10-Q

United states

Securities and exchange commission

WashingTON, d.c. 20549

Form 10-Q

Mark One

[X]	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
	For the quarterly period ended September 30, 2018
[  ]	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
	For the transition period from __________ to __________

Commission file number: 0-49638

ICTV BRANDS INC.

(Exact name of small business issuer as specified in its charter)

Nevada	76-0621102
State or other jurisdiction of incorporation or organization	IRS Employer Identification No.

489 Devon Park Drive, Suite 306

Wayne, PA 19087

(Address of principal executive offices)

(484) 598-2300

(Issuer’s telephone number)

N/A

(Former Name or Former Address, if Changed Since Last Report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes [X] No [  ]

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	[  ]		Accelerated filer	[  ]
Non-accelerated filer	[  ]	(Do not check if a smaller reporting company)	Smaller reporting company	[X]
Emerging growth company	[  ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes [  ] No [X]

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: As of November 15, 2018, the Issuer had 53,140,700 shares of common stock, par value $0.001 per share, issued and outstanding.

Transitional Small Business Disclosure Format (Check one): Yes [  ] No [X]

Page 2 of 51

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS	3
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	37
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	44
ITEM 4.	CONTROLS AND PROCEDURES	45
PART II - OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	49
ITEM 1A.	RISK FACTORS	49
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	49
ITEM 3.	DEFAULTS ON SENIOR SECURITIES	49
ITEM 4.	MINE SAFETY DISCLOSURES	49
ITEM 5.	OTHER INFORMATION	49
ITEM 6.	EXHIBITS	50
SIGNATURES		51

Page 3 of 51

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Condensed Consolidated Balance Sheets as of September 30, 2018 (unaudited) and December 31, 2017	4
Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2018 and 2017 (unaudited)	5
Condensed Consolidated Statement of Shareholders’ Equity for the nine month periods ended September 30, 2018 and 2017 (unaudited)	6-7
Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2018 and 2017 (unaudited)	8
Notes to the Condensed Consolidated Financial Statements (unaudited)	9 - 36

Page 4 of 51

ICTV BRANDS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	September 30, 2018			December 31, 2017
	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	582,697		$	1,258,360
Accounts receivable, net of allowances for returns and doubtful accounts of $869,162 and $913,303 respectively		2,208,095			3,576,376
Inventories		5,740,357			5,631,857
Prepaid expenses and other current assets		649,146			167,914
Total current assets		9,180,295			10,634,507
Property and equipment, net		766,566			887,093
Intangible assets, net		1,723,512			2,248,657
Total assets	$	11,670,373		$	13,770,257
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities	$	5,633,873		$	5,911,778
Long-term debt to related party		916,145			722,908
Notes payable		426,130			-
Deferred revenue		345,664			403,844
Deferred consideration due to related party		86,392			241,379
Other liabilities- net of discount		293,620			369,563
Total current liabilities		7,701,824			7,649,472
Long-term debt to related party, net of current portion		373,095			1,074,141
Notes payable, net of current portion		107,580			-
Deferred revenue – long term		158,726			194,534
Deferred consideration - due to related party, net of current portion		1,035,788			970,688
Other liabilities – long term, net of discount		228,040			371,149
Total long term liabilities		1,903,229			2,610,512
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY:
Preferred stock, $0.001 par value, 20,000,000 shares authorized, of which 210,000 shares designated as Series A, 210,000 and 0 shares issued and outstanding as of September 30, 2018 and December 31, 2017, respectively (Liquidation Preference of $416,632 as of September 30, 2018)		210			-
Common stock, $0.001 par value, 100,000,000 shares authorized, 53,140,700 and 52,340,700 shares issued and outstanding as of September 30, 2018 and December 31, 2017, respectively		42,930			42,130
Additional paid-in capital		20,886,637			20,198,137
Accumulated other comprehensive income		52,548			174,875
Accumulated deficit		(18,917,005	)		(16,904,869	)
Total shareholders’ equity		2,065,320			3,510,273
Total liabilities and shareholders’ equity	$	11,670,373		$	13,770,257

See accompanying notes to condensed consolidated financial statements

Page 5 of 51

ICTV BRANDS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF

OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

	For the three months ended						For the nine months ended
	September 30, 2018			September 30, 2017			September 30, 2018			September 30, 2017
NET SALES	$	5,483,909		$	7,559,754		$	21,466,771		$	23,156,949
COST OF SALES		1,956,153			3,049,989			6,580,809			7,995,170
GROSS PROFIT		3,527,756			4,509,765			14,885,962			15,161,779
OPERATING EXPENSES:
General and administrative		1,680,338			2,488,376			5,945,801			7,643,917
Selling and marketing		2,916,372			4,102,346			10,263,180			11,346,321
Total operating expenses		4,596,710			6,590,722			16,208,981			18,990,238
OPERATING LOSS		(1,068,954	)		(2,080,957	)		(1,323,019	)		(3,828,459	)
OTHER INCOME/(EXPENSE), NET
Interest expense		(189,413	)		(164,377	)		(513,290	)		(215,147	)
Miscellaneous (expense)/income, net, including gain on settlement of contingent consideration in 2017		(4,326	)		1,970,753			(26,883	)		2,030,727
LOSS BEFORE PROVISION FOR INCOME TAX		(1,262,693	)		(274,581	)		(1,863,192	)		(2,012,879	)
PROVISION FOR INCOME TAXES		30,944			112,277			148,944			182,277
NET LOSS	$	(1,293,637	)	$	(386,858	)	$	(2,012,136	)	$	(2,195,156	)
OTHER COMPREHENSIVE (LOSS)/INCOME:
Foreign currency translation adjustment		(21,036	)		112,223			(122,327	)		208,924
COMPREHENSIVE LOSS	$	(1,314,673	)	$	(274,635	)	$	(2,134,463	)	$	(1,986,232	)
NET LOSS PER SHARE
BASIC AND DILUTED	$	(0.02	)	$	(0.01	)	$	(0.04	)	$	(0.04	)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
BASIC AND DILUTED		53,132,004			52,321,826			52,633,008			49,518,478

See accompanying notes to condensed consolidated financial statements

Page 6 of 51

ICTV BRANDS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018

(Unaudited)

	Preferred Stock				Common Stock				Additional		Accumulated Other
	$0.001 par value				$0.001 par value				Paid-In		Comprehensive			Accumulated
	Shares		Amount		Shares		Amount		Capital		Income			Deficit			Totals
Balance at January 1, 2018		-	$	-		52,340,700	$	42,130	$	20,198,137	$	174,875		$	(16,904,869	)	$	3,510,273
Share based compensation		-		-		-		-		30,345		-			-			30,345
Foreign currency translation adjustment		-		-		-		-		-		83,847			-			83,847
Net income		-		-		-		-		-		-			70			70
March 31, 2018		-		-		52,340,700		42,130		20,228,482		258,722			(16,904,799	)		3,624,535
Share based compensation		-		-		700,000		700		148,645		-			-			149,345
Issuance of preferred stock		210,000		210		-		-		402,990		-			-			403,200
Foreign currency translation adjustment		-		-		-		-		-		(185,138	)		-			(185,138	)
Net loss		-		-		-		-		-		-			(718,569	)		(718,569	)
June 30, 2018		210,000		210		53,040,700		42,830		20,780,117		73,584			(17,623,368	)		(3,273,373	)
Share based compensation		-		-		100,000		100		106,520		-			-			106,620
Foreign currency translation adjustment		-		-		-		-		-		(21,036	)		-			(21,036	)
Net loss		-		-		-		-		-		-			(1,293,637	)		(1,293,637	)
Balance at September 30, 2018		210,000	$	210		53,140,700	$	42,930	$	20,886,637	$	52,548		$	(18,917,005	)	$	2,065,320

See accompanying notes to condensed consolidated financial statements.

Page 7 of 51

ICTV BRANDS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017

(Unaudited)

	Preferred Stock				Common Stock				Additional			Accumulated Other
	$0.001 par value				$0.001 par value				Paid-In			Comprehensive			Accumulated
	Shares		Amount		Shares		Amount		Capital			Income			Deficit			Totals
Balance at January 1, 2017		-	$	-		28,343,007	$	18,132	$	11,546,804		$	-		$	(10,276,478	)	$	1,288,458
Share based compensation		-		-		-		-		81,959			-			-			81,959
Issuance of stock for asset purchase		-		-		2,500,000		2,500		847,500			-			-			850,000
Issuance of stock, net of offering costs of $17,070		-		-		20,588,243		20,588		6,962,342			-			-			6,982,930
Issuance of stock for compensation		-		-		600,000		600		335,400			-			-			336,000
Cashless exercise of options		-		-		22,475		23		(23	)		-			-			-
Other comprehensive loss		-		-		-		-		-			(5,417	)		-			(5,417	)
Net loss		-		-		-		-		-			-			(367,618	)		(367,618	)
March 31, 2017		-		-		52,053,725		41,843		19,773,982			(5,417	)		(10,644,096	)		9,166,312
Share based compensation		-		-		-		-		77,099			-			-			77,099
Exercise of options		-		-		250,000		250		55,309						-			55,559
Other comprehensive income		-		-		-		-		-			102,118			-			102,118
Net loss		-		-		-		-		-			-			(1,440,680	)		(1,440,680	)
June 30, 2017		-		-		52,303,725		42,093		19,906,390			96,701			(12,084,776	)		7,960,408
Share based compensation		-		-		-		-		64,287			-			-			64,287
Cashless exercise of options		-		-		20,307		20		(20	)		-			-			-
Other comprehensive income		-		-		-		-		-			112,223			-			112,223
Net loss		-		-		-		-		-			-			(386,858	)		(386,858	)
September 30, 2017		-	$	-		52,324,032	$	42,113	$	19,970,657		$	208,924		$	(12,471,634	)	$	7,750,060

See accompanying notes to condensed consolidated financial statements.

Page 8 of 51

ICTV BRANDS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND SEPTEMBER 30, 2017

(Unaudited)

	September 30, 2018			September 30, 2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(2,012,136	)	$	(2,195,156	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		702,236			820,792
Bad debt expense		923,559			903,710
Share based compensation		286,310			223,345
Issuance of stock for compensation		-			336,000
Change in fair value of contingent consideration		-			(48,035	)
Loss on disposal of property and equipment		-			6,197
Non cash interest expense		76,475			105,459
Gain on settlement of contingent consideration		-			(1,969,245	)
Change in assets and liabilities
Accounts receivable		530,634			(4,113,466	)
Inventories		(196,555	)		922,503
Prepaid expenses and other current assets		(493,843	)		114,171
Accounts payable and accrued liabilities		(69,192	)		3,025,709
Deferred revenue		(94,249	)		(178,553	)
Net cash used in operating activities		(346,761	)		(2,046,569	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(56,592	)		(171,196	)
Cash paid for acquisition of PhotoMedex, Inc.		-			(5,000,000	)
Net cash used in investing activities		(56,592	)		(5,171,196	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of DermaWand® asset purchase agreement		(225,000	)		(150,000	)
Proceeds from issuance of common stock, net of offering costs		-			6,982,930
Proceeds from exercise of options		-			55,559
Proceeds from note payable- Amazon		145,000			-
Proceeds from note payable from related party		100,000			-
Repayments of note payable to Amazon		(10,008	)
Repayments of long-term debt to related party		(507,809	)		(87,441	)
Payments of deferred consideration for asset acquisition		(160,414	)		(14,583	)
Proceeds from issuance of preferred stock		403,200			-
Proceeds from long-term debt to related party		-			2,000,000
Settlement payment made for PhotoMedex Acquisition		-			(2,000,000	)
Net cash (used in) provided by financing activities		(255,031	)		6,786,465
Effect of exchange rates on cash and cash equivalents		(17,279	)		1,683
NET  DECREASE IN CASH AND CASH EQUIVALENTS		(675,663	)		(429,617	)
CASH AND CASH EQUIVALENTS, beginning of the period		1,258,360			1,390,641
CASH AND CASH EQUIVALENTS, end of the period	$	582,697		$	961,024
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Taxes paid	$	-		$	-
Interest paid	$	394,797		$	-
SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITY:
Cashless exercise of options	$	-		$	43
Conversion of accounts payable to note payable	$	298,716			-
Acquisition of PhotoMedex on January 23, 2017
Fair value of assets acquired	$	-		$	9,198,043
Fair value of deferred consideration		-			(4,198,043	)
Cash paid for acquisition	$	-		$	5,000,000
Asset Acquisition of Ermis Labs on January 23, 2017
Cost of assets acquired	$	-		$	1,981,822
Present value of deferred consideration		-			(1,131,822	)
Issuance of common stock for asset purchase		-			(850,000	)
Cash paid for acquisition	$	-		$	-
Settlement of contingent consideration to PhotoMedex on July 12, 2017
Contingent consideration owed to PhotoMedex	$	-		$	3,579,760
Other receivables amount forgiven		-			(837,708	)
Payables extinguished		-			1,017,193
Settlement payment for PhotoMedex acquisition		-			(2,000,000	)
Assignment of deposit amount		-			210,000
Gain on settlement of contingent consideration	$	-		$	1,969,245

See accompanying notes to condensed consolidated financial statements.

Page 9 of 51

ICTV BRANDS INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2018 and 2017

(Unaudited)

Note 1 – Organization and Business of the Company and Liquidity

Organization and Nature of Operations

ICTV Brands Inc. (the “Company”, “we”, or “ICTV”), was organized under the laws of the State of Nevada on September 25, 1998. As of September 30, 2018, we have the following subsidiaries:

● Better Blocks International Limited, or (“BBI”), a New Zealand corporation;

● ICTV Brands Israel Limited., incorporated under the laws of Israel;

● ICTV Brands UK Limited., incorporated under the laws of the United Kingdom;

● ICTV Brands HK Limited, a private limited company limited by shares, incorporated under the laws of Hong Kong (ICTV Brands HK Limited was formally known as “Radiancy HK Limited” and was officially renamed to ICTV Brands HK Limited on July 31, 2017); and

● LK Technology Importaçăo E Exportaçăo LTDA, a private Sociedade limitada formed under the laws of Brazil (“LK Technology”).

● ICTV Brands Canada, Inc. incorporated under the Canada Business Corporations Act.

On January 23, 2017, ICTV Holdings, Inc., a Nevada corporation and the Company’s wholly-owned subsidiary (“ICTV Holdings”) completed the purchase of substantially all the assets of PhotoMedex, Inc., a Nevada corporation and its wholly-owned subsidiaries, Radiancy, Inc., PhotoTherapeutics Ltd., and Radiancy (Israel) Limited, (collectively, the “PHMD Sellers”), pursuant to an asset purchase agreement, dated October 4, 2016, by and among the Company, ICTV Holdings and the PHMD Sellers, as amended by the first amendment thereto dated January 23, 2017.

On November 16, 2017, the Company adopted a Plan of Merger pursuant to which, effective November 16, 2017, ICTV Holdings was merged with and into the Company, with the Company continuing as the surviving corporation, and each share of ICTV Holdings common stock outstanding immediately prior to the effective date was cancelled and extinguished.

On January 23, 2017 Ermis Labs, Inc., a Nevada corporation and the Company’s wholly-owned subsidiary (“Ermis Labs”) completed the purchase of substantially all the assets of Ermis Labs, Inc., a New Jersey corporation (“ELNJ”), pursuant to an asset purchase agreement, dated October 4, 2016, by and among the Company, Ermis Labs, ELNJ, and LeoGroup Private Debt Facility, L.P., a significant shareholder (related party), as amended by the first amendment thereto dated January 23, 2017.

On November 16, 2017, the Company adopted a Plan of Merger pursuant to which, effective November 16, 2017, Ermis Labs was merged with and into the Company, with the Company continuing as the surviving corporation, and each share of Ermis Labs common stock outstanding immediately prior to the effective date was cancelled and extinguished.

On July 12, 2018, the Company formed a wholly owned Canadian Entity under the Canada Business Corporations Act. ICTV’s Canadian Entity is incorporated under the name of ICTV Brands Canada, Inc.

Although our companies are incorporated in New Zealand, Nevada, Israel, United Kingdom, Hong Kong, Canada, and Brazil, our operations are currently run from our Wayne, Pennsylvania office.

Page 10 of 51

ICTV BRANDS INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2018 and 2017

(Unaudited)

Note 1 – Organization and Business of the Company and Liquidity (continued)

We develop, market and sell products through a multi-channel distribution strategy, including direct response television, digital marketing campaigns, live home shopping, traditional retail and e-commerce market places, and our international third-party distributor network. We offer primarily health, beauty and wellness products as well as various consumer products, including no!no!®, a Thermicon® hair removal device, DermaWand®, a skin care device that reduces the appearance of fine lines and wrinkles, and helps improve skin tone and texture, DermaVital®, a professional quality skin care line that effects superior hydration, the CoralActives^® brand of acne treatment and skin cleansing products, DermaBrilliance®, a skin care resurfacing device that helps reduce visible signs of aging, and Jidue®, a facial massager device which helps alleviate stress. We acquire the rights to our products that we market primarily via licensing agreements, acquisition and in-house development and sell both domestically and internationally. We are presently exploring other devices and consumable product lines currently under licensing agreements.

The goal of our strategy is to introduce our brands to the market through an omni-channel platform that includes but is not limited to direct to consumer, live home shopping, traditional retail, e-commerce market places, Hong Kong airlines, and international third-party distributor networks. Our objective is to have our portfolio of products sold through these channels to develop long lasting brands with strong returns on investments.

Liquidity and Going Concern

Our condensed consolidated financial statements have been prepared on a going concern basis, which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. We had a net loss of approximately $2,012,000 for the nine months ended September 30, 2018 and negative cash flows from operating activities of approximately $347,000. In addition, we have an accumulated deficit of approximately $18,917,000 as of September 30, 2018. Additional financing will be required for the Company to successfully implement its long-term growth strategy.

To increase profitability throughout the remainder of 2018 and 2019 and to maintain sufficient cash flow and liquidity, we continue to optimize media expenses to increase profitable sales,and have eliminated several positions within the Company throughout the year including our inhouse legal counsel position. We have also combined the marketing department with the operations team to improve internal efficiencies and decrease overhead costs. We continue to analyze our processes to determine where further overhead cost cutbacks can be made, and operations can be streamlined to further reduce expenditures.

Page 11 of 51

ICTV BRANDS INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2018 and 2017

(Unaudited)

Note 1 – Organization and Business of the Company and Liquidity (continued)

The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. The Company’s ability to raise additional capital through the future issuances of debt or equity is currently being addressed. The ability to obtain additional financing, the successful development of the Company’s contemplated plan of operations, or its ability to achieve profitable operations are necessary for the Company to continue operations. The ability to successfully resolve these factors raise substantial doubt about the Company’s ability to continue as a going concern. The condensed consolidated financial statements of the Company do not include any adjustments that may result from the outcome of these uncertainties.

Note 2 - Summary of significant accounting policies

Basis of Presentation

The unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial statements and within the rules of the Securities and Exchange Commission applicable to interim financial statements and therefore do not include all disclosures that might normally be required for financial statements prepared in accordance with generally accepted accounting principles. The accompanying unaudited condensed consolidated financial statements have been prepared by management without audit and should be read in conjunction with our condensed consolidated financial statements, including the notes thereto, appearing in our Annual Report on Form 10-K for the year ended December 31, 2017. In the opinion of management, all adjustments necessary for a fair presentation of the condensed consolidated financial position, consolidated results of operations and consolidated cash flows, for the periods indicated, have been made. The results of operations for the nine months ended September 30, 2018 are not necessarily indicative of operating results that may be achieved over the course of the full year.

Principles of consolidation

Our accompanying condensed consolidated financial statements include the accounts of our wholly-owned subsidiaries BBI, ICTV Brands UK Limited, ICTV Brands Israel Limited, ICTV Brands HK Limited and LK Technology and ICTV Brands Canada, Inc. from their initial acquisition dates. In October 2016, ICTV Holdings and Ermis Labs, Inc. were formed as holding companies for the asset purchase agreements that were entered into with PhotoMedex, Inc. and Ermis Lab, Inc. (See Note 3 - Business and Asset Acquisitions). On November 16, 2017, ICTV Holdings and Ermis Labs, Inc. were merged into ICTV Brands, Inc. All significant inter-company transactions and balances have been eliminated in consolidation.

Use of estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“US GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Management believes that the estimates utilized in preparing its consolidated financial statements are reasonable and prudent. The most significant estimates used in these condensed consolidated financial statements include the allowance for doubtful accounts, reserves for returns, inventory reserves, valuation allowance on deferred tax assets, valuation of intangibles, and share based compensation. Actual results could differ from these estimates.

Page 12 of 51

ICTV BRANDS INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2018 and 2017

(Unaudited)

Note 2 - Summary of significant accounting policies (continued)

Concentration of credit risk

Financial instruments, which potentially subject us to concentrations of credit risk, include cash and trade receivables. We maintain cash in bank accounts that, at times, may exceed federally insured limits. We have not experienced any losses and believe we are not exposed to any significant risks on our cash in bank accounts.

As of September 30, 2018, 14% of our accounts receivable were due from various individual customers to whom our products had been sold directly via Direct Response Television (“DRTV”). In addition, 53% was due from brick and mortar retailers, 9% was due from e-commerce accounts, 15% was due from live shopping, 5% was due from duty free airline, and 4% was due from miscellaneous customers.

Major customers are considered to be those who accounted for more than 10% of net sales. There were no major customers for the three and nine months ended September 30, 2018 and 2017.

Fair value of financial instruments

Fair value estimates, assumptions and methods used to estimate fair value of the Company’s financial instruments are made in accordance with the requirements of Accounting Standards Codification (“ASC”) 825-10, “Disclosures about Fair Value of Financial Instruments.” We have used available information to derive our estimates. However, because these estimates are made as of a specific point in time, they are not necessarily indicative of amounts we could realize currently. The use of different assumptions or estimating methods may have a material effect on the estimated fair value amounts. The carrying values of financial instruments such as cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, and notes payable approximate their fair values for these instruments.

Cash and cash equivalents

We consider all unrestricted highly liquid investments with an original maturity of three months or less to be cash equivalents.

Foreign currency transactions

Transactions we entered into in currencies other than our local currency, are recorded in our local currency and any changes in currency exchange rates that occur from the initiation of a transaction until settled are recorded as foreign currency gains or losses in the Condensed Consolidated Statements of Operations and Comprehensive Loss.

Functional currency translation

The currency of the primary economic environment in which we operate our Company is conducted in the US dollar (“$” or “dollars”). Thus, our functional currency (other than the foreign subsidiaries mentioned below) is the US dollar. The operations of our foreign subsidiaries are conducted in the local currency of the subsidiary, which is the Hong Kong Dollar (HKD), Great Britain Pound (GBP), Israeli Shekel (ILS), and Canadian Dollar (CAD).

Assets and liabilities of our foreign subsidiaries are translated based on the exchange rates prevailing at the balance sheet date and revenues and expenses are translated at the average exchange rates for the period. Net differences from currency translation are included in other comprehensive income on the accompanying Condensed Consolidated Statements of Operations and Comprehensive Loss.

Page 13 of 51

ICTV BRANDS INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2018 and 2017

(Unaudited)

Note 2 - Summary of significant accounting policies (continued)

Accounts receivable

Accounts receivable are recorded net of allowances for returns and doubtful accounts of approximately $869,000 and $913,000 as of September 30, 2018 and December 31, 2017, respectively. The allowances are calculated based on historical analysis including customer returns and bad debts.

In addition to allowances for returns on accounts receivable, an accrual is made for the return of product that have been sold to customers and had cash collections, while the customer still has the right to return the product. In addition, an accrual is made for contract fees deducted by the customer. The amounts of these accruals included in accounts payable and accrued liabilities in our Condensed Consolidated Balance Sheets were approximately $103,000 and $180,000 as of September 30, 2018 and December 31, 2017, respectively.

Inventories

Inventories consist primarily of finished products held for resale and are valued at the lower of cost (first-in, first-out method) or net realizable value. We adjust inventory for estimated obsolescence when necessary based upon demand and market conditions. The Company’s reserve for obsolescence was approximately $289,000 and $247,000 as of September 30, 2018 and December 31, 2017, respectively. Included in inventory at September 30, 2018 and December 31, 2017 is approximately $55,000 and $51,000, respectively, of consigned product that has been shipped to customers under the 30-day free trial period for which the trial period has not expired and as such the customer has not accepted the product, as well as consigned products that are held at retailer distributors for sale.

Property and equipment

Property and equipment are carried at cost and depreciation and amortization is computed over the estimated useful lives of the individual assets ranging from 3 to 7 years for computer hardware and software and furniture and fixtures. Depreciation and amortization is computed using the straight-line method. Leasehold improvements are depreciated over the lesser of the estimated useful life and lease term. The related cost and accumulated depreciation of assets retired or otherwise disposed of are removed from the accounts and the resultant gain or loss is reflected in earnings. Maintenance and repairs are expensed currently while major renewals and betterments are capitalized. Depreciation and amortization expense amounted to approximately $59,000 and $177,000 and $51,000 and $129,000 for the three and nine months ended September 30, 2018 and 2017, respectively.

Property and equipment consisted of the following at:

	September 30, 2018			December 31, 2017
Computer hardware and software	$	209,509		$	154,061
Furniture and equipment		908,701			907,586
Leasehold improvements		55,840			55,840
		1,174,050			1,117,487
Accumulated depreciation and amortization		(407,484	)		(230,394	)
Property and equipment, net	$	766,566		$	887,093

Page 14 of 51

ICTV BRANDS INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2018 and 2017

(Unaudited)

Note 2 - Summary of significant accounting policies (continued)

Intangible assets

Definite-lived intangibles are amortized using the straight-line method over their estimated useful lives ranging from four to five years. Amortization expense was approximately $175,000 and $525,000 and $251,000 and $692,000 for the three and nine months ended September 30, 2018 and 2017, respectively. We evaluate the recoverability of the intangible assets periodically by taking into account events or circumstances that may warrant revised estimates of useful lives or that may indicate the asset may be impaired.

Impairment of long-lived assets

In accordance with ASC 360-10, “Accounting for the Impairment or Disposal of Long-Lived Assets,” long-lived assets are reviewed for impairment when circumstances indicate that the carrying value of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the assets to the future net undiscounted cash flows estimated by the Company to be generated by such assets. If such assets are considered to be impaired, the impairment to be recognized is the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of by sale are recorded as held for sale at the lower of carrying value or estimated net realizable value. No impairment losses were identified or recorded for the three and nine months ended September 30, 2018 and 2017.

Revenue recognition

On January 1, 2018, the Company adopted Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers, which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers that supersedes most current revenue recognition guidance. The updated guidance, and subsequent clarifications, collectively referred to as ASC 606, require an entity to recognize revenue when it transfers control of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

There was no significant impact to the statement of operations and comprehensive loss as the Company’s existing revenue policies are in line with ASC 606.

We recognize revenue when control of the promised goods or services is transferred to its customers in an amount that reflects the consideration expected to be entitled to in exchange for those goods or services. Our products are sold direct to consumers through direct response television, live home shopping, and e-commerce market places, as well as to retailers. We distribute product to international third-party distributors who purchase the products at wholesale pricing and sell it at an agreed upon price stipulated in the contracts. We also sell product to consumers through consignment arrangements with certain airlines and retailers in Hong Kong who sell products to consumers through in-flight magazines, duty-free carts, or sales counters.

We recognize revenue when performance obligations identified under the terms of the contracts with its customers are satisfied, which generally occurs upon transfer of control in accordance with the contractual terms and conditions of the sale. The majority of our revenue is recognized when product is shipped to the customer. Revenue is measured as the amount of consideration we receive upon shipment. Variable consideration includes various fees charged to us for cooperative advertising, marketing development, chargebacks, other fees and returns. The Company separately offers extended warranties that are separate performance obligations for which the associated revenue is recognized over-time based on the extended warranty period. The revenue recognition for each of our segments are described below.

Page 15 of 51

ICTV BRANDS INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2018 and 2017

(Unaudited)

Note 2 - Summary of significant accounting policies (continued)

Direct to consumer

Our direct to consumer segment includes sales of product directly to end users via infomercials produced by ICTV classified as Direct Response Television (“DRTV”). Revenue is recognized at the point of sale time which is upon shipment to the customer. Also included are products sold to live home shopping networks. Products sold to live home shopping networks are recognized at a point in time which is upon shipment to the live home shopping network, often with the right to return unsold products. Revenue related to our DermaVital® continuity program is recognized monthly upon shipment to customers.

We offer a 30-day risk-free trial as one of our payment options. Revenue on the 30-day risk-free trial sales is not recognized until the control of goods has transferred to the customer which we determine to be when the trial period ends. If the risk-free trial expires without action by the customer, product is determined to be accepted by the customer and revenue is recorded. Revenue for items purchased without the 30-day free trial is recognized upon shipment of the product.

Retail

We generate revenue from products sold to retailers and are payable upon satisfaction of the performance obligation. Revenue is recognized at a point in time. Certain retailers have the right to return unsold products. We generally extend credit terms to our retail customers based on their creditworthiness. Revenue is recorded at the time of shipment.

International third-party distributors

We generate revenue through the sale of products to international third-party distributors who in-turn sell the products to the consumer. Revenue related to international wholesale and third-party distributor customers is recorded at gross amounts with a corresponding charge to cost of sales upon shipment. Revenue is recognized at a point in time when product is shipped to the customer. International third-party distributors are required to pay a deposit before shipment. As of September 30, 2018, and December 31, 2017, we recorded deposits for international third-party distributors of approximately $202,000 and $404,000, respectively, in deferred revenue, current portion.

Airlines and Hong Kong Retail

We sell products to consumers through consignment arrangements with certain airlines and retailers in Hong Kong to sell products to consumers through in-flight magazines, duty-free carts, or in-store counters. We control the goods shipped to the consignees until control of the goods has transferred to the customer. Control is considered transferred to a customer upon payment for goods of which we set the price for this activity. We act as the consignor and the principal, and accordingly, we record consignment sales on a gross basis, once the transfer of control of goods has been passed to the customer. Goods on consignment remain in our inventory until the product has been sold and control of the goods has transferred.

Warranty

We sell warranties on our products for various terms. Customers are offered the option to purchase an extended warranty separate from the product sale for 1 to 5 years. Revenue is recognized ratably over the term, with the unearned warranty included in deferred revenue on the accompanying condensed consolidated balance sheets.

Page 16 of 51

ICTV BRANDS INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2018 and 2017

(Unaudited)

Note 2 - Summary of significant accounting policies (continued)

Variable consideration

The amount of consideration we receive, and revenues recognized across our multi sales channels varies with changes in sales returns and other accommodations and incentives we offer to our customers. When we give our customers the right to return products or provide other accommodations such as chargebacks, promotional discounts, and rebates, we estimate the expected returns and claims based on historical rates as well as events and circumstances that indicate changes to historical rates of product returns and claims. We adjust our estimates of revenue at the earlier of when the most likely amount of consideration we expect to receive changes or when the amount of consideration becomes fixed.

Judgments

We have a return policy whereby the customer can return any product received within 30 days or 60 days of receipt for a full refund. We accrue a reserve for product returns with respect to sales of product when a right of return exists. We accrue a reserve for product returns and customer refunds at the time of sale based on our historical experience. We also accrue for contract fees based on historical experience of our retail customers, as well as expected fees as documented in our retail contracts. The provision for estimated returns as of September 30, 2018 and December 31, 2017 was approximately $605,000 and $747,000, respectively, and has been included in the allowance for returns and doubtful accounts in the accompanying condensed consolidated balance sheets. The reserve for customer refunds and contract fees payable was approximately $103,000 at September 30, 2018 and $180,000 at December 31, 2017 and has been included in accounts payable and accrued liabilities in the accompanying condensed consolidated balance sheets. The amount of goods to be returned to inventory was determined to be immaterial.

For the three and nine months ended September 30, 2018 and 2017, we recorded sales returns of approximately $692,000 and $3,063,000 and $1,225,000 and $4,530,000 respectively, as a reduction of net sales.

Sales taxes

Sales and similar taxes that are imposed on our sales and collected from customers are excluded from net sales.

Shipping and handling costs

Costs for shipping and handling costs, including those activities that occur subsequent to transfer of control to the customer, are recorded as cost of sales and expensed as incurred. We accrue costs for shipping and handling activities that occur after control of the promised goods has transferred to the customer. Revenue from shipping and handling charges was approximately $203,000 and $810,000 and $427,000 and $1,550,000 for the three and nine months ended September 30, 2018 and 2017, respectively.

Page 17 of 51

ICTV BRANDS INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2018 and 2017

(Unaudited)

Note 2 - Summary of significant accounting policies (continued)

Remaining Performance Obligations

As part of our adoption of the new revenue standard, we have elected to use a practical expedient to exclude disclosure of transaction prices allocated to remaining performance obligations, and when we expect to recognize such revenue, for all periods prior to the date of initial application of the standard.

As of September 30, 2018, approximately $302,000 is expected to be recognized from remaining performance obligations for warranty revenue. We expect to recognize revenue for these remaining performance obligations during the next five years approximately as follows:

	Remaining Three Months 2018		2019		2020		2021		2022		2023
Estimated Deferred Warranty Revenue from remaining	$	44,000	$	126,000	$	69,000	$	42,000	$	19,000	$	2,000

Disaggregation of revenue

The following table shows the Company’s revenues disaggregated by reportable segment:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Direct to Consumer	$	4,233,444	$	5,401,048	$	13,155,589	$	17,719,533
International Third-Party Distributors		334,856		380,755		1,807,245		1,842,373
Retail		438,951		1,377,613		4,864,526		2,226,044
Airlines/Hong Kong Retail		476,658		400,338		1,639,411		1,368,999
	$	5,483,909	$	7,559,754	$	21,466,771	$	23,156,949

The following table provides information about contract assets which includes accounts receivable, and contract liabilities which includes deferred revenue and accrued returns and contract fees payable from contracts with customers:

	September 30, 2018		December 31, 2017
Accounts receivable, net of allowance for returns of $604,664 and $747,269, respectively, and doubtful accounts of $264,498 and $166,034, respectively	$	2,208,095	$	3,576,376
Total contract assets	$	2,208,095	$	3,576,376
Deferred revenue	$	504,390	$	598,378
Accrued returns and contract fees payable		102,980		179,922
Total contract liabilities	$	607,370	$	778,300

Page 18 of 51

ICTV BRANDS INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2018 and 2017

(Unaudited)

Note 2 - Summary of significant accounting policies (continued)

Research and Development

Research and development costs are expensed as incurred and are included in selling and marketing expense in the accompanying condensed consolidated statements of operations and comprehensive loss. Research and development costs primarily consist of efforts to discover and develop new products, including clinical trials, product safety testing, and certifications for international regulations and standards. Research and development costs approximated $57,000 and $134,000 and $146,000 and $210,000 for the three and nine months ended September 30, 2018 and 2017, respectively.

Advertising

Advertising costs, consisting of media, internet marketing and production costs, are expensed as incurred and are included in selling and marketing expense in the accompanying condensed consolidated statements of operations and comprehensive loss. Production costs associated with the creation of new and updated infomercials and advertising campaigns are expensed at the commencement of a campaign. We incurred approximately $1,414,000 and $5,212,000 and $2,000,000 and $5,578,000 in media costs for airing of television and print advertising, $727,000 and $2,617,000 and $1,243,000 and $3,332,000 in internet marketing costs, and $31,000 and $114,000 and $113,000 and $260,000 in productions costs for the three and nine months ended September 30, 2018 and 2017, respectively.

