10-Q/A

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

(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, 2012

OR

¨ TRANSITION REPORT UNDER SECTION 13 OF 15(d) OF THE EXCHANGE ACT OF 1934

From the transition period from          to         .

Commission File Number 000-19627

BIOLASE, INC.

(Exact name of small business issuer as specified in its charter)

Delaware	87-0442441
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

4 Cromwell, Irvine, California 92618

(Address of principal executive offices)

(949) 361-1200

(Issuer’s telephone number)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted 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 and post such files).    Yes  x    No  ¨

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

Large Accelerated Filer	¨	Accelerated Filer	x
Non-Accelerated Filer	¨	Smaller Reporting Company	¨

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

The number of shares of the issuer’s common stock, $0.001 par value per share, outstanding as of August 3, 2012 was 31,084,982 shares.

AMENDMENT TO THE QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED JUNE 30, 2012

EXPLANATORY NOTE

The purpose of this Amendment to our Quarterly Report on Form 10-Q for the period ended June 30, 2012 as filed with the Securities and Exchange Commission on August 9, 2012 is to furnish Exhibit 101 to the Form 10-Q as required by Rule 405 of Regulation S-T within the 30 day grace period provided by Rule 405(a)(2) of Regulation S-T.

No changes have been made to the Quarterly Report other than the furnishing of Exhibit 101 as described above. This Amendment to Form 10-Q does not reflect subsequent events occurring after the original filing date of the Form 10-Q or modify

or update in any way disclosures made in the Form 10-Q, as amended.

In addition, pursuant to Rule 12b-15 under the Securities Exchange Act of 1934, as a result of this Amendment to

Form 10-Q, the certifications pursuant to Section 302 and Section 906 of the Sarbanes-Oxley Act of 2002, filed and furnished, respectively as exhibits to the Original Quarterly Report on Form 10-Q have been re-executed and re-filed as of the date of this Amendment to Form 10-Q and are included as exhibits hereto.

ITEM 6. EXHIBITS

The following exhibits are included herein:

Exhibit Number	Name of Exhibit
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14 and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14 and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Chief Financial Officer 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 June 30, 2012, formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Comprehensive Loss, (iii) Consolidated Statements of Cash Flows, (iv) Notes to Consolidated Financial Statements

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

Date: September 5, 2012

BIOLASE, INC., a Delaware Corporation (registrant)
By:	/s/ FEDERICO PIGNATELLI
	Federico Pignatelli
	Chief Executive Officer
	(Principal Executive Officer)
By:	/s/ FREDERICK D. FURRY
	Frederick D. Furry
	Chief Financial Officer
	(Principal Financial and Accounting Officer)

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, Federico Pignatelli, certify that:

1. I have reviewed this quarterly report on Form 10-Q/A 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. The registrant’s other certifying officer and I have disclosed, based on our 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:	September 5, 2012	By:	/s/ FEDERICO PIGNATELLI
			Federico Pignatelli
			Chief Executive Officer
			(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, Frederick D. Furry, certify that:

1. I have reviewed this quarterly report on Form 10-Q/A 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. The registrant’s other certifying officer and I have disclosed, based on our 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: September 5, 2012	By:	/s/ FREDERICK D. FURRY
		Frederick D. Furry
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 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/A for the quarter ended June 30, 2012, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Federico Pignatelli, 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: September 5, 2012	/s/ FEDERICO PIGNATELLI
	Federico Pignatelli
	Chief Executive Officer
	(Principal Executive Officer)

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 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/A for the quarter ended June 30, 2012, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Frederick D. Furry, Chief Operating Officer and Chief Financial 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:	September 5, 2012	/s/ FREDERICK D. FURRY
		Frederick D. Furry
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

XML

Accrued Liabilities and Deferred Revenue (Details 1) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Changes in initial product warranty accrual and expenses under initial and extended warranties
Initial warranty accrual, beginning balance	$ 1,926	$ 2,728	$ 2,218	$ 2,725
Provision for estimated warranty cost	661	448	783	956
Warranty expenditures	(607)	(490)	(1,021)	(995)
Initial warranty accrual, ending balance	1,980	2,686	1,980	2,686
Total warranty accrual, long term		431		431
Total warranty accrual, current portion	$ 1,980	$ 2,255	$ 1,980	$ 2,255

XML

Subsequent Event (Details Textual) (USD $)	0 Months Ended	6 Months Ended
	Aug. 12, 2011	Jun. 30, 2012 Board of Directors [Member]
Subsequent Event (Textual) [Abstract]
Non-qualified stock options		121,000
Subsequent Event (Additional Textual) [Abstract]
Repurchase of common stock	123,000
Average price of common stock for repurchase	$ 1.73

XML

Income Taxes (Details Textual) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Income Tax (Textual) [Abstract]
Increase in liability for unrecognized tax benefit	$ 1,000	$ 1,000	$ 2,000	$ 2,000

XML

Inventory (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Inventory
Raw materials	$ 4,117	$ 4,280
Work-in-process	1,935	2,538
Finished goods	4,648	4,494
Inventory, net	$ 10,700	$ 11,312

XML

Accrued Liabilities and Deferred Revenue (Tables)

6 Months Ended

Jun. 30, 2012

Accrued Liabilities and Deferred Revenue [Abstract]

Components of accrued liabilities

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

	June 30, 2012		December 31, 2011
Payroll and benefits	$	1,684	$	1,928
Warranty accrual		1,980		2,218
Sales tax		491		526
Accrued professional services		759		669
Accrued insurance premium		98		433
Accrued support services		—		200
Other		189		203
Accrued liabilities	$	5,201	$	6,177

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 initial and extended warranties, for the three and six months ended June 30, 2012 and 2011 were as follows (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
Initial warranty accrual, beginning balance	$	1,926		$	2,728		$	2,218		$	2,725
Provision for estimated warranty cost		661			448			783			956
Warranty expenditures		(607	)		(490	)		(1,021	)		(995	)
Initial warranty accrual, ending balance		1,980			2,686			1,980			2,686
Total warranty accrual, long term		—			431			—			431
Total warranty accrual, current portion	$	1,980		$	2,255		$	1,980		$	2,255

Deferred revenue

Deferred revenue is comprised of the following (in thousands):

	June 30, 2012			December 31, 2011
Undelivered elements (training, installation and product and support services)	$	1,374		$	1,105
Extended warranty contracts		1,302			1,056
Total deferred revenue		2,676			2,161
Less long-term amounts:
Extended warranty contracts		(11	)		(25	)
Total deferred revenue, long-term		(11	)		(25	)
Total deferred revenue, current portion	$	2,665		$	2,136

XML

Lines of Credit and Other Borrowings (Details Textual) (USD $)	1 Months Ended		3 Months Ended		6 Months Ended
	May 24, 2017	Dec. 31, 2011	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012 CreditFacility	Jun. 30, 2011	May 24, 2012
Bank Line of Credit and Debt (Textual) [Abstract]
Line of credit borrowing capacity			$ 8,000,000		$ 8,000,000		$ 8,000,000
Number revolving credit facility agreements					2
Fair value warrants Expected terms					5 years
Fair value warrants volatility rate					99.55%
Fair value warrants dividend per share					$ 0.00
Fair value warrants risk free interest rate					0.77%
Bank Line of Credit and Debt (Additional Textual) [Abstract]
Line of credit maturity date					May 01, 2014
Financed insurance premium		433,000
Monthly installment on financed insurance premium		48,000
Finance charge on financed insurance premium		2.50%
Number of monthly insurance premium installments payable		Nine
Annual commitment fee			120,000
Amortization of deferred debt issuance costs			15,000
Interest expense			(38,000)	(6,000)	(42,000)	(304,000)
Accrued interest payable			10,000		10,000
Restricted cash account			106,000		106,000
Borrowings are secured by assets					Substantially all of the Company’s assets now owned or hereinafter acquired
Warrants to purchase common stock granted to Comerica Bank			80,000		80,000		80,000
Exercise price of warrants			2.83		2.83		2.83
Expiration of unexercised warrants	May 24, 2017
Fair value of warrants							135,000
Unused capacity commitment fee percentage					0.25%
Total commitment fees paid					240,000
Financed insurance premium outstanding.			97,000		97,000
Covenant Compliance					Company was in compliance with these covenants with the exception of the earnings before income tax, depreciation and amortization (“EBITDA”) covenant for which the Company obtained a waiver for noncompliance
Amortization of discount on lines of credit					7,000
Subsequent Event [Member]
Bank Line of Credit and Debt (Textual) [Abstract]
Fair value warrants Expected terms					4 years 9 months 22 days
Fair value warrants volatility rate					100.47%
Fair value warrants dividend per share					$ 0.00
Fair value warrants risk free interest rate					0.77%
Fair value warrants exercise price			$ 2.00		$ 2.00
Incremental expense					7,000
Domestic Revolver Credit Facility [Member]
Bank Line of Credit and Debt (Textual) [Abstract]
Line of credit borrowing capacity			4,000,000		4,000,000
Interest on principal balance is LIBOR plus			5.25%		5.25%
LIBOR floor			1.00%		1.00%
Borrowings amount			1,900,000		1,900,000
Ex-Im revolver [Member]
Bank Line of Credit and Debt (Textual) [Abstract]
Line of credit borrowing capacity			4,000,000		4,000,000
Interest on principal balance is LIBOR plus			4.25%		4.25%
LIBOR floor			1.00%		1.00%
Borrowings amount			$ 0		$ 0

