Thank you, and good afternoon, everyone. Thanks for joining us today for the BIOLASE Technology 2011 fourth quarter and yearend results conference call.

You should have all received a copy by e-mail this morning of the release announcing the company's results for the fourth quarter and year ended December 31, 2011.

Before we get started, I've been asked to make the following statements. The words and phrases can be, may affect, may depend, believe, estimate, project, and similar words and phrases are intended to identify forward-looking statements.

Forward-looking statements are subject to various known and unknown risks and uncertainties, and BIOLASE cautions you that any forward-looking information provided is not a guarantee of future performance. Actual results could differ materially from these anticipated in the forward-looking statements due to a number of factors, some of which are beyond BIOLASE's control and may be discussed in BIOLASE's filings with the Securities and Exchange Commission.

All such forward-looking statements are current only as of the date on which the statements are made. BIOLASE does not undertake any obligation to publicly update any forward-looking statements to reflect events or circumstances after the date on which the statement was made or reflect current unanticipated events.

Also, as a quick reminder, the replay of the call will be available on the BIOLASE website at www.biolase.com. The company's 2011 results can also be found on the company's annual report on Form 10-K, which the company will file with the Securities and Exchange Commission.

With me on the call today from BIOLASE are Federico Pignatelli, Chairman and Chief Executive Officer; and Fred Furry, Chief Operating Officer and Chief Financial Officer. Federico and Fred will review the prepared remarks, including an update on the business, operational performance and outlook.

There will be a question-and-answer session at the end of the call, followed by a few closing remarks.

With that, I'd like to turn the call over to Federico. Good afternoon.

Good morning, Matt, and thank you. I want to welcome all of you to our fourth quarter and yearend result conference, and thank you for participating.

Today we will review the progress and various accomplishments achieved by BIOLASE in the 2011 fourth quarter and year and so far in 2012. Beside from giving highlight from the quarter and year, I will be focusing on a couple key points on today's call.

The first was a dynamic that impacted our fourth quarter and yearend results and the solution that we have executed to clear the path for steady growth going forward. Second, will be summary of our product extension activities and the steady fulfillment of our moves towards becoming the total technology solution provider for dental professionals around the globe.

The concept of a one-stop shop for dental technology solution is guiding our strategy and is also resonating with our dental customers, who prefer to have a single reliable resource for their practice technology and equipment needs.

Let me briefly recap the full year 2011. First and most importantly, we have turned the company around commercially, operationally and financially.

In late 2010, when I stepped in to lead the company, sales were in severe decline. The company was taking on debt under very poor terms.

The stock price was well below $1 and employee morale was extremely low. To put it simply, BIOLASE's future was at real risk.

Following a complete turnover on the board and within executive management, as I became the CEO in late 2010, progress was immediately made to shore up the company's finances and get direct sales ramping again. While there are many changes to be listed on this call, progress has continued throughout 2011, resulting in sales growth in the year of more than 85%.

In addition, we have paid off entirely our bank debt and $9 million of irrevocable purchase order from Henry Schein. Overhauled our manufacturing and supply chain systems, installed sound operational and financial systems and become relevant as an investment opportunity again.

In the fourth quarter, progress was also strong, but not at expected level, as we introduce new products, signed important commercial agreements, achieved regulatory milestones and continued to build our infrastructure and systems to support a world-class multiplatform technology company.

Net revenues in the quarter was just above $13.1 million. A growth rate of 35% over last year fourth quarter.

If you exclude the equipment sales to Henry Schein, our former exclusive distributor, totaling $2.5 million in the fourth quarter 2010 to satisfy irrevocable purchase orders, the repayments of the liability in product.

Net revenue actually increased more than 80% over that same period last year. We believe that these are a better measure of our growth in 2011, as a result of returning to our direct sales in select distributor models and Fred would extend on these further in a few minutes.

Unfortunately, we missed our guidance and that is not tolerable. But let me give you some additional color on things that impacted our results for the quarter.

In the fourth our planned launch of the new Waterlase MDX 300 and MDX 450 laser systems at the Chicago Midwinter Dental Show to obsolete some of the market for our older MD Waterlase Turbo system.

I am confident that this pending launch triggered a more determined an aggressive selling effort by our former exclusive distributor Henry Schein to clear out its laser inventory of Waterlase MD Turbo laser system, thereby causing intense competition that disrupted the marketplace during the quarter.

These competitive efforts resulted in the sales of approximately 180 Waterlase MD Turbo system during the fourth quarter, including approximately 120 alone in the month of December. The bad news is that this amount of inventory hitting the market created unforeseeable challenges to our sales force, which resulted in a much lower than expected level of sales.

The good news is that many more dentists have joined the BIOLASE family and became laser dentists. And they will continue to be our customers in the future as they've purchased consumables, upgrade their lasers to newer technology and expand their practices.

We thought that Henry Schein was going to restore its sales force to that would resell sell our product at a profit. But they ultimately seemed to decide that was too arduous, apparently causing them to sell their inventory at or below their cost which clearly impacted our revenue throughout the year and particularly during the fourth quarter.

In order to halt this negative market dynamic, we entered into a definitive agreement to purchase all of the Waterlase MD Turbo laser systems remaining in Schein's inventory. Approximately 180 machine as a fraction of the regional cost paid by Schein.

That purchase will be largely paid for with funds currently owed to BIOLASE by Henry Schein for the purchases of consumables and equipment, primarily during the fourth quarter 2011 and first quarter of 2012 in the normal course of business with the remainder paid in cash.

And to be clear the product sold to Schein for the repayment of debt is not a part of the repurchase equipment. I'm very pleased with the outcome of this purchase as it will eliminate the substantial overhang and create a wide open marketplace for our sales force once again.

I think that it is clear that we faced an extraordinarily circumstance in the period but we are also committed to providing investors with a most accurate and reliable guidance going forward. And Fred will discuss some of the changes in systems that we have put in place to make sure that we do better in that area.

Now I would like to walk through some of operational and strategic highlights on the period all which should have a positive impact of the company's performance in 2012 and beyond.

In the fourth quarter we receive approval from the Korean Food and Drug Administration to sell Waterlase iPlus all-tissue dental laser system. South Korea has an estimated 25,000 dentist and 16,000 dental clinics and their progressive dental practitioners have been particularly prone to adopting hi-tech dental equipment, including more than 1,000 practices that currently use 1 or more BIOLASE dental laser.

It has been by far our most our most active international market.

Our distribution partner in Korea has seen the company's most successful international distributor for almost a decade placing more than 1,000 BIOLASE products of which 80% are Waterlase and Waterlase MDs.

