results of Operations

Nine Months Ended September 30, 2021 Compared with Nine Months Ended September 30, 2020

Net Revenue: The following table summarizes our unaudited net revenues by category, including each category’s percentage of our total revenue, for the nine months ended September 30, 2021 and 2020, as well as the amount of change and percentage of change in each revenue category (dollars in thousands):

	Nine Months Ended
	September 30,								Amount		Percent
	2021				2020				Change		Change
Laser systems	$	16,588	61.9	%	$	6,854	48.1	%	$	9,734		142.0	%
Consumables and other		6,923	25.9	%		4,263	29.9	%		2,660		62.4	%
Services		3,269	12.2	%		3,143	22.0	%		126		4.0	%
Net revenue	$	26,780	100.0	%	$	14,260	100.0	%	$	12,520		87.8	%

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The following table summarizes our unaudited net revenue by geographic location based on the location of customers for the nine months ended September 30, 2021 and 2020, as well as the amount of change and percentage of change in each geographic revenue category (dollars in thousands):

	Nine Months Ended
	September 30,								Amount		Percent
	2021				2020				Change		Change
United States	$	17,024	63.6	%	$	10,079	70.7	%	$	6,945		68.9	%
International		9,756	36.4	%		4,181	29.3	%		5,575		133.3	%
Net revenue	$	26,780	100.0	%	$	14,260	100.0	%	$	12,520		87.8	%

Total net revenue increased by $12.5 million, or 88%, during the nine months ended September 30, 2021 as compared to the same period in 2020 primarily due to worldwide dental office closures in 2020 as a result of the global COVID-19 pandemic. In the U.S., net revenue increased by $6.9 million, or 69%, for the nine months ended September 30, 2021 as compared to the same period in 2020. Outside the U.S., net revenue increased by $5.6 million, or 133%, during the nine months ended September 30, 2021 as compared to the same period in 2020.

Cost of Revenue and Gross Profit: The following table summarizes our unaudited cost of revenue and gross profit for the nine months ended September 30, 2021 and 2020, as well as the amount of change and percentage of change (dollars in thousands):

	Nine Months Ended
	September 30,								Amount		Percent
	2021				2020				Change		Change
Net revenue	$	26,780	100.0	%	$	14,260	100.0	%	$	12,520		87.8	%
Cost of revenue		15,157	56.6	%		9,692	68.0	%		5,465		56.4	%
Gross profit	$	11,623	43.4	%	$	4,568	32.0	%	$	7,055		154.4	%

Gross profit as a percentage of revenue typically fluctuates with product and regional mix, selling prices, product costs and revenue levels. Gross profit for the nine months ended September 30, 2021, was $11.6 million, or 43% of net revenue, an increase of approximately $7.1 million, or 154%, as compared with gross profit of $4.6 million, or 32% of net revenue, for the same period in 2020. The increase in gross profit reflects the impact of the increase in revenues combined with an increase in average selling prices for products sold in the U.S. during the first nine months of 2021 compared to the same period in 2020 and the effect of Employee Retention Credits under the CARES Act of $0.7 million received during the nine months ended September 30, 2021.

Operating Expenses: The following table summarizes our unaudited operating expenses (including as a percentage of net revenue) for the nine months ended September 30, 2021 and 2020, as well as the amount of change and percentage of change (dollars in thousands):

	Nine Months Ended
	September 30,								Amount		Percent
	2021				2020				Change		Change
Sales and marketing	$	10,315	38.5	%	$	7,475	52.4	%	$	2,840		38.0	%
General and administrative		8,613	32.2	%		7,446	52.3	%		1,167		15.7	%
Engineering and development		4,506	16.8	%		2,644	18.5	%		1,862		70.4	%
Loss on patent litigation settlement		190	0.7	%		—	—	%		190		100.0	%
Total operating expenses	$	23,624	88.2	%	$	17,565	123.2	%	$	6,059		34.5	%

Sales and Marketing Expense. Sales and marketing expenses during the nine months ended September 30, 2021 increased by $2.8 million, or 38%, as compared to the same period in 2020. This increase is primarily due to $0.7 million in compensation expense and bonus incentives for achieving sales targets, $0.9 million in increased advertising expenses and related consulting costs, $0.9 million in sales commissions, and $0.8 million in increased travel and trade show related expenses from the impact of the COVID-19 pandemic on our business operations in 2020. These increases were partially offset by $0.5 million from the effect of Employee Retention Credits under the CARES Act received during the nine months ended September 30, 2021.

General and Administrative Expense. General and administrative expenses during the nine months ended September 30, 2021 increased by $1.2 million, or 16%, compared to the same period in 2020, primarily due to $1.4 million related to fees incurred in connection with stockholder meetings held in the first and second quarter of 2021, and to be held in the fourth quarter of 2021, $0.4 million in severance expense, $0.3 million in compensation and leadership bonus awards, and $0.3 million in legal and audit fees. These increases were partially offset by a $1.4 million change in allowance for doubtful accounts, which decreased $0.1 million

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during the nine months ended September 30, 2021 compared to a $1.3 million increase during the nine months ended September 30, 2020.

Engineering and Development Expense. Engineering and development expenses during the nine months ended September 30, 2021 increased by $1.9 million, or 70%, compared to the same period in 2020, primarily due to a $0.5 million increase in legal and consulting fees and a $0.8 million increase in payroll expenses driven by an increase in engineering projects for 2021 as compared to 2020. Although our primary focus will be on our sales and marketing efforts in the remainder of 2021, we expect to continue our investment in engineering and development activity during the period.

Loss on Patent Litigation Settlement. Loss on patent litigation settlement during the nine months ended September 30, 2021 was $0.2 million due to the change in fair value of the remaining accrued liability.

Non-Operating Income (Loss)

Gain (Loss) on Foreign Currency Transactions. We realized a $0.2 million loss on foreign currency transactions during the nine months ended September 30, 2021, compared to a $0.1 million loss during the same period in 2020. The loss was primarily due to exchange rate fluctuations between the U.S. dollar and Euro, as well as other foreign currencies.

Interest Expense, Net. Interest expense was $1.7 million during the nine months ended September 30, 2021, compared to interest expense of $1.8 million during the same period in 2020. We expect interest expense to fluctuate depending on the movement in the London Interbank Bank Offered Rate (“LIBOR”) through the remainder of 2021 and the outstanding balance of our revolving line of credit with Pacific Mercantile Bank (the "PMB Loan"), if any.

Gain on Debt Forgiveness. Gain on debt forgiveness was $3.0 million for the nine months ended September 30, 2021 due to the approval of the Company's request for forgiveness of the loan received under the Paycheck Protection Program under the CARES Act (the "PPP Loan").

Other Income, Net. Other income for the nine months ended September 30, 2020, is comprised of a $5.8 million gain on the change in fair value of the July 2020 Warrants offset by the costs to issue the July 2020 warrants of approximately $1.6 million.

Income Tax (Provision) Benefit. We use a discrete year-to-date method in calculating quarterly provision for income taxes. Our benefit from income taxes was approximately $7 thousand for the nine months ended September 30, 2021 as compared to a provision of approximately $49 thousand for the same period in 2020. For additional information regarding income taxes, see Part I, Item I, Note 14 – Income Taxes.

Net Loss. For the reasons stated above, our net loss totaled approximately $10.9 million for the nine months ended September 30, 2021 compared to a net loss of $10.6 million for the nine months ended September 30, 2020.

Liquidity and Capital Resources

At September 30, 2021, we had approximately $33.6 million in cash, cash equivalents and restricted cash. Management defines cash and cash equivalents as highly liquid deposits with original maturities of 90 days or less when purchased. The increase in cash, cash equivalents, and restricted cash was primarily due to gross proceeds of $14.4 million from the issuance of common stock and $16.6 million from warrants exercised during the nine months ended September 30, 2021.

The following table summarizes our change in cash, cash equivalents and restricted cash (in thousands):

	Nine Months Ended
	September 30,
	2021			2020
Net cash flows used in operating activities	$	(13,606	)	$	(11,447	)
Net cash flows used in investing activities		(396	)		(78	)
Net cash flows provided by financing activities		29,886			24,402
Effect of exchange rate changes		(171	)		181
Net change in cash, cash equivalents and restricted    cash	$	15,713		$	13,058

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Operating Activities

Net cash used in operating activities consists of our net loss, adjusted for our non-cash charges, plus or minus working capital changes. Cash used in operating activities for the nine months ended September 30, 2021 totaled $13.6 million and was primarily comprised of our net loss of $10.9 million, gain on PPP Loan forgiveness of $3.0 million, and a net decrease in operating assets and liabilities of $2.0 million, partially offset by stock-based compensation expense of $1.5 million. The net decrease in our operating assets and liabilities was primarily due to a $2.8 million increase in inventory as we have increased inventory levels to try to mitigate the impact of supply disruptions from potential product shortages and delivery delays due to COVID-19.

Investing Activities

Cash used in investing activities for the nine months ended September 30, 2021 totaled $0.4 million and was comprised of the purchase of property, plant, and equipment. We expect cash flows from investing activities to remain minimal through the remainder of 2021.

Financing Activities

Net cash provided by financing activities for the nine months ended September 30, 2021 totaled $29.9 million primarily due to the sale of common stock from our February 2021 equity offering for net proceeds of $13.3 million and $16.6 million from the exercise of common stock warrants described below.

Effect of Exchange Rate

The $0.2 million effect of exchange rate on cash for the nine months ended September 30, 2021 was due to recognized loss on foreign currency transactions, primarily driven by changes in the Euro during the period.

Future Liquidity Needs

As of September 30, 2021, we had working capital of approximately $39.2 million. Our principal sources of liquidity as of September 30, 2021 consisted of approximately $33.6 million in cash, cash equivalents and restricted cash and $3.6 million of net accounts receivable.

Although the Company received gross proceeds of approximately $14.4 million from an equity offering in February 2021 and $16.6 million for warrant exercises subsequent to December 31, 2020, the Company may still have to raise additional capital in the future. Additional capital requirements may depend on many factors, including, among other things, the rate at which the Company’s business grows, the COVID-19 pandemic and the actions taken to contain it, 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.

The Company has historically experienced losses from operations and has used cash and cash equivalents in operating activities. To be able to discharge our liabilities and commitments in the normal course of business, we must increase sales of our products, control or potentially reduce expenses, and establish profitable operations in order to generate cash from operations or obtain additional funds when needed.

We intend to improve our financial condition and ultimately improve our financial results by increasing revenues through expansion of our product offerings, continuing to expand and develop our field sales force and distributor relationships both domestically and internationally, forming strategic arrangements within the dental and medical industries, educating dental and medical patients as to the benefits of our advanced medical technologies, and reducing expenses.

Term Loan

The information set forth in Note 9 – Debt – Term Loan is hereby incorporated herein by reference.

Revolving Credit Facility

The information set forth in Note 9 – Debt – Lines of Credit – Pacific Mercantile Bank is hereby incorporated herein by reference.

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Paycheck Protection Program Loan

The information set forth in Note 9 – Debt – Paycheck Protection Program Loan is hereby incorporated herein by reference.

EIDL Loan

The information set forth in Note 9 – Debt – EIDL Loan is hereby incorporated herein by reference.

Equity Offering

On February 10, 2021, BIOLASE issued and sold in an underwritten bought deal offering an aggregate of 14,000,000 shares of common stock at a price of $1.03 per share less underwriting discounts and commissions (the "Equity Offering"). The Company received gross proceeds of approximately $14.4 million before deducting underwriting discounts and commissions and estimated offering expenses.

Recent Accounting Pronouncements

For a description of recently issued and adopted accounting pronouncements, including the respective dates of adoption and expected effects on our results of operations and financial condition, please refer to Part I, Item 1, Note 2 – Summary of Significant Accounting Policies, which is incorporated herein by this reference.

Additional Information

BIOLASE®, ZipTip®, ezlase®, eztips®, ComfortPulse®, Waterlase®, Waterlase Dentistry®, Waterlase Express®, iLase®, iPlus®, Epic®, Epic Pro®, WCLI®, World Clinical Laser Institute®, Waterlase MD®, Waterlase Dentistry®, and EZLase® are registered trademarks of BIOLASE, and Pedolase™ is a trademark of BIOLASE. All other product and company names are registered trademarks or trademarks of their respective owners.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

None.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Our management has evaluated, with the participation of our President and Chief Executive Officer, the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on that evaluation, our President and Chief Executive Officer has concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this report.

Changes in Internal Controls over Financial Reporting

There was no change in our internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

In the ordinary course of business, we may periodically become subject to legal proceedings and claims arising in connection with ongoing business activities. The results of litigation and claims cannot be predicted with certainty, and unfavorable resolutions are possible and could materially and adversely affect our results of operations, cash flows and financial position. In addition, regardless of the outcome, litigation could have an adverse impact on us because of defense costs, diversion of management resources and other factors. While the outcome of such proceedings and claims cannot be predicted with certainty, there are no matters, as of September 30, 2021, that, in the opinion of management, will have a material adverse effect on our financial position, results of operations or cash flows.

ITEM 1A. RISK FACTORS

There have been no material changes to our risk factors from those disclosed under “Risk Factors” in Part I, Item 1A of the 2020 Form 10-K and under "Risk Factors" in Part II, Item 1A of the Second Quarter Form 10-Q. The risks and uncertainties described in the 2020 Form 10-K and the Second Quarter Form 10-Q are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also materially adversely affect our business, financial condition, or results of operations.

ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS

			Incorporated by Reference
Exhibit	Description	Filed Herewith	Form	Period Ending/Date of Report	Exhibit	Filing Date
3.1.1	Restated Certificate of Incorporation, including, (i) Certificate of Designations, Preferences and Rights of 6% Redeemable Cumulative Convertible Preferred Stock of the Registrant; (ii) Certificate of Designations, Preferences and Rights of Series A 6% Redeemable Cumulative Convertible Preferred Stock of the Registrant; (iii) Certificate of Correction Filed to Correct a Certain Error in the Certificate of Designation of the Registrant; and (iv) Certificate of Designations of Series B Junior Participating Cumulative Preferred Stock of the Registrant.		S-1, Amendment No. 1	12/23/2005	3.1	12/23/2005
3.1.2	Amendment to Restated Certificate of Incorporation		8-K	05/10/2012	3.1	05/16/2012
3.1.3	Second Amendment to Restated Certificate of Incorporation		8-A/A	11/04/2014	3.1.3	11/04/2014
3.1.4	Third Amendment to Restated Certificate of Incorporation		S-3	07/21/2017	3.4	07/21/2017
3.1.5	Fourth Amendment to Restated Certificate of Incorporation		8-K	05/10/2018	3.1	05/11/2018
3.1.6	Fifth Amendment to Restated Certificate of Incorporation		8-K	05/28/2020	3.1	06/01/2020
3.1.7	Certificate of Elimination of Series B Junior Participating Cumulative Preferred Stock		8-K	11/10/2015	3.1	11/12/2015
3.1.8	Certificate of Designations, Preferences and Rights of Series D Participating Convertible Preferred Stock of the Registrant		8-K	04/18/2017	3.2	04/20/2017
3.1.9	Certificate of Designations, Preferences and Rights of Series E Participating Convertible Preferred Stock of the Registrant		8-K	10/29/2019	3.1	10/30/2019
3.1.10	Certificate of Designations, Preferences, Rights and Limitations of Series F Convertible Preferred Stock of the Registrant, including Certificate of Correction Filed to Correct a Certain Error in the Certificate of Designation of the Registrant		8-K	07/15/2020	3.1	07/22/2020
3.2	Seventh Amended and Restated Bylaws of the Registrant, adopted on October 8, 2018		8-K	10/08/2018	3.1	10/09/2018
4.1	Form of Warrant Issued on November 7, 2014		8-K	11/03/2014	99.1	11/07/2014
4.2	Form of Warrant issued on August 8, 2016		8-K	08/01/2016	99.1	08/02/2016
4.3	Form of Warrant issued April 18, 2017		DEF14A		D	05/19/2017

37

4.4	Warrant to Purchase Stock issued on March 6, 2018 to Western Alliance Bank		10-K	12/31/2017	4.4	03/14/2018
4.5	Warrant to Purchase Stock issued on September 27, 2018 to Western Alliance Bank		10-Q	09/30/2018	4.1	11/14/2018
4.6	Warrant to Purchase Stock issued on September 27, 2018 to SWK Funding LLC		10-Q	09/30/2019	4.2	11/14/2018
4.7	Warrant to Purchase Stock issued on May 7, 2019 to SWK Funding LLC		10-Q	03/31/2019	4.7	05/10/2019
4.8	Consolidated Amended and Restated Warrant to Purchase Common Stock, dated November 9, 2019, by and between the Registrant and SWK Funding LLC		10-Q	09/30/2019	4.8	11/08/2019
4.9	Warrant to Purchase Stock issued on May 15, 2020 to SWK Funding LLC		S-1/A	06/19/2020	4.14	06/19/2020
4.10	Form of Warrant issued on June 9, 2020		8-K	06/08/2020	4.1	06/09/2020
4.11	Form of Warrant issued on July 15, 2020		8-K	07/15/2020	4.2	07/22/2020
4.12	Amended and Restated Warrant Agency Agreement, dated as of July 21, 2020, by and between the Registrant, Computershare, Inc. and Computershare Trust Company, N.A.		8-K	07/15/2020	4.1	07/22/2020
10.1*	Form of Restricted Stock Unit—Phantom Award Notice and Restricted Stock Unit Award Agreement for Employees	X
10.2*	Form of Restricted Stock Unit—Phantom Award Notice and Restricted Stock Unit Award Agreement for Non-Employee Directors	X
10.3*	Restricted Stock Unit—Phantom Award Notice and Restricted Stock Unit Award Agreement, dated July 21, 2021, by and between the Registrant and John R. Beaver	X
10.4*	Form of Stock Appreciation Rights Award Notice and Stock Appreciation Rights Agreement for Non-Employee Directors	X
31.1	Certification pursuant to Rule 13a-14 and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended	X
32.1	Certification pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	**
101	The following unaudited financial information from the Company’s Quarterly Report on Form 10-Q, for the period ended September 30, 2021, formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations and Comprehensive Loss, (iii) Consolidated Statements of Cash Flows, (iv) Notes to Consolidated Financial Statements
101.INS	Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document

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101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

* Compensatory contract or arrangement

** Furnished herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		BIOLASE, INC.
		(Registrant)
November 10, 2021	By:	/s/ JOHN R. BEAVER
Date		John R. Beaver
		President and Chief Executive Officer
			(Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)

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EX-10.1

Employee Form – CA Form SPECIAL RETENTION AWARD Exhibit 10.1

Biolase, Inc.

2018 Long-Term Incentive Plan

Restricted Stock Unit – Phantom Award Notice

[Holder Name]

You have been awarded a restricted stock unit award with respect to shares of Common Stock of Biolase, Inc. (the “Company”) pursuant to the terms and conditions of the Biolase, Inc. 2018 Long-Term Incentive Plan, as amended (the “Plan”) and the Restricted Stock Unit Award Agreement (together with this Phantom Award Notice, the “Agreement”). The Restricted Stock Unit Award Agreement is attached hereto and the Plan and Restricted Stock Unit Award Agreement are available on Shareworks. Capitalized terms not defined herein shall have the meanings specified in the Plan or the Agreement.

Restricted Stock Units:	You have been awarded a restricted stock unit award with respect to [____] shares of the Company’s Common Stock, par value $0.001 per share (the “Common Stock”), subject to adjustment as provided in Section 8.2 of the Agreement (the “Phantom Award”).
Grant Date:	[_____]
Vesting Schedule:	Except as otherwise provided in the Plan or the Agreement,the Phantom Award shall vest if (i) you remain continuously employed with the Company in good standing and performing the objectives of your role with the Company, in each case, through March 31, 2024 (the “Trigger Date” or “Vesting Date”) and (ii) the Company achieves positive EBITDA results for calendar year 2023, excluding Phantom Award expenses associated with the Special Retention Incentive Program, in each case, subject to your continuous employment or service with the Company through the applicable Vesting Date
	For purposes of this Award, “EBITDA” is defined as “net income, or net loss, before interest, taxes, depreciation and amortization, patent litigation settlements, stock-based compensation, and the change in allowance for doubtful accounts”, adjusted to exclude the expense associated with the 2021 Special Retention Incentive Program Grants.
	In the event of a Change in Control, the Phantom Award will vest immediately, and the shares of Phantom Stock may be settled at the Company’s discretion in cash based on the price of BIOLASE common stock on the date of the Change in Control or in BIOLASE common stock, subject to the minimum values outlined in the “Settlement of the Phantom Award” section below.

Settlement of the Phantom Award: The Restricted Stock Units shall be settled in cash based on the greater of the Fair Market Value of a share of Common Stock on the Trigger Date or the Fair Market Value of a share of Common Stock on the Grant Date, less any and all required tax withholdings; provided, however, the Committee retains the discretion, to the extent permitted under the terms of the Plan and applicable law and regulations (including, without limitation, the listing standards of NASDAQ), to settle the Phantom Award in Common Stock, provided that if the Phantom Award is settled in Common Stock, the number of Restricted Stock Units subject to this Award shall be adjusted as necessary to provide a minimum value of $[____], as determined based on a share of Common Stock as of the Vesting Date or, if earlier, the date on which the Committee approves the acceleration of the payout of the Phantom Award, less any and all required withholdings. Notwithstanding anything herein to the contrary, in the event the Company ceases to be publicly-traded, the Phantom Award shall be settled in cash, except as otherwise permitted under Section 5.8 of the Plan in connection with a Change in Control.

2

BIOLASE, INC.
By:
Name:	John Beaver
Title:	President & CEO

Acknowledgment, Acceptance and Agreement:

By signing below and returning this Award Notice to Biolase, Inc. at the address stated herein, I hereby accept the Phantom Award granted to me and acknowledge and agree to be bound by the terms and conditions of this Award Notice, the Agreement and the Plan.

Holder

Date

Biolase, Inc.

27042 Towne Centre Drive, Suite 270

Foothill Ranch, California 92610
Attention: Vice President, Finance

3

Biolase, Inc.

2018 Long-Term Incentive Plan

Restricted Stock Unit Award Agreement

Biolase, Inc., a Delaware corporation (the “Company”), hereby grants to the individual (the “Holder”) named in the Phantom Award notice attached hereto (the “Award Notice”) as of the date set forth in the Phantom Award Notice (the “Grant Date”), pursuant to the provisions of the Biolase, Inc. 2018 Long-Term Incentive Plan, as amended (the “Plan”), a restricted stock unit award (the “Phantom Award”) with respect to the number of shares of the Company’s Common Stock, par value $0.001 per share (“Common Stock”), set forth in the Phantom Award Notice, upon and subject to the restrictions, terms and conditions set forth below, in the Phantom Award Notice and in the Plan. Capitalized terms not defined herein shall have the meanings specified in the Plan.

1. Award Subject to Acceptance of Agreement. The Phantom Award shall be null and void unless the Holder shall accept this Agreement by executing the Phantom Award Notice in the space provided therefor and returning an original execution copy of the Phantom Award Notice to the Company.

2. Rights as a Stockholder. The Holder shall not be entitled to any privileges of ownership with respect to the shares of Common Stock subject to the Phantom Award unless and until, and only to the extent, the Phantom Award is settled in shares of Common Stock pursuant to Section 4 and the Holder becomes a stockholder of record with respect to such shares.

3. Restriction Period and Vesting.

3.1. Vesting Conditions. The Phantom Award shall vest in accordance with the vesting schedule set forth in the Phantom Award Notice, provided the Holder remains continuously employed by or in the service of the Company through the applicable Vesting Date. The period of time prior to the vesting shall be referred to herein as the “Restriction Period.”

3.2. Termination of Service. Notwithstanding any other agreement between the Company and the Holder to the contrary, if the Holder’s employment or service with the Company terminates prior to the end of the Restriction Period for any reason, then the portion of the Phantom Award that was not vested immediately prior to such termination of employment shall be immediately forfeited by the Holder and cancelled by the Company.

3.3. Change in Control. Upon a Change in Control, the Restriction Period shall lapse and the Phantom Award shall become fully vested and shall be subject to Section 5.8 of the Plan.

4. Settlement of Award. Subject to Section 6, as soon as practicable (but not later than 30 days) after the vesting of the Phantom Award, the Company shall pay to the Holder a cash payment equal to the number of shares of Common Stock that vested upon the applicable Vesting Date or vesting event multiplied by the Fair Market Value of a share of Common Stock on the applicable

4

Vesting Date or event, calculated in accordance with the terms of the Phantom Award Notice; provided, however, the Committee may elect, in its sole and absolute discretion and to the extent permitted by applicable law (including the listing requirements of NASDAQ), to settle the Phantom Award, in whole or in part, in Common Stock and shall issue or transfer to the Holder (or such other person as is acceptable to the Company and designated in writing by the Holder) the number of shares of Common Stock underlying the vested Award, as calculated in accordance with the Phantom Award Notice. The Company may effect such issuance or transfer either by the delivery of one or more stock certificates to the Holder or by making an appropriate entry on the books of the Company or the transfer agent of the Company. Except as provided for in Section 8.1, the Company shall pay all original issue or transfer taxes and all fees and expenses incident to such delivery or issuance. Prior to the issuance or transfer to the Holder of the shares of Common Stock subject to the Phantom Award, the Holder shall have no direct or secured claim in any specific assets of the Company or in such shares of Common Stock, and will have the status of a general unsecured creditor of the Company.

5. Transfer Restrictions and Investment Representation.

5.1. Nontransferability of Award. The Phantom Award may not be transferred by the Holder other than by will or the laws of descent and distribution or pursuant to the designation of one or more beneficiaries on the form prescribed by the Company. Except to the extent permitted by the foregoing sentence, the Phantom Award may not be sold, transferred, assigned, pledged, hypothecated, encumbered or otherwise disposed of (whether by operation of law or otherwise) or be subject to execution, attachment or similar process. Upon any attempt to so sell, transfer, assign, pledge, hypothecate, encumber or otherwise dispose of the Phantom Award, the Phantom Award and all rights hereunder shall immediately become null and void.

5.2. Investment Representation. The Holder hereby represents and covenants that (a) any shares of Common Stock acquired upon the vesting of the Phantom Award will be acquired for investment and not with a view to the distribution thereof within the meaning of the Securities Act of 1933, as amended (the “Securities Act”), unless such acquisition has been registered under the Securities Act and any applicable state securities laws; (b) any subsequent sale of any such shares shall be made either pursuant to an effective registration statement under the Securities Act and any applicable state securities laws, or pursuant to an exemption from registration under the Securities Act and such state securities laws; and (c) if requested by the Company, the Holder shall submit a written statement, in form satisfactory to the Company, to the effect that such representation (x) is true and correct as of the date of vesting of the Phantom Award with respect to any shares of Common Stock hereunder or (y) is true and correct as of the date of any sale of any such share, as applicable. As a further condition precedent to the issuance or delivery to the Holder of any shares of Common Stock subject to the Phantom Award, the Holder shall comply with all regulations and requirements of any regulatory authority having control of or supervision over the issuance or delivery of the shares and, in connection therewith, shall execute any documents which the Board or the Committee shall in its sole discretion deem necessary or advisable.

5

6. Covenants of Employee.

6.1. Covenant Not to Compete. Holder recognizes and acknowledges that it is essential for the proper protection of the business of the Company that Holder be restrained from competing against the Company during the term of Holder’s employment with the Company. Therefore, in consideration for the Phantom Award and other good and valuable consideration, Holder agrees that, during the term of the Holder’s employment with the Company, Holder will not engage, directly or indirectly, whether as principal or as agent, officer, director, employee, consultant, shareholder or otherwise, alone or in association with any other person, corporation or other entity, in any Competing Business. For purposes of this Agreement, the term “Competing Business” shall mean: (a) any person, corporation or other entity which sells or attempts to sell, or provides or attempts to provide any products and/or services which are the same as or similar to the products and/or services sold or provided by the Company; or (b) any person, corporation, or other entity that solicits, trades with, advises, calls upon or otherwise does or attempts to do, directly or indirectly, business with any clients, customers or accounts of the Company, its successors, assigns or affiliates that have done business with the Company at any time or from time to time; or (c) any person, corporation or other entity engaged in the same or similar business as the business of the Company.

6.2. Covenant Not to Use Trade Secret Information to Solicit Customers or Clients. Holder recognizes and acknowledges that the Company has expended and will expend considerable and significant amounts of time and money establishing relationships and good will with existing and prospective customers or clients and developing a list of its customers or clients and prospective customers or clients, which list is not available to the general public and which constitutes a Trade Secret under the California Uniform Trade Secret Act (California Civil Code § 3426, et seq.). Holder further recognizes and acknowledges that the aforesaid list may contain other information about the customers or clients and prospective customers or clients not available to the general public and that Holder may be privileged to this list. Holder also recognizes and acknowledges that many of the Company's competitors could not recreate this list without substantial efforts, that the Company's business would be irreparably and greatly damaged by the use of this information other than for its benefit, and that it is essential for the proper protection of the business of the Company that Holder be restrained from soliciting the trade of or trading with the customers or clients of the Company. Therefore, in consideration for the Phantom Award and other good and valuable consideration, Holder agrees that Holder will not, directly or indirectly use the Company’s trade secrets to solicit the trade of, or trade with, or do business with, or attempt to solicit the trade of any of the Company's customers or clients or prospective customers or clients except for the Company's benefit, and except to the extent that Holder traded with or did business with any such customer or client or prospective customer or client prior to the date upon which said Holder was engaged to perform services for and on behalf of the Company. Holder also agrees not to utilize in any manner other than for the benefit of the Company, or provide access to anyone in any Competing Business (as previously defined), the Company’s list of customers, or any information contained in that list.

