| Stockholders' Equity |
NOTE 8 — STOCKHOLDERS’ EQUITY
Preferred Stock
The Board, without further stockholder authorization, may issue from time to time up to 1,000,000 shares of the Company’s preferred stock. Of the 1,000,000 shares of preferred stock, 500,000 shares are designated as Series B Junior Participating Cumulative Preferred Stock. As of December 31, 2018 and 2017, no shares of the Company’s preferred stock were issued or outstanding.
Common Stock
At December 31, 2018, 21,072,491 shares of the Company’s common stock were issued and outstanding. On May 10, 2018, the Company filed the Fourth Amendment to its Restated Certificate of Incorporation to reduce the authorized shares of common stock from 200,000,000 shares to 40,000,000 shares. See Note 1 for further information on the reverse stock split.
Stock Dividends
There were no dividends paid or declared in 2018, 2017 or 2016.
Warrants
The Company issues warrants for the sale of its common stock as approved by its Board. In 2018, the Company issued 708,212 warrants to purchase common stock at a weighted-average exercise price of $1.40, including the SWK Warrants, the DPG Warrants and the Western Alliance Warrants, excluding those warrants issued and canceled as a result of the Bridge Bank loan amendment. Warrants to purchase up to an aggregate of 785,174 unregistered shares of common stock at an exercise price of $9.00 per share were issued in connection with the Company’s April 2017 private placement. The debt-related warrants and the private placements are accounted for within stockholders’ equity in the consolidated balance sheets upon adoption of ASU 2017-11 in the fourth quarter and as of December 31, 2018.
The following table summarizes warrant activity (in thousands, except per share data):
|
|
|
|
|
|
|
Weighted-
Average
|
|
|
|
|
|
|
|
|
Exercise Price
|
|
|
|
|
Shares
|
|
|
Per Share
|
|
|
Warrants outstanding, January 1, 2016
|
|
|
2,018
|
|
|
$
|
20.90
|
|
|
Granted/Issued
|
|
|
407
|
|
|
$
|
10.00
|
|
|
Exercised
|
|
|
—
|
|
|
$
|
—
|
|
|
Forfeited, cancelled, or expired
|
|
|
(144
|
)
|
|
$
|
32.50
|
|
|
Warrants outstanding, December 31, 2016
|
|
|
2,281
|
|
|
$
|
20.90
|
|
|
Granted/Issued
|
|
|
785
|
|
|
$
|
9.00
|
|
|
Exercised
|
|
|
—
|
|
|
$
|
—
|
|
|
Forfeited, cancelled, or expired
|
|
|
(1,841
|
)
|
|
$
|
20.00
|
|
|
Warrants outstanding, December 31, 2017
|
|
|
1,225
|
|
|
$
|
9.65
|
|
|
Granted/Issued
|
|
|
760
|
|
|
$
|
2.23
|
|
|
Exercised
|
|
|
—
|
|
|
$
|
—
|
|
|
Forfeited, cancelled, or expired
|
|
|
(52
|
)
|
|
$
|
2.35
|
|
|
Warrants outstanding, December 31, 2018
|
|
|
1,933
|
|
|
$
|
6.62
|
|
|
Warrants exercisable, December 31, 2018
|
|
|
1,906
|
|
|
$
|
6.43
|
|
|
Vested warrants expired during the 12 months ended
December 31, 2018
|
|
|
—
|
|
|
$
|
—
|
|
On March 6, 2018, in connection with the execution of the Original Business Financing Agreement, the Company issued to Western Alliance warrants (the “Original Western Alliance Warrants”) to purchase up to the number of shares of common stock equal to $120,000 divided by the applicable exercise price at the time such warrants are exercised. The Original Western Alliance Warrants are fully vested and exercisable. The Original Western Alliance Warrants may be exercised with a cash payment from Western Alliance, or, in lieu of a cash payment, Western Alliance may convert the warrants into a number of shares, in whole or in part. The initial exercise price of the warrants was $2.35 per share, which was the Reverse Stock Split-adjusted closing market price of BIOLASE common stock on March 6, 2018. On September 27, 2018, the Company entered into the Second Modification Agreement to amend the Original Business Financing Agreement. In connection with the Second Modification Agreement, the Original Western Alliance Warrants were terminated, and the Company issued new warrants (the “Western Alliance Warrants”) to purchase up to the number of shares of common stock equal to $120,000 divided by the exercise price of $2.13, which was the closing price of the Company’s common stock on September 27, 2018. The Western Alliance Warrants are immediately exercisable and expire on September 27, 2028. These warrants contain down-round features that require the Company to adjust the exercise price proportionately should the Company issue shares at a price per share less than the exercise price. As a result of the early-adoption of ASU 2017-11, the value of these warrants has been recognized in equity in the consolidated balance sheets as of December 31, 2018.