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Intangible Assets and Goodwill (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011	Dec. 31, 2011
Summary of intangible assets and goodwill
Gross	$ 2,576		$ 2,576		$ 2,576
Accumulated Amortization	(2,429)		(2,429)		(2,364)
Impairment
Net	147		147		212
Goodwill (Indefinite life)	2,926		2,926		2,926
Intangible Assets and Goodwill (Additional Textual) [Abstract]
Amortization expense	32,000	32,000	65,000	65,000
Patents (4-10 years) [Member]
Summary of intangible assets and goodwill
Gross	1,914		1,914		1,914
Accumulated Amortization	(1,767)		(1,767)		(1,702)
Impairment
Net	147		147		212
Patents (4-10 years) [Member] | Maximum [Member]
Intangible assets and goodwill (Textual) [Abstract]
Useful life			10 years
Patents (4-10 years) [Member] | Minimum [Member]
Intangible assets and goodwill (Textual) [Abstract]
Useful life			4 years
Trademarks (6 years) [Member]
Summary of intangible assets and goodwill
Gross	69		69		69
Accumulated Amortization	(69)		(69)		(69)
Impairment
Net	0		0		0
Intangible assets and goodwill (Textual) [Abstract]
Useful life			6 years
Other (4 to 6 years) [Member]
Summary of intangible assets and goodwill
Gross	593		593		593
Accumulated Amortization	(593)		(593)		(593)
Impairment
Net	$ 0		$ 0		$ 0
Other (4 to 6 years) [Member] | Maximum [Member]
Intangible assets and goodwill (Textual) [Abstract]
Useful life			6 years
Other (4 to 6 years) [Member] | Minimum [Member]
Intangible assets and goodwill (Textual) [Abstract]
Useful life			4 years

XML

Non-Recurring Event (Details Textual) (USD $)	3 Months Ended	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2012
Non Recurring Event (Textual) [Abstract]
Increase in inventory	$ 1,100,000
Decrease in account receivable	1,100,000
De-recognized of account receivable		155,000
De-recognized Accrued Warranties		142,000
Reversal of accrued sales and marketing service liabilities	350,000
Decrease in revenues	1,100,000
Decrease in cost of revenues	1,100,000
Purchase Price of HSIC's Inventory	$ 1,100,000

XML

Inventory

6 Months Ended

Jun. 30, 2012

Inventory [Abstract]

INVENTORY

NOTE 4—INVENTORY

Inventory is valued at the lower of cost or market (determined by the first-in, first-out method) and is comprised of the following (in thousands):

	June 30, 2012		December 31, 2011
Raw materials	$	4,117	$	4,280
Work-in-process		1,935		2,538
Finished goods		4,648		4,494
Inventory, net	$	10,700	$	11,312

Inventory is net of the provision for excess and obsolete inventory of approximately $2.1 million and $2.3 million at June 30, 2012 and December 31, 2011, respectively.

XML

Segment Information (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Net revenue by geographic location
Net revenue	$ 12,175	$ 12,079	$ 24,495	$ 22,640
United States [Member]
Net revenue by geographic location
Net revenue	8,045	8,609	16,409	17,134
International [Member]
Net revenue by geographic location
Net revenue	$ 4,130	$ 3,470	$ 8,086	$ 5,506

XML

Stock-Based Awards and Per Share Information (Details 1) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2012 Rate	Jun. 30, 2011 Rate	Jun. 30, 2012 Rate	Jun. 30, 2011 Rate
Assumptions used in estimating the fair value of stock options granted
Expected term (years)	3 years 8 months 12 days	3 years 10 months 24 days	3 years 9 months 18 days	3 years 11 months 23 days
Volatility	103.00%	107.00%	103.00%	106.00%
Annual dividend per share	$ 0.00	$ 0.00	$ 0.00	$ 0.00
Risk-free interest rate	0.87%	1.81%	0.88%	1.91%

XML

Stock-Based Awards and Per Share Information (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Classification of compensation expense associated with share-based payments
Allocated Share-based Compensation Expense	$ 340	$ 456	$ 923	$ 676
Cost of revenue [Member]
Classification of compensation expense associated with share-based payments
Allocated Share-based Compensation Expense	58	36	116	66
Sales and marketing [Member]
Classification of compensation expense associated with share-based payments
Allocated Share-based Compensation Expense	120	99	241	184
General and administrative [Member]
Classification of compensation expense associated with share-based payments
Allocated Share-based Compensation Expense	125	274	483	359
Engineering and development [Member]
Classification of compensation expense associated with share-based payments
Allocated Share-based Compensation Expense	$ 37	$ 47	$ 83	$ 67

XML

Segment Information (Details Textual) (USD $)	6 Months Ended			3 Months Ended		6 Months Ended		3 Months Ended		6 Months Ended
	Jun. 30, 2012 Segment	Dec. 31, 2011	Jun. 30, 2012 Assets Held-for-sale [Member]	Jun. 30, 2012 United States [Member]	Jun. 30, 2011 United States [Member]	Jun. 30, 2012 United States [Member]	Jun. 30, 2011 United States [Member]	Jun. 30, 2012 Foreign Subsidiaries [Member]	Jun. 30, 2011 Foreign Subsidiaries [Member]	Jun. 30, 2012 Foreign Subsidiaries [Member]	Jun. 30, 2011 Foreign Subsidiaries [Member]
Segment Information (Textual) [Abstract]
Percentage of sale based on net revenue				66.00%	71.00%	67.00%	76.00%	34.00%	29.00%	33.00%	24.00%
Countries representing > 10% of total net revenue				x	x	x	x
Long-lived assets outside of the United States		$ 542,000	$ 138,000					$ 381,000		$ 381,000
Segment Information (Additional Textual) [Abstract]
Number of business segment	1

XML

Stock-Based Awards and Per Share Information (Details 2) (USD $) In Thousands, except Share data, unless otherwise specified	6 Months Ended
	Jun. 30, 2012
Summary of option activity under stock option plans
Options outstanding at December 31, 2011	3,858,000
Plus: Options granted	590,000
Less: Options exercised	(214,000)
Options forfeited cancelled or expired	(425,000)
Options outstanding at June 30, 2012	3,809,000
Options exercisable at June 30, 2012	2,171,000
Vested options expired during the six months ended June 30, 2012	190,000
Options outstanding, Weighted Average Exercise Price, Beginning of Period	$ 3.75
Plus: Options granted, Weighted average exercise price	$ 2.65
Less: Options exercised, Weighted average exercise price	$ 2.12
Options forfeited, cancelled or expired, Weighted average exercise price	$ 3.78
Options outstanding, Weighted Average Exercise Price, End of Period	$ 3.67
Options exercisable at June 30, 2012, Weighted average exercise price	$ 4.32
Vested options expired during the six months ended June 30, 2012, Weighted average exercise price	$ 5.08
Options outstanding at June 30, 2012, Weighted average remaining contractual term (years)	4 years 2 months 12 days
Options exercisable at June 30, 2012, Weighted average remaining contractual term (years)	4 years 1 month 6 days
Options outstanding at June 30, 2012, Aggregate intrinsic value	$ 229,000
Options exercisable at June 30, 2012, Aggregate intrinsic value	$ 229,000

XML

Stock Based Awards and Per Share Information (Details 3) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Cash proceeds along with fair value disclosures related to grants, exercises and vesting options
Proceeds from stock options exercised	$ 145	$ 370	$ 428	$ 964
Tax benefit related to stock options exercised
Intrinsic value of stock options exercised	80	532	91	1,141
Weighted-average fair value of options granted during period	$ 1.78	$ 3.80	$ 1.82	$ 3.43
Total fair value of shares vested during the period	$ 473	$ 364	$ 1,029	$ 563

XML

Stock-Based Awards and Per Share Information

6 Months Ended

Jun. 30, 2012

Stock-Based Awards and Per Share Information [Abstract]

STOCK-BASED AWARDS AND PER SHARE INFORMATION

NOTE 3—STOCK-BASED AWARDS AND PER SHARE INFORMATION

Stock-Based Compensation

The Company currently has one stock-based compensation plan, the 2002 Stock Incentive Plan (the “2002 Plan”). Eligible persons under the 2002 Plan include certain officers and employees of the Company and directors of the Company. Under the 2002 Plan, 6,950,000 shares of common stock have been authorized for issuance. As of June 30, 2012, 2,498,000 shares of common stock have been issued pursuant to options that were exercised, 3,809,000 shares of common stock have been reserved for options that are outstanding, and 643,000 shares of common stock remain available for future grant.

Compensation cost related to stock options recognized in operating results during the three months ended June 30, 2012 and 2011 was $340,000 and $456,000, respectively. The net impact to earnings for those periods was $(0.01) and $(0.02) per basic and diluted share, respectively. Compensation cost related to stock options recognized in operating results during the six months ended June 30, 2012 and 2011, was $923,000 and $676,000, respectively. The net impact to earnings for those periods was $(0.03) and $(0.02) per basic and diluted share, respectively. At June 30, 2012, the Company had $2.3 million of total unrecognized compensation cost, net of estimated forfeitures, related to unvested share-based compensation arrangements granted under the Company’s existing plans. The Company expects that cost to be recognized over a weighted-average period of 1.3 years.

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2012		2011		2012		2011
Cost of revenue	$	58	$	36	$	116	$	66
Sales and marketing		120		99		241		184
General and administrative		125		274		483		359
Engineering and development		37		47		83		67
	$	340	$	456	$	923	$	676

The Black-Scholes option valuation model is used in estimating the fair value of traded options. This option pricing model requires the Company to make several assumptions regarding the key variables used to calculate the fair value of its stock options. The risk-free interest rate used is based on the U.S. Treasury yield curve in effect for the expected lives of the options at their dates of grant. Since July 1, 2005, the Company has used a dividend yield of zero as it does not intend to pay cash dividends on its common stock in the foreseeable future. The most critical assumption used in calculating the fair value of stock options is the expected volatility of the common stock. Management believes that the historic volatility of the common stock is a reliable indicator of future volatility, and accordingly, a stock volatility factor based on the historical volatility of the common stock over a period of time is used in approximating the estimated volatility of new stock options. The expected term is estimated by analyzing the Company’s historical share option exercise experience over a five year period. Compensation expense is recognized using the straight-line method for all stock-based awards. Compensation expense is recognized only for those options expected to vest, with forfeitures estimated at the date of grant based on historical experience and future expectations. Forfeitures are estimated at the time of the grant and revised as necessary in subsequent periods if actual forfeitures differ from those estimates.

