----

|   | Delaware(State or other jurisdictionof incorporation or organization) |   | 13-3986004(I.R.S.  EmployerIdentification No.) |   |
|--------|-----------------------------------------------------------------------|--------|----------------------------------------------------------|--------|
|   | Large accelerated filer  |   | Accelerated filer           |   |
|--------|----------------------------------|--------|------------------------------------------|--------|
|   | Non-accelerated filer    |   | Smaller reporting company   |   |
|   | Emerging growth company  |   |                                     |   |

----

| Part I. Financial Information: | PAGE                                                                                                |
|--------------------------------|-----------------------------------------------------------------------------------------------------|
|                           |                                                                                                |   |   |
|                           | ITEM 1.  Financial Statements:                                                                 |   |
|                           | a.                                                                                                  | Condensed Consolidated Balance Sheets as of September 30, 2018 and December 31, 2017 (unaudited) | 3 |
|                           |                                                                                                |   |   |
|                           | b.                                                                                                  | Condensed Consolidated Statements of Operations for the three months ended September 30, 2018 and 2017 (unaudited) | 4 |
|                           |                                                                                                |   |   |
|                           | c.                                                                                                  | Condensed Consolidated Statements of Operations for the nine months ended September 30, 2018 and 2017 (unaudited) | 5 |
|                           |                                                                                                |   |   |
|                           | d.                                                                                                  | Condensed Consolidated Statement of Changes in Equity for the nine months ended September 30, 2018 (unaudited) | 6 |
|                           |                                                                                                |   |   |
|                           | e.                                                                                                  | Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2018 and 2017 (unaudited) | 7 |
|                           |                                                                                                |   |   |
|                           | f.                                                                                                  | Notes to Unaudited Condensed Consolidated Financial Statements | 8 |
|                           |                                                                                                |   |   |
|                           | ITEM 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations | 27 |
|                           |                                                                                                |   |   |
|                           | ITEM 3.  Quantitative and Qualitative Disclosure about Market Risk                             | 36 |
|                           |                                                                                                |   |   |
|                           | ITEM 4.  Controls and Procedures                                                               | 36 |
|                           |                                                                                                |   |   |
| Part II. Other Information:    |                                                                                                |
|                           |                                                                                                |   |   |
|                           | ITEM 1.  Legal Proceedings                                                                     | 37 |
|                           |                                                                                                |   |   |
|                           | ITEM 1A.  Risk Factors                                                                         | 37 |
|                           |                                                                                                |   |   |
|                           | ITEM 2.  Unregistered Sales of Equity Securities and Use of Proceeds                           | 37 |
|                           |                                                                                                |   |   |
|                           | ITEM 3.  Defaults Upon Senior Securities                                                       | 37 |
|                           |                                                                                                |   |   |
|                           | ITEM 4.  Mine Safety Disclosures                                                               | 37 |
|                           |                                                                                                |   |   |
|                           | ITEM 5.  Other Information                                                                     | 37 |
|                           |                                                                                                |   |   |
|                           | ITEM 6.  Exhibits                                                                              | 37 |
|                           |                                                                                                |   |   |
|                           |                                                                                                | Signatures | 38 |
|                           |                                                                                                |   |   |
|                           |                                                                                                | Certifications | E-31.1 |

----

|                                                                                                                                                                                         |   |               |     |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|----------|
|                                                                                                                                                                                         |   | September 30, 2018 |     |   | December 31, 2017 |   |
| ASSETS                                                                                                                                                                                       |   |               |     |   |   |   |
| Current assets:                                                                                                                                                                              |   |               |     |   |   |   |
| Cash and cash equivalents                                                                                                                                                                    |   | $                  | 15,888   |   |   | $ | 4,069 |   |
| Accounts receivable, net of allowance for doubtful accounts of $176 and $172, respectively                                                                                                   |   |               | 2,728    |   |   |   | 3,141 |   |
| Inventories                                                                                                                                                                                  |   |               | 2,488    |   |   |   | 3,009 |   |
| Prepaid expenses and other current assets                                                                                                                                                    |   |               | 670      |   |   |   | 533 |   |
| Total current assets                                                                                                                                                                         |   |               | 21,774   |   |   |   | 10,752 |   |
|                                                                                                                                                                                         |   |               |     |   |   |   |   |   |
| Property and equipment, net                                                                                                                                                                  |   |               | 5,698    |   |   |   | 7,703 |   |
| Intangible assets, net                                                                                                                                                                       |   |               | 9,867    |   |   |   | 11,325 |   |
| Goodwill                                                                                                                                                                                     |   |               | 8,803    |   |   |   | 8,803 |   |
| Other assets                                                                                                                                                                                 |   |               | 48       |   |   |   | 48 |   |
| Total assets                                                                                                                                                                                 |   | $                  | 46,190   |   |   | $ | 38,631 |   |
|                                                                                                                                                                                         |   |               |     |   |   |   |   |   |
| LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                                                                         |   |               |     |   |   |   |   |   |
| Current liabilities:                                                                                                                                                                         |   |               |     |   |   |   |   |   |
| Note payable                                                                                                                                                                                 |   | $                  | -        |   |   | $ | 357 |   |
| Current portion of long-term debt                                                                                                                                                            |   |               | -        |   |   |   | 2,387 |   |
| Accounts payable                                                                                                                                                                             |   |               | 1,663    |   |   |   | 2,277 |   |
| Other accrued liabilities                                                                                                                                                                    |   |               | 2,697    |   |   |   | 2,360 |   |
| Warrant liability                                                                                                                                                                            |   |               | 104      |   |   |   | - |   |
| Deferred revenues                                                                                                                                                                            |   |               | 327      |   |   |   | 291 |   |
| Total current liabilities                                                                                                                                                                    |   |               | 4,791    |   |   |   | 7,672 |   |
|                                                                                                                                                                                         |   |               |     |   |   |   |   |   |
| Long-term liabilities:                                                                                                                                                                       |   |               |     |   |   |   |   |   |
| Long-term debt, net                                                                                                                                                                          |   |               | 7,362    |   |   |   | 7,853 |   |
| Deferred tax liability                                                                                                                                                                       |   |               | 392      |   |   |   | 414 |   |
| Warrant liability                                                                                                                                                                            |   |               | -        |   |   |   | 3 |   |
| Other liabilities                                                                                                                                                                            |   |               | 268      |   |   |   | 444 |   |
| Total liabilities                                                                                                                                                                            |   |               | 12,813   |   |   |   | 16,386 |   |
|                                                                                                                                                                                         |   |               |     |   |   |   |   |   |
| Commitments and contingencies (Note 16)                                                                                                                                                      |   |               |     |   |   |   |   |   |
|                                                                                                                                                                                         |   |               |     |   |   |   |   |   |
| Stockholders' equity:                                                                                                                                                                        |   |               |     |   |   |   |   |   |
| Series C Convertible Preferred Stock, $.10 par value, 10,000,000 shares authorized; 9,968 and 36,182 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively |   |               | 1        |   |   |   | 4 |   |
| Common Stock, $.001 par value, 150,000,000 shares authorized; 29,943,086 and 4,304,425 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively               |   |               | 30       |   |   |   | 4 |   |
| Additional paid-in capital                                                                                                                                                                   |   |               | 266,854  |   |   |   | 251,643 |   |
| Accumulated deficit                                                                                                                                                                          |   |               | (233,508 | ) |   |   | (229,406 | ) |
| Total stockholders' equity                                                                                                                                                                   |   |               | 33,377   |   |   |   | 22,245 |   |
| Total liabilities and stockholders' equity                                                                                                                                                   |   | $                  | 46,190   |   |   | $ | 38,631 |   |

