10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

FORM 10 - Q

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

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2013

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 0-11365

PHOTOMEDEX, INC.

(Exact name of registrant as specified in its charter)

Nevada (State or other jurisdiction of incorporation or organization) 59-2058100 (I.R.S.  Employer Identification No.)

147 Keystone Drive, Montgomeryville, Pennsylvania 18936

(Address of principal executive offices, including zip code)

(215) 619-3600

(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 ý

Non-accelerated filer ¨                                                           Smaller reporting company ¨

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 9, 2013 was 21,047,280 shares.

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PHOTOMEDEX, INC.

INDEX TO FORM 10-Q

Part I. Financial Information:			PAGE
	ITEM 1.  Financial Statements:
	a.	Condensed Consolidated Balance Sheets as of March 31, 2013 (unaudited) and December 31, 2012	3
	b.	Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2013 and 2012 (unaudited)	4
	c.	Condensed Consolidated Statement of Changes in Equity for the three months ended March 31, 2013 (unaudited)	5
	d.	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2013 and 2012 (unaudited)	6
	e.	Notes to Condensed Consolidated Financial Statements (unaudited)	7
	ITEM 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations		19
	ITEM 3.  Quantitative and Qualitative Disclosure about Market Risk		29
	ITEM 4.  Controls and Procedures		29
Part II. Other Information:
	ITEM 1.  Legal Proceedings		31
	ITEM 1A.  Risk Factors		31
	ITEM 2.  Unregistered Sales of Equity Securities and Use of Proceeds		31
	ITEM 3.  Defaults Upon Senior Securities		31
	ITEM 4.  Mine Safety Disclosures		31
	ITEM 5.   Other Information		31
	ITEM 6.  Exhibits		32
		Signatures	36
		Certifications	E-31.1

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PART I – Financial Information

ITEM 1. Financial Statements

PHOTOMEDEX, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

	March 31, 2013			December 31, 2012
	(Unaudited)			(Restated)
ASSETS
Current assets:
Cash and cash equivalents	$	45,509		$	44,348
Short term bank deposit		18,000			18,000
Accounts receivable, net of allowance for doubtful accounts of $7,677 and $6,917, respectively		24,281			19,064
Inventories, net		21,483			22,467
Deferred tax asset		19,409			19,441
Prepaid expenses and other current assets		8,746			12,853
Total current assets		137,428			136,173
Property and equipment, net		7,744			6,759
Patents and licensed technologies, net		12,020			12,673
Other intangible assets		10,369			10,854
Goodwill		23,610			24,500
Deferred tax asset		19,541			20,186
Funds in respect of employee rights upon retirement and other assets		818			745
Total assets	$	211,530		$	211,890
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of notes payable	$	468		$	609
Current portion of long-term debt		-			10
Accounts payable		7,257			10,025
Accrued compensation and related expenses		2,496			2,494
Other accrued liabilities		16,679			22,099
Deferred revenues		6,648			5,259
Total current liabilities		33,548			40,496
Long-term liabilities:
Long-term note payable, net of current maturities		125			-
Deferred revenues		3,061			3,313
Other liabilities		121			166
Liability for employee rights upon retirement		646			588
Total liabilities		37,501			44,563
Stockholders’ equity:
Preferred Stock, $.01 par value, 5,000,000 shares authorized; 0 shares issued and outstanding at March 31, 2013 and December 31, 2012		-			-
Common stock, $.01 par value, 50,000,000 shares authorized; 21,047,280 and 21,043,947 shares issued and outstanding at March 31, 2013 and December 31, 2012, respectively		210			210
Additional paid-in capital		132,257			130,954
Retained earnings		42,514			35,302
Accumulated other comprehensive (loss) income		(952	)		861
Total stockholders’ equity		174,029			167,327
Total liabilities and stockholders’ equity	$	211,530		$	211,890

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

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PHOTOMEDEX, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands, except share and per share amounts)

(Unaudited)

	For the Three Months Ended March 31,
	2013			2012
Revenues	$	57,216		$	50,273
Cost of revenues		11,866			11,234
Gross profit		45,350			39,039
Operating expenses:
Engineering and product development		773			758
Selling and marketing		29,326			25,835
General and administrative		5,659			7,119
		35,758			33,712
Operating profit		9,592			5,327
Other income (loss):
Interest and  other financing income (expense), net		131			(230	)
Income before income tax expense		9,723			5,097
Income tax expense		(2,511	)		(240	)
Net income	$	7,212		$	4,857
Net income per share:
Basic	$	0.35		$	0.26
Diluted	$	0.34		$	0.26
Shares used in computing net income per share:
Basic		20,678,023			18,339,977
Diluted		21,147,583			18,876,163
Other comprehensive loss:
Foreign currency translation adjustments		(1,813	)		(5	)
Comprehensive income	$	5,399		$	4,852

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

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PHOTOMEDEX, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE THREE MONTHS ENDED MARCH 31, 2013

(In thousands, except share and per share amounts)

(Unaudited)

	Common Stock				Additional Paid-In		Retained		Accumulated Other Comprehensive
	Shares		Amount		Capital		Earnings		Income (loss)			Total
BALANCE, JANUARY 1, 2013		21,043,947	$	210	$	130,954	$	35,302	$	861		$	167,327
Stock-based compensation related to stock options and restricted stock		-		-		1,197		-		-			1,197
Stock options issued to consultants for services		-		-		93		-		-			93
Options exercised		3,333		-		13		-		-			13
Other comprehensive loss		-		-		-		-		(1,813	)		(1,813	)
Net income for the three months ended March 31, 2013				-		-		7,212		-			7,212
BALANCE, MARCH 31, 2013		21,047,280	$	210	$	132,257	$	42,514	$	(952	)	$	174,029

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

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PHOTOMEDEX, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, except share and per share amounts)

(Unaudited)

	For the Three Months Ended March 31,
	2013			2012
Cash Flows From Operating Activities:
Net income	$	7,212		$	4,857
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		1,443			1,332
Provision for doubtful accounts		1,046			714
Deferred income taxes		523			2,027
Stock-based compensation		1,290			1,753
Changes in operating assets and liabilities:
Accounts receivable		(6,403	)		(7,101	)
Inventories		794			470
Prepaid expenses and other assets		4,013			(1,967	)
Accounts payable		(2,707	)		707
Accrued compensation and related expenses		30			(1,077	)
Other accrued liabilities		(5,372	)		4,894
Other liabilities		58			70
Deferred revenues		1,137			1,469
Net cash provided by operating activities		3,064			8,148
Cash Flows From Investing Activities:
Purchases of property and equipment		(211	)		(96	)
Lasers placed in service		(1,220	)		(366	)
Increase in funds – employees retirement rights		(58	)		(70	)
Net cash used in investing activities		(1,489	)		(532	)
Cash Flows From Financing Activities:
Payments on notes payable		(203	)		(212	)
Repayments of long term debt		(10	)		(525	)
Issuance of warrants		-			98
Proceeds from option exercises		13			27
Net cash used in financing activities		(200	)		(612	)
Effect of exchange rate changes on cash		(214	)		(5	)
Net increase in cash and cash equivalents		1,161			6,999
Cash and cash equivalents, beginning of period		44,348			16,549
Cash and cash equivalents, end of period	$	45,509		$	23,548
Supplemental information:
Cash paid for income taxes	$	3,941		$	56
Cash paid for interest	$	7		$	59

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

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PHOTOMEDEX, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts)

Note 1

The Company:

Background

PhotoMedex, Inc. (and its subsidiaries) (the “Company”) is a Global Skin Health company providing integrated disease management and aesthetic solutions to dermatologists, professional aestheticians and consumers. The Company provides proprietary products and services that address skin diseases and conditions including psoriasis, vitiligo, acne, actinic keratosis (a precursor to certain types of skin cancer) and photo damage.

On December 13, 2011, the Company closed the reverse merger with Radiancy, Inc. Immediately following the reverse merger, the pre-reverse merger shareholders of PhotoMedex, Inc. (“Pre-merged PhotoMedex”) collectively owned approximately 20% of the Company’s outstanding common stock, and the former Radiancy, Inc. stockholders owned approximately 80% of the Company’s outstanding common stock.

The merger was accounted for as a reverse acquisition with Radiancy treated for accounting purposes as the acquirer. As such, the financial statements of Radiancy, Inc. are treated as the historical financial statements of the Company, with the results of Pre-merged PhotoMedex, Inc. being included from December 14, 2011 and thereafter.

As a result of the acquisition, the Company implemented a business plan focused on three key components – a highly trained direct sales force to target Physician and Professional Segments; a multi-tiered marketing platform targeting the global consumer; and a full product-life-cycle model representing the ability to develop and commercialize innovative products from concept through regulatory, physician acceptance, and ultimately marketed directly to the consumer as dictated by normal product-life-cycle evolution. The Company reorganized 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.

Basis of Presentation:

The accompanying condensed consolidated financial statements and related notes should be read in conjunction with our consolidated financial statements and related notes contained in our Annual Report on Form 10-K/A for the fiscal year ended December 31, 2012 (“fiscal 2012”). The unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) related to interim financial statements. As permitted under those rules, certain information and footnote disclosures normally required or included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) have been condensed or omitted. The financial information contained herein is unaudited; however, management believes all adjustments have been made that are considered necessary to present fairly the results of the Company’s financial position and operating results for the interim periods. All such adjustments are of a normal recurring nature.

The results for the three months ended March 31, 2013 are not necessarily indicative of the results to be expected for the year ending December 31, 2013 or for any other interim period or for any future period.

Principles of Consolidation

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

Revenue Recognition

The Company recognizes revenues from product sales when the following four criteria have been met: (i) the product has been delivered and the Company has no significant remaining obligations; (ii) persuasive evidence of an arrangement exists; (iii) the price to the buyer is fixed or determinable; and (iv) collection is reasonably assured. Revenues from product sales are recorded net of provisions for estimated chargebacks, rebates, expected returns and cash discounts.

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PHOTOMEDEX, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts)

The Company ships most of its products FOB shipping point, although from time to time certain customers, for example governmental customers, will insist upon FOB destination. Among the factors the Company takes into account when determining the proper time at which to recognize revenue are when title to the goods transfers and when the risk of loss transfers. Shipments to distributors or physicians that do not fully satisfy the collection criteria are recognized when invoiced amounts are fully paid or fully assured.

For revenue arrangements with multiple deliverables within a single, contractually binding arrangement (usually sales of products with separately priced extended warranty), each element of the contract is accounted for as a separate unit of accounting when it provides the customer value on a stand-alone basis and there is objective evidence of the fair value of the related unit.

With respect to sales arrangements under which the buyer has a right to return the related product, revenue is recognized only if all the following are met: the price is fixed or determinable at the date of sale; the buyer has paid, or is obligated to pay and the obligation is not contingent on resale of the product; the buyer's obligation would not be changed in the event of theft or physical destruction or damage of the product; the buyer has economic substance; the Company does not have significant obligations for future performance to directly bring about resale of the product by the buyer; and the amount of future returns can be reasonably estimated.

The Company provides a provision for product returns based on the experience with historical sales returns, in accordance with ASC Topic 605-15 with respect to sales of product when a right of return exists. Reported revenues are shown net of the returns provision. Such allowance for sales returns is included in Other Accrued Liabilities. (See Note 7).

Deferred revenue includes amounts received with respect to extended warranty maintenance, repairs and other billable services and amounts not yet recognized as revenues. Revenues with respect to such activities are deferred and recognized on a straight-line basis over the duration of the warranty period, the service period or when service is provided, as applicable to each service.

The Company has two distribution channels for its phototherapy treatment equipment. The Company either (i) sells its lasers through a distributor or directly to a physician or (ii) places its lasers in a physician’s office (at no charge to the physician) and generally charges the physician a fee for an agreed upon number of treatments. In some cases, the Company and the customer stipulate to a quarterly or other periodic target of procedures to be performed, and accordingly revenue is recognized ratably over the period.

When the Company places a laser in a physician’s office, it generally recognizes service revenue based on the number of patient treatments performed, or purchased under a periodic commitment, by the physician. Amounts collected with respect to treatments to be performed through laser-access codes that are sold to physicians free of a periodic commitment, but not yet used, are deferred and recognized as a liability until the physician performs the treatment. Unused treatments remain an obligation of the Company because the treatments can only be performed on Company-owned equipment. Once the treatments are delivered to a patient, this obligation has been satisfied.

The Company defers substantially all revenue from sales of treatment codes ordered by and delivered to its customers within the last two weeks of the period in determining the amount of procedures performed by its physician-customers. Management believes this approach closely approximates the actual amount of unused treatments that existed at the end of a period.

Functional Currency

The currency of the primary economic environment in which the operations of the Company and its subsidiaries are conducted is the US dollar ("$" or "dollars"), except Photo Therapeutics, Ltd. which is conducted in the Great Britain Pounds (GBP). Substantially all of the Group's revenues are derived in dollars or in other currencies linked to the dollar. Purchases of most materials and components are carried out in, or linked to the dollar. Thus, the functional (and reporting currency) of the Company and its subsidiaries (other than Photo Therapeutics, Ltd.) is the dollar.

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PHOTOMEDEX, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts)

Balances denominated in, or linked to, foreign currencies are stated on the basis of the exchange rates prevailing at the balance sheet date. For foreign currency transactions included in the statement of comprehensive income, the exchange rates applicable to the relevant transaction dates are used. Transaction gains or losses arising from changes in the exchange rates used in the translation of such balances are carried to financing income or expenses.

Assets and liabilities of a foreign subsidiary, whose functional currency is the local currency, are translated from its respective functional currency to U.S. dollars at the balance sheet date exchange rates. Income and expense items are translated at the average rates of exchange prevailing during the year. Translation adjustments of foreign subsidiary for which the local currency is the functional currency are reflected in the consolidated balance sheets as a component of accumulated other comprehensive income. Deferred taxes are not provided on translation adjustments as the earnings of the subsidiary are considered to be permanently reinvested.

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 fair value of cash and cash equivalents is based on its demand value, which is equal to its carrying value. The estimated fair values of notes payable and long-term debt which are based on borrowing rates that are available to the Company for loans with similar terms, collateral and maturity approximate the carrying values. The fair value of the amounts funded in insurance policies in respect of employee liability for employee rights upon retirement is usually identical or close to their carrying value. Additionally, the carrying value of all other monetary assets and liabilities is estimated to be equal to their fair value due to the short-term nature of these instruments.

Derivative financial instruments are measured at fair value, on a recurring basis. The fair value of derivatives generally reflects the estimated amounts that the Group would receive or pay to terminate the contracts at the reporting dates, based on the prevailing currency prices and the relevant interest rates. Such measurement is classified within Level 2.

In addition to items that are measured at fair value on a recurring basis, there are also assets and liabilities that are measured at fair value on a nonrecurring basis. Assets and liabilities that are measured at fair value on a nonrecurring basis include certain long-lived assets including goodwill. As such, we have determined that each of these fair value measurements reside within Level 3 of the fair value hierarchy.

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PHOTOMEDEX, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts)

Derivatives

The group applies the provisions of Accounting Standards Codification ("ASC") Topic 815, Derivatives and Hedging. In accordance with ASC Topic 815, all the derivative financial instruments are recognized as either financial assets or financial liabilities on the balance sheet at fair value. The accounting for changes in the fair value of a derivative financial instrument depends on whether it has been designated and qualifies as part of a hedging relationship and further, on the type of hedging relationship. For derivative financial instruments that are designated and qualify as hedging instruments, a company must designate the hedging instrument, based upon the exposure being hedged, as a fair value hedge, cash flow hedge or a hedge of a net investment in a foreign operation.

From time to time the Company carries out transactions involving foreign exchange derivative financial instruments (mainly forward exchange contracts) which are designed to hedge the cash flows expected to be paid with respect to forecasted expenses of the Israeli subsidiary (Radiancy) denominated in Israeli local currency (NIS) which is different than its functional currency.

Such derivatives were not designated as hedging instruments, and accordingly they were recognized in the balance sheet at their fair value, with changes in the fair value carried to the Statement of Comprehensive Income and included in financing income (expenses), net.

At March 31, 2013, the balance of such derivative instruments amounted to approximately $377 in assets and approximately $154 were recognized as financing income in the Statement of Comprehensive Income during the quarter ended that date.

The nominal amounts of foreign currency derivatives as of March 31, 2013 consist of forward transactions for the exchange of $4,800 into NIS.

Accrued Warranty Costs

The Company offers a standard warranty on product sales generally for a one to two-year period. In the case of domestic sales of XTRAC lasers, however, the Company has offered longer warranty periods, ranging from three to four years, in order to meet competition or meet customer demands. 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 on the balance sheet. The activity in the warranty accrual during the three months ended March 31, 2013 and 2012 is summarized as follows:

	March 31,
	2013			2012
	(unaudited)			(unaudited)
Accrual at beginning of year	$	1,440		$	1,661
Additions charged to warranty expense		337			483
Expiring warranties		(152	)		(74	)
Claims satisfied		(314	)		(330	)
Total		1,311			1,740
Less: current portion		(1,190	)		(1,308	)
Accrued extended warranty	$	121		$	432

For extended warranty on the consumer products, see Revenue Recognition above.

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PHOTOMEDEX, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts)

Earnings Per Share

Basic and diluted earnings per common share were calculated using the following weighted-average shares outstanding:

	For the Three Months Ended March 31,
	2013		2012
Weighted-average number of common and common equivalent shares outstanding:
Basic number of common shares outstanding		20,678,023		18,339,977
Dilutive effect of stock options and warrants		469,560		536,186
Diluted number of common and common stock equivalent shares outstanding		21,147,583		18,876,163

Diluted earnings per share for the three months ended March 31, 2013, exclude the impact of common stock options and warrants, totaling 1,081,226 shares, as the effect of their inclusion would be anti-dilutive.

Adoption of New Accounting Standards

Effective January 1, 2013, the Company adopted Accounting Standard Update ("ASU") No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. This ASU requires entities to provide information about significant amounts reclassified out of accumulated other comprehensive income. The standard became effective, prospectively, for interim and annual periods beginning after December 15, 2012. The adoption of the standard did not impact the Company's consolidated results of operations and financial condition.

Effective January 1, 2013, the Company adopted Accounting Standard Update ("ASU")No. 2011-11, Balance Sheet – Disclosure about Offsetting Assets and Liabilities ("ASU 2011-11"). ASU 2011-11 enhances disclosures about financial instruments and derivative instruments that are either offset in accordance with the Accounting Standards Codification or are subject to an enforceable master netting arrangement or similar agreement. The amended guidance became effective, in a retrospective manner to all comparative periods presented, for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. The adoption of the standard did not have a material impact on the Company's consolidated results of operations and financial condition.

