10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2015

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-36385

BIOLASE, INC.

(Exact name of registrant as specified in its charter)

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

4 Cromwell

Irvine, California 92618

(Address of principal executive offices, including zip code)

(949) 361-1200

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, 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 definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	¨	Accelerated filer	x
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in 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 April 27, 2015, was 58,152,792 shares.

BIOLASE, INC.

INDEX

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited):	3
	Consolidated Balance Sheets as of March 31, 2015 and December 31, 2014	3
	Consolidated Statements of Operations and Comprehensive Loss for the three months ended March 31, 2015 and March 31, 2014	4
	Consolidated Statements of Cash Flows for the three months ended March 31, 2015 and March 31, 2014	5
	Notes to Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29
Item 4.	Controls and Procedures	29
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	29
Item 1A.	Risk Factors	29
Item 6.	Exhibits	30
Signatures		31

2

PART I. FINANCIAL INFORMATION

ITEM  1. FINANCIAL STATEMENTS

BIOLASE, INC.

CONSOLIDATED BALANCE SHEETS (Unaudited)

(in thousands, except per share data)

	March 31,			December 31,
	2015			2014
ASSETS
Current assets:
Cash and cash equivalents	$	23,739		$	31,560
Restricted cash equivalent		200			—
Accounts receivable, less allowance of $1,764 in 2015 and    $1,711 in 2014		9,811			9,004
Inventory, net		13,172			12,508
Prepaid expenses and other current assets		2,045			1,726
Total current assets		48,967			54,798
Property, plant, and equipment, net		1,747			1,295
Intangible assets, net		96			114
Goodwill		2,926			2,926
Other assets		958			270
Total assets	$	54,694		$	59,403
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	7,645		$	8,357
Accrued liabilities		5,144			5,188
Customer deposits		176			112
Deferred revenue, current portion		2,798			2,494
Total current liabilities		15,763			16,151
Deferred income taxes		692			677
Deferred revenue, long-term		231			—
Capital lease obligation		240			—
Warranty accrual, long-term		640			519
Total liabilities		17,566			17,347
Commitments, contingencies, and subsequent events (Notes 9 and 13)
Stockholders' equity:
Preferred stock, par value $0.001; 1,000 shares authorized,    no shares issued and outstanding		—			—
Common stock, par value $0.001; 100,000 shares    authorized in 2015 and 2014, respectively;    58,153 and 58,115 shares issued and outstanding in    2015 and 2014, respectively		58			58
Additional paid-in-capital		185,972			185,231
Accumulated other comprehensive loss		(790	)		(557	)
Accumulated deficit		(148,112	)		(142,676	)
Total stockholders' equity		37,128			42,056
Total liabilities and stockholders' equity	$	54,694		$	59,403

See accompanying notes to unaudited consolidated financial statements.

3

BIOLASE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited)

(in thousands, except per share data)

	Three Months Ended
	March 31,
	2015			2014
Products and services revenue	$	10,751		$	11,479
License fees and royalty revenue		104			39
Net revenue		10,855			11,518
Cost of revenue		7,645			7,577
Gross profit		3,210			3,941
Operating expenses:
Sales and marketing		4,754			4,455
General and administrative		2,587			3,083
Engineering and development		1,803			973
Excise tax		56			65
Legal settlement		(731	)		—
Total operating expenses		8,469			8,576
Loss from operations		(5,259	)		(4,635	)
(Loss) gain on foreign currency transactions		(130	)		2
Interest expense, net		—			(230	)
Non-operating loss, net		(130	)		(228	)
Loss before income tax provision		(5,389	)		(4,863	)
Income tax provision		47			24
Net loss		(5,436	)		(4,887	)
Other comprehensive (loss) income items:
Foreign currency translation adjustment		(233	)		1
Comprehensive loss	$	(5,669	)	$	(4,886	)
Net loss per share:
Basic	$	(0.09	)	$	(0.13	)
Diluted	$	(0.09	)	$	(0.13	)
Shares used in the calculation of net loss per share:
Basic		58,145			36,455
Diluted		58,145			36,455

See accompanying notes to unaudited consolidated financial statements.

4

BIOLASE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(in thousands)

	Three Months Ended
	March 31,
	2015			2014
Cash Flows from Operating Activities:
Net loss	$	(5,436	)	$	(4,887	)
Adjustments to reconcile net loss to net cash and    cash equivalents used in operating activities:
Depreciation and amortization		158			175
Loss on disposal of property, plant,    and equipment, net		—			(1	)
Provision for bad debts		53			268
Provision for inventory excess and obsolescence		—			261
Amortization of discounts on lines of credit		—			120
Amortization of debt issuance costs		—			57
Stock-based compensation		700			310
Other non-cash compensation		—			61
Deferred income taxes		15			15
Incurred but unpaid interest expense		—			12
Changes in operating assets and liabilities:
Restricted cash		(200	)		—
Accounts receivable		(860	)		2,301
Inventory		(664	)		(774	)
Prepaid expenses and other assets		(677	)		2
Customer deposits		64			(135	)
Accounts payable and accrued liabilities		(1,090	)		(392	)
Deferred revenue		535			(190	)
Net cash and cash equivalents used in operating activities		(7,402	)		(2,797	)
Cash Flows from Investing Activities:
Additions to property, plant, and equipment		(228	)		(86	)
Proceeds from disposal of property, plant, and equipment		—			1
Net cash and cash equivalents used in investing activities		(228	)		(85	)
Cash Flows from Financing Activities:
Borrowings under lines of credit		—			7,570
Payments under lines of credit		—			(9,325	)
Payments of debt issue costs		—			(10	)
Proceeds from equity offering, net of expenses		—			4,793
Deposit on capital lease		(42	)		—
Proceeds from exercise of stock options and warrants		44			248
Net cash and cash equivalents provided by financing activities		2			3,276
Effect of exchange rate changes		(193	)		1
Change in cash and cash equivalents		(7,821	)		395
Cash and cash equivalents, beginning of period		31,560			1,440
Cash and cash equivalents, end of period	$	23,739		$	1,835
Supplemental cash flow disclosure - Cash Paid:
Interest paid	$	—		$	67
Income taxes paid	$	37		$	5
Supplemental cash flow disclosure - Non-cash:
Assets acquired under capital lease	$	383		$	—

See accompanying notes to unaudited consolidated financial statements.

5

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1—DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

The Company

BIOLASE, Inc. (“BIOLASE” and, together with its consolidated subsidiaries, the “Company,” “we,” “our,” or “us”) incorporated in Delaware in 1987, is a medical device company that develops, manufactures, markets, and sells laser systems in dentistry and medicine and also markets, sells, and distributes dental imaging equipment, including cone beam digital x-rays and CAD/CAM intra-oral scanners, in-office, chair-side milling machines and three dimensional printers.

Basis of Presentation

The unaudited consolidated financial statements include the accounts of Biolase, Inc. and its wholly-owned subsidiaries and have been prepared on a basis consistent with the December 31, 2014 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.

The consolidated results of operations for the three months ended March 31, 2015 are not necessarily indicative of the results for the full year. The accompanying consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2014, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 filed with the Securities and Exchange Commission (the “SEC”) on March 6, 2015, as amended on April 29, 2015 (the “2014 Form 10-K”).

Liquidity and Management’s Plans

The Company incurred a loss from operations, a net loss, and used cash in operating activities for the three months ended March 31, 2015. The Company has also suffered recurring losses from operations during the three years ended December 31, 2014.

As of March 31, 2015, the Company had working capital of approximately $33.2 million. The Company’s principal sources of liquidity at March 31, 2015 consisted of approximately $23.7 million in cash and cash equivalents and $9.8 million of net accounts receivable.          

Additional capital requirements may depend on many factors, including, among other things, the rate at which the Company’s business grows, demands for working capital, manufacturing capacity, and any acquisitions that the Company may pursue. From time to time, the Company could be required, or may otherwise attempt, to raise capital through either equity or debt offerings. The Company cannot provide assurance that it will be able to successfully enter into any such equity or debt financings in the future or that the required capital would be available on acceptable terms, if at all, or that any such financing activity would not be dilutive to its stockholders.

6

NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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, indefinite-lived intangible assets, and the ability of 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 2014 Form 10-K. Management believes that there have been no significant changes during the three months ended March 31, 2015 in the Company’s critical accounting policies from those disclosed in Item 7 of the 2014 Form 10-K, except with regard to restricted cash equivalent as set forth below.

Restricted Cash Equivalent

The restricted cash equivalent represents a revolving 90-day certificate of deposit maintained by the Company as collateral in connection with corporate credit cards. At March 31, 2015, the restricted cash equivalent balance was $200,000.

Fair Value of Financial Instruments

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the principal market (or, if none exists, the most advantageous market) for the specific asset or liability at the measurement date (referred to as the “exit price”). The fair value is based on assumptions that market participants would use, including a consideration of nonperformance risk. Under the accounting guidance for fair value hierarchy there are three levels of measurement inputs. Level 1 inputs are quoted prices in active markets for identical assets or liabilities. Level 2 inputs are observable, either directly or indirectly, other than Level 1. Level 3 inputs are unobservable due to little or no corroborating market data.

The Company’s financial instruments, consisting of cash and cash equivalents, and accounts receivable, accounts payable, and accrued liabilities, 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.

Recent Accounting Pronouncements

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

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

7

Recently Issued Accounting Standards

In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which supersedes nearly all existing revenue recognition guidance under GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing GAAP.

The standard is effective for annual periods beginning after December 15, 2016, and interim periods therein, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption (which includes additional footnote disclosures). The Company is currently evaluating the impact of the pending adoption of ASU 2014-09 on its consolidated financial statements and has not yet determined the method by which it will adopt the standard during the year ending December 31, 2017.

In August 2014, the FASB issued ASU No. 2014-15, Disclosure of Uncertainties About an Entity’s Ability to Continue as a Going Concern. The standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued and provides guidance on determining when and how to disclose going concern uncertainties in the financial statements. Certain disclosures will be required if conditions give rise to substantial doubt about an entity’s ability to continue as a going concern. ASU 2014-15 applies to all entities and is effective for annual and interim reporting periods ending after December 15, 2016, with early adoption permitted. The Company does not expect that the adoption of this standard will have a material effect on its financial statements.

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 (as amended effective as of May 26, 2004, November 15, 2005, May 16, 2007, May 5, 2011, June 6, 2013, and October 30, 2014) (the “2002 Plan”), which will expire on May 5, 2019. Persons eligible to receive awards under the 2002 Plan include certain officers, employees, and directors of the Company, as well as its consultants. As of March 31, 2015, a total of 9,250,000 shares have been authorized for issuance under the 2002 Plan (see Note 13 – Subsequent Events), of which 3,031,000 shares of Company common stock have been issued pursuant to options that were exercised, 5,469,000 shares of Company common stock have been reserved for options and restricted stock units that are outstanding, and 750,000 shares of Company common stock remain available for future grants.

Stock-based compensation cost recognized in operating results totaled approximately $700,000 and $310,000 for the three months ended March 31, 2015 and 2014, respectively. The net impact to earnings for the three months ended March 31, 2015 and 2014 was $(0.01) and $(0.01) per basic and diluted share, respectively. At March 31, 2015, the Company had approximately $5.0 million of total unrecognized compensation cost, net of estimated forfeitures, related to unvested share-based compensation arrangements. The Company expects that cost to be recognized over a weighted-average period of 3.4 years.

8

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

	Three Months Ended
	March 31,
	2015		2014
Cost of revenue	$	76	$	46
Sales and marketing		293		125
General and administrative		236		115
Engineering and development		95		24
	$	700	$	310

The stock option fair values, under the 2002 Plan, were estimated using the Black-Scholes option-pricing model with the following assumptions:

	Three Months Ended
	March 31,
	2015		2014
Expected term	7.2 years		3.6 years
Volatility	89.90%		98.37%
Annual dividend per share	$	—	$	—
Risk-free interest rate	1.78%		1.65%

A summary of option activity under the 2002 Plan for the three months ended March 31, 2015 is as follows:

						Weighted Average
				Weighted		Remaining		Aggregate
				Average		Contractual		Intrinsic
	Shares			Exercise Price		Term (Years)		Value(1)
Options outstanding at December 31, 2014		3,391,000		$	3.11		2.97	$	1,063,000
Granted at fair market value		2,232,000		$	2.44
Exercised		(38,000	)	$	1.15
Forfeited, cancelled, or expired		(153,000	)	$	3.44
Options outstanding at March 31, 2015		5,432,000		$	2.84		5.46	$	186,000
Options exercisable at March 31, 2015		2,680,000		$	3.11		2.31	$	183,000
Vested options expired during the quarter    ended March 31, 2015		25,000		$	3.96

(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.

9

Cash proceeds along with fair value disclosures related to grants, exercises, and vested options under the 2002 Plan are provided in the following table (in thousands, except per share amounts):

	Three Months Ended
	March 31,
	2015		2014
Proceeds from stock options exercised	$	44	$	248
Tax benefit related to stock options    exercised (1)	N/A		N/A
Intrinsic value of stock options exercised (2)	$	52	$	82
Weighted-average fair value of options granted    during period	$	2.44	$	1.86
Total fair value of shares vested during    the period	$	293	$	346

(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 the Company’s net operating losses.

(2) The intrinsic value of stock options exercised is the amount by which the market price of the stock on the date of exercise exceeded the market price of the stock on the date of grant.

Restricted Stock Units

The Company issues restricted stock units (“RSUs”) to acquire shares of Company common stock as approved by its board of directors (the “Board”). For the three months ended March 31, 2015 and 2014, the Board did not grant any RSUs. As of March 31, 2015, 37,000 shares of Company common stock have been reserved for RSUs that are outstanding.

Warrants

The Company issues warrants to acquire shares of its common stock underlying such warrants as approved by the Board.

A summary of warrant activity for the three months ended March 31, 2015 is as follows:

			Weighted
			Average
	Shares		Exercise Price
Warrants outstanding at December 31, 2014		888,000	$	6.04
Granted		—
Exercised		—
Forfeited, cancelled, or expired		—
Warrants outstanding at March 31, 2015		888,000	$	6.04
Warrants exercisable at March 31, 2015		753,000	$	6.40
Vested warrants expired during the quarter    ended March 31, 2015		—	N/A

No warrants were exercised during the three months ended March 31, 2015 and 2014.

10

Other Stock-Based Awards

Effective March 9, 2015, the Compensation Committee of the Board granted non-qualified stock options to purchase up to 871,710 shares of Company common stock to its Chief Financial Officer in connection with his employment agreement with the Company. These options were granted at an exercise price of $1.99 per share, the closing price of Company common stock on the grant date. These options expire ten years from the grant date and vest in two tranches as follows: (i) as to options to purchase 523,026 shares (the “First Tranche”), options to purchase 130,757 shares vest and become exercisable on the first anniversary of March 9, 2015, and options to purchase 10,896 shares vest and become exercisable each month following March 9, 2016 for a period of 35 consecutive months, and options to purchase 10,909 shares vest and become exercisable on March 9, 2019, and (ii) as to options to purchase 348,684 shares (the “Second Tranche”), all such shares vest and become exercisable on March 9, 2025 or based on the Company’s achievement of certain enumerated financial performance targets or other milestones, at the discretion of the Compensation Committee.The fair value of the First Tranche of $1.48 per share was estimated using the Black-Scholes option-pricing model with assumptions of 6.1 years for expected term, 88.79% volatility and 1.83% risk-free interest rate. The fair value of the Second Tranche of $1.70 per share was estimated using the Black-Scholes option-pricing model with assumptions of 10.0 years for expected term, 87.87% volatility and 2.19% risk-free interest rate.

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 15,563,000 shares (including 9,206,000 shares issued in connection with the private placement completed by the Company on November 7, 2014) were not included in the computation of diluted loss per share for the three months ended March 31, 2015 as a result of their anti-dilutive effect. For the same 2014 period, anti-dilutive outstanding stock options and warrants to purchase 5,998,000 shares were not included in the computation of diluted loss per share.

Stock Dividend

In February 2014, the Board declared a one-half percent stock dividend payable March 28, 2014, to stockholders of record on March 14, 2014. There is no assurance, with respect to the amount or frequency, that any stock dividend will be declared in the future.  

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):

	March 31,		December 31,
	2015		2014
Raw materials	$	2,951	$	2,857
Work-in-process		1,528		1,348
Finished goods		8,693		8,303
Inventory, net	$	13,172	$	12,508

Inventory is net of a provision for excess and obsolete inventory totaling $2.4 million and $2.4 million as of March 31, 2015 and December 31, 2014, respectively.

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NOTE 5—PROPERTY, PLANT, AND EQUIPMENT

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

	March 31,			December 31,
	2015			2014
Building	$	202		$	226
Leasehold improvements		1,200			1,197
Equipment and computers		5,035			4,948
Furniture and fixtures		413			413
Construction in progress		536			4
		7,386			6,788
Accumulated depreciation and amortization		(5,796	)		(5,669	)
		1,590			1,119
Land		157			176
Property, plant, and equipment, net	$	1,747		$	1,295

The cost of fixed assets acquired under the capital lease of $383,000 is included in the above as part of construction in progress.  For additional information on the capital lease, see Note 9 – Commitments and Contingencies. Depreciation and amortization expense related to property, plant, and equipment totaled $140,000 and $157,000 for the three months ended March 31, 2015 and 2014, respectively.

NOTE 6—INTANGIBLE ASSETS AND GOODWILL

The Company conducted its annual impairment test of intangible assets and goodwill as of June 30, 2014, and determined that there was no impairment. The Company also tests its intangible assets and goodwill between each 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. For intangible assets subject to amortization, the Company performs its impairment test when indicators, such as reductions in demand for its products or significant economic slowdowns, are present. No events have occurred since June 30, 2014, that would trigger further impairment testing of the Company’s intangible assets and goodwill.

Amortization expense for the three months ended March 31, 2015 and 2014 totaled $18,000 and $18,000, respectively. Other intangible assets primarily include acquired customer lists and non-compete agreements.

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

	As of March 31, 2015									As of December 31, 2014
			Accumulated									Accumulated
	Gross		Amortization			Impairment		Net		Gross		Amortization			Impairment		Net
Patents (4-10 years)	$	1,914	$	(1,911	)	$	—	$	3	$	1,914	$	(1,907	)	$	—	$	7
Trademarks (6 years)		69		(69	)		—		—		69		(69	)		—		—
Other (4 to 6 years)		817		(724	)		—		93		817		(710	)		—		107
Total	$	2,800	$	(2,704	)	$	—	$	96	$	2,800	$	(2,686	)	$	—	$	114
Goodwill (Indefinite life)	$	2,926						$	2,926	$	2,926						$	2,926

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NOTE 7—ACCRUED LIABILITIES AND DEFERRED REVENUE

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

	March 31,		December 31,
	2015		2014
Payroll and benefits	$	2,177	$	1,905
Warranty accrual, current portion		1,027		930
Taxes		38		139
Accrued professional services		1,566		1,581
Accrued capital lease payments		143		—
Accrued insurance premium		104		450
Other		89		183
Total accrued liabilities	$	5,144	$	5,188

Changes in the initial product warranty accrual, and the expenses incurred under the Company’s initial and extended warranties, for the three months ended March 31, 2015 and 2014 were as follows (in thousands):

	Three Months Ended
	March 31,
	2015			2014
Initial warranty accrual, beginning balance	$	930		$	1,096
Provision for estimated warranty cost		970			148
Warranty expenditures		(233	)		(219	)
		1,667			1,025
Less warranty accrual, long-term		640			—
Total warranty accrual, current portion	$	1,027		$	1,025

In June 2014, the Company extended the warranty for WaterLase systems from one year to two years for systems purchased after January 1, 2014.

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

	March 31,		December 31,
	2015		2014
Undelivered elements (training, installation, and    product and support services)	$	1,293	$	952
Extended warranty contracts		1,505		1,542
Deferred revenue, current portion	$	2,798	$	2,494

In connection with the Company’s initiatives to measure and improve customer satisfaction and concurrent with the launch of WaterLase iPlus 2.0 in February 2015, the Company introduced its exclusive Practice Growth Guarantee, which is a program that essentially guarantees growth in the Company’s clients’ dental practices through training on a select number of clinical procedures and with billing and marketing support for dentists included. Consistent with the Company’s standard terms and conditions applicable to all of its products, the Practice Growth Guarantee does not give the customer the right to return purchased laser systems or receive a refund of any amount of the purchase price. However, the Practice Growth Guarantee does provide for additional training opportunities and certain billing and marketing support activities to the customer. The Company has estimated deferred revenue related to the Practice Growth Guarantee for all WaterLase iPlus 2.0 system sales during the three months ended March 31, 2015 to be approximately $31,000.

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NOTE 8—LINES OF CREDIT AND OTHER BORROWINGS

Lines of Credit

The Company entered into two revolving credit facility agreements with Comerica Bank (the “Credit Agreements”) on May 24, 2012. The revolving lines of credit provided for borrowings against certain domestic accounts receivable and inventory (the “Domestic Revolver”) and certain export related accounts receivable and inventory (the “Ex-Im Revolver”).

On July 28, 2014, the Company repaid all amounts outstanding under the Credit Agreements, including principal, accrued interest, and fees which totaled, in the aggregate, approximately $2.9 million, and the Credit Agreements were terminated.

