82,338

65,383

49,921

Gross profit

80,382

86,110

68,135

Operating expenses:

General and administrative

58,420

52,070

41,563

Research and development

14,359

12,874

11,232

20,995

14,090

12,943

Lease termination income

(4,000)

Total operating expenses

93,774

75,034

65,738

Income (loss) from operations

(13,392)

11,076

2,397

Income (loss) before income taxes

(123)

^[1]

884

323

(13,515)

11,960

2,720

Income tax (benefit) provision

17,255

(18,033)

143

Net income (loss)

$ (30,770)

$ 29,993

$ 2,577

Net loss per share:

Basic (in dollars per share)

$ (2.23)

$ 2.16

$ 0.19

Diluted (in dollars per share)

$ (2.23)

$ 2.04

$ 0.19

Weighted-average number of shares used in per share calculations:

Basic (in shares)

13,771

13,873

13,225

Diluted (in shares)

13,771

14,728

13,753

Product [Member]

Net revenue:

Revenue from Contract with Customer, Including Assessed Tax

$ 142,535

$ 132,660

$ 99,028

Cost of revenue:

66,843

56,363

40,149

Operating expenses:

Revenue from Contract with Customer, Including Assessed Tax

58,420

Service [Member]

Net revenue:

20,185

18,833

19,028

Cost of revenue:

$ 15,495

$ 9,020

$ 9,772

[1]	Included in interest and other income, net, is the estimated interest expense for advance payment related to service contracts under the new revenue standard.

Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Net income (loss)	$ (30,770)	$ 29,993	$ 2,577
Available-for-sale investments
Net change in unrealized gain (loss) on available-for-sale investments	14	(15)	30
Less: Reclassification adjustment for net gains on investments recognized during the year	9	(5)	(3)
Net change in unrealized gain (loss) on available-for-sale investments	23	(20)	27
Tax provision			10
Other comprehensive income (loss), net of tax	23	(20)	17
Comprehensive income (loss)	$ (30,747)	$ 29,973	$ 2,594

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References + Details

Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	AOCI Attributable to Parent [Member]	Total
Balance (in shares) at Dec. 31, 2015	12,980,807
Balance at Dec. 31, 2015	$ 13	$ 79,782	$ (29,672)	$ (89)	$ 50,034
Deferred tax relating to adoption of ASU 2016-09 at Dec. 31, 2015			49		49
Issuance of common stock for employee purchase plan (in shares)	79,922
Issuance of common stock for employee purchase plan		768			$ 768
Exercise of stock options (in shares)	1,051,138				1,051,138
Exercise of stock options	$ 1	9,342			$ 9,342
Issuance of common stock in settlement of restricted and performance stock units, net of shares withheld for employee taxes, and stock awards (in shares)	116,833
Issuance of common stock in settlement of restricted and performance stock units, net of shares withheld for employee taxes, and stock awards		(618)			(618)
Repurchase of common stock (in shares)	(455,311)
Repurchase of common stock		(4,873)			(4,873)
Stock-based compensation expense		3,713			3,713
Net income (loss)			2,577		2,577
Net change in unrealized loss on available-for-sale investments				17	17
Balance (in shares) at Dec. 31, 2016	13,773,389
Balance at Dec. 31, 2016	$ 14	88,114	(27,046)	(72)	61,010
Issuance of common stock for employee purchase plan (in shares)	78,479
Issuance of common stock for employee purchase plan		1,059			$ 1,059
Exercise of stock options (in shares)	488,398				488,398
Exercise of stock options		4,376			$ 4,376
Issuance of common stock in settlement of restricted and performance stock units, net of shares withheld for employee taxes, and stock awards (in shares)	160,309
Issuance of common stock in settlement of restricted and performance stock units, net of shares withheld for employee taxes, and stock awards		(1,469)			(1,469)
Repurchase of common stock (in shares)	(1,022,602)
Repurchase of common stock	$ (1)	(35,165)			(35,166)
Stock-based compensation expense		5,110			5,110
Net income (loss)			29,993		29,993
Net change in unrealized loss on available-for-sale investments				(20)	$ (20)
Balance (in shares) at Dec. 31, 2017	13,477,973				13,477,973
Balance at Dec. 31, 2017	$ 13	62,025	2,947	(92)	$ 64,893
Issuance of common stock for employee purchase plan (in shares)	64,511
Issuance of common stock for employee purchase plan	$ 1	1,680			$ 1,680
Exercise of stock options (in shares)	271,902				271,902
Exercise of stock options		2,718			$ 2,718
Issuance of common stock in settlement of restricted and performance stock units, net of shares withheld for employee taxes, and stock awards (in shares)	154,466
Issuance of common stock in settlement of restricted and performance stock units, net of shares withheld for employee taxes, and stock awards		(3,128)			(3,128)
Stock-based compensation expense		7,157			7,157
Net income (loss)			(30,770)		(30,770)
Net change in unrealized loss on available-for-sale investments				23	23
Adjustment to opening balance for ASC 606 adoption at Dec. 31, 2017			3,813		$ 3,813
Balance (in shares) at Dec. 31, 2018	13,968,852				13,968,852
Balance at Dec. 31, 2018	$ 14	$ 70,451	$ (24,010)	$ (69)	$ 46,386