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

	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
Expected term		3.70 years			3.90 years			3.80 years			3.98 years
Volatility		103	%		107	%		103	%		106	%
Annual dividend per share	$	0.00		$	0.00		$	0.00		$	0.00
Risk-free interest rate		0.87	%		1.81	%		0.88	%		1.91	%

A summary of option activity under the Company’s stock option plan for the six months ended June 30, 2012 is as follows:

	Shares			Weighted average exercise price		Weighted average remaining contractual term (years)		Aggregate intrinsic value(1)
Options outstanding at December 31, 2011		3,858,000		$	3.75
Plus: Options granted		590,000		$	2.65
Less: Options exercised		(214,000	)	$	2.12
Options forfeited, canceled, or expired		(425,000	)	$	3.78
Options outstanding at June 30, 2012		3,809,000		$	3.67		4.2	$	229,000
Options exercisable at June 30, 2012		2,171,000		$	4.32		4.1	$	229,000
Vested options expired during the six months ended June 30, 2012		190,000		$	5.08

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

Cash proceeds along with fair value disclosures related to grants, exercises and vesting options are provided in the following table (in thousands, except per share amounts):

	Three Months Ended June 30,				Six Months Ended June 30,
	2012		2011		2012		2011
Proceeds from stock options exercised	$	145	$	370	$	422	$	964
Tax benefit related to stock options exercised (1)		N/A		N/A		N/A		N/A
Intrinsic value of stock options exercised (2)	$	80	$	532	$	91	$	1,141
Weighted-average fair value of options granted during period	$	1.78	$	3.80	$	1.82	$	3.43
Total fair value of shares vested during the period	$	473	$	364	$	1,029	$	563

(1) Excess tax benefits received related to stock option exercises are presented as financing cash inflows. The Company currently does not receive a tax benefit related to the exercise of stock options due to 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 market price of the stock on the date of grant.

On March 2, 2012, the Board of Directors accelerated the vesting period for options to purchase 95,833 shares of common stock held by Federico Pignatelli, the Company’s Chairman and Chief Executive Officer (“CEO”). The options were originally granted in December 2011 at $2.58 per share with monthly vesting over four years. The Board of Directors accelerated the vesting period to March 2, 2012, in part due to the CEO’s continued commitment to maintain his annual salary of one dollar for the year ending December 31, 2012. Accelerating the vesting period of the common stock options resulted in the Company recognizing unamortized compensation cost of approximately $183,000 in March 2012. The transaction did not result in any additional compensation cost primarily as the effects of the decrease in the expected term and volatility offset the effects of the difference between the stock price and the option price on the date the vesting of the common stock options were modified.

On May 7, 2012, the Board of Directors granted a non-qualified stock option to purchase 65,000 shares of the Company’s common stock to a consultant, at a price per share of $2.55, the closing market price of the Company’s common stock on the grant date. The option fully vests and becomes exercisable upon the achievement of certain specified performance conditions, as defined in the consulting agreement with this consultant, and the option expires five years from the grant date. As of June 30, 2012, the Company has estimated there is a remote probability of achieving the required performance conditions and, accordingly, no stock-based compensation has been recognized. The Company will reassess whether achievement of the performance conditions is probable on a quarterly basis and recognize stock-based compensation when it is probable that the performance conditions will be achieved.

Warrants

During September 2010, the Company issued warrants (the “IR Warrants”) to purchase an aggregate of 50,000 shares of common stock at a price per share of $0.74 to three service providers who provide investor relations services. The IR Warrants vest quarterly and will be revalued each period until the final vesting date. The holders may convert the IR Warrants into a number of shares, in whole or in part. The first tranche of IR Warrants expire on September 20, 2013. Pursuant to the agreement, the service providers were also entitled to a second tranche of IR Warrants to purchase an aggregate of 50,000 shares of common stock at a price per share of $0.74 as a performance bonus when the Company’s stock price closes at a price in excess of $6.00. The second tranche of IR Warrants were subsequently issued in April 2011 and will expire on April 11, 2014. The Company accounts for these non-employee stock warrants using the Black Scholes option pricing model. The Company has concluded that the vesting date is the ultimate final measurement date, and will revalue any unvested warrants at the end of each reporting period until that date. As a result of issuing the IR Warrants, the Company recognized a benefit of approximately $2,000 and expenses of approximately $23,000 for the three and six months ended June 30, 2012, respectively, and expenses of approximately $114,000 and $210,000 for the three and six months ended June 30, 2011, respectively.

During May 2012, the Company issued warrants to purchase up to 80,000 shares of the Company’s common stock at an exercise price of $2.83 per share to Comerica Bank in connection with two revolving credit facilities entered into on May 24, 2012. The Company reduced the exercise price of the Comerica Warrants from $2.83 to $2.00 per share on August 6, 2012. See Note 8 – Lines of Credit and Other Borrowings for further discussion.

Net Loss Per Share - Basic and Diluted

Basic net loss per share is computed by dividing loss available to common stockholders by the weighted-average number of common shares outstanding for the period. In computing diluted net loss per share, the weighted average number of shares outstanding is adjusted to reflect the effect of potentially dilutive securities.

Outstanding stock options and warrants to purchase 4,637,000 shares were not included in the computation of diluted loss per share for the three and six months ended June 30, 2012 as a result of their anti-dilutive effect. For the same 2011 periods, anti-dilutive outstanding stock options and warrants to purchase 4,775,000 shares were not included in the computation of diluted loss per share.

Stock Dividends

The Company intends to pay a 2% annual stock dividend, in quarterly installments, for the year ending December 31, 2012. Stock dividends are discussed quarterly by the Company’s Board of Directors and management. The actual declaration of future stock dividends and the establishment of the record and payment dates are subject to final determination by the Company’s Board of Directors after its review of the Company’s financial performance, the expected results of future operations, availability of shares, and other factors that the Board of Directors may deem relevant. The Company’s dividend policy may be changed at any time by the Company’s Board of Directors, and there is no assurance, with respect to the amount or frequency, that any stock dividend will be declared in the future.

The Board of Directors declared special one-half percent stock dividends during each of the first two quarters of 2012. The stock dividend declared during the quarter ended June 30, 2012 was payable June 25, 2012 to shareholders of record on June 8, 2012 and the stock dividend declared during the quarter ended March 31, 2012 was payable March 30, 2012 to shareholders of record on March 15, 2012. The Board of Directors deems these two stock dividends to be special dividends and there is no assurance, with respect to amount or frequency, that any stock dividend will be declared again in the future. All stock information presented, other than that related to stock options and warrants, has been adjusted to reflect the effects of these stock dividends.

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Stock Based Awards and Per Share Information (Details Textual) (USD $)	1 Months Ended		3 Months Ended		6 Months Ended				1 Months Ended	6 Months Ended	3 Months Ended	6 Months Ended
	Apr. 30, 2011	Sep. 30, 2010	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011	May 24, 2012	Dec. 31, 2011	Dec. 31, 2011 CEO [Member]	Jun. 30, 2012 CEO [Member]	Jun. 30, 2012 Consultant [Member]	Jun. 30, 2012 Consultant [Member]	Jun. 30, 2012 2002 Stock Incentive Plan [Member]	Jun. 30, 2012 Subsequent Event [Member] Warrant [Member]
Share-based Compensation (Additional Textual) [Abstract]
Common stock authorized for issuance under the 2002 Plan													6,950,000
Common stock issued pursuant to options exercised													2,498,000
Options available for future grant													643,000
Options outstanding			3,809,000		3,809,000			3,858,000					3,809,000
Net impact of share based compensation expense to earnings per basic share			$ (0.01)	$ (0.02)	$ (0.03)	$ (0.02)
Net impact of share based compensation expense to earnings per diluted share			$ (0.01)	$ (0.02)	$ (0.03)	$ (0.02)
Total unrecognized compensation cost			$ 2,300,000		$ 2,300,000
Granted stock options - CEO					$ 2.65
Vesting period of stock options granted - CEO									4 years
Recognized stock compensation cost - CEO										183,000
Accelerated vesting of stock options granted - CEO									95,833
Grant price of stock options			$ 1.78	$ 3.80	$ 1.82	$ 3.43			$ 2.58		$ 2.55	$ 2.55
Non-qualified stock options granted - Consultant											65,000	65,000
Exercise price of Comerica Warrants			2.83		2.83		2.83							2.00
Share Based Compensation (Textual) [Abstract]
IR Warrants to purchase common stock granted	50,000	50,000
Warrants to purchase common stock granted to Comerica Bank			80,000		80,000		80,000
IR warrants issued to purchase common stock	$ 0.74	$ 0.74
Exercise price of Comerica Warrants			2.83		2.83		2.83							2.00
IR Warrants expire	Apr. 11, 2014	Sep. 20, 2013
Minimum closing price for second Tranche IR Warrants		$ 6.00
Second Tranche of IR Warrant issued and expire date	Second tranche of IR Warrants were subsequently issued in April 2011 and will expire on April 11, 2014
Recognized expense related to the IR Warrants			-2000	114000	23000	210000
Outstanding stock options and warrants excluded from diluted loss per share			4,637,000	4,775,000	4,637,000	4,775,000
Special stock dividends intended for the year ended 12/31/2012					2.00%
Special stock dividends declared			0.50%		1.00%
Dividends declared, date of record			Jun. 08, 2012		Jun. 08, 2012
Unrecognized share based compensation cost to be recognized over weighted-average period					1 year 3 months 18 days
Compensation cost related to stock options			$ 340,000	$ 456,000	$ 923,000	$ 676,000

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Accrued Liabilities and Deferred Revenue (Details 2) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Deferred Revenue
Undelivered elements (training, installation and product and support services)	$ 1,374	$ 1,105
Extended warranty contracts	1,302	1,056
Total deferred revenue	2,676	2,161
Less long-term amounts:
Extended warranty contracts	(11)	(25)
Total deferred revenue, long-term	(11)	(25)
Total deferred revenue, current portion	$ 2,665	$ 2,136

