Business Segments and Geographic Data

9 Months Ended

Sep. 30, 2011

Business Segments and Geographic Data [Abstract]

Business Segments and Geographic Data

Note 14

Business Segments and Geographic Data:

Effective January 1, 2010, the Company reorganized its business into four operating units to better align its organization based upon the Company's management structure, products and services offered, markets served and types of customers. The Physician Domestic segment derives its primary revenues from XTRAC procedures performed by dermatologists, the sales of XTRAC laser sales, and the sales of skincare and LED products in the United States. The Physician International segment, in comparison, generates revenues from the sale of equipment, skincare and LED products to dermatologists outside the United States through a network of distributors. The Other Channels segment derives revenues by selling skincare and LED products to indoor tanning and spa markets and to on-line and television retail consumer markets for home use on both a domestic and an international basis. The Surgical Products segment generates revenues by selling laser products and disposables to hospitals and surgery centers on both a domestic and an international basis. Management reviews financial information presented on an operating segment basis for the purposes of making certain operating decisions and assessing financial performance.

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. Unallocated assets include cash, prepaid expenses and deposits. Goodwill of $12,793,455, $4,037,934 and $2,737,811 has been allocated to the Physician Domestic, Physician International and Other Channels segments, respectively, based upon the fair value of the reporting segments as of September 30, 2011 and December 31, 2010. (See Note 5, Goodwill and Other Intangible Assets).

The Company revised its results of operations for its business segments for the three and nine months ended September 30, 2010 to reflect a reclass between the Physician International and Surgical Products costs of revenues. The correction had no effect on the Company's previously reported net loss, consolidated balance sheet, or net cash flows, and is not considered material to any previously reported consolidated financial statements.

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

Three Months Ended September 30, 2011 (unaudited)

	PHYSICIAN DOMESTIC			PHYSICIAN INTERN'L			OTHER CHANNELS			SURGICAL PRODUCTS			TOTAL
Revenues	$	5,354,292		$	1,482,133		$	634,905		$	660,112		$	8,131,442
Costs of revenues		2,470,848			886,085			355,391			339,097			4,051,421
Gross profit		2,883,444			596,048			279,514			321,015			4,080,021
Gross profit %		53.9	%		40.2	%		44.0	%		48.6	%		50.2	%
Allocated operating expenses:
Selling, general and administrative		2,709,562			101,677			184,495			16,028			3,011,762
Engineering and product development		201,944			104,680			42,501			61,551			410,676
Unallocated operating expenses		-			-			-			-			2,846,547
		2,911,506			206,357			226,996			77,579			6,268,985
Income (loss) from operations		(28,062	)		389,691			52,518			243,436			(2,188,964	)
Interest expense, net		-			-			-			-			(960,960	)
Change in fair value of warrant		-			-			-			-			(131,262	)
Net (loss) income	$	(28,062	)	$	389,691		$	52,518		$	243,436		$	(3,281,186	)

Three Months Ended September 30, 2010 (unaudited)

	PHYSICIAN DOMESTIC			PHYSICIAN INTERN'L			OTHER CHANNELS			SURGICAL PRODUCTS			TOTAL
Revenues	$	5,171,196		$	2,715,582		$	524,830		$	1,173,440		$	9,585,048
Costs of revenues		2,577,683			2,118,701			315,237			618,784			5,630,405
Gross profit		2,593,513			596,881			209,593			554,656			3,954,643
Gross profit %		50.1	%		22.0	%		40.0	%		47.3	%		41.3	%
Allocated operating expenses:
Selling, general and administrative		2,657,812			195,894			149,957			71,776			3,075,439
Engineering and product development		96,487			80,641			64,131			30,754			272,013
Unallocated operating expenses		-			-			-			-			1,543,739
		2,754,299			276,535			214,088			102,530			4,891,191
Income (loss) from operations		(160,786	)		320,346			(4,495	)		452,126			(936,548	)
Interest expense, net		-			-			-			-			(863,713	)
Change in fair value of warrants		-			-			-			-			(34,839	)
Net (loss) income	$	(160,786	)	$	320,346		$	(4,495	)	$	452,126		$	(1,835,100	)

Nine Months Ended September 30, 2011 (unaudited)

	PHYSICIANDOMESTIC			PHYSICIAN INTERN'L			OTHER CHANNELS			SURGICAL PRODUCTS			TOTAL
Revenues	$	15,642,260		$	5,030,490		$	1,900,628		$	2,186,342		$	24,759,720
Costs of revenues		7,383,398			3,091,002			1,022,040			1,249,688			12,746,128
Gross profit		8,258,862			1,939,488			878,588			936,654			12,013,592
Gross profit %		52.8	%		36.6	%		46.2	%		42.8	%		48.5	%
Allocated operating expenses:
Selling, general and administrative		8,525,727			364,177			641,274			65,129			9,596,307
Engineering and product development		652,161			343,379			133,009			181,780			1,310,329
Unallocated operating expenses		-			-			-			-			7,261,632
		9,177,888			707,556			774,283			246,909			18,168,268
Income (loss) from operations		(919,026	)		1,231,932			104,305			689,745			(6,154,676	)
Interest expense, net		-			-			-			-			(2,739,116	)
Change in fair value of warrant		-			-			-			-			(1,441,672	)
Net (loss) income	$	(919,026	)	$	1,231,932		$	104,305		$	689,745		$	(10,335,464	)

Nine Months Ended September 30, 2010 (unaudited)

	PHYSICIANDOMESTIC			PHYSICIAN INTERN'L			OTHER CHANNELS			SURGICAL PRODUCTS			TOTAL
Revenues	$	14,415,407		$	5,142,357		$	1,943,717		$	2,781,532		$	24,283,013
Costs of revenues		7,080,523			3,626,337			1,108,468			1,494,683			13,310,011
Gross profit		7,334,884			1,516,020			835,249			1,286,849			10,973,002
Gross profit %		50.9	%		29.5	%		43.0	%		46.3	%		45.2	%
Allocated operating expenses:
Selling, general and administrative		8,035,983			734,184			479,037			142,886			9,392,090
Engineering and product development		319,424			244,019			232,652			95,007			891,102
Unallocated operating expenses		-			-			-			-			5,065,773
		8,355,407			978,203			711,689			237,893			15,348,965
Income (loss) from operations		(1,020,523	)		537,817			123,560			1,048,956			(4,375,963	)
Interest expense, net		-			-			-			-			(2,402,557	)
Change in fair value of warrants		-			-			-			-			(132,795	)
Net (loss) income	$	(1,020,523	)	$	537,817		$	123,560		$	1,048,956		$	(6,911,315	)

	September 30, 2011		December 31, 2010
	(unaudited)
Assets:
Total assets for reportable segments	$	43,682,340	$	44,986,796
Other unallocated assets		3,346,164		4,508,922
Consolidated total	$	47,028,504	$	49,495,718

For the three and nine months ended September 30, 2011 and 2010 there were no material net revenues attributed to any individual foreign country. Net revenues by geographic area were, as follows:

	Three Months Ended September 30, (unaudited)				Nine Months Ended September 30, (unaudited)
	2011		2010		2011		2010
Domestic	$	6,517,701	$	6,869,853	$	19,155,485	$	19,143,687
Foreign		1,613,741		2,715,195		5,604,235		5,139,326
	$	8,131,442	$	9,585,048	$	24,759,720	$	24,283,013

The Company discusses segmental details in its Management Discussion and Analysis found elsewhere in this Quarterly Report on Form 10-Q.