Quarterly report pursuant to Section 13 or 15(d)

Stockholders' Equity

v3.19.2
Stockholders' Equity
6 Months Ended
Jun. 30, 2019
Equity [Abstract]  
Stockholders' Equity

NOTE 4—STOCKHOLDERS’ EQUITY

Reverse Stock Split

At BIOLASE’s annual meeting of stockholders on May 9, 2018 (the “2018 Annual Meeting”), BIOLASE stockholders approved an amendment to BIOLASE’s Restated Certificate of Incorporation, as amended, to effect the Reverse Stock Split of BIOLASE common stock and on May 10, 2018, the Company filed an amendment (the “Amendment”) to its Restated Certificate of Incorporation, as amended, with the Secretary of State of the State of Delaware to effect the Reverse Stock Split, effective as of 11:59 p.m. on May 10, 2018. The Amendment also reduced the authorized shares of common stock from 200,000,000 shares to 40,000,000 shares. Prior year share and per share amounts have been adjusted to reflect the impact of the Reverse Stock Split.

Stock-Based Compensation

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 June 30, 2019, a total of approximately 3.1 million shares of the Company’s common stock have been authorized for issuance under the 2002 Plan, of which approximately 1.5 million shares of the Company’s common stock have been issued pursuant to options that were exercised and restricted stock units (“RSUs”) that were settled in common stock and 1.6 million shares of common stock have been reserved for outstanding options and unvested RSUs, and no shares are 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 Plan, approved by the Company’s stockholders at a special meeting on September 21, 2018 and Amendment No. 2 to the 2018 Plan, approved by the Company’s stockholder’s at its annual meeting of stockholders on May 15, 2019. 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.

Subject to the terms and conditions of the 2018 Plan, the number of shares authorized for grants under the 2018 Plan is 5.0 million. As of June 30, 2019, a total 1.4 million shares of the Company’s common stock have been reserved for outstanding options and unvested RSUs, and 3.6 million shares of common stock remain available for future grants.

The Company recognized stock-based compensation expense of $0.5 million and $0.6 million, for the three months ended June 30, 2019 and June 30, 2018, respectively, and $1.2 million and $1.3 million for the six months ended June 30, 2019 and June 30, 2018, respectively, based on the grant-date fair value. As of June 30, the Company had approximately $1.6 million of total unrecognized compensation expense, net of estimated forfeitures, related to unvested share-based compensation arrangements. The Company expects that expense to be recognized over a weighted-average period of 2.0 years.

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

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Cost of revenue

 

$

54

 

 

$

105

 

 

$

136

 

 

$

162

 

Sales and marketing

 

 

78

 

 

 

154

 

 

 

238

 

 

 

234

 

General and administrative

 

 

283

 

 

 

207

 

 

 

724

 

 

 

674

 

Engineering and development

 

 

32

 

 

 

91

 

 

 

106

 

 

 

188

 

 

 

$

447

 

 

$

557

 

 

$

1,204

 

 

$

1,258

 

 

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

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Expected term

 

6.1 years

 

 

5.7 years

 

 

6.1 years

 

 

5.9 years

 

Volatility

 

 

85.0

%

 

 

81.2

%

 

 

85.8

%

 

 

81.4

%

Annual dividend per share

 

$

 

 

$

 

 

$

 

 

$

 

Risk-free interest rate

 

 

2.50

%

 

 

2.71

%

 

 

2.60

%

 

 

2.46

%

 

A summary of option activity for the six months ended June 30, 2019 is as follows (in thousands, except per share data):

 

 

 

 

 

 

 

 

 

 

Weighted

Average

 

 

 

 

 

 

 

 

 

 

Weighted

 

 

Remaining

 

 

 

 

 

 

 

 

 

 

Average

 

 

Contractual

 

 

Aggregate

 

 

Shares

 

 

Exercise

Price

 

 

Term

(Years)

 

 

Intrinsic

Value(1)

 

Options outstanding, December 31, 2018

 

1,623

 

 

$

6.54

 

 

 

 

 

 

$

 