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Consolidated Balance Sheets (Unaudited)(USD ($))	Jun. 30, 2012	Dec. 31, 2011
Current assets:
Cash and cash equivalents	$ 1,607,000	$ 3,307,000
Restricted cash	106,000
Accounts receivable, less allowance of $604 and $289 in 2012 and 2011, respectively	9,576,000	8,899,000
Inventory, net	10,700,000	11,312,000
Prepaid expenses and other current assets	1,300,000	1,808,000
Assets held for sale	138,000
Total current assets	23,427,000	25,326,000
Property, plant and equipment, net	1,325,000	1,148,000
Intangible assets, net	147,000	212,000
Goodwill	2,926,000	2,926,000
Deferred tax asset	8,000	8,000
Other assets	380,000	187,000
Total assets	28,213,000	29,807,000
Current liabilities:
Lines of credit	1,935,000
Accounts payable	6,859,000	7,804,000
Accrued liabilities	5,201,000	6,177,000
Customer deposits	172,000	165,000
Deferred revenue, current portion	2,665,000	2,136,000
Total current liabilities	16,832,000	16,282,000
Deferred tax liabilities	630,000	594,000
Deferred revenue, long-term	11,000	25,000
Other liabilities, long-term	139,000	337,000
Total liabilities	17,612,000	17,238,000
Commitments and contingencies (Notes 8 and 9)
Stockholders' equity (deficit):
Preferred stock, par value $0.001,1,000 shares authorized, no shares issued and outstanding
Common stock, par value $0.001, 50,000 shares authorized; 33,026 and 32,502 shares issued and 31,063 and 30,538 shares outstanding in 2012 and 2011, respectively	33,000	33,000
Additional paid-in capital	140,140,000	138,507,000
Accumulated other comprehensive loss	(412,000)	(360,000)
Accumulated deficit	(112,761,000)	(109,212,000)
Stockholders' equity excluding treasury stock	27,000,000	28,968,000
Treasury stock (cost of 1,964 shares repurchased)	(16,399,000)	(16,399,000)
Total stockholders' equity	10,601,000	12,569,000
Total liabilities and stockholders' equity	$ 28,213,000	$ 29,807,000

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Concentrations (Details)	6 Months Ended	12 Months Ended	3 Months Ended		6 Months Ended		3 Months Ended		6 Months Ended		3 Months Ended		6 Months Ended		3 Months Ended		6 Months Ended		3 Months Ended		6 Months Ended
	Jun. 30, 2012	Dec. 31, 2011	Jun. 30, 2012 HSIC Worldwide [Member]	Jun. 30, 2011 HSIC Worldwide [Member]	Jun. 30, 2012 HSIC Worldwide [Member]	Jun. 30, 2011 HSIC Worldwide [Member]	Jun. 30, 2012 Waterlase systems [Member]	Jun. 30, 2011 Waterlase systems [Member]	Jun. 30, 2012 Waterlase systems [Member]	Jun. 30, 2011 Waterlase systems [Member]	Jun. 30, 2012 Diode systems [Member]	Jun. 30, 2011 Diode systems [Member]	Jun. 30, 2012 Diode systems [Member]	Jun. 30, 2011 Diode systems [Member]	Jun. 30, 2012 Consumable services and warranty contracts [Member]	Jun. 30, 2011 Consumable services and warranty contracts [Member]	Jun. 30, 2012 Consumable services and warranty contracts [Member]	Jun. 30, 2011 Consumable services and warranty contracts [Member]	Jun. 30, 2012 Imaging System [Member]	Jun. 30, 2011 Imaging System [Member]	Jun. 30, 2012 Imaging System [Member]	Jun. 30, 2011 Imaging System [Member]
Concentrations (Textual) [Abstract]
Percentage of net revenue							58.00%	63.00%	61.00%	53.00%	11.00%	14.00%	11.00%	24.00%	23.00%	20.00%	23.00%	21.00%	7.00%	0.00%	4.00%	0.00%
Percentage of sales concentration to one customer			(3.00%)	26.00%	3.00%	30.00%
Concentrations (Additional Textual) [Abstract]
Maximum account receivable with individual customer	Less than 10%	Less than 10%

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Basis of Presentation

6 Months Ended

Jun. 30, 2012

Basis of Presentation [Abstract]

BASIS OF PRESENTATION

NOTE 1—BASIS OF PRESENTATION

The Company

BIOLASE, Inc., (the “Company”) incorporated in Delaware in 1987, is a medical technology company operating in one business segment that develops, manufactures, and markets lasers, and also markets and distributes dental imaging equipment and other products designed to improve technologies for applications and procedures in dentistry and medicine.

Basis of Presentation

The unaudited consolidated financial statements include the accounts of the Company and its consolidated subsidiaries and have been prepared on a basis consistent with the December 31, 2011 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. These unaudited, interim, 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. Certain amounts have been reclassified to conform to current period presentations.

Use of Estimates

The preparation of these consolidated financial statements in conformity with 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, the ability of indefinite-lived intangible assets and goodwill to be realized, revenue deferrals for multiple element arrangements, 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 is contained on pages 41 to 43 in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of the Company’s Annual Report on Form 10-K for the year ended December 31, 2011 (“2011 Form 10-K”). Management believes that there have been no significant changes during the six months ended June 30, 2012 in the Company’s critical accounting policies from those disclosed in Item 7 of the Company’s 2011 Form 10-K, except with regard to restricted cash as set forth below.

Restricted Cash

The Company maintains depository accounts controlled by Comerica Bank to be held for repayment of lines of credit and accrued interest expense or disbursement to the Company’s operating bank account, pursuant to the terms of two revolving credit facility agreements with the bank. The Company has classified its restricted cash as a current asset commensurate with the related lines of credit included in current liabilities as of June 30, 2012. See Note 8 – Lines of Credit and Other Borrowings for further discussion.

Fair Value of Financial Instruments

The Company’s financial instruments, consisting of cash and cash equivalents, restricted cash, accounts receivable, accounts payable and other accrued expenses, approximate fair value because of the short maturity of these items. Financial instruments consisting of lines of credit approximate fair value, as the interest rates associated with the lines of credit approximates the market rates for debt securities with similar terms and risk characteristics.

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 should be based on assumptions that market participants would use, including a consideration of nonperformance risk. Level 1 measurement of fair value is quoted prices in active markets for identical assets or liabilities.

Money market securities. Money market securities are cash equivalents, which are included in cash and cash equivalents, and consist of highly liquid investments with original maturities of three months or less. Management uses quoted active market prices for identical assets to measure fair value. The Company had money market securities of approximately $446,000 and $0 at June 30, 2012 and December 31, 2011, respectively.

Liquidity and Management’s Plans

The Company has suffered recurring losses from operations during the three years ended December 31, 2011. Although the Company’s revenues increased for the three and six months ended June 30, 2012, compared to the corresponding periods in 2011, the Company incurred a loss from operations and a net loss during this period.

At June 30, 2012, the Company had approximately $6.6 million in working capital. The Company’s principal sources of liquidity at June 30, 2012 consisted of approximately $1.6 million in cash and cash equivalents, $0.1 million in restricted cash, $9.6 million of net accounts receivable, and $5.6 million of available borrowings under two revolving credit facility agreements.

On May 24, 2012, the Company entered into two revolving credit facility agreements with Comerica Bank which provide for borrowings of up to $8.0 million. The Company had approximately $1.9 million of borrowings outstanding under these lines of credit as of June 30, 2012. See Note 8 – Lines of Credit and Other Borrowings for additional information.

The Company’s ability to meet its obligations in the ordinary course of business is dependent upon its ability to sell its products directly to end-users and through distributors, establish profitable operations through increased sales and decreased expenses, and obtain additional funds when needed. Management intends to increase sales by increasing the Company’s product offerings, expanding its direct sales force, and expanding its distributor relationships both domestically and internationally.

There can be no assurance that the Company will be able to increase sales, reduce expenses, or obtain additional financing, if necessary, at a level to meet its current obligations. As a result, the report of the Company’s independent registered public accounting firm on its consolidated financial statements for the year ended December 31, 2011 contained an explanatory paragraph stating that there is a substantial doubt regarding the Company’s ability to continue as a going concern.

The accompanying consolidated financial statements have been prepared on a going concern basis that contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The consolidated financial statements do not include adjustments relating to the recoverability of recorded asset amounts or the amounts or classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

From time to time, the Company may attempt to raise capital through either equity or debt offerings. The Company’s capital requirements will depend on many factors, including, among other things, the effects of any acquisitions it may pursue as well as the rate at which its business grows, with corresponding demands for working capital and manufacturing capacity. The Company could be required, or may elect, to seek additional funding through public or private equity or debt financing. However, a credit facility, or additional funds through public or private equity or other debt financing, may not be available on terms acceptable to the Company or at all, or that any such financing activity would not be dilutive to its stockholders. Without additional funds and/or increased revenues, the Company may not have enough cash or financial resources to operate for the next twelve months.

On February 22, 2012, the Company entered into a definitive termination agreement (the “2012 Termination Agreement”) with Henry Schein, Inc. (“HSIC”), a leading U.S. dental product and equipment distributor and the Company’s former exclusive distributor in North America. The 2012 Termination Agreement, which was completed on April 12, 2012, terminated and superseded all prior agreements with HSIC. Pursuant to the 2012 Termination Agreement, the Company purchased HSIC’s inventory of Waterlase MD Turbo laser systems and HSIC released its liens on the Company’s assets. The Company paid the entire purchase price by offsetting accounts receivable currently due from HSIC from sales made in the normal course of business. None of the funds used to offset the purchase price were related to the original sales of the MD Turbo laser systems that were purchased. See Note 13 – Non-recurring Event for further discussion.

