NOTE

—BALANCE SHEET DETAIL

Inventories

Inventories consist of the following (in thousands):

	December 31,
	2017			2016*
Raw materials	$	19,160	$	9,072
Work in process		2,744		1,894
Finished goods		6,878		4,011
Total	$	28,782	$	14,977

The Raw materials balance in prior year was reclassified for consistency with current year.

Property and Equipment, net

Property, plant and equipment is recorded at cost less allowances for depreciation. The straight-line method of depreciation

is used for all property and equipment.

Property and equipment, net, consists of the following (in thousands):

	December 31,
	2017			2016
Leasehold improvements	$	640		$	652
Office equipment and furniture		2,370			2,973
Machinery and equipment		6,277			5,435
		9,287			9,060
Less: Accumulated depreciation		(7,191	)		(7,153	)
Total Property and equipment, net	$	2,096		$	1,907

Included in machinery and equipment are financed vehicles

used by the Company’s North American sales employees. As of

December 31, 2017

and

2016,

the gross capitalized value of the leased vehicles was

$1.6

million and

$1.4

million and the related accumulated depreciation was

$725,000

and

$492,000

respectively.

Goodwill and Other Intangible Assets

Goodwill and other intangible assets comprise a patent sublicense acquired from Palomar in

2006,

intangible assets and goodwill related to the acquisition of Iridex

’s aesthetic business unit, and, customer relationships in the Benelux countries acquired from a former distributor in

2013.

The components of intangible assets at

December 31, 2017

and

2016

were as follows (in thousands):

	Gross Carrying Amount		Accumulated Amortization & Impairment Amount		Net Amount
December 31, 2017
Patent sublicense	$	1,218	$	1,218	$	—
Customer relationship intangible related to acquisition		2,510		2,510		—
Other identified intangible assets related to acquisition		780		780		—
Other intangible		155		155		—
Goodwill		1,339		—		1,339
Total	$	6,002	$	4,663	$	1,339
December 31, 2016
Patent sublicense	$	1,218	$	1,218	$	—
Customer relationship intangible related to acquisition		2,510		2,508		2
Other identified intangible assets related to acquisition		780		780		—
Other intangible		155		155		—
Goodwill		1,339		—		1,339
Total	$	6,002	$	4,661	$	1,341

Amortization expense in the

201

2016,

and

2015

fiscal years for intangible assets was

$2,000,

$141,000,

and

$452,000,

respectively. Intangible assets were fully amortized and there were

additions as of

December 31, 2017.

Accrued Liabilities

Accrued liabilities consist of the following (in thousands):

	December 31,
	2017		2016
Accrued payroll and related expenses	$	12,567	$	9,036
Sales and marketing accruals		3,710		706
Accrued sales tax		2,920		2,373
Warranty liability		3,508		2,461
Other accrued liabilities		4,143		2,821
Total	$	26,848	$	17,397