Income taxes

In preparing our condensed consolidated financial statements, we make estimates of our current tax exposure and temporary differences resulting from timing differences for reporting items for book and tax purposes. We recognize deferred taxes by the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred income taxes are recognized for differences between the financial statement and tax basis of assets and liabilities at enacted statutory tax rates in effect for the years in which the differences are expected to reverse. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date.

In addition, valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized. In consideration of our accumulated losses and limited historical ability to generate taxable income to utilize our deferred tax assets, we have estimated that we will not be able to realize any benefit from our temporary differences and have recorded a full valuation allowance. If we sustain profitability in the future at levels which cause management to conclude that it is more likely than not that we will realize all or a portion of the net operating loss carry-forward, we would record the estimated net realized value of the deferred tax asset at that time and would then provide for income taxes at a rate equal to our combined federal and state effective rates. Subsequent revisions to the estimated net realizable value of the deferred tax asset could cause our provision for income taxes to vary significantly from period to period.

Page 19 of 51

ICTV BRANDS INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2018 and 2017

(Unaudited)

Note 2 - Summary of significant accounting policies (continued)

Stock options

In June 2001, our shareholders approved our 2001 Stock Option Plan (the “Plan”). The Plan is designed for our employees, officers and directors and is intended to advance our best interests by providing personnel who have substantial responsibility for our management and growth with additional incentive by increasing their proprietary interest in our success, thereby encouraging them to remain our employee. The Plan is administered by our Board of Directors and authorizes the issuance of stock options not to exceed a total of 3,000,000 shares. The terms of any awards under the Plan are determined by the Board of Directors, provided that no options may be granted at less than the fair market value of the stock as of the date of the grant. The Plan expired in February 2011. As of September 30, 2018, 50,000 options are outstanding under the Plan.

In December 2011, our shareholders approved our 2011 Stock Option Plan (the “2011 Plan”). The 2011 Plan is designed for our employees, officers, and directors, and is intended to advance our best interests by providing personnel who have substantial responsibility for our management and growth with additional incentive by increasing their proprietary interest in our success, thereby encouraging them to remain our employee. The 2011 Plan is administered by our Board of Directors and authorizes the issuance of stock options not to exceed a total of 6,000,000 shares. In December 2017, the 2011 Plan was amended to increase the number of stock options that may be awarded to not exceed a total of 8,000,000 shares. The terms of any awards under the 2011 Plan are determined by the Board of Directors, provided that no options may be granted at less than the fair market value of the stock as of the date of the grant. Generally, the options granted vest over three years with one-third vesting on each anniversary date of the grant. As of September 30, 2018, 3,888,335 options are outstanding under the 2011 Plan.

We account for equity instruments issued to non-employees in accordance with the provisions of ASC Topic 505, subtopic 50, Equity-Based Payments to Non-Employees based upon the fair-value of the underlying instrument. The equity instruments, consisting of stock options granted to consultants, are valued using the Black-Scholes valuation model. The measurement of stock-based compensation to non-employees is subject to periodic adjustments as the underlying equity instruments vest and is recognized as an expense over the period which services are received. Nonvested stock options granted to non-employees are remeasured at each reporting period.

We use ASC Topic 718, “Share-Based Payments”, to account for stock-based compensation issued to employees and directors. We recognize compensation expense in an amount equal to the grant date fair value of share-based payments such as stock options granted to employees over the requisite vesting period of the awards using the Black-Scholes valuation model.

In May 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2017-09, which clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. ASU 2017-09 will reduce diversity in practice and result in fewer changes to the terms of an award being accounted for as modifications. Under ASU 2017-09, an entity will not apply modification accounting to a share-based payment award if the award’s fair value, vesting conditions and classification as an equity or liability instrument are the same immediately before and after the change. ASU 2017-09 will be applied prospectively to awards modified on or after the adoption date. The guidance is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. On January 1, 2018, we adopted the provisions of ASU 2017-09 prospectively which did not have a material impact on our condensed consolidated financial statements.

Page 20 of 51

ICTV BRANDS INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2018 and 2017

(Unaudited)

Note 2 - Summary of significant accounting policies (continued)

The following is a summary of stock options outstanding under the Plan and 2011 Plan (collectively “Stock Option Plans”) for the nine months ended September 30, 2018 and 2017:

	Number of Shares								Weighted Average
	Employee			Non-Employee		Totals			Exercise Price
Balance, January 1, 2018		3,993,335			-		3,993,335		$	0.27
Granted during the year		1,555,000			-		1,555,000			0.26
Exercised during the year		-			-		-			-
Cancelled during the year		(700,000	)		-		(700,000	)		0.33
Forfeited during the year		(910,000	)		-		(910,000	)		0.36
Balance, September 30, 2018		3,938,335			-		3,938,335		$	0.21

	Number of Shares								Weighted Average
	Employee			Non- Employee		Totals			Exercise Price
Balance, January 1, 2017		3,680,002			-		3,680,002		$	0.24
Granted during the year		280,000			-		280,000			0.49
Exercised during the year		(136,667	)		-		(136,667	)		0.15
Forfeited during the year		(93,333	)		-		(93,333	)		0.32
Balance, September 30, 2017		3,730,002			-		3,730,002		$	0.26

Of the stock options outstanding as of September 30, 2018 under the Stock Option Plans, 3,433,335 options are currently vested and exercisable. The weighted average exercise price of these options was $0.23. These options expire through January 2028.

The aggregate intrinsic value for options outstanding and exercisable at September 30, 2018 and 2017 was approximately $0 and $618,000, respectively. The aggregate intrinsic value for stock options exercised during the nine months ended September 30, 2017 was approximately $49,000.

On January 9, 2018, we issued options to purchase 1,050,000 shares of the Company’s common stock to six employees, at an exercise price of $0.33 per share. Three of those employees were terminated in the second quarter of 2018, resulting in the forfeiture of their unvested options to purchase, in the aggregate, 600,000 shares of common stock. On June 21, 2018, the remaining three employees voluntarily surrendered their options to purchase, in the aggregate, 450,000 shares of common stock, in consideration of a future stock grant. On June 21, 2018, we issued 400,000 shares of common stock to such remaining three employees, Kelvin Claney, CEO, Douglas Crouthers, Interim President and VP of Sales, and Vincent Dargush, VP of Marketing and Operations, at a fair value of $0.10 per share based on the closing of the Company’s common stock on the date of issuance, in consideration of the surrender of previously granted options and, in each case, as a share bonus, which was immediately vested, for performance in the second quarter of 2018. Also, on June 21, 2018, we issued 300,000 shares of common stock to Ernest P. Kollias, Jr., CFO, at a fair value of $0.10 per share based on the closing of the Company’s common stock on the date of issuance, also as a share bonus, in consideration for performance during the second quarter of 2018, which was immediately vested. The shares issued on June 21, 2018 are restricted for a period of six months from issuance. The recipients of the shares of common stock are key employees of our Company, and the issuance of the common stock is exempt from registration under Section 4(2) of the Securities Act of 1933.

Page 21 of 51

ICTV BRANDS INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2018 and 2017

(Unaudited)

Note 2 - Summary of significant accounting policies (continued)

The Company follows the provisions of ASC Topic 718 “Compensation — Stock Compensation” which requires the measurement and recognition of compensation expense for all share-based payment awards either modified or granted to employees and directors based upon estimated fair values. The 600,000 options forfeited were not vested at the time of forfeiture and therefore resulted in a reversal of previously recognized compensation expense in the amount of approximately $12,000. The result of the modification of issuing 400,000 shares of fully-vested common stock in replacement of 450,000 options surrendered, as noted above, was to immediately recognize the fair value of the original options granted totaling approximately $124,000 and the incremental change in fair value of the replacement awards, which was de minimis to share based compensation expense.

On November 30, 2017, Philip Solomon was granted 250,000 stock options. On July 9, 2018, the Board of Directors authorized the issuance of common stock to Phillip Solomon for the replacement of 250,000 surrendered stock options. Mr. Solomon surrendered these options in consideration of fully-vested 100,000 shares of the Company’s Common Stock. The fair value of the shares was the closing price of the Company’s common stock on July 9, 2018, which was $0.10.

The Company follows the provisions of ASC Topic 718 “Compensation — Stock Compensation” which requires the measurement and recognition of compensation expense for all share-based payment awards either modified or granted to employees and directors based upon estimated fair values. The result of the modification of issuing 100,000 shares of common stock in replacement of 250,000 options surrendered, as noted above, was to immediately recognize the fair value of the original options granted totaling approximately $76,000 to share based compensation expense, and there was no incremental increase in fair value of the replacement awards.

For the three and nine months ended September 30, 2018 and 2017, we recorded approximately $98,000 and $268,000, and $59,000 and $205,000, respectively, in stock compensation expense under the Stock Option Plans. At September 30, 2018, there was approximately $7,000 of total unrecognized compensation cost related to non-vested option grants that will be recognized over the remaining vesting period of 3 years.

The following weighted average assumptions are used in the Black-Scholes option pricing model for the nine months ended September 30, 2018 and 2017 to value the stock options granted during the period:

2018				2017
Risk-free interest rate		2.84	%	Risk-free interest rate		2.17	%
Expected dividend yield		0	%	Expected dividend yield		0	%
Expected life		6 years		Expected life		6 years
Expected volatility		142.79	%	Expected volatility		145	%
Weighted average grant date fair value	$	0.26		Weighted average grant date fair value	$	0.46
Forfeiture rate		0	%	Forfeiture rate		5	%

Page 22 of 51

ICTV BRANDS INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2018 and 2017

(Unaudited)

Note 2 - Summary of significant accounting policies (continued)

The following is a summary of stock options outstanding outside of the Stock Option Plans for the nine months ended September 30, 2018 and 2017:

	Number of Shares
	Employee		Non - Employee		Totals		Weighted Average Exercise Price
Balance, January 1, 2018		333,333		1,476,667		1,810,000	$	0.31
Granted during the year		-		400,000		400,000		0.11
Exercised during the year		-		-		-		-
Expired during the period		-		-		-		-
Balance, September 30, 2018		333,333		1,876,667		2,210,000	$	0.26

	Number of Shares
	Employee			Non - Employee			Totals			Weighted Average Exercise Price
Balance, January 1, 2017		516,667			1,676,667			2,193,334		$	0.35
Granted during the year		-			-			-			-
Exercised during the year		(183,334	)		-			(183,334	)		0.27
Expired during the period		-			(200,000	)		(200,000	)		0.80
Balance, September 30, 2017		333,333			1,476,667			1,810,000		$	0.31

Of the stock options currently outstanding outside of the Stock Option Plans at September 30, 2018, 1,935,000 options are currently vested and exercisable. The weighted average exercise price of these options was $0.30. These options expire through January 2026. The aggregate intrinsic value for options outstanding and exercisable at September 30, 2018 and 2017 was approximately $0 and $411,000, respectively. There were no options exercised during the nine months ended September 30, 2018. The aggregate intrinsic value for stock options exercised during the nine months ended September 30, 2017 was approximately $40,000.

For the three and nine months ended September 30, 2018 and 2017, we recorded approximately $9,000 and $18,000, and $5,000 and $18,000, respectively in stock compensation expense related to stock options outside of the Stock Option Plans. At September 30, 2018, there is approximately, $9,000 of remaining unrecognized compensation cost that will be recognized over the remaining service period of 3 years. Change in the fair value of the options issued to non-employees, as of September 30, 2018 was de minimis.

The following weighted average assumptions are used in the Black-Scholes option pricing model for the nine months ended September 30, 2018 and 2017 to value the stock options granted during the period:

2018
Risk-free interest rate		2.77	%
Expected dividend yield		0.00	%
Expected life		3 years
Expected volatility		143.03	%
Weighted average grant date fair value	$	0.11

There were no options granted for the nine months ended September 30, 2017.

Page 23 of 51

ICTV BRANDS INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2018 and 2017

(Unaudited)

Note 2 - Summary of significant accounting policies (continued)

The following is a summary of all stock options outstanding and nonvested for the nine months ended September 30, 2018:

										Weighted Average
	Employee			Non- Employee			Totals			Exercise Price
Balance, January 1, 2018		476,667			-			476,667		$	0.42
Granted during the period		1,555,000			400,000			1,955,000			0.23
Vested during the period		(10,000	)		(125,000	)		(135,000	)		0.11
Cancelled during the period		(700,000	)		-			(700,000	)		0.33
Forfeited during the period		(816,667	)		-			(816,667	)		0.36
					-
Balance, September 30, 2018		505,000			275,000			780,000		$	0.14

Recently Issued Accounting Pronouncements

In August 2018, the Financial Accounting Standards Board (“FASB”), issued Accounting Standards Update (“ASU”), 2018-13 that eliminates certain disclosure requirements for fair value measurements for all entities, requires public entities to disclose certain new information and modifies some disclosure requirements. The FASB developed the amendments to Accounting Standards Codification (“ASC”) 820 as part of its broader disclosure framework project, which aims to improve the effectiveness of disclosures in the notes to financial statements by focusing on requirements that clearly communicate the most important information to users of the financial statements. The new guidance is effective for all entities for fiscal years beginning after December 15, 2019 and for interim periods within those fiscal years. An entity is permitted to early adopt either the entire standard or only the provisions that eliminate or modify requirements. We are currently evaluating the effect of this guidance on our disclosure.

In June 2018, the FASB issued ASU 2018-07 Compensation – Stock Compensation (Topic 718), Improvements to Nonemployee Share-Based Payment Accounting. This ASU is intended to simplify aspects of share-based compensation issued to non-employees by making the guidance consistent with the accounting for employee share-based compensation. It is effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2018. We are currently in the process of evaluating the impact of the adoption of ASU 2018-07 on its condensed consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13), which requires measurement and recognition of expected credit losses for financial assets held. The ASU is effective for interim and annual periods beginning December 15, 2019 and early adoption is permitted. Entities are required to adopt ASU 2016-13 using a modified retrospective approach, subject to certain limited exceptions. We are currently evaluating the impact of our pending adoption of ASU 2016-13 on our condensed consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which requires lessees to recognize on the balance sheet assets and liabilities for leases with lease terms of more than 12 months. Consistent with current GAAP, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee will depend primarily on its classification as a finance or operating lease. However, unlike current GAAP-which requires only capital leases to be recognized on the balance sheet-the new ASU will require both types of leases to be recognized on the balance sheet. The ASU will take effect for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. This ASU can be applied at the beginning of the earliest period presented using the modified retrospective approach, which includes certain practical expedients that an entity may elect to apply, including an election to use certain transition relief.

In July 2018, the FASB issued ASU No. 2018-10, Codification Improvements to Topic 842, Leases and ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, which make improvements to Accounting Standards Codification (“ASC”) 842 and allow entities to not restate comparative periods in transition to ASC 842 and instead report the comparative periods under ASC 840. The Company plans to adopt this standard using the modified retrospective approach in the first quarter of fiscal 2019, coinciding with the standard’s effective date. While the Company is still evaluating this ASU and related updates, the Company has determined that the primary impact will be to recognize on the balance sheet material right-of-use assets and material lease obligations for all leases with lease terms greater than 12 months.

Page 24 of 51

ICTV BRANDS INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2018 and 2017

(Unaudited)

Note 2 - Summary of significant accounting policies (continued)

Reclassifications

Certain prior period amounts have been reclassified for consistency with the current period presentation of Retail as a reportable segment, as well as the amortization and depreciation being combined on the Statement of Cash Flows for 2017. These reclassifications had no effect on the reported results of operations.

Note 3 - Business and Asset Acquisitions

PhotoMedex Acquisition

As described in Note 1, the PhotoMedex Purchase Agreement was entered into on October 4, 2016 and was completed on January 23, 2017. The total purchase price was $9,500,000.

The purchase price paid by ICTV Holdings in the PhotoMedex Acquisition was paid as follows: (i) $3,000,000 of the purchase price which was raised in a private placement (described below in more detail) was deposited on October 5, 2016 into an escrow account established by counsel to the Company and ICTV Holdings, as escrow agent (the “Escrow Agent”), under an escrow agreement entered into on October 4, 2016 among the Company, ICTV Holdings, the PHMD Sellers, the Escrow Agent, and certain investors in the Company’s private placement (the “Escrow Agreement”), which escrow funds were paid to the PHMD Sellers on January 23, 2017, in accordance with the Escrow Agreement and subject to the conditions thereof; (ii) $2,000,000 of the purchase price was to be paid on or before the 90^th day following January 23, 2017; and (iii) the remainder of the purchase price of $4,500,000 was payable in the form of a continuing royalty as described in more detail below. On October 4, 2016, as required by the PhotoMedex Purchase Agreement, we delivered to PhotoMedex a letter of credit from LeoGroup Private Debt Facility L.P. (a significant shareholder), a private equity fund that secured our obligation to make the $2,000,000 payment referred to in clause (ii) above. The letter of credit was valid until the earlier of; (1) full payment on demand and presentation on or before January 23, 2017, or (2) 180 days from the date of letter of credit. The Company paid $250,000 of the purchase price payable per clause (ii) above in March 2017 and the balance of $1,750,000 was paid on April 22, 2017.

Under the PhotoMedex Purchase Agreement, we were required to pay to PhotoMedex and its subsidiaries a continuing monthly royalty on net cash (invoiced amount less sales refunds, returns, rebates, allowances and similar items) actually received by us or our affiliates from sales of the consumer products that we acquired from PhotoMedex. Such royalty payments commenced with net cash actually received from and after January 23, 2017, and would continue until the total royalty paid to PhotoMedex and its subsidiaries totals $4,500,000, calculated as follows: (i) 35% of net cash from the sale of all acquired consumer products sold through live television promotions made through Home Shopping Network (HSN) in the United States, QVC in the European Union, and The Shopping Channel (TSC) in Canada, less (a) deductions for sales commissions actually paid and on-air costs incurred for those amounts collected related to the sale of the acquired consumer products made through HSN in the United States, QVC in the European Union, and The Shopping Channel (TSC) in Canada, and (b) the cost of goods sold to generate such net cash; and (ii) 6% of net cash from the sale of all acquired consumer products other than the foregoing sales. The fair value of the contingent consideration was determined using the present value of expected payments as of the date of acquisition and totaled $4,198,043 using the assumption of a 9.7% discount rate over 18 months. On July 12, 2017, the Company entered into a Termination and Release Agreement with the PHMD, whereby afterward no further obligation remained.

Page 25 of 51

ICTV BRANDS INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2018 and 2017

(Unaudited)

Note 3 - Business and Asset Acquisitions (continued)

In connection with the PhotoMedex Purchase Agreement, on October 4, 2016, ICTV Holdings entered into a transition services agreement with the PHMD Sellers (the “Transition Services Agreement”), pursuant to which PHMD Sellers had agreed to make available to ICTV Holdings certain services on a transitional basis and allow ICTV Holdings to occupy and use a portion of the PHMD Sellers’ premises and warehouses, in exchange for which ICTV Holdings was to (i) pay to the PHMD Sellers the documented costs and expenses incurred by them in connection with the provision of those services; (ii) pay to the PHMD Sellers the documented lease costs including monthly rental and any utility charges incurred under the applicable leases; (iii) reimburse the PHMD Sellers for the documented costs and expenses incurred by them for the continued storage of inventory and raw materials at warehouse locations, and for services for fulfilling and shipping orders for such inventory; and (iv) reimburse the PHMD Sellers for the payroll, employment-related taxes, benefit costs and out of pocket expenses paid to or on behalf of employees. As of July 12, 2017, pursuant to the terms of the Transition Services Agreement and the Release Agreement, ICTV Holdings has no further obligations under the Transition Services Agreement.

Pursuant to the Release Agreement, as of July 12, 2017, the contingent consideration balance to PhotoMedex totaling $3,579,760 was extinguished. Therefore, the balance at both September 30, 2018 and December 31, 2017 was zero.

The following unaudited condensed pro forma financial information for the nine months ended September 30, 2018 and 2017 represent the combined results of the Company’s operations as if the PhotoMedex Acquisition had occurred on January 1, 2017. Excluded from the pro forma net loss and net loss per share amounts for the nine months ended September 30, 2017 are one-time acquisition costs of $49,312 attributable to the PhotoMedex Acquisition, and the one time settlement gain of $1,969,245. These pro forma results are not necessarily indicative of what historical performance would have been had this business combination been effective as of the hypothetical acquisition date, nor should they be interpreted as expectations of future results.

	For the three months ended September 30,						For the nine months ended September 30,
	2018			2017			2018			2017
Net sales	$	5,483,909		$	7,559,754		$	21,466,771		$	26,695,949
Net loss	$	(1,293,637	)	$	(2,356,103	)	$	(2,012,136	)	$	(3,858,089	)
Net loss per share – basic and diluted	$	(0.02	)	$	(0.05	)	$	(0.04	)	$	(0.08	)
Weighted average number of common shares basic and diluted		53,132,004			52,321,826			52,633,008			49,518,478

The results of operations for the PhotoMedex acquisition have been included in the consolidated financial statements from January 23, 2017, the effective date of the acquisition.

Ermis Labs Asset Purchase

As described in Note 1, the Ermis Labs asset purchase was entered into on October 4, 2016 and was completed on January 23, 2017. Pursuant to the agreement, the aggregate purchase price was to be paid as follows: (i) the issuance of 2,500,000 shares of our common stock to the stockholders of Ermis Labs, which had a fair value on the date of acquisition of $850,000 and (ii) $1,750,000 payable in the form of a continuing royalty as described in more detail below. The issuance of the common stock was made in reliance upon an exemption from the registration requirements of the Securities Act provided under Section 4(a)(2) of the Securities Act.

Page 26 of 51

ICTV BRANDS INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2018 and 2017

(Unaudited)

Note 3 - Business and Asset Acquisitions (continued)

Under the Ermis purchase agreement, we are required to pay to Ermis Labs a continuing monthly royalty of 5% of net cash (invoiced amount less sales refunds, returns, rebates, allowances and similar items) actually received by us or our affiliates from sales of the over-the-counter medicated skin care products acquired in the Ermis Labs Asset Acquisition, commencing with net cash actually received by us or our affiliates from and after January 23, 2017 and continuing until the total royalty paid to Ermis Labs totals $1,750,000; provided, however, that we are required to pay a minimum annual royalty amount of $175,000 on or before December 31 of each year commencing with calendar year ending December 31, 2017. The present value of the deferred consideration of $1,750,000 was $1,131,822, based on the assumption of a discount rate of 10.7% over ten years. All of the assets acquired from Ermis Labs were determined to be impaired and written off at December 31, 2017.

The changes in the Company’s deferred consideration payable due to Ermis Labs, Inc. during the nine months ended September 30, 2018:

Balance at December 31, 2017	$	1,212,067
Consideration payments		(160,414	)
Accretion of interest		70,527
Balance at September 30, 2018-related party	$	1,122,180
Current portion	$	86,392
Non-current portion		1,035,788
	$	1,122,180

For the nine months ended September 30, 2018, consideration payments represented the remaining minimum royalty for the calendar year ended December 31, 2017. We did not incur any royalties for sales of products for both the nine months ended September 30, 2018 and 2017. Interest expense was approximately $23,500 and $71,000 for the three and nine months ended September 30, 2018, respectively, and approximately $23,700 and $69,300 for the three months and nine months ended September 30, 2017, respectively

Note 4 - Fair Value Measurements

We evaluate assets and liabilities subject to fair value measurements on a recurring and non-recurring basis to determine the appropriate level to classify them for each reporting period. This determination requires significant judgments to be made by the Company. The following table sets forth our liabilities that were measured at fair value as of September 30, 2018, by level within the fair value hierarchy:

	Amounts at		Fair Value Measurement
	Fair Value		Level 1		Level 2		Level 3
Note Payable to AOR	$	298,719		-		-	$	298,719
Total liabilities measured at fair value	$	298,719		-		-	$	298,719

The note payable due to AOR, LLC is a Level 3 fair value measurement. The fair value of our liability was determined based on unobservable inputs that are not corroborated by market date, if available, when determining fair value.

The initial fair value of the note was determined to approximate its carry value. The change in fair value for the period ending September 30, 2018 was de minimis.

Page 27 of 51

ICTV BRANDS INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2018 and 2017

(Unaudited)

Note 4 - Fair Value Measurements (continued)

There is no active market for the debt and the value was based on the payment terms in addition to other facts and circumstances. The fair value of the convertible note was based on a probability-adjusted model, which entailed management estimating the probability of (i) exercising the early payment option and (ii) paying off the note according to the original terms. Factors affecting this estimate included the Company’s current financial position, financing plans, and operating objectives.

The Company has evaluated the estimated fair value of financial instruments using available market information and management’s estimates. The use of different market assumptions and/or estimation methodologies could have a significant effect on the estimated fair value amounts. The Company bases its estimates on historical experience and various other assumptions that it believes to be reasonable under the circumstances. Actual results may differ from management’s estimates if these results differ from historical experience or other assumptions do not prove to be substantially accurate, even if such assumptions are reasonable when made.

Note 5 - Commitments and contingencies

We entered a lease from March 2017 through February 2022 related to the office space in Wayne, Pennsylvania. In August 2017, we entered an amendment to expand our space, which increased the monthly base payments. Effective August 1, 2018, we terminated after one year the amendment for the additional space and reduced our payments to approximately $9,000 per month. Beginning January 1, 2018, we signed a new lease for our UK office effective through February 2022. The total monthly cost for our UK office is approximately $2,900. In March 2017, our Hong Kong office entered into a lease expiring in March 2018, which was then renewed until February 2022 for our current office space, costing approximately $1,900 a month. Our Israel office lease is for a one-year term ending in April 2018, which was then renewed until April, 2019 for approximately $1,900 a month. Rent expense incurred during the three and nine months ended September 30, 2018 and 2017 totaled approximately $51,000 and $179,000 and $83,000 and $224,000 respectively.

Page 28 of 51

ICTV BRANDS INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2018 and 2017

(Unaudited)

Note 5 - Commitments and contingencies (continued)

The schedule below details the future financial obligations under the active leases:

	Remaining
	Three
	Months										Total
	2018		2019		2020		2021		2022		Obligation
Wayne - Corporate HQ	$	29,470	$	119,015	$	120,309	$	121,633	$	20,309	$	410,736
Israel Office		5,700		7,600		-		-		-		13,300
UK Office		8,666		34,663		34,663		34,663		5,777		118,432
Hong Kong Office		5,569		22,275		22,275		22,275		3,713		76,107
Total Lease Obligations	$	49,405	$	183,553	$	177,247	$	178,571	$	29,799	$	618,575

Legal Matters

By letter dated March 23, 2018, the Company’s Board of Directors notified Richard Ransom, President of the Company, that his employment would be terminated for cause in 30 days unless Mr. Ransom cured the causes for termination, as presented in the letter, within such 30-day period.

On April 12, 2018, Mr. Ransom filed a Complaint in the Court of Common Pleas of Philadelphia County, Pennsylvania (the “Court”), naming as defendants the Company and our CEO, Kelvin Claney.  On May 3, 2018, the Company filed its Preliminary Objections to the Complaint with the Court. On May 22, 2018, Mr. Ransom withdrew the Complaint and filed an Amended Complaint. On or about June 11, 2018, the Company filed its Preliminary Objections to the Amended Complaint. Thereafter, the Court denied the Company’s Preliminary Objections.    The Amended Complaint alleges that on March 20, 2018, Mr. Ransom was terminated without cause, pursuant to the terms of Mr. Ransom’s employment agreement, as a result of certain changes to the Company’s organizational chart and management duties instituted by the Company’s Chief Executive Officer, Kelvin Claney.  The Amended Complaint seeks to recover Mr. Ransom’s severance compensation for a termination without cause, consisting of approximately $626,000 of base salary thorough the remaining term of his employment agreement; benefits and any performance bonus prorated through the date of termination; immediate vesting of 150,000 stock options; and 1,000,000 shares of the Company’s common stock.  The Amended Complaint also alleges that the Company and Mr. Claney defamed Mr. Ransom and seeks damages in an unspecified amount in excess of $50,000.  On October 29, 2018, the Company filed its Answer to the Amended Complaint denying the allegations therein and made certain Counterclaims against Mr. Ransom.  The Counterclaims allege that Mr. Ransom was terminated for Cause and seeks a Declaratory Judgment requesting same.  The Counterclaims also allege that Mr. Ransom breached his fiduciary duty to the Company and misappropriated and/or converted assets of the Company for his own personal benefit.  As a result, the Company seeks damages from Mr. Ransom in an unspecified amount in excess of $50,000. 

From time to time, we may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. Other than the legal proceeding described above, we are currently not aware of any such legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition, operating results or cash flows.

Page 29 of 51

ICTV BRANDS INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2018 and 2017

(Unaudited)

Note 5 - Commitments and contingencies (continued)

Other matters

Product Liability Insurance

For certain products, we were (and are) listed as an additional insured party under the product manufacturer’s insurance policy. We purchase our own liability insurance which will expire May 20, 2019. At present, management is not aware of any claims against us for any products sold.

Note 6 – Intangible Assets

Intangible assets as of September 30, 2018 and December 31, 2017 consists of the following:

	Useful Life	Gross Carrying Cost		Accumulated Amortization			Impairment Loss		Net Book Value
September 30, 2018
DermaWand® Purchase	5 years	$	1,163,816	$	(800,725	)	$	-	$	363,091
PhotoMedex Patented/Unpatented Technology	5 years		940,628		(313,540	)		-		627,088
PhotoMedex Trademarks	5 years		1,100,000		(366,667	)		-		733,333
Total		$	3,204,444	$	(1,480,932	)	$	-	$	1,723,512

	Useful Life		Gross Carrying Cost		Accumulated Amortization			Impairment Loss			Net Book Value
December 31, 2017
Ermis Labs Formulations/ Trademarks	5 years	$	1,512,443	$	(277,281	)	$	(1,235,162	)	$	-
DermaWand® Purchase	5 years		1,163,816		(581,673	)		-			582,143
PhotoMedex Patented/Unpatented Technology	5 years		940,628		(172,447	)		-			768,181
PhotoMedex Trademarks	5 years		1,100,000		(201,667	)		-			893,333
Total		$	4,716,887	$	(1,233,068	)	$	(1,235,162	)	$	2,248,657

Amortization expense was approximately $175,000 and $525,000 and $251,000 and $692,000 for the three and nine months ended September 30, 2018 and 2017, respectively, of which approximately $73,000 and $219,000 of amortization expense is included in cost of sales for the three and nine months ended September 30, 2018 and $73,000 and $218,000 for the three and nine months ended September 30, 2017, and approximately $102,000 and $306,000 is included in general and administrative expenses for the three and nine months ended September 30, 2018, and $178,000 and $474,000 is included in general and administrative expenses for the three and nine months ended September 30, 2017, respectively. Management evaluates the intangible assets for impairment when there is a triggering event.

Page 30 of 51

ICTV BRANDS INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2018 and 2017

(Unaudited)

Note 6 – Intangible Assets (continued)

The following table outlines the estimated future amortization expense related to the intangible assets held as of September 30, 2018:

2018 (remaining three months)	$	175,000
2019		699,000
2020		408,000
2021		408,000
2022		34,000
Total	$	1,724,000

Note 7 – DermaWand® Purchase Agreement

On January 22, 2016, we entered into a Purchase Agreement with Omega 5 Technologies, Inc. to acquire the worldwide ownership of the DermaWand® patent and all related trademarks and intellectual property for the sum of $1,200,000 to be paid out as follows: $300,000 per year for calendar years 2016 through 2019, payable in uniform quarterly installments on or before the last day of each calendar quarter. As a result, effective January 1, 2016, we are no longer obligated to make royalty payments on sales of DermaWand®. There shall be no interest charged, and we may, in our sole discretion, at any time without permission or penalty pre-pay some or all of the purchase price. Under our old licensing agreement, we had been assigned the patents, related trademarks, and exclusive commercial rights to DermaWand® based upon a $2.50 per unit fee and maintaining annual minimum royalty requirements.

As a result of the agreement, we recorded an offsetting asset and liability at January 1, 2016 in the amount of $1,200,000 for the asset from the intellectual property acquired and a corresponding liability per the payment schedule. As there is no interest charged with the purchase agreement we recorded a discount for imputed interest of approximately $37,000, calculated based on the applicable federal rates at January 22, 2016 of 1.45%, which will be amortized over the term of the agreement using the effective interest method. The intangible asset balance for the patent and trademark will be amortized using the straight-line method over the four period of the agreement, which at this time is management’s best estimate of the remaining useful life.

As of September 30, 2018, the liability balance was approximately $522,000 net of the discount for imputed interest of approximately $3,000 and is classified as other liabilities on the condense consolidated balance sheets. For the three and nine months ended September 30, 2018 and 2017, we amortized approximately $1,000 and $5,000 and $3,000 and $9,000, respectively, of interest expense related to the discount for imputed interest.

Page 31 of 51

ICTV BRANDS INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2018 and 2017

(Unaudited)

Note 8 – Long-term Debt to Related Party

On July 15, 2017, the Company entered a 30-month secured promissory note (the “Note”), to LeoGroup Private Investment Access, LLC (the “Holder”), a significant shareholder and hence related party, in the principal amount of $2,000,000 with an effective interest rate of 34%. The Note provides that the Company shall make monthly principal and interest payments of $100,000 to the Holder for 30 months through January 2020. The Note is secured by a first priority security interest in all the assets of Company, except the Company’s accounts receivable. The Note contains customary financial covenants of the Company and customary events of default. The Company is currently in compliance with this Note. Subject to the terms and conditions of the Note, so long as any event of default, as described in the Note, is continuing, without cure, for a period of five (5) business days after written notice from the Holder to the Company or a longer period if set forth in the notice from Holder or if agreed to by the parties, all obligations of the Company under the Note shall be immediately due and payable, and the Holder may exercise any other remedies available at law or in equity. The Note may not be prepaid, in whole or in part, at any time and from time to time, unless expressly agreed to in writing by the Holder. The total amount of related party interest expense during the three and nine months ended September 30, 2018 was approximately $116,000 and $392,000. There was interest expense of approximately $140,000 for both the three and nine months ended September 30, 2017.

The balance of the long-term debt as of September 30, 2018 and December 31, 2017 was as follows:

	September 30, 2018			December 31, 2017
Total Debt	$	1,289,240		$	1,797,049
Less: current portion	$	(916,145	)	$	(722,908	)
Long-term debt, net	$	373,095		$	1,074,141

Maturities of long-term debt at September 30, 2018, are as follows:

December 31,
2018 (remaining three months)	$	215,100
2019		976,906
2020		97,234
	$	1,289,240

Note 9 – Notes Payable

Note Payable to Amazon

On June 22, 2018, ICTV signed a formal 12-month loan agreement with Amazon Lending. The loan was given in the amount of $145,000 and carries an annual interest rate of 9.69%. For both the three and nine months ended September 30, 2018, interest expense was approximately $3,000. The loan is paid in twelve equal payments of principal and interest of approximately $13,000. These payments will be automatically deducted from any sales that ICTV generates from Amazon.com. If the sales generated do not sufficiently cover the amount of the monthly payment due, Amazon.com is authorized to charge the Company’s credit card on file. There is no early payoff fee for this loan agreement. In the event of a default by the Company, Amazon Lending has a second lien on any and all assets that are at Amazon warehousing facilities, subordinate to the LeoGroup Private Investment Access, LLC Note (see Note 8). The current balance of the loan is approximately $135,000 as of September 30, 2018.