We believe that the level of interest in the Waterlase iPlus is very high and that Korean dentists have been anticipating it's availability for some time. We now have approximately 6% market penetration in the Korean dental market.

On the strategic front, just this past month, we signed a 3 year distribution and marketing agreement with Cefla Dental Group, a leading Italian dental equipment manufacturer making BIOLASE a distributor of Cefla's NewTom Cone Beam 3D imaging products in the U.S. and Canada.

The NewTom products are considered to be among the highest quality 3D dental imaging products in the world. NewTom's Cone-Beam-Computed-Tomography is the compact version of standard CT imaging and has clear advantage of over traditional CT scanners such as less radiation, faster scan times and a more comfortable patient experience.

With a introduction of BIOLASE DaVinci branded imaging systems in the latter part of 2010 and now this distribution agreement for the high end NewTom 60 equipment, we're moving quickly into new direction so I will take a moment to give you color on this strategy.

As the world leading dental laser company with a largest specialized sales force and distribution network in the field, it makes perfect sense to leverage their commercial channel by adding additional products, services and selling opportunities at the same core point.

In addition, the complementary nature of good imaging in laser dentistry is very clear. A better the imaging capabilities of the dental professional the earlier the diagnosis and the more indications that can be identified and treated with our Waterlase iPlus and iLase systems in a minimally, invasively biologically, friendly manner and in many cases without the use of anesthesia.

Because of these relationships we have adopted the motto, see more, do more as a central part of our drive to become the total technology solution for minimally invasive surgery in the dental field.

Our vision is to continue the introduction of a series of market leading products which will nicely augment our suites of highly respected, advanced imaging products in market leading lines of all tissue lasers and diode lasers.

Further evidence of these initiatives was introduced in February of the Waterlase MDX line of all-tissue lasers. The new Waterlase MDX demonstrate our engineering expertise and ability to design products for all segments of the global dental market and is logical the evolution of the Waterlase MD Turbo the best selling all tissue dental laser in history.

The MDX allows us to offer a blend of secrets from the revolutionary iPlus in the MD Turbo in a modernized platform to practitioners that do not require the advanced fees and functionality of the industry-leading iPlus.

The MDX line is also unique exclusive to address specialist market such as endodontists and periodontists who are finding many new ways use lasers in their practices. But do not need some of the primary features of the revolutionary iPlus system.

We anticipate that MDX will be very popular with this market segment and with this differentiated price points it offers an excellent alternative to our flagship iPlus.

The MDX was very well received when we unveiled it at the Chicago midwinter show just recently. And we expect to see a steady ramp in that product line as the marketplace is educated on its utility and value.

As I mentioned in moments ago, this launches is one of its series that we have accomplished and that we plan as we step out to become a multi-product, multi-platform company. To drive that success we also need to continually appraise our commercial team.

In the fourth quarter, we continued to strengthen our international selling network of non exclusive distributor and increase our presence in Europe, Asia and Latin America.

Domestically as of December 31, 2011 our sales force in the U.S. totaled approximately 30, a number that will continue to trend upward as we strive to add strong new sales people while removing lower performing individuals.

We are targeting a tea of 40 to 45 sales professionals in the U.S. by the end of 2012.

It is important to note that the significant percentage of our current sales force was high during 2011 and had to be trained appropriately.

We have made a strong effort to educate and coach our sales force as they are now entering 2012 with more experience and familiarity with our technology offering, their territories and customer base.

We anticipate continuing our dedicated efforts in expanding and strengthening our sales force. In addition, we have appointed Bill Brown, our Vice President of international sales.

As Vice President of sales and marketing, Bill has been an integral part of our management team and has played a critical role in the restructuring and re-launch of BIOLASE.

He has a strong and proven track record, great dedication to BIOLASE. And in-depth understanding of the global dental laser market and the needs of our customers and distributors.

His knowledge and expertise was the instrumental as we continue to grow and introduce new market leading products in our drive to become total technology solution for the dental community.

Finally on the marketing front, I spoke last quarter about the return this year of the BIOLASE on World Clinical Laser Institute, the WCLI, Super Symposium, the single largest and most successful laser dentistry conference worldwide. We are looking forward to the event scheduled from June 7 to the 10 June, in San Diego in California where dentist will hear from and work side by side with the finest laser dentists on their staffs.

They will learn new clinical laser techniques, practice management tools and guidelines for using the laser in conjunction with imaging to generate more business and wealth from their laser equipment investment.

I will now hand the call over to Fred Furry to go through the highlights of our financial results for the quarter and year.

Thank you, Federico and good afternoon. I hope that the weather around the country is as nice for everyone in the call as it is here at Irvine today.

On a GAAP basis revenue for the fourth quarter of 2011 totaled approximately $13.2 million, up 36% from $9.7 million in the same quarter for 2010. Net revenue for fiscal 2011 was approximately $48.9 million, up 87% from $26.2 million in fiscal 2010.

Such increases in revenue volume were primarily driven by our exit from an exclusive distribution arrangement in August 2010 with Henry Schein and a return to a direct sale in multi-distributor business model which was initiated during the fourth quarter of 2010.

In order to gain some insight into our increased revenues during 2011 and visibility into our projected growth for 2012, let's first look back at 2011 and remove equipment sales to Henry Schein, our former exclusive distributor to satisfy its irrevocable purchase orders from August 2010.

These 2010 irrevocable purchase orders constituted a liability in some characteristic to debt that was repaid in product sales from September 2010 through the third quarter of 2011. With respect to 2011, we satisfied approximately $2.9 million, $2.1 million and $900,000 of these 2010 purchase orders with product during the first three quarters respectively.

On an annual basis, excluding $5.9 million and $3.1 million of equipment sales to Henry Schein to satisfy the irrevocable purchase orders during 2010 and 2011 respectively, our revenues totaled $43 million for 2011 and $23.1 million for 2010. This represents an increase of $19.9 million or 86% year-over-year as a result of the return to our direct and selected distributor sales model.

Our direct sales and selected distributor revenues were also impacted during the year and particularly in the fourth quarter by sales of Waterlases by Henry Schein. As Federico has already mentioned, we were competing against a large inventory held by Schein and have taken steps to eliminate this inventory overhang, as we progress into 2012, by agreeing to repurchase approximately 180 MD Turbos at what we believe is very beneficial pricing.

None of the products sold to Henry Schein's repay our debt are included in this repurchase of MD Turbos. And we expect to profit handsomely and strategically from such repurchase.

