Note 14

Business Segments:

The Company organized its business into two operating segments to better align its organization based upon the Company's management structure, products and services offered, markets served and types of customers, as follows: The Dermatology Recurring Procedures segment derives its revenues from the XTRAC procedures performed by dermatologists. The Dermatology Procedures Equipment segment generates revenues from the sale of equipment, such as lasers and lamp products. The Dermatology Imaging segment generated revenues from the sale and usage of imaging devices. The Company has announced that it will no longer support the imaging devices effective September 30, 2017 thus there will be minimal continuing revenues for this segment. Management reviews financial information presented on an operating segment basis for the purposes of making certain operating decisions and assessing financial performance.

Unallocated operating expenses include costs that are not specific to a particular segment but are general to the group; included are expenses incurred for administrative and accounting staff, general liability and other insurance, professional fees and other similar corporate expenses. Interest expense and other income (expense), net are also not allocated to the operating segments.

The following tables reflect results of operations from our business segments for the periods indicated below:

Three Months Ended June 30, 2018 (unaudited)

	Dermatology Recurring Procedures			Dermatology Procedures Equipment			TOTAL
Revenues	$	5,167		$	2,366		$	7,533
Costs of revenues		1,881			1,618			3,499
Gross profit		3,286			748			4,034
Gross profit %		63.6	%		31.6	%		53.6	%

Allocated operating expenses:
Engineering and product development		210			59			269
Selling and marketing		2,170			208			2,378

Unallocated operating expenses		-			-			2,333
		2,380			267			4,980
Income (loss) from operations		906			481			(946	)

Interest expense, net		-			-			(328	)

Change in fair value of warrant liability		-			-			(23	)

Other expense, net		-			-			(18	)

Income (loss) before income taxes	$	906		$	481		$	(1,315	)

Three Months Ended June 30, 2017 (unaudited)

	Dermatology Recurring Procedures			Dermatology Procedures Equipment			TOTAL
Revenues	$	5,971		$	2,500		$	8,471
Costs of revenues		1,843			1,330			3,173
Gross profit		4,128			1,170			5,298
Gross profit %		69.1	%		46.8	%		62.5	%

Allocated operating expenses:
Engineering and product development		340			83			423
Selling and marketing		2,330			516			2,846

Unallocated operating expenses		-			-			1,720
		2,670			599			4,989
Income from operations		1,458			571			309

Interest expense, net		-			-			(1,575	)

Change in fair value of warrant liability		-			-			128

Other income, net		-			-			6

Income (loss) before income taxes	$	1,458		$	571		$	(1,132	)

The following tables reflect results of operations from our business segments for the periods indicated below:

Six Months Ended June 30, 2018 (unaudited)

	Dermatology Recurring Procedures			Dermatology Procedures Equipment			TOTAL
Revenues	$	9,665		$	4,334			13,999
Costs of revenues		3,830			2,963			6,793
Gross profit		5,835			1,371			7,206
Gross profit %		60.4	%		31.6	%		51.5	%

Allocated operating expenses:
Engineering and product development		485			122			607
Selling and marketing		4,386			863			5,249

Unallocated operating expenses		-			-			4,136
		4,871			985			9,992
Income (loss) from operations		964			386			(2,786	)

Interest expense, net		-			-			(691	)

Change in fair value of warrant liability		-			-			(22	)

Other income , net		-			-			1

Income (loss) before income taxes	$	964		$	386		$	(3,498	)

Six Months Ended June 30, 2017 (unaudited)

	Dermatology Recurring Procedures			Dermatology Procedures Equipment			TOTAL
Revenues	$	11,527		$	4,041		$	15,568
Costs of revenues		3,885			2,021			5,906
Gross profit		7,642			2,020			9,662
Gross profit %		66.3	%		50.0	%		62.1	%

Allocated operating expenses:
Engineering and product development		756			142			898
Selling and marketing		5,104			717			5,821

Unallocated operating expenses		-			-			3,321
		5,860			859			10,040
Income (loss) from operations		1,782			1,161			(378	)

Interest expense, net		-			-			(2,921	)

Change in fair value of warrant liability		-			-			(4	)

Other income, net		-			-			6

Income (loss) before income taxes	$	1,782		$	1,161		$	(3,297	)