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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended

~~June~~September 30, 2024


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-36385

BIOLASE, INC.

(Exact name of registrant as specified in its charter)

    Delaware

    87-0442441

    (State or other jurisdiction
of incorporation or organization)

    (I.R.S. Employer
Identification No.)

27042 Towne Centre Drive, Suite 270

Lake Forest, California 92610

(Address of principal executive offices) (Zip Code)

(949) 361-1200

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

    Title of each class

    Trading
symbol(s)

    Name of each exchange on which registered

    N/A

    N/A

    N/A

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.): Yes ☐ No ☒

As of ~~August~~October 131, 2024, the registrant had 36,597,~~056~~334 shares of common stock, $0.001 par value per share, outstanding.

BIOLASE, INC.

INDEX

			Page
EXPLANATORY NOTE
PART I.		FINANCIAL INFORMATION
Item 1.		Financial Statements (Unaudited):	24
		Condensed Consolidated Balance Sheets - June 30, 2024 and December 31, 2023	2
		Condensed Consolidated Balance Sheets - September 30, 2024 and December 31, 2023	4
		Condensed Consolidated Statements of Operations and Comprehensive Loss - Three and Six Months Ended June 30, 2024 and 2023	3
		Condensed Consolidated Statements of Operations and Comprehensive Loss - Three and Nine Months Ended September 30, 2024 and 2023	5
		Condensed Consolidated Statements of Convertible Redeemable Preferred Stock and Stockholders’ Equity (Deficit) - Three and Six Months Ended June 30, 2024 and 2023	4
		Condensed Consolidated Statements of Convertible Redeemable Preferred Stock and Stockholders’ Equity (Deficit) - Three and Nine Months Ended September 30, 2024 and 2023	6
		Condensed Consolidated Statements of Cash Flows - Six Months Ended June 30, 2024 and 2023	6
		Condensed Consolidated Statements of Cash Flows - Nine Months Ended September 30, 2024 and 2023	10
		Notes to Condensed Consolidated Financial Statements	711
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations	2431
Item 3.		Quantitative and Qualitative Disclosures About Market Risk	3543
Item 4.		Controls and Procedures	3543
PART II		OTHER INFORMATION
Item 1.		Legal Proceedings	3645
Item 1A.		Risk Factors	3645
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds	3847
Item 3.		Defaults Upon Senior Securities	3847
Item 4.		Mine Safety Disclosures	3847
Item 5.		Other Information	3848
Item 6.		Exhibits	3949
	Signatures		4151

EXPLANATORY NOTE

As previously disclosed, on June 20, 2024, the Company’s common stock, $0.001 par value per share, trading symbol “BIOL”, was suspended from trading on the Nasdaq Stock Market LLC (the “Nasdaq”). On September 4, 2024, Nasdaq publicly announced that it had determined to commence proceedings to delist the Company’s common stock. Accordingly, the Company does not have any securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934 (the “Exchange Act”).

In addition, as previously disclosed, on October 1, 2024, BIOLASE, Inc. (the “Company”) and its direct domestic subsidiaries filed voluntary petitions for relief (the “Bankruptcy Petitions”) under chapter 11 of Title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”). The Company will continue to operate its businesses as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. In addition, the Company filed a motion seeking approval for certain procedures relating to the marketing and auction (if necessary) of all or some of the Company’s assets, including approval of a “stalking horse” asset purchase agreement (the “Asset Purchase Agreement”) with Sonendo, Inc. (“Sonendo”), a Delaware corporation, pursuant to which Sonendo agreed to acquire substantially all of the Company’s assets (the “Transferred Assets”), and certain bidding procedures for the sale of the Transferred Assets and other assets (the "Bidding Procedures"). The Asset Purchase Agreement includes customary representations and warranties and various customary covenants under the circumstances that are subject to certain limitations, including, without limitation, a break-up fee, expense reimbursement and the right to designate executory contracts and unexpired leases to assume or reject.

On October 17, 2024, the Bankruptcy Court entered an order, which, among other things, approved the Bidding Procedures and the designation of Sonendo as the “stalking horse” bidder.

Unless specifically noted or the context clearly requires otherwise, all information set forth in this Quarterly Report on Form 10-Q relates to the Company as it existed as of September 30, 2024 and prior to the Company’s bankruptcy filing, and does not, and is not intended and should not be read to, reflect the business, financial condition, and results of operations of the Company after the bankruptcy filing, nor of any other entity, including any entity which may result from the bankruptcy proceedings.

PART I. FINANCIAL INFORMATION

Unless specifically noted or the context clearly requires otherwise, all information set forth in this Quarterly Report on Form 10-Q relates to the Company as it existed as of September 30, 2024 and prior to the Company’s bankruptcy proceedings and does not, and is not intended and should not be read to, reflect the business, financial condition, and results of operations of any other entity, including any entity which may result from the bankruptcy proceedings.

ITEM 1. FINANCIAL STATEMENTS

BIOLASE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

(Unaudited)

	June 30,			December 31,
	September 30,			December 31,
	2024			2023
ASSETS	(Unaudited)
Current assets:
Cash and cash equivalents	$	53,~~272~~444		$	6,566
Accounts receivable, less allowance of $329 and $244 as of June 30, 2024 and December 31, 2023, respectively		4,842			5,483
Accounts receivable, less allowance of $457 and $244 as of September 30, 2024 and December 31, 2023, respectively		3,530			5,483
Inventory		109,~~904~~870			11,433
Prepaid expenses and other current assets		12,~~076~~584			1,381
Total current assets		2219,~~094~~428			24,863
Property, plant, and equipment, net		43,~~263~~658			5,525
Goodwill		2,926			2,926
Right-of-use assets, leases		~~1,101~~969			1,519
Other assets		~~257~~260			268
Total assets	$	3027,~~641~~241		$	35,101
LIABILITIES, CONVERTIBLE REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable	$	53,~~491~~001		$	6,065
Accrued liabilities		78,~~662~~153			7,518
Stock warrant liability		21,~~616~~437			1,363
Deferred revenue, current portion		2,~~132~~226			2,452
Current portion of term loans, net of discount		1316,~~275~~042			2,265
Total current liabilities		3130,~~176~~859			19,663
Deferred revenue		~~186~~220			256
Warranty accrual		~~843~~726			593
Non-current term loans		150			11,782
Non-current term loans, net of discount		—			11,782
Non-current operating lease liability		~~315~~211			772
Other liabilities		97106			79
Total liabilities		32,~~767~~122			33,145
Mezzanine Equity:
Series H Convertible Redeemable Preferred stock, par value $0.001 per share; 370 shares authorized, 7 and 5 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively		346			346
Series H Convertible Redeemable Preferred stock, par value $0.001 per share; 370 shares authorized, 7 and 5 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively		346			346
Series J Convertible Redeemable Preferred stock, par value $0.001 per share; 160 shares authorized, 17 and 15 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively		1,857			1,857
Series J Convertible Redeemable Preferred stock, par value $0.001 per share; 160 shares authorized, 0 and 15 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively		—			1,857
Total mezzanine equity		~~2,203~~346			2,203
Stockholders' equity (deficit):
Common stock, par value $0.001 per share; 180,000 shares authorized, 33,406 and 3,416 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively		33			3
Common stock, par value $0.001 per share; 180,000 shares authorized, 36,597 and 3,416 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively		36			3
Additional paid-in capital		322,~~380~~778			317,103
Accumulated other comprehensive loss		(~~659~~530	)		(553	)
Accumulated deficit		(~~326~~327,~~083~~511	)		(316,800	)
Total stockholders' equity (deficit)		(45,~~329~~227	)		(247	)
Total liabilities, convertible redeemable preferred stock and stockholders' equity (deficit)	$	3027,~~641~~241		$	35,101

See accompanying notes to condensed consolidated financial statements.

BIOLASE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(In thousands, except per share data)

(Unaudited)

	Three Months Ended						~~Six~~Nine Months Ended
	June 30,						June 30,
	September 30,						September 30,
	2024			2023			2024			2023
Net revenue	$	1110,~~555~~850		$	1410,~~286~~921		$	2132,~~687~~536		$	2435,~~753~~674
Cost of revenue		6,~~946~~468			87,~~168~~175			1320,~~741~~209			1522,~~299~~474
Gross profit		4,~~609~~382			63,~~118~~746			712,~~946~~327			913,~~454~~200
Operating expenses:
Sales and marketing		32,~~694~~877			63,~~189~~402			79,~~077~~954			1014,~~812~~214
General and administrative		31,~~064~~283			2,~~357~~679			67,~~260~~544			47,~~815~~495
Engineering and development		~~1,071~~917			1,~~444~~362			23,~~354~~271			24,~~991~~352
Total operating expenses		75,~~829~~077			97,~~990~~443			1520,~~691~~769			1826,~~618~~061
Loss from operations		(~~3,220~~695	)		(3,~~872~~697	)		(78,~~745~~442	)		(912,~~164~~861	)
Loss on foreign currency transactions		(~~112~~69	)		(~~235~~307	)		(~~208~~278	)		(~~215~~522	)
Interest expense, net		(~~586~~605	)		(~~583~~598	)		(1,~~208~~812	)		(1,~~160~~758	)
Other income (loss), net		~~1,140~~(47	)		~~(147~~28	)		(82128	)		(~~147~~119	)
Non-operating income (loss), net		~~442~~(721	)		(~~965~~877	)		(12,~~498~~218	)		(12,~~522~~399	)
Loss before income tax provision		(21,~~778~~416	)		(4,~~837~~574	)		(910,~~243~~660	)		(1015,~~686~~260	)
Income tax provision		(2012	)		(3115	)		(4051	)		(3146	)
Net loss		(21,~~798~~428	)		(4,~~868~~589	)		(910,~~283~~711	)		(1015,~~717~~306	)
Other comprehensive loss items:
Foreign currency translation adjustments		~~(20~~129	)		39(105	)		~~(106~~23	)		~~119~~14
Comprehensive loss	$	(21,~~818~~299	)	$	(4,~~829~~694	)	$	(910,~~389~~688	)	$	(1015,~~598~~292	)
Net loss	$	(21,~~798~~428	)	$	(4,~~868~~589	)	$	(910,~~283~~711	)	$	(1015,~~717~~306	)
Deemed dividend on convertible preferred stock		—71			(97,~~377~~610	)		—71			(916,~~377~~987	)
Net loss attributable to common stockholders	$	(21,~~798~~357	)	$	(1412,~~245~~199	)	$	(910,~~283~~640	)	$	(2032,~~094~~293	)
Net loss per share attributable to common stockholders:
Basic and Diluted - Note 1	$	(0.0804	)	$	(2610.1435	)	$	(0.3637	)	$	(4547.9801	)
Shares used in the calculation of net loss per share:
Basic and Diluted - Note 1		3336,~~391~~083			~~545~~1,179			2529,~~616~~131			~~437~~687

See accompanying notes to condensed consolidated financial statements.

BIOLASE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT)

(Unaudited, In thousands)

	Mezzanine Equity										Stockholders' Equity (Deficit)
	Series HConvertible RedeemablePreferred Stock				Series JConvertible RedeemablePreferred Stock						Common Stock				Additional Paid-in			AccumulatedOtherComprehensive			Accumulated			TotalStockholders'
	Shares		Amount		Shares			Amount			Shares		Amount		Capital			Loss			Deficit			Equity (Deficit)
Balance, March 31, 2024		5	$	346		16		$	1,857			33,257	$	33	$	321,957		$	(639	)	$	(323,285	)	$	(1,934	)
Sale of common stock units and pre-funded units, net of fees		—		—		—			—			—		—		2			—			—			2
Paid-in-kind dividend on Series H Convertible Redeemable Preferred Stock		2		—		—			—			—		—		—			—			—			—
Conversion of Series J Convertible Redeemable Preferred Stock		—		—		(5	)		(528	)		138		—		528			—			—			528
Paid-in-kind dividend on Series J Convertible Redeemable Preferred Stock		—		—		1			—			—		—		—			—			—			—
Exercise of Series J Convertible Redeemable Preferred Stock Warrants		—		—		5			528			—		—		(164	)		—			—			(164	)
Issuance of stock from RSUs, net		—		—		—			—			11		—		—			—			—			—
Stock-based compensation		—		—		—			—			—		—		57			—			—			57
Net loss		—		—		—			—			—		—		—			—			(2,798	)		(2,798	)
Foreign currency translation adjustment		—		—		—			—			—		—		—			(20	)		—			(20	)
Balance, June 30, 2024		7	$	346		17		$	1,857			33,406	$	33	$	322,380		$	(659	)	$	(326,083	)	$	(4,329	)
Sale of common stock units and pre-funded units, net of fees		—		—		—			—			—		—		(10	)		—			—			(10	)
Paid-in-kind dividend on Series J Convertible Redeemable Preferred Stock		—		—		1			—			—		—		—			—			—			—
Exchange of Series J Convertible Redeemable Preferred Stock and Warrants		—		—		(2	)		(276	)		3,190		3		357			—			—			360
Expiration of Series J Convertible Redeemable Preferred Stock and Warrants		—		—		(16	)		(1,581	)		—		—		1			—			—			1
Issuance of stock from RSUs, net		—		—		—			—			1		—		—			—			—			—
Stock-based compensation		—		—		—			—			—		—		50			—			—			50
Net loss		—		—		—			—			—		—		—			—			(1,428	)		(1,428	)
Foreign currency translation adjustment		—		—		—			—			—		—		—			129			—			129
Balance, September 30, 2024		7	$	346		—		$	—			36,597	$	36	$	322,778		$	(530	)	$	(327,511	)	$	(5,227	)
Balances, December 31, 2023		5	$	346		15		$	1,857			3,416	$	3	$	317,103		$	(553	)	$	(316,800	)	$	(247	)
Sale of common stock units and pre-funded units, net of fees		—		—		—			—			7,795		8		2,~~778~~767			—			—			2,~~786~~775
Exercise of Class A Warrants		—		—		—			—			13,063		13		1,976			—			—			1,989
Paid-in-kind dividend on Series H Convertible Redeemable Preferred Stock		2		—		—			—			—		—		—			—			—			—
Conversion of Series J Convertible Redeemable Preferred Stock		—		—		(5	)		(528	)		138		—		528			—			—			528
Paid-in-kind dividend on Series J Convertible Redeemable Preferred Stock		—		—		24			—			—		—		—			—			—			—
Exercise of Series J Convertible Redeemable Preferred Stock Warrants		—		—		5			528			—		—		(164	)		—			—			(164	)
Issuance of stock from RSUs, net		—		—		—			—			15		—		—			—			—			—
Exchange of Series J Convertible Redeemable Preferred Stock and Warrants		—		—		(3	)		(276	)		3,190		3		357			—			—			360
Stock-based compensation		—		—		—			—			—		—		159			—			—			159
Expiration of Series J Convertible Redeemable Preferred Stock and Warrants		—		—		(16	)		(1,581	)		—		—		1			—			—			1
Issuance of stock from RSUs, net		—		—		—			—			16		—		—			—			—			—
Stock-based compensation		—		—		—			—			—		—		210			—			—			210
Exercise of common stock warrants		—		—		—			—			8,979		9		—			—			—			9
Net loss		—		—		—			—			—		—		—			—			(910,~~283~~711	)		(910,~~283~~711	)
Foreign currency translation adjustment		—		—		—			—			—		—		—			~~(106~~23	)		—			~~(106~~23	)
Balance, June 30, 2024		7	$	346		17		$	1,857			33,406	$	33	$	322,380		$	(659	)	$	(326,083	)	$	(4,329	)
Balance, September 30, 2024		7	$	346		—		$	—			36,597	$	36	$	322,778		$	(530	)	$	(327,511	)	$	(5,227	)

See accompanying notes to condensed consolidated financial statements.

BIOLASE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT)

(In thousands)

(Unaudited)

	MezzanineEquity										Stockholders' Equity (Deficit)
	Series HConvertible RedeemablePreferred Stock						Series IRedeemablePreferred Stock				Common Stock				Additional Paid-inCapital			AccumulatedOtherComprehensive			Accumulated			TotalStockholders'
	Shares			Amount			Shares		Amount		Shares		Amount		Amount			Loss			Deficit			Equity (Deficit)
Balance, March 31, 2023		—		$	—			—	$	—		263	$	—	$	310,828		$	(653	)	$	(302,017	)	$	8,158
Issuance of Series H Convertible Preferred Stock, net of fees		175			10,500			—		—		—		—		(7,762	)		—			—			(7,762	)
Exercise of Series H Convertible Preferred Stock Warrants		20			1,200			—		—		—		—		(430	)		—			—			(430	)
Conversion of Series H Convertible Preferred Stock		(183	)		(10,980	)		—		—		655		1		10,979			—			—			10,980
Issuance of Series I Redeemable Preferred Stock		—			—			85		—		—		—		—			—			—			—
Issuance of stock from RSUs, net		—			—			—		—		1		—		—			—			—			—
Stock-based compensation		—			—			—		—		—		—		404			—			—			404
Exercise of common stock warrants		—			—			—		—		100		—		100			—			—			100
Net loss		—			—			—		—		—		—		—			—			(4,868	)		(4,868	)
Foreign currency translation adjustment		—			—			—		—		—		—		—			39			—			39
Balance, June 30, 2023		12		$	720			85	$	—		1,019	$	1	$	314,119		$	(614	)	$	(306,885	)	$	6,621
Balances, December 31, 2022		—		$	—			—	$	—		77	$	—	$	301,790		$	(733	)	$	(296,168	)	$	4,889
Sale of common stock and pre-funded warrants, net of fees		—			—			—		—		172		—		8,503			—			—			8,503
Issuance of Series H Convertible Preferred Stock, net of fees		175			10,500			—		—		—		—		(7,762	)		—			—			(7,762	)
Exercise of Series H Convertible Preferred Stock Warrants		20			1,200			—		—		—		—		(430	)		—			—			(430	)
Conversion of Series H Convertible Preferred Stock		(183	)		(10,980	)		—		—		655		1		10,979			—			—			10,980
Issuance of Series I Redeemable Preferred Stock		—			—			85		—		—		—		—			—			—			—
Issuance of stock from RSUs, net		—			—			—		—		1		—		—			—			—			—
Stock-based compensation		—			—			—		—		—		—		925			—			—			925
Exercise of common stock warrants		—			—			—		—		114		—		114			—			—			114
Net loss		—			—			—		—		—		—		—			—			(10,717	)		(10,717	)
Foreign currency translation adjustment		—			—			—		—		—		—		—			119			—			119
Balance, June 30, 2023		12		$	720			85	$	—		1,019	$	1	$	314,119		$	(614	)	$	(306,885	)	$	6,621


	Mezzanine Equity																	Stockholders' Equity (Deficit)
	Series H Convertible Redeemable Preferred Stock						Series I Redeemable Preferred Stock					Series J Convertible Redeemable Preferred Stock						Common Stock				Additional Paid-in Capital			Accumulated Other Comprehensive			Accumulated			Total Stockholders'
	Shares			Amount			Shares			Amount		Shares			Amount			Shares		Amount		Amount			Loss			Deficit			Equity (Deficit)
Balance, June 30, 2023		12		$	720			85		$	—		—		$	—			1,019	$	1	$	314,119		$	(614	)	$	(306,885	)	$	6,621
Issuance of Series H Convertible Preferred Stock, net of fees		—			—			—			—		—			—			—		—		32			—			—			32
Conversion of Series H Convertible Preferred Stock		(7	)		(420	)		—			—		—			—			25		—		420			—			—			420
Redemption of Series I Redeemable Preferred Stock		—			—			(85	)		—		—			—			—		—		—			—			—			—
Issuance of Series J Convertible Preferred Stock, net of fees		—			—			—			—		75			10,330			—		—		(7,611	)		—			—			(7,611	)
Exercise of Series J Convertible Preferred Stock Warrants		—			—			—			—		3			410			—		—		(148	)		—			—			(148	)
Conversion of Series J Convertible Preferred Stock		—			—			—			—		(40	)		(5,488	)		1,222		1		5,487			—			—			5,488
Stock-based compensation		—			—			—			—		—			—			—		—		224			—			—			224
Net loss		—			—			—			—		—			—			—		—		—			—			(4,589	)		(4,589	)
Foreign currency translation adjustment		—			—			—			—		—			—			—		—		—			(105	)		—			(105	)
Balance, September 30, 2023		5		$	300			—		$	—		38		$	5,252			2,266	$	2	$	312,523		$	(719	)	$	(311,474	)	$	332

Balances, December 31, 2022		—		$	—			—		$	—		—		$	—			77	$	—	$	301,790		$	(733	)	$	(296,168	)	$	4,889
Sale of common stock and pre-funded warrants, net of fees		—			—			—			—		—			—			172		—		8,503			—			—			8,503
Issuance of Series H Convertible Preferred Stock, net of fees		175			12,115			—			—		—			—			—		—		(9,345	)		—			—			(9,345	)
Exercise of Series H Convertible Preferred Stock Warrants		20			1,200			—			—		—			—			—		—		(430	)		—			—			(430	)
Conversion of Series H Convertible Preferred Stock		(190	)		(13,015	)		—			—		—			—			680		1		13,014			—			—			13,015
Issuance of Series I Redeemable Preferred Stock		—			—			85			—		—			—			—		—		—			—			—			—
Redemption of Series I Redeemable Preferred Stock		—			—			(85	)		—		—			—			—		—		—			—			—			—
Issuance of Series J Convertible Preferred Stock, net of fees		—			—			—			—		75			10,330			—		—		(7,611	)		—			—			(7,611	)
Exercise of Series J Convertible Preferred Stock Warrants		—			—			—			—		3			410			—		—		(148	)		—			—			(148	)
Conversion of Series J Convertible Preferred Stock		—			—			—			—		(40	)		(5,488	)		1,222		1		5,487			—			—			5,488
Issuance of stock from RSUs, net		—			—			—			—		—			—			1		—		—			—			—			—
Stock-based compensation		—			—			—			—		—			—			—		—		1,149			—			—			1,149
Exercise of common stock warrants		—			—			—			—		—			—			114		—		114			—			—			114
Net loss		—			—			—			—		—			—			—		—		—			—			(15,306	)		(15,306	)
Foreign currency translation adjustment		—			—			—			—		—			—			—		—		—			14			—			14
Balance, September 30, 2023		5		$	300			—		$	—		38		$	5,252			2,266	$	2	$	312,523		$	(719	)	$	(311,474	)	$	332

See accompanying notes to condensed consolidated financial statements.

BIOLASE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Six Months Ended
	Nine Months Ended
	June 30,
	September 30,
	2024			2023
Cash Flows from Operating Activities:
Net loss	$	(910,~~283~~711	)	$	(1015,~~717~~306	)
Adjustments to reconcile net loss to net cash and cash equivalents used in operating activities:
Depreciation		1,~~310~~955			12,~~573~~133
Provision for bad debts		86216			4260
Provision for inventory excess and obsolescence		76			—
Amortization of debt issuance costs		~~242~~359			~~214~~320
Change in fair value of warrants		(~~514~~1,060	)		(78104	)
Issuance costs for common stock warrants		830			224
Expiration of warrant liabilities		(548	)		—
Stock-based compensation		67			775
Issuance costs for common stock warrants		830			447
Gain on disposal of fixed assets		(232	)		—
Stock-based compensation		118			1,050
Gain on disposal of fixed assets		(286	)		—
Changes in operating assets and liabilities:
Accounts receivable		~~555~~1,738			821,393
Inventory		~~374~~1,397			(~~163~~720	)
Prepaid expenses and other current assets		~~734~~(646	)		~~713~~1,322
Accounts payable and accrued liabilities		(~~527~~4,319	)		(12,~~903~~301	)
Deferred revenue		(~~390~~263	)		18(102	)
Net cash and cash equivalents used in operating activities		(611,~~672~~144	)		(911,~~220~~808	)
Cash Flows from Investing Activities:
Purchases of property, plant, and equipment		(2767	)		(~~944~~1,126	)
Proceeds from disposal of property, plant, and equipment		~~284~~358			—
Net cash and cash equivalents provided by (used in) investing activities		~~257~~291			(~~944~~1,126	)
Cash Flows from Financing Activities:
Proceeds from the sale of common stock and pre-funded warrants, net of fees		2,~~786~~776			8,~~502~~503
Proceeds from the sale of Series H Convertible Preferred Stock, net of fees		—			2,738
Proceeds from the sale of Convertible Redeemable Preferred Stock, net of fees		—			5,490
Proceeds from the sale of warrants, net of fees		3,020			~~918~~1,743
Borrowings under term loan		2,500			—
Principal payment on loan		(865	)		—
Proceeds from the exercise of common stock warrants		8			~~115~~114
Proceeds from the exercise of preferred share warrants		270			~~520~~699
Net cash and cash equivalents provided by financing activities		57,~~219~~709			1216,~~793~~549
Effect of exchange rate changes		~~(98~~22	)		~~120~~13
(Decrease) increase in cash and cash equivalents		(13,~~294~~122	)		23,~~749~~628
Cash and cash equivalents, beginning of period		6,566			4,181
Cash and cash equivalents, end of period	$	53,~~272~~444		$	67,~~930~~809
Supplemental cash flow disclosure:
Cash paid for interest	$	~~968~~970		$	~~930~~1,419
Cash received for interest	$	35		$	57
Cash paid for income taxes	$	4253		$	12
Cash paid for operating leases	$	~~157~~238		$	~~159~~230
Non-cash property, plant and equipment additions acquired under inventory	$	78110		$	—
Common stock issued upon cashless warrant exercise	$	1,989		$	—
Common stock issued upon exercise of preferred stock	$	528		$	1018,~~980~~503
Non-cash right-of-use assets obtained in exchange for lease obligation	$	—		$	483
Common stock issued upon exchange of preferred share and preferred share warrants	$	360		$	—
Liability for settlement of preferred shares	$	1,581		$	—
Non-cash right-of-use assets obtained in exchange for lease obligation	$	78		$	483

See accompanying notes to condensed consolidated financial statements.