Page 32 of 51

ICTV BRANDS INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2018 and 2017

(Unaudited)

Note 9 – Notes Payable (continued)

Note Payable to related party

On July 6, 2018, the Company issued a promissory note to Stephen Jarvis, a member of the Board of Directors, for a 60-day interest free loan of $100,000 from Mr. Jarvis. This loan is to be repaid to the lender within 60 days of receipt. If the loan is not paid within 30 days of the due date, it will be considered in default and the note will bear an 18% interest rate until paid. Effective September 4, 2018, the loan was modified and extended all terms and conditions to be due 180 days from issuance.

Note Payable to AOR at fair value

On September 20, 2018, AOR Direct, LLC , a media vendor, and the Company entered into an agreement to convert approximately $299,000 of outstanding payables into a loan with a partial convertible feature. The loan carries a 16% interest rate per annum. The loan is payable in eighteen monthly installments of approximately $19,000, due on the last day of each month, beginning on October 31, 2018. The loan carries an option to prepay $200,000 on or before December 31, 2018. If the Company makes this $200,000 prepayment, the Lender, AOR Direct, LLC, will issue $50,000 of debt forgiveness after which the Lender will allow the Company to convert the remaining, which would approximate $49,000 of debt to common stock, at the closing price of the stock on the day of the signing of the agreement which was $0.08. We have elected to account for the loan using the fair value method which requires the Company to record changes in the fair value as a component of other income and expenses, as outlined in Note 4 Fair Value Measurements. The fair value of the note was estimated at face value of approximately $299,000.

Note 10 - Related party transactions

LeoGroup Private Debt Facility L.P. (“LeoGroup”) became a major shareholder as part of the Ermis Labs Asset Acquisition described in Notes 1 and 3. During the nine months ended September 30, 2018, approximately $160,000 of payments were made to LeoGroup Private Access, LLC in connection with the deferred consideration for the Ermis Labs Asset Acquisition.

On July 15, 2017, LeoGroup Private Access, LLC provided the Company with the $2,000,000 30-month secured promissory note to allow the buyout of the PhotoMedex royalty described in Notes 1 and 7. During the three and nine months ended September 30, 2018, $300,000 and $900,000 of payments, respectively, were made on the loan of which approximately $116,000 and $392,000, respectively, were interest expense. For the three and nine months ended September 30, 2017, interest expense of approximately $140,000 was recorded.

Page 33 of 51

ICTV BRANDS INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2018 and 2017

(Unaudited)

Note 10 - Related party transactions (continued)

On May 2, 2018, the Company and Kelvin Claney, the Company’s Chief Executive Officer, entered into a subscription agreement pursuant to which the Company issued to Mr. Claney 210,000 shares of series A preferred stock, par value $0.001 per share (the “Series A Preferred Stock”), for cash consideration of $403,200, or $1.92 per share described in Note 11.

Note 11 –Series A Preferred Stock

On May 1, 2018, the Board of Directors designated 210,000 shares of the Company’s Series A Preferred Stock and authorized the sale of the Series A Preferred Stock to Kelvin Claney, the Company’s Chief Executive Officer. On May 2, 2018, the Board of Directors of the Company filed the Certificate of Designation, Preferences, Rights and Limitations of the Series A Preferred Stock with the Nevada Secretary of State.

The Series A Preferred Stock has dividend rights per share equal to the dividend rights of the Company’s common stock and has a liquidation preference in the amount of $1.92 per share. Each share of Series A Preferred Stock is entitled to 100 votes on all matters to be voted upon by the Company’s shareholders. The Series A Preferred Stock is redeemable at the option of the Company for a redemption price per share of $1.92, plus 8% per annum from the date of issuance until the date of redemption. If any Series A Preferred Stock is not redeemed within three years from the date of issuance, the holder may convert the Series A Preferred Stock into common stock at a ratio of eight shares of common stock for each share of Series A Preferred Stock. The Series A Preferred Stock is a non-certificated security.

On May 2, 2018, the Company and Kelvin Claney entered into a subscription agreement pursuant to which the Company issued to Mr. Claney 210,000 shares of Series A Preferred Stock for cash consideration of $403,200, or $1.92 per share. Issuance costs were de minimis. The redemption value as of September 30, 2018 was approximately $417,000.

Page 34 of 51

ICTV BRANDS INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2018 and 2017

(Unaudited)

Note 11 –Series A Preferred Stock (continued)

The Company evaluated the Series A Preferred Stock issuance for liability or equity classification in accordance with the provisions of ASC 480, “Distinguishing Liabilities from Equity”, and determined that equity treatment was appropriate because the Series A Preferred did not meet the definition of the liability instruments defined thereunder for convertible instruments. Specifically, the Series A Preferred are not mandatorily redeemable and do not embody an obligation to buy back the shares outside of the Company’s control in a manner that could require the transfer of assets. Additionally, the Company determined that the Series A Preferred would be recorded as permanent equity, not temporary equity, based on the guidance of ASC 480 given that there is no scenario where the holders of equally and more subordinated equity of the entity would not be entitled to also receive the same form of consideration upon the occurrence of the event that gives rise to the redemption.

Note 12 - Basic and diluted earnings (loss) per share

Basic earnings (loss) per share is computed by dividing earnings (loss) available to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted earnings per share gives effect to all dilutive potential common shares outstanding during the period and is computed by dividing the earnings attributable to common stockholders by the weighted-average number of common equivalent shares outstanding for the period, including any dilutive effect from outstanding stock options and convertible preferred stock. Diluted net income per share does not assume conversion, exercise or contingent exercise of securities that would have an anti-dilutive effect.

The Company follows the two-class method when computing earnings (loss) per share in periods when issued shares that meet the definition of participating securities are outstanding. The two-class method determines earnings (loss) per share for each class of common and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings. The Company’s Series A Preferred Stock participates in any dividends declared by the Company on its common stock and are therefore considered to be participating securities. The two-class method requires income available to common stockholders for the period to be allocated between common and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed. Accordingly, in periods in which the Company reports a net loss attributable to common stockholders when participating securities are outstanding, losses are not allocated to the participating securities because they have no contractual obligation to share in the losses of the Company. For purposes of calculating diluted earnings per share attributable to common shareholders, stock options and convertible preferred stock are considered common stock equivalents.

As described above, the Company computes basic and diluted loss per share using a methodology that gives effect to the impact of outstanding participating securities (the “two-class method”). As the three and nine months ended September 30, 2018 and 2017 resulted in net losses, there is no income allocation required under the two-class method or dilution attributed to weighted-average shares outstanding in the calculation of diluted loss per share.

Of the outstanding stock options, 5,068,335 were vested and exercisable at an average exercise price of $0.26. The following common stock equivalents, presented on an as converted basis, were excluded from the calculation of net loss per share for the periods presented, due to their anti-dilutive effect:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Outstanding stock options		6,148,335		5,540,002		6,148,335		5,540,002
Convertible preferred stock		1,680,000		-		1,680,000		-
Convertible loan payable-AOR		601,463		-		601,463		-
		8,429,798		5,540,002		8,429,798		5,540,002

Page 35 of 51

ICTV BRANDS INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2018 and 2017

(Unaudited)

Note 13 - Income taxes

The provision for income taxes is approximately $31,000 and $149,000 for the three and nine months ended September 30, 2018 and $112,000 and $182,000 for the three and nine months ended September 30, 2017. The effective tax rate for the three and nine months ended September 30, 2018 was approximately (3%) and (8%), respectively. The effective tax rate is (40%) and (9%), respectively for the three and nine months ended September 30, 2017. The provision reflects an estimated current tax liability associated with the earnings of our foreign subsidiaries.

Due to the change in ownership provisions of the Internal Revenue Code, the availability of the Company’s net operating loss carry forwards may be subject to annual limitation against taxable income in future periods, which could substantially limit the eventual utilization of such carry forwards. The Company has not updated its Internal Revenue Code Section 382 analysis through September 30, 2018 and has not analyzed the potential impact of its recent equity financing on beneficial ownership. Therefore, no determination has been made whether the net operating loss carry forward of approximately $3,239,000 available prior to the equity financing is subject to the Internal Revenue Code Section 382 limitation.

Note 14 - Segment reporting

We operate in the direct to consumer, retail, international third-party distributors, and airlines and Hong Kong retail segments which are engaged in selling of various consumer products primarily through direct marketing channels as well as selling our products through our international third-party distributor, and certain airlines. We evaluate performance and allocate resources based on several factors, of which the primary financial measure is operating income (loss) by the end customer, either direct to consumer sales, retail, international third-party distributor sales, or airlines and Hong Kong retail sales. Operating expenses are primarily prorated based on the relationship between segment sales to total sales.

Information with respect to our operating income (loss) by segment is as follows:

	For the three months ended													For the three months ended
	September 30, 2018													September 30, 2017
	Direct to Consumer			Retail			International Third-Party Distributor		Airlines and Hong Kong Retail		Totals			Direct to Consumer			Retail		International Third-Party Distributor		Airlines and Hong Kong Retail		Totals
Net sales	$	4,233,444		$	438,951		$	334,856	$	476,658	$	5,483,909		$	5,401,048		$	1,377,613	$	380,755	$	400,338	$	7,559,754
Cost of sales		1,398,603			149,244			167,429		240,877		1,956,153			2,486,303			196,891		199,835		166,960		3,049,989
Gross profit		2,834,841			289,707			167,426		235,782		3,527,756			2,914,745			1,180,722		180,920		233,378		4,509,765
Operating expenses:
General and administrative		1,196,182			339,933			107,618		36,605		1,680,338			2,282,856			101,753		67,252		36,515		2,488,376
Selling and marketing		2,186,624			591,170			26,969		111,609		2,916,372			3,749,376			173,270		22,925		156,775		4,102,346
Total operating expense		3,382,806			931,103			134,587		148,214		4,596,710			6,032,232			275,023		90,177		193,290		6,590,722
Operating income (loss)	$	(547,965	)	$	(641,396	)	$	32,839	$	87,568	$	(1,068,954	)	$	(3,117,487	)	$	905,699	$	90,743	$	40,088	$	(2,080,957	)

Page 36 of 51

ICTV BRANDS INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2018 and 2017

(Unaudited)

Note 14 - Segment reporting (continued)

	For the nine months ended													For the nine months ended
	September 30, 2018													September 30, 2017
	Direct to Consumer			Retail			International Third-Party Distributor		Airlines and Hong Kong Retail		Totals			Direct to Consumer			Retail		International Third-Party Distributor		Airlines and Hong Kong Retail		Totals
Net sales	$	13,155,589		$	4,864,526		$	1,807,245	$	1,639,411	$	21,466,771		$	17,719,533		$	2,226,044	$	1,842,373	$	1,368,999	$	23,156,949
Cost of sales		3,080,931			1,653,939			903,623		942,316		6,580,809			5,763,446			756,855		850,238		624,631		7,995,170
Gross profit		10,074,658			3,210,587			903,622		697,095		14,885,963			11,956,088			1,469,189		992,135		744,368		15,161,779
Operating expenses:
General and administrative		3,971,728			1,347,362			500,565		126,146		5,945,801			6,916,906			382,196		245,966		98,849		7,643,917
Selling and marketing		7,437,301			2,325,711			43,525		456,643		10,263,180			10,357,739			567,316		74,976		346,290		11,346,321
Total operating expense		11,409,029			4,146,483			544,090		582,789		16,208,981			17,274,645			949,512		320,942		445,139		18,990,238
Operating income (loss)	$	(1,334,371	)	$	(462,487	)	$	359,532	$	114,306	$	(1,323,019	)	$	(5,318,557	)	$	519,677	$	671,193	$	299,229	$	(3,828,459	)

Selected balance sheet information by segment is presented in the following table as of:

Total assets by segment as of:

	September 30, 2018		December 31, 2017
Direct to Consumer	$	10,154,035	$	11,135,146
Retail		647,221		1,696,601
International Third-Party Distributors		239,019		75,854
Airlines and Hong Kong Retail		630,098		862,656
Total Assets	$	11,670,373	$	13,770,257

Total assets by geographical region as of:

	September 30, 2018		December 31, 2017
United States and Canada	$	6,729,405	$	8,333,129
Hong Kong		630,098		862,656
United Kingdom		3,464,844		3,476,560
Israel		846,026		1,097,912
Total Assets	$	11,670,373	$	13,770,257

Net sales by geographical region for the three months ended:

	September 30, 2018		September 30, 2017
United States and Canada	$	3,279,152	$	5,385,244
Hong Kong		476,659		400,338
United Kingdom		1,728,098		1,774,172
Israel		-		-
Total Net Sales	$	5,483,909	$	7,559,754

Net sales by geographical region for the nine months ended:

	September 30, 2018		September 30, 2017
United States and Canada	$	13,501,456	$	18,498,764
Hong Kong		1,639,411		1,368,999
United Kingdom		6,325,904		3,289,186
Israel		-		-
Total Net Sales	$	21,466,771	$	23,156,949

Page 37 of 51

ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Except for the historical information presented in this document, the matters discussed in this Form 10-Q, and specifically in the “Management’s Discussion and Analysis or Plan of Operation”, or otherwise incorporated by reference into this document contain “forward looking statements” (as such term is defined in the Private Securities Litigation Reform Act of 1995). These statements can be identified by the use of forward-looking terminology such as “believes”, “expects”, “may”, “will”, “intends”, “should”, or “anticipates” or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties. The safe harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended, apply to forward-looking statements made by the Company. You should not place undue reliance on forward-looking statements. Forward-looking statements involve risks and uncertainties. The actual results that the Company achieves may differ materially from any forward-looking statements due to such risks and uncertainties. These forward-looking statements are based on current expectations, and the Company assumes no obligation to update this information. Readers are urged to carefully review and consider the various disclosures made by the Company in this report on Form 10-Q and in the Company’s other reports filed with the Securities and Exchange Commission that attempt to advise interested parties of the risks and factors that may affect the Company’s business.

The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the consolidated financial statements and accompanying notes in Item 1 and other financial information elsewhere in this report.

Overview

We develop, market and sell products through a multi-channel distribution strategy, including selling direct to consumer, live home shopping, traditional retail and e-commerce market places, Hong Kong airlines and our international third-party distributor network. We offer primarily health, beauty and wellness products as well as various consumer products, including:

● DermaWand®, a skin care device that reduces the appearance of fine lines and wrinkles, and helps improve skin tone and texture;

● DermaVital®, a professional quality skin care line that effects superior hydration;

● CoralActives®, brand of acne treatment and skin cleansing products;

● DermaBrilliance®, a skin care resurfacing device that helps reduce visible signs of aging; and

● Jidue, a facial massager device which helps alleviate stress.

We acquire the rights to the products that we market primarily via licensing agreements, acquisition and in-house development and sell both domestically and internationally. We are continually exploring other devices and consumable product lines currently under licensing agreements that would complement our current portfolio of beauty products.

On January 23, 2017, we acquired several new brands, related intellectual property, inventory and other assets and have begun marketing and selling the following new products. See Note 3 - Business and Asset Acquisitions, to our financial statements for more information about the PhotoMedex and Ermis Labs acquisitions:

● no!no!® Hair, a home use hair removal device;

● no!no!® Skin, a home use device that uses light and heat to calm inflammation and kill bacteria in pores to treat acne;

● no!no!® Face Trainer, a home use mask that supports a series of facial exercises;

● no!no!® Glow, a home use device that uses light and heat energy to treat skin;

● Made Ya Look, a heated eyelash curler;

● no!no!® Smooth Skin Care, an array of skin care products developed to work with the devices to improve the treated skin;

● Kyrobak®, a home use device for the treatment of non-specific lower back pain; and

● ClearTouch®, a home use device for the safe and efficient treatment of nail fungus

Our strategy is to introduce our brands to the market through an omni-channel platform that includes but is not limited to direct response television, digital marketing, live home shopping, traditional retail, e-commerce market places, airlines, and international third-party distributor networks. Our objective is to have our portfolio of products sold through these channels to develop long lasting brands with strong returns on investments.

Page 38 of 51

Fluctuations in our revenue are driven by changes in our sale channels. Revenues may vary substantially from period-to-period depending on what channel has generated the sales for each period. A product that generates revenue in one quarter may not necessarily generate revenues in each quarter of a fiscal year for a variety of reasons, including, seasonal factors, number of infomercials run, the product’s stage in its life-cycle, the public’s general acceptance of the marketing campaign and other outside factors, such as the general state of the economy.

Just as fluctuations in our revenues are driven by changes in our sales channels, our gross margins vary from period to period depending on these sales channels as well.

Many of our expenses for our own products are incurred up-front. Some of our up-front expenditures include infomercial production costs, which are expensed at the start of a campaign and purchases of media time. If our infomercials are successful, these up-front expenditures produce revenue as consumers purchase the products aired on the infomercials. We do not incur infomercial production costs and media time for our international sales to third party distributors as we supply pre-produced infomercials. It is the responsibility of the international infomercial operators to whom we sell the third-party products to take the pre-produced infomercial, adapt it to their local standards and pay for media time.

Results of Operations

The following discussion compares operations for the three and nine months ended September 30, 2018 with the three and nine months ended September 30, 2017.

Net Sales

Our net sales decreased by approximately $2,076,000 to approximately $5,484,000 for the three months ended September 30, 2018 from approximately $7,560,000 for the three months ended September 30, 2017 and decreased by approximately $1,690,000 to approximately $21,467,000 for the nine months ended September 30, 2018 from approximately $23,157,000 for the nine months ended September 30, 2017.

Our direct to consumer segment consists of direct response television (“DRTV”), live home shopping, and e-commerce sales, and is summarized below for the three and nine months ended September 30, 2018 and 2017:

Net sales for the direct to consumer segment for the three months ended September 30, 2018 and 2017 were as follows:

	September 30, 2018		September 30, 2017		(Decrease)
DRTV	$	2,643,000	$	3,992,000	$	(1,349,000	)
Live Home Shopping		811,000		762,000		49,000
E-commerce		779,000		647,000		132,000
Total Direct to Consumer	$	4,233,000	$	5,401,000	$	(1,168,000	)

Our total direct to consumer segment decreased by $1,854,000 for the three months ended September 30, 2018 compared to the three months ended September 30, 2017 due to the decrease in DRTV of $1,370,000, live home shopping of $300,000, and E-Commerce of $184,000.

DRTV sales are mainly driven by television, digital or print media which were down 34% for the three months ended September 30, 2018 compared to the three months ended September 30, 2017. This decrease resulted in a decrease in DRTV sales for the same period. In order to maximize efficiency and costs, media was decreased due to low response during the summer months that have been proven to not be efficient in years prior. E-Commerce sales are also driven by the same media and show similar decreases as DRTV sales.

Live Home Shopping heavily relies on timing of when airings occur. Airings are strategically placed with enough timing in between to provide consistent value to the consumer.

Page 39 of 51

Retail segment saw an increase due to in store placements with Micro by no!no!® launching in Walmart Canada and no!no!® Pro in Jean Coutu in September 2018. The Pivot by no!no!® has also launched during the third quarter 2018 in Argos and Boots in the UK.

International sales decreased by approximately $46,000 from approximately $381,000 for the three months ended September 30, 2017 to approximately $335,000 for the three months ended September 30, 2018 due to a decrease in sales in China. Airlines and Hong Kong retail increased by approximately $76,000 for the three months ended September 30, 2018 due to increased sales in airlines.

Net sales for the direct to consumer segment for the nine months ended September 30, 2018 and 2017 were as follows:

	September 30, 2018		September 30, 2017		Increase (Decrease)
DRTV	$	9,580,000	$	11,744,000	$	(2,164,000	)
Live Home Shopping		1,915,000		3,458,000		(1,543,000	)
E-commerce		1,661,000		2,518,000		(857,000	)
Total Direct to Consumer	$	13,156,000	$	17,720,000	$	(4,564,000	)

For the nine months ended September 30, 2018, total direct to consumer sales decreased by $5,191,000 largely due to the decrease in media which drives the Direct to Consumer business. Retails sales for this period increased by approximately $3,266,000 due to increased sales in the UK. International sales and Hong Kong sales remained flat year over year.

Gross Profit

Gross profit percentage was approximately 64% and 69% for the three and nine months ended September 30, 2018, compared to approximately 60% and 65% during the same three and nine months in 2017. The direct to consumer gross margin percentage was higher for the three and nine months ended September 30, 2018 due to the decrease of returns from approximately 15% and 16% for the three and nine months ended 2017, respectively, to approximately 13% for both the three and nine months ended 2018. Additionally, the increase for the nine months ended September 30, 2018 was offset by the increase in retail sales for nine months ended September 30, 2018 which has a lower gross margin percentage than direct to consumer. We generated approximately $3,528,000 and $14,886,000 respectively in gross margin, compared to approximately $4,510,000 and $15,162,000 during the three and nine months respectively ended September 30, 2017. For the nine months ended September 30, 2017, there was approximately $1,000,000 of returns that reduced gross profit for sales that were previously recognized by PhotoMedex.

Operating Expenses

Three Months Ended September 30, 2018 and 2017

The total operating expenses decreased by approximately $1,994,000 from approximately $6,591,000 for the three months ended September 30, 2017 to approximately $4,597,000 for the three months ended September 30, 2018.

Page 40 of 51

The General and Administrative expenses for the three months ended September 30, 2018 and 2017 are summarized as follows:

	September 30, 2018		September 30, 2017		Increase (Decrease)
General and Administrative:
Payroll and Related Expenses	$	586,210	$	708,950	$	(122,740	)
Stock Based Compensation		106,620		64,287		42,333
Professional Fees		186,450		452,554		(266,104	)
Consulting		45,756		323,315		(277,559	)
Bad Debts		235,947		250,220		(14,273	)
Office Expenses		50,022		71,783		(21,761	)
Depreciation and Amortization		161,511		228,225		(66,714	)
Rent		51,280		54,273		(2,993	)
Insurance		66,740		168,566		(101,826	)
Exchange Gain or Loss		70,381		12,722		57,659
Travel		79,849		68,658		11,191
Other General and Administrative		39,572		84,823		(45,251	)
Total General and Administrative	$	1,680,338	$	2,488,376	$	(808,038	)

Payroll and Related Expenses decreased by approximately $123,000 due to the reduction in staff throughout 2018 along with the decrease in the CEO’s salary.

Stock Based Compensation increased by approximately $42,000 due to the modification of an employee’s options to stock resulting in an increased expense taken in the third quarter of 2018.

Professional fees decreased by approximately $266,000. This decrease is due to less fees incurred in the third quarter for accounting and legal fees.

Consulting expenses decreased by approximately $278,000. This decrease is mainly due to the reduction in spending with KPI Direct, LLC,consultants, as some of these services were no longer necessary, and other functions were absorbed by the operations team. There was also a reduction in the outside services used in the UK.

Insurance expense decreased by $102,000 due to a decrease in our rates due to lower sales that resulted in a refund in September 2018.

Other General and Administrative expenses decreased by approximately $45,000 due to a reduction in dues and subscriptions no longer needed, and miscellaneous expenses reduced in 2018.

The Selling and Marketing expenses for the three months ended September 30, 2018 and 2017 are summarized as follows:

	September 30, 2018		September 30, 2017		Increase (Decrease)
Selling and Marketing:
Answering Service	$	123,069	$	88,991	$	34,078
Customer Service		190,999		247,654		(56,655	)
Merchant Fees		102,830		123,453		(20,623	)
Internet Marketing		726,698		1,242,578		(515,880	)
Media		1,464,390		1,999,748		(535,358	)
Other Marketing		308,386		399,922		(91,536	)
Total Selling and Marketing	$	2,916,372	$	4,102,346	$	(1,185,974	)

Total Selling and Marketing expenses decreased by approximately $1,186,000. In order to maximize efficiency and costs, media was decreased by approximately $536,000. Internet marketing decreased by approximately $516,000 due to decreases in Facebook and Quantcast spending.

Page 41 of 51

Nine Months Ended September 30, 2018 and 2017

Total operating expenses decreased to approximately $16,296,000 for the nine months ended September 30, 2018 from approximately $18,990,000 for the nine months ended September 30, 2017, a decrease of approximately $2,694,000

General and Administrative expenses for the nine months ended September 30, 2018 and 2017 are summarized below:

	September 30, 2018		September 30, 2017		Increase (Decrease)
General and Administrative:
Payroll and Related Expenses	$	2,056,169	$	2,169,035	$	(112,866	)
Stock Based Compensation		286,310		559,345		(273,035	)
Professional Fees		813,640		1,182,734		(369,094	)
Consulting		177,035		742,762		(565,727	)
Bad Debts		923,559		903,710		19,849
Office Expenses		105,134		324,342		(219,208	)
Depreciation and Amortization		483,184		602,577		(119,393	)
Rent		178,866		196,121		(17,255	)
Insurance		307,961		405,841		(97,880	)
Exchange Gain or Loss		205,074		45,983		159,091
Travel		206,579		251,665		(45,086	)
Other General and Administrative		202,290		259,802		(57,512	)
Total General and Administrative	$	5,945,801	$	7,643,917	$	(1,698,116	)

Payroll and related expenses decreased by approximately $113,000. We eliminated the marketing department by combining their duties with our operation team. We also eliminated the inhouse counsel position, and the CEO agreed to an annual reduction of $100,000 from his base salary effective April 1, 2018.

Share based compensation decreased by approximately $273,000. This decrease was due to less stock options awarded in 2018 from 2017, along with forfeited options of terminated employees in 2018.

Professional fees decreased by approximately $369,000. Accounting and legal fees were higher in 2017 due to costs associated with the PhotoMedex acquisition.

Office expenses decreased by approximately $219,000. This decrease is a result in the decrease in postage and overall general office expenditures as the Company continues to analyze the needs of the Company and make the necessary cutbacks.

Consulting fees decreased approximately $566,000. This reduction is due to a decrease in consulting fees with KPI Direct, LLC, consultants, and Conversion Systems, consultants, whose services were used more in 2017 due to the PhotoMedex acquisition.

Exchange gain or loss increased by approximately $159,000 for the nine months ended September 30, 2018 over the prior nine months ended September 30, 2017. This increase is due to currency exchange differences primarily in the UK based on payments and collections in different currencies.

Selling and Marketing expenses for the nine months ended September 30, 2018 and 2017 are summarized below:

	September 30, 2018		September 30, 2017		Increase (Decrease)
Selling and Marketing:
Answering Service	$	427,896	$	469,484	$	(41,588	)
Customer Service		673,023		608,889		64,134
Merchant Fees		283,128		364,981		(81,853	)
Internet Marketing		2,617,008		3,332,165		(715,157	)
Media		5,211,560		5,577,611		(366,051	)
Other Marketing		1,050,565		993,191		57,374
Total Selling and Marketing	$	10,263,180	$	11,346,321	$	(1,083,141	)

Page 42 of 51

Total Selling and Marketing expenses decreased by approximately $1,083,000. In order to maximize efficiency and costs, media was decreased by $366,000. Internet marketing decreased by approximately $715,000 due to decreases in Facebook and Quantcast spending. Merchant fees decreased by approximately $82,000 due to the decrease in direct to consumer sales. Answering service also decreased due to the decrease in sales. Other marketing expenses increased by approximately $57,000 due to additional retail promotions in the UK including attendance at the Electric Beauty Conference and advertisement in the 2018 Gift Guide. Customer service also increased as a result to an increase in volume of customer calls related to new orders, as well as inquiries on previous purchased products.

Net Loss

Three Months Ended September 30, 2018 and 2017

We generated a net loss of approximately $1,294,000 and $387,000 for the three months ended September 30, 2018 and 2017, respectively. Interest expense, net of interest income, for the three months ended September 30, 2018 and 2017 totaled approximately $189,000 and $164,000, respectively primarily due to the long-term note secured with the LeoGroup Private Access, LLC, a significant shareholder hence a related party, in July 2017. During the three months ended September 30, 2018 and 2017, we recorded a tax provision of approximately $31,000 and $112,000, respectively based on the net profit in our UK entity.

Nine Months Ended September 30, 2018 and 2017

We generated a net loss of approximately $2,012,000 and $2,195,000 for the nine months ended September 30, 2018 and 2017, respectively. Interest expense, net of interest income, for the nine months ended September 30, 2018 and 2017 totaled approximately $513,000 and $215,000 primarily due to the long-term note secured with the LeoGroup Private Access, LLC, a significant shareholder hence a related party, in July 2017. During the three months ended September 30, 2018 and 2017, we recorded a tax provision of approximately $149,000 and $182,000, respectively based on the net profit in our UK entity.

Liquidity and Capital Resources

At September 30, 2018, we had approximately $583,000 in cash and cash equivalents compared to approximately $1,258,000 at December 31, 2017. Cash flow used in operating activities was approximately $347,000 for the nine months ended September 30, 2018 compared to cash flow used in operating activities of approximately $2,047,000 for the same period in 2017. The cash used in 2018 was primarily due to the decrease in sales which resulted in an increase in inventory of approximately $197,000 as more inventory was purchased than sold during this period and in prepaid expense by approximately $494,000 mainly for media purchased in advance for future airings.  This was offset by collections of accounts receivable resulting in a decrease in that balance by approximately $531,000. The cash used in operating activities in 2017 was primarily a result of the net loss recorded by the Company.

Cash flow used in investing activities was approximately $57,000 for the nine months ended September 30, 2018 compared to cash flow used in investing activities for the period in 2017 of approximately $5,171,000. During 2018, we paid approximately $57,000 for capital expenditures.

Cash flow used in financing activities was approximately $255,000 for the nine months ended September 30, 2018 compared to cash provided by financing activities of approximately $6,786,000 for the same period in 2017. We used $225,000 to pay-down the liability in connection with the DermaWand® asset purchase agreement during the nine months ended September 30, 2018 and made principal payments of approximately $508,000 toward the long-term debt to related party, LeoGroup Private Access, LLC. We also made payments of approximately $160,000 during the nine months ended September 30, 2018 to satisfy our 2017 minimum royalty payment for deferred considerations related to the Ermis Lab acquisition. This was offset by proceeds of $245,000 from the notes payable, and $403,000 for the issuance of preferred stock.

Page 43 of 51

Going Concern

Our condensed consolidated financial statements have been prepared on a going concern basis, which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. We had a net loss of approximately $2,012,000 for the nine months ended September 30, 2018 and negative cash flows from operating activities of approximately $347,000. In addition, we have an accumulated deficit of approximately $18,917,000 as of September 30, 2018. Additional financing will be required for the Company to successfully implement its long-term growth strategy. There can be no assurance that additional financing can be obtained on terms acceptable to the Company.

To increase profitability throughout the remainder of 2018 and 2019 and to maintain sufficient cash flow and liquidity, we continue to optimize media expenses to increase profitable sales, and have eliminated several positions within the Company throughout the year including our inhouse legal counsel position. We have also combined the marketing department with the operations team to improve internal efficiencies and decrease overhead costs. We continue to analyze our processes to determine where further overhead cost cutbacks can be made, and operations can be streamlined to further reduce expenditures

The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. The Company’s ability to raise additional capital through the future issuances of debt or equity is currently being addressed. The ability to obtain additional financing, the successful development of the Company’s contemplated plan of operations, or its ability to achieve profitable operations are necessary for the Company to continue operations. The ability to successfully resolve these factors raise substantial doubt about the Company’s ability to continue as a going concern. The condensed consolidated financial statements of the Company do not include any adjustments that may result from the outcome of these uncertainties.

Key Management Change

On April 18, 2018, our Board of Directors terminated the employment agreement of our president, Richard Ransom “for cause” as such term is defined in his employment agreement. The Board terminated Mr. Ransom’s employment agreement as a result of certain breaches thereunder. We are currently performing an internal investigation concerning potential additional breaches by Mr. Ransom of his fiduciary duties to the Company and other contractual, statutory and common law violations.

On June 21, 2018, the Board of Directors appointed Douglas M. Crouthers, as interim President, to serve as such until such time as the Company’s Board of Directors determines his position as President to be permanent. Mr. Crouthers is currently our Vice President of Sales and will retain that title while he serves as interim President. Mr. Crouthers current salary and incentive compensation will not change during his term, as interim President.

Mr. Crouthers joined the Company in June 2014, as Vice President of Sales. Mr. Crouthers has more than 20 years of experience in the direct response, direct to consumer and direct to retail industry. He has held senior executive positions with some of the industry’s leading companies. Prior to joining the Company, Mr. Crouthers was Vice President of Sales for Applied Perceptions, LLC, a world-class call center, from June 2013 until June 2014, where he managed all aspects of onboarding and training for new customer service and sales agents. From April 2011 until June 2013, Mr. Crouthers served as Director of Business Development for Monarch, Inc., a television media agency, where he created and maintained key account business partnerships, analyzing and strategizing with clients on advertising campaigns.

Internal Reorganization

Beginning April 15, 2018, our CEO, Kelvin Claney, agreed to an annual reduction of $100,000 from his base salary. The reduction does not affect Mr. Claney’s base salary for purpose of calculating compensation, in the event of employment termination. Due to a redundancy of duties, ICTV’s Marketing Department has been eliminated and its duties have been absorbed by the Operations Department and the Sales Department. We have also eliminated our in-house counsel as a salaried employee. We will also not be entering into any engagements with such counsel as a third-party legal service provider. ICTV has not renewed the lease for its additional rental space, therefore reducing its rent expense by approximately $3,000 per month. We anticipate that these reductions will not compromise our overall performance or efficiency.

Page 44 of 51

Series A Preferred Stock

On May 1, 2018, the Board of Directors designated 210,000 shares of the Company’s Series A Preferred Stock and authorized the sale of the Series A Preferred Stock to Kelvin Claney. On May 2, 2018, the Board of Directors of the Company filed the Certificate of Designation, Preferences, Rights and Limitations of the Series A Preferred Stock with the Nevada Secretary of State.

The Series A Preferred Stock has dividend rights per share equal to the dividend rights of the Company’s common stock and has a liquidation preference in the amount of $1.92 per share. Each share of Series A Preferred Stock is entitled to 100 votes on all matters to be voted upon by the Company’s shareholders. The Series A Preferred Stock is redeemable at the option of the Company for a redemption price per share of $1.92, plus 8% per annum from the date of issuance until the date of redemption. If any Series A Preferred Stock is not redeemed within three years from the date of issuance, the holder may convert the Series A Preferred Stock into common stock at a ratio of eight shares of common stock for each share of Series A Preferred Stock. The Series A Preferred Stock is a non-certificated security.

On May 2, 2018, the Company and Kelvin Claney, the Company’s Chief Executive Officer, entered into a subscription agreement pursuant to which the Company issued to Mr. Claney 210,000 shares of Series A Preferred Stock for cash consideration of $403,200, or $1.92 per share.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Apart from the adoption of ASU 2014-09 (see Note 2 to the Condensed Consolidated Financial Statements included in this Quarterly Report), there have been no changes to our critical accounting policies and estimates in the six months ended September 30, 2018. The Securities and Exchange Commission (“SEC”) defines “critical accounting policies” as those that require application of management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Our significant accounting policies are described under “Critical Accounting Policies” in our “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Item 7, as well as in our consolidated financial statements and footnotes thereto for the year ended December 31, 2017, as filed with the Commission with our Annual Report form 10-K filed on May 31, 2018.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

Page 45 of 51

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management is responsible for establishing and maintaining adequate disclosure controls and procedures. Disclosure controls and procedures are those controls and procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act are recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

We carried out an evaluation as of September 30, 2018, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rules 13a-15(b) and 15d-15(b). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this Quarterly Report, our disclosure controls and procedures were not effective because of the material weaknesses in our internal control over financial reporting as discussed below.

