10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

FORM 10 - Q

ýQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2016

OR

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to ___________

Commission File Number 0-51481

STRATA SKIN SCIENCES, INC.

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization) 13-3986004 (I.R.S.  Employer Identification No.)

100 Lakeside Drive, Suite 100, Horsham, Pennsylvania 19044

(Address of principal executive offices, including zip code)

(215) 619-3200

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant: (i) 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 (ii) has been subject to such filing requirements for the past 90 days.

Yes ý  No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes ý  No ☐

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

Large accelerated filer ☐Accelerated filer ☐

Non-accelerated filer ☐Smaller reporting company ý

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.)

Yes ☐  No ý

The number of shares outstanding of the issuer's common stock as of May 13, 2016 was 10,587,804 shares.

1

STRATA SKIN SCIENCES, INC.

TABLE OF CONTENTS

Part I. Financial Information:			PAGE
	ITEM 1.  Financial Statements:
	a.	Condensed Consolidated Balance Sheets as of March 31, 2016 (unaudited) and December 31, 2015	3
	b.	Condensed Consolidated Statements of Comprehensive Loss for the three months ended March 31, 2016 and 2015 (unaudited)	4
	c.	Condensed Consolidated Statement of Changes in Equity for the three months ended March 31, 2016 (unaudited)	5
	d.	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2016 and 2015 (unaudited)	6
	e.	Notes to Unaudited Condensed Consolidated Financial Statements	7
	ITEM 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations		22
	ITEM 3.  Quantitative and Qualitative Disclosure about Market Risk		29
	ITEM 4.  Controls and Procedures		29
Part II. Other Information:
	ITEM 1.  Legal Proceedings		29
	ITEM 1A.  Risk Factors		30
	ITEM 2.  Unregistered Sales of Equity Securities and Use of Proceeds		30
	ITEM 3.  Defaults Upon Senior Securities		30
	ITEM 4.  Mine Safety Disclosures		30
	ITEM 5.   Other Information		30
	ITEM 6.  Exhibits		31
		Signatures	32
		Certifications	E-31.1

2

PART I – Financial Information

ITEM 1. Financial Statements

STRATA SKIN SCIENCES, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

	March 31, 2016			December 31, 2015
ASSETS	(unaudited)
Current assets:
Cash and cash equivalents	$	3,120		$	3,303
Restricted cash		-			15
Accounts receivable, net of allowance for doubtful accounts of $80 and $45, respectively		3,247			4,068
Inventories, net		4,152			4,128
Prepaid expenses and other current assets		377			465
Total current assets		10,896			11,979
Property and equipment, net		12,818			13,851
Patents and licensed technologies, net		7,003			7,247
Other intangible assets, net		7,770			7,980
Goodwill		8,928			8,928
Other assets		94			94
Total assets	$	47,509		$	50,079
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Note payable	$	195		$	299
Accounts payable		3,503			4,446
Other accrued liabilities		1,639			2,161
Deferred revenues		225			173
Total current liabilities		5,562			7,079
Long-term liabilities:
Long-term debt, net		11,344			9,851
Senior secured convertible debentures, net		10,308			9,839
Warrant liability		5,057			7,042
Deferred tax liability		179			119
Other liabilities		27			62
Total liabilities		32,477			33,992
Commitment and contingencies
Stockholders' equity:
Preferred Stock, $.10 par value, 10,000,000 shares authorized; 6,505 shares issued and outstanding		1			1
Common Stock, $.001 par value, 150,000,000 shares authorized; 10,503,393 and 10,283,393 shares issued and outstanding, respectively		11			10
Additional paid-in capital		223,696			223,315
Accumulated deficit		(208,677	)		(207,240	)
Accumulated other comprehensive income		1			1
Total stockholders' equity		15,032			16,087
Total liabilities and stockholders' equity	$	47,509		$	50,079

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

STRATA SKIN SCIENCES, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands, except share and per share amounts)

(unaudited)

	For the Three Months Ended March 31,
	2016			2015
Revenues	$	7,620		$	81
Cost of revenues		3,422			711
Gross profit (loss)		4,198			(630	)
Operating expenses:
Engineering and product development		525			239
Selling and marketing		3,710			1,027
General and administrative		2,101			1,736
		6,336			3,002
Operating loss before other income (expense), net		(2,138	)		(3,632	)
Other income (expense), net:
Interest expense, net		(1,218	)		(2,324	)
Change in fair value of warrant liability		1,985			(1,334	)
Other income, net		-			18
		767			(3,640	)
Loss before income taxes		(1,371	)		(7,272	)
Income tax expense		(66	)		-
Net loss	$	(1,437	)	$	(7,272	)
Net loss per share:
Basic	$	(0.14	)	$	(1.12	)
Diluted	$	(0.26	)	$	(1.12	)
Shares used in computing net loss per share:
Basic		10,339,657			6,471,906
Diluted		13,307,923			6,471,906

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

STRATA SKIN SCIENCES, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE THREE MONTHS ENDED MARCH 31, 2016

(In thousands, except share and per share amounts)

(Unaudited)

	Convertible Preferred Stock				Common Stock				Additional Paid-In		Accumulated			Accumulated Other Comprehensive
	Shares		Amount		Shares		Amount		Capital		Deficit			Loss		Total
BALANCE, JANUARY 1, 2016		6,505	$	1		10,283,393	$	10	$	223,315	$	(207,240	)	$	1	$	16,087
Stock-based compensation		-		-		-		-		170		-			-		170
Conversion of senior secured convertible debentures		-		-		220,000		1		164		-			-		165
Warrants issued in connection with debt		-		-		-		-		47		-			-		47
Net loss for the three months ended March 31, 2016		-		-		-		-		-		(1,437	)		-		(1,437	)
BALANCE, MARCH 31, 2016		6,505	$	1		10,503,393	$	11	$	223,696	$	(208,677	)	$	1	$	15,032

The accompanying notes are an integral part of these condensed consolidated financial statements.

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STRATA SKIN SCIENCES, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, unaudited)

	For the Three Months Ended March 31,
	2016			2015
Cash Flows From Operating Activities:
Net loss	$	(1,437	)	$	(7,272	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		1,684			316
Provision for doubtful accounts		40			1
Stock-based compensation		170			230
Deferred tax provision		60			-
Amortization of debt discount		639			2,015
Amortization of deferred financing costs		48			180
Change in fair value of warrant liability		(1,985	)		1,334
Changes in operating assets and liabilities:
Accounts receivable		782			214
Inventories		(24	)		113
Prepaid expenses and other assets		88			(76	)
Accounts payable and accrued expenses		(955	)		(110	)
Other accrued liabilities		(523	)		(8	)
Other liabilities		(35	)		(10	)
Deferred revenues		52			(28	)
Net cash used in operating activities		(1,396	)		(3,101	)
Cash Flows From Investing Activities:
Lasers placed-in-service, net		(197	)		-
Restricted cash		15			(100	)
Net cash used in investing activities		(182	)		(100	)
Cash Flows From Financing Activities:
Proceeds from long-term debt		1,500			-
Payments on notes payable		(105	)		-
Net cash provided by financing activities		1,395			-
Net decrease in cash and cash equivalents		(183	)		(3,201	)
Cash and cash equivalents, beginning of period		3,303			11,434
Cash and cash equivalents, end of period	$	3,120		$	8,233
Supplemental information:
Cash paid for interest	$	442		$	139
Supplemental information of non-cash investing and financing activities:
Conversion of senior secured convertible debentures into common stock	$	165		$	2,308
Conversion of convertible preferred stock into common stock	$	-		$	1,508
Reclassification of property and equipment to inventory, net	$	-		$	26
Recognition of warrants issued as debt discount	$	47		$	-

The accompanying notes are an integral part of these condensed consolidated financial statements

6

STRATA SKIN SCIENCES, INC. AND SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts and number of lasers)

Note 1

The Company:

Background

STRATA Skin Sciences, Inc. (and its subsidiary) ("STRATA" or "we" or the "Company") is a medical technology company dedicated to developing and commercializing innovative products for the diagnosis and treatment of serious dermatological disorders. In June 2015 the Company completed the acquisition of the XTRAC Excimer Laser and the VTRAC excimer lamp businesses from PhotoMedex, Inc. which included a subsidiary in India, PhotoMedex India Ltd. The XTRAC® and VTRAC® products are FDA cleared devices for the treatment of psoriasis, vitiligo and other skin disorders. The purchase price was $42,500 plus the assumption of certain business-related liabilities. Management believes that the cash flow generated by these businesses will be sufficient to finance the Company's operations for the foreseeable future. (See Note 2, Acquisition.)

The XTRAC is an ultraviolet light excimer laser system utilized to treat psoriasis, vitiligo and other skin diseases. The XTRAC received FDA clearance in 2000 and has since become a recognized treatment among dermatologists. The system delivers targeted 308um ultraviolet light to affected areas of the skin, leading to psoriasis clearing and vitiligo repigmentation, following a series of treatments. As of March 31, 2016, there were 730 XTRAC systems placed in dermatologists' offices in the United States under the Company's recurring revenue business model. The XTRAC systems employed under the recurring revenue model generate revenue on a per procedure basis. The per-procedure charge is inclusive of the use of the system and the services provided by the Company to the customer which includes system maintenance, reimbursement support service and participation in the direct to patient marketing programs employed by the Company. The XTRAC system's use for psoriasis is covered by nearly all major insurance companies, including Medicare. The VTRAC Excimer Lamp system, offered in addition to the XTRAC system internationally, provides targeted therapeutic efficacy demonstrated by excimer technology with the simplicity of design and reliability of a lamp system.

Liquidity

As of March 31, 2016, the Company had an accumulated deficit of $208,677 and has incurred losses and negative cash flows from operations since inception. To date, the Company has dedicated most of its financial resources to research and development, sales and marketing, and general and administrative expenses.

The Company has been dependent on raising capital from the sale of securities in order to continue to operate and to meet its obligations in the ordinary course of business. Management believes that its cash and cash equivalents as of March 31, 2016 combined with the anticipated revenues from the sale of the Company's products will be sufficient to satisfy its working capital needs, capital asset purchases, outstanding commitments and other liquidity requirements associated with its existing operations through the second quarter of 2017.

Basis of Presentation:

Accounting Principles

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP").

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. All significant intercompany balances and transactions have been eliminated in consolidation.

7

STRATA SKIN SCIENCES, INC. AND SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts and number of lasers)

Quarterly Financial Information and Results of Operations

The condensed consolidated financial statements as of March 31, 2016 and for the three months ended March 31, 2016 and 2015 are unaudited and, in the opinion of management, include all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the financial position as of March 31, 2016,  the results of operations for the three months ended March 31, 2016 and 2015, the statement of stockholders' equity for the three months ended March 31, 2016 and the statement of cash flows for the three months ended March 31, 2016 and 2015. The results of operations and cash flows for the three months ended March 31, 2016 are not necessarily indicative of the results to be expected for the entire year. The condensed consolidated balance sheet as of December 31, 2015 was derived from audited financial statements as of December 31, 2015. While management of the Company believes that the disclosures presented are adequate to make the information not misleading, these condensed consolidated financial statements should be read in conjunction with audited consolidated financial statements and the footnotes thereto, together with Management's Discussion and Analysis of Financial Condition and Results of Operations, contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2015. 

Reclassification

Certain reclassifications from the prior year presentation have been made to conform to the current year presentation. These reclassifications did not have a material impact on the Company's equity, net assets, results of operations or cash flows.

Use of Estimates

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the US requires management to make estimates and assumptions that affect amounts reported of assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting periods. Actual results could differ from those estimates and be based on events different from those assumptions. As of March 31, 2016, the more significant estimates include (1) revenue recognition, including deferred revenues and valuation allowances of accounts receivable, (2) the fair value of assets acquired and liabilities assumed in the business combination, (3) the estimated useful lives of intangible assets and property and equipment, (4) the inputs used in determining the fair value of equity-based awards and (5) the valuation allowance related to deferred tax assets.

Fair Value Measurements

The Company measures and discloses fair value in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification 820, Fair Value Measurements and Disclosures ("ASC Topic 820"). ASC Topic 820 defines fair value, establishes a framework and gives guidance regarding the methods used for measuring fair value, and expands disclosures about fair value measurements. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions there exists a three-tier fair-value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

• Level 1 – unadjusted quoted prices are available in active markets for identical assets or liabilities that the Company has the ability to access as of the measurement date.

• Level 2 – pricing inputs are other than quoted prices in active markets that are directly observable for the asset or liability or indirectly observable through corroboration with observable market data.

• Level 3 – pricing inputs are unobservable for the non-financial asset or liability and only used when there is little, if any, market activity for the non-financial asset or liability at the measurement date. The inputs into the determination of fair value require significant management judgment or estimation. Fair value is determined using comparable market transactions and other valuation methodologies, adjusted as appropriate for liquidity, credit, market and/or other risk factors

This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value.

8

STRATA SKIN SCIENCES, INC. AND SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts and number of lasers)

The Company's recurring fair value measurements at March 31, 2016 and December 31, 2015 are as follows:

	Fair Value as of March 31, 2016		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Liabilities:
Warrant liability (Note 10)	$	5,057	$	-	$	-	$	5,057
	Fair Value as of December 31, 2015		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Liabilities:
Warrant liability (Note 10)	$	7,042	$	-	$	-	$	7,042

The fair value of cash and cash equivalents are based on their respective demand value, which are equal to the carrying value. The fair value of derivative warrant liabilities is estimated using option pricing models that are based on the individual characteristics of the Company's warrants, preferred and common stock, the derivative warrant liability on the valuation date as well as assumptions for volatility, remaining expected life, risk-free interest rate and, in some cases, credit spread. The derivative warrant liabilities are the only recurring Level 3 fair value measures. The carrying value of all other short-term monetary assets and liabilities is estimated to be approximate to their fair value due to the short-term nature of these instruments. The Company assessed its convertible debentures and long-term debt and determined that the fair value of total debt was $18,251 as of March 31, 2016. As of December 31, 2015 the fair value of total debt approximated the recorded value of $15,958.

Several of the warrants have non-standard terms as they relate to a fundamental transaction and require a net-cash settlement upon change in control of the Company and other warrants contain full ratchet provisions that reduce the exercise price of the warrants in the event of a transaction resulting in the issuance of equity below the current price of the warrants. Therefore these warrants are classified as derivatives. These warrants have been recorded at their fair value using a binomial option pricing model and will be recorded at their respective fair value at each subsequent balance sheet date. See Note 10, Warrants, for additional discussion.

Accrued Warranty Costs

The Company offers a standard warranty on product sales generally for a one to two-year period The Company provides for the estimated cost of the future warranty claims on the date the product is sold. Total accrued warranty is included in Other Accrued Liabilities and Other liabilities on the balance sheet. The activity in the warranty accrual during the three months ended March 31, 2016 is summarized as follows:

	March 31, 2016
	(unaudited)
Accrual at beginning of year	$	226
Additions charged to warranty expense		72
Expiring warranties/claimed satisfied		(119	)
Total		179
Less: current portion		(155	)
	$	24

9

STRATA SKIN SCIENCES, INC. AND SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts and number of lasers)

Earnings Per Share

Basic net loss per common share excludes dilution for potentially dilutive securities and is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding during the period. Diluted net loss per common share gives effect to dilutive options, warrants and other potential common shares outstanding during the period and their potential diluted effect is considered using the treasury method.

For the three months ended March 31, 2016 diluted earnings per common share are computed by the numerator effected by the gain on the change in fair value of the warrant liability and the denominator is increased to include the number of additional potential common shares from the warrants underlying the warrant liability.

Diluted earnings per common share were calculated using the following net loss and weighted average shares outstanding for the three months ended March 31, 2016:

	March 31, 2016
Net loss	$	(1,437	)
Gain on the change in fair value of the warrant liability		(1,985	)
Diluted earnings	$	(3,422	)
Weighted average number of common and common equivalent shares outstanding:
Basic number of common shares outstanding		10,339,657
Dilutive effect of warrants		2,968,266
Diluted number of common and common stock equivalent shares outstanding		13,307,923

For the three months ended March 31, 2015, diluted net loss per common share is equal to the basic net loss per common share since all potentially dilutive securities are anti-dilutive. The loss on the change in fair value of the warrant liability would be considered in the diluted earnings per share calculation and was deemed to be antidilutive.

Potential common stock equivalents outstanding as of March 31, 2016 and 2015 consist of common stock equivalents of common stock purchase warrants, senior secured convertible debentures, convertible preferred stock and common stock options, which are summarized as follows:

		March 31,
	2016		2015
Common stock equivalents of convertible debentures	46,215,126		4,328,466
Common stock purchase warrants	16,729,362		13,078,920
Common stock equivalents of convertible preferred stock	2,535,866		4,007,406
Common stock options	2,669,352		1,293,701
Total	68,149,706		22,708,493

Adoption of New Accounting Standards

In April 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2015-03, "Simplifying the Presentation of Debt Issuance Costs" (Subtopic 835-30). ASU No. 2015-03 provides guidance that will require debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, in the same manner as debt discounts, rather than as an asset. The standard was effective for reporting periods beginning after December 15, 2015 and early adoption was permitted. The Company adopted this ASU effective January 1, 2016. (See Note 8, Convertible Debentures.)

10

STRATA SKIN SCIENCES, INC. AND SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts and number of lasers)

In September 2015, the FASB issued ASU No. 2015-16, "Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments." The amendments in ASU 2015-16 require that an acquirer recognize adjustments to estimated amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined, rather than retrospectively adjusting amounts previously reported. The amendments require that the acquirer record, in the same period's financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the estimated amounts, calculated as if the accounting had been completed at the acquisition date. Effective for public business entities for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. The amendments should be applied prospectively to adjustments to provisional amounts that occur after the effective date with earlier application permitted for financial statements that have not been issued. The adoption of this ASU did not have a significant impact on the condensed consolidated financial statements.

Recently Issued Accounting Standards

In February 2016, the FASB issued ASU 2016-02, Leases, This statement requires lessees to present right-of-use assets and lease liabilities on the balance sheet. The standard is effective for public companies for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently evaluating the effect the guidance will have on its financial condition and results of operations.

In November 2015, the FASB issued ASU 2015-17, Income Taxes, Balance Sheet Classification of Deferred Taxes topic of the Codification. This standard requires all deferred tax assets and liabilities to be classified as non-current on the balance sheet instead of separating deferred taxes into current and non-current amounts. In addition, valuation allowance allocations between current and non-current deferred tax assets are no longer required because those allowances also will be classified as non-current. This standard is effective for public companies for annual periods beginning after December 15, 2016 and March 31, 2016. The Company's deferred tax assets is provided with full valuation allowance as of December 31, 2015. As such, the Company does not expect that this standard will have a significant impact on its consolidated financial statements and disclosures upon adoption.

In July, 2015, The FASB issued Accounting Standards Update No. 2015-11, Simplifying the Measurement of Inventory (Topic 330) ("ASU 2015-11"). ASU 2015-11 outlines that inventory within the scope of its guidance be measured at the lower of cost and net realizable value. Inventory measured using last-in, first-out (LIFO) are not impacted by the new guidance. Prior to the issuance of ASU 2015-11, inventory was measured at the lower of cost or market (where market was defined as replacement cost, with a ceiling of net realizable value and floor of net realizable value less a normal profit margin). For a public entity, the amendments in ASU 2015-11 are effective, in a prospective manner, for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period (the first quarter of fiscal year 2017 for the Company). Early adoption is permitted as of the beginning of an interim or annual reporting period. The Company is in the process of assessing the impact, if any, of ASU 2015-11 on its consolidated financial statements.

