-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Tp3z5UpR4Fw6AyLedf7mAPCfoHEpLmZMQ/PlgGqgGWbTAvRYzP3MmxcA/5GgSMjP 4ceAQplxGyuVq9xSqZ90sQ== /in/edgar/work/20000814/0001017062-00-001753/0001017062-00-001753.txt : 20000921 0001017062-00-001753.hdr.sgml : 20000921 ACCESSION NUMBER: 0001017062-00-001753 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BIOLASE TECHNOLOGY INC CENTRAL INDEX KEY: 0000811240 STANDARD INDUSTRIAL CLASSIFICATION: [3843 ] IRS NUMBER: 870442441 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-19627 FILM NUMBER: 697936 BUSINESS ADDRESS: STREET 1: 981 CALLE AMANECER CITY: SAN CLEMENTE STATE: CA ZIP: 92673 BUSINESS PHONE: 7143611200 MAIL ADDRESS: STREET 1: 981 CALLE AMANECER CITY: SAN CLEMENTE STATE: CA ZIP: 92673 10-Q 1 0001.txt BIOLASE TECHNOLOGY FORM 10-Q U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended June 30, 2000 -------------------- [_] 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 0-19627 ------- BIOLASE TECHNOLOGY, INC. (Exact Name of Registrant as Specified in Its Charter) Delaware 87-0442441 (State or other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 981 Calle Amanecer, San Clemente, CA 92673 (Address of Principal Executive Offices) (949) 361-1200 (Registrant's Telephone Number, Including Area Code) Indicate by check 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 [X] No [_] Indicate the number of shares outstanding of each of the issuer's classes of Common Stock, as of the latest practicable date. Common Stock, $.001 par value 19,972,502 - ----------------------------- ---------- Title Class Number of Shares Outstanding at July 31, 2000 BIOLASE TECHNOLOGY, INC.
Page Number ----------- PART 1. FINANCIAL INFORMATION ITEM 1. Financial Statements: Consolidated Condensed Balance Sheets 3 Consolidated Condensed Statements of Operations 4 Consolidated Condensed Statement of Stockholders' Equity 5 Consolidated Condensed Statements of Cash Flows 6 Notes to Consolidated Condensed Financial Statements 7 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9 ITEM 3. Quantitative and Qualitative Disclosures about Market Risk 14 PART II. OTHER INFORMATION ITEM 1. Legal Proceedings 14 ITEM 2. Changes in Securities 14 ITEM 3. Defaults Upon Senior Securities 14 ITEM 4. Submission of Matters to a Vote of Security Holders 15 ITEM 5. Other Information 15 ITEM 6. Exhibits and Reports on Form 8-K 15 SIGNATURE PAGE 16
Page 2 PART I - FINANCIAL INFORMATION Item 1. Financial Statements. - ------------------------------ BIOLASE TECHNOLOGY, INC. CONSOLIDATED CONDENSED BALANCE SHEETS
June 30, 2000 December 31, (Unaudited) 1999 ------------- ------------ Assets: Current assets: Cash and cash equivalents $ 3,422,430 $ 1,180,982 Accounts receivable, less allowance of $117,745 in 2000 and 1999 1,190,764 330,840 Inventories, net of reserves of $438,417 in 2000 and $309,420 in 1999 938,750 658,462 Prepaid expenses and other current assets 136,417 110,062 ------------ ------------ Total current assets 5,688,361 2,280,346 Property and equipment, net 423,401 203,529 Patents, trademarks and licenses, less accumulated amortization of $162,677 in 2000 and $151,278 in 1999 115,558 126,958 Other assets 50,256 61,480 ------------ ------------ Total assets $ 6,277,576 $ 2,672,313 ============ ============ Liabilities and Stockholders' Equity (Deficit): Current liabilities: Line of credit $ 1,341,925 $ 1,341,925 Note payable 428,000 - Accounts payable 625,242 792,073 Accrued expenses 1,178,682 997,287 Accrued expenses related to the reacquisition of foreign distribution rights 14,181 480,300 ------------ ------------ Total current liabilities 3,588,030 3,611,585 ------------ ------------ Stockholders' equity (deficit): Preferred stock, par value $.001, 1,000,000 shares authorized: no shares issued and outstanding in 2000 or 1999 - - Common stock, par value, $.001, 50,000,000 shares authorized, issued 19,786,622 in 2000 and 17,583,305 in 1999 (after deducting 182,880 of escrow shares in 2000 and 1999) 19,787 17,583 Additional paid-in capital 47,356,176 41,809,690 Accumulated deficit (44,686,417) (42,766,545) ------------ ------------ Net stockholders' equity (deficit) 2,689,546 (939,272) ------------ ------------ Total liabilities and stockholders' equity (deficit) $ 6,277,576 $ 2,672,313 ============ ============