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Cash flows from operating activities:
Net income (loss)	$ (30,770)	$ 29,993	$ 2,577
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Stock-based compensation	7,157	5,110	3,713
Depreciation and amortization	1,209	1,016	982
Amortization of contract acquisition costs	1,834
Change in deferred tax assets	17,438	(18,678)	22
Provision for doubtful accounts receivable	(1,257)	1
Other	241	(51)	(7)
Changes in assets and liabilities:
Accounts receivable	(117)	(4,229)	(4,899)
Inventories	768	(13,805)	(2,899)
Other current assets and prepaid expenses	(1,070)	(591)	(432)
Other long-term assets	(2,754)	6	4
Accounts payable	4,277	4,404	639
Accrued liabilities	(3,781)	9,345	3,461
Extended warranty liabilities	3,159
Other long-term liabilities	140		(329)
Deferred revenue	1,305	1,557	(826)
Income tax liability	15	211	(14)
Net cash provided by operating activities	308	14,287	1,992
Cash flows from investing activities:
Acquisition of property, equipment and software*	(1,488)	(855)	(537)
Disposal of property and equipment	41	53	20
Proceeds from sales of marketable investments	13,044	33,640	9,008
Proceeds from maturities of marketable investments	10,050	45,812	25,810
Purchase of marketable investments	(10,874)	(60,956)	(37,693)
Net cash provided by (used in) investing activities	10,773	17,694	(3,392)
Cash flows from financing activities:
Repurchase of common stock		(35,167)	(4,873)
Proceeds from exercise of stock options and employee stock purchase plan	4,399	5,435	10,111
Taxes paid related to net share settlement of equity awards	(3,129)	(1,469)	(618)
Payments on capital lease obligation	(483)	(371)	(313)
Net cash provided by (used in) financing activities	787	(31,572)	4,307
Net increase (decrease) in cash and cash equivalents	11,868	409	2,907
Cash and cash equivalents at beginning of year	14,184	13,775	10,868
Cash and cash equivalents at end of year	26,052	14,184	13,775
Supplemental cash flow information:
Cash paid for interest	85	70	43
Cash paid for income taxes	472	220	222
Supplemental non-cash investing and financing activities:
Assets acquired under capital lease	$ 610	$ 365	$ 801

Note 1 - Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2018

Organization, Consolidation, Basis of Presentation, Business Description and Accounting Policies [Text Block]

NOTE

1—SUMMARY

OF SIGNIFICANT ACCOUNTING POLICIES

Description of Operations and Principles of Consolidation

Cutera, Inc. (“Cutera” or the “Company”) is a global provider of laser and energy-based aesthetic systems for practitioners worldwide. The Company designs, develops, manufactures, distributes and markets light and energy-based product platforms for use by physicians and other qualified practitioners, enabling them to offer safe and effective aesthetic treatments to their customers. The Company currently markets the following system platforms:

excel, enlighten, Juliet, Secret RF, truSculpt

and

xeo

. The Company’s systems offer multiple hand pieces and applications, allowing customers to upgrade their systems. The sales of (i) systems, system upgrades and hand pieces (“Systems” revenue); (ii) hand piece refills applicable to

Titan, truSculpt

and

truSculpt iD

, as well as single use disposable tips applicable to

Juliet

and

Secret RF

(“Consumables” revenue); and (iii) the distribution of

third

party manufactured skincare products (“Skincare” revenue); are collectively classified as “Products” revenue. In addition to Products revenue, the Company generates revenue from the sale of post-warranty service contracts, parts, detachable hand piece replacements (except for

Titan , truSculpt

and

truSculpt iD

) and service labor for the repair and maintenance of products that are out of warranty, all of which are classified as “Service” revenue.

Headquartered in Brisbane, California, the Company has wholly-owned subsidiaries that are currently operational in Australia, Belgium, Canada, France, Germany, Hong Kong, Japan, Spain, Switzerland and the United Kingdom. The Company’s wholly owned subsidiary in Italy is currently dormant. These active subsidiaries market, sell and service the Company’s products outside of the United States. The Consolidated Financial Statements include the accounts of the Company and its subsidiaries. All inter-company transactions and balances have been eliminated.