In May 2014, The FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASU 2014-09").ASU 2014-09 outlines a single comprehensive model to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. ASU 2014-09 also requires entities to disclose sufficient information, both quantitative and qualitative, to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. An entity should apply the amendments in this ASU using one of the following two methods: 1. Retrospectively to each prior reporting period presented with a possibility to elect certain practical expedients, or, 2. Retrospectively with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application. If an entity elects the latter transition method, it also should provide certain additional disclosures. For a public entity, the amendments in ASU 2014-09 were to be effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. In July 2015, the FASB voted for a one year deferral of the effective date of ASU 2014-09 and issued an exposure draft. The new guidance will be effective for annual and interim periods beginning on or after December 15, 2017. Early application is not permitted. The Company is currently assessing the impact that adopting this new accounting guidance will have on its consolidated financial statements and footnote disclosures.

11

In August 2014, the FASB issued Accounting Standards Update No. 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern ("ASU 2014-15"). ASU 2014-15 provides guidance on management's responsibility in evaluating whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity's ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable). ASU 2014-15 also provides guidance related to the required disclosures as a result of management evaluation. The amendments in ASU 2014-15 are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company is currently evaluating the new guidance to determine the impact the adoption of this guidance will have on the Company's results of operations, cash flows or financial condition.

Note 2

Acquisition:

On June 22, 2015, the Company entered into an asset purchase agreement (the "Asset Purchase Agreement") with PhotoMedex Inc. and PhotoMedex Technology, Inc. pursuant to which the Company has purchased the XTRAC and VTRAC laser businesses from PhotoMedex, Inc. (the "Asset Purchase") for $42,528 in cash and assumed certain business-related liabilities. The purchased assets include all of the accounts receivable, inventory and fixed and intangible assets of the business.

The fair value of the assets acquired and liabilities assumed were based on management. The significant intangible assets to be recognized in the valuation are core and product technologies, tradenames and customer relationships. The estimated useful lives over which these assets will be amortized, utilizing the straight line method, are five years for product technologies and ten years for core technologies, tradenames and customer relationships. The following allocation of the aggregate fair value is subject to adjustment based on the fair value of the assets acquired and the liabilities assumed. The Company estimated fair value of the intangibles and lasers placed in service was based on the income approach which estimated cash flow that utilize appropriate discount and capitalization rates and available market information. Estimates of future cash flows are based on a number of factors including the historical operating results, known trends and specific market and economic conditions. The fair value of the Company's remaining fixed assets was estimated based on the cost approach which estimated the cost to replace.

	Fair Value
Current assets	$	7,233
Property, plant and equipment		14,340
Identifiable intangible assets		16,100
Other assets		45
Total assets assumed		37,718
Current liabilities		(3,945	)
Note payable		(57	)
Other long term liabilities		(116	)
Total liabilities assumed		(4,118	)
Net assets acquired	$	33,600

The purchase price exceeded the fair value of the net assets acquired by $8,928, which was recorded as goodwill.

12

STRATA SKIN SCIENCES, INC. AND SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts and number of lasers)

The consolidated results of operations do not include any revenues or expenses related to XTRAC and VTRAC businesses on or prior to June 22, 2015, the date of the asset purchase. The Company's unaudited pro-forma results for the three months ended March 31, 2015 summarize the combined results in the following table, assuming the asset purchase had occurred on January 1, 2015 and after giving effect to the acquisition adjustments, including amortization of the tangible and long-lived intangible assets acquired in the transaction:

	Three Months Ended March 31,2015
	(unaudited)
Net revenues	$	7,557
Net loss	$	(10,157	)
Net loss per basic and diluted share:	$	(1.57	)
Shares used in calculating net loss per basic and diluted share:		6,471,906

These unaudited pro-forma results have been prepared for comparative purposes only and do not purport to be indicative of the results of operations which would have actually resulted had the acquisition occurred on January 1, 2014, nor to be indicative of future results of operations.

Note 3

Inventories, net:

	March 31, 2016		December 31, 2015
	(unaudited)
Raw materials and work in progress	$	3,792	$	3,706
Finished goods		360		422
Total inventories	$	4,152	$	4,128

Work-in-process is immaterial, given the Company's typically short manufacturing cycle, and therefore is disclosed in conjunction with raw materials.

Note 4

Property and Equipment, net:

	March 31, 2016			December 31, 2015
	(unaudited)
Lasers placed-in-service	$	15,966		$	15,782
Equipment, computer hardware and software		1,244			1,219
Furniture and fixtures		2,054			2,080
Leasehold improvements		931			931
		20,195			20,012
Accumulated depreciation and amortization		(7,377	)		(6,161	)
Property and equipment, net	$	12,818		$	13,851

Depreciation and related amortization expense was $1,230 and $41 for the three months ended March 31, 2016 and 2015, respectively.

13

STRATA SKIN SCIENCES, INC. AND SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts and number of lasers)

Note 5

Patents and Licensed Technologies, net:

	March 31, 2016			December 31, 2015
	(unaudited)
Core technology	$	5,974		$	5,974
Product technology		2,000			2,000
		7,974			7,974
Accumulated amortization		(971	)		(727	)
Patents and licensed technologies, net	$	7,003		$	7,247

Related amortization expense was $244 and $1 for each of the three month ended March 31, 2016 and 2015.

Estimated amortization expense for amortizable patents and licensed technologies assets for the future periods is as follows:

Remaining 2016	$	731
2017		975
2018		975
2019		975
2020		775
Thereafter		2,572
Total	$	7,003

Note 6

Other Intangible Assets:

Set forth below is a detailed listing of other definite-lived intangible assets:

	March 31, 2016			December 31, 2015
	(unaudited)
Customer relationships	$	6,900		$	6,900
Tradenames		1,500			1,500
		8,400			8,400
Accumulated amortization		(630	)		(420	)
Other intangible assets, net	$	7,770		$	7,980

Related amortization expense was $210 and $ 0 for the three months ended March 31, 2016 and 2015, respectively.

Estimated amortization expense for the above amortizable intangible assets for the future periods is as follows:

Remaining 2016	$	630
2017		840
2018		840
2019		840
2020		840
Thereafter		3,780
Total	$	7,770

14

STRATA SKIN SCIENCES, INC. AND SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts and number of lasers)

Note 7

Other Accrued Liabilities:

	March 31, 2016		December 31, 2015
	(unaudited)
Accrued warranty, current, see Note 1	$	155	$	168
Accrued compensation, including commissions and vacation		921		1,336
Accrued sales and other taxes		375		349
Accrued professional fees		175		265
Other accrued liabilities		13		43
Total other accrued liabilities	$	1,639	$	2,161

Note 8

Convertible Debentures:

In the following table is a summary of the Company's convertible debentures.

	March 31, 2016		December 31, 2015
	(unaudited)
Senior secured 2.25% convertible debentures, net of unamortized debt discount of $25,718 and $26,267, respectively; and deferred financing costs of $554 and $522, respectively	$	5,841	$	5,489
Senior secured 4% convertible debentures, net of unamortized debt discount of $3,816 and $3,922, respectively; and deferred financing costs of $432 and $443, respectively		4,467		4,350
Total convertible debt	$	10,308	$	9,839

The Company issued $32,500 aggregate principal amount of Debentures (June 2015 Debentures) that, subject to certain ownership limitations and stockholder approval conditions, will be convertible into 43,333,334 shares of Company common stock at an initial conversion price of $0.75 per share. The Debentures bear interest at the rate of 2.25% per year, and, unless previously converted, will mature on the five-year anniversary of the date of issuance, June 22, 2020.

The June 2015 Debentures include a beneficial conversion feature valued at $27,300 that was recorded as a discount to the debentures. On the date of issuance the beneficial conversion feature value was calculated as the difference resulting from subtracting the conversion price of $0.75 from $1.38, the opening market value of the Company's common stock following the announcement of the transaction, multiplied by the number of common shares into which the June 2015 Debentures are convertible. This discount is being amortized over the five year life of the June 2015 Debentures using the effective interest method. The embedded conversion feature contains an anti-dilution provision that allows for downward exercise price adjustments in certain situations. The embedded conversion feature was not bifurcated as it did not meet all of the elements of a derivative.

15

STRATA SKIN SCIENCES, INC. AND SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts and number of lasers)

On July 21, 2014, the Company entered into a definitive Securities Purchase Agreement (the "Purchase Agreement") with institutional investors (the "Investors") providing for the issuance of Senior Secured Convertible Debentures in the aggregate principal amount of $15,000, due, subject to the terms therein, in July 2019 (the "July 2014 Debentures"), and warrants (the "July 2014 Series A Warrants") to purchase up to an aggregate of 6,198,832 shares of common stock, $0.001 par value per share, at an exercise price of $2.45 per share expiring in July 2019. The July 2014 Debentures bear interest at an annual rate of 4%, payable quarterly or upon conversion into shares of common stock. The Debentures are convertible at any time into an aggregate of 5,847,955 shares of common stock at an initial conversion price of $2.565 per share. The Company's obligations under the July 2014 Debentures are secured by a first priority lien on all of the Company's intellectual property pursuant to the terms of a security agreement ("Security Agreement") dated July 21, 2014 among the Company and the Investors. In connection with the Purchase Agreement, the Company entered into a Registration Rights Agreement with the Investors pursuant to which the Company was obligated to file a registration statement to register for resale the shares of Common Stock issuable upon conversion of the Series B Preferred Stock (See Note 10, Warrants) and Debentures and upon exercise of the Warrants. Under the terms of the Registration Rights Agreement, the Company filed a registration statement on August 19, 2014, which was declared effective by the SEC on October 20, 2014 (File No. 333-198249).

For financial reporting purposes, the $15,000 funded by the Investors on July 21, 2014 was allocated first to the fair value of the obligation to issue the Warrants, amounting to $5,296, then to the intrinsic value of the beneficial conversion feature on the July 2014 Debentures of $4,565. The balance was further reduced by the fair value of warrants issued to the placement agent for services rendered of $491, resulting in an initial carrying value of the Debentures of $4,647. The initial debt discount on the July 2014 Debentures totaled $10,353 and is being amortized using the effective interest method over the five year life of the July 2014 Debentures.

During the three months ended March 31, 2016, the investors converted debentures amounting to $165 into 220,000 shares of common stock for the June 2015 note. The debt discount and deferred financing cost adjustment resulting from the conversions increased interest expense by $136 for the three months ended March 31, 2016.

As a condition of the new note facility (See Note 9, Long-term Debt) the Debentures from both the 2014 and 2015 financings were amended. The Debentures holders' first priority lien was subordinated to the new term note facility. Additionally, as a condition of the term note facility, the maturity date of both Debentures was extended to June 30, 2021. The Company evaluated the modifications to determine if there was an extinguishment of debt. Based on the valuation, the discounted cash flows did not change by more than 10%, thus they were treated as a modification.

As of March 31, 2016, the total outstanding amount of Debentures was $40,828.

Note 9

Long-term Debt:

Term-Note Credit Facility

On December 30, 2015, the Company entered into a $12,000 credit facility pursuant to a Credit and Security Agreement (the "Agreement") and related financing documents with MidCap Financial Trust ("MidCap") and the lenders listed therein. Under the Agreement, the credit facility may be drawn down in two tranches, the first of which was drawn for $10,500 on December 30, 2015. The proceeds of this first tranche were used to repay $10,000 principal amount of short-term senior secured promissory notes, plus associated interest, loan fees and expenses. The second tranche was drawn for $1,500 on January 29, 2016. The Company's obligations under the credit facility are secured by a first priority lien on all of the Company's assets. This credit facility includes both financial and non-financial covenants, including a minimum net revenue covenant, beginning in January 2016. The Company is in compliance with these covenants as of March 31, 2016. Interest rate on the credit facility is one month LIBOR plus 8.25%, subject to a LIBOR floor of 0.5%. The Company's existing debentures from its 2014 and 2015 financings were amended as a condition of this new term note facility, including subordination agreements and maturity extensions. As of March 31, 2016 the net balance of long-term debt is $11,344.

16

STRATA SKIN SCIENCES, INC. AND SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts and number of lasers)

In connection with the issuance of the Term Note the Company issued MidCap (and the lenders), on December 30, 2015, a warrant to purchase 650,442 shares of the Company's common stock for an exercise price of $1.13. Additionally, the Company issued MidCap (and the lenders), on January 29, 2016, a warrant to purchase 99,057 shares of the Company's common stock for an exercise price of $1.06. The warrants are exercisable at any time on or prior to the fifth anniversary of its issue date. The warrants are treated as a discount to the debt and are accreted under the effective interest method over the repayment term of 60 months. The Company has accounted for these warrants as equity instruments since there is no option for cash or net-cash settlement when the warrants are exercised and since they are indexed to the Company's common stock. The Company computed the value of the warrants using the Black-Scholes method. The key assumptions used to value the warrants are as follows:

	December 31, 2015			January 29, 2016
Number of shares underlying warrants		650,442			99,057
Exercise price	$	1.13		$	1.06
Stock price on date of issuance	$	1.11		$	1.05
Fair value of warrants	$	321		$	47
Volatility		50.0	%		50.0	%
Risk-free interest rate		1.8	%		1.8	%
Expected dividend yield		0	%		0	%
Expected warrant life	5 years			5 years

Note 10

Warrants:

The Company accounts for warrants that have provisions that protect holders from a decline in the issue price of its common stock (or "down-round" provisions) as liabilities instead of equity. Down-round provisions reduce the exercise or conversion price of a warrant or convertible instrument if a company either issues equity shares for a price that is lower than the exercise or conversion price of those instruments or issues new warrants or convertible instruments that have a lower exercise or conversion price. Net settlement provisions allow the holder of the warrant to surrender shares underlying the warrant equal to the exercise price as payment of its exercise price, instead of physically exercising the warrant by paying cash. The Company evaluated whether warrants to acquire its common stock contain provisions that protect holders from declines in the stock price or otherwise could result in modification of the exercise price and/or shares to be issued under the respective warrant agreements based on a variable that is not an input to the fair value of a "fixed-for-fixed" option.

The Company recognizes such warrants as liabilities at the fair value on each reporting date. The Company computed the value of the warrants using the binomial method. A summary of quantitative information with respect to the valuation methodology and significant unobservable inputs used for the Company's warrant liabilities that are categorized within Level 3 of the fair value hierarchy as of March 31, 2016 and December 31, 2015 is as follows:

	March 31, 2016			December 31, 2015
Number of shares underlying the warrants		14,099,267			14,099,267
Stock price	$	0.95		$	1.11
Volatility		50.00	%		35.90 – 50.00	%
Risk-free interest rate		0.26% – 1.07	%		0.02% - 1.63	%
Expected dividend yield		0	%		0	%
Expected warrant life	0.32 – 4.23 years			0.07 – 4.48 years

17

STRATA SKIN SCIENCES, INC. AND SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts and number of lasers)

Recurring Level 3 Activity and Reconciliation

The tables below provide a reconciliation of the beginning and ending balances for the liability measured at fair value using significant unobservable inputs (Level 3). The table reflects gains and losses for the three month periods ended March 31, 2016 and 2015, for all financial liabilities categorized as Level 3 as of March 31, 2016 and March 31, 2015, respectively.

Fair Value Measurements Using Significant Unobservable Inputs (Level 3):

Issuance Date	December 31, 2015		Decrease in Fair Value			March 31, 2016
10/31/2013	$	379	$	(99	)	$	280
2/5/2014		715		(187	)		528
7/24/2014 Series A (1)		2,415		(621	)		1,794
7/24/2014 Series B (1)		1,726		(638	)		1,088
6/22/2015		1,807		(440	)		1,367
Total	$	7,042	$	(1,985	)	$	5,057

(1)  These warrants were modified on September 30, 2015 and as a result of the modification these warrants met the definition of a derivative and were reclassified to a warrant liability.

Issuance Date	December 31, 2014		Increase in Fair Value		March 31, 2015
10/31/2013	$	233	$	377	$	610
2/5/2014		266		957		1,223
Total	$	499	$	1,334	$	1,833

Number of Warrants Subject to Remeasurement:

Issuance Date	December 31, 2015	Additions	Reductions	March 31, 2016
10/31/2013	685,715	-	-	685,715
2/5/2014	1,329,731	-	-	1,329,731
7/24/2014 Series A	4,288,500	-	-	4,288,500
7/24/2014 Series B	4,795,321	-	-	4,795,321
6/22/2015	3,000,000	-	-	3,000,000
Total	14,099,267	-	-	14,099,267

18

STRATA SKIN SCIENCES, INC. AND SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts and number of lasers)

Note 11

Stockholders' Equity:

Common Stock and Warrants

Outstanding common stock warrants consist at March 31, 2016 of the following:

Issue Date	Expiration Date	Total Warrants		Exercise Price
4/26/2013	4/26/2018		69,321	$	11.18
10/31/2013	4/30/2019		685,715	$	0.75
2/5/2014	2/5/2019		1,329,731	$	0.75
7/24/2014	7/24/2019		6,198,832	$	0.75 - $ 2.45
7/24/2014	7/24/2016		4,795,321	$	0.75
6/22/2015	6/22/2020		3,000,000	$	0.75
12/30/2015	12/30/2020		650,442	$	1.13
			16,729,362

Note 12

Stock-based compensation:

At March 31, 2016, the Company had 2,614,600 options outstanding with a weighted-average exercise price of $1.51. 1,664,600 options are vested and exercisable.

Stock-based compensation expense, primarily included in general and administration, for the three months ended March 31, 2016 and 2015 was $170 and $230, respectively. As of March 31, 2016 there was $488 in unrecognized compensation expense, which will be recognized over a weighted average period of 1.15 years.

Note 13

Income taxes:

The Company accounts for income taxes using the asset and liability method for deferred income taxes. The provision for income taxes includes federal, state and local income taxes currently payable and deferred taxes resulting from temporary differences between the financial statement and tax bases of assets and liabilities. Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized.

Income tax expense of $66 for the three months ended March 31, 2016 was comprised of the change in deferred tax liability related to goodwill. Goodwill is an amortizing asset according to tax regulations. This generates a deferred tax liability that is not used to offset deferred tax assets for valuation allowance considerations. There was no such expense for the three months ended March 31, 2015.

Note 14

Business Segments and Geographic Data:

The Company organized its business into three operating segments to better align its organization based upon the Company's management structure, products and services offered, markets served and types of customers, as follows: The Dermatology Recurring Procedures segment derives its revenues from the XTRAC procedures performed by dermatologists. The Dermatology Procedures Equipment segment generates revenues from the sale of equipment, such as lasers and lamp products. The Dermatology Imaging segment generates revenues from the sale and usage of imaging devices. Management reviews financial information presented on an operating segment basis for the purposes of making certain operating decisions and assessing financial performance. On June 22, 2015, the Company acquired the XTRAC and VTRAC businesses and has classified the revenues and expenses of this business to the two Dermatology Procedures segments. There are no corresponding revenues for the three months ended March 31, 2015.

19

STRATA SKIN SCIENCES, INC. AND SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts and number of lasers)

Unallocated operating expenses include costs that are not specific to a particular segment but are general to the group; included are expenses incurred for administrative and accounting staff, general liability and other insurance, professional fees and other similar corporate expenses. Interest and other financing income (expense), net is also not allocated to the operating segments.