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Property, Plant and Equipment (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Summary of Property, plant and equipment
Property, plant and equipment, gross	$ 8,620	$ 8,312
Accumulated depreciation and amortization	(7,295)	(7,164)
Property, plant and equipment, net	1,325	1,148
Land [Member]
Summary of Property, plant and equipment
Property, plant and equipment, gross	175	247
Building [Member]
Summary of Property, plant and equipment
Property, plant and equipment, gross	234	317
Leasehold Improvements [Member]
Summary of Property, plant and equipment
Property, plant and equipment, gross	957	957
Equipment and computers [Member]
Summary of Property, plant and equipment
Property, plant and equipment, gross	5,933	5,729
Furniture and Fixtures [Member]
Summary of Property, plant and equipment
Property, plant and equipment, gross	1,042	1,036
Construction in Progress [Member]
Summary of Property, plant and equipment
Property, plant and equipment, gross	$ 279	$ 26

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Inventory (Tables)

6 Months Ended

Jun. 30, 2012

Inventory [Abstract]

Inventories

Inventory is valued at the lower of cost or market (determined by the first-in, first-out method) and is comprised of the following (in thousands):

	June 30, 2012		December 31, 2011
Raw materials	$	4,117	$	4,280
Work-in-process		1,935		2,538
Finished goods		4,648		4,494
Inventory, net	$	10,700	$	11,312

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Property, Plant and Equipment (Details Textual)	3 Months Ended		6 Months Ended
	Jun. 30, 2012 USD ($)	Jun. 30, 2011 USD ($)	Jun. 30, 2012 USD ($)	Jun. 30, 2011 USD ($)	Jun. 30, 2012 EUR (€)	Jun. 30, 2012 Land and Building [Member] USD ($)
Property Plant and Equipment (Textual) [Abstract]
Purchase price of land and building	$ 138,000		$ 138,000		€ 110,000	$ 138,000
Property Plant and Equipment (Additional Textual) [Abstract]
Depreciation and amortization of property, plant and equipment	$ 90,000	$ 151,000	$ 182,000	$ 346,000
Business Acquisition, Purchase Price Allocation in different currencies			The purchase price was €110,000, or approximately $138,000, which could be reduced by settlement and other costs at escrow close.

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Intangible Assets and Goodwill (Tables)

6 Months Ended

Jun. 30, 2012

Intangible Assets and Goodwill [Abstract]

Summary of Intangible assets, related accumulated amortization and goodwill

The following table presents details of the Company’s intangible assets, related accumulated amortization and goodwill (in thousands):

	As of June 30, 2012									As of December 31, 2011
	Gross		Accumulated Amortization			Impairment		Net		Gross		Accumulated Amortization			Impairment		Net
Patents (4-10 years)	$	1,914	$	(1,767	)	$	—	$	147	$	1,914	$	(1,702	)	$	—	$	212
Trademarks (6 years)		69		(69	)		—		—		69		(69	)		—		—
Other (4 to 6 years)		593		(593	)		—		—		593		(593	)		—		—
Total	$	2,576	$	(2,429	)	$	—	$	147	$	2,576	$	(2,364	)	$	—	$	212
Goodwill
(Indefinite life)	$	2,926						$	2,926	$	2,926						$	2,926

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Recent Accounting Pronouncements

6 Months Ended

Jun. 30, 2012

Recent Accounting Pronouncements [Abstract]

RECENT ACCOUNTING PRONOUNCEMENTS

NOTE 2—RECENT ACCOUNTING PRONOUNCEMENTS

Changes to GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of accounting standards updates (“ASU’s”) to the FASB’s Accounting Standards Codification (“ASC”).

The Company considers the applicability and impact of all ASU’s. ASU’s not listed below were assessed and determined to not be applicable or are expected to have minimal impact on the Company’s consolidated financial position and results of operations.

Newly Adopted Accounting Standards

In September 2011, the FASB issued guidance for the impairment testing of goodwill. The guidance permits an entity to first assess qualitative factors to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. This guidance is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. The Company adopted this guidance effective January 1, 2012. The adoption did not have a material impact on the Company’s consolidated financial statements.

In June 2011, the FASB updated the accounting guidance relating to presentation of comprehensive income. This guidance requires companies to present total comprehensive income, the components of net income, and the components of other comprehensive income (“OCI”) either in a single continuous statement of comprehensive income or in two, but consecutive, statements. Additionally, companies are required to present on the face of the consolidated financial statements the reclassification adjustments that are reclassified from OCI to net income, where the components of net income and the components of OCI are presented. This guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2011, and requires retrospective application to all periods presented. The Company adopted this guidance effective January 1, 2012 and elected to present a single continuous statement of comprehensive loss. The adoption did not have a material impact on the Company’s consolidated financial statements.

New Accounting Standards Not Yet Adopted

On July 27, 2012, the FASB issued Intangibles—Goodwill and Other (Topic 350) - Testing Indefinite-Lived Intangible Assets for Impairment. The guidance provides entities with an option to first assess qualitative factors to determine whether events or circumstances indicate that it is more likely than not that the indefinite-lived intangible asset is impaired. If an entity concludes that it is more than 50% likely that an indefinite-lived intangible asset is not impaired, no further analysis is required. However, if an entity concludes otherwise, it would be required to determine the fair value of the indefinite-lived intangible asset to measure the amount of actual impairment, if any, as currently required under GAAP. The guidance is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted. Management believes that the adoption will not have a material impact on the Company’s consolidated financial statements.

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Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $) In Thousands, except Per Share data, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Consolidated Balance Sheets [Abstract]
Allowance for accounts receivable	$ 604	$ 289
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	1,000	1,000
Preferred stock, shares issued
Preferred stock, shares outstanding
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	50,000	50,000
Common stock, shares issued	33,026	32,502
Common stock, shares outstanding	31,063	30,538
Treasury stock, shares repurchased	1,964	1,964

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Income Taxes

6 Months Ended

Jun. 30, 2012

Income Taxes [Abstract]

INCOME TAXES

NOTE 12—INCOME TAXES

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 derecognition, 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. For the three and six months ended June 30, 2012 and 2011, the Company recorded an increase of $1,000 and $2,000, and $1,000 and $2,000, respectively, with respect to the liability for unrecognized tax benefits, including related estimates of penalties and interest.

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Document and Entity Information	6 Months Ended
	Jun. 30, 2012	Aug. 03, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	BIOLASE, INC
Entity Central Index Key	0000811240
Document Type	10-Q
Document Period End Date	Jun. 30, 2012
Amendment Flag	false
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q2
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		31,084,982

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Non-Recurring Event

6 Months Ended

Jun. 30, 2012

Non Recurring Event [Abstract]

NON-RECURRING EVENT

NOTE 13—NON-RECURRING EVENT

On April 12, 2012, the Company completed the 2012 Termination Agreement with HSIC whereby the Company purchased HSIC’s inventory of Waterlase MD Turbo laser systems for approximately $1.1 million and HSIC released its liens on the Company’s assets. Pursuant to the terms of the 2012 Termination Agreement, the Company paid the entire purchase price by offsetting accounts receivable currently due from HSIC from sales made in the normal course of business. None of the funds used to offset the purchase price were related to the original sales of the MD Turbo laser systems that were purchased.

As a result of the transaction, the Company recorded a decrease to accounts receivable of approximately $1.1 million with a corresponding decrease to revenue to pay for the purchase of the Waterlase MD Turbo laser systems. The Company also recorded an increase to inventory for the same amount with a corresponding decrease to cost of revenue to record the inventory acquired. As such, while the Company’s revenues and cost of revenues were both reduced by $1.1 million to record the effects of the transaction, there was no effect on the Company’s gross profit during the quarter ended June 30, 2012. In addition, the Company de-recognized approximately $155,000 of accounts receivable due from HSIC related to support services previously provided to HSIC and approximately $142,000 of accrued warranties previously provided to HSIC during the three months ended March 31, 2012. During the quarter ended June 30, 2012, the Company reversed accrued sales and marketing service liabilities of approximately $350,000 because the liability was extinguished with the completion of the performance obligations set forth in the 2012 Termination Agreement.

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Consolidated Statements of Comprehensive Loss (Unaudited) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Consolidated Statements of Comprehensive Loss [Abstract]
Products and services revenue	$ 13,266	$ 11,689	$ 25,578	$ 22,235
Non-recurring event (Note 13)	(1,141)		(1,141)
License fees and royalty revenue	50	390	58	405
Net revenue	12,175	12,079	24,495	22,640
Cost of revenue	7,816	6,466	14,329	12,188
Non-recurring event (Note 13)	(1,141)		(1,141)
Net cost of revenue	6,675	6,466	13,188	12,188
Gross profit	5,500	5,613	11,307	10,452
Operating expenses:
Sales and marketing	3,720	3,010	7,748	5,463
General and administrative	2,221	2,227	4,432	3,926
Engineering and development	1,272	1,093	2,462	2,186
Total operating expenses	7,213	6,330	14,642	11,575
Loss from operations	(1,713)	(717)	(3,335)	(1,123)
Loss on foreign currency transactions	(92)	(16)	(109)	(54)
Interest expense	(38)	(6)	(42)	(304)
Non-operating loss, net	(130)	(22)	(151)	(358)
Loss before income tax provision	(1,843)	(739)	(3,486)	(1,481)
Income tax provision	34	14	63	22
Net loss	(1,877)	(753)	(3,549)	(1,503)
Other comprehensive income (loss) items:
Foreign currency translation adjustments	(115)	47	(52)	161
Comprehensive loss	$ (1,992)	$ (706)	$ (3,601)	$ (1,342)
Net loss per share:
Basic	$ (0.06)	$ (0.03)	$ (0.11)	$ (0.05)
Diluted	$ (0.06)	$ (0.03)	$ (0.11)	$ (0.05)
Shares used in the calculation of net loss per share:
Basic	31,028	29,024	30,954	28,267
Diluted	31,028	29,024	30,954	28,267

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Accrued Liabilities and Deferred Revenue

6 Months Ended

Jun. 30, 2012

Accrued Liabilities and Deferred Revenue [Abstract]

ACCRUED LIABILITIES AND DEFERRED REVENUE

NOTE 7—ACCRUED LIABILITIES AND DEFERRED REVENUE

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

	June 30, 2012		December 31, 2011
Payroll and benefits	$	1,684	$	1,928
Warranty accrual		1,980		2,218
Sales tax		491		526
Accrued professional services		759		669
Accrued insurance premium		98		433
Accrued support services		—		200
Other		189		203
Accrued liabilities	$	5,201	$	6,177

Changes in the initial product warranty accrual, and the expenses incurred under initial and extended warranties, for the three and six months ended June 30, 2012 and 2011 were as follows (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
Initial warranty accrual, beginning balance	$	1,926		$	2,728		$	2,218		$	2,725
Provision for estimated warranty cost		661			448			783			956
Warranty expenditures		(607	)		(490	)		(1,021	)		(995	)
Initial warranty accrual, ending balance		1,980			2,686			1,980			2,686
Total warranty accrual, long term		—			431			—			431
Total warranty accrual, current portion	$	1,980		$	2,255		$	1,980		$	2,255

Deferred revenue is comprised of the following (in thousands):

	June 30, 2012			December 31, 2011
Undelivered elements (training, installation and product and support services)	$	1,374		$	1,105
Extended warranty contracts		1,302			1,056
Total deferred revenue		2,676			2,161
Less long-term amounts:
Extended warranty contracts		(11	)		(25	)
Total deferred revenue, long-term		(11	)		(25	)
Total deferred revenue, current portion	$	2,665		$	2,136

On May 20, 2010, the Company entered into a license agreement (the “2010 P&G Agreement”), with Procter and Gamble Company (“P&G”), which replaced an existing license agreement between the Company and P&G (the “2006 P&G Agreement”). Pursuant to the 2010 P&G Agreement, the Company agreed to continue granting P&G an exclusive license to certain of the Company’s patents to enable P&G to develop products aimed at the consumer market and P&G agreed to pay royalties based on sales of products developed with such intellectual property. On June 28, 2011, the Company entered into an amendment to the 2010 P&G Agreement (the “2011 P&G Amendment”) which extended the effective period for the 2010 P&G Agreement from December 31, 2010 through June 30, 2011, and resulted in the Company recognizing the previously deferred $375,000 of revenue as royalty revenue during the quarter ended June 30, 2011.