Use of Estimates

The preparation of Consolidated Financial Statements in conformity with Generally Accepted Accounting Principles (“GAAP”) requires the Company’s management to make estimates and assumptions that affect the amounts reported of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial Statements and the accompanying notes, and the reported amounts of revenue and expenses during the reported periods. Actual results could differ materially from those estimates.

On an ongoing basis, management evaluates its estimates, including those related to warranty obligations, sales commission, accounts receivable and sales allowances, valuation of inventories, fair values of goodwill, useful lives of property and equipment, assumptions regarding variables used in calculating the fair value of the Company's equity awards, expected achievement of performance based vesting criteria, fair value of investments, the standalone selling price of the Company's products and services, the customer life and period of benefit used to capitalize and amortize contracts acquisition costs, variable consideration, contingent liabilities, recoverability of deferred tax assets, and effective income tax rates, among others. Management bases estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.

isks and Uncertainties

The Company's future results of operations involve a number of risks and uncertainties. Factors that could affect the Company's future operating results and cause actual results to vary materially from expectations include, but are

not

limited to, rapid technological change, continued acceptance of the Company's products, stability of world financial markets, cybersecurity breaches and other disruptions that could compromise the Company’s information or results, management of international activities, competition from substitute products and larger companies, ability to obtain and maintain regulatory approvals, government regulations and oversight, patent and other types of litigation, ability to protect proprietary technology from counterfeit versions of the Company's products, strategic relationships and dependence on key individuals.

Comparability

The Company adopted the new revenue standard effective

January 1, 2018,

using the modified retrospective method. Prior period financial statements were

not

retrospectively restated. The consolidated balance sheet as of

December 31, 2018

and results of operations for

December 31, 2018

were prepared using an accounting standard that was different than that in effect for the year ended

December 31, 2017.

As a result the consolidated balance sheets as of

December 31, 2018

and

December 31, 2017

are

not

directly comparable, nor are the consolidated statement of operations for the years ended

December 31, 2018

and

December 31, 2017.

Recent Accounting Pronouncements

Not

Yet Adopted

February 2016,

the FASB issued ASU

2016

02,

"Leases," (also known as ASC Topic

842

) which will require, among other items, lease accounting to recognize most leases as assets and liabilities on the balance sheet. Qualitative and quantitative disclosures will be enhanced to better understand the amount, timing and uncertainty of cash flows arising from leases. In

July 2018,

the FASB issued ASU

2018

11,

"Targeted Improvements," which gives the option to apply the transition provisions of ASU

2016

at its adoption date instead of at the earliest comparative period presented in its financial statements. In addition, ASU

2018

provides a practical expedient that permits lessors to

not

separate nonlease components from the associated lease component if certain conditions are met. Also in

July 2018,

the FASB issued ASU

2018

10,

"Codification Improvements to ASC Topic

842,

Leases," which clarifies certain aspects of ASU

2016

02.

The Company will adopt ASU

2016

on a modified retrospective basis on its adoption date of

January 1, 2019

with practical expedients, instead of at the earliest comparative period presented in the Company’s financial statements.

The Company will adopt ASC Topic

842

- Leases on

January 1, 2019,

applying the modified retrospective transition approach to all leases existing at the date of initial application. The new standard provides a number of optional practical expedients in transition. The Company elected the ‘package of practical expedients’, which permits the Company

not

to reassess under the new standard the Company’s prior conclusions about lease identification, lease classification and initial direct costs. The Company did

not

elect the practical expedient to use hindsight in determining the lease term.

The Company expects that this standard will have a material effect on our financial statements. While the Company continues to assess all of the effects of adoption, the Company currently believes the most significant effects relate to the recognition of new right-of-use (“ROU”) assets and lease liabilities on our balance sheet for our auto, office, and embedded leases; and the requirement to provide significant new disclosures about our leasing activities.

Upon the adoption of ASC Topic

842,

the Company will recognize additional operating liabilities ranging from

$10.0

million to

$11.0

million, with corresponding ROU assets of the same amount based on the present value of the remaining minimum rental payments under current leasing standards for existing operating leases.

The new standard also provides practical expedients for an entity’s ongoing accounting. The Company will elect the short-term lease recognition exemption for all leases that qualify. This means, for those leases that qualify, the Company will

not

recognize ROU assets or lease liabilities, and this includes

not

recognizing ROU assets or lease liabilities for existing short-term leases of those assets in transition. The Company also will

not

elect the practical expedient to

not

separate lease and non-lease components for all of our leases.

Recently Adopted Accounting Pronouncements

May 2014,

the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)

2014

09,

“Revenue from Contracts with Customers,” amending revenue recognition guidance and requiring more detailed disclosures to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amended guidance, herein referred to as ASC Topic

606,

is effective for annual and interim reporting periods beginning after

December 15, 2017,

with early adoption permitted for public companies effective for annual and interim reporting periods beginning after

December 15, 2016.

