<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Page 1 of 14
Sequentially Numbered
Document, Exhibit Index
Located at Page 13 of 14
FORM 10-QSB
(Mark One)
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the quarterly period ended June 30, 1996
-------------
[ ] Transition report under Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from to
-------------
----------------
Commission File Number
0-19627
BIOLASE TECHNOLOGY, INC.
(Exact name of small business issuer as specified in its charter)
DELAWARE 87-0442441
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
981 CALLE AMANECER, SAN CLEMENTE, CA 92673
(Address of Principal Executive Offices)
(714) 361-1200
(Issuer's Telephone Number)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's
classes of Common Stock, as of the latest practicable date.
COMMON STOCK, $.001 PAR VALUE 11,321,190
- ----------------------------- --------------------------
Title Class Number of Shares Outstanding
at August 26, 1996
TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT
(CHECK ONE): Yes No X
--- ---
<PAGE> 2
BIOLASE TECHNOLOGY, INC.
<TABLE>
<CAPTION>
Page Number
-----------
<S> <C>
PART 1. Financial Information
ITEM 1. Financial Statements:
Consolidated Balance Sheets 3
Consolidated Statements of
Operations 4
Consolidated Statement of
Stockholders' Equity 5
Consolidated Statements of Cash
Flows 6
Notes to Consolidated Financial
Statements 7
ITEM 2. Management's Discussion and Analysis or
Plan of Operation 9
PART II. Other Information 12
ITEM 1. Legal Proceedings "
ITEM 2. Changes in Securities "
ITEM 3. Defaults Upon Senior Securities "
ITEM 4. Submission of Matters to a Vote of Security
Holders "
ITEM 5. Other Information 13
ITEM 6. Exhibits and Reports on Form 8-K "
SIGNATURE PAGE 14
</TABLE>
Page 2
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
BIOLASE TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, 1996 DECEMBER 31, 1995
-----------------
(UNAUDITED)
-----------
<S> <C> <C>
ASSETS:
CURRENT ASSETS:
Cash and cash equivalents $ 625,523 $ 1,565,655
Accounts receivable, less allowance of $55,897 in 1996
and $64,617 in 1995 32,133 64,622
Inventories, net of reserves of $469,859 in 1996
and $491,335 in 1995 466,059 390,928
Prepaid expenses and other current assets 134,042 170,232
------------ ------------
TOTAL CURRENT ASSETS 1,257,757 2,191,437
Property, plant and equipment, less accumulated depreciation of
$964,594 in 1996 and $885,902 in 1995 246,022 289,016
Patents and licenses, less accumulated amortization of $327,614
in 1996 and $327,614 in 1995 22,317 10,070
Other assets 21,688 21,270
------------ ------------
TOTAL ASSETS $ 1,547,784 $ 2,511,793
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:
Current portion of long-term debt $ 11,880 $ 22,324
Accounts payable 68,070 41,880
Accrued expenses 460,371 404,752
Accrued costs related to dissolution of foreign subsidiary 85,814 109,748
Other current liabilities 66,000 89,000
------------ ------------
TOTAL CURRENT LIABILITIES 692,135 667,704
------------ ------------
STOCKHOLDERS' EQUITY:
Preferred stock, par value $.001,
1,000,000 shares authorized, none issued -- --
Common stock, par value, $.001, 50,000,000 shares
authorized, issued 11,320,690 in 1996
and 11,241,112 in 1995 11,321 11,241
Additional paid-in capital 24,288,228 24,169,018
Accumulated deficit (23,443,900) (22,336,170)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 855,649 1,844,089
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,547,784 $ 2,511,793
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
Page 3
<PAGE> 4
ITEM 1. FINANCIAL STATEMENTS (CONTINUED).