610

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1—DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

The Company

BIOLASE, Inc. (“BIOLASE” and, together with its consolidated subsidiaries, the “Company”) is a leading provider of advanced laser systems for the dental industry. The Company develops, manufactures, markets, and sells laser systems that provide significant benefits for dental practitioners and their patients. The Company’s proprietary systems allow dentists, periodontists, endodontists, pediatric dentists, oral surgeons, and other dental specialists to perform a broad range of minimally invasive dental procedures, including cosmetic, restorative, and complex surgical applications. The Company’s laser systems are designed to provide clinically superior results for many types of dental procedures compared to those achieved with drills, scalpels, and other conventional instruments. Potential patient benefits include less pain, fewer shots, faster healing, decreased fear and anxiety, and fewer appointments. Potential practitioner benefits include improved patient care and the ability to perform a higher volume and wider variety of procedures and generate more patient referrals.

Basis of Presentation

The unaudited condensed consolidated financial statements include the accounts of BIOLASE and its wholly-owned subsidiaries and have been prepared on a basis consistent with the December 31, 2023 audited consolidated financial statements and include all material adjustments, consisting of normal recurring adjustments and the elimination of all material intercompany transactions and balances, necessary to fairly present the information set forth therein. The unaudited condensed consolidated financial statements do not include all the footnotes, presentations, and disclosures normally required by accounting principles generally accepted in the United States of America (“GAAP”) for complete consolidated financial statements.

The unaudited condensed consolidated results of operations for the three and ~~six~~nine months ended ~~June~~September 30, 2024 are not necessarily indicative of the results for the full year. The December 31, 2023 condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes thereto for the year ended December 31, 2023 included in included in BIOLASE’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the Securities and Exchange Commission (the “SEC”) on March 21, 2024 (the “2023 Form 10-K”).

Bankruptcy

As previously disclosed, on October 1, 2024 the Company and its direct domestic subsidiaries filed voluntary petitions for relief (the "Bankruptcy Petitions") under chapter 11 of Title 11 of the United States Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court"). The Company will continue to operate its businesses as "debtors-in-possession" under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. In addition, the Company filed a motion seeking approval for certain procedures relating to the marketing and auction (if necessary) of all or some of the Company's assets, including approval of an Asset Purchase Agreement (as defined below) and certain bidding procedures for the sale of the Transferred Assets (as defined below) and other assets (the "Bidding Procedures").

In addition, as previously disclosed, on September 30, 2024 the Company entered into a "stalking horse" asset purchase agreement (the "Asset Purchase Agreement") with Sonendo, Inc. ("Sonendo"), a Delaware corporation, pursuant to which Sonendo agreed to acquire substantially all of the Company's assets (the "Transferred Assets"). The acquisition by Sonendo pursuant to the Asset Purchase Agreement is subject to approval of the Bankruptcy Court following an auction, if necessary, to solicit higher or otherwise better bids. Other interested bidders are permitted to participate in the auction if they submit qualifying bids that are higher or otherwise better than the Asset Purchase Agreement.

Under the Asset Purchase Agreement, Sonendo agreed to acquire the Transferred Assets from the Company for (a) $14.0 million in cash paid at closing, subject to working capital adjustments; plus (b) assumption of certain Assumed Liabilities (as defined in the Asset Purchase Agreement); plus (c) the Delaware Litigation Settlement Value (as defined in the Asset Purchase Agreement). The Asset Purchase Agreement includes customary representations and warranties and various customary covenants under the circumstances that are subject to certain limitations, including, without limitation, a break-up fee, expense reimbursement and the right to designate executory contracts and unexpired leases to assume or reject.

On October 17, 2024, the Bankruptcy Court entered an order, which, among other things, approved the Bidding Procedures and the designation of Sonendo as the “stalking horse” bidder.

On November 4, 2024, the Company commenced the auction for the sale of the Transferred Assets (the “Auction”) pursuant to the Bidding Procedures. Following the completion of the Auction, the Company announced that the bid submitted by MegaGen Implant Co., LTD (“MegaGen”) for (a) $20.50 million in cash paid at closing, subject to working capital adjustments; plus (b) assumption of certain Assumed Liabilities, was the successful bid (the “Successful Bid”), and the bid submitted by Sonendo, which was increased from its prior bid to include (a) $19.95 million in cash paid at closing, subject to working capital adjustments; plus (b) assumption of certain Assumed Liabilities; plus (c) the Delaware Litigation Settlement Value, was the backup bid. The Successful Bid is subject to entry into definitive documentation between the Company and MegaGen. A hearing to consider approval of the results of the Auction is scheduled to take place on November 12, 2024.

The filing of the Bankruptcy Petitions constituted an event of default that accelerates the Company’s obligations under the following agreements: that certain Credit Agreement, dated November 9, 2018 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”) by and among the Company, the lender parties thereto (each a “Lender” and together, the “Lenders”), and SWK; and those certain standard loan documents required for an unsecured loan, dated as of May 22, 2020 (the “SBA Loan”) by and among the Company and the U.S. Small Business Administration (collectively, the “Financial Obligation Agreements”). The Financial Obligation Agreements provide that as a result of the Bankruptcy Petitions, all obligations to pay any debts, principal, interest, fees, expenses, and other amounts due thereunder shall be immediately due and payable. Any efforts to enforce such payment obligations under the Financial Obligation Agreements are automatically stayed as a result of the Bankruptcy Petitions, and the creditors’ rights of enforcement in respect of the Financial Obligation Agreements are subject to the applicable provisions of the Bankruptcy Code.

Prior to the filing of the Bankruptcy Petitions, the Company incurred $1.2 million in legal and financial advisory services as a result of receiving a Default Notice from our term loan lender, SWK Funding LLC, entering into a Forbearance Agreement, and preparing for the Bankruptcy Petitions. Due to these charges being incurred prior to the filing of the Bankruptcy Petitions, these expenses are presented as non-operating other loss on the Consolidated Statement of Operations and Comprehensive Loss.

DIP Financing

In connection with the Bankruptcy Petitions, the Company filed a motion seeking Bankruptcy Court approval of a debtor-in-possession ("DIP") financing on the terms set forth in that certain Terms and Conditions of Proposed Senior Secured, Super-Priority Debtor-in-Possession Credit Facility (the “DIP Term Sheet”), by and among the Company, as a borrower, and SWK Funding LLC ("SWK"), as DIP Lender and Agent. The DIP Term Sheet provides for a senior secured super-priority debtor-in-possession financing (the “DIP Financing”) in an aggregate amount of no less than $2.5 million. The DIP Financing will become available up to an amount of $1.43 million upon the satisfaction of customary conditions precedent thereto, including the entry of an order of the Bankruptcy Court approving the DIP Financing on an interim basis. Subject to entry of an order of the Bankruptcy Court approving the DIP Financing on a final basis, the DIP Obligations (as defined in the DIP Term Sheet) will include $2,500,000 advanced by SWK to the Debtors between September 3, 2024, and September 30, 2024.

The proceeds of the DIP Financing will be used by the Company to (a) fund, after application of all other available cash, post-petition operating expenses and working capital needs of the Company, including, but not limited to, those activities required to remain in, or return to, compliance with laws in accordance with 28 U.S.C. § 1930; (b) pay interest, fees and expenses to SWK in accordance with the DIP Term Sheet (whether or not such amounts are reflected in the Budget (as defined in the DIP Term Sheet)); (c) fund fees and expenses incurred in connection with the 363 Sale (as defined in the DIP Term Sheet); (d) pay permitted prepetition claims and adequate protection payments, if any; (e) pay Professional Fees (as defined in the DIP Term Sheet) provided for in the Budget, including funding of the Carve Out (as defined in the DIP Term Sheet); and (f) pay other costs and expenses of administration of the chapter 11 cases.

The maturity date of the loans made under the DIP Financing is the date that is one hundred-twenty (120) days after the Petition Date, or such later date to which SWK consents in writing.

Subject to certain exceptions, the DIP Financing will be secured by a first priority perfected priming security interest in all of the assets of the Company. The security interests and liens are subject only to certain carve-outs and certain permitted liens, as set forth in the DIP Term Sheet. The DIP Financing is subject to certain milestones, customary covenants, and events of default as set forth in the DIP Term Sheet.

Reverse Stock Split

At the annual meeting of stockholders held on May 2, 2024 (the "2024 Annual Meeting"), BIOLASE stockholders approved an amendment to BIOLASE’s Restated Certificate of Incorporation, as amended (the "Certificate of Incorporation"), to effect a reverse stock split of BIOLASE common stock, par value $0.001 per share (the “common stock”), at a ratio between one-for-two (1:2) and ~~one-for-fifty (1:50) with the ratio to be determined at the discretion of the Board. No official action has been taken to put this reverse stock into effect.~~

At a special meeting of BIOLASE stockholders held on July 20, 2023 (the "special meeting"), BIOLASE stockholders approved an amendment to BIOLASE’s Restated Certificate of Incorporation, as amended (the "Certificate of Incorporation"), to effect a reverse stock split of BIOLASE common stock, par value $0.001 per share (the “common stock”), at a ratio between one-for-two (1:2) and one-for-one hundred (1:100). Immediately after the special meeting, BIOLASE's board of directors (the "Board") approved a one-for-one hundred (1:100) reverse stock split of the outstanding shares of the common stock (the “2023 Reverse Stock Split”). On July 26, 2023, BIOLASE filed an amendment to the Certificate of Incorporation with the Secretary of State of the State of Delaware to effect the 2023 Reverse Stock Split, which became effective on July 27, 2023. The amendment did not change the number of authorized shares of the common stock.12

~~Except~~one-for-fifty ~~as the context otherwise requires, all common stock share numbers, share price amounts~~ (~~including exercise prices, conversion prices, and closing market prices~~1:50), ~~shares~~with ~~issued upon~~ the ~~conversion~~ratio ofto ~~preferred~~be ~~shares,~~determined ~~and~~at ~~shares issued upon~~ the ~~exercise~~discretion of ~~warrants contained in~~ the ~~unaudited~~Board. ~~condensed~~No ~~consolidated~~official ~~financial~~action ~~statements~~has ~~and notes thereto have~~ been ~~retroactively~~taken ~~adjusted~~ to ~~reflect~~put ~~the~~this ~~2023~~reverse ~~Reverse~~stock ~~Stock~~into ~~Split~~effect.

Liquidity and Management’s Plans - Going Concern

The Company incurred losses from operations and used cash in operating activities for the three and ~~six~~nine months ended ~~June~~September 30, 2024 and for the years ended December 31, 2023 and 2022. The Company’s recurring losses, level of cash used in operations, ~~and potential~~ need for additional capital, along with uncertainties surrounding the Company’s ability to raise additional capital, especially in light of the fact that our common stock is no longer traded on the Nasdaq, which makes it harder to attract investors and limits the types of financings that can be conducted, and the filing of the Bankruptcy Petitions on October 1, 2024, raise substantial doubt about the Company’s ability to continue as a going concern. As such, the financial statements contain certain adjustments that are necessary as the Company is unable to continue as a going concern, which includes the reclassification of certain long term liabilities as current.

As of September 30, 2024, the Company had working capital deficit of approximately $11.4 million with the deficit primarily due to the SWK Loan (as defined below) that is set to mature in May 2025. The Company’s principal sources of liquidity as of September 30, 2024 consisted of approximately $3.4 million in cash and cash equivalents and $3.5 million of net accounts receivable. As of December 31, 2023, the Company had working capital of approximately $5.2 million, $6.6 million in cash and cash equivalents and $5.5 million of net accounts receivable. The decrease in cash and cash equivalents since December 31, 2023 was primarily due to a net loss of $10.7 million and principal payments on the Company's term loan of $0.9 million, partially offset by net proceeds of $5.8 million from the February 2024 public offering, a $2.5 million bridge loan from SWK as part of the Forbearance Agreement, $0.4 million in proceeds from the disposal of property, plant, and equipment, and $0.3 million in proceeds from the exercise of preferred share warrants.

~~types~~Additional ofcapital ~~financings~~requirements ~~that~~may ~~can~~depend beon ~~conducted~~many factors, ~~raise~~including, ~~substantial~~among ~~doubt~~other ~~about~~things, the rate at which the Company’s ~~ability~~business grows, demands for working capital, manufacturing capacity, any acquisitions that the Company may pursue, and the outcome of the Bankruptcy Petitions. The Company expects that it will be required to ~~continue~~raise ascapital athrough ~~going~~either ~~concern~~equity or debt offerings. The ~~financial~~Company ~~statements~~cannot doprovide ~~not~~assurance ~~include~~that it will be able to successfully enter into any ~~adjustments~~such equity or debt financings in the future or that ~~might~~the required capital would be ~~necessary~~available on acceptable terms, if ~~the~~at ~~Company~~all, isor ~~unable~~that toany ~~continue~~such asfinancing aactivity ~~going~~would ~~concern~~not be dilutive to its stockholders.

As of June 30, 2024, the Company had working capital deficit of approximately $9.1 million with the deficit primarily due to the SWK Loan that is set to mature in May 2025. The Company’s principal sources of liquidity as of June 30, 2024 consisted of approximately $5.3 million in cash and cash equivalents and $4.8 million of net accounts receivable. As of December 31, 2023, the Company had working capital of approximately $5.2 million, $6.6 million in cash and cash equivalents and $5.5 million of net accounts receivable. The decrease in cash and cash equivalents since December 31, 2023 was primarily due to a net loss of $9.3 million and principal payments on the Company's term loan of $0.9 million, partially offset by net proceeds of $5.8 million from the February 2024 public offering and $0.3 million in proceeds from the disposal of property, plant, and equipment.

Additional capital requirements may depend on many factors, including, among other things, the rate at which the Company’s business grows, demands for working capital, manufacturing capacity, and any acquisitions that the Company may pursue. The Company expects that it will be required to raise capital through either equity or debt offerings. The Company cannot provide assurance that it will be able to successfully enter into any such equity or debt financings in the future or that the required capital would be available on acceptable terms, if at all, or that any such financing activity would not be dilutive to its stockholders.

NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of these condensed consolidated financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect amounts reported in the condensed consolidated financial statements and the accompanying notes. Significant estimates in these condensed consolidated financial statements include allowances on accounts receivable, inventory, and deferred taxes, as well as estimates for accrued warranty expenses, goodwill and the ability of goodwill to be realized, revenue deferrals, effects of stock-based compensation and warrants, contingent liabilities, the provision or benefit for income taxes, and preferred stock. Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may differ materially from those estimates.

Critical Accounting Policies

Information with respect to the Company’s critical accounting policies, which management believes could have the most significant effect on the Company’s reported results and require subjective or complex judgments by management, is discussed in the Company’s 2023 audited financial statements included in the 2023 Form 10-K. Management believes that there have been no significant changes during the ~~six~~nine months ended ~~June~~September 30, 2024 in the Company’s critical accounting policies from those disclosed in the Company’s 2023 audited financial statements included in the 2023 Form 10-K.

Fair Value of Financial Instruments

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the principal market (or, if none exists, the most advantageous market) for the specific asset or liability at the measurement date (referred to as the “exit price”). The fair value is based on assumptions that market participants would use, including a consideration of non-performance risk. Under the accounting guidance for fair value hierarchy, there are three levels of measurement inputs. Level 1 inputs are quoted prices in active markets for identical assets or liabilities. Level 2 inputs are observable, either directly or indirectly. Level 3 inputs are unobservable due to little or no corroborating market data.

The Company’s financial instruments, consisting of cash, cash equivalents, accounts receivable, accounts payable, accrued liabilities, warrants, and the SWK Loan (as defined below) as discussed in Note 9 – Debt, approximate fair value because of the relative short maturity of these items and the market interest rates the Company could obtain.

Concentration of Credit Risk, Interest Rate Risk and Foreign Currency Exchange Rate

Financial instruments which potentially expose the Company to a concentration of credit risk consist principally of cash and cash equivalents, and trade accounts receivable. The Company maintains its cash and cash equivalents with established commercial banks. At times, balances may exceed federally insured limits. To minimize the risk associated with trade accounts receivable, management performs ongoing credit evaluations of customers’ financial condition and maintains relationships with the Company’s customers that allow management to monitor current changes in business operations so the Company can respond as needed. The Company does not, generally, require customers to provide collateral before it sells them its products. However, the Company has required certain distributors to make prepayments for significant purchases of its products.

8Substantially all of the Company’s revenue is denominated in U.S. dollars, including sales to international distributors. Only a small portion of its revenue and expenses is denominated in foreign currencies, principally the Euro and Indian Rupee. The Company’s foreign currency expenditures primarily consist of the cost of maintaining offices, consulting services, and employee-related costs. During the three and nine months ended September 30, 2024 and 2023, respectively, the Company did not enter into any hedging contracts. Future fluctuations in the value of the U.S. dollar may affect the price competitiveness of the Company’s products outside the U.S.

Substantially all of the Company’s revenue is denominated in U.S. dollars, including sales to international distributors. Only a small portion of its revenue and expenses is denominated in foreign currencies, principally the Euro and Indian Rupee. The Company’s foreign currency expenditures primarily consist of the cost of maintaining offices, consulting services, and employee-related costs. During the three and six months ended June 30, 2024 and 2023, respectively, the Company did not enter into any hedging contracts. Future fluctuations in the value of the U.S. dollar may affect the price competitiveness of the Company’s products outside the U.S.

Recent Accounting Pronouncements

Changes to GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of accounting standards updates (“ASUs”) to the FASB’s Accounting Standards Codification (“ASC”).

The Company considers the applicability and impact of all ASUs. ASUs not listed below were assessed and determined not to be applicable or are expected to have minimal impact on the Company’s consolidated financial position and results of operations.

Recently Issued Accounting Standards

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures, to require enhanced income tax disclosures to provide information to assess how an entity’s operations and related tax risks, tax planning, and operational opportunities affect its tax rate and prospects for future cash flows. The amendments in this update provide that a business entity disclose (1) a tabular income tax rate reconciliation, using both percentages and amounts, (2) separate disclosure of any individual reconciling items that are equal to or greater than 5% of the amount computed by multiplying the income (loss) from continuing operations before income taxes by the applicable statutory income tax rate, and disaggregation of certain items that are significant and (3) amount of income taxes paid (net of refunds received) disaggregated by federal, state and foreign jurisdictions, including separate disclosure of any individual jurisdictions greater than 5% of total income taxes paid. These amendments are effective for the Company for annual periods in 2025, applied prospectively, with early adoption and retrospective application permitted. The Company intends to adopt the amendments in this update prospectively in 2025. The impact of the adoption of the amendments in this update is not expected to be material to the Company’s consolidated financial position and results of operations, since the amendments require only enhancement of existing income tax disclosures in the footnotes to the Company’s consolidated financial statements.

NOTE 3—REVENUE RECOGNITION

Contracts with Customers

Revenue for sales of products and services is derived from contracts with customers. The products and services promised in customer contracts include delivery of laser systems, imaging systems, and consumables as well as certain ancillary services such as training and extended warranties. Contracts with each customer generally state the terms of the sale, including the description, quantity and price of each product or service. Payment terms are stated in the contract and vary according to the arrangement. Because the customer typically agrees to a stated rate and price in the contract that does not vary over the life of the contract, the Company’s contracts do not contain variable consideration. The Company establishes a provision for estimated warranty expenses.

Performance Obligations

At contract inception, the Company assesses the products and services promised in its contracts with customers. The Company then identifies performance obligations to transfer distinct products or services to the customers. In order to identify performance ~~obligations, the Company considers all of the products or services promised in contracts regardless of whether they are explicitly stated or are implied by customary business practices.~~

Revenue from products and services transferred to customers at a single point in time accounted for 85% of net revenue for the three and six months ended June 30, 2024 and 90% for the three and six months ended June 30, 2023. The majority of the Company’s revenue recognized at a point in time is for the sale of laser systems and consumables. Revenue from these contracts is recognized when the customer is able to direct the use of and obtain substantially all of the benefits from the product which generally coincides with title transfer during the shipping process.14

~~Revenue from services transferred to customers over time accounted for 15% of net revenue for the three and six months ended June 30~~obligations, ~~2024 and 10% for~~ the ~~three~~Company ~~and~~considers ~~six~~all ~~months ended June 30, 2023. The majority~~ of the ~~Company’s~~products ~~revenue~~or ~~that~~services ispromised ~~recognized~~in ~~over~~contracts ~~time~~regardless ~~relates to product training and extended warranties. Deferred revenue attributable to undelivered elements, which primarily consists~~ of ~~product~~whether ~~training,~~they ~~totaled~~are ~~approximately~~explicitly ~~$0.4~~stated ~~million~~or asare ofimplied ~~June~~by ~~30,~~customary ~~2024~~business ~~and December 31, 2023~~practices.

9Revenue from products and services transferred to customers at a single point in time accounted for 88% and 86% of net revenue for the three and nine months ended September 30, 2024, respectively, and 87% and 89% for the three and nine months ended September 30, 2023, respectively. The majority of the Company’s revenue recognized at a point in time is for the sale of laser systems and consumables. Revenue from these contracts is recognized when the customer is able to direct the use of and obtain substantially all of the benefits from the product which generally coincides with title transfer during the shipping process.

Revenue from services transferred to customers over time accounted for 12% and 14% of net revenue for the three and nine months ended September 30, 2024, respectively, and 13% and 11% for the three and nine months ended September 30, 2023, respectively. The majority of the Company’s revenue that is recognized over time relates to product training and extended warranties. Deferred revenue attributable to undelivered elements, which primarily consists of product training, totaled approximately $0.5 million as of September 30, 2024 and $0.4 million as of December 31, 2023.

Transaction Price Allocation

The transaction price for a contract is allocated to each distinct performance obligation and recognized as revenue when, or as, each performance obligation is satisfied. For contracts with multiple performance obligations, the Company allocates the contract’s transaction price to each performance obligation using the best estimate of the standalone selling price of each distinct good or service in a contract. The primary method used to estimate standalone selling price is the observable price when the good or service is sold separately in similar circumstances and to similar customers.

Significant Judgments

Revenue is recorded for extended warranties over time as the customer benefits from the warranty coverage. This revenue will be recognized equally throughout the contract period as the customer receives benefits from the Company's promise to provide such services. Revenue is recorded for product training when the customer attends a training program or upon the expiration of the obligation, which is generally after six months.

The Company also has contracts that include both the product sales and product training as performance obligations. In those cases, the Company records revenue for product sales at the point in time when the product has been shipped. The customer obtains control of the product when it is shipped, as all shipments are made FOB shipping point, and after the customer selects its shipping method and pays all shipping costs and insurance. The Company has concluded that control is transferred to the customer upon shipment.

Accounts Receivable

Accounts receivable are stated at estimated net realizable value. The allowance for doubtful accounts is based on an analysis of customer accounts and the Company’s historical experience with accounts receivable write-offs.

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):

	June 30,			December 31,
	September 30,			December 31,
	2024			2023
Undelivered elements (training and installation)	$	~~407~~511		$	449
Extended warranty contracts		1,~~911~~935			2,259
Total deferred revenue		2,~~318~~446			2,708
Less: long-term portion of deferred revenue		(~~186~~220	)		(256	)
Deferred revenue — current	$	2,~~132~~226		$	2,452

The balance of contract assets was immaterial as the Company did not have a significant amount of uninvoiced receivables at ~~June~~September 30, 2024 and December 31, 2023.

The amount of revenue recognized during the six months ended June 30, 2024 and 2023 that was included in the opening contract liability balance related to undelivered elements was $0.4 million and $0.3 million, respectively. The amounts related to extended warranty contracts was $0.9 million and $1.1 million for the six months ended June 30, 2024 and 2023, respectively. 15

The amount of revenue recognized during the nine months ended September 30, 2024 and 2023 that was included in the opening contract liability balance related to undelivered elements was $0.4 million and $0.3 million, respectively. The amounts related to extended warranty contracts was $1.8 million and $1.5 million for the nine months ended September 30, 2024 and 2023, respectively.

Disaggregation of Revenue

The Company disaggregates revenue from contracts with customers into geographical regions and by the timing of when goods and services are transferred. The Company determined that disaggregating revenue into these categories depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by regional economic factors.