The 2011 P&G Amendment also provided that effective January 1, 2011, P&G’s exclusive license to the Company’s patents converted to a non-exclusive license unless P&G paid the Company a license payment in the amount of $187,500 by the end of the third quarter of 2011, and at the end of each quarter thereafter, throughout the term of the 2010 P&G Agreement. As a result of P&G not making any payments to the Company in the third and fourth quarters of the year ended December 31, 2011, their license converted to a non-exclusive license. The Company is currently engaged in an active collaboration with P&G to commercialize a consumer product utilizing its patents.

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Intangible Assets and Goodwill

6 Months Ended

Jun. 30, 2012

Intangible Assets and Goodwill [Abstract]

INTANGIBLE ASSETS AND GOODWILL

NOTE 6—INTANGIBLE ASSETS AND GOODWILL

The Company conducted its annual impairment test of intangible assets and goodwill as of June 30, 2012, and determined that there was no impairment. The Company also tests its intangible assets and goodwill between the annual impairment test 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. No events have occurred since June 30, 2012, that would trigger further impairment testing of the Company’s intangible assets and goodwill.

Amortization expense for the three and six months ended June 30, 2012 was $32,000 and $65,000, respectively, and $32,000 and $65,000, respectively, for the same periods in 2011. Other intangible assets consist of an acquired customer list and a non-compete agreement.

The following table presents details of the Company’s intangible assets, related accumulated amortization and goodwill (in thousands):

	As of June 30, 2012									As of December 31, 2011
	Gross		Accumulated Amortization			Impairment		Net		Gross		Accumulated Amortization			Impairment		Net
Patents (4-10 years)	$	1,914	$	(1,767	)	$	—	$	147	$	1,914	$	(1,702	)	$	—	$	212
Trademarks (6 years)		69		(69	)		—		—		69		(69	)		—		—
Other (4 to 6 years)		593		(593	)		—		—		593		(593	)		—		—
Total	$	2,576	$	(2,429	)	$	—	$	147	$	2,576	$	(2,364	)	$	—	$	212
Goodwill
(Indefinite life)	$	2,926						$	2,926	$	2,926						$	2,926

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Property, Plant and Equipment (Tables)

6 Months Ended

Jun. 30, 2012

Property, Plant and Equipment [Abstract]

Summary of Property, plant and equipment

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

	June 30, 2012			December 31, 2011
Land	$	175		$	247
Building		234			317
Leasehold improvements		957			957
Equipment and computers		5,933			5,729
Furniture and fixtures		1,042			1,036
Construction in progress		279			26
		8,620			8,312
Accumulated depreciation and amortization		(7,295	)		(7,164	)
Property, plant, and equipment, net	$	1,325		$	1,148

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Subsequent Event

6 Months Ended

Jun. 30, 2012

Subsequent Events [Abstract]

SUBSEQUENT EVENT

NOTE 14—SUBSEQUENT EVENTS

Stock Repurchase Program

Subsequent to the quarter ended June 30, 2012 and pursuant to the stock repurchase program, which became effective on August 12, 2011, the Company repurchased approximately 123,000 shares of the Company’s common stock at an average price of $1.73 per share. The shares repurchased will be retired and shall resume the status of authorized and unissued shares. The Company expects to record the effects of the stock repurchases in the third quarter ending September 30, 2012.

Definitive Distribution Agreement

In July 2012, the Company entered a definitive five-year agreement with Copenhagen-based 3Shape Corporation (“3Shape”), making the Company a distributor of 3Shape’s TRIOS^® intra-oral scanning technologies for digital impression-taking solutions in the United States and Canada.

Stock Option Grants

Subsequent to the quarter ended June 30, 2012, the Board of Directors granted non-qualified stock options to purchase 121,000 shares of the Company’s common stock to several new employees and key consultants. The Company expects to begin to record the effects of these stock option grants in the third quarter ending September 30, 2012.

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Segment Information

6 Months Ended

Jun. 30, 2012

Segment Information [Abstract]

SEGMENT INFORMATION

NOTE 10—SEGMENT INFORMATION

The Company currently operates in a single business segment. For the three and six months ended June 30, 2012, sales in the United States accounted for approximately 66% and 67% respectively, of net revenue, and international sales accounted for approximately 34% and 33%, respectively, of net revenue. For the three and six months ended June 30, 2011, sales in the United States accounted for approximately 71% and 76% respectively, of net revenue, and international sales accounted for approximately 29% and 24%, respectively, of net revenue.

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2012		2011		2012		2011
United States	$	8,045	$	8,609	$	16,409	$	17,134
International		4,130		3,470		8,086		5,506
	$	12,175	$	12,079	$	24,495	$	22,640

No individual country, other than the United States, represents more than 10% of total net revenue for the three and six months ended June 30, 2012 and 2011.

Long-lived assets located outside of the United States totaled approximately $381,000 and $542,000 as of June 30, 2012 and December 31, 2011, respectively. Assets held for sale located outside of the United States totaled approximately $138,000 as of June 30, 2012.

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Lines of Credit and Other Borrowings

6 Months Ended

Jun. 30, 2012

Notes Payable [Abstract]

LINES OF CREDIT AND OTHER BORROWINGS

NOTE 8—LINES OF CREDIT AND OTHER BORROWINGS

Lines of Credit

On May 24, 2012, the Company entered into two revolving credit facility agreements (the “Credit Agreements”) with Comerica Bank, which provide for borrowings against certain domestic accounts receivable and inventory, as set forth in the $4.0 million revolving credit facility agreement (the “Domestic Revolver”), and borrowings against certain export related accounts receivable and inventory, as set forth in the $4.0 million revolving credit facility agreement (the “Ex-Im Revolver”), for a combined aggregate commitment of borrowings up to $8.0 million. As of June 30, 2012, the Company had outstanding borrowings totaling approximately $1.9 million under the Domestic Revolver and no borrowings under the Ex-Im Revolver. All outstanding borrowings under the lines of credit and accrued interest are due and payable upon the maturity date of May 1, 2014.

The Company had approximately $106,000 in a controlled restricted cash account as of June 30, 2012. The Company’s obligations are generally secured by substantially all of the Company’s assets now owned or hereinafter acquired.

The Credit Agreements require the Company to maintain compliance with certain financial and non-financial covenants, as defined therein. If a default occurs, Comerica Bank may declare the amounts outstanding under the Credit Agreements immediately due and payable. As of June 30, 2012, the Company was in compliance with these covenants with the exception of the earnings before income tax, depreciation and amortization (“EBITDA”) covenant. On August 6, 2012, the Company obtained a waiver for noncompliance of the minimum EBITDA covenant from Comerica Bank as of June 30, 2012. The Company also amended the terms of the Credit Agreements (“Amendment No. 1”) and modified certain future financial covenants.

The interest rates on the outstanding principal balance of the credit facilities bear interest at annual percentage rates equal to the daily adjusting LIBOR rate, plus spreads of 5.25% for the Domestic Revolver and 4.25% for the Ex-Im Revolver. The daily adjusting LIBOR rate is subject to a floor of 1.00% per annum. The Company is also required to pay an unused commitment fee of 0.25% based on a portion of the undrawn lines of credit, payable quarterly in arrears. During the three and six months ended June 30, 2012, the Company incurred $38,000 and $42,000, respectively, of interest expense, of which approximately $10,000 was payable at June 30, 2012. Included in interest expense during the three and six months ended June 30, 2012 is $15,000 of amortization of deferred debt issuance costs and $7,000 of amortization of the discount on lines of credit.

Pursuant to the Credit Agreements, the Company paid both the first and second annual $120,000 commitment fees, each being one and one-half percent of the aggregate $8.0 million commitment, totaling $240,000. The commitment fees and the legal costs associated with acquiring the credit facilities were capitalized and are being amortized as interest expense over the term of the Credit Agreements.

As additional consideration for the lines of credit, the Company also issued warrants to Comerica Bank (the “Comerica Warrants”) to purchase up to 80,000 shares of the Company’s common stock at an exercise price of $2.83 per share. The Comerica Warrants vest in four equal quarterly tranches beginning on May 24, 2012 and are exercisable once vested. The Comerica Warrants may be exercised with a cash payment from Comerica Bank, or, in lieu of a cash payment, Comerica Bank may convert the warrants into a number of shares, in whole or in part. These warrants will expire if unused on May 24, 2017. The fair value of the Comerica Warrants was estimated using the Black-Scholes option-pricing model with the following assumptions: expected term of 5.00 years; volatility of 99.55%; annual dividend per share of $0.00; and risk-free interest rate of 0.77%; and resulted in an estimated fair value of $135,000 which was recorded as equity and resulted in a discount to the credit facilities at issuance. The discount is being amortized to interest expense over the term of the Credit Agreements.

In connection with Amendment No. 1 to the Credit Agreements on August 6, 2012, the Company also reduced the exercise price of the Comerica Warrants from $2.83 to $2.00 per share. The fair value of the re-priced Comerica Warrants was estimated using the Black-Scholes option-pricing model with the following assumptions: expected term of 4.81 years; volatility of 100.47%; annual dividend per share of $0.00; and risk-free interest rate of 0.77%. The modification to the Comerica Warrants resulted in an incremental expense of $7,000 which will be added to the discount and amortized over the remaining term of the Credit Agreements.