The Credit Agreements required the Company to maintain compliance with certain monthly financial and non-financial covenants, as defined therein. Any noncompliance with these covenants could have resulted in default interest rates and penalties, and Comerica Bank could have declared the amounts outstanding immediately due and payable. On March 4, 2014, the Company received a waiver of noncompliance with certain financial and nonfinancial covenants as of January 31, 2014 and December 31, 2013. In connection with this waiver, the Company incurred a fee of $10,000, and Comerica Bank reduced the total aggregate available borrowings on the lines of credit to $5.0 million. The Company was not in compliance with a financial covenant as of February 28, 2014 and, as such, entered into a forbearance agreement (the “Forbearance Agreement”) with Comerica Bank on April 10, 2014.  The Company paid a fee of $10,000 in connection with the Forbearance Agreement, pursuant to which Comerica Bank reduced the total aggregate available borrowings to $4.0 million.

The Company was not in compliance with a financial covenant at March 31, 2014 and did not repay the lines of credit in full on the original maturity date of May 1, 2014. As a result, on May 5, 2014, the Company and Comerica Bank agreed to Amendment No. 1 to the Forbearance Agreement (“Amendment No. 1”), which extended the end of the forbearance period from May 1, 2014 to June 1, 2014. In connection with Amendment No. 1, the maturity date of the revolving lines of credit was extended to June 1, 2014, and the Company paid an administrative fee of $10,000. On June 3, 2014, the Company and Comerica Bank agreed to Amendment No. 2 to Forbearance Agreement (“Amendment No. 2”), which extended the maturity date of the revolving lines of credit to August 1, 2014. In connection with Amendment No. 2, Comerica Bank increased the interest rates on the lines of credit by 0.50%, and the Company paid an administrative fee of $15,000. The Company was not in compliance with certain financial covenants as of May 31, 2014 and, as a result, agreed to Amendment No. 3 to Forbearance Agreement with Comerica Bank whereby the forbearance period was continued to August 1, 2014, and the Company paid an administrative fee of $10,000.   

The outstanding principal balances of the Credit Agreements, as amended June 3, 2014, bore interest at annual percentage rates equal to the daily prime rate, plus 2.50% for the Domestic Revolver and 2.00% for the Ex-Im Revolver. The daily prime rate was subject to a floor of the daily adjusting LIBOR rate plus 2.50% per annum, or if LIBOR was undeterminable, 2.50% per annum. The Company was 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 months ended March 31, 2014, the Company incurred $229,000 of interest expense associated with the credit facilities, including $57,000 of amortization of deferred debt issuance costs and $120,000 of amortization of the discount on lines of credit. There was no interest expense payable at December 31, 2014.

Lockbox arrangements under the revolving bank facilities provided that substantially all of the income generated was deposited directly into lockbox accounts and then swept into cash management accounts for the benefit of Comerica Bank. Cash was disbursed from Comerica Bank to the Company only after payment of the applicable debt service and principal. At December 31, 2014, there were no restricted cash amounts. The Company’s obligations were generally secured by substantially all of the Company’s assets now owned or thereafter acquired.

During the three months ended March 31, 2014, the Company incurred $10,000 of Comerica Bank commitment fees and legal costs associated with the various waivers and amendments. Commitment fees and legal costs associated with acquiring and maintaining the credit facilities were capitalized and amortized on a straight-line basis as interest expense over the remaining term of the Credit Agreements.

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Other Borrowings

The Company financed a portion of its annual insurance premiums which it pays in installments over nine months. As of March 31, 2015, no amounts were outstanding under this arrangement. As of March 31, 2014, $123,000 was outstanding under this arrangement at an annual interest rate of 2.85%, and was included in accrued liabilities in the accompanying consolidated financial statements. The Company incurred interest expense associated with the financed insurance premiums of approximately $1,000 during the three months ended March 31, 2014.

NOTE 9—COMMITMENTS AND CONTINGENCIES

Leases

The Company leases its corporate headquarters and manufacturing facility in Irvine, California and also leases certain other facilities, office equipment, and automobiles under various operating or capital lease arrangements. In February 2015, the Company entered into a 30-month capital lease agreement for information technology equipment. Future minimum lease payments under the capital lease, together with the present value of the net minimum lease payments, for the years ending December 31, 2015, 2016 and 2017 are $129,000, $172,000, and $128,000, respectively. The amount necessary to reduce net minimum lease payments to present value calculated at the Company's incremental borrowing rate of 8.83% at the inception of the lease totaled $46,000. The present value of net minimum lease payments are reflected on the Consolidated Balance Sheets as current and noncurrent obligations of $143,000 within accrued liabilities and $240,000 within capital lease obligation, respectively.

In March 2015, the corporate headquarters and manufacturing facility lease was amended to extend the term through April 30, 2020, modify provisions for tenant improvement allowance of up to $398,000, and adjust the basic rent terms. Future minimum rental commitments under operating lease agreements with non-cancelable terms greater than one year for the years ending December 31, 2015, 2016, 2017 and 2018 and thereafter totaled $483,000, $694,000, $652,000 and $1.5 million, respectively.

Employee arrangements and other compensation

Certain members of management are entitled to severance benefits payable upon termination following a change in control, which would approximate $994,000, in the aggregate, at March 31, 2015. The Company also has agreements with certain employees to pay bonuses based on targeted performance criteria. As of March 31, 2015, approximately $409,000 was accrued for performance bonuses, which is included in accrued liabilities in the consolidated balance sheets.

Purchase commitments

The Company generally purchases components and subassemblies for its products from a limited group of third party suppliers through purchase orders. As of March 31, 2015, the Company had $18.2 million of purchase commitments for which the Company has not received certain goods or services that are expected to be purchased within one year. These purchase commitments were made to secure better pricing and to ensure the Company will have the necessary parts to meet anticipated near-term demand.

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.

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Class Action Lawsuits

On August 23, 2013, a purported class action lawsuit entitled Brady Adams v. Biolase, Inc., et al., Case No. 13-CV-1300 JST (FFMx) was filed in the United States District Court for the Central District of California against BIOLASE, its then Chief Executive Officer, Federico Pignatelli, and its then Chief Financial Officer, Frederick D. Furry. On August 26, 2013, a purported class action lawsuit entitled Ralph Divizio v. Biolase, Inc., et al., Case No. 13-CV-1317 DMG (MRWx) was filed in the same court against BIOLASE, Messrs. Pignatelli and Furry, and its then President and Chief Operating Officer, Alexander K. Arrow. Each of the lawsuits alleges violations of the federal securities laws and asserts causes of action against the defendants under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In accordance with the Private Securities Litigation Reform Act of 1995, on December 10, 2013, the court entered an order consolidating the lawsuits, appointing a lead plaintiff and approving the lead plaintiff’s selection of lead counsel. On February 24, 2014, the lead plaintiff filed a consolidated complaint against the Company and Messrs. Pignatelli, Furry, and Arrow, alleging violations of the federal securities laws and asserting causes of action against the defendants under Sections 10(b) and 20(a) of the Exchange Act.

On November 19, 2013, the Board received a letter from attorneys for purported shareholder David T. Long, demanding that the Board investigate, institute litigation, and take measures to redress and prevent alleged wrongdoing concerning the dissemination of certain allegedly false and misleading public disclosures made by the Company between January 2013 and August 2013.

Subsequent to December 31, 2014, the parties have reached an agreement in principle to settle the consolidated securities class action lawsuit, which is subject to the negotiation of a definitive settlement agreement and preliminary and final approval of the court. Although there can be no assurance that such agreement will be finalized, as of the date of these financial statements, management does not expect the Company to incur additional expenses related to this matter due to certain insurance coverage in place.

Intellectual Property Litigation

On April 24, 2012, CAO Group, Inc. (“CAO”) filed a lawsuit against the Company in the District of Utah for patent infringement of U.S. Patent No. 7,485,116 (the “116 Patent”) regarding the Company’s ezlase dental laser. On September 9, 2012, CAO filed its First Amended Complaint, which added claims for (1) business disparagement/injurious falsehood under common law and (2) unfair competition under 15 U.S.C. Section 1125(a). The additional claims stem from a press release that the Company issued on April 30, 2012, which CAO claims contained false statements that are disparaging to CAO and its diode product. The First Amended Complaint seeks injunctive relief, treble damages, attorneys’ fees, punitive damages, and interest. On November 13, 2012, the Court stayed the lawsuit for 120 days to allow the United States Patent and Trademark Office (the “USPTO”) to consider the Company’s request for reexamination of the patent-in-suit. The USPTO granted the request to reexamine the asserted claims of the patent-in-suit and, on February 28, 2013, the Court stayed the lawsuit until the termination of the reexamination proceedings. On April 23, 2013, the USPTO issued an office action rejecting all of the asserted claims over the prior art, and CAO responded to the office action. On August 28, 2013, the USPTO issued an Action Closing Procedure, rejecting all of CAO’s patent claims. CAO responded to the USPTO’s ruling and on December 10, 2013, the USPTO issued a Right of Appeal Notice, finally rejecting some claims of the 116 Patent while finding that other claims appeared to be patentable. The Company appealed the USPTO’s findings on January 9, 2014 and on January 27, 2014, the USPTO declined to reconsider the finding of certain claims as patentable and instructed the parties to proceed to appeal to the Patent Trial and Appeal Board. On March 17, 2014, the Company filed its brief in support of its appeal of the USPTO’s decision not to reject certain claims of the 116 Patent. On March 24, 2014, CAO filed its brief in support of its appeal of the USPTO’s decision to reject certain claims of the 116 patent. On April 18, 2014, the Company filed a respondent brief in opposition to the CAO’s appeal arguments. On May 30, 2014, both parties filed rebuttal briefs in support of their appeals.  On June 30, 2014, the Company requested an oral hearing before the Board.  On July 1, 2014, the Board noted that request and docketed the case for consideration. A hearing on reconsideration was held in November 2014.

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The Company filed a patent infringement lawsuit against Fotona Proizvodnja Optoelektronskih Naprav D.D. and Fotona LLC (collectively, “Fotona”) in Düsseldorf District Court (the “Düsseldorf Court”) on April 12, 2012 alleging infringement with respect to the Fotona Fidelis dental laser system. Fotona denies liability and seeks the reimbursement of statutory fees from the Company. Together with its response brief, Fotona also filed a nullity action against the patent in dispute, patent number EP 1 560 470. The nullity action is pending at the German Federal Patent Court (the “Patent Court”), Docket No. 1 Ni 58/13 (EP). On September 2, 2013, the Company filed its counterplea in the infringement proceedings and phrased its arguments defending the validity of the patent. These arguments were also the subject of the defense brief to the Patent Court in the parallel nullity action proceedings. On September 9, 2013, the Company filed its response to the Patent Court. Fotona filed a rejoinder on February 3, 2014, including its counterplea on nullity.

On April 29, 2014, the Düsseldorf Court rendered a first instance decision whereby Fotona must cease and desist from selling its Fidelis and Lightwalker dental laser systems, render accounts on past sales, recall respective products, and pay damages on infringement. Additionally, the Company was awarded statutory fees, court costs, and attorney fees. Preliminary enforcement against Fotona is possible if the Company posts a bond totaling €500,000, which is designed to cover a portion of the potential damages, before a final instance decision is available. In Germany, damages can be calculated based on the profits made by the infringer after the formal announcement of the granting of a patent, in this case beginning January 1, 2009, without considering direct labor or any other operational costs. However, Fotona has yet to provide the details of its profits in order to allow the Company to calculate the damages. In the two additional first instance cases following the extension of the initial lawsuit against Fotona, the Düsseldorf Court also required the Company to provide a statutory bond totaling €146,000. Such bonds are traditionally imposed on foreign plaintiffs to cover all statutory, court, and attorney’s fees. Fotona submitted its responses to the action and filed respective invalidation actions against the rights of the Company.  

Subsequent to the foregoing responses, on March 24, 2015 the parties reached an agreement to settle the foregoing litigation and to dismiss the litigation with prejudice.  As part of the settlement, Fotona agreed to pay the Company a total of $1.4 million, with $550,000 payable within 10 days of March 24, 2015 and the remaining, $825,000 payable in three increments of $275,000 each to be paid no later than the first, second and third anniversary of the effective date of the agreement. Pursuant to the settlement agreement, the Company (i) granted Fotona a three-year, non-exclusive, paid-up license in the United States market and a five–year, non-exclusive, paid-up license in markets outside of the United States and (ii) agreed to grant Fotona a non-exclusive, royalty-based license following the expiration of the paid-up licenses.  The Company calculated the present value of the settlement amount to be $1.2 million and allocated such amount to each significant element of the settlement on a relative fair value basis. $731,000 and $68,000 was allocated towards the recovery of the Company’s legal expenses and as settlement for the dismissal of the patent infringement lawsuit and are reflected as legal settlement and license fees and royalty revenue, respectively, on the Consolidated Statements of Operations and Comprehensive Loss. The remaining amount of $379,000 was allocated towards the three-year, non-exclusive, paid-up license in the United States market and the five –year, non-exclusive, paid-up license in markets outside of the United States which was reflected within other assets and long-term deferred revenue on the Consolidated Balance Sheets.  The deferred revenue is being recognized as license revenue over the terms of the paid-up licenses.

Other Matters

In the normal course of business, the Company may be 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, the Company’s 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 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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NOTE 10—SEGMENT INFORMATION

The Company currently operates in a single reportable segment. For the three months ended March 31, 2015, sales in the United States accounted for approximately 55% of net revenue and international sales accounted for approximately 45% of net revenue. For the three months ended March 31, 2014, sales in the United States accounted for approximately 58% of net revenue and international sales accounted for approximately 42% of net revenue.

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

	Three Months Ended
	March 31,
	2015		2014
United States	$	5,930	$	6,709
International		4,925		4,809
	$	10,855	$	11,518

No individual country, other than the United States, represented more than 10% of total net revenue.

Long-lived assets located outside of the United States at our foreign subsidiaries totaled $334,000 and $374,000 as of March 31, 2015 and December 31, 2014, respectively.

NOTE 11—CONCENTRATIONS

Revenue from the Company’s products for the three months ended March 31, 2015 and 2014 are as follows:

	Three Months Ended
	March 31,
	2015			2014
Laser systems		64.6	%		60.4	%
Imaging systems		3.1	%		10.4	%
Consumables and other		17.5	%		13.9	%
Services		13.8	%		15.0	%
License fees and royalties		1.0	%		0.3	%
Total revenue		100.0	%		100.0	%

No individual customer represented more than 10% of the Company’s revenue for the three months ended March 31, 2015 or 2014.

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 March 31, 2015 or December 31, 2014.

The Company currently purchases certain key components of its products from single suppliers. Although there are a limited number of manufacturers of these key components, management believes that other suppliers could provide similar key components on comparable terms. A change in suppliers, however, could cause delays in manufacturing and a possible loss of sales, which could adversely affect the Company’s business, results of operations, and financial condition.

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NOTE 12—INCOME TAXES

The Company accounts for income taxes under the asset and liability method, whereby deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Management evaluates the need to establish a valuation allowance for deferred tax assets based upon the amount of existing temporary differences, the period in which they are expected to be recovered, and expected levels of taxable income. A valuation allowance to reduce deferred tax assets is established when it is “more likely than not” that some or all of the deferred tax assets will not be realized. Based on the Company’s net losses in prior years, management has determined that a full valuation allowance against the Company’s net deferred tax assets is appropriate.

Accounting for uncertainty in income taxes prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return and provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The Company has elected to classify interest and penalties as a component of its income tax provision. With respect to the liability for unrecognized tax benefits, including related estimates of penalties and interest, the Company did not record a liability for unrecognized tax benefits for the three months ended March 31, 2015 and 2014, respectively. The Company does not expect any changes to its unrecognized tax benefit for the next twelve months that would materially impact its consolidated financial statements.

During the three months ended March 31, 2015, the Company recorded an income tax provision of $47,000, resulting in an effective tax rate of (0.9)%. During the three months ended March 31, 2014, the Company recorded an income tax provision of $24,000, resulting in an effective tax rate of (0.5)%. The income tax provisions for the three months ended March 31, 2015 and 2014 were calculated using the discrete year-to-date method. The effective tax rate differs from the statutory tax rate of 34% primarily due to the existence of valuation allowances against net deferred tax assets and current liabilities resulting from the estimated state income tax liabilities and federal alternative minimum tax liability.

NOTE 13—SUBSEQUENT EVENT

Stock-Based Compensation

On April 27, 2015, an additional 2.3 million shares of Company common stock were authorized for issuance under the 2002 Plan.

Also on April 27, 2015, non-employee directors of the Company were granted non-qualified stock options to purchase a combined total of 657,489 shares of Company common stock, as annual compensation for serving on the Board. These options were granted at an exercise price of $2.27, the average closing market price of the Company’s stock for the trailing 12 months prior to grant date, and vest over a 12-month period.

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

The following information should be read in conjunction with the unaudited consolidated financial statements and related notes included elsewhere in this Form 10-Q and our audited consolidated financial statements and related notes included in the Annual Report on Form 10-K for the year ended December 31, 2014 filed with the Securities and Exchange Commission (the “SEC”) on March 6, 2015, as amended on April 29, 2015 (the “2014 Form 10-K”).  In addition to historical information, this discussion and analysis contains “forward-looking statements” as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act, which involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause the results of Biolase, Inc. (“Biolase” and, together with its consolidated subsidiaries, the “Company,” “we”, “our” or “us” ) to differ materially from those expressed or implied by such forward-looking statements. Such forward-looking statements include any statements, predictions, or expectations regarding our earnings, revenue, sales and operations, operating expenses, anticipated cash needs, capital requirements and capital expenditures, depreciation and amortization, needs for additional financing, use of working capital, plans for future products and services and for enhancements of existing products and services, anticipated growth strategies, ability to attract customers, sources of net revenue, anticipated trends and challenges in our business and the markets in which we operate, the adequacy of our facilities, the impact of economic and industry conditions on our customers and our business, customer demand, our competitive position, the outcome of any litigation against us, the perceived benefits of any technology acquisitions, critical accounting policies, the impact of recent accounting pronouncements, recording tax benefits or other financial items in the future, plans, strategies, expectations or objectives of management for future operations, our financial condition or prospects, and any other statement that is not historical fact. Forward-looking statements are often identified by the use of words such as “may,” “might,” “will,” “intend,” “should,” “could,” “can,” “would,” “continue,” “expect,” “believe,” “anticipate,” “estimate,” “predict,” “potential,” “plan,” “seek” and similar expressions and variations or the negativities of these terms or other comparable terminology.

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

· global economic uncertainty and volatility in financial markets;

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

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

· our inability to overcome the hesitation of dentists and patients to adopt laser technologies;

· failure in our efforts to train dental practitioners;

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

· failure of our intellectual property rights to adequately protect our technologies;

· potential third-party claims that our products infringe their intellectual property rights;

· warranty obligations if our products are defective;

· litigation, including the failure of our insurance policies to cover certain expenses related to litigation or our inability to reach a final settlement related to certain litigation;

· failure of our suppliers to supply us with a sufficient amount or adequate quality of materials;

· a change in suppliers, including our inability to purchase certain key components of our products from suppliers other than our current ones;

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

· failure of our efforts to emphasize the importance of our imaging products to translate into increased sales of the same.

Further information about factors that could materially affect the Company, including our results of operations and financial condition, is contained under “Risk Factors” in Item 1A in the 2014 Form 10-K. Except as required by law, we undertake no obligation to revise or update any forward-looking statements to reflect changed assumptions, the occurrence of anticipated or unanticipated events, new information or changes to future results over time or otherwise.

Overview

We are a medical device company that develops, manufactures, markets, and sells laser systems in dentistry and medicine and also markets, sells, and distributes dental imaging equipment, including cone beam digital x-rays and CAD/CAM intra-oral scanners, in-office, chair-side milling machines and three-dimensional printers. Our products advance the practice of dentistry and medicine for patients and health care professionals. Our proprietary dental laser systems allow dentists, periodontists, endodontists, oral surgeons, and other dental specialists to perform a broad range of minimally invasive dental procedures, including cosmetic, restorative, and complex surgical applications. Our laser systems are designed to provide clinically superior results for many types of dental procedures compared to those achieved with drills, scalpels, and other conventional instruments. We have clearance from the U.S. Food and Drug Administration (the “FDA”) to market and sell our laser systems in the United States and also have the necessary registrations to market and sell our laser systems in Canada, the European Union, and many other countries outside the U.S. Additionally, our in-licensed imaging equipment and related products improve diagnoses, applications, and procedures in dentistry and medicine.

We offer two categories of laser system products: WaterLase (all-tissue) systems and Diode (soft-tissue) systems. Our flagship brand, the WaterLase, uses a patented combination of water and laser energy to perform most procedures currently performed using drills, scalpels, and other traditional dental instruments for cutting soft and hard tissue. We also offer our Diode laser systems to perform soft tissue, pain therapy, and cosmetic procedures, including teeth whitening. As of March 31, 2015, we had approximately 200 issued and 150 pending U.S. and international patents, the majority of which are related to WaterLase technology. From 1998 through March 31, 2015, we sold approximately 28,300 laser systems in over 80 countries around the world. Contained in this total are over 10,800 WaterLase systems, including more than 6,800 WaterLase MD and iPlus systems.

Recent Developments

Significant Leadership Changes

Consistent with our goal to refocus our energies on strengthening leadership, worldwide competitiveness and attention to our professional customers and their patients, we announced the appointment of a new Chief Financial Officer in March 2015.

