BIOLASE, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Summary of Significant Accounting Policies (Tables)

Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2018

Schedule of Reconciliation of Cash, Cash Equivalents, and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported in the consolidated balance sheets to the same total reported in the consolidated statements of cash flows (in thousands):

	For the years ended December 31,
	2018		2017
Cash and cash equivalents	$	8,044	$	11,645
Restricted cash		312		251
Total cash, cash equivalents, and restricted cash in the consolidated statement of cash flows	$	8,356	$	11,896

Estimated Useful Lives of Property, Plant and Equipment

The cost of property, plant, and equipment is depreciated using the straight-line method over the following estimated useful lives of the respective assets, except for leasehold improvements, which are depreciated over the lesser of the estimated useful lives of the respective assets or the related lease terms.

Building	30 years
Leasehold improvements	3 to 5 years
Equipment and computers	3 to 5 years
Furniture and fixtures	5 years

Summary of Opening and Closing Balances of Contract Liabilities

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

	December 31,
	2018		2017
Undelivered elements (training, installation, product and support services)	$	730	$	980
Extended warranty contracts		1,735		1,634
Deferred royalties		11		22
Total deferred revenue		2,476		2,636
Less: long-term portion of deferred revenue		—		11
Deferred revenue – current	$	2,476	$	2,625

Summary of Disaggregation of Revenues Related to Geographic Areas

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

	Years Ended December 31,
	2018		2017		2016
United States	$	28,661	$	29,296	$	33,385
International		17,494		17,630		18,425
	$	46,155	$	46,926	$	51,810

Summary of Revenues Disaggregated by Timing of Goods and Services Transferred

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

	For the Year Ended December 31,
	2018		2017		2016
Revenue recognized over time		6,441		7,123		7,103
Revenue recognized at a point in time	$	39,714	$	39,803	$	44,707
Total	$	46,155	$	46,926	$	51,810

Summary of Sales by End Market

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

	For the Year Ended December 31,
	2018		2017		2016
End-customer	$	30,478	$	31,886	$	36,060
Distributors		15,677		15,040		15,750
	$	46,155	$	46,926	$	51,810

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 years ended December 31 are included within accrued liabilities on the Consolidated Balance Sheets and were as follows (in thousands):

	Years Ended December 31,
	2018			2017			2016
Balance, January 1	$	1,190		$	1,706		$	2,188
Provision for estimated warranty cost		901			492			348
Warranty expenditures		(783	)		(1,008	)		(830	)
Balance, December 31		1,308			1,190			1,706
Less: long-term portion of warranty accrual		447			70			773
Current portion of warranty accrual	$	861		$	1,120		$	933

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):

	Years Ended December 31,
	2018		2017		2016
Cost of revenue	$	420	$	207	$	226
Sales and marketing		535		235		477
General and administrative		1,440		1,469		2,051
Engineering and development		373		296		311
	$	2,768	$	2,207	$	3,065

Assumptions on Estimation of Stock Option Fair Values

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

	For the years ended December 31,
	2018			2017			2016
Expected term (years)	5.87				5.51			5.96
Volatility		81	%		79	%		86	%
Annual dividend per share	$	—		$	—		$	—
Risk-free interest rate		2.54	%		1.99	%		1.39	%