See accompanying notes to consolidated condensed financial statements. Page 3 Item 1. Financial Statements (continued). - ------------------------------------------ BIOLASE TECHNOLOGY, INC. CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended Six Months Ended June 30, June 30, -------------------------- -------------------------- 2000 1999 2000 1999 ---- ---- ---- ---- Sales $ 2,258,806 $ 1,406,255 $ 3,785,832 $ 3,192,238 Cost of sales 1,219,753 847,127 2,210,517 1,835,969 ----------- ----------- ----------- ----------- Gross profit 1,039,053 559,128 1,575,315 1,356,269 ----------- ----------- ----------- ----------- Operating expenses: Sales and marketing 806,432 612,475 1,444,458 1,146,795 General and administrative 512,182 702,059 913,060 1,137,754 Engineering and development 603,739 488,552 1,117,178 960,067 ----------- ----------- ----------- ----------- Total operating expenses 1,922,353 1,803,086 3,474,696 3,244,616 ----------- ----------- ----------- ----------- Loss from operations (883,300) (1,243,958) (1,899,381) (1,888,347) Other income (expense) Interest income 29,643 20,539 36,889 24,054 Interest expense (34,119) (22,133) (57,380) (51,115) ----------- ----------- ----------- ----------- Net loss $ (887,776) $(1,245,552) $(1,919,872) $(1,915,408) =========== =========== =========== =========== Loss per share - basic and diluted $ (0.04) $ (0.07) $ (0.10) $ (0.11) =========== =========== =========== =========== Weighted average shares outstanding 19,740,396 17,483,771 18,882,527 16,952,192 =========== =========== =========== ===========
See accompanying notes to consolidated condensed financial statements. Page 4 Item 1. Financial Statements (continued). - ------------------------------------------ BIOLASE TECHNOLOGY, INC. CONSOLIDATED CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT) (Unaudited)
Preferred Stock Common Stock Additional ---------------- --------------------- Paid-in Accumulated Shares Amount Shares Amount Capital Deficit Total ------ ------ ---------- ------ ------- ------- ----- Balance at January 1, 2000 - $ - 17,583,305 $17,583 $41,809,690 $(42,766,545) $ (939,272) Private placement of common stock - - 1,250,000 1,250 2,449,266 - 2,450,516 Exercise of warrants - - 819,150 820 2,878,241 - 2,879,061 Exercise of stock options - - 134,166 134 218,979 - 219,113 Issuance of shares for fractional interest on reverse split - - 1 - - - - Net loss - - - - - (1,919,872) (1,919,872) ---------------------------------------------------------------------------------------------- Balance at June 30, 2000 - $ - 19,786,622 $19,787 $47,356,176 $(44,686,417) $ 2,689,546 ==============================================================================================
See accompanying notes to consolidated condensed financial statements. Page 5 Item 1. Financial Statements (continued). - ------------------------------------------ BIOLASE TECHNOLOGY, INC. CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
Six Months Ended June 30, --------------------------- 2000 1999 ----------- ----------- Cash flows from operating activities: Net loss $(1,919,872) $(1,915,408) Adjustments to reconcile net loss to net cash used by operating activities: Issuance of common stock for earned services - 176,969 Extension of stock options - 93,731 Depreciation and amortization 56,797 58,629 Provision for bad debts - 496 Provision for inventory excess and obsolescence 44,046 44,000 Changes in operating assets and liabilities: Accounts receivable (859,924) (191,646) Inventories (324,334) 333,890 Prepaid expenses and other assets (15,131) (64,697) Accounts payable (166,831) (106,238) Accrued expenses 181,395 286,567 Accrued costs related to reaquisition of foreign distribution rights (38,119) - ----------- ----------- Net cash used by operating activities (3,041,973) (1,283,707) ----------- ----------- Cash flows from investing activities: Sale of marketable securities - 251,485 Additions to property and equipment (265,269) (38,886) Additions to patents, trademarks and licenses - (4,904) ----------- ----------- Net cash provided (used) by investing activities (265,269) 207,695 ----------- ----------- Cash flows from financing activities: Payments against line of credit, net - (363,100) Proceeds from issuance of common stock, net 2,450,516 2,748,000 Proceeds from exercise of stock options and warrants 3,098,174 17,100 ----------- ----------- Net cash provided by financing activities 5,548,690 2,402,000 ----------- ----------- Increase in cash and cash equivalents 2,241,448 1,325,988 Cash and cash equivalents at beginning of period 1,180,982 424,539 ----------- ----------- Cash and cash equivalents at end of period $ 3,422,430 $ 1,750,527 =========== =========== Supplemental cash flow disclosure: Cash paid during the period for interest $ 47,802 $ 55,880 =========== =========== Noncash financing activities: Conversion of accrued expense to note payable $ 428,000 $ - =========== ===========