New Product Offerings

In February 2015, we launched the WaterLase iPlus 2.0 along with our exclusive Practice Growth Guarantee, the latter of which essentially guarantees growth in our clients’ dental practices through training on a select number of clinical procedures and with billing and marketing support for dentists included. The WaterLase iPlus 2.0 includes innovations and improvements designed to enhance patients’ and dentists’ experiences and generate practice growth for dental practitioners through routine use. The WaterLase iPlus 2.0 also marks the debut of the SureFire YSGG Delivery System, which ensures greater uptime through enhanced precision, performance and reliability.  Building on the gold standard for comfortable laser delivery systems, SureFire has redesigned optics that efficiently deliver precise laser energy with a replaceable, disposable shield for better dependability.  Still the most flexible, tension-free delivery system available, SureFire offers improved clinical access and comfort with its minimally-invasive flagship dental laser system and exclusive contra-angle hand-piece.

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In December 2014, we introduced the EPIC X diode laser, an enhanced soft-tissue laser system featuring upgrades and improvements from our EPIC 10, which was released in 2012. EPIC X includes enhancements to nearly every system component to optimize treatment speed and efficiency, including pre-initiated diode tips, allowing dentists to significantly reduce procedure time.

Critical Accounting Policies

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) which require us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and revenues and expenses reported during the period. Information with respect to our critical accounting policies that we believe could have the most significant effect on our reported results and require subjective or complex judgments by management is contained on pages 41 to 43 in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of the 2014 Form 10-K. We believe that there have been no significant changes during the three months ended March 31, 2015 in our critical accounting policies from those disclosed in Item 7 of the 2014 Form 10-K, except as disclosed in Note 2 of this Form 10-Q.

Results of Operations

The following table sets forth certain data from our consolidated statements of operations expressed as percentages of net revenue:

	Three Months Ended
	March 31,
	2015			2014
Products and services revenue		99.0	%		99.7	%
License fees and royalty revenue		1.0	%		0.3	%
Net revenue		100.0	%		100.0	%
Cost of revenue		70.4	%		65.8	%
Gross profit		29.6	%		34.2	%
Operating expenses:
Sales and marketing		43.8	%		38.7	%
General and administrative		23.8	%		26.8	%
Engineering and development		16.6	%		8.4	%
Excise tax		0.5	%		0.5	%
Legal settlement		(6.7	%)		—	%
Total operating expenses		78.0	%		74.4	%
Loss from operations		(48.4	%)		(40.2	%)
Non-operating loss, net		(1.2	%)		(2.0	%)
Loss before income tax provision		(49.6	%)		(42.2	%)
Income tax provision		0.4	%		0.2	%
Net loss		(50.0	%)		(42.4	%)

Non-GAAP Disclosure

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

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Management also believes that the presentation of this non-GAAP financial information provides investors with greater transparency and facilitates comparison of operating results across a broad spectrum of companies with varying capital structures, compensation strategies, derivative instruments, and amortization methods, which provide a more complete understanding of our financial performance, competitive position, and prospects for the future. However, the non-GAAP financial measures presented herein have certain limitations in that they do not reflect all of the costs associated with the operations of our business as determined in accordance with GAAP. Therefore, investors should consider non-GAAP financial measures in addition to, and not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP. Further, the non-GAAP financial measures presented by the Company may be different from the non-GAAP financial measures used by other companies.

Non-GAAP Net Loss

Management uses non-GAAP net loss (defined as net loss before interest, taxes, depreciation and amortization, stock-based, other equity instruments, and other non-cash compensation) in its evaluation of the Company’s core results of operations and trends between fiscal periods and believes that these measures are important components of its internal performance measurement process. Management believes that this non-GAAP financial information reflects an additional way of viewing aspects of our business that, when viewed with our GAAP results, provides a more complete understanding of factors and trends affecting our business. The following table contains a reconciliation of non-GAAP net loss to GAAP net loss (in thousands).

	Three Months Ended
	March 31,
	2015			2014
GAAP net loss, as reported	$	(5,436	)	$	(4,887	)
Adjustments:
Interest expense, net		—			230
Income tax provision		47			24
Depreciation and amortization		158			175
Stock-based, other equity instruments,    and other non-cash compensation		700			371
Non-GAAP net loss	$	(4,531	)	$	(4,087	)

Comparison of Results of Operations

Three months ended March 31, 2015 and 2014

Net Revenue: The following table summarizes our net revenues by category, including each category’s percentage of our total revenue, for the three months ended March 31, 2015 (“First Quarter 2015”) and 2014 (“First Quarter 2014”), as well as the amount of change and percentage of change in each revenue category (dollars in thousands):

	Three Months Ended				Three Months Ended
	March 31,				March 31,				Amount			Percent
	2015				2014				Change			Change
Laser systems	$	7,008	64.6	%	$	6,955	60.4	%	$	53			0.8	%
Imaging systems		341	3.1	%		1,196	10.4	%		(855	)		(71.5	%)
Consumables and other		1,902	17.5	%		1,603	13.9	%		299			18.7	%
Services		1,500	13.8	%		1,725	15.0	%		(225	)		(13.0	%)
Total products and services		10,751	99.0	%		11,479	99.7	%		(728	)		(6.3	%)
License fees and royalty		104	1.0	%		39	0.3	%		65			166.7	%
Net revenue	$	10,855	100.0	%	$	11,518	100.0	%	$	(663	)		(5.8	%)

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Net revenue by geographic location based on the location of customers, including each category’s percentage of our total revenue, for the three months ended March 31, 2015 and 2014, as well as the amount of change and percentage of change in each geographic revenue category, was as follows (dollars in thousands):

	Three Months Ended				Three Months Ended
	March 31,				March 31,				Amount			Percent
	2015				2014				Change			Change
United States	$	5,930	54.6	%	$	6,709	58.2	%	$	(779	)		(11.6	%)
International		4,925	45.4	%		4,809	41.8	%		116			2.4	%
Net revenue	$	10,855	100.0	%	$	11,518	100.0	%	$	(663	)		(5.8	%)

The overall decrease in period-over-period net revenue resulted from decreases in domestic imaging systems and services revenue, partially offset by increases in domestic and international laser systems revenue and domestic consumables and other revenue. Laser system net revenue increased by approximately $53,000, or 0.8%, in First Quarter 2015 compared to First Quarter 2014, and net revenue from imaging systems decreased by approximately $855,000, or 71.5%, in First Quarter 2015 compared to First Quarter 2014. The quarter-over-quarter decrease was primarily due to a decline in worldwide imaging revenue and approximately $600,000 resulting from the negative impact of foreign currency exchange rate fluctuations, partially offset by increases in consumables and license fees and royalty revenue.  Excluding the decline in worldwide imaging revenue, there was a modest year-over-year revenue increase in our core dental laser systems business during First Quarter 2015.

Consistent with our goal to refocus our energies on strengthening leadership, worldwide competitiveness and attention to our professional customers and their patients, in First Quarter 2015, we accomplished our goal to reverse the declining sales of WaterLase that has occurred over the last two years.  During First Quarter 2015, units sold from sales of our flagship WaterLase laser systems increased by 8.7%, as compared to First Quarter 2014. The decrease in net revenue from imaging systems in First Quarter 2015 as compared to First Quarter 2014 is attributable to our shifted focus to our flagship WaterLase laser systems.  We expect to revitalize our emphasis on the importance of our imaging products beginning in the second quarter of 2015.

Consumables and other net revenue, which includes consumable products such as disposable tips and shipping revenue, increased by approximately $299,000, or 18.7%, in First Quarter 2015 compared to First Quarter 2014. This increase in consumables and other net revenue was primarily a result of auxiliary sales to our growing laser customer base.

Services net revenue, which consists of extended warranty service contracts, advanced training programs, and other services, decreased by approximately $225,000, or 13.0%, for First Quarter 2015, as compared to First Quarter 2014. The decrease was primarily due to the extension of warranty for WaterLase systems from one year to two years for systems purchased after January 1, 2014, which was first implemented in June 2014 (the “Second Year Warranty”).

License fees and royalty revenue increased by approximately $65,000, or 166.7%, to $104,000 in First Quarter 2015 compared to $39,000 for First Quarter 2014. These license fees and royalty revenue were attributable to intellectual property related to our laser technologies and past-due royalty revenue recovered in connection with our patent infringement lawsuit settlement. For a detailed discussion of the intellectual property litigation and related settlement, see Note 9 – Commitments and Contingencies.

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Cost of Revenue and Gross Profit: The following table summarizes our cost of revenue and gross profit for the three months ended March 31, 2015 and 2014, as well as the amount of change and percentage of change (dollars in thousands):

	Three Months Ended				Three Months Ended
	March 31,				March 31,				Amount			Percent
	2015				2014				Change			Change
Net revenue	$	10,855	100.0	%	$	11,518	100.0	%	$	(663	)		(5.8	%)
Cost of revenue		7,645	70.4	%		7,577	65.8	%		68			0.9	%
Gross profit	$	3,210	29.6	%	$	3,941	34.2	%	$	(731	)		(18.5	%)

Gross profit as a percentage of revenue typically fluctuates with product and regional mix, selling prices, material costs and revenue levels. The decrease in gross profit as a percentage of revenue for First Quarter 2015, as compared to First Quarter 2014, was mainly attributable to increased international sales volume, increased promotions related to the launch of EPIC X and WaterLase iPlus 2.0, and increased warranty expenses as a result of the Second Year Warranty.

Operating Expenses: The following table summarizes our operating expenses as a percentage of net revenue for the three months ended March 31, 2015 and 2014, as well as the amount of change and percentage of change (dollars in thousands):

	Three Months Ended					Three Months Ended
	March 31,					March 31,					Amount			Percent
	2015							2014			Change			Change
Sales and marketing	$	4,754		43.8	%	$	4,455		38.7	%	$	299			6.7	%
General and administrative		2,587		23.8	%		3,083		26.8	%		(496	)		(16.1	%)
Engineering and development		1,803		16.6	%		973		8.4	%		830			85.3	%
Excise tax		56		0.5	%		65		0.5	%		(9	)		(13.8	%)
Legal settlement		(731	)	(6.7	%)		—		—	%		(731	)	N/A
Total operating expenses	$	8,469		78.0	%	$	8,576		74.4	%	$	(107	)		(1.2	%)

The period-over-period change in operating expense is explained in the following expense categories:

Sales and Marketing Expense. The increase to sales and marketing expense was primarily a result of increased media and advertising expenses of $208,000 and increased payroll and consulting related expenses of $542,000, partially offset by decreased convention related expenses of $306,000 and commissions of $143,000. The increase to media and advertising expenses are the result of our efforts to enhance customer acquisition, customer retention and global brand awareness. The increase to payroll and consulting related expenses (i) is attributable to the increased headcount in our sales and marketing team domestically and internationally as we continue to expand into new and existing markets and (ii) includes an increase of $168,000 in stock-based compensation primarily attributable to grants to existing and new employees.

General and Administrative Expense. The decrease to general and administrative expense was primarily due to decreased legal expenses and professional fees of $627,000, a decrease to our provision for doubtful accounts of $215,000 and decreased investor relations expenses of $110,000, partially offset by increased payroll and consulting related expenses of $396,000. The decrease in legal expenses and professional fees resulted from the atypical defense of the director dispute and resulting shareholder litigation incurred during First Quarter 2014. The increase in payroll and consulting related expenses resulted from a higher headcount in certain functions to support growth in our business, including an increase of $121,000 in stock-based compensation primarily attributable to grants to existing and new employees.

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Engineering and Development Expense. The increase to engineering and development expense was primarily due to increased payroll, consulting and temporary labor expenses of $525,000, and increased operating supplies cost of $225,000, resulting from our focused efforts to accelerate innovation of both our existing products and technologies as well as to develop new products and technologies, which we believe will further strengthen our worldwide leadership position.

Excise Tax Expense. The Patient Protection and Affordable Care Act imposes a 2.3% medical device excise tax on certain product sales to customers located in the U.S. We incurred excise tax expenses of $56,000, or 0.5% of net revenue, for First Quarter 2015 as compared to $65,000, or 0.5% of net revenue, for First Quarter 2014.

Legal Settlement. On April 12, 2012, we filed a patent infringement lawsuit against Fotona Proizvodnja Optoelektronskih Naprav D.D. and Fotona LLC (collectively, “Fotona”) in Düsseldorf District Court alleging infringement with respect to the Fotona Fidelis dental laser system. On March 24, 2015, we entered into a settlement agreement with Fotona.  We allocated $731,000 of the settlement amount toward the recovery of our legal expenses related to litigation. For a more detailed discussion of the intellectual property litigation, see Note 9 – Commitments and Contingencies.

(Loss) Gain on Foreign Currency Transactions. We realized a $130,000 loss on foreign currency transactions for First Quarter 2015, compared to a $2,000 gain on foreign currency transactions for First Quarter 2014 due to exchange rate fluctuations between the U.S. dollar and other currencies, including, primarily the Euro.

Interest Expense, Net. Interest expense consisted primarily of interest on our revolving credit facilities and amortization of debt issuance costs and debt discount. There was no interest expense for First Quarter 2015. Interest expense totaled approximately $230,000 for First Quarter 2014. The decrease was a result of the Company paying in full all amounts due under the revolving lines of credit with Comerica Bank in July 2014.

Income Tax Provision (Benefit). We use a discrete year-to-date method in calculating quarterly provision for income taxes.Our provision for income taxes was $47,000 for First Quarter 2015, compared to a provision of $24,000 for First Quarter 2014. The increase of $23,000, or 95.8%, in income tax provision was primarily due to increased international sales revenue, which accounted for 45.4% of net revenue in First Quarter 2015 and 41.8% of net revenue in First Quarter 2014. For additional information regarding income taxes, see Note 12 – Income Taxes.

Net Loss. Our net loss totaled approximately $5.4 million for First Quarter 2015 compared to a net loss of $4.9 million for First Quarter 2014. The increase in net loss of approximately $549,000, or 11.2%, was primarily due to a decrease in gross profit of $731,000, partially offset by a decrease to total operating expenses of $107,000.

Liquidity and Capital Resources

At March 31, 2015, we had approximately $23.7 million in cash and cash equivalents. Management defines cash and cash equivalents as highly liquid deposits with original maturities of 90 days or less when purchased. The decrease in our cash and cash equivalents by $7.8 million at March 31, 2015 as compared to December 31, 2014, was primarily driven by cash used in operating activities of $7.4 million, cash used in investing activities of $228,000 and effect of exchange rate changes of $193,000, partially offset by cash provided by financing activities of $2,000.

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

	Three Months Ended
	March 31,
	2015			2014
Net cash flows used in operating activities	$	(7,402	)	$	(2,797	)
Net cash flows used in investing activities		(228	)		(85	)
Net cash flows provided by financing activities		2			3,276
Effect of exchange rate changes		(193	)		1
Net change in cash and cash equivalents	$	(7,821	)	$	395

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Operating Activities

Net cash used in operating activities consists of our net loss, adjusted for our non-cash charges, plus or minus working capital changes. Cash used in operating activities for the three months ended March 31, 2015, totaled $7.4 million and was primarily comprised of our net loss of $5.4 million plus an increase in inventory of $664,000, an increase in accounts receivable of $860,000, an increase in restricted cash of $200,000, an increase in prepaid expenses and other assets of $677,000, and a decrease in accounts payable and accrued liabilities of $1.1 million, partially offset by decreases in deferred revenue of $535,000 and customer deposits of $64,000.

Investing Activities

Cash used in investing activities for the three months ended March 31, 2015 consisted primarily of $228,000 of capital expenditures. For fiscal 2015, we expect capital expenditures to total approximately $1.3 million and we expect depreciation and amortization to total approximately $700,000.

Financing Activities

Net cash provided by financing activities for three months ended March 31, 2015 of $2,000 resulted from net proceeds received from stock options exercised of $44,000, partially offset by our deposit on capital lease of $42,000.  

Effect of Exchange Rate

The $193,000 decrease in effect of exchange rate on cash for First Quarter 2015 was primarily due to a recognized $130,000 loss on foreign currency transactions.

Future Liquidity Needs

As of March 31, 2015, we had working capital of approximately $33.2 million. Our principal sources of liquidity at March 31, 2015 consisted of approximately $23.7 million in cash and cash equivalents and $9.8 million of net accounts receivable.

In order for us to continue operations and be able to discharge our liabilities and commitments in the normal course of business, we must increase sales of our products directly to end-users and through distributors, establish profitable operations through the combination of increased sales and decreased expenses, and generate cash from operations or obtain additional funds when needed. We cannot guarantee that we will be able to increase sales, reduce expenses, or obtain additional funds if needed. If we are unable to increase sales, reduce expenses, or raise sufficient additional capital, we may be unable to continue to fund our operations, develop our products, or realize value from our assets and discharge our liabilities in the normal course of business.

Additional capital requirements may depend on many factors, including, among other things, the rate at which our business grows, demands for working capital, manufacturing capacity, and any acquisitions that we may pursue. From time to time, we could be required, or may otherwise attempt, to raise capital through either equity or debt offerings. We cannot provide assurance that we will enter into any such equity or debt financings in the future or that the required capital would be available on acceptable terms, if at all, or that any such financing activity would not be dilutive to our stockholders.

Recent Accounting Pronouncements

For a description of recently issued and adopted accounting pronouncements, including the respective dates of adoption and expected effects on our results of operation and financial condition, please refer to Part I, Item 1, Note 2 of the Notes to the Unaudited Consolidated Financial Statements included in this Quarterly Report on Form 10-Q, which is incorporated herein by this reference.

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Additional Information

BIOLASE®, ZipTip®, ezlase®, eztips®, MD Flow®, Comfortpulse®, WaterLase®, iLase®, iPlus®, WCLI®, World Clinical Laser Institute®, WaterLase MD®, WaterLase Dentistry®, Galaxy BioMill®, Occulase iPlus®, Epic Diode Laser®, Waterlase MD®, Geyser®, Epic Laser®, Dermalase®, Occulase®, and Diolase® are registered trademarks of BIOLASE, Inc., and Diolase™, HydroPhotonics™, LaserPal™, HydroBeam™, Occulase MD™, Epic™, Deltalaser™, Delta™, Biolase DaVinci Imaging™, Oculase™, Practice Growth Guarantee™ and Practice Growth. Guaranteed™ are trademarks of BIOLASE, Inc.  All other product and company names are registered trademarks or trademarks of their respective owners.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in the information provided in the section entitled “Quantitative and Qualitative Disclosures about Market Risk” in the 2014 Form 10-K.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this report (the “Evaluation Date”). Based on this evaluation, our principal executive officer and principal financial officer concluded as of the Evaluation Date that our disclosure controls and procedures were effective such that the information relating to the Company, including our consolidated subsidiaries, required to be disclosed in our SEC reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to the Company’s management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during our most recently completed fiscal quarter. Based on that evaluation, our principal executive officer and principal financial officer concluded that there has not been any change in our internal control over financial reporting during the quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM  1. LEGAL PROCEEDINGS

For a description of our legal proceedings, please refer to Part I, Item 1, Note 9 to the Notes to the Unaudited Consolidated Financial Statements included in this Quarterly Report on Form 10-Q, which is incorporated herein by reference in response to this Item.

ITEM  1A. RISK FACTORS

There have been no material changes to the risk factors as disclosed in Part I, Item 1A “Risk Factors” in the 2014 Form 10-K.

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ITEM 6. EXHIBITS

			Incorporated by Reference
Exhibit	Description	Filed Herewith	Form	Period Ending/Date of Report	Exhibit	Filing Date
3.1.1	Restated Certificate of Incorporation, including, (i) Certificate of Designations, Preferences and Rights of 6% Redeemable Cumulative Convertible Preferred Stock of the Registrant; (ii) Certificate of Designations, Preferences and Rights of Series A 6% Redeemable Cumulative Convertible Preferred Stock of the Registrant; (iii) Certificate of Correction Filed to Correct a Certain Error in the Certificate of Designation of the Registrant; and (iv) Certificate of Designations of Series B Junior Participating Cumulative Preferred Stock of the Registrant.		S-1, Amendment No. 1		3.1	12/23/2005
3.1.2	Amendment to Restated Certificate of Incorporation, effective as of May 14, 2012		8-K	05/10/2012	3.1	05/16/2012
3.1.3	Second Amendment to Restated Certificate of Incorporation, effective as of October 30, 2014		8-A/A		3.1.3	11/04/2014
3.2.1	Sixth Amended and Restated Bylaws of Biolase, Inc., adopted on June 26, 2014		8-K	06/26/2014	3.1	06/30/2014
10.1	Separation Agreement with General Release of All Claims, dated January 31, 2015, by and between Frederick D. Furry and Biolase, Inc.	X
10.2	Employment Agreement, dated February 22, 2015 and entered into on February 24, 2015, by and between David Dreyer and Biolase, Inc.		10-K	12/31/2014	10.25	03/06/2015
10.3	Third Amendment to Lease, dated March 16, 2015, by and between The Irvine Company LLC and Biolase, Inc.	X
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	X
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	X
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 March 31, 2015, formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations and Comprehensive Loss, (iii) Consolidated Statements of Cash Flows, (iv) Notes to Consolidated Financial Statements	X

*  Management compensatory plan or arrangement

+  Furnished herewith

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SIGNATURES

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

Date: May 1, 2015

BIOLASE, INC.,
(Registrant)
By:	/s/ JEFFREY M. NUGENT
	Jeffrey M. Nugent
	President and Chief Executive Officer
	(Principal Executive Officer)
By:	/s/ DAVID C. DREYER
	David C. Dreyer
	Senior Vice President and Chief Financial Officer
	(Principal Financial and Accounting Officer)

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EX-10.1

Exhibit 10.1

Biolase, Inc.