On November 9, 2018, in connection with the Credit Agreement, BIOLASE issued to SWK, LLC or its assignees (collectively with SWK, the “Holder”) warrants to purchase up to 372,023 shares of common stock. The exercise price of the SWK Warrants is $1.34 per share, which was the average closing price of common stock for the ten trading days immediately preceding November 9, 2018. The SWK Warrants are immediately exercisable, expire on November 9, 2026 and contain a “cashless exercise feature.” Subject to certain limitations, the Holder has certain piggyback registration rights with respect to the shares that are issued upon exercise of the SWK Warrants. These warrants contain down-round features that require the Company to adjust the exercise price proportionately should the Company issue shares at a price per share less than the exercise price. As a result of the early-adoption of ASU 2017-11, the value of these warrants has been recognized in equity in the consolidated balance sheets as of December 31, 2018.
On November 14, 2018, in connection with the SWK Loan, the Company issued to DPG warrants to purchase up to 279,851 shares of common stock. The exercise price of the DPG Warrants is $1.34 per share, which was the average closing price of common stock for the ten trading days immediately preceding November 9, 2018. The DPG Warrants are immediately exercisable, expire on November 9, 2026 and contain a “cashless exercise feature.” Subject to certain limitations, the Holder has certain piggyback registration rights with respect to the shares that are issued upon exercise of the DPG Warrants. These warrants contain down-round features that require the Company to adjust the exercise price proportionately should the Company issue shares at a price per share less than the exercise price. As a result of the early-adoption of ASU 2017-11, the value of these warrants has been recognized in equity in the consolidated balance sheet as of December 31, 2018.
Stock Options
2002 Stock Incentive Plan
The 2002 Stock Incentive Plan (as amended effective as of May 26, 2004, November 15, 2005, May 16, 2007, May 5, 2011, June 6, 2013, October 30, 2014, April 27, 2015, and May 6, 2016, the “2002 Plan”) was replaced by the 2018 Plan (as defined below) with respect to future equity awards. Persons eligible to receive awards under the 2002 Plan included officers, employees, and directors of the Company, as well as consultants. As of December 31, 2018, a total of 3,110,000 shares have been authorized for issuance under the 2002 Plan, of which 961,982 shares of common stock have been issued pursuant to options that were exercised, 1,724,264 shares of common stock have been reserved for options and restricted stock units that are outstanding, and 0 shares of common stock remain available for future grants.
2018 Stock Incentive Plan
At the 2018 Annual Meeting, the Company’s stockholders approved the 2018 Long-Term Incentive Plan (as amended, the “2018 Plan”) which was amended by Amendment No. 1 to the 2018 Long Term Incentive Plan, approved by the Company’s stockholders at a special meeting on September 21, 2018. The purposes of the 2018 Plan are (i) to align the interests of the Company’s stockholders and recipients of awards under the 2018 Plan by increasing the proprietary interest of such recipients in the Company’s growth and success; (ii) to advance the interests of the Company by attracting and retaining non-employee directors, officers, other employees, consultants, independent contractors and agents; and (iii) to motivate such persons to act in the long-term best interests of the Company and its stockholders.