The Company’s revenues related to the following geographic areas were as follows (in thousands):

Three Months Ended

~~Six~~Nine Months Ended

June 30,

September 30,

2024

2023

2024

2023

United States

8,~~240~~246

107,~~741~~298

1423,~~930~~176

1724,~~499~~797

International

32,~~315~~604

3,~~545~~623

69,~~757~~360

710,~~254~~877

Net revenue

1110,~~555~~850

1410,~~286~~921

2132,~~687~~536

2435,~~753~~674

Information regarding revenues disaggregated by the timing of when goods and services are transferred is as follows (in thousands):

Three Months Ended

~~Six~~Nine Months Ended

June 30,

September 30,

2024

2023

2024

2023

Revenue recognized over time

1,~~713~~257

1,~~415~~366

34,~~201~~457

23,~~584~~950

Revenue recognized at a point in time

9,~~842~~593

129,~~871~~555

1828,~~486~~079

2231,~~169~~724

Net revenue

1110,~~555~~850

1410,~~286~~921

2132,~~687~~536

2435,~~753~~674

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

Three Months Ended

~~Six~~Nine Months Ended

June 30,

September 30,

2024

2023

2024

2023

End-customer

8,~~240~~246

107,~~741~~298

1423,~~930~~176

1724,~~499~~797

Distributors

32,~~315~~604

3,~~545~~623

69,~~757~~360

710,~~254~~877

Net revenue

1110,~~555~~850

1410,~~286~~921

2132,~~687~~536

2435,~~753~~674

Shipping and Handling Costs and Revenues

Shipping and freight costs are treated as fulfillment costs. For shipments to end-customers, the customer bears the shipping and freight costs and has control of the product upon shipment. For shipments to distributors, the distributor bears the shipping and freight costs, including insurance, tariffs and other import/export costs.

NOTE 4—CONVERTIBLE REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)

The Board, without further stockholder authorization, may authorize the issuance from time to time of up to 1,000,000 shares of the Company’s preferred stock. Of the 1,000,000 shares of preferred stock, as of ~~June~~September 30, 2024, 370,000 shares were designated as Series H, par value $0.001 per share, 160,000 shares were designated as Series J, par value $0.001 per share, and 125,000 shares were designated as Series I, par value $0.001 per share.

Preferred Stock

Series J Preferred Stock

On September 13, 2023, the Company consummated the sale of 75,000 Units (the "Units") with each Unit consisting of (A) one share of BIOLASE Series J Convertible Redeemable Preferred Stock, par value $0.001 per share and a stated value equal to $100.00 (the “Series J Convertible Preferred Stock”), and (B) one warrant (the “Series J Warrants”) to purchase one-half of one (0.50) share of Series J Convertible Preferred Stock, at a price to the public of $60.00 per Unit, less underwriting discounts and commissions. The public offering price of $60.00 per Unit reflects the issuance of the Series J Convertible Preferred Stock with an original issue discount of 40%. The Company filed a registration statement on Form S-1 in September 2023, which registered the Units, the Series J Convertible Preferred Stock, the Series J Warrants and the shares of Series J Convertible Preferred Stock and common stock underlying such securities and additional shares of Series J Convertible Preferred Stock that will be issued, if and when the Board declares such dividends, as paid in-kind dividends (“PIK dividends”) at a rate of 20% per annum and the shares of Common Stock issuable upon conversion of the Series J Convertible Preferred Stock issued as PIK dividends. The registration statement was declared effective on September 13, 2023 and the offering closed on September 18, 2023. Each Warrant has an exercise price of $30.00 per share, is exercisable for one-half of one (0.5) share of Series J Convertible Preferred Stock, is immediately exercisable and will expire one (1) year from the date of issuance.

1116

public offering price of $60.00 per Unit reflects the issuance of the Series J Convertible Preferred Stock with an original issue discount of 40%. The Company filed a registration statement on Form S-1 in September 2023, which registered the Units, the Series J Convertible Preferred Stock, the Series J Warrants and the shares of Series J Convertible Preferred Stock and common stock underlying such securities and additional shares of Series J Convertible Preferred Stock that will be issued, if and when the Board declares such dividends, as paid in-kind dividends (“PIK dividends”) at a rate of 20% per annum and the shares of Common Stock issuable upon conversion of the Series J Convertible Preferred Stock issued as PIK dividends. The registration statement was declared effective on September 13, 2023 and the offering closed on September 18, 2023. Each Warrant has an exercise price of $30.00 per share, is exercisable for one-half of one (0.5) share of Series J Convertible Preferred Stock, is immediately exercisable and will expire one (1) year from the date of issuance.

Each share of Series J Convertible Preferred Stock is convertible at the option of the holder at any time into the number of shares of common stock determined by dividing the $100.00 stated value per share by a conversion price of $3.26. Each outstanding share of Series J Convertible Preferred Stock is mandatorily redeemable by the Company in cash on September 13, 2024 (the "Series J Maturity Date").

Gross proceeds from the offering were $4.5 million before broker fees and related expenses of approximately $1.0 million. In accordance with applicable accounting standards, the $4.5 million gross proceeds were allocated to the Series J Convertible Preferred Stock and the Series J Warrants in the amount of $3.5 million and $1.0 million, respectively. The allocation was based on the fair value of the Series J Warrants of $1.0 million as of the commitment date, with the residual proceeds of $3.5 million allocated to the Series J Convertible Preferred Stock. Net proceeds allocated to the Series J Convertible Preferred Stock and Series J Warrants was $2.7 million and $0.8 million respectively.

The Series J Convertible Preferred stock was classified as mezzanine equity on the consolidated balance sheet as they are contingently redeemable prior to the Series J Maturity Date and the conversion from preferred shares to shares of common stock is at the option of the holder at any time before the Series J Maturity Date. The Series J Warrants were classified as accrued liabilities on the consolidated balance sheet as the warrants are convertible into preferred shares, which are mandatorily redeemable in cash upon the Series J Maturity Date if they are not converted to shares of common stock before such date.

The Series J Convertible Preferred Stock was issued at a discount with the total redemption value of the Series J Convertible Preferred Shares and PIK Dividends of $10.3 million. The redemption value in excess of the net proceeds received allocated to the Series J Convertible Preferred Shares was $7.6 million and was recognized as a decrease in additional paid-in-capital at the commitment date. Upon conversion of Series J Warrants to Series J Convertible Preferred shares, the value of the Series J Convertible Preferred Stock issued is the stated value per share plus the PIK dividend. The redemption value in excess of the net proceeds received from the exercise of warrants and the fair value of such warrants is recognized as a decrease in additional paid-in-capital at the conversion date.

AsOn ofJuly ~~June 30~~16, 2024, ~~14,960 of~~ the ~~Series~~Company Jissued ~~Warrants~~an ~~have~~aggregate ~~been exercised for 7,480 shares~~ of ~~Series J Convertible Preferred Stock~~3, 5190,~~621~~476 shares of ~~Series~~its Jcommon ~~Convertible~~stock, ~~Preferred~~par ~~Stock~~value ~~have~~$0.001 ~~been~~per ~~issued~~share, asin ~~part~~exchange offor ~~PIK~~(i) ~~dividends~~2,546 ~~and 70,965~~ shares of the Company’s Series J Convertible Redeemable Preferred Stock, ~~were~~par ~~converted~~value ~~to approximately 2~~$0.2001 ~~million~~per ~~shares~~share ~~of common stock. During~~ (the ~~six~~"Series ~~months~~J ~~ended~~Preferred ~~June 30~~Stock"), ~~2024~~and 9(ii) 8,000 ~~of the~~ Series J Preferred Warrants ~~were~~to ~~exercised~~purchase ~~and~~ 4,~~500~~000 shares of ~~the~~ Series J ~~Convertible~~ Preferred Stock, ~~were~~pursuant ~~converted.~~to Asthe terms of ~~June~~that ~~30,~~certain ~~2024,~~Exchange ~~there~~Agreement ~~are~~(the 17"Exchange Agreement") entered into on July 16,~~136~~ ~~Series~~2024 Jby ~~Convertible~~the ~~Preferred~~Company ~~Stock~~and ~~outstanding~~the investor named therein.

The ~~mezzanine~~Company ~~classified~~issued common stock to the investor in reliance on the exemption from the registration requirements of the Securities Act of 1933, as amended, afforded by Section 3(a)(9) thereof. The shares of Common Stock issued upon exchange of the Series J ~~Convertible~~ Preferred Stock ~~are~~and ~~presented~~Series atJ ~~their~~Preferred ~~maximum~~Warrants ~~redemption~~have ~~value~~not ~~that~~been ~~includes~~registered ~~accretion~~under ~~related~~the toSecurities Act and may not be offered or sold in the ~~PIK~~United ~~dividends~~States in the absence of an effective registration statement or exemption from the registration requirements. No proceeds have been or will be received and no commissions have been or will be paid by the Company in connection with the exchange described herein.

The elimination of the Series J Preferred Warrants and the Series J Convertible Redeemable Preferred Stock were presented as a reduction in accrued liabilities and mezzanine equity in the amounts of $0.1 million and $0.3 million, respectively, with a corresponding increase to additional paid-in-capital.

On September 18, 2024, all 52,040 unexercised Series J Warrants expired, and all 15,805 unconverted Series J Convertible Preferred Stock were to be mandatorily redeemed at their stated value of $100.00. However, due to the pending bankruptcy filing, the Company was unable to complete this mandatory redemption in the amount of $1.6 million in cash to holders of these Series J Convertible Preferred Stock. The expiration of the Series J Warrants was presented as a $0.5 million decrease in accrued liabilities with a corresponding gain on warrants. The $1.6 million mandatory redemption amount for unsettled Series J Convertible Preferred Stock was presented as a decrease in mezzanine equity and an increase in accrued liabilities.

From the date of sale through the expiration date, 14,960 of the Series J Warrants were exercised for 7,480 shares of Series J Convertible Preferred Stock, 6,836 shares of Series J Convertible Preferred Stock were issued as part of PIK dividends, 2,546 shares of Series J Convertible Preferred Stock were exchanged for shares of common stock as part of the Exchange Agreement, and 70,965 shares of Series J Convertible Preferred Stock were converted to approximately 2.2 million shares of common stock. During the nine months ended September 30, 2024, 9,000 of the Series J Warrants were exercised for 4,500 Series J Convertible Preferred Stock, 4,500 shares of the Series J Convertible Preferred Stock were converted to common stock, 3,745 Series J Convertible Preferred Stock were issued as part of PIK dividends, and 2,546 shares of Series J Convertible Preferred Stock were exchanged for shares of common stock as part of the Exchange Agreement. As of September 30, 2024, there were no Series J Convertible Preferred Stock or Series J Warrants outstanding.

The mezzanine classified Series J Convertible Preferred Stock were presented at their maximum redemption value that included accretion related to the PIK dividends.

Series I Preferred Stock

On June 5, 2023, the Board declared a dividend of one one-thousandth of a share of Series I Preferred Stock, par value $0.001 per share ("Series I Preferred Stock"), for each share of common stock outstanding as of June 16, 2023 (as calculated on a pre 2023 Reverse Stock Split basis). The certificate of designation for the Series I Preferred Stock provided that all shares of Series I Preferred Stock not present in person or by proxy at any meeting of stockholders held to vote on the 2023 Reverse Stock Split immediately prior to the opening of the polls at such meeting would be automatically redeemed (the “Series I Initial Redemption”) and that any outstanding shares of Series I Preferred Stock that have not been redeemed pursuant to the Series I Initial Redemption would be redeemed in whole, but not in part, (i) if and when ordered by the Board or (ii) automatically upon the effectiveness of the amendment to the Certificate of Incorporation effecting the 2023 Reverse Stock Split that was subject to the vote (the "Series I Subsequent Redemption"). On July 20, 2023, the Series I Initial Redemption occurred, and on July 27, 2023, the Series I Subsequent Redemption occurred. As a result, no shares of Series I Preferred Stock remain outstanding as of July 27, 2023.

Series H Preferred Stock

On May 24, 2023, the Company consummated the sale of 175,000 Units (the "Units") with each Unit consisting of (A) one share of BIOLASE Series H Convertible Redeemable Preferred Stock, par value $0.001 per share and a stated value equal to $50.00 (the “Series H Convertible Preferred Stock”), and (B) one warrant (the “Series H Warrants”) to purchase one-half of one (0.50) share of Series H Convertible Preferred Stock, at a price to the public of $26.00 per Unit, less underwriting discounts and commissions. The public offering price of $26.00 per Unit reflects the issuance of the Series H Convertible Preferred Stock with an original issue discount of 48%. The Company filed a registration statement on Form S-1 in May 2023, which registered the Units, the Series H Convertible Preferred Stock, the Series H Warrants and the shares of Series H Convertible Preferred Stock and common stock underlying such securities and additional shares of Series H Convertible Preferred Stock that will be issued, if and when the Board declares such dividends, as paid in-kind dividends (“PIK dividends”) at a rate of 20% and the shares of Common Stock issuable upon conversion of the Series H Convertible Preferred Stock issued as PIK dividends. The registration statement was declared effective on May 24, 2023 and the offering closed on May 26, 2023. Each Series H Warrant has an exercise price of $13.00 per share, is exercisable for one-half of one (0.5) share of Series H Convertible Preferred Stock, is immediately exercisable and will expire two (2) years from the date of issuance.

effective on May 24, 2023 and the offering closed on May 26, 2023. Each Series H Warrant has an exercise price of $13.00 per share, is exercisable for one-half of one (0.5) share of Series H Convertible Preferred Stock, is immediately exercisable and will expire two (2) years from the date of issuance.

Each share of Series H Convertible Preferred Stock is convertible at the option of the holder at any time into the number of shares of common stock determined by dividing the $50.00 stated value per share by a conversion price of $13.98 (as adjusted for the 2023 Reverse Stock Split). Each outstanding share of Series H Convertible Preferred Stock is mandatorily redeemable by the Company in cash on May 24, 2025 (the "Series H Maturity Date").

Gross proceeds from the offering were $4.6 million before broker fees and related expenses of approximately $0.9 million. In accordance with applicable accounting standards, the $4.6 million gross proceeds were allocated to the Series H Convertible Preferred Stock and the Series H Warrants in the amount of $3.4 million and $1.2 million, respectively. The allocation was based on the fair value of the Series H Warrants of $1.2 million as of the commitment date, with the residual proceeds of $3.4 million allocated to the Series H Convertible Preferred Stock. Net proceeds allocated to the Series H Convertible Preferred Stock and Series H Warrants was $2.7 million and $1.0 million, respectively.

The Series H Convertible Preferred Stock was classified as mezzanine equity on the consolidated balance sheet as they are contingently redeemable prior to the Series H Maturity Date and the conversion from preferred shares to shares of common stock is at the option of the holder at any time before the Series H Maturity Date. The Series H Warrants were classified as accrued liabilities on the consolidated balance sheet as the warrants are convertible into preferred shares, which are mandatorily redeemable in cash upon the Series H Maturity Date if they are not converted to shares of common stock before such date.

The Series H Convertible Preferred Stock was issued at a discount with the total redemption value of the Series H Convertible Preferred Shares and PIK Dividends of $10.5 million. The redemption value in excess of the net proceeds received allocated to the Series H Convertible Preferred Stock was $7.8 million and was recognized as a decrease in additional paid-in-capital at the commitment date. Upon conversion of Series H Warrants to Series H Convertible Preferred Stock, the value of the Series H Convertible Preferred Stock issued is the stated value per share plus the PIK dividend. The redemption value in excess of the net proceeds received from the exercise of warrants and the fair value of such warrants is recognized as a decrease in additional paid-in-capital at the conversion date.

As of ~~June~~September 30, 2024, 40,000 of the Series H Warrants have been exercised for 20,000 shares of Series H Convertible Preferred Stock, 1,923 shares of Series H Convertible Preferred Stock have been issued as part of PIK dividends, and 190,000 shares of Series H Convertible Preferred Stock have been converted to approximately 0.7 million shares of common stock. There ~~has~~have been no exercises of Series H Warrants or conversion of Series H Convertible Preferred Stock during the ~~six~~nine months ended ~~June~~September 30, 2024. As of ~~June~~September 30, 2024, there are 6,923 Series H Convertible Preferred Stock outstanding.

The mezzanine classified Series H Convertible Preferred Stock are presented at their maximum redemption value that includes accretion related to the PIK dividends.

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, 2017, 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, directors of the Company, and consultants to the Company. As of ~~June~~September 30, 2024, a total of 1,244 shares have been authorized for issuance under the 2002 Plan, of which approximately 908 shares of common stock have been issued pursuant to options that were exercised and restricted stock units ("RSUs") that were vested, approximately 138 shares of common stock have been reserved for options that are outstanding, and no shares of common stock remain available for future grants.

2018 Stock Incentive Plan

At the 2018 annual meeting of stockholders, the Company’s stockholders approved the 2018 Long-Term Incentive Plan (as amended effective as of September 21, 2018, May 15, 2019, May 13, 2020, June 11, 2021, and April 27, 2023, the “2018 Plan”). 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.

13Under the terms of the 2018 Plan, approximately 58,815 shares of common stock remain available for issuance as of September 30, 2024. As of September 30, 2024, a total of 112,268 shares of common stock have been authorized for issuance under the 2018 Plan, of which approximately 23,232 shares have already been issued and approximately 30,221 shares of the Company’s common stock have been reserved for issuance upon the exercise of outstanding options or stock appreciation rights ("SARs"), and/or settlement of unvested or deferred RSUs under the 2018 Plan.

~~Under~~The ~~the~~Company ~~terms~~recognized ofstock-based ~~the~~compensation ~~2018~~expense ~~Plan, approximately 58,815 shares~~ of ~~common~~$0.1 ~~stock~~million ~~remain available~~ for ~~issuance~~the asthree ofand ~~June~~nine ~~30,~~months ~~2024.~~ended AsSeptember ~~of June~~ 30, 2024, aand ~~total~~$0.3 ofmillion ~~112,268~~and ~~shares~~$1.1 ofmillion ~~common~~for ~~stock~~the ~~have~~three ~~been~~and ~~authorized~~nine ~~for~~months ~~issuance~~ended ~~under~~September ~~the~~30, ~~2018 Plan~~2023, respectively. As of ~~which~~September ~~approximately~~30, 222024 and 2023,~~954~~ ~~shares~~the ~~have~~Company ~~already~~had ~~been~~approximately ~~issued~~$0.1 million and ~~approximately~~$0.7 30million,~~499~~ ~~shares~~respectively, of ~~the~~total ~~Company’s~~unrecognized ~~common~~compensation ~~stock~~expense, ~~have~~net ~~been~~of ~~reserved~~estimated ~~for~~forfeitures, ~~issuance~~related ~~upon~~to ~~the~~unvested ~~exercise~~share-based ofcompensation ~~outstanding~~arrangements. ~~options~~The orCompany ~~stock~~expects ~~appreciation~~that ~~rights~~expense ~~("SARs"),~~to ~~and/or~~be ~~settlement~~recognized ofover ~~unvested~~a ~~RSUs~~weighted-average ~~under~~period ~~the~~of ~~2018~~1.2 ~~Plan~~years.

The Company recognized stock-based compensation gain of $0.1 million and expense of $0.1 million for the three and six months ended June 30, 2024, respectively, and $0.1 million and $0.8 million for the three and six months ended June 30, 2023, respectively. As of June 30, 2024 and 2023, the Company had approximately $0.1 million and $1.0 million, respectively, 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 1.3 years.

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

	Three Months Ended						~~Six~~Nine Months Ended
	June 30,						June 30,
	September 30,						September 30,
	2024			2023			2024			2023
Cost of revenue	$	—		$	57		$	—		$	2330
Sales and marketing		4937			~~105~~46			71107			~~302~~347
General and administrative		~~(95~~14	)		~~(25~~198	)		(311	)		~~405~~603
Engineering and development		—			(125	)		(1—	)		4570
Total	$	~~(46~~51	)	$	84276		$	67118		$	~~775~~1,050

Stock Option Activity

There were no option grants or exercises during the ~~six~~nine months ended ~~June~~September 30, 2024 and 2023.

Restricted Stock Units

A summary of unvested RSU activity for the ~~six~~nine months ended ~~June~~September 30, 2024 is as follows (in thousands, except per share amounts):

				Weighted
				Average Grant
	Shares			Date Fair Value
Unvested RSUs as of December 31, 2023		44		$	18.50
Vested		(27	)	$	1925.8023
Forfeited or cancelled		(6	)	$	19.51
Unvested RSUs as of June 30, 2024		11		$	34.68
Unvested RSUs as of September 30, 2024		11		$	21.31

Warrants

From time to time, the Company issues warrants to acquire shares of common stock as approved by the Board.

February 2024 Public Offering

On February 15, 2024, the Company completed a public offering (the "February 2024 Offering") and issued (i) 7,795,000 units (the "Units"), with each Unit consisting of (A) one share of the Company’s common stock, par value $0.001 per share, (B) one Class A warrant to purchase one share of common stock (the "Class A Common Warrants"), each exercisable from time to time for one share of Common Stock at an exercise price of $0.66 per share, and (C) one Class B warrant to purchase one share of common stock (the "Class B Common Warrants"), each exercisable from time to time for one share of Common Stock at an exercise price of $0.748 per share and (ii) 8,205,000 pre-funded units (the "Pre-Funded Units"), with each Pre-Funded Unit consisting of (A) one pre-funded warrant (the "Pre-Funded Warrants"), each such Pre-Funded Warrant being exercisable from time to time for one share of Common Stock at an exercise price of $0.001 per share, (B) one Class A Common Warrant, and (C) one Class B Common Warrant. The Units were sold at the public offering price of $0.44 per Unit and the Pre-Funded Units were sold at the public offering price of $0.439 per Pre-Funded Unit. The Company received gross proceeds of approximately $7.0 million, before deducting underwriting discounts and commissions, estimated offering expenses, and before the exercise of warrants.

Based on the terms and conditions of the February 2024 Offering, the Company determined that liability classification was appropriate for the Class A Common Warrants and Class B Common Warrants and recognized the gross proceeds from the issuance allocated to the warrants in excess of par of $3.7 million in accrued liabilities and expensed issuance costs of $0.6 million allocated to the warrants. The Class A Common Warrants were valued using either a long stock position plus a long call position or a Black-Scholes call option model which was deemed appropriate given the warrants can be exercised via the stated exercise price, or an alternative cashless exercise for 0.95 shares per warrant, with a fair value that approximates 95% of the current stock price. The unobservable inputs utilized in determining the fair value of the Class A Common Warrants, which are categorized as a Level 3 instrument, is the volatility rate of 85%. The Class B Common Warrants were valued using a Monte Carlo simulation. The unobservable inputs utilized in determining the fair value of the Class B Common Warrants, which are categorized as a Level 3 instrument, is the volatility rate of 85% as well as the probability of a future financing event.

Pursuant to that certain Securities Purchase Agreement, dated December 6, 2023, by and between the Company and the investor (the “Investor”) named in the signature page thereto (the “December 2023 Purchase Agreement”), the Company agreed, among other things, pursuant to Section 4.12 thereof not to enter into a Variable Rate Transaction (as defined in the December 2023 Purchase Agreement) for a period of one-hundred and eighty (180) days following the closing date of that offering (or June 5, 2024) (the “VRT Prohibition”). In order to induce the Investor to agree to waive the VRT Prohibition to enable the Company to effect the Offering, the Company and the Investor entered into a Consent and Waiver, dated February 12, 2024 (the “Consent and Waiver”), whereby the Company agreed to issue to the Investor a new warrant to purchase up to 2,221,880 shares of Common Stock (the “Investor Warrant”), which Investor Warrant is in a form substantially identical to the Class B Common Warrants that is described above. The Investor Warrants will be exercisable commencing on the effective date of stockholder approval for the issuance of the shares of Common Stock issuable upon exercise of the Investor Warrants and will expire on the fifth anniversary of such stockholder approval date.

Based on the terms and conditions of the Investor Warrant, the Company determined that liability classification was appropriate for the warrants and recognized a liability of $0.2 million in accrued liabilities at the date of issuance and expensed as issuance costs.

December 2023 Registered Direct Offering

On December 6, 2023, the Company entered into a Securities Purchase Agreement with a single institutional investor Purchaser, pursuant to which the Company issued in a registered direct offering, 331,000 shares of the Company’s common stock, and pre-funded warrants to purchase 779,940 shares of Common Stock with an exercise price of $0.001 per share, and in a concurrent private placement, warrants to purchase an aggregate of 2,221,880 shares of Common Stock with an initial exercise price of $1.23. The combined purchase price for one Share and two Common Warrants was $1.23, and the combined purchase price for one Pre-Funded Warrant and two Common Warrants was $1.229. The Company received gross proceeds of approximately $1.4 million, before deducting underwriting discounts and commissions, estimated offering expenses, and before the exercise of warrants. In connection with the closing of the February 2024 Offering, the exercise price of these warrants was reduced to $0.2256 per share due to certain anti-dilution provisions in these warrants.

Based on the terms and conditions of the December 2023 public offering, the Company determined that equity classification was appropriate for the pre-funded warrants and warrants, and recognized the net proceeds from the issuance of common stock, pre-funded warrants, and warrants in excess of par of $1.0 million in additional paid-in capital

September 2023 Offering

On September 18, 2023, the Company completed a public offering and issued, 75,000 units, with each Unit consisting of (A) one share of the Company’s Series J Convertible Redeemable Preferred Stock, par value $0.001 per share, and (B) one warrant to purchase one-half of one (0.50) share of Series J Convertible Preferred Stock, at a price to the public of $60.00 per Unit, less underwriting discounts and commissions. Each Warrant has an exercise price of $30.00 per share, is exercisable for one-half of one (0.5) share of Series J Convertible Preferred Stock, is immediately exercisable and will expire one (1) year from the date of issuance. The Company received gross proceeds of approximately $4.5 million, before deducting underwriting discounts and commissions, estimated offering expenses, and before the exercise of warrants.