Granted at fair market value

 

70

 

 

$

2.08

 

 

 

 

 

 

 

 

 

Exercised

 

(2

)

 

$

2.10

 

 

 

 

 

 

 

 

 

Forfeited, cancelled, or expired

 

(159

)

 

$

5.77

 

 

 

 

 

 

 

 

 

Options outstanding at June 30, 2019

 

1,532

 

 

$

6.42

 

 

 

5.46

 

 

$

16,200

 

Options exercisable at June 30, 2019

 

1,165

 

 

$

7.56

 

 

 

4.61

 

 

$

 

Vested options expired during the quarter ended June 30, 2019

 

14

 

 

$

13.25

 

 

 

 

 

 

 

 

 

(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.

 

A summary of unvested stock option activity for the six months ended June 30, 2019 is as follows (in thousands, except per share data):

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

Average Grant

 

 

Shares

 

 

Date Fair Value

 

Unvested options at December 31, 2018

 

522

 

 

$

2.11

 

Granted

 

70

 

 

$

1.53

 

Vested

 

(147

)

 

$

2.94

 

Forfeited or cancelled

 

(78

)

 

$

2.62

 

Unvested options at June 30, 2019

 

367

 

 

$

1.56

 

 

Cash proceeds, along with fair value disclosures related to grants, exercises and vested options are as follows (in thousands, except per share amounts):

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Proceeds from stock options exercised

 

$

 

 

$

 

 

$

3

 

 

$

2

 

Tax benefit related to stock options

   exercised (1)

 

N/A

 

 

N/A

 

 

N/A

 

 

N/A

 

Intrinsic value of stock options exercised (2)

 

$

 

 

$

 

 

$

 

 

$

 

Weighted-average fair value of options

   granted during period

 

$

1.53

 

 

$

1.27

 

 

$

1.53

 

 

$

1.46

 

Total fair value of shares vested during the

   period

 

$

90

 

 

$

843

 

 

$

431

 

 

$

245

 

 

(1) Excess tax benefits received related to stock option exercises are presented as operating 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

There were no material grants made during the three and six months ended June 30, 2019.

A summary of unvested RSU activity for the six months ended June 30, 2019 is as follows (in thousands, except per share amounts):

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

Average Grant

 

 

Shares

 

 

Date Fair Value

 

Unvested RSUs at December 31, 2018

 

2,163

 

 

$

1.84

 

Granted

 

97

 

 

$

2.08

 

Vested

 

(794

)

 

$

1.74

 

Forfeited or cancelled

 

(213

)

 

$

2.37

 

Unvested RSUs at June 30, 2019

 

1,253

 

 

$

1.87

 

 

Warrants

The Company issues warrants to acquire shares of the Company’s common stock as approved by the Board. A summary of warrant activity for the six months ended June 30, 2019 is as follows (in thousands, except exercise price amounts):

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

Average

 

 

Shares

 

 

Exercise Price

 

Warrants outstanding, December 31, 2018

 

1,934

 

 

$

6.62

 

Granted or Issued

 

149

 

 

$

2.22

 

Exercised

 

 

 

$

 

Forfeited, cancelled, or expired

 

 

 

$

 

Warrants outstanding at June 30, 2019

 

2,083

 

 

$

6.30

 

Warrants exercisable at June 30, 2019

 

2,083

 

 

$

6.30

 

Vested warrants expired during the quarter ended June 30, 2019

 

 

 

$

 

 

See Note 9 for additional information on the Western Alliance Warrants, the SWK Warrants, and the DPG Warrants (each as defined below).

Net Loss Per Share – Basic and Diluted

Basic net loss per share is computed by dividing net loss available to common stockholders by the weighted-average number of shares of the Company’s common stock 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, RSUs and warrants to purchase approximately 5.7 million shares were not included in the calculation of diluted loss per share for the three and six months ended June 30, 2019, as their effect would have been anti-dilutive. For the same 2018 periods, anti-dilutive outstanding stock options and warrants to purchase 3.8 million shares were not included in the computation of diluted loss per share.