4 Cromwell

Irvine, California 92618

January 30, 2015

Frederick D. Furry

c/o Biolase, Inc.

4 Cromwell

Irvine, California  92618

Re: Transition Arrangement

Dear Fred:

The purpose of this letter is to confirm the circumstances of your employment with Biolase, Inc. (the “Company”) over an interim period, as we have discussed recently.  Our intent is to facilitate the Company’s orderly transition to a new Chief Financial Officer, and to provide you with a monetary severance payment (the “Transition Success Payment”), in exchange for your cooperation in this transition.

We plan to continue your employment as Chief Financial Officer at your current base salary and benefits through and including January 31, 2015.  During that period of time, you will be transitioning your duties and responsibilities to others, as directed by the Company, and you will use your best efforts to ensure a smooth, amicable, and orderly transition.  Although our plan is to continue your employment through January 31, 2015, your employment status until that time will remain “at will,” which means that either you or the Company may end your employment at any time for any reason.

Provided that you remain employed by the Company on January 31, 2015 and you have performed your transitional duties to the Company’s reasonable satisfaction, (i) you will receive a Transition Success Payment equal to three (3) additional months of compensation at your current base salary level, (ii) the Company will agree to extend the period to exercise your vested stock options ninety (90) days in addition to the ninety (90) day period afforded employees separated without cause under the Company’s 2002 Stock Incentive Plan, as amended (for a total period of one hundred and eighty (180) days to exercise your stock options that have vested on or before January 31, 2015, and (iii) the Company will arrange and pay for the reasonable cost of outplacement services of the Company’s choosing, not to exceed $20,000.00.  The payments set forth in (i) above will be payable following your separation with the Company, and in accordance with the normal payroll cycle, less all normal payroll deductions.

If your employment ends for any reason before January 31, 2015 (unless by mutual agreement between you and the Company), you will not be eligible for the Transition Success Payment.  Your receipt of the Transition Success Payment shall be entirely conditional upon

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your execution and non-revocation of the Separation Agreement with Release of All Claims, which is set forth on Exhibit A attached hereto.

Please sign below to indicate your acceptance of this agreement.

We thank you for your hard work, dedication, and contribution to the Company, and we look forward to a mutually satisfactory transition.

Very truly yours,

/s/ Jeffrey M. Nugent

Jeffrey M. Nugent

President and Chief Executive Officer

ACCEPTED AND AGREED:

/s/ Frederick D. Furry

Frederick D. Furry

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EXHIBIT A

SEPARATION AGREEMENT WITH

GENERAL RELEASE OF ALL CLAIMS

This Separation Agreement With General Release of All Claims (“Agreement”) is entered into by and between Frederick D. Furry (“Mr. Furry”), and Biolase, Inc., a Delaware corporation (“the Company”), and is intended by the parties hereto to settle fully and finally any claims that Mr. Furry may have against the Company and all obligations of the Company to Mr. Furry except as set forth in and incorporated into this Agreement.

a. Employment Separation.  Mr. Furry’s employment with the Company will be terminated effective January 31, 2015 (the “Separation Date”).  From and after the Separation Date, Mr. Furry shall no longer be employed by, or act in any capacity for, the Company.

b. Termination Pay.  Mr. Furry acknowledges that he has been paid his base salary and accrued but unused vacation through the Separation Date  (“Termination Pay”).  Mr. Furry shall submit expense reimbursement requests with suitable documentation within thirty (30) days, and the Company shall promptly process such requests in accordance with its expense reimbursement policies.

c. Severance Payments; Extension of Exercise Period; Outplacement.  In consideration for the promises contained herein, Biolase agrees to pay Mr. Furry, subject to his performance of the terms and conditions set forth in this Agreement, severance compensation equal to three (3) months of Mr. Furry’s base salary as in effect as of the date of this Agreement, less all applicable withholding and deductions.  The foregoing severance compensation shall be payable in equal installments commencing on a date that is within ten (10) business days following the non-revocation and expiration of the seven (7) day revocation period identified below, and ending on the two (2) month anniversary of such date, and will be made in accordance with the Company’s standard payroll practices and procedures. In addition, the Company will agree to extend the period to exercise Mr. Furry’s vested stock options ninety (90) days, in addition to the ninety (90) day period afforded employees separated without cause under the Company’s 2002 Stock Incentive Plan, as amended (for a total period of one hundred and eighty (180) days to exercise Mr. Furry’s stock options that have vested on or before the Separation Date.  Finally, the Company will arrange and directly pay the reasonable cost of outplacement services of the Company’s choosing for Mr. Furry, in the event

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Mr. Furry elects to use such a service within thirty (30) days of the Separation Date, not to exceed $20,000.00.

d. COBRA Benefits.  Mr. Furry shall be entitled to receive continuation healthcare benefits for herself and his eligible dependents as provided under COBRA upon his election of such coverage.  

e. Vested Retirement Benefits.  Nothing in this Agreement shall limit, expand upon, or alter in any way any vested retirement benefits that Mr. Furry has or is entitled to receive under any Company sponsored 401(k) or other retirement plan to which Mr. Furry may have been entitled to participate by virtue of his employment.  Mr. Furry’s rights and obligations shall continue to be governed by the terms of such plans, as they presently exist or as they may permissibly be amended, and shall be based upon his Separation Date.

f. No Other Payments.  Other than whatever is specifically provided for in this Agreement, Mr. Furry acknowledges that there are no other sums or benefits of any nature whatsoever due and owing to him, other than whatever ongoing or future payments are provided for in this Agreement.  In consideration for this Agreement, Mr. Furry specifically waives any claim that he may have to any past, present, or future compensation of any nature whatsoever arising out of his prior employment with the Company.

g. Confirmation Of Payment Of Wages.   Mr. Furry acknowledges that he has been paid all wages due and owing to him from the Company, including all minimum wages, overtime compensation, commissions, bonuses, waiting-time penalties, and liquidated damages.  Accordingly, Mr. Furry understands that the release provisions below release and discharge the Company from any and all claims that he may have against the Company for unpaid wages and other compensation including, but not limited to, any claims for unpaid wages, salary, bonuses, commissions, stock, stock options, vacation pay, holiday pay, sick or disability pay, fringe benefits, expense reimbursements, severance pay, or any other form of compensation.

h. Biolase Proprietary Information. As a material inducement to Biolase to enter into this Agreement, Mr. Furry covenants and represents that (i) he has complied with the terms and conditions of the Biolase Proprietary Information Agreement at all times during his employment with Biolase; and (ii) he will continue to comply with such terms for the periods specified therein.  The terms of the Biolase Proprietary Agreement are incorporated into this Agreement by reference and made a part hereof.

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i. Continuing Obligations of Mr. Furry.   To the extent that Mr. Furry has come into contact with confidential or trade secret information concerning the Company and its operations or concerning the Company’s customers, prospective customers, or projects, Mr. Furry will continue to protect the confidentiality of such information.  In addition, Mr. Furry represents and warrants that, he has returned to the Company and has not copied or duplicated in any manner whatsoever, all tangible and intangible property (including, without limitation, all computer hardware, whether portable or stationary, and software), books, records, documents and reports owned by, or pertaining to the business of, the Company or any of the Company’s existing or prospective clients that was in Mr. Furry’s possession or under Mr. Furry’s direct or indirect control as of the Separation Date.  If Mr. Furry shall come into possession of any property (tangible or intangible), books, records, documents or reports of the type described above after the Separation Date, Mr. Furry will promptly return them to the Company.

j. Furry Complete Release.  Mr. Furry, on behalf of herself, his heirs and assigns, fully and forever releases and discharges the Company and, as the case may be, each of its respective employees, shareholders, officers, directors, agents, attorneys, predecessors, successors, assigns, and affiliated corporations or organizations, whether previously or hereafter affiliated in any manner (collectively, the “Released Company Parties”), to the fullest extent permitted by law, from any and all claims, demands, causes of action, charges of discrimination, obligations, damages, attorneys’ fees, costs and liabilities of any nature whatsoever, including all claims of race, sex, national origin, religion, handicap and age discrimination under any federal or state statute, whether or not now known, suspected or claimed, which Mr. Furry ever had, now has, or may claim to have as of the date of this Agreement against the Released Company Parties.  

k. General Nature of Release.  The Release set forth above is a general release of all claims, demands, causes of action, obligations, damages, and liabilities of any nature whatsoever that are described in the Release and is intended to encompass all known and unknown, foreseen and unforeseen claims which Mr. Furry may have against the Released Company Parties, except that Mr. Furry does not release any claims that may not be released herein as a matter of law, including but not limited to claims for indemnity under Labor Code Section 2802, claims that may be adjudicated before the California Workers’ Compensation Appeals Board, claims for vested benefits or any claims for enforcement of any other provision of this Agreement.  This Release specifically includes, without limiting the generality of the foregoing, any claims against any Released Company Party occurring before the effective date of this Agreement and arising out

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of or related to alleged violations of any federal or state employment discrimination laws, including, but not limited to, the California Fair Employment and Housing Act; the Age Discrimination In Employment Act; the Older Workers Benefit Protection Act; Title VII of the Civil Rights Act of 1964; the Americans With Disabilities Act; the National Labor Relations Act; the Equal Pay Act; the Employee Retirement Income Security Act of 1974; as well as claims arising out of or related to violations of the provisions of the California Government Code; the California Business & Professions Code, including Business & Professions Code Section 17200 et seq.; state and federal wage and hour laws; breach of contract; fraud; misrepresentation; common counts; unfair competition; unfair business practices; negligence; defamation; infliction of emotional distress; invasion of privacy; assault; battery; false imprisonment; wrongful termination; and any other state or federal law, rule, or regulation.  Mr. Furry acknowledges that his separation and the consideration offered hereunder were based on an individual determination and were not offered in conjunction with any group termination or group severance program and waives any claim to the contrary, and further acknowledges that he does not presently believe he has suffered any work-related injury or illness.  

l. Release of Unknown Claims.  It is the intention of Mr. Furry to release both known and unknown claims of any nature whatsoever.  This includes, without limitation, claims, which Mr. Furry does not know or suspect to exist in his favor at the time of executing this release, even though such claims, if known by him would have materially affected his settlement with the Company.  Accordingly, Mr. Furry expressly waives all rights under Section 1542 of the Civil Code of the State of California, which reads as follows:

“A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor.”

m. Non-Disparagement; Neutral Reference.  Mr. Furry agrees during the term of this Agreement and for a period of ten (10) years thereafter, he shall not, in any communication with any person or entity, including any actual or potential customer, client, investor, vendor, or business partner of the Company, or any third party media outlet, make any derogatory or disparaging or critical negative statements – orally, written or otherwise – against the Company, or any of its directors, officers, agents, employees, contractors, or affiliated persons or entities.  Mr. Furry also agrees that unless compelled by valid legal process he will not give or offer to provide

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any statements, testimony or the like in connection with any claim, action, or demand (being contemplated or) brought against the Company which concerns the Company, his employment or the cessation of his employment with the Company, the Company’s business practices, its customers and/or prospective customers, its products, and/or any other aspect of the Company’s business, its directors, officers, agents, employees, contractors, or affiliated persons or entities.  Further, Mr. Furry agrees that if he agrees that should he be called as a witness or to provide testimony in any case, action, and/or proceeding concerning the Company, he and/or his counsel will contact either the President and Chief Executive Officer or the Secretary of the Company immediately, but in no event later than ten (10) days before he is to be deposed or to testify as a witness, so that the Company can take whatever precautionary measures it deems necessary to protect from disclosure any of its proprietary and/or confidential information and/or documents.  Biolase, for its part, agrees that Mr. Furry shall direct any employment inquiries to the Company’s President and Chief Executive Officer and that in response to any inquiry so directed the Company will confirm Mr. Furry’s title, dates of employment, and final salary.  Mr. Furry’s entry into this Agreement constitutes his authorization for the Company to provide the foregoing information in response to any employment inquiry.

n. No Other Actions.  Mr. Furry represents and covenants that he has not filed or lodged any complaints or charges against any of the Released Company Parties with any local, state, or federal agency or court.  

o. Risk of Different Facts.  The parties to this Agreement acknowledge that they may hereafter discover facts different from or in addition to those they now know or believe to be true, and they expressly agree to assume the risk of the possible discovery of additional or different facts, and agree that this Agreement shall be and remain effective in all respects regardless of such additional or different facts.

p. Non-Admission of Liability.  This Agreement is a severance agreement designed, among other things, to provide additional compensation and benefits to Mr. Furry that he would not otherwise receive.  This Agreement shall not in any way be construed as an admission of liability by any of the parties to this Agreement.

q. Strict Confidentiality.   As a material inducement to the Company to enter into this Agreement, Mr. Furry represents and promises that all terms and conditions of this Agreement, including the amount of the consideration referred to above shall be and remain confidential.  In the event any disclosure concerning this Agreement or the circumstances relating thereto may appear to be required by valid legal process, Mr.

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Furry shall notify the Company in writing as soon as reasonably possible in advance of the threatened disclosure and provide any affected party or persons a reasonable opportunity to contest or oppose such disclosure.

r. No Future Actions.  Mr. Furry covenants and agrees never to commence, aid in any way, prosecute or cause to be commenced or prosecuted any action or other proceeding based upon any claims, demands, causes of action, obligations, damages or liabilities which are the subject of this Agreement; provided however, that Mr. Furry does not relinquish any protected rights he may have to file a charge, testify, assist or participate in any manner in an investigation, hearing or proceeding conducted by the Equal Employment Opportunity Commission, the Office of Federal Contract Compliance, or any similar state human rights agency.  However, Mr. Furry may not recover additional compensation or damages as a result of such participation.

s. Twenty-One Day Consideration Period.  This Agreement was originally given to Mr. Furry on the Separation Date.  Mr. Furry shall have twenty-one (21) days to consider this Agreement; provided however, that if Mr. Furry chooses to sign this Agreement before the end of this twenty-one (21)-day period, Mr. Furry acknowledges that he does so knowingly and voluntarily and waives any claim that to the effect that he was not given the full twenty-one (21) days to consider whether to sign this Agreement or did not use the entire period of time available to consider this Agreement or to consult with an attorney.

t. Seven Day Revocation Period.  Following execution of this Agreement, Mr. Furry shall have seven (7) days to revoke this Agreement.  To be effective, the revocation must be in writing and signed by Mr. Furry and must be delivered to and received by the Company, before 5 p.m. of the 7th day.  This Agreement shall become effective on the eighth (8th) day.  Any revocation shall be in writing and shall be effective upon timely receipt by the Company by: Jeffrey M. Nugent, President and Chief Executive Officer, Biolase, Inc., 4 Cromwell, Irvine, California, 92618.

u. Non-Assignment of Claim.  Mr. Furry warrants that he has made no assignment and will make no assignment of any claim, chose in action, right of action, or any right of any kind whatsoever, embodied in this Agreement and referred to herein, and that no other person or entity of any kind (other than as expressly mentioned above) had or has any interest in any of the demands, obligations, actions, causes of action, debts, liabilities, rights, contracts, damages, attorneys’ fees, costs, expenses, losses or claims referred to herein.

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v. Successors and Assigns.  This Agreement, and all the terms and provisions hereof, shall be binding upon and shall inure to the benefit of the parties and their respective heirs, legal representatives, successors and assigns.

w. Assistance of Counsel.  Mr. Furry acknowledges that he has been advised to consult with counsel of his choosing before entering into this Agreement.  The parties specifically represent that they either have consulted to their satisfaction with their attorneys, or have elected on their own accord not to seek legal counsel, prior to executing this Agreement concerning the terms and conditions of this Agreement.

x. Interpretation.  Should any portion, word, clause, phrase, sentence or paragraph of this Agreement be declared void or unenforceable, such portion shall be considered independent and severable from the remainder, the validity of which shall remain unaffected.  Whenever required by the context, as used in this Agreement the singular number shall include the plural, and the masculine gender shall include the feminine and neuter.

y. Entire Agreement.  This Agreement constitutes the entire agreement between the parties who have executed it and supersedes any and all other agreements, understandings, negotiations, or discussions, either oral or in writing, express or implied, between the parties to this Agreement.  The parties hereto acknowledge that no representations, inducements, promises, agreements, or warranties, oral or otherwise, have been made by them, or anyone acting on their behalf, which are not embodied in this Agreement, that they have not executed this Agreement in reliance on any such representations, inducements, promise, agreement or warranty, and that no representation, inducement, promise, agreement or warranty not contained in this Agreement, including, but not limited to, any purported supplements, modifications, waivers or terminations of this Agreement shall be valid or binding, unless executed in writing by all of the parties to this Agreement.

z. Governing Law.  This Agreement shall be enforced and governed under the laws of the State of California without reference to its choice of law provisions.

aa. Knowing and Voluntary Agreement.  This Agreement in all respects has been voluntarily and knowingly executed by the parties hereto. Mr. Furry has been advised that this is an important legal document and that he should consult with an attorney of his choosing prior to entering into this Agreement.  Mr. Furry specifically represents that he has been given an opportunity to consult with counsel and that, to the extent desired, he has consulted with an attorney of his choosing regarding

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the terms and conditions of this Agreement.  Mr. Furry acknowledges that the Company and its advisors and attorneys have not provided Mr. Furry any legal advice in connection with this Agreement.

bb. Counterparts.  This Agreement may be executed in counterparts, and when each party has signed and delivered at least one such counterpart, each counterpart shall be deemed an original, and, when taken together with other signed counterparts, shall constitute one agreement, which shall be binding upon and effective as to all parties.

cc. No Waiver.  Failure to insist on compliance of any term, covenant or condition contained in this Agreement shall not be deemed a waiver of that term, covenant, or condition, nor shall any waiver or relinquishment of any right or power contained in this Agreement at any one time or more times be deemed a waiver or relinquishment of any right or power at any other time or times.

dd. Arbitration.  Any disputes concerning this Agreement or otherwise arising out of this Agreement or Mr. Furry’s employment or termination that the parties are unable to resolve among them shall be submitted to final and binding arbitration in Orange County, California at and under the rules of the Judicial Arbitration and Mediation Service (“JAMS”); provided that nothing in this provision shall prevent the Company from seeking injunctive relief in any Court of competent jurisdiction.

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IN WITNESS WHEREOF, the undersigned have executed this Separation Agreement and General Release of All Claims on the date(s) set forth hereinafter.

Dated: January 31, 2015	By:	/s/ Frederick D. Furry
		FREDERICK D. FURRY
	BIOLASE, INC
Dated: January 31, 2015	By:	/s/ Jeffrey M. Nugent
		Jeffrey M. Nugent
		President and Chief Executive Officer

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EX-10.3

Exhibit 10.3

THIRD AMENDMENT TO LEASE

I.PARTIES AND DATE.

This Third Amendment to Lease (the "Amendment") dated March 16, 2015, is by and between THE IRVINE COMPANY LLC, a Delaware limited liability company (“Landlord”), and BIOLASE, INC. (formerly known as Biolase Technology, Inc.), a Delaware corporation (“Tenant”).

II.RECITALS.

On January 10, 2006, Landlord and Tenant entered into a lease for space in a building located at 4 Cromwell, Irvine, California (“Premises”), which lease was amended by a First Amendment to Lease dated September 24, 2009 and by a Second Amendment to Lease dated January 4, 2011.  The foregoing lease, as so amended, is hereinafter referred to as the “Lease”.

Landlord and Tenant each desire to modify the Lease to extend the Lease Term, to adjust the Basic Rent and to make such other modifications as are set forth in "III. MODIFICATIONS" next below.

III.MODIFICATIONS.

A.  Basic Lease Provisions.  The Basic Lease Provisions are hereby amended as follows:

1. Item 5 is hereby deleted in its entirety and substituted therefor shall be the following:

“5.  Lease Term:  The Term of this Lease shall expire at midnight on

April 30, 2020.”

2.Item 6 is hereby amended by adding the following:

“Commencing May 1, 2015, the Basic Rent shall be Forty Five Thousand Five Hundred Twenty Dollars ($45,520.00) per month, based on $.80 per rentable square foot.

Commencing May 1, 2016, the Basic Rent shall be Forty Seven Thousand Seven Hundred Ninety-Six Dollars ($47,796.00) per month, based on $.84 per rentable square foot.

Commencing May 1, 2017, the Basic Rent shall be Fifty Thousand Seventy Two Dollars ($50,072.00) per month, based on $.88 per rentable square foot.

Commencing May 1, 2018, the Basic Rent shall be Fifty Two Thousand Three Hundred Forty-Eight Dollars ($52,348.00) per month, based on $.92 per rentable square foot.

Commencing May 1, 2019, the Basic Rent shall be Fifty Four Thousand Six Hundred Twenty-Four Dollars ($54,624.00) per month, based on $.96 per rentable square foot.”

B.  Parking.  Section 6.4 of the Lease is hereby amended to provide that Tenant shall not assign or sublet any of the parking spaces, either voluntarily or by operation of law, without the prior written consent of Landlord, except in connection with an authorized assignment of the Lease or subletting of the Premises.