Recently Issued Accounting Standards

In March 2013, the FASB issued Accounting Standards Update (ASU) 2013-5, Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity.

ASU 2013-5 clarifies that, when a reporting entity (parent) ceases to have a controlling financial interest in a subsidiary or group of assets that is a business (other than a sale of in substance real estate or conveyance of oil and gas mineral rights) within a foreign entity, the parent is required to apply the guidance in Subtopic 830-30 to release any related cumulative translation adjustment into net income. Accordingly, the cumulative translation adjustment should be released into net income only if the sale or transfer results in the complete or substantially complete liquidation of the foreign entity in which the subsidiary or group of assets had resided. ASU 2013-5 also clarifies that if the business combination achieved in stages relates to a previously held equity method investment (step-acquisition) that is a foreign entity, the amount of accumulated other comprehensive income that is reclassified and included in the calculation of gain or loss shall include any foreign currency translation adjustment related to that previously held investment.

For public companies, the amendments in this Update will be effective prospectively for fiscal years (and interim reporting periods within those years) beginning after December 15, 2013. The amendments should be applied prospectively to derecognition events occurring after the effective date. Prior periods should not be adjusted. Early adoption is permitted. If an entity elects to early adopt the amendments, it should apply them as of the beginning of the entity’s fiscal year of adoption. The adoption of the standard will not materially impact the Company's consolidated results of operations and financial condition.

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PHOTOMEDEX, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts)

Note 2

Inventories:

	March 31, 2013		December 31, 2012
	(unaudited)
Raw materials and work in progress	$	9,494	$	9,012
Finished goods		11,989		13,455
Total inventories	$	21,483	$	22,467

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

Note 3

Property and Equipment:

	March 31, 2013			December 31, 2012
	(unaudited)
Lasers-in-service	$	8,594		$	7,301
Equipment, computer hardware and software		4,220			4,015
Furniture and fixtures		619			617
Leasehold improvements		399			396
		13,832			12,329
Accumulated depreciation and amortization		(6,088	)		(5,570	)
Property and equipment, net	$	7,744		$	6,759

Depreciation and related amortization expense was $634 and $638 for the three months ended March 31, 2013 and 2012, respectively.

Note 4

Patents and Licensed Technologies, net:

	March 31, 2013			December 31, 2012
	(unaudited)
Gross Amount beginning of period	$	15,411		$	15,124
Additions		18			181
Translation differences		(193	)		106
Gross Amount end of period		15,236			15,411
Accumulated amortization		(3,216	)		(2,738	)
Patents and licensed technologies, net	$	12,020		$	12,673

Related amortization expense was $509 and $507 for the three months ended March 31, 2013 and 2012, respectively.

Estimated amortization expense for amortizable patents and licensed technologies assets for the next five years is as follows:

Last nine months of 2013	$	1,524
2014		2,032
2015		2,025
2016		1,946
2017		878
Thereafter		3,615
Total	$	12,020

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PHOTOMEDEX, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts)

Note 5

Goodwill and Other Intangible Assets:

As part of the purchase price allocation for the reverse acquisition, the Company recorded goodwill in the amount of $24,005, as restated, and definite-lived intangibles in the amount of $12,000. Goodwill reflects the value or premium of the acquisition price in excess of the fair values assigned to specific tangible and intangible assets. Goodwill has an indefinite useful life and therefore is not amortized as an expense, but is reviewed annually for impairment of its fair value to the Company. The purchase price intrinsically recognizes the benefits of the broadened depth of the management team and the addition of a sizeable direct sales force creating greater access to the physician community with branded products and technologies. Furthermore, the purchase price paid by Radiancy, Inc, a private company includes, among other things, other benefits such as the intrinsic value of being a Nasdaq-listed issuer post merger and now having access to capital markets and stockholder liquidity.

Balance at January 1, 2013, as restated	$	24,500
Translation differences		(890	)
Balance at March 31, 2013	$	23,610

The Company has no impairment loss as of March 31, 2013.

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

	March 31, 2013									December 31, 2012
	(unaudited)
	Trademarks			Customer Relationships			Total			Trademarks			Customer Relationships			Total
Gross Amount beginning of period	$	5,744		$	6,372		$	12,116		$	5,700		$	6,300		$	12,000
Translation differences		(80	)		(130	)		(210	)		44			72			116
Gross Amount end of period		5,664			6,242			11,906			5,744			6,372			12,116
Accumulated amortization		(731	)		(806	)		(1,537	)		(598	)		(664	)		(1,262	)
Net Book Value	$	4,933		$	5,436		$	10,369		$	5,146		$	5,708		$	10,854

Related amortization expense was $300 and $300 for the periods ended March 31, 2013 and 2012, respectively. Customer Relationships embody the value to the Company of relationships that Pre-merged PhotoMedex had formed with its customers. Trademarks include the tradenames and various trademarks associated with Pre-merged PhotoMedex products (e.g. “XTRAC”, “Neova” “Omnilux” and “Lumiere”).

Estimated amortization expense for the above amortizable intangible assets for the next five years is as follows:

Last nine months of 2013	$	900
2014		1,200
2015		1,200
2016		1,200
2017		1,200
Thereafter		4,669
Total	$	10,369

- 13 -

PHOTOMEDEX, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts)

Note 6

Accrued Compensation and related expenses:

	March 31, 2013		December 31, 2012
	(unaudited)
Accrued payroll and related taxes	$	563	$	1,010
Accrued vacation		335		262
Accrued commissions and bonus		1,598		1,222
Total accrued compensation and related expense	$	2,496	$	2,494

Note 7

Other Accrued Liabilities:

	March 31, 2013		December 31, 2012
	(unaudited)
Accrued warranty, current	$	1,190	$	1,274
Accrued taxes, net (2)		1,401		4,304
Accrued sales returns (1)		11,548		11,901
Other accrued liabilities		2,540		4,620
Total other accrued liabilities	$	16,679	$	22,099

(1)   The activity in the sales returns liability account was as follows:

	Three Months Ended March 31,
	2013			2012
	(unaudited)			(unaudited)
Balance at beginning of year	$	11,781		$	6,143
Additions that reduce net sales		10,008			10,566
Deductions from reserves		(10,241	)		(6,726	)
Balance at end of period	$	11,548		$	9,983

(2)   The December 31, 2012 balance is shown as restated.

Note 8

Income Taxes:

The Company's effective tax rate is dependent upon the geographic distribution of its earnings or losses (mainly between US and Israel).

The difference between the Company's effective tax rates for the three month period ended March 31, 2013 and the U.S. Federal statutory rate (34%) resulted primarily from Pre-merged PhotoMedex current operations which have generated losses, which reduced the overall corporate tax expense and which will have effect on current tax expense when the Company elects to file a U.S. consolidated income tax return. In addition, the Israeli and UK subsidiaries’ earnings are taxed at rates lower than the federal statutory rate (generally 20% to 24%, respectively).

The application of income tax law is inherently complex. Laws and regulations in this area are voluminous and can be ambiguous; the Company is, therefore, obliged to make many subjective assumptions and judgments regarding the application of such laws and regulations to its facts and circumstances. In addition, interpretations of and guidance surrounding income tax laws and regulations are subject to changes over time. Any changes in the Company's subjective assumptions and judgments could materially affect amounts recognized in its consolidated balance sheets and statements of income.

- 14 -

PHOTOMEDEX, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts)

Note 9

Employee Stock Benefit Plans:

Post-Reverse Merger

Following the closing of the reverse acquisition, the previous Non-Employee Director Stock Option Plan of PhotoMedex (the acquired entity) was adopted by the group. This plan has authorized 120,000 shares; of which 7,000 shares had been issued or were reserved for issuance as awards of shares of common stock, and 17,285 shares were reserved for outstanding stock options.

In addition, following the closing of the reverse acquisition, the previous 2005 Equity Compensation Plan (“2005 Equity Plan”) of Pre-merged PhotoMedex (the acquired entity) was also adopted for use by the group. The 2005 Equity Plan has authorized 3,000,000 shares, of which 753,095 shares had been issued or were reserved for issuance as awards of shares of common stock, and 1,055,546 shares were reserved for outstanding options.

Stock option activity under all of the Company’s share-based compensation plans for the three months ended March 31, 2013 was as follows:

	Number of Options			Weighted Average Exercise Price
Outstanding, January 1, 2013		898,541		$	16.65
Granted		259,625			16.59
Exercised		(3,333	)		6.24
Cancelled		(9,166	)		26.11
Outstanding, March 31, 2013		1,145,667		$	16.59
Options exercisable at March 31, 2013		325,042		$	17.71

At March 31, 2013, there was $12,032 of total unrecognized compensation cost related to non-vested option grants and stock awards that is expected to be recognized over a weighted-average period of 3.5 years. The intrinsic value of options outstanding and exercisable at March 31, 2013 was not significant.

The Company calculates expected volatility for a share-based grants based on historic daily stock price observations of its common stock. For estimating the expected term of share-based grants made in the three months ended March 31, 2013, the Company has adopted the simplified method. The Company has used historical data to estimate expected employee behaviors related to option exercises and forfeitures and included these expected forfeitures as a part of the estimate of expense as of the grant date.

The Company uses the Black-Scholes option-pricing model to estimate fair value of grants of stock options with the following weighted-average assumptions:

	Three Months Ended March 31, 2013
Risk-free interest rate		1.26	%
Volatility		85.25	%
Expected dividend yield		0	%
Expected life	5.5 years
Estimated forfeiture rate		0	%

With respect to grants of options, the risk-free rate of interest is based on the U.S. Treasury rates appropriate for the expected term of the grant or award.

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PHOTOMEDEX, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts)

On February 28, 2013, the Company granted an aggregate of 177,125 options to purchase common stock to a number of employees and consultants with a strike price of $15, which was higher than the quoted market value of our stock at the date of grants. The options vest over five years and expire ten years from the date of grant. Also on February 28, 2013, the Company granted an aggregate of 82,500 non-qualified options to purchase common stock to two executive employees with a strike price of $20, which was set to match the exercise price of the warrants issued in the reverse merger and was higher than the quoted market value of our stock at the date of grant. The aggregate fair value of the options granted was $2,590. The options vest over five years and expire ten years from the date of grant.

Total stock based compensation expense was $1,290 and $1,753 for the three months ended March 31, 2013 and 2012.

Note 10

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 Consumer segment derives its revenues from the design, development, manufacturing and selling of long-term hair reduction and acne consumer products. The Physician Recurring segment derives its revenues from the XTRAC procedures performed by dermatologists, the sales of skincare products, the sales of surgical disposables and accessories to hospitals and surgery centers and on the repair, maintenance and replacement parts on our various products. The Professional segment generates revenues from the sale of equipment, such as lasers, medical and esthetic light and heat-based products and LED products. 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 and cash equivalents, prepaid expenses and deposits.

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

Three Months Ended March 31, 2013

	CONSUMER			PHYSICIAN RECURRING			PROFESSIONAL			TOTAL
Revenues	$	49,060		$	5,955		$	2,201		$	57,216
Costs of revenues		7,517			2,931			1,418			11,866
Gross profit		41,543			3,024			783			45,350
Gross profit %		84.7	%		50.8	%		35.6	%		79.3	%
Allocated operating expenses:
Engineering and product development		218			324			231			773
Selling and marketing expenses		25,631			3,174			521			29,326
Unallocated operating expenses		-			-			-			5,659
		25,849			3,498			752			35,758
Income (loss) from operations		15,694			(474	)		31			9,592
Interest  and other financing income, net		-			-			-			131
Net income (loss) before taxes	$	15,694		$	( 474	)	$	31		$	9,723

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PHOTOMEDEX, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts)

Three Months Ended March 31, 2012

	CONSUMER			PHYSICIAN RECURRING			PROFESSIONAL			TOTAL
Revenues	$	42,201		$	5,073		$	2,999		$	50,273
Costs of revenues		6,772			2,679			1,783			11,234
Gross profit		35,429			2,394			1,216			39,039
Gross profit %		84.0	%		47.2	%		40.5	%		77.7	%
Allocated operating expenses:
Engineering and product development		237			310			211			758
Selling and marketing expenses		22,148			2,530			1,157			25,835
Unallocated operating expenses		-			-			-			7,119
		22,385			2,840			1,368			33,712
Income (loss) from operations		13,044			(446	)		(152	)		5,327
Interest and other financing (expense), net		-			-			-			(230	)
Net income (loss) before taxes	$	13,044		$	( 446	)	$	( 152	)	$	5,097

For the three months ended March 31, 2013 and 2012, net revenues by geographic area were as follows:

	Three Months Ended March 31,
	2013		2012
North America 1	$	44,899	$	38,689
Asia Pacific 2		5,762		5,307
Europe (including Israel)		5,633		5,208
South America		922		1,069
	$	57,216	$	50,273
1 United States	$	38,007	$	36,622
2  Japan	$	4,262	$	3,327

As of March 31, 2013 and December 31, 2012, long-lived assets by geographic area were as follows:

	March 31, 2013		December 31, 2012
	(unaudited)
North America	$	6,641	$	5,772
Asia Pacific		-		-
Europe (including Israel)		1,103		987
South America		-		-
	$	7,744	$	6,759

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

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PHOTOMEDEX, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts)

Note 11

Significant Customer Concentration:

	Three Months Ended March 31,
	2013	2012
Customer A	10%	5%

No other customer was more than 10% of total company revenues for the three months ended March 31, 2013 and 2012.

- 18 -

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 PhotoMedex, Inc., a Nevada corporation (referred to in this Report as “we,” “us,” “our,” “PhotoMedex,” 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 and in our Annual Report on Form 10-K/A for the year ended December 31, 2012. 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

Our current strategic focus is built upon three key components –a highly trained direct sales force to target Physician and Professional Segments; a multi-tiered marketing platform targeting the global consumer and a full product-life-cycle model representing the ability to develop and commercialize innovative products from concept thru regulatory and physician acceptance, and ultimately marketed directly to the consumer as dictated by normal product life-cycle evolution.

We believe that we are one of only a few aesthetic dermatology companies to have succeeded in taking professional technologies geared toward physicians and med spas and adapting them for the home-use market. Our professional- and consumer-use products are listed below, noting that this is not an exhaustive listing of our product portfolio but represents our current key areas of focus.

Key Technology Platforms

• Thermicon® brand Heat Transfer Technology. In this technique, a patented thermodynamic wire gently singes and burns off the hair above the skin’s surface. It conducts heat pulses, which enable longer-lasting hair removal. This technology drives our home-use no!no! Hair Removal 8800™ device, which is designed to reduce hair growth. Product variations include devices designed for men and for sensitive, small areas such as the face, among other versions.  

• LHE® brand Technology. LHE® combines direct heat and a full-spectrum light source to give a greater treatment advantage for psoriasis and acne care, skin tightening, skin rejuvenation, wrinkle reduction, collagen renewal, vascular and pigmented lesion treatments, and hair removal. Using LHE®, the Mistral intelligent phototherapy medical device can treat a larger spot size than a laser with less discomfort. In addition, our research finds that LHE offers meaningful results for thin, light hair. The technology is also used in the no!no! Skin™, a handheld consumer product sold worldwide under the no!no!® brand. The no!no! Skin™ is a 510(k)-cleared product that has been clinically shown to reduce acne by 81% over 24 hours.  

• XTRAC® Excimer Laser. XTRAC received FDA clearance in 2000 and has since become a widely recognized treatment among dermatologists for psoriasis and other skin conditions for which there are no cures. The machine delivers narrow ultraviolet B (“UVB”) light to affected areas of skin, leading to psoriasis remission in an average of 8 to 12 treatments and of vitiligo after 48 treatments. XTRAC is endorsed by the National Psoriasis Foundation, and its use for psoriasis is covered by nearly all major insurance companies, including Medicare. Nearly 65% of companies now offer reimbursement for vitiligo as well, a figure that is increasing.

- 19 -

• NEOVA®. This line of topical formulations is designed to prevent premature skin aging due to UV-induced DNA damage. The therapy seeks to repair photo-damaged skin using a novel combination of two key ingredients: DNA repair enzymes and our Copper Peptide Complex®. The NEOVA line includes DNA Damage Control SILC SHEER SPF 45, an award-winning tinted sunscreen. The DNA repair enzymes of this sunscreen are clinically shown to reduce UV damage by 45% and increase UV protection by 300% in one hour.  

• Light-emitting Diode (LED) Technology. Our LED technology is used in both its Omnilux™ and Lumière™ Light Therapy systems. Omnilux is FDA cleared to treat wrinkles, acne, minor muscle pain and pigmented lesions, and is applicable to all skin types. Lumière is designed for use in non-medical applications and combines the LED light with a line of topical lotions to improve the appearance of fine lines, wrinkles, skin tone and blemishes, giving aesthetic professionals a complete non-invasive skin care solution.

Our revenue generation is categorized as either Consumer, Physician-Recurring or Professional. Each segment benefits from the combination of our proprietary global consumer marketing engine with our direct sales force for U.S. physicians.

Consumer

The global consumer market is our largest business unit due to our success at bringing professional technologies into the home-use arena. Cumulatively, we have sold more than 4.3 million no!no!® products to consumers, the majority of whom have been in Japan and North America.

Even at this level of sales, we believe we have ample opportunity for further expansion, as Japan’s 2012 population was over 127 million people and North America’s was approximately 314 million people—far greater than the more than three million who have already purchased our products.

Our consumer marketing platform is built upon a proprietary direct-to-consumer sales engine and creative marketing programs that drive brand awareness.

Sales Channels

Our multi-channel marketing and distribution model consists of television, online, print and radio direct-response advertising, as well as high-end retailers. We believe that this marketing and distribution model, through which each channel complements and supports the others, provides:

• greater brand awareness across channels;

• cost-effective consumer acquisition and education;

• premium brand building; and

• improved convenience for consumers.

Direct to Consumer. Our direct-to-consumer channel consists of sales generated through infomercials, websites and call centers. We utilize several forms of advertising to drive our direct-to-consumer sales and brand awareness, including print, online, television and radio.

Retailers and Home Shopping Channels. Our retailers and home shopping channels enable us to provide additional points of contact to educate consumers about our solutions, expand our presence beyond our direct to consumer activity and further strengthen and enhance our brand image.

Distributors. In some territories, we operate through exclusive distribution agreements with leading distribution companies that are dominant in their respective market and have the ability to promote our products through their existing retail and home shopping networks.