The following tables reflect results of operations from our business segments for the periods indicated below:

Three Months Ended March 31, 2016 (unaudited)

	Dermatology Recurring Procedures			Dermatology Procedures Equipment			Dermatology Imaging			TOTAL
Revenues	$	5,528		$	1,990		$	102		$	7,620
Costs of revenues		2,304			951			167			3,422
Gross profit		3,224			1,039			( 65	)		4,198
Gross profit %		58.3	%		52.2	%		(63.7	%)		55.1	%
Allocated operating expenses:
Engineering and product development		311			62			152			525
Selling and marketing expenses		3,510			108			92			3,710
Unallocated operating expenses		-			-			-			2,101
		3,821			170			244			6,336
Income (loss) from operations		(597	)		869			(309	)		(2,138	)
Interest expense, net		-			-			-			(1,218	)
Change in fair value of warrant liability		-			-			-			1,985
Other income (expense), net		-			-			-			-
Income (loss) before income taxes	$	(597	)	$	869		$	(309	)	$	(1,371	)

20

STRATA SKIN SCIENCES, INC. AND SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts and number of lasers)

Three Months Ended March 31, 2015 (unaudited)

	Dermatology Recurring Procedures			Dermatology Procedures Equipment			Dermatology Imaging			TOTAL
Revenues	$	-		$	-		$	81		$	81
Costs of revenues		-			-			711			711
Gross profit		-			-			(630	)		(630	)
Gross profit %		0.0	%		0.0	%		(777.8	%)		(777.8	%)
Allocated operating expenses:
Engineering and product development		-			-			239			239
Selling and marketing expenses		-			-			1,027			1,027
Unallocated operating expenses		-			-			-			1,736
		-			-			1,266			3,002
Loss from operations		-			-			(1,896	)		(3,632	)
Interest expense, net		-			-						(2,324	)
Change in fair value of warrant liability		-			-			-			(1,334	)
Other income (expense), net		-			-			-			18
Net loss	$	-		$	-		$	(1,896	)	$	(7,272	)

For the three months ended March 31, 2016 and 2015 there were no material net revenues attributable to any individual foreign country. Net revenues by geographic area were, as follows:

	Three Months Ended March 31,
	2016		2015
Domestic	$	5,622	$	38
Foreign		1,998		43
	$	7,620	$	81

Note 15

Significant Customer Concentration:

For the three months ended March 31, 2016, revenues from sales to the Company's international master distributor (GlobalMed Technologies) were $1,686, or 22.1%, of total revenues for such period. At March 31, 2016, the accounts receivable balance from GlobalMed Technologies was $443, or 13.6%, of total net accounts receivable. No other customer represented more than 10% of total company revenues for the three months ended March 31, 2016 and 2015.

Note 16

Subsequent Events:

On April 5, 2016, investors converted debentures amounting to $63 into 84,411 shares of common stock. See Note 8, Convertible Debentures.

21

ITEM 2.Management's Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion of our financial condition and results of operations should be read in conjunction with the condensed consolidated financial statements and notes to condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements that involve risks and uncertainties. These forward-looking statements include, but are not limited to, statements about the plans, objectives, expectations and intentions of STRATA Skin Sciences, Inc., a Delaware corporation (referred to in this Report as "we," "us," "our," "STRATA," "STRATA Skin Sciences" or "registrant") and other statements contained in this Report that are not historical facts. When reviewing the discussion below, you should keep in mind the substantial risks and uncertainties that characterize our business. In particular, we encourage you to review the risks and uncertainties described in Item 1A "Risk Factors" included elsewhere in this report, in our Annual Report on Form 10-K for the year ended December 31, 2015. These risks and uncertainties could cause actual results to differ materially from those projected in forward-looking statements contained in this report or implied by past results and trends. Forward-looking statements are statements that attempt to forecast or anticipate future developments in our business, financial condition or results of operations and statements — see "Cautionary Note Regarding Forward-Looking Statements" that appears at the end of this discussion. These statements, like all statements in this report, speak only as of their date (unless another date is indicated), and we undertake no obligation to update or revise these statements in light of future developments.

The following financial data, in this narrative, are expressed in thousands, except for the earnings per share.

Introduction, Outlook and Overview of Business Operations

STRATA Skin Sciences, Inc. ("STRATA" or "we" or the "Company") is a medical technology company dedicated to developing and commercializing innovative products for the diagnosis and treatment of serious dermatological disorders. In June 2015 we completed the acquisition of the XTRAC system and the VTRAC system businesses. The XTRAC and VTRAC products are FDA cleared devices for the treatment of psoriasis, vitiligo and other skin disorders. The purchase price was $42,528 plus the assumption of certain business-related liabilities. These products generated $32,874 in revenues in 2015 with a gross margin of 60.7% on a pro forma basis. Management believes that these businesses acquired create a platform on which to transform STRATA into a leading medical dermatology company. Management further believes that the cash flow generated by these businesses will be sufficient to finance our operations through the second quarter of 2017.

The XTRAC device is utilized to treat psoriasis, vitiligo and other skin diseases. The XTRAC device received FDA clearance in 2000 and has since become a widely recognized treatment among dermatologists. The system delivers targeted 308um ultraviolet light to affected areas of skin, leading to psoriasis clearing and vitiligo repigmentation, following a series of treatments. As of March 31, 2016, there were 730 XTRAC systems placed in dermatologists' offices in the United States under our recurring revenue model, up from 640 at March 31, 2015. Under the recurring revenue model, the XTRAC system is placed in a physician's office and revenue is recognized on a per procedure basis. The XTRAC system's use for psoriasis is covered by nearly all major insurance companies, including Medicare. The VTRAC Excimer Lamp system, offered internationally in addition to the XTRAC, provides targeted therapeutic efficacy demonstrated by excimer technology with the simplicity of design and reliability of a lamp system. There are approximately 7.5 million people in the United States and up to 125 million people worldwide suffering from psoriasis, and 1% to 2% of the world's population suffers from vitiligo. In 2015, over 354,000 XTRAC laser treatments were performed on approximately 22,000 patients in the United States.

The financial results of the XTRAC and VTRAC businesses have been included in the results of operations subsequent to June 22, 2015, the date of the acquisition. The assets of the businesses purchased and liabilities assumed have been consolidated as of June 22, 2015.

MelaFind is a non-invasive, point-of-care (i.e., in the doctor's office) instrument designed to aid in the dermatologists' decision to biopsy pigmented skin lesions, particularly melanoma. The successful commercialization of MelaFind is dependent on many factors, one of which is the establishment of reimbursement policies that include the use of the MelaFind's capabilities to assist in the biopsy decision. Management anticipates that it may require several years of continued effort for insurance companies to establish such policies.

22

In July 2015, the CPT® Editorial Panel of the American Medical Association posted to the AMA's website the list of Category III codes that became effective January 16, 2016.  These codes included T0400 and T0401, which apply to our MelaFind system. This action followed from our application submitted in July 2014 for a Current Procedural Terminology ("CPT") code, which is necessary for Medicare Part B reimbursement by the Centers for Medicare and Medicaid Services ("CMS").

Key Technology

• XTRAC® Excimer Laser. XTRAC received FDA clearance in 2000 and has since become a widely recognized treatment among dermatologists for psoriasis and other skin diseases. The XTRAC System delivers ultra-narrowband ultraviolet B ("UVB") light to affected areas of skin. Following a series of treatments typically performed twice weekly, psoriasis remission can be achieved and vitiligo patches can be re-pigmented. XTRAC is endorsed by the National Psoriasis Foundation, and its use for psoriasis is covered by nearly all major insurance companies, including Medicare. We estimate that more than half of all major insurance companies now offer reimbursement for vitiligo as well, a figure that is increasing.

• VTRAC® Lamp. VTRAC received FDA clearance in 2005 and provides targeted therapeutic efficacy demonstrated by excimer technology with the simplicity of design and reliability of a lamp system.

• MelaFind®. MelaFind received a Pre-Market Approval, or PMA, from the FDA, in November 2011, having already received in September 2011 Conformité Européenne ("CE") Mark approval. MelaFind is a non-invasive, point–of-care, (i.e. in the doctor's office) instrument to aid dermatologists in their decision to biopsy suspicious pigmented lesions, (e.g. melanoma). MelaFind aids in the evaluation of clinically atypical pigmented skin lesions, when a dermatologist chooses to obtain additional information before making a final decision to biopsy in order to rule out melanoma. MelaFind acquires and displays multi-spectral (from blue to near infrared) images and dermoscopic Red Green Blue ("RGB") digital data from pigmented skin lesions.

Sales and Marketing

As of March 31, 2016, our sales and marketing personnel consisted of 50 full-time positions, inclusive of a direct sales organization as well as an in-house call center staffed with patient advocates and a reimbursement group that provides necessary insurance information to our physician partners and their patients.

Critical Accounting Policies and Estimates

There have been no changes to our critical accounting policies in the three months ended March 31, 2016. Critical accounting policies and the significant estimates made in accordance with such policies are regularly discussed with our Audit Committee. Those policies are discussed 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 the footnotes thereto for the fiscal year ended December 31, 2015, as filed with the SEC with our Annual Report on Form 10-K filed on March 15, 2016.

23

Results of Operations (The following financial data, in this narrative, are expressed in thousands, except for the earnings per share.)

Revenues

The following table presents revenues from our three segments for the periods indicated below:

	For the Three Months Ended March 31,
	2016		2015
Dermatology Recurring Procedures	$	5,528	$	-
Dermatology Procedures Equipment		1,990		-
Dermatology Imaging		102		81
Total Revenues	$	7,620	$	81

We completed the asset purchase of the XTRAC and VTRAC businesses on June 22, 2015 and as such, there are no corresponding revenues for the three months ended March 31, 2015.

Dermatology Recurring Procedures

Recognized treatment revenue for the three months ended March 31, 2016 was $5,528, which approximates 74,000 treatments, with prices between $65 to $95 per treatment. Increases in procedures are dependent upon building market acceptance through marketing programs with our physician partners and their patients to show that the XTRAC procedures will be of clinical benefit and will be generally reimbursed by insurers. We have a direct to patient program for XTRAC advertising in the United States targeted at psoriasis and vitiligo patients through a variety of media including television and radio; and through our use of social media such as FaceBook and Twitter. Our advertising expenditures in this area are aimed at reaching the more than 10 million patients in the United States afflicted with these diseases.

We defer substantially all sales of treatment codes ordered by and delivered to the customer within the last two weeks of the period in determining the amount of procedures performed by our physician-customers. Management believes this approach closely approximates the actual amount of unused treatments that existed at the end of a period. For the three months ended March 31, 2016, we deferred net revenues of $160 under this approach.

Dermatology Procedures Equipment

For the three months ended March 31, 2016 dermatology equipment revenues were $1,990. Internationally, we sold 24 systems for the three months ended March 31, 2016, 17 XTRAC and 7 VTRAC systems.

Dermatology Imaging

For the three months ended March 31, 2016 and 2015, imaging revenues were $102 and $81, respectively. Imaging revenues are generated from the MelaFind systems, through direct capital equipment sales and through a leasing model. Under the leasing model, there is an upfront installation fee and a monthly usage fee based on the number of lesions examined.

24

Cost of Revenues

The following table illustrates cost of revenues from our three business segments for the periods listed below:

	For the Three Months Ended March 31,
	2016		2015
Dermatology Recurring Procedures	$	2,304	$	-
Dermatology Procedures Equipment		951		-
Dermatology Imaging		167		711
Total Cost of Revenues	$	3,422	$	711

As we completed the asset purchase of XTRAC and VTRAC businesses on June 22, 2015, there were no corresponding cost of revenues for the three months ended March 31, 2015.

Gross Profit Analysis

Gross profit increased to $4,198 for the three months ended March 31, 2016 from ($630) during the same period in 2015. As a percentage of revenues, the gross margin was 55.1% for the three months ended March 31, 2016 from (777.8%) during the same period in 2015.

The following tables analyze changes in our gross margin, by segment, for the periods presented below:

	For the Three Months Ended March 31, 2016												For the Three
	Dermatology Recurring Procedures			Dermatology Procedures Equipment			Dermatology Imaging			Total			Months Ended March 31, 2015
Revenues	$	5,528		$	1,990		$	102		$	7,620		$	81
Cost of revenues		2,304			951			167			3,422			711
Gross profit	$	3,224		$	1,039		$	(65	)	$	4,198		$	(630	)
Gross margin percentage		58.3	%		52.2	%		(63.8	%)		55.1	%		(777.8	%)

The primary reason for the changes in gross profit for the three months ended March 31, 2016, compared to the same period in 2015, was the acquisition of the XTRAC and VTRAC businesses on June 22, 2015. The gross profit related to these businesses was allocated to the two Dermatology Procedures segments. There was no corresponding gross profit for the three months ended March 31, 2015.

Engineering and Product Development

Engineering and product development expenses for the three months ended March 31, 2016 increased to $525 from $239 for the three months ended March 31, 2015. The increase was due to $373 in engineering and product development expenses related to the XTRAC and VTRAC businesses for the three months ended March 31, 2016. As the XTRAC and VTRAC acquisition was completed on June 22, 2015, there was no corresponding expense for the three months ended March 31, 2015. Offsetting this increase was planned reductions in the ongoing research and development efforts for the MelaFind.

25

Selling and Marketing Expenses

For the three months ended March 31, 2016, selling and marketing expenses increased to $3,710 from $1,027 for the three months ended March 31, 2015. The increases were related to the XTRAC and VTRAC businesses of $3,619. As the XTRAC and VTRAC acquisition was completed on June 22, 2015, there was no corresponding expense for the three months ended March 31, 2015. Offsetting some of the increases, were decreases in the MelaFind Division primarily related to salary and headcount decreases and overall impact of cost reduction initiatives.

General and Administrative Expenses

For the three months ended March 31, 2016, general and administrative expenses increased to $2,101 from $1,736 for the three months ended March 31, 2015. The changes were due to the acquisition of the XTRAC and VTRAC businesses on June 22, 3015. Some General and Administrative expenses were brought over with this acquisition including finance, IT and other administrative personnel. These increases were offset, in part, by decreases in the MelaFind Division primarily related to salary and headcount changes and other cost reduction initiatives.

Interest Expense, Net

Interest expense for the three months ended March 31, 2016 was $1,218 compared to $2,324 in the three months ended March 31, 2015. Interest expense during the periods of 2016 and 2015 relate to the 4% senior convertible debentures issued in July 2014, which includes amortization of the related debt discount and deferred financing fees. The 2016 period also includes interest expense related to both the senior note and the 2.25% senior convertible debentures issued on June 22, 2015. Additionally, approximately $136 of interest expense was recognized as a result of the conversion of $165 of debentures into common stock during the three months ended March 31, 2016.

Change in Fair Value of Warrant Liability

In accordance with FASB ASC 470, "Debt – Debt with Conversion and Other Options" ("ASC Topic 470") and FASB ASC 820, Fair Value Measurements and Disclosures ("ASC Topic 820"), we measured the fair value of our warrants that were recorded at their fair value and recognized as liabilities as of March 31, 2016, and recorded $1,985 in other income for the three months ended March 31, 2016. We measured the fair value of these warrants as of March 31, 2015, and recorded $1,334 in other expense for the three months ended March 31, 2015.

Other Income (Expense), net

Other income, net for the three months ended March 31, 2016 was $0 compared to $18 for the three months ended March 31, 2015. Other income mainly represents royalty income we earn each quarter from Kavo Dental GmbH on the licensing of certain technology patents.

Income Taxes

Income tax expense for the three months ended March 31, 2016 was $66 compared to $0 for the three months ended March 31, 2015. The expense is comprised of the change in deferred tax liability related to goodwill. Goodwill is an amortizing asset according to tax regulations. This generates a deferred tax liability that is not used to offset deferred tax assets for valuation allowance considerations.

Net Loss

The factors described above resulted in net loss of $1,437 during the three months ended March 31, 2016, as compared to net loss of $7,272 during the three months ended March 31, 2015.

Deemed Dividend

We modified the terms of warrants that were set to expire in January 2016, by extending the expiration date by six months. As a result of the modification, we recorded a deemed dividend related to these warrants of $116, which was determined as the difference between the fair value of these warrants immediately before the modification and immediately after. The binomial method was used to value the warrants. 

26

Non-GAAP adjusted EBITDA

As a result of our acquisition of the XTRAC and VTRAC products, we have determined to supplement our condensed consolidated financial statements, prepared in accordance with GAAP, presented elsewhere within this report, we will provide certain non-GAAP measures of financial performance. These non-GAAP measures include non-GAAP adjusted EBITDA.

We consider these non-GAAP measures in addition to our results prepared under current accounting standards, but they are not a substitute for, nor superior to, GAAP measures. These non-GAAP measures are provided to enhance readers' overall understanding of our current financial performance and to provide further information for comparative purposes.

Specifically, we believe the non-GAAP measures provide useful information to management and investors by isolating certain expenses, gains and losses that may not be indicative of our core operating results and business outlook. In addition, we believe non-GAAP measures enhance the comparability of results against prior periods. Reconciliation to the most directly comparable GAAP measure of all non-GAAP measures included in this report is as follows:

	For the Three Months Ended March 31,
	2016			2015			Change
Net loss	$	(1,437	)	$	(7,272	)	$	5,835
Adjustments:
Income taxes		66			-			66
Depreciation and amortization		1,684			316			1,368
Interest expense, net		532			139			393
Non-cash interest expense		686			2,185			(1,499	)
EBITDA		1,531			(4,632	)		6,163
Stock-based compensation expense		170			230			(100	)
Change in fair value of warrants		(1,985	)		1,334			(3,319	)
Non-GAAP adjusted EBITDA	$	(284	)	$	(3,068	)	$	2,784

Liquidity and Capital Resources

As of March 31, 2016 we had $5,334 of working capital compared to $4,900 as of December 31, 2015. Cash and cash equivalents were $3,120 as of March 31, 2016, as compared to $3,318 as of December 31, 2015.

In June 2015, we raised additional gross proceeds of approximately $42,500 through the issuance of $32,500 of 2.25% senior secured convertible debentures due June 2020, $10,000 of Senior secured notes and warrants to purchase common stock. The debentures are convertible at any time into an aggregate of approximately 43.3 million shares of our common stock at a price of $0.75 per share. Our obligations under the debentures are secured by a subordinated first priority lien on all of our assets. Through the three months of 2016, $165 of debentures were converted into common stock.

On December 30, 2015, the Company entered into a $12,000 credit facility pursuant to a Credit and Security Agreement (the "Agreement") and related financing documents with MidCap Financial Trust ("MidCap") and the lenders listed therein. Under the Agreement, the credit facility may be drawn down in two tranches, the first of which was drawn for $10,500 on December 30, 2015. The proceeds of this first tranche were used to repay $10,000 principal amount of short-term senior secured promissory notes, plus associated interest, loan fees and expenses. The second tranche was drawn for $1,500 on January 29, 2016. The Company's obligations under the credit facility are secured by a first priority lien on all of the Company's assets. Other financing documents included subordination agreements and other amendments with the Company's existing debenture holders from its 2014 and 2015 financings.

27

We have experienced recurring losses and negative cash flow from operations since inception. We have been dependent on raising capital from the sale of securities in order to continue to operate and to meet our obligations in the ordinary course of business. We believe that our cash as of March 31, 2016 combined with the anticipated revenues from the sale of our products will be sufficient to satisfy our working capital needs, capital asset purchases, outstanding commitments and other liquidity requirements associated with our existing operating through the second quarter of 2017.

Net cash and cash equivalents used in operating activities was $1,396 for the three months ended March 31 30, 2016 compared to cash used in operating activities of $3,101 for the three months ended March 31, 2015. The primary reason for the change was the lasers placed in service during the period.

Net cash and cash equivalents used in investing activities was $182 for the three months ended March 31, 2016 compared to cash used in investing activities of $100 for the three months ended March 31, 2015.

Net cash and cash equivalents provided by financing activities was $1,395 for the three months ended March 31, 2016 compared to cash provided by financing activities of $0 for the three months ended March 31, 2015. In the three months ended March 31, 2016, we drew down $1,500 on a long-term debt facility.

Commitments and Contingencies

There were no items, except as described above, that significantly impacted our commitments and contingencies as discussed in the notes to our 2015 annual financial statements included in our Annual Report on Form 10-K.