6

6.3. Covenant Not to Solicit Employees. Holder recognizes and acknowledges that the Company has expended and will expend considerable and significant amounts of time and money establishing relationships with and/or training its employees. Holder recognizes and acknowledges that it is essential for the proper protection of the business of the Company that Holder be restrained from soliciting any employee of the Company to leave the employ of the Company. Therefore, in consideration for the Phantom Award and other good and valuable consideration, Holder agrees that, during the term of Holder’s employment with the Company, and during the two (2) year period commencing on the date of termination of Holder’s employment with the Company, Holder will not solicit, or attempt to solicit, any employee of the Company to leave the Company for any reason whatsoever.

6.4. Covenant Not to Violate Corporate Confidences.

(a) Holder recognizes and acknowledges that (a) during the term of Holder’s employment with the Company, it may be necessary for Holder to acquire, and during the course of Holder’s previous work for or on behalf of the Company prior to the commencement of this Agreement, Holder may have already acquired, information which could include, in whole or in part, information concerning the Company’s sales, sales volume, sales methods, sales proposals, customers or clients and prospective customers or clients (including lists thereof), identity of customers or clients and prospective customers or clients, identity of key personnel in the employ of customers or clients and prospective customers or clients, amount or kind of customer's or client’s purchases from and/or transactions with the Company, the needs and requirements of any or all customers or clients, the terms and conditions under which the Company deals with customers or clients or prospective customers or clients, the terms and conditions under which the Company deals with vendors or suppliers or prospective vendors or suppliers, employee lists, the Company’s sources of supply, the Company’s billing rates, methods, techniques, compositions, ideas, creations, drawings, renderings, plans, improvements, inventions, computer programs and data, system documentation, special hardware, product hardware, related software development, correspondence, letters, notes, notebooks, reports, flowcharts, proposals, processes and/or any and all other trade secret, confidential or proprietary information belonging to the Company or relating to the Company’s business(es) and/or affairs, (collectively referred to herein as the “Confidential and Proprietary Information”); (b) this Confidential and Proprietary Information has been compiled by the Company at great expense and over a great amount of time; (c) this Confidential and Proprietary Information derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use; (d) the Confidential and Proprietary Information is the subject of efforts that are reasonable under the circumstances to maintain its secrecy; (e) the Confidential and Proprietary Information is the sole and exclusive property of the Company; (f) the use, misappropriation or disclosure of the Confidential and Proprietary Information by Holder or otherwise would constitute a breach of trust and could cause irreparable injury to the Company; and (g) it is essential to the protection of the Company’s good will and to the maintenance of the Company’s competitive position that the Confidential and Proprietary Information be kept secret and that Holder not disclose the Confidential and Proprietary Information to others or use the Confidential and Proprietary Information to Holder’s own advantage or the advantage of others.

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(b) In consideration for the Phantom Award and other good and valuable consideration, and as a material inducement to the Company to disclose or allow to be known to Holder some or all of the Confidential and Proprietary Information during the term of Holder’s employment with the Company (at the Company’s sole and absolute discretion), Holder hereby agrees that, throughout the term of Holder’s employment with the Company and following the date of termination of Holder’s employment with the Company, Holder will hold and safeguard the Confidential and Proprietary Information in trust for the Company, and not misappropriate or divulge to any person that is not affiliated with the Company, or make available to anyone for use outside the Company’s organization at any time, either during the term of Holder’s employment with the Company or subsequent to the termination of Holder’s employment with the Company, except with the express written consent of the Company or as provided by this agreement, any of the Company's Confidential and Proprietary Information, whether or not developed or created by Holder.

(c) Holder further agrees that, upon termination of Holder’s employment with the Company, or at any time upon request by the Company, Holder shall surrender to the Company all Company property which said Holder is then in possession, including any and all tangible evidence of such Confidential and Proprietary Information.

6.5. Proprietary Rights.

(a) Holder agrees that all Work Product, as hereinafter defined, created solely or jointly by Holder, arising from or relating to any services performed by Holder for or on behalf of the Company, or in the course Holder’s performance of Holder’s duties as an Holder of the Company, or previously performed by Holder for or on behalf of the Company, shall be deemed “work made for hire” and shall be the sole and exclusive property of the Company. Holder shall execute all such assignments, oaths, declarations and other documents as may be prepared by the Company to effect the foregoing. In addition, Holder agrees that all other property, materials, papers, books, records, computer software and programs of the Company, as well as all reproductions thereof, relating to the business and affairs of the Company, or its customers or clients, whether or not prepared by Holder, shall be the sole and exclusive property of the Company. Without the prior written consent of the Company, Holder agrees not to use any such Work Product or other property of the Company for any purpose other than to perform services for or on behalf of the Company.

(b) For purposes of this Agreement, the term “Work Product” shall include but is not limited to all documentation, manuals, materials, creative works, methods, techniques, compositions, ideas, creations, drawings, renderings, plans, improvements, inventions, computer programs and data, system documentation, special hardware, product hardware, related software development, correspondence, letters, notes, notebooks, reports, flowcharts, proposals, financial calculations and formulae, know-how and other information, (including, without limitation, any Confidential and Proprietary Information (as defined herein)), which is created for or on behalf of the Company, in whole or in part, by Holder, whether or not such Work Product is capable of being copyrighted, patented, trademarked or otherwise protected under applicable law.

(c) Holder agrees that said Holder shall assist in every lawful way in protecting or enforcing the Company's rights in and to the Work Product and/or other property of the

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Company, and in prosecuting and defending appeals, interferences, infringement suits and controversies relating thereto. The provisions of this Section 6 shall survive the termination of Holder’s employment with the Company.

(d) Consistent with California Labor Code Section 2870, the provisions of Section 6.5 do not apply to invention that Holder develops entirely on his or her own time without using the Company’s equipment, supplies, facilities, or trade secret information except for those inventions that either (a) relate at the time of conception or reduction to practice of the invention to the Company’s business, or actual or demonstrably anticipated research or development of the Company, or (b) result from any work performed by Holder for the Company.

6.6. Non-disparagement. In consideration for the Phantom Award and other good and valuable consideration, Holder agrees not to disparage the Company at any time during or following Holder’s employment with the Company. Prohibited actions include, but are not limited to, private or public comments, statements, or writings critical of the Company, any Subsidiary or any affiliate.

6.7. Exceptions. Notwithstanding this Section 6, nothing in this Agreement shall prohibit Holder from participating in concerted activity under the National Labor Relations Act or disclosing information to government agencies/entities as legally required, and/or from reporting possible violations of federal or state law or regulation to any governmental agency or entity, including but not limited to the Department of Justice, the Securities and Exchange Commission, the congress, and any agency inspector general, or making other disclosures that are protected under the whistleblower provisions of federal or state law or regulation. Holder does not need the prior authorization from the Company to make any such reports or disclosures and Holder is not required to notify the Company that Holder has made such reports or disclosures.

6.8. Reformation. If, at any time of enforcement of this Section 6, a court or an arbitrator holds that the restrictions stated herein are unreasonable or unenforceable under circumstances then existing, the parties hereto agree that the court or arbitrator shall be allowed to revise the restrictions contained herein to cover the restrictions to the maximum extent permitted by law. This Agreement shall not authorize a court or arbitrator to increase or broaden any of the restrictions in this Section 6.

7. Clawback of Proceeds.

7.1. Clawback of Proceeds. If, during the one-year period following Holder’s termination of employment Holder materially violates any agreement between Holder and the Company or its Subsidiaries with respect to Section 6 of this Agreement: (i) the Phantom Award shall be forfeited and (ii) the Holder shall immediately remit a cash payment to the Company equal to cash payments received by the Holder or, if the Phantom Award was settled in Common Stock, the Fair Market Value of a share of Common Stock on the date on which the Company first became aware of such violation or the date of Holder’s termination of employment, whichever is greater, multiplied by the number of shares of Common Stock that were delivered to the Holder pursuant to the vesting of the Phantom Award. The remedy provided by this Section 7 shall be in addition to and not in

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lieu of any rights or remedies which the Company may have against the Holder in respect of a breach by the Holder of any duty or obligation to the Company.

7.2. Right of Setoff. The Holder agrees that by accepting the Phantom Award Notice the Holder authorizes the Company and its affiliates to deduct, to the extent permitted by applicable law, any amount or amounts owed by the Holder pursuant to this Section 7 from any amounts payable by or on behalf of the Company or any affiliate to the Holder, including, without limitation, any amount payable to the Holder as salary, wages, vacation pay, bonus or the settlement of the Phantom Award or any stock-based award. This right of setoff shall not be an exclusive remedy and the Company’s or an affiliate’s election not to exercise this right of setoff with respect to any amount payable to the Holder shall not constitute a waiver of this right of setoff with respect to any other amount payable to the Holder or any other remedy.

8. Additional Terms and Conditions of Award.

8.1. Withholding Taxes.

(a) If the Phantom Award is settled in cash, the cash payment shall be reduced by such amount as the Company determines is required, under all applicable federal, state, local or other laws or regulations, to be withheld and paid over as income or other withholding taxes (the “Required Tax Payments”).

(b) If any portion of the Phantom Award is settled in Common Stock, as a condition precedent to the issuance or transfer of any shares of Common Stock upon vesting of the Phantom Award, Holder shall, upon request by the Company, pay to the Company the Required Tax Payments with respect to the issuance or transfer of such shares of Common Stock. If Holder shall fail to advance the Required Tax Payments after request by the Company, the Company may, in its discretion, deduct any Required Tax Payments from any amount then or thereafter payable by the Company to Holder. Holder may elect to satisfy his or her obligation to advance the Required Tax Payments by any of the following means: (i) a cash payment to the Company; (ii) delivery to the Company (either actual delivery or by attestation procedures established by the Company) of previously owned whole shares of Common Stock having an aggregate Fair Market Value, determined as of the date on which such withholding obligation arises (the “Tax Date”), equal to the Required Tax Payments; or (iii) any combination of (i) or (ii). Shares of Common Stock to be delivered or withheld may not have a Fair Market Value in excess of the minimum amount of the Required Tax Payments. No share of Common Stock or certificate representing a share of Common Stock shall be issued or delivered until the Required Tax Payments have been satisfied in full.

8.2. Adjustment. In the event of any equity restructuring (within the meaning of Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation—Stock Compensation or any successor or replacement accounting standard) that causes the per share value of shares of Common Stock to change, such as a stock dividend, stock split, spinoff, rights offering or recapitalization through an extraordinary cash dividend, the terms of the Phantom Award (including the number and class of securities subject to the Phantom Award), shall be appropriately adjusted by the

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Committee. In the event of any other change in corporate capitalization, including a merger, consolidation, reorganization, or partial or complete liquidation of the Company, such equitable adjustments described in the foregoing sentence may be made as determined to be appropriate and equitable by the Committee to prevent dilution or enlargement of rights of participants. In either case, the decision of the Committee regarding any such adjustment shall be final, binding and conclusive.

8.3. Compliance with Applicable Law. The Phantom Award is subject to the condition that if the listing, registration or qualification of the shares subject to the Phantom Award upon any securities exchange or under any law, or the consent or approval of any governmental body, or the taking of any other action is necessary or desirable as a condition of, or in connection with, the issuance or delivery of shares hereunder, the shares of Common Stock subject to the Phantom Award shall not be issued, unless such listing, registration, qualification, consent, approval or other action shall have been effected or obtained, free of any conditions not acceptable to the Company. The Company agrees to use reasonable efforts to effect or obtain any such listing, registration, qualification, consent, approval or other action.

8.4. Award Confers No Rights to Continued Employment or Service. In no event shall the granting of the Phantom Award or its acceptance by Holder, or any provision of this Agreement or the Plan, give or be deemed to give Holder any right to continued employment by or service with the Company, any Subsidiary or any affiliate of the Company or affect in any manner the right of the Company, any Subsidiary or any affiliate of the Company to terminate the employment or service of any person at any time.

8.5. Decisions of Board or Committee. The Board or the Committee shall have the right to resolve all questions which may arise in connection with the Phantom Award. Any interpretation, determination or other action made or taken by the Board or the Committee regarding the Plan or this Agreement shall be final, binding and conclusive.

8.6. Successors. This Agreement shall be binding upon and inure to the benefit of any successor or successors of the Company and any person or persons who shall, upon the death of Holder, acquire any rights hereunder in accordance with this Agreement or the Plan.

8.7. Notices. All notices, requests or other communications provided for in this Agreement shall be made, if to the Company, to Biolase, Inc., Attn: Vice President, Finance, 27042 Towne Centre Drive, Suite 270, Foothill Ranch, CA 92610, and if to the Holder, to the last known mailing address of the Holder contained in the records of the Company. All notices, requests or other communications provided for in this Agreement shall be made in writing either (a) by personal delivery, (b) by facsimile or electronic mail with confirmation of receipt, (c) bymailing in the United States mails or (d) by express courier service. The notice, request or other communication shall be deemed to be received upon personal delivery, upon confirmation of receipt of facsimile or electronic mail transmission or upon receipt by the party entitled thereto if by United States mail or express courier service; provided, however, that if a notice, request or other communication sent to

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the Company is not received during regular business hours, it shall be deemed to be received on the next succeeding business day of the Company.

8.8. Governing Law. This Agreement, the Phantom Award and all determinations made and actions taken pursuant hereto and thereto, to the extent not governed by the Code or the laws of the United States, shall be governed by the laws of the State of Delaware and construed in accordance therewith without giving effect to principles of conflicts of laws.

8.9. Agreement Subject to the Plan. This Agreement is subject to the provisions of the Plan and shall be interpreted in accordance therewith. In the event that the provisions of this Agreement and the Plan conflict, the Plan shall control. The Holder hereby acknowledges receipt of a copy of the Plan.

8.10. Entire Agreement. This Agreement and the Plan constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and the Holder with respect to the subject matter hereof, and may not be modified adversely to the Holder’s interest except by means of a writing signed by the Company and the Holder.

8.11. Partial Invalidity. The invalidity or unenforceability of any particular provision of this Agreement shall not effect the other provisions hereof and this Agreement shall be construed in all respects as if such invalid or unenforceable provisions were omitted.

8.12. Amendment and Waiver. The provisions of this Agreement may be amended or waived only by the written agreement of the Company and the Holder, and no course of conduct or failure or delay in enforcing the provisions of this Agreement shall affect the validity, binding effect or enforceability of this Agreement.

8.13. Counterparts. The Phantom Award Notice may be executed in two counterparts, each of which shall be deemed an original and both of which together shall constitute one and the same instrument.

* * *

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EX-10.2

SPECIAL RETENTION AWARD Exhibit 10.2

Biolase, Inc.

2018 Long-Term Incentive Plan

Restricted Stock Unit – Phantom Award Notice

[Name of Director]

You have been awarded a restricted stock unit award with respect to shares of Common Stock of Biolase, Inc. (the “Company”) pursuant to the terms and conditions of the Biolase, Inc. 2018 Long-Term Incentive Plan, as amended (the “Plan”) and the Restricted Stock Unit Award Agreement (together with this Phantom Award Notice, the “Agreement”). The Restricted Stock Unit Award Agreement is attached hereto and the Plan and Restricted Stock Unit Award Agreement are available on Shareworks. Capitalized terms not defined herein shall have the meanings specified in the Plan or the Agreement.

Restricted Stock Units:	You have been awarded a restricted stock unit award with respect to [______]shares of the Company’s Common Stock, par value $0.001 per share (the “Common Stock”), subject to adjustment as provided in Section 8.2 of the Agreement (the “Phantom Award”).
Grant Date:	[______]
Vesting Schedule:	Except as otherwise provided in the Plan or the Agreement,the Phantom Award shall vest if you remain continuously in service as a member of the Board of Directors of the Company in good standing and performing the objectives of your role with the Company through March 31, 2024 (the “Trigger Date” or “Vesting Date”). However, if the Fair Market Value of a share of Common Stock on the Trigger Date is greater than $1.40 per share (the “Payout Cap”), then 50% of the amount of the Phantom Award in excess of the Payout Cap shall be paid to you on the one-year anniversary of the Trigger Date and the remaining 50% of the amount of the Phantom Award in excess of the Payout Cap shall be paid to you on the two-year anniversary of the Trigger Date (the Trigger Date and the one-year and two-year anniversaries of the Trigger Date, shall each be a “Vesting Date”), in each case, subject to your continuous employment or service with the Company through the applicable Vesting Date; provided, further, that if the Company elects to and is permitted under the Plan and applicable law and regulations (including, without limitation, the listing standards of NASDAQ) to settle the Phantom Award in Common Stock, the Payout Cap set forth above shall not apply, and the Committee retains the discretion to accelerate the payment of the Phantom Award, in its sole and absolute discretion.  For the avoidance of doubt, the Payout Cap shall be an absolute dollar value

	and shall not fluctuate based on changes in the Company’s Common Stock price or other measures of earnings.
	In the event of a Change in Control, the Phantom Award will vest immediately, and the shares of Phantom Stock may be settled at the Company’s discretion in cash based on the price of BIOLASE common stock on the date of the Change in Control or in BIOLASE common stock, subject to the minimum values outlined in the “Settlement of the Phantom Award” section below.
Settlement of the Phantom Award:	The Restricted Stock Units shall be settled in cash based on the greater of the Fair Market Value of a share of Common Stock on the Trigger Date or the Fair Market Value of a share of Common Stock on the Grant Date, less any and all required tax withholdings; provided, however, the Committee retains the discretion, to the extent permitted under the terms of the Plan and applicable law and regulations (including, without limitation, the listing standards of NASDAQ), to settle the Phantom Award in Common Stock, provided that if the Phantom Award is settled in Common Stock, the number of Restricted Stock Units subject to this Award shall be adjusted as necessary to provide a minimum value of $[______], as determined based on a share of Common Stock as of the Vesting Date or, if earlier, the date on which the Committee approves the acceleration of the payout of the Phantom Award, less any and all required withholdings. Notwithstanding anything herein to the contrary, in the event the Company ceases to be publicly-traded, the Phantom Award shall be settled in cash, except as otherwise permitted under Section 5.8 of the Plan in connection with a Change in Control.

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BIOLASE, INC.
By:
Name:	John Beaver
Title:	President & CEO

Acknowledgment, Acceptance and Agreement:

By signing below and returning this Award Notice to Biolase, Inc. at the address stated herein, I hereby accept the Phantom Award granted to me and acknowledge and agree to be bound by the terms and conditions of this Award Notice, the Agreement and the Plan.

Holder

Date

Biolase, Inc.

27042 Towne Centre Drive, Suite 270

Foothill Ranch, California 92610
Attention: Vice President, Finance

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Biolase, Inc.

2018 Long-Term Incentive Plan

Restricted Stock Unit Award Agreement

Biolase, Inc., a Delaware corporation (the “Company”), hereby grants to the individual (the “Holder”) named in the Phantom Award notice attached hereto (the “Award Notice”) as of the date set forth in the Phantom Award Notice (the “Grant Date”), pursuant to the provisions of the Biolase, Inc. 2018 Long-Term Incentive Plan, as amended (the “Plan”), a restricted stock unit award (the “Phantom Award”) with respect to the number of shares of the Company’s Common Stock, par value $0.001 per share (“Common Stock”), set forth in the Phantom Award Notice, upon and subject to the restrictions, terms and conditions set forth below, in the Phantom Award Notice and in the Plan. Capitalized terms not defined herein shall have the meanings specified in the Plan.

1. Award Subject to Acceptance of Agreement. The Phantom Award shall be null and void unless the Holder shall accept this Agreement by executing the Phantom Award Notice in the space provided therefor and returning an original execution copy of the Phantom Award Notice to the Company.

2. Rights as a Stockholder. The Holder shall not be entitled to any privileges of ownership with respect to the shares of Common Stock subject to the Phantom Award unless and until, and only to the extent, the Phantom Award is settled in shares of Common Stock pursuant to Section 4 and the Holder becomes a stockholder of record with respect to such shares.

3. Restriction Period and Vesting.

3.1. Vesting Conditions. The Phantom Award shall vest in accordance with the vesting schedule set forth in the Phantom Award Notice, provided the Holder remains continuously employed by or in the service of the Company through the applicable Vesting Date. The period of time prior to the vesting shall be referred to herein as the “Restriction Period.”

3.2. Termination of Service. Notwithstanding any other agreement between the Company and the Holder to the contrary, if the Holder’s employment or service with the Company terminates prior to the end of the Restriction Period for any reason, then the portion of the Phantom Award that was not vested immediately prior to such termination of employment shall be immediately forfeited by the Holder and cancelled by the Company.

3.3. Change in Control. Upon a Change in Control, the Restriction Period shall lapse and the Phantom Award shall become fully vested and shall be subject to Section 5.8 of the Plan.

4. Settlement of Award. Subject to Section 6, as soon as practicable (but not later than 30 days) after the vesting of the Phantom Award, the Company shall pay to the Holder a cash payment equal to the number of shares of Common Stock that vested upon the applicable Vesting Date or vesting event multiplied by the Fair Market Value of a share of Common Stock on the applicable

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Vesting Date or event, calculated in accordance with the terms of the Phantom Award Notice; provided, however, the Committee may elect, in its sole and absolute discretion and to the extent permitted by applicable law (including the listing requirements of NASDAQ), to settle the Phantom Award, in whole or in part, in Common Stock and shall issue or transfer to the Holder (or such other person as is acceptable to the Company and designated in writing by the Holder) the number of shares of Common Stock underlying the vested Award, as calculated in accordance with the Phantom Award Notice. The Company may effect such issuance or transfer either by the delivery of one or more stock certificates to the Holder or by making an appropriate entry on the books of the Company or the transfer agent of the Company. Except as provided for in Section 8.1, the Company shall pay all original issue or transfer taxes and all fees and expenses incident to such delivery or issuance. Prior to the issuance or transfer to the Holder of the shares of Common Stock subject to the Phantom Award, the Holder shall have no direct or secured claim in any specific assets of the Company or in such shares of Common Stock, and will have the status of a general unsecured creditor of the Company.

5. Transfer Restrictions and Investment Representation.

5.1. Nontransferability of Award. The Phantom Award may not be transferred by the Holder other than by will or the laws of descent and distribution or pursuant to the designation of one or more beneficiaries on the form prescribed by the Company. Except to the extent permitted by the foregoing sentence, the Phantom Award may not be sold, transferred, assigned, pledged, hypothecated, encumbered or otherwise disposed of (whether by operation of law or otherwise) or be subject to execution, attachment or similar process. Upon any attempt to so sell, transfer, assign, pledge, hypothecate, encumber or otherwise dispose of the Phantom Award, the Phantom Award and all rights hereunder shall immediately become null and void.

5.2. Investment Representation. The Holder hereby represents and covenants that (a) any shares of Common Stock acquired upon the vesting of the Phantom Award will be acquired for investment and not with a view to the distribution thereof within the meaning of the Securities Act of 1933, as amended (the “Securities Act”), unless such acquisition has been registered under the Securities Act and any applicable state securities laws; (b) any subsequent sale of any such shares shall be made either pursuant to an effective registration statement under the Securities Act and any applicable state securities laws, or pursuant to an exemption from registration under the Securities Act and such state securities laws; and (c) if requested by the Company, the Holder shall submit a written statement, in form satisfactory to the Company, to the effect that such representation (x) is true and correct as of the date of vesting of the Phantom Award with respect to any shares of Common Stock hereunder or (y) is true and correct as of the date of any sale of any such share, as applicable. As a further condition precedent to the issuance or delivery to the Holder of any shares of Common Stock subject to the Phantom Award, the Holder shall comply with all regulations and requirements of any regulatory authority having control of or supervision over the issuance or delivery of the shares and, in connection therewith, shall execute any documents which the Board or the Committee shall in its sole discretion deem necessary or advisable.

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6. Covenants of Employee.

6.1. Covenant Not to Compete. Holder recognizes and acknowledges that it is essential for the proper protection of the business of the Company that Holder be restrained from competing against the Company during the term of Holder’s employment with the Company. Therefore, in consideration for the Phantom Award and other good and valuable consideration, Holder agrees that, during the term of the Holder’s employment with the Company, Holder will not engage, directly or indirectly, whether as principal or as agent, officer, director, employee, consultant, shareholder or otherwise, alone or in association with any other person, corporation or other entity, in any Competing Business. For purposes of this Agreement, the term “Competing Business” shall mean: (a) any person, corporation or other entity which sells or attempts to sell, or provides or attempts to provide any products and/or services which are the same as or similar to the products and/or services sold or provided by the Company; or (b) any person, corporation, or other entity that solicits, trades with, advises, calls upon or otherwise does or attempts to do, directly or indirectly, business with any clients, customers or accounts of the Company, its successors, assigns or affiliates that have done business with the Company at any time or from time to time; or (c) any person, corporation or other entity engaged in the same or similar business as the business of the Company.

6.2. Covenant Not to Use Trade Secret Information to Solicit Customers or Clients. Holder recognizes and acknowledges that the Company has expended and will expend considerable and significant amounts of time and money establishing relationships and good will with existing and prospective customers or clients and developing a list of its customers or clients and prospective customers or clients, which list is not available to the general public and which constitutes a Trade Secret under the California Uniform Trade Secret Act (California Civil Code § 3426, et seq.). Holder further recognizes and acknowledges that the aforesaid list may contain other information about the customers or clients and prospective customers or clients not available to the general public and that Holder may be privileged to this list. Holder also recognizes and acknowledges that many of the Company's competitors could not recreate this list without substantial efforts, that the Company's business would be irreparably and greatly damaged by the use of this information other than for its benefit, and that it is essential for the proper protection of the business of the Company that Holder be restrained from soliciting the trade of or trading with the customers or clients of the Company. Therefore, in consideration for the Phantom Award and other good and valuable consideration, Holder agrees that Holder will not, directly or indirectly use the Company’s trade secrets to solicit the trade of, or trade with, or do business with, or attempt to solicit the trade of any of the Company's customers or clients or prospective customers or clients except for the Company's benefit, and except to the extent that Holder traded with or did business with any such customer or client or prospective customer or client prior to the date upon which said Holder was engaged to perform services for and on behalf of the Company. Holder also agrees not to utilize in any manner other than for the benefit of the Company, or provide access to anyone in any Competing Business (as previously defined), the Company’s list of customers, or any information contained in that list.

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6.3. Covenant Not to Solicit Employees. Holder recognizes and acknowledges that the Company has expended and will expend considerable and significant amounts of time and money establishing relationships with and/or training its employees. Holder recognizes and acknowledges that it is essential for the proper protection of the business of the Company that Holder be restrained from soliciting any employee of the Company to leave the employ of the Company. Therefore, in consideration for the Phantom Award and other good and valuable consideration, Holder agrees that, during the term of Holder’s employment with the Company, and during the two (2) year period commencing on the date of termination of Holder’s employment with the Company, Holder will not solicit, or attempt to solicit, any employee of the Company to leave the Company for any reason whatsoever.

6.4. Covenant Not to Violate Corporate Confidences.

(a) Holder recognizes and acknowledges that (a) during the term of Holder’s employment with the Company, it may be necessary for Holder to acquire, and during the course of Holder’s previous work for or on behalf of the Company prior to the commencement of this Agreement, Holder may have already acquired, information which could include, in whole or in part, information concerning the Company’s sales, sales volume, sales methods, sales proposals, customers or clients and prospective customers or clients (including lists thereof), identity of customers or clients and prospective customers or clients, identity of key personnel in the employ of customers or clients and prospective customers or clients, amount or kind of customer's or client’s purchases from and/or transactions with the Company, the needs and requirements of any or all customers or clients, the terms and conditions under which the Company deals with customers or clients or prospective customers or clients, the terms and conditions under which the Company deals with vendors or suppliers or prospective vendors or suppliers, employee lists, the Company’s sources of supply, the Company’s billing rates, methods, techniques, compositions, ideas, creations, drawings, renderings, plans, improvements, inventions, computer programs and data, system documentation, special hardware, product hardware, related software development, correspondence, letters, notes, notebooks, reports, flowcharts, proposals, processes and/or any and all other trade secret, confidential or proprietary information belonging to the Company or relating to the Company’s business(es) and/or affairs, (collectively referred to herein as the “Confidential and Proprietary Information”); (b) this Confidential and Proprietary Information has been compiled by the Company at great expense and over a great amount of time; (c) this Confidential and Proprietary Information derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use; (d) the Confidential and Proprietary Information is the subject of efforts that are reasonable under the circumstances to maintain its secrecy; (e) the Confidential and Proprietary Information is the sole and exclusive property of the Company; (f) the use, misappropriation or disclosure of the Confidential and Proprietary Information by Holder or otherwise would constitute a breach of trust and could cause irreparable injury to the Company; and (g) it is essential to the protection of the Company’s good will and to the maintenance of the Company’s competitive position that the Confidential and Proprietary Information be kept secret and that Holder not disclose the Confidential and Proprietary Information to others or use the Confidential and Proprietary Information to Holder’s own advantage or the advantage of others.