Returning to our results from 2011, approximately 69% of our revenues for the fourth quarter and 60% of our revenues for the year ended December 31, 2011, were from the sale of our all-tisse Waterlase system. The vast majority of which were the revolutionary Waterlase iPlus.

Sales of our diode laser systems made up approximately 12% and 19% of total revenue during the fourth quarter and year ended December 31, 2011, respectively.

The percentage of net revenues in this year's fourth quarter from the U.S. and the international markets, including unit sales and consumables totaled approximately 69% and 31% respectively as compared to approximately 74% and 26% of net revenue in the prior year's comparable period.

For the year, the breakdown of U.S. and international revenues in 2011 totaled approximately 67% and 33% respectively, compared to approximately 64% and 36% respectively for 2010.

Gross profit as a percentage of GAAP net revenue for the 2011 fourth quarter and the year was 42% and 44% respectively compared to 50% and 34% for the prior year comparable period. The gross profit in the fourth quarter of 2011 increased from 41% in the third quarter of 2011, primarily due to higher volume of U.S.

sales revenues generated during the quarter.

Operating expenses in 2011 were $25.3 million compared to $20.3 million in the prior year period. Operating expenses improved as a percentage of net sales to 52% for 2011 from 77% for the prior year.

When compared to the increase in our revenues of over 85% year-over-year, expenses only increased by 25%. A significant portion of this increase was related to legal fees necessary to unwind lingering issues from our former exclusive distributor relationship with Schein.

On a GAAP basis, our net loss for the fourth quarter of 2011 totaled $2 million or a loss of $0.06 per share compared to net income of $174,000 or $0.01 per share in the fourth quarter of 2010. After removing non-cash depreciation and amortization expenses of $133,000, and non-cash stock based equity instrument and non-cash compensation expense of $638,000, this year's fourth quarter resulted in a non-GAAP net loss of $1.3 million or a loss of $0.04 per share compared with non-GAAP net income of $869,000 or $0.04 per share for the fourth quarter of 2010.

The non-GAAP net loss in the fourth quarter of 2010 included the removal of interest expense of $145,000.

Our net loss for fiscal year 2011 totaled $4.5 million or a loss of $0.15 per share compared to a net loss of $12 million or a loss of $0.47 per share for the prior year. After removing interest expense of $305,000, non-cash depreciation and amortization expenses of $695,000 and non-cash stock based equity instrument and non-cash compensation expense of $2.1 million, the non-GAAP net loss for the fiscal year 2011 was $1.4 million or a loss of $0.05 per share compared with a non-GAAP net loss of $9.8 million or a loss of $0.38 per share for the fiscal year 2010, an improvement of 87% year-over-year.

Turning to the balance sheet, as of December 31, 2011, we had cash and cash equivalent of approximately $3.3 million, accounts receivable of $8.9 million, inventory of $11.3 million and shareholder’s equity of $12.6 million.

Moving on to financial guidance. Our revenue guidance for the first quarter of 2012 is approximately $11 million, an increase of approximately $3.3 million or 43% compared to the first quarter of 2011 after removing $2.9 million for the repayment of the liability and product to Henry Schein during the first quarter of 2011.

Our full year revenue guidance for 2012 is between $57 million to $60 million. Excluding equipment sales to Henry Schein for the repayment of approximately $5.9 million during 2011, the midpoint of our guidance of $58.5 million represents an increase of 36% for our direct sales and selected distributor model in 2012 year-over-year.

Now, I want to make an important statement about our guidance going forward. Many of investors and analysts have rightly expressed the concern regarding our missing guidance during 2011.

There is nobody here more dissatisfied about this result than Federico and myself, and we are working diligently to rectify these circumstances.

Thank you, Fred. Before we hand the call over to the operator for questions, I have several concluding remarks.

Notwithstanding our overall underperformance against our 2011 guidance, I am very proud of the company's progress in 2011 and expect this to continue throughout 2012, as we lay a solid foundation.

While we did not meet the expectations set by our own guidance, we make great strides with over 98% growth year-over-year, excluding sales from the irrevocable purchase order from Henry Schein and have established a solid foundation for further success in 2012.

As we have discussed and announced over the year, we will continue our product expansion activities in dentistry toward becoming the total technology solution for minimally invasive surgery for dental professionals around the globe. This concept is a one-stop shop for dental technology solution is guiding our strategy and is also resonating with our dental customers, who prefer to have a single reliable resource of the practice technology and equipment needs.

We will also continue to aggressively pursue market outside of dentistry to this elevation of our promising IP portfolio. In ophthalmology, for example, we are rapidly moving toward treatments for dry eye, glaucoma and cataracts, and then IDE for presbyopia.

Extending our technology into ophthalmology as well as orthopedic, aesthetics, podiatry, and other areas of medicine remains a very strong focus for BIOLASE in 2012. This concludes our formal prepared remark.

And I would like now to open up the call to questions.

Federico, let me start here, just as a general question. Given this inventory issue with Henry Schein, did BIOLASE have any visibility on the inventory levels that I am just trying to understand, was it timing issue, was it that you're going direct and Henry Schein said, screw it, and they started dumping inventory.

What triggered all this and what visibility did you all have going into Q4?

But again, we cannot speak for Henry Schein. We can only speak for BIOLASE.

What we believe that has happened is that Henry Schein, when we decided to go direct and not just deal exclusively with them, they had to basically take a business decision in investing in forming a group of sales people and an infrastructure to sell lasers.

And at a certain point, they found that quite difficult and also of quite investment. So they most likely decided to just cash in their inventory.

And that is what we believe that has happened.

Also we have an obligation contractually to let them know of new upcoming products. So when we did let them know about the MDX line that these are the clear evolution of the MD, they went on to clearly take a very aggressive stance in liquidating their inventory.

This inventory in the hands of our former exclusive distributor has been a thorn in our side for quite some time now. And we frankly are very happy that they sold approximately 260 MD lasers and its systems in 2011.

And that we have repurchased the remaining MD systems in their inventory, so all is cleared now.

What they have currently is the brand new iLase that they are selling regularly and that's it. So in essence, we cleared out a fundamental problem that was lingering and that was interfering with our direct selling effort.

Federico, would it be fair for me to say that in fiscal '11, I mean one of the things subliminally, when we look back and we do the math, there was always element of timing of revenues and what not relative to the estimates out there. I guess, my key question is, is it fair for me to say that you'll did not have visibility into the Henry Schein inventory and selling mechanisms.

And as a result, the guidance that you all had laid out there sort of boxed you all into a corner. Would that be fair in my assessment there?

Absolutely. I mean, again, that was an unexpected realization on our part.