See accompanying notes to consolidated condensed financial statements. Page 6 BIOLASE TECHNOLOGY, INC. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS June 30, 2000 Note 1 - ------ The accompanying consolidated condensed financial statements of BioLase Technology, Inc. (the "Company") have been prepared by the Company without audit and do not include all disclosures required by generally accepted accounting principles for complete financial statements. The consolidated condensed balance sheet at December 31, 1999 was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles. In the opinion of management, the consolidated condensed financial statements include all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the financial condition of the Company as of June 30, 2000 and the results of operations for the three and six- month periods then ended. The Company's consolidated condensed financial statements have been presented on the basis that the Company will continue as a going-concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company reported net losses of $4,797,137, $10,346,069 and $2,823,910 for the years ended December 31, 1999, 1998 and 1997, respectively, and net losses of $887,776 and $1,919,872 for the three and six- month periods ended June 30, 2000, respectively, and has an accumulated deficit of $44,686,417 at June 30, 2000. These recurring losses and the need for continued funding, discussed below, raise substantial doubt about the Company's ability to continue as a going-concern. The Company remains dependent upon its ability to obtain outside financing either through the issuance of additional shares of its common or preferred stock or through borrowings until it achieves sustained profitability through increased sales and improved product margins. The Company's business continues to focus on the manufacturing and marketing of its laser-based technologies incorporated in its newly introduced products, the Millennium(R) II WaterLase(TM) and the Twilite(TM) laser system. Financing the development of laser-based medical and dental devices and instruments and the operations of the Company has been achieved principally through the private placements of preferred and common stock and the exercise of stock options and warrants. During the six months ended June 30, 2000 and the three years ended December 31, 1999, the Company raised approximately $5,549,000 and $7,061,000, respectively, of net equity funds in this manner. Based upon the expected increase in sales and the additional funds already received, the Company believes that it should have sufficient capital resources to sustain it during the year in relation to its fiscal year 2000 business plan. Should the Company require further capital resources in fiscal year 2000, it would most likely address such requirement through a combination of sales of its products, sales of equity securities through private placements, and/or debt financing. If circumstances changed, and additional capital was needed, no assurances can be given that the Company would be able to obtain such additional capital resources. If unexpected events occur requiring the Company to obtain additional capital and it is unable to do so, it then might attempt to preserve its available resources by deferring the creation or satisfaction of various commitments, deferring the introduction of various products Page 7 or entry into various markets, or otherwise scaling back its operations. If the Company were unable to raise such additional capital or defer certain costs as described above, such inability would have an adverse effect on the financial position, results of operations, cash flows and prospects of the Company and ultimately on its ability to continue as a going-concern. The consolidated condensed financial statements do not give effect to any adjustments that might be necessary if the Company were unable to meet its obligations or continue operations. Operating results for the three and six-month periods ended June 30, 2000 are not necessarily indicative of the results to be expected for the year ending December 31, 2000. These statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Form 10-K for the year ended December 31, 1999. Note 2 - ------ Inventories, net of reserves, consist of the following:
June 30, 2000 December 31, 1999 (unaudited) ----------- ----------------- Raw materials $ 533,922 $ 434,315 Work-in-process and subassemblies 327,990 151,203 Finished goods 76,838 72,944 ----------- ----------- $ 938,750 $ 658,462 =========== ===========
Note 3 - ------ Property and equipment, at cost, consist of the following:
June 30, 2000 December 31, 1999 (unaudited) ------------- ----------------- Building $ 100,000 $ - Leasehold improvements 171,445 171,445 Equipment and computers 974,712 884,841 Furniture and fixtures 276,205 200,806 Demonstration units 247,354 247,354 ----------- ----------- Total cost 1,769,716 1,504,446 Less, accumulated depreciation and amortization (1,346,315) (1,300,917) ----------- ----------- $ 423,401 $ 203,529 =========== ===========
Page 8 Note 4 - ------ Accrued expenses consist of the following:
June 30, 2000 December 31, 1999 (unaudited) ----------- ----------------- Accrued payroll and benefits $ 442,836 $245,930 Accrued professional fees 75,517 100,742 Accrued legal costs 184,750 132,261 Accrued warranty 225,875 163,175 Other 249,704 355,179 ---------- -------- $1,178,682 $997,287 ========== ========
Note 5 - ------ Basic and diluted loss per share is based on the weighted average number of common shares outstanding. Potential common stock, which consists of stock options and warrants, has been excluded from per share calculations, as the effect of the assumed exercise of this potential common stock is anti-dilutive at June 30, 2000 and 1999. ITEM 2. Management's Discussion and Analysis of Financial Condition and Results - -------------------------------------------------------------------------------- of Operations. - -------------- Qualifying Statement With Respect To Forward-Looking Information: The United States Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for certain forward-looking statements. Such forward-looking statements are based upon the current expectations of the Company and speak only as of the date made. These forward-looking statements involve risks, uncertainties and other factors. The factors discussed below under "Forward- Looking Statements" and elsewhere in this Quarterly Report on Form 10-Q are among those factors that in some cases have affected the Company's historic results and could cause actual results in the future to differ significantly from the results anticipated in forward-looking statements made in this Quarterly Report on Form 10-Q, in future filings by the Company with the Securities and Exchange Commission, in the Company's press releases and in oral statements made by authorized officers of the Company. When used in this Quarterly Report on Form 10-Q, the words "estimate," "project," "anticipate," "expect," "intend," "believe," "hope," "may" and similar expressions, as well as "will," "shall" and other indications of future tense, are intended to identify forward-looking statements. The following discussion should be read in conjunction with the consolidated condensed financial statements and notes thereto. Results of Operations - Three-month period ended June 30, 2000 as compared to the three-month period ended June 30, 1999: Sales for the three months ended June 30, 2000 increased $852,551, or 61%, to $2,258,806 from the $1,406,255 reported for the same period in 1999. The increase was due principally to the Company's overall increased marketing efforts and new product introductions Page 9 of its WaterLase(TM) (Millennium(R) II) soft and hard tissue laser system and its Twilite(TM) dental diode soft tissue laser system. The increased marketing efforts included increases in the Company's sales and marketing infrastructure, strengthening of growing alliances with various international distributors and raising customer and patient awareness of the Company's flagship product, the WaterLase(TM). 2000 second quarter sales did not include royalty income from the licensing arrangement of the Company's LazerSmile(TM) tooth whitening technology to a consumer oriented distributor. The licensing arrangement has expired and the Company is currently evaluating its alternatives for distribution of its LazerSmile(TM) product. Gross profit for the second quarter of 2000 was $1,039,053, or 46% of sales, compared to $559,128, or 40% of sales, for the second quarter of 1999, an increase of $479,925, or 86%. The increase in gross profit was due principally to the increased sales volume combined with improved production efficiencies, partially offset by increased indirect expenses reflecting the Company's present growth. Operating expenses for the three months ended June 30, 2000 were $1,922,353 compared to $1,803,086 for the same period