Off-Balance Sheet Arrangements

At March 31, 2016, we had no off-balance sheet arrangements.

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are subject to the "safe harbor" created by those sections. Forward-looking statements are based on our management's beliefs and assumptions and on information currently available to our management. In some cases, you can identify forward-looking statements by terms such as "may," "will," "should," "could," "would," "expect," "plan," "anticipate," "believe," "estimate," "project," "predict," "intend," "potential" and similar expressions intended to identify forward-looking statements. These statements, including statements relating to our anticipated revenue streams and our belief that the cash flow generated by these businesses will be sufficient to finance our operations, involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance, time frames or achievements to be materially different from any future results, performance, time frames or achievements expressed or implied by the forward-looking statements. We discuss many of these risks, uncertainties and other factors in our Annual Report on Form 10-K for the year ended December 31, 2015, and in this Quarterly Report on Form 10-Q in greater detail under Item 1A. "Risk Factors." Given these risks, uncertainties and other factors, you should not place undue reliance on these forward-looking statements. Also, these forward-looking statements represent our estimates and assumptions only as of the date of this filing. You should read this Quarterly Report on Form 10-Q completely and with the understanding that our actual future results may be materially different from what we expect. We hereby qualify our forward-looking statements by our cautionary statements. Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

28

ITEM 3.  Quantitative and Qualitative Disclosure about Market Risk

Our exposure to market risk is confined to our cash, cash equivalents, and short-term investments. We invest in high-quality financial instruments, primarily money market funds, with the average effective duration of the portfolio within one year which we believe are subject to limited credit risk. We currently do not hedge interest rate exposure. Due to the short-term nature of our investments, we do not believe that we have any material exposure to interest rate risk arising from our investments. We are exposed to credit risks in the event of default by the financial institutions or issuers of investments in excess of FDIC insured limits. We perform periodic evaluations of the relative credit standing of these financial institutions and limit the amount of credit exposure with any institution.

ITEM 4.  Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures, (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act")), as of March 31, 2016. Based on that evaluation, management has concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level described below.

Limitations on the Effectiveness of Controls.

A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within an organization have been detected. Accordingly, our disclosure controls and procedures are designed to provide reasonable, not absolute, assurance that the objectives of our disclosure control system are met and, as set forth above, our Chief Executive Officer and Chief Financial Officer have concluded, based on their evaluation as of the end of the period covered by this report, that our disclosure controls and procedures were effective to provide reasonable assurance that the objectives of our disclosure control system were met.

Changes in Internal Control over Financial Reporting

There have been no change in our internal control over financial reporting in our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - Other Information

ITEM 1. Legal Proceedings

From time to time in the ordinary course of our business, we may be involved in certain other legal actions and claims, incidental to the normal course of our business. These may include controversies relating to contract claims and employment related matters, some of which claims may be material in which case we will make separate disclosure as required.

29

ITEM 1A. Risk Factors

We are not currently in compliance with the $1.00 minimum bid Nasdaq listing requirement. Failure to maintain the listing of our common stock on the NASDAQ Capital Market could adversely affect us, including our ability to maintain compliance with certain debt covenants and to raise funds.

On April 27, 2016, we received a letter (the "Notice") from the Listing Qualifications Staff of the NASDAQ Stock Market (the "Staff") notifying us that we are not in compliance with the $1.00 minimum closing bid price requirement under the NASDAQ Listing Rules (the "Listing Rules"). The Listing Rules require listed securities to maintain a minimum bid price of $1.00 per share. If a NASDAQ-listed company trades below the minimum bid price requirement for 30 consecutive business days, it is notified of the deficiency. Based upon the Staff's review, we no longer satisfy this requirement. The Listing Rules provide us with a compliance period of 180 calendar days, or until October 24, 2016, to regain compliance with this requirement.

To regain compliance with the minimum bid price requirement, we must have a closing bid price of $1.00 per share or more for a minimum of ten consecutive business days during this compliance period. In the event that we do not regain compliance within this period, we may be eligible for additional time to regain compliance by satisfying certain requirements. However, if it appears to the Staff that we will not be able to cure the deficiency, or if we are otherwise not eligible, the Staff will notify us that our common stock will be delisted from the NASDAQ Capital Market. We may appeal the Staff's determination to delist our common stock to a Hearing Panel. During any appeal process, our common stock would continue to trade on the NASDAQ Capital Market. The Notice has no immediate effect on the listing or trading of our common stock on the NASDAQ Capital Market.

We will continue to monitor the closing bid price for our common stock and to assess our options for maintaining the listing of its common stock on the NASDAQ Capital Market in light of the Notice. Failure to maintain the listing of our common stock on the NASDAQ Capital Market could lead to an event of default under the debentures issued in our 2015 financing. Also, if delisting were to occur, selling our common stock could be more difficult because smaller quantities of shares would likely be bought and sold, transactions could be delayed, and security analysts' coverage of us may be reduced. Furthermore, while we believe that our common stock would trade on the OTC Bulletin Board, we would lose various advantages attendant to listing on a national securities exchange, including but not limited to, eligibility to register the sale or resale of our shares on Form S-3 and the automatic exemption from registration under state securities laws for exchange-listed securities, which could have a negative effect on our ability to raise funds.

Other than the risk factor noted above as of March 31, 2016, our other risk factors have not changed materially from the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2015.

ITEM 2. Unregistered sales of equity securities and use of proceeds

None.

ITEM 3. Defaults upon senior securities.

None.

ITEM 4. Mine Safety Disclosures

None.

ITEM 5. Other Information

None.

30

ITEM 6.  Exhibits

3.1	Fifth Amended and Restated Certificate of Incorporation of the Company (Incorporated by reference to Exhibit 3.1 contained in our Registration Statement on Form S-3 (File No. 333-167113), as filed on May 26, 2010).
3.2	Fourth Amended and Restated Bylaws of the Company (Incorporated by reference to Exhibit 3.2 contained in our Form 8-K current report as filed on July 21, 2015).
3.3	Certificate of Amendment to Fifth Amended and Restated Certificate of Incorporation of the Company (Incorporated by reference to Exhibit 3.1 contained in our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2013 filed on August 7, 2014).
3.4	Certificate of Amendment to Fifth Amended and Restated Certificate of Incorporation of the Company (Incorporated by reference to Exhibit 3.1 contained in our Current Report on Form 8-K, filed on July 10, 2014).
3.5	Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Preferred Stock (Incorporated by reference to Exhibit 3.1 contained in our Current Report on Form 8-K, filed on February 3, 2014).
3.6	Certificate of Designation of Preferences, Rights and Limitations of Series B Convertible Preferred Stock (Incorporated by reference to Exhibit 3.1 contained in our Current Report on Form 8-K, filed on July 23, 2014).
3.7	Certificate of Amendment to Fifth Amended and Restated Certificate of Incorporation of the Company (Incorporated by reference to Exhibit 3.1 contained in our Current Report on Form 8-K, as filed on September 30, 2015).
31.1	Rule 13a-14(a) Certificate of Chief Executive Officer
31.2	Rule 13a-14(a) Certificate of Chief Financial Officer
32.1*	Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Schema
101.CAL	XBRL Taxonomy Calculation Linkbase
101.DEF	XBRL Taxonomy Definition Linkbase
101.LAB	XBRL Taxonomy Label Linkbase
101.PRE	XBRL Taxonomy Presentation Linkbase

* The certifications attached as Exhibit 32.1 accompany this Quarterly Report on Form 10-Q pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed "filed" by the Registrant for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

31

SIGNATURES

Pursuant to the requirements of the Securities Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

	STRATA SKIN SCIENCES, INC.
Date   May 16, 2016	By:	/s/ Michael R. Stewart
		Name  Michael R. Stewart
		Title    Chief Executive Officer

Date   May 16, 2016	By:	/s/ Christina L. Allgeier
		Name  Christina L. Allgeier
		Title    Chief Financial Officer

32

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Michael R. Stewart, certify that:

(1) I have reviewed this quarterly report on Form 10-Q of STRATA Skin Sciences, 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: May 16, 2016	By:	/s/ Michael R. Stewart
		Name:  Michael R. Stewart
		Title:    Chief Executive Officer

E-31.1

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Christina Allgeier, certify that:

(1) I have reviewed this quarterly report on Form 10-Q of STRATA Skin Sciences, 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.

Dated: May 16, 2016	By:	/s/ Christina Allgeier
		Christina Allgeier
		Chief Financial Officer

E-31.2

EX-32.1

EXHIBIT 32.1

SECTION 906 CERTIFICATION

CERTIFICATION (1)

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1350, as adopted), Michael R. Stewart, the Chief Executive Officer of STRATA Skin Sciences, Inc. (the "Company"), and Christina Allgeier, the Chief Financial Officer of the Company, each hereby certifies that, to the best of their knowledge:

1. The Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2016, to which this Certification is attached as Exhibit 32.1 (the "Periodic Report"), fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended, and

2. The information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: May 16, 2016

/s/ Michael R. Stewart                          

Name:  Michael R. Stewart

Title: Chief Executive Officer

/s/ Christina Allgeier                                

Name: Christina Allgeier

Title: Chief Financial Officer

(1) This certification accompanies the Quarterly Report on Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of STRATA Skin Sciences, Inc. under the Securities Act of 1933, as amended, or the Exchange Act (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing. A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to STRATA Skin Sciences, Inc. and will be retained by STRATA Skin Sciences, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

E-32.1

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2016	May. 13, 2016
Document And Entity Information
Entity Registrant Name	STRATA Skin Sciences, Inc.
Entity Central Index Key	0001051514
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		10,587,804
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q1
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2016

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Current assets:
Cash and cash equivalents	$ 3,120	$ 3,303
Restricted cash	0	15
Accounts receivable, net of allowance for doubtful accounts of $80 and $45, respectively	3,247	4,068
Inventories, net	4,152	4,128
Prepaid expenses and other current assets	377	465
Total current assets	10,896	11,979
Property and equipment, net	12,818	13,851
Patents and licensed technologies, net	7,003	7,247
Other intangible assets, net	7,770	7,980
Goodwill	8,928	8,928
Other assets	94	94
Total assets	47,509	50,079
Current liabilities:
Note payable	195	299
Accounts payable	3,503	4,446
Other accrued liabilities	1,639	2,161
Deferred revenues	225	173
Total current liabilities	5,562	7,079
Long-term liabilities:
Long-term debt, net	11,344	9,851
Senior secured convertible debentures, net	10,308	9,839
Warrant liability	5,057	7,042
Deferred tax liability	179	119
Other liabilities	27	62
Total liabilities	$ 32,477	$ 33,992
Commitment and contingencies
Stockholders' equity:
Preferred Stock, $.10 par value, 10,000,000 shares authorized; 6,505 shares issued and outstanding	$ 1	$ 1
Common Stock, $.001 par value, 150,000,000 shares authorized; 10,503,393 and 10,283,393 shares issued and outstanding, respectively	11	10
Additional paid-in capital	223,696	223,315
Accumulated deficit	(208,677)	(207,240)
Accumulated other comprehensive income	1	1
Total stockholders' equity	15,032	16,087
Total liabilities and stockholders' equity	$ 47,509	$ 50,079

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CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Current assets:
Allowance for doubtful accounts, current	$ 80	$ 45
Stockholders' equity:
Preferred stock, par value (in dollars per share)	$ 0.10	$ 0.10
Preferred stock, shares authorized (in shares)	10,000,000	10,000,000
Preferred stock, shares issued (in shares)	6,505	6,505
Preferred stock, shares outstanding (in shares)	6,505	6,505
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	150,000,000	150,000,000
Common stock, shares issued (in shares)	10,503,393	10,283,393
Common stock, shares outstanding (in shares)	10,503,393	10,283,393

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) [Abstract]
Revenues	$ 7,620	$ 81
Cost of revenues	3,422	711
Gross profit (loss)	4,198	(630)
Operating expenses:
Engineering and product development	525	239
Selling and marketing	3,710	1,027
General and administrative	2,101	1,736
Total operating expenses	6,336	3,002
Operating loss before other income (expense), net	(2,138)	(3,632)
Other income (expense), net:
Interest expense, net	(1,218)	(2,324)
Change in fair value of warrant liability	1,985	(1,334)
Other income, net	0	18
Other income (expense), net	767	(3,640)
Loss before income taxes	(1,371)	(7,272)
Income tax expense	(66)	0
Net loss	$ (1,437)	$ (7,272)
Net loss per share:
Basic (in dollars per share)	$ (0.14)	$ (1.12)
Diluted (in dollars per share)	$ (0.26)	$ (1.12)
Shares used in computing net loss per share:
Basic (in shares)	10,339,657	6,471,906
Diluted (in shares)	13,307,923	6,471,906

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CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Unaudited) - 3 months ended Mar. 31, 2016 - USD ($) $ in Thousands	Convertible Preferred Stock [Member]	Common Stock [Member]	Additional Paid-In Capital [Member]	Accumulated Deficit [Member]	Accumulated Other Comprehensive Loss [Member]	Total
Beginning balance at Dec. 31, 2015	$ 1	$ 10	$ 223,315	$ (207,240)	$ 1	$ 16,087
Beginning balance (in shares) at Dec. 31, 2015	6,505	10,283,393
Stock-based compensation	$ 0	$ 0	170	0	0	170
Conversion of senior secured convertible debentures	$ 0	$ 1	164	0	0	165
Conversion of senior secured convertible debentures (in shares)	0	220,000
Warrants issued in connection with debt	$ 0	$ 0	47	0	0	47
Net loss for the three months ended March 31, 2016	0	0	0	(1,437)	0	(1,437)
Ending balance at Mar. 31, 2016	$ 1	$ 11	$ 223,696	$ (208,677)	$ 1	$ 15,032
Ending balance (in shares) at Mar. 31, 2016	6,505	10,503,393

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Cash Flows From Operating Activities:
Net loss	$ (1,437)	$ (7,272)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	1,684	316
Provision for doubtful accounts	40	1
Stock-based compensation	170	230
Deferred tax provision	60	0
Amortization of debt discount	639	2,015
Amortization of deferred financing costs	48	180
Change in fair value of warrant liability	(1,985)	1,334
Changes in operating assets and liabilities:
Accounts receivable	782	214
Inventories	(24)	113
Prepaid expenses and other assets	88	(76)
Accounts payable and accrued expenses	(955)	(110)
Other accrued liabilities	(523)	(8)
Other liabilities	(35)	(10)
Deferred revenues	52	(28)
Net cash used in operating activities	(1,396)	(3,101)
Cash Flows From Investing Activities:
Lasers placed-in-service, net	(197)	0
Restricted cash	15	(100)
Net cash used in investing activities	(182)	(100)
Cash Flows From Financing Activities:
Proceeds from long-term debt	1,500	0
Payments on notes payable	(105)	0
Net cash provided by financing activities	1,395	0
Net decrease in cash and cash equivalents	(183)	(3,201)
Cash and cash equivalents, beginning of period	3,303	11,434
Cash and cash equivalents, end of period	3,120	8,233
Supplemental information:
Cash paid for interest	442	139
Supplemental information of non-cash investing and financing activities:
Conversion of senior secured convertible debentures into common stock	165	2,308
Conversion of convertible preferred stock into common stock	0	1,508
Reclassification of property and equipment to inventory, net	0	26
Recognition of warrants issued as debt discount	$ 47	$ 0

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The Company

3 Months Ended

Mar. 31, 2016

The Company [Abstract]

The Company

Note 1

The Company:

Background

STRATA Skin Sciences, Inc. (and its subsidiary) ("STRATA" or "we" or the "Company") is a medical technology company dedicated to developing and commercializing innovative products for the diagnosis and treatment of serious dermatological disorders. In June 2015 the Company completed the acquisition of the XTRAC Excimer Laser and the VTRAC excimer lamp businesses from PhotoMedex, Inc. which included a subsidiary in India, PhotoMedex India Ltd. The XTRAC® and VTRAC® products are FDA cleared devices for the treatment of psoriasis, vitiligo and other skin disorders. The purchase price was $42,500 plus the assumption of certain business-related liabilities. Management believes that the cash flow generated by these businesses will be sufficient to finance the Company's operations for the foreseeable future. (See Note 2, Acquisition.)

The XTRAC is an ultraviolet light excimer laser system utilized to treat psoriasis, vitiligo and other skin diseases. The XTRAC received FDA clearance in 2000 and has since become a recognized treatment among dermatologists. The system delivers targeted 308um ultraviolet light to affected areas of the skin, leading to psoriasis clearing and vitiligo repigmentation, following a series of treatments. As of March 31, 2016, there were 730 XTRAC systems placed in dermatologists' offices in the United States under the Company's recurring revenue business model. The XTRAC systems employed under the recurring revenue model generate revenue on a per procedure basis. The per-procedure charge is inclusive of the use of the system and the services provided by the Company to the customer which includes system maintenance, reimbursement support service and participation in the direct to patient marketing programs employed by the Company. The XTRAC system's use for psoriasis is covered by nearly all major insurance companies, including Medicare. The VTRAC Excimer Lamp system, offered in addition to the XTRAC system internationally, provides targeted therapeutic efficacy demonstrated by excimer technology with the simplicity of design and reliability of a lamp system.

Liquidity

As of March 31, 2016, the Company had an accumulated deficit of $208,677 and has incurred losses and negative cash flows from operations since inception. To date, the Company has dedicated most of its financial resources to research and development, sales and marketing, and general and administrative expenses.

The Company has been dependent on raising capital from the sale of securities in order to continue to operate and to meet its obligations in the ordinary course of business. Management believes that its cash and cash equivalents as of March 31, 2016 combined with the anticipated revenues from the sale of the Company's products will be sufficient to satisfy its working capital needs, capital asset purchases, outstanding commitments and other liquidity requirements associated with its existing operations through the second quarter of 2017.

Basis of Presentation:

Accounting Principles

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP").

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. All significant intercompany balances and transactions have been eliminated in consolidation.

Quarterly Financial Information and Results of Operations

The condensed consolidated financial statements as of March 31, 2016 and for the three months ended March 31, 2016 and 2015 are unaudited and, in the opinion of management, include all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the financial position as of March 31, 2016,  the results of operations for the three months ended March 31, 2016 and 2015, the statement of stockholders' equity for the three months ended March 31, 2016 and the statement of cash flows for the three months ended March 31, 2016 and 2015. The results of operations and cash flows for the three months ended March 31, 2016 are not necessarily indicative of the results to be expected for the entire year. The condensed consolidated balance sheet as of December 31, 2015 was derived from audited financial statements as of December 31, 2015. While management of the Company believes that the disclosures presented are adequate to make the information not misleading, these condensed consolidated financial statements should be read in conjunction with audited consolidated financial statements and the footnotes thereto, together with Management's Discussion and Analysis of Financial Condition and Results of Operations, contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2015. 

Reclassification

Certain reclassifications from the prior year presentation have been made to conform to the current year presentation. These reclassifications did not have a material impact on the Company's equity, net assets, results of operations or cash flows.

Use of Estimates

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the US requires management to make estimates and assumptions that affect amounts reported of assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting periods. Actual results could differ from those estimates and be based on events different from those assumptions. As of March 31, 2016, the more significant estimates include (1) revenue recognition, including deferred revenues and valuation allowances of accounts receivable, (2) the fair value of assets acquired and liabilities assumed in the business combination, (3) the estimated useful lives of intangible assets and property and equipment, (4) the inputs used in determining the fair value of equity-based awards and (5) the valuation allowance related to deferred tax assets.

Fair Value Measurements

The Company measures and discloses fair value in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification 820, Fair Value Measurements and Disclosures ("ASC Topic 820"). ASC Topic 820 defines fair value, establishes a framework and gives guidance regarding the methods used for measuring fair value, and expands disclosures about fair value measurements. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions there exists a three-tier fair-value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

• Level 1 – unadjusted quoted prices are available in active markets for identical assets or liabilities that the Company has the ability to access as of the measurement date.