A “material weakness” is defined as a significant deficiency or combination of significant deficiencies that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. A “significant deficiency” is defined as a control deficiency, or combination of control deficiencies, that adversely affects the Company’s ability to initiate, authorize, record, process, or report external financial information reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the Company’s annual or interim financial statements that is more than inconsequential will not be prevented or detected.

Management identified the following material weaknesses in the Company’s internal control over financial reporting as of September 30, 2018:

ERP System Implementation

Our operations expanded significantly primarily due to the PhotoMedex and Ermis Labs acquisitions occurring in January 2017. As a result, we had not been able to establish the proper accounting and financial reporting oversight of such increased activity. The lack of a fully implemented enterprise resource planning system (“ERP”) contributed to the situation. During the fourth quarter of 2017, we implemented an ERP system; however, issues related to the implementation of the ERP system resulted in a delay in the financial statement close process, such as execution of certain financial statement controls, including timely account reconciliations, analysis and reviews, that had not operated as intended for all financial statement accounts. Due to the unanticipated delay, the ERP system implementation resulted in business and operational interruptions and have resulted in a material weakness in the financial statement close process as of December 31, 2017 and September 30, 2018. The system has been implemented, and policies and procedures have begun to be put in place to ensure timely and accurate financial statements for 2018. The system was used for all reporting and reconciliations for the nine months ended September 30, 2018.

Inventory

During the third and fourth quarter of 2017, an internal control material weakness surrounding the Company’s inventory accounts was noted. The material weakness was the result of substantial reliance on manual reporting processes and spreadsheets, in connection with the inventory acquired from PhotoMedex, which was external to the Company’s accounting system. Inventory acquired from PhotoMedex was accounted for by using a manual Excel spreadsheet, which did not properly account for inventory transferred to our primary warehouse and distribution center during the nine months ended September 30, 2017, resulting in quantities being recorded twice and overstating the consolidated inventory balance. There were also insufficient physical count processes and insufficient compensating detective controls in place to identify the error. Management discovered the overstatement during the six months ended June 30, 2017 and immediately restated its second quarter 2017 financial statements. These factors resulted in a material weakness in our inventory controls and procedures. The material weakness was still present at December 31, 2017 and September 30, 2018 due to delays in the implementation process of our ERP system. We have started the implementation of receiving the automatic feeds from the warehouse to the ERP system. All warehouses are scheduled to be complete for the closing of the fourth quarter 2018.

Page 46 of 51

Implementation and Adoption of New Accounting Standard, ASC 606

As of January 1, 2018, the Company has adopted ASU No. 2014-09, Revenue from Contracts with Customers, which provides for a single five-step model to be applied to all revenue contracts with customers as well as requires substantial additional financial statement disclosures. The Company was required to adopt the new standard effective January 1, 2018. We have performed a detailed review of our revenue arrangements which consist primarily of product sales based on the guidance in the standard. Based on our review completed in June 2018 of the interpretive guidance that has been issued, there was not a material impact on our consolidated financial statements. We have begun the implementation of changes to our financial reporting processes related to revenue recognition and the control activities within them. These included the development of new policies based on the five-step model provided in the new revenue standard, new training, ongoing contract review requirements, and gathering of information provided for disclosures. As a result, we have identified this as a material weakness.

Technical Accounting

When recording complex or non-routine transactions, such as those involving the Company’s Series A Preferred Stock, the modification to previously issued stock options, and accounting for debt with embedded features, the Company did not maintain sufficient technical resources with an appropriate level of experience and training in the application of U.S. GAAP and SEC disclosure requirements commensurate with the nature and complexity of financial reporting requirements to ensure transactions are appropriately accounted for in a timely manner.

As a result, there is a reasonable possibility that material misstatements of the consolidated financial statements, including disclosures, will not be prevented or detected on a timely basis. We believe, based upon our initial assessment, that the uncertainty of the extent to which the lack of controls, policies, and procedures impact our financial reporting process presents itself as a material weakness.

Income Tax Study

With the acquisition of PhotoMedex in January of 2017, we have experienced material changes in our operations, in particular expanding our operations with foreign subsidiaries. Although we have currently engaged a third-party tax consultant to ensure tax compliance, we have not yet formalized our analysis and policies to address potential foreign tax exposures, specifically in the form of a transfer price study. The Company also experienced a significant change in ownership as a result of a private placement of common stock that occurred in January 2017. Due to the change in ownership provisions of the Internal Revenue Code, the availability of the Company’s net operating loss carry forwards may be subject to annual limitation against taxable income in future periods, which could substantially limit the eventual utilization of such carry forwards. As of September 30, 2018, we have not updated our analysis and have not yet analyzed the potential impact of our recent equity financing on beneficial ownership. There has been no determination if the net operating loss carryforward of approximately $3,239,000, available prior to the equity financing, is subject to the Internal Revenue Code Section 382 limitation. These studies are currently ongoing, and a determination will be made upon completion. As a result, we have identified this as a material weakness.

Page 47 of 51

Technology Controls

We have identified that our information technology security and environment have material control deficiencies, including but not limited to a lack of retention policy, lack of an audit log, weak password policies, and a lack of security of physical and file security of system. We are currently utilizing a third-party IT firm for normal processes and support. In addition to this third-party IT support, the Company has formally engaged ADEM Solutions in order to analyze and address the deficiencies and weaknesses. ADEM Solutions has been utilized to perform an assessment of our current information and technology environment and prepare for us an action plan for remediation of deficiencies stated above. We believe, based upon our initial assessment, that the uncertainty of the extent to which the lack of controls, policies, and procedures, impact our financial reporting process, presents itself as a material weakness.

Planned Remediation of Material Weaknesses in Internal Controls of our Financial Reporting

ERP

As noted above, we began to implement our ERP system on October 1, 2017. We have hired qualified team members and engaged external resources with significant prior experience with systems similar to our ERP system to provide additional capacity, analytical and functional capabilities, and cross-training. We plan to implement business process improvements that are anticipated to both strengthen controls governing management review and approvals and enable a more efficient and effective month end close. While the implementation process has caused unanticipated delays in our financial reporting, when fully implemented and operational, we believe the measures described above will remediate the control deficiencies that have led to the material weakness we have identified and strengthen our internal controls over financial reporting. As of September 30, 2018, the accounting functions in the system are fully functioning, and all financial reporting and reconciliations are being completed in the new system. We continue to evaluate the business needs of the system and establish the policies and procedures that will allows to utilize the system to its fullest potential.

Inventory

To remediate the Company’s material weakness surrounding its inventory accounts, we have implemented an ERP system and integrated accounting software that began to be implemented on October 1, 2017. Upon full implementation it is intended to eliminate the manual process controls currently in place that allowed the error to occur in the second quarter 2017. The new system, when fully implemented, will allow for real time tracking of inventory balances, greatly increasing controls around the balances on hand at any given time. This will allow us to reconcile our inventory to the third-party warehouse reports on a regular basis. As of September 30, 2018, all USA PhotoMedex finished devices inventory reside in our primary warehouse and distribution center, which now conducts pre-counts of inventory before each quarter end, as well as a year-end wall to wall inventory count, eliminating the likelihood and/or material impact of such an error reoccurring.

Revenue Recognition

To remediate the Company’s material weakness surrounding its financial reporting, the Company’s management has hired an experienced third-party accounting firm during the quarter ending December 31, 2017 to guide management in the gathering of data, review and implementation of ASC 606. The unanticipated delays caused by the ERP implementation also led to delays in completing the revenue recognition evaluation and implementation. Management intends to invest whatever time is necessary from both management and Company staff in order to work with the third-party accounting firm to ensure proper implementation of ASC 606. As of September 30, 2018, the Company fully adopted the standard, and management has begun to design controls to be put in place to adhere to this standard.

Page 48 of 51

Technical Accounting

To effectively remediate this material weakness, the Company will seek sufficient third-party technical resources with an appropriate level of experience and training to assist with the accounting of complex, non-routine transactions in a timely manner. The Company has also engaged a third-party equity management software company to administer the Company’s stock options, stock grants, and all other stock related transactions, which we expect will be implemented in the fourth quarter. This third-party equity management software will assist the Company to more accurately and timely address stock option transactions.

Income Tax

Management intends to complete these studies during 2018 so as to reflect the results in our 2017 tax returns for each respective operation, both domestic and foreign, which will resolve the material weakness. As of September 30, 2018, a Statement of Work has been initiated to complete this study.

Technology Controls

As part of our remediation efforts, we are currently utilizing a third-party IT firm for normal processes and support. In addition to this third-party IT support, the Company has formally engaged ADEM Solutions in order to address the deficiencies and weaknesses. ADEM Solutions has been utilized to perform an assessment of our current information and technology environment and has prepared an action plan designed to resolve the Company’s material weakness by September 30, 2018 which includes implementation of Microsoft’s Office 365 suite includes Exchange Online, which is a hosted messaging application that provides organizations with access to the full-featured version of Exchange Server. It includes access to email, calendars, contacts and tasks for any endpoint device. We also implemented departmental and individual permissions for the shared drive on the file server. Lastly, reports regarding security concerns are now being generated and reviewed on a weekly basis. These controls will be reassessed to ensure there are no further deficiencies.

Summary

As part of our ongoing remedial efforts, we have and will continue to enhance our internal controls over financial reporting, by, among other things: hiring qualified accounting and finance personnel; increasing our efforts to educate our personnel on the application of the internal control structure; emphasize with management the importance of our internal control structure; continue to seek outside consulting services where we believe the complexity of a particular matter exceeds our internal capabilities; and by continuing to implement improved accounting systems.

We are committed to continuing to improve our internal control processes and we will continue to review our financial reporting controls and procedures. As we continue to evaluate and work to improve our internal controls over financial reporting, we may determine additional measures needed to address control deficiencies or modify certain activities of the remediation measures described above.

Changes in Internal Control over Financial Reporting

On October 1, 2017, we began to implement a new ERP system on a Company-wide basis, which is expected to improve the efficiency of certain financial and related transaction processes. The implementation will result in business and operational interruptions as our old system is being phased out. As discussed above, we believe we have developed an appropriate plan to remediate and have begun our remediation efforts related to the material weaknesses.

Along with the foregoing remediation actions and the changes described in the previous section, the Company adopted ASU 2014-09 (see Note 2 to the Condensed Consolidated Financial Statements included in this Quarterly Report) effective January 1, 2018 and is in the process of implementing controls for financial reporting surrounding the implementation ASC 606.

Page 49 of 51

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. Other than the legal proceeding described above, we are currently not aware of any such legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition, operating results or cash flows.

ITEM 1A. RISK FACTORS

Not required for smaller reporting company.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES

On July 9, 2018, the Board of Directors authorized the issuance of Common Stock to Phillip Solomon for the replacement of stock options. On November 30, 2017, Philip Solomon was granted 250,000 stock options. Mr. Solomon surrendered these options in consideration of 50,000 shares of the Company’s Common Stock. On July 9, 2018, the Board of Directors also approved a grant to Mr. Solomon of an additional 50,000 shares of the Company’s Common Stock at a share price of $0.10 per share as a share bonus in consideration for performance during the third quarter of 2018.

On July 16, 2018, the Board of Directors authorized an amendment to the prior issuance of stock options granted to Tracey Kidd on June 21, 2018. The consulting agreement is being revised to provide an increase in the total options from 300,000 to 400,000. The additional 100,000 stock options was issued at an exercise price equal to the average closing price of the Company’s common stock over the ten trading days prior to the date of grant, which is deemed to be the fair market value of the Company’s common stock as of the date of grant. 50,000 of the additional 100,000 stock options vested immediately upon grant. The remaining 50,000 stock options will vest one year after the date of grant.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

None.

Page 50 of 51

ITEM 6. EXHIBITS

Exhibit No.	Description
2.1	Share and Option Purchase Agreement	Incorporated by reference to Exhibit 2.1 to the Company’s Form SB-2, filed with the Securities and Exchange Commission on October 3, 2001.
3.1	Amended and Restated Articles of Incorporation	Incorporated by reference to Exhibit 3.1 to the Company’s Form SB-2, filed with the Securities and Exchange Commission on October 3, 2001.
3.2	Amended and Restated Bylaws	Incorporated by reference to Exhibit 3.2 to the Company’s Form SB-2, filed with the Securities and Exchange Commission on October 3, 2001.
3.3	First Amendment to Amended and Restated Bylaws	Incorporated by reference to Exhibit 3.3 to the Company’s Form SB-2, filed with the Securities and Exchange Commission on October 3, 2001.
4.1	Specimen certificate evidencing the common stock	Incorporated herein by reference to Exhibit 4.1 to the Company’s Form SB-2, filed with the Securities and Exchange Commission on October 3, 2001
4.2	Promissory Note, dated July 15, 2017, issued by ICTV Brands Inc. in favor of LeoGroup Private Investment Access, LLC in the principal amount of $2,000,000	Incorporated herein by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on July 18, 2017
4.3	Promissory Note, dated July 6, 2018, issued by ICTV Brands Inc. in favor of Stephen Jarvis, in the principal amount of $100,000	Filed herewith
4.4	Certificate of Designation of the Series A Preferred Stock	Incorporated herein by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on May 2, 2018
10.1	2001 Stock Option Plan	Incorporated by reference to Exhibit 10.2 to the Company’s Form SB-2, filed with the Securities and Exchange Commission on October 3, 2001.
10.2	2011 Incentive Stock Option Plan	Incorporated herein by reference to Exhibit 10.13 to the Company’s Registration Statement on Form S-1, filed with the Securities and Exchange Commission on April 14, 2017
31.1	Rule 13a-14(a)/15d-14(a) Certification – Chief Executive Officer	Filed herewith
31.2	Rule 13a-14(a)/15d-14(a) Certification – Chief Financial Officer	Filed herewith
32	Section 1350 Certifications	Filed herewith
101.INS	XBRL Instance Document	*
101.SCH	XBRL Taxonomy Extension Schema Document	*
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document	*
101.DEF	XBEL Taxonomy Extension Dedinition Linkbase Document	*
101.LAB	XBRL Extension Label Linkbase Document	*
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document	*

* As provided in Rule 406T of Regulation S–T, this information shall not be deemed “filed” for purposes of Sections 11 and 12 of the Securities Act and Section 18 of the Securities Exchange Act or otherwise subject to liability under those sections.

Page 51 of 51

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	ICTV BRANDS INC.
	Registrant
Date: November 19, 2018	By:	/s/ Kelvin Claney
	Name:	Kelvin Claney
	Title:	Chief Executive Officer
Date: November 19, 2018	By:	/s/ Ernest P. Kollias, Jr.
	Name:	Ernest P. Kollias, Jr.
	Title:	Chief Financial Officer

EX-4.3

 

 

EX-31.1

Exhibit 31.1

Certification Pursuant to Rule 13-A-14 or

15 D-14 of the Securities Exchange Act of 1934

As Adopted Pursuant to Section 302 of The Sarbanes-Oxley Act of 2002

I, Kelvin Claney, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of ICTV Brands, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 19, 2018

/s/ Kelvin Claney

Kelvin Claney

Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification Pursuant to Rule 13-A-14 or

15 D-14 of the Securities Exchange Act of 1934

As Adopted Pursuant to Section 302 of The Sarbanes-Oxley Act of 2002

I, Ernest P. Kollias, Jr., certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of ICTV Brands, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date November 19, 2018

/s/ Ernest P. Kollias, Jr.

Ernest P. Kollias, Jr.

Chief Financial Officer

EX-32

Exhibit 32

Certification Pursuant to

18. U.S.C. Section 1350, As Adopted Pursuant to Section 906 of

The Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of ICTV Brands, Inc. (the “Company”) on Form 10-Q for the period ending September 30, 2018 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Kelvin Claney, Chief Executive Officer and Ernest P. Kollias, Jr., Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of their knowledge and belief:

(1)	the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Kelvin Claney

Kelvin Claney,

Chief Executive Officer

/s/ Ernest P. Kollias, Jr.

Ernest P. Kollias, Jr.,

Chief Financial Officer

Date: November 19, 2018

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2018	Nov. 15, 2018
Document And Entity Information
Entity Registrant Name	ICTV Brands Inc.
Entity Central Index Key	0001076522
Document Type	10-Q
Document Period End Date	Sep. 30, 2018
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Small Business Flag	true
Entity Emerging Growth Company	false
Entity Ex Transition Period	false
Entity Common Stock, Shares Outstanding		53,140,700
Trading Symbol	ICTV
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2018

XML

Condensed Consolidated Balance Sheets (Unaudited) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
CURRENT ASSETS:
Cash and cash equivalents	$ 582,697	$ 1,258,360
Accounts receivable, net of allowances for returns and doubtful accounts of $869,162 and $913,303 respectively	2,208,095	3,576,376
Inventories	5,740,357	5,631,857
Prepaid expenses and other current assets	649,146	167,914
Total current assets	9,180,295	10,634,507
Property and equipment, net	766,566	887,093
Intangible assets, net	1,723,512	2,248,657
Total assets	11,670,373	13,770,257
CURRENT LIABILITIES:
Accounts payable and accrued liabilities	5,633,873	5,911,778
Long-term debt to related party	916,145	722,908
Notes payable	426,130
Deferred revenue	345,664	403,844
Deferred consideration due to related party	86,392	241,379
Other liabilities- net of discount	293,620	369,563
Total current liabilities	7,701,824	7,649,472
Long-term debt to related party, net of current portion	373,095	1,074,141
Notes payable, net of current portion	107,580
Deferred revenue - long term	158,726	194,534
Deferred consideration - due to related party, net of current portion	1,035,788	970,688
Other liabilities - long term, net of discount	228,040	371,149
Total long term liabilities	1,903,229	2,610,512
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Preferred stock, $0.001 par value, 20,000,000 shares authorized, of which 210,000 shares designated as Series A, 210,000 and 0 shares issued and outstanding as of September 30, 2018 and December 31, 2017, respectively (Liquidation Preference of $416,632 as of September 30, 2018)	210
Common stock, $0.001 par value, 100,000,000 shares authorized, 53,140,700 and 52,340,700 shares issued and outstanding as of September 30, 2018 and December 31, 2017, respectively	42,930	42,130
Additional paid-in capital	20,886,637	20,198,137
Accumulated other comprehensive income	52,548	174,875
Accumulated deficit	(18,917,005)	(16,904,869)
Total shareholders' equity	2,065,320	3,510,273
Total liabilities and shareholders' equity	$ 11,670,373	$ 13,770,257

XML

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Statement of Financial Position [Abstract]
Accounts receivable, allowances for returns and doubtful net	$ 869,162	$ 913,303
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	20,000,000	20,000,000
Preferred stock, shares designated as series A	210,000	210,000
Preferred stock, shares issued	210,000	0
Preferred stock, shares outstanding	210,000	0
Liquidation preference price per share	$ 416,632
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	53,140,700	52,340,700
Common stock, shares outstanding	53,140,700	52,340,700

XML

Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Income Statement [Abstract]
NET SALES	$ 5,483,909	$ 7,559,754	$ 21,466,771	$ 23,156,949
COST OF SALES	1,956,153	3,049,989	6,580,809	7,995,170
GROSS PROFIT	3,527,756	4,509,765	14,885,962	15,161,779
OPERATING EXPENSES:
General and administrative	1,680,338	2,488,376	5,945,801	7,643,917
Selling and marketing	2,916,372	4,102,346	10,263,180	11,346,321
Total operating expenses	4,596,710	6,590,722	16,208,981	18,990,238
OPERATING LOSS	(1,068,954)	(2,080,957)	(1,323,019)	(3,828,459)
OTHER INCOME/(EXPENSE), NET
Interest expense	(189,413)	(164,377)	(513,290)	(215,147)
Miscellaneous (expense)/income, net, including gain on settlement of contingent consideration in 2017	(4,326)	1,970,753	(26,883)	2,030,727
LOSS BEFORE PROVISION FOR INCOME TAX	(1,262,693)	(274,581)	(1,863,192)	(2,012,879)
PROVISION FOR INCOME TAXES	30,944	112,277	148,944	182,277
NET LOSS	(1,293,637)	(386,858)	(2,012,136)	(2,195,156)
OTHER COMPREHENSIVE (LOSS)/INCOME:
Foreign currency translation adjustment	(21,036)	112,223	(122,327)	208,924
COMPREHENSIVE LOSS	$ (1,314,673)	$ (274,635)	$ (2,134,463)	$ (1,986,232)
NET LOSS PER SHARE
BASIC AND DILUTED	$ (0.02)	$ (0.01)	$ (0.04)	$ (0.04)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
BASIC AND DILUTED	53,132,004	52,321,826	52,633,008	49,518,478

XML

Condensed Consolidated Statement of Shareholders' Equity (Unaudited) - USD ($)	Preferred Stock [Member]	Common Stock [Member]	Additional Paid-In Capital [Member]	Accumulated Other Comprehensive Income [Member]	Accumulated Deficit [Member]	Total
Balance at Dec. 31, 2016		$ 18,132	$ 11,546,804		$ (10,276,478)	$ 1,288,458
Balance, shares at Dec. 31, 2016		28,343,007
Share based compensation			81,959			81,959
Issuance of stock for asset purchase		$ 2,500	847,500			850,000
Issuance of stock for asset purchase, shares		2,500,000
Issuance of stock, net of offering costs of $17,070		$ 20,588	6,962,342			6,982,930
Issuance of stock, net of offering costs of $17,070, shares		20,588,243
Issuance of stock for compensation		$ 600	335,400			336,000
Issuance of stock for compensation, shares		600,000
Cashless exercise of options		$ 23	(23)
Cashless exercise of options, shares		22,475
Other comprehensive income				(5,417)		(5,417)
Net loss					(367,618)	(367,618)
Balance at Mar. 31, 2017		$ 41,843	19,773,982	(5,417)	(10,644,096)	9,166,312
Balance, shares at Mar. 31, 2017		52,053,725
Balance at Dec. 31, 2016		$ 18,132	11,546,804		(10,276,478)	1,288,458
Balance, shares at Dec. 31, 2016		28,343,007
Issuance of stock for compensation						336,000
Foreign currency translation adjustment						208,924
Net loss						(2,195,156)
Balance at Sep. 30, 2017		$ 42,113	19,970,657	208,924	(12,471,634)	7,750,060
Balance, shares at Sep. 30, 2017		52,324,032
Balance at Mar. 31, 2017		$ 41,843	19,773,982	(5,417)	(10,644,096)	9,166,312
Balance, shares at Mar. 31, 2017		52,053,725
Share based compensation			77,099			77,099
Other comprehensive income				102,118		102,118
Exercise of options		$ 250	55,309			55,559
Exercise of options, shares		250,000
Net loss					(1,440,680)	(1,440,680)
Balance at Jun. 30, 2017		$ 42,093	19,906,390	96,701	(12,084,776)	7,960,408
Balance, shares at Jun. 30, 2017		52,303,725
Share based compensation			64,287			64,287
Cashless exercise of options		$ 20	(20)
Cashless exercise of options, shares		20,307
Other comprehensive income				112,223		112,223
Foreign currency translation adjustment						112,223
Net loss					(386,858)	(386,858)
Balance at Sep. 30, 2017		$ 42,113	19,970,657	208,924	(12,471,634)	7,750,060
Balance, shares at Sep. 30, 2017		52,324,032
Balance at Dec. 31, 2017		$ 42,130	20,198,137	174,875	(16,904,869)	3,510,273
Balance, shares at Dec. 31, 2017		52,340,700
Share based compensation			30,345			30,345
Foreign currency translation adjustment				83,847		83,847
Net loss					70	70
Balance at Mar. 31, 2018		$ 42,130	20,228,482	258,722	(16,904,799)	3,624,535
Balance, shares at Mar. 31, 2018		52,340,700
Balance at Dec. 31, 2017		$ 42,130	20,198,137	174,875	(16,904,869)	3,510,273
Balance, shares at Dec. 31, 2017		52,340,700
Issuance of stock for compensation
Foreign currency translation adjustment						(122,327)
Net loss						(2,012,136)
Balance at Sep. 30, 2018	$ 210	$ 42,930	20,886,637	52,548	(18,917,005)	2,065,320
Balance, shares at Sep. 30, 2018	210,000	53,140,700
Balance at Mar. 31, 2018		$ 42,130	20,228,482	258,722	(16,904,799)	3,624,535
Balance, shares at Mar. 31, 2018		52,340,700
Share based compensation		$ 700	148,645			149,345
Share based compensation shares		700,000
Issuance of preferred stock	$ 210		402,990			403,200
Issuance of preferred stock, shares	210,000
Foreign currency translation adjustment				(185,138)		(185,138)
Net loss					(718,569)	(718,569)
Balance at Jun. 30, 2018	$ 210	$ 42,830	20,780,117	73,584	(17,623,368)	(3,273,373)
Balance, shares at Jun. 30, 2018	210,000	53,040,700
Share based compensation		$ 100	106,520			106,620
Issuance of stock for asset purchase		100,000
Other comprehensive income						(1,314,674)
Foreign currency translation adjustment				(21,036)		(21,036)
Net loss					(1,293,637)	(1,293,637)
Balance at Sep. 30, 2018	$ 210	$ 42,930	$ 20,886,637	$ 52,548	$ (18,917,005)	$ 2,065,320
Balance, shares at Sep. 30, 2018	210,000	53,140,700

XML

Condensed Consolidated Statement of Shareholders' Equity (Parenthetical)	3 Months Ended
	Mar. 31, 2017 USD ($)
Statement of Stockholders' Equity [Abstract]
Net of offering costs	$ 17,070

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (2,012,136)	$ (2,195,156)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	702,236	820,792
Bad debt expense	923,559	903,710
Share based compensation	286,310	223,345
Issuance of stock for compensation		336,000
Change in fair value of contingent consideration		(48,035)
Loss on disposal of property and equipment		6,197
Non cash interest expense	76,475	105,459
Gain on settlement of contingent consideration		(1,969,245)
Change in assets and liabilities
Accounts receivable	530,634	(4,113,466)
Inventories	(196,555)	922,503
Prepaid expenses and other current assets	(493,843)	114,171
Accounts payable and accrued liabilities	(69,192)	3,025,709
Deferred revenue	(94,249)	(178,553)
Net cash used in operating activities	(346,761)	(2,046,569)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	(56,592)	(171,196)
Cash paid for acquisition of PhotoMedex, Inc.		(5,000,000)
Net cash used in investing activities	(56,592)	(5,171,196)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of DermaWand® asset purchase agreement	(225,000)	(150,000)
Proceeds from issuance of common stock, net of offering costs		6,982,930
Proceeds from exercise of options		55,559
Proceeds from note payable from related party	100,000
Repayments of long-term debt to related party	(507,809)	(87,441)
Payments of deferred consideration for asset acquisition	(160,414)	(14,583)
Proceeds from issuance of preferred stock	403,200
Proceeds from long-term debt to related party		2,000,000
Settlement payment made for PhotoMedex Acquisition		(2,000,000)
Net cash (used in) provided by financing activities	(255,031)	6,786,465
Effect of exchange rates on cash and cash equivalents	(17,279)	1,683
NET DECREASE IN CASH AND CASH EQUIVALENTS	(675,663)	(429,617)
CASH AND CASH EQUIVALENTS, beginning of the period	1,258,360	1,390,641
CASH AND CASH EQUIVALENTS, end of the period	582,697	961,024
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Taxes paid
Interest paid	394,797
SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITY:
Cashless exercise of options		43
Conversion of accounts payable to note payable	298,716
PhotoMedex [Member]
SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITY:
Fair value of assets acquired		9,198,043
Fair value of deferred consideration		(4,198,043)
Cash paid for acquisition		5,000,000
Contingent consideration owed to PhotoMedex		3,579,760
Other receivables amount forgiven		(837,708)
Payables extinguished		1,017,193
Settlement payment made		(2,000,000)
Assignment of deposit amount		210,000
Gain on settlement of contingent consideration		1,969,245
Ermis Labs [Member]
SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITY:
Fair value of assets acquired		1,981,822
Fair value of deferred consideration		(1,131,822)
Cash paid for acquisition
Issuance of common stock		(850,000)
Amazon [Member]
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from note payable from related party	145,000
Repayments of note payable to Amazon	$ (10,008)

XML

Organization and Business of the Company and Liquidity

9 Months Ended

Sep. 30, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization and Business of the Company and Liquidity

Note 1 – Organization and Business of the Company and Liquidity

Organization and Nature of Operations

ICTV Brands Inc. (the “Company”, “we”, or “ICTV”), was organized under the laws of the State of Nevada on September 25, 1998. As of September 30, 2018, we have the following subsidiaries:

● Better Blocks International Limited, or (“BBI”), a New Zealand corporation;

● ICTV Brands Israel Limited., incorporated under the laws of Israel;

● ICTV Brands UK Limited., incorporated under the laws of the United Kingdom;

● ICTV Brands HK Limited, a private limited company limited by shares, incorporated under the laws of Hong Kong (ICTV Brands HK Limited was formally known as “Radiancy HK Limited” and was officially renamed to ICTV Brands HK Limited on July 31, 2017); and

● LK Technology Importaçăo E Exportaçăo LTDA, a private Sociedade limitada formed under the laws of Brazil (“LK Technology”).  

● ICTV Brands Canada, Inc. incorporated under the Canada Business Corporations Act.

On January 23, 2017, ICTV Holdings, Inc., a Nevada corporation and the Company’s wholly-owned subsidiary (“ICTV Holdings”) completed the purchase of substantially all the assets of PhotoMedex, Inc., a Nevada corporation and its wholly-owned subsidiaries, Radiancy, Inc., PhotoTherapeutics Ltd., and Radiancy (Israel) Limited, (collectively, the “PHMD Sellers”), pursuant to an asset purchase agreement, dated October 4, 2016, by and among the Company, ICTV Holdings and the PHMD Sellers, as amended by the first amendment thereto dated January 23, 2017.

On November 16, 2017, the Company adopted a Plan of Merger pursuant to which, effective November 16, 2017, ICTV Holdings was merged with and into the Company, with the Company continuing as the surviving corporation, and each share of ICTV Holdings common stock outstanding immediately prior to the effective date was cancelled and extinguished.

On January 23, 2017 Ermis Labs, Inc., a Nevada corporation and the Company’s wholly-owned subsidiary (“Ermis Labs”) completed the purchase of substantially all the assets of Ermis Labs, Inc., a New Jersey corporation (“ELNJ”), pursuant to an asset purchase agreement, dated October 4, 2016, by and among the Company, Ermis Labs, ELNJ, and LeoGroup Private Debt Facility, L.P., a significant shareholder (related party), as amended by the first amendment thereto dated January 23, 2017.

On November 16, 2017, the Company adopted a Plan of Merger pursuant to which, effective November 16, 2017, Ermis Labs was merged with and into the Company, with the Company continuing as the surviving corporation, and each share of Ermis Labs common stock outstanding immediately prior to the effective date was cancelled and extinguished.

On July 12, 2018, the Company formed a wholly owned Canadian Entity under the Canada Business Corporations Act. ICTV’s Canadian Entity is incorporated under the name of ICTV Brands Canada, Inc.

Although our companies are incorporated in New Zealand, Nevada, Israel, United Kingdom, Hong Kong, Canada, and Brazil, our operations are currently run from our Wayne, Pennsylvania office.

We develop, market and sell products through a multi-channel distribution strategy, including direct response television, digital marketing campaigns, live home shopping, traditional retail and e-commerce market places, and our international third-party distributor network. We offer primarily health, beauty and wellness products as well as various consumer products, including no!no!®, a Thermicon® hair removal device, DermaWand®, a skin care device that reduces the appearance of fine lines and wrinkles, and helps improve skin tone and texture, DermaVital®, a professional quality skin care line that effects superior hydration, the CoralActives^® brand of acne treatment and skin cleansing products, DermaBrilliance®, a skin care resurfacing device that helps reduce visible signs of aging, and Jidue®, a facial massager device which helps alleviate stress. We acquire the rights to our products that we market primarily via licensing agreements, acquisition and in-house development and sell both domestically and internationally. We are presently exploring other devices and consumable product lines currently under licensing agreements.

The goal of our strategy is to introduce our brands to the market through an omni-channel platform that includes but is not limited to direct to consumer, live home shopping, traditional retail, e-commerce market places, Hong Kong airlines, and international third-party distributor networks. Our objective is to have our portfolio of products sold through these channels to develop long lasting brands with strong returns on investments.

Liquidity and Going Concern

Our condensed consolidated financial statements have been prepared on a going concern basis, which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. We had a net loss of approximately $2,012,000 for the nine months ended September 30, 2018 and negative cash flows from operating activities of approximately $347,000. In addition, we have an accumulated deficit of approximately $18,917,000 as of September 30, 2018. Additional financing will be required for the Company to successfully implement its long-term growth strategy.

To increase profitability throughout the remainder of 2018 and 2019 and to maintain sufficient cash flow and liquidity, we continue to optimize media expenses to increase profitable sales,and have eliminated several positions within the Company throughout the year including our inhouse legal counsel position. We have also combined the marketing department with the operations team to improve internal efficiencies and decrease overhead costs. We continue to analyze our processes to determine where further overhead cost cutbacks can be made, and operations can be streamlined to further reduce expenditures.

The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. The Company’s ability to raise additional capital through the future issuances of debt or equity is currently being addressed. The ability to obtain additional financing, the successful development of the Company’s contemplated plan of operations, or its ability to achieve profitable operations are necessary for the Company to continue operations. The ability to successfully resolve these factors raise substantial doubt about the Company’s ability to continue as a going concern. The condensed consolidated financial statements of the Company do not include any adjustments that may result from the outcome of these uncertainties.

XML

Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2018

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Note 2 - Summary of significant accounting policies

Basis of Presentation

The unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial statements and within the rules of the Securities and Exchange Commission applicable to interim financial statements and therefore do not include all disclosures that might normally be required for financial statements prepared in accordance with generally accepted accounting principles. The accompanying unaudited condensed consolidated financial statements have been prepared by management without audit and should be read in conjunction with our condensed consolidated financial statements, including the notes thereto, appearing in our Annual Report on Form 10-K for the year ended December 31, 2017. In the opinion of management, all adjustments necessary for a fair presentation of the condensed consolidated financial position, consolidated results of operations and consolidated cash flows, for the periods indicated, have been made. The results of operations for the nine months ended September 30, 2018 are not necessarily indicative of operating results that may be achieved over the course of the full year.

Principles of consolidation

Our accompanying condensed consolidated financial statements include the accounts of our wholly-owned subsidiaries BBI, ICTV Brands UK Limited, ICTV Brands Israel Limited, ICTV Brands HK Limited and LK Technology and ICTV Brands Canada, Inc. from their initial acquisition dates. In October 2016, ICTV Holdings and Ermis Labs, Inc. were formed as holding companies for the asset purchase agreements that were entered into with PhotoMedex, Inc. and Ermis Lab, Inc. (See Note 3 - Business and Asset Acquisitions). On November 16, 2017, ICTV Holdings and Ermis Labs, Inc. were merged into ICTV Brands, Inc. All significant inter-company transactions and balances have been eliminated in consolidation.