in 1999, a modest increase of $119,267, or 7%. Sales and marketing expense increased $193,957, or 32%, during the second quarter of 2000 compared to the same period in 1999 due principally to increases in (i) variable selling expenses related to higher sales volumes, (ii) advertising in professional journals and publications, (iii) design/printing of product sales brochures, and (iv) participation expenses at trade shows and medical conventions. General and administrative expense decreased $189,877, or 27%, during the second quarter of 2000 compared to the second quarter of 1999 due principally to the absence of (i) $171,400 in non- recurring expense included in 1999 and (ii) $44,000 related to the licensing of the Company's LazerSmile(TM) technology. The reductions were partially offset by increases in various professional and administrative costs associated with the Company's growth. Engineering and development expense increased $115,187, or 24%, due principally to increases in (i) engineering project costs related to final enhancement and refinement of the Company's Millennium(R) II WaterLase(TM) and its Twilite(TM) diode soft-tissue laser, and (ii) employee-related expenses associated with increases to the engineering staff of the Company. Interest income for the three months ended June 30, 2000 increased $9,104, or 44%, to $29,643 compared to the $20,539 reported for the same period in 1999, due principally to increased balances in the Company's interest bearing accounts from proceeds received from its first quarter 2000 private placement and the exercise of certain stock options and stock warrants. Interest expense increased $11,986, or 54%, to $34,119 for the second quarter of 2000 from the $22,133 reported for the same period in 1999. The increase in interest expense was due principally to interest related to the $428,000 note payable that commenced March 1, 2000. The Company's net loss decreased $357,776 to $887,776, or $0.04 per share, for the three months ended June 30, 2000 from a net loss of $1,245,552, or $0.07 per share, for the same period in 1999. The reduction in the per share loss for the second quarter of 2000 was enhanced by a 13% increase in weighted average shares outstanding. Page 10 Results of Operations - Six-month period ended June 30, 2000 as compared to the six-month period ended June 30, 1999: Sales increased $593,594, or 19%, to $3,785,832 during the six-month period ended June 30, 2000 from the $3,192,238 reported for the comparable period in 1999. The increase was due principally to the introduction of the Company's WaterLase(TM) system (Millennium(R) II) and the Twilite(TM) diode laser system. As the introduction of these products occurred in March, 2000, the six-month increase was softened by only four months of product shipment. The increase was further alleviated by reduced pricing of the Company's first generation Millennium(R) system, primarily in the first quarter of 2000, to prepare for the launching of the Millennium(R) II WaterLase(TM). Gross profit for the first half of 2000 was $1,575,315, or 42% of sales, compared to $1,356,269, or 42% of sales, for the first half of 1999, an increase of $219,046, or 16%. Gross profit for the first half of 2000 was adversely affected by a decrease in the average unit selling price of the Company's first generation Millennium(R), in the first quarter of 2000 compared to the first quarter of 1999, which has been replaced with the significantly smaller and lighter Millennium(R) II WaterLase(TM). The gross profit margin was 35% for the three months ended March 31, 2000 compared to 46% for the three months ended June 30,2000. The Company does not anticipate any significant effect on third quarter gross profit margins related to the transition from the first generation Millennium(R) as remaining inventory levels have reached near depletion. Operating expenses during the first half of 2000 reflected an increase of $230,080, or 7%, to $3,474,696 from the $3,244,616 reported for the first half of 1999. Sales and marketing expense increased $297,663, or 26%, during the first half of 2000 compared to the same period in 1999 due principally to the same cause experienced during the second quarter of 2000 as noted above. General and administrative expense decreased $224,694, or 20%, during the first half of 2000 compared to the same period in 1999 due principally to the absence of $190,981 in non-recurring expense and $44,000 related to the licensing of the Company's LazerSmile(TM) technology included in 1999. These reductions