----

|                                                                      |   | For the Three Months EndedSeptember 30, |       |
|---------------------------------------------------------------------------|--------|-----------------------------------------|------------|
|                                                                      |   | 2018                                    |       |   | 2017 |   |
|                                                                      |   |                                    |       |   |   |   |
| Revenues (Note 3)                                                         |   | $                                       | 7,892      |   |   | $ | 7,285 |   |
|                                                                      |   |                                    |       |   |   |   |   |   |
| Cost of revenues                                                          |   |                                    | 3,049      |   |   |   | 3,276 |   |
|                                                                      |   |                                    |       |   |   |   |   |   |
| Gross profit                                                              |   |                                    | 4,843      |   |   |   | 4,009 |   |
|                                                                      |   |                                    |       |   |   |   |   |   |
| Operating expenses:                                                       |   |                                    |       |   |   |   |   |   |
| Engineering and product development                                       |   |                                    | 224        |   |   |   | 411 |   |
| Selling and marketing                                                     |   |                                    | 2,487      |   |   |   | 2,492 |   |
| General and administrative                                                |   |                                    | 2,184      |   |   |   | 1,678 |   |
|                                                                      |   |                                    | 4,895      |   |   |   | 4,581 |   |
|                                                                      |   |                                    |       |   |   |   |   |   |
| Operating loss before other expense, net                                  |   |                                    | (52        | ) |   |   | (572 | ) |
|                                                                      |   |                                    |       |   |   |   |   |   |
| Other income (expense), net:                                              |   |                                    |       |   |   |   |   |   |
| Interest expense, net                                                     |   |                                    | (239       | ) |   |   | (1,343 | ) |
| Change in fair value of warranty liability                                |   |                                    | (79        | ) |   |   | 81 |   |
| Loss on extinguishment of debentures                                      |   |                                    | -          |   |   |   | (11,799 | ) |
|                                                                      |   |                                    | (318       | ) |   |   | (13,061 | ) |
|                                                                      |   |                                    |       |   |   |   |   |   |
| Loss before income taxes                                                  |   |                                    | (370       | ) |   |   | (13,633 | ) |
|                                                                      |   |                                    |       |   |   |   |   |   |
| Income tax benefit (expense)                                              |   |                                    | 80         |   |   |   | (38 | ) |
|                                                                      |   |                                    |       |   |   |   |   |   |
| Net loss                                                                  |   | $                                       | (290       | ) |   | $ | (13,671 | ) |
|                                                                      |   |                                    |       |   |   |   |   |   |
| Net loss per common share - basic and diluted                             |   | $                                       | (0.01      | ) |   | $ | (3.32 | ) |
|                                                                      |   |                                    |       |   |   |   |   |   |
| Shares used in computing net loss per basic and diluted common share      |   |                                    | 29,912,827 |   |   |   | 2,477,743 |   |
|                                                                      |   |                                    |       |   |   |   |   |   |
| Net loss per Preferred C share - basic and diluted                        |   | $                                       | (3.23      | ) |   | $ | (1,235.43 | ) |
|                                                                      |   |                                    |       |   |   |   |   |   |
| Shares used in computing net loss per basic and diluted Preferred C share |   |                                    | 10,049     |   |   |   | 4,400 |   |
|                                                                      |   |                                    |       |   |   |   |   |   |

----

|                                                                      |   | For the Nine Months EndedSeptember 30, |       |
|---------------------------------------------------------------------------|--------|----------------------------------------|------------|
|                                                                      |   | 2018                                   |       |   | 2017 |   |
|                                                                      |   |                                   |       |   |   |   |
| Revenues (Note 3)                                                         |   | $                                      | 21,892     |   |   | $ | 22,852 |   |
|                                                                      |   |                                   |       |   |   |   |   |   |
| Cost of revenues                                                          |   |                                   | 9,842      |   |   |   | 9,182 |   |
|                                                                      |   |                                   |       |   |   |   |   |   |
| Gross profit                                                              |   |                                   | 12,050     |   |   |   | 13,670 |   |
|                                                                      |   |                                   |       |   |   |   |   |   |
| Operating expenses:                                                       |   |                                   |       |   |   |   |   |   |
| Engineering and product development                                       |   |                                   | 831        |   |   |   | 1,309 |   |
| Selling and marketing                                                     |   |                                   | 7,737      |   |   |   | 8,312 |   |
| General and administrative                                                |   |                                   | 6,319      |   |   |   | 4,999 |   |
|                                                                      |   |                                   | 14,887     |   |   |   | 14,620 |   |
|                                                                      |   |                                   |       |   |   |   |   |   |
| Operating loss before other expense, net                                  |   |                                   | (2,837     | ) |   |   | (950 | ) |
|                                                                      |   |                                   |       |   |   |   |   |   |
| Other expense, net:                                                       |   |                                   |       |   |   |   |   |   |
| Interest expense, net                                                     |   |                                   | (930       | ) |   |   | (4,264 | ) |
| Change in fair value of warrant liability                                 |   |                                   | (101       | ) |   |   | 77 |   |
| Other income, net                                                         |   |                                   | -          |   |   |   | 6 |   |
| Loss on extinguishment of debentures                                      |   |                                   | -          |   |   |   | (11,799 | ) |
|                                                                      |   |                                   | (1,031     | ) |   |   | (15,980 | ) |
|                                                                      |   |                                   |       |   |   |   |   |   |
| Loss before income taxes                                                  |   |                                   | (3,868     | ) |   |   | (16,930 | ) |
|                                                                      |   |                                   |       |   |   |   |   |   |
| Income tax expense                                                        |   |                                   | -          |   |   |   | (181 | ) |
|                                                                      |   |                                   |       |   |   |   |   |   |
| Net loss                                                                  |   | $                                      | (3,868     | ) |   | $ | (17,111 | ) |
|                                                                      |   |                                   |       |   |   |   |   |   |
| Net loss per common share – basic and diluted:                      |   | $                                      | (0.15      | ) |   | $ | (5.94 | ) |
|                                                                      |   |                                   |       |   |   |   |   |   |
| Shares used in computing net loss per basic and diluted share:            |   |                                   | 16,099,752 |   |   |   | 2,328,274 |   |
|                                                                      |   |                                   |       |   |   |   |   |   |
| Net loss per Preferred C share – basic and diluted:                 |   | $                                      | (57.58     | ) |   | $ | (2,208.96 | ) |
|                                                                      |   |                                   |       |   |   |   |   |   |
| Shares used in computing net loss per basic and diluted Preferred C share |   |                                   | 23,872     |   |   |   | 1,483 |   |

----

|                                                        |   |                                |    |   |         |   |   |               |   |   |        |   |   |    |   |
|-------------------------------------------------------------|--------|-------------------------------------|---------|--------|--------------|--------|--------|--------------------|--------|--------|-------------|--------|--------|---------|--------|
|                                                        |   |                                |    |   |         |   |   |               |   |   |        |   |   |    |   |
|                                                        |   | Series C ConvertiblePreferred Stock |    |   | Common Stock |   |   | Additional Paid-In |   |   | Accumulated |   |   |    |   |
|                                                        |   | Shares                              |    |   | Amount       |   |   | Shares             |   |   | Amount      |   |   | Capital |   |   | Deficit |   |   | Total |   |
| BALANCE, DECEMBER 31, 2017                                  |   |                                | 36,182  |   |         | $      | 4      |               |   |   | 4,304,425   |   |   | $       | 4      |   |   | $ | 251,643 |   |   | $ | (229,406 | ) |   | $ | 22,245 |   |
| Adoption of accounting standard                             |   |                                | -       |   |         |   | -      |               |   |   | -           |   |   |    | -      |   |   |   | - |   |   |   | (234 | ) |   |   | (234 | ) |
| BALANCE, JANUARY 1, 2018                                    |   |                                | 36,182  |   |         |   | 4      |               |   |   | 4,304,425   |   |   |    | 4      |   |   |   | 251,643 |   |   |   | (229,640 | ) |   |   | 22,011 |   |
| Stock-based compensation                                    |   |                                | -       |   |         |   | -      |               |   |   | -           |   |   |    | -      |   |   |   | 570 |   |   |   | - |   |   |   | 570 |   |
| Conversion of convertible preferred stock into common stock |   |                                | (26,214 | )      |         |   | (3     | )                  |   |   | 9,744,916   |   |   |    | 10     |   |   |   | (7 | ) |   |   | - |   |   |   | - |   |
| Sale of common stock, net of expenses of $2,336             |   |                                | -       |   |         |   | -      |               |   |   | 15,893,745  |   |   |    | 16     |   |   |   | 14,648 |   |   |   | - |   |   |   | 14,664 |   |
| Net loss for the nine months ended September 30, 2018       |   |                                | -       |   |         |   | -      |               |   |   | -           |   |   |    | -      |   |   |   | - |   |   |   | (3,868 | ) |   |   | (3,868 | ) |
| BALANCE, SEPTEMBER 30, 2018                                 |   |                                | 9,968   |   |         | $      | 1      |               |   |   | 29,943,086  |   |   | $       | 30     |   |   | $ | 266,854 |   |   | $ | (233,508 | ) |   | $ | 33,377 |   |