The Company adopted the new revenue standard in the

first

quarter of fiscal year

2018

using the modified retrospective method. The Company recognized the cumulative effect of applying the new revenue standard as an adjustment to retained earnings. The comparative information has

not

been restated and continues to be reported under the accounting standards in effect for the periods presented.

See “Revenue Recognition,” for additional accounting policy and transition disclosures.

January 26, 2017,

the FASB issued Accounting Standards Update

No.

2017

04,

Intangibles—Goodwill and Other (Topic

350

): Simplifying the Test for Goodwill Impairment. The new guidance requires only a

one

-step quantitative impairment test, whereby a goodwill impairment loss will be measured as the excess of a reporting unit’s carrying amount over its fair value (

not

to exceed the total goodwill allocated to that reporting unit). The new guidance eliminates Step

of the current

two

-step goodwill impairment test, and requires companies to perform the goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. Companies will continue to have the option of performing a qualitative assessment of goodwill impairment; however, if a company performs a qualitative assessment of its goodwill and fails, it must proceed with quantitative impairment testing (ASC

350

The amendment is effective for the Company for its fiscal years beginning after

December 15, 2019.

The amendment is required to be adopted prospectively. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after

January 1, 2017 (

350

). The Company early adopted ASU

2017

04—Intangibles—Goodwill

and Other (Topic

350

): Simplifying the Test for Goodwill Impairment, on

October 1, 2018.

There was

material impact upon adoption of the new standard to the financial statements.

See ” Goodwill and Other Intangible Assets” in Note

– Balance Sheet Detail.

June 2018,

the FASB issued ASU

No.

2018

07,

"Compensation -Stock Compensation (Topic

718

): Improvement to Nonemployee Share-Based Payment Accounting". The new guidance changes the accounting for nonemployee awards including: (

) equity-classified share-based payment awards issued to nonemployees will be measured on the grant date, instead of the previous requirement to remeasure the awards through the performance completion date, (

) for performance conditions, compensation cost associated with the award will be recognized when the achievement of the performance condition is probable, rather than upon achievement of the performance condition, and (

) the current requirement to reassess the classification (equity or liability) for nonemployee awards upon vesting will be eliminated, except for awards in the form of convertible instruments. The new guidance also clarifies that any share-based payment awards issued to customers should be evaluated under ASC Topic

606.

The amendments in the new guidance are effective for annual and interim reporting periods beginning after

December 15, 2018,

with early adoption permitted for public companies, but

earlier than an entity’s adoption date of ASC Topic

606.

The Company will adopt the new standard effective

January 1, 2019

and the Company does

not

expect to have a material impact upon adoption of the new standard to the financial statements.

Revenue

The Company adopted ASC Topic

606,

"Revenue from Contracts with Customers," on

January 1, 2018,

applying the modified retrospective method to all agreements that were

not

completed as of

January 1, 2018.

Results for reporting periods beginning after

January 1, 2018

are presented under ASC Topic

606,

while prior period amounts are

not

adjusted and continue to be reported under the accounting standards in effect for the prior periods. A cumulative catch up adjustment was recorded to beginning retained earnings to reflect the impact of all existing arrangements under ASC Topic

606.

Upon adoption of ASC Topic

606,

the Company recorded an increase to retained earnings, net of deferred tax liability, of

$3.8

million (Note

) for contracts still in force as of

January 1, 2018

for the following items in the

first

quarter of

2018:

●

$237,000

reduction in deferred revenue balances for the differences in the amount of revenue recognized for the Company’s revenue streams as a result of allocation of revenue based on standalone selling prices to the Company’s various performance obligations.

●

$151,000

increase in deferred revenue balances, related to the accretion of financing costs for multi-year post-warranty service contracts for customers who pay more than

one

year in advance of receiving the service. The Company estimated interest expense for such advance payments under the new revenue standard.

●

$210,000

decrease in accrued liabilities.

●

$4.7

million for the capitalization of the incremental contract acquisition costs, such as sales commissions paid in connection with system sales. These contract acquisition costs were capitalized and are being amortized over the period of anticipated support renewals which is estimated to be approximately

2.5

years. The Company expensed such costs when incurred under the prior guidance.

●

$1.2

million deferred tax liability related to the direct tax effect of the ASC Topic

606

adoption.