were partially offset by increased professional and administrative expenses associated with the Company's growth. Engineering and development expense increased $157,111, or 16%, during the first half of 2000 compared to the same period in 1999 due principally to expenses associated with the completion of the Millennium(R) II and Twilite(TM) products combined with an increase in employee- related expenses related to increased engineer staffing. Interest income increased $12,835, or 53%, to $36,889 during the first half of 2000 from the $24,054 reported during the same period in 1999. The increase was due principally to higher cash balances in interest-bearing accounts obtained from the completion of a private placement in the first quarter of 2000 and the exercise of certain stock options and stock warrants during the first half of 2000. Interest expense was comparable between the first half of 2000 and 1999. The Company's net loss for the first half of 2000 was $1,919,872, or $0.10 per share, compared to a net loss of $1,915,408, or $0.11 per share, for the same period in 1999. The reduction in the per share loss for the first half of 2000 was enhanced by an 11% increase in weighted average shares outstanding. Page 11 Financial Condition Cash and cash equivalents increased to $3,422,430 at June 30, 2000 from $1,180,982 at December 31, 1999 due principally to net proceeds of $2,450,516 received from a private placement of Company common stock and stock purchase warrants in February 2000, and the exercise of certain stock options and stock purchase warrants generating $3,098,174 in cash proceeds. These increases in cash and cash equivalents were offset by cash used by operating activities aggregating $3,041,973 and capital expenditures of $265,269. Accounts receivable increased $859,924 to $1,190,764 at June 30, 2000 from the $330,840 reported at December 31, 1999. The significant increase was due principally to orders shipped during June 2000 for which payments will be received during the third quarter of 2000. Inventories at June 30, 2000 were $938,750 compared to $658,462 at December 31, 1999, an increase of $280,288. The increase was due principally to the Company's increased purchase of components to meet its upcoming production requirements for both Millennium(R) II and Twilite(TM). The Company believes that its business does not presently operate in a normalized cycle in which information regarding inventory turns would be meaningful but that such information will become meaningful once productions and deliveries of the Company's products are normalized. Prepaid expenses and other current assets at June 30, 2000 were $136,417, reflecting an increase of $26,355 from the $110,062 reported at December 31, 1999. The increase was due principally to deposits placed for booth space at dental trade shows that are to be held during the second half of 2000 and early 2001. Current liabilities of $3,588,030 at June 30, 2000 were comparable to the $3,611,585 reported at December 31, 1999. Accounts payable decreased $166,831 at June 30, 2000 compared to December 31, 1999 due principally to an increase in the payable turnover reduced by an increased level of purchases associated with the Company's anticipated production requirements. Accrued expenses increased by $181,395 reflecting higher levels of operating expenses associated with the Company's growth. In March 2000, the Company converted $428,000 of the $480,300 accrued expenses related to the reacquisition of foreign distribution rights reported in the financial statements at December 31, 1999 to a 6-month, 6% note payable, due September 1, 2000. Capital expenditures during the first half of 2000 totaled $265,269 related primarily to a $100,000 deposit for the purchase of the Company's manufacturing facility (see "Liquidity and Capital Resources" below), a $41,141 deposit for the purchase of a new sales booth for use at professional trade shows, with the remaining capital expenditures related to the purchase of personal computers to accommodate the increase in personnel at the Company. Patents, trademarks and licenses were comparable to those reported at December 31, 1999, less normal amortization for the first half of 1999. Other assets were comparable to those reported at December 31, 1999 as well. Stockholders' equity/deficit increased $3,628,818 to $2,689,546 at June 30, 2000 from a deficit position of $939,272 at December 31, 1999 due to (i) net proceeds of $2,450,516 received from a private placement in March 2000, and (ii) proceeds of $3,098,174 