----

|                                                                            |   | For the Nine Months EndedSeptember 30, |   |
|---------------------------------------------------------------------------------|--------|----------------------------------------|--------|
|                                                                            |   | 2018                                   |   |   | 2017 |   |
| Cash Flows From Operating Activities:                                           |   |                                   |   |   |   |   |
| Net loss                                                                        |   | $                                      | (3,868 | ) |   | $ | (17,111 | ) |
| Adjustments to reconcile net loss to net cash provided by operating activities: |   |                                   |   |   |   |   |   |   |
| Depreciation and amortization                                                   |   |                                   | 3,993  |   |   |   | 4,811 |   |
| Provision for doubtful accounts                                                 |   |                                   | 53     |   |   |   | 58 |   |
| Loss on disposal of property and equipment                                      |   |                                   | 503    |   |   |   | - |   |
| Gain on cancelation of distributor rights agreement                             |   |                                   | -      |   |   |   | (40 | ) |
| Net impairment of intangible asset and liability                                |   |                                   | (11    | ) |   |   | 23 |   |
| Stock-based compensation                                                        |   |                                   | 570    |   |   |   | 136 |   |
| Deferred tax provision                                                          |   |                                   | (22    | ) |   |   | 180 |   |
| Amortization of debt discount                                                   |   |                                   | 44     |   |   |   | 2,344 |   |
| Amortization of deferred financing costs                                        |   |                                   | 79     |   |   |   | 171 |   |
| Loss on extinguishment of debt                                                  |   |                                   | -      |   |   |   | 11,799 |   |
| Change in fair value of warrant liability                                       |   |                                   | 101    |   |   |   | (77 | ) |
| Changes in operating assets and liabilities:                                    |   |                                   |   |   |   |   |   |   |
| Accounts receivable                                                             |   |                                   | 361    |   |   |   | 130 |   |
| Inventories                                                                     |   |                                   | 521    |   |   |   | (716 | ) |
| Prepaid expenses and other assets                                               |   |                                   | (137   | ) |   |   | 406 |   |
| Accounts payable                                                                |   |                                   | (614   | ) |   |   | 71 |   |
| Other accrued liabilities                                                       |   |                                   | 423    |   |   |   | (162 | ) |
| Other liabilities                                                               |   |                                   | (3     | ) |   |   | 108 |   |
| Deferred revenues                                                               |   |                                   | (198   | ) |   |   | 115 |   |
| Net cash provided by operating activities                                       |   |                                   | 1,795  |   |   |   | 2,246 |   |
|                                                                            |   |                                   |   |   |   |   |   |   |
| Cash Flows From Investing Activities:                                           |   |                                   |   |   |   |   |   |   |
| Lasers placed-in-service                                                        |   |                                   | (1,254 | ) |   |   | (1,450 | ) |
| Purchases of property and equipment, net                                        |   |                                   | (6     | ) |   |   | (321 | ) |
| Payments on distributor rights liability                                        |   |                                   | (23    | ) |   |   | (115 | ) |
| Net cash used in investing activities                                           |   |                                   | (1,283 | ) |   |   | (1,886 | ) |
|                                                                            |   |                                   |   |   |   |   |   |   |
| Cash Flows From Financing Activities:                                           |   |                                   |   |   |   |   |   |   |
| Proceeds from issuance of common stock                                          |   |                                   | 14,664 |   |   |   | - |   |
| Repayments of long-term debt                                                    |   |                                   | (3,000 | ) |   |   | (857 | ) |
| Payments on notes payable                                                       |   |                                   | (357   | ) |   |   | (304 | ) |
| Net cash provided by (used in) financing activities                             |   |                                   | 11,307 |   |   |   | (1,161 | ) |
|                                                                            |   |                                   |   |   |   |   |   |   |
| Net increase (decrease) in cash and cash equivalents                            |   |                                   | 11,819 |   |   |   | (801 | ) |
| Cash and cash equivalents, beginning of period                                  |   |                                   | 4,069  |   |   |   | 3,928 |   |
|                                                                            |   |                                   |   |   |   |   |   |   |
| Cash and cash equivalents, end of period                                        |   | $                                      | 15,888 |   |   | $ | 3,127 |   |
|                                                                            |   |                                   |   |   |   |   |   |   |
| Supplemental information:                                                       |   |                                   |   |   |   |   |   |   |
| Cash paid for interest                                                          |   | $                                      | 808    |   |   | $ | 1,934 |   |
|                                                                            |   |                                   |   |   |   |   |   |   |
| Supplemental information of non-cash investing and financing activities:        |   |                                   |   |   |   |
| Conversion of senior secured convertible debentures into common stock           |   | $                                      | -      |   |   | $ | 262 |   |
| Acquisition of distributor rights asset and license liability                   |   | $                                      | -      |   |   | $ | 286 |   |
| Issuance of convertible preferred stock in exchange for convertible debentures  |   |                                   | -      |   |   |   | 25,910 |   |

----

----

|   | • | 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. |

----

| Issuance Date |   | December 31, 2017 |   |   | Increase inFair Value |   |   | September 30, 2018 |   |
|---------------|--------|-------------------|--------|--------|-----------------------|--------|--------|--------------------|--------|
|          |   |              |   |   |                  |   |   |               |   |
| 10/31/2013    |   |              | 2      |   |                  |   | 51     |               |   |   | 53 |   |
| 2/5/2014      |   |              | 1      |   |                  |   | 50     |               |   |   | 51 |   |
|          |   | $                 | 3      |   |                  | $      | 101    |               |   | $ | 104 |   |
| Issuance Date |   | December 31, 2016 |   |   | Decrease inFair Value |   |   | December 31, 2017 |   |
|---------------|--------|-------------------|--------|--------|-----------------------|--------|--------|-------------------|--------|
|          |   |              |   |   |                  |   |   |              |   |
| 10/31/2013    |   |              | 39     |   |                  |   | (37    | )                 |   |   | 2 |   |
| 2/5/2014      |   |              | 66     |   |                  |   | (65    | )                 |   |   | 1 |   |
|          |   | $                 | 105    |   |                  | $      | (102   | )                 |   | $ | 3 |   |