Based on the terms and conditions of the September 2023 public offering, the Company determined that liability classification was appropriate for the warrants and recognized the gross proceeds from the issuance allocated to the warrants in excess of par of $1.0 million in accrued liabilities and expensed issuance costs of $0.2 million allocated to the warrants.

During the nine months ended September 30, 2024, 9,000 Series J Warrants were exercised for 4,500 shares of Series J Convertible Preferred Stock and 8,000 Series J Warrants were exchanged for shares of common stock as part of the Exchange Agreement. On September 18, 2024, all 52,040 unexercised Series J Warrants expired, and no Series J Warrants remain outstanding as of September 30, 2024.

May 2023 Offering

On May 26, 2023, the Company completed a public offering and issued, 175,000 units, with each Unit consisting of (A) one share of the Company’s Series H Convertible Redeemable Preferred Stock, par value $0.001 per share, and (B) one warrant to purchase one-half of one (0.50) share of Series H Convertible Preferred Stock, at a price to the public of $26.00 per Unit, less underwriting discounts and commissions. Each Warrant has an exercise price of $13.00 per share, is exercisable for one-half of one (0.5) share of Series H Convertible Preferred Stock, is immediately exercisable and will expire two (2) years from the date of issuance. The Company received gross proceeds of approximately $4.6 million, before deducting underwriting discounts and commissions, estimated offering expenses, and before the exercise of warrants.

purchase one-half of one (0.50) share of Series H Convertible Preferred Stock, at a price to the public of $26.00 per Unit, less underwriting discounts and commissions. Each Warrant has an exercise price of $13.00 per share, is exercisable for one-half of one (0.5) share of Series H Convertible Preferred Stock, is immediately exercisable and will expire two (2) years from the date of issuance. The Company received gross proceeds of approximately $4.6 million, before deducting underwriting discounts and commissions, estimated offering expenses, and before the exercise of warrants.

Based on the terms and conditions of the May 2023 public offering, the Company determined that liability classification was appropriate for the warrants and recognized the gross proceeds from the issuance allocated to the warrants in excess of par of $1.2 million in accrued liabilities and expensed issuance costs of $0.2 million allocated to the warrants.

January 2023 Offering

On January 9, 2023, the Company completed a public offering, pursuant to which the Company agreed to issue, in a registered direct offering, 171,678 shares of common stock, par value $0.001 per share, and pre-funded warrants to purchase 114,035 shares of common stock with an exercise price of $1.00 per share. The purchase price for one share of common stock was determined to be $35.00, and the purchase price for one January 2023 Pre-Funded Warrant was determined to be $34.00. The Company received aggregate gross proceeds from the transactions of approximately $9.9 million, before deducting underwriting discounts and commissions and other transaction expenses paid by the Company.

Based on the terms and conditions of the January 2023 public offering, the Company determined that equity classification was appropriate for the pre-funded warrants and recognized the net proceeds from the issuance of common stock and pre-funded warrants in excess of par of $8.5 million in additional paid-in capital.

A summary of the share equivalent of warrant activity for the ~~six~~nine months ended ~~June~~September 30, 2024 is as follows (in thousands, except exercise price amounts):

				Weighted
				Average
	Shares			ExercisePrice
Warrants outstanding as of December 31, 2023		4,323		$	11.88
Granted or Issued		42,427		$	0.57
Granted or issued		42,427		$	0.57
Exercised		(22,874	)	$	—
Exercised or exchanged		(22,997	)	$	0.34
Warrants outstanding as of June 30, 2024		23,876		$	2.52
Forfeited, cancelled, or expired		(798	)	$	30.00
Warrants exercisable as of June 30, 2024		23,876		$	2.52
Warrants outstanding as of September 30, 2024		22,955		$	1.42
Vested warrants expired during the period ended June 30, 2024		—		$	—
Warrants exercisable as of September 30, 2024		22,955		$	1.42
Vested warrants expired during the period ended September 30, 2024		(798	)	$	30.00

The following tables summarize the Company's stock warrants measured at fair value (level 3) on a recurring basis:

	December 31,							~~Fair~~Expiration ~~Value~~/			~~June~~Fair ~~30,~~Value			September 30,
	2023		Additions		Exercises			~~Adjustment~~Exchange			~~2024~~Adjustment			2024
Series H Warrants	$	620	$	—	$	—		$	56—		$	~~676~~127		$	747
Series J Warrants		743		—		(95	)		(16632	)		~~632~~(16	)		—
Class A Warrants		—		2,280		(1,960	)		~~(106~~—	)		~~214~~(177	)		143
Class B Warrants		—		1,379		—			~~(419~~—	)		~~960~~(899	)		480
Investor Warrants		—		192		—			~~(58~~—	)		~~134~~(125	)		67
Total Level 3	$	1,363	$	3,851	$	(2,055	)	$	(~~543~~632	)	$	2(1,~~616~~090	)	$	1,437

Phantom Awards and Stock Appreciation Rights

In 2021, 2022 and 2023 the Company granted phantom RSUs which were granted in lieu of stock-settled RSUs historically granted for leadership bonuses and non-employee director service. The phantom RSUs had either time-based or performance-based vesting conditions and a cash settlement date in 2024 with the Company's option to settle the award in common stock at the sole discretion of the Board. At inception, these phantom RSUs were included as a component of long-term liability on the consolidated balance sheet and were not considered stock-based compensation due to the cash-settlement feature of the award and the then current limitation on the number of remaining shares authorized for issuance. In 2022, as a result of the Reverse Stock Split, the phantom awards were reclassed to equity and included as a component of additional paid-in-capital in the amount of $0.1 million, with a portion remaining as a component of long-term liability on the consolidated balance sheet due to certain guaranteed minimums, and the expense subsequent to the remeasurement date considered stock-based compensation. As of December 31, 2023, approximately 2,113 of these phantom RSUs were cancelled due to non-achievement of performance metrics, and during the three months ended March 31, 2024 an additional 828 units were cancelled due to non-achievement. In March 2024, the Board approved settlement of the remaining 291 phantom RSUs with time-based vesting conditions in quarterly cash installments through April 2025 in the aggregate amount of $0.6 million. As of September 30, 2024, $0.5 million was included in accrued liabilities on the consolidated balance sheet. As of December 31, 2023, $0.5 million was included in accrued liabilities and $0.2 million was included in additional paid-in-capital on the consolidated balance sheet

16As of September 30, 2024, there are approximately 236 outstanding SARs granted in 2021 in lieu of stock-settled RSUs historically granted for non-employee director service. Upon exercise, the SARs could be settled in cash with the Company's option to settle in common stock at the sole discretion of the Board. These SARs were fully vested in 2022. No expense was recognized during the nine months ended September 30, 2024 and 2023, respectively.

2,113 of these phantom RSUs were cancelled due to non-achievement of performance metrics, and during the three months ended March 31, 2024 an additional 828 units were cancelled due to non-achievement. As of March 31, 2024, the Board approved settlement of the remaining 291 phantom RSUs with time-based vesting conditions in quarterly cash installments through April 2025 in the aggregate amount of $0.6 million. As of June 30, 2024, $0.5 million was included in accrued liabilities on the consolidated balance sheet. As of December 31, 2023, $0.5 million was included in accrued liabilities and $0.2 million was included in additional paid-in-capital on the consolidated balance sheet22

As of June 30, 2024, there are approximately 236 outstanding SARs granted in 2021 in lieu of stock-settled RSUs historically granted for non-employee director service. Upon exercise, the SARs could be settled in cash with the Company's option to settle in common stock at the sole discretion of the Board. These SARs were fully vested in 2022. No expense was recognized during the six months ended June 30, 2024 and 2023, respectively.

Net Loss Per Share – Basic and Diluted

Basic net loss per share is computed by dividing net loss attributable to common stockholders by the weighted-average number of shares of BIOLASE common stock outstanding for the period. In computing diluted net loss per share, the weighted average number of shares of common stock outstanding is adjusted to reflect the effect of potentially dilutive securities. Net loss is adjusted for any deemed dividends to preferred stockholders to compute net income attributable to common stockholders. The February 2024 Pre-Funded Warrants were included in the calculation of basic and diluted loss per share for the six months ended June 30, 2024 as the underlying warrant shares are issuable for little or no cash consideration. The January 2023 Pre-Funded Warrants were included in the calculation of basic and diluted loss per share for the three and six months ended June 30, 2023 as the underlying warrant shares are issuable for little or no cash consideration.

~~Outstanding~~The ~~stock options~~8,205,000 ~~restricted~~February ~~stock~~2024 ~~units,~~Pre-Funded ~~preferred~~Warrants ~~shares~~and 779,940 ~~and~~December ~~warrants~~2023 toPre-Funded ~~purchase~~Warrants ~~approximately~~were ~~24,456,808~~included in the calculation of basic and ~~366~~diluted loss per share as of the date of issuance for the nine months ended September 30,~~154~~ 2024 as the underlying warrant shares ~~were~~are ~~not~~issuable for little or no cash consideration. The 114,035 January 2023 Pre-Funded Warrants were included in the calculation of ~~diluted~~basic ~~net~~and diluted loss per share ~~amounts~~as ~~for~~of the ~~periods~~date ~~ended~~of ~~June~~issuance ~~30,~~for ~~2024~~the three and ~~June~~nine months ended September 30, 2023, ~~respectively,~~ as ~~their~~the ~~effect~~underlying ~~would~~warrant ~~have~~shares ~~been~~are ~~anti-dilutive.~~issuable for little or no cash consideration.

Outstanding stock options, restricted stock units, preferred shares, and warrants to purchase approximately 23,010,024 and 2,537,031 shares were not included in the calculation of diluted net loss per share amounts for the periods ended September 30, 2024 and September 30, 2023, respectively, as their effect would have been anti-dilutive.

NOTE 5—INVENTORY

Inventory is valued at the lower of cost or net realizable value and is comprised of the following (in thousands):

	June 30,		December 31,
	September 30,		December 31,
	2024		2023
Raw materials	$	5,~~528~~028	$	6,168
Work-in-process		1,~~514~~262		1,299
Finished goods		3,~~862~~580		3,966
Inventory	$	109,~~904~~870	$	11,433

Inventory has been reduced by estimates for excess and obsolete amounts totaling $2.3 million as of ~~June~~September 30, 2024 and $2.5 million as of December 31, 2023.

NOTE 6—PROPERTY, PLANT, AND EQUIPMENT

Property, plant, and equipment, net is comprised of the following (in thousands):

	June 30,			December 31,
	September 30,			December 31,
	2024			2023
Building	$	~~199~~207		$	205
Leasehold improvements		1,251			1,251
Equipment and computers		1412,~~467~~806			14,628
Furniture and fixtures		519			519
Construction in progress		—			92
Total property, plant, and equipment before depreciation and land		1614,~~436~~783			16,695
Less: Accumulated depreciation		(1211,~~328~~287	)		(11,330	)
Total property, plant, and equipment, net before land		43,~~108~~496			5,365
Land		~~155~~162			160
Property, plant, and equipment, net	$	43,~~263~~658		$	5,525

17Depreciation expense related to property, plant, and equipment totaled $0.6 million and $2.0 million for the three and nine months ended September 30, 2024 and $0.6 million and $2.1 million for the three and nine months ended September 30, 2023.

Depreciation expense related to property, plant, and equipment totaled $0.7 million and $1.3 million for the three and six months ended June 30, 2024 and $1.4 million and $1.6 million for the three and six months ended June 30, 2023.

During the three months ended June 30, 2023, the Company revised its accounting for laser equipment transferred as part of its marketing efforts to potential customers and other sales representatives without any payment. As a result, a cumulative adjustment of $0.8 million was recorded to depreciation expense in the three and six months ended June 30, 2023.

NOTE 7—INTANGIBLE ASSETS AND GOODWILL

The Company conducted its annual impairment test of goodwill as of September 30, ~~2023~~2024 and determined that there was no impairment. The Company ~~also~~filed ~~tests~~the ~~its~~Bankruptcy ~~intangible~~Petitions ~~assets~~on ~~and~~October ~~goodwill~~1, ~~between~~2024, ~~the~~and ~~annual~~signed ~~impairment~~the ~~tests~~Asset ifPurchase ~~events~~Agreement ~~occur~~on orSeptember ~~circumstances~~30, ~~change~~2024. ~~that~~The ~~would~~Asset ~~more~~Purchase ~~likely~~Agreement ~~than~~was ~~not~~in ~~reduce~~ the ~~fair~~amount ~~value~~ of ~~the Company or its assets below their carrying amounts~~$14.0 ~~For~~million ~~intangible~~which ~~assets~~was ~~subject~~in toexcess ~~amortization,~~of the Company’s ~~performs~~carrying ~~its impairment test when indicators~~value, ~~such~~indicating asno ~~reductions~~impairment into ~~demand~~its ~~or significant economic slowdowns, are present~~Goodwill. ~~During~~On ~~the~~November ~~fourth quarter ended December 31~~4, ~~2023~~2024, ~~due to~~ the ~~sustained~~Company ~~decrease~~commenced in the ~~stock~~auction ~~price~~for of the ~~common~~sale ~~stock decreasing the implied fair value~~ of the ~~business,~~Transferred ~~the~~Assets ~~Company~~and ~~performed~~received a ~~quantitative~~winning ~~assessment~~bid of ~~impairment over goodwill and determined that there was no impairment to the Company's goodwill~~$20.50 ~~Goodwill~~million ~~was valued using an equally weighted income approach and market approach. The unobservable inputs utilized~~ in ~~determining~~cash ~~the~~from ~~fair~~MegaGen ~~value~~with ~~of the goodwill, which is categorized as~~ a ~~Level~~back-up 3bid ~~instrument, are the discount rate~~ of $19.1%95 ~~and~~million ~~various~~from ~~revenue growth rates utilized in the financial forecast of future cash flows~~Sonendo.

As of June 30, 2024 and December 31, 2023, the Company had goodwill (indefinite life) of $2.9 million. As of June 30, 2024 and December 31, 2023, all intangible assets subject to amortization have been fully amortized and there was no amortization expense recognized during the three and six months ended June 30, 2024 and 2023. 23

The Company also tests its intangible assets and goodwill between the annual impairment tests if events occur or circumstances change that would more likely than not reduce the fair value of the Company or its assets below their carrying amounts. For intangible assets subject to amortization, the Company performs its impairment test when indicators, such as reductions in demand or significant economic slowdowns, are present. During the fourth quarter ended December 31, 2023, due to the sustained decrease in the stock price of the common stock decreasing the implied fair value of the business, the Company performed a quantitative assessment of impairment over goodwill and determined that there was no impairment to the Company's goodwill. Goodwill was valued using an equally weighted income approach and market approach. The unobservable inputs utilized in determining the fair value of the goodwill, which is categorized as a Level 3 instrument, are the discount rate of 19.1% and various revenue growth rates utilized in the financial forecast of future cash flows.

As of September 30, 2024 and December 31, 2023, the Company had goodwill (indefinite life) of $2.9 million. As of September 30, 2024 and December 31, 2023, all intangible assets subject to amortization have been fully amortized and there was no amortization expense recognized during the three and nine months ended September 30, 2024 and 2023.

NOTE 8—ACCRUED LIABILITIES

Accrued liabilities are comprised of the following (in thousands):

	June 30,		December 31,
	September 30,		December 31,
	2024		2023
Payroll and benefits	$	32,~~640~~625	$	3,343
Warranty accrual, current portion		1,000		1,321
Series J Convertible Redeemable Preferred Stock liability		1,581		—
Operating lease liability		~~904~~856		888
Accrued professional services		994		422
Warranty accrual, current portion		800		1,321
Taxes		349		452
Accrued professional services		778		422
Accrued insurance premium		161		473
Accrued interest		723		256
Other		614		619
Taxes		386		452
Accrued liabilities	$	7,662	$	7,518
Accrued insurance premium		—		473
Other		404		363
Accrued liabilities	$	8,153	$	7,518

Changes in the initial product warranty accrual and the expenses incurred under the Company’s initial and extended warranties are included within accrued liabilities and were as follows (in thousands):

Three Months Ended

~~Six~~Nine Months Ended

June 30,

September 30,

2024

2023

2024

2023

Balance, beginning of period

1,~~891~~843

1,~~855~~772

1,914

1,653

Provision for estimated warranty cost

~~808~~346

~~802~~997

1,~~487~~833

12,~~960~~957

Warranty expenditures

(~~856~~663

)

(~~885~~942

)

(12,~~558~~221

)

(12,~~841~~783

)

Balance, end of period

1,~~843~~526

1,~~772~~827

1,~~843~~526

1,~~772~~827

Less: long-term portion of warranty accrual

~~843~~726

~~397~~463

~~843~~726

~~397~~463

Current portion of warranty accrual

~~1,000~~800

1,~~375~~364

~~1,000~~800

1,~~375~~364

The Company's Waterlase laser systems sold domestically are covered by a warranty against defects in material and workmanship for a period of up to one year from the date of sale to the end-user by the Company or a distributor. The Company's diode systems sold domestically are covered by a warranty against defects in material and workmanship for a period of up to two years from the date of sale to the end-user by the Company or a distributor. Waterlase systems and diode systems sold internationally are covered by a warranty against defects in material and workmanship for a period of up to 24 months from date of sale to the international distributor. The Company's laser systems warranty covers parts and service for sales in its North American territories and parts only for international distributor sales.

In North America and select international locations, the Company sells extended warranty contracts to its laser systems end-users that cover the period after the expiration of the Company's standard warranty coverage for its laser systems. Extended warranty coverage provided under the Company's service contracts varies by the type of system and the level of service desired by the customer. Products or accessories remanufactured, refurbished, or sold by unauthorized parties, voids all warranties in place for such products and exempts the Company from liability issues relating to the use of such products.

NOTE 9—DEBT

The following table presents the details of the principal outstanding and unamortized discount (in thousands):

	June 30,			December 31,
	September 30,			December 31,
	2024			2023
SWK Loan	$	1316,~~695~~195		$	14,560
EIDL Loan		150			150
Discount and debt issuance costs on SWK Loan		(~~420~~303	)		(663	)
Total		1316,~~425~~042			14,047
Current term loans		1316,~~275~~042			2,265
Non current term loans, net of discount	$	~~150~~—		$	11,782

The Company recognized approximately $0.6 million and $1.28 million in interest expense for the three and ~~six~~nine months ended ~~June~~September 30, 2024, respectively, and $0.6 million and $1.28 million for the three and ~~six~~nine months ended ~~June~~September 30, 2023, respectively. The weighted-average interest rate as of ~~June~~September 30, 2024 was 14.5955%.

The future minimum principal and interest payments as of ~~June~~September 30, 2024 are as follows (in thousands):

	Principal		Interest (1)
Remainder of 2024	$	116,~~400~~345	$	~~896~~2,209
2025		~~12,295~~—		~~842~~—
2026		—		9—
2027		3—		6—
2028 and thereafter		~~147~~—		83—
Total future payments	$	1316,~~845~~345	$	12,~~836~~209
(1) Estimated using London Interbank Bank Offered Rate (“LIBOR”) as of June 30, 2024

(1) Estimated using London Interbank Bank Offered Rate ("LIBOR") as of September 30, 2024

Term Loan

On November 9, 2018, the Company entered into athat certain five-year secured Credit Agreement ~~(as amended, restated, and supplemented from time to time, the “Credit Agreement”)~~ with SWK ~~Funding LLC (“SWK”)~~, pursuant to which the Company has outstanding principal of $13.3 million (“SWK Loan”) as of ~~June~~September 30, 2024. In addition, pursuant to the Credit Agreement, the Company is required to pay certain exit fees totaling $1.4 million upon loan termination which are recorded as a debt premium. The Company’s obligations under the Credit Agreement are secured by substantially all of the Company’s assets. Under the terms of the Credit Agreement and subsequent amendments as discussed in the Company’s 2023 Form 10-K, repayment of the SWK Loan is interest-only for the first two years, paid quarterly with the option to extend the interest-only period. Principal repayments were to begin in the first quarter of 2021. On June 30, 2022 the Company entered into the ninth amendment to the Credit Agreement (the "Ninth Amendment"), which extended the interest-only period by two quarters from May 2023 to November 2023. On December 30, 2022, the Company entered into the tenth amendment to the Credit Agreement, which lowered the required minimum consolidated unencumbered liquid assets from $3 million to $2.5 million and removed the conditional minimum last twelve months aggregate revenue and EBITDA as of the end of the twelve-month period ended December 31, 2022. On November 15, 2023, the Company entered into the Eleventh Amendment to Credit Agreement, which reduced the principal amortization payments due on November 15, 2023 and February 15, 2024 to $165,000, reduced the required minimum consolidated unencumbered liquid assets to $1.5 million through and including December 30, 2023 and to $2.5 million thereafter, and reduced the required minimum consolidated unencumbered liquid assets to $3.5 million as of the last day of any fiscal quarter beginning with the period ending March 31, 2024. In connection with the Ninth Amendment, the Company prepaid $1.0 million of the outstanding loan balance. Principal repayments began in November 2023 and are $0.7 million quarterly after February 2024 until the SWK Loan matures in May 2025. The loan bears interest of 9% plus LIBOR with a floor of 1.25%, or another index that approximates LIBOR as close as possible if and when LIBOR no longer exists.

~~During~~In ~~the~~May ~~three months ended June 30,~~ 2024 all remaining long-term balances related to the SWK Loan were reclassified to current liabilities due to the loan maturity date of May 31, 2025.

19The Company was scheduled to make its quarterly principal and interest payment of approximately $1.2 million on August 15, 2024. However, the Company was unable to make this payment. On August 22, 2024 SWK notified the Company of an alleged event of default under the Credit Agreement, and extended the August payment date to August 30, 2024.

AsOn ofAugust ~~June 30~~31, 2024, the Company ~~was~~and inSWK ~~compliance~~entered ~~with~~into a Forbearance Agreement (the ~~debt~~"Forbearance ~~covenants~~Agreement"). Under the terms of the Forbearance Agreement, SWK agreed: (a) not to accelerate or cause the acceleration of the maturity of the loans or other obligations or to otherwise enforce payment of the obligations of the Company in full under the Credit Agreement. and the loan

documents, and (b) not to exercise any other default or event of default related rights and remedies available to SWK against the Company under any loan document or applicable law with respect to any obligation owed under the loan documents. Upon termination or expiration of the period (the “Forbearance Period”), SWK shall be entitled to exercise any of its respective rights and remedies under the Forbearance Agreement, the other loan documents, or applicable law, including, without limitation, the right to enforce any and all of the liens on, and security interests in, the collateral described in the loan documents, without further notice, demand, notice of intent to accelerate, notice of acceleration, presentment, protest or other formalities of any kind. The Forbearance Period terminated upon the Company's filing of chapter 11 bankruptcy on October 1, 2024. The Company also agreed to pay the reasonable fees and expenses of SWK in connection with entering into the Forbearance Agreement and the other loan documents.

In addition, the Forbearance Agreement provided that during the Forbearance Period, provided no Forbearance Default has occurred and certain other conditions are met, Agent and Lenders agreed to fund term loans, in an aggregate amount not to exceed $2,500,000 (the bridge loan) and in accordance with the terms of the Forbearance Agreement, to pay operating expenses of the Company, including, without limitation, payments with respect to out of pocket legal or restructuring expenses of the Company, Agent or Lenders.

Under the Forbearance Agreement, the Company also agreed to, among other things, prepare for and file a bankruptcy case under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware for the sale of the Company’s assets. In connection with the sale process the Company agreed to comply with certain process milestones which require, among other things, the entry into a purchase and sale agreement with a so-called “stalking horse bidder” by September 30, 2024, filing a bankruptcy case by October 1, 2024, and closing the sale by November 15, 2024. All of the milestones and the entire sale process are subject to bankruptcy court approval and the milestones that occur after the commencement of the Company’s bankruptcy case are subject to change by the bankruptcy court to accommodate its own schedule.

The Forbearance Agreement further provides that the Company shall request that Lenders provide a debtor-in-possession loan (the “DIP Loan”) to the Company in the Chapter 11 case, on terms acceptable to the Agent and Lenders. The Agent is to condition the provision of the DIP Loan to the Company on the $2,500,000 bridge loan described in the preceding paragraph itself being considered a debtor-in-possession loan and being “rolled-up” in the DIP Loan to be provided to the Company in the Chapter 11 case pursuant to the final order that will be entered in the Chapter 11 case by the bankruptcy court approving the DIP Loan.

During the Forbearance Period, the Company had agreed, among other things: (a) not to grant or pay any executive bonuses without the consent of the Agent, (b) to provide the Agent with notice of any employee resignation, (c) not to make any expenditure for the business to consumer laser product line, (d) to comply with the cash flow forecasted budget it created in connection with entering into the Forbearance Agreement and to keep its aggregate expenditures within an agreed upon budget variance of 10% in the case of expenditures, (e) to provide weekly reporting of actual results compared to the budget, (f) not to suffer the appointment of a receiver, trustee, custodian or similar fiduciary, (g) to pay all reasonable fees and expenses incurred by the Agent and Lenders in connection with the Forbearance Agreement and the loan documents, including the reasonable and documented fees and expenses of the Agent’s and Lenders’ external counsel, and (h) not to pay or make any distributions on account of subordinated debt of the Company and its subsidiaries or agree to any amendments to any subordinated debt documents without the Agent’s consent.