- 20 -

Markets

North America. Our consumer distribution segment in North America had sales of approximately $39 million and $33 million for the three months ended March 31, 2013 and 2012, respectively. We use a mix of direct-to-consumer advertising that includes infomercials, commercials, catalog, radio and internet-based marketing campaigns, coupled with select retail resellers, such as Neiman Marcus, Henri Bendel, Planet Beauty, Bed, Bath & Beyond and others; home shopping channels such as HSN; and online retailers such as Amazon, Dermadoctor.com and Drugstore.com. We believe these channels complement each other, as consumers that have seen our direct-to-consumer advertising may purchase at our retailers, and those who have seen our solutions demonstrated at our retailers may purchase solutions through our websites or call centers.

International (excluding North America). In the international consumer segment, sales were approximately $10 million and $9 million for the three months ended March 31, 2013 and 2012, respectively. We utilize various sales and marketing methods including sales by direct-to-consumer, sales to retailers and home shopping channels. Our main international markets are Japan, United Kingdom, Argentina and Australia.

Physician Recurring

Physician recurring sales primarily include those generated from two of our product lines: (1) XTRAC® lasers, a noninvasive, FDA-cleared solution for psoriasis and vitiligo, and (2) NEOVA® skin care, a topical therapy combining DNA repair enzymes and copper peptide complexes to prevent premature skin aging. Both XTRAC and NEOVA represent recurring revenue streams with significant market opportunities. In addition, our expertise in direct-to-consumer advertising and innovative marketing programs is anticipated to drive greater brand awareness and adoption for both XTRAC and NEOVA products.

XTRAC®

The XTRAC business is considered a recurring revenue stream given its pay-per-use model, where the machines are provided to professionals who then pay us based on the number of treatments administered with the device.

NEOVA®

Sales of the NEOVA skin care products at present are driven by physicians, who act as spokespersons to their patients in support of the NEOVA line. We have historically marketed to physicians in the dermatology and plastic surgery field, but plan to supplement these efforts with a direct-to-consumer approach to lead patients into those practices. NEOVA addresses a sizeable global market for anti-aging skin care products.

Professional

Sales under the professional business segment are mainly generated from capital equipment, such as our Velocity and VTRAC equipment, our LHE® brand products and our Omnilux and Lumière Light Therapy systems.

We view this segment as an area of opportunity for us since the reverse acquisition with Radiancy, Inc., or Radiancy, completed on December 13, 2011. We now possess a greatly expanded product offering for the physician community. In addition, following the December 2011 reverse acquisition, we inherited from Pre-merged PhotoMedex a 48-person, experienced direct sales force that already reaches a network of approximately 3,000 physician locations in the U.S. We are now also distributing through this direct sales force the LHE-based professional products in addition to our other equipment to physicians, dermatologists, salons, spas, and other aesthetic practitioners. We view this fully trained sales staff as a significant opportunity. We view this fully trained sales staff as a resource in expanding the Professional segment of our revenues.

Sales and Marketing

As of March 31, 2013, our sales and marketing personnel consisted of 64 full-time positions.

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Critical Accounting Policies and Estimates

There have been no changes to our critical accounting policies and estimates in the three months ended March 31, 2013. Critical accounting policies and the significant estimates made in accordance with them 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 of our Annual Report on Form 10-K/A for the year ended December 31, 2012.

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 business segments for the periods indicated below:

	For the Three Months Ended March 31,
	2013		2012
Consumer	$	49,060	$	42,201
Physician Recurring		5,955		5,073
Professional		2,201		2,999
Total Revenues	$	57,216	$	50,273

Consumer Segment

The following table illustrates the key changes in the revenues of the Consumer segment, by sales channel, for the periods reflected below:

	For the Three Months Ended March 31,
	2013		2012
Direct-to-consumer	$	31,722	$	31,516
Distributors		5,291		4,693
Retailers and home shopping channels		12,047		5,992
Total Consumer Revenues	$	49,060	$	42,201

For the three months ended March 31, 2013, consumer products revenues were $49,060 compared to $42,201 in the three months ended March 31, 2012. The increase of 16.3% during the periods was mainly due to the following reasons:

• Direct to Consumer. Revenues for the three months ended March 31 2013 were $31,722 compared to $31,516 for the same period in 2012. The revenues were consistent for the periods.

• Retailers and Home Shopping Channels. Revenues for the three months ended March 31, 2013 were $12,047 compared to $5,992 for the same period in 2012. The increase of 101% was mainly due to our successful marketing programs to the various home shopping channel customers, mainly in the United States (“US”) and the UK and the additional retailers added to this channel.

• Distributors Channels. Revenues for the three months ended March 31, 2103 were $5,291 compared to $4,693 for the same period in 2012.The increase in revenues of 13% was due to increased marketing efforts by our partner in Japan as well as new product introduction.

- 22 -

The following table illustrates the key changes in the revenues of the Consumer segment, by markets, for the periods reflected below:

	For the Three Months Ended March 31,
	2013		2012
North America	$	39,225	$	32,997
International		9,835		9,204
Total Consumer Revenues	$	49,060	$	42,201

Physician Recurring Segment

The following table illustrates the key changes in the revenues of the Physician Recurring segment for the periods reflected below:

	For the Three Months Ended March 31,
	2013		2012
XTRAC Treatments	$	2,569	$	1,679
Neova skincare		2,226		2,165
Surgical products		467		540
Other		693		689
Total Physician Recurring Revenues	$	5,955	$	5,073

XTRAC Treatments

Recognized treatment revenue for the three months ended March 31, 2013 was $2,569, which approximates 37,000 treatments, with prices between $65 to $85 per treatment, compared to recognized revenues of $1,679 or approximately 24,000 treatments for the three months ended March 31, 2012. 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 be generally reimbursed.

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, 2013, we deferred net revenues of $590 under this approach compared to deferred net revenues of $145 for the three months ended March 31, 2012.

NEOVA skincare

For the three months ended March 31, 2013, revenues were $2,226 compared to $2,165 for the three months ended March 31, 2012. These revenues are generated from the sale of various skin, hair, and wound care products to physicians in both the domestic and international markets.

Surgical products

For the three months ended March 31, 2013 and 2012, revenues were $467 and $540, respectively. These revenues are generated from the sale of various related laser fibers and laser disposables in both the domestic and international markets.

- 23 -

The following table illustrates the key changes in the revenues of the Physicians Recurring segment, by markets, for the periods reflected below:

	For the Three Months Ended March 31,
	2013		2012
North America	$	5,162	$	4,425
International		793		648
Total Physicians Recurring Revenues	$	5,955	$	5,073

Professional Segment

The following table illustrates the key changes in the revenues of the Professional segment for the periods reflected below:

	For the Three Months Ended March 31,
	2013		2012
Dermatology equipment	$	1,077	$	1,358
LHE equipment		778		991
Omnilux/Lumiere equipment		253		592
Surgical lasers		93		58
Total Professional Revenues	$	2,201	$	2,999

Dermatology equipment

For the three months ended March 31, 2013 and 2012, dermatology equipment revenues were $1,077 and $1,358, respectively. Included in the March 31, 2012 amount were domestic XTRAC laser sales of $468 on ten lasers sold. There were no domestic XTRAC laser sales for the three months ended March 31, 2013. We sell the laser directly to the customer for certain reasons, including the costs of logistical support and customer preference. Our preference is to consign lasers to customers which will thrive under the per-procedure model. Internationally, we sold thirty-three systems for the three months ended March 31, 2013, twenty of which were VTRAC systems, a lamp-based alternative UVB light source that has a wholesale sales price that is below our competitors’ international dermatology equipment and below our XTRAC laser. The international sales of our XTRAC and VTRAC systems were $890 for the three months ended March 31, 2012. We sold twenty-nine systems for the three months ended March 31, 2012, seventeen of which were VTRAC systems, a lamp-based alternative UVB light source that has a wholesale sales price that is below our competitors’ international dermatology equipment and below our XTRAC laser.

LHE® brand products

LHE® brand products revenues include revenues derived from the sales of mainly Mistral™, Kona™, FSD™, SpaTouch Elite™ and accessories. These devices are sold to physicians, spas and beauty salons.

For the three months ended March 31, 2013 and 2012, LHE® brand products revenues were $778 and $991, respectively.

Omnilux/Lumiere equipment

For the three months ended March 31, 2013 and 2012, Omnilux/Lumiere equipment revenues were $253 and $592, respectively. These revenues are generated from the sale of LED devices. The Omnilux units are sold for medical applications and the Lumière is a sister technology to Omnilux with the same patent protection, but it is designed for use in non-medical applications, especially at salons and spas.

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Surgical lasers

Surgical lasers revenues include revenues derived from the sales of surgical laser systems. For the three months ended March 31, 2013 and 2012, surgical laser revenues were $93, representing three laser systems and $58, representing one laser system, respectively.

The following table illustrates the key changes in the revenues of the Professional segment, by markets, for the periods reflected below:

	For the Three Months Ended March 31,
	2013		2012
North America	$	520	$	1,267
International		1,681		1,732
Total Professional Revenues	$	2,201	$	2,999

Cost of Revenues: all segments

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

	For the Three Months Ended March 31,
	2013		2012
Consumer	$	7,517	$	6,772
Physician Recurring		2,931		2,679
Professional		1,418		1,783
Total Cost of Revenues	$	11,866	$	11,234

Overall, cost of revenues has increased in the segments due to the related increases in revenues.

Gross Profit Analysis

Gross profit increased to $45,350 for the three months ended March 31, 2013 from $39,039 during the same period in 2012. As a percentage of revenues, the gross margin increased to 79.3% for the three months ended March 31, 2013 from 77.7% for the same period in 2012.

The following table analyzes changes in our gross margin for the periods presented below:

Company Profit Analysis	For the Three Months Ended March 31,
	2013			2012
Revenues	$	57,216		$	50,273
Percent increase		13.8	%
Cost of revenues		11,866			11,234
Percent increase		5.6	%
Gross profit	$	45,350		$	39,039
Gross margin percentage		79.3	%		77.7	%

The primary reasons for the changes in gross profit and the gross margin percentage for the three months ended March 31, 2013, compared to the same period in 2012, were due to a change in the sales mix mainly increases in home shopping channel and retailers within the Consumer segment. In addition the Physician Recurring segment had 17% greater revenues than the prior year period with a greater gross margin percentage driven by greater utilization of our installed base of XTRAC equipment.

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The following table analyzes the gross profit for our Consumer segment for the periods presented below:

Consumer Segment	For the Three Months Ended March 31,
	2013			2012
Revenues	$	49,060		$	42,201
Percent increase		16.3	%
Cost of revenues		7,517			6,772
Percent increase		11.0	%
Gross profit	$	41,543		$	35,429
Gross margin percentage		84.7	%		84.0	%

Gross profit for the three months ended March 31, 2013 increased by $6,114 from the comparable period in 2012. The key factor for this increase was due to the increase in all channels of consumer revenues.

The following table analyzes the gross profit for our Physician Recurring segment for the periods presented below:

Physician Recurring Segment	For the Three Months Ended March 31,
	2013			2012
Revenues	$	5,955		$	5,073
Percent increase		17.4	%
Cost of revenues		2,931			2,679
Percent increase		9.4	%
Gross profit	$	3,024		$	2,394
Gross margin percentage		50.8	%		47.2	%

Gross profit for the three months ended March 31, 2013 increased by $630 from the comparable period in 2012. The primary reason for the increased gross margin is the increase in XTRAC treatments on the existing installed laser base of equipment. Incremental treatments delivered on existing equipment incur negligible incremental costs.

The following table analyzes the gross profit for our Professional segment for the periods presented below:

Professional Segment	For the Three Months Ended March 31,
	2013			2012
Revenues	$	2,201		$	2,999
Percent decrease		(26.6	%)
Cost of revenues		1,418			1,783
Percent decrease		(20.5	%)
Gross profit	$	783		$	1,216
Gross margin percentage		35.6	%		40.5	%

Gross profit for the three months ended March 31, 2013 decreased by $433 from the comparable period in 2012. The key factor for the decrease was the decrease in revenues for each product type.

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Engineering and Product Development

Engineering and product development expenses for the three months ended March 31, 2013 increased to $773 from $758 for the three months ended March 31, 2012. The majority of this expense relates to the salaries of our worldwide engineering and product development team and are in line with the prior year.

Selling and Marketing Expenses

For the three months ended March 31, 2013, selling and marketing expenses increased to $29,326 from $25,835 for the three months ended March 31, 2012. The increase was primarily for the following reasons:

• We increased no!no! Hair Removal direct to consumer activities in North America and the UK via infomercial, online campaigns, radio and print media, which resulted in an increase in advertising, media buying, and other related selling and marketing expenses.

• The increase in the percentage of selling and marketing expenses compared to total revenues was mainly due to an increase of the direct to consumer advertising and selling activities (media buying, advertisement, public relations, production of commercials and relevant marketing materials). Media buying and advertising expenses in the three months ended March 31, 2013 were 25.7% of total revenues compared to 25.4% of total revenues in the three months ended March 31, 2012.

General and Administrative Expenses

For the three months ended March 31, 2013, general and administrative expenses decreased to $5,659 from $7,119 for the three months ended March 31, 2012. The decrease was due to the following reason:

• There was a decrease of $1,794 in legal expense due to the completion of major litigation during 2012.

Interest and Other Financing Expense, Net

Net interest and other financing income for the three months ended March 31, 2013 increased to $131, as compared to expense of $230 for the three months ended March 31, 2012. The increase of $361 is mainly due to a decrease in interest expense of $184. The interest expense related to the term note that was assumed in the reverse merger. The remaining change was due to currency fluctuation of the U.S. Dollar versus the New Israeli Shekel, the Euro, the GBP and the Australian Dollar. The functional currency of all members of the group is the U.S. Dollar, except for Photo Therapeutics, Ltd, which has a functional currency of GBP.

Taxes on Income, Net

For the three months ended March 31, 2013, the net taxes on income amounted to $2,511 as compared to $240 for the three months ended March 31, 2012. Partially offsetting the tax expense for the three months ended March 31, 2012, we recorded a federal income tax receivable in 2012; the refund was received on February 28, 2013, due to the expected carryback of our 2011 net operating loss from Radiancy, Inc. for a refund of the 2010 federal taxes paid.

Net Income

The factors described above resulted in net income of $7,212 during the three months ended March 31, 2013, as compared to $4,857 during the three months ended March 31, 2012, an increase of 48%.

To supplement our consolidated financial statements presented elsewhere within this report, in accordance with GAAP, management provides certain non-GAAP measures of financial performance. These non-GAAP measures include non-GAAP adjusted income.

Management’s reference to these non-GAAP measures should be considered in addition to results prepared under current accounting standards, but 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.

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Specifically, management believes 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, management believes 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,
	2013		2012		Change
Net income	$	7,212	$	4,857	$	2,355
Adjustments:
Depreciation and amortization		1,443		1,332		111
Stock-based compensation expense		1,290		1,753		(463	)
Litigation expense		-		1,794		(1,794	)
Other investment financing costs		-		400		(400	)
Severance and related costs		-		88		(88	)
Interest expense, net		5		189		(184	)
Income tax expense		2,511		240		2,271
Non-GAAP adjusted income	$	12,461	$	10,653	$	1,808

Liquidity and Capital Resources

At March 31, 2013, our current ratio was 4.10 compared to 3.36 at December 31, 2012. As of March 31, 2013 we had $103,880 of working capital compared to $95,677 as of December 31, 2012. Cash and cash equivalents were $45,509 as of March 31, 2013, as compared to $44,348 as of December 31, 2012. In addition, we had $18,000 in short term bank deposits as of March 31, 2013 and December 31, 2012.

On April 27, 2012, we closed on a two-tranche registered offering in which we sold an aggregate of 3,023,432 shares of its common stock at an offering price of $13.23 per share. The sale resulted in net proceeds of approximately $37.8 million. The net proceeds will be used for general corporate purposes, including capital expenditures, continued product development, sales and marketing initiatives and working capital.

On August 18, 2012, the Board of Directors approved a stock repurchase program up to a maximum to $25 million. To date, we have repurchased 842,961 shares at an average price of $12.76 per share for a total of $10,756.

We believe our existing balances of cash and cash equivalents will be sufficient to satisfy our working capital needs, capital asset purchases, outstanding commitments and other liquidity requirements associated with our existing operations through and beyond the second quarter of 2014.

Net cash and cash equivalents provided in operating activities was $3,064 for the three months ended March 31, 2013 compared to $8,148 for the three months ended March 31, 2012.

Net cash and cash equivalents used in investing activities was $1,489 for the three months ended March 31, 2013 compared to $532 for the three months ended March 31, 2013. This was primarily due to the increase in the placement of lasers into service for the three months ended March 31, 2013.

When we retire a laser from service that is no longer useable, we write off the net book value of the laser, which is typically negligible. Over the last few years, such retirements of lasers from service have been immaterial.

Net cash and cash equivalents used by financing activities was $200 for the three months ended March 31, 2013 compared to $612 for the three months ended March 31, 2013. In the three months ended March 31, 2013, we had repayments of $10 on long-term debt and $203 for certain notes payable.

Commitments and Contingencies

There were no items that significantly impacted our commitments and contingencies as discussed in the notes to our 2012 annual financial statements included in our Annual Report on Form 10-K/A.

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Off-Balance Sheet Arrangements

At March 31, 2013, we had no off-balance sheet arrangements.

Impact of Inflation

We have not operated in a highly inflationary period, and we do not believe that inflation has had a material effect on sales or expenses.

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 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/A for the year ended December 31, 2012, 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.

ITEM 3.  Quantitative and Qualitative Disclosure about Market Risk

Foreign Exchange Risk

During the three months ended March 31, 2013, there were no material changes to our market risk disclosures as set forth in Part II Item 7A. “Quantitative and Qualitative Disclosures About Market Risk” in the Annual Report on Form 10-K/A that we filed for the year ended December 31, 2012.

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) under the Securities Exchange Act of 1934 (the “Exchange Act”)), as of March 31, 2013. Based on that evaluation, management has concluded that, as of such date, our disclosure controls and procedures were effective.

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.

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Changes in Internal Control over Financial Reporting

There has 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.

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PART II - Other Information

ITEM 1. Legal Proceedings

From time to time we are involved in legal proceedings arising in the ordinary course of business. We are involved in certain legal actions and claims which we believe, based on discussions with legal counsel, will likely be resolved without a material effect on our consolidated financial position, results of operations or liquidity.

ITEM 1A. Risk Factors

As of March 31, 2013, our risk factors have not changed materially from the risk factors previously disclosed in our Annual Report on Form 10-K/A for the year ended December 31, 2012.