We do not know what the Schein strategy can be ahead of time. And so we realized very late in the quarter in December that was a very aggressive marketing of the MD systems.

And obviously that affected our completion of sales of our own systems, because that clearly tapped into the clients that are interested in dental laser technology. So affected basically our client channel.

And because they are moving aggressively over 180 systems, we definitely got affected in most likely not selling 40 or 50 systems ourselves. And that is the shortfall between our guidance of Q4 and what the final number was.

Frederick, let me switch gears and just go into fiscal 2012 guidance, and I want to make sure I understand the nuts and bolts correctly. And please stop me if my math is wrong or I am missing something.

Let's say you exclude the Henry Schein purchase orders in fiscal '11. So if I use the baseline of $43 million in fiscal '11, the midpoint of your fiscal '12 numbers are $58.5 million.

So I get the math there.

And if I look at Q1 '12 as $11 million, just choose wrong numbers for argument sake, my math suggest that Q4 '12, you should be exiting somewhere in the $17 million-plus run rate. And I guess the question I have is, walk us through the trajectory as they move throughout 2012.

What different catalyst/events will precede Q4 to get to a certain ramp rate and exit with a guidance that you all have provided?

There are 2 primary things that we looked at as we built our sales forecast. And the first is, the number of sales people we have today and the number we expect to have in Q2, Q3 and Q4, based on our hiring practices and the plans we have in place.

So we do expect every quarter to have a greater sales force, a more experienced and a larger sales force. So we expect to have sales impact from that.

We also expect to see some incremental increases from our introduction of the NewTom digital imaging from Cefla. We have that ramping up throughout the year.

So we have a very, very low expectation early in 2012 and that ramps continually for each quarter. So those 2 factors would be the primary things that we looked at when we build our model.

And also let's not forget that we introduced late in the year the DaVinci imaging line that is a very vast imaging line. So we would have a ramp up of the imaging product line as a whole, the DaVinci, the NewTom and more to come.

And also we will introduce a full new line of diode laser product for dental practices in the next few months. And coupled with what Fred said is, we will have a stronger and larger sales force and also with the fact that the Q1 is always historically the slowest quarter of the year, you can understand that the second half of the year will be stronger.

Federico, how should I look at rep productivity in the U.S. I think so I heard there are 30 reps in the U.S.

Please correct me if I misheard that number. So am I doing the math correctly or thinking this correctly that let's say you have $30 million of revenue, 67% or so in the U.S., divided by 30 reps.

That's about $300,000 per quarter rep productivity annualized as $1.2 million. I guess my question is twofold.

One is the way I am thinking correct? And two, if a 1.2 million rep productivity currently exists, what are the marginal efficiencies that can be derived from these reps?

Well, again, it is really not exactly correct to do that kind of math. I understand from where you're coming from, but at a certain point, it's not just a number of sales reps.

It's the support that the sales reps have and the products-- the amount the products that they have to sell. So eventually it's not just multiplying the number of reps and a $1 million per rep that will give you an understanding of the growth of sales.

Eventually, per rep, there will be increase in sales as they become more experienced and as they have a greater variety of products. In the old days, we had sales reps doing $2.5 million, $3 million a year.

So again, we cannot just limit this sales rep capacity at $1 million on average. We will have always the superstars, and then we will have the wonderful beyond.

But we are clearly very dedicated coaching and directing these salespeople in becoming very successful.

Let me just ask about what happened with Schein here. In the December quarter, they were dumping lasers on the market.

Obviously at some point, they stopped, because now they have inventory left. Can you just talk about when and why they stopped?

Because we started talking to them and we said instead of dumping it into the market, we're here to buy it all in one transaction, but obviously at a lower price. The fact is that they have costs associated in selling.

So even though they were selling aggressively, they had to pay salaries, they had to have sales people, they had to have a whole organization to allow that to happen. So now they are free of that.

Now they can essentially not be burdened by these kinds of expenses. The BIOLASE is eventually a $3,000 laser and they sell it through their website, through their catalog.

And so it doesn't really need specialized salespeople like to sell MD laser systems.

Did any of this spill over into the first quarter?

They sold a few units in the first quarter. And we are finalizing the account now, because the transaction is just about to close, especially, Dalton, it could be a number that can vary a little bit.

It could be 175 at the end. That's why we used approximately 180.

So their role going forward will just be to sell the iLase or will they continue to service accounts that they've previously sold Waterlases to, like selling the disposables?

They will be free to act as a selected nonexclusive dealer. That doesn't mean that we are not going to have a relationship.

I am happy to have the relationship with Schein. And Mr.

Bergman, the CEO, wrote me a very kind letter after the transaction was not consumed, because it's not yet. But when we finalized it, looking forward in continuing into a profitable and positive collaboration with BIOLASE.

And I answered the same way to him. It doesn’t mean at all, that we are antagonistic.

It's simply that in the past, what has happened has happened and now we're looking into the future and clearly with Schein when there is a product that they are interested in purchasing, we will be very happy to provide them their product.

Essentially they were sitting on a large inventory that was aging. And that was an uncomfortable position for them and we completely understand that.

We can sympathize with that. In our hands, that inventory has value, because we can upgrade that inventory to essentially MDX, refurbishing 2012 and/or for parts to service this large installed base of MDs.

But most of them, they will be converted and upgraded to MDX. Some we'll put in schools, because the very important things to have at schools behind our Waterlase technology.

So frankly, it is a great transaction for all parties, because on one side Schein gets reasonable. On the other side, we get rid of this overhang that was an unknown entity for us in conducting our direct sales efforts.

And we are in a very professional and positive relationship with Schein.

Shifting gears here for a minute, can you talk about the contribution you expect this year from the imaging products?

Again, we expect that it would be well received, but I am not going to venture there in giving the numbers, because it is a new product line. We believe we will be successful and we believe that we will over time establish ourselves in a strong manner in this field.

But again, it is a new product line. We are just starting basically.

You can see 3 months went by already. We are hiring a dedicated sales force for imaging.

So definitely we'll be in the millions, but again we are not venturing in giving a determined forecast. We are positive although.

Definitely, we believe that it is a great addition. Again, let's not forget that the BIOLASE brand is known by over 90% of dentists in North America and is known as a high-tech dental equipment brand.

So we are leveraging in fact not only our install basse and our sales force, but also our brand.

Could you say you're hiring a dedicated imaging sales force?

Yes. We will have a small number of superstars in the imaging to help our overall sales force in closing deals.

When you are closing an imaging system that is a NewTom or a D3D, we are talking about machines that cost over $100,000. You want to clearly have specialized people.