• Level 2 – pricing inputs are other than quoted prices in active markets that are directly observable for the asset or liability or indirectly observable through corroboration with observable market data.

• Level 3 – pricing inputs are unobservable for the non-financial asset or liability and only used when there is little, if any, market activity for the non-financial asset or liability at the measurement date. The inputs into the determination of fair value require significant management judgment or estimation. Fair value is determined using comparable market transactions and other valuation methodologies, adjusted as appropriate for liquidity, credit, market and/or other risk factors

This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value.

The Company's recurring fair value measurements at March 31, 2016 and December 31, 2015 are as follows:

	Fair Value as of March 31, 2016		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Liabilities:
Warrant liability (Note 10)	$	5,057	$	-	$	-	$	5,057
	Fair Value as of December 31, 2015		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Liabilities:
Warrant liability (Note 10)	$	7,042	$	-	$	-	$	7,042

The fair value of cash and cash equivalents are based on their respective demand value, which are equal to the carrying value. The fair value of derivative warrant liabilities is estimated using option pricing models that are based on the individual characteristics of the Company's warrants, preferred and common stock, the derivative warrant liability on the valuation date as well as assumptions for volatility, remaining expected life, risk-free interest rate and, in some cases, credit spread. The derivative warrant liabilities are the only recurring Level 3 fair value measures. The carrying value of all other short-term monetary assets and liabilities is estimated to be approximate to their fair value due to the short-term nature of these instruments. The Company assessed its convertible debentures and long-term debt and determined that the fair value of total debt was $18,251 as of March 31, 2016. As of December 31, 2015 the fair value of total debt approximated the recorded value of $15,958.

Several of the warrants have non-standard terms as they relate to a fundamental transaction and require a net-cash settlement upon change in control of the Company and other warrants contain full ratchet provisions that reduce the exercise price of the warrants in the event of a transaction resulting in the issuance of equity below the current price of the warrants. Therefore these warrants are classified as derivatives. These warrants have been recorded at their fair value using a binomial option pricing model and will be recorded at their respective fair value at each subsequent balance sheet date. See Note 10, Warrants, for additional discussion.

Accrued Warranty Costs

The Company offers a standard warranty on product sales generally for a one to two-year period The Company provides for the estimated cost of the future warranty claims on the date the product is sold. Total accrued warranty is included in Other Accrued Liabilities and Other liabilities on the balance sheet. The activity in the warranty accrual during the three months ended March 31, 2016 is summarized as follows:

	March 31, 2016
	(unaudited)
Accrual at beginning of year	$	226
Additions charged to warranty expense		72
Expiring warranties/claimed satisfied		(119	)
Total		179
Less: current portion		(155	)
	$	24

Earnings Per Share

Basic net loss per common share excludes dilution for potentially dilutive securities and is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding during the period. Diluted net loss per common share gives effect to dilutive options, warrants and other potential common shares outstanding during the period and their potential diluted effect is considered using the treasury method.

For the three months ended March 31, 2016 diluted earnings per common share are computed by the numerator effected by the gain on the change in fair value of the warrant liability and the denominator is increased to include the number of additional potential common shares from the warrants underlying the warrant liability.

Diluted earnings per common share were calculated using the following net loss and weighted average shares outstanding for the three months ended March 31, 2016:

	March 31, 2016
Net loss	$	(1,437	)
Gain on the change in fair value of the warrant liability		(1,985	)
Diluted earnings	$	(3,422	)
Weighted average number of common and common equivalent shares outstanding:
Basic number of common shares outstanding		10,339,657
Dilutive effect of warrants		2,968,266
Diluted number of common and common stock equivalent shares outstanding		13,307,923

For the three months ended March 31, 2015, diluted net loss per common share is equal to the basic net loss per common share since all potentially dilutive securities are anti-dilutive. The loss on the change in fair value of the warrant liability would be considered in the diluted earnings per share calculation and was deemed to be antidilutive.

Potential common stock equivalents outstanding as of March 31, 2016 and 2015 consist of common stock equivalents of common stock purchase warrants, senior secured convertible debentures, convertible preferred stock and common stock options, which are summarized as follows:

		March 31,
	2016		2015
Common stock equivalents of convertible debentures	46,215,126		4,328,466
Common stock purchase warrants	16,729,362		13,078,920
Common stock equivalents of convertible preferred stock	2,535,866		4,007,406
Common stock options	2,669,352		1,293,701
Total	68,149,706		22,708,493

Adoption of New Accounting Standards

In April 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2015-03, "Simplifying the Presentation of Debt Issuance Costs" (Subtopic 835-30). ASU No. 2015-03 provides guidance that will require debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, in the same manner as debt discounts, rather than as an asset. The standard was effective for reporting periods beginning after December 15, 2015 and early adoption was permitted. The Company adopted this ASU effective January 1, 2016. (See Note 8, Convertible Debentures.)

In September 2015, the FASB issued ASU No. 2015-16, "Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments." The amendments in ASU 2015-16 require that an acquirer recognize adjustments to estimated amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined, rather than retrospectively adjusting amounts previously reported. The amendments require that the acquirer record, in the same period's financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the estimated amounts, calculated as if the accounting had been completed at the acquisition date. Effective for public business entities for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. The amendments should be applied prospectively to adjustments to provisional amounts that occur after the effective date with earlier application permitted for financial statements that have not been issued. The adoption of this ASU did not have a significant impact on the condensed consolidated financial statements.

Recently Issued Accounting Standards

In February 2016, the FASB issued ASU 2016-02, Leases, This statement requires lessees to present right-of-use assets and lease liabilities on the balance sheet. The standard is effective for public companies for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently evaluating the effect the guidance will have on its financial condition and results of operations.

In November 2015, the FASB issued ASU 2015-17, Income Taxes, Balance Sheet Classification of Deferred Taxes topic of the Codification. This standard requires all deferred tax assets and liabilities to be classified as non-current on the balance sheet instead of separating deferred taxes into current and non-current amounts. In addition, valuation allowance allocations between current and non-current deferred tax assets are no longer required because those allowances also will be classified as non-current. This standard is effective for public companies for annual periods beginning after December 15, 2016 and March 31, 2016. The Company's deferred tax assets is provided with full valuation allowance as of December 31, 2015. As such, the Company does not expect that this standard will have a significant impact on its consolidated financial statements and disclosures upon adoption.

In July, 2015, The FASB issued Accounting Standards Update No. 2015-11, Simplifying the Measurement of Inventory (Topic 330) ("ASU 2015-11"). ASU 2015-11 outlines that inventory within the scope of its guidance be measured at the lower of cost and net realizable value. Inventory measured using last-in, first-out (LIFO) are not impacted by the new guidance. Prior to the issuance of ASU 2015-11, inventory was measured at the lower of cost or market (where market was defined as replacement cost, with a ceiling of net realizable value and floor of net realizable value less a normal profit margin). For a public entity, the amendments in ASU 2015-11 are effective, in a prospective manner, for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period (the first quarter of fiscal year 2017 for the Company). Early adoption is permitted as of the beginning of an interim or annual reporting period. The Company is in the process of assessing the impact, if any, of ASU 2015-11 on its consolidated financial statements.

In May 2014, The FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASU 2014-09").ASU 2014-09 outlines a single comprehensive model to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. ASU 2014-09 also requires entities to disclose sufficient information, both quantitative and qualitative, to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. An entity should apply the amendments in this ASU using one of the following two methods: 1. Retrospectively to each prior reporting period presented with a possibility to elect certain practical expedients, or, 2. Retrospectively with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application. If an entity elects the latter transition method, it also should provide certain additional disclosures. For a public entity, the amendments in ASU 2014-09 were to be effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. In July 2015, the FASB voted for a one year deferral of the effective date of ASU 2014-09 and issued an exposure draft. The new guidance will be effective for annual and interim periods beginning on or after December 15, 2017. Early application is not permitted. The Company is currently assessing the impact that adopting this new accounting guidance will have on its consolidated financial statements and footnote disclosures.

In August 2014, the FASB issued Accounting Standards Update No. 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern ("ASU 2014-15"). ASU 2014-15 provides guidance on management's responsibility in evaluating whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity's ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable). ASU 2014-15 also provides guidance related to the required disclosures as a result of management evaluation. The amendments in ASU 2014-15 are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company is currently evaluating the new guidance to determine the impact the adoption of this guidance will have on the Company's results of operations, cash flows or financial condition.

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Acquisition

3 Months Ended

Mar. 31, 2016

Acquisition [Abstract]

Acquisition

Note 2

Acquisition:

On June 22, 2015, the Company entered into an asset purchase agreement (the "Asset Purchase Agreement") with PhotoMedex Inc. and PhotoMedex Technology, Inc. pursuant to which the Company has purchased the XTRAC and VTRAC laser businesses from PhotoMedex, Inc. (the "Asset Purchase") for $42,528 in cash and assumed certain business-related liabilities. The purchased assets include all of the accounts receivable, inventory and fixed and intangible assets of the business.

The fair value of the assets acquired and liabilities assumed were based on management. The significant intangible assets to be recognized in the valuation are core and product technologies, tradenames and customer relationships. The estimated useful lives over which these assets will be amortized, utilizing the straight line method, are five years for product technologies and ten years for core technologies, tradenames and customer relationships. The following allocation of the aggregate fair value is subject to adjustment based on the fair value of the assets acquired and the liabilities assumed. The Company estimated fair value of the intangibles and lasers placed in service was based on the income approach which estimated cash flow that utilize appropriate discount and capitalization rates and available market information. Estimates of future cash flows are based on a number of factors including the historical operating results, known trends and specific market and economic conditions. The fair value of the Company's remaining fixed assets was estimated based on the cost approach which estimated the cost to replace.

	Fair Value
Current assets	$	7,233
Property, plant and equipment		14,340
Identifiable intangible assets		16,100
Other assets		45
Total assets assumed		37,718
Current liabilities		(3,945	)
Note payable		(57	)
Other long term liabilities		(116	)
Total liabilities assumed		(4,118	)
Net assets acquired	$	33,600

The purchase price exceeded the fair value of the net assets acquired by $8,928, which was recorded as goodwill.

The consolidated results of operations do not include any revenues or expenses related to XTRAC and VTRAC businesses on or prior to June 22, 2015, the date of the asset purchase. The Company's unaudited pro-forma results for the three months ended March 31, 2015 summarize the combined results in the following table, assuming the asset purchase had occurred on January 1, 2015 and after giving effect to the acquisition adjustments, including amortization of the tangible and long-lived intangible assets acquired in the transaction:

	Three Months Ended March 31,2015
	(unaudited)
Net revenues	$	7,557
Net loss	$	(10,157	)
Net loss per basic and diluted share:	$	(1.57	)
Shares used in calculating net loss per basic and diluted share:		6,471,906

These unaudited pro-forma results have been prepared for comparative purposes only and do not purport to be indicative of the results of operations which would have actually resulted had the acquisition occurred on January 1, 2014, nor to be indicative of future results of operations.

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Inventories, net

3 Months Ended

Mar. 31, 2016

Inventories, net [Abstract]

Inventories, net

Note 3

Inventories, net:

	March 31, 2016		December 31, 2015
	(unaudited)
Raw materials and work in progress	$	3,792	$	3,706
Finished goods		360		422
Total inventories	$	4,152	$	4,128

Work-in-process is immaterial, given the Company's typically short manufacturing cycle, and therefore is disclosed in conjunction with raw materials.

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Property and Equipment, net

3 Months Ended

Mar. 31, 2016

Property and Equipment, net [Abstract]

Property and Equipment, net

Note 4

Property and Equipment, net:

	March 31, 2016			December 31, 2015
	(unaudited)
Lasers placed-in-service	$	15,966		$	15,782
Equipment, computer hardware and software		1,244			1,219
Furniture and fixtures		2,054			2,080
Leasehold improvements		931			931
		20,195			20,012
Accumulated depreciation and amortization		(7,377	)		(6,161	)
Property and equipment, net	$	12,818		$	13,851

Depreciation and related amortization expense was $1,230 and $41 for the three months ended March 31, 2016 and 2015, respectively.

Note 5

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Patents and Licensed Technologies, net

3 Months Ended

Mar. 31, 2016

Patents and Licensed Technologies, net [Abstract]

Patents and Licensed Technologies, net

Note 5

Patents and Licensed Technologies, net:

	March 31, 2016			December 31, 2015
	(unaudited)
Core technology	$	5,974		$	5,974
Product technology		2,000			2,000
		7,974			7,974
Accumulated amortization		(971	)		(727	)
Patents and licensed technologies, net	$	7,003		$	7,247

Related amortization expense was $244 and $1 for each of the three month ended March 31, 2016 and 2015.

Estimated amortization expense for amortizable patents and licensed technologies assets for the future periods is as follows:

Remaining 2016	$	731
2017		975
2018		975
2019		975
2020		775
Thereafter		2,572
Total	$	7,003

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Other Intangible Assets

3 Months Ended

Mar. 31, 2016

Other Intangible Assets [Abstract]

Other Intangible Assets

Note 6

Other Intangible Assets:

Set forth below is a detailed listing of other definite-lived intangible assets:

	March 31, 2016			December 31, 2015
	(unaudited)
Customer relationships	$	6,900		$	6,900
Tradenames		1,500			1,500
		8,400			8,400
Accumulated amortization		(630	)		(420	)
Other intangible assets, net	$	7,770		$	7,980

Related amortization expense was $210 and $ 0 for the three months ended March 31, 2016 and 2015, respectively.

Estimated amortization expense for the above amortizable intangible assets for the future periods is as follows:

Remaining 2016	$	630
2017		840
2018		840
2019		840
2020		840
Thereafter		3,780
Total	$	7,770

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Other Accrued Liabilities

3 Months Ended

Mar. 31, 2016

Other Accrued Liabilities [Abstract]

Other Accrued Liabilities

Note 7

Other Accrued Liabilities:

	March 31, 2016		December 31, 2015
	(unaudited)
Accrued warranty, current, see Note 1	$	155	$	168
Accrued compensation, including commissions and vacation		921		1,336
Accrued sales and other taxes		375		349
Accrued professional fees		175		265
Other accrued liabilities		13		43
Total other accrued liabilities	$	1,639	$	2,161

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Convertible Debentures

3 Months Ended

Mar. 31, 2016

Convertible Debentures [Abstract]

Convertible Debentures

Note 8

Convertible Debentures:

In the following table is a summary of the Company's convertible debentures.

	March 31, 2016		December 31, 2015
	(unaudited)
Senior secured 2.25% convertible debentures, net of unamortized debt discount of $25,718 and $26,267, respectively; and deferred financing costs of $554 and $522, respectively	$	5,841	$	5,489
Senior secured 4% convertible debentures, net of unamortized debt discount of $3,816 and $3,922, respectively; and deferred financing costs of $432 and $443, respectively		4,467		4,350
Total convertible debt	$	10,308	$	9,839

The Company issued $32,500 aggregate principal amount of Debentures (June 2015 Debentures) that, subject to certain ownership limitations and stockholder approval conditions, will be convertible into 43,333,334 shares of Company common stock at an initial conversion price of $0.75 per share. The Debentures bear interest at the rate of 2.25% per year, and, unless previously converted, will mature on the five-year anniversary of the date of issuance, June 22, 2020.

The June 2015 Debentures include a beneficial conversion feature valued at $27,300 that was recorded as a discount to the debentures. On the date of issuance the beneficial conversion feature value was calculated as the difference resulting from subtracting the conversion price of $0.75 from $1.38, the opening market value of the Company's common stock following the announcement of the transaction, multiplied by the number of common shares into which the June 2015 Debentures are convertible. This discount is being amortized over the five year life of the June 2015 Debentures using the effective interest method. The embedded conversion feature contains an anti-dilution provision that allows for downward exercise price adjustments in certain situations. The embedded conversion feature was not bifurcated as it did not meet all of the elements of a derivative.

On July 21, 2014, the Company entered into a definitive Securities Purchase Agreement (the "Purchase Agreement") with institutional investors (the "Investors") providing for the issuance of Senior Secured Convertible Debentures in the aggregate principal amount of $15,000, due, subject to the terms therein, in July 2019 (the "July 2014 Debentures"), and warrants (the "July 2014 Series A Warrants") to purchase up to an aggregate of 6,198,832 shares of common stock, $0.001 par value per share, at an exercise price of $2.45 per share expiring in July 2019. The July 2014 Debentures bear interest at an annual rate of 4%, payable quarterly or upon conversion into shares of common stock. The Debentures are convertible at any time into an aggregate of 5,847,955 shares of common stock at an initial conversion price of $2.565 per share. The Company's obligations under the July 2014 Debentures are secured by a first priority lien on all of the Company's intellectual property pursuant to the terms of a security agreement ("Security Agreement") dated July 21, 2014 among the Company and the Investors. In connection with the Purchase Agreement, the Company entered into a Registration Rights Agreement with the Investors pursuant to which the Company was obligated to file a registration statement to register for resale the shares of Common Stock issuable upon conversion of the Series B Preferred Stock (See Note 10, Warrants) and Debentures and upon exercise of the Warrants. Under the terms of the Registration Rights Agreement, the Company filed a registration statement on August 19, 2014, which was declared effective by the SEC on October 20, 2014 (File No. 333-198249).

For financial reporting purposes, the $15,000 funded by the Investors on July 21, 2014 was allocated first to the fair value of the obligation to issue the Warrants, amounting to $5,296, then to the intrinsic value of the beneficial conversion feature on the July 2014 Debentures of $4,565. The balance was further reduced by the fair value of warrants issued to the placement agent for services rendered of $491, resulting in an initial carrying value of the Debentures of $4,647. The initial debt discount on the July 2014 Debentures totaled $10,353 and is being amortized using the effective interest method over the five year life of the July 2014 Debentures.

During the three months ended March 31, 2016, the investors converted debentures amounting to $165 into 220,000 shares of common stock for the June 2015 note. The debt discount and deferred financing cost adjustment resulting from the conversions increased interest expense by $136 for the three months ended March 31, 2016.

As a condition of the new note facility (See Note 9, Long-term Debt) the Debentures from both the 2014 and 2015 financings were amended. The Debentures holders' first priority lien was subordinated to the new term note facility. Additionally, as a condition of the term note facility, the maturity date of both Debentures was extended to June 30, 2021. The Company evaluated the modifications to determine if there was an extinguishment of debt. Based on the valuation, the discounted cash flows did not change by more than 10%, thus they were treated as a modification.

As of March 31, 2016, the total outstanding amount of Debentures was $40,828.

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Long-term Debt

3 Months Ended

Mar. 31, 2016

Long-term Debt [Abstract]

Long-term Debt

Note 9

Long-term Debt:

Term-Note Credit Facility

On December 30, 2015, the Company entered into a $12,000 credit facility pursuant to a Credit and Security Agreement (the "Agreement") and related financing documents with MidCap Financial Trust ("MidCap") and the lenders listed therein. Under the Agreement, the credit facility may be drawn down in two tranches, the first of which was drawn for $10,500 on December 30, 2015. The proceeds of this first tranche were used to repay $10,000 principal amount of short-term senior secured promissory notes, plus associated interest, loan fees and expenses. The second tranche was drawn for $1,500 on January 29, 2016. The Company's obligations under the credit facility are secured by a first priority lien on all of the Company's assets. This credit facility includes both financial and non-financial covenants, including a minimum net revenue covenant, beginning in January 2016. The Company is in compliance with these covenants as of March 31, 2016. Interest rate on the credit facility is one month LIBOR plus 8.25%, subject to a LIBOR floor of 0.5%. The Company's existing debentures from its 2014 and 2015 financings were amended as a condition of this new term note facility, including subordination agreements and maturity extensions. As of March 31, 2016 the net balance of long-term debt is $11,344.