As of December 31, 2018, a total of 3,271,101 shares of common stock have been authorized for issuance under the 2018 Plan, of which 1,875,801 shares of common stock have been reserved for outstanding options and unvested RSUs, and 1,395,300 shares of common stock remain available for future grants.
Stock options may be granted as incentive or non-qualified options; however, no incentive stock options have been granted to date. The exercise price of options is at least equal to the market price of the stock as of the date of grant. Options may vest over various periods but typically vest on a quarterly basis over four years. Options expire after five years, ten years, or within a specified time from termination of employment, if earlier. The Company issues new shares of common stock upon the exercise of stock options. The following table summarizes option activity under the 2002 Plan and the 2018 Plan (in thousands, except per share data):
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|
|
|
|
|
|
|
|
Weighted-
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-
Average
|
|
|
Average
Remaining
|
|
|
Aggregate
|
|
|
|
|
|
|
|
|
Exercise Price
|
|
|
Contractual
|
|
|
Intrinsic
|
|
|
|
|
Shares
|
|
|
Per Share
|
|
|
Term (Years)
|
|
|
Value(1)
|
|
|
Options outstanding, January 1, 2016
|
|
|
898
|
|
|
$
|
15.15
|
|
|
|
|
|
|
|
|
|
|
Granted at fair market value
|
|
|
622
|
|
|
$
|
7.10
|
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
Forfeited, cancelled, or expired
|
|
|
(198
|
)
|
|
$
|
15.05
|
|
|
|
|
|
|
|
|
|
|
Options outstanding, December 31, 2016
|
|
|
1,322
|
|
|
$
|
13.60
|
|
|
|
|
|
|
|
|
|
|
Granted at fair market value
|
|
|
446
|
|
|
$
|
5.15
|
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
—
|
|
|
$
|
4.30
|
|
|
|
|
|
|
|
|
|
|
Forfeited, cancelled, or expired
|
|
|
(421
|
)
|
|
$
|
9.15
|
|
|
|
|
|
|
|
|
|
|
Options outstanding, December 31, 2017
|
|
|
1,347
|
|
|
$
|
8.99
|
|
|
|
|
|
|
|
|
|
|
Granted at fair market value
|
|
|
611
|
|
|
$
|
1.98
|
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
(1
|
)
|
|
$
|
2.10
|
|
|
|
|
|
|
|
|
|
|
Forfeited, cancelled, or expired
|
|
|
(334
|
)
|
|
$
|
10.68
|
|
|
|
|
|
|
|
|
|
|
Options outstanding, December 31, 2018
|
|
|
1,623
|
|
|
$
|
6.54
|
|
|
|
5.94
|
|
|
$
|
—
|
|
|
Options exercisable, December 31, 2018
|
|
|
1,101
|
|
|
$
|
7.88
|
|
|
|
4.98
|
|
|
$
|
—
|
|
|
Vested options expired during the twelve months
ended December 31, 2018
|
|
|
102
|
|
|
$
|
18.06
|
|
|
|
|
|
|
|
|
|
|
|
(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 a grant.