BIOLASE TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------- --------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Sales $ 161,137 $ 412,828 $ 304,752 $ 591,832
Cost of sales 136,072 266,311 271,895 458,395
----------- ---------- ----------- -----------
Gross profit 25,065 146,517 32,857 133,437
----------- ---------- ----------- -----------
Operating expenses:
Sales and marketing 137,007 150,895 317,148 314,305
General and administrative 257,722 209,884 409,824 426,316
Engineering and development 246,411 147,984 426,928 553,404
Litigation and settlement costs 2,147 11,127 3,581 14,581
----------- ---------- ----------- -----------
Total operating expenses 643,287 519,890 1,157,481 1,308,606
----------- ---------- ----------- -----------
Loss from operations (618,222) (373,373) (1,124,624) (1,175,169)
Other income (expense):
Interest income (expense), net 7,210 (1,745) 16,894 1,689
----------- ---------- ----------- -----------
Net loss $ (611,012) $ (375,118) $(1,107,730) $(1,173,480)
=========== ========== =========== ===========
Loss per share of common stock $ (0.05) $ (0.04) $ (0.10) $ (0.13)
=========== ========== =========== ===========
Weighted average shares outstanding 11,299,783 9,093,431 11,276,800 8,754,653
=========== ========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
Page 4
<PAGE> 5
ITEM 1. FINANCIAL STATEMENTS (CONTINUED).
BIOLASE TECHNOLOGY, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(UNAUDITED)
<TABLE>
<CAPTION>
ADDITIONAL TOTAL
COMMON STOCK PAID-IN ACCUMULATED STOCKHOLDERS'
SHARES AMOUNT CAPITAL DEFICIT EQUITY
------ ------ ------- ------- ------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1995 11,241,164 $11,241 $24,169,018 ($22,336,170) $ 1,844,089
Exercise of stock options 79,526 80 119,210 -- 119,290
Net loss -- -- -- (1,107,730) (1,107,730)
---------- ------- ----------- ------------ -----------
Balance at June 30, 1996 11,320,690 $11,321 $24,288,228 ($23,443,900) $ 855,649
========== ======= =========== ============ ===========
</TABLE>
See accompanying notes to consolidated financial statements.
Page 5
<PAGE> 6
ITEM 1. FINANCIAL STATEMENTS (CONTINUED).
BIOLASE TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30
-----------------------
1996 1995
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(1,107,730) $(1,173,480)
Adjustments to reconcile net loss to net cash used by
operating activities:
Depreciation and amortization 78,691 102,663
Provision for bad debts -- 332
Provision for inventory write-off -- 7,500
Earned escrow shares of common stock -- 29,374
Changes in operating assets and liabilities:
Accounts receivable 32,489 (6,457)
Inventories (75,131) 181,604
Prepaid expenses and other assets 35,772 (11,479)
Accounts payable 26,190 (41,680)
Accrued expenses 55,619 (78,384)
Accrued costs related to dissolution of foreign subsidiary (23,934) --
Other current liabilities (23,000) (14,651)
----------- -----------
Net cash used by operating activities (1,001,034) (1,004,658)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (35,697) (15,478)
Additions to patents and licenses (12,247) (750)
----------- -----------
Net cash used by investing activities (47,944) (16,228)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of long-term debt (10,444) (10,254)
Proceeds from issuance of common stock for cash 922,307
Proceeds from exercise of stock options 119,290 --
----------- -----------
Net cash provided by financing activities 108,846 912,053
----------- -----------
Decrease in cash and cash equivalents (940,132) (108,833)
Cash and cash equivalents at beginning of period 1,565,655 1,162,041
----------- -----------
Cash and cash equivalents at end of period $ 625,523 $ 1,053,208
=========== ===========
Supplemental cash flow disclosure:
Cash paid during the period for interest $ 2,584 $ 8,625
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
Page 6
<PAGE> 7
BIOLASE TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996
Note 1
The accompanying unaudited consolidated financial statements of BioLase
Technology, Inc. (the "Company") have been prepared in accordance with the
instructions to Form 10-QSB and do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring adjustments) considered necessary for a fair presentation
have been included.
The Company's consolidated financial statements have been presented on
the basis that the Company will continue as a going concern, which contemplates
the realization of assets and the satisfaction of liabilities in the normal
course of business. The Company reported net losses of $2,023,822, $3,050,333
and $7,549,262 for the years ended December 31, 1995, 1994, and 1993
respectively, a net loss of $1,107,730 for the six-month period ended June 30,
1996, and has an accumulated deficit of $23,443,900 at June 30, 1996, which
raise substantial doubt about the Company's ability to continue as a going
concern.