C.  Brokers.  Article XVIII of the Lease is amended to provide that the parties recognize the following parties as the brokers who negotiated this Amendment, and agree that Landlord shall be responsible for payment of brokerage commissions to such brokers pursuant to its separate agreements with such brokers: Irvine Realty Company (“Landlord’s Broker”) is the agent of Landlord exclusively and CBRE Brokerage Services (“Tenant’s Broker”) is the agent of Tenant exclusively.  By the execution of this Amendment, each of Landlord and Tenant hereby acknowledge and confirm (a) receipt of a copy of a Disclosure Regarding Real Estate Agency Relationship conforming to the requirements of California Civil Code 2079.16, and (b) the agency relationships specified herein, which acknowledgement and confirmation is expressly made for the benefit of Tenant’s Broker.  If there is no Tenant’s Broker so identified herein, then such acknowledgement and confirmation is expressly made for the benefit of Landlord’s Broker.  By the execution of this Amendment, Landlord and Tenant are executing the confirmation of the agency relationships set forth herein. The warranty and indemnity provisions of Article XVIII of the Lease, as amended hereby, shall be binding and enforceable in connection with the negotiation of this Amendment.

D.  Acceptance of Premises; Tenant Improvements.  Tenant acknowledges that the lease of the Premises pursuant to this Amendment shall be on an “as-is” basis without further obligation on Landlord’s part as to improvements whatsoever, except that Landlord hereby agrees to complete the Tenant Improvements for the Premises in accordance with the provisions of Exhibit X, Work Letter, attached hereto.  The foregoing shall not affect any pre-existing obligations under any representations and warranties expressly made by Landlord pursuant to the Lease, but any such representations and warranties shall not be deemed re-made pursuant to this Amendment.

IV.GENERAL.

A.  Effect of Amendments.  The Lease shall remain in full force and effect and unmodified except to the extent that it is modified by this Amendment.

B.  Entire Agreement.  This Amendment embodies the entire understanding between Landlord and Tenant with respect to the modifications set forth in "III. MODIFICATIONS" above and can be changed only by a writing signed by Landlord and Tenant.

C.  Defined Terms.  All words commencing with initial capital letters in this Amendment and defined in the Lease shall have the same meaning in this Amendment as in the Lease, unless they are otherwise defined in this Amendment.

D.  Corporate and Partnership Authority.  If Tenant is a corporation or partnership, or is comprised of either or both of them, each individual executing this Amendment for the corporation or partnership represents that he or she is duly authorized to execute and deliver this Amendment on behalf of the corporation or partnership and that this Amendment is binding upon the corporation or partnership in accordance with its terms.

E.  Counterparts; Digital Signatures.  If this Amendment is executed in counterparts, each is hereby declared to be an original; all, however, shall constitute but one and the same amendment.  In any action or proceeding, any photographic, photostatic, or other copy of this Amendment may be introduced into evidence without foundation. The parties agree to accept a digital image (including but not limited to an image in the form of a PDF, JPEG, GIF file, or other e-signature) of this Amendment, if applicable, reflecting the execution of one or both of the parties, as a true and correct original.

F. Certified Access Specialist.  As of the date of this Amendment, there has been no inspection of the Building and Project by a Certified Access Specialist as referenced in Section 1938 of the California Civil Code.

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V.EXECUTION.

Landlord and Tenant executed this Amendment on the date as set forth in "I. PARTIES AND DATE." above.

LANDLORD:	TENANT:
THE IRVINE COMPANY LLC	BIOLASE, INC.
a Delaware limited liability company	a Delaware corporation

By /s/ Steven M. Case	By /s/ Brendan O’Connell
Steven M. Case, Executive Vice President	Name: Brendan O’Connell
Office Properties	Title: VP Finance / Corporate Controller

By /s/ Michael T. Bennett	By /s/ David Dreyer
Michael T. Bennett, Senior Vice President	Name: David Dreyer
Operations, Office Properties	Title: Chief Financial Officer

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EXHIBIT X

INDUSTRIAL WORK LETTER

DOLLAR ALLOWANCE

[PREAPPROVED PRELIMINARY PLAN]

The tenant improvement work to be contracted for by Landlord hereunder ("Tenant Improvement Work") shall consist of the design and construction of all tenant improvements ("Tenant Improvements”), including work in place as of the date hereof, required for the Premises pursuant to the approved final Working Drawings and Specifications (as hereinafter defined).  All of the Tenant Improvement Work shall be performed by a contractor selected by Landlord and in accordance with the procedures and requirements set forth below.

I.ARCHITECTURAL AND CONSTRUCTION PROCEDURES.

A.  Prior to the execution of this Lease, Tenant and Landlord have approved a detailed plan for the Tenant Improvements prepared by H. Hendy Associates, dated December 16, 2014 (“Preliminary Plan”), and (ii) an estimate prepared by Casco Contractors, dated January 5, 2014 of the cost to complete the Tenant Improvements in accordance with the Preliminary Plan (“Preliminary Cost Estimate”).  To the extent applicable, the build-out of the Tenant Improvements shall include Landlord’s building standard tenant improvements, materials and specifications for the Project (“Building Standard Improvements”), except for those additions or variations to Building Standard Improvements expressly approved by Landlord and noted on the Preliminary Plan (any such addition or variation from the Standard Improvements shall be referred to herein as a “Non-Standard Improvement”)

B.  Within 5 business days following any request from Landlord or Landlord’s architect, Tenant shall provide in writing to Landlord or Landlord's architect all specifications and information requested by Landlord for the preparation of final construction documents and costing, including without limitation Tenant's final selection of paint and floor finishes, complete specifications and locations (including electrical, load and HVAC requirements) of Tenant's equipment, and details of all Non-Standard Improvements (as defined above) which have been approved by Landlord as part of the Preliminary Plan (collectively, "Programming Information").  Tenant understands that final construction documents for the Tenant Improvements shall be predicated on the Programming Information, and accordingly that such information must be accurate and complete and that any defects or problems due to incomplete or inaccurate Programming Information shall be the responsibility of the Tenant and that the Landlord shall have no obligation or liability for such defects or problems arising from any incomplete or inaccurate Programming Information.  

C.  Following receipt of the Programming Information, Landlord's architect and engineers shall prepare and deliver to Tenant working drawings and specifications for the Tenant Improvements based on the approved Preliminary Plan ("Working Drawings and Specifications"), and Landlord's contractor shall prepare a final construction cost estimate ("Final Cost Estimate") for the Tenant Improvements in conformity with the Working Drawings and Specifications.  Tenant shall have 5 business days from the receipt thereof to approve or disapprove the Working Drawings and Specifications and the Final Cost Estimate.  Tenant shall not unreasonably withhold or delay its approval, and any disapproval or requested modification shall be limited to items not consistent with the approved Preliminary Plan or Preliminary Cost Estimate.  Should Tenant disapprove the Working Drawings and Specifications or the Final Cost Estimate, such disapproval shall be accompanied by specific reasons for disapproval and a detailed list of requested revisions.  Any revision requested by Tenant and accepted by Landlord, shall be incorporated into a revised set of Working Drawings and Specifications and the Final Cost Estimate, and Tenant shall approve same in writing within 5 business days of receipt without further revision.  

D.  In the event that Tenant requests in writing a revision to the Working Drawings and Specifications ("Change"), and Landlord so approves such Change as provided in the Section next below, Landlord shall advise Tenant by written change order as soon as is practical of any increase in the Completion Cost such Change would cause.  Tenant shall approve or disapprove such change order, if any, in writing within 2 business days following Tenant's receipt of such change order.  If Tenant approves any such change order, Landlord, at its election, may either (i) require as a condition to the effectiveness of such change order that Tenant pay the increase in the Completion Cost attributable to such change order concurrently with delivery of Tenant’s approval of the change order, or (ii) defer Tenant’s payment of such increase until the date 10 business days after delivery of invoices for same, provided however, that the Tenant Contribution must in any event be paid in full prior to Tenant’s commencing occupancy of the Premises.  If Tenant disapproves any such change order, Tenant shall nonetheless be responsible for the reasonable architectural and/or planning fees incurred in preparing such change order.  Landlord shall have no obligation to interrupt or modify the Tenant Improvement Work pending Tenant's approval of a change order, but if Tenant fails to timely approve a change order, Landlord may (but shall not be required to) suspend the applicable Tenant Improvement Work.

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E.  Landlord agrees that it shall not unreasonably withhold its consent to Tenant's requested Changes, provided that such consent may be withheld in all events if the requested Change (i) is of a lesser quality than the Tenant Improvements previously approved by Landlord, (ii) fails to conform to applicable governmental requirements, (iii) would result in the Premises requiring building services beyond the level Landlord has agreed to provide Tenant under this Lease, (iv) would delay construction of the Tenant Improvements, (v) interferes in any manner with the proper functioning of, or Landlord’s access to, any mechanical, electrical, plumbing or HVAC systems, facilities or equipment in or serving the Building,  or (vi) would have an adverse aesthetic impact to the Premises or would cause additional expenses to Landlord in reletting the Premises.  

F.  All Standard Tenant Improvements and Non-Standard Improvements shall become the property of Landlord and shall be surrendered with the Premises at the end of the expiration or sooner termination of this Lease, except that Landlord shall have the right, by notice to Tenant given at the time of Tenant’s election of any “Alternate” shown on the approved Preliminary Plan or at the time of Landlord’s approval of any Change,  to require Tenant either: (i) to remove all or any of such Alternate(s) which are elected by Tenant, and all or any of the Tenant Improvements approved by way of such Change(s) requested by Tenant, to repair any damage to the Premises or the Common Area arising from such removal, and to replace any Non-Standard Improvements approved by way of such Change with the applicable Building Standard, or (ii) to reimburse Landlord for the reasonable cost of such removal, repair and replacement upon demand.  Any such removals, repairs and replacements by Tenant shall be completed by the Expiration Date or sooner termination of this Lease.  It is understood and agreed, however, that Tenant shall not be required to remove or replace any Tenant Improvements shown in the Preliminary Plan.

G.  It is understood that all or a portion of the Tenant Improvements may be done during Tenant’s occupancy of the Premises.  In this regard, Tenant agrees to assume any risk of injury, loss or damage to Tenant to the extent not the result of Landlord’s negligence or willful misconduct.  While Landlord agrees to employ construction practices reasonably intended to minimize disruptions to the operation of Tenant’s business in the Premises, Tenant acknowledges and agrees that some disruptions may occur during the course of construction of the Tenant Improvements, and in no event shall rent abate as the result of the construction of the Tenant Improvements.  Tenant shall pay for and cause Tenant’s furniture and other equipment to be moved as necessary (including disconnecting and reconnecting computers and telecommunications cabling equipment) so as to facilitate the Tenant Improvements Work.

H.  It is further understood and agreed that the Tenant Improvements shall be substantially completed not later than December 31, 2015 to be eligible for funding by Landlord, and that Landlord shall not be obligated to fund any portion of the Landlord’s Contribution towards the Tenant Improvements commenced after such date.

I.Tenant hereby designates Brendan O’Connell (“Tenant’s Construction Representative”), Telephone No. (949) 361-1200, Email: boconnell@biolase.net, as its representative, agent and attorney-in-fact for all matters related to the Tenant Improvement Work, including but not by way of limitation, for purposes of receiving notices, approving submittals and issuing requests for Changes, and Landlord shall be entitled to rely upon authorizations and directives of such person(s) as if given directly by Tenant.  The foregoing authorization is intended to provide assurance to Landlord that it may rely upon the directives and decision making of the Tenant’s Construction Representative with respect to the Tenant Improvement Work and is not  intended to limit or reduce Landlord’s right to reasonably rely upon any decisions or directives given by other officers or representatives of Tenant.   Any notices or submittals to, or requests of, Tenant related to this Work Letter and/or the Tenant Improvement Work may be sent to Tenant’s Construction Representative at the email address above provided. Tenant may amend the designation of its Tenant’s Construction Representative(s) at any time upon delivery of written notice to Landlord.

II.COST OF TENANT IMPROVEMENTS

A.  Landlord shall complete, or cause to be completed, the Tenant Improvements, at the construction cost shown in the Final Cost Estimate (subject to increases for Landlord approved Changes and as otherwise provided in this Work Letter), in accordance with final Working Drawings and Specifications approved by both Landlord and Tenant.  

B.  Landlord shall pay up to $398,300.00, based on $7.00 per rentable square foot of the Premises ("Landlord's Maximum Contribution"), of the final “Completion Cost” (as defined below).  Tenant acknowledges that the Landlord's Maximum Contribution is intended only as the maximum amount Landlord will pay toward approved Tenant Improvements, and any partitions, modular office stations, fixtures, cabling, furniture and equipment requested by Tenant are in no event subject to payment as part of Landlord’s Contribution.  In the event the Completion Cost of the Tenant Improvement Work is less than the Landlord’s Maximum Contribution, Landlord’s actual contribution toward the Completion Cost ("Landlord's Contribution") shall equal such lesser amount, and Tenant shall have no right to receive any credit, refund or allowance of any kind for any unused portion of the Landlord's Maximum Contribution nor shall Tenant be allowed to make revisions to an approved Preliminary Plan, Working Drawings and Specifications or request a Change in an effort to apply any unused portion of Landlord's Maximum Contribution.

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In addition to the Landlord’s Maximum Contribution, Landlord shall make available to Tenant an amount not to exceed $284,500.00 (the “Landlord’s Amortizing Contribution”), based on $5.00 per rentable square foot of the Premises, to be utilized towards the Completion Cost. Tenant shall elect in writing whether or not to use the Landlord’s Amortizing Contribution prior to the commencement of the Tenant Improvement Work. The Landlord’s Amortizing Contribution shall be subject to the limitations and restrictions provided in this Work Letter for applications of the Landlord’s Contribution; provided, however, that  any portion of the Landlord’s Amortizing Contribution funded by Landlord towards the Completion Cost shall be amortized over the 60-month Term of the Lease as extended by this Amendment using an interest factor of 7% per annum, and the Basic Rent payable during the 60 months of the Lease Term as extended by this Amendment shall be increased by said amortized payments, retroactive to May 1, 2015. Upon request by Landlord, the amount of such rental adjustment shall be memorialized on a form provided by Landlord.  In the event that the amount of the rental adjustment is finally determined subsequent to May 1, 2015, Tenant shall promptly pay to Landlord a lump sum amount equal to the total accrued sums owing due to the retroactive adjustment. 

C.  Tenant shall pay any costs due to inaccurate or incomplete Programming Information and the amount, if any, by which aggregate Completion Cost for the Tenant Improvement Work exceeds the Landlord’s Maximum Contribution and Landlord’s Amortizing Contribution that Tenant elects to utilize.  The amounts to be paid by Tenant for the Tenant Improvements pursuant to this Section II.C. are sometimes cumulatively referred to herein as the “Tenant’s Contribution”.

D.  The “Completion Cost” shall mean all costs of Landlord in completing the Tenant Improvements in accordance with the approved Working Drawings and Specifications and with any approved Changes thereto, including but not limited to the following costs:  (i) payments made to architects, engineers, contractors, subcontractors and other third party consultants in the performance of the work, (ii) permit fees and other sums paid to governmental agencies, and (iii) costs of all materials incorporated into the work or used in connection with the work.  The Completion Cost shall also include a construction management fee to be paid to Landlord or to Landlord's management agent in the amount of three percent (3%) of the Completion Cost.  Unless expressly authorized in writing by Landlord, the Completion Cost shall not include (and no portion of the Landlord Contribution shall be paid for) any costs incurred by Tenant, including without limitation, any costs for space planners, managers, advisors or consultants retained by Tenant in connection with the Tenant Improvements.

E.  Prior to start of construction of the Tenant Improvements, Tenant shall pay to Landlord in full the amount of the Tenant's Contribution set forth in the approved Preliminary Cost Estimate or in the Final Cost Estimate (once approved by Tenant).  If the actual Completion Cost of the Tenant Improvements is greater than the Final Cost Estimate because of Changes, modifications or extras not reflected on the approved Working Drawings and Specifications, then Tenant shall pay all such additional costs within 10 business days after written demand for same.  The balance of any sums not otherwise paid by Tenant shall be due and payable on or before the commencement of construction.  If Tenant defaults in the payment of any sums due under this Work Letter, Landlord shall (in addition to all other remedies) have the same rights as in the case of Tenant's failure to pay rent under the Lease, including, without limitation, the right to terminate this Lease and recover damages from Tenant and/or to charge a late payment fee and to collect interest on delinquent payments, and Landlord may (but shall not be required to) suspend the Tenant Improvement Work following such default.

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EX-31.1

Exhibit 31.1

CERTIFICATION

I, Jeffrey M. Nugent, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the period ended March 31, 2015 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: May 1, 2015	By:	/s/ JEFFREY M. NUGENT
		Jeffrey M. Nugent
		President and Chief Executive Officer (Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION

I, David C. Dreyer, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the period ended March 31, 2015 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: May 1, 2015	By:	/s/ DAVID C. DREYER
		David C. Dreyer
		Senior Vice President and 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. § 1350

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

In connection with the Quarterly Report of BIOLASE, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2015 (the “Report”), I, Jeffrey M. Nugent, President and 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: May 1, 2015	/s/ JEFFREY M. NUGENT
	Jeffrey M. Nugent
	President and Chief Executive Officer (Principal Executive Officer)

EX-32.2

Exhibit 32.2

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. § 1350

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

In connection with the Quarterly Report of BIOLASE, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2015 (the “Report”), I, David C. Dreyer, Senior Vice President 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: May 1, 2015	/s/ DAVID C. DREYER
	David C. Dreyer
	Senior Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)

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Intangible Assets and Goodwill - Additional Information (Detail) (USD $)	3 Months Ended		6 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Jun. 30, 2014
Goodwill And Intangible Assets Disclosure [Abstract]
Intangible assets and goodwill impairment			$ 0
Amortization expense	$ 18,000	$ 18,000

XML

Summary of Net Revenue by Geographic Location (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Segment Reporting Information [Line Items]
Net revenue	$ 10,855	$ 11,518
UNITED STATES
Segment Reporting Information [Line Items]
Net revenue	5,930	6,709
International
Segment Reporting Information [Line Items]
Net revenue	$ 4,925	$ 4,809

XML

Commitments and Contingencies - Additional Information (Detail)	1 Months Ended	3 Months Ended				3 Months Ended			3 Months Ended
	Feb. 28, 2015	Mar. 31, 2015 USD ($)	Mar. 31, 2014 USD ($)	Apr. 29, 2014 Surety Bond EUR (€)	Mar. 31, 2015 Statutory Bond EUR (€)	Mar. 31, 2015 Licensing Agreements United States	Mar. 31, 2015 Licensing Agreements Outside Of United States	Apr. 29, 2014 Settled Litigation USD ($)	Mar. 31, 2015 Employee Arrangements and Other Compensation USD ($)
Commitment And Contingencies [Line Items]
Extended lease term		Apr. 30, 2020
Provisions for tenant improvement allowance, maximum		$ 398,000
Future minimum lease obligations, for the year ended December 31, 2015		483,000
Future minimum lease obligations, for the year ended December 31, 2016		694,000
Future minimum lease obligations, for the year ended December 31, 2017		652,000
Future minimum lease obligations, for the year ended December 31, 2018 and thereafter		1,500,000
Capital lease agreement term for information technology equipment	30 months
Future minimum lease payments under capital lease, net minimum lease payment for the year ended December 31, 2015		129,000
Future minimum lease payments under capital lease, net minimum lease payment for the year ended December 31, 2016		172,000
Future minimum lease payments under capital lease, net minimum lease payment for the year ended December 31, 2017		128,000
Future minimum lease payments borrowing rate		8.83%
Present Value Of Net Minimum Lease Payments At Inception Of Lease		46,000
Capital Lease Obligations, Current		143,000
Capital lease obligation		240,000
Change in control, if occurs, may require severance benefits payable									994,000
Accrued for performance bonuses									409,000
Purchase commitments pending		18,200,000
Amount of injunction bond to be posted				500,000	146,000
Litigation Settlement Amount Receivable Non-Current		825,000
Receivable For Legal Settlements On First Anniversary		275,000
Receivable For Legal Settlements On Second Anniversary		275,000
Receivable For Legal Settlements On Third Anniversary		275,000
Litigation Settlement Amount Receivable Current		550,000
License period						3 years	5 years
Litigation Settlement Receivable		1,400,000
Litigation Expense Recovered		731,000	0
Settlement Expense For Dismissal of Patent Infringement Lawsuit Recovered		68,000
Legal settlement at present value		1,200,000
Deferred revenue								$ 379,000
Foregoing litigation settlement, description		As part of the settlement, Fotona agreed to pay the Company a total of $1.4 million, with $550,000 payable within 10 days of March 24, 2015 and the remaining, $825,000 payable in three increments of $275,000 each to be paid no later than the first, second and third anniversary of the effective date of the agreement.

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Cash Proceeds Along with Fair Value Disclosures Related to Grants, Exercises, and Vested Options (Detail) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2015		Mar. 31, 2014
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Proceeds from stock options exercised	$ 44		$ 248
Tax benefit related to stock options exercised		[1]		[1]
Intrinsic value of stock options exercised	52	[2]	82	[2]
Weighted-average fair value of options granted	$ 2.44		$ 1.86
Total fair value of shares vested during the period	$ 293		$ 346

[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 the Company’s net operating losses.