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The following table summarizes additional information for those options that are outstanding and exercisable as of December 31, 2018 (in thousands, except per share data):
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|
|
Options Outstanding
|
|
|
Exercisable
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-
|
|
|
Average
|
|
|
|
|
|
|
Weighted-
|
|
|
|
|
Number
|
|
|
Average
|
|
|
Remaining
|
|
|
Number
|
|
|
Average
|
|
|
Range of Exercise Prices
|
|
of Shares
|
|
|
Exercise Price
|
|
|
Life (Years)
|
|
|
of Shares
|
|
|
Exercise Price
|
|
|
$1.17 - $2.13
|
|
|
416
|
|
|
$
|
1.95
|
|
|
|
9.19
|
|
|
|
105
|
|
|
$
|
2.10
|
|
|
$ 2.14 - $6.57
|
|
|
273
|
|
|
$
|
4.06
|
|
|
|
7.20
|
|
|
|
204
|
|
|
$
|
4.30
|
|
|
$6.58 - $7.50
|
|
|
391
|
|
|
$
|
7.17
|
|
|
|
3.06
|
|
|
|
320
|
|
|
$
|
7.16
|
|
|
$7.51 - $11.10
|
|
|
283
|
|
|
$
|
9.15
|
|
|
|
6.32
|
|
|
|
213
|
|
|
$
|
9.43
|
|
|
$11.11 - $20.35
|
|
|
260
|
|
|
$
|
12.69
|
|
|
|
3.30
|
|
|
|
259
|
|
|
$
|
12.69
|
|
|
Total
|
|
|
1,623
|
|
|
$
|
6.54
|
|
|
|
5.94
|
|
|
|
1,101
|
|
|
$
|
7.88
|
|
Cash proceeds, along with fair value disclosures related to grants, exercises, and vesting options, are as follows for the years ended December 31 (in thousands, except per share amounts):
|
|
|
Years Ended
|
|
|
|
|
December 31,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
Proceeds from stock options exercised
|
|
$
|
2
|
|
|
$
|
3
|
|
|
$
|
1
|
|
|
Tax benefit related to stock options exercised(1)
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
Intrinsic value of stock options exercised(2)
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
Weighted-average fair value of options granted
|
|
$
|
1.38
|
|
|
$
|
3.45
|
|
|
$
|
5.15
|
|
|
Total fair value of shares vested during the year
|
|
$
|
1,191
|
|
|
$
|
1,286
|
|
|
$
|
1,728
|
|
|
(1)
|
Excess tax benefits received related to stock option exercises are presented as operating cash inflows. For the periods presented, the Company did not receive a tax benefit related to the exercise of stock options due to its 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.
|
2018 Stock Option Activity
Effective January 25, 2018, the Compensation Committee of the Board awarded 360,000 non-qualified stock options to purchase shares of common stock to certain employees of the Company. These awards were valued at $2.11 per share and expire 10 years from the grant date. The options vest ratably over the 36-month period, commencing on February 25, 2018.
Additional options were granted during 2018, none of which were individually material.
2017 Stock Option Activity
|
|
•
|
Effective February 6, 2017, the Compensation Committee of the Board issued 122,200 non-qualified stock options to purchase shares of the Company’s common stock to certain employees of the Company. These awards were issued at $7.75 per share, the closing market price of the Company’s common stock on the grant date, and expire 10 years from the grant date. Vesting periods for options are as follows: (i) for the 117,200 options awarded to existing employees, one-half vest on the first anniversary of grant date and one-half vest on the second anniversary of the grant date and (ii) for the 5,000 options awarded to new employees, 25% vest on February 6, 2018 and the remainder vest ratably over the 36-month period, commencing on March 6, 2018.
|
|
|
•
|
On May 10, 2017, non-employee directors of the Company were granted a total of 105,105 non-qualified stock options to purchase shares of common stock. These awards were issued at $6.05 per share, the closing market price of common stock on the grant date, and expire 10 years from the grant date. The total grant vests in equal installments over a consecutive 12-month period, commencing on June 10, 2017.
|
|
|
•
|
On September 1, 2017, Paul N. Clark resigned from the Board, effective September 11, 2017, and as Chairman of the Board, effective September 1, 2017. Effective September 1, 2017, Dr. Jonathan T. Lord was appointed Chairman of the Board. On September 11, 2017, the Compensation Committee of the Board approved a modification to expiration dates applicable to Mr. Clark’s vested options. As a result of the modification, the Company recognized additional compensation expense of $44,000 for the year ended December 31, 2017. On September 11, 2017, Dr. Lord was granted 13,077 non-qualified stock options to purchase shares of common stock at $2.70 per share, the closing market price of the Company’s common stock on the grant date, and expiring 10 years from the grant date. On September 12, 2017, Dr. Lord was granted 13,178 non-qualified stock options to purchase shares of common stock at $3.05 per share, the closing market price of common stock on the grant date, and expiring 10 years from the grant date. Both grants vest in equal installments over an eight-month period, commencing on October 10, 2017.