The following table summarizes the effects of adopting ASC Topic

606

on the Company’s consolidated balance sheet as of

December 31, 2018:

	As reported under ASC Topic 606		Adjustments		Balances under Prior GAAP
	(In thousands)

Other long-term assets	$	5,971	$	(5,217)	$	754
Deferred revenue		12,566		(106)		12,460
Retained earnings (deficit)		(24,010)		4,610		(19,400)

The following table summarizes the effects of adopting ASC Topic

606

on Company’s consolidated income statement for the year ended

December 31, 2018:

	As reported under Topic 606		Adjustments		Balances under Prior GAAP
	(In thousands)
Products revenue	$	142,535	$	274	$	142,261
Service revenue		20,185		280		19,905
Sales and marketing		58,420		540		58,960
Interest and other income, net*		(123)		297		174

* Included in interest and other income, net, is the estimated interest expense for advance payment related to service contracts under the new revenue standard.

Adoption of the standard had

impact on total net cash from or used in operating, investing, or financing activities within the consolidated statements of cash flows.

As part of the Company's adoption of ASC Topic

606,

the Company elected to use the following practical expedients: (i)

not

to adjust the promised amount of consideration for the effects of a significant financing component when the Company expects, at contract inception, that the period between the Company's transfer of a promised product or service to a customer and when the customer pays for that product or service will be

one

year or less; (ii) to expense costs as incurred for costs to obtain a contract when the amortization period would have been

one

year or less; (iii)

not

to recast revenue for contracts that begin and end in the same fiscal year; and (iv)

not

to assess whether promised goods or services are performance obligations if they are immaterial in the context of the contract with the customer.

Revenue recognition

Revenue recognition- Period before

January 1, 2018 -

ASC Topic

606

Adoption

The Company recognized revenue under ASC Topic

605

prior to the adoption of ASC Topic

606

effective

January 1 2018.

Under ASC

605,

the Company recognized products revenue when title and risk of ownership was transferred, provided that:

● Persuasive evidence of an arrangement exists;

● The price is fixed or determinable;

● Delivery has occurred or services have been rendered; and

● Collectability is reasonably assured.

Transfer of title and risk of ownership occurs when the product is shipped to the customer or when the customer receives the product, depending on the nature of the arrangement. Revenue is recorded net of customer and distributor discounts. When collectability is

not

reasonably assured, the Company recognizes revenue upon receipt of cash payment. Sales to customers and distributors do

not

include any return or exchange rights. In addition, the Company’s distributor agreements obligate the distributor to pay the Company for the sale regardless of whether the distributor is able to resell the product. Shipping and handling charges are invoiced to customers based on the amount of products sold. Shipping and handling fees are recorded as revenue and the related expense as a component of Products cost of revenue.

Multiple-element Arrangements

A multiple-element arrangement includes the sale of

one

or more tangible product offerings with

one

or more associated services offerings, each of which are individually considered separate units of accounting. The Company determined that its multiple-element arrangements are generally comprised of the following elements that are recognized as separate units of accounting: Product, service contracts, training, and in some cases, marketing support and installation.

For multiple-element arrangements, judgments are required as to the allocation of the proceeds received from an arrangement to the multiple elements of the arrangement. For multiple element arrangements the Company allocates revenue to all deliverables based on their relative selling prices in accordance with the FASB Accounting Standards Codification (“ASC”)

605

25.

Because the Company has neither vendor specific objective evidence (“VSOE”) nor

third

-party evidence of selling price for the Company's systems, the allocation of revenue has been based on the Company's best estimate of selling prices (“BESP”). The objective of BESP is to determine the price at which the Company would transact a sale if the product or service was sold on a stand-alone basis. The Company determines BESP for the Company's deliverables by considering multiple factors including, but

not

limited to, features and functionality of the system, geographies, type of customer and market conditions

With respect to the sale of its earlier generation of the

truSculpt

product, the Company includes unlimited refills as part of the

truSculpt

standard warranty and the Company does

not

account for the

truSculpt

warranty as a separate deliverable under the multiple-element arrangement revenue guidance. Upon a

truSculpt

sale, the Company recognizes the estimated costs which will be incurred under the warranty obligation in Products cost of revenue. Revenue from the sale of refills is recorded as Product revenue in the period in which such sales are made.

Customer Marketing Arrangements

The Company has a customer marketing and incentive program called “Cutera Bucks” for its North America customers through which it offers various sales incentives and discounts and pays or reimburses customers for qualifying expenses associated with practice set-up, advertising procedures related to the system purchased, and other expenses. The Company records such incentives as a reduction of revenue at the time when the sale of the system is recorded.

Service Revenue

The Company also offers customers extended service contracts. Revenue under service contracts is recognized on a straight-line basis over the period of the applicable service contract. Revenue from services performed in the absence of a service contract, including installation and training revenue, is recognized when the related services are performed and collectability is reasonably assured. Service revenue billed on a time and material basis, from customers whose systems are

not

under a service contact, is recognized as the services are provided. Service revenue for the years ended

December 31, 2017

and

2016

was

$18.8

million, and

$19.0

million.