The Company's ability to continue as a going concern is dependent upon
its ability to obtain outside financing through either debt or equity financing
and, ultimately, a movement to profitability through increased sales, continued
engineering development, and on-going cost containment. The Company's focus has
been realigned to emphasize the marketing of its hydro-kinetic tissue cutting
systems (the Millennium(TM) series), laser systems and endodontic products, and
continued development of biomaterial products and cost-effective laser
technologies for medical and dental surgical applications.
The Company's current business plan anticipates a shortfall in working
capital to occur in the fourth quarter of 1996 unless additional capital is
raised. Financing the development of laser dental instruments and operations of
the Company has been achieved principally through private placements of common
stock and the exercise of stock options. During the three years ended December
31, 1995, the Company raised approximately $9,776,000 of equity funds.
Management believes that significant additional capital resources will be
required to complete the FDA approval process to allow use of the Company's
laser and hydro-kinetic products for hard tissue applications and to fund the
Company's working capital needs for 1997. The Company anticipates obtaining the
necessary capital resources through the sale of equity securities in either
public offerings or private placements, or through debt financing. (FLS) No
assurance can be given, however, that the Company will be able to obtain such
capital resources. The consolidated financial statements do not include any
adjustments that might result from the outcome of the uncertainty regarding the
Company's ability to continue as a going concern.
Operating results for the three and six-month periods ended June 30, 1996
and 1995 are not necessarily indicative of the results to be expected for the
year ending December 31, 1996. These statements should be read in conjunction
with the audited consolidated financial statements and notes thereto included in
the Company's Form 10-KSB for the year ended December 31, 1995.
Note 2
<TABLE>
<CAPTION>
Inventories, net of reserves, (unaudited)
consist of the following: June 30, 1996 December 31, 1995
------------- -----------------
<S> <C> <C>
Raw materials $179,258 $178,669
Work-in-process - -
Finished goods 286,801 212,259
-------- --------
$466,059 $390,928
======== ========
</TABLE>
Page 7
<PAGE> 8
Note 3
<TABLE>
<CAPTION>
Property, plant and equipment, (unaudited)
at cost, consist of the following: June 30, 1996 December 31, 1995
------------- -----------------
<S> <C> <C>
Leasehold improvements $ 149,282 $ 149,282
Equipment and computers 707,825 674,575
Furniture and fixtures 106,154 103,707
Demonstration units 247,354 247,354
---------- ----------
Total cost 1,210,615 1,174,918
Less, accumulated depreciation and amortization (964,593) (885,902)
---------- ----------
$ 246,022 $ 289,016
========== ==========
</TABLE>
Note 4
Loss per share is based on the weighted average number of common shares
outstanding. Common stock equivalents, which consist of stock options, have been
excluded from per share calculations, as the effect of the assumed exercise of
these common stock equivalents is anti-dilutive at June 30, 1996 and 1995.
Note 5
As of December 31, 1995, the Company had net operating loss carryforwards
for federal and state purposes of approximately $20 million and $6.8 million,
respectively. The net operating loss carryforwards expire through 2010 and 2000,
respectively. The utilization of net operating loss carryforwards may be limited
under the provisions of Internal Revenue Code Section 382.
Note 6
Since November 12, 1992, the Company's Common Stock has been authorized
for inclusion on the National Association of Securities Dealers Automated
Quotation System - SmallCap Market ("NASDAQ"). The Company's Common Stock is
quoted on such system under the symbol "BLTI". Requirements for continued
quotation on NASDAQ include total assets of $2,000,000 and stockholders' equity
of $1,000,000. At June 30, 1996, the Company was not in compliance with these
requirements as total assets and stockholders' equity were $1,547,784 and
$855,649, respectively. The Company is presently pursuing means to bring it into
compliance with the NASDAQ requirements, including obtaining additional equity
financing through a private placement. The Company expects to be notified by
NASDAQ that it is out of compliance with NASDAQ's continuing listing requirement
and that the Company will have thirty days from such notice to restore
compliance or have its Common Stock excluded from trading on NASDAQ.