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

Rule 14a-8 Shareholder Proposal Deadline

The 2013 annual meeting of shareholders will be held on August 1, 2013, which is more than 30 days before the anniversary of the 2012 annual meeting of shareholders which was held on November 6, 2012. As a result, pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, the Company has set a revised deadline for the receipt of any shareholder proposals submitted pursuant to Rule 14a-8 for inclusion in the Company’s proxy materials for the 2013 annual meeting of shareholders. The new deadline for delivering shareholder proposals to the Company is the close of business on May 29, 2013, which date was determined in accordance with Rule 14a-8(e). Any shareholder proposal requested to be included in the proxy materials for the 2013 annual meeting of shareholders must (i) be received by Michele Pupach, Corporate Counsel, at the Company’s principal executive offices at 147 Keystone Drive, Montgomeryville, PA 18936 on or before May 29, 2013; and (ii) satisfy all of the requirements of, and not otherwise be permitted to be excluded under, Rule 14a-8 promulgated by the SEC and our Bylaws. To ensure prompt receipt by the Company, the Company recommends that such proposals be sent certified mail, return receipt requested.

Certificate of Incorporation and Bylaws Deadline

The Company’s Certificate of Incorporation and Bylaws provide that, in order for a shareholder to make nominations for the election of directors or proposals for business to be brought before the annual meeting, a shareholder must deliver notice of such nominations and/or proposals to the Corporate Secretary not less than 30 days nor more than 60 days prior to the date of the annual meeting; provided, that if less than 31 days’ notice of the date of the annual meeting is given to shareholders, such notice must be received no later than the close of business on the 10th day following the day on which notice of the date of the annual meeting was provided to shareholders. A copy of the Certificate of Incorporation and Bylaws may be obtained from the Company. Shareholders may recommend qualified director candidates by writing to Michele Pupach, Corporate Counsel, PhotoMedex, Inc. 147 Keystone Drive, Montgomeryville, PA 18936. Submissions should include information regarding a candidate’s background, qualifications, experience and willingness to serve as a director. To ensure prompt receipt by the Company, the proposal should be sent certified mail, return receipt requested. Proposals must comply with our Bylaws related to shareholder proposals and with SEC Rule 14a-8 in order to be included in our proxy materials for the 2013 annual meeting of shareholders.

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ITEM 6.  Exhibits

2.1	Amended and Restated Agreement and Plan of Merger, dated as of October 31, 2011, by and among Radiancy, Inc., PhotoMedex, Inc. and PHMD Merger Sub, Inc., including the Form of Warrant. (23)
3.1	Amended and Restated Articles of Incorporation of PhotoMedex, Inc. a Nevada corporation, filed on December 12, 2011 with the Secretary of State for the State of Nevada. (23)
3.2	Bylaws of PhotoMedex, Inc. (a Nevada corporation), adopted December 28, 2010 (18)
4.1	Form of Warrant to Purchase Shares of Common Stock of PhotoMedex (19)
4.2	Term Loan and Security Agreement, dated as of March 19, 2010 between PhotoMedex, Inc. and Clutterbuck Funds LLC (26) (Exhibit 4.12 therein)
4.3	Term Note, dated March 19, 2010, between PhotoMedex, Inc. and Clutterbuck Funds, LLC (26) (Exhibit 4.13 therein)
4.4	Amendment No. 1 to Term Loan and Security Agreement, dated April 30, 2010 (27) (Exhibit 4.20 therein)
4.5	Amendment No. 2 to Term Loan and Security Agreement, dated March 28, 2011 (27) (Exhibit 4.21 therein)
10.1	Lease Agreement dated May 29, 1996, between Surgical Laser Technologies, Inc. and Nappen & Associates (Montgomeryville, Pennsylvania) (2)
10.2	Lease Renewal Agreement, dated January 18, 2001, between Surgical Laser Technologies, Inc. and Nappen & Associates (2)
10.3	Lease Agreement, dated July 10, 2006, PhotoMedex, Inc. and Nappen & Associates (3)
10.4	Standard Industrial/Commercial Multi-Tenant Lease - Net, dated July 30, 2008 (additional facility at Carlsbad, California) (15)
10.5	Standard Industrial/Commercial Multi-Tenant Lease  Net, dated March 17, 2005 (Carlsbad, California) (5)
10.6	License and Development Agreement, dated May 22, 2002, between Surgical Laser Technologies, Inc. and Reliant Technologies, Inc. (2)
10.7	Settlement Agreement and Release, dated November 11, 2008, by and among Allergan, Inc., Murray A. Johnstone, MD, PhotoMedex, Inc. and ProCyte Corporation. (15)
10.8	Master Asset Purchase Agreement, dated September 7, 2004, between PhotoMedex, Inc. and Stern Laser, srl (6)
10.9	License Agreement, dated March 31, 2006, and effective April 1, 2006, between the Mount Sinai School of Medicine and PhotoMedex, Inc. (7)
10.10	2005 Equity Compensation Plan, approved December 28, 2005 (8)
10.11	Amended and Restated 2000 Non-Employee Director Stock Option Plan (1)
10.12	Amended and Restated 2000 Stock Option Plan (1)
10.13	1996 Stock Option Plan, assumed from ProCyte (9)
10.14	Amended and Restated Employment Agreement with Dennis M. McGrath, dated September 1, 2007 (12)
10.15	Amended and Restated Employment Agreement of Michael R. Stewart, dated September 1, 2007 (12)
10.16	Restricted Stock Purchase Agreement of Dennis M. McGrath, dated January 15, 2006 (5)
10.17	Consulting Agreement dated January 21, 1998 between the Company and R. Rox Anderson, M.D. (4)
10.18	Restricted Stock Purchase Agreement of Dennis M. McGrath, dated May 1, 2007 (10)
10.19	Restricted Stock Purchase Agreement of Michael R. Stewart, dated May 1, 2007 (10)
10.20	Restricted Stock Purchase Agreement of Michael R. Stewart, dated August 13, 2007 (11)
10.21	Amended and Restated 2000 Non-Employee Director Stock Option Plan, dated as of June 26, 2007 (24)
10.22	Amended and Restated 2005 Equity Compensation Plan, dated as of June 26, 2007, as amended on October 28, 2008 (14)
10.23	Form of Indemnification Agreement for directors and executive officers of PhotoMedex, Inc. (13)
10.24	Restricted Stock Purchase Agreement of Dennis M. McGrath, dated June 15, 2009 (16)
10.25	Restricted Stock Purchase Agreement of Michael R. Stewart, dated June 15, 2009 (16)
10.26	Co-Promotion Agreement, dated as of January 7, 2010, between PhotoMedex, Inc and Galderma Laboratories, L.P. (17)
10.27	Amended and Restated 2000 Non-Employee Director Stock Option Plan, dated as of August 3, 2010 (18)
10.28	Amended and Restated 2005 Equity Compensation Plan, dated as of August 3, 2010. (18)
10.29	Restricted Stock Agreement of Dennis M. McGrath, dated March 30, 2011 (18)
10.30	Restricted Stock Agreement of Michael R. Stewart, dated March 30, 2011 (18)

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10.31	Restricted Stock Agreement of Christina L. Allgeier, dated March 30, 2011 (18)
10.32	Amended and Restated Employment agreement, entered into by and between PhotoMedex, Inc. and Dennis McGrath on July 4, 2011. (19)
10.33	Amended and Restated Restricted Stock Agreement, entered into as of August 11, 2011, by and between PhotoMedex, Inc. and Dennis McGrath. (20)
10.34	Restricted Stock Agreement, entered into as of July 4, 2011, by and between PhotoMedex, Inc. and Dennis McGrath. (19)
10.35	Non-Qualified Stock Option Agreement, entered into as of July 4, 2011, by and between PhotoMedex, Inc. and Dennis McGrath. (19)
10.40	Amended and Restated Employment Agreement entered into by and between PhotoMedex, Inc. and Dolev Rafaeli on August 9, 2011. (21)
10.41	Distribution Agreement by and between Radiancy, Inc. and Ya-Man Ltd., dated October 17, 2008. (21)
10.42	Distribution Agreement Extension by and between Radiancy, Inc. and Ya-Man Ltd., dated August 12, 2010. (21)
10.43	First Amendment to the Nonqualified Stock Option Agreement, dated as of October 31, 2011, by and between PhotoMedex, Inc. and Dennis McGrath (22)
10.44	First Amendment to the Nonqualified Stock Option Agreement, dated as of October 31, 2011, by and between PhotoMedex, Inc. and Michael R. Stewart (22)
10.45	Lease Renewal Agreement, dated February 22, 2012, PhotoMedex, Inc. and FR National Life LLC (28)
10.46	Lease Agreement dated September 1, 2010, by and between 30 Ramland Road, LLC and Radiancy, Inc. (Orangeburg). (25)
10.47	Unprotected Tenancy Agreement dated September 7, 2008 by and between S.A.I. Yarak Buildings and Investments Ltd. and Radiancy (Israel) Ltd. (Hod Hasharon) (25)
10.48	Annex to S.A.I. Radiancy Unprotected Tenancy Lease, dated as of January 20, 2008, by and between S.A.I. Yarak Buildings and Investments Ltd. and Radiancy (Israel) Ltd. (25)
10.49	Exclusive License Agreement for Methods of Treating Diseased Tissue, dated April 1, 2012, by and between the Regents of the University of California and PhotoMedex, Inc. (25)
10.50	Non-Qualified Stock Option Agreement dated March 18, 2012 between PhotoMedex, Inc. and Dolev Rafaeli (25)
10.51	Non-Qualified Stock Option Agreement dated March 18, 2012 between PhotoMedex, Inc. and Dennis McGrath (25)
10.52	Warrant issued March 1, 2012 to Crystal Research Associates LLC. (29)
10.53	Lease Agreement dated August 24, 2012, by and between 30 Ramland Road, LLC and Radiancy, Inc. (Orangeburg). (30)
10.54	Non-Qualified Stock Option Agreement dated February 28, 2013 between PhotoMedex, Inc. and Dolev Rafaeli (31)
10.55	Non-Qualified Stock Option Agreement dated February 28, 2013 between PhotoMedex, Inc. and Dennis McGrath (31)
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

- 33 -

(1)   Filed as part of our Registration Statement on Form S-4, on October 18, 2002, and as amended.

(2)   Filed as part of our Annual Report on Form 10-K for the year ended December 31, 2002.

(3)   Filed as part of our Annual Report on Form 10-K for the year ended December 31, 2006.

(4)   Filed as part of our Registration Statement on Form S-1/A, on August 5, 1999.

(5)   Filed as part of our Annual Report on Form 10-K for the year ended December 31, 2005.

(6)   Filed as part of our Current Report on Form 8-K, on September 13, 2004.

(7)   Filed as part of our Current Report on Form 8-K, on April 10, 2006.

(8)   Filed as part of our Definitive Proxy Statement on Schedule 14A, on November 15, 2005.

(9)   Filed as part of our Registration Statement on Form S-8, on April 13, 2005.

(10)   Filed as part of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2007.

(11)   Filed as part of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2007.

(12)   Filed as part of our Annual Report on Form 10-K for the year ended December 31, 2007.

(13)   Filed as part of our Current Report on Form 8-K on March 5, 2009.

(14)   Filed as part of our Definitive Proxy Statement on Schedule 14A on December 18, 2008.

(15)   Filed as part of our Annual Report on Form 10-K for the year ended December 31, 2008.

(16)   Filed as part of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2009.

(17)   Filed as part of our Current Report on Form 8-K on January 11, 2010.

(18)   Filed as part of our Annual Report on Form 10-K for the year ended December 31, 2010.

(19)    Filed as part of our Current Report on Form 8-K on July 8, 2011.

(20)    Filed as part of our Registration Statement on Form S-4, on August 12, 2011.

(21)   Filed as part of our Registration Statement on Form S-4/A, on October 5, 2011.

(22)   Filed as part of our Registration Statement on Form S-4/A, on November 2, 2011.

(23)   Filed as part of our Current Report on Form 8-K on December 16, 2011.

(24)   Filed as part of our Current Report on Form 8-K on July 2, 2007.

(25)   Filed as part of our Annual Report on Form 10-K for the year ended December 31, 2011.

(26)   Filed as part of our Current Report on form 8-K on March 23, 2010.

(27)   Filed as part of our Annual Report on Form 10-K for the year ended December 31, 2010.

(28)	Filed as part of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2012.
(29)	Filed as part of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2012.
(30)	Filed as part of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2012.

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(31)	Filed with this Form 10-Q.
*	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.
†	Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended (the “Securities Act”), are deemed not filed for purposes of Section 18 of the Exchange Act, and otherwise not subject to liability under those sections. This exhibit shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the Registrant specifically incorporates this exhibit by reference.

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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.

	PHOTOMEDEX, INC.
Date   May 10, 2013	By:	/s/ Dolev Rafaeli
		Name  Dolev Rafaeli
		Title    Chief Executive Officer

Date   May 10, 2013	By:	/s/ Dennis M. McGrath
		Name  Dennis M. McGrath
		Title    President & Chief Financial Officer

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EX-10.54

EXHIBIT 10.54

PHOTOMEDEX, INC.

NONQUALIFIED STOCK OPTION AGREEMENT

THIS AGREEMENT is made as of February 28, 2013 (the “Grant Date), by and between PhotoMedex, Inc., a Nevada corporation (the "Company"), and Dolev Rafaeli ("Optionee"), the Chief Executive Officer of the Company.

R E C I T A L

The Board of Directors of the Company (the "Board of Directors") has authorized the granting, out of and subject to the Company’s 2005 Equity Compensation Plan (the “Plan”), to Optionee as an executive officer of the Company of a non-qualified stock option to purchase the number of shares of Common Stock of the Company specified in Section 1 hereof, at the price specified therein, such option to be for the term and upon the terms and conditions hereinafter stated.

A G R E E M E N T

NOW, THEREFORE, in consideration of the premises and of the undertakings of the parties hereto contained herein, it is hereby agreed:

1.           Number of Shares; Option Price.  Pursuant to said action of the Company’s stockholders and the Board of Directors, the Company hereby grants to Optionee, subject to Optionee’s counter-execution and delivery of this Agreement to the Company and subject to the terms of the Plan, the option ("Option") and to the Optionee’s Employment Agreement with the Company dated August 9, 2011, to purchase up to 47,500 shares ("Option Shares") of Common Stock of the Company, at the exercise price per share equal to $20.00 per share.

2.           Term.  Subject to this Agreement, this Option, if not earlier exercised, shall expire ten (10) years from the Grant Date (the “Term”).

3.           Vesting; Exercisability.  a) The Option shall vest 20% on each of the first five (5) anniversaries of the Grant Date. The Options shall continue to vest for as long as the Optionee provides services to the Company.  The Options shall vest immediately under conditions (including a Change of Control) defined in the Employment Agreement.  b) The Option shall remain exercisable, for as long as Optionee provides services to the Company under his Employment Agreement.  In the event that Optionee ceases to provide services under his Employment Agreement, the Options shall remain exercisable for the periods specified in the Employment Agreement, and in the absence of such a specification, then as specified in the Plan.

4.           Method and Time of Exercise.  The Option may be exercised by written notice delivered to the Company stating the number of shares with respect to which the Option is being exercised, together with a check made payable to the Company in the amount of the purchase price of such shares plus the amount of applicable federal, state, local or foreign withholding taxes.  Not less than 100 shares may be purchased at any one time unless the number purchased is the total number purchasable under such Option at the time.  Only whole shares may be purchased.

- 1 -

5.           Tax Withholding.  As a condition to exercise of this Option, the Company may require the Optionee to pay over to the Company all applicable federal, state, local or foreign taxes which the Company is required to withhold with respect to the exercise of this Option.  At the discretion of the Company and upon the request of the Optionee, the minimum statutory withholding tax requirements may be satisfied by the withholding of shares of Common Stock otherwise issuable to the Optionee upon the exercise of this Option.

6.           Nontransferability.  This Option may not be assigned or transferred except, if applicable, by will or by the laws of descent and distribution, and may be exercised only by Optionee during Optionee's lifetime and after Optionee's death, by Optionee's representative or by the person entitled thereto under Optionee's will or the laws of intestate succession.

7.           Optionee Not a Shareholder.  Optionee shall have no rights as a shareholder with respect to the Common Stock of the Company covered by the Option until the date of issuance of a stock certificate or stock certificates to him upon exercise of the Option.  No adjustment will be made for dividends or other rights for which the record date is prior to the date such stock certificate or certificates are issued.

8.           Restrictions on Sale of Shares.  It is acknowledged by the Company that the shares underlying the Option granted hereunder have been duly registered by a Form S-8 with the Securities and Exchange Commission.

9.           Notices.  All notices to the Company shall be addressed to the Company at the principal office of the Company at 147 Keystone Drive, Montgomeryville, Pennsylvania 18936, Telecopier No. (215) 619-3209, and all notices to Optionee shall be addressed to Optionee at the address and telecopier number of Optionee on file with the Company, or to such other address and telecopier number as either may designate to the other in writing.  A notice shall be deemed to be duly given if and when enclosed in a properly addressed sealed envelope deposited, postage prepaid, with the United States Postal Service and followed by telecopier to the addressee.  In lieu of giving notice by mail as aforesaid, written notices under this Agreement may be given by personal delivery to Optionee or to the Company (as the case may be).

10.           Adjustments.  If there is any change in the capitalization of the Company affecting in any manner the number or kind of outstanding shares of Common Stock of the Company, whether by stock dividend, stock split, reclassification or recapitalization of such stock, or because the Company has merged or consolidated with one or more other corporations (and provided the Option does not thereby terminate pursuant to Section 2 hereof), then the number and kind of shares then subject to the Option and the price to be paid therefor shall be appropriately adjusted by the Board of Directors; provided, however, that in no event shall any such adjustment result in the Company's being required to sell or issue any fractional shares.  Any such adjustment shall be made without change in the aggregate purchase price applicable to the unexercised portion of the Option, but with an appropriate adjustment to the price of each Share or other unit of security covered by this Option.

- 2 -

11.           Cessation of Corporate Existence.  Notwithstanding any other provision of this Option, but subject to the provisions of Optionee’s Employment Agreement, upon the dissolution or liquidation of the Company, the reorganization, merger or consolidation of the Company with one or more corporations as a result of which the Company is not the surviving corporation, or the sale of substantially all the assets of the Company or of more than 50% of the then outstanding stock of the Company to another corporation or other entity, the Option granted hereunder shall terminate; provided, however, that in its sole and absolute discretion, the surviving corporation may, but shall not be so obligated to, tender to any Optionee, an option to purchase shares of the surviving corporation, and such new option or options shall contain such terms and provisions as shall be required substantially to preserve the rights and benefits of this Option.

12.  Invalid Provisions.  In the event that any provision of this Agreement is found to be invalid or otherwise unenforceable under any applicable law, such invalidity or unenforceability shall not be construed as rendering any other provisions contained herein invalid or unenforceable, and all such other provisions shall be given full force and effect to the same extent as though the invalid or unenforceable provision were not contained herein.

13.  Applicable Law.  This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania.

14. Counterparts.  This Agreement may be executed in counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more counterparts have been signed by each of the parties hereto and delivered to the other.