We will have our sales force opening the doors and then the specialized people going in and closing the deal.

I recall that at a recent dental show speaking with a sales rep from Benco and he was really excited about the iPlus. Is Benco contributing revenues in a material percentage or they're just getting started?

Again, Benco is a great company, but we have a beginning of a very good relationship with them. But there was clearly a concern-- a legitimate concern on behalf of Benco regarding the inventory that Schein was holding, inventory of MDs and the fact that Schein has purchased a large amount in late 2010 and early part of 2011 of iLase.

We will also have an upgraded version of iLase and we will introduce new products in the diode line. And we've just launched MDX line.

So essentially, I think that in 2012 we will see Benco being more active in selling our products, now that this is an issue of this large inventory has been cleared up.

I understand your hesitation to offer guidance on the imaging sales. But if I recall correctly, imaging contributed approximately $100,000 in revenues in Q3.

Is it a similar number for Q4?

Again, those that were kind of past of marketing that we did, we did not even have a signed agreement, a completed agreement with the full digital line back then regarding the DaVinci. We needed to even clear the name of BIOLASE DaVinci.

So there were a lot of things that we're holding out back in marketing actively. The total sales of imaging is a nominal amount in 2011.

So it is not really to be taken in consideration in 2011. From now on, we have everything laid out to start doing what we need to do.

And we should presume that first quarter should be slow, but second quarter will begin to ramp. Is that fair?

For the imaging or overall?

Imaging.

Yes, obviously in Q2, we will see a ramp-up in imaging. But anyway, there is a seasonality in capital equipment in dentistry.

Q1 is usually the weakest. Then you have Q2 which is stronger.

Then you have some slowdown in Q3. And then usually you have a very strong Q4 because of the tax advantages that dentists have in purchasing capital equipment before yearend.

So that is more or less how the quarterly sales lay out during a fiscal year.

Is Mike signed up as a leasing partner for this or for the imaging line, the NewTom product?

Michael felt his company is always a good partner, but again is not an exclusive partner, but is a very valuable partner of BIOLASE in our leasing, is always present at any tradeshow. We have a very productive collaboration, positive collaboration with him and his company.

So yes, I mean he would be behind any leasing of equipment. But again, he is not the only one.

I mean dentist can have his own leasing company, his own preferred leasing company. And then if he is a distributor, it could be Schein or it could be a Benco.

It could be somebody else. They have their own leasing arm.

In fact, Mike is an important element in the overall leasing aspect of selling products, but he is not the only one.

And as far as atypically of imaging equipment, what we are seeing, 55 and 3 to 5 I guess for the iLase and 55 for the iPlus. What could we expect for imaging?

Imaging, we have such a full line of products, we go from $3,000 all the way to $170,000. So it's almost impossible to give you an average price, because we are selling a multitude between the DaVinci and the NewTom.

We are selling a multitude of products and more to come.

And now with you're taking over the NewTom distribution or at least the one of the key partners there, are there issues on the integration into the dental management software? Do the images already load up into Dentrix, any of these other attractive management software solution?

Yes, that is all taken care of.

There is no additional negotiation with Henry Schein to get the images into Dentrix, right, that's been done?

Yes, it's taken care of from the manufacturer.

Just one last question on Henry Schein issue. With this agreement when it finally completed here, does this mean that Hency Schein, the only inventory they have of BIOLASE equipment is the disposable equipment?

No. They still have units of iLase that is the handheld battery-operated laser.

It is 5 watts. It is a wonderful laser we introduced it in 2010.

So basically, it is a brand new laser, and they are selling it. It is a laser that sells for around $3,000.

So it is the kind of laser that is sold through catalogs, through the internet and so on.

I guess what I was really driving at they don't have any more Waterlase models at all?

They have a handful of iGlasses. That is the new laser that we introduced, the very brand new one.

Okay, but just a handful. So there is no potential inventory issue with the iPlus.

You're not concerned about that?

Not at all.

And as I remember, last quarter it was mentioned that the movement of products on the international market was one of the reasons why the gross margin was at the low 40s and here we are back up to higher contribution in the U.S. And I would think as a result the gross margin might be a little bit higher.

Is there anything else going on there? Is there any supply issue or anything else happening there?

Overseas?

I am just wondering why the gross margin might not have been higher since there was a larger contribution from U.S. revenues in the fourth quarter relative to third quarter.

We have certain costs that might not be as visible to the outside, including warranty, service and certain other costs associated with that. And those are starting to trend downward, but they are still involved in our computation of cost of sales.

It's not just a straight cost to build a unit. We are also, as we said several times before, we have a large facility here and we have some room for growth, which we are anticipating over the next couple of year.

So we are not fully absorbed in our inventory or overhead right now, but we do expect to see improvements in that over the year as well.

And in the past, it's been mentioned about a 50% gross margin. So it sounds like that next year, is it fair to say that from current levels there would be more movement in that direction.

We're moving towards that on the laser side of things by the end of 2012. And now with the introduction of some of these with the distributor relationship we may not have the same level of margin and we may end up breaking that out as it grows as a component of our business so we can give you some visibility into what the different margins are.

But we do expect significant manufacturing efficiencies in 2012 compared to 2011. We also expect improvements in our service and warranties but Ben, we still have the lack of absorption of our overhead.

And as we grow, that will improve as well obviously.

In the imaging we do have a healthy margins, don't get us wrong. Particularly in the smaller products, as we go to the higher end products the margins becomes a little more challenging but it's still a healthy margin that clearly is not at 50%, as we can have for lasers, it will be somewhat lower.

And could you walk me through the thought process on taking on another imaging product. Is it designed just to really have more products for the sales force or might there been a slow ramp up in the DaVinci and of thinking that we need to have more product make any progress at all in the imaging.

I just want to make sure I'm clear on that?

We are making progresses in the imaging but again we are started to build out infrastructure. We just closed in NewTom.

We just recently closed the entire line of the DaVinci. We clear the name because we were very attached to the BIOLASE DaVinci name.

So we are putting together a specialized sales force. So basically you're going to see a ramp up of our effort in this particularly field that we believe it is strategical, also to penetrate the general dentist, the general practitioner

We have dearly opened up the doors to the GP, because imaging today, really has become standard of care and if you go to any of these dental shows, you will see that activity where people go and people are interested in going is not around dental chairs and dental drills but is around digital imaging and laser.

Also we have the price point differentiation now that the company never had in the past in all product lines from the lasers to the digital imaging and that is very nice to have because the old BIOLASE basically was a one-product company and was at top of the line and instead now we have a multitude of products in both lasers and imaging and at different entry price point.