If the Common Stock were excluded from the quotation on NASDAQ, it would
likely trade on the over-the-counter market, in what is commonly referred to as
the "Electronic Bulletin Board" or "pink sheets". The exclusion of the Common
Stock from continued quotation and trading on NASDAQ may make the sale of the
Common Stock subject to restrictive sales practice requirements, may make it
more difficult to dispose of or obtain accurate quotations for the market price
of shares of the Common Stock, may cause a diminution of news coverage of the
Company, and may create greater difficulty in arranging future financing.
Page 8
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
The following discussion should be read in conjunction with the
consolidated financial statements and notes thereto.
RESULTS OF OPERATIONS - FISCAL THREE AND SIX-MONTH PERIODS ENDED JUNE 30, 1996
COMPARED WITH COMPARABLE 1995 PERIODS:
Sales decreased $252,000 for the second quarter of 1996 and $287,000 for
the first half of 1996 as compared to the same periods, respectively, in 1995.
The Company's laser division reported sales for the second quarter of 1996 of
$48,000, a decrease of $274,000 from the $322,000 reported for the same period
in 1995. Consolidated sales for the first half of 1996 were $305,000, a decrease
of $287,000 compared to the first half of 1995.
The decreases in sales within the laser division are due principally to
reduced laser unit shipments to the Company's primary market, Germany, as a
result of the Company realigning its laser distribution channel in Germany. This
realignment was necessitated by the need to obtain a more experienced
distribution channel to meet the anticipated sales volume of the Company's new
hydro-kinetic tissue cutting system, the Millennium(TM) series, which addresses
a much broader market than the Company's previous laser systems. (The preceding
sentence constitutes a forward looking statement [hereinafter identified as
"FLS"]. Each of the forward looking statements in this Quarterly Report on Form
10-QSB is subject to various factors that could cause actual results to differ
materially from the results anticipated in such forward looking statement, as
more fully discussed in this Item 2 under "Forward Looking Statements".) The
Company has recently shipped its first production unit of Millennium(TM) to
Germany for clinical evaluation and demonstration purposes and anticipates
signing a distribution agreement with a large dental device distributor in
Germany during the third quarter of 1996; initial sales of the Company's new
Millennium(TM) series to its potential German distributor are anticipated in the
first quarter of 1997. (FLS) Domestically, the Company does not anticipate a
strong increase in sales for its laser division unless and until it receives
clearance to market its laser and hydro-kinetic systems for certain hard-tissue
and other applications. (FLS) The Company has commenced clinical trials with its
Millennium(TM) series utilizing its hydro-kinetic technology to obtain clinical
data for its hard-tissue application to the Food and Drug Administration
("FDA"). (FLS) The Company is in the process of applying for FDA approvals
relating to dermatology and cosmetic surgery utilizing the Millennium(TM) series
and its hydro-kinetic technology as well. (FLS)
Gross profits decreased to $25,000 during the second quarter of 1996,
down $122,000 from $147,000 for the same period in 1995. Gross profits for the
first half of 1996 were down $100,000 compared to the same period in 1995. These
decreases are due principally to the reduction in sales of the laser division.
Product margins are similar to those of the same periods in 1995; however, the
disproportional reduction in gross profit compared to sales is due principally
to the under absorption of fixed overhead costs brought about by lower sales
volume.
The net loss for the second quarter of 1996 was $611,000 compared to
$375,000 for the same period in 1995, an increase of $236,000; the net loss
position decreased in the first half of 1996 to $1,108,000, a reduction of
$65,000 from the $1,173,000 reported for the same period in 1995. The increase
in the net loss for the second quarter of 1996 compared to the same period in
1995 is due principally to lower sales volume coupled with an increase in
operating expenses due primarily to expenses associated with the Company's
refinement of its hydro-kinetic technology. The decrease in the net loss for the
first half of 1996 as compared to 1995 is a result of reduced operating expenses
due principally to the Company's downsizing and an increase in net interest
income offset by reduced sales volume.