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

XML

Segment Information (Tables)

3 Months Ended

Mar. 31, 2015

Segment Reporting [Abstract]

Summary of Net Revenue by Geographic Location

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

	Three Months Ended
	March 31,
	2015		2014
United States	$	5,930	$	6,709
International		4,925		4,809
	$	10,855	$	11,518

XML

Concentrations - Additional Information (Detail)	3 Months Ended		12 Months Ended
	Mar. 31, 2015 Customer	Mar. 31, 2014 Customer	Dec. 31, 2014
Concentration Risk [Line Items]
Number of customers which represented more than 10% of the Company's revenue	0	0
Number of customers which represented more than 10% of the Company's accounts receivable	0	0
Sales Revenue, Net
Concentration Risk [Line Items]
Maximum revenue and account receivable with individual customer	Less than 10%		Less than 10%
Account Receivable
Concentration Risk [Line Items]
Maximum revenue and account receivable with individual customer	Less than 10%		Less than 10%

XML

Changes in Initial Product Warranty Accrual and Expenses Under Initial and Extended Warranties (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Dec. 31, 2014
Movement in Standard Product Warranty Accrual
Initial warranty accrual, beginning balance	$ 930	$ 1,096
Provision for estimated warranty cost	970	148
Warranty expenditures	(233)	(219)
Initial warranty accrual, ending balance	1,667	1,025
Less warranty accrual, long-term	640	0	519
Total warranty accrual, current portion	$ 1,027	$ 1,025	$ 930

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Summary of Property, Plant, and Equipment (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Property Plant And Equipment [Line Items]
Property, plant, and equipment gross, excluding land	$ 7,386	$ 6,788
Accumulated depreciation and amortization	(5,796)	(5,669)
Property, plant, and equipment net, excluding land	1,590	1,119
Land	157	176
Property, plant, and equipment, net	1,747	1,295
Building
Property Plant And Equipment [Line Items]
Property, plant and equipment, gross	202	226
Leasehold Improvements
Property Plant And Equipment [Line Items]
Property, plant and equipment, gross	1,200	1,197
Equipment and Computers
Property Plant And Equipment [Line Items]
Property, plant and equipment, gross	5,035	4,948
Furniture and Fixtures
Property Plant And Equipment [Line Items]
Property, plant and equipment, gross	413	413
Construction in Progress
Property Plant And Equipment [Line Items]
Property, plant and equipment, gross	$ 536	$ 4

XML

Subsequent Event - Additional Information (Detail) (USD $)	3 Months Ended		0 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Apr. 27, 2015
Subsequent Event [Line Items]
Stock options granted	2,232,000
Granted	$ 2.44	$ 1.86
Subsequent Event | Non Qualified Stock Options | Non Employee Directors
Subsequent Event [Line Items]
Stock options granted			657,489
Granted			$ 2.27
Vesting period of grant			12 months
2002 Stock Incentive Plan | Subsequent Event
Subsequent Event [Line Items]
Common stock, additional shares authorized			2,300,000

XML

Segment Information - Additional Information (Detail) (USD $)	3 Months Ended
	Mar. 31, 2015 Customer	Mar. 31, 2014 Customer	Dec. 31, 2014
Segment Reporting Information [Line Items]
Number of customers which represented more than 10% of the Company's revenue	0	0
International
Segment Reporting Information [Line Items]
Long-lived assets outside of the United States	334,000		$ 374,000
Sales Revenue, Net | International
Segment Reporting Information [Line Items]
Number of customers which represented more than 10% of the Company's revenue	0	0
Customer Concentration Risk | Sales Revenue, Net | UNITED STATES
Segment Reporting Information [Line Items]
Concentration Risk Percentage	55.00%	58.00%
Customer Concentration Risk | Sales Revenue, Net | International
Segment Reporting Information [Line Items]
Concentration Risk Percentage	45.00%	42.00%

XML

Inventory

3 Months Ended

Mar. 31, 2015

Inventory Disclosure [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):

	March 31,		December 31,
	2015		2014
Raw materials	$	2,951	$	2,857
Work-in-process		1,528		1,348
Finished goods		8,693		8,303
Inventory, net	$	13,172	$	12,508

Inventory is net of a provision for excess and obsolete inventory totaling $2.4 million and $2.4 million as of March 31, 2015 and December 31, 2014, respectively.

XML

Accrued Liabilities and Deferred Revenue - Additional Information (Detail) (USD $)	3 Months Ended	6 Months Ended	12 Months Ended
	Mar. 31, 2015	Jun. 30, 2014	Dec. 31, 2013
Payables And Accruals [Abstract]
WaterLase systems warranty period		2 years	1 year
Deferred revenue recognized	$ 31,000

XML

Stock-Based Awards and Per Share Information - Additional Information (Detail) (USD $)	1 Months Ended	3 Months Ended		0 Months Ended
	Feb. 28, 2014	Mar. 31, 2015	Mar. 31, 2014	Nov. 07, 2014	Mar. 09, 2015	Dec. 31, 2014
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Common stock issued pursuant to options exercised		38,000
Compensation cost related to stock options		$ 700,000	$ 310,000
Net impact of share based compensation expense to earnings per basic share		$ (0.01)	$ (0.01)
Net impact of share based compensation expense to earnings per diluted share		$ (0.01)	$ (0.01)
Total unrecognized compensation cost		$ 5,000,000
Unrecognized share based compensation cost to be recognized over weighted-average period		3 years 4 months 24 days
Granted		2,232,000
Expected term		7 years 2 months 12 days	3 years 7 months 6 days
Volatility		89.90%	98.37%
Risk-free interest rate		1.78%	1.65%
Outstanding stock options and warrants excluded from diluted loss per share		15,563,000	5,998,000
Annual Stock Dividend Payable Rate	0.50%
Dividends Payable, Date of Record	Mar. 14, 2014
Private Placement
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Outstanding stock options and warrants included in connection with November 2014				9,206,000
CFO Grant Award Tranche One
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Granted					523,026
Share based compensation arrangement by share Based payment award fair value price					$ 1.48
Expected term					6 years 1 month 6 days
Volatility					88.79%
Risk-free interest rate					1.83%
CFO Grant Award Tranche Two
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share based compensation arrangement by share Based payment award fair value price					$ 1.70
Expected term					10 years
Volatility					87.87%
Risk-free interest rate					2.19%
Warrants
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Restricted stock units outstanding		888,000				888,000
Warrants exercised		0	0
Restricted Stock Units (RSUs)
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Restricted stock units outstanding		37,000
Non Qualified Stock Options | Chief Financial Officer
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Granted					871,710
Exercise Price of Stock Options					$ 1.99
Options expiration period					10 years
One Year Anniversary | CFO Grant Award Tranche One
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Option shares vested and exercised					130,757
Shares vested and exercised consecutive term					35 months
Shares vested and exercisable date					Mar. 09, 2016
One Month Anniversary | CFO Grant Award Tranche One
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Option shares vested and exercised					10,896
Thirty Six Month Anniversary | CFO Grant Award Tranche One
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Option shares vested and exercised					10,909
Shares vested and exercisable date					Mar. 09, 2019
Ten Year Anniversary | CFO Grant Award Tranche Two
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Granted					348,684
Shares vested and exercisable date					Mar. 09, 2025
2002 Stock Incentive Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Plan expiration date		May 05, 2019
Common stock authorized for issuance under the 2002 Plan		9,250,000
Common stock issued pursuant to options exercised		3,031,000
Options and restricted stock units outstanding		5,469,000
Options available for future grants		750,000

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Summary of Significant Accounting Policies - Additional Information (Detail) (USD $)	Mar. 31, 2015	Dec. 31, 2014
Accounting Policies [Abstract]
Restricted cash equivalent	$ 200,000	$ 0

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Summary of Deferred Revenue (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Components of deferred revenue
Undelivered elements (training, installation, and product and support services)	$ 1,293	$ 952
Extended warranty contracts	1,505	1,542
Deferred revenue, current portion	$ 2,798	$ 2,494

XML

Classification of Compensation Expense Associated with Share-Based Payments (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Allocated Share-based Compensation Expense	$ 700	$ 310
Cost Of Revenue
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Allocated Share-based Compensation Expense	76	46
Sales and Marketing
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Allocated Share-based Compensation Expense	293	125
General and Administrative Expense
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Allocated Share-based Compensation Expense	236	115
Engineering And Development
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Allocated Share-based Compensation Expense	$ 95	$ 24

XML

Assumptions Used in Estimating Fair Value of Stock Options Granted (Detail)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Share Based Compensation Arrangement By Share Based Payment Award Fair Value Assumptions And Methodology [Abstract]
Expected term	7 years 2 months 12 days	3 years 7 months 6 days
Volatility	89.90%	98.37%
Risk-free interest rate	1.78%	1.65%

XML

Stock-Based Awards and Per Share Information

3 Months Ended

Mar. 31, 2015

Disclosure Of Compensation Related Costs Sharebased Payments [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 (as amended effective as of May 26, 2004, November 15, 2005, May 16, 2007, May 5, 2011, June 6, 2013, and October 30, 2014) (the “2002 Plan”), which will expire on May 5, 2019. Persons eligible to receive awards under the 2002 Plan include certain officers, employees, and directors of the Company, as well as its consultants. As of March 31, 2015, a total of 9,250,000 shares have been authorized for issuance under the 2002 Plan (see Note 13 – Subsequent Events), of which 3,031,000 shares of Company common stock have been issued pursuant to options that were exercised, 5,469,000 shares of Company common stock have been reserved for options and restricted stock units that are outstanding, and 750,000 shares of Company common stock remain available for future grants.

Stock-based compensation cost recognized in operating results totaled approximately $700,000 and $310,000 for the three months ended March 31, 2015 and 2014, respectively. The net impact to earnings for the three months ended March 31, 2015 and 2014 was $(0.01) and $(0.01) per basic and diluted share, respectively. At March 31, 2015, the Company had approximately $5.0 million of total unrecognized compensation cost, net of estimated forfeitures, related to unvested share-based compensation arrangements. The Company expects that cost to be recognized over a weighted-average period of 3.4 years.

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

	Three Months Ended
	March 31,
	2015		2014
Cost of revenue	$	76	$	46
Sales and marketing		293		125
General and administrative		236		115
Engineering and development		95		24
	$	700	$	310

The stock option fair values, under the 2002 Plan, were estimated using the Black-Scholes option-pricing model with the following assumptions:

	Three Months Ended
	March 31,
	2015		2014
Expected term	7.2 years		3.6 years
Volatility	89.90%		98.37%
Annual dividend per share	$	—	$	—
Risk-free interest rate	1.78%		1.65%

A summary of option activity under the 2002 Plan for the three months ended March 31, 2015 is as follows:

						Weighted Average
				Weighted		Remaining		Aggregate
				Average		Contractual		Intrinsic
	Shares			Exercise Price		Term (Years)		Value(1)
Options outstanding at December 31, 2014		3,391,000		$	3.11		2.97	$	1,063,000
Granted at fair market value		2,232,000		$	2.44
Exercised		(38,000	)	$	1.15
Forfeited, cancelled, or expired		(153,000	)	$	3.44
Options outstanding at March 31, 2015		5,432,000		$	2.84		5.46	$	186,000
Options exercisable at March 31, 2015		2,680,000		$	3.11		2.31	$	183,000
Vested options expired during the quarter    ended March 31, 2015		25,000		$	3.96

(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 vested options under the 2002 Plan are provided in the following table (in thousands, except per share amounts):

	Three Months Ended
	March 31,
	2015		2014
Proceeds from stock options exercised	$	44	$	248
Tax benefit related to stock options    exercised (1)	N/A		N/A
Intrinsic value of stock options exercised (2)	$	52	$	82
Weighted-average fair value of options granted    during period	$	2.44	$	1.86
Total fair value of shares vested during    the period	$	293	$	346

(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 the Company’s net operating losses.

(2) The intrinsic value of stock options exercised is the amount by which the market price of the stock on the date of exercise exceeded the market price of the stock on the date of grant.

Restricted Stock Units

The Company issues restricted stock units (“RSUs”) to acquire shares of Company common stock as approved by its board of directors (the “Board”). For the three months ended March 31, 2015 and 2014, the Board did not grant any RSUs. As of March 31, 2015, 37,000 shares of Company common stock have been reserved for RSUs that are outstanding.

Warrants

The Company issues warrants to acquire shares of its common stock underlying such warrants as approved by the Board.

A summary of warrant activity for the three months ended March 31, 2015 is as follows:

			Weighted
			Average
	Shares		Exercise Price
Warrants outstanding at December 31, 2014		888,000	$	6.04
Granted		—
Exercised		—
Forfeited, cancelled, or expired		—
Warrants outstanding at March 31, 2015		888,000	$	6.04
Warrants exercisable at March 31, 2015		753,000	$	6.40
Vested warrants expired during the quarter    ended March 31, 2015		—	N/A

No warrants were exercised during the three months ended March 31, 2015 and 2014.

Other Stock-Based Awards

Effective March 9, 2015, the Compensation Committee of the Board granted non-qualified stock options to purchase up to 871,710 shares of Company common stock to its Chief Financial Officer in connection with his employment agreement with the Company. These options were granted at an exercise price of $1.99 per share, the closing price of Company common stock on the grant date. These options expire ten years from the grant date and vest in two tranches as follows: (i) as to options to purchase 523,026 shares (the “First Tranche”), options to purchase 130,757 shares vest and become exercisable on the first anniversary of March 9, 2015, and options to purchase 10,896 shares vest and become exercisable each month following March 9, 2016 for a period of 35 consecutive months, and options to purchase 10,909 shares vest and become exercisable on March 9, 2019, and (ii) as to options to purchase 348,684 shares (the “Second Tranche”), all such shares vest and become exercisable on March 9, 2025 or based on the Company’s achievement of certain enumerated financial performance targets or other milestones, at the discretion of the Compensation Committee.The fair value of the First Tranche of $1.48 per share was estimated using the Black-Scholes option-pricing model with assumptions of 6.1 years for expected term, 88.79% volatility and 1.83% risk-free interest rate. The fair value of the Second Tranche of $1.70 per share was estimated using the Black-Scholes option-pricing model with assumptions of 10.0 years for expected term, 87.87% volatility and 2.19% risk-free interest rate.

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 15,563,000 shares (including 9,206,000 shares issued in connection with the private placement completed by the Company on November 7, 2014) were not included in the computation of diluted loss per share for the three months ended March 31, 2015 as a result of their anti-dilutive effect. For the same 2014 period, anti-dilutive outstanding stock options and warrants to purchase 5,998,000 shares were not included in the computation of diluted loss per share.

Stock Dividend

In February 2014, the Board declared a one-half percent stock dividend payable March 28, 2014, to stockholders of record on March 14, 2014. There is no assurance, with respect to the amount or frequency, that any stock dividend will be declared in the future.  

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Summary of Option Activity (Detail) (USD $)	3 Months Ended			12 Months Ended
	Mar. 31, 2015		Mar. 31, 2014	Dec. 31, 2014
Number of Shares
Beginning Balance	3,391,000
Granted	2,232,000
Exercised	(38,000)
Forfeited, cancelled, or expired	(153,000)
Ending Balance	5,432,000			3,391,000
Options exercisable, March 31, 2015	2,680,000
Vested options expired during the twelve months ended March 31, 2015	25,000
Weighted Average Exercise Price
Beginning Balance	$ 3.11
Granted	$ 2.44		$ 1.86
Exercised	$ 1.15
Forfeited, cancelled, or expired	$ 3.44
Ending Balance	$ 2.84			$ 3.11
Options exercisable, March 31, 2015	$ 3.11
Vested options expired during the twelve months ended March 31, 2015	$ 3.96
Weighted Average Remaining Contractual Term (In Years)
Options outstanding	5 years 5 months 16 days			2 years 11 months 19 days
Options exercisable	2 years 3 months 22 days
Aggregate Intrinsic Value
Options outstanding	$ 1,063,000	[1]
Options outstanding	186,000	[1]		1,063,000	[1]
Options exercisable	$ 183,000	[1]

[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.

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Intangible Assets and Related Accumulated Amortization (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Dec. 31, 2014
Intangible Assets And Goodwill [Line Items]
Intangible assets, gross	$ 2,800	$ 2,800
Intangible assets, accumulated amortization	(2,704)	(2,686)
Intangible assets, net	96	114
Useful life	Indefinite life
Goodwill gross	2,926	2,926
Goodwill	2,926	2,926
Patents
Intangible Assets And Goodwill [Line Items]
Intangible assets, gross	1,914	1,914
Intangible assets, accumulated amortization	(1,911)	(1,907)
Intangible assets, net	3	7
Patents | Minimum
Intangible Assets And Goodwill [Line Items]
Useful life	4 years
Patents | Maximum
Intangible Assets And Goodwill [Line Items]
Useful life	10 years
Trademarks
Intangible Assets And Goodwill [Line Items]
Useful life	6 years
Intangible assets, gross	69	69
Intangible assets, accumulated amortization	(69)	(69)
Other Intangible Assets
Intangible Assets And Goodwill [Line Items]
Intangible assets, gross	817	817
Intangible assets, accumulated amortization	(724)	(710)
Intangible assets, net	$ 93	$ 107
Other Intangible Assets | Minimum
Intangible Assets And Goodwill [Line Items]
Useful life	4 years
Other Intangible Assets | Maximum
Intangible Assets And Goodwill [Line Items]
Useful life	6 years

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Consolidated Balance Sheets (Unaudited) (USD $)	Mar. 31, 2015	Dec. 31, 2014
Current assets:
Cash and cash equivalents	$ 23,739,000	$ 31,560,000
Restricted cash equivalent	200,000	0
Accounts receivable, less allowance of $1,764 in 2015 and $1,711 in 2014	9,811,000	9,004,000
Inventory, net	13,172,000	12,508,000
Prepaid expenses and other current assets	2,045,000	1,726,000
Total current assets	48,967,000	54,798,000
Property, plant, and equipment, net	1,747,000	1,295,000
Intangible assets, net	96,000	114,000
Goodwill	2,926,000	2,926,000
Other assets	958,000	270,000
Total assets	54,694,000	59,403,000
Current liabilities:
Accounts payable	7,645,000	8,357,000
Accrued liabilities	5,144,000	5,188,000
Customer deposits	176,000	112,000
Deferred revenue, current portion	2,798,000	2,494,000
Total current liabilities	15,763,000	16,151,000
Deferred income taxes	692,000	677,000
Deferred revenue, long-term	231,000
Capital lease obligation	240,000
Warranty accrual, long-term	640,000	519,000
Total liabilities	17,566,000	17,347,000
Commitments, contingencies, and subsequent events (Notes 9 and 13)
Stockholders' equity:
Preferred stock, par value $0.001; 1,000 shares authorized, no shares issued and outstanding
Common stock, par value $0.001; 100,000 shares authorized in 2015 and 2014, respectively; 58,153 and 58,115 shares issued and outstanding in 2015 and 2014, respectively	58,000	58,000
Additional paid-in-capital	185,972,000	185,231,000
Accumulated other comprehensive loss	(790,000)	(557,000)
Accumulated deficit	(148,112,000)	(142,676,000)
Total stockholders' equity	37,128,000	42,056,000
Total liabilities and stockholders' equity	$ 54,694,000	$ 59,403,000

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Lines of Credit and Other Borrowings - Additional Information (Detail) (USD $)	0 Months Ended						3 Months Ended		12 Months Ended
	Jul. 28, 2014	Jun. 03, 2014	May 31, 2014	May 05, 2014	Apr. 10, 2014	Mar. 04, 2014	Mar. 31, 2015 Agreement	Mar. 31, 2014	Dec. 31, 2014
Line Of Credit Facility [Line Items]
Number revolving credit facility agreements							2
Repayments under Credit Agreements	$ 2,900,000							$ 9,325,000
Credit agreements amendment fee					10,000	10,000
Lines of credit maximum borrowing capacity					4,000,000	5,000,000
Line of credit facility, expiration date		Aug. 01, 2014	Aug. 01, 2014	Jun. 01, 2014					May 01, 2014
Revolving lines of credit fee paid		15,000	10,000	10,000
Increase decrease in interest rate of lines of credit facility		0.50%
Prime floor, daily prime plus LIBOR							2.50%	2.50%
Unused capacity commitment fee percentage							0.25%
Interest expense incurred for lines of credit and loan and security agreement								229,000
Accrued interest payable									0
Amortization of discounts on lines of credit								120,000
Amortization of debt issuance costs								57,000
Restricted cash equivalent							200,000		0
Aggregate agreements amendment fee.								10,000
Financed insurance premium							0	123,000
Number of monthly insurance premium installments payable							Nine
Financial insurance premiums interest rate								2.85%
Interest expense incurred for financed insurance premiums								$ 1,000
Domestic Revolver Credit Facility | Prime Rate
Line Of Credit Facility [Line Items]
Interest on principal balance rate plus							2.50%
Ex-Im Revolver | Prime Rate | Minimum
Line Of Credit Facility [Line Items]
Interest on principal balance rate plus							2.00%

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Description of Business and Basis of Presentation

3 Months Ended

Mar. 31, 2015

Accounting Policies [Abstract]

Description of Business and Basis of Presentation

NOTE 1—DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

The Company

BIOLASE, Inc. (“BIOLASE” and, together with its consolidated subsidiaries, the “Company,” “we,” “our,” or “us”) incorporated in Delaware in 1987, is a medical device company that develops, manufactures, markets, and sells laser systems in dentistry and medicine and also markets, sells, and distributes dental imaging equipment, including cone beam digital x-rays and CAD/CAM intra-oral scanners, in-office, chair-side milling machines and three dimensional printers.