Use of estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“US GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Management believes that the estimates utilized in preparing its consolidated financial statements are reasonable and prudent. The most significant estimates used in these condensed consolidated financial statements include the allowance for doubtful accounts, reserves for returns, inventory reserves, valuation allowance on deferred tax assets, valuation of intangibles, and share based compensation. Actual results could differ from these estimates.

Concentration of credit risk

Financial instruments, which potentially subject us to concentrations of credit risk, include cash and trade receivables. We maintain cash in bank accounts that, at times, may exceed federally insured limits. We have not experienced any losses and believe we are not exposed to any significant risks on our cash in bank accounts.

As of September 30, 2018, 14% of our accounts receivable were due from various individual customers to whom our products had been sold directly via Direct Response Television (“DRTV”). In addition, 53% was due from brick and mortar retailers, 9% was due from e-commerce accounts, 15% was due from live shopping, 5% was due from duty free airline, and 4% was due from miscellaneous customers.

Major customers are considered to be those who accounted for more than 10% of net sales. There were no major customers for the three and nine months ended September 30, 2018 and 2017.

Fair value of financial instruments

Fair value estimates, assumptions and methods used to estimate fair value of the Company’s financial instruments are made in accordance with the requirements of Accounting Standards Codification (“ASC”) 825-10, “Disclosures about Fair Value of Financial Instruments.” We have used available information to derive our estimates. However, because these estimates are made as of a specific point in time, they are not necessarily indicative of amounts we could realize currently. The use of different assumptions or estimating methods may have a material effect on the estimated fair value amounts. The carrying values of financial instruments such as cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, and notes payable approximate their fair values for these instruments.

Cash and cash equivalents

We consider all unrestricted highly liquid investments with an original maturity of three months or less to be cash equivalents.

Foreign currency transactions

Transactions we entered into in currencies other than our local currency, are recorded in our local currency and any changes in currency exchange rates that occur from the initiation of a transaction until settled are recorded as foreign currency gains or losses in the Condensed Consolidated Statements of Operations and Comprehensive Loss.

Functional currency translation

The currency of the primary economic environment in which we operate our Company is conducted in the US dollar (“$” or “dollars”). Thus, our functional currency (other than the foreign subsidiaries mentioned below) is the US dollar. The operations of our foreign subsidiaries are conducted in the local currency of the subsidiary, which is the Hong Kong Dollar (HKD), Great Britain Pound (GBP), Israeli Shekel (ILS), and Canadian Dollar (CAD).

Assets and liabilities of our foreign subsidiaries are translated based on the exchange rates prevailing at the balance sheet date and revenues and expenses are translated at the average exchange rates for the period. Net differences from currency translation are included in other comprehensive income on the accompanying Condensed Consolidated Statements of Operations and Comprehensive Loss.

Accounts receivable

Accounts receivable are recorded net of allowances for returns and doubtful accounts of approximately $869,000 and $913,000 as of September 30, 2018 and December 31, 2017, respectively. The allowances are calculated based on historical analysis including customer returns and bad debts.

In addition to allowances for returns on accounts receivable, an accrual is made for the return of product that have been sold to customers and had cash collections, while the customer still has the right to return the product. In addition, an accrual is made for contract fees deducted by the customer. The amounts of these accruals included in accounts payable and accrued liabilities in our Condensed Consolidated Balance Sheets were approximately $103,000 and $180,000 as of September 30, 2018 and December 31, 2017, respectively.

Inventories

Inventories consist primarily of finished products held for resale and are valued at the lower of cost (first-in, first-out method) or net realizable value. We adjust inventory for estimated obsolescence when necessary based upon demand and market conditions. The Company’s reserve for obsolescence was approximately $289,000 and $247,000 as of September 30, 2018 and December 31, 2017, respectively. Included in inventory at September 30, 2018 and December 31, 2017 is approximately $55,000 and $51,000, respectively, of consigned product that has been shipped to customers under the 30-day free trial period for which the trial period has not expired and as such the customer has not accepted the product, as well as consigned products that are held at retailer distributors for sale.

Property and equipment

Property and equipment are carried at cost and depreciation and amortization is computed over the estimated useful lives of the individual assets ranging from 3 to 7 years for computer hardware and software and furniture and fixtures. Depreciation and amortization is computed using the straight-line method. Leasehold improvements are depreciated over the lesser of the estimated useful life and lease term. The related cost and accumulated depreciation of assets retired or otherwise disposed of are removed from the accounts and the resultant gain or loss is reflected in earnings. Maintenance and repairs are expensed currently while major renewals and betterments are capitalized. Depreciation and amortization expense amounted to approximately $59,000 and $177,000 and $51,000 and $129,000 for the three and nine months ended September 30, 2018 and 2017, respectively.

Property and equipment consisted of the following at:

	September 30, 2018			December 31, 2017
Computer hardware and software	$	209,509		$	154,061
Furniture and equipment		908,701			907,586
Leasehold improvements		55,840			55,840
		1,174,050			1,117,487
Accumulated depreciation and amortization		(407,484	)		(230,394	)
Property and equipment, net	$	766,566		$	887,093

Intangible assets

Definite-lived intangibles are amortized using the straight-line method over their estimated useful lives ranging from four to five years. Amortization expense was approximately $175,000 and $525,000 and $251,000 and $692,000 for the three and nine months ended September 30, 2018 and 2017, respectively. We evaluate the recoverability of the intangible assets periodically by taking into account events or circumstances that may warrant revised estimates of useful lives or that may indicate the asset may be impaired.

Impairment of long-lived assets

In accordance with ASC 360-10, “Accounting for the Impairment or Disposal of Long-Lived Assets,” long-lived assets are reviewed for impairment when circumstances indicate that the carrying value of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the assets to the future net undiscounted cash flows estimated by the Company to be generated by such assets. If such assets are considered to be impaired, the impairment to be recognized is the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of by sale are recorded as held for sale at the lower of carrying value or estimated net realizable value. No impairment losses were identified or recorded for the three and nine months ended September 30, 2018 and 2017.

Revenue recognition

On January 1, 2018, the Company adopted Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers, which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers that supersedes most current revenue recognition guidance. The updated guidance, and subsequent clarifications, collectively referred to as ASC 606, require an entity to recognize revenue when it transfers control of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

There was no significant impact to the statement of operations and comprehensive loss as the Company’s existing revenue policies are in line with ASC 606.

We recognize revenue when control of the promised goods or services is transferred to its customers in an amount that reflects the consideration expected to be entitled to in exchange for those goods or services. Our products are sold direct to consumers through direct response television, live home shopping, and e-commerce market places, as well as to retailers. We distribute product to international third-party distributors who purchase the products at wholesale pricing and sell it at an agreed upon price stipulated in the contracts. We also sell product to consumers through consignment arrangements with certain airlines and retailers in Hong Kong who sell products to consumers through in-flight magazines, duty-free carts, or sales counters.

We recognize revenue when performance obligations identified under the terms of the contracts with its customers are satisfied, which generally occurs upon transfer of control in accordance with the contractual terms and conditions of the sale. The majority of our revenue is recognized when product is shipped to the customer. Revenue is measured as the amount of consideration we receive upon shipment. Variable consideration includes various fees charged to us for cooperative advertising, marketing development, chargebacks, other fees and returns. The Company separately offers extended warranties that are separate performance obligations for which the associated revenue is recognized over-time based on the extended warranty period. The revenue recognition for each of our segments are described below.

Direct to consumer

Our direct to consumer segment includes sales of product directly to end users via infomercials produced by ICTV classified as Direct Response Television (“DRTV”). Revenue is recognized at the point of sale time which is upon shipment to the customer. Also included are products sold to live home shopping networks. Products sold to live home shopping networks are recognized at a point in time which is upon shipment to the live home shopping network, often with the right to return unsold products. Revenue related to our DermaVital® continuity program is recognized monthly upon shipment to customers.

We offer a 30-day risk-free trial as one of our payment options. Revenue on the 30-day risk-free trial sales is not recognized until the control of goods has transferred to the customer which we determine to be when the trial period ends. If the risk-free trial expires without action by the customer, product is determined to be accepted by the customer and revenue is recorded. Revenue for items purchased without the 30-day free trial is recognized upon shipment of the product.

Retail

We generate revenue from products sold to retailers and are payable upon satisfaction of the performance obligation. Revenue is recognized at a point in time. Certain retailers have the right to return unsold products. We generally extend credit terms to our retail customers based on their creditworthiness. Revenue is recorded at the time of shipment.

International third-party distributors

We generate revenue through the sale of products to international third-party distributors who in-turn sell the products to the consumer. Revenue related to international wholesale and third-party distributor customers is recorded at gross amounts with a corresponding charge to cost of sales upon shipment. Revenue is recognized at a point in time when product is shipped to the customer. International third-party distributors are required to pay a deposit before shipment. As of September 30, 2018, and December 31, 2017, we recorded deposits for international third-party distributors of approximately $202,000 and $404,000, respectively, in deferred revenue, current portion.

Airlines and Hong Kong Retail

We sell products to consumers through consignment arrangements with certain airlines and retailers in Hong Kong to sell products to consumers through in-flight magazines, duty-free carts, or in-store counters. We control the goods shipped to the consignees until control of the goods has transferred to the customer. Control is considered transferred to a customer upon payment for goods of which we set the price for this activity. We act as the consignor and the principal, and accordingly, we record consignment sales on a gross basis, once the transfer of control of goods has been passed to the customer. Goods on consignment remain in our inventory until the product has been sold and control of the goods has transferred.

Warranty

We sell warranties on our products for various terms. Customers are offered the option to purchase an extended warranty separate from the product sale for 1 to 5 years. Revenue is recognized ratably over the term, with the unearned warranty included in deferred revenue on the accompanying condensed consolidated balance sheets.

Variable consideration

The amount of consideration we receive, and revenues recognized across our multi sales channels varies with changes in sales returns and other accommodations and incentives we offer to our customers. When we give our customers the right to return products or provide other accommodations such as chargebacks, promotional discounts, and rebates, we estimate the expected returns and claims based on historical rates as well as events and circumstances that indicate changes to historical rates of product returns and claims. We adjust our estimates of revenue at the earlier of when the most likely amount of consideration we expect to receive changes or when the amount of consideration becomes fixed.

Judgments

We have a return policy whereby the customer can return any product received within 30 days or 60 days of receipt for a full refund. We accrue a reserve for product returns with respect to sales of product when a right of return exists. We accrue a reserve for product returns and customer refunds at the time of sale based on our historical experience. We also accrue for contract fees based on historical experience of our retail customers, as well as expected fees as documented in our retail contracts. The provision for estimated returns as of September 30, 2018 and December 31, 2017 was approximately $605,000 and $747,000, respectively, and has been included in the allowance for returns and doubtful accounts in the accompanying condensed consolidated balance sheets. The reserve for customer refunds and contract fees payable was approximately $103,000 at September 30, 2018 and $180,000 at December 31, 2017 and has been included in accounts payable and accrued liabilities in the accompanying condensed consolidated balance sheets. The amount of goods to be returned to inventory was determined to be immaterial.

For the three and nine months ended September 30, 2018 and 2017, we recorded sales returns of approximately $692,000 and $3,063,000 and $1,225,000 and $4,530,000 respectively, as a reduction of net sales.

Sales taxes

Sales and similar taxes that are imposed on our sales and collected from customers are excluded from net sales.

Shipping and handling costs

Costs for shipping and handling costs, including those activities that occur subsequent to transfer of control to the customer, are recorded as cost of sales and expensed as incurred. We accrue costs for shipping and handling activities that occur after control of the promised goods has transferred to the customer. Revenue from shipping and handling charges was approximately $203,000 and $810,000 and $427,000 and $1,550,000 for the three and nine months ended September 30, 2018 and 2017, respectively. 

Remaining Performance Obligations

As part of our adoption of the new revenue standard, we have elected to use a practical expedient to exclude disclosure of transaction prices allocated to remaining performance obligations, and when we expect to recognize such revenue, for all periods prior to the date of initial application of the standard.

As of September 30, 2018, approximately $302,000 is expected to be recognized from remaining performance obligations for warranty revenue. We expect to recognize revenue for these remaining performance obligations during the next five years approximately as follows:

	Remaining Three Months 2018		2019		2020		2021		2022		2023
Estimated Deferred Warranty Revenue from remaining	$	44,000	$	126,000	$	69,000	$	42,000	$	19,000	$	2,000

Disaggregation of revenue

The following table shows the Company’s revenues disaggregated by reportable segment:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Direct to Consumer	$	4,233,444	$	5,401,048	$	13,155,589	$	17,719,533
International Third-Party Distributors		334,856		380,755		1,807,245		1,842,373
Retail		438,951		1,377,613		4,864,526		2,226,044
Airlines/Hong Kong Retail		476,658		400,338		1,639,411		1,368,999
	$	5,483,909	$	7,559,754	$	21,466,771	$	23,156,949

The following table provides information about contract assets which includes accounts receivable, and contract liabilities which includes deferred revenue and accrued returns and contract fees payable from contracts with customers:

	September 30, 2018		December 31, 2017
Accounts receivable, net of allowance for returns of $604,664 and $747,269, respectively, and doubtful accounts of $264,498 and $166,034, respectively	$	2,208,095	$	3,576,376
Total contract assets	$	2,208,095	$	3,576,376
Deferred revenue	$	504,390	$	598,378
Accrued returns and contract fees payable		102,980		179,922
Total contract liabilities	$	607,370	$	778,300

Research and Development

Research and development costs are expensed as incurred and are included in selling and marketing expense in the accompanying condensed consolidated statements of operations and comprehensive loss. Research and development costs primarily consist of efforts to discover and develop new products, including clinical trials, product safety testing, and certifications for international regulations and standards. Research and development costs approximated $57,000 and $134,000 and $146,000 and $210,000 for the three and nine months ended September 30, 2018 and 2017, respectively.

Advertising

Advertising costs, consisting of media, internet marketing and production costs, are expensed as incurred and are included in selling and marketing expense in the accompanying condensed consolidated statements of operations and comprehensive loss. Production costs associated with the creation of new and updated infomercials and advertising campaigns are expensed at the commencement of a campaign. We incurred approximately $1,414,000 and $5,212,000 and $2,000,000 and $5,578,000 in media costs for airing of television and print advertising, $727,000 and $2,617,000 and $1,243,000 and $3,332,000 in internet marketing costs, and $31,000 and $114,000 and $113,000 and $260,000 in productions costs for the three and nine months ended September 30, 2018 and 2017, respectively.

Income taxes

In preparing our condensed consolidated financial statements, we make estimates of our current tax exposure and temporary differences resulting from timing differences for reporting items for book and tax purposes. We recognize deferred taxes by the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred income taxes are recognized for differences between the financial statement and tax basis of assets and liabilities at enacted statutory tax rates in effect for the years in which the differences are expected to reverse. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date.

In addition, valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized. In consideration of our accumulated losses and limited historical ability to generate taxable income to utilize our deferred tax assets, we have estimated that we will not be able to realize any benefit from our temporary differences and have recorded a full valuation allowance. If we sustain profitability in the future at levels which cause management to conclude that it is more likely than not that we will realize all or a portion of the net operating loss carry-forward, we would record the estimated net realized value of the deferred tax asset at that time and would then provide for income taxes at a rate equal to our combined federal and state effective rates. Subsequent revisions to the estimated net realizable value of the deferred tax asset could cause our provision for income taxes to vary significantly from period to period.

Stock options

In June 2001, our shareholders approved our 2001 Stock Option Plan (the “Plan”). The Plan is designed for our employees, officers and directors and is intended to advance our best interests by providing personnel who have substantial responsibility for our management and growth with additional incentive by increasing their proprietary interest in our success, thereby encouraging them to remain our employee. The Plan is administered by our Board of Directors and authorizes the issuance of stock options not to exceed a total of 3,000,000 shares. The terms of any awards under the Plan are determined by the Board of Directors, provided that no options may be granted at less than the fair market value of the stock as of the date of the grant. The Plan expired in February 2011. As of September 30, 2018, 50,000 options are outstanding under the Plan.

In December 2011, our shareholders approved our 2011 Stock Option Plan (the “2011 Plan”). The 2011 Plan is designed for our employees, officers, and directors, and is intended to advance our best interests by providing personnel who have substantial responsibility for our management and growth with additional incentive by increasing their proprietary interest in our success, thereby encouraging them to remain our employee. The 2011 Plan is administered by our Board of Directors and authorizes the issuance of stock options not to exceed a total of 6,000,000 shares. In December 2017, the 2011 Plan was amended to increase the number of stock options that may be awarded to not exceed a total of 8,000,000 shares. The terms of any awards under the 2011 Plan are determined by the Board of Directors, provided that no options may be granted at less than the fair market value of the stock as of the date of the grant. Generally, the options granted vest over three years with one-third vesting on each anniversary date of the grant. As of September 30, 2018, 3,888,335 options are outstanding under the 2011 Plan.

We account for equity instruments issued to non-employees in accordance with the provisions of ASC Topic 505, subtopic 50, Equity-Based Payments to Non-Employees based upon the fair-value of the underlying instrument. The equity instruments, consisting of stock options granted to consultants, are valued using the Black-Scholes valuation model. The measurement of stock-based compensation to non-employees is subject to periodic adjustments as the underlying equity instruments vest and is recognized as an expense over the period which services are received. Nonvested stock options granted to non-employees are remeasured at each reporting period.

We use ASC Topic 718, “Share-Based Payments”, to account for stock-based compensation issued to employees and directors. We recognize compensation expense in an amount equal to the grant date fair value of share-based payments such as stock options granted to employees over the requisite vesting period of the awards using the Black-Scholes valuation model.

In May 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2017-09, which clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. ASU 2017-09 will reduce diversity in practice and result in fewer changes to the terms of an award being accounted for as modifications. Under ASU 2017-09, an entity will not apply modification accounting to a share-based payment award if the award’s fair value, vesting conditions and classification as an equity or liability instrument are the same immediately before and after the change. ASU 2017-09 will be applied prospectively to awards modified on or after the adoption date. The guidance is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. On January 1, 2018, we adopted the provisions of ASU 2017-09 prospectively which did not have a material impact on our condensed consolidated financial statements.

The following is a summary of stock options outstanding under the Plan and 2011 Plan (collectively “Stock Option Plans”) for the nine months ended September 30, 2018 and 2017:

	Number of Shares								Weighted Average
	Employee			Non-Employee		Totals			Exercise Price
Balance, January 1, 2018		3,993,335			-		3,993,335		$	0.27
Granted during the year		1,555,000			-		1,555,000			0.26
Exercised during the year		-			-		-			-
Cancelled during the year		(700,000	)		-		(700,000	)		0.33
Forfeited during the year		(910,000	)		-		(910,000	)		0.36
Balance, September 30, 2018		3,938,335			-		3,938,335		$	0.21

	Number of Shares								Weighted Average
	Employee			Non- Employee		Totals			Exercise Price
Balance, January 1, 2017		3,680,002			-		3,680,002		$	0.24
Granted during the year		280,000			-		280,000			0.49
Exercised during the year		(136,667	)		-		(136,667	)		0.15
Forfeited during the year		(93,333	)		-		(93,333	)		0.32
Balance, September 30, 2017		3,730,002			-		3,730,002		$	0.26

Of the stock options outstanding as of September 30, 2018 under the Stock Option Plans, 3,433,335 options are currently vested and exercisable. The weighted average exercise price of these options was $0.23. These options expire through January 2028.

The aggregate intrinsic value for options outstanding and exercisable at September 30, 2018 and 2017 was approximately $0 and $618,000, respectively. The aggregate intrinsic value for stock options exercised during the nine months ended September 30, 2017 was approximately $49,000.

On January 9, 2018, we issued options to purchase 1,050,000 shares of the Company’s common stock to six employees, at an exercise price of $0.33 per share. Three of those employees were terminated in the second quarter of 2018, resulting in the forfeiture of their unvested options to purchase, in the aggregate, 600,000 shares of common stock. On June 21, 2018, the remaining three employees voluntarily surrendered their options to purchase, in the aggregate, 450,000 shares of common stock, in consideration of a future stock grant. On June 21, 2018, we issued 400,000 shares of common stock to such remaining three employees, Kelvin Claney, CEO, Douglas Crouthers, Interim President and VP of Sales, and Vincent Dargush, VP of Marketing and Operations, at a fair value of $0.10 per share based on the closing of the Company’s common stock on the date of issuance, in consideration of the surrender of previously granted options and, in each case, as a share bonus, which was immediately vested, for performance in the second quarter of 2018. Also, on June 21, 2018, we issued 300,000 shares of common stock to Ernest P. Kollias, Jr., CFO, at a fair value of $0.10 per share based on the closing of the Company’s common stock on the date of issuance, also as a share bonus, in consideration for performance during the second quarter of 2018, which was immediately vested. The shares issued on June 21, 2018 are restricted for a period of six months from issuance. The recipients of the shares of common stock are key employees of our Company, and the issuance of the common stock is exempt from registration under Section 4(2) of the Securities Act of 1933.

The Company follows the provisions of ASC Topic 718 “Compensation — Stock Compensation” which requires the measurement and recognition of compensation expense for all share-based payment awards either modified or granted to employees and directors based upon estimated fair values. The 600,000 options forfeited were not vested at the time of forfeiture and therefore resulted in a reversal of previously recognized compensation expense in the amount of approximately $12,000. The result of the modification of issuing 400,000 shares of fully-vested common stock in replacement of 450,000 options surrendered, as noted above, was to immediately recognize the fair value of the original options granted totaling approximately $124,000 and the incremental change in fair value of the replacement awards, which was de minimis to share based compensation expense.

On November 30, 2017, Philip Solomon was granted 250,000 stock options. On July 9, 2018, the Board of Directors authorized the issuance of common stock to Phillip Solomon for the replacement of 250,000 surrendered stock options. Mr. Solomon surrendered these options in consideration of fully-vested 100,000 shares of the Company’s Common Stock. The fair value of the shares was the closing price of the Company’s common stock on July 9, 2018, which was $0.10.

The Company follows the provisions of ASC Topic 718 “Compensation — Stock Compensation” which requires the measurement and recognition of compensation expense for all share-based payment awards either modified or granted to employees and directors based upon estimated fair values. The result of the modification of issuing 100,000 shares of common stock in replacement of 250,000 options surrendered, as noted above, was to immediately recognize the fair value of the original options granted totaling approximately $76,000 to share based compensation expense, and there was no incremental increase in fair value of the replacement awards.

For the three and nine months ended September 30, 2018 and 2017, we recorded approximately $98,000 and $268,000, and $59,000 and $205,000, respectively, in stock compensation expense under the Stock Option Plans. At September 30, 2018, there was approximately $7,000 of total unrecognized compensation cost related to non-vested option grants that will be recognized over the remaining vesting period of 3 years.

The following weighted average assumptions are used in the Black-Scholes option pricing model for the nine months ended September 30, 2018 and 2017 to value the stock options granted during the period:

2018				2017
Risk-free interest rate		2.84	%	Risk-free interest rate		2.17	%
Expected dividend yield		0	%	Expected dividend yield		0	%
Expected life		6 years		Expected life		6 years
Expected volatility		142.79	%	Expected volatility		145	%
Weighted average grant date fair value	$	0.26		Weighted average grant date fair value	$	0.46
Forfeiture rate		0	%	Forfeiture rate		5	%

The following is a summary of stock options outstanding outside of the Stock Option Plans for the nine months ended September 30, 2018 and 2017:

	Number of Shares
	Employee		Non - Employee		Totals		Weighted Average Exercise Price
Balance, January 1, 2018		333,333		1,476,667		1,810,000	$	0.31
Granted during the year		-		400,000		400,000		0.11
Exercised during the year		-		-		-		-
Expired during the period		-		-		-		-
Balance, September 30, 2018		333,333		1,876,667		2,210,000	$	0.26

	Number of Shares
	Employee			Non - Employee			Totals			Weighted Average Exercise Price
Balance, January 1, 2017		516,667			1,676,667			2,193,334		$	0.35
Granted during the year		-			-			-			-
Exercised during the year		(183,334	)		-			(183,334	)		0.27
Expired during the period		-			(200,000	)		(200,000	)		0.80
Balance, September 30, 2017		333,333			1,476,667			1,810,000		$	0.31

Of the stock options currently outstanding outside of the Stock Option Plans at September 30, 2018, 1,935,000 options are currently vested and exercisable. The weighted average exercise price of these options was $0.30. These options expire through January 2026. The aggregate intrinsic value for options outstanding and exercisable at September 30, 2018 and 2017 was approximately $0 and $411,000, respectively. There were no options exercised during the nine months ended September 30, 2018. The aggregate intrinsic value for stock options exercised during the nine months ended September 30, 2017 was approximately $40,000.

For the three and nine months ended September 30, 2018 and 2017, we recorded approximately $9,000 and $18,000, and $5,000 and $18,000, respectively in stock compensation expense related to stock options outside of the Stock Option Plans. At September 30, 2018, there is approximately, $9,000 of remaining unrecognized compensation cost that will be recognized over the remaining service period of 3 years. Change in the fair value of the options issued to non-employees, as of September 30, 2018 was de minimis.

The following weighted average assumptions are used in the Black-Scholes option pricing model for the nine months ended September 30, 2018 and 2017 to value the stock options granted during the period:

2018
Risk-free interest rate		2.77	%
Expected dividend yield		0.00	%
Expected life		3 years
Expected volatility		143.03	%
Weighted average grant date fair value	$	0.11

There were no options granted for the nine months ended September 30, 2017.

The following is a summary of all stock options outstanding and nonvested for the nine months ended September 30, 2018:

										Weighted Average
	Employee			Non- Employee			Totals			Exercise Price
Balance, January 1, 2018		476,667			-			476,667		$	0.42
Granted during the period		1,555,000			400,000			1,955,000			0.23
Vested during the period		(10,000	)		(125,000	)		(135,000	)		0.11
Cancelled during the period		(700,000	)		-			(700,000	)		0.33
Forfeited during the period		(816,667	)		-			(816,667	)		0.36
					-
Balance, September 30, 2018		505,000			275,000			780,000		$	0.14

Recently Issued Accounting Pronouncements

In August 2018, the Financial Accounting Standards Board (“FASB”), issued Accounting Standards Update (“ASU”), 2018-13 that eliminates certain disclosure requirements for fair value measurements for all entities, requires public entities to disclose certain new information and modifies some disclosure requirements. The FASB developed the amendments to Accounting Standards Codification (“ASC”) 820 as part of its broader disclosure framework project, which aims to improve the effectiveness of disclosures in the notes to financial statements by focusing on requirements that clearly communicate the most important information to users of the financial statements. The new guidance is effective for all entities for fiscal years beginning after December 15, 2019 and for interim periods within those fiscal years. An entity is permitted to early adopt either the entire standard or only the provisions that eliminate or modify requirements. We are currently evaluating the effect of this guidance on our disclosure.

In June 2018, the FASB issued ASU 2018-07 Compensation – Stock Compensation (Topic 718), Improvements to Nonemployee Share-Based Payment Accounting. This ASU is intended to simplify aspects of share-based compensation issued to non-employees by making the guidance consistent with the accounting for employee share-based compensation. It is effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2018. We are currently in the process of evaluating the impact of the adoption of ASU 2018-07 on its condensed consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13), which requires measurement and recognition of expected credit losses for financial assets held. The ASU is effective for interim and annual periods beginning December 15, 2019 and early adoption is permitted. Entities are required to adopt ASU 2016-13 using a modified retrospective approach, subject to certain limited exceptions. We are currently evaluating the impact of our pending adoption of ASU 2016-13 on our condensed consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which requires lessees to recognize on the balance sheet assets and liabilities for leases with lease terms of more than 12 months. Consistent with current GAAP, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee will depend primarily on its classification as a finance or operating lease. However, unlike current GAAP-which requires only capital leases to be recognized on the balance sheet-the new ASU will require both types of leases to be recognized on the balance sheet. The ASU will take effect for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. This ASU can be applied at the beginning of the earliest period presented using the modified retrospective approach, which includes certain practical expedients that an entity may elect to apply, including an election to use certain transition relief.

In July 2018, the FASB issued ASU No. 2018-10, Codification Improvements to Topic 842, Leases and ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, which make improvements to Accounting Standards Codification (“ASC”) 842 and allow entities to not restate comparative periods in transition to ASC 842 and instead report the comparative periods under ASC 840. The Company plans to adopt this standard using the modified retrospective approach in the first quarter of fiscal 2019, coinciding with the standard’s effective date. While the Company is still evaluating this ASU and related updates, the Company has determined that the primary impact will be to recognize on the balance sheet material right-of-use assets and material lease obligations for all leases with lease terms greater than 12 months.

Reclassifications

Certain prior period amounts have been reclassified for consistency with the current period presentation of Retail as a reportable segment, as well as the amortization and depreciation being combined on the Statement of Cash Flows for 2017. These reclassifications had no effect on the reported results of operations.

XML

Business and Asset Acquisitions

9 Months Ended

Sep. 30, 2018

Business Combinations [Abstract]

Business and Asset Acquisitions

Note 3 - Business and Asset Acquisitions

PhotoMedex Acquisition

As described in Note 1, the PhotoMedex Purchase Agreement was entered into on October 4, 2016 and was completed on January 23, 2017. The total purchase price was $9,500,000.

The purchase price paid by ICTV Holdings in the PhotoMedex Acquisition was paid as follows: (i) $3,000,000 of the purchase price which was raised in a private placement (described below in more detail) was deposited on October 5, 2016 into an escrow account established by counsel to the Company and ICTV Holdings, as escrow agent (the “Escrow Agent”), under an escrow agreement entered into on October 4, 2016 among the Company, ICTV Holdings, the PHMD Sellers, the Escrow Agent, and certain investors in the Company’s private placement (the “Escrow Agreement”), which escrow funds were paid to the PHMD Sellers on January 23, 2017, in accordance with the Escrow Agreement and subject to the conditions thereof; (ii) $2,000,000 of the purchase price was to be paid on or before the 90^th day following January 23, 2017; and (iii) the remainder of the purchase price of $4,500,000 was payable in the form of a continuing royalty as described in more detail below. On October 4, 2016, as required by the PhotoMedex Purchase Agreement, we delivered to PhotoMedex a letter of credit from LeoGroup Private Debt Facility L.P. (a significant shareholder), a private equity fund that secured our obligation to make the $2,000,000 payment referred to in clause (ii) above. The letter of credit was valid until the earlier of; (1) full payment on demand and presentation on or before January 23, 2017, or (2) 180 days from the date of letter of credit. The Company paid $250,000 of the purchase price payable per clause (ii) above in March 2017 and the balance of $1,750,000 was paid on April 22, 2017.

Under the PhotoMedex Purchase Agreement, we were required to pay to PhotoMedex and its subsidiaries a continuing monthly royalty on net cash (invoiced amount less sales refunds, returns, rebates, allowances and similar items) actually received by us or our affiliates from sales of the consumer products that we acquired from PhotoMedex. Such royalty payments commenced with net cash actually received from and after January 23, 2017, and would continue until the total royalty paid to PhotoMedex and its subsidiaries totals $4,500,000, calculated as follows: (i) 35% of net cash from the sale of all acquired consumer products sold through live television promotions made through Home Shopping Network (HSN) in the United States, QVC in the European Union, and The Shopping Channel (TSC) in Canada, less (a) deductions for sales commissions actually paid and on-air costs incurred for those amounts collected related to the sale of the acquired consumer products made through HSN in the United States, QVC in the European Union, and The Shopping Channel (TSC) in Canada, and (b) the cost of goods sold to generate such net cash; and (ii) 6% of net cash from the sale of all acquired consumer products other than the foregoing sales. The fair value of the contingent consideration was determined using the present value of expected payments as of the date of acquisition and totaled $4,198,043 using the assumption of a 9.7% discount rate over 18 months. On July 12, 2017, the Company entered into a Termination and Release Agreement with the PHMD, whereby afterward no further obligation remained.

In connection with the PhotoMedex Purchase Agreement, on October 4, 2016, ICTV Holdings entered into a transition services agreement with the PHMD Sellers (the “Transition Services Agreement”), pursuant to which PHMD Sellers had agreed to make available to ICTV Holdings certain services on a transitional basis and allow ICTV Holdings to occupy and use a portion of the PHMD Sellers’ premises and warehouses, in exchange for which ICTV Holdings was to (i) pay to the PHMD Sellers the documented costs and expenses incurred by them in connection with the provision of those services; (ii) pay to the PHMD Sellers the documented lease costs including monthly rental and any utility charges incurred under the applicable leases; (iii) reimburse the PHMD Sellers for the documented costs and expenses incurred by them for the continued storage of inventory and raw materials at warehouse locations, and for services for fulfilling and shipping orders for such inventory; and (iv) reimburse the PHMD Sellers for the payroll, employment-related taxes, benefit costs and out of pocket expenses paid to or on behalf of employees. As of July 12, 2017, pursuant to the terms of the Transition Services Agreement and the Release Agreement, ICTV Holdings has no further obligations under the Transition Services Agreement.

Pursuant to the Release Agreement, as of July 12, 2017, the contingent consideration balance to PhotoMedex totaling $3,579,760 was extinguished. Therefore, the balance at both September 30, 2018 and December 31, 2017 was zero.

The following unaudited condensed pro forma financial information for the nine months ended September 30, 2018 and 2017 represent the combined results of the Company’s operations as if the PhotoMedex Acquisition had occurred on January 1, 2017. Excluded from the pro forma net loss and net loss per share amounts for the nine months ended September 30, 2017 are one-time acquisition costs of $49,312 attributable to the PhotoMedex Acquisition, and the one time settlement gain of $1,969,245. These pro forma results are not necessarily indicative of what historical performance would have been had this business combination been effective as of the hypothetical acquisition date, nor should they be interpreted as expectations of future results.

	For the three months ended September 30,						For the nine months ended September 30,
	2018			2017			2018			2017
Net sales	$	5,483,909		$	7,559,754		$	21,466,771		$	26,695,949
Net loss	$	(1,293,637	)	$	(2,356,103	)	$	(2,012,136	)	$	(3,858,089	)
Net loss per share – basic and diluted	$	(0.02	)	$	(0.05	)	$	(0.04	)	$	(0.08	)
Weighted average number of common shares basic and diluted		53,132,004			52,321,826			52,633,008			49,518,478

The results of operations for the PhotoMedex acquisition have been included in the consolidated financial statements from January 23, 2017, the effective date of the acquisition.

Ermis Labs Asset Purchase

As described in Note 1, the Ermis Labs asset purchase was entered into on October 4, 2016 and was completed on January 23, 2017. Pursuant to the agreement, the aggregate purchase price was to be paid as follows: (i) the issuance of 2,500,000 shares of our common stock to the stockholders of Ermis Labs, which had a fair value on the date of acquisition of $850,000 and (ii) $1,750,000 payable in the form of a continuing royalty as described in more detail below. The issuance of the common stock was made in reliance upon an exemption from the registration requirements of the Securities Act provided under Section 4(a)(2) of the Securities Act.