In connection with the issuance of the Term Note the Company issued MidCap (and the lenders), on December 30, 2015, a warrant to purchase 650,442 shares of the Company's common stock for an exercise price of $1.13. Additionally, the Company issued MidCap (and the lenders), on January 29, 2016, a warrant to purchase 99,057 shares of the Company's common stock for an exercise price of $1.06. The warrants are exercisable at any time on or prior to the fifth anniversary of its issue date. The warrants are treated as a discount to the debt and are accreted under the effective interest method over the repayment term of 60 months. The Company has accounted for these warrants as equity instruments since there is no option for cash or net-cash settlement when the warrants are exercised and since they are indexed to the Company's common stock. The Company computed the value of the warrants using the Black-Scholes method. The key assumptions used to value the warrants are as follows:

	December 31, 2015			January 29, 2016
Number of shares underlying warrants		650,442			99,057
Exercise price	$	1.13		$	1.06
Stock price on date of issuance	$	1.11		$	1.05
Fair value of warrants	$	321		$	47
Volatility		50.0	%		50.0	%
Risk-free interest rate		1.8	%		1.8	%
Expected dividend yield		0	%		0	%
Expected warrant life	5 years			5 years

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Warrants

3 Months Ended

Mar. 31, 2016

Warrants [Abstract]

Warrants

Note 10

Warrants:

The Company accounts for warrants that have provisions that protect holders from a decline in the issue price of its common stock (or "down-round" provisions) as liabilities instead of equity. Down-round provisions reduce the exercise or conversion price of a warrant or convertible instrument if a company either issues equity shares for a price that is lower than the exercise or conversion price of those instruments or issues new warrants or convertible instruments that have a lower exercise or conversion price. Net settlement provisions allow the holder of the warrant to surrender shares underlying the warrant equal to the exercise price as payment of its exercise price, instead of physically exercising the warrant by paying cash. The Company evaluated whether warrants to acquire its common stock contain provisions that protect holders from declines in the stock price or otherwise could result in modification of the exercise price and/or shares to be issued under the respective warrant agreements based on a variable that is not an input to the fair value of a "fixed-for-fixed" option.

The Company recognizes such warrants as liabilities at the fair value on each reporting date. The Company computed the value of the warrants using the binomial method. A summary of quantitative information with respect to the valuation methodology and significant unobservable inputs used for the Company's warrant liabilities that are categorized within Level 3 of the fair value hierarchy as of March 31, 2016 and December 31, 2015 is as follows:

	March 31, 2016			December 31, 2015
Number of shares underlying the warrants		14,099,267			14,099,267
Stock price	$	0.95		$	1.11
Volatility		50.00	%		35.90 – 50.00	%
Risk-free interest rate		0.26% – 1.07	%		0.02% - 1.63	%
Expected dividend yield		0	%		0	%
Expected warrant life	0.32 – 4.23 years			0.07 – 4.48 years

Recurring Level 3 Activity and Reconciliation

The tables below provide a reconciliation of the beginning and ending balances for the liability measured at fair value using significant unobservable inputs (Level 3). The table reflects gains and losses for the three month periods ended March 31, 2016 and 2015, for all financial liabilities categorized as Level 3 as of March 31, 2016 and March 31, 2015, respectively.

Fair Value Measurements Using Significant Unobservable Inputs (Level 3):

Issuance Date	December 31, 2015		Decrease in Fair Value			March 31, 2016
10/31/2013	$	379	$	(99	)	$	280
2/5/2014		715		(187	)		528
7/24/2014 Series A (1)		2,415		(621	)		1,794
7/24/2014 Series B (1)		1,726		(638	)		1,088
6/22/2015		1,807		(440	)		1,367
Total	$	7,042	$	(1,985	)	$	5,057

(1)  These warrants were modified on September 30, 2015 and as a result of the modification these warrants met the definition of a derivative and were reclassified to a warrant liability.

Issuance Date	December 31, 2014		Increase in Fair Value		March 31, 2015
10/31/2013	$	233	$	377	$	610
2/5/2014		266		957		1,223
Total	$	499	$	1,334	$	1,833

Number of Warrants Subject to Remeasurement:

Issuance Date	December 31, 2015	Additions	Reductions	March 31, 2016
10/31/2013	685,715	-	-	685,715
2/5/2014	1,329,731	-	-	1,329,731
7/24/2014 Series A	4,288,500	-	-	4,288,500
7/24/2014 Series B	4,795,321	-	-	4,795,321
6/22/2015	3,000,000	-	-	3,000,000
Total	14,099,267	-	-	14,099,267

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Stockholders' Equity

3 Months Ended

Mar. 31, 2016

Stockholders' Equity [Abstract]

Stockholders' Equity

Note 11

Stockholders' Equity:

Common Stock and Warrants

Outstanding common stock warrants consist at March 31, 2016 of the following:

Issue Date	Expiration Date	Total Warrants		Exercise Price
4/26/2013	4/26/2018		69,321	$	11.18
10/31/2013	4/30/2019		685,715	$	0.75
2/5/2014	2/5/2019		1,329,731	$	0.75
7/24/2014	7/24/2019		6,198,832	$	0.75 - $ 2.45
7/24/2014	7/24/2016		4,795,321	$	0.75
6/22/2015	6/22/2020		3,000,000	$	0.75
12/30/2015	12/30/2020		650,442	$	1.13
			16,729,362

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Stock-based compensation

3 Months Ended

Mar. 31, 2016

Stock-based compensation [Abstract]

Stock-based compensation

Note 12

Stock-based compensation:

At March 31, 2016, the Company had 2,614,600 options outstanding with a weighted-average exercise price of $1.51. 1,664,600 options are vested and exercisable.

Stock-based compensation expense, primarily included in general and administration, for the three months ended March 31, 2016 and 2015 was $170 and $230, respectively. As of March 31, 2016 there was $488 in unrecognized compensation expense, which will be recognized over a weighted average period of 1.15 years.

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Income taxes

3 Months Ended

Mar. 31, 2016

Income taxes [Abstract]

Income taxes

Note 13

Income taxes:

The Company accounts for income taxes using the asset and liability method for deferred income taxes. The provision for income taxes includes federal, state and local income taxes currently payable and deferred taxes resulting from temporary differences between the financial statement and tax bases of assets and liabilities. Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized.

Income tax expense of $66 for the three months ended March 31, 2016 was comprised of the change in deferred tax liability related to goodwill. Goodwill is an amortizing asset according to tax regulations. This generates a deferred tax liability that is not used to offset deferred tax assets for valuation allowance considerations. There was no such expense for the three months ended March 31, 2015.

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Business Segments and Geographic Data

3 Months Ended

Mar. 31, 2016

Business Segments and Geographic Data [Abstract]

Business Segments and Geographic Data

Note 14

Business Segments and Geographic Data:

The Company organized its business into three operating segments to better align its organization based upon the Company's management structure, products and services offered, markets served and types of customers, as follows: The Dermatology Recurring Procedures segment derives its revenues from the XTRAC procedures performed by dermatologists. The Dermatology Procedures Equipment segment generates revenues from the sale of equipment, such as lasers and lamp products. The Dermatology Imaging segment generates revenues from the sale and usage of imaging devices. Management reviews financial information presented on an operating segment basis for the purposes of making certain operating decisions and assessing financial performance. On June 22, 2015, the Company acquired the XTRAC and VTRAC businesses and has classified the revenues and expenses of this business to the two Dermatology Procedures segments. There are no corresponding revenues for the three months ended March 31, 2015.

Unallocated operating expenses include costs that are not specific to a particular segment but are general to the group; included are expenses incurred for administrative and accounting staff, general liability and other insurance, professional fees and other similar corporate expenses. Interest and other financing income (expense), net is also not allocated to the operating segments.

The following tables reflect results of operations from our business segments for the periods indicated below:

Three Months Ended March 31, 2016 (unaudited)

	Dermatology Recurring Procedures			Dermatology Procedures Equipment			Dermatology Imaging			TOTAL
Revenues	$	5,528		$	1,990		$	102		$	7,620
Costs of revenues		2,304			951			167			3,422
Gross profit		3,224			1,039			( 65	)		4,198
Gross profit %		58.3	%		52.2	%		(63.7	%)		55.1	%
Allocated operating expenses:
Engineering and product development		311			62			152			525
Selling and marketing expenses		3,510			108			92			3,710
Unallocated operating expenses		-			-			-			2,101
		3,821			170			244			6,336
Income (loss) from operations		(597	)		869			(309	)		(2,138	)
Interest expense, net		-			-			-			(1,218	)
Change in fair value of warrant liability		-			-			-			1,985
Other income (expense), net		-			-			-			-
Income (loss) before income taxes	$	(597	)	$	869		$	(309	)	$	(1,371	)

Three Months Ended March 31, 2015 (unaudited)

	Dermatology Recurring Procedures			Dermatology Procedures Equipment			Dermatology Imaging			TOTAL
Revenues	$	-		$	-		$	81		$	81
Costs of revenues		-			-			711			711
Gross profit		-			-			(630	)		(630	)
Gross profit %		0.0	%		0.0	%		(777.8	%)		(777.8	%)
Allocated operating expenses:
Engineering and product development		-			-			239			239
Selling and marketing expenses		-			-			1,027			1,027
Unallocated operating expenses		-			-			-			1,736
		-			-			1,266			3,002
Loss from operations		-			-			(1,896	)		(3,632	)
Interest expense, net		-			-						(2,324	)
Change in fair value of warrant liability		-			-			-			(1,334	)
Other income (expense), net		-			-			-			18
Net loss	$	-		$	-		$	(1,896	)	$	(7,272	)

For the three months ended March 31, 2016 and 2015 there were no material net revenues attributable to any individual foreign country. Net revenues by geographic area were, as follows:

	Three Months Ended March 31,
	2016		2015
Domestic	$	5,622	$	38
Foreign		1,998		43
	$	7,620	$	81

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Significant Customer Concentration

3 Months Ended

Mar. 31, 2016

Significant Customer Concentration [Abstract]

Significant Customer Concentration

Note 15

Significant Customer Concentration:

For the three months ended March 31, 2016, revenues from sales to the Company's international master distributor (GlobalMed Technologies) were $1,686, or 22.1%, of total revenues for such period. At March 31, 2016, the accounts receivable balance from GlobalMed Technologies was $443, or 13.6%, of total net accounts receivable. No other customer represented more than 10% of total company revenues for the three months ended March 31, 2016 and 2015.

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Subsequent Events

3 Months Ended

Mar. 31, 2016

Subsequent Events [Abstract]

Subsequent Events

Note 16

Subsequent Events:

On April 5, 2016, investors converted debentures amounting to $63 into 84,411 shares of common stock. See Note 8, Convertible Debentures.

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The Company (Policies)

3 Months Ended

Mar. 31, 2016

The Company [Abstract]

Liquidity

Liquidity

As of March 31, 2016, the Company had an accumulated deficit of $208,677 and has incurred losses and negative cash flows from operations since inception. To date, the Company has dedicated most of its financial resources to research and development, sales and marketing, and general and administrative expenses.

The Company has been dependent on raising capital from the sale of securities in order to continue to operate and to meet its obligations in the ordinary course of business. Management believes that its cash and cash equivalents as of March 31, 2016 combined with the anticipated revenues from the sale of the Company's products will be sufficient to satisfy its working capital needs, capital asset purchases, outstanding commitments and other liquidity requirements associated with its existing operations through the second quarter of 2017.

Accounting Principles

Accounting Principles

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP").

Principles of Consolidation

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. All significant intercompany balances and transactions have been eliminated in consolidation.

Quarterly Financial Information and Results of Operations

Quarterly Financial Information and Results of Operations

The condensed consolidated financial statements as of March 31, 2016 and for the three months ended March 31, 2016 and 2015 are unaudited and, in the opinion of management, include all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the financial position as of March 31, 2016,  the results of operations for the three months ended March 31, 2016 and 2015, the statement of stockholders' equity for the three months ended March 31, 2016 and the statement of cash flows for the three months ended March 31, 2016 and 2015. The results of operations and cash flows for the three months ended March 31, 2016 are not necessarily indicative of the results to be expected for the entire year. The condensed consolidated balance sheet as of December 31, 2015 was derived from audited financial statements as of December 31, 2015. While management of the Company believes that the disclosures presented are adequate to make the information not misleading, these condensed consolidated financial statements should be read in conjunction with audited consolidated financial statements and the footnotes thereto, together with Management's Discussion and Analysis of Financial Condition and Results of Operations, contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2015. 

Reclassification

Reclassification

Certain reclassifications from the prior year presentation have been made to conform to the current year presentation. These reclassifications did not have a material impact on the Company's equity, net assets, results of operations or cash flows.

Use of Estimates

Use of Estimates

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the US requires management to make estimates and assumptions that affect amounts reported of assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting periods. Actual results could differ from those estimates and be based on events different from those assumptions. As of March 31, 2016, the more significant estimates include (1) revenue recognition, including deferred revenues and valuation allowances of accounts receivable, (2) the fair value of assets acquired and liabilities assumed in the business combination, (3) the estimated useful lives of intangible assets and property and equipment, (4) the inputs used in determining the fair value of equity-based awards and (5) the valuation allowance related to deferred tax assets.

Fair Value Measurements

Fair Value Measurements

The Company measures and discloses fair value in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification 820, Fair Value Measurements and Disclosures ("ASC Topic 820"). ASC Topic 820 defines fair value, establishes a framework and gives guidance regarding the methods used for measuring fair value, and expands disclosures about fair value measurements. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions there exists a three-tier fair-value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

• Level 1 – unadjusted quoted prices are available in active markets for identical assets or liabilities that the Company has the ability to access as of the measurement date.

• Level 2 – pricing inputs are other than quoted prices in active markets that are directly observable for the asset or liability or indirectly observable through corroboration with observable market data.

• Level 3 – pricing inputs are unobservable for the non-financial asset or liability and only used when there is little, if any, market activity for the non-financial asset or liability at the measurement date. The inputs into the determination of fair value require significant management judgment or estimation. Fair value is determined using comparable market transactions and other valuation methodologies, adjusted as appropriate for liquidity, credit, market and/or other risk factors

This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value.

The Company's recurring fair value measurements at March 31, 2016 and December 31, 2015 are as follows:

	Fair Value as of March 31, 2016		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Liabilities:
Warrant liability (Note 10)	$	5,057	$	-	$	-	$	5,057
	Fair Value as of December 31, 2015		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Liabilities:
Warrant liability (Note 10)	$	7,042	$	-	$	-	$	7,042

The fair value of cash and cash equivalents are based on their respective demand value, which are equal to the carrying value. The fair value of derivative warrant liabilities is estimated using option pricing models that are based on the individual characteristics of the Company's warrants, preferred and common stock, the derivative warrant liability on the valuation date as well as assumptions for volatility, remaining expected life, risk-free interest rate and, in some cases, credit spread. The derivative warrant liabilities are the only recurring Level 3 fair value measures. The carrying value of all other short-term monetary assets and liabilities is estimated to be approximate to their fair value due to the short-term nature of these instruments. The Company assessed its convertible debentures and long-term debt and determined that the fair value of total debt was $18,251 as of March 31, 2016. As of December 31, 2015 the fair value of total debt approximated the recorded value of $15,958.

Several of the warrants have non-standard terms as they relate to a fundamental transaction and require a net-cash settlement upon change in control of the Company and other warrants contain full ratchet provisions that reduce the exercise price of the warrants in the event of a transaction resulting in the issuance of equity below the current price of the warrants. Therefore these warrants are classified as derivatives. These warrants have been recorded at their fair value using a binomial option pricing model and will be recorded at their respective fair value at each subsequent balance sheet date. See Note 10, Warrants, for additional discussion.

Accrued Warranty Costs

Accrued Warranty Costs

The Company offers a standard warranty on product sales generally for a one to two-year period The Company provides for the estimated cost of the future warranty claims on the date the product is sold. Total accrued warranty is included in Other Accrued Liabilities and Other liabilities on the balance sheet. The activity in the warranty accrual during the three months ended March 31, 2016 is summarized as follows:

	March 31, 2016
	(unaudited)
Accrual at beginning of year	$	226
Additions charged to warranty expense		72
Expiring warranties/claimed satisfied		(119	)
Total		179
Less: current portion		(155	)
	$	24

Earnings Per Share

Earnings Per Share

Basic net loss per common share excludes dilution for potentially dilutive securities and is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding during the period. Diluted net loss per common share gives effect to dilutive options, warrants and other potential common shares outstanding during the period and their potential diluted effect is considered using the treasury method.

For the three months ended March 31, 2016 diluted earnings per common share are computed by the numerator effected by the gain on the change in fair value of the warrant liability and the denominator is increased to include the number of additional potential common shares from the warrants underlying the warrant liability.

Diluted earnings per common share were calculated using the following net loss and weighted average shares outstanding for the three months ended March 31, 2016:

	March 31, 2016
Net loss	$	(1,437	)
Gain on the change in fair value of the warrant liability		(1,985	)
Diluted earnings	$	(3,422	)
Weighted average number of common and common equivalent shares outstanding:
Basic number of common shares outstanding		10,339,657
Dilutive effect of warrants		2,968,266
Diluted number of common and common stock equivalent shares outstanding		13,307,923

For the three months ended March 31, 2015, diluted net loss per common share is equal to the basic net loss per common share since all potentially dilutive securities are anti-dilutive. The loss on the change in fair value of the warrant liability would be considered in the diluted earnings per share calculation and was deemed to be antidilutive.

Potential common stock equivalents outstanding as of March 31, 2016 and 2015 consist of common stock equivalents of common stock purchase warrants, senior secured convertible debentures, convertible preferred stock and common stock options, which are summarized as follows:

		March 31,
	2016		2015
Common stock equivalents of convertible debentures	46,215,126		4,328,466
Common stock purchase warrants	16,729,362		13,078,920
Common stock equivalents of convertible preferred stock	2,535,866		4,007,406
Common stock options	2,669,352		1,293,701
Total	68,149,706		22,708,493

Adoption of New Accounting Standards

Adoption of New Accounting Standards

In April 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2015-03, "Simplifying the Presentation of Debt Issuance Costs" (Subtopic 835-30). ASU No. 2015-03 provides guidance that will require debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, in the same manner as debt discounts, rather than as an asset. The standard was effective for reporting periods beginning after December 15, 2015 and early adoption was permitted. The Company adopted this ASU effective January 1, 2016. (See Note 8, Convertible Debentures.)

In September 2015, the FASB issued ASU No. 2015-16, "Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments." The amendments in ASU 2015-16 require that an acquirer recognize adjustments to estimated amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined, rather than retrospectively adjusting amounts previously reported. The amendments require that the acquirer record, in the same period's financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the estimated amounts, calculated as if the accounting had been completed at the acquisition date. Effective for public business entities for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. The amendments should be applied prospectively to adjustments to provisional amounts that occur after the effective date with earlier application permitted for financial statements that have not been issued. The adoption of this ASU did not have a significant impact on the condensed consolidated financial statements.

Recently Issued Accounting Standards

Recently Issued Accounting Standards

In February 2016, the FASB issued ASU 2016-02, Leases, This statement requires lessees to present right-of-use assets and lease liabilities on the balance sheet. The standard is effective for public companies for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently evaluating the effect the guidance will have on its financial condition and results of operations.