|
|
|
•
|
On October 27, 2017, Frederic H. Moll, M.D. resigned from the Board, effective November 11, 2017. On November 11, 2017, the Compensation Committee of the Board approved a modification to expiration dates applicable to Dr. Moll’s vested options. As a result of the modification, the Company recognized additional compensation expense of $22,000 for the year ended December 31, 2017. Also, on October 27, 2017 the Board elected Richard B. Lanman, M.D. to the Board. In connection with his election to the Board, on November 1, 2017, Dr. Lanman was granted 27,066 non-qualified stock options to purchase shares of common stock at $3.75 per share, the closing market price of the Company’s common stock on the grant date, and expiring 10 years from the grant date.
|
|
|
•
|
Effective November 7, 2017, the Compensation Committee of the Company’s Board issued 85,200 non-qualified stock options to purchase shares of common stock to certain employees of the Company. These awards were issued at $3.00 per share, the closing market price of the Company’s common stock on the grant date, and expire 10 years from the grant date. Vesting periods for options are as follows: one-half vest on the first anniversary of the grant date and one-half vest ratably monthly commencing thirteen months after the grant date through the twenty-fourth month.
|
2016 Stock Option Activity
|
|
•
|
On February 26, 2016, the Compensation Committee of the Board awarded to certain employees and consultants of the Company a total of 59,000 non-qualified stock options to purchase shares of common stock. These awards were issued at $4.30 per share, the closing market price of the Company’s common stock on the grant date, and expire 10 years from the grant date. Vesting periods for options are as follows: (i) 37,000 options, awarded to existing employees, vest ratably over a 48 month period, commencing one month from the grant date, and (ii) 22,000 options, awarded to new 2016 employees, vest 25% on the one-year anniversary of the grant date and the remainder ratably over the 36-month period, commencing 13 months after of the grant date.
|
|
|
•
|
On April 18, 2016, in connection with the hiring of the two new Vice Presidents, the Compensation Committee of the Board awarded 65,000 non-qualified stock options to purchase shares of common stock. These awards were issued at $7.15 per share, the closing market price of the Company’s common stock on the grant date, and expire 10 years from the grant date. Vesting periods for the options are as follows: (i) one-half of the total grant is subject to time vesting, with 25% vesting as of April 18, 2017 and the remaining 75% vesting ratably monthly over a 36-month period commencing on April 18, 2017, and (ii) one-half of the total grant is subject to specific 2016 and 2017 performance criteria, with vesting upon completion of the applicable performance criteria. As of December 31, 2016, 48,750 non-qualified stock options to purchase shares of the Company’s common stock remain outstanding.
|
|
|
•
|
On May 6, 2016, non-employee directors of the Company were granted a total of 119,551 non-qualified stock options to purchase shares of common stock. These awards were issued at $7.05 per share, the closing market price of the Company’s common stock on the grant date, and expire 10 years from the grant date. The total grant vests in equal installments over a consecutive 12-month period, commencing on June 6, 2016.
|
|
|
•
|
On August 29, 2016, in connection with the hiring of a new Senior Director, the Compensation Committee of the Board awarded 12,000 non-qualified stock options to purchase shares of common stock. This award was issued at $8.25 per share, the closing market price of the Company’s common stock on the grant date, and expires 10 years from the grant date. Vesting periods for the options are as follows: (i) one-half of the total grant is subject to ratable time vesting over a 48-month period commencing on September 29, 2016, and (ii) one-half of the total grant is subject to specific 2017 performance criteria, with vesting upon completion of the applicable performance criteria. As of December 31, 2016, 12,000 non-qualified stock options to purchase shares of the Company’s common stock remain outstanding.