As of September 30, 2024, the Company was in compliance with the terms of the Forbearance Agreement.

EIDL Loan

On May 22, 2020, the Company executed the standard loan documents required for securing a loan (the “EIDL Loan”) from the Small Business Administration (the "SBA") under its Economic Injury Disaster Loan assistance program in light of the impact of the COVID-19 pandemic on the Company’s business. The principal amount of the EIDL Loan is $150,000, with the proceeds to be used for working capital purposes. Interest on the EIDL Loan accrues at the rate of 3.75% per annum, and installment payments, including principal and interest, are due monthly beginning in July 2021 and are payable through July 2050. In April 2021, the SBA announced that it was extending the first payment due date for all loans until 2022, or 24 months from the loan execution date. In March 2022, the SBA announced that it was extending the first payment due date for all loans an additional six months, or 30 months from the loan execution date. The Company began making payments on the EIDL Loan starting in November 2022. Fixed payments are first applied to any accrued interest.

Due to the Forbearance Agreement and subsequent Bankruptcy Petition, the $150,000 EIDL Loan balance was classified as a current liability as of September 30, 2024

NOTE 10—LEASES

The Company enters into operating leases primarily for real estate, office equipment, and fleet vehicles. Lease terms generally range from one to five years, and often include options to renew for one year. The Company leases its corporate headquarters pursuant to a lease that expires on December 31, 2025 and leases a manufacturing facility located in Corona, California, which expires on June 30, 2025. The Company also leases additional office space and certain office equipment under various operating lease arrangements.

On January 22, 2020, the Company entered into a five-year real property lease agreement for an approximately 11,000 square foot facility in Corona, California for its manufacturing operations. The lease commenced on July 1, 2020. On December 10, 2021, the Company entered into a lease for an additional 15,000 square feet at its facility. This additional lease commenced on February 1, 2022 and expires on June 30, 2025.

On February 4, 2020, the Company also entered into a 66-month real property lease agreement for office space of approximately 12,000 square feet of office space in Lake Forest, California. The lease commenced on July 1, 2020. On May 26, 2022, the Company entered into an additional lease at this location to expand the leased space by an additional 8,000 square feet for an additional training facility and model dental office. The lease commenced on March 8, 2023 and expires December 31, 2025.

Information related to the Company’s right-of-use assets and related liabilities were as follows (in thousands):

	Three Months Ended						~~Six~~Nine Months Ended
	June 30,						June 30,
	September 30,						September 30,
	2024			2023			2024			2023
Cash paid for operating lease liabilities	$	8081		$	9270		$	~~157~~238		$	~~159~~230
Right-of-use assets obtained in exchange for new operating lease obligations	$	—78		$	19—		$	—78		$	483
Weighted-average remaining lease term	1.42 years			2.30 years			1.42 years			2.30 years
Weighted-average discount rate		1214.36	%		12.3	%		1214.36	%		12.3	%

Lease expense consists of payments for real property, office copiers, and IT equipment. The Company recognizes payments for non-lease components such as common area maintenance in the period incurred. As of ~~June~~September 30, 2024, the Company had no significant leases that had not commenced.

The Company allocates lease cost amongst lease and non-lease components. The Company excludes short-term leases (those with lease terms of less than one year at inception) from the measurement of lease liabilities or right-of-use assets.

20Maturities of lease liabilities within the next year as of September 30, 2024 for leases that have commenced are as follows (in thousands):

Maturities of lease liabilities as of June 30, 2024 for leases that have commenced are as follows (in thousands):


	September 30,
2024	$	904
2025		238
2026		9
2027		—
2028 and thereafter		—
Total future minimum lease obligations		1,151
Less imputed interest		(84	)
Total lease liabilities	$	1,067

Current operating lease liabilities, included in accrued liabilities	$	856
Non current lease liabilities		211
Total lease liabilities	$	1,067

	June 30,
2024	$	919
2025		410
2026		1
2027		—
2028 and thereafter		—
Total future minimum lease obligations		1,330
Less imputed interest		(111	)
Total lease liabilities	$	1,219
Current operating lease liabilities, included in accrued liabilities	$	904
Non current lease liabilities		315
Total lease liabilities	$	1,219

As of September 30, 2024, right-of-use assets were $1.0 million and lease liabilities were $1.1 million.

AsRent ofexpense ~~June~~totaled $0.3 million and $0.9 million for the three and nine months ended September 30, 2024, ~~right-of-use~~respectively, ~~assets~~and ~~were~~$0.3 million and $10.19 million for the three and ~~lease~~nine ~~liabilities~~months ~~were~~ended ~~$1.2~~September ~~million.~~30, 2023, respectively.

~~Rent expense totaled $0.3 million and $0.6 million for the three and six months ended June 30, 2024 and $0.3 million and $0.6 million for the three and six months ended June 30, 2023.~~27

Future minimum rental commitments under lease agreements, as of ~~June~~September 30, 2024, with non-cancelable terms greater than one year for each of the years ending December 31 are as follows (in thousands):

	Year Ended
	December 31,
Remainder of 2024	$	~~510~~267
2025		~~817~~849
2026		335
2027		—
2028 and thereafter		—
Total future minimum lease obligations		1,~~330~~151
Less imputed interest		(~~111~~84	)
Total lease liabilities	$	1,~~219~~067

NOTE 11—SEGMENT INFORMATION

The Company currently operates in a single business segment. Management uses one measurement of profitability and does not segregate its business for internal reporting. For the three and ~~six~~nine months ended ~~June~~September 30, 2024, sales to customers in the United States accounted for approximately 7176% and 6971% of net revenue and international sales accounted for approximately 2924% and 3129% of net revenue, respectively. For the three and ~~six~~nine months ended ~~June~~September 30, 2023, sales to customers in the United States accounted for approximately 7567% and 7170% of net revenue and international sales accounted for approximately 2533% and 2930% of net revenue, respectively. No individual country, other than the United States, represented more than 10% of total net revenue during the three and ~~six~~nine months ended ~~June~~September 30, 2024 or 2023.

Net revenue by geographic location based on the location of customers was as follows (in thousands):

Three Months Ended

~~Six~~Nine Months Ended

June 30,

September 30,

2024

2023

2024

2023

United States

8,~~240~~246

107,~~741~~298

1423,~~930~~176

1724,~~499~~797

International

32,~~315~~604

3,~~545~~623

69,~~757~~360

710,~~254~~877

Net revenue

1110,~~555~~850

1410,~~286~~921

2132,~~687~~536

2435,~~753~~674

Property, plant, and equipment by geographic location was as follows (in thousands):

	June 30,		December 31,
	September 30,		December 31,
	2024		2023
United States	$	43,~~035~~424	$	5,283
International		~~228~~234		242
Total	$	43,~~263~~658	$	5,525

NOTE 12—CONCENTRATIONS

Revenue from the Company’s products are as follows (dollars in thousands):

	Three Months Ended								~~Six~~Nine Months Ended
	June 30,								June 30,
	September 30,								September 30,
	2024				2023				2024				2023
Laser systems	$	65,~~007~~876	5254.02	%	$	86,~~754~~647	6160.39	%	$	1117,~~182~~058	5152.64	%	$	1521,~~019~~666	60.7	%
Consumables and other		3,~~835~~717	3334.2	%		42,~~117~~908	2826.86	%		711,~~304~~021	33.69	%		710,~~150~~058	28.92	%
Services		1,~~713~~257	1411.86	%		1,~~415~~366	912.95	%		34,~~201~~457	1413.87	%		23,~~584~~950	1011.41	%
Net revenue	$	1110,~~555~~850	100.0	%	$	1410,~~286~~921	100.0	%	$	2132,~~687~~536	100.0	%	$	2435,~~753~~674	100.0	%

No individual customer represented more than 10% of the Company’s revenue for the three and ~~six~~nine months ended ~~June~~September 30, 2024 or 2023.

The Company maintains its cash and cash equivalents in money market investment accounts with established commercial banks. Such cash deposits periodically exceed the Federal Deposit Insurance Corporation insured limit.

As of June 30, 2024, accounts receivable from one customer totaled approximately 12% of total gross accounts receivable with the entire balance being current. As of December 31, 2023 accounts receivable from one customer totaled approximately 11% of total gross accounts receivable which has been partially received in 2024 and partially reserved for uncollectibility as of June 30, 2024.28

As of September 30, 2024, no individual customer represented more than 10% of the Company's accounts receivable. As of December 31, 2023 accounts receivable from one customer totaled approximately 11% of total gross accounts receivable which has been partially received in 2024 and partially reserved for uncollectibility as of September 30, 2024.

The Company currently purchases certain key components of its products from single suppliers. Although there are a limited number of manufacturers of these key components, management believes that other suppliers could provide similar key components on comparable terms. A change in suppliers, however, could cause delays in manufacturing and a possible loss of sales, which could adversely affect the Company’s business, results of operations and financial condition.

NOTE 13—INCOME TAXES

The Company accounts for income taxes under the asset and liability method, whereby deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Management evaluates the need to establish a valuation allowance for deferred tax assets based upon the amount of existing temporary differences, the period in which they are expected to be recovered, and expected levels of taxable income. A valuation allowance to reduce deferred tax assets is established when it is “more likely than not” that some or all of the deferred tax assets will not be realized. Based on the Company’s net losses in prior years, management has determined that a full valuation allowance against the Company’s net deferred tax assets is appropriate.

Accounting for uncertainty in income taxes prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return and provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The Company has elected to classify interest and penalties as a component of its income tax provision. With respect to the liability for unrecognized tax benefits, including related estimates of penalties and interest, the Company did not record a liability for unrecognized tax benefits for the three and ~~six~~nine months ended ~~June~~September 30, 2024 and 2023. The Company does not expect any changes to its unrecognized tax benefit for the next 12 months that would materially impact its consolidated financial statements.

During the three and ~~six~~nine months ended ~~June~~September 30, 2024, the Company recorded an income tax provision of $2012,000 and $4051,000 resulting in an effective tax rate of 0.78% and 0.45%, respectively. During the three and ~~six~~nine months ended ~~June~~September 30, 2023, the Company recorded an income tax provision of $3115,000 and $46,000, respectively, resulting in an effective tax rate of 0.~~6% and 0.~~3%~~, respectively~~. The income tax provisions for the three and ~~six~~nine months ended ~~June~~September 30, 2024 and 2023 were calculated using the discrete year-to-date method. The effective tax rate differs from the statutory tax rate of 21% primarily due to the existence of valuation allowances against net deferred tax assets and current liabilities resulting from the estimated state income tax liabilities and foreign tax liability.

effective tax rate differs from the statutory tax rate of 21% primarily due to the existence of valuation allowances against net deferred tax assets and current liabilities resulting from the estimated state income tax liabilities and foreign tax liability.

NOTE 14—SUBSEQUENT EVENTS

The Company has evaluated all events or transactions that occurred after ~~June~~September 30, 2024 through ~~August~~November 87, 2024, which is the date that the condensed consolidated financial statements were available to be issued. During this period, there were no material subsequent events requiring recognition or disclosure, other than those described below.

On July 16, 2024, the Company issued an aggregate of 3,190,476 shares of its common stock, par value $0.001 per share, in exchange for (i) 2,546 shares of the Company’s Series J Convertible Redeemable Preferred Stock, par value $0.001 per share (the "Series J Preferred Stock"), and (ii) 8,000 Series J Preferred Warrants to purchase 4,000 shares of Series J Preferred Stock, pursuant to the terms of that certain Exchange Agreement entered into on July 16, 2024 by the Company and the investor named therein.Bankruptcy

~~The~~As previously disclosed, on October 1, 2024 the Company ~~issued~~and ~~common~~its ~~stock~~direct todomestic subsidiaries filed voluntary petitions for relief (the ~~Investor~~"Bankruptcy inPetitions") ~~reliance~~under onchapter 11 of Title 11 of the ~~exemption~~United ~~from~~States Code (the ~~registration~~"Bankruptcy ~~requirements~~Code") ofin the ~~Securities~~United ~~Act~~States ofBankruptcy ~~1933,~~Court asfor ~~amended,~~the ~~afforded~~District byof ~~Section~~Delaware 3(~~a)(9)~~the ~~thereof~~"Bankruptcy Court"). The ~~shares~~Company ofwill ~~Common~~continue ~~Stock~~to ~~issued~~operate ~~upon~~its ~~exchange~~businesses ofas "debtors-in-possession" under the ~~Series~~jurisdiction Jof ~~Preferred~~the ~~Stock~~Bankruptcy Court and ~~Series~~in Jaccordance ~~Preferred~~with ~~Warrants~~the ~~have~~applicable ~~not~~provisions ~~been~~of ~~registered~~the ~~under~~Bankruptcy Code and orders of the ~~Securities~~Bankruptcy ~~Act~~Court. In addition, the Company filed a motion seeking approval for certain procedures relating to the marketing and ~~may~~auction ~~not~~(if benecessary) ~~offered~~of all or ~~sold~~some inof the ~~United~~Company's ~~States~~assets, inincluding approval of an Asset Purchase Agreement (as previously defined) and certain bidding procedures for the ~~absence~~sale of anthe ~~effective~~Transferred ~~registration~~Assets ~~statement~~(as orpreviously ~~exemption~~defined) ~~from~~and other assets (the ~~registration~~"Bidding ~~requirements~~Procedures"). NoThe ~~proceeds~~Asset ~~have~~Purchase ~~been~~Agreement orincludes ~~will~~customary berepresentations ~~received~~and warranties and novarious ~~commissions~~customary ~~have~~covenants ~~been~~under orthe ~~will~~circumstances bethat ~~paid~~are bysubject ~~the~~to ~~Company~~certain inlimitations, ~~connection~~including, ~~with~~without limitation, a break-up fee, expense reimbursement and the ~~exchange~~right ~~described~~to ~~herein.~~designate executory contracts and unexpired leases to assume or reject.

23On October 17, 2024, the Bankruptcy Court entered an order, which, among other things, approved the Bidding Procedures and the designation of Sonendo as the “stalking horse” bidder.

OTCQB Delisting

On October 2, 2024, the Company received notice from OTC Markets Group, Inc. (the “OTC”) that the Company no longer meets the Standards for Continued Eligibility for OTCQB as per the OTCQB Standards, Section 2.3(5). The Company’s shares of common stock commenced trading on the Pink Market platform operated by the OTC at the market open on October 3, 2024 under the “BIOLQ” ticker symbol. Existing stockholders will find the securities quoted on the OTC Pink Market and freely tradable without any further action needed.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following information should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q (this “Form 10-Q”) and our audited consolidated financial statements and related notes included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the Securities and Exchange Commission (the “SEC”) on March 21, 2024 (the “2023 Form 10-K”).

In addition to historical information, this discussion and analysis contains “forward-looking statements” as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that involve risks, uncertainties, and assumptions, which could cause actual results to differ materially from management's expectations. Such forward-looking statements include statements, predictions, or expectations regarding expected investment activities, future liquidity, potential collaborations, market opportunities, plans with respect to products and services, future demand for improved dental care and dental laser equipment, seasonality and the reasons therefor, operating and other expenses, anticipated cash needs, our strategy and any other statement that is not historical fact. Forward-looking statements are identified by the use of words such as “may,” “might,” “will,” “intend,” “should,” “could,” “can,” “would,” “continue,” “expect,” “believe,” “anticipate,” “estimate,” “predict,” “outlook,” “potential,” “plan,” “seek,” “forecast,” and similar expressions and variations or the negatives of these terms or other comparable terminology.

The forward-looking statements contained in this Form 10-Q are based on the expectations, estimates, projections, beliefs, and assumptions of our management based on information available to management as of the date on which this Form 10-Q was filed with the SEC, or as of the date on which the information incorporated by reference was filed with the SEC, as applicable, all of which are subject to change. Forward-looking statements are subject to risks, uncertainties, and other factors that are difficult to predict and could cause actual results to differ materially from those stated or implied by our forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to:

•

substantial doubt about our ability to continue as a going concern;

•

the status, progress or outcome of the Company’s proceedings under chapter 11 of Title 11 of the United States Code, and/or any other strategic alternatives or contingency planning initiatives;

•

losses that we have experienced for each of the past several years;

•

our inability to meet our redemption obligations under the existing convertible redeemable preferred stock;

•

our failure to relist our common stock on a national exchange or maintain compliance with the requirements of the ~~OTCQB~~OTC Markets Group (the "OTC");

•

global economic uncertainty and volatility in financial markets;

•

inability to raise additional capital on terms acceptable to us;

•

our relationships with, and the efforts of, third-party distributors;

•

failure in our efforts to train dental practitioners or to overcome the hesitation of dentists and patients to adopt laser technologies;

•

inconsistencies between future data and our clinical results;

•

competition from other companies, including those with greater resources;

•

our inability to successfully develop and commercialize enhanced or new products that remain competitive with products or alternative technologies developed by others;

•

the inability of our customers to obtain third-party reimbursement for their use of our products;

•

limitations on our ability to use net operating loss carryforwards;

•

problems in manufacturing our products;

•

warranty obligations if our products are defective;

•

adverse publicity regarding our technology or products;

•

adverse events to our patients during the use of our products, regardless of whether caused by our products;

•

issues with our suppliers, including the failure of our suppliers to supply us with a sufficient amount or adequate quality of materials;

•

rapidly changing standards and competing technologies;

•

our inability to effectively manage and implement our growth strategies;

•

risks associated with operating in international markets, including potential liabilities under the Foreign Corrupt Practices Act;

•

breaches of our information technology systems;

•

seasonality;

•

litigation, including the failure of our insurance policies to cover certain expenses relating to litigation and our inability to reach a final settlement related to certain litigation;

•

disruptions to our operations at our primary manufacturing facility;

•

loss of our key management personnel or our inability to attract or retain qualified personnel;

•

risks and uncertainties relating to acquisitions, including difficulties integrating acquired businesses successfully into our existing operations and risks of discovering previously undisclosed liabilities;

•

failure to meet covenants in the Credit Agreement, dated as of November 9, 2018 (as amended from time to time, the “Credit Agreement”), by and between BIOLASE and SWK Funding LLC ("SWK") and related risks of foreclosure triggered by an event of default under the Credit Agreement;

•

interest rate risk, which could result in higher expense in the event of interest rate increases;

•

obligations to make debt payments under the Credit Agreement;

•

risks of foreclosure triggered by an event of default under the Credit Agreement;

•

failure to comply with the reporting obligations of the Exchange Act and Section 404 of the Sarbanes-Oxley Act of 2002, as amended or maintain adequate internal control over financial reporting;

•

climate change initiatives;

•

failure of our intellectual property rights to adequately protect our technologies and potential third-party claims that our products infringe their intellectual property rights;

•

changes in government regulation or the inability to obtain or maintain necessary governmental approvals;

•

our failure to comply with existing or new laws and regulations, including fraud and abuse and health information privacy and securities laws;

•

changes in the regulatory requirements of the Food and Drug Administration (“FDA”) applicable to laser products, dental devices, or both;

•

recall or other regulatory action concerning our products after receiving FDA clearance or approval; and

•

risks relating to ownership of our common stock, including high volatility and dilution.

Further information about factors that could materially affect the Company, including our results of operations and financial condition, is contained under “Risk Factors” in Item 1A in the 2023 Form 10-K and Item 1A of Part II of this Form 10-Q. Except as required by law, we undertake no obligation to revise or update any forward-looking statements to reflect changed assumptions, the occurrence of anticipated or unanticipated events, new information or changes to future results over time or otherwise.

Overview

BIOLASE, Inc. (“BIOLASE” and, together with its consolidated subsidiaries, the “Company,” “we,” “our” or “us”) is a leading provider of advanced laser systems for the dental industry. We develop, manufacture, market, and sell laser systems that provide significant benefits for dental practitioners and their patients. Our proprietary systems allow dentists, periodontists, endodontists, pediatric dentists, oral surgeons, and other dental specialists to perform a broad range of minimally invasive dental procedures, including cosmetic, restorative, and complex surgical applications. Our laser systems are designed to provide clinically superior results for many types of dental procedures compared to those achieved with drills, scalpels, and other conventional instruments. Potential patient benefits include less pain, fewer shots, faster healing, decreased fear and anxiety, and fewer appointments. Potential practitioner benefits include improved patient care and the ability to perform a higher volume, and wider variety of procedures.

We offer two categories of laser system products: Waterlase (all-tissue) systems and diode (soft-tissue) systems. Our flagship brand, the Waterlase, uses a patented combination of water and laser energy and is FDA cleared for over 80 clinical indications to perform most procedures currently performed using drills, scalpels, and other traditional dental instruments for cutting soft and hard tissue. For example, Waterlase safely debrides implants without damaging or significantly affecting surface temperature and is an 32

25We offer two categories of laser system products: Waterlase (all-tissue) systems and diode (soft-tissue) systems. Our flagship brand, the Waterlase, uses a patented combination of water and laser energy and is FDA cleared for over 80 clinical indications to perform most procedures currently performed using drills, scalpels, and other traditional dental instruments for cutting soft and hard tissue. For example, Waterlase safely debrides implants without damaging or significantly affecting surface temperature and is an effective, safe solution for preserving sick implants. In addition, Waterlase disinfects root canals more efficiently than some traditional chemical methods. We offer our diode laser systems to perform soft tissue, pain therapy, and cosmetic procedures, including teeth whitening. As of December 31, 2023, we maintained approximately 241 active and 21 pending United States and international patents, with the majority relating to our Waterlase technology. Our patent portfolio is regularly evaluated, and we strategically prioritize our core patents to ensure optimal intellectual property coverage while minimizing annual maintenance fees. From 1998 through December 31, 2023, we have sold over 47,700 laser systems in over 80 countries around the world, and we believe that Waterlase iPlus is the world’s best-selling all-tissue dental laser. Since 1998, we have been the global leading innovator, manufacturer, and marketer of dental laser systems.

~~effective,~~We ~~safe~~also ~~solution~~manufacture ~~for~~and ~~preserving~~sell ~~sick~~consumable ~~implants.~~products Inand ~~addition,~~accessories ~~Waterlase~~for ~~disinfects root canals more efficiently than some traditional chemical methods. We offer~~ our ~~diode~~ laser systems. toOur ~~perform~~Waterlase ~~soft tissue, pain therapy,~~ and ~~cosmetic~~diode ~~procedures,~~systems ~~including~~use ~~teeth~~disposable ~~whitening.~~laser Astips of ~~December~~differing ~~31,~~sizes ~~2023, we maintained approximately 241 active~~ and 21shapes ~~pending~~depending ~~United~~on ~~States and international patents, with~~ the ~~majority~~procedure ~~relating~~being ~~to our Waterlase technology~~performed. ~~Our~~We ~~patent~~also ~~portfolio~~market isflexible ~~regularly~~fibers ~~evaluated,~~ and wehand ~~strategically~~pieces ~~prioritize~~that ~~our~~dental ~~core~~practitioners ~~patents~~replace toat ~~ensure~~some ~~optimal~~point ~~intellectual~~after ~~property~~initially ~~coverage~~purchasing ~~while~~laser ~~minimizing~~systems. ~~annual~~For ~~maintenance~~our ~~fees.~~Epic ~~From~~line ~~1998~~of ~~through~~diode ~~December~~laser 31systems, ~~2023,~~ we ~~have~~sell ~~sold~~teeth ~~over~~whitening ~~47,700~~gel ~~laser~~kits. ~~systems~~During inthe ~~over~~quarter 80ended ~~countries~~September ~~around~~30, ~~the world~~2024, ~~and~~the wesale ~~believe~~of ~~that~~lasers ~~Waterlase~~accounted ~~iPlus~~for isapproximately ~~the~~54% ~~world’s~~of ~~best-selling~~our ~~all-tissue~~total ~~dental~~sales, ~~laser.~~and ~~Since~~consumables, ~~1998~~accessories, weand ~~have~~services ~~been~~accounted ~~the~~for ~~global~~approximately ~~leading~~46% ~~innovator, manufacturer, and marketer~~ of ~~dental~~our ~~laser~~total ~~systems~~sales.

We ~~also~~currently ~~manufacture~~operate ~~and~~in ~~sell~~a ~~consumable~~single ~~products~~reportable ~~and~~business ~~accessories~~segment. ~~for~~We ~~our~~had ~~laser~~net ~~systems.~~revenues ~~Our~~of ~~Waterlase~~$10.9 million and ~~diode~~$32.5 ~~systems~~million ~~use~~for ~~disposable~~the ~~laser~~three ~~tips~~and ofnine ~~differing~~months ~~sizes~~ended ~~and~~September ~~shapes~~30, ~~depending~~2024, onrespectively ~~the~~and ~~procedure~~net ~~being~~revenues ~~performed~~of $10.9 Wemillion ~~also~~and ~~market~~$35.7 ~~flexible~~million ~~fibers~~for the three and ~~hand~~nine ~~pieces~~months ~~that~~ended ~~dental~~September ~~practitioners~~30, ~~replace~~2023, atrespectively. ~~some~~We ~~point~~had ~~after~~net ~~initially~~losses ~~purchasing~~of ~~laser~~$1.4 ~~systems~~million and $10.7 ~~For~~million ~~our~~for ~~Epic~~the ~~line~~three ofand ~~diode~~nine ~~laser~~months ~~systems~~ended September 30, we2024, ~~sell~~respectively ~~teeth~~and ~~whitening~~$4.6 ~~gel~~million ~~kits~~and $15.3 ~~During~~million for the ~~quarter~~three and nine months ended ~~June~~September 30, ~~2024,~~2023. ~~the~~We ~~sale~~had oftotal ~~lasers~~assets ~~accounted~~of ~~for~~$27.2 ~~approximately~~million ~~52%~~as of ~~our~~September ~~total sales~~30, ~~and~~2024 ~~consumables, accessories,~~ and ~~services~~$35.1 ~~accounted~~million ~~for~~as ~~approximately 48%~~ of ~~our~~December ~~total~~31, ~~sales~~2023.