In November 2015, the FASB issued ASU 2015-17, Income Taxes, Balance Sheet Classification of Deferred Taxes topic of the Codification. This standard requires all deferred tax assets and liabilities to be classified as non-current on the balance sheet instead of separating deferred taxes into current and non-current amounts. In addition, valuation allowance allocations between current and non-current deferred tax assets are no longer required because those allowances also will be classified as non-current. This standard is effective for public companies for annual periods beginning after December 15, 2016 and March 31, 2016. The Company's deferred tax assets is provided with full valuation allowance as of December 31, 2015. As such, the Company does not expect that this standard will have a significant impact on its consolidated financial statements and disclosures upon adoption.

In July, 2015, The FASB issued Accounting Standards Update No. 2015-11, Simplifying the Measurement of Inventory (Topic 330) ("ASU 2015-11"). ASU 2015-11 outlines that inventory within the scope of its guidance be measured at the lower of cost and net realizable value. Inventory measured using last-in, first-out (LIFO) are not impacted by the new guidance. Prior to the issuance of ASU 2015-11, inventory was measured at the lower of cost or market (where market was defined as replacement cost, with a ceiling of net realizable value and floor of net realizable value less a normal profit margin). For a public entity, the amendments in ASU 2015-11 are effective, in a prospective manner, for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period (the first quarter of fiscal year 2017 for the Company). Early adoption is permitted as of the beginning of an interim or annual reporting period. The Company is in the process of assessing the impact, if any, of ASU 2015-11 on its consolidated financial statements.

In May 2014, The FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASU 2014-09").ASU 2014-09 outlines a single comprehensive model to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. ASU 2014-09 also requires entities to disclose sufficient information, both quantitative and qualitative, to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. An entity should apply the amendments in this ASU using one of the following two methods: 1. Retrospectively to each prior reporting period presented with a possibility to elect certain practical expedients, or, 2. Retrospectively with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application. If an entity elects the latter transition method, it also should provide certain additional disclosures. For a public entity, the amendments in ASU 2014-09 were to be effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. In July 2015, the FASB voted for a one year deferral of the effective date of ASU 2014-09 and issued an exposure draft. The new guidance will be effective for annual and interim periods beginning on or after December 15, 2017. Early application is not permitted. The Company is currently assessing the impact that adopting this new accounting guidance will have on its consolidated financial statements and footnote disclosures.

In August 2014, the FASB issued Accounting Standards Update No. 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern ("ASU 2014-15"). ASU 2014-15 provides guidance on management's responsibility in evaluating whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity's ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable). ASU 2014-15 also provides guidance related to the required disclosures as a result of management evaluation. The amendments in ASU 2014-15 are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company is currently evaluating the new guidance to determine the impact the adoption of this guidance will have on the Company's results of operations, cash flows or financial condition.

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The Company (Tables)

3 Months Ended

Mar. 31, 2016

The Company [Abstract]

Fair Value Measurements on Recurring Basis

The Company's recurring fair value measurements at March 31, 2016 and December 31, 2015 are as follows:

	Fair Value as of March 31, 2016		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Liabilities:
Warrant liability (Note 10)	$	5,057	$	-	$	-	$	5,057
	Fair Value as of December 31, 2015		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Liabilities:
Warrant liability (Note 10)	$	7,042	$	-	$	-	$	7,042

Accrued Warranty Costs Activity

The activity in the warranty accrual during the three months ended March 31, 2016 is summarized as follows:

	March 31, 2016
	(unaudited)
Accrual at beginning of year	$	226
Additions charged to warranty expense		72
Expiring warranties/claimed satisfied		(119	)
Total		179
Less: current portion		(155	)
	$	24

Diluted Earnings Per Common Share Calculated using Net Loss And Weighted Average Shares Outstanding

Diluted earnings per common share were calculated using the following net loss and weighted average shares outstanding for the three months ended March 31, 2016:

	March 31, 2016
Net loss	$	(1,437	)
Gain on the change in fair value of the warrant liability		(1,985	)
Diluted earnings	$	(3,422	)
Weighted average number of common and common equivalent shares outstanding:
Basic number of common shares outstanding		10,339,657
Dilutive effect of warrants		2,968,266
Diluted number of common and common stock equivalent shares outstanding		13,307,923

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share

Potential common stock equivalents outstanding as of March 31, 2016 and 2015 consist of common stock equivalents of common stock purchase warrants, senior secured convertible debentures, convertible preferred stock and common stock options, which are summarized as follows:

		March 31,
	2016		2015
Common stock equivalents of convertible debentures	46,215,126		4,328,466
Common stock purchase warrants	16,729,362		13,078,920
Common stock equivalents of convertible preferred stock	2,535,866		4,007,406
Common stock options	2,669,352		1,293,701
Total	68,149,706		22,708,493

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Acquisition (Tables)

3 Months Ended

Mar. 31, 2016

Acquisition [Abstract]

Estimated Fair Value of Assets Acquired and Liabilities Assumed

The fair value of the Company's remaining fixed assets was estimated based on the cost approach which estimated the cost to replace.

	Fair Value
Current assets	$	7,233
Property, plant and equipment		14,340
Identifiable intangible assets		16,100
Other assets		45
Total assets assumed		37,718
Current liabilities		(3,945	)
Note payable		(57	)
Other long term liabilities		(116	)
Total liabilities assumed		(4,118	)
Net assets acquired	$	33,600

Unaudited Pro-forma Results

The Company's unaudited pro-forma results for the three months ended March 31, 2015 summarize the combined results in the following table, assuming the asset purchase had occurred on January 1, 2015 and after giving effect to the acquisition adjustments, including amortization of the tangible and long-lived intangible assets acquired in the transaction:

	Three Months Ended March 31,2015
	(unaudited)
Net revenues	$	7,557
Net loss	$	(10,157	)
Net loss per basic and diluted share:	$	(1.57	)
Shares used in calculating net loss per basic and diluted share:		6,471,906

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Inventories, net (Tables)

3 Months Ended

Mar. 31, 2016

Inventories, net [Abstract]

Schedule of Inventory

Inventories, net:

	March 31, 2016		December 31, 2015
	(unaudited)
Raw materials and work in progress	$	3,792	$	3,706
Finished goods		360		422
Total inventories	$	4,152	$	4,128

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Property and Equipment, net (Tables)

3 Months Ended

Mar. 31, 2016

Property and Equipment, net [Abstract]

Summary of Property and Equipment, Net

Property and Equipment, net:

	March 31, 2016			December 31, 2015
	(unaudited)
Lasers placed-in-service	$	15,966		$	15,782
Equipment, computer hardware and software		1,244			1,219
Furniture and fixtures		2,054			2,080
Leasehold improvements		931			931
		20,195			20,012
Accumulated depreciation and amortization		(7,377	)		(6,161	)
Property and equipment, net	$	12,818		$	13,851

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Patents and Licensed Technologies, net (Tables)

3 Months Ended

Mar. 31, 2016

Patents and Licensed Technologies, net [Abstract]

Schedule of Patents and Licensed Technologies, Net

Patents and Licensed Technologies, net:

	March 31, 2016			December 31, 2015
	(unaudited)
Core technology	$	5,974		$	5,974
Product technology		2,000			2,000
		7,974			7,974
Accumulated amortization		(971	)		(727	)
Patents and licensed technologies, net	$	7,003		$	7,247

Estimated Amortization Expense for Amortizable Patents and Licensed Technologies Assets

Estimated amortization expense for amortizable patents and licensed technologies assets for the future periods is as follows:

Remaining 2016	$	731
2017		975
2018		975
2019		975
2020		775
Thereafter		2,572
Total	$	7,003

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Other Intangible Assets (Tables)

3 Months Ended

Mar. 31, 2016

Other Intangible Assets [Abstract]

Schedule of Other Definite-lived Intangible Assets

Set forth below is a detailed listing of other definite-lived intangible assets:

	March 31, 2016			December 31, 2015
	(unaudited)
Customer relationships	$	6,900		$	6,900
Tradenames		1,500			1,500
		8,400			8,400
Accumulated amortization		(630	)		(420	)
Other intangible assets, net	$	7,770		$	7,980

Finite-lived Intangible Assets Amortization Expense

Estimated amortization expense for the above amortizable intangible assets for the future periods is as follows:

Remaining 2016	$	630
2017		840
2018		840
2019		840
2020		840
Thereafter		3,780
Total	$	7,770

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Other Accrued Liabilities (Tables)

3 Months Ended

Mar. 31, 2016

Other Accrued Liabilities [Abstract]

Schedule of Other Accrued Liabilities

Other Accrued Liabilities:

	March 31, 2016		December 31, 2015
	(unaudited)
Accrued warranty, current, see Note 1	$	155	$	168
Accrued compensation, including commissions and vacation		921		1,336
Accrued sales and other taxes		375		349
Accrued professional fees		175		265
Other accrued liabilities		13		43
Total other accrued liabilities	$	1,639	$	2,161

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Convertible Debentures (Tables)

3 Months Ended

Mar. 31, 2016

Convertible Debentures [Abstract]

Summary of Convertible Debentures

In the following table is a summary of the Company's convertible debentures.

	March 31, 2016		December 31, 2015
	(unaudited)
Senior secured 2.25% convertible debentures, net of unamortized debt discount of $25,718 and $26,267, respectively; and deferred financing costs of $554 and $522, respectively	$	5,841	$	5,489
Senior secured 4% convertible debentures, net of unamortized debt discount of $3,816 and $3,922, respectively; and deferred financing costs of $432 and $443, respectively		4,467		4,350
Total convertible debt	$	10,308	$	9,839

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Long-term Debt (Tables)

3 Months Ended

Mar. 31, 2016

Long-term Debt [Abstract]

Key Assumptions Used to Value the Warrants under Long-term Debt

The key assumptions used to value the warrants are as follows:

	December 31, 2015			January 29, 2016
Number of shares underlying warrants		650,442			99,057
Exercise price	$	1.13		$	1.06
Stock price on date of issuance	$	1.11		$	1.05
Fair value of warrants	$	321		$	47
Volatility		50.0	%		50.0	%
Risk-free interest rate		1.8	%		1.8	%
Expected dividend yield		0	%		0	%
Expected warrant life	5 years			5 years

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Warrants (Tables)

3 Months Ended

Mar. 31, 2016

Warrants [Abstract]

Warrants Fair Value Assumptions

A summary of quantitative information with respect to the valuation methodology and significant unobservable inputs used for the Company's warrant liabilities that are categorized within Level 3 of the fair value hierarchy as of March 31, 2016 and December 31, 2015 is as follows:

	March 31, 2016			December 31, 2015
Number of shares underlying the warrants		14,099,267			14,099,267
Stock price	$	0.95		$	1.11
Volatility		50.00	%		35.90 – 50.00	%
Risk-free interest rate		0.26% – 1.07	%		0.02% - 1.63	%
Expected dividend yield		0	%		0	%
Expected warrant life	0.32 – 4.23 years			0.07 – 4.48 years

Schedule of Derivative Warrant Liabilities

Fair Value Measurements Using Significant Unobservable Inputs (Level 3):

Issuance Date	December 31, 2015		Decrease in Fair Value			March 31, 2016
10/31/2013	$	379	$	(99	)	$	280
2/5/2014		715		(187	)		528
7/24/2014 Series A (1)		2,415		(621	)		1,794
7/24/2014 Series B (1)		1,726		(638	)		1,088
6/22/2015		1,807		(440	)		1,367
Total	$	7,042	$	(1,985	)	$	5,057

(1)  These warrants were modified on September 30, 2015 and as a result of the modification these warrants met the definition of a derivative and were reclassified to a warrant liability.

Issuance Date	December 31, 2014		Increase in Fair Value		March 31, 2015
10/31/2013	$	233	$	377	$	610
2/5/2014		266		957		1,223
Total	$	499	$	1,334	$	1,833

Schedule of Warrants Subject to Remeasurement

Number of Warrants Subject to Remeasurement:

Issuance Date	December 31, 2015	Additions	Reductions	March 31, 2016
10/31/2013	685,715	-	-	685,715
2/5/2014	1,329,731	-	-	1,329,731
7/24/2014 Series A	4,288,500	-	-	4,288,500
7/24/2014 Series B	4,795,321	-	-	4,795,321
6/22/2015	3,000,000	-	-	3,000,000
Total	14,099,267	-	-	14,099,267

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Stockholders' Equity (Tables)

3 Months Ended

Mar. 31, 2016

Stockholders' Equity [Abstract]

Summary of Outstanding Common Stock Warrants

Outstanding common stock warrants consist at March 31, 2016 of the following:

Issue Date	Expiration Date	Total Warrants		Exercise Price
4/26/2013	4/26/2018		69,321	$	11.18
10/31/2013	4/30/2019		685,715	$	0.75
2/5/2014	2/5/2019		1,329,731	$	0.75
7/24/2014	7/24/2019		6,198,832	$	0.75 - $ 2.45
7/24/2014	7/24/2016		4,795,321	$	0.75
6/22/2015	6/22/2020		3,000,000	$	0.75
12/30/2015	12/30/2020		650,442	$	1.13
			16,729,362

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Business Segments and Geographic Data (Tables)

3 Months Ended

Mar. 31, 2016

Business Segments and Geographic Data [Abstract]

Schedule of Segment Reporting Information by Segment

The following tables reflect results of operations from our business segments for the periods indicated below:

Three Months Ended March 31, 2016 (unaudited)

	Dermatology Recurring Procedures			Dermatology Procedures Equipment			Dermatology Imaging			TOTAL
Revenues	$	5,528		$	1,990		$	102		$	7,620
Costs of revenues		2,304			951			167			3,422
Gross profit		3,224			1,039			( 65	)		4,198
Gross profit %		58.3	%		52.2	%		(63.7	%)		55.1	%
Allocated operating expenses:
Engineering and product development		311			62			152			525
Selling and marketing expenses		3,510			108			92			3,710
Unallocated operating expenses		-			-			-			2,101
		3,821			170			244			6,336
Income (loss) from operations		(597	)		869			(309	)		(2,138	)
Interest expense, net		-			-			-			(1,218	)
Change in fair value of warrant liability		-			-			-			1,985
Other income (expense), net		-			-			-			-
Income (loss) before income taxes	$	(597	)	$	869		$	(309	)	$	(1,371	)

Three Months Ended March 31, 2015 (unaudited)

	Dermatology Recurring Procedures			Dermatology Procedures Equipment			Dermatology Imaging			TOTAL
Revenues	$	-		$	-		$	81		$	81
Costs of revenues		-			-			711			711
Gross profit		-			-			(630	)		(630	)
Gross profit %		0.0	%		0.0	%		(777.8	%)		(777.8	%)
Allocated operating expenses:
Engineering and product development		-			-			239			239
Selling and marketing expenses		-			-			1,027			1,027
Unallocated operating expenses		-			-			-			1,736
		-			-			1,266			3,002
Loss from operations		-			-			(1,896	)		(3,632	)
Interest expense, net		-			-						(2,324	)
Change in fair value of warrant liability		-			-			-			(1,334	)
Other income (expense), net		-			-			-			18
Net loss	$	-		$	-		$	(1,896	)	$	(7,272	)

Schedule of Net Revenues by Geographic Areas

For the three months ended March 31, 2016 and 2015 there were no material net revenues attributable to any individual foreign country. Net revenues by geographic area were, as follows:

	Three Months Ended March 31,
	2016		2015
Domestic	$	5,622	$	38
Foreign		1,998		43
	$	7,620	$	81

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The Company (Details) $ in Thousands		3 Months Ended
	Jun. 22, 2015 USD ($)	Mar. 31, 2016 USD ($) Systems shares	Mar. 31, 2015 USD ($) shares	Dec. 31, 2015 USD ($)
Liquidity [Abstract]
Accumulated deficit		$ (208,677)		$ (207,240)
Fair Value Assets And Liabilities, Measured On Recurring And Nonrecurring Basis [Line Items]
Fair value of debt		18,251		15,958
Product Warranty Accrual [Roll Forward]
Accrual at beginning of year		226
Additions charged to warranty expense		72
Expiring warranties/claimed satisfied		(119)
Total		179
Less: current portion		(155)		(168)
Accrued warranty, non-current portion		24
Earnings Per Share [Abstract]
Net loss		(1,437)
Change in fair value of warrant liability		(1,985)	$ 1,334
Diluted earnings		$ (3,422)
Weighted average number of common and common equivalent shares outstanding:
Basic number of common shares outstanding (in shares) | shares		10,339,657	6,471,906
Dilutive effect of warrants (in shares) | shares		2,968,266
Diluted number of common and common stock equivalent shares outstanding (in shares) | shares		13,307,923	6,471,906
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potential common stock equivalents (in shares) | shares		68,149,706	22,708,493
Minimum [Member]
Product Warranty Liability [Line Items]
Standard warranty period		1 year
Maximum [Member]
Product Warranty Liability [Line Items]
Standard warranty period		2 years
Fair Value, Measurements, Recurring [Member]
Fair Value Assets And Liabilities, Measured On Recurring And Nonrecurring Basis [Line Items]
Warrant liability (Note 10)		$ 5,057		7,042
Fair Value, Measurements, Recurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value Assets And Liabilities, Measured On Recurring And Nonrecurring Basis [Line Items]
Warrant liability (Note 10)		0		0
Fair Value, Measurements, Recurring [Member] | Significant other Observable Inputs (Level 2) [Member]
Fair Value Assets And Liabilities, Measured On Recurring And Nonrecurring Basis [Line Items]
Warrant liability (Note 10)		0		0
Fair Value, Measurements, Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value Assets And Liabilities, Measured On Recurring And Nonrecurring Basis [Line Items]
Warrant liability (Note 10)		$ 5,057		$ 7,042
XTRAC and VTRAC [Member]
Business Acquisition [Line Items]
Acquisition price	$ 42,528
XTRAC [Member]
Business Acquisition [Line Items]
Number of systems placed in dermatologists offices | Systems		730
Common Stock Equivalents of Convertible Debentures [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potential common stock equivalents (in shares) | shares		46,215,126	4,328,466
Common Stock Purchase Warrants [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potential common stock equivalents (in shares) | shares		16,729,362	13,078,920
Common Stock Equivalents of Convertible Preferred Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potential common stock equivalents (in shares) | shares		2,535,866	4,007,406
Common Stock Options [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potential common stock equivalents (in shares) | shares		2,669,352	1,293,701

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Acquisition (Details) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended
	Jun. 22, 2015	Mar. 31, 2016	Mar. 31, 2015	Dec. 31, 2015
Aggregate Fair Value of Assets Acquired and the Liabilities Assumed [Abstract]
Goodwill		$ 8,928		$ 8,928
Unaudited Pro-forma Results [Abstract]
Net revenues			$ 7,557
Net loss			$ (10,157)
Net loss per basic and diluted share: (in dollars per share)			$ (1.57)
Shares used in calculating net loss per basic and diluted share: (in shares)			6,471,906
Core Technology [Member]
Business Acquisition [Line Items]
Estimated useful life		10 years
Product Technology [Member]
Business Acquisition [Line Items]
Estimated useful life		5 years
Trade Names [Member]
Business Acquisition [Line Items]
Estimated useful life		10 years
Customer Relationships [Member]
Business Acquisition [Line Items]
Estimated useful life		10 years
XTRAC and VTRAC [Member]
Business Acquisition [Line Items]
Acquisition price	$ 42,528
Aggregate Fair Value of Assets Acquired and the Liabilities Assumed [Abstract]
Current assets	7,233
Property, plant and equipment	14,340
Identifiable intangible assets	16,100
Other assets	45
Total assets assumed	37,718
Current liabilities	(3,945)
Note payable	(57)
Other long term liabilities	(116)
Total liabilities assumed	(4,118)
Net assets acquired	$ 33,600
Goodwill		$ 8,928

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Inventories, net (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Mar. 31, 2015
Schedule of inventory [Abstract]
Raw materials and work in progress	$ 3,792	$ 3,706
Finished goods	360	422
Total inventories	$ 4,152	$ 4,128