|
|
|
•
|
On September 15, 2016, in connection with the hiring of a new Vice President, the Compensation Committee of the Board awarded 50,000 non-qualified stock options to purchase shares of common stock. This award was issued at $8.90 per share, the closing market price of the Company’s common stock on the grant date, and expires 10 years from the grant date. Vesting periods for the options are as follows: (i) one-half of the total grant is subject to time vesting with 25% vesting as of September 15, 2017 and the remaining 75% vesting ratably monthly over a 36-month period commencing on September 15, 2017, and (ii) one-half of the total grant is subject to specific 2017 and 2018 performance criteria, with vesting upon completion of the applicable performance criteria. As of December 31, 2016, 50,000 non-qualified stock options to purchase shares of the Company’s common stock remain outstanding.
|
|
|
•
|
On October 3, 2016, in connection with the hiring of a new Vice President, the Compensation Committee of the Board awarded 25,000 non-qualified stock options to purchase shares of common stock. This award was issued at $8.60 per share, the closing market price of the Company’s common stock on the grant date, and expires 10 years from the grant date. Vesting periods for the options are as follows: (i) one-half of the total grant is subject to time vesting with 25% vesting as of October 3, 2017 and the remaining 75% vesting ratably monthly over a 36-month period commencing on October 3, 2017, and (ii) one-half of the total grant is subject to specific 2017 through 2019 performance criteria, with vesting upon completion of the applicable performance criteria. As of December 31, 2016, 25,000 non-qualified stock options to purchase shares of the Company’s common stock remain outstanding.
|
|
|
•
|
During the year ended December 31, 2016, the Compensation Committee of the Board granted non-qualified stock options to purchase 280,000 shares of common stock to the Company’s President and Chief Executive Officer. The exercise price of such options ranged from $7.20-$7.25 per share, vest over two to four years, and expire 10 years from the grant date.
|
Restricted Stock Units
2018 Restricted Stock Units Activity
|
|
•
|
Under the 2002 Plan, effective January 26, 2018, the Board issued 40,000 RSUs to the Company’s President and Chief Executive Officer. This award was valued at $2.00 per share, the reverse stock split adjusted closing market price of the Company’s common stock on the grant date, and will vest upon the achievement of specific annual Company performance criteria.
|
Effective September 10, 2018 and September 21, 2018, respectively, the Compensation Committee of the Board granted the following:
|
|
•
|
650,000 shares to the Company’s President and Chief Executive Officer. These awards were valued at $2.17 per share, the closing price of the Company’s common stock on the grant date. Vesting periods for the awards are as follows: (i) 54% of the total grant is subject to time vesting with 33% vesting on August 7, 2019 and the remaining 67% vesting ratably semi-annually over the two-year period commencing on February 7, 2020; and (ii) 46% of the awards is subject to specific 2019, 2020 and 2021 performance criteria, with vesting upon satisfaction of the applicable performance criteria, subject to continued service through the applicable vesting dates.
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•
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30,388 shares to certain employees of the Company. These awards were valued at $2.06 per share, the closing price of the Company’s common stock on the grant date. Vesting periods for the awards are as follows: (i) 50% of 24,271 shares vest on September 10, 2019 and the remaining 50% vest on September 10, 2020; and (ii) 6,117 shares fully vest on March 15, 2019, subject to continued service through the applicable vesting dates.
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Effective May 14, 2018, the Compensation Committee of the Board granted the following:
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•
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1,193,850 shares to certain Board members, employees and consultants of the Company. These awards were valued at $1.45 per share, the closing price of the Company’s common stock on the grant date, and vest 40% on December 31, 2018 and 60% on December 31, 2019, subject to continued service through the applicable vesting dates.