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(b) In consideration for the Phantom Award and other good and valuable consideration, and as a material inducement to the Company to disclose or allow to be known to Holder some or all of the Confidential and Proprietary Information during the term of Holder’s employment with the Company (at the Company’s sole and absolute discretion), Holder hereby agrees that, throughout the term of Holder’s employment with the Company and following the date of termination of Holder’s employment with the Company, Holder will hold and safeguard the Confidential and Proprietary Information in trust for the Company, and not misappropriate or divulge to any person that is not affiliated with the Company, or make available to anyone for use outside the Company’s organization at any time, either during the term of Holder’s employment with the Company or subsequent to the termination of Holder’s employment with the Company, except with the express written consent of the Company or as provided by this agreement, any of the Company's Confidential and Proprietary Information, whether or not developed or created by Holder.

(c) Holder further agrees that, upon termination of Holder’s employment with the Company, or at any time upon request by the Company, Holder shall surrender to the Company all Company property which said Holder is then in possession, including any and all tangible evidence of such Confidential and Proprietary Information.

6.5. Proprietary Rights.

(a) Holder agrees that all Work Product, as hereinafter defined, created solely or jointly by Holder, arising from or relating to any services performed by Holder for or on behalf of the Company, or in the course Holder’s performance of Holder’s duties as an Holder of the Company, or previously performed by Holder for or on behalf of the Company, shall be deemed “work made for hire” and shall be the sole and exclusive property of the Company. Holder shall execute all such assignments, oaths, declarations and other documents as may be prepared by the Company to effect the foregoing. In addition, Holder agrees that all other property, materials, papers, books, records, computer software and programs of the Company, as well as all reproductions thereof, relating to the business and affairs of the Company, or its customers or clients, whether or not prepared by Holder, shall be the sole and exclusive property of the Company. Without the prior written consent of the Company, Holder agrees not to use any such Work Product or other property of the Company for any purpose other than to perform services for or on behalf of the Company.

(b) For purposes of this Agreement, the term “Work Product” shall include but is not limited to all documentation, manuals, materials, creative works, methods, techniques, compositions, ideas, creations, drawings, renderings, plans, improvements, inventions, computer programs and data, system documentation, special hardware, product hardware, related software development, correspondence, letters, notes, notebooks, reports, flowcharts, proposals, financial calculations and formulae, know-how and other information, (including, without limitation, any Confidential and Proprietary Information (as defined herein)), which is created for or on behalf of the Company, in whole or in part, by Holder, whether or not such Work Product is capable of being copyrighted, patented, trademarked or otherwise protected under applicable law.

(c) Holder agrees that said Holder shall assist in every lawful way in protecting or enforcing the Company's rights in and to the Work Product and/or other property of the

8

Company, and in prosecuting and defending appeals, interferences, infringement suits and controversies relating thereto. The provisions of this Section 6 shall survive the termination of Holder’s employment with the Company.

(d) Consistent with California Labor Code Section 2870, the provisions of Section 6.5 do not apply to invention that Holder develops entirely on his or her own time without using the Company’s equipment, supplies, facilities, or trade secret information except for those inventions that either (a) relate at the time of conception or reduction to practice of the invention to the Company’s business, or actual or demonstrably anticipated research or development of the Company, or (b) result from any work performed by Holder for the Company.

6.6. Non-disparagement. In consideration for the Phantom Award and other good and valuable consideration, Holder agrees not to disparage the Company at any time during or following Holder’s employment with the Company. Prohibited actions include, but are not limited to, private or public comments, statements, or writings critical of the Company, any Subsidiary or any affiliate.

6.7. Exceptions. Notwithstanding this Section 6, nothing in this Agreement shall prohibit Holder from participating in concerted activity under the National Labor Relations Act or disclosing information to government agencies/entities as legally required, and/or from reporting possible violations of federal or state law or regulation to any governmental agency or entity, including but not limited to the Department of Justice, the Securities and Exchange Commission, the congress, and any agency inspector general, or making other disclosures that are protected under the whistleblower provisions of federal or state law or regulation. Holder does not need the prior authorization from the Company to make any such reports or disclosures and Holder is not required to notify the Company that Holder has made such reports or disclosures.

6.8. Reformation. If, at any time of enforcement of this Section 6, a court or an arbitrator holds that the restrictions stated herein are unreasonable or unenforceable under circumstances then existing, the parties hereto agree that the court or arbitrator shall be allowed to revise the restrictions contained herein to cover the restrictions to the maximum extent permitted by law. This Agreement shall not authorize a court or arbitrator to increase or broaden any of the restrictions in this Section 6.

7. Clawback of Proceeds.

7.1. Clawback of Proceeds. If, during the one-year period following Holder’s termination of employment Holder materially violates any agreement between Holder and the Company or its Subsidiaries with respect to Section 6 of this Agreement: (i) the Phantom Award shall be forfeited and (ii) the Holder shall immediately remit a cash payment to the Company equal to cash payments received by the Holder or, if the Phantom Award was settled in Common Stock, the Fair Market Value of a share of Common Stock on the date on which the Company first became aware of such violation or the date of Holder’s termination of employment, whichever is greater, multiplied by the number of shares of Common Stock that were delivered to the Holder pursuant to the vesting of the Phantom Award. The remedy provided by this Section 7 shall be in addition to and not in

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lieu of any rights or remedies which the Company may have against the Holder in respect of a breach by the Holder of any duty or obligation to the Company.

7.2. Right of Setoff. The Holder agrees that by accepting the Phantom Award Notice the Holder authorizes the Company and its affiliates to deduct, to the extent permitted by applicable law, any amount or amounts owed by the Holder pursuant to this Section 7 from any amounts payable by or on behalf of the Company or any affiliate to the Holder, including, without limitation, any amount payable to the Holder as salary, wages, vacation pay, bonus or the settlement of the Phantom Award or any stock-based award. This right of setoff shall not be an exclusive remedy and the Company’s or an affiliate’s election not to exercise this right of setoff with respect to any amount payable to the Holder shall not constitute a waiver of this right of setoff with respect to any other amount payable to the Holder or any other remedy.

8. Additional Terms and Conditions of Award.

8.1. Withholding Taxes.

(a) If the Phantom Award is settled in cash, the cash payment shall be reduced by such amount as the Company determines is required, under all applicable federal, state, local or other laws or regulations, to be withheld and paid over as income or other withholding taxes (the “Required Tax Payments”).

(b) If any portion of the Phantom Award is settled in Common Stock, as a condition precedent to the issuance or transfer of any shares of Common Stock upon vesting of the Phantom Award, Holder shall, upon request by the Company, pay to the Company the Required Tax Payments with respect to the issuance or transfer of such shares of Common Stock. If Holder shall fail to advance the Required Tax Payments after request by the Company, the Company may, in its discretion, deduct any Required Tax Payments from any amount then or thereafter payable by the Company to Holder. Holder may elect to satisfy his or her obligation to advance the Required Tax Payments by any of the following means: (i) a cash payment to the Company; (ii) delivery to the Company (either actual delivery or by attestation procedures established by the Company) of previously owned whole shares of Common Stock having an aggregate Fair Market Value, determined as of the date on which such withholding obligation arises (the “Tax Date”), equal to the Required Tax Payments; or (iii) any combination of (i) or (ii). Shares of Common Stock to be delivered or withheld may not have a Fair Market Value in excess of the minimum amount of the Required Tax Payments. No share of Common Stock or certificate representing a share of Common Stock shall be issued or delivered until the Required Tax Payments have been satisfied in full.

8.2. Adjustment. In the event of any equity restructuring (within the meaning of Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation—Stock Compensation or any successor or replacement accounting standard) that causes the per share value of shares of Common Stock to change, such as a stock dividend, stock split, spinoff, rights offering or recapitalization through an extraordinary cash dividend, the terms of the Phantom Award (including the number and class of securities subject to the Phantom Award), shall be appropriately adjusted by the

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Committee. In the event of any other change in corporate capitalization, including a merger, consolidation, reorganization, or partial or complete liquidation of the Company, such equitable adjustments described in the foregoing sentence may be made as determined to be appropriate and equitable by the Committee to prevent dilution or enlargement of rights of participants. In either case, the decision of the Committee regarding any such adjustment shall be final, binding and conclusive.

8.3. Compliance with Applicable Law. The Phantom Award is subject to the condition that if the listing, registration or qualification of the shares subject to the Phantom Award upon any securities exchange or under any law, or the consent or approval of any governmental body, or the taking of any other action is necessary or desirable as a condition of, or in connection with, the issuance or delivery of shares hereunder, the shares of Common Stock subject to the Phantom Award shall not be issued, unless such listing, registration, qualification, consent, approval or other action shall have been effected or obtained, free of any conditions not acceptable to the Company. The Company agrees to use reasonable efforts to effect or obtain any such listing, registration, qualification, consent, approval or other action.

8.4. Award Confers No Rights to Continued Employment or Service. In no event shall the granting of the Phantom Award or its acceptance by Holder, or any provision of this Agreement or the Plan, give or be deemed to give Holder any right to continued employment by or service with the Company, any Subsidiary or any affiliate of the Company or affect in any manner the right of the Company, any Subsidiary or any affiliate of the Company to terminate the employment or service of any person at any time.

8.5. Decisions of Board or Committee. The Board or the Committee shall have the right to resolve all questions which may arise in connection with the Phantom Award. Any interpretation, determination or other action made or taken by the Board or the Committee regarding the Plan or this Agreement shall be final, binding and conclusive.

8.6. Successors. This Agreement shall be binding upon and inure to the benefit of any successor or successors of the Company and any person or persons who shall, upon the death of Holder, acquire any rights hereunder in accordance with this Agreement or the Plan.

8.7. Notices. All notices, requests or other communications provided for in this Agreement shall be made, if to the Company, to Biolase, Inc., Attn: Vice President, Finance, 27042 Towne Centre Drive, Suite 270, Foothill Ranch, CA 92610, and if to the Holder, to the last known mailing address of the Holder contained in the records of the Company. All notices, requests or other communications provided for in this Agreement shall be made in writing either (a) by personal delivery, (b) by facsimile or electronic mail with confirmation of receipt, (c) bymailing in the United States mails or (d) by express courier service. The notice, request or other communication shall be deemed to be received upon personal delivery, upon confirmation of receipt of facsimile or electronic mail transmission or upon receipt by the party entitled thereto if by United States mail or express courier service; provided, however, that if a notice, request or other communication sent to

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the Company is not received during regular business hours, it shall be deemed to be received on the next succeeding business day of the Company.

8.8. Governing Law. This Agreement, the Phantom Award and all determinations made and actions taken pursuant hereto and thereto, to the extent not governed by the Code or the laws of the United States, shall be governed by the laws of the State of Delaware and construed in accordance therewith without giving effect to principles of conflicts of laws.

8.9. Agreement Subject to the Plan. This Agreement is subject to the provisions of the Plan and shall be interpreted in accordance therewith. In the event that the provisions of this Agreement and the Plan conflict, the Plan shall control. The Holder hereby acknowledges receipt of a copy of the Plan.

8.10. Entire Agreement. This Agreement and the Plan constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and the Holder with respect to the subject matter hereof, and may not be modified adversely to the Holder’s interest except by means of a writing signed by the Company and the Holder.

8.11. Partial Invalidity. The invalidity or unenforceability of any particular provision of this Agreement shall not effect the other provisions hereof and this Agreement shall be construed in all respects as if such invalid or unenforceable provisions were omitted.

8.12. Amendment and Waiver. The provisions of this Agreement may be amended or waived only by the written agreement of the Company and the Holder, and no course of conduct or failure or delay in enforcing the provisions of this Agreement shall affect the validity, binding effect or enforceability of this Agreement.

8.13. Counterparts. The Phantom Award Notice may be executed in two counterparts, each of which shall be deemed an original and both of which together shall constitute one and the same instrument.

* * *

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EX-10.3

Exhibit 10.3

Employee Form- CA Form

SPECIAL RETENTION AWARD

Biolase, Inc.

2018 Long-Term Incentive Plan

Restricted Stock Unit-Phantom Award Notice

John Beaver

You have been awarded a restricted stock unit award with respect to shares of Common Stock of Biolase, Inc. (the "Company") pursuant to the terms and conditions of the Biolase, Inc. 2018 Long-Term Incentive Plan, as amended (the "Plan") and the Restricted Stock Unit Award Agreement (together with this Phantom Award Notice, the "Agreement"). The Restricted Stock Unit Award Agreement is attached hereto and the Plan and Restricted Stock Unit Award Agreement are available on Shareworks. Capitalized terms not defined herein shall have the meanings specified in the Plan or the Agreement.

Restricted Stock Units:	You have been awarded a restricted stock unit award with respect to4,144,139 shares of the Company's Common Stock, par value $0.001per share (the "Common Stock"), subject to adjustment as provided inSection 8.2 of the Agreement (the "Phantom Award").
Grant Date:	June 11, 2021
Vesting Schedule:	Except as otherwise provided in the Plan or the Agreement, the PhantomAward shall vest as follows (each such date, the "Trigger Date" or"Vesting Date"). One-half of the Phantom Award shall vest if theCompany achieves positive EBITDA results for calendar year 2023,excluding Phantom Award expenses associated with the SpecialRetention Incentive Program, and one-half of the Phantom Award shallvest if either (i) the Company achieves $250 million in marketcapitalization for a period of thirty (30) consecutive days, or (ii) theCompany is sold with a transaction value of at least $250 million, in allcases subject to your continuous employment with the Company in goodstanding and performing the objectives of your role with the Companythrough March 31, 2024; providedhowever if the Fair Market Value ofa share of Common Stock on the Trigger Date is greater than $1.40 pershare (the "Payout Cap"), then 50% of the amount of the Phantom Awardin excess of the Payout Cap shall be paid to you on the one-yearanniversary of the Trigger Date and the remaining 50% of the amount ofthe Phantom Award in excess of the Payout Cap shall be paid to you onthe two-year anniversary of the Trigger Date (the Trigger Date and theone-year and two-year anniversaries of the Trigger Date, shall each be a"Vesting Date"), in each case, subject to your continuous employmentor service with the Company through the applicable Vesting Date;provided, further, that if the Company elects to and is permitted underthe Plan and applicable law and regulations (including, withoutlimitation, the listing standards of NASDAQ) to settle the PhantomAward in Common Stock, the Payout Cap set forth above shall not apply, and the Committee retains the discretion to accelerate the payment of thePhantom Award, in its sole and absolute discretion. For the avoidanceof doubt, the Payout Cap shall be an absolute dollar value and shall notfluctuate based on changes in the Company's Common Stock price orother measures of earnings.

	For purposes of this Award, "EBITDA" is defined as "net income, or netloss, before interest, taxes, depreciation and amortization, patentlitigation settlements, stock-based compensation, and the change inallowance for doubtful accounts", adjusted to exclude the expenseassociated with the 2021 Special Retention Incentive Program Grants.
	In the event of a Change in Control, the Phantom Award will vestimmediately, and the shares of Phantom Stock may be settled at theCompany's discretion in cash based on the price of BIOLASE commonstock on the date of the Change in Control or in BIOLASE commonstock, subject to the minimum values outlined in the "Settlement of thePhantom Award" section below.
Settlement ofthe Phantom Award:	The Restricted Stock Units shall be settled in cash based on the greaterof the Fair Market Value of a share of Common Stock on the TriggerDate or the Fair Market Value of a share of Common Stock on the GrantDate, less any and all required tax withholdings; provided, however, theCommittee retains the discretion, to the extent permitted under the termsof the Plan and applicable law and regulations (including, withoutlimitation, the listing standards of NASDAQ), to settle the PhantomAward in Common Stock, provided that if the Phantom Award is settledin Common Stock, the number of Restricted Stock Units subject to thisAward shall be adjusted as necessary to provide a minimum value of$1,730,799.50 for each of the two vesting criteria described under"Vesting Schedule" as determined based on a share of Common Stockas of the Vesting Date or, if earlier, the date on which the Committeeapproves the acceleration of the payout of the Phantom Award, less anyand all required withholdings. For purposes of clarity, the two vestingcriteria are (1.) Company achieves positive EBITDA results for calendaryear 2023, excluding Phantom Award expenses associated with theSpecial Retention Incentive Program and (2.) either (i) the Companyachieves $250 million in market capitalization for a period of thirty (30)consecutive days, or (ii) the Company is sold with a transaction value ofat least $250 million. Notwithstanding anything herein to the contrary,in the event the Company ceases to be publicly-traded, the PhantomAward shall be settled in cash, except as otherwise permitted underSection 5.8 of the Plan in connection with a Change in Control.

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BIOLASE, INC.
By:
Name: Jonathan Lord
Title:	Director and Board Chair

Acknowledgment, Acceptance and Agreement:

By signing below and returning this Award Notice to Biolase, Inc. at the address stated herein, I hereby accept the Phantom Award granted to me and acknowledge and agree to be bound by the terms and conditions of this Award Notice, the Agreement and the Plan.

 

Date

Biolase, Inc.

27042 Towne Centre Drive, Suite 270

Foothill Ranch, California 92610

Attention: Vice President, Finance

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Biolase, Inc.

2018 Long-Term Incentive Plan

Restricted Stock Unit Award Agreement

Biolase, Inc., a Delaware corporation (the "Company"), hereby grants to the individual (the "Holder") named in the Phantom Award notice attached hereto (the "Award Notice") as of the date set forth in the Phantom Award Notice (the "Grant Date"), pursuant to the provisions of the Biolase, Inc. 2018 Long-Term Incentive Plan, as amended (the "Plan"), a restricted stock unit award (the "Phantom Award") with respect to the number of shares of the Company's Common Stock, par value $0.001 per share ("Common Stock"), set forth in the Phantom Award Notice, upon and subject to the restrictions, terms and conditions set forth below, in the Phantom Award Notice and in the Plan. Capitalized terms not defined herein shall have the meanings specified in the Plan.

1.Award Subject to Acceptance of Agreement. The Phantom Award shall be null and void unless the Holder shall accept this Agreement by executing the Phantom Award Notice in the space provided therefor and returning an original execution copy of the Phantom Award Notice to the Company.

2.Rights as a Stockholder. The Holder shall not be entitled to any privileges of ownership with respect to the shares of Common Stock subject to the Phantom Award unless and until, and only to the extent, the Phantom Award is settled in shares of Common Stock pursuant to Section 4 and the Holder becomes a stockholder of record with respect to such shares.

3.Restriction Period and Vesting.

3.1.Vesting Conditions. The Phantom Award shall vest in accordance with the vesting schedule set forth in the Phantom Award Notice, provided the Holder remains continuously employed by or in the service of the Company through the applicable Vesting Date. The period of time prior to the vesting shall be referred to herein as the "Restriction Period."

3.2.Termination of Service. Notwithstanding any other agreement between the Company and the Holder to the contrary, if the Holder's employment or service with the Company terminates prior to the end of the Restriction Period for any reason, then the portion of the Phantom Award that was not vested immediately prior to such termination of employment shall be immediately forfeited by the Holder and cancelled by the Company.

3.3.Change in Control. Upon a Change in Control, the Restriction Period shall lapse and the Phantom Award shall become fully vested and shall be subject to Section 5.8 of the Plan.

4.Settlement of Award. Subject to Section 6, as soon as practicable (but not later than 30 days) after the vesting of the Phantom Award, the Company shall pay to the Holder a cash payment equal to the number of shares of Common Stock that vested upon the applicable Vesting Date or vesting event multiplied by the Fair Market Value of a share of Common Stock on the applicable Vesting Date or event, calculated in accordance with the terms of the Phantom Award Notice; provided, however, the Committee may elect, in its sole and absolute discretion and to the extent permitted by applicable law (including the listing requirements of NASDAQ), to settle the Phantom Award, in whole or in part, in Common Stock and shall issue or transfer to the Holder (or such other person as is acceptable to the Company and designated in writing by the Holder) the number of shares of Common Stock underlying the vested Award, as calculated in accordance with the Phantom Award Notice. The Company may effect such issuance or transfer either by the delivery of one or more stock certificates to the Holder or by making an appropriate entry on the books of the Company or the transfer agent of the Company. Except as provided for in Section 8.1, the Company shall pay all original issue or transfer taxes and all fees and expenses incident to such delivery or issuance. Prior to the issuance or transfer to the Holder of the shares of Common Stock subject to the Phantom Award, the Holder shall have no direct or secured claim in any specific assets of the Company or in such shares of Common Stock, and will have the status of a general unsecured creditor of the Company.

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5. Transfer Restrictions and Investment Representation.

5.1. Nontransferability of Award. The Phantom Award may not be transferred by the Holder other than by will or the laws of descent and distribution or pursuant to the designation of one or more beneficiaries on the form prescribed by the Company. Except to the extent permitted by the foregoing sentence, the Phantom Award may not be sold, transferred, assigned, pledged, hypothecated, encumbered or otherwise disposed of (whether by operation of law or otherwise) or be subject to execution, attachment or similar process. Upon any attempt to so sell, transfer, assign, pledge, hypothecate, encumber or otherwise dispose of the Phantom Award, the Phantom Award and all rights hereunder shall immediately become null and void.

5.2. Investment Representation. The Holder hereby represents and covenants that (a) any shares of Common Stock acquired upon the vesting of the Phantom Award will be acquired for investment and not with a view to the distribution thereof within the meaning of the Securities Act of 1933, as amended (the "Securities Act"), unless such acquisition has been registered under the Securities Act and any applicable state securities laws; (b) any subsequent sale of any such shares shall be made either pursuant to an effective registration statement under the Securities Act and any applicable state securities laws, or pursuant to an exemption from registration under the Securities Act and such state securities laws; and (c) if requested by the Company, the Holder shall submit a written statement, in form satisfactory to the Company, to the effect that such representation (x) is true and correct as of the date of vesting of the Phantom Award with respect to any shares of Common Stock hereunder or (y) is true and correct as of the date of any sale of any such share, as applicable. As a further condition precedent to the issuance or delivery to the Holder of any shares of Common Stock subject to the Phantom Award, the Holder shall comply with all regulations and requirements of any regulatory authority having control of or supervision over the issuance or delivery of the shares and, in connection therewith, shall execute any documents which the Board or the Committee shall in its sole discretion deem necessary or advisable.

6. Covenants of Employee.

6.1. Covenant Not to Compete. Holder recognizes and acknowledges that it is essential for the proper protection of the business of the Company that Holder be restrained from competing against the Company during the term of Holder's employment with the Company. Therefore, in consideration for the Phantom Award and other good and valuable consideration, Holder agrees that, during the term of the Holder's employment with the Company, Holder will not engage, directly or indirectly, whether as principal or as agent, officer, director, employee, consultant, shareholder or otherwise, alone or in association with any other person, corporation or other entity, in any Competing Business. For purposes of this Agreement, the term "Competing Business" shall mean: (a) any person, corporation or other entity which sells or attempts to sell, or provides or attempts to provide any products and/or services which are the same as or similar to the products and/or services sold or provided by the Company; or (b) any person, corporation, or other entity that solicits, trades with, advises, calls upon or otherwise does or attempts to do, directly or indirectly, business with any clients, customers or accounts of the Company, its successors, assigns or affiliates that have done business with the Company at any time or from time to time; or (c) any person, corporation or other entity engaged in the same or similar business as the business of the Company.

6.2. Covenant Not to Use Trade Secret Information to Solicit Customers or Clients. Holder recognizes and acknowledges that the Company has expended and will expend considerable and significant amounts of time and money establishing relationships and good will with existing and prospective customers or clients and developing a list of its customers or clients and prospective customers or clients, which list is not available to the general public and which constitutes a Trade Secret under the California Uniform Trade Secret Act (California Civil Code § 3426, et seq.). Holder further recognizes and acknowledges that the aforesaid list may contain other information about the customers or clients and prospective customers or clients not available to the general public and that Holder may be privileged to this list. Holder also recognizes and acknowledges that many of the Company's competitors could not recreate this list without substantial efforts, that the Company's business would be irreparably and greatly damaged by the use of this information other than for its benefit, and that it is essential for the proper protection of the business of the Company that Holder be restrained from soliciting the trade of or trading with the customers or clients of the Company. Therefore, in consideration for the Phantom Award and other good and valuable consideration, Holder agrees that Holder will not, directly or indirectly use the Company's trade secrets to

5

solicit the trade of, or trade with, or do business with, or attempt to solicit the trade of any of the Company's customers or clients or prospective customers or clients except for the Company's benefit, and except to the extent that Holder traded with or did business with any such customer or client or prospective customer or client prior to the date upon which said Holder was engaged to perform services for and on behalf of the Company. Holder also agrees not to utilize in any manner other than for the benefit of the Company, or provide access to anyone in any Competing Business (as previously defined), the Company's list of customers, or any information contained in that list.

6.3. Covenant Not to Solicit Employees. Holder recognizes and acknowledges that the Company has expended and will expend considerable and significant amounts of time and money establishing relationships with and/or training its employees. Holder recognizes and acknowledges that it is essential for the proper protection of the business of the Company that Holder be restrained from soliciting any employee of the Company to leave the employ of the Company. Therefore, in consideration for the Phantom Award and other good and valuable consideration, Holder agrees that, during the term of Holder's employment with the Company, and during the two (2) year period commencing on the date of termination of Holder's employment with the Company, Holder will not solicit, or attempt to solicit, any employee of the Company to leave the Company for any reason whatsoever.

6.4. Covenant Not to Violate Corporate Confidences.

(a) Holder recognizes and acknowledges that (a) during the term of Holder's employment with the Company, it may be necessary for Holder to acquire, and during the course of Holder's previous work for or on behalf of the Company prior to the commencement of this Agreement, Holder may have already acquired, information which could include, in whole or in part, information concerning the Company's sales, sales volume, sales methods, sales proposals, customers or clients and prospective customers or clients (including lists thereof), identity of customers or clients and prospective customers or clients, identity of key personnel in the employ of customers or clients and prospective customers or clients, amount or kind of customer's or client's purchases from and/or transactions with the Company, the needs and requirements of any or all customers or clients, the terms and conditions under which the Company deals with customers or clients or prospective customers or clients, the terms and conditions under which the Company deals with vendors or suppliers or prospective vendors or suppliers, employee lists, the Company's sources of supply, the Company's billing rates, methods, techniques, compositions, ideas, creations, drawings, renderings, plans, improvements, inventions, computer programs and data, system documentation, special hardware, product hardware, related software development, correspondence, letters, notes, notebooks, reports, flowcharts, proposals, processes and/or any and all other trade secret, confidential or proprietary information belonging to the Company or relating to the Company's business(es) and/or affairs, (collectively referred to herein as the "Confidential and Proprietary Information"); (b) this Confidential and Proprietary Information has been compiled by the Company at great expense and over a great amount of time; (c) this Confidential and Proprietary Information derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use; (d) the Confidential and Proprietary Information is the subject of efforts that are reasonable under the circumstances to maintain its secrecy; (e) the Confidential and Proprietary Information is the sole and exclusive property of the Company; (f) the use, misappropriation or disclosure of the Confidential and Proprietary Information by Holder or otherwise would constitute a breach of trust and could cause irreparable injury to the Company; and (g) it is essential to the protection of the Company's good will and to the maintenance of the Company's competitive position that the Confidential and Proprietary Information be kept secret and that Holder not disclose the Confidential and Proprietary Information to others or use the Confidential and Proprietary Information to Holder's own advantage or the advantage of others.

(b) In consideration for the Phantom Award and other good and valuable consideration, and as a material inducement to the Company to disclose or allow to be known to Holder some or all of the Confidential and Proprietary Information during the term of Holder's employment with the Company (at the Company's sole and absolute discretion), Holder hereby agrees that, throughout the term of Holder's employment with the Company and following the date of termination of Holder's employment with the Company, Holder will hold and safeguard the Confidential and Proprietary Information in trust for the Company, and not misappropriate or divulge to any person that is not affiliated with the Company, or make available to anyone for use outside the Company's organization at any time, either during the term of Holder's employment with the Company or subsequent to the termination of Holder's employment with the Company, except

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with the express written consent of the Company or as provided by this agreement, any of the Company's Confidential and Proprietary Information, whether or not developed or created by Holder.

(c) Holder further agrees that, upon termination of Holder's employment with the Company, or at any time upon request by the Company, Holder shall surrender to the Company all Company property which said Holder is then in possession, including any and all tangible evidence of such Confidential and Proprietary Information.