We currently operate in a single reportable business segment. We had net revenues of $11.6 million and $21.7 million for the three and six months ended June 30, 2024, respectively and net revenues of $14.3 million and $24.8 million for the three and six months ended June 30, 2023, respectively. We had net losses of $2.8 million and $9.3 million for the three and six months ended June 30, 2024, respectively and $4.9 million and $10.7 million for the three and six months ended June 30, 2023. We had total assets of $30.6 million as of June 30, 2024 and $35.1 million as of December 31, 2023.

Business and Outlook

Our Waterlase systems precisely cut hard tissue, bone, and soft tissue with minimal or no damage to surrounding tissue and dental structures. Our diode systems, which include the Epic system, are designed to complement our Waterlase systems, and are used only in soft tissue procedures, pain therapy, hygiene, and cosmetic applications, including teeth whitening. The diode systems, together with our Waterlase systems, offer practitioners a broad product line with a range of features and price points.

We also manufacture and sell consumable products and accessories for our laser systems. Our Waterlase and diode systems use disposable laser tips of differing sizes and shapes depending on the procedure being performed. We also market flexible fibers and hand pieces that dental practitioners replace at some point after initially purchasing laser systems. For our Epic systems, we sell teeth whitening gel kits.

Due to the limitations associated with traditional and alternative dental instruments, we believe there is a large market opportunity for all-tissue dental laser systems that provide superior clinical outcomes, reduce the need to use anesthesia, help reduce trauma, pain, and discomfort associated with dental procedures, and increase patient acceptance for treatment protocols.

Our strategy is to increase awareness and demand for (i) our products among dental practitioners by educating dental practitioners and patients about the clinical benefits of our product suite and (ii) our laser systems among patients by educating patients about the clinical benefits of the Waterlase and diode systems. An important goal of ours is to increase consumables revenue by selling more single-use accessories used by dental practitioners when performing procedures using our dental laser systems. In the short term, we are striving for operating excellence through lean enterprise initiatives, with a specific focus on our sales strategy and cash flow management, coupled with optimizing our engineering capabilities to develop innovative new products.

We also seek to create value through innovation and leveraging existing technologies into adjacent medical applications. We plan to expand our product line and clinical applications by developing enhancements and transformational innovations, including new clinical solutions for dental applications and for other adjacent medical applications. In particular, we believe that our existing technologies can provide significant improvements over existing standards of care in fields including ophthalmology, otolaryngology, orthopedics, podiatry, pain management, aesthetics/dermatology, veterinary, and consumer products. We plan to continue to explore potential collaborations to apply our proprietary laser technologies with expanded FDA-cleared indications to other medical applications in the future.

The Company experienced revenue decline of 191% and 129% for the three and ~~six~~nine months ended ~~June~~September 30, 2024, respectively, compared to the same period in 2023. The Company is currently forecasting revenue for fiscal year 2024 to be above fiscal year 2023, as the Company's strategy described above continues to generate sales to new customers and additional consumable sales to existing customers.

2633

Recent Developments

~~Nasdaq~~Bankruptcy ~~delisting~~and Asset Purchase Agreement

OnAs ~~June~~previously 17disclosed, ~~2024,~~on ~~Nasdaq~~October ~~notified~~1, 2024 the Company ~~that~~and its direct domestic subsidiaries filed voluntary petitions for relief (the ~~Nasdaq~~"Bankruptcy ~~Hearings~~Petitions") ~~Panel~~under ~~determined~~chapter to11 ~~delist~~of Title 11 of the ~~Company’s~~United ~~common~~States ~~stock~~Code ~~and~~(the ~~that~~"Bankruptcy ~~trading~~Code") in the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court"). The Company’s ~~securities~~will ~~would~~continue beto ~~suspended~~operate atits businesses as "debtors-in-possession" under the ~~open~~jurisdiction of ~~trading~~the onBankruptcy ~~June~~Court ~~20,~~and ~~2024.~~in ~~Nasdaq~~accordance ~~completed~~with the ~~delisting~~applicable byprovisions ~~filing~~of the Bankruptcy Code and orders of the Bankruptcy Court. In addition, the Company filed a ~~Form~~motion 25seeking ~~Notification~~approval for certain procedures relating to the marketing and auction (if necessary) of ~~Delisting~~all ~~with~~or some of the ~~U.S.~~Company's ~~Securities~~assets, including approval of an Asset Purchase Agreement (as defined below) and ~~Exchange~~certain ~~Commission~~bidding procedures for the sale of the Transferred Assets (as defined below) and other assets (the "Bidding Procedures").

AsIn ~~previously reported~~addition, ~~the~~as ~~Nasdaq~~previously ~~Listing~~disclosed, ~~Qualifications~~on ~~Staff~~September ~~notified~~30, 2024 the Company ~~that~~entered itinto ~~was~~a in"stalking ~~violation~~horse" ofasset ~~the~~purchase ~~bid~~agreement ~~price~~(the ~~requirement~~"Asset ofPurchase ~~Nasdaq Listing Rule 5550(a~~Agreement")~~(2)~~ ~~(the~~with ~~“Bid~~Sonendo, ~~Price~~Inc. ~~Rule”~~("Sonendo"), ~~and~~a ~~the~~Delaware ~~equity~~corporation, ~~requirement~~pursuant into ~~Listing~~which ~~Rule~~Sonendo ~~5550(b)(1)~~agreed ~~(the~~to ~~“Equity~~acquire ~~Rule”)~~substantially orall ~~any~~ of the ~~alternative~~Company's ~~requirements~~assets in(the ~~Listing~~"Transferred ~~Rule 5550(b~~Assets"). The ~~Company~~acquisition ~~appeared~~by ~~before~~Sonendo ~~the~~pursuant ~~Panel~~to onthe ~~June~~Asset 4,Purchase ~~2024~~Agreement ~~and~~is atsubject ~~the~~to ~~hearing,~~approval of the ~~Company’s~~Bankruptcy ~~senior~~Court ~~management~~following ~~and~~an ~~outside~~auction, ~~advisors~~if ~~outlined~~necessary, ~~the~~to ~~Company’s~~solicit ~~compliance~~higher ~~plan~~or ~~for~~otherwise ~~the~~better ~~Panel,~~bids. ~~which~~Other ~~included~~interested ~~the~~bidders ~~Company’s~~are ~~plans~~permitted to ~~regain~~participate ~~compliance~~in ~~with~~ the ~~Bid~~auction ~~Price~~if ~~Rule~~they ~~(i.e.,~~submit ~~meet~~qualifying ~~the~~bids ~~minimum~~that ~~closing~~are ~~bid~~higher ~~price~~or ~~requirement~~otherwise ofbetter ~~$1.00)~~than ~~and~~ the ~~Equity~~Asset ~~Rule~~Purchase (iAgreement.~~e.,~~ ~~maintain a stockholders’ equity of at least $2.5 million).~~

~~The~~Under ~~Company~~the ~~began~~Asset ~~trading~~Purchase ~~under~~Agreement, ~~its~~Sonendo ~~current~~agreed ~~trading~~to ~~symbol~~acquire ~~"BIOL"~~the onTransferred Assets from the ~~OTC~~Company ~~Markets~~for (~~OTCQB~~a) ~~with~~$14.0 ~~the~~million ~~open~~in cash paid at closing, subject to working capital adjustments; plus (b) assumption of certain Assumed Liabilities (as defined in the ~~markets~~Asset onPurchase ~~June~~Agreement); ~~20,~~plus ~~2024~~(c) the Delaware Litigation Settlement Value (as defined in the Asset Purchase Agreement). The ~~Company~~Asset ~~plans~~Purchase toAgreement ~~continue~~includes customary representations and warranties and various customary covenants under the circumstances that are subject to ~~file~~certain ~~its~~limitations, ~~required~~including, ~~periodic~~without ~~reports~~limitation, ~~and~~a ~~other~~break-up ~~filings~~fee, ~~with~~expense reimbursement and the ~~SEC~~right to designate executory contracts and unexpired leases to assume or reject.

~~February~~On October 17, 2024, ~~Public~~the ~~Offering~~Bankruptcy Court entered an order, which, among other things, approved the Bidding Procedures and the designation of Sonendo as the “stalking horse” bidder.

On ~~February~~November 154, 2024, the Company ~~completed~~commenced athe ~~public~~auction ~~offering~~for (the ~~"Offering")~~sale ~~and~~of ~~issued~~the ~~(i)~~Transferred ~~7,795,000~~Assets ~~units~~ (the ~~"Units"~~“Auction”), ~~with~~pursuant ~~each~~to ~~Unit consisting of (A) one share of~~ the ~~Company’s~~Bidding ~~common stock, par value $0~~Procedures.~~001~~ ~~per~~Following ~~share (~~the ~~"Common~~completion ~~Stock"), (B) one Class A warrant to purchase one share~~ of ~~Common Stock (~~the ~~"Class A Common Warrants")~~Auction, ~~each~~the ~~exercisable~~Company ~~from~~announced ~~time~~that tothe ~~time~~bid ~~for~~submitted ~~one~~by ~~share~~MegaGen ofImplant ~~Common Stock at an exercise price of $0~~Co.~~66 per share~~, ~~and~~LTD (C“MegaGen”) ~~one~~was ~~Class~~the Bsuccessful ~~warrant~~bid ~~to purchase one share of Common Stock~~ (the ~~"Class~~“Successful ~~B Common Warrants"~~Bid”), ~~each exercisable from time to time for one share of Common Stock at an exercise price of $0.748 per share~~ and ~~(ii) 8,205,000 pre-funded units (~~the ~~"Pre-Funded~~bid ~~Units"),~~submitted ~~with~~by ~~each~~Sonendo ~~Pre-Funded~~was ~~Unit consisting of (A) one pre-funded warrant (~~the ~~"Pre-Funded~~backup ~~Warrants"),~~bid. ~~each~~The ~~such~~Successful ~~Pre-Funded~~Bid ~~Warrant~~is ~~being~~subject ~~exercisable from time~~ to ~~time~~entry ~~for~~into ~~one~~definitive ~~share~~documentation ofbetween ~~Common~~the ~~Stock~~Company atand ~~an exercise price of $0~~MegaGen.~~001~~ ~~per share, (B) one Class~~ A ~~Common~~hearing ~~Warrant,~~to ~~and~~consider ~~(C)~~approval ~~one~~of ~~Class B Common Warrant. The Units were sold at~~ the ~~public~~results ~~offering price~~ of ~~$0.44 per Unit and~~ the ~~Pre-Funded~~Auction ~~Units~~is ~~were~~scheduled ~~sold~~to attake ~~the~~place ~~public~~on ~~offering~~November ~~price of $0.439 per Pre-Funded Unit. The Company received gross proceeds of approximately $7.0 million~~12, ~~before deducting placement agent fees, estimated offering expenses, and before the exercise of warrants~~2024.

~~Pursuant~~The tofiling ~~that~~of ~~certain~~the ~~Securities~~Bankruptcy ~~Purchase~~Petitions ~~Agreement,~~constituted ~~dated~~an ~~December~~event 6,of ~~2023,~~default bythat ~~and~~accelerates ~~between~~ the Company’s ~~and~~obligations ~~the~~under ~~investor (~~the ~~“Investor”)~~following ~~named~~agreements: inthat ~~the~~certain ~~signature~~Credit ~~page~~Agreement ~~thereto~~by ~~(the~~and ~~“December~~among ~~2023 Purchase Agreement”),~~ the Company ~~agreed~~, ~~among~~the ~~other~~lender ~~things,~~parties ~~pursuant~~thereto to(each ~~Section 4.12 thereof not to enter into~~ a ~~Variable~~“Lender” ~~Rate~~and ~~Transaction~~together, ~~(as defined in~~ the ~~December~~“Lenders”), ~~2023~~and ~~Purchase~~SWK; ~~Agreement)~~and ~~for~~those acertain ~~period~~standard ofloan ~~one-hundred~~documents ~~and~~required ~~eighty~~for ~~(180)~~an ~~days~~unsecured ~~following~~loan, ~~the~~dated ~~closing~~as ~~date~~ of ~~that~~May ~~offering (or June 5~~22, ~~2024)~~2020 (the “~~VRT~~SBA ~~Prohibition~~Loan”). Inby ~~order~~and toamong ~~induce~~ the ~~Investor to agree to waive the VRT Prohibition to enable the~~ Company ~~to effect the Offering, the Company~~ and the ~~Investor~~U.S. ~~entered~~Small ~~into~~Business aAdministration ~~Consent and Waiver~~(collectively, ~~dated February 12, 2024 (~~the “~~Consent~~Financial ~~and~~Obligation ~~Waiver~~Agreements”),. ~~whereby~~The ~~the~~Financial ~~Company~~Obligation ~~agreed~~Agreements toprovide ~~issue~~that toas ~~the~~a ~~Investor~~result aof ~~new~~the ~~warrant~~Bankruptcy toPetitions, ~~purchase~~all upobligations to ~~2,221,880~~pay ~~shares~~any ofdebts, ~~Common~~principal, ~~Stock~~interest, ~~(the~~fees, ~~“Investor Warrant”)~~expenses, ~~which~~and ~~Investor~~other ~~Warrant~~amounts isdue inthereunder ashall ~~form~~be ~~substantially~~immediately ~~identical~~due toand ~~the~~payable. ~~Class~~Any Befforts ~~Common~~to ~~Warrants~~enforce ~~that~~such ispayment ~~described~~obligations ~~above.~~under ~~The~~the ~~Investor~~Financial ~~Warrants~~Obligation ~~became~~Agreements ~~exercisable~~are ~~commencing~~automatically onstayed ~~the~~as ~~effective~~a ~~date~~result of ~~stockholder~~the ~~approval~~Bankruptcy ~~on May 2~~Petitions, ~~2024~~and ~~for~~ the ~~issuance~~creditors’ ofrights ~~the shares~~ of ~~Common~~enforcement ~~Stock~~in ~~issuable~~respect ~~upon exercise~~ of the ~~Investor~~Financial ~~Warrants~~Obligation ~~and~~Agreements ~~will~~are ~~expire~~subject onto the ~~fifth~~applicable ~~anniversary~~provisions of ~~such~~the ~~stockholder~~Bankruptcy ~~approval date~~Code.

InDIP addition, on December 8, 2023, pursuant to the December 2023 Purchase Agreement, the Investor was issued a warrant to purchase up to 2,221,880 shares of Common Stock (the “December 2023 Warrants”) that provide for adjustment of the exercise price, if the Company or any of its subsidiaries, as applicable, sell or grant any right to reprice, or otherwise dispose of or issue any shares of its Common Stock or common stock equivalents, at an effective price per share that is less than the exercise price then in effect (such lower price, the “Base Share Price” and such issuances collectively, a “Dilutive Issuance”). The Offering is a Dilutive Issuance, therefore, the exercise price of the December 2023 Warrants were reduced to equal the Base Share Price, which is equal to $0.2256 per share. The December 2023 Warrants were issued in a private placement pursuant to the exemption provided in Section 4(a)(2) under the Securities Act and Rule 506(b) promulgated thereunder; however, the Company is obligated to register these warrants on a resale registration statement, which registration statement was declared effective on April 2, 2024. The December 2023 Warrants became exercisable commencing on the effective date of stockholder approval on May 2, 2024 for the issuance of the shares of Common Stock issuable upon exercise of the December 2023 Warrants.Financing

As previously disclosed, in connection with the Bankruptcy Petitions, the Company filed a motion seeking Bankruptcy Court approval of a debtor-in-possession ("DIP") financing on the terms set forth in that certain Terms and Conditions of Proposed Senior Secured, Super-Priority Debtor-in-Possession Credit Facility (the “DIP Term Sheet”), by and among the Company, as a borrower, and SWK, as DIP Lender and Agent. The DIP Term Sheet provides for a senior secured super-priority debtor-in-possession financing (the “DIP Financing”) in an aggregate amount of no less than $2.5 million. The DIP Financing will become available up to an amount of $1.43 million upon the satisfaction of customary conditions precedent thereto, including the entry of an order of the Bankruptcy Court approving the DIP Financing on an interim basis. Subject to entry of an order of the Bankruptcy Court approving the DIP Financing on a final basis, the DIP Obligations (as defined in the DIP Term Sheet) will include $2,500,000 advanced by SWK to the Debtors between September 3, 2024, and September 30, 2024.

in, or return to, compliance with laws in accordance with 28 U.S.C. § 1930; (b) pay interest, fees and expenses to SWK in accordance with the DIP Term Sheet (whether or not such amounts are reflected in the Budget (as defined in the DIP Term Sheet)); (c) fund fees and expenses incurred in connection with the 363 Sale (as defined in the DIP Term Sheet); (d) pay permitted prepetition claims and adequate protection payments, if any; (e) pay Professional Fees (as defined in the DIP Term Sheet) provided for in the Budget, including funding of the Carve Out (as defined in the DIP Term Sheet); and (f) pay other costs and expenses of administration of the chapter 11 cases.

The maturity date of the loans made under the DIP Financing is the date that is one hundred-twenty (120) days after the Petition Date, or such later date to which SWK consents in writing.

Forbearance Agreement

As previously disclosed, on August 31, 2024, the Company and SWK entered into a Forbearance Agreement (the "Forbearance Agreement"). Under the terms of the Forbearance Agreement, SWK agreed: (a) not to accelerate or cause the acceleration of the maturity of the loans or other obligations or to otherwise enforce payment of the obligations of the Company in full under the Credit Agreement and the loan documents, and (b) not to exercise any other default or event of default related rights and remedies available to SWK against the Company under any loan document or applicable law with respect to any obligation owed under the loan documents. Upon termination or expiration of the period (the “Forbearance Period”), SWK shall be entitled to exercise any of its respective rights and remedies under the Forbearance Agreement, the other loan documents, or applicable law, including, without limitation, the right to enforce any and all of the liens on, and security interests in, the collateral described in the loan documents, without further notice, demand, notice of intent to accelerate, notice of acceleration, presentment, protest or other formalities of any kind. The Forbearance Period terminated upon the Company's filing of chapter 11 bankruptcy on October 1, 2024. The Company also agreed to pay the reasonable fees and expenses of SWK in connection with entering into the Forbearance Agreement and the other loan documents.

During the Forbearance Period, SWK loaned the Company an additional $2.5 million payable upon loan maturity. In connection with the bankruptcy filing, the scheduled quarterly principal and interest payments in August 2024 and November 2024 were delayed for payment upon loan maturity.

Stock Exchange Matters

As previously disclosed, on June 17, 2024, the Nasdaq Stock Market LLC (“Nasdaq”) notified the Company that the Nasdaq Hearings Panel determined to delist the Company’s common stock and that trading of the Company’s securities would be suspended at the open of trading on June 20, 2024. Nasdaq completed the delisting by filing a Form 25 Notification of Delisting with the U.S. Securities and Exchange Commission. On June 20, 2024, the Company began trading under "BIOL" on the OTC (OTCQB).

On October 2, 2024, the Company received notice from the OTC that the Company no longer met the Standards for Continued Eligibility for OTCQB as per the OTCQB Standards, Section 2.3(5). The Company’s shares of common stock commenced trading on the Pink Market platform operated by the OTC at the market open on October 3, 2024 under the “BIOLQ” ticker symbol.

Exchange Agreement

On July 16, 2024, the Company issued an aggregate of 3,190,476 shares of its common stock, par value $0.001 per share, in exchange for (i) 2,546 shares of the Company’s Series J Convertible Redeemable Preferred Stock, par value $0.001 per share (the "Series J Preferred Stock"), and (ii) 8,000 Series J Preferred Warrants to purchase 4,000 shares of Series J Preferred Stock, pursuant to the terms of that certain Exchange Agreement (the "Exchange Agreement") entered into on July 16, 2024 by the Company and the investor named therein.

The Company issued common stock to the investor in reliance on the exemption from the registration requirements of the Securities Act of 1933, as amended, afforded by Section 3(a)(9) thereof. The shares of Common Stock issued upon exchange of the Series J Preferred Stock and Series J Preferred Warrants have not been registered under the Securities Act and may not be offered or sold in the United States in the absence of an effective registration statement or exemption from the registration requirements. No proceeds have been or will be received and no commissions have been or will be paid by the Company in connection with the exchange described herein.

Critical Accounting Estimates

The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) which require us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the condensed consolidated financial statements and revenues and expenses reported during the period. Information with respect to our critical accounting policies that we believe could have the most significant effect on our reported results and require subjective or complex judgments by management is contained in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” of the 2023 Form 10-K. There have been no significant changes during the nine months ended September 30, 2024 in our critical accounting policies from those disclosed in Item 7 of the 2023 Form 10-K.

reported amounts of assets and liabilities at the date of the condensed consolidated financial statements and revenues and expenses reported during the period. Information with respect to our critical accounting policies that we believe could have the most significant effect on our reported results and require subjective or complex judgments by management is contained in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” of the 2023 Form 10-K. There have been no significant changes during the six months ended June 30, 2024 in our critical accounting policies from those disclosed in Item 7 of the 2023 Form 10-K.

Results of Operations

The following table sets forth certain data from our unaudited operating results, expressed in thousands and as percentages of net revenue:

	Three Months Ended								~~Six~~Nine Months Ended
	June 30,								June 30,
	September 30,								September 30,
	2024				2023				2024				2023
Net revenue	$	1110,~~555~~850	100.0	%	$	1410,~~286~~921	100.0	%	$	2132,~~687~~536	100.0	%	$	2435,~~753~~674	100.0	%
Cost of revenue		6,~~946~~468	6059.16	%		87,~~168~~175	5765.27	%		1320,~~741~~209	6362.41	%		1522,~~299~~474	6163.80	%
Gross profit		4,~~609~~382	3940.94	%		63,~~118~~746	4234.83	%		712,~~946~~327	3637.69	%		913,~~454~~200	3837.20	%
Operating expenses:
Sales and marketing		32,~~694~~877	3226.05	%		63,~~189~~402	4331.32	%		79,~~077~~954	3230.6	%		1014,~~812~~214	4339.78	%
General and administrative		31,~~064~~283	2611.58	%		2,~~357~~679	1624.5	%		67,~~260~~544	2823.91	%		47,~~815~~495	1921.50	%
Engineering and development		~~1,071~~917	98.35	%		1,~~444~~362	1012.15	%		23,~~354~~271	10.91	%		24,~~991~~352	12.12	%
Total operating expenses		75,~~829~~077	6746.8	%		97,~~990~~443	6968.92	%		1520,~~691~~769	7263.48	%		1826,~~618~~061	7573.30	%
Loss from operations		(~~3,220~~695)	(276.94)	%		(3,~~872~~697)	(2733.19)	%		(78,~~745~~442)	(3525.89)	%		(912,~~164~~861)	(3736.10)	%
Non-operating income (loss), net		~~442~~(721)	3(6.96)	%		(~~965~~877)	(6.8.0)	%		(12,~~498~~218)	(6.89)	%		(12,~~522~~399)	(6.17)	%
Loss before income tax provision		(21,~~778~~416)	(2413.0)	%		(4,~~837~~574)	(3341.9)	%		(910,~~243~~660)	(4232.68)	%		(1015,~~686~~260)	(4342.27)	%
Income tax provision		(2012)	(0.21)	%		(3115)	(0.21)	%		(4051)	(0.21)	%		(3146)	(0.1)	%
Net loss	$	(21,~~798~~428)	(2413.2)	%	$	(4,~~868~~589)	(3442.10)	%	$	(910,~~283~~711)	(4232.89)	%	$	(1015,~~717~~306)	(4342.38)	%

Non-GAAP Disclosure

In addition to the financial information prepared in conformity with GAAP, we provide certain historical non-GAAP financial information. Management believes that these non-GAAP financial measures assist investors in making comparisons of period-to-period operating results and that, in some respects, are indicative of our ongoing core performance.

Management believes that the presentation of this non-GAAP financial information provides investors with greater transparency and facilitates comparison of operating results across a broad spectrum of companies with varying capital structures, compensation strategies, derivative instruments, and amortization methods, which provides a more complete understanding of our financial performance, competitive position, and prospects for the future. However, the non-GAAP financial measures presented in this Form 10-Q have certain limitations in that they do not reflect all of the costs associated with the operations of our business as determined in accordance with GAAP. Therefore, investors should consider non-GAAP financial measures in addition to, and not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP. Further, the non-GAAP financial measures presented by us may be different from similarly named non-GAAP financial measures used by other companies.

Adjusted EBITDA

Management uses Adjusted EBITDA in its evaluation of our core results of operations and trends between fiscal periods and believes that these measures are important components of its internal performance measurement process. Adjusted EBITDA is defined as net loss before interest, taxes, depreciation, stock-based and other non-cash compensation, severance expense, change in allowance for doubtful accounts, increase in inventory reserves, stock warrant issuance costs, and loss on warrants. Management uses Adjusted EBITDA in its evaluation of our core results of operations and trends between fiscal periods and believes that these measures are important components of its internal performance measurement process. Therefore, investors should consider non-GAAP financial measures in addition to, and not as a substitute for, or as superior to, measures of financial performance prepared in accordance with ~~GAAP. Further, the non-GAAP financial measures presented by us may be different from similarly named non-GAAP financial measures used by other companies.~~

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GAAP. Further, the non-GAAP financial measures presented by us may be different from similarly named non-GAAP financial measures used by other companies.