And it appears to me that the MDX line would also expand your market ability into the more of the GP dentistry. Is that right or do they typically build for the iLase or iPlus?

No, again, not everybody can afford the iPlus so you're correct. The MDX 300 and MDX 450, they are priced differently.

The MDX 300 is less expensive. Then we have used units of MD that are going to be certified-- recertified by the company for sale.

So that would be a lower point price point so basically we're going to able to offer GPs at four different levels of price points in entering laser dentistry, something that BIOLASE really never had and no other company never had.

So we are not reinventing the world. If you look at Mercedes or a BMW they have 4 or 5 different models at different price point and so we are not reinventing the world.

We are just doing commercially makes sense.

I got 4 questions, I’ll be very specific. Your guidance for first quarter, what visibility do you have, I mean its March you should have decent visibility but historically your quarters are back half weighted.

So we as shareholders don't want another surprise. The second question is related to cash.

Lenny, let me answer question by question. Otherwise I will start taking notes.

Yes we have a decent-- you say decent, I'm going to use the same term decent.

Decent?

Decent to good. What interpretation do you give to the term decent.

Does that mean you're confident in hitting the number?

Well I would not give a guidance if I would not be confident.

In terms of the cash position can you just clarify, since you’re going to add another 10 sales people and your efforts in R&D, it seem to be expanding. Can you just reassure us that at $3 million, $4 million cash balance would be sufficient to continue to grow the business through the year?

The fact is that it would be nice to see $30 million in cash but we don't have that advantage. There is a lot of cash in inventory.

Inventory grew because it was a surprise to us, for instance, that Schein was so aggressive in selling in these but we have iPlus finished product obviously at the end of the year that we build expecting to sell it.

So that increased inventory. We also increased the inventory, we put money in critical parts, because we don't want to have last minute surprises and now they're having critical components to complete the manufacturing of the laser, it's something that has happened in the past.

So there is a substantial amount of money there. Then there is a substantial amount of money in account receivables as well.

So overall, there is money but in the bank we don't a large amount but we're going to manage.

So does that mean that you're comfortable with the cash position, there is no immediate need and when I mean immediate I mean two quarters out, to go raise any more money?

Frankly, we expect that Q1 is a challenging one. And we're basically almost past that.

And then Q3 we should be starting hopefully to be in cash generation mode. And frankly I think that the difficult moment is Q1 and we are almost over.

And we're less interested in priorities number one issue among investors, I think, is reassuring that there is not going to be a dilution event in the upcoming quarter like we did last year.

I can tell you that we are not seeing in selling shares at these prices. We believe that the stock does not reflect the potential and the realities of the company and that's our belief.

And so we are very concerned about any further dilution.

Well that wasn't the commitment to my question but that does clarify at least some of it. The third question was relating to the non-dental markets.

Can you give us some milestones that we as investors can look to forward to in terms of achieving commercial viability for either the eye market or for the orthopedics market?

What I mean by milestones is when you're file a 510(k), things of that sort if it get plans to clinical trials and anything that we could look forward to and to give us confidence of these products will be in the market in a timely manner?

While some products they can be in the market in the second half of the year. We cannot be too specific but in 2011, no 510(k) was filed.

In 2012, we will file 18 of them. So we're going to be very active in that field and we have been carrying on some clinicals in ophthalmology, some clinicals in podiatry, and we're with very good results.

So I think that ophthalmology is probably the closest to give out some benefit together with podiatry. We're doing more work in dermatology and we will see something in 2012, we expect.

And orthopedics, clearly as you can see the hardest surface in the human body you can cut very efficiently, bone. But the orthopedic market is dominated by a few players.

So we will definitely, once we have the 510(k) approved, we will be talking to them. And we have on the team, actually an expert in the orthopedic market.

Ehab Esabmiel [ph], so he would be very beneficial for BIOLASE in attempting to enter that market with Waterlase technology. It is a very interesting market, the orthopedic market.

So you don't have any time tables on when you're going to actually submit 510(k)s for either of those for 18, as you said 18 separate 510(k)s? Is that just for those two markets, or is it including podiatry?

Including podiatry and that means different medical applications. Frankly, I don't want to tip the competition or whatever we are doing.

All those 18 are going to be submitted by yearend, at least that's the hope. Is that correct?

Yes. I mean, there is a very strong concerted effort in applying for these 18 510(k)s in the months to come.

And just a last question. Me as a shareholder, I'm a little frustrated, as I see the competition going by the wayside, and I mean either going out of business or having regulatory problems, the latest of which is Syneron.

I understand they lost their CE Mark. And I think the rumor was today that one of the distributors actually had a forced recall from the government in Germany.

Can you just address when the implosion of HOYA, Fotona, and now Syneron are actually going to help your international efforts?

Well, HOYA has ceased operation and they had some 1,200 lasers worldwide. So that definitely clears up the field.

We are sorry that they are out of business, but we are happy clearly for us. Syneron, yes, we have heard about the possibility that they have lost their CE Mark for their LifeTouch that is their dental product.

We are quite surprised that we haven't seen any public announcement from Syneron yet. But there is what apparently has happened from information that we have.

So they have sold so far 400 of those units at $60,000, and this product was introduced in 2010 more or less 18 months ago.

Fotona is another competitor. By the way Syneron doesn't sell in United States.

It would have to pay royalties to us, as HOYA was paying royalties to us, because we also have the patents underlying the erbium YAG. We do not license anyone for the Waterlase, but we also own the erbium YAG underlying patent.

So who wants to sell an erbium YAG has to pay us royalties.

So actually we're in the process of auditing HOYA for royalties. And Syneron is not in United State selling, but apparently they have their own issue overseas.

And Fotona, they are selling and they are obviously essentially are suppose to pay us royalties. And they have made us some offers that we at the moment have not accepted.

And we have our own issues with Fotona in Europe. And so we are looking at that, because we are very strong in protecting IP portfolio.

And for what we know, Fotona is for sale from the Slovenian government, as has been offered the company to us from a representative of the government.

So that is the situation and we don't know what is going to happen to Fotona if it's going to be sold or not. But for sure we will assert our IP portfolio with them, and they already have been put on notice of that.

You have virtually no competition. To speak up, why haven't we seen an acceleration in sales ex the Schein, we're realizing that.

But it's more a question about international sales. I mean do you anticipate that.

I mean if there's a recall on Syneron product 400 systems. What is the dentist going to do, if there's a recall?

He's got to buy a system. He's got to buy it from someone and it seems that you're the only guy left.