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•
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398,275 shares to certain Board members of the Company. These awards were valued at $1.45 per share, the closing price of BIOLASE common stock on the grant date, and fully vest on the first anniversary of the grant date, subject to continued service through the applicable vesting date.
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•
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10,127 shares to certain employees of the Company. These awards were valued at $1.45 per share, the closing price of the Company’s common stock on the grant date, and were fully vested on the grant date, subject to continued service through the applicable vesting date.
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Effective June 15, 2018, the Board granted 155,000 RSUs to two new Board members. These awards were valued at $1.25 per share, the closing price of the Company’s common stock on the grant date, and vest fully on May 9, 2019.
2017 Restricted Stock Units Activity
Effective February 6, 2017, the Compensation Committee of the Board approved the grant of the following awards:
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16,000 restricted stock units (“RSUs”) were awarded to an employee of the Company as part of the employee’s 2017 compensation. These awards were valued at $7.75 per share, the closing market price of the Company’s common stock on the grant date, and vest as follows: (i) 6,000 of the RSUs vested on March 14, 2017, (ii) 4,000 of the RSUs vested on September 14, 2017, and (iii) 6,000 of the RSUs vest on May 10, 2018.
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•
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200,000 stock-settled RSUs were awarded to the Company’s President and Chief Executive Officer as part of his 2017 compensation. These RSUs were valued at $7.75 per share, the closing market price of the Company’s common stock on the grant date. These RSUs vest as follows: (i) one-quarter of the RSUs vest on February 6, 2019, (ii) one-eighth of the RSUs vest on February 6, 2020, (iii) one-eighth of the RSUs vest on February 6, 2021, and (iv) one-half of the RSUs vest upon the achievement of specific interim and annual Company performance criteria.
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•
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On May 9, 2017 and in connection with the Company’s 2017 compensation plan, 100,000 RSUs were awarded to certain employees and consultants of the Company. These awards were valued at $6.10 per share, the closing market price of the Company’s common stock on the grant date. The RSUs vest as follows: (i) one-half of the total grant is subject to time vesting with 50% vesting on May 9, 2018 and the remaining 50% vesting on May 9, 2019, and (ii) one-half of the total grant is subject to specific 2017 and 2018 performance criteria, with vesting upon satisfaction of the applicable performance criteria.
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•
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On May 10, 2017, non-employee directors of the Company were granted a total of 35,032 RSUs valued at $6.05 per share, the closing market price of the Company’s common stock on the grant date. These awards vest on May 10, 2018. On September 1, 2017, Paul N. Clark resigned from the Board, effective September 11, 2017, and as Chairman of the Board, effective September 1, 2017. On September 11, 2017, the Compensation Committee of the Board approved a modification to the vesting criteria applicable to Mr. Clark’s unvested RSUs. As a result of the modification, the Company recognized additional compensation expense of $12,000 for the year ended December 31, 2017. On October 27, 2017, Frederic H. Moll, M.D. resigned from the Board, effective November 11, 2017. On November 11, 2017, the Compensation Committee of the Board approved a modification to the vesting criteria applicable to Dr. Moll’s unvested RSUs. As a result of the modification, the Company recognized additional compensation expense of $10,000 for the year ended December 31, 2017.
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2016 Restricted Stock Units Activity
Under the 2002 Plan, effective February 26, 2016, the Compensation Committee of the Board granted the following awards:
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77,700 restricted stock units (“RSUs”) were awarded to certain employees and consultants of the Company. These awards were valued at $4.30 per share, the closing market price of common stock on the grant date, and fully vested on July 1, 2016.
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•
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28,000 RSUs were awarded to certain employees and consultants of the Company as part of their compensation plan. These awards were valued at $4.30 per share, the closing market price of the Company’s common stock on the grant date, and vest 25% on each of the first, second, third, and fourth anniversaries of the grant date.