Bill and Hold Arrangement

Under ASC

605

2017

the Company segregated certain products for

one

order at the request of a customer for a limited period of time at a

third

-party storage facility (“bill -and -hold”). Revenue recognition for the bill-and-hold transaction requires consideration of, among other things, whether the customer has made a written fixed commitment to purchase the product; the existence of a substantial business purpose for the arrangement; the bill-and-hold arrangement is at the request of the customer; the scheduled delivery date must be reasonable and consistent with the buyer's business purpose; title and risk of ownership must pass to the customer and

additional performance obligations exist by the Company, at the time of the bill-and-hold the product is complete and ready for shipment and the product has been segregated from the Company's inventory. The Company recognized revenue of

$938,000

for a bill-and-hold transaction in

2017.

There were

such transactions in

2016.

Revenue recognition- Period after

January 1, 2018 -

ASC Topic

606

Adoption

Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for promised goods or services. The Company’s performance obligations are satisfied either over time or at a point in time. Revenue from performance obligations that are transferred to customers over time accounted for approximately

12%

of the Company’s total revenue for the

twelve

months ended

December 31, 2018.

The Company has certain system sale arrangements that contain multiple products and services. For these bundled sale arrangements, the Company accounts for individual products and services as separate performance obligations if they are distinct. The Company’s products and services are distinct if a customer can benefit from the product or service on its own or with other resources that are readily available to the customer, and if the Company’s promise to transfer the products or service to the customer is separately identifiable from other promises in the contract. The Company’s system sale arrangements include a combination of the following performance obligations: the system and software license (considered as

one

performance obligation), system accessories (hand pieces), training, other accessories, extended service contracts and marketing services.

For the Company’s system sale arrangements that include an extended service contract, the period of service commences at the expiration of the Company’s standard warranty offered at the time of the system sale. The Company considers the extended service contracts terms in the arrangements that are legally enforceable to be performance obligations. Other than extended service contracts and marketing services (which are satisfied over time), the Company generally satisfies all of the performance obligations at a point in time. Systems, system accessories (hand pieces), training, time and materials services are also sold on a stand-alone basis, and related performance obligations are satisfied at a point in time. For contracts with multiple performance obligations, the Company allocates the transaction price of the contract to each performance obligation on a relative standalone selling price basis.

Nature of Products and Services

Systems

System revenue represents the sale of a system or an upgrade of an existing system. A system consists of a console that incorporates a universal graphic user interface, a laser or other energy based module, control system software and high voltage electronics, as well as

one

or more hand pieces. However, depending on the application, the laser or other energy based module is sometimes contained in the hand piece such as with the Company’s

Pearl

and

Pearl Fractional

applications instead of within the console.

The Company offers customers the ability to select the system that best fits their practice at the time of purchase and then to cost-effectively add applications to their system as their practice grows. This provides customers the flexibility to upgrade their systems whenever they choose and provides the Company with a source of additional Systems revenue.

The Company concludes that the system or upgrade and the right to use the embedded software represent a single performance obligation as the software license is integral to the functionality of the system or upgrade.

The Company does

not

identify calibration and installation services for systems other than

enlighten

as performance obligations because such services are immaterial in the context of the contract. The related costs to complete calibration and installation for systems other than

enlighten

are immaterial. Calibration and installation services for

enlighten

systems are identified as separate performance obligations.

For systems sold directly to end-customers that are credit approved, revenue is recognized when the Company transfers control to the end-customer, which occurs when the product is shipped to the customer or when the customer receives the product, depending on the nature of the arrangement. The Company recognizes revenue on a cash basis for system sales to international direct end-customer sales that have

not

been credit approved, as the performance obligations in the contract are satisfied. For systems sold through credit approved distributors, revenue is recognized at the time of shipment.

The Company typically receives payment for its system consoles and other accessories within

days of shipment. Certain international distributor arrangements allow for longer payment terms.

Skincare products

The Company sells

third

-party manufactured skincare products in Japan. The

third

-party skincare products are purchased from the

third

-party manufacturers and sold to licensed physicians. The Company acts as the principal in this arrangement, as it determines the price to charge customers for the skincare products, and controls the products before they are transferred to the customer. Skincare products are typically sold in contracts in which the skincare products represent the sole performance obligations. The Company recognizes revenue for skincare products at a point in time, upon shipment.

Consumables (Other accessories)

The Company treats its customers' purchases of replacement

Titan

truSculpt

and

truSculpt iD

hand pieces as Consumable revenue, which provides the Company with a source of recurring revenue from existing customers. The Company’s recently launched

Juliet

and

Secret RF

products have single use disposable tips which must be replaced after every treatment. Sales of these consumable tips further enhance the Company’s recurring revenue. Hand piece refills of the Company’s legacy

truSculpt

product are accounted for in accordance with the Company’s standard warranty and service contract policies.

