Segment and Geographic Information

12 Months Ended

Dec. 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 about 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.

The following financial information is the information that the chief decision maker uses to analyze the Company's financial performance.  Periods prior to the year ended December 31, 2011 have been restated to present the information in accordance with 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 year ended December 31,
	2012
	Professional			Consumer				Total
Revenues		$	77,487,353		$	3,085,882			$	80,573,235
Cost of revenues and royalties			31,313,699			6,580,752				37,894,451
Gross profit (loss)			46,173,654			(3,494,870	)			42,678,784
Operating expenses			45,367,516			3,302,673				48,670,189
Income (loss) from operations		$	806,138		$	(6,797,543	)		$	(5,991,405	)

	For the year ended December 31,
	2011
	Professional		Consumer			Total
Revenues	$	99,882,758	$	3,554,110		$	103,436,868
Cost of revenues and royalties		39,436,166		3,267,165			42,703,331
Gross profit		60,446,592		286,945			60,733,537
Operating expenses		46,402,221		3,593,634			49,995,855
Income (loss) from operations	$	14,044,371	$	(3,306,689	)	$	10,737,682

	For the year ended December 31,
	2010
	Professional			Consumer			Total
Revenues	$	63,720,885		$	-		$	63,720,885
Cost of revenues and royalties		22,755,797			135,737			22,891,534
Gross profit (loss)		40,965,088			(135,737	)		40,829,351
Operating expenses		42,261,837			7,759,099			50,020,936
Loss from operations	$	(1,296,749	)	$	(7,894,836	)	$	(9,191,585	)

As of December 31, 2012 and 2011, we had $167.4 million and $171.7 million, respectively, in total assets related to our Professional Product segment.  As of December 31, 2012 and 2011, we had $1.4 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 years ended December 31, 2012, 2011, and 2010.

(in thousands)	2012				2011					2010
	Total Revenues		Long-lived Assets			Total Revenues		Long-lived Assets		Total Revenues		Long-lived Assets
United States	$	43,696	$	35,760		$	73,466	$	36,549	$	36,654	$	37,086
Europe		13,758		81			9,434		107		9,899		-
Canada		6,654		-			5,010		-		5,317		-
Middle East		3,845		-			3,767		-		2,108		-
Asia / Pacific Rim		2,813		-			3,302		-		1,746		-
South and Central America		2,958		-			3,260		-		3,288		-
Australia		3,469		-			3,022		-		2,839		-
Japan		3,380		44			2,176		57		1,870		79
Total	$	80,573	$	35,885		$	103,437	$	36,713	$	63,721	$	37,165

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. Since we were selling the PaloVia laser through retail channels for which we had no history and were unable to estimate the customer return rates and the expected warranty accrual needed on sales of our consumer product, 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.  At December 31, 2012 and December 31, 2011, we had no deferred revenue related to the PaloVia laser.  Included in our consolidated inventory balances at December 31, 2012 and December 31, 2011 is approximately $0.7 million and $5.3 million, respectively, of consumer product inventory.  During the year ended December 31, 2012, we recognized a $3.8 million charge to reduce our consumer product inventory to its estimated net realizable amounts.  At December 31, 2012 and December 31, 2011, we had $0.3 million and $0.8 million, respectively, of inventory on consignment in finished goods.