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In connection with the President and Chief Executive Officer’s employment agreement, the maximum performance bonus was awarded, consisting of (i) $100,000 paid in cash during the nine months ended September 30, 2016, and (ii) the grant of 11,904 RSUs, valued at $4.30 per share, the closing market price of the Company’s common stock on the grant date. Half of these RSUs vested on March 30, 2016 and half of these RSUs vested on February 18, 2017.
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On March 10, 2016, the Compensation Committee of the Board approved the grant of 14,000 RSUs to the Company’s Chief Financial Officer as part of his 2015 compensation. These awards were valued at $6.15 per share, the closing market price of the Company’s common stock on the grant date, and fully vested on July 1, 2016.
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•
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On May 6, 2016, as compensation for their service during the current year, non-employee directors of the Company were granted a total of 49,750 RSUs valued at $7.05 per share, the closing market price of common stock on the grant date. These awards vest on May 6, 2017.
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The following table summarize RSU activity under the 2002 and 2018 Plans (in thousands):
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Shares
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Unvested restricted stock units, January 1, 2016
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—
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Granted
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181
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Vested
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(97
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)
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Forfeited or cancelled
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—
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Unvested restricted stock units, December 31, 2016
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84
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Granted
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470
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Vested
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(81
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)
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Forfeited or cancelled
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(115
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)
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Unvested restricted stock units, December 31, 2017
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358
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Granted
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2,836
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Vested
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(604
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)
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Forfeited or cancelled
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(427
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)
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Unvested restricted stock units, December 31, 2018
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2,163
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Inducement Stock-Based Awards
2018 Inducement Activity
There were no new grants relating to inducements for the year ended December 31, 2018. Approximately 124,000 options were canceled and 328,500 remain outstanding at December 31, 2018.
2017 Inducement Activity
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On March 13, 2017, and as amended on April 19, 2017, in connection with the hiring of a new Vice President of Sales, the Compensation Committee of the Board awarded non-qualified stock options to purchase 80,000 shares of BIOLASE common stock. This award was issued at $5.85 per share, the closing market price of the Company’s common stock on the grant date, and expires 10 years from the grant date. Vesting periods for the options are as follows: (i) two-fifths of the total grant is subject to time vesting with 25% vesting as of March 13, 2018 and the remaining 75% vesting ratably monthly over a 36-month period commencing on March 13, 2018, and (ii) three-fifths of the total grant is subject to specific 2017 and 2018 performance criteria, with vesting upon satisfaction of the applicable performance criteria. This award was forfeited upon the departure of the Vice President of Sales in November 2017.
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On March 27, 2017, in connection with the hiring of a new Senior Vice President and Chief Financial Officer, the Compensation Committee of the Board awarded non-qualified stock options to purchase 120,000 shares of common stock. This award was issued at $6.40 per share, the closing market price of the Company’s common stock on the grant date, and expires 10 years from the grant date. Vesting periods for the options are as follows: (i) two-thirds of the total grant is subject to time vesting with 25% vesting as of March 27, 2018 and the remaining 75% vesting ratably monthly over a 36-month period commencing on March 27, 2018, and (ii) one-third of the total grant is subject to specific 2017 and 2018 performance criteria, with vesting upon satisfaction of the applicable performance criteria. This award was forfeited upon the departure of the Senior Vice President and Chief Financial Officer in May 2017.
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•
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On October 2, 2017, in connection with the hiring of a new Senior Vice President and Chief Financial Officer, the Compensation Committee of the Board awarded non-qualified stock options to purchase 120,000 shares of common stock. This award was issued at $2.95 per share, the closing market price of the Company’ common stock on the grant date, and expires 10 years from the grant date. Vesting periods for the options are as follows: (i) two-thirds of the total grant is subject to time vesting with 25% vesting as of October 2, 2018 and the remaining 75% vesting ratably monthly over a 36-month period commencing on October 2, 2018, and (ii) one-third of the total grant is subject to specific 2018 and 2019 performance criteria, with vesting upon satisfaction of the applicable performance criteria.
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