6.5. Proprietary Rights.

(a) Holder agrees that all Work Product, as hereinafter defined, created solely or jointly by Holder, arising from or relating to any services performed by Holder for or on behalf of the Company, or in the course Holder's performance of Holder's duties as an Holder of the Company, or previously performed by Holder for or on behalf of the Company, shall be deemed "work made for hire" and shall be the sole and exclusive property of the Company. Holder shall execute all such assignments, oaths, declarations and other documents as may be prepared by the Company to effect the foregoing. In addition, Holder agrees that all other property, materials, papers, books, records, computer software and programs of the Company, as well as all reproductions thereof, relating to the business and affairs of the Company, or its customers or clients, whether or not prepared by Holder, shall be the sole and exclusive property of the Company. Without the prior written consent of the Company, Holder agrees not to use any such Work Product or other property of the Company for any purpose other than to perform services for or on behalf of the Company.

(b) For purposes of this Agreement, the term "Work Product" shall include but is not limited to all documentation, manuals, materials, creative works, methods, techniques, compositions, ideas, creations, drawings, renderings, plans, improvements, inventions, computer programs and data, system documentation, special hardware, product hardware, related software development, correspondence, letters, notes, notebooks, reports, flowcharts, proposals, financial calculations and formulae, know-how and other information, (including, without limitation, any Confidential and Proprietary Information (as defined herein)), which is created for or on behalf of the Company, in whole or in part, by Holder, whether or not such Work Product is capable of being copyrighted, patented, trademarked or otherwise protected under applicable law.

(c) Holder agrees that said Holder shall assist in every lawful way in protecting or enforcing the Company's rights in and to the Work Product and/or other property of the Company, and in prosecuting and defending appeals, interferences, infringement suits and controversies relating thereto. The provisions of this Section 6 shall survive the termination of Holder's employment with the Company.

(d) Consistent with California Labor Code Section 2870, the provisions of Section 6.5 do not apply to invention that Holder develops entirely on his or her own time without using the Company's equipment, supplies, facilities, or trade secret information except for those inventions that either (a) relate at the time of conception or reduction to practice of the invention to the Company's business, or actual or demonstrably anticipated research or development of the Company, or (b) result from any work performed by Holder for the Company.

6.6. Non-disparagement. In consideration for the Phantom Award and other good and valuable consideration, Holder agrees not to disparage the Company at any time during or following Holder's employment with the Company. Prohibited actions include, but are not limited to, private or public comments, statements, or writings critical of the Company, any Subsidiary or any affiliate.

6.7. Exceptions. Notwithstanding this Section 6, nothing in this Agreement shall prohibit Holder from participating in concerted activity under the National Labor Relations Act or disclosing information to government agencies/entities as legally required, and/or from reporting possible violations of federal or state law or regulation to any governmental agency or entity, including but not limited to the Department of Justice, the Securities and Exchange Commission, the congress, and any agency inspector general, or making other disclosures that are protected under the whistleblower provisions of federal or state law or regulation. Holder does not need the prior authorization from the Company to make any such reports or disclosures and Holder is not required to notify the Company that Holder has made such reports or disclosures.

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6.8. Reformation. If, at any time of enforcement of this Section 6, a court or an arbitrator holds that the restrictions stated herein are unreasonable or unenforceable under circumstances then existing, the parties hereto agree that the court or arbitrator shall be allowed to revise the restrictions contained herein to cover the restrictions to the maximum extent permitted by law. This Agreement shall not authorize a court or arbitrator to increase or broaden any of the restrictions in this Section 6.

7. Clawback of Proceeds.

7.1. Clawback of Proceeds. If, during the one-year period following Holder's termination of employment Holder materially violates any agreement between Holder and the Company or its Subsidiaries with respect to Section 6 of this Agreement: (i) the Phantom Award shall be forfeited and (ii) the Holder shall immediately remit a cash payment to the Company equal to cash payments received by the Holder or, if the Phantom Award was settled in Common Stock, the Fair Market Value of a share of Common Stock on the date on which the Company first became aware of such violation or the date of Holder's termination of employment, whichever is greater, multiplied by the number of shares of Common Stock that were delivered to the Holder pursuant to the vesting of the Phantom Award. The remedy provided by this Section 7 shall be in addition to and not in lieu of any rights or remedies which the Company may have against the Holder in respect of a breach by the Holder of any duty or obligation to the Company.

7.2. Right of Setoff. The Holder agrees that by accepting the Phantom Award Notice the Holder authorizes the Company and its affiliates to deduct, to the extent permitted by applicable law, any amount or amounts owed by the Holder pursuant to this Section 7 from any amounts payable by or on behalf of the Company or any affiliate to the Holder, including, without limitation, any amount payable to the Holder as salary, wages, vacation pay, bonus or the settlement of the Phantom Award or any stock-based award. This right of setoff shall not be an exclusive remedy and the Company's or an affiliate's election not to exercise this right of setoff with respect to any amount payable to the Holder shall not constitute a waiver of this right of setoff with respect to any other amount payable to the Holder or any other remedy.

8. Additional Terms and Conditions of Award.

8.1. Withholding Taxes.

(a) If the Phantom Award is settled in cash, the cash payment shall be reduced by such amount as the Company determines is required, under all applicable federal, state, local or other laws or regulations, to be withheld and paid over as income or other withholding taxes (the "Required Tax Payments").

(b) If any portion of the Phantom Award is settled in Common Stock, as a condition precedent to the issuance or transfer of any shares of Common Stock upon vesting of the Phantom Award, Holder shall, upon request by the Company, pay to the Company the Required Tax Payments with respect to the issuance or transfer of such shares of Common Stock. If Holder shall fail to advance the Required Tax Payments after request by the Company, the Company may, in its discretion, deduct any Required Tax Payments from any amount then or thereafter payable by the Company to Holder. Holder may elect to satisfy his or her obligation to advance the Required Tax Payments by any of the following means: (i) a cash payment to the Company; (ii) delivery to the Company (either actual delivery or by attestation procedures established by the Company) of previously owned whole shares of Common Stock having an aggregate Fair Market Value, determined as of the date on which such withholding obligation arises (the "Tax Date"), equal to the Required Tax Payments; or (iii) any combination of (i) or (ii). Shares of Common Stock to be delivered or withheld may not have a Fair Market Value in excess of the minimum amount of the Required Tax Payments. No share of Common Stock or certificate representing a share of Common Stock shall be issued or delivered until the Required Tax Payments have been satisfied in full.

8.2. Adjustment. In the event of any equity restructuring (within the meaning of Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation-Stock Compensation or any successor or replacement accounting standard) that causes the per share value of shares of Common Stock to change, such as a stock dividend, stock split, spinoff, rights offering or recapitalization through an extraordinary cash dividend, the terms of the Phantom Award (including the number and class of securities subject to the Phantom A

8

ward), shall be appropriately adjusted by the Committee. In the event of any other change in corporate capitalization, including a merger, consolidation, reorganization, or partial or complete liquidation of the Company, such equitable adjustments described in the foregoing sentence may be made as determined to be appropriate and equitable by the Committee to prevent dilution or enlargement of rights of participants. In either case, the decision of the Committee regarding any such adjustment shall be final, binding and conclusive.

8.3. Compliance with Applicable Law. The Phantom Award is subject to the condition that if the listing, registration or qualification of the shares subject to the Phantom Award upon any securities exchange or under any law, or the consent or approval of any governmental body, or the taking of any other action is necessary or desirable as a condition of, or in connection with, the issuance or delivery of shares hereunder, the shares of Common Stock subject to the Phantom Award shall not be issued, unless such listing, registration, qualification, consent, approval or other action shall have been effected or obtained, free of any conditions not acceptable to the Company. The Company agrees to use reasonable efforts to effect or obtain any such listing, registration, qualification, consent, approval or other action.

8.4. Award Confers No Rights to Continued Employment or Service. In no event shall the granting of the Phantom Award or its acceptance by Holder, or any provision of this Agreement or the Plan, give or be deemed to give Holder any right to continued employment by or service with the Company, any Subsidiary or any affiliate of the Company or affect in any manner the right of the Company, any Subsidiary or any affiliate of the Company to terminate the employment or service of any person at any time.

8.5. Decisions of Board or Committee. The Board or the Committee shall have the right to resolve all questions which may arise in connection with the Phantom Award. Any interpretation, determination or other action made or taken by the Board or the Committee regarding the Plan or this Agreement shall be final, binding and conclusive.

8.6. Successors. This Agreement shall be binding upon and inure to the benefit of any successor or successors of the Company and any person or persons who shall, upon the death of Holder, acquire any rights hereunder in accordance with this Agreement or the Plan.

8.7. Notices. All notices, requests or other communications provided for in this Agreement shall be made, if to the Company, to Biolase, Inc., Attn: Vice President, Finance, 27042 Towne Centre Drive, Suite 270, Foothill Ranch, CA 92610, and if to the Holder, to the last known mailing address of the Holder contained in the records of the Company. All notices, requests or other communications provided for in this Agreement shall be made in writing either (a) by personal delivery, (b) by facsimile or electronic mail with confirmation of receipt, (c) by mailing in the United States mails or (d) by express courier service. The notice, request or other communication shall be deemed to be received upon personal delivery, upon confirmation of receipt of facsimile or electronic mail transmission or upon receipt by the party entitled thereto if by United States mail or express courier service; provided, however, that if a notice, request or other communication sent to the Company is not received during regular business hours, it shall be deemed to be received on the next succeeding business day of the Company.

8.8. Governing Law. This Agreement, the Phantom Award and all determinations made and actions taken pursuant hereto and thereto, to the extent not governed by the Code or the laws of the United States, shall be governed by the laws of the State of Delaware and construed in accordance therewith without giving effect to principles of conflicts of laws.

8.9. Agreement Subject to the Plan. This Agreement is subject to the provisions of the Plan and shall be interpreted in accordance therewith. In the event that the provisions of this Agreement and the Plan conflict, the Plan shall control. The Holder hereby acknowledges receipt of a copy of the Plan.

8.10. Entire Agreement. This Agreement and the Plan constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and the Holder with respect to the subject matter hereof, and may not be modified adversely to the Holder's interest except by means of a writing signed by the Company and the Holder.

9

8.11. Partial Invalidity. The invalidity or unenforceability of any particular provision of this Agreement shall not effect the other provisions hereof and this Agreement shall be construed in all respects as if such invalid or unenforceable provisions were omitted.

8.12. Amendment and Waiver. The provisions of this Agreement may be amended or waived only by the written agreement of the Company and the Holder, and no course of conduct or failure or delay in enforcing the provisions of this Agreement shall affect the validity, binding effect or enforceability of this Agreement.

8.13. Counterparts. The Phantom Award Notice may be executed in two counterparts, each of which shall be deemed an original and both of which together shall constitute one and the same instrument.

* * *

10

EX-10.4

Exhibit 10.4

Biolase, Inc.

2018 Long-Term Incentive Plan

Stock Appreciation Rights Award Notice

[Name of Director]

You have been awarded stock appreciation rights covering shares of Common Stock of Biolase, Inc. (the “Company”) pursuant to the terms and conditions of the Biolase, Inc. 2018 Long-Term Incentive Plan, as amended (the “Plan”) and the Stock Appreciation Rights Agreement (together with this Award Notice, the “Agreement”). The Stock Appreciation Rights Agreement is attached hereto and the Plan and Stock Appreciation Rights Agreement are available on Shareworks. Capitalized terms not defined herein shall have the meanings specified in the Plan or the Agreement.

Stock Appreciation Rights:	You have been awarded Stock Appreciation Rights covering [____] shares of the Company’s Common Stock, par value $0.001 per share (the “Common Stock”), subject to adjustment as provided in Section 4.1 of the Agreement.
Grant Date:	[_______]
Base Price:	$[______________] per share, subject to adjustment as provided in Section 4.1 of the Agreement.
Time-Based Vesting Schedule:	Except as otherwise provided in the Plan, the Agreement or any other agreement between the Company or any of its Subsidiaries and you, the shares of Common Stock subject to the Stock Appreciation Rights on the Grant Date shall vest as follows: one-fourth of the shares of common stock subject to the Stock Appreciation Rights shall vest on each of the three, six, nine, and twelve-month anniversaries of the Grant Date.
Termination of Service:	The time-based vesting schedule shall be subject to the requirement that you are, and have been, continuously (except for any absence for vacation, leave, etc. in accordance with the Company's or its Subsidiaries' policies): (A) employed by the Company or any of its Subsidiaries; (B) serving as a Non-Employee Director; or (C) providing services to the Company or any of its Subsidiaries as an independent contractor, in each case, from the Grant Date through and including the applicable vesting date.
Expiration Date:	Except to the extent earlier terminated pursuant to Section 2.2 of the Agreement or earlier exercised pursuant to Section 2.3 of the Agreement, the Stock Appreciation Rights shall terminate at 5:00 p.m., U.S. Pacific time, on the tenth anniversary of the Grant Date.

BIOLASE, INC.

By:

Acknowledgment, Acceptance and Agreement:

By signing below and returning this Award Notice to Biolase, Inc. at the address stated herein, I hereby accept the Stock Appreciation Rights granted to me and acknowledge and agree to be bound by the terms and conditions of this Award Notice, the Agreement and the Plan.

Holder

Date

Biolase, Inc.

27042 Towne Centre Drive, Suite 270

Foothill Ranch, California 92610

Attention: Director of Financial Reporting

2

Biolase, Inc.
2018 Long-Term Incentive Plan

Stock Appreciation Rights Agreement

Biolase, Inc., a Delaware corporation (the “Company”), hereby grants to the individual (“Holder”) named in the award notice attached hereto (the “Award Notice”) as of the date set forth in the Award Notice (the “Grant Date”), pursuant to the provisions of the Biolase, Inc. 2002 Stock Incentive Plan (the “Plan”), stock appreciation rights covering the number of shares of the Company’s Common Stock, par value $0.001 per share (“Common Stock”), set forth in the Award Notice at the price per share set forth in the Award Notice (the “Base Price”) (the “SAR”), upon and subject to the terms and conditions set forth below, in the Award Notice and in the Plan. The SAR entitles the Holder to receive, upon exercise, a cash payment equal to the Fair Market Value as of the exercise date of the number of shares (“Gain Shares”) of Common Stock with an aggregate value equal to the difference between the Fair Market Value of one share of Common Stock on the exercise date (up to a maximum Fair Market Value of $1.40 per share of Common Stock) and the Base Price, subject to Holder’s fulfillment of the vesting and other conditions set forth in this Agreement. Capitalized terms not defined herein shall have the meanings specified in the Plan.

1. SAR Subject to Acceptance of Agreement. The SAR shall be null and void unless Holder shall accept this Agreement by executing the Award Notice in the space provided therefor and returning an original execution copy of the Award Notice to the Company.

2. Time and Manner of Exercise of SAR.

2.1. Maximum Term of SAR. In no event may the SAR be exercised, in whole or in part, after the expiration date set forth in the Award Notice (the “Expiration Date”).

2.2. Vesting and Exercise of SAR. The SAR shall become vested and exercisable in accordance with the vesting schedule set forth in the Award Notice (the “Vesting Schedule”). The period of time prior to the full vesting of the SAR shall be referred to herein as the “Vesting Period.” Immediately upon the Holder’s termination of service for any reason, the SAR shall terminate with respect to the unvested portion of the SAR on the effective date of such termination of service. The SAR shall be exercisable following a termination of Holder’s service according to the following terms and conditions:

(a) Termination for any Reason. If Holder’s service with the Company terminates for any reason, the SAR, only to the extent vested on the effective date of such termination of service, may thereafter be exercised by Holder or Holder’s executor, administrator, legal representative, guardian or similar person until and including the earlier to occur of (i) the date which is one year after the date of termination of service and (ii) the Expiration Date.

(b) Change in Control.

(i) Immediately prior to the effective date of a Change in Control, the SAR shall vest and become exercisable for all of the shares subject to the SAR and may be exercised for any or all of those shares or, at the election of the Company, the Holder shall receive, in full settlement for such SAR, a cash payment in an amount equal to the aggregate number of shares of Common Stock then subject to the SAR multiplied by the excess, if any, of the Fair Market Value of a share of Common Stock as of the date of the Change in Control, over the Base Price. Notwithstanding anything herein to the contrary, the SAR shall not vest and become exercisable on an accelerated basis if and to the extent: (i) the SAR is assumed by the successor corporation (or parent thereof) or is otherwise continued in full

3

force and effect pursuant to the terms of the Change in Control transaction or (ii) the SAR is replaced with a cash incentive program of the successor corporation which preserves the spread existing at the time of the Change in Control on the shares subject to the SAR that were not otherwise exercisable at the time of the Change in Control (the excess of the Fair Market Value of such shares over the aggregate Base Price payable for such shares) and provides for subsequent payout of that spread no later than the time the SAR would have vested and become exercisable for those shares.

(ii) Immediately following the consummation of the Change in Control, the SAR shall terminate, except to the extent assumed by the successor corporation (or parent thereof) or otherwise continued in effect pursuant to the terms of the Change in Control transaction.

(iii) If the SAR is assumed or otherwise continued in effect in connection with a Change in Control, then the SAR shall be appropriately adjusted, upon such Change in Control, to apply to the number and class of securities which would have been issuable to Holder in consummation of such Change in Control had the SAR been exercised immediately prior to such Change in Control, and appropriate adjustments shall also be made to the Base Price, subject to Section 409A of the Code. To the extent that the holders of Common Stock receive cash consideration for their Common Stock in consummation of the Change in Control, the successor corporation (or its parent) may, in connection with the assumption of this SAR, substitute one or more shares of its own common stock with a fair market value equivalent to the cash consideration paid per share of Common Stock in such Change in Control.

(iv) This Agreement shall not in any way affect the right of the Corporation to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.

2.3. Method of Exercise. Subject to the limitations set forth in this Agreement, the SAR, to the extent vested, may be exercised by Holder (a) by delivering to the Company an exercise notice in the form prescribed by the Company specifying the number of whole shares of Common Stock for which the SAR is being exercised, and (b) by executing such documents as the Company may reasonably request.

2.4. Termination of SAR. In no event may the SAR be exercised after it terminates as set forth in this Section 2.4. The SAR shall terminate, to the extent not earlier terminated pursuant to Section 2.2 or exercised pursuant to Section 2.3, on the Expiration Date. Upon the termination of the SAR, the SAR and all rights hereunder shall immediately become null and void.

3. Settlement of Award. Upon exercise of the SAR, in whole or in part, the Company shall pay to the Holder (or his or her beneficiary, as applicable) the cash payment payable with respect to the portion of the SAR exercised within 30 days following the exercise date (but no later than December 31st of the year in which the exercise occurs); provided, however, the Committee may elect, in its sole and absolute discretion, to settle the Gain Shares in Common Stock, with the Holder receiving one share of Common Stock for each Gain Share. Any issuance of shares shall be evidenced by the appropriate

4

entry on the books of the Company or of a duly authorized transfer agent of the Company. The Company shall pay all original issue or transfer taxes and all fees and expenses incident to such share issuance.

4. Transfer Restrictions and Investment Representations.

4.1. Nontransferability of SAR. The SAR may not be transferred by Holder other than by will or the laws of descent and distribution or pursuant to the designation of one or more beneficiaries on the form prescribed by the Company. Except to the extent permitted by the foregoing sentence, (i) during Holder’s lifetime the SAR is exercisable only by Holder or Holder’s legal representative, guardian or similar person and (ii) the SAR may not be sold, transferred, assigned, pledged, hypothecated, encumbered or otherwise disposed of (whether by operation of law or otherwise) or be subject to execution, attachment or similar process. Upon any attempt to so sell, transfer, assign, pledge, hypothecate, encumber or otherwise dispose of the SAR, the SAR and all rights hereunder shall immediately become null and void.

4.2. Investment Representation. Holder hereby represents and covenants that (a) any shares of Common Stock received upon exercise of the SAR will be purchased for investment and not with a view to the distribution thereof within the meaning of the Securities Act of 1933, as amended (the “Securities Act”), unless such purchase has been registered under the Securities Act and any applicable state securities laws; (b) any subsequent sale of any such shares shall be made either pursuant to an effective registration statement under the Securities Act and any applicable state securities laws, or pursuant to an exemption from registration under the Securities Act and such state securities laws; and (c) if requested by the Company, Holder shall submit a written statement, in a form satisfactory to the Company, to the effect that such representation (x) is true and correct as of the date of any purchase of any shares hereunder or (y) is true and correct as of the date of any sale of any such shares, as applicable. As a further condition precedent to any exercise of the SAR, Holder shall comply with all regulations and requirements of any regulatory authority having control of or supervision over the issuance or delivery of the shares and, in connection therewith, shall execute any documents which the Board or the Plan Administrator shall in its sole discretion deem necessary or advisable.

5. Additional Terms and Conditions.

5.1. Adjustment. In the event of any equity restructuring (within the meaning of Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation—Stock Compensation or any successor or replacement accounting standard) that causes the per share value of shares of Common Stock to change, such as a stock dividend, stock split, spinoff, rights offering or recapitalization through an extraordinary cash dividend, the number and class of securities available under this Plan, the terms of the SAR (including the number and class of securities subject to the SAR and the Base Price per share) shall be appropriately adjusted by the Committee, in accordance with Section 409A of the Code. In the event of any other change in corporate capitalization, including a merger, consolidation, reorganization, or partial or complete liquidation of the Company, such equitable adjustments described in the foregoing sentence may be made as determined to be appropriate and equitable by the Committee to prevent dilution or enlargement of rights of participants. In either case, the decision of the Committee regarding any such adjustment shall be final, binding and conclusive.

5.2. Compliance with Applicable Law. The SAR is subject to the condition that if the listing, registration or qualification of the shares subject to the SAR upon any securities exchange or under any law, or the consent or approval of any governmental body, or the taking of any other action is necessary or desirable as a condition of, or in connection with, the purchase or issuance of shares hereunder, the SAR may not be exercised, in whole or in part, and such shares may not be issued, unless such listing, registration, qualification, consent, approval or other action shall have been effected or obtained, free of any conditions not acceptable to the Company. The Company agrees to use reasonable efforts to effect or obtain any such listing, registration, qualification, consent, approval or other action.

5

5.3. SAR Confers No Rights as Stockholder. Holder shall not be entitled to any privileges of ownership with respect to shares of Common Stock subject to the SAR unless and until such shares are purchased and issued upon the exercise of the SAR, in whole or in part, and Holder becomes a stockholder of record with respect to such issued shares. Holder shall not be considered a stockholder of the Company with respect to any such shares not so purchased and issued.

5.4. SAR Confers No Rights to Continued Service. In no event shall the granting of the SAR or its acceptance by Holder, or any provision of this Agreement or the Plan, give or be deemed to give Holder any right to continued service by the Company, any Subsidiary or any affiliate of the Company or affect in any manner the right of the Company, any Subsidiary or any affiliate of the Company to terminate the service of any person at any time.

5.5. Decisions of Board or Committee. The Board or the Committee shall have the right to resolve all questions which may arise in connection with the SAR or its exercise. Any interpretation, determination or other action made or taken by the Board or the Committee regarding the Plan or this Agreement shall be final, binding and conclusive.

5.6. Successors. This Agreement shall be binding upon and inure to the benefit of any successor or successors of the Company and any person or persons who shall, upon the death of Holder, acquire any rights hereunder in accordance with this Agreement or the Plan.

5.7. Notices. All notices, requests or other communications provided for in this Agreement shall be made, if to the Company, to Biolase, Inc., Attn: Director of Financial Reporting, 4 Cromwell, Irvine, California, 92618, and if to Holder, to the last known mailing address of Holder contained in the records of the Company. All notices, requests or other communications provided for in this Agreement shall be made in writing either (a) by personal delivery, (b) by facsimile or electronic mail with confirmation of receipt, (c) bymailing in the United States mails or (d) by express courier service. The notice, request or other communication shall be deemed to be received upon personal delivery, upon confirmation of receipt of facsimile or electronic mail transmission or upon receipt by the party entitled thereto if by United States mail or express courier service; provided, however, that if a notice, request or other communication sent to the Company is not received during regular business hours, it shall be deemed to be received on the next succeeding business day of the Company.

5.8. Governing Law. This Agreement, the SAR and all determinations made and actions taken pursuant hereto and thereto, to the extent not governed by the Code or the laws of the United States, shall be governed by the laws of the State of Delaware and construed in accordance therewith without giving effect to principles of conflicts of laws.

5.9. Agreement Subject to the Plan. This Agreement is subject to the provisions of the Plan and shall be interpreted in accordance therewith. In the event that the provisions of this Agreement and the Plan conflict, the Plan shall control. The Holder hereby acknowledges receipt of a copy of the Plan.

5.10. Entire Agreement. This Agreement and the Plan constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and the Holder with respect to the subject matter hereof, and may not be modified adversely to the Holder’s interest except by means of a writing signed by the Company and the Holder.

5.11. Partial Invalidity. The invalidity or unenforceability of any particular provision of this Agreement shall not effect the other provisions hereof and this Agreement shall be construed in all respects as if such invalid or unenforceable provisions were omitted.

6

5.12. Amendment and Waiver. The provisions of this Agreement may be amended or waived only by the written agreement of the Company and the Holder, and no course of conduct or failure or delay in enforcing the provisions of this Agreement shall affect the validity, binding effect or enforceability of this Agreement.

5.13. Counterparts. The Award Notice may be executed in two counterparts, each of which shall be deemed an original and both of which together shall constitute one and the same instrument.