The following table contains a reconciliation of non-GAAP Adjusted EBITDA to GAAP net loss attributable to common stockholders (in thousands):

	Three Months Ended						~~Six~~Nine Months Ended
	June 30,						June 30,
	September 30,						September 30,
	2024			2023			2024			2023
GAAP net loss attributable to common stockholders	$	(21,~~798~~357	)	$	(1412,~~245~~199	)	$	(910,~~283~~640	)	$	(2032,~~094~~293	)
Deemed dividend on convertible preferred stock		—(71	)		97,~~377~~610			—(71	)		916,~~377~~987
GAAP net loss	$	(21,~~798~~428	)	$	(4,~~868~~589	)	$	(910,~~283~~711	)	$	(1015,~~717~~306	)
Adjustments:
Interest expense, net		~~586~~605			~~583~~598			1,~~208~~812			1,~~160~~758
Income tax provision		2012			3115			4051			3146
Depreciation		~~650~~645			~~1,424~~560			1,~~310~~955			12,~~573~~133
Severance expense		—			~~229~~1			182			~~229~~230
Change in allowance for doubtful accounts		~~113~~130			5918			86216			4260
Stock-based and other non-cash compensation		~~(46~~51	)		84276			67118			~~775~~1,050
Stock warrant issuance costs		—			224			830			224
Reorganization expenses		1,200			—			1,200			—
Gain on warrants		(1,070	)		(77	)		(514	)		(77	)
Stock warrant issuance costs		—			222			830			447
Adjusted EBITDA	$	(2,545	)	$	(2,311	)	$	(6,074	)	$	(6,760	)
Gain on warrants		(1,093	)		(250	)		(1,608	)		(328	)
Adjusted EBITDA	$	122		$	(3,149	)	$	(5,955	)	$	(9,910	)

Comparison of Results of Operations

Three Months Ended ~~June~~September 30, 2024 Compared with Three Months Ended ~~June~~September 30, 2023

Net Revenue: The following table summarizes our unaudited net revenue by category, including each category’s percentage of our total revenue, for the three months ended ~~June~~September 30, 2024 and 2023, as well as the amount of change and percentage of change in each revenue category (dollars in thousands):

	Three Months Ended
	June 30,								Amount			Percent
	September 30,								Amount			Percent
	2024				2023				Change			Change
Laser systems	$	65,~~007~~876	5254.02	%	$	86,~~754~~647	6160.39	%	$	(~~2,747~~771	)		(3111.46	)%
Consumables and other		3,~~835~~717	3334.2	%		42,~~117~~908	2826.86	%		~~(282~~809	)		(627.8	)%
Services		1,~~713~~257	1411.86	%		1,~~415~~366	912.95	%		~~298~~(109	)		21(8.10	)%
Net revenue	$	1110,~~555~~850	100.0	%	$	1410,~~286~~921	100.0	%	$	(~~2,731~~71	)		(190.17	)%

The following table summarizes our unaudited net revenue by geographic location based on the location of customers for the three months ended ~~June~~September 30, 2024 and 2023, as well as the amount of change and percentage of change in each geographic revenue category (dollars in thousands):

	Three Months Ended
	June 30,								Amount			Percent
	September 30,								Amount			Percent
	2024				2023				Change			Change
United States	$	8,~~240~~246	7176.30	%	$	107,~~741~~298	7566.28	%	$	~~(2,501~~948	)		~~(23~~13.30	)%
International		32,~~315~~604	2824.70	%		3,~~545~~623	2433.82	%		(~~230~~1,019	)		(628.51	)%
Net revenue	$	1110,~~555~~850	100.0	%	$	1410,~~286~~921	100.0	%	$	(~~2,731~~71	)		(190.17	)%

Typically, we experience fluctuations in revenue from quarter to quarter due to seasonality. Revenue in the first quarter typically is lower than average, and revenue in the fourth quarter typically is higher than average, due to the buying patterns of dental practitioners. We believe that this trend exists because a significant number of dentists purchase their capital equipment towards the end of the calendar year in order to maximize their practice earnings while seeking to minimize their taxes. They often use certain tax incentives, such as accelerated depreciation methods for purchasing capital equipment, as part of their year-end tax planning. In addition, revenue in the third quarter may be affected by vacation patterns which can cause revenue to be flat or lower than in the second quarter of the year. Our historical seasonal fluctuations may also be impacted by sales promotions used by large dental distributors that encourage end-of-quarter and end-of-year buying in our industry.

2937

~~Net~~second ~~revenue~~quarter ~~decreased~~of bythe $2year.7 ~~million,~~Our orhistorical ~~19%,~~seasonal ~~during~~fluctuations ~~the~~may ~~three~~also ~~months~~be ~~ended~~impacted ~~June~~by ~~30,~~sales ~~2024~~promotions asused ~~compared~~by tolarge ~~the~~dental ~~same~~distributors ~~period~~that inencourage ~~2023 primarily due to a decrease in laser systems sales from the impact~~ end-of-quarter ~~the~~and ~~current macro~~end-~~economic~~of-year ~~environment~~buying ~~causing~~in ~~extended~~our ~~sales cycles, which includes increased interest rates~~industry. ~~Net revenue was $11.6 million during the three months ended June 30, 2024 compared to $14.3 million for the same period in 2023.~~

~~Cost~~Net ofrevenue ~~Revenue~~decreased ~~and~~by ~~Gross~~$0.1 ~~Profit:~~million, ~~The~~or ~~following~~1%, ~~table~~during ~~summarizes~~the ~~our~~three ~~unaudited~~months ~~cost~~ended ofSeptember ~~revenue~~30, ~~and~~2024 ~~gross~~as ~~profit~~compared ~~for~~to the ~~three~~same ~~months~~period ~~ended~~in ~~June~~2023 ~~30,~~primarily ~~2024~~due ~~and~~to ~~2023,~~a asdecrease ~~well~~in aslaser systems sales from the ~~amount~~impact of ~~change~~the current macro-economic environment causing extended sales cycles, which includes elevated interest rates, partially offset by an increase in consumables and ~~percentage~~other revenue from improved utilization of ~~change~~installed ~~(dollars~~laser insystems. ~~thousands):~~Net revenue was $10.9 million during the three months ended September 30, 2024 and 2023.

	Three Months Ended
	June 30,								Amount			Percent
	2024				2023				Change			Change
Net revenue	$	11,555	100.0	%	$	14,286	100.0	%	$	(2,731	)		(19.1	)%
Cost of revenue		6,946	60.1	%		8,168	57.2	%		(1,222	)		(15.0	)%
Gross profit	$	4,609	39.9	%	$	6,118	42.8	%	$	(1,509	)		(24.7	)%

Cost of Revenue and Gross Profit: The following table summarizes our unaudited cost of revenue and gross profit for the three months ended September 30, 2024 and 2023, as well as the amount of change and percentage of change (dollars in thousands):

Gross profit as a percentage of net revenue typically fluctuates with product and regional mix, selling prices, product costs and revenue levels. Gross profit for the three months ended June 30, 2024, was $4.6 million, or 40% of net revenue, which was lower than a gross profit of $6.1 million, or 43% of net revenue, for the same period in 2023. The 3% decrease in gross profit as a percentage of revenue is primarily due to higher warranty and freight expenses, as well as unfavorable absorption of fixed expenses, partially offset by lower material costs and favorable mix of products sold for the three months ended June 30, 2024.


	Three Months Ended
	September 30,								Amount			Percent
	2024				2023				Change			Change
Net revenue	$	10,850	100.0	%	$	10,921	100.0	%	$	(71	)		(0.7	)%
Cost of revenue		6,468	59.6	%		7,175	65.7	%		(707	)		(9.9	)%
Gross profit	$	4,382	40.4	%	$	3,746	34.3	%	$	636			17.0	%

~~Operating~~Gross ~~Expenses:~~profit ~~The~~as ~~following~~a ~~table~~percentage ~~summarizes~~of ~~our~~net ~~unaudited~~revenue ~~operating~~typically ~~expenses~~fluctuates ~~(including~~with asproduct aand ~~percentage~~regional ofmix, ~~net~~selling prices, product costs and revenue) levels. Gross profit for the three months ended ~~June~~September 30, 2024, ~~and~~was ~~2023~~$4.4 million, asor ~~well~~40% asof ~~the~~net ~~amount~~revenue, which was higher than a gross profit of ~~change~~$3.7 ~~and~~million, or 34% of net revenue, for the same period in 2023. The 6% increase in gross profit as a percentage of ~~change~~net ~~(dollars~~revenue when compared to the same period in ~~thousands):~~2023 reflects an improvement in supply chain issues that resulted in a decrease to warranty reserves, service expense and freight charges during the three months ended September 30, 2024.

	Three Months Ended
	June 30,								Amount			Percent
	2024				2023				Change			Change
Sales and marketing	$	3,694	32.0	%	$	6,189	43.3	%	$	(2,495	)		(40.3	)%
General and administrative		3,064	26.5	%		2,357	16.5	%		707			30.0	%
Engineering and development		1,071	9.3	%		1,444	10.1	%		(373	)		(25.8	)%
Total operating expenses	$	7,829	67.8	%	$	9,990	69.9	%	$	(2,161	)		(21.6	)%

Operating Expenses: The following table summarizes our unaudited operating expenses (including as a percentage of net revenue) for the three months ended September 30, 2024 and 2023, as well as the amount of change and percentage of change (dollars in thousands):

Sales and Marketing Expense. Sales and marketing expenses during the three months ended June 30, 2024 decreased by $2.5 million, or 40%, as compared to the same period in 2023. This decrease is primarily due to $1.1 million in lower compensation costs from the impact of our cost savings initiatives implemented during the first quarter of 2024, and from lower commissions and bonus incentives for achieving lower sales targets, a $0.9 million decrease in depreciation expense recognized for equipment used in sales and marketing for demos, training and educational purposes, of which $0.8 million was non-recurring in the three months ended June 30, 2023, a $0.4 million decrease in other expenses including travel and tradeshow related costs, and $0.1 million in severance expenses that did not occur in the three months ended June 30, 2024.


	Three Months Ended
	September 30,								Amount			Percent
	2024				2023				Change			Change
Sales and marketing	$	2,877	26.5	%	$	3,402	31.2	%	$	(525	)		(15.4	)%
General and administrative		1,283	11.8	%		2,679	24.5	%		(1,396	)		(52.1	)%
Engineering and development		917	8.5	%		1,362	12.5	%		(445	)		(32.7	)%
Total operating expenses	$	5,077	46.8	%	$	7,443	68.2	%	$	(2,366	)		(31.8	)%

~~General~~Sales and ~~Administrative~~Marketing Expense. ~~General~~Sales and ~~administrative~~marketing expenses during the three months ended ~~June~~September 30, 2024 ~~increased~~decreased by $0.75 million, or 3015%, as compared to the same period in 2023. This ~~increase~~decrease is primarily due to ~~$0.5~~lower ~~million~~compensation inexpenses ~~higher~~from ~~legal,~~the ~~audit~~impact ~~and~~of ~~consulting~~our ~~expenses~~cost ~~and~~savings ainitiatives ~~$0.2~~implemented ~~million~~during ~~increase~~the infirst ~~accruals~~quarter ~~for~~of 2024, as well as a ~~new~~decrease ~~annual~~in ~~performance~~commissions ~~award~~and ~~program~~bonus ~~that~~incentives ~~was~~when ~~implemented~~compared into the ~~first~~same ~~quarter~~period ofin ~~2024~~2023.

~~Engineering~~General and ~~Development~~Administrative Expense. ~~Engineering~~General and ~~development~~administrative expenses during the three months ended ~~June~~September 30, 2024 decreased by $01.4 million, or 2652%, compared to the same period in 2023. This decrease is ~~primarily~~ due to ~~$0.2~~the ~~million~~reversal inof ~~lower~~expenses ~~compensation~~for ~~costs~~annual ~~from~~bonus incentives during the ~~impact~~three ofmonths ~~our~~ended ~~cost~~September ~~savings~~30, ~~initiatives~~2024 ~~implemented~~from ~~during~~not ~~the~~achieving ~~first~~financial ~~quarter~~performance oftargets, ~~2024~~as well as less legal, consulting and ~~fewer~~investor ~~engineering~~relations ~~projects~~activity ~~for~~from ~~2024,~~our asspecial ~~compared~~shareholder tomeeting held during the third quarter of 2023, ~~resulting~~to inobtain aapproval ~~$0.2~~for ~~million~~our ~~decrease~~reverse instock ~~legal,~~split ~~consulting~~that ~~fees,~~did ~~and~~not ~~other~~reoccur ~~miscellaneous~~in ~~costs~~the third quarter of 2024.

Engineering and Development Expense. Engineering and development expenses during the three months ended September 30, 2024 decreased by $0.4 million, or 33%, compared to the same period in 2023. This decrease is primarily due to lower compensation expenses from the impact of our cost savings initiatives implemented during the first quarter of 2024, as well as the reversal of expenses for annual bonus incentives during the three months ended September 30, 2024 from not achieving financial performance targets.

Non-Operating Income (Loss)

Loss on Foreign Currency Transactions. We realized an approximately $~~112~~0.1 ~~thousand~~million loss on foreign currency transactions during the three months ended ~~June~~September 30, 2024 compared to an approximately $~~235~~0.3 ~~thousand~~million loss on foreign currency transactions during the three months ended ~~June~~September 30, 2023, primarily due to exchange rate fluctuations between the U.S. dollar and Euro, as well as other foreign currencies.

~~Interest Expense, Net. Interest expense was $0.6 million during the three months ended June 30, 2024 which was consistent with the three months ended June 30, 2023.~~38

Interest Expense, Net. Interest expense was $0.6 million during the three months ended September 30, 2024 which was consistent with the three months ended September 30, 2023.

Other Income (Expense), Net. Other ~~Income~~Expense for the three months ended ~~June~~September 30, 2024 was $47 thousand and relates to $1.12 million in legal and ~~relates~~financial advisory services incurred as a result of receiving a Default Notice from our term loan lender, SWK Funding LLC, and entering into a Forbearance Agreement. Under the Forbearance Agreement, the Company agreed to, among other things, prepare for and file a bankruptcy case under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware for the sale of the Company’s assets. In connection with the sale process the Company agreed to comply with certain process milestones which require, among other things, the entry into a purchase and sale agreement with a so-called “stalking horse bidder” by September 30, 2024, filing a bankruptcy case by October 1, 2024, and closing the sale by November 15, 2024. These expenses were partially offset by $1.01 million of gains recorded on the revaluation of liability classified stock warrants as well as the Series J and H warrants, and $0.1 million of gains recorded upon the sale of property, plant, and equipment during the three months ended ~~June~~September 30, 2024.

Income Tax Provision. We use a discrete year-to-date method in calculating quarterly provision for income taxes. Our provision for income taxes for the three months ended ~~June~~September 30, 2024 was consistent with the same period in 2023. For additional information regarding income taxes, see Part I, Item I, Note 13 – Income Taxes.

Net Loss. For the reasons stated above, our net loss totaled approximately $21.84 million for the three months ended ~~June~~September 30, 2024 compared to a net loss of $4.96 million for the three months ended ~~June~~September 30, 2023.

~~Six~~Nine Months Ended ~~June~~September 30, 2024 Compared with ~~Six~~Nine Months Ended ~~June~~September 30, 2023

Net Revenue: The following table summarizes our unaudited net revenue by category, including each category’s percentage of our total revenue, for the ~~six~~nine months ended ~~June~~September 30, 2024 and 2023, as well as the amount of change and percentage of change in each revenue category (dollars in thousands):

	Six Months Ended
	Nine Months Ended
	June 30,											Percent
	September 30,											Percent
	2024				2023							Change
Laser systems	$	1117,~~182~~058	5152.64	%	$	1521,~~019~~666	60.7	%	$	(34,~~837~~608	)		(2521.53	)%
Consumables and other		711,~~304~~021	33.69	%		710,~~150~~058	28.92	%		~~154~~963			29.26	%
Services		34,~~201~~457	1413.87	%		23,~~584~~950	1011.41	%		~~617~~507			2312.98	%
Net revenue	$	2132,~~687~~536	100.0	%	$	2435,~~753~~674	100.0	%	$	(3,~~066~~138	)		(128.48	)%

The following table summarizes our unaudited net revenue by geographic location based on the location of customers for the ~~six~~nine months ended ~~June~~September 30, 2024 and 2023, as well as the amount of change and percentage of change in each geographic revenue category (dollars in thousands):

	Six Months Ended
	Nine Months Ended
	June 30,											Percent
	September 30,											Percent
	2024				2023							Change
United States	$	1423,~~930~~176	6871.82	%	$	1724,~~499~~797	7069.75	%	$	(21,~~569~~621	)		(146.75	)%
International		69,~~757~~360	3128.28	%		710,~~254~~877	2930.35	%		(~~497~~1,517	)		(613.9	)%
Net revenue	$	2132,~~687~~536	100.0	%	$	2435,~~753~~674	100.0	%	$	(3,~~066~~138	)		(128.48	)%

Net revenue decreased by $3.1 million, or 129%, during the ~~six~~nine months ended ~~June~~September 30, 2024, as compared to the same period in 2023 primarily due to a decrease in laser systems sales from the impact of the current macro-economic environment causing extended sales cycles, which includes ~~increased~~elevated interest rates, partially offset by an increase in consumables and other revenue from improved utilization of installed laser systems. Net revenue was $2132.75 million during the ~~six~~nine months ended ~~June~~September 30, 2024 compared to $2435.87 million for the same period in 2023.

Cost of Revenue and Gross Profit: The following table summarizes our unaudited cost of revenue and gross profit for the six months ended June 30, 2024 and 2023, as well as the amount of change and percentage of change (dollars in thousands): 39

	Six Months Ended
	June 30,											Percent
	2024				2023							Change
Net revenue	$	21,687	100.0	%	$	24,753	100.0	%	$	(3,066	)		(12.4	)%
Cost of revenue		13,741	63.4	%		15,299	61.8	%		(1,558	)		(10.2	)%
Gross profit	$	7,946	36.6	%	$	9,454	38.2	%	$	(1,508	)		(16.0	)%

Cost of Revenue and Gross Profit: The following table summarizes our unaudited cost of revenue and gross profit for the nine months ended September 30, 2024 and 2023, as well as the amount of change and percentage of change (dollars in thousands):


	Nine Months Ended
	September 30,											Percent
	2024				2023							Change
Net revenue	$	32,536	100.0	%	$	35,674	100.0	%	$	(3,138	)		(8.8	)%
Cost of revenue		20,209	62.1	%		22,474	63.0	%		(2,265	)		(10.1	)%
Gross profit	$	12,327	37.9	%	$	13,200	37.0	%	$	(873	)		(6.6	)%

Gross profit as a percentage of net revenue typically fluctuates with product and regional mix, selling prices, product costs and revenue levels. Gross profit for the ~~six~~nine months ended ~~June~~September 30, 2024, was $712.93 million, or 3738% of net revenue, which was slightly lower than a gross profit of $913.52 million, or 3837% of net revenue, for the same period in 2023. ~~The~~Lower 1%overall ~~decrease~~sales involume ~~gross~~during ~~profit~~the asnine amonths ~~percentage~~ended ofSeptember ~~revenue~~30, is2024 ~~primarily~~contributed ~~due~~ to ~~higher~~the ~~warranty~~decrease ~~and~~in ~~freight~~gross ~~expenses,~~profit. asThe ~~well~~$1% increase in gross profit as ~~unfavorable~~a ~~absorption~~percentage of ~~fixed~~revenue ~~expenses~~when ~~for~~compared to the ~~six~~same ~~months~~period ~~ended~~in ~~June~~2023 ~~30,~~reflects ~~2024,~~the ~~and~~improvement ~~severance~~in ~~expenses~~supply ~~that~~chain ~~did~~issues ~~not~~that ~~occur~~resulted in ~~the~~a ~~six~~decrease ~~months~~to ~~ended~~warranty ~~June 30~~reserves, ~~2024~~service expense and freight charges, partially offset by ~~lower~~higher ~~material~~depreciation ~~costs~~expense from facilities and ~~favorable~~manufacturing ~~mix~~equipment ofplaced ~~products~~into ~~sold~~service ~~for~~during the ~~six~~three months ended ~~June~~September 30, ~~2024~~2023.

Operating Expenses: The following table summarizes our unaudited operating expenses (including as a percentage of net revenue) for the ~~six~~nine months ended ~~June~~September 30, 2024 and 2023, as well as the amount of change and percentage of change (dollars in thousands):

	Six Months Ended
	Nine Months Ended
	June 30,											Percent
	September 30,											Percent
	2024				2023							Change
Sales and marketing	$	79,~~077~~954	3230.6	%	$	1014,~~812~~214	4339.69	%	$	(34,~~735~~260	)		(3430.50	)%
General and administrative		67,~~260~~544	2823.91	%		47,~~815~~495	1921.50	%		~~1,445~~49			~~30.~~0.7	%
Engineering and development		23,~~354~~271	10.91	%		24,~~991~~352	12.12	%		(~~637~~1,081	)		(2124.38	)%
Total operating expenses	$	1520,~~691~~769	7263.48	%	$	1826,~~618~~061	7573.21	%	$	(25,~~927~~292	)		(1520.73	)%

Sales and Marketing Expense. Sales and marketing expenses during the ~~six~~nine months ended ~~June~~September 30, 2024 decreased by $34.73 million, or 3430%, as compared to the same period in 2023. This decrease is primarily due to $12.82 million in lower compensation ~~costs~~expense from the impact of our cost savings initiatives implemented over the last year and from lower commissions and bonus incentives ~~for achieving lower sales targets~~, a $0.87 million decrease in depreciation expense recognized for equipment used in sales and marketing for demos, training and educational purposes, which was non-recurring in the ~~six~~nine months ended ~~June~~September 30, ~~2024~~2023, a $0.87 million decrease in ~~other expenses including~~ travel and tradeshow related costs, a $0.2 million decrease in advertising costs, ~~and~~ $0.1 million in severance expenses that did not occur in the ~~six~~nine months ended ~~June~~September 30, 2024, and $0.4 million less in various other expenses when compared to the same period in 2023.

General and Administrative Expense. General and administrative expenses of $7.5 million during the ~~six~~nine months ended ~~June~~September 30, 2024 ~~increased~~was byconsistent ~~$1.4~~when ~~million, or 30%,~~ compared to the same period in 2023. ~~This~~Compensation ~~increase~~and isbonus ~~primarily~~incentives ~~due~~decreased toby $0.95 million infrom ~~higher~~the ~~legal,~~impact ~~audit~~of ~~and~~cost ~~consulting~~savings ~~expenses~~initiatives ~~and~~implemented during the latter part of the second quarter of 2023, which was offset by a $0.52 million increase in ~~accruals~~our allowance for adoubtful ~~new~~accounts ~~annual~~reserve, ~~performance~~and ~~award~~$0.3 ~~program~~million ~~that was implemented~~ in ~~the~~higher ~~six~~legal, ~~months~~audit ~~ended~~and ~~June~~consulting ~~30, 2024~~expenses.

Engineering and Development Expense. Engineering and development expenses during the ~~six~~nine months ended ~~June~~September 30, 2024 decreased by $01.61 million, or 2125%, compared to the same period in 2023. This decrease is primarily due to $0.25 million in lower compensation ~~costs~~expense from the impact of our cost savings initiatives implemented over the last year, and fewer engineering projects for 2024, as compared to the same period in 2023, resulting in a $0.42 million decrease in legal, and consulting ~~fees~~expenses, and a $0.4 million decrease in other miscellaneous costs.

Non-Operating Income (Loss)

Loss on Foreign Currency Transactions. We realized an approximately $~~208~~0.3 ~~thousand~~million loss on foreign currency transactions during the ~~six~~nine months ended ~~June~~September 30, 2024 compared to an approximately $~~215~~0.5 ~~thousand~~million ~~gain~~loss on foreign currency transactions during the ~~six~~nine months ended ~~June~~September 30, 2024, primarily due to exchange rate fluctuations between the U.S. dollar and Euro, as well as other foreign currencies.

~~Interest Expense, Net. Interest expense was $1.2 million during the six months ended June 30, 2024 which was consistent with the six months ended June 30, 2023.~~40

~~Other~~Interest ~~Income (~~Expense), Net. ~~Other~~Interest ~~Expense~~expense ~~for the six months ended June 30, 2024~~ was $0.1 ~~million and relates to $0~~.8 million ofduring ~~issuance costs from~~ the ~~February~~nine ~~2024~~months ~~public~~ended ~~offering~~September ~~that were allocated to the Class A Common Warrants~~30, ~~Class~~2024 Bwhich ~~Common Warrants, and Investor warrants and immediately expensed due to the liability classification of the warrants. This loss~~ was ~~partially~~consistent ~~offset~~with ~~by $0.5 million of gains on~~ the ~~revaluation~~nine ~~of these stock warrants, as well as the Series J and H warrants, and $0.2 million of gains recorded upon the sale of property, plant, and equipment during the six~~ months ended ~~June~~September 30, ~~2024~~2023.

