Restatement of Consolidated Financial Statements

12 Months Ended

Dec. 31, 2012

Restatement of Consolidated Financial Statements [Abstract]

Restatement of Consolidated Financial Statements [Text Block]

Note 17

Restatement of Consolidated Financial Statements:

As described below, the Company restated certain balance sheet items including goodwill, deferred tax assets, and other current liabilities. This change is the result of management and its third-party subject matter expert for material and complex tax transactions continuing to evaluate the level of certainty in connection with the use of pre-merger net operating loss carryforwards against future taxable income in the United Kingdom (U.K).

This restatement has no impact on any item in the Consolidated Statements of Comprehensive Income, including diluted earnings per share, and no net impact on the Consolidated Statements of Cash Flows for any period, as originally reported.

Background

 The Original Form 10-K disclosed in connection with our U.K. subsidiary (Photo Therapeutics Limited) that, after conversion to U.S. dollars, the subsidiary had approximately $12 million of net operating loss carryforwards available to it. The Original Form 10-K also disclosed that "if a corporation undergoes an "ownership change" and/or a "change in trade or business" under various standards of Her Majesty's Revenue Code (HMRC, U.K.), the amount of a company's pre-change NOLs that may be utilized to offset future taxable income in the U.K. may be limited or not available for offset against that income." As the Company further stated in the Original 10-K, it was "currently evaluating what effect, if any, the reverse merger and integration of Radiancy's business may have on its U.K. NOLs." As a result, an uncertain tax position existed surrounding the applicability of using past U.K. net operating loss carryforwards, and management adopted the required approach and prepared the Original Form 10-K under the assumption at that time that it was more likely than not that these losses could not be used against future U.K. taxable income.

Subsequent to the filing date of the Original Form 10-K, management, supported with the involvement of its third-party subject matter expert for material and complex tax transactions in the U.K. continued to evaluate the likelihood of being able to use past U.K. NOLs against future U.K. taxable income. As a result of further analysis, management was able to make a more informed judgment about its level of certainty and, therefore, modified its conclusion to reflect that the past accumulated net operating losses in the U.K. could be used to offset future taxable income in the U.K.

In accordance with ASC Topic 740-10-35-2, management believes the weight of evidence supports the view that a restatement of the financial statements as of December 31, 2012 and 2011 is warranted as management's conclusion is a new interpretation of previously available information, and in accordance with ASC Topic 805-10-25-19 and ASC Topic 250, such restatement most accurately reflects the impact of this revised conclusion.

Restated Amounts:

For December 31, 2012, the restated balance sheet reflects increases in the current and long-term deferred tax assets of $808 and of $1,729, respectively, and decreases of $815 in current taxes payable and $3,352 in goodwill.

For December 31, 2011, the restated balance sheet reflects increases to the current and long-term deferred tax assets of $781 and $2,460, respectively and a decrease of the goodwill of $3,241.

Management believes these revised balances more accurately reflect at December 31, 2012 and 2011 the benefit available to the company of past accumulated losses in its U.K. subsidiary.

This restatement has no impact on the Consolidated Statements of Comprehensive Income, including diluted earnings per share and has no net impact on the Consolidated Statement of Cash Flows for any period, as originally reported.

As a result, the Company is filing this Amended Form 10-K to amend the following and reflect the above:

Impact of the Restatement

	As of December 31, 2012
Balance Sheet Data:	As Previously Reported			Adjustment			As Restated
Deferred tax asset, current	$	18,633		$	808		$	19,441
Deferred tax asset, long term		18,457			1,729			20,186
Goodwill		27,852			(3,352	)		24,500
Other current liabilities		22,914			(815	)		22,099
	For the Year Ended December 31, 2012
Cash Flow Data:	As Previously Reported			Adjustment			As Restated
Operating activities - Deferred income taxes		(3,132	)		802			(2,330	)
Operating activities – Other accrued liabilities		6,521			(802	)		5,719

	As of December 31, 2011
Balance Sheet Data:	As Previously Reported		Adjustment			As Restated
Deferred tax asset, current	$	10,079	$	781		$	10,860
Deferred tax asset, long term		22,977		2,460			25,437
Goodwill		27,246		(3,241	)		24,005