- 3 -

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year first above written.

("Company")

PHOTOMEDEX, INC.

By: /s/ Dennis M. McGrath     

Dennis M. McGrath

President & Chief Financial Officer

("Optionee") 

By: /s/ Dolev Rafaeli    

Dolev Rafaeli

Address:

FAX

SSN:  xxx-xx-xxxx

In ratification of the above Agreement	/s/ Yoav Ben-Dror
	Yoav Ben-Dror
	Vice Chairman of the Board

- 4 -

EX-10.55

EXHIBIT 10.55

PHOTOMEDEX, INC.

NONQUALIFIED STOCK OPTION AGREEMENT

THIS AGREEMENT is made as of February 28, 2013 (the “Grant Date), by and between PhotoMedex, Inc., a Nevada corporation (the "Company"), and Dennis McGrath ("Optionee"), the President and Chief Financial Officer of the Company.

R E C I T A L

The Board of Directors of the Company (the "Board of Directors") has authorized the granting, out of and subject to the Company’s 2005 Equity Compensation Plan (the “Plan”), to Optionee as an executive officer of the Company of a non-qualified stock option to purchase the number of shares of Common Stock of the Company specified in Section 1 hereof, at the price specified therein, such option to be for the term and upon the terms and conditions hereinafter stated.

A G R E E M E N T

NOW, THEREFORE, in consideration of the premises and of the undertakings of the parties hereto contained herein, it is hereby agreed:

1.           Number of Shares; Option Price.  Pursuant to said action of the Company’s stockholders and the Board of Directors, the Company hereby grants to Optionee, subject to Optionee’s counter-execution and delivery of this Agreement to the Company and subject to the terms of the Plan, the option ("Option") and to the Optionee’s Employment Agreement with the Company dated July 4, 2011, to purchase up to 35,000 shares ("Option Shares") of Common Stock of the Company, at the exercise price per share equal to $20.00 per share..

2.           Term.  Subject to this Agreement, this Option, if not earlier exercised, shall expire ten (10) years from the Grant Date (the “Term”).

3.           Vesting; Exercisability.  a) The Option shall vest 20% on each of the first five (5) anniversaries of the Grant Date. The Options shall continue to vest for as long as the Optionee provides services to the Company.  The Options shall vest immediately under conditions (including a Change of Control) defined in the Employment Agreement.  b) The Option shall remain exercisable, for as long as Optionee provides services to the Company under his Employment Agreement.  In the event that Optionee ceases to provide services under his Employment Agreement, the Options shall remain exercisable for the periods specified in the Employment Agreement, and in the absence of such a specification, then as specified in the Plan.

4.           Method and Time of Exercise.  The Option may be exercised by written notice delivered to the Company stating the number of shares with respect to which the Option is being exercised, together with a check made payable to the Company in the amount of the purchase price of such shares plus the amount of applicable federal, state, local or foreign withholding taxes.  Not less than 100 shares may be purchased at any one time unless the number purchased is the total number purchasable under such Option at the time.  Only whole shares may be purchased.

- 1 -

5.           Tax Withholding.  As a condition to exercise of this Option, the Company may require the Optionee to pay over to the Company all applicable federal, state, local or foreign taxes which the Company is required to withhold with respect to the exercise of this Option.  At the discretion of the Company and upon the request of the Optionee, the minimum statutory withholding tax requirements may be satisfied by the withholding of shares of Common Stock otherwise issuable to the Optionee upon the exercise of this Option.

6.           Nontransferability.  This Option may not be assigned or transferred except, if applicable, by will or by the laws of descent and distribution, and may be exercised only by Optionee during Optionee's lifetime and after Optionee's death, by Optionee's representative or by the person entitled thereto under Optionee's will or the laws of intestate succession.

7.           Optionee Not a Shareholder.  Optionee shall have no rights as a shareholder with respect to the Common Stock of the Company covered by the Option until the date of issuance of a stock certificate or stock certificates to him upon exercise of the Option.  No adjustment will be made for dividends or other rights for which the record date is prior to the date such stock certificate or certificates are issued.

8.           Restrictions on Sale of Shares.  It is acknowledged by the Company that the shares underlying the Option granted hereunder have been duly registered by a Form S-8 with the Securities and Exchange Commission.

9.           Notices.  All notices to the Company shall be addressed to the Company at the principal office of the Company at 147 Keystone Drive, Montgomeryville, Pennsylvania 18936, Telecopier No. (215) 619-3209, and all notices to Optionee shall be addressed to Optionee at the address and telecopier number of Optionee on file with the Company, or to such other address and telecopier number as either may designate to the other in writing.  A notice shall be deemed to be duly given if and when enclosed in a properly addressed sealed envelope deposited, postage prepaid, with the United States Postal Service and followed by telecopier to the addressee.  In lieu of giving notice by mail as aforesaid, written notices under this Agreement may be given by personal delivery to Optionee or to the Company (as the case may be).

10.           Adjustments.  If there is any change in the capitalization of the Company affecting in any manner the number or kind of outstanding shares of Common Stock of the Company, whether by stock dividend, stock split, reclassification or recapitalization of such stock, or because the Company has merged or consolidated with one or more other corporations (and provided the Option does not thereby terminate pursuant to Section 2 hereof), then the number and kind of shares then subject to the Option and the price to be paid therefor shall be appropriately adjusted by the Board of Directors; provided, however, that in no event shall any such adjustment result in the Company's being required to sell or issue any fractional shares.  Any such adjustment shall be made without change in the aggregate purchase price applicable to the unexercised portion of the Option, but with an appropriate adjustment to the price of each Share or other unit of security covered by this Option.

11.           Cessation of Corporate Existence.  Notwithstanding any other provision of this Option, but subject to the provisions of Optionee’s Employment Agreement, upon the dissolution or liquidation of the Company, the reorganization, merger or consolidation of the Company with one or

- 2 -

more corporations as a result of which the Company is not the surviving corporation, or the sale of substantially all the assets of the Company or of more than 50% of the then outstanding stock of the Company to another corporation or other entity, the Option granted hereunder shall terminate; provided, however, that in its sole and absolute discretion, the surviving corporation may, but shall not be so obligated to, tender to any Optionee, an option to purchase shares of the surviving corporation, and such new option or options shall contain such terms and provisions as shall be required substantially to preserve the rights and benefits of this Option.

12.  Invalid Provisions.  In the event that any provision of this Agreement is found to be invalid or otherwise unenforceable under any applicable law, such invalidity or unenforceability shall not be construed as rendering any other provisions contained herein invalid or unenforceable, and all such other provisions shall be given full force and effect to the same extent as though the invalid or unenforceable provision were not contained herein.

13.  Applicable Law.  This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania.

14. Counterparts.  This Agreement may be executed in counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more counterparts have been signed by each of the parties hereto and delivered to the other.

- 3 -

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year first above written.

	("Company")
	PHOTOMEDEX, INC.
	By:  /s/ Dolev Rafaeli
	Dolev Rafaeli
	Chief Executive Officer
	("Optionee")
	By:  /s/ Dennis McGrath
	Dennis McGrath
	Address:
	Fax No:
	SSN:  xxx-xx-xxxx
In ratification of the above Agreement	/s/ Yoav Ben-Dror
	Yoav Ben-Dror
	Vice Chairman of the Board

- 4 -

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Dolev Rafaeli, certify that:

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

	PhotoMedex, Inc.
Date: May 10, 2013	By:	/s/ Dolev Rafaeli
		Name:  Dolev Rafaeli
		Title:    Chief Executive Officer

E-31.1

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Dennis M. McGrath, certify that:

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

	Company Name
Date:  May 10, 2013	By:	/s/  Dennis M. McGrath
		Name  Dennis M. McGrath
		Title  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), Dolev Rafaeli, the Chief Executive Officer of PhotoMedex, Inc. (the “Company”), and Dennis M. McGrath, the President and Chief Financial Officer of the Company, each hereby certifies that, to the best of his knowledge:

1. The Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2013, 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 10, 2013

/s/ Dolev Rafaeli

Name:  Dolev Rafaeli

Title: Chief Executive Officer

/s/ Dennis M. McGrath

Name: Dennis M. McGrath

Title: President and 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 PhotoMedex, 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 PhotoMedex, Inc. and will be retained by PhotoMedex, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

E-32.1

XML

Accrued Compensation and related expenses (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013		Dec. 31, 2012
Accrued Compensation and related expenses [Abstract]
Accrued payroll and related taxes	$ 563		$ 1,010
Accrued vacation	335		262
Accrued commissions and bonus	1,598		1,222
Total accrued compensation and related expense	$ 2,496	[1]	$ 2,494

[1] (unaudited)

XML

Employee Stock Benefit Plans (Tables)

3 Months Ended

Mar. 31, 2013

Employee Stock Benefit Plans [Abstract]

Stock option activity under share-based compensation plans

Stock option activity under all of the Company's share-based compensation plans for the three months ended March 31, 2013 was as follows:

	Number of Options			Weighted Average Exercise Price
Outstanding, January 1, 2013		898,541		$	16.65
Granted		259,625			16.59
Exercised		(3,333	)		6.24
Cancelled		(9,166	)		26.11
Outstanding, March 31, 2013		1,145,667		$	16.59
Options exercisable at March 31, 2013		325,042		$	17.71

Weighted average assumptions used to estimate fair value of stock options

The Company uses the Black-Scholes option-pricing model to estimate fair value of grants of stock options with the following weighted-average assumptions:

	Three Months Ended March 31, 2013
Risk-free interest rate		1.26	%
Volatility		85.25	%
Expected dividend yield		0	%
Expected life	5.5 years
Estimated forfeiture rate		0	%

XML

Business Segment and Geographic Data (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013 Segment	Mar. 31, 2012	Dec. 31, 2012
Business Segment and Geographic Data [Abstract]
Number of operating units	3
Results of operations from business segments [Abstract]
Revenues	$ 57,216	$ 50,273
Cost of revenues	11,866	11,234
Gross profit	45,350	39,039
Gross profit % (in hundredths)	79.30%	77.70%
Allocated operating expenses [Abstract]
Engineering and product development	773	758
Selling and marketing expenses	29,326	25,835
Unallocated operating expenses	5,659	7,119
Total operating expenses	35,758	33,712
Operating profit	9,592	5,327
Interest and other financing income (expense), net	131	(230)
Net income (loss) before taxes	9,723	5,097
Net revenues by geographic area [Abstract]
Revenues	57,216	50,273
Long-lived assets by geographic area [Abstract]
Long-lived assets	7,744		6,759
North America [Member]
Results of operations from business segments [Abstract]
Revenues	44,899	38,689
Net revenues by geographic area [Abstract]
Revenues	44,899	38,689
Long-lived assets by geographic area [Abstract]
Long-lived assets	6,641		5,772
Asia Pacific [Member]
Results of operations from business segments [Abstract]
Revenues	5,762	5,307
Net revenues by geographic area [Abstract]
Revenues	5,762	5,307
Long-lived assets by geographic area [Abstract]
Long-lived assets	0		0
Europe (Including Israel) [Member]
Results of operations from business segments [Abstract]
Revenues	5,633	5,208
Net revenues by geographic area [Abstract]
Revenues	5,633	5,208
Long-lived assets by geographic area [Abstract]
Long-lived assets	1,103		987
South America [Member]
Results of operations from business segments [Abstract]
Revenues	922	1,069
Net revenues by geographic area [Abstract]
Revenues	922	1,069
Long-lived assets by geographic area [Abstract]
Long-lived assets	0		0
United States [Member]
Results of operations from business segments [Abstract]
Revenues	38,007	36,622
Net revenues by geographic area [Abstract]
Revenues	38,007	36,622
Japan [Member]
Results of operations from business segments [Abstract]
Revenues	4,262	3,327
Net revenues by geographic area [Abstract]
Revenues	4,262	3,327
CONSUMER [Member]
Results of operations from business segments [Abstract]
Revenues	49,060	42,201
Cost of revenues	7,517	6,772
Gross profit	41,543	35,429
Gross profit % (in hundredths)	84.70%	84.00%
Allocated operating expenses [Abstract]
Engineering and product development	218	237
Selling and marketing expenses	25,631	22,148
Unallocated operating expenses	0	0
Total operating expenses	25,849	22,385
Operating profit	15,694	13,044
Interest and other financing income (expense), net	0	0
Net income (loss) before taxes	15,694	13,044
Net revenues by geographic area [Abstract]
Revenues	49,060	42,201
PHYSICIAN RECURRING [Member]
Results of operations from business segments [Abstract]
Revenues	5,955	5,073
Cost of revenues	2,931	2,679
Gross profit	3,024	2,394
Gross profit % (in hundredths)	50.80%	47.20%
Allocated operating expenses [Abstract]
Engineering and product development	324	310
Selling and marketing expenses	3,174	2,530
Unallocated operating expenses	0	0
Total operating expenses	3,498	2,840
Operating profit	(474)	(446)
Interest and other financing income (expense), net	0	0
Net income (loss) before taxes	(474)	(446)
Net revenues by geographic area [Abstract]
Revenues	5,955	5,073
PROFESSIONAL [Member]
Results of operations from business segments [Abstract]
Revenues	2,201	2,999
Cost of revenues	1,418	1,783
Gross profit	783	1,216
Gross profit % (in hundredths)	35.60%	40.50%
Allocated operating expenses [Abstract]
Engineering and product development	231	211
Selling and marketing expenses	521	1,157
Unallocated operating expenses	0	0
Total operating expenses	752	1,368
Operating profit	31	(152)
Interest and other financing income (expense), net	0	0
Net income (loss) before taxes	31	(152)
Net revenues by geographic area [Abstract]
Revenues	$ 2,201	$ 2,999

XML

Property and Equipment

3 Months Ended

Mar. 31, 2013

Property and Equipment [Abstract]

Property and Equipment

Note 3

Property and Equipment:

	March 31, 2013			December 31, 2012
	(unaudited)
Lasers-in-service	$	8,594		$	7,301
Equipment, computer hardware and software		4,220			4,015
Furniture and fixtures		619			617
Leasehold improvements		399			396
		13,832			12,329
Accumulated depreciation and amortization		(6,088	)		(5,570	)
Property and equipment, net	$	7,744		$	6,759

Depreciation and related amortization expense was $634 and $638 for the three months ended March 31, 2013 and 2012, respectively.

XML

Inventories (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013		Dec. 31, 2012
Schedule of inventories [Abstract]
Raw materials and work-in-process	$ 9,494		$ 9,012
Finished goods	11,988		13,455
Total inventories	$ 21,483	[1]	$ 22,467

[1] (unaudited)

XML

The Company and Summary of Significant Accounting Policies (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2013 Segment Channel	Mar. 31, 2012	Dec. 31, 2012
Business Acquisition [Line Items]
Effective date of merger	Dec. 13, 2011
Number of operating units	3
Revenue Recognition [Abstract]
Number of distribution channels	2
Period of sales deferred	14 days
Derivatives [Abstract]
Balance of derivative instruments	$ 377
Amount recognized as financing income	154
Notional amounts of foreign currency derivatives	4,800
Activity in warranty accrual [Roll Forward]
Accrual at beginning of year	1,440	1,661
Additions charged to warranty expense	337	483
Expiring warranties	(152)	(74)
Claims satisfied	(314)	(330)
Total	1,311	1,740
Less: current portion	(1,190)	(1,308)	(1,274)
Accrued extended warranty	$ 121	$ 432
Weighted-average number of common and common equivalent shares outstanding [Abstract]
Basic number of common shares outstanding (in shares)	20,678,023	18,339,977
Dilutive effect of stock options and warrants (in shares)	469,560	536,186
Diluted number of common and common stock equivalent shares outstanding (in shares)	21,147,583	18,876,163
Common stock options and warrants excluded from computation of diluted earnings per share (in shares)	1,081,226
Minimum [Member]
Warranty on Product Sales [Line Items]
Period of warranty on product sales	1 year
Extended period of warranty on domestic sale of laser equipment	3 years
Maximum [Member]
Warranty on Product Sales [Line Items]
Period of warranty on product sales	2 years
Extended period of warranty on domestic sale of laser equipment	4 years
PhotoMedex, Inc. [Member]
Business Acquisition [Line Items]
Percentage of ownership on reverse merger (in hundredths)	20.00%
Radiancy, Inc. [Member]
Business Acquisition [Line Items]
Percentage of ownership on reverse merger (in hundredths)	80.00%

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Property and Equipment (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013		Mar. 31, 2012	Dec. 31, 2012
Schedule property and equipment [Abstract]
Property and equipment, gross	$ 13,832			$ 12,329
Accumulated depreciation and amortization	(6,088)			(5,570)
Total property and equipment, net	7,744	[1]		6,759
Depreciation and related amortization expense	634		638
Lasers-in-service [Member]
Schedule property and equipment [Abstract]
Property and equipment, gross	8,594			7,301
Equipment, Computer Hardware and Software [Member]
Schedule property and equipment [Abstract]
Property and equipment, gross	4,220			4,015
Furniture and Fixtures [Member]
Schedule property and equipment [Abstract]
Property and equipment, gross	619			617
Leasehold Improvements [Member]
Schedule property and equipment [Abstract]
Property and equipment, gross	$ 399			$ 396

[1] (unaudited)

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Patents and Licensed Technologies, net (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended			12 Months Ended
	Mar. 31, 2013		Mar. 31, 2012	Dec. 31, 2012
Patents and Licensed Technologies [Abstract]
Patents and licensed technologies, net	$ 12,020	[1]		$ 12,673
Estimated amortization expense for amortizable patents and licensed technologies assets [Abstract]
Patents and licensed technologies, net	12,020	[1]		12,673
Patents and Licensed Technologies [Member]
Patents and Licensed Technologies [Abstract]
Gross Amount beginning of period	15,411		15,124	15,124
Additions	18			181
Translation differences	(193)			106
Gross Amount end of period	15,236			15,411
Accumulated amortization	(3,216)			(2,738)
Patents and licensed technologies, net	12,020			12,673
Amortization expense	509		507
Estimated amortization expense for amortizable patents and licensed technologies assets [Abstract]
Last nine months of 2013	1,524
2014	2,032
2015	2,025
2016	1,946
2017	878
Thereafter	3,615
Patents and licensed technologies, net	$ 12,020			$ 12,673

[1] (unaudited)

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Inventories

3 Months Ended

Mar. 31, 2013

Inventories [Abstract]

Inventories

Note 2

Inventories:

	March 31, 2013		December 31, 2012
	(unaudited)
Raw materials and work in progress	$	9,494	$	9,012
Finished goods		11,989		13,455
Total inventories	$	21,483	$	22,467