Extended contract services

The Company offers post-warranty services to its customers through extended service contracts that cover parts and labor for a term of one, two, or

three

years. Service contract revenue is recognized over time, using a time based measure of progress, as the customers benefit from the service throughout the service period. The Company also offers services on a time-and-materials basis for detachable hand piece replacements, parts and labor. Revenue related to services performed on a time-and-materials basis is recognized when performed. These post-warranty services serve as additional sources of recurring revenue from the Company’s installed product base

Training

Sales of system to customers include training on the system to be provided within

180

days of purchase. The Company considers training as a separate performance obligation as customers can immediately benefit from the training together with the customer’s system. Training is also sold separately from systems. The Company recognizes revenue for training when the training is provided. Training is

not

required for customers to use the systems.

Customer Marketing Support

In North America, the Company offers marketing and consulting phone support to its customers who purchase

truSculpt

and

truSculpt iD

systems. These customer marketing support services include a practice development model and marketing training, performed remotely with ongoing phone consultations for

six

months from date of purchase. The Company considers customer marketing support a separate performance obligation, and recognizes revenue over the

six

-month term of the contracts.

Significant Judgments

The Company combines

two

or more contracts entered into at or near the same time with the same customer and accounts for the contracts as a single contract. The contracts are negotiated as a package with a single commercial objective. The Company exercises significant judgment to evaluate the relevant facts and circumstances in determining whether the separate contracts of contracts comprise a single contract can affect the allocation of consideration to the distinct performance obligations, which could have an effect on results of operations for the periods involved.

The Company is required to estimate the total consideration expected to be received from contracts with customers. In limited circumstances, the consideration expected to be received is variable based on the specific terms of the contract The Company has

not

experienced significant returns or refunds to customers. Estimating consideration expected to be received from contracts with customers requires significant judgment and the change in these estimates could have an effect on its results of operations during the periods involved.

The Company determines standalone selling price ("SSP") for each performance obligation as follows:

Systems: The SSPs for systems are based on directly observable sales in similar circumstances to similar customers. When SSP is

not

directly observable, the Company estimates SSP using the expected cost plus margin approach.

Training: SSP is based on observable price when sold on a standalone basis.

Extended warranty/Service contracts: SSP is based on observable price when sold on a standalone basis (by customer type).

Customer Marketing Support: SSP is estimated based on cost plus a margin.

Set-up /Installation: Set-up or installation for all other systems (excluding the enlighten system) is immaterial in the context of the contract as the set-up or installation for systems other than enlighten. The related costs to complete set-up or installation are immaterial.

The calibration and installation service of the enlighten system are treated as separate performance obligations because the Company regularly sells enlighten systems without the calibration and installation service.

Loyalty Program

The Company launched a customer loyalty program during the

third

quarter of

2018

for qualified customers located in the U.S. and Canada. Under the programs, customers accumulate points based on their purchasing levels. Once a loyalty program member achieves a certain tier level, the member earns a reward. A customer’s account has to be in good standing in order to receive the benefits of the rewards program. Rewards are given on a quarterly basis and must be used in the following quarter. Customers receive a notification regarding their rewards tier by the

fifth

(

) day of the following quarter. All unused rewards are forfeited.

The fair value of the reward earned by loyalty program members is included in accrued liabilities and recorded as a reduction of net sales at the time the reward is earned.

Cash Equivalents, and

Marketable Investments

The Company invests its cash primarily in money market funds and in highly liquid debt instruments of U.S. federal and municipal governments and their agencies, commercial paper and corporate debt securities. All highly liquid investments with stated maturities of

three

months or less from date of purchase are classified as cash equivalents; all highly liquid investments with stated maturities of greater than

three

months are classified as marketable investments. The majority of the Company’s cash and investments are held in U.S. banks and the Company's foreign subsidiaries maintain a limited amount of cash in their local banks to cover their short term operating expenses.

The Company determines the appropriate classification of its investments in marketable securities at the time of purchase and re-evaluates such designation at each balance sheet date. The Company’s marketable securities have been classified and accounted for as available-for-sale securities. Investments with remaining maturities of more than

one

year are viewed by the Company as available to support current operations, and are classified as current assets under the caption marketable investments in the accompanying consolidated balance sheets. Investments in marketable securities are carried at fair value, with the unrealized gains and losses reported as a component of stockholders’ equity. Any realized gains or losses on the sale of marketable securities are determined on a specific identification method, and such gains and losses are reflected as a component of interest and other income, net.

