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, 2019

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,
	2019		2018
Cash and cash equivalents	$	5,789	$	8,044
Restricted cash		312		312
Total cash, cash equivalents, and restricted cash in the consolidated statement of cash flows	$	6,101	$	8,356

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,
	2019		2018
Undelivered elements (training, installation, product and support services)	$	559	$	730
Extended warranty contracts		2,063		1,735
Deferred royalties		—		11
Total deferred revenue		2,622		2,476
Less: long-term portion of deferred revenue		385		—
Deferred revenue – current	$	2,237	$	2,476

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,
	2019		2018		2017
United States	$	22,814	$	28,661	$	29,296
International		14,985		17,494		17,630
	$	37,799	$	46,155	$	46,926

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,
	2019		2018		2017
Revenue recognized over time		7,174		6,441		7,123
Revenue recognized at a point in time	$	30,625	$	39,714	$	39,803
Total	$	37,799	$	46,155	$	46,926

Summary of Sales by End Market

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

	For the Year Ended December 31,
	2019		2018		2017
End-customer	$	25,173	$	30,478	$	31,886
Distributors		12,626		15,677		15,040
	$	37,799	$	46,155	$	46,926

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,
	2019			2018			2017
Balance, January 1	$	1,308		$	1,190		$	1,706
Provision for estimated warranty cost		806			901			492
Warranty expenditures		(1,004	)		(783	)		(1,008	)
Balance, December 31		1,110			1,308			1,190
Less: long-term portion of warranty accrual		245			447			70
Current portion of warranty accrual	$	865		$	861		$	1,120

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,
	2019		2018		2017
Cost of revenue	$	293	$	420	$	207
Sales and marketing		557		535		235
General and administrative		1,662		1,440		1,469
Engineering and development		230		373		296
	$	2,742	$	2,768	$	2,207

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,
	2019			2018			2017
Expected term (years)		5.97		5.87				5.51
Volatility		85	%		81	%		79	%
Annual dividend per share	$	—		$	—		$	—
Risk-free interest rate		2.55	%		2.54	%		1.99	%