Note 12

Business Segments:

The Company has organized its business into two operating segments to present 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. 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, 2019

	Dermatology Recurring Procedures			Dermatology Procedures Equipment			TOTAL
Revenues	$	5,839		$	1,886		$	7,725
Costs of revenues		1,733			1,082			2,815
Gross profit		4,106			804			4,910
Gross profit %		70.3	%		42.6	%		63.6	%

Allocated operating expenses:
Engineering and product development		198			37			235
Selling and marketing		2,771			187			2,958

Unallocated operating expenses		-			-			2,700
		2,969			224			5,893
Income (loss) from operations		1,137			580			(983	)

Interest expense, net		-			-			(145	)
Income (loss) before income taxes	$	1,137		$	580		$	(1,128	)

Six Months Ended June 30, 2019

	Dermatology Recurring Procedures			Dermatology Procedures Equipment			TOTAL
Revenues	$	11,151		$	4,057		$	15,208
Costs of revenues		3,526			2,163			5,689
Gross profit		7,625			1,894			9,519
Gross profit %		68.4	%		46.7	%		62.6	%

Allocated operating expenses:
Engineering and product development		440			99			539
Selling and marketing		5,539			485			6,024

Unallocated operating expenses		-			-			5,180
		5,979			584			11,743
Income (loss) from operations		1,646			1,310			(2,224	)


Interest expense, net		-			-			(280	)

Income (loss) before income taxes	$	1,646		$	1,310		$	(2,504	)

Three Months Ended June 30, 2018

	Dermatology Recurring Procedures			Dermatology Procedures Equipment			TOTAL
Revenues	$	5,022		$	2,366		$	7,388
Costs of revenues		1,919			1,630			3,549
Gross profit		3,103			736			3,839
Gross profit %		61.8	%		31.1	%		52.0	%

Allocated operating expenses:
Engineering and product development		210			59			269
Selling and marketing		2,168			210			2,378

Unallocated operating expenses		-			-			2,411
		2,378			269			5,058
Income (loss) from operations		725			467			(1,219	)

Interest expense, net		-			-			(328	)
Change in fair value of warranty liability		-			-			(23	)
Other expense, net		-			-			(19	)
Income (loss) before income taxes	$	725		$	467		$	(1,589	)

Six Months Ended June 30, 2018

	Dermatology Recurring Procedures			Dermatology Procedures Equipment			TOTAL
Revenues	$	9,792		$	4,334		$	14,126
Costs of revenues		3,908			2,985			6,893
Gross profit		5,884			1,349			7,233
Gross profit %		60.1	%		31.1	%		51.2	%

Allocated operating expenses:
Engineering and product development		484			123			607
Selling and marketing		4,384			865			5,249

Unallocated operating expenses		-			-			4,295
		4,868			988			10,151
Income (loss) from operations		1,016			361			(2,918	)

Interest expense, net		-			-			(691	)

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

Other income, net		-			-			1

Income (loss) before income taxes	$	1,016		$	361		$	(3,630	)