Under the Ermis purchase agreement, we are required to pay to Ermis Labs a continuing monthly royalty of 5% of net cash (invoiced amount less sales refunds, returns, rebates, allowances and similar items) actually received by us or our affiliates from sales of the over-the-counter medicated skin care products acquired in the Ermis Labs Asset Acquisition, commencing with net cash actually received by us or our affiliates from and after January 23, 2017 and continuing until the total royalty paid to Ermis Labs totals $1,750,000; provided, however, that we are required to pay a minimum annual royalty amount of $175,000 on or before December 31 of each year commencing with calendar year ending December 31, 2017. The present value of the deferred consideration of $1,750,000 was $1,131,822, based on the assumption of a discount rate of 10.7% over ten years. All of the assets acquired from Ermis Labs were determined to be impaired and written off at December 31, 2017.

The changes in the Company’s deferred consideration payable due to Ermis Labs, Inc. during the nine months ended September 30, 2018:

Balance at December 31, 2017	$	1,212,067
Consideration payments		(160,414	)
Accretion of interest		70,527
Balance at September 30, 2018-related party	$	1,122,180
Current portion	$	86,392
Non-current portion		1,035,788
	$	1,122,180

For the nine months ended September 30, 2018, consideration payments represented the remaining minimum royalty for the calendar year ended December 31, 2017. We did not incur any royalties for sales of products for both the nine months ended September 30, 2018 and 2017. Interest expense was approximately $23,500 and $71,000 for the three and nine months ended September 30, 2018, respectively, and approximately $23,700 and $69,300 for the three months and nine months ended September 30, 2017, respectively

XML

Fair Value Measurements

9 Months Ended

Sep. 30, 2018

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 4 - Fair Value Measurements

We evaluate assets and liabilities subject to fair value measurements on a recurring and non-recurring basis to determine the appropriate level to classify them for each reporting period. This determination requires significant judgments to be made by the Company. The following table sets forth our liabilities that were measured at fair value as of September 30, 2018, by level within the fair value hierarchy:

	Amounts at		Fair Value Measurement
	Fair Value		Level 1		Level 2		Level 3
Note Payable to AOR	$	298,719		-		-	$	298,719
Total liabilities measured at fair value	$	298,719		-		-	$	298,719

The note payable due to AOR, LLC is a Level 3 fair value measurement. The fair value of our liability was determined based on unobservable inputs that are not corroborated by market date, if available, when determining fair value.

The initial fair value of the note was determined to approximate its carry value. The change in fair value for the period ending September 30, 2018 was de minimis.

There is no active market for the debt and the value was based on the payment terms in addition to other facts and circumstances. The fair value of the convertible note was based on a probability-adjusted model, which entailed management estimating the probability of (i) exercising the early payment option and (ii) paying off the note according to the original terms. Factors affecting this estimate included the Company’s current financial position, financing plans, and operating objectives.

The Company has evaluated the estimated fair value of financial instruments using available market information and management’s estimates. The use of different market assumptions and/or estimation methodologies could have a significant effect on the estimated fair value amounts. The Company bases its estimates on historical experience and various other assumptions that it believes to be reasonable under the circumstances. Actual results may differ from management’s estimates if these results differ from historical experience or other assumptions do not prove to be substantially accurate, even if such assumptions are reasonable when made.

XML

Commitments and Contingencies

9 Months Ended

Sep. 30, 2018

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Note 5 - Commitments and contingencies

We entered a lease from March 2017 through February 2022 related to the office space in Wayne, Pennsylvania. In August 2017, we entered an amendment to expand our space, which increased the monthly base payments. Effective August 1, 2018, we terminated after one year the amendment for the additional space and reduced our payments to approximately $9,000 per month. Beginning January 1, 2018, we signed a new lease for our UK office effective through February 2022. The total monthly cost for our UK office is approximately $2,900. In March 2017, our Hong Kong office entered into a lease expiring in March 2018, which was then renewed until February 2022 for our current office space, costing approximately $1,900 a month. Our Israel office lease is for a one-year term ending in April 2018, which was then renewed until April, 2019 for approximately $1,900 a month. Rent expense incurred during the three and nine months ended September 30, 2018 and 2017 totaled approximately $51,000 and $179,000 and $83,000 and $224,000 respectively.

The schedule below details the future financial obligations under the active leases:

	Remaining
	Three
	Months										Total
	2018		2019		2020		2021		2022		Obligation
Wayne - Corporate HQ	$	29,470	$	119,015	$	120,309	$	121,633	$	20,309	$	410,736
Israel Office		5,700		7,600		-		-		-		13,300
UK Office		8,666		34,663		34,663		34,663		5,777		118,432
Hong Kong Office		5,569		22,275		22,275		22,275		3,713		76,107
Total Lease Obligations	$	49,405	$	183,553	$	177,247	$	178,571	$	29,799	$	618,575

Legal Matters

By letter dated March 23, 2018, the Company’s Board of Directors notified Richard Ransom, President of the Company, that his employment would be terminated for cause in 30 days unless Mr. Ransom cured the causes for termination, as presented in the letter, within such 30-day period.

On April 12, 2018, Mr. Ransom filed a Complaint in the Court of Common Pleas of Philadelphia County, Pennsylvania (the “Court”), naming as defendants the Company and our CEO, Kelvin Claney.  On May 3, 2018, the Company filed its Preliminary Objections to the Complaint with the Court. On May 22, 2018, Mr. Ransom withdrew the Complaint and filed an Amended Complaint. On or about June 11, 2018, the Company filed its Preliminary Objections to the Amended Complaint. Thereafter, the Court denied the Company’s Preliminary Objections.    The Amended Complaint alleges that on March 20, 2018, Mr. Ransom was terminated without cause, pursuant to the terms of Mr. Ransom’s employment agreement, as a result of certain changes to the Company’s organizational chart and management duties instituted by the Company’s Chief Executive Officer, Kelvin Claney.  The Amended Complaint seeks to recover Mr. Ransom’s severance compensation for a termination without cause, consisting of approximately $626,000 of base salary thorough the remaining term of his employment agreement; benefits and any performance bonus prorated through the date of termination; immediate vesting of 150,000 stock options; and 1,000,000 shares of the Company’s common stock.  The Amended Complaint also alleges that the Company and Mr. Claney defamed Mr. Ransom and seeks damages in an unspecified amount in excess of $50,000.  On October 29, 2018, the Company filed its Answer to the Amended Complaint denying the allegations therein and made certain Counterclaims against Mr. Ransom.  The Counterclaims allege that Mr. Ransom was terminated for Cause and seeks a Declaratory Judgment requesting same.  The Counterclaims also allege that Mr. Ransom breached his fiduciary duty to the Company and misappropriated and/or converted assets of the Company for his own personal benefit.  As a result, the Company seeks damages from Mr. Ransom in an unspecified amount in excess of $50,000. 

From time to time, we may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. Other than the legal proceeding described above, we are currently not aware of any such legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition, operating results or cash flows.

Other matters

Product Liability Insurance

For certain products, we were (and are) listed as an additional insured party under the product manufacturer’s insurance policy. We purchase our own liability insurance which will expire May 20, 2019. At present, management is not aware of any claims against us for any products sold.

XML

Intangible Assets

9 Months Ended

Sep. 30, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets

Note 6 – Intangible Assets

Intangible assets as of September 30, 2018 and December 31, 2017 consists of the following:

	Useful Life	Gross Carrying Cost		Accumulated Amortization			Impairment Loss		Net Book Value
September 30, 2018
DermaWand® Purchase	5 years	$	1,163,816	$	(800,725	)	$	-	$	363,091
PhotoMedex Patented/Unpatented Technology	5 years		940,628		(313,540	)		-		627,088
PhotoMedex Trademarks	5 years		1,100,000		(366,667	)		-		733,333
Total		$	3,204,444	$	(1,480,932	)	$	-	$	1,723,512

	Useful Life		Gross Carrying Cost		Accumulated Amortization			Impairment Loss			Net Book Value
December 31, 2017
Ermis Labs Formulations/ Trademarks	5 years	$	1,512,443	$	(277,281	)	$	(1,235,162	)	$	-
DermaWand® Purchase	5 years		1,163,816		(581,673	)		-			582,143
PhotoMedex Patented/Unpatented Technology	5 years		940,628		(172,447	)		-			768,181
PhotoMedex Trademarks	5 years		1,100,000		(201,667	)		-			893,333
Total		$	4,716,887	$	(1,233,068	)	$	(1,235,162	)	$	2,248,657

Amortization expense was approximately $175,000 and $525,000 and $251,000 and $692,000 for the three and nine months ended September 30, 2018 and 2017, respectively, of which approximately $73,000 and $219,000 of amortization expense is included in cost of sales for the three and nine months ended September 30, 2018 and $73,000 and $218,000 for the three and nine months ended September 30, 2017, and approximately $102,000 and $306,000 is included in general and administrative expenses for the three and nine months ended September 30, 2018, and $178,000 and $474,000 is included in general and administrative expenses for the three and nine months ended September 30, 2017, respectively. Management evaluates the intangible assets for impairment when there is a triggering event.

The following table outlines the estimated future amortization expense related to the intangible assets held as of September 30, 2018:

2018 (remaining three months)	$	175,000
2019		699,000
2020		408,000
2021		408,000
2022		34,000
Total	$	1,724,000

XML

DermaWand® Purchase Agreement

9 Months Ended

Sep. 30, 2018

Dermawand Purchase Agreement

DermaWand® Purchase Agreement

Note 7 – DermaWand® Purchase Agreement

On January 22, 2016, we entered into a Purchase Agreement with Omega 5 Technologies, Inc. to acquire the worldwide ownership of the DermaWand® patent and all related trademarks and intellectual property for the sum of $1,200,000 to be paid out as follows: $300,000 per year for calendar years 2016 through 2019, payable in uniform quarterly installments on or before the last day of each calendar quarter. As a result, effective January 1, 2016, we are no longer obligated to make royalty payments on sales of DermaWand®. There shall be no interest charged, and we may, in our sole discretion, at any time without permission or penalty pre-pay some or all of the purchase price. Under our old licensing agreement, we had been assigned the patents, related trademarks, and exclusive commercial rights to DermaWand® based upon a $2.50 per unit fee and maintaining annual minimum royalty requirements.

As a result of the agreement, we recorded an offsetting asset and liability at January 1, 2016 in the amount of $1,200,000 for the asset from the intellectual property acquired and a corresponding liability per the payment schedule. As there is no interest charged with the purchase agreement we recorded a discount for imputed interest of approximately $37,000, calculated based on the applicable federal rates at January 22, 2016 of 1.45%, which will be amortized over the term of the agreement using the effective interest method. The intangible asset balance for the patent and trademark will be amortized using the straight-line method over the four period of the agreement, which at this time is management’s best estimate of the remaining useful life.

As of September 30, 2018, the liability balance was approximately $522,000 net of the discount for imputed interest of approximately $3,000 and is classified as other liabilities on the condense consolidated balance sheets. For the three and nine months ended September 30, 2018 and 2017, we amortized approximately $1,000 and $5,000 and $3,000 and $9,000, respectively, of interest expense related to the discount for imputed interest.

XML

Long-term Debt to Related Party

9 Months Ended

Sep. 30, 2018

Debt Disclosure [Abstract]

Long-term Debt to Related Party

Note 8 – Long-term Debt to Related Party

On July 15, 2017, the Company entered a 30-month secured promissory note (the “Note”), to LeoGroup Private Investment Access, LLC (the “Holder”), a significant shareholder and hence related party, in the principal amount of $2,000,000 with an effective interest rate of 34%. The Note provides that the Company shall make monthly principal and interest payments of $100,000 to the Holder for 30 months through January 2020. The Note is secured by a first priority security interest in all the assets of Company, except the Company’s accounts receivable. The Note contains customary financial covenants of the Company and customary events of default. The Company is currently in compliance with this Note. Subject to the terms and conditions of the Note, so long as any event of default, as described in the Note, is continuing, without cure, for a period of five (5) business days after written notice from the Holder to the Company or a longer period if set forth in the notice from Holder or if agreed to by the parties, all obligations of the Company under the Note shall be immediately due and payable, and the Holder may exercise any other remedies available at law or in equity. The Note may not be prepaid, in whole or in part, at any time and from time to time, unless expressly agreed to in writing by the Holder. The total amount of related party interest expense during the three and nine months ended September 30, 2018 was approximately $116,000 and $392,000. There was interest expense of approximately $140,000 for both the three and nine months ended September 30, 2017.

The balance of the long-term debt as of September 30, 2018 and December 31, 2017 was as follows:

	September 30, 2018			December 31, 2017
Total Debt	$	1,289,240		$	1,797,049
Less: current portion	$	(916,145	)	$	(722,908	)
Long-term debt, net	$	373,095		$	1,074,141

Maturities of long-term debt at September 30, 2018, are as follows:

December 31,
2018 (remaining three months)	$	215,100
2019		976,906
2020		97,234
	$	1,289,240

XML

Notes Payable

9 Months Ended

Sep. 30, 2018

Debt Disclosure [Abstract]

Notes Payable

Note 9 – Notes Payable

Note Payable to Amazon

On June 22, 2018, ICTV signed a formal 12-month loan agreement with Amazon Lending. The loan was given in the amount of $145,000 and carries an annual interest rate of 9.69%. For both the three and nine months ended September 30, 2018, interest expense was approximately $3,000. The loan is paid in twelve equal payments of principal and interest of approximately $13,000. These payments will be automatically deducted from any sales that ICTV generates from Amazon.com. If the sales generated do not sufficiently cover the amount of the monthly payment due, Amazon.com is authorized to charge the Company’s credit card on file. There is no early payoff fee for this loan agreement. In the event of a default by the Company, Amazon Lending has a second lien on any and all assets that are at Amazon warehousing facilities, subordinate to the LeoGroup Private Investment Access, LLC Note (see Note 8). The current balance of the loan is approximately $135,000 as of September 30, 2018.

Note Payable to related party

On July 6, 2018, the Company issued a promissory note to Stephen Jarvis, a member of the Board of Directors, for a 60-day interest free loan of $100,000 from Mr. Jarvis. This loan is to be repaid to the lender within 60 days of receipt. If the loan is not paid within 30 days of the due date, it will be considered in default and the note will bear an 18% interest rate until paid. Effective September 4, 2018, the loan was modified and extended all terms and conditions to be due 180 days from issuance.

Note Payable to AOR at fair value

On September 20, 2018, AOR Direct, LLC , a media vendor, and the Company entered into an agreement to convert approximately $299,000 of outstanding payables into a loan with a partial convertible feature. The loan carries a 16% interest rate per annum. The loan is payable in eighteen monthly installments of approximately $19,000, due on the last day of each month, beginning on October 31, 2018. The loan carries an option to prepay $200,000 on or before December 31, 2018. If the Company makes this $200,000 prepayment, the Lender, AOR Direct, LLC, will issue $50,000 of debt forgiveness after which the Lender will allow the Company to convert the remaining, which would approximate $49,000 of debt to common stock, at the closing price of the stock on the day of the signing of the agreement which was $0.08. We have elected to account for the loan using the fair value method which requires the Company to record changes in the fair value as a component of other income and expenses, as outlined in Note 4 Fair Value Measurements. The fair value of the note was estimated at face value of approximately $299,000.

XML

Related Party Transactions

9 Months Ended

Sep. 30, 2018

Related Party Transactions [Abstract]

Related Party Transactions

Note 10 - Related party transactions

LeoGroup Private Debt Facility L.P. (“LeoGroup”) became a major shareholder as part of the Ermis Labs Asset Acquisition described in Notes 1 and 3. During the nine months ended September 30, 2018, approximately $160,000 of payments were made to LeoGroup Private Access, LLC in connection with the deferred consideration for the Ermis Labs Asset Acquisition.

On July 15, 2017, LeoGroup Private Access, LLC provided the Company with the $2,000,000 30-month secured promissory note to allow the buyout of the PhotoMedex royalty described in Notes 1 and 7. During the three and nine months ended September 30, 2018, $300,000 and $900,000 of payments, respectively, were made on the loan of which approximately $116,000 and $392,000, respectively, were interest expense. For the three and nine months ended September 30, 2017, interest expense of approximately $140,000 was recorded. 

On May 2, 2018, the Company and Kelvin Claney, the Company’s Chief Executive Officer, entered into a subscription agreement pursuant to which the Company issued to Mr. Claney 210,000 shares of series A preferred stock, par value $0.001 per share (the “Series A Preferred Stock”), for cash consideration of $403,200, or $1.92 per share described in Note 11.

XML

Series A Preferred Stock

9 Months Ended

Sep. 30, 2018

Equity [Abstract]

Series A Preferred Stock

Note 11 –Series A Preferred Stock

On May 1, 2018, the Board of Directors designated 210,000 shares of the Company’s Series A Preferred Stock and authorized the sale of the Series A Preferred Stock to Kelvin Claney, the Company’s Chief Executive Officer. On May 2, 2018, the Board of Directors of the Company filed the Certificate of Designation, Preferences, Rights and Limitations of the Series A Preferred Stock with the Nevada Secretary of State.

The Series A Preferred Stock has dividend rights per share equal to the dividend rights of the Company’s common stock and has a liquidation preference in the amount of $1.92 per share. Each share of Series A Preferred Stock is entitled to 100 votes on all matters to be voted upon by the Company’s shareholders. The Series A Preferred Stock is redeemable at the option of the Company for a redemption price per share of $1.92, plus 8% per annum from the date of issuance until the date of redemption. If any Series A Preferred Stock is not redeemed within three years from the date of issuance, the holder may convert the Series A Preferred Stock into common stock at a ratio of eight shares of common stock for each share of Series A Preferred Stock. The Series A Preferred Stock is a non-certificated security.

On May 2, 2018, the Company and Kelvin Claney entered into a subscription agreement pursuant to which the Company issued to Mr. Claney 210,000 shares of Series A Preferred Stock for cash consideration of $403,200, or $1.92 per share. Issuance costs were de minimis. The redemption value as of September 30, 2018 was approximately $417,000.

The Company evaluated the Series A Preferred Stock issuance for liability or equity classification in accordance with the provisions of ASC 480, “Distinguishing Liabilities from Equity”, and determined that equity treatment was appropriate because the Series A Preferred did not meet the definition of the liability instruments defined thereunder for convertible instruments. Specifically, the Series A Preferred are not mandatorily redeemable and do not embody an obligation to buy back the shares outside of the Company’s control in a manner that could require the transfer of assets. Additionally, the Company determined that the Series A Preferred would be recorded as permanent equity, not temporary equity, based on the guidance of ASC 480 given that there is no scenario where the holders of equally and more subordinated equity of the entity would not be entitled to also receive the same form of consideration upon the occurrence of the event that gives rise to the redemption.

XML

Basic and Diluted Earnings (Loss) Per Share

9 Months Ended

Sep. 30, 2018

NET LOSS PER SHARE

Basic and Diluted Earnings (Loss) Per Share

Note 12 - Basic and diluted earnings (loss) per share

Basic earnings (loss) per share is computed by dividing earnings (loss) available to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted earnings per share gives effect to all dilutive potential common shares outstanding during the period and is computed by dividing the earnings attributable to common stockholders by the weighted-average number of common equivalent shares outstanding for the period, including any dilutive effect from outstanding stock options and convertible preferred stock. Diluted net income per share does not assume conversion, exercise or contingent exercise of securities that would have an anti-dilutive effect.

The Company follows the two-class method when computing earnings (loss) per share in periods when issued shares that meet the definition of participating securities are outstanding. The two-class method determines earnings (loss) per share for each class of common and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings. The Company’s Series A Preferred Stock participates in any dividends declared by the Company on its common stock and are therefore considered to be participating securities. The two-class method requires income available to common stockholders for the period to be allocated between common and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed. Accordingly, in periods in which the Company reports a net loss attributable to common stockholders when participating securities are outstanding, losses are not allocated to the participating securities because they have no contractual obligation to share in the losses of the Company. For purposes of calculating diluted earnings per share attributable to common shareholders, stock options and convertible preferred stock are considered common stock equivalents.

As described above, the Company computes basic and diluted loss per share using a methodology that gives effect to the impact of outstanding participating securities (the “two-class method”). As the three and nine months ended September 30, 2018 and 2017 resulted in net losses, there is no income allocation required under the two-class method or dilution attributed to weighted-average shares outstanding in the calculation of diluted loss per share.

Of the outstanding stock options, 5,068,335 were vested and exercisable at an average exercise price of $0.26. The following common stock equivalents, presented on an as converted basis, were excluded from the calculation of net loss per share for the periods presented, due to their anti-dilutive effect:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Outstanding stock options		6,148,335		5,540,002		6,148,335		5,540,002
Convertible preferred stock		1,680,000		-		1,680,000		-
Convertible loan payable-AOR		601,463		-		601,463		-
		8,429,798		5,540,002		8,429,798		5,540,002

XML

Income Taxes

9 Months Ended

Sep. 30, 2018

Income Tax Disclosure [Abstract]

Income Taxes

Note 13 - Income taxes

The provision for income taxes is approximately $31,000 and $149,000 for the three and nine months ended September 30, 2018 and $112,000 and $182,000 for the three and nine months ended September 30, 2017. The effective tax rate for the three and nine months ended September 30, 2018 was approximately (3%) and (8%), respectively. The effective tax rate is (40%) and (9%), respectively for the three and nine months ended September 30, 2017. The provision reflects an estimated current tax liability associated with the earnings of our foreign subsidiaries.

Due to the change in ownership provisions of the Internal Revenue Code, the availability of the Company’s net operating loss carry forwards may be subject to annual limitation against taxable income in future periods, which could substantially limit the eventual utilization of such carry forwards. The Company has not updated its Internal Revenue Code Section 382 analysis through September 30, 2018 and has not analyzed the potential impact of its recent equity financing on beneficial ownership. Therefore, no determination has been made whether the net operating loss carry forward of approximately $3,239,000 available prior to the equity financing is subject to the Internal Revenue Code Section 382 limitation.

XML

Segment Reporting

9 Months Ended

Sep. 30, 2018

Segment Reporting [Abstract]

Segment Reporting

Note 14 - Segment reporting

We operate in the direct to consumer, retail, international third-party distributors, and airlines and Hong Kong retail segments which are engaged in selling of various consumer products primarily through direct marketing channels as well as selling our products through our international third-party distributor, and certain airlines. We evaluate performance and allocate resources based on several factors, of which the primary financial measure is operating income (loss) by the end customer, either direct to consumer sales, retail, international third-party distributor sales, or airlines and Hong Kong retail sales. Operating expenses are primarily prorated based on the relationship between segment sales to total sales.

Information with respect to our operating income (loss) by segment is as follows:

	For the three months ended													For the three months ended
	September 30, 2018													September 30, 2017
report	Direct to Consumer			Retail			International Third-Party Distributor		Airlines and Hong Kong Retail		Totals			Direct to Consumer			Retail		International Third-Party Distributor		Airlines and Hong Kong Retail		Totals
Net sales	$	4,233,444		$	438,951		$	334,856	$	476,658	$	5,483,909		$	5,401,048		$	1,377,613	$	380,755	$	400,338	$	7,559,754
Cost of sales		1,398,603			149,244			167,429		240,877		1,956,153			2,486,303			196,891		199,835		166,960		3,049,989
Gross profit		2,834,841			289,707			167,426		235,782		3,527,756			2,914,745			1,180,722		180,920		233,378		4,509,765
Operating expenses:
General and administrative		1,196,182			339,933			107,618		36,605		1,680,338			2,282,856			101,753		67,252		36,515		2,488,376
Selling and marketing		2,186,624			591,170			26,969		111,609		2,916,372			3,749,376			173,270		22,925		156,775		4,102,346
Total operating expense		3,382,806			931,103			134,587		148,214		4,596,710			6,032,232			275,023		90,177		193,290		6,590,722
Operating income (loss)	$	(547,965	)	$	(641,396	)	$	32,839	$	87,568	$	(1,068,954	)	$	(3,117,487	)	$	905,699	$	90,743	$	40,088	$	(2,080,957	)

	For the nine months ended													For the nine months ended
	September 30, 2018													September 30, 2017
	Direct to Consumer			Retail			International Third-Party Distributor		Airlines and Hong Kong Retail		Totals			Direct to Consumer			Retail		International Third-Party Distributor		Airlines and Hong Kong Retail		Totals
Net sales	$	13,155,589		$	4,864,526		$	1,807,245	$	1,639,411	$	21,466,771		$	17,719,533		$	2,226,044	$	1,842,373	$	1,368,999	$	23,156,949
Cost of sales		3,080,931			1,653,939			903,623		942,316		6,580,809			5,763,446			756,855		850,238		624,631		7,995,170
Gross profit		10,074,658			3,210,587			903,622		697,095		14,885,963			11,956,088			1,469,189		992,135		744,368		15,161,779
Operating expenses:
General and administrative		3,971,728			1,347,362			500,565		126,146		5,945,801			6,916,906			382,196		245,966		98,849		7,643,917
Selling and marketing		7,437,301			2,325,711			43,525		456,643		10,263,180			10,357,739			567,316		74,976		346,290		11,346,321
Total operating expense		11,409,029			4,146,483			544,090		582,789		16,208,981			17,274,645			949,512		320,942		445,139		18,990,238
Operating income (loss)	$	(1,334,371	)	$	(462,487	)	$	359,532	$	114,306	$	(1,323,019	)	$	(5,318,557	)	$	519,677	$	671,193	$	299,229	$	(3,828,459	)

Selected balance sheet information by segment is presented in the following table as of:

Total assets by segment as of:

	September 30, 2018		December 31, 2017
Direct to Consumer	$	10,154,035	$	11,135,146
Retail		647,221		1,696,601
International Third-Party Distributors		239,019		75,854
Airlines and Hong Kong Retail		630,098		862,656
Total Assets	$	11,670,373	$	13,770,257

Total assets by geographical region as of:

	September 30, 2018		December 31, 2017
United States and Canada	$	6,729,405	$	8,333,129
Hong Kong		630,098		862,656
United Kingdom		3,464,844		3,476,560
Israel		846,026		1,097,912
Total Assets	$	11,670,373	$	13,770,257

Net sales by geographical region for the three months ended:

	September 30, 2018		September 30, 2017
United States and Canada	$	3,279,152	$	5,385,244
Hong Kong		476,659		400,338
United Kingdom		1,728,098		1,774,172
Israel		-		-
Total Net Sales	$	5,483,909	$	7,559,754

Net sales by geographical region for the nine months ended:

	September 30, 2018		September 30, 2017
United States and Canada	$	13,501,456	$	18,498,764
Hong Kong		1,639,411		1,368,999
United Kingdom		6,325,904		3,289,186
Israel		-		-
Total Net Sales	$	21,466,771	$	23,156,949

XML

Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2018

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial statements and within the rules of the Securities and Exchange Commission applicable to interim financial statements and therefore do not include all disclosures that might normally be required for financial statements prepared in accordance with generally accepted accounting principles. The accompanying unaudited condensed consolidated financial statements have been prepared by management without audit and should be read in conjunction with our condensed consolidated financial statements, including the notes thereto, appearing in our Annual Report on Form 10-K for the year ended December 31, 2017. In the opinion of management, all adjustments necessary for a fair presentation of the condensed consolidated financial position, consolidated results of operations and consolidated cash flows, for the periods indicated, have been made. The results of operations for the nine months ended September 30, 2018 are not necessarily indicative of operating results that may be achieved over the course of the full year.

Principles of Consolidation

Principles of consolidation

Our accompanying condensed consolidated financial statements include the accounts of our wholly-owned subsidiaries BBI, ICTV Brands UK Limited, ICTV Brands Israel Limited, ICTV Brands HK Limited and LK Technology and ICTV Brands Canada, Inc. from their initial acquisition dates. In October 2016, ICTV Holdings and Ermis Labs, Inc. were formed as holding companies for the asset purchase agreements that were entered into with PhotoMedex, Inc. and Ermis Lab, Inc. (See Note 3 - Business and Asset Acquisitions). On November 16, 2017, ICTV Holdings and Ermis Labs, Inc. were merged into ICTV Brands, Inc. All significant inter-company transactions and balances have been eliminated in consolidation.

Use of Estimates

Use of estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“US GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Management believes that the estimates utilized in preparing its consolidated financial statements are reasonable and prudent. The most significant estimates used in these condensed consolidated financial statements include the allowance for doubtful accounts, reserves for returns, inventory reserves, valuation allowance on deferred tax assets, valuation of intangibles, and share based compensation. Actual results could differ from these estimates.

Concentration of Credit Risk

Concentration of credit risk

Financial instruments, which potentially subject us to concentrations of credit risk, include cash and trade receivables. We maintain cash in bank accounts that, at times, may exceed federally insured limits. We have not experienced any losses and believe we are not exposed to any significant risks on our cash in bank accounts.

As of September 30, 2018, 14% of our accounts receivable were due from various individual customers to whom our products had been sold directly via Direct Response Television (“DRTV”). In addition, 53% was due from brick and mortar retailers, 9% was due from e-commerce accounts, 15% was due from live shopping, 5% was due from duty free airline, and 4% was due from miscellaneous customers.

Major customers are considered to be those who accounted for more than 10% of net sales. There were no major customers for the three and nine months ended September 30, 2018 and 2017.

Fair Value of Financial Instruments

Fair value of financial instruments

Fair value estimates, assumptions and methods used to estimate fair value of the Company’s financial instruments are made in accordance with the requirements of Accounting Standards Codification (“ASC”) 825-10, “Disclosures about Fair Value of Financial Instruments.” We have used available information to derive our estimates. However, because these estimates are made as of a specific point in time, they are not necessarily indicative of amounts we could realize currently. The use of different assumptions or estimating methods may have a material effect on the estimated fair value amounts. The carrying values of financial instruments such as cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, and notes payable approximate their fair values for these instruments.

Cash and Cash Equivalents

Cash and cash equivalents

We consider all unrestricted highly liquid investments with an original maturity of three months or less to be cash equivalents.

Foreign Currency Transactions

Foreign currency transactions

Transactions we entered into in currencies other than our local currency, are recorded in our local currency and any changes in currency exchange rates that occur from the initiation of a transaction until settled are recorded as foreign currency gains or losses in the Condensed Consolidated Statements of Operations and Comprehensive Loss.

Functional Currency Translation

Functional currency translation

The currency of the primary economic environment in which we operate our Company is conducted in the US dollar (“$” or “dollars”). Thus, our functional currency (other than the foreign subsidiaries mentioned below) is the US dollar. The operations of our foreign subsidiaries are conducted in the local currency of the subsidiary, which is the Hong Kong Dollar (HKD), Great Britain Pound (GBP), Israeli Shekel (ILS), and Canadian Dollar (CAD).

Assets and liabilities of our foreign subsidiaries are translated based on the exchange rates prevailing at the balance sheet date and revenues and expenses are translated at the average exchange rates for the period. Net differences from currency translation are included in other comprehensive income on the accompanying Condensed Consolidated Statements of Operations and Comprehensive Loss.

Accounts Receivable

Accounts receivable

Accounts receivable are recorded net of allowances for returns and doubtful accounts of approximately $869,000 and $913,000 as of September 30, 2018 and December 31, 2017, respectively. The allowances are calculated based on historical analysis including customer returns and bad debts.

In addition to allowances for returns on accounts receivable, an accrual is made for the return of product that have been sold to customers and had cash collections, while the customer still has the right to return the product. In addition, an accrual is made for contract fees deducted by the customer. The amounts of these accruals included in accounts payable and accrued liabilities in our Condensed Consolidated Balance Sheets were approximately $103,000 and $180,000 as of September 30, 2018 and December 31, 2017, respectively.

Inventories

Inventories

Inventories consist primarily of finished products held for resale and are valued at the lower of cost (first-in, first-out method) or net realizable value. We adjust inventory for estimated obsolescence when necessary based upon demand and market conditions. The Company’s reserve for obsolescence was approximately $289,000 and $247,000 as of September 30, 2018 and December 31, 2017, respectively. Included in inventory at September 30, 2018 and December 31, 2017 is approximately $55,000 and $51,000, respectively, of consigned product that has been shipped to customers under the 30-day free trial period for which the trial period has not expired and as such the customer has not accepted the product, as well as consigned products that are held at retailer distributors for sale.

Property and Equipment

Property and equipment

Property and equipment are carried at cost and depreciation and amortization is computed over the estimated useful lives of the individual assets ranging from 3 to 7 years for computer hardware and software and furniture and fixtures. Depreciation and amortization is computed using the straight-line method. Leasehold improvements are depreciated over the lesser of the estimated useful life and lease term. The related cost and accumulated depreciation of assets retired or otherwise disposed of are removed from the accounts and the resultant gain or loss is reflected in earnings. Maintenance and repairs are expensed currently while major renewals and betterments are capitalized. Depreciation and amortization expense amounted to approximately $59,000 and $177,000 and $51,000 and $129,000 for the three and nine months ended September 30, 2018 and 2017, respectively.

Property and equipment consisted of the following at:

	September 30, 2018			December 31, 2017
Computer hardware and software	$	209,509		$	154,061
Furniture and equipment		908,701			907,586
Leasehold improvements		55,840			55,840
		1,174,050			1,117,487
Accumulated depreciation and amortization		(407,484	)		(230,394	)
Property and equipment, net	$	766,566		$	887,093

Intangible Assets

Intangible assets

Definite-lived intangibles are amortized using the straight-line method over their estimated useful lives ranging from four to five years. Amortization expense was approximately $175,000 and $525,000 and $251,000 and $692,000 for the three and nine months ended September 30, 2018 and 2017, respectively. We evaluate the recoverability of the intangible assets periodically by taking into account events or circumstances that may warrant revised estimates of useful lives or that may indicate the asset may be impaired.

Impairment of Long-Lived Assets

Impairment of long-lived assets

In accordance with ASC 360-10, “Accounting for the Impairment or Disposal of Long-Lived Assets,” long-lived assets are reviewed for impairment when circumstances indicate that the carrying value of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the assets to the future net undiscounted cash flows estimated by the Company to be generated by such assets. If such assets are considered to be impaired, the impairment to be recognized is the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of by sale are recorded as held for sale at the lower of carrying value or estimated net realizable value. No impairment losses were identified or recorded for the three and nine months ended September 30, 2018 and 2017.

Revenue Recognition

Revenue recognition

On January 1, 2018, the Company adopted Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers, which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers that supersedes most current revenue recognition guidance. The updated guidance, and subsequent clarifications, collectively referred to as ASC 606, require an entity to recognize revenue when it transfers control of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

There was no significant impact to the statement of operations and comprehensive loss as the Company’s existing revenue policies are in line with ASC 606.

We recognize revenue when control of the promised goods or services is transferred to its customers in an amount that reflects the consideration expected to be entitled to in exchange for those goods or services. Our products are sold direct to consumers through direct response television, live home shopping, and e-commerce market places, as well as to retailers. We distribute product to international third-party distributors who purchase the products at wholesale pricing and sell it at an agreed upon price stipulated in the contracts. We also sell product to consumers through consignment arrangements with certain airlines and retailers in Hong Kong who sell products to consumers through in-flight magazines, duty-free carts, or sales counters.

We recognize revenue when performance obligations identified under the terms of the contracts with its customers are satisfied, which generally occurs upon transfer of control in accordance with the contractual terms and conditions of the sale. The majority of our revenue is recognized when product is shipped to the customer. Revenue is measured as the amount of consideration we receive upon shipment. Variable consideration includes various fees charged to us for cooperative advertising, marketing development, chargebacks, other fees and returns. The Company separately offers extended warranties that are separate performance obligations for which the associated revenue is recognized over-time based on the extended warranty period. The revenue recognition for each of our segments are described below.