----

|                                                            |   | Three Months EndedSeptember 30, 2018 |       |   | Nine Months EndedSeptember 30, 2018 |   |
|-----------------------------------------------------------------|--------|--------------------------------------|------------|--------|-------------------------------------|--------|
|                                                            |   | Common Stock                         |       |   | Series C Preferred Stock            |   |   | Common Stock |   |   | Series C Preferred Stock |   |
|                                                            |   |                                 |       |   |                                |   |   |   |   |   |   |   |
| Net loss                                                        |   | $                                    | (257       | )      |                                | $      | (33 | ) |   | $ | (2,493 | ) |   | $ | (1,375 | ) |
|                                                            |   |                                 |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average number of shares outstanding during the period |   |                                 | 29,912,827 |   |                                |   | 10,049 |   |   |   | 16,099,752 |   |   |   | 23,872 |   |
|                                                            |   |                                 |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Basic and Diluted net loss per share                            |   | $                                    | (0.01      | )      |                                | $      | (3.23 | ) |   | $ | (0.15 | ) |   | $ | (57.58 | ) |
|                                                            |   | For the Three Months Ended September 30, 2017 |      |   | For the Nine Months Ended September 30, 2017 |   |
|-----------------------------------------------------------------|--------|-----------------------------------------------|-----------|--------|----------------------------------------------|--------|
|                                                            |   | Common stock                                  |      |   | Series C Preferred stock                     |   |   | Common stock |   |   | Series C Preferred stock |   |
|                                                            |   |                                          |      |   |                                         |   |   |   |   |   |   |   |
| Net loss                                                        |   | $                                             | (8,235    | )      |                                         | $      | (5,436 | ) |   | $ | (13,835 | ) |   | $ | (3,276 | ) |
|                                                            |   |                                          |      |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average number of shares outstanding during the period |   |                                          | 2,477,743 |   |                                         |   | 4,400 |   |   |   | 2,328,274 |   |   |   | 1,483 |   |
|                                                            |   |                                          |      |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Basic and Diluted net loss per share                            |   | $                                             | (3.32     | )      |                                         | $      | (1,235.43 | ) |   | $ | (5.94 | ) |   | $ | (2,208.96 | ) |
|                                                      |   | Three Months Ended September 30, |   | Nine Months Ended September 30, |
|-----------------------------------------------------------|--------|----------------------------------|--------|---------------------------------|
|                                                      |   | 2018                             |   | 2017                            |   | 2018 |   | 2017 |
| Common stock equivalents of convertible debentures        |   | -                                |   | 7,546,299                       |   |   | -  | 8,191,777 |
| Common stock purchase warrants                            |   | 2,392,760                        |   | 2,406,625                       |   | 2,398,651 |   | 2,406,625 |
| Common stock equivalents of convertible Preferred B stock |   | -                                |   | 228,336                         |   | - |   | 343,261 |
| Common stock equivalents of convertible Preferred C stock |   | 3,777,033                        |   | -                               |   | 8,874,092 |   | - |
| Restricted stock units                                    |   | 140,097                          |   | -                               |   | 58,717 |   | - |
| Common stock options                                      |   | 4,371,764                        |   | 855,389                         |   | 2,786,400 |   | 873,554 |
| Total                                                     |   | 10,681,654                       |   | 11,036,649                      |   | 14,117,860 |   | 11,815,217 |

----

|                    |   | For the Three Months Ended September 30, 2018 |   |
|-------------------------|--------|-----------------------------------------------|--------|
| Statement of Operations |   | As Reported                                   |   |   | Balances Without Adoption of ASC 606 |   |   | Effect of Adoption Higher / (Lower) |   |
|                    |   |                                          |   |   |   |   |   |   |   |
| Revenues                |   | $                                             | 7,892  |   |   | $ | 7,946 |   |   | $ | (54 | ) |
|                    |   | For the Nine Months Ended September 30, 2018 |   |
|-------------------------|--------|----------------------------------------------|--------|
| Statement of Operations |   | As Reported                                  |   |   | Balances Without Adoption of ASC 606 |   |   | Effect of Adoption Higher / (Lower) |   |
|                    |   |                                         |   |   |   |   |   |   |   |
| Revenues                |   | $                                            | 21,892 |   |   | $ | 22,006 |   |   | $ | (114 | ) |

----

|  | On March 30, 2018 the Company entered into a Stock Purchase Agreement (the "Accelmed SPA") and a Registration Rights Agreement with Accelmed Growth Partners L.P. ("Accelmed") investing $13,000 into the Company at a price per share of $1.08; upon closing Accelmed received 12,037,037 shares of its common stock. |
|----------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | In connection with the Accelmed investment, the Company entered into two separate stock purchase agreements, each for approximately $1,000 with its then current shareholders, Broadfin Capital ("Broadfin") and Sabby Management ("Sabby"). Upon closing of these transactions, each of Sabby and Broadfin received 925,926 shares of the Company's common stock at a price per share of $1.08. |
|----------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|  | Two separate subscription agreements were also executed on in connection with the Accelmed investment: (i) a subscription agreement with Gohan Investments, Ltd. for $1,000 to purchase 925,926 shares of the Company's common stock at $1.08 per share; and (ii) a subscription agreement with Dr. Dolev Rafaeli, the new CEO of the Company effective May 29, 2018, for $1,000 to purchase 925,926 shares of the Company's common stock at $1.08 per share. |
|----------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|     |   | Three Months Ended September 30, 2018 |   |
|----------|--------|---------------------------------------|--------|
|     |   | Dermatology Recurring Procedures      |   |   | Dermatology Procedures Equipment |   |   | TOTAL |   |
| Domestic |   | $                                     | 5,556  |   |   | $ | 366 |   |   | $ | 5,922 |   |
| Foreign  |   |                                  | -      |   |   | $ | 1,970 |   |   |   | 1,970 |   |
| Total    |   | $                                     | 5,556  |   |   | $ | 2,366 |   |   | $ | 7,892 |   |
|     |   |                                  |   |   |   |   |   |   |   |   |   |   |
|     |   | Nine Months Ended September 30, 2018 |   |
|----------|--------|--------------------------------------|--------|
|     |   | Dermatology Recurring Procedures     |   |   | Dermatology Procedures Equipment |   |   | TOTAL |   |
| Domestic |   | $                                    | 15,221 |   |   | $ | 1,337 |   |   | $ | 16,558 |   |
| Foreign  |   |                                 | -      |   |   | $ | 5,334 |   |   |   | 5,334 |   |
| Total    |   | $                                    | 15,221 |   |   | $ | 6,671 |   |   | $ | 21,892 |   |
|     |   |                                 |   |   |   |   |   |   |   |   |   |   |
|     |   | Three Months Ended September 30, 2017 |   |
|----------|--------|---------------------------------------|--------|
|     |   | Dermatology Recurring Procedures      |   |   | Dermatology Procedures Equipment |   |   | TOTAL |   |
| Domestic |   | $                                     | 5,525  |   |   | $ | 617 |   |   | $ | 6,142 |   |
| Foreign  |   |                                  | -      |   |   | $ | 1,143 |   |   |   | 1,143 |   |
| Total    |   | $                                     | 5,525  |   |   | $ | 1,760 |   |   | $ | 7,285 |   |
|     |   |                                  |   |   |   |   |   |   |   |   |   |   |
|     |   | Nine Months Ended September 30, 2017 |   |
|----------|--------|--------------------------------------|--------|
|     |   | Dermatology Recurring Procedures     |   |   | Dermatology Procedures Equipment |   |   | TOTAL |   |
| Domestic |   | $                                    | 17,051 |   |   | $ | 1,959 |   |   | $ | 19,010 |   |
| Foreign  |   |                                 | -      |   |   | $ | 3,842 |   |   |   | 3,842 |   |
| Total    |   | $                                    | 17,051 |   |   | $ | 5,801 |   |   | $ | 22,852 |   |
|     |   |                                 |   |