You said it, I didn’t say it but the same thing for Hoya. I mean, if you are a HOYA user, what you're going to do?

Well, again, we are looking at these opportunities and we're doing everything we can, but these are very recent event. I'm talking about very, very recent events.

And part of the opportunities that BIOLASE has, clearly, the fields has never been cleared up as it is now or ever in the history of BIOLASE selling dental lasers.

So we are very pleased that there's been sort of a clearing up of the field. And frankly, the clearing up of a field that doesn't come in our opinion from the fact that laser dentistry is not well-accepted, is that nobody could really compete with Waterlase technology, because the erbium YAG is not enough.

The Waterlase technology, that is our technology, is more efficient than any other technology.

Just a couple of quick things. One of the companies that you didn't mention in terms of the competitive landscape is AMD.

And I was just wondering, if there are any consequence at all, given where those units are manufactured and what the quality of the units are? Because I think that once we talk about AMD then we effectively would have talked about virtually every competitor.

I'm not aware of any competitor that's really left?

You're correct, Chris. Well, AMD really only manufactures low-end value.

They do not manufacture a all-tissue or hard tissue laser. Their lasers are sold around $3,000.

They are manufactured in China from what we know. And they haven't introduced any new product for quite some time.

It was interesting to see their boot being very, very marginal from the large boot that they had previously at the Chicago Dental Show.

So I frankly do not see as comparing ourselves in any shape of form to AMD. I think that they really are targeting the very, very low-end of the market and for the diode only.

And again, if they would like to enter the erbium YAG market, they would have to pay us royalties. And they would have to have essentially our permission to do so.

So the fact is that i.e., don't really consider them as a strong competitor. It is essentially a marketing machine with very little technology there.

And so I think that the field is quite clear, frankly.

Second thing I want to talk about is whether Gordon Christensen has had a chance to review the iPlus, whether that will be coming out in any journal articles that he writes?

That's frankly kind of a confidential. I can't really comment on that one Chris.

Well, let me just ask you just a general question. Is Gordon predisposed to be positive towards lasers in general?

Because he tends to talk about themes, when he does review individual product, but he also is instrumental in pushing themes. So do you know whether he's pro-laser or not pro-laser, or does he typically just stick to product-by-product?

Our understanding is that he's opening up very much towards lasers.

Next thing is the P&G relationship, could you just talk. And if you give us any kind of update on that whether it's continued to move forward?

It's moving forward in a very positive manner. It's a productive collaboration and I just have to leave it at that.

Next thing for you, Fred, is I'm just wondering if you could give us an update on Richard Whipp had come in and really made some significant changes in terms of the manufacturing processes and procedures down on the manufacturing floor. I remember, when you first came on board I think it was taking literally weeks from the time that you got an order to the time that that order could be shipped.

So what's the manufacturing convergence cycle now? And how much more improvements can be made on the manufacturing?

In other words, there comes a point where you've leaned out the processes as lean as they can get. And now the only thing left to boost up the margins is really higher volumes.

So where are we in that?

I think when you get to lean manufacturing, you have a bit of a ramp up in your cost. And then you sort of level off and then you start the lean process.

So we're on the downward slope of that graph. So we reach the peak in some point, in late 2011.

And now we are starting the lean things out. We’ve reconstituted the production for.

We have a whole new layout and a flow, and with work construction, all kinds of wonderful things to help with the production levels down there.

And I would expect probably by mid-2012 will be leaned out, so to speak. And we are also positioning for the future, so we can duplicate lines now and in order to ramp up production in certain areas, that's like sort of the next agenda there.

But we're very, very happy with the progress we've made in our manufacturing process, in our supply chain.

So on the supply side, at this point, you have the redundant suppliers that you need and have you renegotiated where necessary all the supply agreements with the suppliers, so that you get them at the advantageous prices?

That's a very, very broad-based question. Obviously, we are making efforts to rebuild relationships with our suppliers.

In many cases, we have and we're very, very happy with that. In other cases, we have haven't.

So we've looked for additional or alternative suppliers. And one thing, Rick has brought along with our engineering group.

Rick has a tremendous amount of resources out there and he's been able to find us some really nice alternative to what we've been using in the past.

And I do want to circle back, Chris, you did mentioned about time to ship or getting product out the door. And we can pretty much ship.

We have an inventory in stock of certain products and colors. And we can ship pretty much anything within 48 hours now.

So we're very proud about that.

Also, again, part of building this foundation in 2011 for the new BIOLASE has been establishing a very strong collaboration between the R&D department and the manufacturing department. Because, before things that were engineered in a way that pleased the R&D department and then, okay, go ahead and build this.

And that doesn't happen anymore. There is a very strong collaboration that brings, clearly, the advantage of over time increased gross margins and the reliability in all senses from reliability of the machine and also how clearly the supply chain.

So it sounds to me at this point that you’re really in a blocking and tackling mode. This is really now all about execution.

The competitors have cleared themselves out. The issues with Schein are now behind you.

You have a very large number of products that you're going to be putting through the FDA process and we'll see when those get released. You have a flagship product that broke the barrier that dentists were constantly complaining about, which is that the laser wasn't as fast as a high speed handpiece.

So you conquered that. That's out of the way.

At this point, it really sounds to me like it's a story of leveraging your brand, increasing awareness amongst the dentists of the benefits of lasers, hiring enough sales people, getting the word out and then just sell it. I mean it's all because your manufacturing isn't an issue anymore.

Your supply chain isn't an issue more. The distributors aren't an issue anymore.

I mean it's sort of like you go down the block and say, okay, what are the issues that what this company was facing. It just sounds like this is now just the 2012, is really just about pure execution.

Again, it's not a lot of headwinds, other than just market dynamics in general. You know, how fast will dentists adopt a revolutionary technology.

Although, it's been around from quite some time, is that an accurate depiction of where the company is?

All you said is what I would have said but I can summarize that we have cleared the path in 2011. And that we feel that now the real BIOLASE will be seen in 2012 and moving forward.

So yes, all that you said is correct. And it's all about execution.

Clearly, like any other company we're worried about the general economic environment. We have to face it and Q4 was affected also in part by what it was happening in Europe, has affected the European sales, has affected Asian sales.

We all know Asia depends a lot in exports to the European market. So while United States is showing some signs of North America in general, some sign of recovering.

We had essentially the 2008 crisis happening in Europe in Q4. So clearly we monitor.

That is my biggest worry of all that general economic environment, but rather than that I'm extremely confident that laser dentistry and Waterlase dentistry is going to be recognized over time as the standard care in dentistry and that laser dentistry is only way to grow.