Direct to consumer

Our direct to consumer segment includes sales of product directly to end users via infomercials produced by ICTV classified as Direct Response Television (“DRTV”). Revenue is recognized at the point of sale time which is upon shipment to the customer. Also included are products sold to live home shopping networks. Products sold to live home shopping networks are recognized at a point in time which is upon shipment to the live home shopping network, often with the right to return unsold products. Revenue related to our DermaVital® continuity program is recognized monthly upon shipment to customers.

We offer a 30-day risk-free trial as one of our payment options. Revenue on the 30-day risk-free trial sales is not recognized until the control of goods has transferred to the customer which we determine to be when the trial period ends. If the risk-free trial expires without action by the customer, product is determined to be accepted by the customer and revenue is recorded. Revenue for items purchased without the 30-day free trial is recognized upon shipment of the product.

Retail

We generate revenue from products sold to retailers and are payable upon satisfaction of the performance obligation. Revenue is recognized at a point in time. Certain retailers have the right to return unsold products. We generally extend credit terms to our retail customers based on their creditworthiness. Revenue is recorded at the time of shipment.

International third-party distributors

We generate revenue through the sale of products to international third-party distributors who in-turn sell the products to the consumer. Revenue related to international wholesale and third-party distributor customers is recorded at gross amounts with a corresponding charge to cost of sales upon shipment. Revenue is recognized at a point in time when product is shipped to the customer. International third-party distributors are required to pay a deposit before shipment. As of September 30, 2018, and December 31, 2017, we recorded deposits for international third-party distributors of approximately $202,000 and $404,000, respectively, in deferred revenue, current portion.

Airlines and Hong Kong Retail

We sell products to consumers through consignment arrangements with certain airlines and retailers in Hong Kong to sell products to consumers through in-flight magazines, duty-free carts, or in-store counters. We control the goods shipped to the consignees until control of the goods has transferred to the customer. Control is considered transferred to a customer upon payment for goods of which we set the price for this activity. We act as the consignor and the principal, and accordingly, we record consignment sales on a gross basis, once the transfer of control of goods has been passed to the customer. Goods on consignment remain in our inventory until the product has been sold and control of the goods has transferred.

Warranty

We sell warranties on our products for various terms. Customers are offered the option to purchase an extended warranty separate from the product sale for 1 to 5 years. Revenue is recognized ratably over the term, with the unearned warranty included in deferred revenue on the accompanying condensed consolidated balance sheets.

Variable consideration

The amount of consideration we receive, and revenues recognized across our multi sales channels varies with changes in sales returns and other accommodations and incentives we offer to our customers. When we give our customers the right to return products or provide other accommodations such as chargebacks, promotional discounts, and rebates, we estimate the expected returns and claims based on historical rates as well as events and circumstances that indicate changes to historical rates of product returns and claims. We adjust our estimates of revenue at the earlier of when the most likely amount of consideration we expect to receive changes or when the amount of consideration becomes fixed.

Judgments

We have a return policy whereby the customer can return any product received within 30 days or 60 days of receipt for a full refund. We accrue a reserve for product returns with respect to sales of product when a right of return exists. We accrue a reserve for product returns and customer refunds at the time of sale based on our historical experience. We also accrue for contract fees based on historical experience of our retail customers, as well as expected fees as documented in our retail contracts. The provision for estimated returns as of September 30, 2018 and December 31, 2017 was approximately $605,000 and $747,000, respectively, and has been included in the allowance for returns and doubtful accounts in the accompanying condensed consolidated balance sheets. The reserve for customer refunds and contract fees payable was approximately $103,000 at September 30, 2018 and $180,000 at December 31, 2017 and has been included in accounts payable and accrued liabilities in the accompanying condensed consolidated balance sheets. The amount of goods to be returned to inventory was determined to be immaterial.

For the three and nine months ended September 30, 2018 and 2017, we recorded sales returns of approximately $692,000 and $3,063,000 and $1,225,000 and $4,530,000 respectively, as a reduction of net sales.

Sales taxes

Sales and similar taxes that are imposed on our sales and collected from customers are excluded from net sales.

Shipping and handling costs

Costs for shipping and handling costs, including those activities that occur subsequent to transfer of control to the customer, are recorded as cost of sales and expensed as incurred. We accrue costs for shipping and handling activities that occur after control of the promised goods has transferred to the customer. Revenue from shipping and handling charges was approximately $203,000 and $810,000 and $427,000 and $1,550,000 for the three and nine months ended September 30, 2018 and 2017, respectively.

Remaining Performance Obligations

As part of our adoption of the new revenue standard, we have elected to use a practical expedient to exclude disclosure of transaction prices allocated to remaining performance obligations, and when we expect to recognize such revenue, for all periods prior to the date of initial application of the standard.

As of September 30, 2018, approximately $302,000 is expected to be recognized from remaining performance obligations for warranty revenue. We expect to recognize revenue for these remaining performance obligations during the next five years approximately as follows:

	Remaining Three Months 2018		2019		2020		2021		2022		2023
Estimated Deferred Warranty Revenue from remaining	$	44,000	$	126,000	$	69,000	$	42,000	$	19,000	$	2,000

Disaggregation of revenue

The following table shows the Company’s revenues disaggregated by reportable segment:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Direct to Consumer	$	3,606,472	$	5,460,161	$	12,528,617	$	17,719,533
International Third-Party Distributors		334,856		321,642		1,807,245		1,842,373
Retail		1,065,923		1,377,613		5,491,498		2,226,044
Airlines/Hong Kong Retail		476,658		400,338		1,639,411		1,368,999
	$	5,483,909	$	7,559,754	$	21,466,771	$	23,156,949

The following table provides information about contract assets which includes accounts receivable, and contract liabilities which includes deferred revenue and accrued returns and contract fees payable from contracts with customers:

	September 30, 2018		December 31, 2017
Accounts receivable, net of allowance for returns of $604,664 and $747,269, respectively, and doubtful accounts of $264,498 and $166,034, respectively	$	2,208,095	$	3,576,376
Total contract assets	$	2,208,095	$	3,576,376
Deferred revenue	$	504,390	$	598,378
Accrued returns and contract fees payable		102,980		179,922
Total contract liabilities	$	607,370	$	778,300

Research and Development

Research and Development

Research and development costs are expensed as incurred and are included in selling and marketing expense in the accompanying condensed consolidated statements of operations and comprehensive loss. Research and development costs primarily consist of efforts to discover and develop new products, including clinical trials, product safety testing, and certifications for international regulations and standards. Research and development costs approximated $57,000 and $134,000 and $146,000 and $210,000 for the three and nine months ended September 30, 2018 and 2017, respectively.

Advertising

Advertising

Advertising costs, consisting of media, internet marketing and production costs, are expensed as incurred and are included in selling and marketing expense in the accompanying condensed consolidated statements of operations and comprehensive loss. Production costs associated with the creation of new and updated infomercials and advertising campaigns are expensed at the commencement of a campaign. We incurred approximately $1,414,000 and $5,212,000 and $2,000,000 and $5,578,000 in media costs for airing of television and print advertising, $727,000 and $2,617,000 and $1,243,000 and $3,332,000 in internet marketing costs, and $31,000 and $114,000 and $113,000 and $260,000 in productions costs for the three and nine months ended September 30, 2018 and 2017, respectively.

Income Taxes

Income taxes

In preparing our condensed consolidated financial statements, we make estimates of our current tax exposure and temporary differences resulting from timing differences for reporting items for book and tax purposes. We recognize deferred taxes by the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred income taxes are recognized for differences between the financial statement and tax basis of assets and liabilities at enacted statutory tax rates in effect for the years in which the differences are expected to reverse. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date.

In addition, valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized. In consideration of our accumulated losses and limited historical ability to generate taxable income to utilize our deferred tax assets, we have estimated that we will not be able to realize any benefit from our temporary differences and have recorded a full valuation allowance. If we sustain profitability in the future at levels which cause management to conclude that it is more likely than not that we will realize all or a portion of the net operating loss carry-forward, we would record the estimated net realized value of the deferred tax asset at that time and would then provide for income taxes at a rate equal to our combined federal and state effective rates. Subsequent revisions to the estimated net realizable value of the deferred tax asset could cause our provision for income taxes to vary significantly from period to period.

Stock Options

Stock options

In June 2001, our shareholders approved our 2001 Stock Option Plan (the “Plan”). The Plan is designed for our employees, officers and directors and is intended to advance our best interests by providing personnel who have substantial responsibility for our management and growth with additional incentive by increasing their proprietary interest in our success, thereby encouraging them to remain our employee. The Plan is administered by our Board of Directors and authorizes the issuance of stock options not to exceed a total of 3,000,000 shares. The terms of any awards under the Plan are determined by the Board of Directors, provided that no options may be granted at less than the fair market value of the stock as of the date of the grant. The Plan expired in February 2011. As of September 30, 2018, 50,000 options are outstanding under the Plan.

In December 2011, our shareholders approved our 2011 Stock Option Plan (the “2011 Plan”). The 2011 Plan is designed for our employees, officers, and directors, and is intended to advance our best interests by providing personnel who have substantial responsibility for our management and growth with additional incentive by increasing their proprietary interest in our success, thereby encouraging them to remain our employee. The 2011 Plan is administered by our Board of Directors and authorizes the issuance of stock options not to exceed a total of 6,000,000 shares. In December 2017, the 2011 Plan was amended to increase the number of stock options that may be awarded to not exceed a total of 8,000,000 shares. The terms of any awards under the 2011 Plan are determined by the Board of Directors, provided that no options may be granted at less than the fair market value of the stock as of the date of the grant. Generally, the options granted vest over three years with one-third vesting on each anniversary date of the grant. As of September 30, 2018, 3,888,335 options are outstanding under the 2011 Plan.

We account for equity instruments issued to non-employees in accordance with the provisions of ASC Topic 505, subtopic 50, Equity-Based Payments to Non-Employees based upon the fair-value of the underlying instrument. The equity instruments, consisting of stock options granted to consultants, are valued using the Black-Scholes valuation model. The measurement of stock-based compensation to non-employees is subject to periodic adjustments as the underlying equity instruments vest and is recognized as an expense over the period which services are received. Nonvested stock options granted to non-employees are remeasured at each reporting period.

We use ASC Topic 718, “Share-Based Payments”, to account for stock-based compensation issued to employees and directors. We recognize compensation expense in an amount equal to the grant date fair value of share-based payments such as stock options granted to employees over the requisite vesting period of the awards using the Black-Scholes valuation model.

In May 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2017-09, which clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. ASU 2017-09 will reduce diversity in practice and result in fewer changes to the terms of an award being accounted for as modifications. Under ASU 2017-09, an entity will not apply modification accounting to a share-based payment award if the award’s fair value, vesting conditions and classification as an equity or liability instrument are the same immediately before and after the change. ASU 2017-09 will be applied prospectively to awards modified on or after the adoption date. The guidance is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. On January 1, 2018, we adopted the provisions of ASU 2017-09 prospectively which did not have a material impact on our condensed consolidated financial statements.

The following is a summary of stock options outstanding under the Plan and 2011 Plan (collectively “Stock Option Plans”) for the nine months ended September 30, 2018 and 2017:

	Number of Shares								Weighted Average
	Employee			Non-Employee		Totals			Exercise Price
Balance, January 1, 2018		3,993,335			-		3,993,335		$	0.27
Granted during the year		1,555,000			-		1,555,000			0.26
Exercised during the year		-			-		-			-
Cancelled during the year		(700,000	)		-		(700,000	)		0.33
Forfeited during the year		(910,000	)		-		(910,000	)		0.36
Balance, September 30, 2018		3,938,335			-		3,938,335		$	0.21

	Number of Shares								Weighted Average
	Employee			Non- Employee		Totals			Exercise Price
Balance, January 1, 2017		3,680,002			-		3,680,002		$	0.24
Granted during the year		280,000			-		280,000			0.49
Exercised during the year		(136,667	)		-		(136,667	)		0.15
Forfeited during the year		(93,333	)		-		(93,333	)		0.32
Balance, September 30, 2017		3,730,002			-		3,730,002		$	0.26

Of the stock options outstanding as of September 30, 2018 under the Stock Option Plans, 3,433,335 options are currently vested and exercisable. The weighted average exercise price of these options was $0.23. These options expire through January 2028.

The aggregate intrinsic value for options outstanding and exercisable at September 30, 2018 and 2017 was approximately $0 and $618,000, respectively. The aggregate intrinsic value for stock options exercised during the nine months ended September 30, 2017 was approximately $49,000.

On January 9, 2018, we issued options to purchase 1,050,000 shares of the Company’s common stock to six employees, at an exercise price of $0.33 per share. Three of those employees were terminated in the second quarter of 2018, resulting in the forfeiture of their unvested options to purchase, in the aggregate, 600,000 shares of common stock. On June 21, 2018, the remaining three employees voluntarily surrendered their options to purchase, in the aggregate, 450,000 shares of common stock, in consideration of a future stock grant. On June 21, 2018, we issued 400,000 shares of common stock to such remaining three employees, Kelvin Claney, CEO, Douglas Crouthers, Interim President and VP of Sales, and Vincent Dargush, VP of Marketing and Operations, at a fair value of $0.10 per share based on the closing of the Company’s common stock on the date of issuance, in consideration of the surrender of previously granted options and, in each case, as a share bonus, which was immediately vested, for performance in the second quarter of 2018. Also, on June 21, 2018, we issued 300,000 shares of common stock to Ernest P. Kollias, Jr., CFO, at a fair value of $0.10 per share based on the closing of the Company’s common stock on the date of issuance, also as a share bonus, in consideration for performance during the second quarter of 2018, which was immediately vested. The shares issued on June 21, 2018 are restricted for a period of six months from issuance. The recipients of the shares of common stock are key employees of our Company, and the issuance of the common stock is exempt from registration under Section 4(2) of the Securities Act of 1933.

The Company follows the provisions of ASC Topic 718 “Compensation — Stock Compensation” which requires the measurement and recognition of compensation expense for all share-based payment awards either modified or granted to employees and directors based upon estimated fair values. The 600,000 options forfeited were not vested at the time of forfeiture and therefore resulted in a reversal of previously recognized compensation expense in the amount of approximately $12,000. The result of the modification of issuing 400,000 shares of fully-vested common stock in replacement of 450,000 options surrendered, as noted above, was to immediately recognize the fair value of the original options granted totaling approximately $124,000 and the incremental change in fair value of the replacement awards, which was de minimis to share based compensation expense.

On November 30, 2017, Philip Solomon was granted 250,000 stock options. On July 9, 2018, the Board of Directors authorized the issuance of common stock to Phillip Solomon for the replacement of 250,000 surrendered stock options. Mr. Solomon surrendered these options in consideration of fully-vested 100,000 shares of the Company’s Common Stock. The fair value of the shares was the closing price of the Company’s common stock on July 9, 2018, which was $0.10.

The Company follows the provisions of ASC Topic 718 “Compensation — Stock Compensation” which requires the measurement and recognition of compensation expense for all share-based payment awards either modified or granted to employees and directors based upon estimated fair values. The result of the modification of issuing 100,000 shares of common stock in replacement of 250,000 options surrendered, as noted above, was to immediately recognize the fair value of the original options granted totaling approximately $76,000 to share based compensation expense, and there was no incremental increase in fair value of the replacement awards.

For the three and nine months ended September 30, 2018 and 2017, we recorded approximately $98,000 and $268,000, and $59,000 and $205,000, respectively, in stock compensation expense under the Stock Option Plans. At September 30, 2018, there was approximately $7,000 of total unrecognized compensation cost related to non-vested option grants that will be recognized over the remaining vesting period of 3 years.

The following weighted average assumptions are used in the Black-Scholes option pricing model for the nine months ended September 30, 2018 and 2017 to value the stock options granted during the period:

2018				2017
Risk-free interest rate		2.84	%	Risk-free interest rate		2.17	%
Expected dividend yield		0	%	Expected dividend yield		0	%
Expected life		6 years		Expected life		6 years
Expected volatility		142.79	%	Expected volatility		145	%
Weighted average grant date fair value	$	0.26		Weighted average grant date fair value	$	0.46
Forfeiture rate		0	%	Forfeiture rate		5	%

The following is a summary of stock options outstanding outside of the Stock Option Plans for the nine months ended September 30, 2018 and 2017:

	Number of Shares
	Employee		Non - Employee		Totals		Weighted Average Exercise Price
Balance, January 1, 2018		333,333		1,476,667		1,810,000	$	0.31
Granted during the year		-		400,000		400,000		0.11
Exercised during the year		-		-		-		-
Expired during the period		-		-		-		-
Balance, September 30, 2018		333,333		1,876,667		2,210,000	$	0.26

	Number of Shares
	Employee			Non - Employee			Totals			Weighted Average Exercise Price
Balance, January 1, 2017		516,667			1,676,667			2,193,334		$	0.35
Granted during the year		-			-			-			-
Exercised during the year		(183,334	)		-			(183,334	)		0.27
Expired during the period		-			(200,000	)		(200,000	)		0.80
Balance, September 30, 2017		333,333			1,476,667			1,810,000		$	0.31

Of the stock options currently outstanding outside of the Stock Option Plans at September 30, 2018, 1,935,000 options are currently vested and exercisable. The weighted average exercise price of these options was $0.30. These options expire through January 2026. The aggregate intrinsic value for options outstanding and exercisable at September 30, 2018 and 2017 was approximately $0 and $411,000, respectively. There were no options exercised during the nine months ended September 30, 2018. The aggregate intrinsic value for stock options exercised during the nine months ended September 30, 2017 was approximately $40,000.

For the three and nine months ended September 30, 2018 and 2017, we recorded approximately $9,000 and $18,000, and $5,000 and $18,000, respectively in stock compensation expense related to stock options outside of the Stock Option Plans. At September 30, 2018, there is approximately, $9,000 of remaining unrecognized compensation cost that will be recognized over the remaining service period of 3 years. Change in the fair value of the options issued to non-employees, as of September 30, 2018 was de minimis.

The following weighted average assumptions are used in the Black-Scholes option pricing model for the nine months ended September 30, 2018 and 2017 to value the stock options granted during the period:

2018
Risk-free interest rate		2.77	%
Expected dividend yield		0.00	%
Expected life		3 years
Expected volatility		143.03	%
Weighted average grant date fair value	$	0.11

There were no options granted for the nine months ended September 30, 2017.

The following is a summary of all stock options outstanding and nonvested for the nine months ended September 30, 2018:

										Weighted Average
	Employee			Non- Employee			Totals			Exercise Price
Balance, January 1, 2018		476,667			-			476,667		$	0.42
Granted during the period		1,555,000			400,000			1,955,000			0.23
Vested during the period		(10,000	)		(125,000	)		(135,000	)		0.11
Cancelled during the period		(700,000	)		-			(700,000	)		0.33
Forfeited during the period		(816,667	)		-			(816,667	)		0.36
					-
Balance, September 30, 2018		505,000			275,000			780,000		$	0.14

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

In August 2018, the Financial Accounting Standards Board (“FASB”), issued Accounting Standards Update (“ASU”), 2018-13 that eliminates certain disclosure requirements for fair value measurements for all entities, requires public entities to disclose certain new information and modifies some disclosure requirements. The FASB developed the amendments to Accounting Standards Codification (“ASC”) 820 as part of its broader disclosure framework project, which aims to improve the effectiveness of disclosures in the notes to financial statements by focusing on requirements that clearly communicate the most important information to users of the financial statements. The new guidance is effective for all entities for fiscal years beginning after December 15, 2019 and for interim periods within those fiscal years. An entity is permitted to early adopt either the entire standard or only the provisions that eliminate or modify requirements. We are currently evaluating the effect of this guidance on our disclosure.

In June 2018, the FASB issued ASU 2018-07 Compensation – Stock Compensation (Topic 718), Improvements to Nonemployee Share-Based Payment Accounting. This ASU is intended to simplify aspects of share-based compensation issued to non-employees by making the guidance consistent with the accounting for employee share-based compensation. It is effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2018. We are currently in the process of evaluating the impact of the adoption of ASU 2018-07 on its condensed consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13), which requires measurement and recognition of expected credit losses for financial assets held. The ASU is effective for interim and annual periods beginning December 15, 2019 and early adoption is permitted. Entities are required to adopt ASU 2016-13 using a modified retrospective approach, subject to certain limited exceptions. We are currently evaluating the impact of our pending adoption of ASU 2016-13 on our condensed consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which requires lessees to recognize on the balance sheet assets and liabilities for leases with lease terms of more than 12 months. Consistent with current GAAP, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee will depend primarily on its classification as a finance or operating lease. However, unlike current GAAP-which requires only capital leases to be recognized on the balance sheet-the new ASU will require both types of leases to be recognized on the balance sheet. The ASU will take effect for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. This ASU can be applied at the beginning of the earliest period presented using the modified retrospective approach, which includes certain practical expedients that an entity may elect to apply, including an election to use certain transition relief.

In July 2018, the FASB issued ASU No. 2018-10, Codification Improvements to Topic 842, Leases and ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, which make improvements to Accounting Standards Codification (“ASC”) 842 and allow entities to not restate comparative periods in transition to ASC 842 and instead report the comparative periods under ASC 840. The Company plans to adopt this standard using the modified retrospective approach in the first quarter of fiscal 2019, coinciding with the standard’s effective date. While the Company is still evaluating this ASU and related updates, the Company has determined that the primary impact will be to recognize on the balance sheet material right-of-use assets and material lease obligations for all leases with lease terms greater than 12 months.

Reclassifications

Reclassifications

Certain prior period amounts have been reclassified for consistency with the current period presentation of Retail as a reportable segment, as well as the amortization and depreciation being combined on the Statement of Cash Flows for 2017. These reclassifications had no effect on the reported results of operations.

XML

Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2018

Schedule of Property and Equipment

Property and equipment consisted of the following at:

	September 30, 2018			December 31, 2017
Computer hardware and software	$	209,509		$	154,061
Furniture and equipment		908,701			907,586
Leasehold improvements		55,840			55,840
		1,174,050			1,117,487
Accumulated depreciation and amortization		(407,484	)		(230,394	)
Property and equipment, net	$	766,566		$	887,093

Schedule of Estimated Deferred Warranty Revenue from Remaining Obligations

We expect to recognize revenue for these remaining performance obligations during the next five years approximately as follows:

	Remaining Three Months 2018		2019		2020		2021		2022		2023
Estimated Deferred Warranty Revenue from remaining	$	44,000	$	126,000	$	69,000	$	42,000	$	19,000	$	2,000

Schedule of Disaggregation of Revenue

The following table shows the Company’s revenues disaggregated by reportable segment:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Direct to Consumer	$	4,233,444	$	5,401,048	$	13,155,589	$	17,719,533
International Third-Party Distributors		334,856		380,755		1,807,245		1,842,373
Retail		438,951		1,377,613		4,864,526		2,226,044
Airlines/Hong Kong Retail		476,658		400,338		1,639,411		1,368,999
	$	5,483,909	$	7,559,754	$	21,466,771	$	23,156,949

Schedule of Contract Assets and Liabilities

The following table provides information about contract assets which includes accounts receivable, and contract liabilities which includes deferred revenue and accrued returns and contract fees payable from contracts with customers:

	September 30, 2018		December 31, 2017
Accounts receivable, net of allowance for returns of $604,664 and $747,269, respectively, and doubtful accounts of $264,498 and $166,034, respectively	$	2,208,095	$	3,576,376
Total contract assets	$	2,208,095	$	3,576,376
Deferred revenue	$	504,390	$	598,378
Accrued returns and contract fees payable		102,980		179,922
Total contract liabilities	$	607,370	$	778,300

Schedule of Stock Options Outstanding, Nonvested

The following is a summary of all stock options outstanding and nonvested for the nine months ended September 30, 2018:

										Weighted Average
	Employee			Non- Employee			Totals			Exercise Price
Balance, January 1, 2018		476,667			-			476,667		$	0.42
Granted during the period		1,555,000			400,000			1,955,000			0.23
Vested during the period		(10,000	)		(125,000	)		(135,000	)		0.11
Cancelled during the period		(700,000	)		-			(700,000	)		0.33
Forfeited during the period		(816,667	)		-			(816,667	)		0.36
					-
Balance, September 30, 2018		505,000			275,000			780,000		$	0.14

Stock Option Plan [Member]

Summary of Stock Options Outstanding Under Stock Option Plan

The following is a summary of stock options outstanding outside of the Stock Option Plans for the nine months ended September 30, 2018 and 2017:

	Number of Shares
	Employee		Non - Employee		Totals		Weighted Average Exercise Price
Balance, January 1, 2018		333,333		1,476,667		1,810,000	$	0.31
Granted during the year		-		400,000		400,000		0.11
Exercised during the year		-		-		-		-
Expired during the period		-		-		-		-
Balance, September 30, 2018		333,333		1,876,667		2,210,000	$	0.26

	Number of Shares
	Employee			Non - Employee			Totals			Weighted Average Exercise Price
Balance, January 1, 2017		516,667			1,676,667			2,193,334		$	0.35
Granted during the year		-			-			-			-
Exercised during the year		(183,334	)		-			(183,334	)		0.27
Expired during the period		-			(200,000	)		(200,000	)		0.80
Balance, September 30, 2017		333,333			1,476,667			1,810,000		$	0.31

Schedule of Assumptions Used in Black-Scholes Option Pricing Model

The following weighted average assumptions are used in the Black-Scholes option pricing model for the nine months ended September 30, 2018 and 2017 to value the stock options granted during the period:

2018
Risk-free interest rate		2.77	%
Expected dividend yield		0.00	%
Expected life		3 years
Expected volatility		143.03	%
Weighted average grant date fair value	$	0.11

2011 Stock Option Plan [Member]

Summary of Stock Options Outstanding Under Stock Option Plan

The following is a summary of stock options outstanding under the Plan and 2011 Plan (collectively “Stock Option Plans”) for the nine months ended September 30, 2018 and 2017:

	Number of Shares								Weighted Average
	Employee			Non-Employee		Totals			Exercise Price
Balance, January 1, 2018		3,993,335			-		3,993,335		$	0.27
Granted during the year		1,555,000			-		1,555,000			0.26
Exercised during the year		-			-		-			-
Cancelled during the year		(700,000	)		-		(700,000	)		0.33
Forfeited during the year		(910,000	)		-		(910,000	)		0.36
Balance, September 30, 2018		3,938,335			-		3,938,335		$	0.21

	Number of Shares								Weighted Average
	Employee			Non- Employee		Totals			Exercise Price
Balance, January 1, 2017		3,680,002			-		3,680,002		$	0.24
Granted during the year		280,000			-		280,000			0.49
Exercised during the year		(136,667	)		-		(136,667	)		0.15
Forfeited during the year		(93,333	)		-		(93,333	)		0.32
Balance, September 30, 2017		3,730,002			-		3,730,002		$	0.26

Schedule of Assumptions Used in Black-Scholes Option Pricing Model

The following weighted average assumptions are used in the Black-Scholes option pricing model for the nine months ended September 30, 2018 and 2017 to value the stock options granted during the period:

2018				2017
Risk-free interest rate		2.84	%	Risk-free interest rate		2.17	%
Expected dividend yield		0	%	Expected dividend yield		0	%
Expected life		6 years		Expected life		6 years
Expected volatility		142.79	%	Expected volatility		145	%
Weighted average grant date fair value	$	0.26		Weighted average grant date fair value	$	0.46
Forfeiture rate		0	%	Forfeiture rate		5	%

XML

Business and Asset Acquisitions (Tables)

9 Months Ended

Sep. 30, 2018

PhotoMedex [Member]

Schedule of Pro Forma Financial Information

	For the three months ended September 30,						For the nine months ended September 30,
	2018			2017			2018			2017
Net sales	$	5,483,909		$	7,559,754		$	21,466,771		$	26,695,949
Net loss	$	(1,293,637	)	$	(2,356,103	)	$	(2,012,136	)	$	(3,858,089	)
Net loss per share – basic and diluted	$	(0.02	)	$	(0.05	)	$	(0.04	)	$	(0.08	)
Weighted average number of common shares basic and diluted		53,132,004			52,321,826			52,633,008			49,518,478

Ermis Labs [Member]

Schedule of Deferred Consideration

The changes in the Company’s deferred consideration payable due to Ermis Labs, Inc. during the nine months ended September 30, 2018:

Balance at December 31, 2017	$	1,212,067
Consideration payments		(160,414	)
Accretion of interest		70,527
Balance at September 30, 2018-related party	$	1,122,180
Current portion	$	86,392
Non-current portion		1,035,788
	$	1,122,180

XML

Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2018

Fair Value Disclosures [Abstract]

Schedule of Fair Value, Liabilities Measured On Recurring Basis

The following table sets forth our liabilities that were measured at fair value as of September 30, 2018, by level within the fair value hierarchy:

	Amounts at		Fair Value Measurement
	Fair Value		Level 1		Level 2		Level 3
Note Payable to AOR	$	298,719		-		-	$	298,719
Total liabilities measured at fair value	$	298,719		-		-	$	298,719

XML

Commitments and Contingencies (Tables)

9 Months Ended

Sep. 30, 2018

Commitments and Contingencies Disclosure [Abstract]

Schedule of Future Financial Obligations Under Leases

The schedule below details the future financial obligations under the active leases:

	Remaining
	Three
	Months										Total
	2018		2019		2020		2021		2022		Obligation
Wayne - Corporate HQ	$	29,470	$	119,015	$	120,309	$	121,633	$	20,309	$	410,736
Israel Office		5,700		7,600		-		-		-		13,300
UK Office		8,666		34,663		34,663		34,663		5,777		118,432
Hong Kong Office		5,569		22,275		22,275		22,275		3,713		76,107
Total Lease Obligations	$	49,405	$	183,553	$	177,247	$	178,571	$	29,799	$	618,575

XML

Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Intangible Assets Net

Intangible assets as of September 30, 2018 and December 31, 2017 consists of the following:

	Useful Life	Gross Carrying Cost		Accumulated Amortization			Impairment Loss		Net Book Value
September 30, 2018
DermaWand® Purchase	5 years	$	1,163,816	$	(800,725	)	$	-	$	363,091
PhotoMedex Patented/Unpatented Technology	5 years		940,628		(313,540	)		-		627,088
PhotoMedex Trademarks	5 years		1,100,000		(366,667	)		-		733,333
Total		$	3,204,444	$	(1,480,932	)	$	-	$	1,723,512

	Useful Life		Gross Carrying Cost		Accumulated Amortization			Impairment Loss			Net Book Value
December 31, 2017
Ermis Labs Formulations/ Trademarks	5 years	$	1,512,443	$	(277,281	)	$	(1,235,162	)	$	-
DermaWand® Purchase	5 years		1,163,816		(581,673	)		-			582,143
PhotoMedex Patented/Unpatented Technology	5 years		940,628		(172,447	)		-			768,181
PhotoMedex Trademarks	5 years		1,100,000		(201,667	)		-			893,333
Total		$	4,716,887	$	(1,233,068	)	$	(1,235,162	)	$	2,248,657

Schedule of Finite-lived Intangible Assets, Future Amortization Expense

The following table outlines the estimated future amortization expense related to the intangible assets held as of September 30, 2018:

2018 (remaining three months)	$	175,000
2019		699,000
2020		408,000
2021		408,000
2022		34,000
Total	$	1,724,000

XML

Long-term Debt to Related Party (Tables)

9 Months Ended

Sep. 30, 2018

Debt Disclosure [Abstract]

Schedule of Long Term Debt

The balance of the long-term debt as of September 30, 2018 and December 31, 2017 was as follows:

	September 30, 2018			December 31, 2017
Total Debt	$	1,289,240		$	1,797,049
Less: current portion	$	(916,145	)	$	(722,908	)
Long-term debt, net	$	373,095		$	1,074,141

Schedule of Maturities of Long Term Debt

Maturities of long-term debt at September 30, 2018, are as follows:

December 31,
2018 (remaining three months)	$	215,100
2019		976,906
2020		97,234
	$	1,289,240

XML

Basic and Diluted Earnings (Loss) Per Share (Tables)

9 Months Ended

Sep. 30, 2018

NET LOSS PER SHARE

Schedule of Antidilutive Securities Excluded from Computation of Diluted Earnings Per Share

The following common stock equivalents, presented on an as converted basis, were excluded from the calculation of net loss per share for the periods presented, due to their anti-dilutive effect:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Outstanding stock options		6,148,335		5,540,002		6,148,335		5,540,002
Convertible preferred stock		1,680,000		-		1,680,000		-
Convertible loan payable-AOR		601,463		-		601,463		-
		8,429,798		5,540,002		8,429,798		5,540,002

XML

Segment Reporting (Tables)

9 Months Ended

Sep. 30, 2018

Segment Reporting [Abstract]

Schedule of Operating Income (Loss) by Operating Segment

Information with respect to our operating income (loss) by segment is as follows:

	For the three months ended													For the three months ended
	September 30, 2018													September 30, 2017
report	Direct to Consumer			Retail			International Third-Party Distributor		Airlines and Hong Kong Retail		Totals			Direct to Consumer			Retail		International Third-Party Distributor		Airlines and Hong Kong Retail		Totals
Net sales	$	4,233,444		$	438,951		$	334,856	$	476,658	$	5,483,909		$	5,401,048		$	1,377,613	$	380,755	$	400,338	$	7,559,754
Cost of sales		1,398,603			149,244			167,429		240,877		1,956,153			2,486,303			196,891		199,835		166,960		3,049,989
Gross profit		2,834,841			289,707			167,426		235,782		3,527,756			2,914,745			1,180,722		180,920		233,378		4,509,765
Operating expenses:
General and administrative		1,196,182			339,933			107,618		36,605		1,680,338			2,282,856			101,753		67,252		36,515		2,488,376
Selling and marketing		2,186,624			591,170			26,969		111,609		2,916,372			3,749,376			173,270		22,925		156,775		4,102,346
Total operating expense		3,382,806			931,103			134,587		148,214		4,596,710			6,032,232			275,023		90,177		193,290		6,590,722
Operating income (loss)	$	(547,965	)	$	(641,396	)	$	32,839	$	87,568	$	(1,068,954	)	$	(3,117,487	)	$	905,699	$	90,743	$	40,088	$	(2,080,957	)

	For the nine months ended													For the nine months ended
	September 30, 2018													September 30, 2017
	Direct to Consumer			Retail			International Third-Party Distributor		Airlines and Hong Kong Retail		Totals			Direct to Consumer			Retail		International Third-Party Distributor		Airlines and Hong Kong Retail		Totals
Net sales	$	13,155,589		$	4,864,526		$	1,807,245	$	1,639,411	$	21,466,771		$	17,719,533		$	2,226,044	$	1,842,373	$	1,368,999	$	23,156,949
Cost of sales		3,080,931			1,653,939			903,623		942,316		6,580,809			5,763,446			756,855		850,238		624,631		7,995,170
Gross profit		10,074,658			3,210,587			903,622		697,095		14,885,963			11,956,088			1,469,189		992,135		744,368		15,161,779
Operating expenses:
General and administrative		3,971,728			1,347,362			500,565		126,146		5,945,801			6,916,906			382,196		245,966		98,849		7,643,917
Selling and marketing		7,437,301			2,325,711			43,525		456,643		10,263,180			10,357,739			567,316		74,976		346,290		11,346,321
Total operating expense		11,409,029			4,146,483			544,090		582,789		16,208,981			17,274,645			949,512		320,942		445,139		18,990,238
Operating income (loss)	$	(1,334,371	)	$	(462,487	)	$	359,532	$	114,306	$	(1,323,019	)	$	(5,318,557	)	$	519,677	$	671,193	$	299,229	$	(3,828,459	)