----

|                               |   | September 30, 2018 |   |   | December 31, 2017 |   |
|------------------------------------|--------|--------------------|--------|--------|-------------------|--------|
|                               |   |               |   |   |              |   |
| Raw materials and work in progress |   | $                  | 2,391  |   |              | $      | 2,490 |   |
| Finished goods                     |   |               | 97     |   |              |   | 519 |   |
| Total inventories                  |   | $                  | 2,488  |   |              | $      | 3,009 |   |
|                                      |   | September 30, 2018 |    |   | December 31, 2017 |   |
|-------------------------------------------|--------|--------------------|---------|--------|-------------------|--------|
|                                      |   |               |    |   |              |   |
| Lasers placed-in-service                  |   | $                  | 18,352  |   |              | $      | 17,820 |   |
| Equipment, computer hardware and software |   |               | 185     |   |              |   | 462 |   |
| Furniture and fixtures                    |   |               | 130     |   |              |   | 124 |   |
| Leasehold improvements                    |   |               | 31      |   |              |   | 31 |   |
|                                      |   |               | 18,698  |   |              |   | 18,437 |   |
| Accumulated depreciation and amortization |   |               | (13,000 | )      |              |   | (10,734 | ) |
| Property and equipment, net               |   | $                  | 5,698   |   |              | $      | 7,703 |   |
|                   |   | Balance |   |   | Accumulated Amortization |    |   | Intangible Assets, net |   |
|------------------------|--------|---------|--------|--------|--------------------------|---------|--------|------------------------|--------|
|                   |   |    |   |   |                     |    |   |                   |   |
| Core technology        |   | $  | 5,700  |   |                     | $  | (1,853 | )                      |   | $  | 3,847 |   |
| Product technology     |   |    | 1,500  |   |                     |    | (1,150 | )                      |   |   | 350 |   |
| Customer relationships |   |    | 6,900  |   |                     |    | (2,243 | )                      |   |   | 4,657 |   |
| Tradenames             |   |    | 1,500  |   |                     |    | (487   | )                      |   |   | 1,013 |   |
|                   |   | $       | 15,600 |   |                     | $       | (5,733 | )                      |   | $ | 9,867 |   |

----

|                   |   | Balance |   |   | Accumulated Amortization |   |   | Intangible Assets, net |   |
|------------------------|--------|---------|--------|--------|--------------------------|--------|--------|------------------------|--------|
|                   |   |    |   |   |                     |   |   |                   |   |
| Core technology        |   |    | 5,700  |   |                     |   | (1,425 | )                      |   |   | 4,275 |   |
| Product technology     |   |    | 1,500  |   |                     |   | (1,000 | )                      |   |   | 500 |   |
| Customer relationships |   |    | 6,900  |   |                     |   | (1,725 | )                      |   |   | 5,175 |   |
| Tradenames             |   |    | 1,500  |   |                     |   | (375   | )                      |   |   | 1,125 |   |
| Distribution rights    |   |    | 286    |   |                     |   | (36    | )                      |   |   | 250 |   |
|                   |   | $       | 15,886 |   |                     | $      | (4,561 | )                      |   | $ | 11,325 |   |
| Remaining 2018 |   | $      | 402   |   |
|----------------|--------|--------|-------|--------|
| 2019           |   |   | 1,610 |   |
| 2020           |   |   | 1,510 |   |
| 2021           |   |   | 1,410 |   |
| 2022           |   |   | 1,410 |   |
| Thereafter     |   |   | 3,525 |   |
| Total          |   | $      | 9,867 |   |
|                                                     |   | September 30, 2018 |   |   | December 31, 2017 |   |
|----------------------------------------------------------|--------|--------------------|--------|--------|-------------------|--------|
|                                                     |   |               |   |   |              |   |
| Accrued warranty, current                                |   | $                  | 146    |   |              | $      | 109 |   |
| Accrued compensation, including commissions and vacation |   |               | 1,196  |   |              |   | 785 |   |
| Accrued sales and other taxes                            |   |               | 869    |   |              |   | 904 |   |
| Distributor rights liability, current                    |   |               | -      |   |              |   | 85 |   |
| Accrued professional fees and other accrued liabilities  |   |               | 486    |   |              |   | 477 |   |
| Total other accrued liabilities                          |   | $                  | 2,697  |   |              | $      | 2,360 |   |

----

|                                  |   | September 30, 2018 |   |   | December 31, 2017 |   |
|---------------------------------------|--------|--------------------|--------|--------|-------------------|--------|
|                                  |   |               |   |   |              |   |
| Balance at beginning of period        |   | $                  | 178    |   |              | $      | 115 |   |
| Additions charged to warranty expense |   |               | 91     |   |              |   | 161 |   |
| Expiring warranties/claimed satisfied |   |               | (19    | )      |              |   | (98 | ) |
| Balance at end of period              |   | $                  | 250    |   |              | $      | 178 |   |
|                                                                                                                      |   | September 30, 2018 |   |   | December 31, 2017 |   |
|---------------------------------------------------------------------------------------------------------------------------|--------|--------------------|--------|--------|-------------------|--------|
|                                                                                                                      |   |               |   |   |              |   |
| Term note, net of debt discount of $117 and $160, respectively; and deferred financing cost of $92 and $171, respectively |   | $                  | 7,362  |   |              | $      | 10,240 |   |
| Less: current portion                                                                                                     |   |               | -      |   |              |   | (2,387 | ) |
| Total long-term debt                                                                                                      |   | $                  | 7,362  |   |              | $      | 7,853 |   |

----

| Remaining in 2018 |   | $      | -     |   |
|-------------------|--------|--------|-------|--------|
| 2019              |   |   | 252   |   |
| 2020              |   |   | 3,029 |   |
| 2021              |   |   | 3,029 |   |
| 2022              |   |   | 1,261 |   |
|              |   | $      | 7,571 |   |

----

----

| Issue Date  | Expiration Date       |   | Total Warrants |      |   | Exercise Price |   |
|-------------|-----------------------|--------|----------------|-----------|--------|----------------|--------|
|        |                  |   |           |      |   |           |   |
| 10/31/2013* |  4/30/2019       |   |           | 137,143   |   |           | $      | 3.75 |   |
| 2/5/2014*   |    2/5/2019 |   |           | 265,947   |   |           | $      | 3.75 |   |
| 7/24/2014   |  7/24/2019       |   |           | 1,239,769 |   |           | $      | 3.75 - $ 12.25 |   |
| 6/22/2015   |  6/22/2020       |   |           | 600,000   |   |           | $      | 3.75 |   |
| 12/30/2015  | 12/30/2020            |   |           | 130,089   |   |           | $      | 5.65 |   |
| 1/29/2016   |   1/29/2021      |   |           | 19,812    |   |           | $      | 5.30 |   |
|        |                  |   |           | 2,392,760 |   |           |   |   |   |

----

|                                       |   | Dermatology Recurring Procedures |   |   | Dermatology Procedures Equipment |   |   | TOTAL  |   |
|--------------------------------------------|--------|----------------------------------|--------|--------|----------------------------------|--------|--------|--------|--------|
| Revenues                                   |   | $                                | 5,556  |   |                             | $      | 2,336  |   |   | $ | 7,892 |   |
| Costs of revenues                          |   |                             | 1,757  |   |                             |   | 1,292  |   |   |   | 3,049 |   |
| Gross profit                               |   |                             | 3,799  |   |                             |   | 1,044  |   |   |   | 4,843 |   |
| Gross profit %                             |   |                             | 68.4   | %      |                             |   | 44.7   | %      |   |   | 61.4 | % |
|                                       |   |                             |   |   |                             |   |   |   |   |   |   |   |
| Allocated operating expenses:              |   |                             |   |   |                             |   |   |   |   |   |   |   |
| Engineering and product development        |   |                             | 178    |   |                             |   | 46     |   |   |   | 224 |   |
| Selling and marketing                      |   |                             | 2,276  |   |                             |   | 211    |   |   |   | 2,487 |   |
|                                       |   |                             |   |   |                             |   |   |   |   |   |   |   |
| Unallocated operating expenses             |   |                             | -      |   |                             |   | -      |   |   |   | 2,184 |   |
|                                       |   |                             | 2,454  |   |                             |   | 257    |   |   |   | 4,895 |   |
| Income (loss) from operations              |   |                             | 1,345  |   |                             |   | 787    |   |   |   | (52 | ) |
|                                       |   |                             |   |   |                             |   |   |   |   |   |   |   |
| Interest expense, net                      |   |                             | -      |   |                             |   | -      |   |   |   | (239 | ) |
| Change in fair value of warranty liability |   |                             | -      |   |                             |   | -      |   |   |   | (79 | ) |
| Income (loss) before income taxes          |   | $                                | 1,345  |   |                             | $      | 787    |   |   | $ | (370 | ) |