7

EX-31.1

Exhibit 31.1

CERTIFICATION

I, John R. Beaver, certify that:

1.I have reviewed this quarterly report on Form 10-Q for the period ended September 30, 2021 of BIOLASE, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 10, 2021	By:	/s/ JOHN R. BEAVER
		John R. Beaver
		President and Chief Executive Officer (Principal Executive Officer, Principal Financial Officer, and Principal Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. § 1350

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of BIOLASE, Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2021 (the “Report”), I, John R. Beaver, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(i) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 10, 2021	By:	/s/ JOHN R. BEAVER
		John R. Beaver
		President and Chief Executive Officer (Principal Executive Officer, Principal Financial Officer, and Principal Accounting Officer)

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2021	Nov. 04, 2021
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2021
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q3
Trading Symbol	BIOL
Entity Registrant Name	BIOLASE, INC.
Entity Central Index Key	0000811240
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Common Stock, Shares Outstanding		153,279,540
Entity Current Reporting Status	Yes
Entity Shell Company	false
Entity Interactive Data Current	Yes
Title of 12(b) Security	Common stock at par value $0.001 per share
Security Exchange Name	NASDAQ
Entity File Number	001-36385
Entity Tax Identification Number	87-0442441
Entity Address, Address Line One	27042 Towne Centre Drive
Entity Address, Address Line Two	Suite 270
Entity Address, City or Town	Lake Forest
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	92610
City Area Code	949
Local Phone Number	361-1200
Entity Incorporation, State or Country Code	DE
Document Transition Report	false
Document Quarterly Report	true

XML

Consolidated Balance Sheets (Unaudited) - USD ($)	Sep. 30, 2021	Dec. 31, 2020
Current assets:
Cash and cash equivalents	$ 33,385,000	$ 17,564,000
Restricted cash	204,000	312,000
Accounts receivable, less allowance of $2,871 and $4,017 as of September 30, 2021 and December 31, 2020, respectively	3,637,000	3,059,000
Inventory	14,062,000	11,157,000
Prepaid expenses and other current assets	1,366,000	3,018,000
Total current assets	52,654,000	35,110,000
Property, plant, and equipment, net	889,000	782,000
Goodwill	2,926,000	2,926,000
Right of use asset	1,823,000	1,976,000
Other assets	222,000	231,000
Total assets	58,514,000	41,025,000
Current liabilities:
Accounts payable	3,597,000	2,651,000
Accrued liabilities	6,182,000	6,667,000
Deferred revenue, current portion	2,278,000	1,905,000
Current portion of term loans, net of discount	1,400,000	0
Total current liabilities	13,457,000	11,223,000
Deferred revenue	294,000	374,000
Warranty accrual	472,000	384,000
Non current term loans, net of discount	12,114,000	16,186,000
Non current operating lease liability	1,557,000	1,774,000
Other liabilities	298,000	1,056,000
Total liabilities	28,192,000	30,997,000
Commitments and contingencies — Note 11
Stockholders' equity:
Series F Preferred stock, par value $0.001 per share; 18 shares authorized, 0 and 1 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively	34,000	118,000
Common stock, par value $0.001 per share; 180,000 shares authorized, 153,322 and 97,709 shares issued and 153,277 and 97,663 outstanding as of September 30, 2021 and December 31, 2020, respectively	153,000	98,000
Additional paid-in-capital	292,948,000	261,573,000
Accumulated other comprehensive loss	(558,000)	(385,000)
Accumulated deficit	(262,255,000)	(251,376,000)
Total stockholders' equity	30,322,000	10,028,000
Total liabilities, redeemable preferred stock and stockholders' equity	$ 58,514,000	$ 41,025,000

XML

Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Statement of Financial Position [Abstract]
Allowance for accounts receivable	$ 2,871	$ 4,017
Series E Preferred stock, shares authorized	1,000,000
Series E Preferred stock, shares outstanding	0	0
Series F Preferred stock, par value	$ 0.001	$ 0.001
Series F Preferred stock, shares authorized	18,000	18,000
Series F Preferred stock, shares issued	0	1,000
Series F Preferred stock, shares outstanding	0	1,000
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	180,000,000	180,000,000
Common stock, shares issued	153,322,000	97,709,000
Common stock, shares outstanding	153,277,000	97,663,000

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Consolidated Statements Of Operations And Comprehensive Loss (Unaudited) - USD ($) shares in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Income Statement [Abstract]
Net revenue	$ 9,531,000	$ 6,539,000	$ 26,780,000	$ 14,260,000
Cost of revenue	4,689,000	4,265,000	15,157,000	9,692,000
Gross profit	4,842,000	2,274,000	11,623,000	4,568,000
Operating expenses:
Sales and marketing	3,451,000	2,678,000	10,315,000	7,475,000
General and administrative	2,479,000	2,300,000	8,613,000	7,446,000
Engineering and development	1,540,000	963,000	4,506,000	2,644,000
Loss on patent litigation settlement	29,000	0	190,000	0
Total operating expenses	7,499,000	5,941,000	23,624,000	17,565,000
Loss from operations	(2,657,000)	(3,667,000)	(12,001,000)	(12,997,000)
Gain (Loss) on foreign currency transactions	(36,000)	53,000	(172,000)	(68,000)
Interest expense, net	(569,000)	(568,000)	(1,727,000)	(1,782,000)
Gain on debt forgiveness	0	0	3,014,000	0
Other income, net	0	4,209,000	0	4,209,000
Non-operating gain (loss), net	(605,000)	3,694,000	1,115,000	2,359,000
Loss before income tax (provision) benefit	(3,262,000)	27,000	(10,886,000)	(10,638,000)
Income tax (provision) benefit	(14,000)	(15,000)	7,000	(49,000)
Net income (loss)	(3,276,000)	12,000	(10,879,000)	(10,687,000)
Other comprehensive loss items:
Foreign currency translation adjustments	(90,000)	111,000	(173,000)	167,000
Comprehensive income (loss)	(3,366,000)	123,000	(11,052,000)	(10,520,000)
Net income (loss)	(3,276,000)	12,000	(10,879,000)	(10,687,000)
Deemed dividend on convertible preferred stock	(9,000)	(17,378,000)	(546,000)	(17,378,000)
Net loss attributable to common stockholders	$ (3,285,000)	$ (17,366,000)	$ (11,425,000)	$ (28,065,000)
Net loss per share attributable to common stockholders:
Basic	$ (0.02)	$ (0.21)	$ (0.08)	$ (0.56)
Diluted	$ (0.02)	$ (0.21)	$ (0.08)	$ (0.56)
Shares used in the calculation of net loss per share:
Basic	151,941	81,341	145,809	50,366
Diluted	151,941	81,341	145,809	50,366

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Consolidated Statements Of Redeemable Preferred Stock and Stockholders' Equity (Unaudited) - USD ($) $ in Thousands	Total	Series E Convertible Preferred Stock	Series F Convertible Preferred Stock	July 2020 Warrants	June 2020 Warrants	Common Stock	Common Stock Series E Convertible Preferred Stock	Common Stock Series F Convertible Preferred Stock	Common Stock June 2020 Warrants	Additional Paid-in Capital	Additional Paid-in Capital Series E Convertible Preferred Stock	Additional Paid-in Capital Series F Convertible Preferred Stock	Additional Paid-in Capital July 2020 Warrants	Additional Paid-in Capital June 2020 Warrants	Convertible Preferred Stock	Convertible Preferred Stock Series F Convertible Preferred Stock	Accumulated Other Comprehensive Loss	Accumulated Deficit	Mezzanine Equity Series E Convertible Preferred Stock
Beginning balance at Dec. 31, 2019	$ 377					$ 31				$ 235,594							$ (701)	$ (234,547)
Beginning balance at Dec. 31, 2019																			$ 3,965
Beginning balance, shares at Dec. 31, 2019																			70,000
Balance (in shares) at Dec. 31, 2019						31,459,000
Issuance of convertible preferred stock in rights offering, net of offering costs			$ 2,411													$ 2,411
Issuance of convertible preferred stock in rights offering, net of offering costs, shares																18,000
Beneficial conversion on Convertible Preferred Stock												$ 2,700				$ (2,700)
Conversion of convertible preferred stock		$ 3,965					$ 7	$ 43			$ 3,958	16,905				$ (16,948)			$ (3,965)
Conversion of convertible preferred stock, shares							6,957,000	42,370,000								(17,000)			(70,000)
Sale of common stock	3,872					$ 11				3,861
Sale of common stock, shares						10,800,000
Sale of common stock warrants	3,031			$ 9,450						3,031			$ 9,450
Issuance of restricted shares	164
Deemed Dividend on Convertible Preferred Stock	(17,378)											(17,378)				$ 17,378
Stock offering costs	(856)									(856)
Stock-based compensation	1,846									1,846
Warrants issued in connection with debt instruments	67									67
Issuance of stock from RSUs, net	162					$ 1				161
Issuance of stock from RSUs, net, shares						1,297,000
Exercise of common stock warrants					$ 46									$ 46
Exercise of common stock warrants, shares									116,000
Net loss	(10,687)																	(10,687)
Foreign currency translation adjustments	167																167
Ending balance at Sep. 30, 2020	13,851					$ 93				259,385					$ 141		(534)	(245,234)
Balance (in shares) at Sep. 30, 2020						92,999,000
Ending balance, shares at Sep. 30, 2020															1,000
Beginning balance at Dec. 31, 2019	377					$ 31				235,594							(701)	(234,547)
Beginning balance at Dec. 31, 2019																			$ 3,965
Beginning balance, shares at Dec. 31, 2019																			70,000
Balance (in shares) at Dec. 31, 2019						31,459,000
Sale of common stock, shares			17,000
Ending balance at Dec. 31, 2020	$ 10,028					$ 98				261,573						$ 118	(385)	(251,376)
Balance (in shares) at Dec. 31, 2020	97,709,000					97,709,000
Ending balance, shares at Dec. 31, 2020	0		882													1,000
Beginning balance at Jun. 30, 2020	$ 1,308					$ 50				247,149							(645)	(245,246)
Balance (in shares) at Jun. 30, 2020						50,322,000
Issuance of convertible preferred stock in rights offering, net of offering costs			$ 2,411													$ 2,411
Issuance of convertible preferred stock in rights offering, net of offering costs, shares																18,000
Beneficial conversion on Convertible Preferred Stock												2,700				$ (2,700)
Conversion of convertible preferred stock								$ 43				16,905				$ (16,948)
Conversion of convertible preferred stock, shares								42,370,000								(17,000)
Sale of common stock warrants				$ 9,450									$ 9,450
Deemed Dividend on Convertible Preferred Stock	(17,378)											$ (17,378)				$ 17,378
Stock-based compensation	513									513
Issuance of stock from RSUs, net, shares						191,000
Exercise of common stock warrants					$ 46									$ 46
Exercise of common stock warrants, shares									116,000
Net loss	12																	12
Foreign currency translation adjustments	111																111
Ending balance at Sep. 30, 2020	13,851					$ 93				259,385					$ 141		(534)	(245,234)
Balance (in shares) at Sep. 30, 2020						92,999,000
Ending balance, shares at Sep. 30, 2020															1,000
Beginning balance at Dec. 31, 2020	$ 10,028					$ 98				261,573						$ 118	(385)	(251,376)
Beginning balance, shares at Dec. 31, 2020	0		882													1,000
Balance (in shares) at Dec. 31, 2020	97,709,000					97,709,000
Conversion of convertible preferred stock						$ 2				628						$ (630)
Conversion of convertible preferred stock, shares						1,577,000										(1,000)
Sale of common stock	$ 13,291					$ 14				13,277
Sale of common stock, shares			18,000			14,000,000
Exercise of stock option Shares	176,000					176,000
Exercise of stock option	$ 66									66
Issuance of restricted shares, Shares						260,000
Issuance of restricted shares										164
Issuance of common stock for settlement of liability	510					$ 1				509
Issuance of common stock for settlement of liability, Shares						500,000
Deemed Dividend on Convertible Preferred Stock	(546)									(546)						$ 546
Stock-based compensation	2,253									2,253
Issuance of stock from RSUs, net						$ 3				(3)
Issuance of stock from RSUs, net, shares						3,381,000
Exercise of common stock warrants	15,062					$ 35				15,027
Exercise of common stock warrants, shares						35,719,000
Net loss	(10,879)																	(10,879)
Foreign currency translation adjustments	(173)																(173)
Ending balance at Sep. 30, 2021	$ 30,322					$ 153				292,948						34	(558)	(262,255)
Balance (in shares) at Sep. 30, 2021	153,322,000					153,322,000
Ending balance, shares at Sep. 30, 2021	0		251
Beginning balance at Jun. 30, 2021	$ 33,256					$ 151				292,517						35	(468)	(258,979)
Balance (in shares) at Jun. 30, 2021						151,236,000
Conversion of convertible preferred stock										10						(10)
Conversion of convertible preferred stock, shares						25,000
Exercise of stock option Shares						176,000
Exercise of stock option	$ 66									66
Issuance of restricted shares, Shares	260,000
Issuance of restricted shares	$ 164									164
Deemed Dividend on Convertible Preferred Stock	(9)									(9)						9
Stock-based compensation	192									192
Issuance of stock from RSUs, net						$ 2				(2)
Issuance of stock from RSUs, net, shares						1,600,000
Exercise of common stock warrants	10									10
Exercise of common stock warrants, shares						25,000
Net loss	(3,276)																	(3,276)
Foreign currency translation adjustments	(90)																(90)
Ending balance at Sep. 30, 2021	$ 30,322					$ 153				$ 292,948						$ 34	$ (558)	$ (262,255)
Balance (in shares) at Sep. 30, 2021	153,322,000					153,322,000
Ending balance, shares at Sep. 30, 2021	0		251

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Consolidated Statements Of Redeemable Preferred Stock And Shareholders' Equity (Parenthetical) - USD ($) $ in Millions	3 Months Ended	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2020
Series F Convertible Preferred Stock
Convertible preferred stock in right offering, issuance cost	$ 0.3	$ 0.3

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Consolidated Statements Of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020
Cash Flows from Operating Activities:
Net loss	$ (10,879)	$ (10,687)
Adjustments to reconcile net loss to net cash and cash equivalents used in operating activities:
Depreciation and amortization	281	527
Provision for bad debts	(162)	1,263
Provision for sales returns	0	87
Inventory write-offs and disposals	(117)	0
Amortization of discounts on lines of credit	126	123
Amortization of debt issuance costs	290	240
Patent litigation mark-to-market	190	0
Change in fair value of warrants	0	(5,850)
Issuance of restricted shares	164	0
Issuance costs for common stock warrants	0	1,640
Stock-based compensation	1,488	2,367
Gain on debt forgiveness	3,014	0
Changes in operating assets and liabilities:
Accounts receivable	(417)	4,017
Inventory	(2,788)	(1,597)
Prepaid expenses and other current assets	235	430
Accounts payable and accrued liabilities	705	(3,445)
Deferred revenue	292	(562)
Net cash and cash equivalents used in operating activities	(13,606)	(11,447)
Cash Flows from Investing Activities:
Purchases of property, plant, and equipment	(396)	(78)
Net cash and cash equivalents used in investing activities	(396)	(78)
Cash Flows from Financing Activities:
Proceeds from the sale of common stock	13,291	6,912
Proceeds from sale of common stock warrants	0	15,300
Proceeds from the issuance of Series F Convertible Preferred Stock	0	2,700
Payments of equity offering costs	(6)	(1,281)
Payment of July 2020 Warrant issuance costs	0	(1,640)
Borrowings on other long-term loans	0	3,140
Principal payment on loan	0	(700)
Borrowings on credit facility	0	3,000
Repayment of credit facility	0	(3,000)
Proceeds from the exercise of common stock warrants	16,560	46
Payment of debt issuance costs	(25)	(75)
Proceeds from exercise of stock options	66	0
Net cash and cash equivalents provided by financing activities	29,886	24,402
Effect of exchange rate changes	(171)	181
Increase in cash, cash equivalents and restricted cash	15,713	13,058
Cash, cash equivalents and restricted cash, beginning of period	17,876	6,101
Cash, cash equivalents and restricted cash, end of period	33,589	19,159
Supplemental cash flow disclosure:
Cash paid for interest	1,328	1,438
Cash received for interest	44	0
Cash paid for income taxes	154	21
Cash paid for operating leases	185	417
Non-cash settlement of liability	510	151
Non-cash right-of-use assets obtained in exchange for lease obligation	48	2,037
Deemed dividend on preferred stock	546	17,378
Warrants issued in connection with debt instruments	$ 0	$ 67

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Description of Business and Basis of Presentation

9 Months Ended

Sep. 30, 2021

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”) is a leading provider of advanced laser systems for the dental industry. The Company develops, manufactures, markets, and sells laser systems that provide significant benefits for dental practitioners and their patients. The Company’s proprietary systems allow dentists, periodontists, endodontists, pediatric dentists, oral surgeons, and other dental specialists to perform a broad range of minimally invasive dental procedures, including cosmetic, restorative, and complex surgical applications. The Company’s laser systems are designed to provide clinically superior results for many types of dental procedures compared to those achieved with drills, scalpels, and other conventional instruments. Potential patient benefits include less pain, fewer shots, faster healing, decreased fear and anxiety, and fewer appointments. Potential practitioner benefits include improved patient care and the ability to perform a higher volume and wider variety of procedures and generate more patient referrals.

Basis of Presentation

The unaudited consolidated financial statements include the accounts of BIOLASE and its wholly-owned subsidiaries and have been prepared on a basis consistent with the December 31, 2020 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. The unaudited 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.

The consolidated results of operations for the three and nine months ended September 30, 2021 are not necessarily indicative of the results for the full year. The accompanying consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the fiscal year ended December 31, 2020, included in BIOLASE’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020 filed with the Securities and Exchange Commission (the “SEC”) on March 31, 2021 (the “2020 Form 10-K”).

Liquidity and Management’s Plans

The Company incurred losses from operations and used cash in operating activities for the three and nine months ended September 30, 2021 and for the years ended December 31, 2020, 2019, and 2018.

As of September 30, 2021, the Company had working capital of approximately $39.2 million. The Company’s principal sources of liquidity as of September 30, 2021 consisted of approximately $33.6 million in cash, cash equivalents, and restricted cash, $3.6 million of net accounts receivable, and unused availability under the PMB Loan (as defined below) of approximately $2.8 million. As of December 31, 2020, the Company had working capital of approximately $23.9 million, $17.9 million in cash, cash equivalents and restricted cash and $3.1 million of net accounts receivable. The increase in cash, cash equivalents, and restricted cash since December 31, 2020 was primarily due to gross proceeds of $14.4 million from the issuance of common stock and $16.6 million from warrants exercised in the nine months ended September 30, 2021. See Note 4 to the consolidated financial statements for additional information on these common stock issuances and warrant exercises.

Additional capital requirements may depend on many factors, including, among other things, the rate at which the Company’s business grows, the COVID-19 pandemic and the actions taken to contain it, 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.

COVID-19 Risk and Uncertainties and CARES Act

The COVID-19 pandemic severely impacted global economic activity, and many countries and many states in the United States reacted to the COVID-19 pandemic by instituting quarantines, mandating business and school closures and restricting travel. These mandated business closures included dental office closures worldwide, in large part, for all but emergency procedures. The ability of the Company’s salespeople to call on dental customers during these closures was greatly limited. In addition, most dental shows and workshops scheduled in 2020 were canceled. As a result of reduced sales due to the COVID-19 pandemic and actions taken to contain it, cash generated from the Company’s operations during 2020 were less than anticipated. Given the uncertainties regarding the

ongoing and future effects of COVID-19, there is no assurance that sales will return to normal levels during the remainder of 2021 or at any time thereafter.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act") was signed into law. The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer-side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations, increased limitations on qualified charitable contributions, and technical corrections to tax depreciation methods for qualified improvement property.

The Company analyzed the provisions of the CARES Act and determined that it will not have a material impact on its future financial condition, results of operations, or liquidity, other than approximately $1.8 million received as part of the Employee Retention Credit.

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2021

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 generally accepted accounting principles in the United States of America (“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, goodwill and the ability of goodwill to be realized, revenue deferrals, 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 as discussed in the Company’s 2020 audited financial statements included in the 2020 Form 10-K. Management believes that there have been no significant changes during the nine months ended September 30, 2021 in the Company’s critical accounting policies from those disclosed in the Company’s 2020 audited financial statements included in the 2020 Form 10-K.

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 non-performance 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. Level 3 inputs are unobservable due to little or no corroborating market data.

The Company’s financial instruments, consisting of cash, cash equivalents, restricted cash, accounts receivable, accounts payable, accrued liabilities, and the SWK Loan (as defined below) as discussed in Note 9, approximate fair value because of the nature of these items.

Concentration of Credit Risk, Interest Rate Risk and Foreign Currency Exchange Rate

Financial instruments which potentially expose the Company to a concentration of credit risk consist principally of cash and cash equivalents, restricted cash, and trade accounts receivable. The Company maintains its cash and cash equivalents and restricted cash with established commercial banks. At times, balances may exceed federally insured limits. To minimize the risk associated with trade accounts receivable, management performs ongoing credit evaluations of customers’ financial condition and maintains relationships with the Company’s customers that allow management to monitor current changes in business operations so the Company can respond as needed. The Company does not, generally, require customers to provide collateral before it sells them its products. However, the Company has required certain distributors to make prepayments for significant purchases of products.

Substantially all of the Company’s revenue is denominated in U.S. dollars, including sales to international distributors. Only a small portion of its revenue and expenses is denominated in foreign currencies, principally the Euro and Indian Rupee. The Company’s foreign currency expenditures primarily consist of the cost of maintaining offices, consulting services, and employee-related costs. During the three and nine months ended September 30, 2021 and 2020, respectively, the Company did not enter into any

hedging contracts. Future fluctuations in the value of the U.S. dollar may affect the price competitiveness of the Company’s products outside the U.S.

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 (“ASC”).

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 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. This ASU clarifies the accounting for modifications or exchanges of freestanding equity-classified written call options (i.e. warrants) so that the transaction should be treated as an exchange of the original instrument for a new instrument. This standard is effective for fiscal years beginning after December 15, 2021 on a prospective basis, with early adoption permitted. The adoption of this update is not expected to have a material impact on the Company's consolidated financial position and results of operations.

In December 2019, the FASB issued ASU 2019-12, Income Taxes – Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes by clarifying and amending existing guidance related to the recognition of franchise tax, the evaluation of a step-up in the tax basis of goodwill and the effects of enacted changes in tax laws or rates in the effective tax rate computation, among other clarifications. ASU 2019-12 is effective for annual periods beginning after December 15, 2020, including interim periods within those fiscal years, and early adoption is permitted. The Company adopted this guidance effective January 1, 2021, and the adoption of this standard did not have a material impact on its consolidated financial statements.

In August 2020, the FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40). This ASU reduces the number of accounting models for convertible debt instruments and convertible preferred stock and amends the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions. In addition, this ASU improves and amends the related earnings per share guidance. This standard is effective for the Company beginning on January 1, 2022, with early adoption permitted only in the first quarter of 2021. Adoption is either a modified retrospective method or a fully retrospective method of transition. The Company is currently assessing the impact the new guidance will have on its consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The standard’s main goal is to improve financial reporting by requiring earlier recognition of credit losses on financing receivables and other financial assets in scope and to replace the incurred loss impairment methodology under current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The Company will be required to use a forward-looking expected credit loss model for accounts receivables, loans, and other financial instruments. Credit losses relating to available-for-sale debt securities will also be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. The standard will be effective for the Company beginning January 1, 2023, with early adoption permitted beginning January 1, 2019. The Company is currently assessing the impact that adopting this new accounting standard will have on its consolidated financial statements. 

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Revenue Recognition

9 Months Ended

Sep. 30, 2021

Revenue Recognition [Abstract]

Revenue Recognition

NOTE 3—REVENUE RECOGNITION

Contracts with Customers

Revenue for sales of products and services is derived from contracts with customers. The products and services promised in customer contracts include delivery of laser systems, imaging systems, and consumables as well as certain ancillary services such as training and extended warranties. Contracts with each customer generally state the terms of the sale, including the description, quantity and price of each product or service. Payment terms are stated in the contract and vary according to the arrangement. Because the customer typically agrees to a stated rate and price in the contract that does not vary over the life of the contract, the Company’s contracts do not contain variable consideration. The Company establishes a provision for estimated warranty expense.

Performance Obligations

At contract inception, the Company assesses the products and services promised in its contracts with customers. The Company then identifies performance obligations to transfer distinct products or services to the customers. In order to identify performance obligations, the Company considers all of the products or services promised in contracts regardless of whether they are explicitly stated or are implied by customary business practices.

Revenue from products and services transferred to customers at a single point in time accounted for 88% of net revenue for the three and nine months ended September 30, 2021 and 86% and 78% of net revenue for the three and nine months ended September 30, 2020, respectively. The majority of the Company’s revenue recognized at a point in time is for the sale of laser systems and consumables. Revenue from these contracts is recognized when the customer is able to direct the use of and obtain substantially all of the benefits from the product which generally coincides with title transfer during the shipping process.

Revenue from services transferred to customers over time accounted for 12% of net revenue for the three and nine months ended September 30, 2021 and 14% and 22% of net revenue for the three and nine months ended September 30, 2020, respectively. The majority of the Company’s revenue that is recognized over time relates to product training and extended warranties. Deferred revenue attributable to undelivered elements, which primarily consists of product training, totaled approximately $1.0 million and $0.7 million as of September 30, 2021 and December 31, 2020, respectively.

Transaction Price Allocation

The transaction price for a contract is allocated to each distinct performance obligation and recognized as revenue when, or as, each performance obligation is satisfied. For contracts with multiple performance obligations, the Company allocates the contract’s transaction price to each performance obligation using the best estimate of the standalone selling price of each distinct good or service in a contract. The primary method used to estimate standalone selling price is the observable price when the good or service is sold separately in similar circumstances and to similar customers.

Significant Judgments

Revenue is recorded for extended warranties over time as the customer benefits from the warranty coverage. This revenue will be recognized equally throughout the contract period as the customer receives benefits from the Company's promise to provide such services. Revenue is recorded for product training as the customer attends a training program or upon the expiration of the obligation, which is generally after nine months.

The Company also has contracts that include both the product sales and product training as performance obligations. In those cases, the Company records revenue for product sales at the point in time when the product has been shipped. The customer obtains control of the product when it is shipped, as all shipments are made FOB shipping point, and after the customer selects its shipping method and pays all shipping costs and insurance. The Company has concluded that control is transferred to the customer upon shipment.

Accounts Receivable

Accounts receivable are stated at estimated net realizable value. The allowance for doubtful accounts is based on an analysis of customer accounts and the Company’s historical experience with accounts receivable write-offs.

Contract Liabilities

The Company performs its obligations under a contract with a customer by transferring products and/or services in exchange for consideration from the customer. The Company typically invoices its customers as soon as control of an asset is transferred and a receivable for the Company is established. The Company, however, recognizes a contract liability when a customer prepays for goods and/or services and the Company has not transferred control of the goods and/or services. The opening and closing balances of the Company’s contract liabilities are as follows (in thousands):

	September 30,			December 31,
	2021			2020
Undelivered elements (training, installation, product    and support services)	$	1,015		$	670
Extended warranty contracts		1,557			1,609
Total deferred revenue		2,572			2,279
Less: long-term portion of deferred revenue		(294	)		(374	)
Deferred revenue — current	$	2,278		$	1,905

The balance of contract assets was immaterial as the Company did not have a significant amount of uninvoiced receivables at September 30, 2021 and December 31, 2020.

The amount of revenue recognized during the nine months ended September 30, 2021 and 2020 that was included in the opening contract liability balance related to undelivered elements was $0.2 million and $0.3 million, respectively. The amounts related to extended warranty contracts was $1.1 million and $2.0 million, for the nine months ended September 30, 2021 and 2020, respectively.

Disaggregation of Revenue

The Company disaggregates revenue from contracts with customers into geographical regions and by the timing of when goods and services are transferred. The Company determined that disaggregating revenue into these categories depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by regional economic factors.

The Company’s revenues related to the following geographic areas were as follows (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
United States	$	5,939	$	4,755	$	17,024	$	10,079
International		3,592		1,784		9,756		4,181
Total net revenue	$	9,531	$	6,539	$	26,780	$	14,260

Information regarding revenues disaggregated by the timing of when goods and services are transferred is as follows (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
Revenue recognized over time	$	1,116	$	898	$	3,269	$	3,143
Revenue recognized at a point in time		8,415		5,641		23,511		11,117
Net revenue	$	9,531	$	6,539	$	26,780	$	14,260

The Company’s sales by end market were as follows (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
End-customer	$	5,939	$	5,087	$	17,024	$	9,845
Distributors		3,592		1,452		9,756		4,415
Net revenue	$	9,531	$	6,539	$	26,780	$	14,260

Shipping and Handling Costs and Revenues

Shipping and freight costs are treated as fulfillment costs. For shipments to end-customers, the customer bears the shipping and freight costs and has control of the product upon shipment. For shipments to distributors, the distributor bears the shipping and freight costs, including insurance, tariffs and other import/export costs.

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Redeemable Preferred Stock and Stockholders' Equity

9 Months Ended

Sep. 30, 2021

Temporary Equity And Equity [Abstract]

Redeemable Preferred Stock and Stockholders' Equity

NOTE 4—REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY

BIOLASE's board of directors (the "Board"), without further stockholder authorization, may issue from time to time up to 1,000,000 shares of the Company’s preferred stock. Of the 1,000,000 shares of preferred stock, 69,565 shares are designated as Series E Participating Convertible Preferred Stock, par value $0.001 per share (“Series E Preferred Stock”), and 18,000 shares are designated as Series F Convertible Preferred Stock, par value $0.001 per share (“Series F Preferred Stock”).

Common Stock

On February 10, 2021, BIOLASE issued and sold in an underwritten bought deal offering an aggregate of 14,000,000 shares of common stock at a price of $1.03 per share less underwriting discounts and commissions (the "Equity Offering"). The Company received gross proceeds of approximately $14.4 million before deducting underwriting discounts and commissions and estimated offering expenses of $1.1 million.

Preferred Stock

Series F Convertible Preferred Stock

On July 23, 2020, the Company consummated the sale of an aggregate of 18,000 shares of Series F Preferred Stock and 45,000,000 warrants (the “July 2020 Warrants”), with each warrant exercisable for one share of BIOLASE common stock, through a registered rights offering the Company completed on July 22, 2020 (the “Rights Offering”). Each share of Series F Preferred Stock is convertible at the Company’s option at any time on or after July 22, 2021 or at the option of the holder at any time, into the number of shares of BIOLASE common stock determined by dividing the $1,000 stated value per share of the Series F Preferred Stock by a conversion price of $0.40 per share. Each share of Series F Preferred Stock is convertible into 2,500 shares of common stock, and each July 2020 Warrant entitles the holder thereof to purchase one share BIOLASE common stock at a conversion price of $0.40 per share.

In accordance with applicable accounting standards, the $18.0 million gross proceeds from the Rights Offering were allocated to the Series F Preferred Stock and the July 2020 Warrants in the amount of $2.7 million and $15.3 million, respectively. The allocation was based on the fair value of the July 2020 Warrants of $15.3 million as of the commitment date, with the residual proceeds of $2.7 million allocated to the Series F Preferred Stock.

The Series F Preferred Stock contained a beneficial conversion feature which resulted in a deemed dividend to preferred stockholders of approximately $2.7 million, upon immediate accretion. Additionally, the July 2020 Warrants were recognized as a discount to the Series F Preferred Stock, with the conversion of approximately 18,000 and 17,000 Series F Preferred Stock to common stock as of September 30, 2021 and December 31, 2020 respectively. Upon conversion, this discount was accreted and also recognized as a deemed dividend to preferred stockholders in the amount of $0.5 million and $14.7 million for the nine months ended September 30, 2021 and the year ended December 31, 2020, respectively.

Approximately 251 and 882 shares of Series F Preferred Stock remained outstanding as of September 30, 2021 and December 31, 2020, respectively.

Redeemable Preferred Stock

Series E Participating Convertible Preferred Stock

As of September 30, 2021 and December 31, 2020, there were no shares of Series E Preferred Stock issued and outstanding.

