NOTE 11 — SUBSEQUENT EVENTS (unaudited)

Patent Litigation

On January 25, 2019 (the “Effective Date”), BIOLASE, Inc. (the “Company”) entered into a settlement agreement (the “Settlement Agreement”) with CAO Group, Inc. (“CAO”). Pursuant to the Settlement Agreement, CAO has agreed to dismiss with prejudice the previously-disclosed lawsuits filed by CAO against the Company in April 2012 and January 2018 alleging, among other things, that the Company’s ezlase dental laser and diode laser infringe on certain patents owned by CAO. In addition, CAO granted to the Company and its affiliates a non-exclusive, non-transferable (except as provided in the Settlement Agreement), royalty-free, fully-paid, worldwide license to the licensed patents for use in the licensed products and agreed not to sue the Company, its affiliates or any of its manufacturers, distributors, suppliers or customers for use of the licensed patents in the licensed products, and the parties agreed to a mutual release of claims. The Company has agreed (i) to pay to CAO, within five days of the Effective Date, $500,000 in cash, (ii) to issue to CAO, within 30 days of the Effective Date, 500,000 restricted shares of common stock of the Company (the “Stock Consideration”), and (iii) to pay to CAO, within 30 days of December 31, 2021, an amount in cash equal to the difference (if positive) between $1,000,000 and the value of the Stock Consideration on December 31, 2021. The Stock Consideration vests and becomes transferrable on December 31, 2021, subject to the terms of a restricted stock agreement to be entered into between the parties. The Company considered this a Type I subsequent event and recognized a $1.5 million contingent loss on patent litigation settlement in its statement of operations for the year ended December 31, 2018.

Equity Awards

Restricted Stock Units

Effective February 22, 2019, the Compensation Committee of the Board issued to certain employees of the Company a total of approximately 0.9 million non-qualified RSUs as part of the Company’s 2019 performance bonus program.  Vesting of these awards will occur quarterly based on the achievement of specific Company performance criteria. These awards expire 10 years from the grant date and were valued at $2.26 per share, the closing market price of the Company’s common stock on the grant date.