received from the exercise of certain stock options and stock purchase warrants, both of which were offset by the first half-year net loss of $1,919,872. The Company executed an agreement with the former shareholders of Laser Skin Toner, Inc. ("LSTI") whereby 525,000 of the 1,417,120 shares of the Company's common stock issued as consideration for the assets of LSTI in July Page 12 1998 are to be returned to the Company for subsequent cancellation in August 2000. The agreement also calls for the cancellation of the 182,880 shares of the Company's common stock held in escrow for issuance to LSTI based on future performance of the technology purchased from LSTI. Liquidity and Capital Resources The Company remains dependent upon its ability to obtain outside financing either through the issuance of additional shares of its common or preferred stock or through borrowings until it achieves sustained profitability through increased sales and improved product margins. The Company's business continues to focus on the manufacturing and marketing of its laser-based technologies incorporated in its newly introduced products, the Millennium(R) II and the Twilite(TM) laser systems. Financing the development of laser-based medical and dental devices and instruments and the operations of the Company has been achieved principally through the private placements of preferred and common stock and the exercise of stock options and warrants. During the six months ended June 30, 2000 and the three years ended December 31, 1999, the Company raised approximately $5,549,000 and $7,061,000, respectively, of net equity funds in this manner. Based upon the expected increase in sales and the additional funds already received, the Company believes that it should have sufficient capital resources to sustain it during the year in relation to its fiscal year 2000 business plan. Should the Company require further capital resources in fiscal year 2000, it would most likely address such requirement through a combination of sales of its products, sales of equity securities through private placements, and/or debt financing. If circumstances changed, and additional capital was needed, no assurances can be given that the Company would be able to obtain such additional capital resources. If unexpected events occur requiring the Company to obtain additional capital and it is unable to do so, it then might attempt to preserve its available resources by deferring the creation or satisfaction of various commitments, deferring the introduction of various products or entry into various markets, or otherwise scaling back its operations. If the Company were unable to raise such additional capital or defer certain costs as described above, such inability would have an adverse effect on the financial position, results of operations, cash flows and prospects of the Company and ultimately on its ability to continue as a going-concern. At June 30, 2000, the Company had $1,341,925 outstanding under a revolving credit agreement with a bank. The revolving credit agreement provides for borrowings of up to $2,500,000 for the financing of inventory and is collateralized by substantially all of the Company's accounts receivable and inventories. The interest rate is fixed throughout the term of the credit agreement and is computed based upon LIBOR plus 0.5% at the time of any borrowings. At June 30, 2000, the weighted average interest rate on the outstanding balance was 7.23%. The Company is required to reduce the outstanding loan balance by an amount equal to the cost of goods sold associated with sales of inventory upon collection of sales proceeds. The current revolving credit agreement expires on December 1, 2000 at which point the Company will be required to either pay any remaining balance of the credit facility or refinance the credit facility. No assurances can be given that the Company will be able to refinance the line of credit or that the terms on which it may be able to refinance the line of credit will be as favorable as the terms of the existing line. If the Company is unable to Page 13 refinance and is therefore required to repay the line of credit, the diversion of resources to that purpose may adversely affect the Company's operations and financial condition. The Company's lease on its manufacturing facility expires in September 2000. The lessor had notified the Company that it did not intend to renew the lease with the Company as the building had been listed for sale by the lessor. In response, the Company researched similar leasing rates