Segment and Geographic Information

3 Months Ended

Mar. 31, 2012

Segment and Geographic Information [Abstract]

Segment and Geographic Information

Note 2 – Segment and Geographic Information

In accordance with ASC 280 Segment Reporting, operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision-making group, in making decisions how to allocate resources and assess performance. Our chief decision maker, as defined under the FASB’s guidance, is a combination of the Chief Executive Officer and the Chief Financial Officer. In the fourth quarter of 2011, we changed the manner in which the Company’s financial information is evaluated.  We now view our operations and manage our business as two segments, Professional Product segment and Consumer Product segment.

Financial information for the three months ended March 31, 2011 has also been presented for our two reportable operating segments.

The table below presents the financial information for our two reportable segments.  Revenues include our professional and consumer product revenues, service revenues, royalty revenues, and other revenues.  Cost of revenues and royalties include the material, manufacturing, service, and quality control expenses related to our professional and consumer product and service revenues and the cost of royalties related to our royalty revenues.  Operating expenses include selling and marketing expenses, research and development expenses, and general and administrative expenses.

	For the three months ended March 31,
(in thousands)	2012									2011
	Professional			Consumer			Total			Professional			Consumer			Total
Revenues	$	18,021		$	979		$	19,000		$	18,156		$	-		$	18,156
Cost of revenues and royalties		7,280			835			8,115			7,403			41			7,444
Gross profit (loss)		10,741			144			10,885			10,753			(41	)		10,712
Operating expenses		12,258			948			13,206			12,063			627			12,690
Loss from operations	$	(1,517	)	$	(804	)	$	(2,321	)	$	(1,310	)	$	(668	)	$	(1,978	)

As of March 31, 2012 and December 31, 2011, we had $165.0 million and $171.7 million, respectively, in total assets related to our Professional Product segment.  As of March 31, 2012 and December 31, 2011, we had $5.8 million and $6.3 million, respectively, in total assets related to our Consumer Product segment.

Our total revenues are attributed to geographic areas based on the location of the end customer.  The following table presents total revenues and long-lived assets for the three months ended March 31, 2012 and 2011.

(in thousands)	2012				2011
	Total Revenues		Long-lived assets		Total Revenues		Long-lived assets
United States	$	10,545	$	36,240	$	10,988	$	37,186
Europe		3,182		101		2,416		24
Canada		1,757		-		851		-
South and Central America		1,133		-		949		-
Japan		861		46		515		74
Middle East		823		-		915		-
Asia / Pacific Rim		354		-		716		-
Australia		345		-		806		-
Total	$	19,000	$	36,387	$	18,156	$	37,284

In the fourth quarter of 2010, we launched the PaloVia® Skin Renewing Laser® – our first consumer product.  Our Consumer Product segment consists of the business activities related to the PaloVia laser. Upon launch, we were selling the PaloVia laser through retail channels with which we had no history and, as such, we were unable to estimate the customer return rates and the expected warranty accrual needed on sales of our consumer product. Therefore, we deferred all consumer product revenues from the PaloVia laser until the fourth quarter of 2011.  During the fourth quarter of 2011, we determined that we had sufficient history to be able to estimate our customer return rates and the expected warranty accrual needed on sales of our consumer product.  In the fourth quarter of 2011, we recognized $3.5 million of consumer product revenues related to the PaloVia laser.  In the first quarter of 2012, we recognized $1.0 million of consumer product revenues.  At March 31, 2012 and December 31, 2011, we had no deferred revenue related to the PaloVia laser.  Included in our consolidated inventory balances at March 31, 2012 and December 31, 2011 is approximately $5.2 million and $5.3 million, respectively, of consumer product inventory.  At March 31, 2012 and December 31, 2011, we had $0.4 million and $0.8 million, respectively, of inventory on consignment in finished goods.