Note 17

Business Segments:

The Company organized its business into three 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 usage of its equipment by dermatologists to perform XTRAC procedures. 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 had announced that it would 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 and other financing income (expense), net, is also not allocated to the operating segments.

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

Year Ended December 31, 2018

	Dermatology Recurring Procedures			Dermatology Procedures Equipment			Dermatology Imaging			TOTAL
Revenues	$	21,053		$	8,802		$	-		$	29,855
Costs of revenues		7,378			5,357			-			12,735
Gross profit		13,675			3,445			-			17,120
Gross profit %		65.0	%		39.1	%		-	%		57.3	%

Allocated operating expenses:
Engineering and product development		855			210			-			1,065
Selling and marketing expenses		9,249			1,375			-			10,624

Unallocated operating expenses		-			-			-			8,786
		10,104			1,585			-			20,475
Income (loss) from operations		3,571			1, 860			-			(3,355	)

Interest expense, net		-			-			-			(1,142	)

Other income, net		-			-			-			200

Income (loss) before income taxes	$	3,571		$	1,860		$	-		$	(4,297	)

Year Ended December 31, 2017

	Dermatology Recurring Procedures (audited)			Dermatology Procedures Equipment (audited)			Dermatology Imaging			TOTAL (as restated)
Revenues	$	22,954		$	8,792		$	17		$	31,763
Costs of revenues		8,337			4,436			225			12,998
Gross profit		14,617			4,356			(208	)		18,765
Gross profit %		63.7	%		49.5	%		-1223.5	%		59.1	%

Allocated operating expenses:
Engineering and product development		1,431			279			1			1,711
Selling and marketing expenses		9,477			1,772			-			11,249

Unallocated operating expenses		-			-			-			7,604
		10,908			2,051			1			20,564
Income (loss) from operations		3,709			2,305			(209	)		(1,799	)

Interest expense, net		-			-			-			(3,196	)
Change in fair value of warrant liability		-			-			-			595
Change in fair value of embedded conversion feature											3,158
Other income, net		-			-			-			17
Loss on extinguishment of debentures		-			-			-			(20,160	)

Income (loss) before income taxes	$	3,709		$	2,305		$	(209	)	$	(21,385	)

As of December 31, 2018 and 2017, total assets by reportable segment were as follows:

	December 31,
Assets:	2018		2017 (as restated)
Dermatology Recurring Procedures	$	26,789	$	30,174
Dermatology Procedures Equipment		3,476		4,451
Other unallocated assets		17,242		4,506
Consolidated total	$	47,507	$	39,131

Substantially all long-lived assets were located in domestic markets for both of the years ended December 31, 2018 and 2017.