Basis of Presentation

The unaudited consolidated financial statements include the accounts of Biolase, Inc. and its wholly-owned subsidiaries and have been prepared on a basis consistent with the December 31, 2014 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.

The consolidated results of operations for the three months ended March 31, 2015 are not necessarily indicative of the results for the full year. The accompanying consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2014, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 filed with the Securities and Exchange Commission (the “SEC”) on March 6, 2015, as amended on April 29, 2015 (the “2014 Form 10-K”).

Liquidity and Management’s Plans

The Company incurred a loss from operations, a net loss, and used cash in operating activities for the three months ended March 31, 2015. The Company has also suffered recurring losses from operations during the three years ended December 31, 2014.

As of March 31, 2015, the Company had working capital of approximately $33.2 million. The Company’s principal sources of liquidity at March 31, 2015 consisted of approximately $23.7 million in cash and cash equivalents and $9.8 million of net accounts receivable.          

Additional capital requirements may depend on many factors, including, among other things, the rate at which the Company’s business grows, demands for working capital, manufacturing capacity, and any acquisitions that the Company may pursue. From time to time, the Company could be required, or may otherwise attempt, to raise capital through either equity or debt offerings. The Company cannot provide assurance that it will be able to successfully enter into any such equity or debt financings in the future or that the required capital would be available on acceptable terms, if at all, or that any such financing activity would not be dilutive to its stockholders.

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Components of Inventory (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Components of inventory, net of allowances
Raw materials	$ 2,951	$ 2,857
Work-in-process	1,528	1,348
Finished goods	8,693	8,303
Inventory, net	$ 13,172	$ 12,508

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Property, Plant, and Equipment (Tables)

3 Months Ended

Mar. 31, 2015

Property Plant And Equipment [Abstract]

Summary of Property, Plant, and Equipment

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

	March 31,			December 31,
	2015			2014
Building	$	202		$	226
Leasehold improvements		1,200			1,197
Equipment and computers		5,035			4,948
Furniture and fixtures		413			413
Construction in progress		536			4
		7,386			6,788
Accumulated depreciation and amortization		(5,796	)		(5,669	)
		1,590			1,119
Land		157			176
Property, plant, and equipment, net	$	1,747		$	1,295

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Inventory - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Inventory Disclosure [Abstract]
Provision for excess and obsolete inventory	$ 2.4	$ 2.4

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Accrued Liabilities and Deferred Revenue (Tables)

3 Months Ended

Mar. 31, 2015

Payables And Accruals [Abstract]

Components of Accrued Liabilities

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

	March 31,		December 31,
	2015		2014
Payroll and benefits	$	2,177	$	1,905
Warranty accrual, current portion		1,027		930
Taxes		38		139
Accrued professional services		1,566		1,581
Accrued capital lease payments		143		—
Accrued insurance premium		104		450
Other		89		183
Total accrued liabilities	$	5,144	$	5,188

Changes in Initial Product Warranty Accrual and Expenses Under Initial and Extended Warranties

Changes in the initial product warranty accrual, and the expenses incurred under the Company’s initial and extended warranties, for the three months ended March 31, 2015 and 2014 were as follows (in thousands):

	Three Months Ended
	March 31,
	2015			2014
Initial warranty accrual, beginning balance	$	930		$	1,096
Provision for estimated warranty cost		970			148
Warranty expenditures		(233	)		(219	)
		1,667			1,025
Less warranty accrual, long-term		640			—
Total warranty accrual, current portion	$	1,027		$	1,025

Components of Deferred Revenue

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

	March 31,		December 31,
	2015		2014
Undelivered elements (training, installation, and    product and support services)	$	1,293	$	952
Extended warranty contracts		1,505		1,542
Deferred revenue, current portion	$	2,798	$	2,494

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Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2015

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of these consolidated financial statements in conformity with 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, indefinite-lived intangible assets, and the ability of 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 2014 Form 10-K. Management believes that there have been no significant changes during the three months ended March 31, 2015 in the Company’s critical accounting policies from those disclosed in Item 7 of the 2014 Form 10-K, except with regard to restricted cash equivalent as set forth below.

Restricted Cash Equivalent

The restricted cash equivalent represents a revolving 90-day certificate of deposit maintained by the Company as collateral in connection with corporate credit cards. At March 31, 2015, the restricted cash equivalent balance was $200,000.

Fair Value of Financial Instruments

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the principal market (or, if none exists, the most advantageous market) for the specific asset or liability at the measurement date (referred to as the “exit price”). The fair value is based on assumptions that market participants would use, including a consideration of nonperformance risk. Under the accounting guidance for fair value hierarchy there are three levels of measurement inputs. Level 1 inputs are quoted prices in active markets for identical assets or liabilities. Level 2 inputs are observable, either directly or indirectly, other than Level 1. Level 3 inputs are unobservable due to little or no corroborating market data.

The Company’s financial instruments, consisting of cash and cash equivalents, and accounts receivable, accounts payable, and accrued liabilities, 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.

Recent Accounting Pronouncements

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

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

Recently Issued Accounting Standards

In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which supersedes nearly all existing revenue recognition guidance under GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing GAAP.

The standard is effective for annual periods beginning after December 15, 2016, and interim periods therein, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption (which includes additional footnote disclosures). The Company is currently evaluating the impact of the pending adoption of ASU 2014-09 on its consolidated financial statements and has not yet determined the method by which it will adopt the standard during the year ending December 31, 2017.

In August 2014, the FASB issued ASU No. 2014-15, Disclosure of Uncertainties About an Entity’s Ability to Continue as a Going Concern. The standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued and provides guidance on determining when and how to disclose going concern uncertainties in the financial statements. Certain disclosures will be required if conditions give rise to substantial doubt about an entity’s ability to continue as a going concern. ASU 2014-15 applies to all entities and is effective for annual and interim reporting periods ending after December 15, 2016, with early adoption permitted. The Company does not expect that the adoption of this standard will have a material effect on its financial statements.

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Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Statement Of Financial Position [Abstract]
Allowance for accounts receivable	$ 1,764	$ 1,711
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	58,153,000	58,115,000
Common stock, shares outstanding	58,153,000	58,115,000

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Income Taxes

3 Months Ended

Mar. 31, 2015

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 12—INCOME TAXES

The Company accounts for income taxes under the asset and liability method, whereby deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Management evaluates the need to establish a valuation allowance for deferred tax assets based upon the amount of existing temporary differences, the period in which they are expected to be recovered, and expected levels of taxable income. A valuation allowance to reduce deferred tax assets is established when it is “more likely than not” that some or all of the deferred tax assets will not be realized. Based on the Company’s net losses in prior years, management has determined that a full valuation allowance against the Company’s net deferred tax assets is appropriate.

Accounting for uncertainty in income taxes prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return and provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The Company has elected to classify interest and penalties as a component of its income tax provision. With respect to the liability for unrecognized tax benefits, including related estimates of penalties and interest, the Company did not record a liability for unrecognized tax benefits for the three months ended March 31, 2015 and 2014, respectively. The Company does not expect any changes to its unrecognized tax benefit for the next twelve months that would materially impact its consolidated financial statements.

During the three months ended March 31, 2015, the Company recorded an income tax provision of $47,000, resulting in an effective tax rate of (0.9)%. During the three months ended March 31, 2014, the Company recorded an income tax provision of $24,000, resulting in an effective tax rate of (0.5)%. The income tax provisions for the three months ended March 31, 2015 and 2014 were calculated using the discrete year-to-date method. The effective tax rate differs from the statutory tax rate of 34% primarily due to the existence of valuation allowances against net deferred tax assets and current liabilities resulting from the estimated state income tax liabilities and federal alternative minimum tax liability.

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Document and Entity Information	3 Months Ended
	Mar. 31, 2015	Apr. 27, 2015
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q1
Trading Symbol	BIOL
Entity Registrant Name	BIOLASE, INC
Entity Central Index Key	0000811240
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		58,152,792

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Subsequent Event

3 Months Ended

Mar. 31, 2015

Disclosure Subsequent Events Additional Information [Abstract]

Subsequent Event

NOTE 13—SUBSEQUENT EVENT

Stock-Based Compensation

On April 27, 2015, an additional 2.3 million shares of Company common stock were authorized for issuance under the 2002 Plan.

Also on April 27, 2015, non-employee directors of the Company were granted non-qualified stock options to purchase a combined total of 657,489 shares of Company common stock, as annual compensation for serving on the Board. These options were granted at an exercise price of $2.27, the average closing market price of the Company’s stock for the trailing 12 months prior to grant date, and vest over a 12-month period.

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Consolidated Statements Of Operations And Comprehensive Loss (Unaudited) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Statement Consolidated Statements Of Operations And Comprehensive Loss [Abstract]
Products and services revenue	$ 10,751	$ 11,479
License fees and royalty revenue	104	39
Net revenue	10,855	11,518
Cost of revenue	7,645	7,577
Gross profit	3,210	3,941
Operating expenses:
Sales and marketing	4,754	4,455
General and administrative	2,587	3,083
Engineering and development	1,803	973
Excise tax	56	65
Legal settlement	(731)	0
Total operating expenses	8,469	8,576
Loss from operations	(5,259)	(4,635)
(Loss) gain on foreign currency transactions	(130)	2
Interest expense, net		230
Non-operating loss, net	(130)	(228)
Loss before income tax provision	(5,389)	(4,863)
Income tax provision	47	24
Net loss	(5,436)	(4,887)
Other comprehensive (loss) income items:
Foreign currency translation adjustment	(233)	1
Comprehensive loss	$ (5,669)	$ (4,886)
Net loss per share:
Basic	$ (0.09)	$ (0.13)
Diluted	$ (0.09)	$ (0.13)
Shares used in the calculation of net loss per share:
Basic	58,145	36,455
Diluted	58,145	36,455

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Accrued Liabilities and Deferred Revenue

3 Months Ended

Mar. 31, 2015

Payables And Accruals [Abstract]

Accrued Liabilities and Deferred Revenue

NOTE 7—ACCRUED LIABILITIES AND DEFERRED REVENUE

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

	March 31,		December 31,
	2015		2014
Payroll and benefits	$	2,177	$	1,905
Warranty accrual, current portion		1,027		930
Taxes		38		139
Accrued professional services		1,566		1,581
Accrued capital lease payments		143		—
Accrued insurance premium		104		450
Other		89		183
Total accrued liabilities	$	5,144	$	5,188

Changes in the initial product warranty accrual, and the expenses incurred under the Company’s initial and extended warranties, for the three months ended March 31, 2015 and 2014 were as follows (in thousands):

	Three Months Ended
	March 31,
	2015			2014
Initial warranty accrual, beginning balance	$	930		$	1,096
Provision for estimated warranty cost		970			148
Warranty expenditures		(233	)		(219	)
		1,667			1,025
Less warranty accrual, long-term		640			—
Total warranty accrual, current portion	$	1,027		$	1,025

In June 2014, the Company extended the warranty for WaterLase systems from one year to two years for systems purchased after January 1, 2014.

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

	March 31,		December 31,
	2015		2014
Undelivered elements (training, installation, and    product and support services)	$	1,293	$	952
Extended warranty contracts		1,505		1,542
Deferred revenue, current portion	$	2,798	$	2,494

In connection with the Company’s initiatives to measure and improve customer satisfaction and concurrent with the launch of WaterLase iPlus 2.0 in February 2015, the Company introduced its exclusive Practice Growth Guarantee, which is a program that essentially guarantees growth in the Company’s clients’ dental practices through training on a select number of clinical procedures and with billing and marketing support for dentists included. Consistent with the Company’s standard terms and conditions applicable to all of its products, the Practice Growth Guarantee does not give the customer the right to return purchased laser systems or receive a refund of any amount of the purchase price. However, the Practice Growth Guarantee does provide for additional training opportunities and certain billing and marketing support activities to the customer. The Company has estimated deferred revenue related to the Practice Growth Guarantee for all WaterLase iPlus 2.0 system sales during the three months ended March 31, 2015 to be approximately $31,000.

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Intangible Assets and Goodwill

3 Months Ended

Mar. 31, 2015

Goodwill And Intangible Assets Disclosure [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, 2014, and determined that there was no impairment. The Company also tests its intangible assets and goodwill between each 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. For intangible assets subject to amortization, the Company performs its impairment test when indicators, such as reductions in demand for its products or significant economic slowdowns, are present. No events have occurred since June 30, 2014, that would trigger further impairment testing of the Company’s intangible assets and goodwill.

Amortization expense for the three months ended March 31, 2015 and 2014 totaled $18,000 and $18,000, respectively. Other intangible assets primarily include acquired customer lists and non-compete agreements.

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

	As of March 31, 2015									As of December 31, 2014
			Accumulated									Accumulated
	Gross		Amortization			Impairment		Net		Gross		Amortization			Impairment		Net
Patents (4-10 years)	$	1,914	$	(1,911	)	$	—	$	3	$	1,914	$	(1,907	)	$	—	$	7
Trademarks (6 years)		69		(69	)		—		—		69		(69	)		—		—
Other (4 to 6 years)		817		(724	)		—		93		817		(710	)		—		107
Total	$	2,800	$	(2,704	)	$	—	$	96	$	2,800	$	(2,686	)	$	—	$	114
Goodwill (Indefinite life)	$	2,926						$	2,926	$	2,926						$	2,926

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Intangible Assets and Goodwill (Tables)

3 Months Ended

Mar. 31, 2015

Goodwill And Intangible Assets Disclosure [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 March 31, 2015									As of December 31, 2014
			Accumulated									Accumulated
	Gross		Amortization			Impairment		Net		Gross		Amortization			Impairment		Net
Patents (4-10 years)	$	1,914	$	(1,911	)	$	—	$	3	$	1,914	$	(1,907	)	$	—	$	7
Trademarks (6 years)		69		(69	)		—		—		69		(69	)		—		—
Other (4 to 6 years)		817		(724	)		—		93		817		(710	)		—		107
Total	$	2,800	$	(2,704	)	$	—	$	96	$	2,800	$	(2,686	)	$	—	$	114
Goodwill (Indefinite life)	$	2,926						$	2,926	$	2,926						$	2,926

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Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2015

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The unaudited consolidated financial statements include the accounts of Biolase, Inc. and its wholly-owned subsidiaries and have been prepared on a basis consistent with the December 31, 2014 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.

The consolidated results of operations for the three months ended March 31, 2015 are not necessarily indicative of the results for the full year. The accompanying consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2014, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 filed with the Securities and Exchange Commission (the “SEC”) on March 6, 2015, as amended on April 29, 2015 (the “2014 Form 10-K”).

Liquidity and Management's Plans

Liquidity and Management’s Plans

The Company incurred a loss from operations, a net loss, and used cash in operating activities for the three months ended March 31, 2015. The Company has also suffered recurring losses from operations during the three years ended December 31, 2014.

As of March 31, 2015, the Company had working capital of approximately $33.2 million. The Company’s principal sources of liquidity at March 31, 2015 consisted of approximately $23.7 million in cash and cash equivalents and $9.8 million of net accounts receivable.          

Additional capital requirements may depend on many factors, including, among other things, the rate at which the Company’s business grows, demands for working capital, manufacturing capacity, and any acquisitions that the Company may pursue. From time to time, the Company could be required, or may otherwise attempt, to raise capital through either equity or debt offerings. The Company cannot provide assurance that it will be able to successfully enter into any such equity or debt financings in the future or that the required capital would be available on acceptable terms, if at all, or that any such financing activity would not be dilutive to its stockholders.

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, indefinite-lived intangible assets, and the ability of 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 Policy

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 2014 Form 10-K. Management believes that there have been no significant changes during the three months ended March 31, 2015 in the Company’s critical accounting policies from those disclosed in Item 7 of the 2014 Form 10-K, except with regard to restricted cash equivalent as set forth below.

Restricted Cash Equivalent

The restricted cash equivalent represents a revolving 90-day certificate of deposit maintained by the Company as collateral in connection with corporate credit cards. At March 31, 2015, the restricted cash equivalent balance was $200,000.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the principal market (or, if none exists, the most advantageous market) for the specific asset or liability at the measurement date (referred to as the “exit price”). The fair value is based on assumptions that market participants would use, including a consideration of nonperformance risk. Under the accounting guidance for fair value hierarchy there are three levels of measurement inputs. Level 1 inputs are quoted prices in active markets for identical assets or liabilities. Level 2 inputs are observable, either directly or indirectly, other than Level 1. Level 3 inputs are unobservable due to little or no corroborating market data.

The Company’s financial instruments, consisting of cash and cash equivalents, and accounts receivable, accounts payable, and accrued liabilities, 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.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

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

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

Recently Issued Accounting Standards

In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which supersedes nearly all existing revenue recognition guidance under GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing GAAP.

The standard is effective for annual periods beginning after December 15, 2016, and interim periods therein, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption (which includes additional footnote disclosures). The Company is currently evaluating the impact of the pending adoption of ASU 2014-09 on its consolidated financial statements and has not yet determined the method by which it will adopt the standard during the year ending December 31, 2017.

In August 2014, the FASB issued ASU No. 2014-15, Disclosure of Uncertainties About an Entity’s Ability to Continue as a Going Concern. The standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued and provides guidance on determining when and how to disclose going concern uncertainties in the financial statements. Certain disclosures will be required if conditions give rise to substantial doubt about an entity’s ability to continue as a going concern. ASU 2014-15 applies to all entities and is effective for annual and interim reporting periods ending after December 15, 2016, with early adoption permitted. The Company does not expect that the adoption of this standard will have a material effect on its financial statements.

Commitments And Contingencies Disclosure [Abstract]

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.

Income Tax Disclosure [Abstract]

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 de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The Company has elected to classify interest and penalties as a component of its income tax provision. With respect to the liability for unrecognized tax benefits, including related estimates of penalties and interest, the Company did not record a liability for unrecognized tax benefits for the three months ended March 31, 2015 and 2014, respectively. The Company does not expect any changes to its unrecognized tax benefit for the next twelve months that would materially impact its consolidated financial statements.

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Segment Information

3 Months Ended

Mar. 31, 2015

Segment Reporting [Abstract]

Segment Information

NOTE 10—SEGMENT INFORMATION

The Company currently operates in a single reportable segment. For the three months ended March 31, 2015, sales in the United States accounted for approximately 55% of net revenue and international sales accounted for approximately 45% of net revenue. For the three months ended March 31, 2014, sales in the United States accounted for approximately 58% of net revenue and international sales accounted for approximately 42% of net revenue.

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

	Three Months Ended
	March 31,
	2015		2014
United States	$	5,930	$	6,709
International		4,925		4,809
	$	10,855	$	11,518

No individual country, other than the United States, represented more than 10% of total net revenue.

Long-lived assets located outside of the United States at our foreign subsidiaries totaled $334,000 and $374,000 as of March 31, 2015 and December 31, 2014, respectively.

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Lines Of Credit and Other Borrowings

3 Months Ended

Mar. 31, 2015

Debt Disclosure [Abstract]

Lines of Credit and Other Borrowings

NOTE 8—LINES OF CREDIT AND OTHER BORROWINGS

Lines of Credit

The Company entered into two revolving credit facility agreements with Comerica Bank (the “Credit Agreements”) on May 24, 2012. The revolving lines of credit provided for borrowings against certain domestic accounts receivable and inventory (the “Domestic Revolver”) and certain export related accounts receivable and inventory (the “Ex-Im Revolver”).

On July 28, 2014, the Company repaid all amounts outstanding under the Credit Agreements, including principal, accrued interest, and fees which totaled, in the aggregate, approximately $2.9 million, and the Credit Agreements were terminated.

The Credit Agreements required the Company to maintain compliance with certain monthly financial and non-financial covenants, as defined therein. Any noncompliance with these covenants could have resulted in default interest rates and penalties, and Comerica Bank could have declared the amounts outstanding immediately due and payable. On March 4, 2014, the Company received a waiver of noncompliance with certain financial and nonfinancial covenants as of January 31, 2014 and December 31, 2013. In connection with this waiver, the Company incurred a fee of $10,000, and Comerica Bank reduced the total aggregate available borrowings on the lines of credit to $5.0 million. The Company was not in compliance with a financial covenant as of February 28, 2014 and, as such, entered into a forbearance agreement (the “Forbearance Agreement”) with Comerica Bank on April 10, 2014.  The Company paid a fee of $10,000 in connection with the Forbearance Agreement, pursuant to which Comerica Bank reduced the total aggregate available borrowings to $4.0 million.

The Company was not in compliance with a financial covenant at March 31, 2014 and did not repay the lines of credit in full on the original maturity date of May 1, 2014. As a result, on May 5, 2014, the Company and Comerica Bank agreed to Amendment No. 1 to the Forbearance Agreement (“Amendment No. 1”), which extended the end of the forbearance period from May 1, 2014 to June 1, 2014. In connection with Amendment No. 1, the maturity date of the revolving lines of credit was extended to June 1, 2014, and the Company paid an administrative fee of $10,000. On June 3, 2014, the Company and Comerica Bank agreed to Amendment No. 2 to Forbearance Agreement (“Amendment No. 2”), which extended the maturity date of the revolving lines of credit to August 1, 2014. In connection with Amendment No. 2, Comerica Bank increased the interest rates on the lines of credit by 0.50%, and the Company paid an administrative fee of $15,000. The Company was not in compliance with certain financial covenants as of May 31, 2014 and, as a result, agreed to Amendment No. 3 to Forbearance Agreement with Comerica Bank whereby the forbearance period was continued to August 1, 2014, and the Company paid an administrative fee of $10,000.   