Other Borrowings

In December 2011, the Company financed approximately $433,000 of insurance premiums payable in nine equal monthly installments of approximately $48,000 each, including a finance charge of 2.50%. As of June 30, 2012, there was approximately $97,000 outstanding under this arrangement. Such amount is included in Accrued Liabilities in the accompanying consolidated financial statements.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2012

Commitments and Contingencies [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 9—COMMITMENTS AND CONTINGENCIES

Litigation

The Company discloses material loss contingencies deemed to be reasonably possible and accrues for loss contingencies when, in consultation with its legal advisors, management concludes that a loss is probable and reasonably estimable. The ability to predict the ultimate outcome of such matters involves judgments, estimates, and inherent uncertainties. The actual outcome of such matters could differ materially from management’s estimates.

Intellectual Property

On April 24, 2012, CAO Group, Inc. filed a lawsuit against the Company in the United States District Court for the District of Utah, Central Division, alleging patent infringement of U.S. Patent No. 7,485,116 involving the Company’s ezLase diode laser. The complaint seeks unspecified damages, attorneys’ fees, interest, costs, and injunctive relief. Management plans to vigorously defend against the allegations.

Other Matters

In the normal course of business, the Company is subject to other legal proceedings, lawsuits and other claims. Although the ultimate aggregate amount of probable monetary liability or financial impact with respect to these matters is subject to many uncertainties and is therefore not predictable with assurance, management believes that any monetary liability or financial impact to the Company from these other matters, individually and in the aggregate, would not be material to the Company’s consolidated financial condition, results of operations or cash flows. However, there can be no assurance with respect to such result, and monetary liability or financial impact to the Company from these other matters could differ materially from those projected.

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Concentrations

6 Months Ended

Jun. 30, 2012

Concentrations [Abstract]

CONCENTRATIONS

NOTE 11—CONCENTRATIONS

Revenue from Waterlase systems, the Company’s principal product, which includes the iPlus, MDX systems, and the MD Turbo, comprised 58% and 61% of total net revenue for the three and six months ended June 30, 2012, respectively, and 63% and 53% of total net revenue, respectively, for the same periods in 2011. Revenue from Diode systems comprised 11% of total net revenue for both the three and six months ended June 30, 2012, and 14% and 24%, for the same periods of 2011. Revenue from consumables, service and warranty contracts comprised 23% of total net revenue for both the three and six months ended June 30, 2012, and 20% and 21%, for the same periods of 2011. Revenue from imaging systems comprised 7% and 4% of total net revenue for the three and six months ended June 30, 2012, respectively, and 0% for the same periods in 2011.

Approximately (3)% and 3% of the Company’s net revenue in the three and six months ended June 30, 2012 was generated through sales to HSIC worldwide. Approximately 26% and 30% of the Company’s net revenue in the three and six months ended June 30, 2011 was generated through sales to HSIC worldwide.

The Company maintains its cash and cash equivalent 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 June 30, 2012 and December 31, 2011.

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 a delay in manufacturing and a possible loss of sales, which could adversely affect the Company’s results of operations.

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Inventory (Details Textual) (USD $) In Millions, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Inventory (Textual) [Abstract]
Provision for excess inventory and obsolete inventory	$ 2.1	$ 2.3

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Stock-Based Awards and Per Share Information (Tables)

6 Months Ended

Jun. 30, 2012

Stock-Based Awards and Per Share Information [Abstract]

Classification of compensation expense associated with share-based payments

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2012		2011		2012		2011
Cost of revenue	$	58	$	36	$	116	$	66
Sales and marketing		120		99		241		184
General and administrative		125		274		483		359
Engineering and development		37		47		83		67
	$	340	$	456	$	923	$	676

Assumptions used in estimating the fair value of stock options granted

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

	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
Expected term		3.70 years			3.90 years			3.80 years			3.98 years
Volatility		103	%		107	%		103	%		106	%
Annual dividend per share	$	0.00		$	0.00		$	0.00		$	0.00
Risk-free interest rate		0.87	%		1.81	%		0.88	%		1.91	%

Summary of option activity under stock option plans

A summary of option activity under the Company’s stock option plan for the six months ended June 30, 2012 is as follows:

	Shares			Weighted average exercise price		Weighted average remaining contractual term (years)		Aggregate intrinsic value(1)
Options outstanding at December 31, 2011		3,858,000		$	3.75
Plus: Options granted		590,000		$	2.65
Less: Options exercised		(214,000	)	$	2.12
Options forfeited, canceled, or expired		(425,000	)	$	3.78
Options outstanding at June 30, 2012		3,809,000		$	3.67		4.2	$	229,000
Options exercisable at June 30, 2012		2,171,000		$	4.32		4.1	$	229,000
Vested options expired during the six months ended June 30, 2012		190,000		$	5.08

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

Cash proceeds along with fair value disclosures related to grants, exercises and vesting options

Cash proceeds along with fair value disclosures related to grants, exercises and vesting options are provided in the following table (in thousands, except per share amounts):

	Three Months Ended June 30,				Six Months Ended June 30,
	2012		2011		2012		2011
Proceeds from stock options exercised	$	145	$	370	$	422	$	964
Tax benefit related to stock options exercised (1)		N/A		N/A		N/A		N/A
Intrinsic value of stock options exercised (2)	$	80	$	532	$	91	$	1,141
Weighted-average fair value of options granted during period	$	1.78	$	3.80	$	1.82	$	3.43
Total fair value of shares vested during the period	$	473	$	364	$	1,029	$	563

(1) Excess tax benefits received related to stock option exercises are presented as financing cash inflows. The Company currently does not receive a tax benefit related to the exercise of stock options due to 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 market price of the stock on the date of grant.

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Segment Information (Tables)

6 Months Ended

Jun. 30, 2012

Segment Information [Abstract]

Net revenue by geographic location

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2012		2011		2012		2011
United States	$	8,045	$	8,609	$	16,409	$	17,134
International		4,130		3,470		8,086		5,506
	$	12,175	$	12,079	$	24,495	$	22,640

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Accrued Liabilities and Deferred Revenue (Details Textual) (2010 Procter & Gamble Company Agreement [Member], USD $)	3 Months Ended	9 Months Ended
	Jun. 30, 2011	Sep. 30, 2011
2010 Procter & Gamble Company Agreement [Member]
Deferred Revenue (Textual) [Abstract]
Recognized previously deferred revenue license fees and royalty	$ 375,000
Required quarterly license payment		$ 187,500

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Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Cash Flows From Operating Activities:
Net loss	$ (3,549)	$ (1,503)
Adjustments to reconcile net loss to net cash and cash equivalents used in operating activities:
Depreciation and amortization	247	411
Loss on disposal of assets, net	6	8
Provision for bad debts	315	20
Provision for inventory excess and obsolescence		118
Amortization of discount on lines of credit	7
Amortization of discount on term loan payable		78
Amortization of debt issuance costs	15	99
Stock-based compensation	923	676
Other equity instruments compensation	23	210
Other non-cash compensation	124	124
Deferred income taxes		(2)
Other	10
Changes in operating assets and liabilities:
Restricted cash	(106)
Accounts receivable	(992)	(3,086)
Inventory	612	(1,160)
Prepaid expenses and other assets	723	486
Customer deposits	7	(4,959)
Accounts payable and accrued liabilities	(2,154)	1,234
Deferred revenue	515	143
Net cash and cash equivalents used in operating activities	(3,274)	(7,103)
Cash Flows From Investing Activities:
Additions to property, plant and equipment	(457)	(157)
Net cash and cash equivalents used in investing activities	(457)	(157)
Cash Flows From Financing Activities:
Borrowings under lines of credit	2,350
Repayments of lines of credit	(415)
Payments under term loan payable		(2,700)
Payment of debt issuance costs	(295)
Proceeds from equity offering, net of expenses		17,325
Proceeds from exercise of stock options and warrants	428	964
Net cash and cash equivalents provided by financing activities	2,068	15,589
Effect of exchange rate changes	(37)	111
Change in cash and cash equivalents	(1,700)	8,440
Cash and cash equivalents, beginning of period	3,307	1,694
Cash and cash equivalents, end of period	1,607	10,134
Cash paid during the period for:
Interest	10	79
Income taxes	$ 29	$ 8

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Property, Plant and Equipment

6 Months Ended

Jun. 30, 2012

Property, Plant and Equipment [Abstract]

PROPERTY, PLANT AND EQUIPMENT

NOTE 5—PROPERTY, PLANT, AND EQUIPMENT

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

	June 30, 2012			December 31, 2011
Land	$	175		$	247
Building		234			317
Leasehold improvements		957			957
Equipment and computers		5,933			5,729
Furniture and fixtures		1,042			1,036
Construction in progress		279			26
		8,620			8,312
Accumulated depreciation and amortization		(7,295	)		(7,164	)
Property, plant, and equipment, net	$	1,325		$	1,148

Depreciation and amortization expense related to property, plant, and equipment totaled approximately $90,000 and $182,000 for the three and six months ended June 30, 2012, respectively, and $151,000 and $346,000 for the three and six months ended June 30, 2011, respectively.

On June 12, 2012, management entered into a Sale and Purchase Agreement in which the Company agreed to sell the smaller of two buildings and a portion of the land parcel of its two-building property in Floss, Germany. The purchase price was €110,000, or approximately $138,000, which could be reduced by settlement and other costs at escrow close. As of June 30, 2012, the Company reclassified the land and building being sold to assets held for sale at their respective purchase price. The Company is undertaking an appraisal of the remaining property and expects to record the final effects of the sale in the quarter ending September 30, 2012.