----

|                                      |   | Dermatology Recurring Procedures |   |   | Dermatology Procedures Equipment |   |   | Dermatology Imaging |   |   | TOTAL   |   |
|-------------------------------------------|--------|----------------------------------|--------|--------|----------------------------------|--------|--------|---------------------|--------|--------|---------|--------|
| Revenues                                  |   | $                                | 5,525  |   |                             | $      | 1,751  |                |   | $      | 9       |   |   | $ | 7,285 |   |
| Costs of revenues                         |   |                             | 2,084  |   |                             |   | 967    |                |   |   | 225     |   |   |   | 3,276 |   |
| Gross profit                              |   |                             | 3,441  |   |                             |   | 784    |                |   |   | (216    | )      |   |   | 4,009 |   |
| Gross profit %                            |   |                             | 62.3   | %      |                             |   | 44.8   | %                   |   |   | (2400.0 | %)     |   |   | 55.0 | % |
|                                      |   |                             |   |   |                             |   |   |                |   |   |    |   |   |   |   |   |
| Allocated operating expenses:             |   |                             |   |   |                             |   |   |                |   |   |    |   |   |   |   |   |
| Engineering and product development       |   |                             | 348    |   |                             |   | 63     |                |   |   | -       |   |   |   | 411 |   |
| Selling and marketing expenses            |   |                             | 2,043  |   |                             |   | 449    |                |   |   | -       |   |   |   | 2,492 |   |
|                                      |   |                             |   |   |                             |   |   |                |   |   |    |   |   |   |   |   |
| Unallocated operating expenses            |   |                             | -      |   |                             |   | -      |                |   |   | -       |   |   |   | 1,678 |   |
|                                      |   |                             | 2,391  |   |                             |   | 512    |                |   |   | -       |   |   |   | 4,581 |   |
| Income (loss) from operations             |   |                             | 1,050  |   |                             |   | 272    |                |   |   | (216    | )      |   |   | (572 | ) |
|                                      |   |                             |   |   |                             |   |   |                |   |   |    |   |   |   |   |   |
| Interest expense, net                     |   |                             | -      |   |                             |   | -      |                |   |   | -       |   |   |   | (1,343 | ) |
| Change in fair value of warrant liability |   |                             | -      |   |                             |   | -      |                |   |   | -       |   |   |   | 81 |   |
| Loss on extinguishment of debt            |   |                             | -      |   |                             |   | -      |                |   |   | -       |   |   |   | (11,799 | ) |
|                                      |   |                             |   |   |                             |   |   |                |   |   |    |   |   |   |   |   |
| Income (loss) before income taxes         |   | $                                | 1,050  |   |                             | $      | 272    |                |   | $      | (216    | )      |   | $ | (13,633 | ) |
|                                      |   |                             |   |   |                             |   |   |                |   |   |    |   |   |   |   |   |
|                                      |   | Dermatology Recurring Procedures |   |   | Dermatology Procedures Equipment |   |   | TOTAL  |   |
|-------------------------------------------|--------|----------------------------------|--------|--------|----------------------------------|--------|--------|--------|--------|
| Revenues                                  |   | $                                | 15,221 |   |                             | $      | 6,671  |   |   | $ | 21,892 |   |
| Costs of revenues                         |   |                             | 5,587  |   |                             |   | 4,255  |   |   |   | 9,842 |   |
| Gross profit                              |   |                             | 9,634  |   |                             |   | 2,416  |   |   |   | 12,050 |   |
| Gross profit %                            |   |                             | 63.3   | %      |                             |   | 36.2   | %      |   |   | 55.0 | % |
|                                      |   |                             |   |   |                             |   |   |   |   |   |   |   |
| Allocated operating expenses:             |   |                             |   |   |                             |   |   |   |   |   |   |   |
| Engineering and product development       |   |                             | 663    |   |                             |   | 168    |   |   |   | 831 |   |
| Selling and marketing                     |   |                             | 6,663  |   |                             |   | 1,074  |   |   |   | 7,737 |   |
|                                      |   |                             |   |   |                             |   |   |   |   |   |   |   |
| Unallocated operating expenses            |   |                             | -      |   |                             |   | -      |   |   |   | 6,319 |   |
|                                      |   |                             | 7,326  |   |                             |   | 1,242  |   |   |   | 14,887 |   |
| Income (loss) from operations             |   |                             | 2,308  |   |                             |   | 1,174  |   |   |   | (2,837 | ) |
|                                      |   |                             |   |   |                             |   |   |   |   |   |   |   |
| Interest expense, net                     |   |                             | -      |   |                             |   | -      |   |   |   | (930 | ) |
|                                      |   |                             |   |   |                             |   |   |   |   |   |   |   |
| Change in fair value of warrant liability |   |                             | -      |   |                             |   | -      |   |   |   | (101 | ) |
|                                      |   |                             |   |   |                             |   |   |   |   |   |   |   |
| Income (loss) before income taxes         |   | $                                | 2,308  |   |                             | $      | 1,174  |   |   | $ | (3,868 | ) |

----

|                                      |   | Dermatology Recurring Procedures |   |   | DermatologyProcedures Equipment |   |   | Dermatology Imaging |   |   | TOTAL    |   |
|-------------------------------------------|--------|----------------------------------|--------|--------|---------------------------------|--------|--------|---------------------|--------|--------|----------|--------|
| Revenues                                  |   | $                                | 17,051 |   |                            | $      | 5,784  |                |   | $      | 17       |   |   | $ | 22,852 |   |
| Costs of revenues                         |   |                             | 5,969  |   |                            |   | 2,988  |                |   |   | 225      |   |   |   | 9,182 |   |
| Gross profit                              |   |                             | 11,082 |   |                            |   | 2,796  |                |   |   | ( 208    | )      |   |   | 13,670 |   |
| Gross profit %                            |   |                             | 65.0   | %      |                            |   | 48.3   | %                   |   |   | (1,223.5 | %)     |   |   | 59.8 | % |
|                                      |   |                             |   |   |                            |   |   |                |   |   |     |   |   |   |   |   |
| Allocated operating expenses:             |   |                             |   |   |                            |   |   |                |   |   |     |   |   |   |   |   |
| Engineering and product development       |   |                             | 1,104  |   |                            |   | 204    |                |   |   | 1        |   |   |   | 1,309 |   |
| Selling and marketing expenses            |   |                             | 7,145  |   |                            |   | 1,167  |                |   |   | -        |   |   |   | 8,312 |   |
|                                      |   |                             |   |   |                            |   |   |                |   |   |     |   |   |   |   |   |
| Unallocated operating expenses            |   |                             | -      |   |                            |   | -      |                |   |   | -        |   |   |   | 4,999 |   |
|                                      |   |                             | 8,249  |   |                            |   | 1,371  |                |   |   | 1        |   |   |   | 14,620 |   |
| Income (loss) from operations             |   |                             | 2,833  |   |                            |   | 1,425  |                |   |   | (209     | )      |   |   | (950 | ) |
|                                      |   |                             |   |   |                            |   |   |                |   |   |     |   |   |   |   |   |
| Interest expense, net                     |   |                             | -      |   |                            |   | -      |                |   |   | -        |   |   |   | (4,264 | ) |
| Change in fair value of warrant liability |   |                             | -      |   |                            |   | -      |                |   |   | -        |   |   |   | 77 |   |
| Loss on extinguishment of debt            |   |                             | -      |   |                            |   | -      |                |   |   | -        |   |   |   | (11,799 | ) |
| Other income (expense), net               |   |                             | -      |   |                            |   | -      |                |   |   | -        |   |   |   | 6 |   |
|                                      |   |                             |   |   |                            |   |   |                |   |   |     |   |   |   |   |   |
| Income (loss) before income taxes         |   | $                                | 2,833  |   |                            | $      | 1,425  |                |   | $      | (209     | )      |   | $ | (16,930 | ) |
|                                      |   |                             |   |   |                            |   |   |                |   |   |     |   |   |   |   |   |