Stock-Based Compensation

2002 Stock Incentive 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, October 30, 2014, April 27, 2015, and May 6, 2017, the “2002 Plan”) was replaced by the 2018 Plan (as defined below) with respect to future equity awards. Persons eligible to receive awards under the 2002 Plan included officers, employees, directors of the Company, and consultants. As of September 30, 2021, a total of 3,110,000 shares have been authorized for issuance under the

2002 Plan, of which approximately 1,036,00 shares of common stock have been issued pursuant to options that were exercised and restricted stock units ("RSUs") that were vested, approximately 879,000 shares of common stock have been reserved for options that are outstanding, and no shares of common stock remain available for future grants.

2018 Stock Incentive Plan

At the 2018 annual meeting of stockholders, the Company’s stockholders approved the 2018 Long-Term Incentive Plan (as amended, the “2018 Plan”) which was amended by Amendment No. 1 to the 2018 Plan, approved by the Company’s stockholders at a special meeting on September 21, 2018, Amendment No. 2 to the 2018 Plan, as approved by the Company’s stockholders on May 15, 2019, Amendment No. 3 to the 2018 Plan, as approved by the Company’s stockholders on May 13, 2020, and Amendment No. 4 to the 2018 Plan, as approved by the Company's stockholders on June 11, 2021. Although the increase of 24,700,000 in the number of shares of BIOLASE common stock available for issuance under the 2018 Plan was approved by the stockholders on June 11, 2021, the proposal to amend BIOLASE's certificate of incorporation to increase the number of authorized shares of BIOLASE common stock was not approved by stockholders at the meeting. Therefore, the shares available for issuance under the 2018 Plan only increased by the number of remaining shares authorized for issuance. The purposes of the 2018 Plan are (i) to align the interests of the Company’s stockholders and recipients of awards under the 2018 Plan by increasing the proprietary interest of such recipients in the Company’s growth and success; (ii) to advance the interests of the Company by attracting and retaining non-employee directors, officers, other employees, consultants, independent contractors, and agents; and (iii) to motivate such persons to act in the long-term best interests of the Company and its stockholders.

Under the terms of the 2018 Plan, approximately 36,921,000 shares of BIOLASE common stock are available for issuance; however, because the increase in the number of authorized shares under the certificate of incorporation was not approved by stockholders at the 2021 annual meeting, only approximately 2.4 million shares are available for future grants as of the date of these unaudited consolidated financial statements. As of September 30, 2021, a total of approximately 4,744,000 shares of the Company’s common stock have been reserved for issuance upon the exercise of outstanding options and or settlement of unvested RSUs under the 2018 Plan.

The Company recognized stock-based compensation expense of $0.2 million and $1.5 million for the three and nine months ended September 30, 2021, respectively, and $0.8 million and $2.4 million for the three and nine months ended September 30, 2020, respectively. As of September 30, 2021 and 2020, the Company had approximately $0.8 million and $1.4 million, respectively, of total unrecognized compensation expense, net of estimated forfeitures, related to unvested share-based compensation arrangements. The Company expects that expense to be recognized over a weighted-average period of 1.5 years. As of September 30, 2021 and December 31, 2020, $0.0 million and $0.9 million of the total stock compensation cost related to performance-based awards was recognized as a liability.

The following table summarizes the income statement classification of compensation expense associated with share-based payments (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
Cost of revenue	$	25	$	79	$	138	$	208
Sales and marketing		62		183		291		571
General and administrative		61		517		777		1,424
Engineering and development		44		68		282		164
Total	$	192	$	847	$	1,488	$	2,367

The stock option fair values were estimated using the Black-Scholes option-pricing model with the following assumptions:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2021			2020			2021			2020
Expected term (years)		6.1		N/A				6.1			5.5
Volatility		111	%		—	%		111	%		103	%
Annual dividend per share	N/A			N/A			N/A			N/A
Risk-free interest rate		0.98	%		—	%		0.86	%		0.37	%

A summary of option activity for the nine months ended September 30, 2021 is as follows (in thousands, except per share data):

				Weighted		Weighted Average Remaining
				Average		Contractual		Aggregate
	Shares			Exercise Price		Term (Years)		Intrinsic Value(1)
Options outstanding at December 31, 2020		2,398		$	2.96		7.2	$	53
Granted at fair market value		50		$	0.87
Exercised		(176	)	$	0.38
Forfeited, cancelled, or expired		(102	)	$	7.78
Options outstanding at September 30, 2021		2,170		$	2.89		6.6	$	286
Options exercisable at September 30, 2021		2,052		$	3.00		6.5	$	277
Vested options expired during the period    ended September 30, 2021		91		$	8.48

(1)The intrinsic value calculation does not include negative values, which can occur when the fair market value on the reporting date is less than the exercise price of the award.

A summary of unvested stock option activity for the nine months ended September 30, 2021 is as follows (in thousands, except per share data):

				Weighted
				Average Grant
	Shares			Date Fair Value
Unvested options at December 31, 2020		1,323		$	0.34
Granted		50		$	0.72
Vested		(1,256	)	$	0.31
Unvested options at September 30, 2021		117		$	0.73

Fair value disclosures related to grants, exercises and vested options are as follows (in thousands, except per share amounts):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
Proceeds from stock options exercised	$	66	$	—	$	66	$	—
Tax benefit related to stock options exercised (1)	N/A		N/A		N/A		N/A
Intrinsic value of stock options exercised (2)	$	42	$	—	$	42	$	—
Weighted-average fair value of options granted    during period	$	0.49	$	—	$	0.72	$	0.29
Total fair value of stock options vested during the period	$	8	$	34	$	395	$	188

(1)Excess tax benefits received related to stock option exercises are presented as operating 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 exercise price of the options.

Restricted Stock Units

During the nine months ended September 30, 2021, the Company granted approximately 2.8 million RSUs and the Company canceled approximately 0.1 million RSUs with performance-based vesting due to non-achievement of the performance targets.

A summary of unvested RSU activity for the nine months ended September 30, 2021 is as follows (in thousands, except per share amounts):

				Weighted
				Average Grant
	Shares			Date Fair Value
Unvested RSUs at December 31, 2020		3,672		$	0.66
Granted		2,808		$	0.83
Vested		(3,772	)	$	0.69
Forfeited or cancelled		(601	)	$	1.33
Unvested RSUs at September 30, 2021		2,107		$	0.63

Warrants

The Company issues warrants to acquire shares of BIOLASE common stock as approved by the Board. During the first quarter of 2021, the Company received proceeds of $15.0 million from warrants exercised in 2021 and $1.5 million from warrants exercised at the end of the fourth quarter of 2020, which was a receivable included in other current assets as of December 31, 2020.

A summary of warrant activity for the nine months ended September 30, 2021 is as follows (in thousands, except exercise price amounts):

				Weighted
				Average
	Shares			Exercise Price
Warrants outstanding, December 31, 2020		54,052		$	0.62
Exercised		(35,790	)	$	0.43
Forfeited, cancelled, or expired		(407	)	$	10.00
Warrants outstanding at September 30, 2021		17,855		$	0.80
Warrants exercisable at September 30, 2021		17,855		$	0.80
Vested warrants expired during the period    ended September 30, 2021		(407	)	$	10.00

See Note 9 for information on the Western Alliance Warrants, the SWK Warrants, and the DPG Warrants (each as defined below).

Phantom Awards and Stock Appreciation Rights

During the nine months ended September 30, 2021, the Company issued 10.1 million phantom RSUs in lieu of stock-settled RSUs historically granted for leadership bonuses and non-employee director service. The phantom RSUs have either time-based or performance-based vesting conditions and will be settled in cash in 2024 with the Company's option to settle the award in BIOLASE common stock at the sole discretion of the Board. These phantom RSUs are included as a component of long-term liability on the consolidated balance sheet and are not considered stock-based compensation due to the cash-settlement feature of the award. If at any time the determination is made to settle the phantom RSUs in BIOLASE common stock, the awards will be included as a component of additional paid-in capital on the consolidated balance sheet. The expense recognized during the three and nine months ended September 30, 2021 was $0.2 million.

During the nine months ended September 30, 2021, the Company issued 0.7 million stock appreciation rights ("SARs") in lieu of stock-settled RSUs historically granted for non-employee director service. Upon exercise, the SARs will be settled in cash with the Company's option to settle in BIOLASE common stock at the sole discretion of the Board. These SARS are included in accrued liabilities on the consolidated balance sheet and are not considered stock-based compensation due to the cash-settlement feature of the award. If at any time the determination is made to settle in BIOLASE common stock, the awards will be included as a component of additional paid-in capital on the consolidated balance sheet. The expense recognized during the three and nine months ended September 30, 2021 was $0.1 million and $0.2 million, respectively.

Net Loss Per Share – Basic and Diluted

Basic net loss per share is computed by dividing net loss attributable to common stockholders by the weighted-average number of shares of BIOLASE common stock outstanding for the period. In computing diluted net loss per share, the weighted average

number of shares of common stock outstanding is adjusted to reflect the effect of potentially dilutive securities. Net income (loss) is adjusted for any deemed dividends to preferred stockholders to compute net income attributable to common stockholders.

Outstanding stock options, RSUs, and warrants to purchase approximately 24.0 million and 67.2 million shares were not included in the calculation of diluted loss per share amounts for the periods ended September 30, 2021 and September 30, 2020, respectively, as their effect would have been anti-dilutive. Also excluded in the calculation of diluted loss per share amount for the three and nine months ended September 30, 2021 are the 627,500 shares of BIOLASE common stock issuable upon conversion of the 251 shares of Series F Preferred Stock outstanding as of September 30, 2021.

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Inventory

9 Months Ended

Sep. 30, 2021

Inventory Disclosure [Abstract]

Inventory

NOTE 5—INVENTORY

Inventory is valued at the lower of cost or net realizable value and is comprised of the following (in thousands):

	September 30,		December 31,
	2021		2020
Raw materials	$	5,122	$	3,721
Work-in-process		1,784		1,158
Finished goods		7,156		6,278
Inventory	$	14,062	$	11,157

Inventory has been reduced by estimates for excess and obsolete amounts totaling $0.7 million as of September 30, 2021 and December 31, 2020.

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Property, Plant, and Equipment

9 Months Ended

Sep. 30, 2021

Property, Plant and Equipment [Abstract]

Property, Plant, and Equipment

NOTE 6—PROPERTY, PLANT, AND EQUIPMENT

Property, plant, and equipment, net is comprised of the following (in thousands):

	September 30,			December 31,
	2021			2020
Building	$	215		$	229
Leasehold improvements		90			52
Equipment and computers		7,876			7,477
Furniture and fixtures		471			465
Construction in progress		—			46
Total		8,652			8,269
Accumulated depreciation and amortization		(7,931	)		(7,664	)
Property, plant, and equipment, net before land		721			605
Land		168			177
Property, plant, and equipment, net	$	889		$	782

Depreciation and amortization expense related to property, plant, and equipment totaled $0.1 million and $0.3 million for the three and nine months ended September 30, 2021 and $0.1 million and $0.5 million for the three and nine months ended September 30, 2020, respectively.

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Intangible Assets and Goodwill

9 Months Ended

Sep. 30, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets And Goodwill

NOTE 7—INTANGIBLE ASSETS AND GOODWILL

The Company conducted its annual impairment test of goodwill as of December 31, 2020 and determined that there was no impairment. The Company also tests its intangible assets and goodwill between the annual impairment tests 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 or significant economic slowdowns, are present. No events have occurred since December 31, 2020 through the date of these unaudited consolidated financial statements that would trigger further impairment testing of the Company’s intangible assets and goodwill.

As of September 30, 2021 and December 31, 2020, the Company had goodwill of $2.9 million. As of September 30, 2021 and December 31, 2020, all intangible assets have been fully amortized and no amortization expense was recognized during the three and nine months ended September 30, 2021 and 2020.

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Accrued Liabilities

9 Months Ended

Sep. 30, 2021

Payables and Accruals [Abstract]

Accrued Liabilities

NOTE 8—ACCRUED LIABILITIES

Accrued liabilities are comprised of the following (in thousands):

	September 30,		December 31,
	2021		2020
Payroll and benefits	$	3,017	$	3,552
Settlement accrual		680		—
Warranty accrual, current portion		545		748
Lease liability		404		305
Taxes		357		165
Accrued professional services		283		281
Accrued insurance premium		—		885
Other		896		731
Accrued liabilities	$	6,182	$	6,667

The CARES Act allows employers to defer the deposit and payment of the employer's share of Social Security taxes through December 31, 2020. Under the CARES Act, the Company deferred $0.4 million as of September 30, 2021. The deferred liability is included in accrued payroll and benefits.

As of September 30, 2021, a settlement accrual liability of $0.7 million related to the CAO Settlement Agreement (as defined below) was included in current accrued liabilities. See Note 11 for additional information.

Changes in the initial product warranty accrual and the expenses incurred under the Company’s initial and extended warranties are included within accrued liabilities and were as follows (in thousands):

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2021			2020			2021			2020
Balance, beginning of period	$	551		$	853		$	1,132		$	1,110
Provision for estimated warranty cost		832			345			1,129			575
Warranty expenditures		(366	)		(344	)		(1,244	)		(831	)
Balance, end of period		1,017			854			1,017			854
Less: long-term portion of warranty accrual		472			204			472			204
Current portion of warranty accrual	$	545		$	650		$	545		$	650

The Company's Waterlase laser systems sold domestically are covered by a warranty against defects in material and workmanship for a period of up to one year from the date of sale to the end-user by the Company or a distributor. The Company's diode systems sold domestically are covered by a warranty against defects in material and workmanship for a period of up to two years from the date of sale to the end-user by the Company or a distributor. Waterlase systems and diode systems sold internationally are covered by a warranty against defects in material and workmanship for a period of up to 28 months from date of sale to the international distributor. The Company's laser systems warranty covers parts and service for sales in its North American territories and parts only for international distributor sales.

In North America and select international locations, the Company sells extended warranty contracts to its laser systems end users that cover the period after the expiration of the Company's standard warranty coverage for its laser systems. Extended warranty coverage provided under the Company's service contracts varies by the type of system and the level of service desired by the customer. Products or accessories remanufactured, refurbished, or sold by unauthorized parties, voids all warranties in place for such products and exempts the Company from liability issues relating to the use of such products. The Company distributes extended warranties on certain imaging products, including its digital radiography products. However, all imaging products that the Company distributes are initially covered by manufacturer’s warranties.

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Debt

9 Months Ended

Sep. 30, 2021

Debt Disclosure [Abstract]

Debt

NOTE 9—DEBT

The following table presents the details of the principal outstanding and unamortized discount (in thousands):

	September 30,			December 31,
	2021			2020
SWK Loan	$	14,300		$	14,300
PPP Loan		—			2,980
EIDL Loan		150			150
Discount and debt issuance costs on SWK Loan		(936	)		(1,244	)
Total		13,514			16,186
Current term loans, net of discount		(1,400	)		—
Non current term loans, net of discount	$	12,114		$	16,186

The Company recognized approximately $0.6 million and $1.7 million in interest expense for the three and nine months ended September 30, 2021 and $0.6 million and $1.8 million in interest expense for the three and nine months ended September 30, 2020, respectively. The weighted-average interest rate as of September 30, 2021 was 12.25%.

The future minimum principal and interest payments as of September 30, 2021 are as follows (in thousands):

	Principal		Interest (1)
Remainder of 2021	$	—	$	443
2022		2,100		1,716
2023		2,800		1,393
2024		9,400		1,899
2025		1		8
2026 and thereafter		149		88
Total future payments	$	14,450	$	5,547
(1) Estimated using London Interbank Bank Offered Rate (“LIBOR”) as of September 30, 2021

Lines of Credit

Pacific Mercantile Bank

On October 28, 2019, the Company entered into a loan and security agreement (the “Loan Agreement”) with Pacific Mercantile Bank, as lender (“PMB”), which provides for a revolving line of credit (the “PMB Loan”) in a maximum principal amount not to exceed the lesser of (i) $3 million or (ii) the sum of 90% of the Eligible Accounts (as defined in the Loan Agreement) plus 75% of the Eligible Inventory (as defined in the Loan Agreement, and subject to certain limitations set forth therein); provided that the maximum principal amount of the PMB Loan may be reduced from time to time in PMB’s good faith business judgment as set forth in the Loan Agreement. Borrowings under the PMB Loan may be used for working capital. The PMB Loan matures on October 28, 2021, unless earlier terminated.

The Company’s obligations under the PMB Loan are secured by a security interest in substantially all of the Company’s property. No borrowings may be made under the PMB Loan Agreement unless and until Exim Bank agrees to guarantee the PMB Loan and the Company has entered into a borrower agreement with Exim Bank.

Borrowings under the PMB Loan bear interest at a daily rate equal to the prime rate published in the Wall Street Journal, plus 1.5% per annum; provided, that the interest rate in effect on any day shall not be less than 6.0% per annum. Additionally, the Company is required to pay an initial and annual fee of $52,500 to Exim Bank.

The PMB Loan Agreement requires the Company to maintain unrestricted cash at PMB plus unused availability under the PMB Loan in an amount equal to at least the Burn Rate. “Burn Rate” means the Company’s net profit/net loss plus depreciation plus amortization plus stock-based compensation plus the change in the accounts receivable reserve, measured on a trailing three-month basis. In addition, the PMB Loan Agreement contains customary affirmative and negative covenants for financings of its type (subject to customary exceptions).

As of September 30, 2021 and December 31, 2020, the Company had no borrowings outstanding and unused availability under the PMB Loan of approximately $2.8 million and $2.3 million, respectively.

Term Loan

On November 9, 2018, the Company entered into a five-year secured Credit Agreement (the “Credit Agreement”) with SWK Funding LLC (“SWK”), pursuant to which the Company has borrowed $14.3 million (“SWK Loan”) as of September 30, 2021. The Company’s obligations under the Credit Agreement are secured by substantially all of the Company’s assets. Under the terms of the Credit Agreement and subsequent amendments as discussed in the Company’s 2020 Form 10-K, repayment of the SWK Loan is interest-only through the second quarter of 2022, paid quarterly with the option to extend the interest-only period. Principal repayments begin in the second quarter of 2022 and will be approximately $0.7 million quarterly until the SWK Loan matures in the second quarter of 2024. The loan bears interest of 10% plus LIBOR floor of 2.25% or another index that approximates LIBOR as close as possible if and when LIBOR no longer exists.

In light of the Company's increase in working capital from the Equity Offering and cash received from warrants exercised, the Company entered into the Seventh Amendment to the Credit Agreement (the “Seventh Amendment”) with SWK on February 24, 2021, which provides for adjusted minimum aggregate revenue and EBITDA requirements at the end of certain periods, to the extent that the Company's liquid assets are less than $15 million. While the Company's liquid assets are at or above $15 million, no financial maintenance covenants are applicable.

For the Seventh Amendment, the Company paid an incremental amendment fee of $25,000, which is being amortized over the remaining life of the loan as of the date of the amendment.

As of September 30, 2021, the Company was in compliance with debt covenants of the Credit Agreement.

Paycheck Protection Program Loan

On April 14, 2020, the Company was granted a loan (the “PPP Loan”) under the Paycheck Protection Program from PMB in the aggregate amount of $2,980,000, pursuant to the Paycheck Protection Program under the CARES Act.

The PPP Loan, which was in the form of a note dated April 13, 2020 issued by BIOLASE, matures on April 13, 2022 and bears interest at a rate of 1.0% per annum. Interest is payable monthly commencing on November 1, 2020. The note may be prepaid at any time prior to maturity with no prepayment penalties. Funds from the PPP Loan may only be used for payroll costs, costs used to continue group health care benefits, mortgage payments, rent, utilities, and interest on other debt obligations incurred before February 15, 2020. The Company recorded the principal amount of approximately $3.0 million due on the PPP Loan in non-current term loans in the consolidated balance sheet as of December 31, 2020. Interest on the PPP Loan was not material. The Company believes it used the entire PPP Loan amount for qualifying expenses. Under the terms of the PPP, certain amounts of the PPP Loan may be forgiven if they are used for qualifying expenses as described in the CARES Act.

In July 2020, the Company amended the provisions of the PPP Loan. The amendment modifies the original payment deferment period from six months to the date that the United States Small Business Administration (“SBA") remits the Company’s loan forgiveness to PMB or if no forgiveness is requested to ten months after the end of the 24-week measurement period. The amendment also increased the amount of non-payroll costs eligible for loan forgiveness from 25% to 40%. During 2020, the Company requested forgiveness in accordance with the application requirements.

In June 2021, the Company received a reply to its request, and the PPP Loan along with all accrued interest was forgiven by the SBA. The amount of loan forgiveness is presented as a component of non-operating (gain) loss on the Company's consolidated statement of operations. The SBA may undertake a review of a loan of any size during the six-year period following forgiveness of the loan. The review may include the loan forgiveness application, as well as whether the Company received the proper loan amount. There can be no assurance as to the result of any such SBA review.

EIDL Loan

On May 22, 2020, the Company executed the standard loan documents required for securing a loan (the “EIDL Loan”) from the SBA under its Economic Injury Disaster Loan assistance program in light of the impact of the COVID-19 pandemic on the Company’s business. The principal amount of the EIDL Loan is $150,000, with proceeds to be used for working capital purposes. Interest on the EIDL Loan accrues at the rate of 3.75%, per annum and installment payments, including principal and interest, are due monthly beginning in July 2021 and are payable through July 2050. In April 2021, the SBA announced that it was extending the first payment due date for all loans until 2022, or 24 months from the loan execution date. The Company is obligated to begin making payments on this EIDL Loan starting in May 2022.

Western Alliance Warrants

On March 6, 2018, the Company issued to Western Alliance warrants (the “Original Western Alliance Warrants”) to purchase up to the number of shares of common stock equal to $120,000 divided by the applicable exercise price at the time such warrants are exercised. The Original Western Alliance Warrants are fully vested and exercisable. The Original Western Alliance Warrants may be exercised with a cash payment from Western Alliance, or, in lieu of a cash payment, Western Alliance may convert the warrants into a number of shares, in whole or in part. The initial exercise price of the warrants was $2.35 per share. On September 27, 2018, the Company entered into the Second Modification Agreement to amend the Original Business Financing Agreement. In connection with the Second Modification Agreement, the Original Western Alliance Warrants were terminated, and the Company issued new warrants (the “Western Alliance Warrants”) to purchase up to the number of shares of common stock equal to $120,000 divided by the exercise price of $2.13, which was the closing price of the Company’s common stock on September 27, 2018. The Western Alliance Warrants are immediately exercisable and expire on September 27, 2028. These warrants contain down-round features that require the Company to adjust the exercise price proportionately should the Company issue shares at a price per share less than the exercise price. The sale of common stock in the second quarter of 2020 triggered an adjustment to the exercise price to approximately $0.60 per share. The impact of the adjustment to the exercise price was not material.

SWK Warrants

In connection with the Credit Agreement, on November 9, 2018, the Company issued to SWK warrants (the “SWK Warrants”) to purchase up to 372,023 shares of BIOLASE common stock. The SWK Warrants were immediately exercisable and expire on November 9, 2026. The initial exercise price of the SWK Warrants was $1.34, which was the average closing price of BIOLASE common stock for the ten trading days immediately preceding November 9, 2018. These warrants contain down-round features that require the Company to adjust the exercise price proportionately should the Company issue shares at a price per share less than the exercise price. The fair value of the SWK Warrants was estimated using the Black-Scholes option-pricing model with the following assumptions: expected term of 8 years; volatility of 81.79%; annual dividend per share of $0.00; and risk-free interest rate of 3.13%; and resulted in an estimated fair value of $0.4 million.

In November 2019, these warrants were consolidated and the exercise price was adjusted to $1.00, and in March 2020, the exercise price was adjusted a second time to $0.49. The impact of both reprice events was de minimis to the consolidated financial statements. In connection with the Fifth Amendment, the Company entered into a Third Amendment to the SWK Warrant Agreement. Under this amendment, the Company granted to SWK 63,779 additional common stock warrants at an exercise price of approximately $0.39. All other terms and conditions to the additional warrants were the same as those previously granted. The Company also revised the exercise price of the 487,198 common stock warrants held by SWK to $0.39. The Company measured the fair value of the 63,779 warrants granted using the Black-Scholes. The fair value of the additional warrants and the aggregate impact of the exercise price adjustments in previous amendments to the Warrant Agreement were less than $0.1 million and not material to the consolidated financial statements. Due to the repricing that occurred in the second quarter of 2020, the down round features of these warrants was not triggered by the Company’s June 2020 sale of common stock.

DPG Warrants

In connection with the SWK Loan, the Company paid a finder’s fee to Deal Partners Group ("DPG") of $0.4 million cash and issued warrants to purchase up to 279,851 shares of common stock (the “DPG Warrants”). The DPG Warrants were issued on November 14, 2018, were exercisable immediately, and expire on November 9, 2026. The initial exercise price of the DPG Warrants was $1.34 which was the average closing price of the Company’s common stock for the ten trading days immediately preceding November 9, 2018. These warrants contain down-round features that require the Company to adjust the exercise price proportionately should the Company issue shares at a price per share less than the exercise price. The fair value of the DPG Warrants of $0.3 million was estimated using the Black-Scholes option pricing model with the following assumptions: expected term of 8 years; volatility of 81.79%; annual dividend per share of $0.00; and risk-free interest rate of 3.13%. In May 2019 the Company issued 149,727 warrants to purchase common stock at a weighted average exercise price of $2.17 to SWK and DPG.

In November 2019, the exercise price of the DPG Warrants issued on November 14, 2018 was adjusted from $1.34 per share to $0.88 per share and the exercise price of the DPG Warrants issued on May 7, 2019 was adjusted from $2.17 per share to $1.42 per share. The impact of the reprice was de minimis to the unaudited consolidated financial statements. The June 2020 sale of common stock triggered the down round features of these warrants, and in August 2020, the Company adjusted the exercise price of these warrants to $0.62 and $0.38 per share. The impact of this reprice was not material.

The value of both the SWK Warrants and the DPG Warrants was recognized as a discount on the SWK Loan and is being amortized on a straight-line basis which approximates the effective-interest method, over the loan term of five years. Additionally, based on the adoption of ASU 2017-11 in the fourth quarter of 2018, these warrants are classified as equity in the consolidated balance sheet as of September 30, 2021 and December 31, 2020.

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Leases

9 Months Ended

Sep. 30, 2021

Leases [Abstract]

Leases

NOTE 10—LEASES

The Company enters into operating leases primarily for real estate, office equipment, and fleet vehicles. Lease terms generally range from one to five years, and often include options to renew for one year. The Company leases its 11,000 square foot corporate headquarters pursuant to a lease that expires on December 31, 2025 and leases a manufacturing facility located in Corona, California, which expires on June 30, 2025. The Company also leases additional office space and certain office equipment under various operating lease arrangements.

On January 22, 2020, the Company entered into a five-year real property lease agreement for an approximately 11,000 square foot facility in Corona, California and moved its manufacturing operations. The lease commenced on July 1, 2020.

On February 4, 2020, the Company also entered into a 66-month real property lease agreement for office space of approximately 11,000 square feet of office space in Foothill Ranch, California. The lease commenced on July 1, 2020.

Information related to the Company’s right-of-use assets and related liabilities were as follows (in thousands):

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2021			2020			2021			2020
Cash paid for operating lease liabilities	$	62		$	87		$	185		$	417
Right-of-use assets obtained in exchange for new operating    lease obligations	$	-		$	1,440			48		$	2,037
Weighted-average remaining lease term	3.8 years			4.9 years			3.8 years			5.2 years
Weighted-average discount rate		12.3	%		12.3	%		12.3	%		12.3	%

Lease expense consists of payments for real property, office copiers, and IT equipment. The Company recognizes payments for non-lease components such as common area maintenance in the period incurred. As of September 30, 2021, the Company had no significant leases that had not commenced.

The Company allocates lease cost amongst lease and non-lease components. The Company excludes short-term leases (those with lease terms of less than one year at inception) from the measurement of lease liabilities or right-of-use assets.

Maturities of lease liabilities as of September 30, 2021 for leases that have commenced are as follows (in thousands):

	September 30,
2022	$	624
2023		621
2024		613
2025		519
2026 and thereafter		121
Total future minimum lease obligations		2,498
Less imputed interest		(537	)
Total lease liabilities	$	1,961
Current operating lease liabilities, included in    accrued liabilities	$	404
Non current lease liabilities		1,557
Total lease liabilities	$	1,961

As of September 30, 2021, right-of-use assets were $1.8 million and lease liabilities were $2.0 million.

Rent expense totaled $0.2 million and $0.6 million for the three and nine months ended September 30, 2021 and $0.1 million and $0.5 million for the three and nine months ended September 30, 2020.