Schedule of Selected Balance Sheet Information by Segment

Total assets by segment as of:

	September 30, 2018		December 31, 2017
Direct to Consumer	$	10,154,035	$	11,135,146
Retail		647,221		1,696,601
International Third-Party Distributors		239,019		75,854
Airlines and Hong Kong Retail		630,098		862,656
Total Assets	$	11,670,373	$	13,770,257

Schedule of Assets and Net Sales by Geographical Region

Total assets by geographical region as of:

	September 30, 2018		December 31, 2017
United States and Canada	$	6,729,405	$	8,333,129
Hong Kong		630,098		862,656
United Kingdom		3,464,844		3,476,560
Israel		846,026		1,097,912
Total Assets	$	11,670,373	$	13,770,257

Net sales by geographical region for the three months ended:

	September 30, 2018		September 30, 2017
United States and Canada	$	3,279,152	$	5,385,244
Hong Kong		476,659		400,338
United Kingdom		1,728,098		1,774,172
Israel		-		-
Total Net Sales	$	5,483,909	$	7,559,754

Net sales by geographical region for the nine months ended:

	September 30, 2018		September 30, 2017
United States and Canada	$	13,501,456	$	18,498,764
Hong Kong		1,639,411		1,368,999
United Kingdom		6,325,904		3,289,186
Israel		-		-
Total Net Sales	$	21,466,771	$	23,156,949

XML

Organization and Business of the Company and Liquidity (Details Narrative) - USD ($)	3 Months Ended						9 Months Ended
	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Net income (loss)	$ (1,293,637)	$ (718,569)	$ 70	$ (386,858)	$ (1,440,680)	$ (367,618)	$ (2,012,136)	$ (2,195,156)
Net cash provided (used in) operating activities							(346,761)	$ (2,046,569)
Accumulated deficit	$ 18,917,005						$ 18,917,005		$ 16,904,869

XML

Summary of Significant Accounting Policies (Details Narrative) - USD ($)					3 Months Ended		9 Months Ended		12 Months Ended
	Jul. 09, 2018	Jun. 21, 2018	Jan. 09, 2018	Nov. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017	Dec. 31, 2016
Accounts receivable, allowances for returns and doubtful net					$ 869,162		$ 869,162		$ 913,303
Accounts payable and accrued liabilities					103,000		103,000		180,000
Inventory reserve for obsolescence					289,000		289,000		247,000
Consigned inventory					55,000		55,000		51,000
Depreciation and amortization expense					59,000	$ 51,000	177,000	$ 129,000
Amortization expense of intangible assets					175,000	251,000	525,000	692,000
Impairment loss on intangible assets									1,235,162
Deposits					202,000		$ 202,000		404,000
Extended warranty term, description							Customers are offered the option to purchase an extended warranty separate from the product sale for 1 to 5 years.
Provision for estimated returns					605,000		$ 605,000		747,000
Reserve for customer refunds and contract fees payable					103,000		103,000		$ 180,000
Sales returns					692,000	1,225,000	3,063,000	4,530,000
Revenue from shipping and handling charges					203,000	427,000	810,000	1,550,000
Research and development costs					57,000	146,000	134,000	210,000
Media costs incurred for airing infomercials					1,414,000	2,000,000	5,161,000	5,465,000
Internet marketing costs					727,000	1,243,000	2,617,000	3,332,000
Advertising campaigns new production costs					$ 31,000	$ 113,000	$ 114,000	$ 260,000
Number of stock options shares outstanding					5,068,335		5,068,335
Number of options forfeited not vested							816,667
Number of stock option granted, shares							1,955,000
Accounting Standards Update 2016-09 [Member]
Number of common stock issued							400,000
Number of options forfeited not vested							600,000
Share based compensation expense							$ 12,000
Surrendering of options							450,000
Number of stock option granted							$ 124,000
Six Employees [Member]
Options to purchase common stock			1,050,000
Exercise price of options			$ 0.33
Three Employees [Member]
Number of common stock options forfeited		450,000
Number of common stock issued		400,000
Shares issued price per share		$ 0.10
Ernest P. Kollias, Jr. [Member]
Number of common stock issued		300,000
Shares issued price per share		$ 0.10
Philip Solomon [Member]
Maximum number of stock options authorizes to issue	250,000
Exercise price of options	$ 0.10
Surrendering of options				100,000
Number of stock option granted, shares				250,000
Number of stock option granted	$ 76,000
2001 Stock Option Plan [Member]
Stock option plan expire date							Feb. 28, 2011
Number of stock options shares outstanding					50,000		50,000
2001 Stock Option Plan [Member] | Board of Directors [Member]
Maximum number of stock options authorizes to issue					3,000,000		3,000,000
2011 Stock Option Plan [Member]
Stock option plan expire date							Jan. 31, 2028
Number of stock options shares outstanding					3,888,335	3,730,002	3,888,335	3,730,002	3,993,335	3,680,002
Number of stock shares vested and exercisable					3,433,335		3,433,335
Weighted average exercise price of option					$ 0.23		$ 0.23
Number of options exercisable								136,667
Value of option outstanding and exercisable					$ 0	$ 618,000	$ 0	$ 618,000
Aggregate intrinsic value of options exercised								$ 49,000
Exercise price of options							$ 0.26	$ 0.49
Number of common stock options forfeited							910,000	93,333
Number of stock option granted, shares							1,555,000	280,000
2011 Stock Option Plan [Member] | Board of Directors [Member]
Maximum number of stock options authorizes to issue					6,000,000		6,000,000
Stock Option Plan [Member]
Stock option plan expire date							Jan. 31, 2026
Number of stock options shares outstanding					2,210,000	1,810,000	2,210,000	1,810,000	1,810,000	2,193,334
Number of stock shares vested and exercisable					1,935,000		1,935,000
Weighted average exercise price of option					$ 0.30		$ 0.30
Number of options exercisable							183,300	183,334
Aggregate intrinsic value of options exercised								$ 40,000
Exercise price of options							$ 0.11
Share based compensation expense					$ 98,000	$ 59,000	$ 268,000	$ 205,000
Number of stock option granted, shares							400,000	280,000
Unrecognized compensation cost					$ 7,000		$ 7,000
Unrecognized compensation cost related to non-vested option grants over the remaining vesting period						3 years
Aggregate intrinsic value for options outstanding and exercisable					0	411,000	0	411,000
Stock Option Plan [Member] | Stock Option [Member]
Share based compensation expense					$ 9,000	$ 5,000	$ 18,000	$ 18,000
Unrecognized compensation cost					9,000		9,000
Warranty Revenue [Member]
Revenue remaining performance obligations					$ 302,000		$ 302,000
Minimum [Member]
Furniture and equipment estimated useful life							3 years
Intangible assets estimated useful lives							4 years
Maximum [Member]
Furniture and equipment estimated useful life							7 years
Intangible assets estimated useful lives							5 years
Maximum [Member] | 2011 Stock Option Plan [Member]
Number of stock options shares outstanding					8,000,000		8,000,000
Accounts Receivable [Member] | Direct Response Television [Member]
Customer concentration risk							14.00%
Accounts Receivable [Member] | Brick and Mortar Retailers [Member]
Customer concentration risk							53.00%
Accounts Receivable [Member] | E-Commerce Accounts [Member]
Customer concentration risk							9.00%
Accounts Receivable [Member] | Live Shopping [Member]
Customer concentration risk							15.00%
Accounts Receivable [Member] | AirLine Business [Member]
Customer concentration risk							5.00%
Accounts Receivable [Member] | Miscellaneous Customers [Member]
Customer concentration risk							4.00%
Sales Revenue, Net [Member]
Customer concentration risk							10.00%

XML

Summary of Significant Accounting Policies - Schedule of Property and Equipment (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Accounting Policies [Abstract]
Computer hardware and software	$ 209,509	$ 154,061
Furniture and equipment	908,701	907,586
Leasehold improvements	55,840	55,840
Property and equipment, gross	1,174,050	1,117,487
Accumulated depreciation and amortization	(407,484)	(230,394)
Property and equipment, net	$ 766,566	$ 887,093

XML

Summary of Significant Accounting Policies - Schedule of Estimated Deferred Warranty Revenue from Remaining Obligations (Details) - Warranty Revenue [Member]	Sep. 30, 2018 USD ($)
Estimated Deferred Warranty Revenue from remaining	$ 302,000
Remaining Three Months 2018 [Member]
Estimated Deferred Warranty Revenue from remaining	44,000
2019 [Member]
Estimated Deferred Warranty Revenue from remaining	126,000
2020 [Member]
Estimated Deferred Warranty Revenue from remaining	69,000
2021 [Member]
Estimated Deferred Warranty Revenue from remaining	42,000
2022 [Member]
Estimated Deferred Warranty Revenue from remaining	19,000
2023 [Member]
Estimated Deferred Warranty Revenue from remaining	$ 2,000

XML

Summary of Significant Accounting Policies - Schedule of Disaggregation of Revenue (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Revenues	$ 5,483,909	$ 7,559,754	$ 21,466,771	$ 23,156,949
Direct to Consumer [Member]
Revenues	4,233,444	5,401,048	13,155,589	17,719,533
International Third Party Distributors [Member]
Revenues	334,856	380,755	1,807,245	1,842,373
Retail [Member]
Revenues	438,951	1,377,613	4,864,526	2,226,044
Airlines/Hong Kong Retail [Member]
Revenues	$ 476,658	$ 400,338	$ 1,639,411	$ 1,368,999

XML

Summary of Significant Accounting Policies - Schedule of Contract Assets and Liabilities (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Accounting Policies [Abstract]
Accounts receivable, net of allowance for returns of $604,664 and $747,269, respectively, and doubtful accounts of $264,498 and $166,034, respectively	$ 2,208,095	$ 3,576,376
Total contract assets	2,208,095	3,576,376
Deferred revenue	504,390	598,378
Accrued returns and contract fees payable	102,980	179,922
Total contract liabilities	$ 607,370	$ 778,300

XML

Summary of Significant Accounting Policies - Schedule of Contract Assets and Liabilities (Details) (Parenthetical) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Accounting Policies [Abstract]
Allowance for returns on accounts receivable	$ 604,664	$ 747,269
Allowance for doubtful accounts receivable	$ 264,498	$ 166,034

XML

Summary of Significant Accounting Policies - Summary of Stock Options Outstanding Under Stock Option Plan (Details) - $ / shares	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Number of Shares Granted during the year	1,955,000
Number of Shares Outstanding, ending balance	5,068,335
Weighted Average Exercise Price, ending balance	$ 0.26
Employee Stock [Member]
Number of Shares Granted during the year	1,555,000
Non-Employee Stock [Member]
Number of Shares Granted during the year	400,000
2011 Stock Option Plan [Member]
Number of Shares Outstanding, beginning balance	3,993,335	3,680,002
Number of Shares Granted during the year	1,555,000	280,000
Number of Shares Exercised during the year		(136,667)
Number of Shares Cancelled during the year	(700,000)
Number of Shares Forfeited during the year	(910,000)	(93,333)
Number of Shares Outstanding, ending balance	3,888,335	3,730,002
Weighted Average Exercise Price, beginning balance	$ 0.27	$ 0.24
Weighted Average Exercise Price, Granted during the year	0.26	0.49
Weighted Average Exercise Price, Exercised during the year		0.15
Weighted Average Exercise Price, Cancelled during the year	0.33
Weighted Average Exercise Price, Forfeited during the year	0.36	0.32
Weighted Average Exercise Price, ending balance	$ 0.21	$ 0.26
2011 Stock Option Plan [Member] | Employee Stock [Member]
Number of Shares Outstanding, beginning balance	3,993,335	3,680,002
Number of Shares Granted during the year	1,555,000	280,000
Number of Shares Exercised during the year		(136,667)
Number of Shares Cancelled during the year	(700,000)
Number of Shares Forfeited during the year	(910,000)	(93,333)
Number of Shares Outstanding, ending balance	3,938,335	3,730,002
2011 Stock Option Plan [Member] | Non-Employee Stock [Member]
Number of Shares Outstanding, beginning balance
Number of Shares Granted during the year
Number of Shares Exercised during the year
Number of Shares Forfeited during the year
Number of Shares Outstanding, ending balance
Stock Option Plan [Member]
Number of Shares Outstanding, beginning balance	1,810,000	2,193,334
Number of Shares Granted during the year	400,000	280,000
Number of Shares Exercised during the year	(183,300)	(183,334)
Number of Shares Cancelled during the year		(200,000)
Number of Shares Outstanding, ending balance	2,210,000	1,810,000
Weighted Average Exercise Price, beginning balance	$ 0.31	$ 0.35
Weighted Average Exercise Price, Granted during the year	0.11
Weighted Average Exercise Price, Exercised during the year		0.27
Weighted Average Exercise Price, Cancelled during the year		0.80
Weighted Average Exercise Price, ending balance	$ 0.26	$ 0.31
Stock Option Plan [Member] | Employee Stock [Member]
Number of Shares Outstanding, beginning balance	333,333	516,667
Number of Shares Granted during the year
Number of Shares Exercised during the year		(183,334)
Number of Shares Cancelled during the year
Number of Shares Outstanding, ending balance	333,333	333,333
Stock Option Plan [Member] | Non-Employee Stock [Member]
Number of Shares Outstanding, beginning balance	1,476,667	1,676,667
Number of Shares Granted during the year	400,000
Number of Shares Exercised during the year
Number of Shares Cancelled during the year		(200,000)
Number of Shares Outstanding, ending balance	1,876,667	1,476,667

XML

Summary of Significant Accounting Policies - Schedule of Assumptions Used in Black-Scholes Option Pricing Model (Details) - $ / shares	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
2011 Stock Option Plan [Member]
Risk-free interest rate	2.84%	2.17%
Expected dividend yield	0.00%	0.00%
Expected life	6 years	6 years
Expected volatility	142.79%	145.00%
Weighted average grant date fair value	$ 0.26	$ 0.46
Forfeiture rate	0.00%	5.00%
Stock Option Plan [Member]
Risk-free interest rate	2.77%
Expected dividend yield	0.00%
Expected life	3 years
Expected volatility	143.03%
Weighted average grant date fair value	$ 0.11

XML

Summary of Significant Accounting Policies - Schedule of Stock Options Outstanding, Nonvested (Details)	9 Months Ended
	Sep. 30, 2018 $ / shares shares
Stock options outstanding, nonvested beginning balance	476,667
Stock options outstanding, Granted during the period	1,955,000
Stock options outstanding, Vested during the period	(135,000)
Stock options outstanding, Cancelled during the period	(700,000)
Stock options outstanding, Forfeited during the period	(816,667)
Stock options outstanding, ending balance	780,000
Weighted Average Exercise Price, beginning balance | $ / shares	$ 0.42
Weighted Average Exercise Price, Granted during the period | $ / shares	0.23
Weighted Average Exercise Price, Vested during the period | $ / shares	0.11
Weighted Average Exercise Price, Cancelled during the period | $ / shares	0.33
Weighted Average Exercise Price, Forfeited during the period | $ / shares	0.36
Weighted Average Exercise Price, ending balance | $ / shares	$ 0.14
Employee Stock [Member]
Stock options outstanding, nonvested beginning balance	476,667
Stock options outstanding, Granted during the period	1,555,000
Stock options outstanding, Vested during the period	(10,000)
Stock options outstanding, Cancelled during the period	(700,000)
Stock options outstanding, Forfeited during the period	(816,667)
Stock options outstanding, ending balance	505,000
Non-Employee Stock [Member]
Stock options outstanding, nonvested beginning balance
Stock options outstanding, Granted during the period	400,000
Stock options outstanding, Vested during the period	(125,000)
Stock options outstanding, Cancelled during the period
Stock options outstanding, Forfeited during the period
Stock options outstanding, ending balance	275,000

XML

Business and Asset Acquisitions (Details Narrative) - USD ($)							3 Months Ended		9 Months Ended		12 Months Ended
	Jul. 12, 2017	Apr. 22, 2017	Jan. 23, 2017	Jan. 23, 2017	Oct. 05, 2016	Oct. 04, 2016	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Acquisition balance									$ 0		$ 0
Interest expense							$ 1,000	$ 3,000	5,000	$ 9,000
PhotoMedex, Inc [Member]
Purchase price									250,000
Purchase agreement description					The purchase price paid by ICTV Holdings in the PhotoMedex Acquisition was paid as follows: (i) $3,000,000 of the purchase price which was raised in a private placement (described below in more detail) was deposited on October 5, 2016 into an escrow account established by counsel to the Company and ICTV Holdings, as escrow agent (the "Escrow Agent"), under an escrow agreement entered into on October 4, 2016 among the Company, ICTV Holdings, the PHMD Sellers, the Escrow Agent, and certain investors in the Company's private placement (the "Escrow Agreement"), which escrow funds were paid to the PHMD Sellers on January 23, 2017, in accordance with the Escrow Agreement and subject to the conditions thereof; (ii) $2,000,000 of the purchase price was to be paid on or before the 90th day following January 23, 2017; and (iii) the remainder of the purchase price of $4,500,000 was payable in the form of a continuing royalty as described in more detail below.
Escrow deposit					$ 3,000,000
Royalty expenses					$ 4,500,000
Photo Medex Acquisitio [Member]
Acquisition costs										49,312
Gain on settlement of debt										1,969,245
PhotoMedex Purchase Agreement [Member]
Purchase price		$ 1,750,000				$ 9,500,000
Royalty expenses									$ 4,500,000
Sales percentage									6.00%
Present value of deferred consideration									$ 4,198,043
PhotoMedex Purchase Agreement [Member] | Home Shopping Network [Member]
Sales percentage									35.00%
PhotoMedex Purchase Agreement [Member] | Measurement Input, Discount Rate [Member]
Fair value assumption, discount rate									9.70%
PhotoMedex Purchase Agreement [Member] | Measurement Input, Expected Term [Member]
Fair value assumptions, term									18 months
PhotoMedex Purchase Agreement [Member] | LeoGroup [Member]
Proceeds from line of credit						2,000,000
PhotoMedex Purchase Agreement [Member] | Before 90 days [Member]
Purchase price						$ 2,000,000
PhotoMedex Release Agreement [Member]
Contingent consideration payments for acquisition	$ 3,579,760
Ermis Labs Purchase Agreement [Member]
Interest expense							$ 23,500	$ 23,700	$ 71,000	$ 69,300
Ermis Labs Purchase Agreement [Member] | Ermis Labs, Inc. [Member]
Royalty expenses			$ 1,750,000
Present value of deferred consideration											1,750,000
Royalty percentage			5.00%
Payment of minimum royalty amount			$ 175,000
Present value of expected payments											$ 1,131,822
Ermis Labs Purchase Agreement [Member] | Measurement Input, Discount Rate [Member] | Ermis Labs, Inc. [Member]
Fair value assumption, discount rate											10.70%
Ermis Labs Purchase Agreement [Member] | Measurement Input, Expected Term [Member] | Ermis Labs, Inc. [Member]
Fair value assumptions, term											10 years
Ermis Labs Purchase Agreement [Member] | Ermis Labs Acquisition [Member]
Royalty expenses				$ 1,750,000
Number of common stock issued, shares				2,500,000
Number of common stock issued				$ 850,000

XML

Business and Asset Acquisitions - Schedule of Pro Forma Financial Information (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Business Combinations [Abstract]
Net sales	$ 5,483,909	$ 7,559,754	$ 21,466,771	$ 26,695,949
Net loss	$ (1,293,637)	$ (2,356,103)	$ (2,012,136)	$ (3,858,089)
Net loss per share - basic and diluted	$ (0.02)	$ (0.05)	$ (0.04)	$ (0.08)
Weighted average number of common shares basic and diluted	$ 53,132,004	$ 52,321,826	$ 52,633,008	$ 49,518,478

XML

Business and Asset Acquisitions - Schedule of Deferred Consideration (Details)	9 Months Ended
	Sep. 30, 2018 USD ($)
Current portion	$ 86,392
Non-current portion	1,035,788
Total deferred consideration	1,122,180
Ermis Labs Acquisition [Member]
Deferred consideration payable, beginning	1,212,067
Consideration payments	(160,414)
Accretion of interest	70,527
Deferred consideration payable, ending	$ 1,122,180

XML

Fair Value Measurements - Schedule of Fair Value, Liabilities Measured On Recurring Basis (Details)	Sep. 30, 2018 USD ($)
Note Payable to AOR	$ 298,719
Total liabilities measured at fair value	298,719
Fair Value, Inputs, Level 1 [Member]
Note Payable to AOR
Total liabilities measured at fair value
Fair Value, Inputs, Level 2 [Member]
Note Payable to AOR
Total liabilities measured at fair value
Fair Value, Inputs, Level 3 [Member]
Note Payable to AOR	298,719
Total liabilities measured at fair value	$ 298,719

XML

Commitments and Contingencies (Details Narrative) - USD ($)				1 Months Ended		3 Months Ended		9 Months Ended
	Oct. 29, 2018	Jul. 02, 2018	Apr. 12, 2018	Aug. 31, 2017	Mar. 31, 2017	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Lease description				we entered an amendment to expand our space, which increased the monthly base payments.				We entered a lease from March 2017 through February 2022
Rent expense		$ 9,000				$ 51,000	$ 83,000	$ 179,000	$ 224,000
Base salary			$ 626,000
Stock options vested			150,000
Damages sought	$ 50,000		$ 50,000
Product liability insurance expiry description								expire May 20, 2019.
Common Stock [Member]
Stock options vested			1,000,000
UK Office [Member]
Rent expense								$ 2,900
Hong Kong Office [Member]
Lease description					A lease expiring in March 2018, which was then renewed until February 2022
Rent expense					$ 1,900
Israel Office [Member]
Lease description								A one-year term ending in April 2018, which was then renewed until April 20, 2019
Rent expense								$ 1,900

XML

Commitments and Contingencies - Schedule of Future Financial Obligations Under Leases (Details)	Sep. 30, 2018 USD ($)
2018	$ 49,405
2019	183,553
2020	177,247
2021	178,571
2022	29,799
Total Lease Obligations	618,575
Wayne - Corporate HQ [Member]
2018	29,470
2019	119,015
2020	120,309
2021	121,633
2022	20,309
Total Lease Obligations	410,736
Israel Office [Member]
2018	5,700
2019	7,600
2020
2021
2022
Total Lease Obligations	13,300
UK Office [Member]
2018	8,666
2019	34,663
2020	34,663
2021	34,663
2022	5,777
Total Lease Obligations	118,432
Hong Kong Office [Member]
2018	5,569
2019	22,275
2020	22,275
2021	22,275
2022	3,713
Total Lease Obligations	$ 76,107

XML

Intangible Assets (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Amortization of intangible assets	$ 175,000	$ 251,000	$ 525,000	$ 692,000
Cost of Sales [Member]
Amortization of intangible assets	73,000	73,000	219,000	218,000
General and Administrative Expense [Member]
Amortization of intangible assets	$ 102,000	$ 178,000	$ 306,000	$ 474,000

XML

Intangible Assets - Schedule of Intangible Assets Net (Details) - USD ($)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Gross Carrying Cost	$ 3,204,444		$ 3,204,444		$ 4,716,887
Accumulated Amortization	(1,480,932)		(1,480,932)		(1,233,068)
Impairment loss					(1,235,162)
Net Book Value	1,723,512		1,723,512		2,248,657
DermaWand Purchase [Member]
Gross Carrying Cost	1,163,816		1,163,816		1,163,816
Accumulated Amortization	(800,725)		(800,725)		(581,673)
Impairment loss
Net Book Value	363,091		$ 363,091		$ 582,143
Intangible assets useful life			5 years		5 years
PhotoMedex Patented/Unpatented Technology [Member]
Gross Carrying Cost	940,628		$ 940,628		$ 940,628
Accumulated Amortization	(313,540)		(313,540)		(172,447)
Impairment loss
Net Book Value	627,088		$ 627,088		$ 768,181
Intangible assets useful life			5 years		5 years
PhotoMedex Trademarks [Member]
Gross Carrying Cost	1,100,000		$ 1,100,000		$ 1,100,000
Accumulated Amortization	(366,667)		(366,667)		(201,667)
Impairment loss
Net Book Value	$ 733,333		$ 733,333		$ 898,333
Intangible assets useful life			5 years		5 years
Ermis Labs Formulations/Trademarks [Member]
Gross Carrying Cost					$ 1,512,443
Accumulated Amortization					(277,281)
Impairment loss					(1,235,162)
Net Book Value
Intangible assets useful life					5 years

XML

Intangible Assets - Schedule of Finite-lived Intangible Assets, Future Amortization Expense (Details)	Sep. 30, 2018 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
2018 (remaining three months)	$ 175,000
2019	699,000
2020	408,000
2021	408,000
2022	34,000
Intangible assets estimated future amortization expense	$ 1,724,000

XML

DermaWand® Purchase Agreement (Details Narrative) - USD ($)		3 Months Ended		9 Months Ended
	Jan. 22, 2016	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Jan. 02, 2016
Trademarks and intellectual property		$ 1,724,000		$ 1,724,000
Offset asset and liability						$ 1,200,000
Discount for imputed interest	$ 37,000	3,000		3,000
Percentage of discount for imputed interest calculated based on applicable federal rates	1.45%
Other liabilities		522,000		522,000
Interest expense		$ 1,000	$ 3,000	$ 5,000	$ 9,000
Patent and Trademark [Member]
Patent and trademark amortized period	4 years
DermaWand [Member]
Trademarks and intellectual property	$ 1,200,000
Per unit fee and maintaining annual minimum royalty requirements	$ 2.50
DermaWand [Member] | 2016 [Member]
Trademarks and intellectual property	$ 300,000
DermaWand [Member] | 2017 [Member]
Trademarks and intellectual property	300,000
DermaWand [Member] | 2018 [Member]
Trademarks and intellectual property	300,000
DermaWand [Member] | 2019 [Member]
Trademarks and intellectual property	$ 300,000

XML

Long-term Debt to Related Party (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Jul. 15, 2017
Interest expense related party	$ 116,000	$ 140,000	$ 392,000	$ 140,000
LeoGroup Private Investment Access LLC [Member]
Principal amount					$ 2,000,000
Effective interest rate					34.00%
Interest payable					$ 100,000

XML

Long-term Debt to Related Party - Schedule of Long Term Debt (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Debt Disclosure [Abstract]
Total Debt	$ 1,289,240	$ 1,797,049
Less: current portion	(916,145)	(722,908)
Long-term debt, net	$ 373,095	$ 1,074,141

XML

Long-term Debt to Related Party - Schedule of Maturities of Long Term Debt (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Debt Disclosure [Abstract]
2018	$ 215,100
2019	976,906
2020	97,234
Long term debt	$ 1,289,240	$ 1,797,049

XML

Notes Payable (Details Narrative) - USD ($)			3 Months Ended		9 Months Ended
	Sep. 20, 2018	Jun. 22, 2018	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Jul. 06, 2018
Interest expense			$ 1,000	$ 3,000	$ 5,000	$ 9,000
Fair value of notes payable			298,719		298,719
AOR Direct, LLC [Member]
Loans payable	$ 299,000
Debt instrument interest rate	16.00%
Debt instrument monthly payments	$ 19,000
Debt forgiveness	50,000
Conversion of debt into common stock	$ 49,000
Conversion price per share	$ 0.08
Fair value of notes payable	$ 299,000
AOR Direct, LLC [Member] | December 31, 2018 [Member]
Prepayment of debt	$ 200,000
Mr Stephen Jarvis [Member]
Debt instrument interest rate							18.00%
Loan interest amount							$ 100,000
Amazon Lending [Member]
Loans payable		$ 145,000	135,000		135,000
Debt instrument interest rate		9.69%
Interest expense			$ 3,000		$ 3,000
Repayment of debt		$ 13,000

XML

Related Party Transactions (Details Narrative) - USD ($)				3 Months Ended			9 Months Ended
	May 02, 2018	May 02, 2018	May 01, 2018	Sep. 30, 2018	Sep. 30, 2017	Mar. 31, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017	Jul. 15, 2017
Repayments of related party debt							$ 225,000	$ 150,000
Repayments of debt				$ 300,000			900,000
Interest expense				$ 116,000	$ 140,000		$ 392,000	$ 140,000
Share price per share				$ 0.001	$ 0.001		$ 0.001	$ 0.001	$ 0.001
Shares issued during period, value						$ 6,982,930
Subscription Agreement [Member] | Series A Preferred Stock [Member]
Number of common stock issued	210,000
Shares issued during period, value	$ 403,200
Chief Executive Officer [Member] | Series A Preferred Stock [Member]
Number of common stock issued			210,000
Chief Executive Officer [Member] | Subscription Agreement [Member] | Series A Preferred Stock [Member]
Number of common stock issued		210,000
Shares issued price per share	$ 1.92	$ 1.92
Share price per share	$ 0.001	$ 0.001
Shares issued during period, value		$ 403,200
LeoGroup Private Debt Facility L.P [Member]
Repayments of related party debt							$ 160,000
Secured promissory note										$ 2,000,000

XML

Series A Preferred Stock (Details Narrative) - USD ($)				3 Months Ended
	May 02, 2018	May 02, 2018	May 01, 2018	Mar. 31, 2017	Sep. 30, 2018	Dec. 31, 2017
Liquidation preference per share					$ 416,632
Shares issued during period, value				$ 6,982,930
Redemption amount					$ 417,000
Series A Preferred Stock [Member]
Liquidation preference per share			$ 1.92
Shares voting rights			Each share of Series A Preferred Stock is entitled to 100 votes on all matters to be voted upon by the Company's shareholders.
Redemption price per share			$ 1.92
Series A Preferred Stock [Member] | Subscription Agreement [Member]
Number of shares issued	210,000
Redemption price per share	$ 1.92	$ 1.92
Shares issued during period, value	$ 403,200
Chief Executive Officer [Member] | Series A Preferred Stock [Member]
Number of shares issued			210,000
Chief Executive Officer [Member] | Series A Preferred Stock [Member] | Subscription Agreement [Member]
Number of shares issued		210,000
Shares issued during period, value		$ 403,200

XML

Basic and Diluted Earnings (Loss) Per Share (Details Narrative)	Sep. 30, 2018 $ / shares shares
NET LOSS PER SHARE
Stock options outstanding | shares	5,068,335
Stock options average exercise price | $ / shares	$ 0.26

XML

Basic and Diluted Earnings (Loss) Per Share - Schedule of Antidilutive Securities Excluded from Computation of Diluted Earnings Per Share (Details) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Antidilutive securities excluded from computation of EPS	8,429,798	5,540,002	8,429,798	5,540,002
Outstanding Stock Options [Member]
Antidilutive securities excluded from computation of EPS	6,148,335	5,540,002	6,148,335	5,540,002
Convertible Preferred Stock [Member]
Antidilutive securities excluded from computation of EPS	1,680,000		1,680,000
Convertible Loan Payable-AOR [Member]
Antidilutive securities excluded from computation of EPS	601,463		601,463

XML

Income Taxes (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Income Tax Disclosure [Abstract]
Provision for income taxes	$ 30,944	$ 112,277	$ 148,944	$ 182,277
Foreign effective income tax rate	3.00%	40.00%	8.00%	9.00%
Net operating loss carry forward	$ 3,239,000		$ 3,239,000

XML

Segment Reporting - Schedule of Operating Income (Loss) by Operating Segment (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Net sales	$ 5,483,909	$ 7,559,754	$ 21,466,771	$ 23,156,949
Cost of sales	1,956,153	3,049,989	6,580,809	7,995,170
Gross profit	3,527,756	4,509,765	14,885,962	15,161,779
General and administrative	1,680,338	2,488,376	5,945,801	7,643,917
Selling and marketing	2,916,372	4,102,346	10,263,180	11,346,321
Total operating expense	4,596,710	6,590,722	16,208,981	18,990,238
Operating income (loss)	(1,068,954)	(2,080,957)	(1,323,019)	(3,828,459)
Direct to Consumer [Member]
Net sales	4,233,444	5,401,048	13,155,589	17,719,533
Cost of sales	1,398,603	2,486,303	3,080,931	5,763,446
Gross profit	2,834,841	2,914,745	10,074,658	11,956,088
General and administrative	1,196,182	2,282,856	3,971,728	6,916,906
Selling and marketing	2,186,624	3,749,376	7,437,301	10,357,739
Total operating expense	3,382,806	6,032,232	11,409,029	17,274,645
Operating income (loss)	(547,965)	(3,117,487)	(1,334,371)	(5,318,557)
Retail [Member]
Net sales	438,951	1,377,613	4,864,526	2,226,044
Cost of sales	149,244	196,891	1,653,939	756,855
Gross profit	289,707	1,180,722	3,210,587	1,469,189
General and administrative	339,933	101,753	1,347,362	382,196
Selling and marketing	591,170	173,270	2,325,711	567,316
Total operating expense	931,103	275,023	4,146,483	949,512
Operating income (loss)	(641,396)	905,699	(462,487)	519,677
International Third Party Distributor [Member]
Net sales	334,856	380,755	1,807,245	1,842,373
Cost of sales	167,429	199,835	903,623	850,238
Gross profit	167,426	180,920	903,622	992,135
General and administrative	107,618	67,252	500,565	245,966
Selling and marketing	26,969	22,925	43,525	74,976
Total operating expense	134,587	90,177	544,090	320,942
Operating income (loss)	32,839	90,743	359,532	671,193
Airlines And Hong Kong Retail [Member]
Net sales	476,658	400,338	1,639,411	1,368,999
Cost of sales	240,877	166,960	942,316	624,631
Gross profit	235,782	233,378	697,095	744,368
General and administrative	36,605	36,515	126,146	98,849
Selling and marketing	111,609	156,775	456,643	346,290
Total operating expense	148,214	193,290	582,789	445,139
Operating income (loss)	$ 87,568	$ 40,088	$ 114,306	$ 299,229

XML

Segment Reporting - Schedule of Selected Balance Sheet Information by Segment (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Total Assets	$ 11,670,373	$ 13,770,257
Direct to Consumer [Member]
Total Assets	10,154,035	11,135,146
Retail [Member]
Total Assets	647,221	1,696,601
International Third Party Distributors [Member]
Total Assets	239,019	75,854
Airlines And Hong Kong Retail [Member]
Total Assets	$ 630,098	$ 862,656

XML

Segment Reporting - Schedule of Assets and Net Sales by Geographical Region (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Total assets	$ 11,670,373		$ 11,670,373		$ 13,770,257
Net sales	5,483,909	$ 7,559,754	21,466,771	$ 23,156,949
United States and Canada [Member]
Total assets	6,729,405		6,729,405		8,333,129
Net sales	3,279,152	5,385,244	13,501,456	18,498,764
Hong Kong [Member]
Total assets	630,098		630,098		862,656
Net sales	476,659	400,338	1,639,411	1,368,999
United Kingdom [Member]
Total assets	3,464,844		3,464,844		3,476,560
Net sales	1,728,098	1,774,172	6,325,904	3,289,186
Israel [Member]
Total assets	846,026		846,026		$ 1,097,912
Net sales