32Other Income (Expense), Net. Other Expense for the nine months ended September 30, 2024 was $128 thousand and relates to $1.2 million in legal and financial advisory services incurred as a result of receiving a Default Notice from our term loan lender, SWK Funding LLC, and entering into a Forbearance Agreement. Under the Forbearance Agreement, the Company agreed to, among other things, prepare for and file a bankruptcy case under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware for the sale of the Company’s assets. In connection with the sale process the Company agreed to comply with certain process milestones which require, among other things, the entry into a purchase and sale agreement with a so-called “stalking horse bidder” by September 30, 2024, filing a bankruptcy case by October 1, 2024, and closing the sale by November 15, 2024. In addition, there was $0.8 million of issuance costs from the February 2024 public offering that were allocated to the Class A Common Warrants, Class B Common Warrants, and Investor warrants and immediately expensed due to the liability classification of the warrants. These expenses were partially offset by $1.6 million of gains recorded on the revaluation of liability classified stock warrants, as well as the Series J and H warrants, and $0.3 million of gains recorded upon the sale of property, plant, and equipment during the nine months ended September 30, 2024.

Income Tax Provision. We use a discrete year-to-date method in calculating quarterly provision for income taxes. Our provision for income taxes for the ~~six~~nine months ended ~~June~~September 30, 2024 was consistent with the same period in 2023. For additional information regarding income taxes, see Part I, Item I, Note 13 – Income Taxes.

Net Loss. For the reasons stated above, our net loss totaled approximately $910.37 million for the ~~six~~nine months ended ~~June~~September 30, 2024 compared to a net loss of $1015.73 million for the ~~six~~nine months ended ~~June~~September 30, 2023.

Liquidity and Capital Resources - Going Concern

As of ~~June~~September 30, 2024, we had approximately $5.3.4 million in cash and cash equivalents compared to $6.6 million as of December 31, 2023. Management defines cash and cash equivalents as highly liquid deposits with original maturities of 90 days or less when purchased. The decrease in cash and cash equivalents from December 31, 2023 was primarily due to cash used in operating activities of $611.71 million and principal payments on our term loan of $0.9 million, partially offset by net proceeds of $5.8 million from the February 2024 public offering, a $2.5 million bridge loan from SWK as part of the Forbearance Agreement, $0.34 million in proceeds from the disposal of property, plant, and equipment, and proceeds of $0.3 million from the exercise of preferred share warrants.

The following table summarizes our change in cash, cash equivalents and restricted cash (in thousands):

	Six Months Ended
	Nine Months Ended
	June 30,
	September 30,
	2024			2023
Net cash flows used in operating activities	$	(611,~~672~~144	)	$	(911,~~220~~808	)
Net cash flows provided by (used in) investing activities		~~257~~291			(~~944~~1,126	)
Net cash flows provided by financing activities		57,~~219~~709			1216,~~793~~549
Effect of exchange rate changes		~~(98~~22	)		~~120~~13
Net change in cash and cash equivalents	$	(13,~~294~~122	)	$	23,~~749~~628

Operating Activities

Net cash used in operating activities consists of our net loss, adjusted for our non-cash charges, plus or minus working capital changes. Cash used in operating activities for the ~~six~~nine months ended ~~June~~September 30, 2024 totaled $611.71 million and was primarily comprised of our net loss of $910.37 million.

Investing Activities

Cash provided by investing activities for the ~~six~~nine months ended ~~June~~September 30, 2024 totaled $0.3 million and was comprised of the proceeds from the disposal of property, plant, and equipment.

Financing Activities

Net cash provided by financing activities for the ~~six~~nine months ended ~~June~~September 30, 2024 totaled $57.27 million and was derived from $5.8 million in net proceeds from the February 2024 public offering, ~~and~~a $02.35 million ~~from~~bridge ~~the~~loan ~~exercise~~from ofSWK ~~preferred~~as ~~share~~part ~~warrants,~~of ~~partially~~the ~~offset by $0.9 million principal payments on our term loan.~~

Forbearance Agreement, and $0.3 million from the exercise of preferred share warrants, partially offset by $0.9 million principal payments on our term loan.

Effect of Exchange Rate

The $9822 thousand effect of exchange rate on cash for the ~~six~~nine months ended ~~June~~September 30, 2024 was due to recognized loss on foreign currency transactions, primarily driven by changes in the Euro during the period.

Future Liquidity Needs

As of ~~June~~September 30, 2024, we had a working capital deficit of approximately $911.14 million. Our principal sources of liquidity as of ~~June~~September 30, 2024 consisted of approximately $5.3.4 million in cash and cash equivalents and $43.85 million of net accounts receivable.

The Company will need to raise additional capital in the future. Additional capital requirements may depend on many factors, including, among other things, the rate at which the Company’s business grows, demands for working capital, manufacturing capacity, and any acquisitions that the Company may pursue. The Company expects that it will be required to raise capital through either equity or debt offerings. The Company cannot provide assurance that it will be able to successfully enter into any such equity or debt financings in the future or that the required capital will be available on acceptable terms, if at all, or that any such financing activity will not be dilutive to its stockholders especially in light of the fact that our common stock is no longer traded on the Nasdaq, which makes it harder to attract investors and limits the types of financings that can be conducted.

will not be dilutive to its stockholders especially in light of the fact that our common stock is no longer traded on the Nasdaq, which makes it harder to attract investors and limits the types of financings that can be conducted.

The Company has historically experienced losses from operations and has used cash and cash equivalents in operating activities. To be able to discharge our liabilities and commitments in the normal course of business, we must increase sales of our products, control or potentially reduce expenses, and establish profitable operations in order to generate cash from operations or obtain additional funds when needed.

The Company’s recurring losses, level of cash used in operations, and potential need for additional capital, along with uncertainties surrounding the Company’s ability to raise additional capital, and the filing of the Bankruptcy Petitions raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Despite the February 2024 public offering, as well as the $2.5 million bridge loan from SWK as part of the DIP Financing, in order for the Company to continue operations beyond the next 12 months and be able to discharge its liabilities and commitments in the normal course of business, it must either raise additional capital or increase sales of our products, control or potentially reduce expenses, and establish profitable operations in order to generate cash from operations or obtain additional funds when needed.

We will endeavor to improve our financial condition and ultimately improve our financial results by increasing revenues through expansion of our product offerings, continuing to expand and develop our field sales force and distributor relationships both domestically and internationally, forming strategic arrangements within the dental and medical industries, educating dental and medical patients as to the benefits of our advanced medical technologies, and reducing expenses; however, there is no assurance that will be able to improve our financial condition.

Term Loan

The information set forth in Part I, Item 1, Note 9 – Debt – Term Loan is hereby incorporated herein by reference.

EIDL Loan

The information set forth in Part I, Item 1, Note 9 – Debt – EIDL Loan is hereby incorporated herein by reference.

February 2024 Public Offering

On February 15, 2024, the Company completed a public offering and issued (i) 7,795,000 units, with each Unit consisting of (A) one share of the Company’s Common Stock, (B) one Class A Common Warrant to purchase one share of Common Stock, each exercisable from time to time for one share of Common Stock at an exercise price of $0.66 per share, and (C) one Class B Common Warrant to purchase one share of Common Stock, each exercisable from time to time for one share of Common Stock at an exercise price of $0.748 per share and (ii) 8,205,000 pre-funded units, with each Pre-Funded Unit consisting of (A) one pre-funded warrant, each such Pre-Funded Warrant being exercisable from time to time for one share of Common Stock at an exercise price of $0.001 per share, (B) one Class A Common Warrant, and (C) one Class B Common Warrant. The Units were sold at the public offering price of $0.44 per Unit and the Pre-Funded Units were sold at the public offering price of $0.439 per Pre-Funded Unit. The Company received gross proceeds of approximately $7.0 million, before deducting placement agent fees, estimated offering expenses, and before the exercise of warrants.

price of $0.001 per share, (B) one Class A Common Warrant, and (C) one Class B Common Warrant. The Units were sold at the public offering price of $0.44 per Unit and the Pre-Funded Units were sold at the public offering price of $0.439 per Pre-Funded Unit. The Company received gross proceeds of approximately $7.0 million, before deducting placement agent fees, estimated offering expenses, and before the exercise of warrants.

Recent Accounting Pronouncements

For a description of recently issued and adopted accounting pronouncements, including the respective dates of adoption and expected effects on our results of operations and financial condition, please refer to Part I, Item 1, Note 2 – Summary of Significant Accounting Policies, which is incorporated herein by this reference.

Additional Information

BIOLASE®, ZipTip®, ezlase®, eztips®, ComfortPulse®, Waterlase®, Waterlase Dentistry®, Waterlase Express®, iLase®, iPlus®, Epic®, Epic Pro®, WCLI®, World Clinical Laser Institute®, Waterlase MD®, Waterlase Dentistry®, and EZLase® are registered trademarks of BIOLASE, and Pedolase™ is a trademark of BIOLASE. All other product and company names are registered trademarks or trademarks of their respective owners.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Our management has evaluated, with the participation of our President and Chief Executive Officer and our Chief Financial Officer, the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of the end of the period covered by this Quarterly Report on Form 10-Q. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Based on that evaluation, our President and Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this report.

As discussed in our Annual Report on Form 10-K, we identified a material weakness in our internal control over financial reporting as we have determined that our controls were not operating effectively to assess the proper presentation of net loss per share attributable to common stockholders for the three and six months ended June 30, 2023 and the three and nine months ended September 30, 2023. This material weakness was the result of insufficient accounting assessment for unique and complex transactions outside of the business's normal operations.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

In light of this material weakness, we performed additional analysis as deemed necessary to ensure that our financial statements were prepared in accordance with U.S. generally accepted accounting principles for the period ended December 31, 2023 and management believes that the financial statements included in the Annual Report on Form 10-K present fairly in all material respects our financial position, results of operations and cash flows for the periods presented.

Changes in Internal Controls over Financial Reporting

There was no change in our internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting, except for the remediation of the material weakness identified in prior period as discussed blow.

To remediate the aforementioned material weakness, management has implemented additional controls to ensure that financial statement presentation, specifically in relation to net loss per share attributable to common stockholders, for unique and complex transactions are sufficiently investigated and documented at the time of inception, and technical experts are engaged for advisement.

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PART II. OTHER INFORMATION

Unless specifically noted or the context clearly requires otherwise, all information set forth in this Quarterly Report on Form 10-Q relates to the Company as it existed as of September 30, 2024 and prior to the Company’s bankruptcy proceedings and does not, and is not intended and should not be read to, reflect the business, financial condition, and results of operations of any other entity, including any entity which may result from the bankruptcy proceedings.

ITEM 1. LEGAL PROCEEDINGS

From time to time, we are involved in legal proceedings and regulatory proceedings arising out of our operations. We establish reserves for specific liabilities in connection with legal actions that we deem to be probable and estimable. The ability to predict the ultimate outcome of such matters involves judgments, estimates, and inherent uncertainties. The actual outcome of such matters could differ materially from management’s estimates.

On January 4, 2023, Plaintiff PIPStek, LLC (a wholly-owned subsidiary of Sonendo, Inc.) filed a lawsuit against BIOLASE, Inc. in the Federal District Court for the District of Delaware, alleging that BIOLASE’s Waterlase dental laser product infringes two PIPStek patents. A third patent was subsequently added to the case. The Complaint seeks unspecified damages and injunctive relief, as well as costs and attorneys’ fees against BIOLASE. BIOLASE has answered denying all of PIPStek’s allegations and also asserting that the asserted patents are invalid and not infringed. BIOLASE intends to continue to vigorously and fully defend itself against PIPStek’s claims. The parties have exchanged preliminary contentions. Trial in this matter is currently set for May 12, 2025.

ITEM 1A. RISK FACTORS

Except as set forth below, there have been no material changes to our risk factors from those disclosed under “Risk Factors” in Part I, Item 1A of the 2023 Form 10-K. The risks and uncertainties described in the 2023 Form 10-K and set forth below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also materially adversely affect our business, financial condition, or results of operations.

Due to our accumulated deficit, recurring and negative cash flow from operations for the year ended December 31, 2023 and the three and ~~six~~nine months ended ~~June~~September 30, 2024 there is substantial doubt about our ability to continue as a going concern.

Our audited consolidated financial statements for the year ended December 31, 2023 were prepared on a going concern basis in accordance with generally accepted accounting principles in the United States. The going concern basis assumes that we will continue in operation for the next 12 months and will be able to realize our assets and discharge our liabilities and commitments in the normal course of business. Thus, our consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern. Our recurring losses, negative cash flow, need for additional capital, and the uncertainties surrounding our ability to raise such capital raise substantial doubt about our ability to continue as a going concern. For us to continue operations beyond the next 12 months and be able to discharge our liabilities and commitments in the normal course of business, we must sell our products directly to end-users and through distributors, establish profitable operations through increased sales, decrease expenses, generate cash from operations or raise additional funds when needed. Our goal is to improve our financial condition and ultimately improve our financial results by increasing revenues through expanding awareness of the benefits of our dental lasers among dental specialists and general practitioners and reducing expenses. However, if we are unable to do so on a timely basis, we will be required to seek additional capital. In that event, we would seek additional funds through various financing sources, including the sale of our equity and debt securities, however, there can be no guarantees that such funds will be available on commercially reasonable terms, if at all especially in light of the fact that our common stock is no longer traded on the Nasdaq, which makes it harder to attract investors and limits the types of financings that can be conducted. If we are unable to raise additional capital, increase sales or reduce expenses, we will be unable to continue to fund our operations, develop our products, realize value from our assets, and discharge our liabilities in the normal course of business. If we become unable to continue as a going concern, we could have to liquidate our assets, and potentially realize significantly less than the values at which they are carried on our financial statements, and stockholders could lose all or part of their investment in our common stock. The Report of Independent Registered Public Accounting Firm from Macias Gini & O’Connell LLP contains an explanatory paragraph regarding our ability to continue as a going concern. In addition, the notes to our financial statements included in this Quarterly Report on Form 10-Q states that our recurring losses, level of cash used in operations, and potential need for additional capital, along with uncertainties surrounding our ability to raise additional capital, raise substantial doubt about our ability to continue as a going concern.

We ~~have~~are ~~experienced~~subject ~~net~~to ~~losses~~risks ~~for each of the quarter ended June 30, 2024~~ and ~~the~~uncertainties ~~past~~associated ~~three~~with ~~years, and we could experience additional losses and have difficulty achieving profitability in~~ the ~~future~~bankruptcy proceedings.

WeThe ~~had~~bankruptcy anproceedings ~~accumulated~~could ~~deficit~~have ofa ~~$326.1~~material ~~million~~adverse aseffect ofon ~~June 30, 2024 and an accumulated deficit of $316.8 million as of December 31, 2023. We recorded net losses of $20.6 million and $28.6 million for~~ the ~~years~~Company’s ~~ended December 31~~business, ~~2023~~financial ~~and 2022~~condition, ~~respectively,~~results ~~and net losses~~ of ~~$9.3~~operations ~~million~~ and ~~$10~~cash flows.7 ~~million~~So ~~for~~long as the ~~six~~bankruptcy ~~months~~proceedings ~~ended June 30~~continue, ~~2024~~our ~~and~~senior ~~2023,~~management ~~respectively.~~may Inbe ~~order~~required to ~~achieve~~spend ~~profitability,~~a wesignificant ~~must~~amount ~~increase~~of ~~net~~time ~~revenue through new sales~~ and ~~control~~effort ~~our~~dealing ~~costs.~~with ~~Failure~~bankruptcy toproceedings ~~increase~~instead ~~our~~of ~~net~~focusing ~~revenue and decrease our costs could cause our stock price to decline and could have a material adverse effect~~ on our business, ~~financial condition, and results of~~ operations. The

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bankruptcy proceedings also may make it more difficult to retain management and the key personnel necessary to the success and growth of our business. In addition, during the period of time we are involved in the bankruptcy proceedings, our customers and suppliers may lose confidence in our ability to restructure our business and may seek to establish alternative commercial relationships.

Other significant risks associated with the bankruptcy proceedings that could have a material adverse effect on our business, financial condition, results of operations and cash flows include or relate to the following, among others:

•

our ability to obtain approval from the Bankruptcy Court with respect to motions or other requests made to the Bankruptcy Court in the Bankruptcy Petitions;

•

our ability to obtain approval from the Bankruptcy Court with respect to the results of the Auction;

•

our ability to confirm and consummate the plan of reorganization;

•

our ability to consummate the sale of the Transferred Assets;

•

the effects of the filing of the Bankruptcy Petitions on our business and the interests of various constituents, including our stockholders;

•

the high costs of the bankruptcy proceedings and related fees;

•

our ability to maintain relationships with payors, suppliers, employees, and other third parties as a result of the Bankruptcy Petitions;

•

Bankruptcy Court rulings in the Bankruptcy Petitions as well as the outcome of other pending litigation and the outcome of the Bankruptcy Petitions in general;

•

the length of time that we will operate with chapter 11 protection;

•

the sufficiency of the Company’s cash on hand and ability to obtain sufficient financing to allow us to conduct our business during the pendency of the bankruptcy proceedings, confirm a plan of reorganization, or sell some or all of our assets during the bankruptcy proceedings in orderly fashion;

•

third-party motions in the Bankruptcy Petitions, which may interfere with our ability to confirm and consummate the plan of reorganization or another restructuring transaction, including motions by third parties that may force us into chapter 7 proceedings under the Bankruptcy Code, rather than chapter 11 proceedings; and

•

our ability to continue as a going concern.

Because of the risks and uncertainties associated with the bankruptcy proceedings, we may not be able to accurately predict or quantify the ultimate impact the bankruptcy proceedings may have on our business, financial condition, results of operations and cash flows, nor can we accurately predict the ultimate impact the bankruptcy proceedings may have on our corporate or capital structure.

We have experienced net losses for each of the quarter ended September 30, 2024 and the past three years, and we could experience additional losses and have difficulty achieving profitability in the future.

We had an accumulated deficit of $327.5 million as of September 30, 2024 and an accumulated deficit of $316.8 million as of December 31, 2023. We recorded net losses of $20.6 million and $28.6 million for the years ended December 31, 2023 and 2022, respectively, and net losses of $10.7 million and $15.3 million for the nine months ended September 30, 2024 and 2023, respectively. In order to achieve profitability, we must increase net revenue through new sales and control our costs. Failure to increase our net revenue and decrease our costs could cause our stock price to decline and could have a material adverse effect on our business, financial condition, and results of operations.

The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred to as “covered securities.” Because our Common Stock is not listed on the Nasdaq Capital Market, our Common Stock is not a covered security and therefore we are subject to regulation in each state in which we offer our securities. Accordingly, the types of financings that we may engage in are limited.

Because of the trading volatility often associated with low-priced stocks not listed on a national securities exchange, many brokerage houses and institutional investors have internal policies and practices that either prohibit them from investing in low-priced stocks or tend to discourage individual brokers from recommending low-priced stocks to their customers. Some of those policies and practices may make the processing of trades in low-priced stocks economically unattractive to brokers. Additionally, because brokers’ commissions on low-priced stocks generally represent a higher percentage of the stock price than commissions on higher-priced stocks, a low average price per share of common stock can result in individual stockholders paying transaction costs representing a higher percentage of their total share value than would be the case if the share price were higher.

As a result of Nasdaq delisting our securities from trading on its exchange, we could face significant material adverse consequences, including:

•

a limited availability of market quotations for our securities:

•

reduced liquidity with respect to our securities;

•

a determination that our common stock is a "penny stock" which will require brokers trading in our common stock to adhere to more stringent rules, possibly resulting in a reduced level of trading ~~actvity~~activity in the secondary trading market for our common stock;

•

a limited amount of news and analyst coverage for our company; and

•

a decreased ability to issue additional securities or obtain additional financing in the future.

Our common stock is subject to the “penny stock” rules of the SEC and the trading market in the securities is limited, which makes transactions in the stock cumbersome and may reduce the value of an investment in the stock.

Rule 15g-9 under the Exchange Act, establishes the definition of a “penny stock,” for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require: (a) that a broker or dealer approve a person’s account for transactions in penny stocks; and (b) the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.

In order to approve a person’s account for transactions in penny stocks, the broker or dealer must: (a) obtain financial information and investment experience objectives of the person and (b) make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.

The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the SEC relating to the penny stock market, which, in highlight form: (a) sets forth the basis on which the broker or dealer made the suitability determination; and (b) confirms that the broker or dealer received a signed, written agreement from the investor prior to the transaction. Generally, brokers may be less willing to execute transactions in securities subject to the “penny stock” rules. This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our common stock.

Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker or dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

ITEM 3. Defaults Upon Senior Securities

None.

ITEM 4. Mine Safety Disclosures

Not applicable.

ITEM 5. Other Information

During the three months ended ~~June~~September 30, 2024, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “~~nonRule~~non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

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ITEM 6. EXHIBITS

     
    Incorporated by Reference

    Exhibit

    Description

    Filed
Herewith

    Form

    Period
Ending/Date
of Report

    Exhibit

    Filing
Date

    1.1

    Placement Agency Agreement, dated February 13, 2024, by and among BIOLASE, Inc., Lake Street Capital Markets, LLC and Maxim Group LLC

    8-K

    02/12/2024

    1.1

    02/15/2024

    3.1.1

    Restated Certificate of Incorporation, including, (i) Certificate of Designations, Preferences and Rights of 6% Redeemable Cumulative Convertible Preferred Stock of the Registrant; (ii) Certificate of Designations, Preferences and Rights of Series A 6% Redeemable Cumulative Convertible Preferred Stock of the Registrant; (iii) Certificate of Correction Filed to Correct a Certain Error in the Certificate of Designation of the Registrant; and (iv) Certificate of Designations of Series B Junior Participating Cumulative Preferred Stock of the Registrant.

    S-1,
Amendment
No. 1

    12/23/2005

    3.1

    12/23/2005

    3.1.2

    Amendment to Restated Certificate of Incorporation

    8-K

    05/10/2012

    3.1

    05/16/2012

    3.1.3

    Second Amendment to Restated Certificate of Incorporation

    8-A/A

    11/04/2014

    3.1.3

    11/04/2014

    3.1.4

    Third Amendment to Restated Certificate of Incorporation

    S-3

    07/21/2017

    3.4

    07/21/2017

    3.1.5

    Fourth Amendment to Restated Certificate of Incorporation

    8-K

    05/10/2018

    3.1

    05/11/2018

    3.1.6

    Fifth Amendment to Restated Certificate of Incorporation

    8-K

    05/28/2020

    3.1

    06/01/2020

    3.1.7

    Sixth Amendment to Restated Certificate of Incorporation

    8-K

    04/28/2022

    3.1

    05/02/2022

    3.1.8

    Seventh Amendment to Restated Certificate of Incorporation

    8-K

    07/20/2023

    3.1

    07/26/2023

    3.1.9

    Certificate of Designation of Series H Convertible Redeemable Preferred Stock

    8-K

    05/24/2023

    3.1

    05/26/2023

    3.1.10

    Certificate of Designation of Series I Preferred Stock

    8-K

    06/05/2023

    3.1

    06/06/2023

    3.1.11

    Certificate of Designation of Series J Convertible Redeemable Preferred Stock

    8-K

    09/13/2023

    3.1

    09/18/2023

    3.2

    Eighth Amended and Restated Bylaws of the Registrant adopted on March 1, 2022

    8-K

    03/01/2022

    3.1

    03/03/2022

    4.1

    Form of Pre-Funded Warrant to Purchase Common Stock

    8-K

    02/12/2024

    4.1

    02/15/2024

    4.2

    Form of Class A Warrant to Purchase Common Stock

    8-K

    02/12/2024

    4.2

    02/15/2024

3949

4.3

Form of Class B Warrant to Purchase Common Stock

8-K

02/12/2024

4.3

02/15/2024

4.4

Warrant Agency Agreement, dated February 15, 2024, by and among BIOLASE, Inc., Computershare Inc., a Delaware corporation, and its affiliate, Computershare Trust Company, N.A., a federal trust company

8-K

02/12/2024

4.4

02/15/2024

4.5

Form of Warrant issued to Investor

8-K

02/12/2024

4.5

02/15/2024

10.1^

Forbearance Agreement dated as of August 31, 2024, by and between BIOLASE, Inc. and SWK Funding LLC as agent and lender.

8-K

08/31/2024

10.1

09/06/2024

31.1

Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended

31.2

Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended

32.1

Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2

Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS

Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.

101.SCH

Inline XBRL Taxonomy Extension Schema Document

104

Cover Page Interactive Data File (embedded within the Inline XBRL document)

* Furnished herewith

40^ Schedules and attachments have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company hereby undertakes to furnish supplemental copies of any of the omitted schedules and attachments upon request by the Securities and Exchange Commission.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		BIOLASE, INC.
		(Registrant)
August 8, 2024	By:	/s/ JOHN R. BEAVER
November 7, 2024	By:	/s/ JOHN R. BEAVER
Date		John R. Beaver
		President and Chief Executive Officer
			(Principal Executive Officer)
August 8, 2024	By:	/s/ JENNIFER BRIGHT
November 7, 2024	By:	/s/ JENNIFER BRIGHT
Date		Jennifer Bright
		Chief Financial Officer
			(Principal Financial Officer and Principal Accounting Officer)

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