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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Goodwill and Other Intangible Assets (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended			12 Months Ended
	Mar. 31, 2013		Mar. 31, 2012	Dec. 31, 2012
Goodwill [Line Items]
Definite-lived intangible assets recorded as a part of purchase price allocation	$ 12,000
Goodwill [Roll Forward]
Goodwill, beginning balance	24,500
Translation differences	(890)
Goodwill, ending balance	23,610	[1]		24,500
Accumulated impairment loss	0
Schedule of definite-lived intangible assets [Abstract]
Gross Amount beginning of period	12,116		12,000	12,000
Translation differences	(210)			116
Gross Amount end of period	11,906			12,116
Accumulated Amortization	(1,537)			(1,262)
Net Book Value	10,369			10,854
Amortization expense	300		300
Estimated amortization expense for amortizable intangible assets [Abstract]
Last nine months of 2013	900
2014	1,200
2015	1,200
2016	1,200
2017	1,200
Thereafter	4,669
Net Book Value	10,369			10,854
Trademarks [Member]
Schedule of definite-lived intangible assets [Abstract]
Gross Amount beginning of period	5,744		5,700	5,700
Translation differences	(80)			44
Gross Amount end of period	5,664			5,744
Accumulated Amortization	(731)			(598)
Net Book Value	4,933			5,146
Estimated amortization expense for amortizable intangible assets [Abstract]
Net Book Value	4,933			5,146
Customer Relationships [Member]
Schedule of definite-lived intangible assets [Abstract]
Gross Amount beginning of period	6,372		6,300	6,300
Translation differences	(130)			72
Gross Amount end of period	6,242			6,372
Accumulated Amortization	(806)			(664)
Net Book Value	5,436			5,708
Estimated amortization expense for amortizable intangible assets [Abstract]
Net Book Value	5,436			5,708
Current Reportable Segments [Member]
Goodwill [Line Items]
Goodwill recorded as a part of purchase price allocation	$ 24,005

[1] (unaudited)

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CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013		Dec. 31, 2012
Current assets:
Cash and cash equivalents	$ 45,509	[1]	$ 44,348
Short term bank deposit	18,000	[1]	18,000
Accounts receivable, net of allowance for doubtful accounts of $7,677 and $6,917, respectively	24,281	[1]	19,064
Inventories, net	21,483	[1]	22,467
Deferred tax asset	19,409	[1]	19,441
Prepaid expenses and other current assets	8,746	[1]	12,853
Total current assets	137,428	[1]	136,173
Property and equipment, net	7,744	[1]	6,759
Patents and licensed technologies, net	12,020	[1]	12,673
Other intangible assets	10,369	[1]	10,854
Goodwill	23,610	[1]	24,500
Deferred tax asset	19,541	[1]	20,186
Funds in respect of employee rights upon retirement and other assets	818	[1]	745
Total assets	211,530	[1]	211,890
Current liabilities:
Current portion of notes payable	468	[1]	609
Current portion of long-term debt	0	[1]	10
Accounts payable	7,257	[1]	10,025
Accrued compensation and related expenses	2,496	[1]	2,494
Other accrued liabilities	16,679	[1]	22,099
Deferred revenues	6,648	[1]	5,259
Total current liabilities	33,548	[1]	44,563
Long-term liabilities:
Long-term note payable, net of current maturities	125	[1]	0
Deferred revenues	3,061	[1]	3,313
Other liabilities	121	[1]	166
Liability for employee rights upon retirement	646	[1]	588
Total liabilities	37,501	[1]	44,563
Stockholders' equity:
Preferred Stock, $.01 par value, 5,000,000 shares authorized; 0 shares issued and outstanding at March 31, 2013 and December 31, 2012	0	[1]	0
Common stock, $.01 par value, 50,000,000 shares authorized; 21,047,280 and 21,043,947 shares issued and outstanding at March 31, 2013 and December 31, 2012, respectively	210	[1]	210
Additional paid-in capital	132,257	[1]	130,954
Retained earnings	42,514	[1]	35,302
Accumulated other comprehensive (loss) income	(952)	[1]	861
Total stockholders' equity	174,029	[1]	167,327
Total liabilities and stockholders' equity	$ 211,530	[1]	$ 211,890

[1] (unaudited)

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013		Mar. 31, 2012
Cash Flows From Operating Activities:
Net income	$ 7,212		$ 4,857
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	1,443		1,332
Provision for doubtful accounts	1,046		714
Deferred income taxes	523		2,027
Stock-based compensation	1,290		1,753
Changes in operating assets and liabilities:
Accounts receivable	(6,403)		(7,101)
Inventories	794		470
Prepaid expenses and other assets	4,013		(1,967)
Accounts payable	(2,707)		707
Accrued compensation and related expenses	30		(1,077)
Other accrued liabilities	(5,372)		4,894
Other liabilities	(58)		70
Deferred revenues	1,137		1,469
Net cash provided by operating activities	3,064		8,148
Cash Flows From Investing Activities:
Purchases of property and equipment	(211)		(96)
Lasers placed in service	(1,220)		(366)
Increase in funds - employees retirement rights	(58)		(70)
Net cash used in investing activities	(1,489)		(532)
Cash Flows From Financing Activities:
Payments on notes payable	(203)		(212)
Repayments of long term debt	(10)		(525)
Issuance of warrants	0		98
Proceeds from option exercises	13		27
Net cash used in financing activities	(200)		(612)
Effect of exchange rate changes on cash	(214)		(5)
Net increase in cash and cash equivalents	1,161		6,999
Cash and cash equivalents, beginning of period	44,348		16,549
Cash and cash equivalents, end of period	45,509	[1]	23,548
Supplemental information:
Cash paid for income taxes	3,941		56
Cash paid for interest	$ 7		$ 59

[1] (unaudited)

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Income Taxes (Details)	3 Months Ended
	Mar. 31, 2013
Effective income tax rate reconciliation [Line Items]
Statutory income tax rate (in hundredths)	34.00%
Israeli subsidiaries [Member]
Effective income tax rate reconciliation [Line Items]
Rate at which subsidiary earnings are taxed (in hundredths)	20.00%
UK Subsidiaries [Member]
Effective income tax rate reconciliation [Line Items]
Rate at which subsidiary earnings are taxed (in hundredths)	24.00%

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Goodwill and Other Intangible Assets (Tables)

3 Months Ended

Mar. 31, 2013

Goodwill and Other Intangible Assets [Abstract]

Schedule of goodwill acquired

Balance at January 1, 2013, as restated	$	24,500
Translation differences		(890	)
Balance at March 31, 2013	$	23,610

Schedule of other definite-lived intangible assets

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

	March 31, 2013									December 31, 2012
	(unaudited)
	Trademarks			Customer Relationships			Total			Trademarks			Customer Relationships			Total
Gross Amount beginning of period	$	5,744		$	6,372		$	12,116		$	5,700		$	6,300		$	12,000
Translation differences		(80	)		(130	)		(210	)		44			72			116
Gross Amount end of period		5,664			6,242			11,906			5,744			6,372			12,116
Accumulated amortization		(731	)		(806	)		(1,537	)		(598	)		(664	)		(1,262	)
Net Book Value	$	4,933		$	5,436		$	10,369		$	5,146		$	5,708		$	10,854

Schedule of estimated amortization expense for amortizable intangible assets

Estimated amortization expense for the above amortizable intangible assets for the next five years is as follows:

Last nine months of 2013	$	900
2014		1,200
2015		1,200
2016		1,200
2017		1,200
Thereafter		4,669
Total	$	10,369

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Employee Stock Benefit Plans (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended			1 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Mar. 31, 2013 Stock Options [Member]	Feb. 28, 2013 Stock Options [Member] Employees And Consultants [Member]	Feb. 28, 2013 Stock Options [Member] Executive Employees [Member] Executive	Mar. 31, 2013 Non-Employee Director Stock Option Plan [Member]	Mar. 31, 2013 Non-Employee Director Stock Option Plan [Member] Common Stock [Member]	Mar. 31, 2013 Non-Employee Director Stock Option Plan [Member] Stock Options [Member]	Mar. 31, 2013 2005 Equity Plan [Member]	Mar. 31, 2013 2005 Equity Plan [Member] Common Stock [Member]	Mar. 31, 2013 2005 Equity Plan [Member] Stock Options [Member]
Employee Stock Benefit Plan [Abstract]
Common stock authorized in stock option plan (in shares)						120,000			3,000,000
Common stock issued or reserved for issuance (in shares)							7,000	17,285		753,095	1,055,546
Number of Options [Roll Forward]
Outstanding (in shares)			898,541
Granted (in shares)			259,625	177,125	82,500
Exercised (in shares)			(3,333)
Cancelled (in shares)			(9,166)
Outstanding (in shares)			1,145,667
Options exercisable (in shares)			325,042
Weighted Average Exercise Price [Roll Forward]
Outstanding (in dollars per share)			$ 16.65
Granted (in dollars per share)			$ 16.59	$ 15	$ 20
Exercised (in dollars per share)			$ 6.24
Cancelled (in dollars per share)			$ 26.11
Outstanding (in dollars per share)			$ 16.59
Options exercisable (in dollars per share)			$ 17.71
Unrecognized compensation cost related to non-vested option grants and stock awards	$ 12,032
Weighted-average period over which unrecognized compensation is expected to be recognized	3 years 6 months
Weighted average assumptions to estimate fair value of grants of stock options [Abstract]
Risk-free interest rate (in hundredths)			1.26%
Volatility (in hundredths)			85.25%
Expected dividend yield (in hundredths)			0.00%
Expected life			5 years 6 months
Estimated forfeiture rate (in hundredths)			0.00%
Options granted to purchase common stock (in shares)			259,625	177,125	82,500
Strike price of options granted (in dollars per share)			$ 16.59	$ 15	$ 20
Vesting period of options granted				5 years	5 years
Expiration period of options granted				10 years	10 years
Number of executive employees					2
Aggregate fair value of options granted					2,590
Total stock based compensation expense	$ 1,290	$ 1,753

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Other Accrued Liabilities (Tables)

3 Months Ended

Mar. 31, 2013

Other Accrued Liabilities [Abstract]

Schedule of other accrued liabilities

Other Accrued Liabilities:

	March 31, 2013		December 31, 2012
	(unaudited)
Accrued warranty, current	$	1,190	$	1,274
Accrued taxes, net (2)		1,401		4,304
Accrued sales returns (1)		11,548		11,901
Other accrued liabilities		2,540		4,620
Total other accrued liabilities	$	16,679	$	22,099

(1)   The activity in the sales returns liability account was as follows:

	Three Months Ended March 31,
	2013			2012
	(unaudited)			(unaudited)
Balance at beginning of year	$	11,781		$	6,143
Additions that reduce net sales		10,008			10,566
Deductions from reserves		(10,241	)		(6,726	)
Balance at end of period	$	11,548		$	9,983

(2) The December 31, 2012 balance is shown as Restated.

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The Company and Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2013

The Company and Summary of Significant Accounting Policies [Abstract]

The Company and Summary of Significant Accounting Policies

Note 1

The Company:

Background

PhotoMedex, Inc. (and its subsidiaries) (the "Company") is a Global Skin Health company providing integrated disease management and aesthetic solutions to dermatologists, professional aestheticians and consumers. The Company provides proprietary products and services that address skin diseases and conditions including psoriasis, vitiligo, acne, actinic keratosis (a precursor to certain types of skin cancer) and photo damage.

On December 13, 2011, the Company closed the reverse merger with Radiancy, Inc. Immediately following the reverse merger, the pre-reverse merger shareholders of PhotoMedex, Inc. ("Pre-merged PhotoMedex") collectively owned approximately 20% of the Company's outstanding common stock, and the former Radiancy, Inc. stockholders owned approximately 80% of the Company's outstanding common stock.

The merger was accounted for as a reverse acquisition with Radiancy treated for accounting purposes as the acquirer. As such, the financial statements of Radiancy, Inc. are treated as the historical financial statements of the Company, with the results of Pre-merged PhotoMedex, Inc. being included from December 14, 2011 and thereafter.

As a result of the acquisition, the Company implemented a business plan focused on three key components – a highly trained direct sales force to target Physician and Professional Segments; a multi-tiered marketing platform targeting the global consumer; and a full product-life-cycle model representing the ability to develop and commercialize innovative products from concept through regulatory, physician acceptance, and ultimately marketed directly to the consumer as dictated by normal product-life-cycle evolution. The Company reorganized 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.

Basis of Presentation:

The accompanying condensed consolidated financial statements and related notes should be read in conjunction with our consolidated financial statements and related notes contained in our Annual Report on Form 10-K/A for the fiscal year ended December 31, 2012 ("fiscal 2012"). The unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission ("SEC") related to interim financial statements. As permitted under those rules, certain information and footnote disclosures normally required or included in financial statements prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") have been condensed or omitted. The financial information contained herein is unaudited; however, management believes all adjustments have been made that are considered necessary to present fairly the results of the Company's financial position and operating results for the interim periods. All such adjustments are of a normal recurring nature.

The results for the three months ended March 31, 2013 are not necessarily indicative of the results to be expected for the year ending December 31, 2013 or for any other interim period or for any future period.

Principles of Consolidation

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

Revenue Recognition

The Company recognizes revenues from product sales when the following four criteria have been met: (i) the product has been delivered and the Company has no significant remaining obligations; (ii) persuasive evidence of an arrangement exists; (iii) the price to the buyer is fixed or determinable; and (iv) collection is reasonably assured. Revenues from product sales are recorded net of provisions for estimated chargebacks, rebates, expected returns and cash discounts.

The Company ships most of its products FOB shipping point, although from time to time certain customers, for example governmental customers, will insist upon FOB destination. Among the factors the Company takes into account when determining the proper time at which to recognize revenue are when title to the goods transfers and when the risk of loss transfers. Shipments to distributors or physicians that do not fully satisfy the collection criteria are recognized when invoiced amounts are fully paid or fully assured.

For revenue arrangements with multiple deliverables within a single, contractually binding arrangement (usually sales of products with separately priced extended warranty), each element of the contract is accounted for as a separate unit of accounting when it provides the customer value on a stand-alone basis and there is objective evidence of the fair value of the related unit.

With respect to sales arrangements under which the buyer has a right to return the related product, revenue is recognized only if all the following are met: the price is fixed or determinable at the date of sale; the buyer has paid, or is obligated to pay and the obligation is not contingent on resale of the product; the buyer's obligation would not be changed in the event of theft or physical destruction or damage of the product; the buyer has economic substance; the Company does not have significant obligations for future performance to directly bring about resale of the product by the buyer; and the amount of future returns can be reasonably estimated.

The Company provides a provision for product returns based on the experience with historical sales returns, in accordance with ASC Topic 605-15 with respect to sales of product when a right of return exists. Reported revenues are shown net of the returns provision. Such allowance for sales returns is included in Other Accrued Liabilities. (See Note 7).

Deferred revenue includes amounts received with respect to extended warranty maintenance, repairs and other billable services and amounts not yet recognized as revenues. Revenues with respect to such activities are deferred and recognized on a straight-line basis over the duration of the warranty period, the service period or when service is provided, as applicable to each service.

The Company has two distribution channels for its phototherapy treatment equipment. The Company either (i) sells its lasers through a distributor or directly to a physician or (ii) places its lasers in a physician's office (at no charge to the physician) and generally charges the physician a fee for an agreed upon number of treatments. In some cases, the Company and the customer stipulate to a quarterly or other periodic target of procedures to be performed, and accordingly revenue is recognized ratably over the period.

When the Company places a laser in a physician's office, it generally recognizes service revenue based on the number of patient treatments performed, or purchased under a periodic commitment, by the physician. Amounts collected with respect to treatments to be performed through laser-access codes that are sold to physicians free of a periodic commitment, but not yet used, are deferred and recognized as a liability until the physician performs the treatment. Unused treatments remain an obligation of the Company because the treatments can only be performed on Company-owned equipment. Once the treatments are delivered to a patient, this obligation has been satisfied.

The Company defers substantially all revenue from sales of treatment codes ordered by and delivered to its customers within the last two weeks of the period in determining the amount of procedures performed by its physician-customers. Management believes this approach closely approximates the actual amount of unused treatments that existed at the end of a period.

Functional Currency

The currency of the primary economic environment in which the operations of the Company and its subsidiaries are conducted is the US dollar ("$" or "dollars"), except Photo Therapeutics, Ltd. which is conducted in the Great Britain Pounds (GBP). Substantially all of the Group's revenues are derived in dollars or in other currencies linked to the dollar. Purchases of most materials and components are carried out in, or linked to the dollar. Thus, the functional (and reporting currency) of the Company and its subsidiaries (other than Photo Therapeutics, Ltd.) is the dollar.

Balances denominated in, or linked to, foreign currencies are stated on the basis of the exchange rates prevailing at the balance sheet date. For foreign currency transactions included in the statement of comprehensive income, the exchange rates applicable to the relevant transaction dates are used. Transaction gains or losses arising from changes in the exchange rates used in the translation of such balances are carried to financing income or expenses.

Assets and liabilities of a foreign subsidiary, whose functional currency is the local currency, are translated from its respective functional currency to U.S. dollars at the balance sheet date exchange rates. Income and expense items are translated at the average rates of exchange prevailing during the year. Translation adjustments of foreign subsidiary for which the local currency is the functional currency are reflected in the consolidated balance sheets as a component of accumulated other comprehensive income. Deferred taxes are not provided on translation adjustments as the earnings of the subsidiary are considered to be permanently reinvested.

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 fair value of cash and cash equivalents is based on its demand value, which is equal to its carrying value. The estimated fair values of notes payable and long-term debt which are based on borrowing rates that are available to the Company for loans with similar terms, collateral and maturity approximate the carrying values. The fair value of the amounts funded in insurance policies in respect of employee liability for employee rights upon retirement is usually identical or close to their carrying value. Additionally, the carrying value of all other monetary assets and liabilities is estimated to be equal to their fair value due to the short-term nature of these instruments.

Derivative financial instruments are measured at fair value, on a recurring basis. The fair value of derivatives generally reflects the estimated amounts that the Group would receive or pay to terminate the contracts at the reporting dates, based on the prevailing currency prices and the relevant interest rates. Such measurement is classified within Level 2.

In addition to items that are measured at fair value on a recurring basis, there are also assets and liabilities that are measured at fair value on a nonrecurring basis. Assets and liabilities that are measured at fair value on a nonrecurring basis include certain long-lived assets including goodwill. As such, we have determined that each of these fair value measurements reside within Level 3 of the fair value hierarchy.

