Several class actions have been filed against dental laser system manufacturer Biolase Technology, Inc. (Nasdaq:BLTI), and certain of its officers and directors by stockholders who purchased the company's common stock between October 29, 2003, and July 16, 2004. The actions claim that the defendants violated federal securities laws by issuing a series of material misrepresentations to the market over this time period, thereby artificially inflating the price of the company's securities. The stockholders seek to recover compensatory damages for the loss of value of their stock.

The complaints allege that, during the applicable period, the defendants caused Biolase to recognize revenue in advance of earning it and failed to record adequate reserves for returns, causing the company’s financial results to be inflated. This inflation was vital to the company because it allowed Biolase to complete a secondary stock offering of 2.8 million shares in February 2004 at $18.80 per share.

During the same time period, the defendants allegedly knew that Biolase was not performing nearly as well as represented in its public announcements and SEC filings. The true facts, which the defendants allegedly knew but concealed from the investing public, were:

• The company's Waterlase technology was not gaining market share, and demand for the product was not increasing at the rates represented by the defendants;

• Biolase had introduced a lower-priced entry level laser which was cannibalizing the company's sales of its more expensive technology, making the company’s earnings reports false and misleading;

• The defendants concealed the decreasing demand of its more expensive technology by granting extended payment terms and price breaks to customers; and

• The company would not achieve the earnings growth as forecasted.

On July 16, 2004, after the markets closed, Biolase reported its preliminary results for the second quarter of 2004, revealing its financial difficulties. When the improper accounting was revealed, the company’s stock declined to $8.78 on volume of 4.8 million shares. Within two weeks, the company’s CFO resigned.

If you purchased securities issued by Biolase during the applicable period, you may request appointment by the court as a lead plaintiff if you do so by October 5, 2004. A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the court must determine that your claim is typical of the claims of other class members, and that you will adequately represent the class. Under certain circumstances, one or more class members may together serve as lead plaintiffs. Your ability to share in any recovery is not affected by the decision whether or not to serve as a lead plaintiff. You may retain any counsel of your choice to serve you in this action, or you may choose to do nothing, and remain in the class as a silent member.