The outstanding principal balances of the Credit Agreements, as amended June 3, 2014, bore interest at annual percentage rates equal to the daily prime rate, plus 2.50% for the Domestic Revolver and 2.00% for the Ex-Im Revolver. The daily prime rate was subject to a floor of the daily adjusting LIBOR rate plus 2.50% per annum, or if LIBOR was undeterminable, 2.50% per annum. The Company was 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 months ended March 31, 2014, the Company incurred $229,000 of interest expense associated with the credit facilities, including $57,000 of amortization of deferred debt issuance costs and $120,000 of amortization of the discount on lines of credit. There was no interest expense payable at December 31, 2014.

Lockbox arrangements under the revolving bank facilities provided that substantially all of the income generated was deposited directly into lockbox accounts and then swept into cash management accounts for the benefit of Comerica Bank. Cash was disbursed from Comerica Bank to the Company only after payment of the applicable debt service and principal. At December 31, 2014, there were no restricted cash amounts. The Company’s obligations were generally secured by substantially all of the Company’s assets now owned or thereafter acquired.

During the three months ended March 31, 2014, the Company incurred $10,000 of Comerica Bank commitment fees and legal costs associated with the various waivers and amendments. Commitment fees and legal costs associated with acquiring and maintaining the credit facilities were capitalized and amortized on a straight-line basis as interest expense over the remaining term of the Credit Agreements.

Other Borrowings

The Company financed a portion of its annual insurance premiums which it pays in installments over nine months. As of March 31, 2015, no amounts were outstanding under this arrangement. As of March 31, 2014, $123,000 was outstanding under this arrangement at an annual interest rate of 2.85%, and was included in accrued liabilities in the accompanying consolidated financial statements. The Company incurred interest expense associated with the financed insurance premiums of approximately $1,000 during the three months ended March 31, 2014.

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2015

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

NOTE 9—COMMITMENTS AND CONTINGENCIES

Leases

The Company leases its corporate headquarters and manufacturing facility in Irvine, California and also leases certain other facilities, office equipment, and automobiles under various operating or capital lease arrangements. In February 2015, the Company entered into a 30-month capital lease agreement for information technology equipment. Future minimum lease payments under the capital lease, together with the present value of the net minimum lease payments, for the years ending December 31, 2015, 2016 and 2017 are $129,000, $172,000, and $128,000, respectively. The amount necessary to reduce net minimum lease payments to present value calculated at the Company's incremental borrowing rate of 8.83% at the inception of the lease totaled $46,000. The present value of net minimum lease payments are reflected on the Consolidated Balance Sheets as current and noncurrent obligations of $143,000 within accrued liabilities and $240,000 within capital lease obligation, respectively.

In March 2015, the corporate headquarters and manufacturing facility lease was amended to extend the term through April 30, 2020, modify provisions for tenant improvement allowance of up to $398,000, and adjust the basic rent terms. Future minimum rental commitments under operating lease agreements with non-cancelable terms greater than one year for the years ending December 31, 2015, 2016, 2017 and 2018 and thereafter totaled $483,000, $694,000, $652,000 and $1.5 million, respectively.

Employee arrangements and other compensation

Certain members of management are entitled to severance benefits payable upon termination following a change in control, which would approximate $994,000, in the aggregate, at March 31, 2015. The Company also has agreements with certain employees to pay bonuses based on targeted performance criteria. As of March 31, 2015, approximately $409,000 was accrued for performance bonuses, which is included in accrued liabilities in the consolidated balance sheets.

Purchase commitments

The Company generally purchases components and subassemblies for its products from a limited group of third party suppliers through purchase orders. As of March 31, 2015, the Company had $18.2 million of purchase commitments for which the Company has not received certain goods or services that are expected to be purchased within one year. These purchase commitments were made to secure better pricing and to ensure the Company will have the necessary parts to meet anticipated near-term demand.

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.

Class Action Lawsuits

On August 23, 2013, a purported class action lawsuit entitled Brady Adams v. Biolase, Inc., et al., Case No. 13-CV-1300 JST (FFMx) was filed in the United States District Court for the Central District of California against BIOLASE, its then Chief Executive Officer, Federico Pignatelli, and its then Chief Financial Officer, Frederick D. Furry. On August 26, 2013, a purported class action lawsuit entitled Ralph Divizio v. Biolase, Inc., et al., Case No. 13-CV-1317 DMG (MRWx) was filed in the same court against BIOLASE, Messrs. Pignatelli and Furry, and its then President and Chief Operating Officer, Alexander K. Arrow. Each of the lawsuits alleges violations of the federal securities laws and asserts causes of action against the defendants under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In accordance with the Private Securities Litigation Reform Act of 1995, on December 10, 2013, the court entered an order consolidating the lawsuits, appointing a lead plaintiff and approving the lead plaintiff’s selection of lead counsel. On February 24, 2014, the lead plaintiff filed a consolidated complaint against the Company and Messrs. Pignatelli, Furry, and Arrow, alleging violations of the federal securities laws and asserting causes of action against the defendants under Sections 10(b) and 20(a) of the Exchange Act.

On November 19, 2013, the Board received a letter from attorneys for purported shareholder David T. Long, demanding that the Board investigate, institute litigation, and take measures to redress and prevent alleged wrongdoing concerning the dissemination of certain allegedly false and misleading public disclosures made by the Company between January 2013 and August 2013.

Subsequent to December 31, 2014, the parties have reached an agreement in principle to settle the consolidated securities class action lawsuit, which is subject to the negotiation of a definitive settlement agreement and preliminary and final approval of the court. Although there can be no assurance that such agreement will be finalized, as of the date of these financial statements, management does not expect the Company to incur additional expenses related to this matter due to certain insurance coverage in place.

Intellectual Property Litigation

On April 24, 2012, CAO Group, Inc. (“CAO”) filed a lawsuit against the Company in the District of Utah for patent infringement of U.S. Patent No. 7,485,116 (the “116 Patent”) regarding the Company’s ezlase dental laser. On September 9, 2012, CAO filed its First Amended Complaint, which added claims for (1) business disparagement/injurious falsehood under common law and (2) unfair competition under 15 U.S.C. Section 1125(a). The additional claims stem from a press release that the Company issued on April 30, 2012, which CAO claims contained false statements that are disparaging to CAO and its diode product. The First Amended Complaint seeks injunctive relief, treble damages, attorneys’ fees, punitive damages, and interest. On November 13, 2012, the Court stayed the lawsuit for 120 days to allow the United States Patent and Trademark Office (the “USPTO”) to consider the Company’s request for reexamination of the patent-in-suit. The USPTO granted the request to reexamine the asserted claims of the patent-in-suit and, on February 28, 2013, the Court stayed the lawsuit until the termination of the reexamination proceedings. On April 23, 2013, the USPTO issued an office action rejecting all of the asserted claims over the prior art, and CAO responded to the office action. On August 28, 2013, the USPTO issued an Action Closing Procedure, rejecting all of CAO’s patent claims. CAO responded to the USPTO’s ruling and on December 10, 2013, the USPTO issued a Right of Appeal Notice, finally rejecting some claims of the 116 Patent while finding that other claims appeared to be patentable. The Company appealed the USPTO’s findings on January 9, 2014 and on January 27, 2014, the USPTO declined to reconsider the finding of certain claims as patentable and instructed the parties to proceed to appeal to the Patent Trial and Appeal Board. On March 17, 2014, the Company filed its brief in support of its appeal of the USPTO’s decision not to reject certain claims of the 116 Patent. On March 24, 2014, CAO filed its brief in support of its appeal of the USPTO’s decision to reject certain claims of the 116 patent. On April 18, 2014, the Company filed a respondent brief in opposition to the CAO’s appeal arguments. On May 30, 2014, both parties filed rebuttal briefs in support of their appeals.  On June 30, 2014, the Company requested an oral hearing before the Board.  On July 1, 2014, the Board noted that request and docketed the case for consideration. A hearing on reconsideration was held in November 2014.

The Company filed a patent infringement lawsuit against Fotona Proizvodnja Optoelektronskih Naprav D.D. and Fotona LLC (collectively, “Fotona”) in Düsseldorf District Court (the “Düsseldorf Court”) on April 12, 2012 alleging infringement with respect to the Fotona Fidelis dental laser system. Fotona denies liability and seeks the reimbursement of statutory fees from the Company. Together with its response brief, Fotona also filed a nullity action against the patent in dispute, patent number EP 1 560 470. The nullity action is pending at the German Federal Patent Court (the “Patent Court”), Docket No. 1 Ni 58/13 (EP). On September 2, 2013, the Company filed its counterplea in the infringement proceedings and phrased its arguments defending the validity of the patent. These arguments were also the subject of the defense brief to the Patent Court in the parallel nullity action proceedings. On September 9, 2013, the Company filed its response to the Patent Court. Fotona filed a rejoinder on February 3, 2014, including its counterplea on nullity.

On April 29, 2014, the Düsseldorf Court rendered a first instance decision whereby Fotona must cease and desist from selling its Fidelis and Lightwalker dental laser systems, render accounts on past sales, recall respective products, and pay damages on infringement. Additionally, the Company was awarded statutory fees, court costs, and attorney fees. Preliminary enforcement against Fotona is possible if the Company posts a bond totaling €500,000, which is designed to cover a portion of the potential damages, before a final instance decision is available. In Germany, damages can be calculated based on the profits made by the infringer after the formal announcement of the granting of a patent, in this case beginning January 1, 2009, without considering direct labor or any other operational costs. However, Fotona has yet to provide the details of its profits in order to allow the Company to calculate the damages. In the two additional first instance cases following the extension of the initial lawsuit against Fotona, the Düsseldorf Court also required the Company to provide a statutory bond totaling €146,000. Such bonds are traditionally imposed on foreign plaintiffs to cover all statutory, court, and attorney’s fees. Fotona submitted its responses to the action and filed respective invalidation actions against the rights of the Company.  

Subsequent to the foregoing responses, on March 24, 2015 the parties reached an agreement to settle the foregoing litigation and to dismiss the litigation with prejudice.  As part of the settlement, Fotona agreed to pay the Company a total of $1.4 million, with $550,000 payable within 10 days of March 24, 2015 and the remaining, $825,000 payable in three increments of $275,000 each to be paid no later than the first, second and third anniversary of the effective date of the agreement. Pursuant to the settlement agreement, the Company (i) granted Fotona a three-year, non-exclusive, paid-up license in the United States market and a five–year, non-exclusive, paid-up license in markets outside of the United States and (ii) agreed to grant Fotona a non-exclusive, royalty-based license following the expiration of the paid-up licenses.  The Company calculated the present value of the settlement amount to be $1.2 million and allocated such amount to each significant element of the settlement on a relative fair value basis. $731,000 and $68,000 was allocated towards the recovery of the Company’s legal expenses and as settlement for the dismissal of the patent infringement lawsuit and are reflected as legal settlement and license fees and royalty revenue, respectively, on the Consolidated Statements of Operations and Comprehensive Loss. The remaining amount of $379,000 was allocated towards the three-year, non-exclusive, paid-up license in the United States market and the five –year, non-exclusive, paid-up license in markets outside of the United States which was reflected within other assets and long-term deferred revenue on the Consolidated Balance Sheets.  The deferred revenue is being recognized as license revenue over the terms of the paid-up licenses.

Other Matters

In the normal course of business, the Company may be 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, the Company’s 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 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

3 Months Ended

Mar. 31, 2015

Risks And Uncertainties [Abstract]

Concentrations

NOTE 11—CONCENTRATIONS

Revenue from the Company’s products for the three months ended March 31, 2015 and 2014 are as follows:

	Three Months Ended
	March 31,
	2015			2014
Laser systems		64.6	%		60.4	%
Imaging systems		3.1	%		10.4	%
Consumables and other		17.5	%		13.9	%
Services		13.8	%		15.0	%
License fees and royalties		1.0	%		0.3	%
Total revenue		100.0	%		100.0	%

No individual customer represented more than 10% of the Company’s revenue for the three months ended March 31, 2015 or 2014.

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 March 31, 2015 or December 31, 2014.

The Company currently purchases certain key components of its products from single suppliers. Although there are a limited number of manufacturers of these key components, management believes that other suppliers could provide similar key components on comparable terms. A change in suppliers, however, could cause delays in manufacturing and a possible loss of sales, which could adversely affect the Company’s business, results of operations, and financial condition.

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Summary of Warrant Activity (Detail) (Warrants, USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Warrants
Shares
Beginning Balance	888,000
Exercised	0	0
Ending Balance	888,000
Warrants exercisable, March 31, 2015	753,000
Weighted Average Exercise Price
Beginning Balance	$ 6.04
Ending Balance	$ 6.04
Warrants exercisable at March 31, 2015	$ 6.40

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Income Taxes - Additional Information (Detail) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Income Tax Disclosure [Abstract]
Liability for unrecognized tax benefit, including related estimates of penalties and interest	$ 0	$ 0
Income tax provision (benefit)	$ 47,000	$ 24,000
Projected annual effective tax rate	(0.90%)	(0.50%)
Statutory tax rate	34.00%	34.00%

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Inventory (Tables)

3 Months Ended

Mar. 31, 2015

Inventory Disclosure [Abstract]

Components of 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):

	March 31,		December 31,
	2015		2014
Raw materials	$	2,951	$	2,857
Work-in-process		1,528		1,348
Finished goods		8,693		8,303
Inventory, net	$	13,172	$	12,508

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Concentrations (Tables)

3 Months Ended

Mar. 31, 2015

Risks And Uncertainties [Abstract]

Summary of Net Revenue from Various Products

Revenue from the Company’s products for the three months ended March 31, 2015 and 2014 are as follows:

	Three Months Ended
	March 31,
	2015			2014
Laser systems		64.6	%		60.4	%
Imaging systems		3.1	%		10.4	%
Consumables and other		17.5	%		13.9	%
Services		13.8	%		15.0	%
License fees and royalties		1.0	%		0.3	%
Total revenue		100.0	%		100.0	%

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Concentrations - Summary of Net Revenue from Various Products (Detail) (Product Concentration Risk, Sales Revenue, Net)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Concentration Risk [Line Items]
Concentration Risk Percentage	100.00%	100.00%
Laser systems
Concentration Risk [Line Items]
Concentration Risk Percentage	64.60%	60.40%
Imaging systems
Concentration Risk [Line Items]
Concentration Risk Percentage	3.10%	10.40%
Consumables and other
Concentration Risk [Line Items]
Concentration Risk Percentage	17.50%	13.90%
Services
Concentration Risk [Line Items]
Concentration Risk Percentage	13.80%	15.00%
License fees and royalties
Concentration Risk [Line Items]
Concentration Risk Percentage	1.00%	0.30%

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Components of Accrued Liabilities (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014	Mar. 31, 2014
Components of accrued liabilities
Payroll and benefits	$ 2,177	$ 1,905
Warranty accrual, current portion	1,027	930	1,025
Taxes	38	139
Accrued professional services	1,566	1,581
Accrued capital lease payments	143
Accrued insurance premium	104	450
Other	89	183
Total accrued liabilities	$ 5,144	$ 5,188

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Consolidated Statements Of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Cash Flows from Operating Activities:
Net loss	$ (5,436)	$ (4,887)
Adjustments to reconcile net loss to net cash and cash equivalents used in operating activities:
Depreciation and amortization	158	175
Loss on disposal of property, plant, and equipment, net		(1)
Provision for bad debts	53	268
Provision for inventory excess and obsolescence		261
Amortization of discounts on lines of credit		120
Amortization of debt issuance costs		57
Stock-based compensation	700	310
Other non-cash compensation		61
Deferred income taxes	15	15
Incurred but unpaid interest expense		12
Changes in operating assets and liabilities:
Restricted cash	(200)
Accounts receivable	(860)	2,301
Inventory	(664)	(774)
Prepaid expenses and other assets	(677)	2
Customer deposits	64	(135)
Accounts payable and accrued liabilities	(1,090)	(392)
Deferred revenue	535	(190)
Net cash and cash equivalents used in operating activities	(7,402)	(2,797)
Cash Flows from Investing Activities:
Additions to property, plant, and equipment	(228)	(86)
Proceeds from disposal of property, plant, and equipment		1
Net cash and cash equivalents used in investing activities	(228)	(85)
Cash Flows from Financing Activities:
Borrowings under lines of credit		7,570
Payments under lines of credit		(9,325)
Payments of debt issue costs		(10)
Proceeds from equity offering, net of expenses		4,793
Deposit on capital lease	(42)
Proceeds from exercise of stock options and warrants	44	248
Net cash and cash equivalents provided by financing activities	2	3,276
Effect of exchange rate changes	(193)	1
Change in cash and cash equivalents	(7,821)	395
Cash and cash equivalents, beginning of period	31,560	1,440
Cash and cash equivalents, end of period	23,739	1,835
Supplemental cash flow disclosure - Cash Paid:
Interest paid		67
Income taxes paid	37	5
Supplemental cash flow disclosure - Non-cash:
Assets acquired under capital lease	$ 383

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Property, Plant, and Equipment

3 Months Ended

Mar. 31, 2015

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):

	March 31,			December 31,
	2015			2014
Building	$	202		$	226
Leasehold improvements		1,200			1,197
Equipment and computers		5,035			4,948
Furniture and fixtures		413			413
Construction in progress		536			4
		7,386			6,788
Accumulated depreciation and amortization		(5,796	)		(5,669	)
		1,590			1,119
Land		157			176
Property, plant, and equipment, net	$	1,747		$	1,295

The cost of fixed assets acquired under the capital lease of $383,000 is included in the above as part of construction in progress.  For additional information on the capital lease, see Note 9 – Commitments and Contingencies. Depreciation and amortization expense related to property, plant, and equipment totaled $140,000 and $157,000 for the three months ended March 31, 2015 and 2014, respectively.

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Description of Business and Basis of Presentation - Additional Information (Detail) (USD $)	Mar. 31, 2015	Dec. 31, 2014	Mar. 31, 2014	Dec. 31, 2013
Organization Consolidation And Presentation Of Financial Statements [Abstract]
Working capital	$ 33,200,000
Cash and cash equivalents	23,739,000	31,560,000	1,835,000	1,440,000
Net accounts receivable	$ 9,811,000	$ 9,004,000

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Property, Plant, and Equipment - Additional Information (Detail) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Property Plant And Equipment [Abstract]
Fixed assets acquired under capital lease	$ 383,000
Depreciation and amortization	$ 140,000	$ 157,000

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Stock-Based Awards and Per Share Information (Tables)

3 Months Ended

Mar. 31, 2015

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Summary of Income Statement Classification of Compensation Expense

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

	Three Months Ended
	March 31,
	2015		2014
Cost of revenue	$	76	$	46
Sales and marketing		293		125
General and administrative		236		115
Engineering and development		95		24
	$	700	$	310

Assumptions on Estimation of Stock Option Fair Values

The stock option fair values, under the 2002 Plan, were estimated using the Black-Scholes option-pricing model with the following assumptions:

	Three Months Ended
	March 31,
	2015		2014
Expected term	7.2 years		3.6 years
Volatility	89.90%		98.37%
Annual dividend per share	$	—	$	—
Risk-free interest rate	1.78%		1.65%

Summary of Option Activity

A summary of option activity under the 2002 Plan for the three months ended March 31, 2015 is as follows:

						Weighted Average
				Weighted		Remaining		Aggregate
				Average		Contractual		Intrinsic
	Shares			Exercise Price		Term (Years)		Value(1)
Options outstanding at December 31, 2014		3,391,000		$	3.11		2.97	$	1,063,000
Granted at fair market value		2,232,000		$	2.44
Exercised		(38,000	)	$	1.15
Forfeited, cancelled, or expired		(153,000	)	$	3.44
Options outstanding at March 31, 2015		5,432,000		$	2.84		5.46	$	186,000
Options exercisable at March 31, 2015		2,680,000		$	3.11		2.31	$	183,000
Vested options expired during the quarter    ended March 31, 2015		25,000		$	3.96

(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 Vested Options

Cash proceeds along with fair value disclosures related to grants, exercises, and vested options under the 2002 Plan are provided in the following table (in thousands, except per share amounts):

	Three Months Ended
	March 31,
	2015		2014
Proceeds from stock options exercised	$	44	$	248
Tax benefit related to stock options    exercised (1)	N/A		N/A
Intrinsic value of stock options exercised (2)	$	52	$	82
Weighted-average fair value of options granted    during period	$	2.44	$	1.86
Total fair value of shares vested during    the period	$	293	$	346

(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 the Company’s net operating losses.

(2) The intrinsic value of stock options exercised is the amount by which the market price of the stock on the date of exercise exceeded the market price of the stock on the date of grant.

Summary of Warrant Activity

A summary of warrant activity for the three months ended March 31, 2015 is as follows:

			Weighted
			Average
	Shares		Exercise Price
Warrants outstanding at December 31, 2014		888,000	$	6.04
Granted		—
Exercised		—
Forfeited, cancelled, or expired		—
Warrants outstanding at March 31, 2015		888,000	$	6.04
Warrants exercisable at March 31, 2015		753,000	$	6.40
Vested warrants expired during the quarter    ended March 31, 2015		—	N/A