Derivatives

The group applies the provisions of Accounting Standards Codification ("ASC") Topic 815, Derivatives and Hedging. In accordance with ASC Topic 815, all the derivative financial instruments are recognized as either financial assets or financial liabilities on the balance sheet at fair value. The accounting for changes in the fair value of a derivative financial instrument depends on whether it has been designated and qualifies as part of a hedging relationship and further, on the type of hedging relationship. For derivative financial instruments that are designated and qualify as hedging instruments, a company must designate the hedging instrument, based upon the exposure being hedged, as a fair value hedge, cash flow hedge or a hedge of a net investment in a foreign operation.

From time to time the Company carries out transactions involving foreign exchange derivative financial instruments (mainly forward exchange contracts) which are designed to hedge the cash flows expected to be paid with respect to forecasted expenses of the Israeli subsidiary (Radiancy) denominated in Israeli local currency (NIS) which is different than its functional currency.

Such derivatives were not designated as hedging instruments, and accordingly they were recognized in the balance sheet at their fair value, with changes in the fair value carried to the Statement of Comprehensive Income and included in financing income (expenses), net.

At March 31, 2013, the balance of such derivative instruments amounted to approximately $377 in assets and approximately $154 were recognized as financing income in the Statement of Comprehensive Income during the quarter ended that date.

The nominal amounts of foreign currency derivatives as of March 31, 2013 consist of forward transactions for the exchange of $4,800 into NIS.

Accrued Warranty Costs

The Company offers a standard warranty on product sales generally for a one to two-year period. In the case of domestic sales of XTRAC lasers, however, the Company has offered longer warranty periods, ranging from three to four years, in order to meet competition or meet customer demands. 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 on the balance sheet. The activity in the warranty accrual during the three months ended March 31, 2013 and 2012 is summarized as follows:

	March 31,
	2013			2012
	(unaudited)			(unaudited)
Accrual at beginning of year	$	1,440		$	1,661
Additions charged to warranty expense		337			483
Expiring warranties		(152	)		(74	)
Claims satisfied		(314	)		(330	)
Total		1,311			1,740
Less: current portion		(1,190	)		(1,308	)
Accrued extended warranty	$	121		$	432

For extended warranty on the consumer products, see Revenue Recognition above.

Earnings Per Share

Basic and diluted earnings per common share were calculated using the following weighted-average shares outstanding:

	For the Three Months Ended March 31,
	2013		2012
Weighted-average number of common and common equivalent shares outstanding:
Basic number of common shares outstanding		20,678,023		18,339,977
Dilutive effect of stock options and warrants		469,560		536,186
Diluted number of common and common stock equivalent shares outstanding		21,147,583		18,876,163

Diluted earnings per share for the three months ended March 31, 2013, exclude the impact of common stock options and warrants, totaling 1,081,226 shares, as the effect of their inclusion would be anti-dilutive.

Adoption of New Accounting Standards

Effective January 1, 2013, the Company adopted Accounting Standard Update ("ASU") No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. This ASU requires entities to provide information about significant amounts reclassified out of accumulated other comprehensive income. The standard became effective, prospectively, for interim and annual periods beginning after December 15, 2012. The adoption of the standard did not impact the Company's consolidated results of operations and financial condition.

Effective January 1, 2013, the Company adopted Accounting Standard Update ("ASU")No. 2011-11, Balance Sheet – Disclosure about Offsetting Assets and Liabilities ("ASU 2011-11"). ASU 2011-11 enhances disclosures about financial instruments and derivative instruments that are either offset in accordance with the Accounting Standards Codification or are subject to an enforceable master netting arrangement or similar agreement. The amended guidance became effective, in a retrospective manner to all comparative periods presented, for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. The adoption of the standard did not have a material impact on the Company's consolidated results of operations and financial condition.

Recently Issued Accounting Standards

In March 2013, the FASB issued Accounting Standards Update (ASU) 2013-5, Parent's Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity.

ASU 2013-5 clarifies that, when a reporting entity (parent) ceases to have a controlling financial interest in a subsidiary or group of assets that is a business (other than a sale of in substance real estate or conveyance of oil and gas mineral rights) within a foreign entity, the parent is required to apply the guidance in Subtopic 830-30 to release any related cumulative translation adjustment into net income. Accordingly, the cumulative translation adjustment should be released into net income only if the sale or transfer results in the complete or substantially complete liquidation of the foreign entity in which the subsidiary or group of assets had resided. ASU 2013-5 also clarifies that if the business combination achieved in stages relates to a previously held equity method investment (step-acquisition) that is a foreign entity, the amount of accumulated other comprehensive income that is reclassified and included in the calculation of gain or loss shall include any foreign currency translation adjustment related to that previously held investment.

For public companies, the amendments in this Update will be effective prospectively for fiscal years (and interim reporting periods within those years) beginning after December 15, 2013. The amendments should be applied prospectively to derecognition events occurring after the effective date. Prior periods should not be adjusted. Early adoption is permitted. If an entity elects to early adopt the amendments, it should apply them as of the beginning of the entity's fiscal year of adoption. The adoption of the standard will not materially impact the Company's consolidated results of operations and financial condition.

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CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Current assets:
Accounts receivable, allowance for doubtful accounts	$ 7,677	$ 6,917
Stockholders' Equity
Preferred Stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred Stock, authorized (in shares)	5,000,000	5,000,000
Preferred Stock, issued (in shares)	0	0
Preferred Stock, outstanding (in shares)	0	0
Common Stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common Stock, authorized (in shares)	50,000,000	50,000,000
Common Stock, issued (in shares)	21,047,280	21,043,947
Common Stock, outstanding (in shares)	21,047,280	21,043,947

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The Company and Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2013

The Company and Summary of Significant Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation:

The accompanying condensed consolidated financial statements and related notes should be read in conjunction with our consolidated financial statements and related notes contained in our Annual Report on Form 10-K/A for the fiscal year ended December 31, 2012 ("fiscal 2012"). The unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission ("SEC") related to interim financial statements. As permitted under those rules, certain information and footnote disclosures normally required or included in financial statements prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") have been condensed or omitted. The financial information contained herein is unaudited; however, management believes all adjustments have been made that are considered necessary to present fairly the results of the Company's financial position and operating results for the interim periods. All such adjustments are of a normal recurring nature.

The results for the three months ended March 31, 2013 are not necessarily indicative of the results to be expected for the year ending December 31, 2013 or for any other interim period or for any future period.

Principles of Consolidation

Principles of Consolidation

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

Revenue Recognition

Revenue Recognition

The Company recognizes revenues from product sales when the following four criteria have been met: (i) the product has been delivered and the Company has no significant remaining obligations; (ii) persuasive evidence of an arrangement exists; (iii) the price to the buyer is fixed or determinable; and (iv) collection is reasonably assured. Revenues from product sales are recorded net of provisions for estimated chargebacks, rebates, expected returns and cash discounts.

The Company ships most of its products FOB shipping point, although from time to time certain customers, for example governmental customers, will insist upon FOB destination. Among the factors the Company takes into account when determining the proper time at which to recognize revenue are when title to the goods transfers and when the risk of loss transfers. Shipments to distributors or physicians that do not fully satisfy the collection criteria are recognized when invoiced amounts are fully paid or fully assured.

For revenue arrangements with multiple deliverables within a single, contractually binding arrangement (usually sales of products with separately priced extended warranty), each element of the contract is accounted for as a separate unit of accounting when it provides the customer value on a stand-alone basis and there is objective evidence of the fair value of the related unit.

With respect to sales arrangements under which the buyer has a right to return the related product, revenue is recognized only if all the following are met: the price is fixed or determinable at the date of sale; the buyer has paid, or is obligated to pay and the obligation is not contingent on resale of the product; the buyer's obligation would not be changed in the event of theft or physical destruction or damage of the product; the buyer has economic substance; the Company does not have significant obligations for future performance to directly bring about resale of the product by the buyer; and the amount of future returns can be reasonably estimated.

The Company provides a provision for product returns based on the experience with historical sales returns, in accordance with ASC Topic 605-15 with respect to sales of product when a right of return exists. Reported revenues are shown net of the returns provision. Such allowance for sales returns is included in Other Accrued Liabilities. (See Note 7).

Deferred revenue includes amounts received with respect to extended warranty maintenance, repairs and other billable services and amounts not yet recognized as revenues. Revenues with respect to such activities are deferred and recognized on a straight-line basis over the duration of the warranty period, the service period or when service is provided, as applicable to each service.

The Company has two distribution channels for its phototherapy treatment equipment. The Company either (i) sells its lasers through a distributor or directly to a physician or (ii) places its lasers in a physician's office (at no charge to the physician) and generally charges the physician a fee for an agreed upon number of treatments. In some cases, the Company and the customer stipulate to a quarterly or other periodic target of procedures to be performed, and accordingly revenue is recognized ratably over the period.

When the Company places a laser in a physician's office, it generally recognizes service revenue based on the number of patient treatments performed, or purchased under a periodic commitment, by the physician. Amounts collected with respect to treatments to be performed through laser-access codes that are sold to physicians free of a periodic commitment, but not yet used, are deferred and recognized as a liability until the physician performs the treatment. Unused treatments remain an obligation of the Company because the treatments can only be performed on Company-owned equipment. Once the treatments are delivered to a patient, this obligation has been satisfied.

The Company defers substantially all revenue from sales of treatment codes ordered by and delivered to its customers within the last two weeks of the period in determining the amount of procedures performed by its physician-customers. Management believes this approach closely approximates the actual amount of unused treatments that existed at the end of a period.

Functional Currency

Functional Currency

The currency of the primary economic environment in which the operations of the Company and its subsidiaries are conducted is the US dollar ("$" or "dollars"), except Photo Therapeutics, Ltd. which is conducted in the Great Britain Pounds (GBP). Substantially all of the Group's revenues are derived in dollars or in other currencies linked to the dollar. Purchases of most materials and components are carried out in, or linked to the dollar. Thus, the functional (and reporting currency) of the Company and its subsidiaries (other than Photo Therapeutics, Ltd.) is the dollar.

Balances denominated in, or linked to, foreign currencies are stated on the basis of the exchange rates prevailing at the balance sheet date. For foreign currency transactions included in the statement of comprehensive income, the exchange rates applicable to the relevant transaction dates are used. Transaction gains or losses arising from changes in the exchange rates used in the translation of such balances are carried to financing income or expenses.

Assets and liabilities of a foreign subsidiary, whose functional currency is the local currency, are translated from its respective functional currency to U.S. dollars at the balance sheet date exchange rates. Income and expense items are translated at the average rates of exchange prevailing during the year. Translation adjustments of foreign subsidiary for which the local currency is the functional currency are reflected in the consolidated balance sheets as a component of accumulated other comprehensive income. Deferred taxes are not provided on translation adjustments as the earnings of the subsidiary are considered to be permanently reinvested.

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 fair value of cash and cash equivalents is based on its demand value, which is equal to its carrying value. The estimated fair values of notes payable and long-term debt which are based on borrowing rates that are available to the Company for loans with similar terms, collateral and maturity approximate the carrying values. The fair value of the amounts funded in insurance policies in respect of employee liability for employee rights upon retirement is usually identical or close to their carrying value. Additionally, the carrying value of all other monetary assets and liabilities is estimated to be equal to their fair value due to the short-term nature of these instruments.

Derivative financial instruments are measured at fair value, on a recurring basis. The fair value of derivatives generally reflects the estimated amounts that the Group would receive or pay to terminate the contracts at the reporting dates, based on the prevailing currency prices and the relevant interest rates. Such measurement is classified within Level 2.

In addition to items that are measured at fair value on a recurring basis, there are also assets and liabilities that are measured at fair value on a nonrecurring basis. Assets and liabilities that are measured at fair value on a nonrecurring basis include certain long-lived assets including goodwill. As such, we have determined that each of these fair value measurements reside within Level 3 of the fair value hierarchy.

Derivatives

Derivatives

The group applies the provisions of Accounting Standards Codification ("ASC") Topic 815, Derivatives and Hedging. In accordance with ASC Topic 815, all the derivative financial instruments are recognized as either financial assets or financial liabilities on the balance sheet at fair value. The accounting for changes in the fair value of a derivative financial instrument depends on whether it has been designated and qualifies as part of a hedging relationship and further, on the type of hedging relationship. For derivative financial instruments that are designated and qualify as hedging instruments, a company must designate the hedging instrument, based upon the exposure being hedged, as a fair value hedge, cash flow hedge or a hedge of a net investment in a foreign operation.

From time to time the Company carries out transactions involving foreign exchange derivative financial instruments (mainly forward exchange contracts) which are designed to hedge the cash flows expected to be paid with respect to forecasted expenses of the Israeli subsidiary (Radiancy) denominated in Israeli local currency (NIS) which is different than its functional currency.

Such derivatives were not designated as hedging instruments, and accordingly they were recognized in the balance sheet at their fair value, with changes in the fair value carried to the Statement of Comprehensive Income and included in financing income (expenses), net.

At March 31, 2013, the balance of such derivative instruments amounted to approximately $377 in assets and approximately $154 were recognized as financing income in the Statement of Comprehensive Income during the quarter ended that date.

The nominal amounts of foreign currency derivatives as of March 31, 2013 consist of forward transactions for the exchange of $4,800 into NIS.

Accrued Warranty Costs

Accrued Warranty Costs

The Company offers a standard warranty on product sales generally for a one to two-year period. In the case of domestic sales of XTRAC lasers, however, the Company has offered longer warranty periods, ranging from three to four years, in order to meet competition or meet customer demands. 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 on the balance sheet. The activity in the warranty accrual during the three months ended March 31, 2013 and 2012 is summarized as follows:

	March 31,
	2013			2012
	(unaudited)			(unaudited)
Accrual at beginning of year	$	1,440		$	1,661
Additions charged to warranty expense		337			483
Expiring warranties		(152	)		(74	)
Claims satisfied		(314	)		(330	)
Total		1,311			1,740
Less: current portion		(1,190	)		(1,308	)
Accrued extended warranty	$	121		$	432

For extended warranty on the consumer products, see Revenue Recognition above.

Earnings Per Share

Earnings Per Share

Basic and diluted earnings per common share were calculated using the following weighted-average shares outstanding:

	For the Three Months Ended March 31,
	2013		2012
Weighted-average number of common and common equivalent shares outstanding:
Basic number of common shares outstanding		20,678,023		18,339,977
Dilutive effect of stock options and warrants		469,560		536,186
Diluted number of common and common stock equivalent shares outstanding		21,147,583		18,876,163

Diluted earnings per share for the three months ended March 31, 2013, exclude the impact of common stock options and warrants, totaling 1,081,226 shares, as the effect of their inclusion would be anti-dilutive.

Recently Issued Accounting Standards

Recently Issued Accounting Standards

In March 2013, the FASB issued Accounting Standards Update (ASU) 2013-5, Parent's Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity.

ASU 2013-5 clarifies that, when a reporting entity (parent) ceases to have a controlling financial interest in a subsidiary or group of assets that is a business (other than a sale of in substance real estate or conveyance of oil and gas mineral rights) within a foreign entity, the parent is required to apply the guidance in Subtopic 830-30 to release any related cumulative translation adjustment into net income. Accordingly, the cumulative translation adjustment should be released into net income only if the sale or transfer results in the complete or substantially complete liquidation of the foreign entity in which the subsidiary or group of assets had resided. ASU 2013-5 also clarifies that if the business combination achieved in stages relates to a previously held equity method investment (step-acquisition) that is a foreign entity, the amount of accumulated other comprehensive income that is reclassified and included in the calculation of gain or loss shall include any foreign currency translation adjustment related to that previously held investment.

For public companies, the amendments in this Update will be effective prospectively for fiscal years (and interim reporting periods within those years) beginning after December 15, 2013. The amendments should be applied prospectively to derecognition events occurring after the effective date. Prior periods should not be adjusted. Early adoption is permitted. If an entity elects to early adopt the amendments, it should apply them as of the beginning of the entity's fiscal year of adoption. The adoption of the standard will not materially impact the Company's consolidated results of operations and financial condition.

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Document and Entity Information	3 Months Ended
	Mar. 31, 2013	May 09, 2013
Document and Entity Information [Abstract]
Entity Registrant Name	PHOTOMEDEX INC
Entity Central Index Key	0000711665
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	Accelerated Filer
Entity Common Stock, Shares Outstanding		21,047,280
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q1
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2013

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The Company and Summary of Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2013

The Company and Summary of Significant Accounting Policies [Abstract]

Activity in the warranty accrual

The Company offers a standard warranty on product sales generally for a one to two-year period. In the case of domestic sales of XTRAC lasers, however, the Company has offered longer warranty periods, ranging from three to four years, in order to meet competition or meet customer demands. 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 on the balance sheet. The activity in the warranty accrual during the three months ended March 31, 2013 and 2012 is summarized as follows:

	March 31,
	2013			2012
	(unaudited)			(unaudited)
Accrual at beginning of year	$	1,440		$	1,661
Additions charged to warranty expense		337			483
Expiring warranties		(152	)		(74	)
Claims satisfied		(314	)		(330	)
Total		1,311			1,740
Less: current portion		(1,190	)		(1,308	)
Accrued extended warranty	$	121		$	432

Calculation of basic and diluted earnings per common share using weighted average shares outstanding

Basic and diluted earnings per common share were calculated using the following weighted-average shares outstanding:

	For the Three Months Ended March 31,
	2013		2012
Weighted-average number of common and common equivalent shares outstanding:
Basic number of common shares outstanding		20,678,023		18,339,977
Dilutive effect of stock options and warrants		469,560		536,186
Diluted number of common and common stock equivalent shares outstanding		21,147,583		18,876,163

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) [Abstract]
Revenues	$ 57,216	$ 50,273
Cost of revenues	11,866	11,234
Gross profit	45,350	39,039
Operating expenses:
Engineering and product development	773	758
Selling and marketing	29,326	25,835
General and administrative	5,659	7,119
Total operating expenses	35,758	33,712
Operating profit	9,592	5,327
Other income (loss):
Interest and other financing income (expense), net	131	(230)
Income before income tax expense	9,723	5,097
Income tax expense	(2,511)	(240)
Net income	7,212	4,857
Net income per share:
Basic (in dollars per share)	$ 0.35	$ 0.26
Diluted (in dollars per share)	$ 0.34	$ 0.26
Shares used in computing net income per share:
Basic (in shares)	20,678,023	18,339,977
Diluted (in shares)	21,147,583	18,876,163
Other comprehensive loss:
Foreign currency translation adjustments	(1,813)	(5)
Comprehensive income	$ 5,399	$ 4,852

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Accrued Compensation and related expenses

3 Months Ended

Mar. 31, 2013

Accrued Compensation and related expenses [Abstract]

Accrued Compensation and related expenses

Note 6

Accrued Compensation and related expenses:

	March 31, 2013		December 31, 2012
	(unaudited)
Accrued payroll and related taxes	$	563	$	1,010
Accrued vacation		335		262
Accrued commissions and bonus		1,598		1,222
Total accrued compensation and related expense	$	2,496	$	2,494

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Goodwill and Other Intangible Assets

3 Months Ended

Mar. 31, 2013

Goodwill and Other Intangible Assets [Abstract]

Goodwill and Other Intangible Assets

Note 5

Goodwill and Other Intangible Assets:

As part of the purchase price allocation for the reverse acquisition, the Company recorded goodwill in the amount of $24,005, as restated, and definite-lived intangibles in the amount of $12,000. Goodwill reflects the value or premium of the acquisition price in excess of the fair values assigned to specific tangible and intangible assets. Goodwill has an indefinite useful life and therefore is not amortized as an expense, but is reviewed annually for impairment of its fair value to the Company. The purchase price intrinsically recognizes the benefits of the broadened depth of the management team and the addition of a sizeable direct sales force creating greater access to the physician community with branded products and technologies. Furthermore, the purchase price paid by Radiancy, Inc, a private company includes, among other things, other benefits such as the intrinsic value of being a Nasdaq-listed issuer post merger and now having access to capital markets and stockholder liquidity.