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Property and Equipment, net (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Dec. 31, 2015
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 20,195		$ 20,012
Accumulated depreciation and amortization	(7,377)		(6,161)
Property and equipment, net	12,818		13,851
Depreciation and related amortization expense	1,230	$ 41
Lasers Placed-In-Service [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	15,966		15,782
Equipment, Computer Hardware and Software [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	1,244		1,219
Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	2,054		2,080
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 931		$ 931

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Patents and Licensed Technologies, net (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Dec. 31, 2015
Finite-Lived Intangible Assets [Line Items]
Patents and licensed technologies, net	$ 7,003		$ 7,247
Estimated amortization expense [Abstract]
Patents and licensed technologies, net	7,003		7,247
Core Technology [Member]
Finite-Lived Intangible Assets [Line Items]
Patents and licensed technologies, gross	5,974		5,974
Product Technology [Member]
Finite-Lived Intangible Assets [Line Items]
Patents and licensed technologies, gross	2,000		2,000
Patents and Licensed Technologies [Member]
Finite-Lived Intangible Assets [Line Items]
Patents and licensed technologies, gross	7,974		7,974
Accumulated amortization	(971)		(727)
Patents and licensed technologies, net	7,003		7,247
Amortization expense	244	$ 1
Estimated amortization expense [Abstract]
Remaining 2016	731
2017	975
2018	975
2019	975
2020	775
Thereafter	2,572
Patents and licensed technologies, net	$ 7,003		$ 7,247

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Other Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Dec. 31, 2015
Finite-Lived Intangible Assets [Line Items]
Other intangible assets, net	$ 7,770		$ 7,980
Estimated amortization expense [Abstract]
Other intangible assets, net	7,770		7,980
Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Other intangible assets, gross	6,900		6,900
Tradenames [Member]
Finite-Lived Intangible Assets [Line Items]
Other intangible assets, gross	1,500		1,500
Customer Relationships and Tradenames [Member]
Finite-Lived Intangible Assets [Line Items]
Other intangible assets, gross	8,400		8,400
Accumulated amortization	(630)		(420)
Other intangible assets, net	7,770		7,980
Amortization expense of other intangible assets	210	$ 0
Estimated amortization expense [Abstract]
Remaining 2016	630
2017	840
2018	840
2019	840
2020	840
Thereafter	3,780
Other intangible assets, net	$ 7,770		$ 7,980

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Other Accrued Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Other Accrued Liabilities [Abstract]
Accrued warranty, current, see Note 1	$ 155	$ 168
Accrued compensation, including commissions and vacation	921	1,336
Accrued sales and other taxes	375	349
Accrued professional fees	175	265
Other accrued liabilities	13	43
Total other accrued liabilities	$ 1,639	$ 2,161

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Convertible Debentures (Details) $ / shares in Units, $ in Thousands		3 Months Ended
	Jul. 21, 2014 USD ($) shares $ / shares	Mar. 31, 2016 USD ($) shares $ / shares	Jan. 29, 2016 USD ($) $ / shares	Dec. 31, 2015 USD ($) $ / shares
Debt Instrument [Line Items]
Total convertible debt		$ 10,308		$ 9,839
Exercise price of warrants (in dollars per share) | $ / shares			$ 1.06	$ 1.13
Common stock, par value (in dollars per share) | $ / shares		$ 0.001		$ 0.001
Fair value of warrants			$ 47	$ 321
Debentures outstanding amount		$ 40,828
Maximum [Member]
Debt Instrument [Line Items]
Discounted cash flow change		10.00%
Series A Warrants [Member]
Debt Instrument [Line Items]
Number of warrants to purchase common stock (in shares) | shares	6,198,832
Exercise price of warrants (in dollars per share) | $ / shares	$ 2.45
Warrants expiration date		Jul. 01, 2019
Common stock, par value (in dollars per share) | $ / shares	$ 0.001
Senior Secured 2.25% Convertible Debentures [Member]
Debt Instrument [Line Items]
Total convertible debt		$ 5,841		5,489
Debt instrument, unamortized discount		25,718		26,267
Deferred financing costs		$ 554		522
Senior secured convertible debentures interest rate		2.25%
Aggregate principal amount of debt		$ 32,500
Number of shares debt convertible (in shares) | shares		43,333,334
Senior secured convertible debentures conversion price (in dollars per share) | $ / shares		$ 0.75
Debt instrument, maturity period		5 years
Debt instrument, convertible, beneficial conversion feature		$ 27,300
Maturity date		Jun. 30, 2021
Senior Secured 2.25% Convertible Debentures [Member] | Maximum [Member]
Debt Instrument [Line Items]
Senior secured convertible debentures conversion price (in dollars per share) | $ / shares		$ 1.38
Senior Secured 2.25% Convertible Debentures [Member] | Minimum [Member]
Debt Instrument [Line Items]
Senior secured convertible debentures conversion price (in dollars per share) | $ / shares		$ 0.75
Senior Secured 4% Convertible Debentures [Member]
Debt Instrument [Line Items]
Total convertible debt		$ 4,467		4,350
Debt instrument, unamortized discount	$ 10,353	3,816		3,922
Deferred financing costs		$ 432		$ 443
Senior secured convertible debentures interest rate		4.00%
Aggregate principal amount of debt	$ 15,000
Number of shares debt convertible (in shares) | shares	5,847,955
Senior secured convertible debentures conversion price (in dollars per share) | $ / shares	$ 2.565
Debt instrument, maturity period		5 years
Debt instrument, convertible, beneficial conversion feature	$ 4,565
Maturity date		Jun. 30, 2021
Fair value of warrants	5,296
Fair value of warrants adjustment (income) expense	491
Debt instrument initial carrying amount	$ 4,647
June 2015 Note [Member]
Debt Instrument [Line Items]
Debentures converted in shares of common stock, value		$ 165
Debt conversion, converted instrument, issued (in shares) | shares		220,000
Interest expense on debt		$ 136

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Long-term Debt (Details) $ / shares in Units, $ in Thousands			3 Months Ended	12 Months Ended
	Jan. 29, 2016 USD ($) $ / shares shares	Dec. 30, 2015 USD ($) Tranche	Mar. 31, 2016 USD ($)	Dec. 31, 2015 USD ($) $ / shares shares
Line of Credit Facility [Line Items]
Outstanding long term debt			$ 11,344	$ 9,851
Assumptions used to value the warrants [Abstract]
Number of shares underlying warrants (in shares) | shares	99,057			650,442
Exercise price (in dollars per share) | $ / shares	$ 1.06			$ 1.13
Stock price on date of issuance (in dollars per share) | $ / shares	$ 1.05			$ 1.11
Fair value of warrants	$ 47			$ 321
Volatility	50.00%			50.00%
Risk-free interest rate	1.80%			1.80%
Expected dividend yield	0.00%			0.00%
Expected warrant life	5 years			5 years
Term-Note Credit Facility [Member] | LIBOR [Member]
Line of Credit Facility [Line Items]
Interest rate on credit facility			8.25%
MidCap Financial Trust [Member]
Line of Credit Facility [Line Items]
Repayment term			60 months
MidCap Financial Trust [Member] | Term-Note Credit Facility [Member]
Line of Credit Facility [Line Items]
Maximum borrowing capacity under the agreement		$ 12,000
Number of tranches | Tranche		2
Outstanding long term debt			$ 11,344
MidCap Financial Trust [Member] | Term-Note Credit Facility [Member] | LIBOR [Member]
Line of Credit Facility [Line Items]
LIBOR floor Rate			0.50%
MidCap Financial Trust [Member] | Term-Note Credit Facility [Member] | First Tranche [Member]
Line of Credit Facility [Line Items]
Proceeds from credit facility		$ 10,500
Repayment of debt		$ (10,000)
MidCap Financial Trust [Member] | Term-Note Credit Facility [Member] | Second Tranche [Member]
Line of Credit Facility [Line Items]
Proceeds from credit facility	$ 1,500

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Warrants (Details) $ / shares in Units, $ in Thousands			3 Months Ended		12 Months Ended
		Jan. 29, 2016 $ / shares shares	Mar. 31, 2016 USD ($) Warrant $ / shares shares	Mar. 31, 2015 USD ($)	Dec. 31, 2015 USD ($) Warrant $ / shares shares
Fair Value Assumptions [Abstract]
Number of shares underlying the warrants | shares		99,057			650,442
Stock price (in dollars per share) | $ / shares		$ 1.05			$ 1.11
Volatility		50.00%			50.00%
Risk-free interest rate		1.80%			1.80%
Expected dividend yield		0.00%			0.00%
Expected warrant life		5 years			5 years
Warrant [Member]
Fair Value Assumptions [Abstract]
Number of shares underlying the warrants | shares			14,099,267		14,099,267
Stock price (in dollars per share) | $ / shares			$ 0.95		$ 1.11
Volatility			50.00%
Expected dividend yield			0.00%		0.00%
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Purchases, (Sales), Issuances, (Settlements) [Abstract]
Number of warrants, beginning of period			14,099,267
Additions			0
Reductions			0
Balance as end of period			14,099,267		14,099,267
Warrant [Member] | Minimum [Member]
Fair Value Assumptions [Abstract]
Volatility					35.90%
Risk-free interest rate			0.26%		0.02%
Expected warrant life			3 months 25 days		25 days
Warrant [Member] | Maximum [Member]
Fair Value Assumptions [Abstract]
Volatility					50.00%
Risk-free interest rate			1.07%		1.63%
Expected warrant life			4 years 2 months 23 days		4 years 5 months 23 days
Warrant [Member] | 10/31/2013 [Member]
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Purchases, (Sales), Issuances, (Settlements) [Abstract]
Number of warrants, beginning of period			685,715
Additions			0
Reductions			0
Balance as end of period			685,715		685,715
Warrant [Member] | 2/5/2014 [Member]
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Purchases, (Sales), Issuances, (Settlements) [Abstract]
Number of warrants, beginning of period			1,329,731
Additions			0
Reductions			0
Balance as end of period			1,329,731		1,329,731
Warrant [Member] | 7/24/2014 Series A [Member]
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Purchases, (Sales), Issuances, (Settlements) [Abstract]
Number of warrants, beginning of period			4,288,500
Additions			0
Reductions			0
Balance as end of period			4,288,500		4,288,500
Warrant [Member] | 7/24/2014 Series B [Member]
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Purchases, (Sales), Issuances, (Settlements) [Abstract]
Number of warrants, beginning of period			4,795,321
Additions			0
Reductions			0
Balance as end of period			4,795,321		4,795,321
Warrant [Member] | 6/22/2015 [Member]
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Purchases, (Sales), Issuances, (Settlements) [Abstract]
Number of warrants, beginning of period			3,000,000
Additions			0
Reductions			0
Balance as end of period			3,000,000		3,000,000
Warrant [Member] | Level 3 [Member]
Fair Value Measurements Using Significant Unobservable Inputs (Level 3) [Abstract]
Balance as beginning of period | $			$ 7,042	$ 499	$ 499
Increase (decrease) in fair value | $			(1,985)	1,334
Balance as end of period | $			5,057	1,833	7,042
Warrant [Member] | Level 3 [Member] | 10/31/2013 [Member]
Fair Value Measurements Using Significant Unobservable Inputs (Level 3) [Abstract]
Balance as beginning of period | $			379	233	233
Increase (decrease) in fair value | $			(99)	377
Balance as end of period | $			280	610	379
Warrant [Member] | Level 3 [Member] | 2/5/2014 [Member]
Fair Value Measurements Using Significant Unobservable Inputs (Level 3) [Abstract]
Balance as beginning of period | $			715	266	266
Increase (decrease) in fair value | $			(187)	957
Balance as end of period | $			528	$ 1,223	715
Warrant [Member] | Level 3 [Member] | 7/24/2014 Series A [Member]
Fair Value Measurements Using Significant Unobservable Inputs (Level 3) [Abstract]
Balance as beginning of period | $	[1]		2,415
Increase (decrease) in fair value | $	[1]		(621)
Balance as end of period | $	[1]		1,794		2,415
Warrant [Member] | Level 3 [Member] | 7/24/2014 Series B [Member]
Fair Value Measurements Using Significant Unobservable Inputs (Level 3) [Abstract]
Balance as beginning of period | $	[1]		1,726
Increase (decrease) in fair value | $	[1]		(638)
Balance as end of period | $	[1]		1,088		1,726
Warrant [Member] | Level 3 [Member] | 6/22/2015 [Member]
Fair Value Measurements Using Significant Unobservable Inputs (Level 3) [Abstract]
Balance as beginning of period | $			1,807
Increase (decrease) in fair value | $			(440)
Balance as end of period | $			$ 1,367		$ 1,807

[1] These warrants were modified on September 30, 2015 and as a result of the modification these warrants met the definition of a derivative and were reclassified to a warrant liability.

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Stockholders' Equity (Details) - $ / shares	3 Months Ended
	Mar. 31, 2016	Jan. 29, 2016	Dec. 31, 2015	Jul. 21, 2014
Class of Warrant or Right [Line Items]
Total Warrants (in shares)	16,729,362
Exercise price (in dollars per share)		$ 1.06	$ 1.13
Series A Warrants [Member]
Class of Warrant or Right [Line Items]
Exercise price (in dollars per share)				$ 2.45
Common Stock Warrant One [Member]
Class of Warrant or Right [Line Items]
Issue Date	Apr. 26, 2013
Expiration Date	Apr. 26, 2018
Total Warrants (in shares)	69,321
Exercise price (in dollars per share)	$ 11.18
Common Stock Warrant Two [Member]
Class of Warrant or Right [Line Items]
Issue Date	Oct. 31, 2013
Expiration Date	Apr. 30, 2019
Total Warrants (in shares)	685,715
Exercise price (in dollars per share)	$ 0.75
Common Stock Warrant Three [Member]
Class of Warrant or Right [Line Items]
Issue Date	Feb. 05, 2014
Expiration Date	Feb. 05, 2019
Total Warrants (in shares)	1,329,731
Exercise price (in dollars per share)	$ 0.75
Common Stock Warrant Four [Member]
Class of Warrant or Right [Line Items]
Issue Date	Jul. 24, 2014
Expiration Date	Jul. 24, 2019
Total Warrants (in shares)	6,198,832
Common Stock Warrant Four [Member] | Minimum [Member]
Class of Warrant or Right [Line Items]
Exercise price (in dollars per share)	$ 0.75
Common Stock Warrant Four [Member] | Maximum [Member]
Class of Warrant or Right [Line Items]
Exercise price (in dollars per share)	$ 2.45
Common Stock Warrant Five [Member]
Class of Warrant or Right [Line Items]
Issue Date	Jul. 24, 2014
Expiration Date	Jul. 24, 2016
Total Warrants (in shares)	4,795,321
Exercise price (in dollars per share)	$ 0.75
Common Stock Warrant Six [Member]
Class of Warrant or Right [Line Items]
Issue Date	Jun. 22, 2015
Expiration Date	Jun. 22, 2020
Total Warrants (in shares)	3,000,000
Exercise price (in dollars per share)	$ 0.75
Common Stock Warrant Seven [Member]
Class of Warrant or Right [Line Items]
Issue Date	Dec. 30, 2015
Expiration Date	Dec. 30, 2020
Total Warrants (in shares)	650,442
Exercise price (in dollars per share)	$ 1.13

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Stock-based compensation (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Number of Stock Options [Roll Forward]
Stock-based compensation expense	$ 170	$ 230
Unrecognized compensation expense	$ 488
Unrecognized compensation expense, weighted average period	1 year 1 month 24 days
Stock Options [Member]
Number of Stock Options [Roll Forward]
Stock based compensation options outstanding (in shares)	2,614,600
Stock based compensation weighted average exercise price (in dollars per share)	$ 1.51
Stock based compensation vested (in shares)	1,664,600
Stock based compensation exercisable (in shares)	1,664,600

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Income taxes (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Income taxes [Abstract]
Income tax expense change in deferred tax liability related to goodwill	$ 66	$ 0

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Business Segments and Geographic Data (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2016 USD ($) Segment	Mar. 31, 2015 USD ($)
Segment Reporting Information [Line Items]
Number of operating segments | Segment	3
Number of dermatology procedures segments | Segment	2
Results of Operations from Business Segments [Abstract]
Revenues	$ 7,620	$ 81
Cost of revenues	3,422	711
Gross profit	$ 4,198	$ (630)
Gross profit %	55.10%	(777.80%)
Allocated operating expenses [Abstract]
Engineering and product development	$ 525	$ 239
Selling and marketing expenses	3,710	1,027
Unallocated operating expenses	2,101	1,736
Total operating expenses	6,336	3,002
Income (loss) from operations	(2,138)	(3,632)
Interest expense, net	(1,218)	(2,324)
Change in fair value of warrant liability	1,985	(1,334)
Other income (expense), net	0	18
Income (loss) before income taxes	(1,371)	(7,272)
Dermatology Recurring Procedures [Member]
Results of Operations from Business Segments [Abstract]
Revenues	0
Operating Segments [Member] | Dermatology Recurring Procedures [Member]
Results of Operations from Business Segments [Abstract]
Revenues	5,528	0
Cost of revenues	2,304	0
Gross profit	$ 3,224	$ 0
Gross profit %	58.30%	0.00%
Allocated operating expenses [Abstract]
Engineering and product development	$ 311	$ 0
Selling and marketing expenses	3,510	0
Unallocated operating expenses	0	0
Total operating expenses	3,821	0
Income (loss) from operations	(597)	0
Interest expense, net	0	0
Change in fair value of warrant liability	0	0
Other income (expense), net	0	0
Income (loss) before income taxes	(597)	0
Operating Segments [Member] | Dermatology Procedures Equipment [Member]
Results of Operations from Business Segments [Abstract]
Revenues	1,990	0
Cost of revenues	951	0
Gross profit	$ 1,039	$ 0
Gross profit %	52.20%	0.00%
Allocated operating expenses [Abstract]
Engineering and product development	$ 62	$ 0
Selling and marketing expenses	108	0
Unallocated operating expenses	0	0
Total operating expenses	170	0
Income (loss) from operations	869	0
Interest expense, net	0	0
Change in fair value of warrant liability	0	0
Other income (expense), net	0	0
Income (loss) before income taxes	869	0
Operating Segments [Member] | Dermatology Imaging [Member]
Results of Operations from Business Segments [Abstract]
Revenues	102	81
Cost of revenues	167	711
Gross profit	$ (65)	$ (630)
Gross profit %	(63.70%)	(777.80%)
Allocated operating expenses [Abstract]
Engineering and product development	$ 152	$ 239
Selling and marketing expenses	92	1,027
Unallocated operating expenses	0	0
Total operating expenses	244	1,266
Income (loss) from operations	(309)	(1,896)
Interest expense, net	0
Change in fair value of warrant liability	0	0
Other income (expense), net	0	0
Income (loss) before income taxes	(309)	(1,896)
Reportable Geographical Components [Member] | Domestic [Member]
Results of Operations from Business Segments [Abstract]
Revenues	5,622	38
Reportable Geographical Components [Member] | Foreign [Member]
Results of Operations from Business Segments [Abstract]
Revenues	$ 1,998	$ 43

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Significant Customer Concentration (Details) - Customer Concentration Risk [Member] $ in Thousands	3 Months Ended
	Mar. 31, 2016 USD ($)
Product Information [Line Items]
Revenues	$ 1,686
Accounts receivable	$ 443
Revenue [Member]
Product Information [Line Items]
Concentration risk percentage	22.10%
Accounts Receivable [Member]
Product Information [Line Items]
Concentration risk percentage	13.60%

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Subsequent Events (Details) - Subsequent Event [Member] $ in Thousands	Apr. 05, 2016 USD ($) shares
Subsequent Events [Line Items]
Debentures converted in shares of common stock, value | $	$ 63
Debentures converted in shares of common stock (in shares) | shares	84,411