Future minimum rental commitments under lease agreements, as of September 30, 2021, with non-cancelable terms greater than one year for each of the years ending December 31 are as follows (in thousands):

	Year Ended
	December 31,
Remainder of 2021	$	166
2022		610
2023		624
2024		609
2025 and thereafter		489
Total future minimum lease obligations		2,498
Less imputed interest		(537	)
Total lease liabilities	$	1,961

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2021

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

NOTE 11—COMMITMENTS AND CONTINGENCIES

On April 24, 2012, CAO Group, Inc. (“CAO”) filed a lawsuit against BIOLASE in the District of Utah alleging that BIOLASE’s ezlase dental laser infringes on U.S. Patent No. 7,485,116 (the “116 Patent”). On September 9, 2012, CAO amended its complaint, adding 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 BIOLASE issued on April 30, 2012, which CAO claims contained false statements that are disparaging to CAO and its diode product. The amended complaint sought injunctive relief, treble damages, attorneys’ fees, punitive damages, and interest. Until January 24, 2018, this lawsuit was stayed in connection with United States Patent and Trademark Office proceedings relating to the 116 Patent, which proceedings ultimately culminated in a January 27, 2017 decision by the United States Court of Appeals for the Federal Circuit, affirming the findings of the Patent Trial and Appeal Board, which were generally favorable to the Company. On January 25, 2018, CAO moved for leave to file a second amended complaint to add certain claims, which filing the Company did not oppose.

On January 23, 2018, CAO filed a lawsuit against BIOLASE in the Central District of California alleging that BIOLASE’s diode lasers infringe on U.S. Patent Nos. 8,337,097, 8,834,497, 8,961,040 and 8,967,883. The complaint sought injunctive relief, treble damages, attorneys’ fees, punitive damages, and interest.

On January 25, 2019 (the “Effective Date”), BIOLASE entered into a settlement agreement (the “CAO Settlement Agreement”) with CAO. Pursuant to the CAO Settlement Agreement, CAO agreed to dismiss with prejudice the lawsuits filed by CAO against the Company in April 2012 and January 2018. In addition, CAO granted to the Company and its affiliates a non-exclusive, non-transferable (except as provided in the CAO Settlement Agreement), royalty-free, fully-paid, worldwide license to the licensed patents for use in the licensed products and agreed not to sue the Company, its affiliates or any of its manufacturers, distributors, suppliers or customers for use of the licensed patents in the licensed products, and the parties agreed to a mutual release of claims. The Company agreed (i) to pay to CAO, within five days of the Effective Date, $500,000 in cash, (ii) to issue to CAO, within 30 days of the Effective Date, 500,000 restricted shares of common stock of the Company (the “Stock Consideration”), and (iii) to pay to CAO, within 30 days of December 31, 2021, an amount in cash equal to the difference (if positive) between $1,000,000 and the value of the Stock Consideration on December 31, 2021. The Stock Consideration vests and becomes transferrable on December 31, 2021, subject to the terms of a restricted stock agreement entered into between the parties. The Company considered this a Type I subsequent event and recognized a $1.5 million contingent loss on patent litigation settlement in its consolidated statement of operations for the year ended December 31, 2018. In January 2019, the Company paid CAO $500,000 in cash. On January 31, 2019, the case was dismissed with prejudice. During the three-month period ended March 31, 2019, the Company recorded an additional loss on patent litigation of $0.2 million which represented the change in fair value of the restricted stock to be issued to CAO at March 31, 2019. Subsequent to March 31, 2019, the Company reversed the additional loss commensurate with the fluctuations in the Company’s share price. In August 2020, the Company signed a Letter Agreement to terminate the Manufacturing Agreement and purchase from CAO raw materials and other inventory held by CAO as part of the original CAO Settlement Agreement.

In February 2021, the Company issued 500,000 restricted shares of common stock in satisfaction of its obligation to issue the Stock Consideration to CAO under the CAO Settlement Agreement and reduced the accrued liability to $0.6 million. As of September 30, 2021, the remaining accrued liability related to the CAO Settlement Agreement was included in current accrued liabilities in the amount of $0.7 million. As of December 31, 2020, the accrued liability related to the CAO Settlement Agreement was $1.0 million and was included in non-current other liabilities.

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Segment Information

9 Months Ended

Sep. 30, 2021

Segment Reporting [Abstract]

Segment Information

NOTE 12—SEGMENT INFORMATION

The Company currently operates in a single business segment. Management uses one measurement of profitability and does not segregate its business for internal reporting. For the three and nine months ended September 30, 2021, sales to customers in the United

States accounted for approximately 62% and 64% of net revenue and international sales accounted for approximately 38% and 36% of net revenue, respectively. For the three and nine months ended September 30, 2020, sales to customers in the United States accounted for approximately 73% and 71% of net revenue and international sales accounted for approximately 27% and 29% of net revenue, respectively. No individual country, other than the United States, represented more than 10% of total net revenue during the three and nine months ended September 30, 2021 or 2020.

Net revenue by geographic location based on the location of customers was as follows (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
United States	$	5,939	$	4,755	$	17,024	$	10,079
International		3,592		1,784		9,756		4,181
Total net revenue	$	9,531	$	6,539	$	26,780	$	14,260

Property, plant, and equipment by geographic location was as follows (in thousands):

	September 30,		December 31,
	2021		2020
United States	$	618	$	486
International		271		296
Total	$	889	$	782

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Concentrations

9 Months Ended

Sep. 30, 2021

Risks and Uncertainties [Abstract]

Concentrations

NOTE 13—CONCENTRATIONS

Revenue from the Company’s products are as follows (dollars in thousands):

	Three Months Ended								Nine Months Ended
	September 30,								September 30,
	2021				2020				2021				2020
Laser systems	$	6,084	63.8	%	$	3,712	56.7	%	$	16,588	61.9	%	$	6,854	48.1	%
Consumables and other	$	2,331	24.5	%		1,929	29.5	%		6,923	25.9	%		4,263	29.9	%
Services	$	1,116	11.7	%		898	13.8	%		3,269	12.2	%		3,143	22.0	%
Total net revenue	$	9,531	100.0	%	$	6,539	100.0	%	$	26,780	100.0	%	$	14,260	100.0	%

No individual customer represented more than 10% of the Company’s revenue for the three and nine months ended September 30, 2021 or 2020.

The Company maintains its cash and cash equivalents in money market investment accounts with established commercial banks. Such cash deposits periodically exceed the Federal Deposit Insurance Corporation insured limit.

No individual customer represented more than 10% of the Company’s accounts receivable at September 30, 2021 and December 31, 2020.

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.

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Income Taxes

9 Months Ended

Sep. 30, 2021

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 14—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 and nine months ended September 30, 2021 and 2020. The Company does not expect any changes to its unrecognized tax benefit for the next 12 months that would materially impact its consolidated financial statements.

During the three and nine months ended September 30, 2021, the Company recorded an income tax provision of $14,000 and income tax benefit of $7,000, respectively, resulting in an effective tax rate of 0.4% and 0.1%, respectively. During the three and nine months ended September 30, 2020, the Company recorded an income tax provision of $15,000 and $49,000, respectively, resulting in an effective tax rate of 55.6% and 0.5%, respectively. The income tax provisions and benefit for the three and nine months ended September 30, 2021 and 2020 were calculated using the discrete year-to-date method. The effective tax rate differs from the statutory tax rate of 21% 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 foreign tax liability.

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2021

Accounting Policies [Abstract]

Use of Estimates

Use of Estimates

The preparation of these consolidated financial statements in conformity with generally accepted accounting principles in the United States of America (“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, goodwill and the ability of goodwill to be realized, revenue deferrals, 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

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 as discussed in the Company’s 2020 audited financial statements included in the 2020 Form 10-K. Management believes that there have been no significant changes during the nine months ended September 30, 2021 in the Company’s critical accounting policies from those disclosed in the Company’s 2020 audited financial statements included in the 2020 Form 10-K.

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 non-performance 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. Level 3 inputs are unobservable due to little or no corroborating market data.

The Company’s financial instruments, consisting of cash, cash equivalents, restricted cash, accounts receivable, accounts payable, accrued liabilities, and the SWK Loan (as defined below) as discussed in Note 9, approximate fair value because of the nature of these items.

Concentration of Credit Risk, Interest Rate Risk and Foreign Currency Exchange Rate

Concentration of Credit Risk, Interest Rate Risk and Foreign Currency Exchange Rate

Financial instruments which potentially expose the Company to a concentration of credit risk consist principally of cash and cash equivalents, restricted cash, and trade accounts receivable. The Company maintains its cash and cash equivalents and restricted cash with established commercial banks. At times, balances may exceed federally insured limits. To minimize the risk associated with trade accounts receivable, management performs ongoing credit evaluations of customers’ financial condition and maintains relationships with the Company’s customers that allow management to monitor current changes in business operations so the Company can respond as needed. The Company does not, generally, require customers to provide collateral before it sells them its products. However, the Company has required certain distributors to make prepayments for significant purchases of products.

Substantially all of the Company’s revenue is denominated in U.S. dollars, including sales to international distributors. Only a small portion of its revenue and expenses is denominated in foreign currencies, principally the Euro and Indian Rupee. The Company’s foreign currency expenditures primarily consist of the cost of maintaining offices, consulting services, and employee-related costs. During the three and nine months ended September 30, 2021 and 2020, respectively, the Company did not enter into any

hedging contracts. Future fluctuations in the value of the U.S. dollar may affect the price competitiveness of the Company’s products outside the U.S.

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 (“ASC”).

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 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. This ASU clarifies the accounting for modifications or exchanges of freestanding equity-classified written call options (i.e. warrants) so that the transaction should be treated as an exchange of the original instrument for a new instrument. This standard is effective for fiscal years beginning after December 15, 2021 on a prospective basis, with early adoption permitted. The adoption of this update is not expected to have a material impact on the Company's consolidated financial position and results of operations.

In December 2019, the FASB issued ASU 2019-12, Income Taxes – Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes by clarifying and amending existing guidance related to the recognition of franchise tax, the evaluation of a step-up in the tax basis of goodwill and the effects of enacted changes in tax laws or rates in the effective tax rate computation, among other clarifications. ASU 2019-12 is effective for annual periods beginning after December 15, 2020, including interim periods within those fiscal years, and early adoption is permitted. The Company adopted this guidance effective January 1, 2021, and the adoption of this standard did not have a material impact on its consolidated financial statements.

In August 2020, the FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40). This ASU reduces the number of accounting models for convertible debt instruments and convertible preferred stock and amends the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions. In addition, this ASU improves and amends the related earnings per share guidance. This standard is effective for the Company beginning on January 1, 2022, with early adoption permitted only in the first quarter of 2021. Adoption is either a modified retrospective method or a fully retrospective method of transition. The Company is currently assessing the impact the new guidance will have on its consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The standard’s main goal is to improve financial reporting by requiring earlier recognition of credit losses on financing receivables and other financial assets in scope and to replace the incurred loss impairment methodology under current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The Company will be required to use a forward-looking expected credit loss model for accounts receivables, loans, and other financial instruments. Credit losses relating to available-for-sale debt securities will also be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. The standard will be effective for the Company beginning January 1, 2023, with early adoption permitted beginning January 1, 2019. The Company is currently assessing the impact that adopting this new accounting standard will have on its consolidated financial statements. 

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Revenue Recognition (Tables)

9 Months Ended

Sep. 30, 2021

Revenue Recognition [Abstract]

Summary of Opening and Closing Balances of Contract Liabilities

The Company performs its obligations under a contract with a customer by transferring products and/or services in exchange for consideration from the customer. The Company typically invoices its customers as soon as control of an asset is transferred and a receivable for the Company is established. The Company, however, recognizes a contract liability when a customer prepays for goods and/or services and the Company has not transferred control of the goods and/or services. The opening and closing balances of the Company’s contract liabilities are as follows (in thousands):

	September 30,			December 31,
	2021			2020
Undelivered elements (training, installation, product    and support services)	$	1,015		$	670
Extended warranty contracts		1,557			1,609
Total deferred revenue		2,572			2,279
Less: long-term portion of deferred revenue		(294	)		(374	)
Deferred revenue — current	$	2,278		$	1,905

Summary of Disaggregation of Revenues Related to Geographic Areas

The Company’s revenues related to the following geographic areas were as follows (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
United States	$	5,939	$	4,755	$	17,024	$	10,079
International		3,592		1,784		9,756		4,181
Total net revenue	$	9,531	$	6,539	$	26,780	$	14,260

Summary of Revenues Disaggregated by Timing of Goods and Services Transferred

Information regarding revenues disaggregated by the timing of when goods and services are transferred is as follows (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
Revenue recognized over time	$	1,116	$	898	$	3,269	$	3,143
Revenue recognized at a point in time		8,415		5,641		23,511		11,117
Net revenue	$	9,531	$	6,539	$	26,780	$	14,260

Summary of Sales by End Market

The Company’s sales by end market were as follows (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
End-customer	$	5,939	$	5,087	$	17,024	$	9,845
Distributors		3,592		1,452		9,756		4,415
Net revenue	$	9,531	$	6,539	$	26,780	$	14,260

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Redeemable Preferred Stock and Stockholders' Equity (Tables)

9 Months Ended

Sep. 30, 2021

Equity [Abstract]

Summary of Income Statement Classification of Compensation Expense

The following table summarizes the income statement classification of compensation expense associated with share-based payments (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
Cost of revenue	$	25	$	79	$	138	$	208
Sales and marketing		62		183		291		571
General and administrative		61		517		777		1,424
Engineering and development		44		68		282		164
Total	$	192	$	847	$	1,488	$	2,367

Assumptions on Estimation of Stock Option Fair Values

The stock option fair values were estimated using the Black-Scholes option-pricing model with the following assumptions:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2021			2020			2021			2020
Expected term (years)		6.1		N/A				6.1			5.5
Volatility		111	%		—	%		111	%		103	%
Annual dividend per share	N/A			N/A			N/A			N/A
Risk-free interest rate		0.98	%		—	%		0.86	%		0.37	%

Summary of Option Activity

A summary of option activity for the nine months ended September 30, 2021 is as follows (in thousands, except per share data):

				Weighted		Weighted Average Remaining
				Average		Contractual		Aggregate
	Shares			Exercise Price		Term (Years)		Intrinsic Value(1)
Options outstanding at December 31, 2020		2,398		$	2.96		7.2	$	53
Granted at fair market value		50		$	0.87
Exercised		(176	)	$	0.38
Forfeited, cancelled, or expired		(102	)	$	7.78
Options outstanding at September 30, 2021		2,170		$	2.89		6.6	$	286
Options exercisable at September 30, 2021		2,052		$	3.00		6.5	$	277
Vested options expired during the period    ended September 30, 2021		91		$	8.48

(1)The intrinsic value calculation does not include negative values, which can occur when the fair market value on the reporting date is less than the exercise price of the award.

Summary of Unvested Stock Option Activity

A summary of unvested stock option activity for the nine months ended September 30, 2021 is as follows (in thousands, except per share data):

				Weighted
				Average Grant
	Shares			Date Fair Value
Unvested options at December 31, 2020		1,323		$	0.34
Granted		50		$	0.72
Vested		(1,256	)	$	0.31
Unvested options at September 30, 2021		117		$	0.73

Fair Value Disclosures Related to Grants, Exercises and Vesting Options

Fair value disclosures related to grants, exercises and vested options are as follows (in thousands, except per share amounts):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
Proceeds from stock options exercised	$	66	$	—	$	66	$	—
Tax benefit related to stock options exercised (1)	N/A		N/A		N/A		N/A
Intrinsic value of stock options exercised (2)	$	42	$	—	$	42	$	—
Weighted-average fair value of options granted    during period	$	0.49	$	—	$	0.72	$	0.29
Total fair value of stock options vested during the period	$	8	$	34	$	395	$	188

(1)Excess tax benefits received related to stock option exercises are presented as operating 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 exercise price of the options.

Summary of Unvested Restricted Stock Units

A summary of unvested RSU activity for the nine months ended September 30, 2021 is as follows (in thousands, except per share amounts):

				Weighted
				Average Grant
	Shares			Date Fair Value
Unvested RSUs at December 31, 2020		3,672		$	0.66
Granted		2,808		$	0.83
Vested		(3,772	)	$	0.69
Forfeited or cancelled		(601	)	$	1.33
Unvested RSUs at September 30, 2021		2,107		$	0.63

Summary of Warrant Activity

A summary of warrant activity for the nine months ended September 30, 2021 is as follows (in thousands, except exercise price amounts):

				Weighted
				Average
	Shares			Exercise Price
Warrants outstanding, December 31, 2020		54,052		$	0.62
Exercised		(35,790	)	$	0.43
Forfeited, cancelled, or expired		(407	)	$	10.00
Warrants outstanding at September 30, 2021		17,855		$	0.80
Warrants exercisable at September 30, 2021		17,855		$	0.80
Vested warrants expired during the period    ended September 30, 2021		(407	)	$	10.00

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Inventory (Tables)

9 Months Ended

Sep. 30, 2021

Inventory Disclosure [Abstract]

Components of Inventory

Inventory is valued at the lower of cost or net realizable value and is comprised of the following (in thousands):

	September 30,		December 31,
	2021		2020
Raw materials	$	5,122	$	3,721
Work-in-process		1,784		1,158
Finished goods		7,156		6,278
Inventory	$	14,062	$	11,157

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Property, Plant, and Equipment (Tables)

9 Months Ended

Sep. 30, 2021

Property, Plant and Equipment [Abstract]

Summary of Property, Plant, and Equipment

Property, plant, and equipment, net is comprised of the following (in thousands):

	September 30,			December 31,
	2021			2020
Building	$	215		$	229
Leasehold improvements		90			52
Equipment and computers		7,876			7,477
Furniture and fixtures		471			465
Construction in progress		—			46
Total		8,652			8,269
Accumulated depreciation and amortization		(7,931	)		(7,664	)
Property, plant, and equipment, net before land		721			605
Land		168			177
Property, plant, and equipment, net	$	889		$	782

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Accrued Liabilities (Tables)

9 Months Ended

Sep. 30, 2021

Payables and Accruals [Abstract]

Components of Accrued Liabilities

Accrued liabilities are comprised of the following (in thousands):

	September 30,		December 31,
	2021		2020
Payroll and benefits	$	3,017	$	3,552
Settlement accrual		680		—
Warranty accrual, current portion		545		748
Lease liability		404		305
Taxes		357		165
Accrued professional services		283		281
Accrued insurance premium		—		885
Other		896		731
Accrued liabilities	$	6,182	$	6,667

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 are included within accrued liabilities and were as follows (in thousands):

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2021			2020			2021			2020
Balance, beginning of period	$	551		$	853		$	1,132		$	1,110
Provision for estimated warranty cost		832			345			1,129			575
Warranty expenditures		(366	)		(344	)		(1,244	)		(831	)
Balance, end of period		1,017			854			1,017			854
Less: long-term portion of warranty accrual		472			204			472			204
Current portion of warranty accrual	$	545		$	650		$	545		$	650

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Debt (Tables)

9 Months Ended

Sep. 30, 2021

Debt Disclosure [Abstract]

Summary of Principal Outstanding and Unamortized Discount

The following table presents the details of the principal outstanding and unamortized discount (in thousands):

	September 30,			December 31,
	2021			2020
SWK Loan	$	14,300		$	14,300
PPP Loan		—			2,980
EIDL Loan		150			150
Discount and debt issuance costs on SWK Loan		(936	)		(1,244	)
Total		13,514			16,186
Current term loans, net of discount		(1,400	)		—
Non current term loans, net of discount	$	12,114		$	16,186

Summary of Future Minimum Principal and Interest Payments

The future minimum principal and interest payments as of September 30, 2021 are as follows (in thousands):

	Principal		Interest (1)
Remainder of 2021	$	—	$	443
2022		2,100		1,716
2023		2,800		1,393
2024		9,400		1,899
2025		1		8
2026 and thereafter		149		88
Total future payments	$	14,450	$	5,547
(1) Estimated using London Interbank Bank Offered Rate (“LIBOR”) as of September 30, 2021

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Leases (Tables)

9 Months Ended

Sep. 30, 2021

Leases [Abstract]

Information related to Right-of-use Assets and Liabilities

Information related to the Company’s right-of-use assets and related liabilities were as follows (in thousands):

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2021			2020			2021			2020
Cash paid for operating lease liabilities	$	62		$	87		$	185		$	417
Right-of-use assets obtained in exchange for new operating    lease obligations	$	-		$	1,440			48		$	2,037
Weighted-average remaining lease term	3.8 years			4.9 years			3.8 years			5.2 years
Weighted-average discount rate		12.3	%		12.3	%		12.3	%		12.3	%

Schedule of Maturities of Lease Liabilities

Maturities of lease liabilities as of September 30, 2021 for leases that have commenced are as follows (in thousands):

	September 30,
2022	$	624
2023		621
2024		613
2025		519
2026 and thereafter		121
Total future minimum lease obligations		2,498
Less imputed interest		(537	)
Total lease liabilities	$	1,961
Current operating lease liabilities, included in    accrued liabilities	$	404
Non current lease liabilities		1,557
Total lease liabilities	$	1,961

Future minimum rental commitments under lease agreements with non-cancelable Operating Leases

Future minimum rental commitments under lease agreements, as of September 30, 2021, with non-cancelable terms greater than one year for each of the years ending December 31 are as follows (in thousands):

	Year Ended
	December 31,
Remainder of 2021	$	166
2022		610
2023		624
2024		609
2025 and thereafter		489
Total future minimum lease obligations		2,498
Less imputed interest		(537	)
Total lease liabilities	$	1,961

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Segment Information (Tables)

9 Months Ended

Sep. 30, 2021

Segment Reporting [Abstract]

Summary of Net Revenue by Geographic Location

Net revenue by geographic location based on the location of customers was as follows (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
United States	$	5,939	$	4,755	$	17,024	$	10,079
International		3,592		1,784		9,756		4,181
Total net revenue	$	9,531	$	6,539	$	26,780	$	14,260

Summary of Property, Plant and Equipment by Geographic Location

Property, plant, and equipment by geographic location was as follows (in thousands):

	September 30,		December 31,
	2021		2020
United States	$	618	$	486
International		271		296
Total	$	889	$	782

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Concentrations (Tables)

9 Months Ended

Sep. 30, 2021

Risks and Uncertainties [Abstract]

Summary of Net Revenue from Various Products

Revenue from the Company’s products are as follows (dollars in thousands):

	Three Months Ended								Nine Months Ended
	September 30,								September 30,
	2021				2020				2021				2020
Laser systems	$	6,084	63.8	%	$	3,712	56.7	%	$	16,588	61.9	%	$	6,854	48.1	%
Consumables and other	$	2,331	24.5	%		1,929	29.5	%		6,923	25.9	%		4,263	29.9	%
Services	$	1,116	11.7	%		898	13.8	%		3,269	12.2	%		3,143	22.0	%
Total net revenue	$	9,531	100.0	%	$	6,539	100.0	%	$	26,780	100.0	%	$	14,260	100.0	%

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Description of Business and Basis of Presentation - Additional Information (Detail) - USD ($) shares in Thousands, $ in Thousands		3 Months Ended	9 Months Ended
	Feb. 10, 2021	Dec. 31, 2020	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2019
Basis Of Presentation [Line Items]
Series F Preferred stock, shares issued		1	0
Gross proceeds from the issuance of common stock, net of offering costs	$ 14,400
Gross proceeds from warrant exercises		$ 1,500	$ 16,560	$ 46
Cash, cash equivalents, and restricted cash		17,876	33,589	$ 19,159	$ 6,101
Accounts receivable, net		3,059	3,637
Equity raise of gross proceeds	$ 14,400
Amount received for Employee Retention Credit			1,800
SWK Loan
Basis Of Presentation [Line Items]
Working capital		23,900	39,200
Pacific Mercantile Bank | Loan Agreement
Basis Of Presentation [Line Items]
Unused availability		$ 2,300	$ 2,800

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Revenue Recognition - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2020
Revenue Recognition [Abstract]
Revenue recognized from contract liability			$ 200	$ 300
Contract With Customer Liability Revenue Recognized Extended Warranty			1,100	$ 2,000
Undelivered elements (product training, installation, product and support services)	$ 1,015		$ 1,015		$ 670
Revenue from services transferred to customers over time, percentage	12.00%	14.00%	12.00%	22.00%
Revenue from products and services transferred to customers, percentage	88.00%	86.00%	88.00%	78.00%

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Summary of Opening and Closing Balances of Contract Liabilities (Detail) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Revenue Recognition [Abstract]
Undelivered elements (training, installation, product and support services)	$ 1,015	$ 670
Extended warranty contracts	1,557	1,609
Total deferred revenue	2,572	2,279
Less long-term portion of deferred revenue	(294)	(374)
Deferred revenue — current	$ 2,278	$ 1,905

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Summary of Disaggregation of Revenues Related to Geographic Areas (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Disaggregation Of Revenue [Line Items]
Total net revenue	$ 9,531	$ 6,539	$ 26,780	$ 14,260
United States
Disaggregation Of Revenue [Line Items]
Total net revenue	5,939	4,755	17,024	10,079
International
Disaggregation Of Revenue [Line Items]
Total net revenue	$ 3,592	$ 1,784	$ 9,756	$ 4,181

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Summary of Revenues Disaggregated by Timing of Goods and Services Transferred (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Disaggregation Of Revenue [Line Items]
Net revenue	$ 9,531	$ 6,539	$ 26,780	$ 14,260
Revenue Recognized Over Time
Disaggregation Of Revenue [Line Items]
Net revenue	1,116	898	3,269	3,143
Revenue Recognized at a Point in Time
Disaggregation Of Revenue [Line Items]
Net revenue	$ 8,415	$ 5,641	$ 23,511	$ 11,117

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Summary of Sales by End Market (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Disaggregation Of Revenue [Line Items]
Net revenue	$ 9,531	$ 6,539	$ 26,780	$ 14,260
End-customer
Disaggregation Of Revenue [Line Items]
Net revenue	5,939	5,087	17,024	9,845
Distributors
Disaggregation Of Revenue [Line Items]
Net revenue	$ 3,592	$ 1,452	$ 9,756	$ 4,415

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Redeemable Preferred Stock and Stockholders' Equity - Additional Information (Detail) - USD ($)					3 Months Ended				9 Months Ended		12 Months Ended
	Jun. 11, 2021	Feb. 10, 2021	Feb. 10, 2021	Jul. 23, 2020	Sep. 30, 2021	Mar. 31, 2021	Dec. 31, 2020	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2020
Temporary Equity And Stockholders Equity [Line Items]
Temporary equity preferred stock, shares authorized					1,000,000				1,000,000
Common stock, shares authorized					180,000,000		180,000,000		180,000,000		180,000,000
Common stock, shares issued		14,000,000	14,000,000		153,322,000		97,709,000		153,322,000		97,709,000
Shares Issued, Price Per Share		$ 1.03	$ 1.03
Equity raise of gross proceeds			$ 14,400,000
Series F Preferred stock, shares issued					0		1,000		0		1,000
Common stock value				$ 1,000	$ 153,000		$ 98,000		$ 153,000		$ 98,000
Proceeds from Warrant Exercise						$ 15,000,000.0
Proceeds from the exercise of common stock warrants							$ 1,500,000		$ 16,560,000	$ 46,000
Expected term (years)					6 years 1 month 6 days				6 years 1 month 6 days	5 years 6 months
Risk-free interest rate					0.98%			0.00%	0.86%	0.37%
Change in fair value of warrants									$ 0	$ (5,850,000)
Issuance costs for common stock warrants									$ 0	1,640,000
Series E Preferred stock, shares authorized					1,000,000				1,000,000
Conversion of preferred stock into common stock					251				251
Convertible preferred stock, shares outstanding					0		0		0		0
Compensation expense related to stock options					$ 200,000			$ 800,000	$ 1,500,000	2,400,000
Total unrecognized compensation expense					800,000			1,400,000	$ 800,000	1,400,000
Unrecognized share based compensation expense to be recognized over weighted-average period									1 year 6 months
Allocated Share-based Compensation Expense					$ 192,000			$ 847,000	$ 1,488,000	$ 2,367,000
Outstanding stock options, RSUs and warrants excluded from diluted loss per share									24,000,000.0	67,200,000
July 2020 Warrants
Temporary Equity And Stockholders Equity [Line Items]
Warrant issued				45,000,000
Proceeds from issuance of warrants									$ 15,300,000
Warrants issued in connection with debt instruments									$ 15,300,000
July 2020 Warrants | Rights Offering
Temporary Equity And Stockholders Equity [Line Items]
Allocated to the warrants based upon fair values				$ 15,300,000
Common Stock
Temporary Equity And Stockholders Equity [Line Items]
Other offering expenses		$ 1,100,000
Series F Convertible Preferred Stock
Temporary Equity And Stockholders Equity [Line Items]
Conversion price				$ 0.40
Series E Convertible Preferred Stock
Temporary Equity And Stockholders Equity [Line Items]
Temporary equity preferred stock, shares authorized					69,565				69,565
Series E Preferred stock, shares authorized					69,565				69,565
Convertible preferred stock, shares issued					0		0		0		0
Preferred stock par value					$ 0.001				$ 0.001
Series F Convertible Preferred Stock
Temporary Equity And Stockholders Equity [Line Items]
Temporary equity preferred stock, shares authorized					18,000				18,000
Convertible preferred stock, Common shares issued upon conversion				2,500
Series F Preferred stock, shares issued				18,000
Proceeds from issuance of warrants						2,700,000
Conversion price				$ 0.40
Proceeds of common stock and warrants				$ 18,000,000.0
Warrants issued in connection with debt instruments						$ 2,700,000
Sale of common stock, shares									18,000		17,000
Deemed dividend on convertible preferred stock				2,700,000					$ 500,000		$ 14,700,000
Series E Preferred stock, shares authorized					18,000				18,000
Preferred stock, par value					$ 0.001				$ 0.001
Convertible preferred stock, shares outstanding					251		882		251		882
Series F Convertible Preferred Stock | Rights Offering
Temporary Equity And Stockholders Equity [Line Items]
Proceeds allocated to the warrants based upon fair values				$ 2,700,000
Private Placement | Series F Convertible Preferred Stock
Temporary Equity And Stockholders Equity [Line Items]
Common stock, shares issued					627,500				627,500
Maximum
Temporary Equity And Stockholders Equity [Line Items]
Temporary equity preferred stock, shares authorized					1,000,000				1,000,000
Series E Preferred stock, shares authorized					1,000,000				1,000,000
2002 Stock Incentive Plan
Temporary Equity And Stockholders Equity [Line Items]
Common stock authorized for issuance					3,110,000				3,110,000
Options and restricted stock units outstanding					879,000				879,000
2018 Long-Term Incentive Plan
Temporary Equity And Stockholders Equity [Line Items]
Common Stock Issued Pursuant To Options Exercised									4,744,000
Increase in Number of Units Available for Issuance	24,700,000
Common stock issued pursuant to options exercised									4,744,000
2018 Long-Term Incentive Plan | Common Stock
Temporary Equity And Stockholders Equity [Line Items]
Common stock authorized for issuance					36,921,000				36,921,000
Options available for future grants					2,400,000				2,400,000
Restricted Stock Units (RSUs)
Temporary Equity And Stockholders Equity [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Granted									2,800,000
Cancelled RSU due to non achievement of performance targets									100,000
Performance-Based Awards
Temporary Equity And Stockholders Equity [Line Items]
Compensation expense related to stock options									$ 0.0		$ 900,000
Phantom Share Units (PSUs)
Temporary Equity And Stockholders Equity [Line Items]
Allocated Share-based Compensation Expense					$ 200,000				$ 200,000
Shares issued in period									10,100,000
Stock Appreciation Rights (SARs)
Temporary Equity And Stockholders Equity [Line Items]
Allocated Share-based Compensation Expense					$ 100,000				$ 200,000
Shares issued in period									700,000