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Basis of Presentation (Details) (USD $)	6 Months Ended
	Jun. 30, 2012 CreditFacility	Jul. 27, 2012	May 24, 2012	Dec. 31, 2011	Jun. 30, 2011	Dec. 31, 2010
Basis of Presentation (Additional Textual) [Abstract]
Line of credit borrowing capacity	$ 8,000,000		$ 8,000,000
Line of credit remaining borrowing capacity	5,600,000
Number revolving credit facility agreements	2
Basis of Presentation (Textual) [Abstract]
Working capital	6,600,000
Cash and cash equivalents	1,607,000			3,307,000	10,134,000	1,694,000
Net accounts receivable	9,576,000			8,899,000
Restricted cash	106,000
Period of financial resources	The Company may not have enough cash or financial resources to operate for the next twelve months.
Money market securities	446,000			0
Money market securities maximum maturities period	3 months
Percentage estimation of intangible assets impairment		50.00%
Revolving Credit Facility [Member]
Basis of Presentation (Additional Textual) [Abstract]
Number revolving credit facility agreements	2
Borrowings amount	$ 1,900,000

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Accrued Liabilities and Deferred Revenue (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2010
Components of accrued liabilities
Payroll and benefits	$ 1,684		$ 1,928
Warranty accrual	1,980	1,926	2,218	2,686	2,728	2,725
Sales tax	491		526
Accrued professional services	759		669
Accrued insurance premium	98		433
Accrued support services			200
Other	189		203
Accrued liabilities	$ 5,201		$ 6,177

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Basis of Presentation (Policies)

6 Months Ended

Jun. 30, 2012

Basis of Presentation [Abstract]

Basis of Presentation

Basis of Presentation

The unaudited consolidated financial statements include the accounts of the Company and its consolidated subsidiaries and have been prepared on a basis consistent with the December 31, 2011 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. These unaudited, interim, 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. Certain amounts have been reclassified to conform to current period presentations.

Use of Estimates

Use of Estimates

The preparation of these consolidated financial statements in conformity with 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, the ability of indefinite-lived intangible assets and goodwill to be realized, revenue deferrals for multiple element arrangements, 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 is contained on pages 41 to 43 in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of the Company’s Annual Report on Form 10-K for the year ended December 31, 2011 (“2011 Form 10-K”). Management believes that there have been no significant changes during the six months ended June 30, 2012 in the Company’s critical accounting policies from those disclosed in Item 7 of the Company’s 2011 Form 10-K, except with regard to restricted cash as set forth below.

Restricted Cash

Restricted Cash

The Company maintains depository accounts controlled by Comerica Bank to be held for repayment of lines of credit and accrued interest expense or disbursement to the Company’s operating bank account, pursuant to the terms of two revolving credit facility agreements with the bank. The Company has classified its restricted cash as a current asset commensurate with the related lines of credit included in current liabilities as of June 30, 2012. See Note 8 – Lines of Credit and Other Borrowings for further discussion.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The Company’s financial instruments, consisting of cash and cash equivalents, restricted cash, accounts receivable, accounts payable and other accrued expenses, approximate fair value because of the short maturity of these items. Financial instruments consisting of lines of credit approximate fair value, as the interest rates associated with the lines of credit approximates the market rates for debt securities with similar terms and risk characteristics.

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 should be based on assumptions that market participants would use, including a consideration of nonperformance risk. Level 1 measurement of fair value is quoted prices in active markets for identical assets or liabilities.

Liquidity and Management's Plans

Liquidity and Management’s Plans

The Company has suffered recurring losses from operations during the three years ended December 31, 2011. Although the Company’s revenues increased for the three and six months ended June 30, 2012, compared to the corresponding periods in 2011, the Company incurred a loss from operations and a net loss during this period.

At June 30, 2012, the Company had approximately $6.6 million in working capital. The Company’s principal sources of liquidity at June 30, 2012 consisted of approximately $1.6 million in cash and cash equivalents, $0.1 million in restricted cash, $9.6 million of net accounts receivable, and $5.6 million of available borrowings under two revolving credit facility agreements.

On May 24, 2012, the Company entered into two revolving credit facility agreements with Comerica Bank which provide for borrowings of up to $8.0 million. The Company had approximately $1.9 million of borrowings outstanding under these lines of credit as of June 30, 2012. See Note 8 – Lines of Credit and Other Borrowings for additional information.

The Company’s ability to meet its obligations in the ordinary course of business is dependent upon its ability to sell its products directly to end-users and through distributors, establish profitable operations through increased sales and decreased expenses, and obtain additional funds when needed. Management intends to increase sales by increasing the Company’s product offerings, expanding its direct sales force, and expanding its distributor relationships both domestically and internationally.

There can be no assurance that the Company will be able to increase sales, reduce expenses, or obtain additional financing, if necessary, at a level to meet its current obligations. As a result, the report of the Company’s independent registered public accounting firm on its consolidated financial statements for the year ended December 31, 2011 contained an explanatory paragraph stating that there is a substantial doubt regarding the Company’s ability to continue as a going concern.

The accompanying consolidated financial statements have been prepared on a going concern basis that contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The consolidated financial statements do not include adjustments relating to the recoverability of recorded asset amounts or the amounts or classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

From time to time, the Company may attempt to raise capital through either equity or debt offerings. The Company’s capital requirements will depend on many factors, including, among other things, the effects of any acquisitions it may pursue as well as the rate at which its business grows, with corresponding demands for working capital and manufacturing capacity. The Company could be required, or may elect, to seek additional funding through public or private equity or debt financing. However, a credit facility, or additional funds through public or private equity or other debt financing, may not be available on terms acceptable to the Company or at all, or that any such financing activity would not be dilutive to its stockholders. Without additional funds and/or increased revenues, the Company may not have enough cash or financial resources to operate for the next twelve months.

On February 22, 2012, the Company entered into a definitive termination agreement (the “2012 Termination Agreement”) with Henry Schein, Inc. (“HSIC”), a leading U.S. dental product and equipment distributor and the Company’s former exclusive distributor in North America. The 2012 Termination Agreement, which was completed on April 12, 2012, terminated and superseded all prior agreements with HSIC. Pursuant to the 2012 Termination Agreement, the Company purchased HSIC’s inventory of Waterlase MD Turbo laser systems and HSIC released its liens on the Company’s assets. The Company paid the entire purchase price by offsetting accounts receivable currently due from HSIC from sales made in the normal course of business. None of the funds used to offset the purchase price were related to the original sales of the MD Turbo laser systems that were purchased. See Note 13 – Non-recurring Event for further discussion.

Newly Adopted Accounting Standards

Newly Adopted Accounting Standards

In September 2011, the FASB issued guidance for the impairment testing of goodwill. The guidance permits an entity to first assess qualitative factors to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. This guidance is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. The Company adopted this guidance effective January 1, 2012. The adoption did not have a material impact on the Company’s consolidated financial statements.

In June 2011, the FASB updated the accounting guidance relating to presentation of comprehensive income. This guidance requires companies to present total comprehensive income, the components of net income, and the components of other comprehensive income (“OCI”) either in a single continuous statement of comprehensive income or in two, but consecutive, statements. Additionally, companies are required to present on the face of the consolidated financial statements the reclassification adjustments that are reclassified from OCI to net income, where the components of net income and the components of OCI are presented. This guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2011, and requires retrospective application to all periods presented. The Company adopted this guidance effective January 1, 2012 and elected to present a single continuous statement of comprehensive loss. The adoption did not have a material impact on the Company’s consolidated financial statements.

New Accounting Standards Not Yet Adopted

New Accounting Standards Not Yet Adopted

On July 27, 2012, the FASB issued Intangibles—Goodwill and Other (Topic 350) - Testing Indefinite-Lived Intangible Assets for Impairment. The guidance provides entities with an option to first assess qualitative factors to determine whether events or circumstances indicate that it is more likely than not that the indefinite-lived intangible asset is impaired. If an entity concludes that it is more than 50% likely that an indefinite-lived intangible asset is not impaired, no further analysis is required. However, if an entity concludes otherwise, it would be required to determine the fair value of the indefinite-lived intangible asset to measure the amount of actual impairment, if any, as currently required under GAAP. The guidance is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted. Management believes that the adoption will not have a material impact on the Company’s consolidated financial statements.

Money market securities

Money market securities. Money market securities are cash equivalents, which are included in cash and cash equivalents, and consist of highly liquid investments with original maturities of three months or less. Management uses quoted active market prices for identical assets to measure fair value. The Company had money market securities of approximately $446,000 and $0 at June 30, 2012 and December 31, 2011, respectively.

Stock option fair value

The Black-Scholes option valuation model is used in estimating the fair value of traded options. This option pricing model requires the Company to make several assumptions regarding the key variables used to calculate the fair value of its stock options. The risk-free interest rate used is based on the U.S. Treasury yield curve in effect for the expected lives of the options at their dates of grant. Since July 1, 2005, the Company has used a dividend yield of zero as it does not intend to pay cash dividends on its common stock in the foreseeable future. The most critical assumption used in calculating the fair value of stock options is the expected volatility of the common stock. Management believes that the historic volatility of the common stock is a reliable indicator of future volatility, and accordingly, a stock volatility factor based on the historical volatility of the common stock over a period of time is used in approximating the estimated volatility of new stock options. The expected term is estimated by analyzing the Company’s historical share option exercise experience over a five year period. Compensation expense is recognized using the straight-line method for all stock-based awards. Compensation expense is recognized only for those options expected to vest, with forfeitures estimated at the date of grant based on historical experience and future expectations. Forfeitures are estimated at the time of the grant and revised as necessary in subsequent periods if actual forfeitures differ from those estimates.

Inventory

Inventory is valued at the lower of cost or market (determined by the first-in, first-out method)

Goodwill and Intangible Assets

The Company conducted its annual impairment test of intangible assets and goodwill as of June 30, 2012, and determined that there was no impairment. The Company also tests its intangible assets and goodwill between the annual impairment test 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. No events have occurred since June 30, 2012, that would trigger further impairment testing of the Company’s intangible assets and goodwill.

Commitments and Contingencies

The Company discloses material loss contingencies deemed to be reasonably possible and accrues for loss contingencies when, in consultation with its legal advisors, management concludes that a loss is probable and reasonably estimable.

Income tax uncertainties

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 derecognition, 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. For the three and six months ended June 30, 2012 and 2011, the Company recorded an increase of $1,000 and $2,000, and $1,000 and $2,000, respectively, with respect to the liability for unrecognized tax benefits, including related estimates of penalties and interest.