Last question, real quick and that is, what is the next set of shows? I mean, June we have the big World Laser Institute that you will be running.

The ADA is way later in the year I think is that September or October. What's left now that you get past the Chicago Midwinter, what are the other shows that are still to come?

Or, how does the calendar layout from here forward? Because I presume that there is a lot of activity that happens at these shows.

Yes. The fact is that, Chris, the internet has changed many aspects of world and the business and has affected also the tradeshows.

And so the attendance has come down at tradeshows and but if the Chicago used to be a 4 day tradeshow but now its limited to 3 if the attendances down across all tradeshows.

So we are reviewing that because we use to go to many, many of those in the past and I've reduced them to more or less 10. And we are reviewing that just as to speak to maybe reduce it to just a 4 or5 major and it's just because it is more productive to us to go to the smaller regional ones because they cost far less, they are much easier to organize and they are very effective.

And instead of these major shows that represent a large investment.

And yes there is a return, we sell, there is no doubt. But it is also a nice ticket, a nice bill to pay for these large dental shows and I'm trying to rationalize where basically I have the highest return.

So instead of going to 10, 12 we might it will go just to the 4 to 5 major ones and go more to redirect that money to the regional ones.

Yes, a couple calls ago I was criticized for asking way too many questions, so I just I only going to ask one. And I appreciate you guys are giving us all the time.

And maybe I shouldn't ask any, because the last caller outlined some nice progress report there. I just wanted to circle back to second quarter of '11 there was an issue that Henry Schein kind of pulled a switch right at the end of the quarter and ordered Waterlases rather than the iLases, which have been caused a miss of that quarter.

So do I have a correct that they ordered, so they weren't ordering Water MDs, were they, they were ordering the iLase or the iPlus?

Yes.

But they were ordering iPlus even though they had what turned out to be well over 300 MDs in inventory?

Yes. There was the new a product and obviously, like any distributor of standing like they are they want to have the latest and the best.

Yes. I understand that, but they ended up ordering an awful lot.

They ordered more than you were expecting, that's for sure. And so I just want to circle back on the question that someone did asked before, do you have visibility in their, iPlus inventory, and we can be pretty convinced that a repeat is not going to happen?

I don't see frankly any repeats of anything anymore the situation with Schein that was worrying Schein and was worrying us, was really the MD. There is nothing else that worries us with Schein.

They have a very, very physiological inventory of iPlus that are selling. And so basically any distributor always will have a certain amount of inventory they don't just buy one unit at a time.

So they place a quarterly order and then they filter those orders through the quarter and then they reorder. Also, interesting enough with Schein, we have 7 international territories that are doing very well, and so we will continue with Schein also internationally.

Again, we have cleared the air. The Schein has a world-wide distribution agreement now instead we can pick and choose.

We can do whatever we want. When to be with them and how and we can give them minimum quantitative.

We can do whatever we deem appropriate to do for our business and there are certain international market that are very well organized and performing well. So we're very pleased to deal with them in other markets as we deal with other dealers or we are direct.

Again, I want to make clear that there is no backlog with Schein in any shape or form and the fact is that there was a problem caused by past management and also in past it closed by the financial crises, an economic crisis of 2008. And so new the management in Schein had to find some ways to resolve this past issue and I think that that was resolved in an optimal way, I would say for both parties because like I said now everything is normalized.

It sounds like you're no longer providing guidance for BIOLASE imaging for 2012. Last year you talked about it being anywhere from $10 million to $25 million in revenue.

One, is it fair to say that the guidance is now below $10 million and why is it that you could give us $25 million worth of the guidance and now you give us any guidance? What happened there?

I frankly don't recall of this $25 million but I'm a human being so I might have the lack of memory I don't know but I don't recall $25 million. What I'm saying is that I like to cautious in guidance, given the fact that unfortunately there has been a clear underperformance on our part in predicting the future and so there is an economic recession.

There are difficulties in getting credit. And those two elements are elements that they play a role.

We essentially are a capital-equipment company, and capital-equipment software's when the economic environment is tough and when credit is tough to get. Only 10% of the sales for instance in the laser field, they are done by cash usually they give us their credit card and 90% is done through leases.

So for the low end in digital imaging for the low-priced items I believe is going to be mostly credit cards or the leases over certain levels of purchases but for the large system, most likely it's going to be close to 100% leases, I just want to be cautious, and that’s it.

Number one, you said that the name was cleared for BIOLASE's DaVinci, does that mean that it has passed FDA approval or is there still something to go on as far as approval process there.

No it's just a trade mark. So this FDA has nothing to do with it, it's a trademark issue.

Is there any approval process that has to be done on the DaVinci?

No that is taking care from the manufacturer and then has to be cleared under our name but it is more of a formality than anything else.

So you will be in full position to sell. And then secondly, Fred, can you give me guidance on in the receivables you had about close to $8.9 million.

Was some portion of that from Schein that will be used to pay for the repurchase of the Waterlase?

They're going to pay a portion or we're going to pay a portion by then canceling that or forgiving that that AR to us. A portion of that AR relates to perhaps purchases in Q4 and then a portion relates to some purchases in Q1.

And can you give me an approximate, if you back this out, what the DSOs would be?

We're not specifying what that balance is. It's not something we're permitted to do through the terms of the agreement.

Just really quick, on the sales side, are we expecting any new sales initiatives, now that Bill has been placed in charge? And also, your sales and marketing it looks like it ticked up rather considerably in the fourth quarter.

Should we use the fourth quarter as a base going forward or where there special items in that number?

Well, first, George, you're thanking us, we're thanking you, all of you for the interest that you have towards BIOLASE. I am going to have Fred to answer, that question is more of a technical question.

Well, in general, you're on the right track George, but there are some things in Q4 that probably won't be repeated in the near term. There were some additional expenses related to the compensation package for the sales people.

And as we go through 2012 and reconstitute the commission plan, we'll see that more of a—smoothed out into our quarterly basis and not so much towards the end of the year. And we also had a few severance payments made in Q4 that would have gone through sales and marketing.

That was part of reshuffling of the sales and marketing department.

I want to thank very much all of you for attending our Q4 and yearend conference call. Again, thank you for the interest in BIOLASE and thank you for the interest in laser dental technology that is really the future of dentistry.

Dentistry affects the life of every person. And the goal of BIOLASE is to make dentistry and medicine become high-tech and to improve the quality of how surgery is performed on the human body.

So it's a great goal that we have. And thank you for your interest in this endeavor of ours with your help and interest.

With that, we will talk again for the Q1 call. Thank you very much.