Sales and marketing expenses decreased $14,000 for the second quarter of
1996 as compared to the same period in 1995, due principally to market
evaluation expenses incurred in the second quarter of 1995 that did not exist in
1996. Sales and marketing expenses for the first half of 1996 were comparable to
that of 1995 with an increase in the first quarter of 1996 related to increased
advertising and trade show participation expenses offset by the aforementioned
decrease in market evaluation expenses in the second
Page 9
<PAGE> 10
quarter of 1996 as compared to 1995. The Company anticipates an increase in its
sales and marketing expense commencing the fourth quarter of 1996 with the ramp
up of a direct sales force utilizing independent representatives for sales
within its endodontic division. (FLS)
General and administrative expenses increased $48,000 for the second
quarter of 1996 as compared to the second quarter of 1995 while declining
$16,000 for the first half of 1996 compared to the same period in 1995. The
increase in the second quarter is due principally to increased costs related to
protecting the Company's technology both domestically and abroad (see Item 1,
"Legal Proceedings" included herewith at Part II of this Quarterly Report on
Form 10-QSB), and promoting the Company through various publications and
investor forums; this increase is partially offset by reductions in the
Company's general insurance premiums from the same period in 1995. The slight
decrease in the first half of 1996 as compared to 1995 is due principally to the
Company's ongoing cost containment efforts that outweighed the increased costs
related to technology protection and promotion.
Engineering and development expenses increased $98,000 for the second
quarter of 1996 as compared to the same period in 1995 due principally to the
Company completing its design of its hydro-kinetic tissue cutting system, the
Millennium(TM), and the procurement of material to manufacture six prototypes to
be used for clinical evaluation. Increased costs related to certain FDA clinical
studies were incurred during the second quarter of 1996 specifically with the
objective of obtaining required approvals by the FDA for marketing the
Millennium(TM) series domestically. The Company anticipates these increased
costs to continue through the fourth quarter of 1996 as it continues its efforts
to obtain hard-tissue and other approvals for the Millennium(TM) series. (FLS)
The first half of 1996 reflected a decrease of $126,000 in engineering and
development expenses compared to the first half of 1995 and is due principally
to the reduction in engineering personnel since the first quarter of 1995,
partially offset by the aforementioned increased costs in the second quarter of
1996.
The Company is presently in the engineering design phase of its
LaserBrush(TM), a hand-held toothbrush expected to utilize optical energy and
specifically developed toothpaste compounds to illuminate and identify bacteria.
Completion of the design and packaging of the LaserBrush(TM) is expected in
early 1997. (FLS) The Company has recently begun the development of
FlavorFlow(TM), a water conditioning system that utilizes certain patent-pending
technology for sanitizing and altering the flavor and scent of fluids typically
administered during medical and dental surgical procedures. The Company
anticipates completion of the design and the related packaging in early 1997.
(FLS)
Interest income, net, increased $9,000 and $15,000 for the second quarter
and first half of 1996, respectively, as compared to the same periods in 1995.
The increases are due to increased cash balances available for investment in
cash equivalents during 1996 as compared to 1995 coupled with a slight decrease
in interest expense due to the expiration of certain capital leases.
LIQUIDITY AND CAPITAL RESOURCES:
The Company's liquidity at June 30, 1996 has declined significantly
compared to December 31, 1995 and is due principally to the reduction in sales.
Working capital decreased $958,000 while cash and cash equivalents declined
$940,000. Net cash used by operating activities for the six-month period ended
June 30, 1996 was comparable to that for the same period in 1995. Net cash used
by investing activities for the six-month period ended June 30, 1996 increased
$32,000 over the same period in 1995 due principally to an increase in capital
expenditures along with an increase in capitalized patent and licensing costs
related to the Company's patent-pending hydro-kinetic technology. Net cash
provided by financing activities were $803,000 lower for the six-month period
ended June 30, 1996 than in the comparable 1995 period reflecting principally
the absence in 1996 of private placement proceeds; $922,000 of such proceeds
were received in May, 1995.