----

| Year Ending December 31, |   |
|--------------------------|--------|
| 2018                     |   | 92 |   |
| 2019                     |   | 352 |   |
| 2020                     |   | 213 |   |
| 2021                     |   | 220 |   |
| 2022                     |   | 227 |   |
| Thereafter               |   | 17 |   |

----

----

|   | • | XTRAC® Excimer Laser. XTRAC received FDA clearance in 2000 and has since become a widely recognized treatment among dermatologists for psoriasis and other skin diseases. The XTRAC System delivers ultra-narrowband ultraviolet B ("UVB") light to affected areas of skin. Following a series of treatments typically performed twice weekly, psoriasis remission can be achieved, and vitiligo patches can be re-pigmented. XTRAC is endorsed by the National Psoriasis Foundation, and its use for psoriasis is covered by nearly all major insurance companies, including Medicare. We estimate that more than half of all major insurance companies now offer reimbursement for vitiligo as well, a figure that is increasing. |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | • | In the third quarter of 2018, we announced the FDA granted clearance for our Multi Micro Dose (MMD) tip for our XTRAC excimer laser. The MMD Tip accessory is indicated for use in conjunction with the XTRAC laser system to filter the Narrow Band UVB ("NB-UVB") light at delivery in order to calculate and individualize the maximum non-blistering dose for a particular patient.                                                                                                                                                                                                                                                                                                                                                  |
|   | • | In the third quarter of 2018, we announced the launch of our S3, the next generation XTRAC.  The S3 is smaller, faster and has a smart user interface.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | • | VTRAC® Lamp. VTRAC received FDA clearance in 2005 and provides targeted therapeutic efficacy demonstrated by excimer technology with the simplicity of design and reliability of a lamp system.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   | • | STRATAPEN®. STRATAPEN uses the patent-pending Biolock cartridge. The Biolock needle depth can be adjusted during the course of the procedure to accommodate different treatment areas and can easily maneuver around facial contours and delicate features, such as the eyes, nose and mouth.                                                                                                                                                                                                                                                                                                                                                                                                                                       |

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|                             |   | For the Three Months Ended September 30, |   |   | For the Nine Months Ended September 30, |   |
|----------------------------------|--------|------------------------------------------|--------|--------|-----------------------------------------|--------|
|                             |   | 2018                                     |   |   | 2017                                    |   |   | 2018 |   |   | 2017 |   |
| Dermatology Recurring Procedures |   | $                                        | 5,556  |   |                                    | $      | 5,525 |   |   | $ | 15,221 |   |   | $ | 17,051 |   |
| Dermatology Procedures Equipment |   |                                     | 2,336  |   |                                    |   | 1,751 |   |   |   | 6,671 |   |   |   | 5,784 |   |
| Dermatology Imaging              |   |                                     | -      |   |                                    |   | 9 |   |   |   | - |   |   |   | 17 |   |
|                             |   |                                     |   |   |                                    |   |   |   |   |   |   |   |   |   |   |   |
| Total Revenues                   |   | $                                        | 7,892  |   |                                    | $      | 7,285 |   |   | $ | 21,892 |   |   | $ | 22,852 |   |

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|                             |   | For the Three Months Ended September 30, |   |   | For the Nine Months Ended September 30, |   |
|----------------------------------|--------|------------------------------------------|--------|--------|-----------------------------------------|--------|
|                             |   | 2018                                     |   |   | 2017                                    |   |   | 2018 |   |   | 2017 |   |
| Dermatology Recurring Procedures |   | $                                        | 1,757  |   |                                    | $      | 2,084 |   |   | $ | 5,587 |   |   | $ | 5,969 |   |
| Dermatology Procedures Equipment |   |                                     | 1,292  |   |                                    |   | 967 |   |   |   | 4,255 |   |   |   | 2,988 |   |
| Dermatology Imaging              |   |                                     | -      |   |                                    |   | 225 |   |   |   | - |   |   |   | 225 |   |
|                             |   |                                     |   |   |                                    |   |   |   |   |   |   |   |   |   |   |   |
| Total Cost of Revenues           |   | $                                        | 3,049  |   |                                    | $      | 3,276 |   |   | $ | 9,842 |   |   | $ | 9,182 |   |
| Company Profit Analysis     |   | For the Three Months Ended September 30, |   |   | For the Nine Months Ended September 30, |   |
|-----------------------------|--------|------------------------------------------|--------|--------|-----------------------------------------|--------|
|                        |   | 2018                                     |   |   | 2017                                    |   |   | 2018 |   |   | 2017 |   |
| Revenues                    |   | $                                        | 7,892  |   |                                    | $      | 7,285 |   |   | $ | 21,892 |   |   | $ | 22,852 |   |
| Percent increase (decrease) |   |                                     | 8.3    | %      |                                    |   |   |   |   |   | (4.2 | %) |   |   |   |   |
| Cost of revenues            |   |                                     | 3,049  |   |                                    |   | 3,276 |   |   |   | 9,842 |   |   |   | 9,182 |   |
| Percent (decrease) increase |   |                                     | (6.9   | %)     |                                    |   |   |   |   |   | 7.2 | % |   |   |   |   |
| Gross profit                |   | $                                        | 4,843  |   |                                    | $      | 4,009 |   |   | $ | 12,050 |   |   | $ | 13,670 |   |
| Gross margin percentage     |   |                                     | 61.4   | %      |                                    |   | 55.0 | % |   |   | 55.0 | % |   |   | 59.8 | % |

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| Dermatology Recurring Procedures |   | For the Three Months Ended September 30, |   |   | For the Nine Months Ended September 30, |   |
|----------------------------------|--------|------------------------------------------|--------|--------|-----------------------------------------|--------|
|                             |   | 2018                                     |   |   | 2017                                    |   |   | 2018 |   |   | 2017 |   |
| Revenues                         |   | $                                        | 5,556  |   |                                    | $      | 5,525 |   |   | $ | 15,221 |   |   | $ | 17,051 |   |
| Percent increase (decrease)      |   |                                     | 0.5    | %      |                                    |   |   |   |   |   | (10.7 | %) |   |   |   |   |
| Cost of revenues                 |   |                                     | 1,757  |   |                                    |   | 2,084 |   |   |   | 5,587 |   |   |   | 5,969 |   |
| Percent decrease                 |   |                                     | (15.6  | %)     |                                    |   |   |   |   |   | (6.40 | %) |   |   |   |   |
| Gross profit                     |   | $                                        | 3,799  |   |                                    | $      | 3,441 |   |   | $ | 9,634 |   |   | $ | 11,082 |   |
| Gross margin percentage          |   |                                     | 68.4   | %      |                                    |   | 62.3 | % |   |   | 63.3 | % |   |   | 65.0 | % |
| Dermatology Procedures Equipment |   | For the Three Months Ended September 30, |   |   | For the Nine Months Ended September 30, |   |
|----------------------------------|--------|------------------------------------------|--------|--------|-----------------------------------------|--------|
|                             |   | 2018                                     |   |   | 2017                                    |   |   | 2018 |   |   | 2017 |   |
| Revenues                         |   | $                                        | 2,336  |   |                                    | $      | 1,751 |   |   | $ | 6,671 |   |   | $ | 5,784 |   |
| Percent increase                 |   |                                     | 33.4   | %      |                                    |   |   |   |   |   | 15.3 | % |   |   |   |   |
| Cost of revenues                 |   |                                     | 1,292  |   |                                    |   | 967 |   |   |   | 4,255 |   |   |   | 2,988 |   |
| Percent increase                 |   |                                     | 33.6   | %      |                                    |   |   |   |   |   | 42.4 | % |   |   |   |   |
| Gross profit                     |   | $                                        | 1,044  |   |                                    | $      | 784 |   |   | $ | 2,415 |   |   | $ | 2,796 |   |
| Gross margin percentage          |   |                                     | 44.7   | %      |                                    |   | 44.8 | % |   |   | 36.2 | % |   |   | 48.3 | % |