Balance at January 1, 2013, as restated	$	24,500
Translation differences		(890	)
Balance at March 31, 2013	$	23,610

The Company has no impairment loss as of March 31, 2013.

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

	March 31, 2013									December 31, 2012
	(unaudited)
	Trademarks			Customer Relationships			Total			Trademarks			Customer Relationships			Total
Gross Amount beginning of period	$	5,744		$	6,372		$	12,116		$	5,700		$	6,300		$	12,000
Translation differences		(80	)		(130	)		(210	)		44			72			116
Gross Amount end of period		5,664			6,242			11,906			5,744			6,372			12,116
Accumulated amortization		(731	)		(806	)		(1,537	)		(598	)		(664	)		(1,262	)
Net Book Value	$	4,933		$	5,436		$	10,369		$	5,146		$	5,708		$	10,854

Related amortization expense was $300 and $300 for the periods ended March 31, 2013 and 2012, respectively. Customer Relationships embody the value to the Company of relationships that Pre-merged PhotoMedex had formed with its customers. Trademarks include the tradenames and various trademarks associated with Pre-merged PhotoMedex products (e.g. "XTRAC", "Neova" "Omnilux" and "Lumiere").

Estimated amortization expense for the above amortizable intangible assets for the next five years is as follows:

Last nine months of 2013	$	900
2014		1,200
2015		1,200
2016		1,200
2017		1,200
Thereafter		4,669
Total	$	10,369

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Accrued Compensation and related expenses (Tables)

3 Months Ended

Mar. 31, 2013

Accrued Compensation and related expenses [Abstract]

Schedule of accrued compensation and related expenses

Accrued Compensation and related expenses:

	March 31, 2013		December 31, 2012
	(unaudited)
Accrued payroll and related taxes	$	563	$	1,010
Accrued vacation		335		262
Accrued commissions and bonus		1,598		1,222
Total accrued compensation and related expense	$	2,496	$	2,494

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Inventories (Tables)

3 Months Ended

Mar. 31, 2013

Inventories [Abstract]

Schedule of Inventories

Inventories:

	March 31, 2013		December 31, 2012
	(unaudited)
Raw materials and work in progress	$	9,494	$	9,012
Finished goods		11,989		13,455
Total inventories	$	21,483	$	22,467

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Employee Stock Benefit Plans

3 Months Ended

Mar. 31, 2013

Employee Stock Benefit Plans [Abstract]

Employee Stock Benefit Plans

Note 9

Employee Stock Benefit Plans:

Post-Reverse Merger

Following the closing of the reverse acquisition, the previous Non-Employee Director Stock Option Plan of PhotoMedex (the acquired entity) was adopted by the group. This plan has authorized 120,000 shares; of which 7,000 shares had been issued or were reserved for issuance as awards of shares of common stock, and 17,285 shares were reserved for outstanding stock options.

In addition, following the closing of the reverse acquisition, the previous 2005 Equity Compensation Plan ("2005 Equity Plan") of Pre-merged PhotoMedex (the acquired entity) was also adopted for use by the group. The 2005 Equity Plan has authorized 3,000,000 shares, of which 753,095 shares had been issued or were reserved for issuance as awards of shares of common stock, and 1,055,546 shares were reserved for outstanding options.

Stock option activity under all of the Company's share-based compensation plans for the three months ended March 31, 2013 was as follows:

	Number of Options			Weighted Average Exercise Price
Outstanding, January 1, 2013		898,541		$	16.65
Granted		259,625			16.59
Exercised		(3,333	)		6.24
Cancelled		(9,166	)		26.11
Outstanding, March 31, 2013		1,145,667		$	16.59
Options exercisable at March 31, 2013		325,042		$	17.71

At March 31, 2013, there was $12,032 of total unrecognized compensation cost related to non-vested option grants and stock awards that is expected to be recognized over a weighted-average period of 3.5 years. The intrinsic value of options outstanding and exercisable at March 31, 2013 was not significant.

The Company calculates expected volatility for a share-based grants based on historic daily stock price observations of its common stock. For estimating the expected term of share-based grants made in the three months ended March 31, 2013, the Company has adopted the simplified method. The Company has used historical data to estimate expected employee behaviors related to option exercises and forfeitures and included these expected forfeitures as a part of the estimate of expense as of the grant date.

The Company uses the Black-Scholes option-pricing model to estimate fair value of grants of stock options with the following weighted-average assumptions:

	Three Months Ended March 31, 2013
Risk-free interest rate		1.26	%
Volatility		85.25	%
Expected dividend yield		0	%
Expected life	5.5 years
Estimated forfeiture rate		0	%

With respect to grants of options, the risk-free rate of interest is based on the U.S. Treasury rates appropriate for the expected term of the grant or award.

On February 28, 2013, the Company granted an aggregate of 177,125 options to purchase common stock to a number of employees and consultants with a strike price of $15, which was higher than the quoted market value of our stock at the date of grants. The options vest over five years and expire ten years from the date of grant. Also on February 28, 2013, the Company granted an aggregate of 82,500 non-qualified options to purchase common stock to two executive employees with a strike price of $20, which was set to match the exercise price of the warrants issued in the reverse merger and was higher than the quoted market value of our stock at the date of grant. The aggregate fair value of the options granted was $2,590. The options vest over five years and expire ten years from the date of grant.

Total stock based compensation expense was $1,290 and $1,753 for the three months ended March 31, 2013 and 2012.

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Other Accrued Liabilities

3 Months Ended

Mar. 31, 2013

Other Accrued Liabilities [Abstract]

Other Accrued Liabilities

Note 7

Other Accrued Liabilities:

	March 31, 2013		December 31, 2012
	(unaudited)
Accrued warranty, current	$	1,190	$	1,274
Accrued taxes, net (2)		1,401		4,304
Accrued sales returns (1)		11,548		11,901
Other accrued liabilities		2,540		4,620
Total other accrued liabilities	$	16,679	$	22,099

(1)   The activity in the sales returns liability account was as follows:

	Three Months Ended March 31,
	2013			2012
	(unaudited)			(unaudited)
Balance at beginning of year	$	11,781		$	6,143
Additions that reduce net sales		10,008			10,566
Deductions from reserves		(10,241	)		(6,726	)
Balance at end of period	$	11,548		$	9,983

(2) The December 31, 2012 balance is shown as Restated.

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Income Taxes

3 Months Ended

Mar. 31, 2013

Income Taxes [Abstract]

Income Taxes

Note 8

Income Taxes:

The Company's effective tax rate is dependent upon the geographic distribution of its earnings or losses (mainly between US and Israel).

The difference between the Company's effective tax rates for the three month period ended March 31, 2013 and the U.S. Federal statutory rate (34%) resulted primarily from Pre-merged PhotoMedex current operations which have generated losses, which reduced the overall corporate tax expense and which will have effect on current tax expense when the Company elects to file a U.S. consolidated income tax return. In addition, the Israeli and UK subsidiaries' earnings are taxed at rates lower than the federal statutory rate (generally 20% to 24%, respectively).

The application of income tax law is inherently complex. Laws and regulations in this area are voluminous and can be ambiguous; the Company is, therefore, obliged to make many subjective assumptions and judgments regarding the application of such laws and regulations to its facts and circumstances. In addition, interpretations of and guidance surrounding income tax laws and regulations are subject to changes over time. Any changes in the Company's subjective assumptions and judgments could materially affect amounts recognized in its consolidated balance sheets and statements of income.

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Business Segment and Geographic Data

3 Months Ended

Mar. 31, 2013

Business Segment and Geographic Data [Abstract]

Business Segment and Geographic Data

Note 10

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 Consumer segment derives its revenues from the design, development, manufacturing and selling of long-term hair reduction and acne consumer products. The Physician Recurring segment derives its revenues from the XTRAC procedures performed by dermatologists, the sales of skincare products, the sales of surgical disposables and accessories to hospitals and surgery centers and on the repair, maintenance and replacement parts on our various products. The Professional segment generates revenues from the sale of equipment, such as lasers, medical and esthetic light and heat-based products and LED products. 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 and cash equivalents, prepaid expenses and deposits.

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

Three Months Ended March 31, 2013

	CONSUMER			PHYSICIAN RECURRING			PROFESSIONAL			TOTAL
Revenues	$	49,060		$	5,955		$	2,201		$	57,216
Costs of revenues		7,517			2,931			1,418			11,866
Gross profit		41,543			3,024			783			45,350
Gross profit %		84.7	%		50.8	%		35.6	%		79.3	%
Allocated operating expenses:
Engineering and product development		218			324			231			773
Selling and marketing expenses		25,631			3,174			521			29,326
Unallocated operating expenses		-			-			-			5,659
		25,849			3,498			752			35,758
Income (loss) from operations		15,694			(474	)		31			9,592
Interest  and other financing income, net		-			-			-			131
Net income (loss) before taxes	$	15,694		$	( 474	)	$	31		$	9,723

Three Months Ended March 31, 2012

	CONSUMER			PHYSICIAN RECURRING			PROFESSIONAL			TOTAL
Revenues	$	42,201		$	5,073		$	2,999		$	50,273
Costs of revenues		6,772			2,679			1,783			11,234
Gross profit		35,429			2,394			1,216			39,039
Gross profit %		84.0	%		47.2	%		40.5	%		77.7	%
Allocated operating expenses:
Engineering and product development		237			310			211			758
Selling and marketing expenses		22,148			2,530			1,157			25,835
Unallocated operating expenses		-			-			-			7,119
		22,385			2,840			1,368			33,712
Income (loss) from operations		13,044			(446	)		(152	)		5,327
Interest and other financing expense, net		-			-			-			(230	)
Net income (loss) before taxes	$	13,044		$	( 446	)	$	( 152	)	$	5,097

For the three months ended March 31, 2013 and 2012, net revenues by geographic area were as follows:

	Three Months Ended March 31,
	2013		2012
North America 1	$	44,899	$	38,689
Asia Pacific 2		5,762		5,307
Europe (including Israel)		5,633		5,208
South America		922		1,069
	$	57,216	$	50,273
1 United States	$	38,007	$	36,622
2  Japan	$	4,262	$	3,327

As of March 31, 2013 and December 31, 2012, long-lived assets by geographic area were as follows:

	March 31, 2013		December 31, 2012
	(unaudited)
North America	$	6,641	$	5,772
Asia Pacific		-		-
Europe (including Israel)		1,103		987
South America		-		-
	$	7,744	$	6,759

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

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Other Accrued Liabilities (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013		Mar. 31, 2012	Dec. 31, 2012
Other Accrued Liabilities [Abstract]
Accrued warranty, current	$ 1,190		$ 1,308	$ 1,274
Accrued taxes, net, as restated	1,401	[1]		4,304	[1]
Accrued sales return	11,548	[2]	9,983
Other accrued liabilities	2,540			4,620
Total other accrued liabilities	16,679	[3]		22,099
Balance at beginning of year	11,901	[2]	6,143
Additions that reduce net sales	10,008		10,566
Deductions from reserves	(10,241)		(6,726)
Balance at end of period	$ 11,548	[2]	$ 9,983

[1] The December 31, 2012 balance is shown as Restated.

[2] The activity in the sales returns liability account was as follows: Three Months Ended March 31, 2013 2012 (unaudited) (unaudited) Balance at beginning of year $ 11,781 $ 6,143 Additions that reduce net sales 10,008 43,284 Deductions from reserves (10,241 ) (37,526 ) Balance at end of period $ 11,548 $ 11,901

[3] (unaudited)

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Patents and Licensed Technologies, net (Tables)

3 Months Ended

Mar. 31, 2013

Patents and Licensed Technologies, net [Abstract]

Schedule of patents and licensed technologies

Patents and Licensed Technologies, net:

	March 31, 2013			December 31, 2012
	(unaudited)
Gross Amount beginning of period	$	15,411		$	15,124
Additions		18			181
Translation differences		(193	)		106
Gross Amount end of period		15,236			15,411
Accumulated amortization		(3,216	)		(2,738	)
Patents and licensed technologies, net	$	12,020		$	12,673

Amortization expense for amortizable patents and licensed technologies

Estimated amortization expense for amortizable patents and licensed technologies assets for the next five years is as follows:

Last nine months of 2013	$	1,524
2014		2,032
2015		2,025
2016		1,946
2017		878
Thereafter		3,615
Total	$	12,020

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Business Segment and Geographic Data (Tables)

3 Months Ended

Mar. 31, 2013

Business Segment and Geographic Data [Abstract]

Results of operations from business segments

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

Three Months Ended March 31, 2013

	CONSUMER			PHYSICIAN RECURRING			PROFESSIONAL			TOTAL
Revenues	$	49,060		$	5,955		$	2,201		$	57,216
Costs of revenues		7,517			2,931			1,418			11,866
Gross profit		41,543			3,024			783			45,350
Gross profit %		84.7	%		50.8	%		35.6	%		79.3	%
Allocated operating expenses:
Engineering and product development		218			324			231			773
Selling and marketing expenses		25,631			3,174			521			29,326
Unallocated operating expenses		-			-			-			5,659
		25,849			3,498			752			35,758
Income (loss) from operations		15,694			(474	)		31			9,592
Interest  and other financing income, net		-			-			-			131
Net income (loss) before taxes	$	15,694		$	( 474	)	$	31		$	9,723

Three Months Ended March 31, 2012

	CONSUMER			PHYSICIAN RECURRING			PROFESSIONAL			TOTAL
Revenues	$	42,201		$	5,073		$	2,999		$	50,273
Costs of revenues		6,772			2,679			1,783			11,234
Gross profit		35,429			2,394			1,216			39,039
Gross profit %		84.0	%		47.2	%		40.5	%		77.7	%
Allocated operating expenses:
Engineering and product development		237			310			211			758
Selling and marketing expenses		22,148			2,530			1,157			25,835
Unallocated operating expenses		-			-			-			7,119
		22,385			2,840			1,368			33,712
Income (loss) from operations		13,044			(446	)		(152	)		5,327
Interest and other financing expense, net		-			-			-			(230	)
Net income (loss) before taxes	$	13,044		$	( 446	)	$	( 152	)	$	5,097

Net revenues and long-lived assets by geographical area

For the three months ended March 31, 2013 and 2012, net revenues by geographic area were as follows:

	Three Months Ended March 31,
	2013		2012
North America 1	$	44,899	$	38,689
Asia Pacific 2		5,762		5,307
Europe (including Israel)		5,633		5,208
South America		922		1,069
	$	57,216	$	50,273
1 United States	$	38,007	$	36,622
2  Japan	$	4,262	$	3,327

As of March 31, 2013 and December 31, 2012, long-lived assets by geographic area were as follows:

	March 31, 2013		December 31, 2012
	(unaudited)
North America	$	6,641	$	5,772
Asia Pacific		-		-
Europe (including Israel)		1,103		987
South America		-		-
	$	7,744	$	6,759

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CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Unaudited) (USD $) In Thousands, except Share data, unless otherwise specified	Common Stock [Member]	Additional Paid-In Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (loss) [Member]	Total
BALANCE at Dec. 31, 2012	$ 210	$ 130,954	$ 35,302	$ 861	$ 167,327
BALANCE (in shares) at Dec. 31, 2012	21,043,947				21,043,947
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation related to stock options and restricted stock	0	1,197	0	0	1,197
Adjustments To Additional Paid In Capital, Stock Options Issued for Services	0	93	0	0	93
Options exercised	0	13	0	0	13
Options Exercised (in shares)	3,333
Other comprehensive loss	0	0	0	(1,813)	(1,813)
Net income	0	0	7,212	0	7,212
BALANCE at Mar. 31, 2013	$ 210	$ 132,257	$ 42,514	$ (952)	$ 174,029	[1]
BALANCE (in shares) at Mar. 31, 2013	21,047,280				21,047,280

[1] (unaudited)

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Patents and Licensed Technologies, net

3 Months Ended

Mar. 31, 2013

Patents and Licensed Technologies, net [Abstract]

Patents and Licensed Technologies, net

Note 4

Patents and Licensed Technologies, net:

	March 31, 2013			December 31, 2012
	(unaudited)
Gross Amount beginning of period	$	15,411		$	15,124
Additions		18			181
Translation differences		(193	)		106
Gross Amount end of period		15,236			15,411
Accumulated amortization		(3,216	)		(2,738	)
Patents and licensed technologies, net	$	12,020		$	12,673

Related amortization expense was $509 and $507 for the three months ended March 31, 2013 and 2012, respectively.

Estimated amortization expense for amortizable patents and licensed technologies assets for the next five years is as follows:

Last nine months of 2013	$	1,524
2014		2,032
2015		2,025
2016		1,946
2017		878
Thereafter		3,615
Total	$	12,020

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Significant Customer Concentration (Tables)

3 Months Ended

Mar. 31, 2013

Significant Customer Concentration [Abstract]

Significant customer concentration

Significant Customer Concentration:

	Three Months Ended March 31,
	2013	2012
Customer A	10%	5%

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Significant Customer Concentration (Details) (Customer A [Member])	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Customer A [Member]
Revenue, Major Customer [Line Items]
Percentage of revenue generated by single major customer (in hundredths)	10.00%	5.00%

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Property and Equipment (Tables)

3 Months Ended

Mar. 31, 2013

Property and Equipment [Abstract]

Schedule property and equipment

Property and Equipment:

	March 31, 2013			December 31, 2012
	(unaudited)
Lasers-in-service	$	8,594		$	7,301
Equipment, computer hardware and software		4,220			4,015
Furniture and fixtures		619			617
Leasehold improvements		399			396
		13,832			12,329
Accumulated depreciation and amortization		(6,088	)		(5,570	)
Property and equipment, net	$	7,744		$	6,759