The Company's consolidated financial statements have been presented on
the basis that it is a going concern, which contemplates the realization of
assets and the satisfaction of liabilities in the normal course of business. Its
viability as a going concern is dependent upon its ability to obtain outside
Page 10
<PAGE> 11
financing either through the issuance of additional shares of its Common Stock
or Preferred Stock, or through borrowings and, ultimately, a movement to
profitability through increased sales, continued engineering development, and
on-going cost containment. (FLS) The Company's focus has been realigned to
emphasize the marketing of its hydro-kinetic tissue cutting system
(Millennium(TM)), laser systems and endodontic products, and the continued
development of biomaterial products and cost-effective laser technologies for
medical and dental surgical applications.
Based on the Company's current business plan, working capital is
anticipated to fall below the level required to meet its obligations in the
fourth quarter of fiscal 1996 unless additional capital is raised. (FLS) The
Company is exploring the possibility of additional equity or debt financing;
however, there are no assurances that the Company will obtain the financing
required to sustain its operations. (FLS) If unsuccessful, the Company's ability
to meet its obligations would be greatly impaired, and the Company may be unable
to continue operations. (FLS) Should this occur, it would be necessary to
undertake such other actions as may be appropriate to preserve asset values.
(FLS)
Financing the development of the Millennium(TM) series and other laser
instruments, and operations of the Company has been achieved principally through
private placements of common stock and the exercise of stock options and
warrants. During the three years ended December 31, 1995, the Company has raised
approximately $9,776,000 of equity funds. Management believes that significant
additional capital resources will be required to complete the application to the
FDA for authorization to use the Company's hydro-kinetic technology for
hard-tissue applications and to fund the Company's working capital needs for
1997. (FLS) The Company anticipates obtaining the necessary capital resources
through the sale of equity securities in either public offerings or private
placements, or through debt financing. (FLS) No assurance can be given, however,
that the Company will be able to obtain such capital resources. (FLS)
FORWARD LOOKING STATEMENTS:
The forward looking statements contained in this Quarterly Report on Form
10-QSB are subject to various risks, uncertainties and other factors that could
cause actual results to differ materially from the results anticipated in such
forward looking statements. Included among the important risks, uncertainties
and other factors are those hereinafter discussed.
Few of the forward looking statements in this Quarterly Report on Form
10-QSB deal with matters that are within the unilateral control of the Company.
There is substantial government regulation of the manufacture and sale of
medical products, including many of the Company's products, by governmental
agencies in the United States and foreign countries. These governmental agencies
often have considerable discretion in determining whether and when to approve
the marketing of the Company's products that have not yet received such
approval.
The availability of equity and debt financing to the Company is affected
by, among other things, domestic and world economic conditions and the
competition for funds. Rising interest rates might affect the feasibility of
debt financing that is offered. Potential investors and lenders will be
influenced by their evaluations of the Company and its products and comparisons
with alternative investment opportunities.
The Company's products do not provide the exclusive means for
accomplishing an objective, and customers may choose alternative means. Many of
the Company's competitors have much greater financial resources and technical
capabilities than does the Company, which may enable such competitors to design
and produce superior products or to market their products in a manner that
achieves commercial success even in the face of technical superiority on the
part of the Company's products.
The Company's patents may not offer effective protection against
competitors. Competitors may be able to design around the Company's patents or
employ technologies not covered by such patents. In addition, the Company's
patents may be challenged, and even if such patents are upheld, the diversion of
financial and human resources associated with patent litigation could adversely
affect the Company.
Page 11
<PAGE> 12
The Company may be found to be violating the patents of others and forced to
obtain a license under such patents or modify the design of its products.
Rapid technological developments are expected to continue in the
industries in which the Company competes. The Company may not be able to
develop, manufacture and market products which meet changing user requirements
or which successfully anticipate or respond to technological changes on a
cost-effective and timely manner.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Company is a real party in interest in an Interference proceeding
pending in the U.S. Patent & Trademark Office. This proceeding, entitled
Vassiliadis v. Levy, was initiated on April 22, 1993 and arises out of patent
applications asserting conflicting claims to the technology involved in cutting
tooth tissue with laser radiation in the presence of a cooling fluid. U.S.
Patent No. 5,020,995 covering this technology has been issued and is owned by
the Company. Decisions made thus far during the Interference proceeding has
confirmed the originality of the technology owned by the Company. The Company
has been advised that the only remaining issue to be resolved in the
Interference is the patentability of certain claims covered by U.S. Patent No.