----

----

|                                   |   | For the Three Months Ended September 30, |   |   | For the Nine Months Ended September 30, |   |
|---------------------------------------------|--------|------------------------------------------|--------|--------|-----------------------------------------|--------|
|                                        |   | 2018                                     |   |   | 2017                                    |   |   | 2018 |   |   | 2017 |   |
|                                        |   |                                     |   |   |                                    |   |   |   |   |   |   |   |
| Net Loss                                    |   | $                                        | (290   | )      |                                    | $      | (13,671 | ) |   | $ | (3,868 | ) |   | $ | (17,111 | ) |
|                                        |   |                                     |   |   |                                    |   |   |   |   |   |   |   |   |   |   |   |
| Adjustments:                                |   |                                     |   |   |                                    |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation/amortization*                  |   |                                     | 1,253  |   |                                    |   | 1,602 |   |   |   | 3,993 |   |   |   | 4,811 |   |
| Income taxes                                |   |                                     | (80    | )      |                                    |   | 38 |   |   |   | - |   |   |   | 181 |   |
| Interest expense                            |   |                                     | 239    |   |                                    |   | 1,343 |   |   |   | 930 |   |   |   | 4,264 |   |
|                                        |   |                                     |   |   |                                    |   |   |   |   |   |   |   |   |   |   |   |
| Non-GAAP EBITDA                             |   |                                     | 1,122  |   |                                    |   | (10,688 | ) |   |   | 1,055 |   |   |   | (7,855 | ) |
|                                        |   |                                     |   |   |                                    |   |   |   |   |   |   |   |   |   |   |   |
| Stock compensation                          |   |                                     | 366    |   |                                    |   | 63 |   |   |   | 570 |   |   |   | 136 |   |
| Change in fair value of warrants            |   |                                     | 79     |   |                                    |   | (81 | ) |   |   | 101 |   |   |   | (77 | ) |
| Write-off of Nordlys inventory & assets |   |                                     | -      |   |                                    |   | - |   |   |   | 280 |   |   |   | - |   |
| Loss on extinguishment of debt              |   |                                     | -      |   |                                    |   | 11,799 |   |   |   | - |   |   |   | 11,799 |   |
| Impairment of distributors rights agreement |   |                                     | -      |   |                                    |   | - |   |   |   | (11 | ) |   |   | - |   |
|                                        |   |                                     |   |   |                                    |   |   |   |   |   |   |   |   |   |   |   |
| Non-GAAP adjusted EBITDA                    |   | $                                        | 1,567  |   |                                    | $      | 1,093 |   |   | $ | 1,995 |   |   | $ | 4,003 |   |

----

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| 3.1  |   | Fifth Amended and Restated Certificate of Incorporation of the Company (Incorporated by reference to Exhibit 3.1 contained in our Registration Statement on Form S-3 (File No. 333-167113), as filed on May 26, 2010).                              |
|------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.2  |   | Fourth Amended and Restated Bylaws of the Company (Incorporated by reference to Exhibit 3.2 contained in our Form 8-K current report as filed on January 8, 2016).                                                                                                 |
| 3.3  |   | Certificate of Amendment to Fifth Amended and Restated Certificate of Incorporation of the Company (Incorporated by reference to Exhibit 3.1 contained in our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2013 filed on August 7, 2013). |
| 3.4  |   | Certificate of Amendment to Fifth Amended and Restated Certificate of Incorporation of the Company (Incorporated by reference to Exhibit 3.1 contained in our Current Report on Form 8-K, filed on July 10, 2014).                                  |
| 3.5  |   | Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Preferred Stock (Incorporated by reference to Exhibit 3.1 contained in our Current Report on Form 8-K, filed on February 3, 2014).                        |
| 3.6  |   | Certificate of Designation of Preferences, Rights and Limitations of Series B Convertible Preferred Stock (Incorporated by reference to Exhibit 3.1 contained in our Current Report on Form 8-K, filed on July 23, 2014).                           |
| 3.7  |   | Certificate of Amendment to Fifth Amended and Restated Certificate of Incorporation of the Company (Incorporated by reference to Exhibit 3.1 contained in our Current Report on Form 8-K, as filed on September 30, 2015).                                         |
| 3.8  |   | Certificate of Amendment to Fifth Amended and Restated Certificate of Incorporation of the Company (Incorporated by reference to Exhibit 3.1 contained in our Current Report on Form 8-K, as filed on January 8, 2016).                                            |
| 3.9  |   | Certificate of Designations of Series C Convertible Preferred Stock (Incorporated by reference to Exhibit 3.1 contained in our Current Report on Form 8-K, as filed on September 25, 2017).                                                                        |
| 10.1 |   | Sublease Agreement between Luigi Bormioli Corporation and Strata Skin Sciences, Inc. for office space at 5 Walnut Grove Drive, Horsham, PA 19044 (incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K filed on October 3, 2018). |

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| 31.1   |   | Rule 13a-14(a) Certificate of Chief Executive Officer                                                                                                                          |
|------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 31.2   |   | Rule 13a-14(a) Certificate of Chief Financial Officer                                                                                                                          |
| 32.1*            |   | Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
| 101.INS          |   | XBRL Instance Document                                                                                                                                                         |
| 101.SCH          |   | XBRL Taxonomy Schema                                                                                                                                                           |
| 101.CAL          |   | XBRL Taxonomy Calculation Linkbase                                                                                                                                             |
| 101.DEF          |   | XBRL Taxonomy Definition Linkbase                                                                                                                                              |
| 101.LAB          |   | XBRL Taxonomy Label Linkbase                                                                                                                                                   |
| 101.PRE          |   | XBRL Taxonomy Presentation Linkbase                                                                                                                                            |
| * | The certifications attached as Exhibit 32.1 accompany this Quarterly Report on Form 10-Q pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed "filed" by the Registrant for purposes of Section 18 of the Securities Exchange Act of 1934, as amended. |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |  STRATA SKIN SCIENCES, INC. |   |
|--------|----------------------------------|--------|
| Date   November 14, 2018 | By:    | /s/ Dolev Rafaeli                                                |   |
|------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                               |   | Name  Dolev Rafaeli                                                                                                                                                                                                                                                                                    |   |
|                               |   | Title    President & Chief Executive Officer                                                                                                                                                                                                                                             |   |
| Date   November 14, 2018 | By:    | /s/ Matthew C. Hill                                            |   |
|------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                               |   | Name  Matthew C. Hill                                                                                                                                                                                                                                                                 |   |
|                               |   | Title    Chief Financial Officer                                                                                                                                                                                                                                            |   |

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