BIOLASE, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Awards and Per Share Information (Tables)

Stock-Based Awards and Per Share Information (Tables)

9 Months Ended

Sep. 30, 2013

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):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
Cost of revenue	$	73	$	67	$	227	$	183
Sales and marketing		154		134		443		375
General and administrative		225		103		459		586
Engineering and development		39		53		110		136
	$	491	$	357	$	1,239	$	1,280

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 assumptions:

	Three Months Ended September 30,
	2013			2012				2013				2012
Expected term (in years)		3.70			3.70				3.66				3.80
Volatility		83	%		97	%			83	%			101	%
Annual dividend per share	$	0.00		$	0.00		$		0.00		$		0.00
Risk-free interest rate		1.54	%		0.68	%			0.99	%			0.81	%

Summary of Option Activity Under Stock Option Plan

A summary of option activity under the Company’s stock option plan for the nine months ended September 30, 2013 is as follows:


Options outstanding at December 31, 2012	3,860,000		$	3.48
Plus: Options granted	1,516,000		$	3.90
Less: Options exercised	(342,000	)	$	2.07
Options forfeited, canceled, or expired	(660,000	)	$	4.34
Options outstanding at September 30, 2013	4,374,000		$	3.55	4.02	$	171,000
Options exercisable at September 30, 2013	2,480,000		$	3.57	3.39	$	166,000
Vested options expired during the quarter ended September 30, 2013	66,000		$	10.28

(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.

Cash Proceeds Along with Fair Value Disclosures Related to Grants, Exercises, and Vesting Options

Cash proceeds along with fair value disclosures related to grants, exercises, and vesting options are provided in the following table (in thousands, except per share amounts):

	Three Months Ended September 30,					Nine Months Ended September 30,
	2013		2012			2013			2012
Proceeds from stock options exercised	$	10	$	33	$		707	$		455
Tax benefit related to stock options exercised (1)		N/A		N/A			N/A			N/A
Intrinsic value of stock options exercised (2)	$	6	$	0	$		860	$		91
Weighted-average fair value of options granted during period	$	3.31	$	1.02	$		3.90	$		1.55
Total fair value of shares vested during the period	$	437	$	398	$		1,155	$		1,410

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

- Definition

Tabular disclosure of the allocation of equity-based compensation costs to a given line item on the balance sheet and income statement for the period. This may include the reporting line for the costs and the amount capitalized and expensed.

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