5,020,995. With respect to that issue, briefs have been submitted, an oral
hearing was held on August 2, 1996, and a decision is pending.
In May, 1993, the Company filed an application, which is pending, for
the reissue of U.S. Patent No. 5,020,995. The application for reissue reflects
more specific claims related to cutting tooth tissue with laser radiation in the
presence of a cooling fluid. The ultimate outcome of the interference proceeding
and the application for reissue should not adversely affect the Company's legal
right to market the related technology. The patent-pending position of the
Company's hydro-kinetic technology and the related intellectual property are not
affected by the matters at issue in the Interference proceeding.
From time to time, the Company is involved in legal proceedings
incidental to its business. It is management's opinion that these actions,
individually and in the aggregate, will not have a material adverse effect on
the Company's financial condition, and that adequate provision has been made for
the resolution of such actions and proceedings.
ITEM 2. CHANGES IN SECURITIES.
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS.
Following are the results of matters submitted to a vote at the Annual
Stockholders' Meeting held June 11, 1996:
(1) The election of the following individuals to the Company's Board of
Directors, to serve until the next Annual Meeting of Stockholders and
until their successors are duly elected and qualified:
Page 12
<PAGE> 13
<TABLE>
<CAPTION>
Votes For Votes Against
--------- -------------
<S> <C> <C>
Donald A. La Point 8,698,035 31,643
Federico Pignatelli 8,713,035 16,643
Gordon Werner 8,713,035 16,643
</TABLE>
(2) The approval of the First Amendment to the Company's Amended and
Restated 1993 Stock Option Plan increasing the aggregate number of the
Company's Common Stock available for issuance under the Plan to
1,500,000. The number of votes cast for were 4,950,039; votes cast
against were 177,181; the number of abstentions were 15,040; the number
of broker non-votes were 3,587,418.
(3) The ratification of the appointment of Coopers & Lybrand L.L.P. as
the Company's independent public accountants for the year ended December
31, 1995 and the year ending December 31, 1996. The number of votes cast
for were 8,706,863; votes cast against were 11,850; the number of
abstentions were 10,965.
ITEM 5. OTHER INFORMATION.
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(A) EXHIBITS
27 Financial Data Schedule
(B) REPORTS ON FORM 8-K
None
Page 13
<PAGE> 14
SIGNATURE PAGE
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
BIOLASE TECHNOLOGY, INC.
a Delaware Corporation
Date: September 4, 1996 /s/ Donald A. La Point
----------------------
Donald A. La Point
President & Chief Executive Officer
Date: September 4, 1996 /s/ Stephen R. Tartamella
-------------------------
Stephen R. Tartamella
Vice President & Chief Financial Officer
Page 14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
FINANCIAL STATEMENTS AT JUNE 30, 1996 AND FOR THE SIX-MONTH PERIOD THEN ENDED
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH QUARTERLY REPORT ON FORM
10-QSB FOR THE PERIOD ENDED JUNE 30, 1996.
</LEGEND>
<CIK> 0000811240
<NAME> BIOLASE TECHNOLOGIES, INC.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<EXCHANGE-RATE> 1
<CASH> 625,523
<SECURITIES> 0
<RECEIVABLES> 88,030
<ALLOWANCES> 55,897
<INVENTORY> 466,059
<CURRENT-ASSETS> 1,257,757
<PP&E> 1,210,616
<DEPRECIATION> 964,594
<TOTAL-ASSETS> 1,547,784
<CURRENT-LIABILITIES> 692,135
<BONDS> 0
0
0
<COMMON> 11,321
<OTHER-SE> 844,328
<TOTAL-LIABILITY-AND-EQUITY> 1,547,784
<SALES> 304,752
<TOTAL-REVENUES> 304,752
<CGS> 271,895
<TOTAL-COSTS> 271,895
<OTHER-EXPENSES> 426,928
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,107,730)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,107,730)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,107,730)
<EPS-PRIMARY> (.10)
<EPS-DILUTED> (.10)
</TABLE>