in close proximity to its present location and determined that competitive lease rates on a similar building in structure and size were dramatically higher than the Company's current rate. In addition, the cost of relocation to the Company would have been substantial and could have included, but not have been limited to, business interruption costs, actual moving costs and large up-front deposits typically required on new lease potentials. Accordingly, the Company entered into an agreement to purchase its existing manufacturing facility at a purchase price of $1,983,000. The Company has received a commitment from a bank to fund $1,200,000 of the purchase price, secured by a first trust deed. The terms of the commitment include (i) a variable interest rate of prime plus 0.25%, adjusted every three years, (ii) a term of 15 years, with a loan amortization term of 20 years, and (iii) loan origination fees of 1.75% of the loan. The Company anticipates the closing of escrow on the subject property to occur no later than August 2000; however, the Company can give no assurance that the property will be purchased until escrow actually closes. Item 3. Quantitative and Qualitative Disclosures about Market Risk. - -------------------------------------------------------------------- Not Applicable PART II - OTHER INFORMATION Item 1. Legal Proceedings. - --------------------------- See Item 3 "Legal Proceedings" included within the Company's Annual Report on Form 10-K for fiscal year ended December 31, 1999 for information regarding certain pending legal proceedings. From time to time, the Company is involved in legal proceedings incidental to its business. It is management's opinion that pending actions, individually and in the aggregate, will not have a material adverse effect on the Company's financial condition, and that adequate provision has been made for the resolution of such actions and proceedings. Item 2. Changes in Securities. - ------------------------------- None Item 3. Defaults Upon Senior Securities. - ----------------------------------------- None Page 14 Item 4. Submission of Matters to a Vote of Security Holders. - ------------------------------------------------------------- Following are the results of matters submitted to a vote at the Annual Meeting of Stockholders held May 23, 2000: (1) The election of the following individuals to the Company's Board of Directors, to serve until the next Annual Meeting of Stockholders and until their successors are duly elected and qualified:
Votes For Votes Withheld --------- -------------- Federico Pignatelli 11,870,461 124,974 George V. d'Arbeloff 11,870,461 124,974 William A. Owens 11,870,461 124,974 Jeffrey W. Jones 11,870,411 125,024
(2) The ratification of the appointment of PricewaterhouseCoopers LLP as the Company's independent public accountants for the year ending December 31, 2000. The number of votes cast for were 11,901,243; votes cast against were 78,319; and 15,873 votes abstained. Item 5. Other Information. - --------------------------- None Item 6. Exhibits and Reports on Form 8-K. - ------------------------------------------ (a) Exhibits 27. Financial Data Schedule (electronic filing only) (b) Reports on Form 8-K None Page 15 SIGNATURE PAGE 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 TECHNOLOGY, INC. a Delaware Corporation Date: August 14, 2000 /s/ Jeffrey W. Jones -------------------- ---------------------------------------- Jeffrey W. Jones President & Chief Executive Officer Date: August 14, 2000 /s/ Stephen R. Tartamella -------------------- ---------------------------------------- Stephen R. Tartamella Vice President & Chief Financial Officer Page 16 EX-27 2 0002.txt FINANCIAL DATA SCHEDULE - ARTICLE 5
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S CONSOLIDATED CONDENSED BALANCE SHEET AT JUNE 30, 2000 AND ITS CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS FOR THE THREE AND SIX MONTH PERIODS THEN ENDED. 3-MOS 6-MOS DEC-31-2000 DEC-31-2000 APR-01-2000 JAN-01-2000 JUN-30-2000 JUN-30-2000 3,422,430 3,422,430 0 0 1,308,509 1,308,509 (117,745) (117,745) 938,750 938,750 5,688,361 5,688,361 1,769,716 1,769,716 (1,346,315) (1,346,315) 6,277,576 6,277,576 3,588,030 3,588,030 0 0 0 0 0 0 19,787 19,787 2,669,759 2,669,759 6,277,576 6,277,576 2,258,806 3,785,832 2,258,806 3,785,832 1,219,753 2,210,517 1,219,753 2,210,517 603,739 1,117,178 0 0 34,119 57,380 (887,776) (1,919,872) 0 0 (887,776) (1,919,872) 0 0 0 0 0 0 (887,776) (1,919,872) (.04) (.10) (.04) (.10)
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