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Classification of Compensation Expense Associated with Share-Based Payments (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Allocated Share-based Compensation Expense	$ 192	$ 847	$ 1,488	$ 2,367
Cost of Revenue
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Allocated Share-based Compensation Expense	25	79	138	208
Sales and Marketing
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Allocated Share-based Compensation Expense	62	183	291	571
General and Administrative
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Allocated Share-based Compensation Expense	61	517	777	1,424
Engineering and Development
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Allocated Share-based Compensation Expense	$ 44	$ 68	$ 282	$ 164

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Assumptions Used in Estimating Fair Value of Stock Options Granted (Detail)	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract]
Expected term (years)	6 years 1 month 6 days		6 years 1 month 6 days	5 years 6 months
Volatility	111.00%	0.00%	111.00%	103.00%
Risk-free interest rate	0.98%	0.00%	0.86%	0.37%

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Summary of Option Activity (Detail) $ / shares in Units, shares in Thousands, $ in Thousands	9 Months Ended		12 Months Ended
	Sep. 30, 2021 USD ($) $ / shares shares		Dec. 31, 2020 USD ($) $ / shares shares
Equity [Abstract]
Beginning Balance | shares	2,398
Granted at fair market value | shares	50
Exercised | shares	(176)
Forfeited, cancelled, or expired | shares	(102)
Ending Balance | shares	2,170		2,398
Options exercisable at September 30, 2021 | shares	2,052
Vested options expired during the period ended September 30, 2021 | shares	91
Beginning Balance | $ / shares	$ 2.96
Granted at fair market value | $ / shares	0.87
Exercised | $ / shares	0.38
Forfeited, cancelled, or expired | $ / shares	7.78
Ending Balance | $ / shares	2.89		$ 2.96
Options exercisable at September 30, 2021 | $ / shares	3.00
Vested options expired during the period ended September 30, 2021 | $ / shares	$ 8.48
Weighted-Average Remaining Contractual Term (Years)
Options outstanding	6 years 7 months 6 days		7 years 2 months 12 days
Options exercisable	6 years 6 months
Options outstanding | $	$ 286	[1]	$ 53	[1]
Options exercisable | $	$ 277	[1]

[1] The intrinsic value calculation does not include negative values, which can occur when the fair market value on the reporting date is less than the exercise price of the award.

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Summary of Unvested Stock Option Activity (Detail) - $ / shares shares in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Granted	$ 0.49	$ 0	$ 0.72	$ 0.29
Stock Options
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Beginning Balance			1,323
Granted			50
Vested			(1,256)
Ending Balance	117		117
Beginning Balance			$ 0.34
Granted			0.72
Vested			0.31
Ending Balance	$ 0.73		$ 0.73

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Fair Value Disclosures Related to Grants, Exercises and Vested Options (Detail) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Share-based Payment Arrangement [Abstract]
Proceeds from stock options exercised		$ 66	$ 0	$ 66	$ 0
Intrinsic value of stock options exercised	[1]	$ 42	$ 0	$ 42	$ 0
Weighted-average fair value of options granted during period		$ 0.49	$ 0	$ 0.72	$ 0.29
Total fair value of stock options vested during the period		$ 8	$ 34	$ 395	$ 188

[1] The intrinsic value of stock options exercised is the amount by which the market price of the stock on the date of exercise exceeded the exercise price of the options.

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Summary of Unvested Restricted Stock Units (Detail) - Restricted Stock Units (RSUs) shares in Thousands	9 Months Ended
	Sep. 30, 2021 $ / shares shares
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Beginning Balance | shares	3,672
Granted | shares	2,808
Vested | shares	(3,772)
Forfeited or cancelled | shares	(601)
Ending Balance | shares	2,107
Unvested RSUs at December 31, 2020 | $ / shares	$ 0.66
Granted | $ / shares	0.83
Vested | $ / shares	0.69
Forfeited or cancelled | $ / shares	1.33
Unvested RSUs at September 30, 2021 | $ / shares	$ 0.63

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Summary of Warrant Activity (Detail) - Warrants shares in Thousands	9 Months Ended
	Sep. 30, 2021 $ / shares shares
Class Of Warrant Or Right [Line Items]
Beginning Balance | shares	54,052
Exercised | shares	(35,790)
Forfeited, cancelled, or expired | shares	(407)
Ending Balance | shares	17,855
Warrants exercisable at September 30, 2021 | shares	17,855
Vested warrants expired during the period ended June 30, 2021 | shares	(407)
Beginning Balance | $ / shares	$ 0.62
Exercised | $ / shares	0.43
Forfeited, cancelled, or expired | $ / shares	10.00
Ending Balance | $ / shares	0.80
Warrants exercisable at September 30, 2021 | $ / shares	0.80
Vested warrants expired during the period ended September 30, 2021 | $ / shares	$ 10.00

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Components of Inventory (Detail) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Components of inventory, net of allowances
Raw materials	$ 5,122	$ 3,721
Work-in-process	1,784	1,158
Finished goods	7,156	6,278
Inventory	$ 14,062	$ 11,157

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Inventory - Additional Information (Detail) - USD ($) $ in Millions	Sep. 30, 2021	Dec. 31, 2020
Inventory Disclosure [Abstract]
Inventory reduced by estimate for excess and obsolete amount	$ 0.7	$ 0.7

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Summary of Property, Plant, and Equipment (Detail) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Property Plant And Equipment [Line Items]
Property, plant, and equipment gross, excluding land	$ 8,652	$ 8,269
Accumulated depreciation and amortization	(7,931)	(7,664)
Property, plant, and equipment, net before land	721	605
Land	168	177
Property, plant, and equipment, net	889	782
Building
Property Plant And Equipment [Line Items]
Property, plant, and equipment gross, excluding land	215	229
Leasehold Improvements
Property Plant And Equipment [Line Items]
Property, plant, and equipment gross, excluding land	90	52
Equipment and Computers
Property Plant And Equipment [Line Items]
Property, plant, and equipment gross, excluding land	7,876	7,477
Furniture and Fixtures
Property Plant And Equipment [Line Items]
Property, plant, and equipment gross, excluding land	471	465
Construction in Progress
Property Plant And Equipment [Line Items]
Property, plant, and equipment gross, excluding land	$ 0	$ 46

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Property, Plant, and Equipment - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Property, Plant and Equipment [Abstract]
Depreciation and amortization expenses	$ 0.1	$ 0.1	$ 0.3	$ 0.5

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Intangible Assets and Goodwill - Additional Information (Detail) - USD ($)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2020
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill impairment loss					$ 0
Intangible assets and goodwill impairment					0
Goodwill	$ 2,926,000		$ 2,926,000		$ 2,926,000
Amortization expense	$ 0	$ 0	$ 0	$ 0

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Components of Accrued Liabilities (Detail) - USD ($) $ in Thousands	Sep. 30, 2021	Feb. 28, 2021	Dec. 31, 2020	Sep. 30, 2020
Payables and Accruals [Abstract]
Payroll and benefits	$ 3,017		$ 3,552
Settlement accrual	680		0
Warranty accrual, current portion	545		748	$ 650
Lease liability	404		305
Taxes	357		165
Accrued professional services	283		281
Accrued insurance premium	0		885
Other	896		731
Accrued liabilities	$ 6,182	$ 600	$ 6,667

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Changes in Initial Product Warranty Accrual and Expenses Under Initial and Extended Warranties (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2020
Movement in Standard Product Warranty Accrual
Balance, beginning of period	$ 551	$ 853	$ 1,132	$ 1,110
Provision for estimated warranty cost	832	345	1,129	575
Warranty expenditures	(366)	(344)	(1,244)	(831)
Balance, end of period	1,017	854	1,017	854
Less: long-term portion of warranty accrual	472	204	472	204	$ 384
Current portion of warranty accrual	$ 545	$ 650	$ 545	$ 650	$ 748

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Accrued Liabilities - Additional Information (Detail) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2021	Feb. 28, 2021	Dec. 31, 2020
Accrued Liabilities [Line Items]
Deferred Liability	$ 400
Accrued liability	6,182	$ 600	$ 6,667
CAO Settlement Agreement
Accrued Liabilities [Line Items]
Accrued liability	$ 700
Maximum | United States | Waterlase Laser Systems
Accrued Liabilities [Line Items]
Product warrant period	1 year
Maximum | United States | Diode Systems
Accrued Liabilities [Line Items]
Product warrant period	2 years
Maximum | International | Waterlase Systems And Diode Systems
Accrued Liabilities [Line Items]
Product warrant period	28 months

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Debt - Summary of Principal Outstanding and Unamortized Discount (Detail) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Debt Instrument [Line Items]
Non current term loans	$ 13,514	$ 16,186
Term loan, net of discount	1,400	0
Non current term loans, net of discount	12,114	16,186
PPP Loan
Debt Instrument [Line Items]
Non current term loans	0	2,980
EIDL Loan
Debt Instrument [Line Items]
Non current term loans	150	150
SWK Loan
Debt Instrument [Line Items]
Non current term loans	14,300	14,300
Discount and debt issuance costs on SWK Loan	$ (936)	$ (1,244)

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Debt - Additional Information (Detail)						1 Months Ended						3 Months Ended		6 Months Ended	9 Months Ended
	May 22, 2020 USD ($)	Apr. 13, 2020 USD ($)	Oct. 28, 2019 USD ($)	Nov. 09, 2018 USD ($) d $ / shares shares	Sep. 27, 2018 USD ($) $ / shares	Apr. 30, 2021	Sep. 30, 2020 $ / shares	Aug. 31, 2020 $ / shares	Jul. 31, 2020	Mar. 31, 2020 USD ($) $ / shares shares	Nov. 30, 2019 $ / shares	Sep. 30, 2021 USD ($) $ / shares shares	Sep. 30, 2020 USD ($)	Jun. 30, 2020 $ / shares	Sep. 30, 2021 USD ($) $ / shares shares	Sep. 30, 2020 USD ($)	Feb. 24, 2021 USD ($)	Dec. 31, 2020 USD ($) $ / shares shares	Jul. 23, 2020 USD ($) shares	Apr. 14, 2020 USD ($)	Dec. 31, 2019 $ / shares	May 31, 2019 $ / shares shares	May 07, 2019 $ / shares	Nov. 14, 2018 $ / shares	Mar. 06, 2018 USD ($) $ / shares
Debt Instrument [Line Items]
Borrowings under lines of credit															$ 0	$ 3,000,000
Debt issuance costs															25,000	75,000
Common stock value												$ 153,000			153,000			$ 98,000	$ 1,000
EBITDA target												$ (2,657,000)	$ (3,667,000)		$ (12,001,000)	(12,997,000)
Preferred stock, shares issued | shares												0			0			1,000
Preferred stock par value | $ / shares												$ 0.001			$ 0.001			$ 0.001
Non current term loans												$ 13,514,000			$ 13,514,000			$ 16,186,000
Interest expense												$ 600,000	$ 600,000		$ 1,700,000	1,800,000
Weighted-average interest rate												12.25%			12.25%
Warrants adjusted exercise price | $ / shares														$ 0.60
Warrants, estimated fair value															$ 0	(5,850,000)
Change in fair value of warrants															$ 0	$ (5,850,000)
Series F Convertible Preferred Stock
Debt Instrument [Line Items]
Preferred stock, shares issued | shares																			18,000
SWK Warrants
Debt Instrument [Line Items]
Warrants adjusted strike price | $ / shares										$ 0.49	$ 1.00
Warrants issued to purchase shares of common stock | shares										487,198
Initial exercise price of warrants | $ / shares				$ 1.34						$ 0.39
Weighted average exercise price of warrants | $ / shares				$ 1.34						$ 0.39
Warrants expire date				Nov. 09, 2026
Number of trading days of average closing price of common stock | d				10
Warrants expiration period				8 years
Warrants fair value assumptions, expected volatility rate				81.79%
Warrants fair value assumptions annual dividend per share | $ / shares				$ 0.00
Warrants fair value assumptions, risk-free interest rate				3.13%
Warrants, estimated fair value				$ 400,000
Additional Warrants issued to purchase shares of common stock | shares										63,779
Change in fair value of warrants				400,000
Warrants effective-interest method amortization period															5 years
DPG Warrants
Debt Instrument [Line Items]
Finder's fee				$ 400,000
Warrants expire date				Nov. 09, 2026
Class Of Warrant Or Rights Expiration Date				Nov. 09, 2026
Number of trading days of average closing price of common stock | d				10
Warrants expiration period				8 years
Warrants fair value assumptions, expected volatility rate				81.79%
Warrants fair value assumptions annual dividend per share | $ / shares				$ 0.00
Warrants fair value assumptions, risk-free interest rate				3.13%
Warrants, estimated fair value				$ 300,000
Change in fair value of warrants				$ 300,000
Adjusted exercise price of warrants | $ / shares							$ 0.62	$ 0.38
DPG Warrants | Warrants Issued on November 9, 2018
Debt Instrument [Line Items]
Initial exercise price of warrants | $ / shares																					$ 0.88			$ 1.34
Weighted average exercise price of warrants | $ / shares																					0.88			$ 1.34
DPG Warrants | Warrants Issued on May, 2019
Debt Instrument [Line Items]
Initial exercise price of warrants | $ / shares																					1.42		$ 2.17
Weighted average exercise price of warrants | $ / shares																					$ 1.42		$ 2.17
Original Western Alliance Warrant
Debt Instrument [Line Items]
Initial exercise price of warrants | $ / shares																									$ 2.35
Weighted average exercise price of warrants | $ / shares																									$ 2.35
Western Alliance Warrant
Debt Instrument [Line Items]
Initial exercise price of warrants | $ / shares					$ 2.13
Weighted average exercise price of warrants | $ / shares					$ 2.13
Warrants expire date					Sep. 27, 2028
SWK Warrants and DPG Warrants
Debt Instrument [Line Items]
Warrants issued to purchase shares of common stock | shares																						149,727
Initial exercise price of warrants | $ / shares																						$ 2.17
Weighted average exercise price of warrants | $ / shares																						$ 2.17
PPP Loan
Debt Instrument [Line Items]
Loan forgiveness description of period															The review may include the loan forgiveness application, as well as whether the Company received the proper loan amount. There can be no assurance as to the result of any such SBA review.
Non current term loans												$ 0			$ 0			2,980,000
Period for review of forgiveness of loan															6 years
EIDL Loan
Debt Instrument [Line Items]
Note interest rate per annum	3.75%
Non current term loans												150,000			$ 150,000			150,000
Loan principal amount	$ 150,000,000
Loan interest rate per annum	3.75%
Loan periodic payment terms	installment payments, including principal and interest, are due monthly beginning in July 2021 and are
Loan balance payment terms	payable through July 2050.
Extension of loan due date						2022
Maximum | SWK Warrants
Debt Instrument [Line Items]
Warrants issued to purchase shares of common stock | shares				372,023,000
Warrants, estimated fair value										$ 100,000
Change in fair value of warrants										$ 100,000
Maximum | DPG Warrants
Debt Instrument [Line Items]
Warrants issued to purchase shares of common stock | shares				279,851
Maximum | Original Western Alliance Warrant
Debt Instrument [Line Items]
Warrants issued to purchase shares of common stock equal value																									$ 120,000
Maximum | Western Alliance Warrant
Debt Instrument [Line Items]
Warrants issued to purchase shares of common stock equal value					$ 120,000
Maximum | PPP Loan
Debt Instrument [Line Items]
Nonpayroll costs eligible for loan forgiveness percentage									40.00%
Minimum | PPP Loan
Debt Instrument [Line Items]
Nonpayroll costs eligible for loan forgiveness percentage									25.00%
Pacific Mercantile Bank | PPP Loan
Debt Instrument [Line Items]
Loan granted amount from bank																				$ 2,980,000
Note issued date		Apr. 13, 2020
Note maturity date		Apr. 13, 2022
Note interest rate per annum		1.00%
Note payable commencing date		Nov. 01, 2020
Note prepayment penalties		$ 0
Non current term loans																		3,000,000.0
Loan interest rate per annum		1.00%
SWK Loan
Debt Instrument [Line Items]
Repayments of lines of credit				$ 700,000
Line of credit facility term				5 years
Borrowings under lines of credit															14,300,000
Debt instrument, principal repayments beginning term				2022
Debt instrument, maturity term				2024
Non current term loans												14,300,000			$ 14,300,000			14,300,000
SWK Loan | LIBOR
Debt Instrument [Line Items]
Line of credit facility interest rate description				or another index that approximates LIBOR as close as possible if and when LIBOR no longer exists.
Line of credit facility bearing floating interest rate per annum															10.00%
SWK Loan | Credit Agreement, Seventh Amendment
Debt Instrument [Line Items]
Incremental amendment fee															$ 25,000
SWK Loan | Maximum | Credit Agreement, Seventh Amendment
Debt Instrument [Line Items]
Debt instrument covenants unencumbered liquid assets																	$ 15,000,000
SWK Loan | Minimum | Credit Agreement, Seventh Amendment
Debt Instrument [Line Items]
Debt instrument covenants unencumbered liquid assets																	$ 15,000,000
Loan Agreement | Pacific Mercantile Bank
Debt Instrument [Line Items]
Line of credit facility, maximum borrowing capacity			$ 3,000,000
Maximum borrowing base percentage of eligible accounts			90.00%
Maximum borrowing base percentage of eligible inventory			75.00%
Line of credit facility expiration date			Oct. 28, 2021
Interest rate			1.50%
Line of credit, outstanding borrowings												0			0			0
Line of credit facility, unused availability												$ 2,800,000			$ 2,800,000			$ 2,300,000
Loan Agreement | Pacific Mercantile Bank | Minimum
Debt Instrument [Line Items]
Interest rate			6.00%
Loan Agreement | Exim Bank
Debt Instrument [Line Items]
Line of credit facility initial and annual fee			$ 52,500

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Debt - Summary of Future Minimum Principal and Interest Payments (Detail) $ in Thousands	Sep. 30, 2021 USD ($)
Debt Disclosure [Abstract]
Remainder of 2021	$ 0
2022	2,100
2023	2,800
2024	9,400
2025	1
2026 and thereafter	149
Total future payments	14,450
Remainder of 2021	443	[1]
2022	1,716	[1]
2023	1,393	[1]
2024	1,899	[1]
2025	8	[1]
2026 and thereafter	88	[1]
Total future payments	$ 5,547	[1]

[1] (1) Estimated using London Interbank Bank Offered Rate (“LIBOR”) as of September 30, 2021

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Leases - Additional Information (Detail) $ in Thousands			3 Months Ended		9 Months Ended
	Feb. 04, 2020 ft²	Jan. 22, 2020 ft²	Sep. 30, 2021 USD ($) ft²	Sep. 30, 2020 USD ($)	Sep. 30, 2021 USD ($) ft²	Sep. 30, 2020 USD ($)	Dec. 31, 2020 USD ($)
Lessee Lease Description [Line Items]
Rent expense			$ 200	$ 100	$ 600	$ 500
Operating lease, options to renew term			1 year		1 year
Lessee, Operating Lease, Existence of Option to Extend [true false]					true
Operating lease, right-of-use asset			$ 1,823		$ 1,823		$ 1,976
Operating lease, liability			$ 1,961		$ 1,961
Corona Lease [Member]
Lessee Lease Description [Line Items]
Lease term		5 years
Lease Expiration Date					Jun. 30, 2025
Lease Commencement Date		Jul. 01, 2020
Foothill Ranch [Member]
Lessee Lease Description [Line Items]
Lease term	66 months
Lease Expiration Date					Dec. 31, 2025
Lease Commencement Date	Jul. 01, 2020
Lease facility area | ft²	11,000
Foothill Ranch [Member] | Corona Lease [Member]
Lessee Lease Description [Line Items]
Lease facility area | ft²		11,000	11,000		11,000
Minimum
Lessee Lease Description [Line Items]
Lease term			1 year		1 year
Maximum
Lessee Lease Description [Line Items]
Lease term			5 years		5 years
Lease initial term of contract					1 year

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Leases - Information related to Right-of-use Assets and Liabilities (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Leases [Abstract]
Cash paid for operating lease liabilities	$ 62	$ 87	$ 185	$ 417
Right-of-use assets obtained in exchange for new operating lease obligations	$ 0	$ 1,440	$ 48	$ 2,037
Weighted-average remaining lease term	3 years 9 months 18 days	4 years 10 months 24 days	3 years 9 months 18 days	5 years 2 months 12 days
Weighted-average discount rate	12.30%	12.30%	12.30%	12.30%

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Leases - Schedule of Maturities of Lease Liabilities (Detail) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Leases [Abstract]
2022	$ 624
2023	621
2024	613
2025	519
2026 and thereafter	121
Total operating lease liability	2,498
Less imputed interest	(537)
Total lease liabilities	1,961
Current operating lease liabilities	404	$ 305
Non current operating lease liability	$ 1,557	$ 1,774

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Leases - Future Minimum Rental Commitments Under Lease Agreements (Detail) $ in Thousands	Sep. 30, 2021 USD ($)
Leases [Abstract]
Remainder of 2021	$ 166
2022	610
2023	624
2024	609
2025 and thereafter	489
Total future minimum lease obligations	2,498
Less imputed interest	(537)
Total lease liabilities	$ 1,961

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Commitments and Contingencies - Additional Information (Detail) - USD ($)		1 Months Ended		3 Months Ended			9 Months Ended		12 Months Ended
	Jan. 25, 2019	Feb. 28, 2021	Jan. 31, 2019	Sep. 30, 2021	Sep. 30, 2020	Mar. 31, 2019	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2018	Dec. 31, 2020
Commitment And Contingencies [Line Items]
Litigation settlement share issued		500,000
Contingent loss on patent litigation settlement				$ (29,000)	$ 0		$ (190,000)	$ 0
Accrued liability		$ 600,000		6,182,000			6,182,000			$ 6,667,000
CAO Settlement Agreement
Commitment And Contingencies [Line Items]
Accrued liability				700,000			700,000
CAO Settlement Agreement | Patent Litigation
Commitment And Contingencies [Line Items]
Settlement agreement date	January 25, 2019
Number of days litigation settlement to be paid in cash	5 days
Litigation settlement in cash	$ 500,000
Number of days litigation settlement shares to be issued	30 days
Litigation settlement share issued	500,000
Number of days litigation settlement to be paid in value of stock consideration	30 days
Settlement agreement, terms	The Company agreed (i) to pay to CAO, within five days of the Effective Date, $500,000 in cash, (ii) to issue to CAO, within 30 days of the Effective Date, 500,000 restricted shares of common stock of the Company (the “Stock Consideration”), and (iii) to pay to CAO, within 30 days of December 31, 2021, an amount in cash equal to the difference (if positive) between $1,000,000 and the value of the Stock Consideration on December 31, 2021.
Litigation settlement amount in cash equal to difference between value of stock consideration	$ 1,000,000
Contingent loss on patent litigation settlement									$ 1,500,000
Payment for litigation settlement in cash			$ 500,000
Loss on litigation settlement						$ (200,000)
Accrued liability				$ 700,000			$ 700,000			$ 1,000,000.0

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Segment Information - Additional Information (Detail) - Sales Revenue, Net - Customer	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Customer Concentration Risk | United States
Segment Reporting Information [Line Items]
Percentage of sales	62.00%	73.00%	64.00%	71.00%
Customer Concentration Risk | International
Segment Reporting Information [Line Items]
Percentage of sales	38.00%	27.00%	36.00%	29.00%
Geographic Concentration Risk | International
Segment Reporting Information [Line Items]
Number of customers which represented more than 10% of the Company's revenue	0	0	0	0

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Summary of Net Revenue by Geographic Location (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Segment Reporting Information [Line Items]
Total net revenue	$ 9,531	$ 6,539	$ 26,780	$ 14,260
United States
Segment Reporting Information [Line Items]
Total net revenue	5,939	4,755	17,024	10,079
International
Segment Reporting Information [Line Items]
Total net revenue	$ 3,592	$ 1,784	$ 9,756	$ 4,181

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Summary of Property, Plant and Equipment by Geographic Location (Detail) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Segment Reporting Information [Line Items]
Property, plant, and equipment, net	$ 889	$ 782
United States
Segment Reporting Information [Line Items]
Property, plant, and equipment, net	618	486
International
Segment Reporting Information [Line Items]
Property, plant, and equipment, net	$ 271	$ 296

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Concentrations - Summary of Net Revenue from Various Products (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Concentration Risk [Line Items]
Total net revenue	$ 9,531	$ 6,539	$ 26,780	$ 14,260
Product Concentration Risk | Sales Revenue, Net
Concentration Risk [Line Items]
Percentage of sales	100.00%	100.00%	100.00%	100.00%
Laser systems
Concentration Risk [Line Items]
Total net revenue	$ 6,084	$ 3,712	$ 16,588	$ 6,854
Laser systems | Product Concentration Risk | Sales Revenue, Net
Concentration Risk [Line Items]
Percentage of sales	63.80%	56.70%	61.90%	48.10%
Consumables and other
Concentration Risk [Line Items]
Total net revenue	$ 2,331	$ 1,929	$ 6,923	$ 4,263
Consumables and other | Product Concentration Risk | Sales Revenue, Net
Concentration Risk [Line Items]
Percentage of sales	24.50%	29.50%	25.90%	29.90%
Services
Concentration Risk [Line Items]
Total net revenue	$ 1,116	$ 898	$ 3,269	$ 3,143
Services | Product Concentration Risk | Sales Revenue, Net
Concentration Risk [Line Items]
Percentage of sales	11.70%	13.80%	12.20%	22.00%

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Concentrations - Additional Information (Detail) - Customer	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2020
Product Concentration Risk | Sales Revenue, Net
Concentration Risk [Line Items]
Number of customers which represented more than 10% of the Company's revenue	0	0	0	0
Concentration Risk Percentage	100.00%	100.00%	100.00%	100.00%
Product Concentration Risk | Account Receivable
Concentration Risk [Line Items]
Number of customers which represented more than 10% of the Company's accounts receivable			0		0
Minimum | Product Concentration Risk | Sales Revenue, Net
Concentration Risk [Line Items]
Concentration Risk Percentage	10.00%	10.00%	10.00%	10.00%
Minimum | Customer Concentration Risk | Account Receivable
Concentration Risk [Line Items]
Concentration Risk Percentage			10.00%		10.00%

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Income Taxes - Additional Information (Detail) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Income Tax Disclosure [Abstract]
Liability for unrecognized tax benefit, including related estimates of penalties and interest	$ 0		$ 0
Income tax provision (benefit)	$ (14,000)	$ (15,000)	$ 7,000	$ (49,000)
Projected annual effective tax rate	0.40%	55.60%	0.10%	0.50%
Statutory tax rate			21.00%