Fair Value of Financial Instruments

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as considers counterparty credit risk in its assessment of fair value. The Company’s financial instruments include cash equivalents, accounts receivable, accounts payable and accrued liabilities. Carrying amounts of the Company's financial instruments, approximate their fair values as of the balance sheet dates given their generally short maturities. The fair value hierarchy distinguishes between (

) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (

) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of

three

broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level

) and the lowest priority to unobservable inputs (Level

). The

three

levels of the fair value hierarchy are described below in accordance with ASC

820:

●

Level

Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities.

●

Level

Directly or indirectly observable inputs as of the reporting date through correlation with market data, including quoted prices for similar assets and liabilities in active markets and quoted prices in markets that are

not

active. Level

also includes assets and liabilities that are valued using models or other pricing methodologies that do

not

require significant judgment since the input assumptions used in the models, such as interest rates and volatility factors, are corroborated by readily observable data from actively quoted markets for substantially the full term of the financial instrument.

●

Level

Unobservable inputs that are supported by little or

market activity and reflect the use of significant management judgment. These values are generally determined using pricing models for which the assumptions utilize management’s estimates of market participant assumptions.

In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Company also considers counterparty credit risk in its assessment of fair value.

Impairment of Marketable Investments

After determining the fair value of available-for-sales debt instruments, gains or losses on these securities are recorded to other comprehensive income, until either the security is sold or the Company determines that the decline in value is other-than-temporary. The primary differentiating factors that the Company considers in classifying impairments as either temporary or other-than-temporary impairments are the Company’s intent and ability to retain the investment in the issuer for a period of time sufficient to allow for any anticipated recovery in market value or the maturity of the investment, the length of the time and the extent to which the market value of the investment has been less than cost and the financial condition and near-term prospects of the issuer. There were

other-than-temporary impairments in the years ended

December 31, 2018,

2017,

and

2016.

Allowance for Sales Returns and Doubtful Accounts

The allowance for sales returns is based on the Company’s estimates of potential future product returns and other allowances related to current period product revenue. The Company analyzes historical returns, current economic trends and changes in customer demand and acceptance of the Company's products.

In cases where the Company is aware of circumstances that

may

impair a specific customer’s ability to meet its obligations to the Company, the Company records a specific allowance against amounts due from the customer, and thereby reduces the net recognized receivable to the amounts it reasonably believes will be collected

Concentration of Credit Risk and Other Risks and Uncertainties

The Company operates in markets that are highly competitive and rapidly changing. Significant technological changes, shifting customer needs, the emergence of competitive products or services with new capabilities and other factors could negatively impact our operating results.

The Company is also subject to risks related to changes in the value of our significant balance of financial instruments. Financial instruments that potentially subject the Company to concentrations of risk consist principally of cash, cash equivalents, marketable investments and accounts receivable. The Company’s cash and cash equivalents are primarily invested in deposits and money market accounts with

three

major financial institutions in the U.S. In addition, the Company has operating cash balances in banks in each of the international locations in which it operates. Deposits in these banks

may

exceed the amount of insurance provided on such deposits, if any. Management believes that these financial institutions are financially sound and, accordingly, believes that minimal credit risk exists. To date, the Company has

not

experienced any losses on its deposits of cash and cash equivalents.

The Company invests in debt instruments, including bonds of the U.S. Government, its agencies and municipalities. The Company has also invested in other high grade investments such as commercial paper and corporate debt securities. The Company has established guidelines relative to credit ratings, diversification and maturities that seek to maintain safety and liquidity. By policy, the Company restricts its exposure to any single issuer by imposing concentration limits. To minimize the exposure due to adverse shifts in interest rates, the Company maintains investments at an average maturity of generally less than

twelve

months.

Accounts receivable are recorded net of an allowance for doubtful accounts, and are typically unsecured and are derived from revenue earned from worldwide customers. The Company controls credit risk through credit approvals, credit limits, and monitoring procedures. The Company performs credit evaluations of its customers and maintains reserves for potential credit losses. As of

December 31, 2018

and

2017,

there was

one

customer who represented

4.9%

of the Company’s net accounts receivable. During the years ended

December 31, 2018,

2017,

and

2016,

domestic revenue accounted for

62%,

and

55%,

respectively, of total revenue, while international revenue accounted for

37%,

38%,

and

45%,

respectively, of total revenue.

single customer represented more than

10%

of total revenue for any of the years ended

December 31, 2018,

2017,

and

2016.

Supplier concentration

The Company relies on

third

parties for the supply of components of its products, as well as

third

-party logistics providers. In instances where these parties fail to perform their obligations, the Company

may

be unable to find alternative suppliers or satisfactorily deliver its products to its customers.

Inventories

Inventories are stated at the lower of cost and net realizable value, cost being determined on a standard cost basis which approximates actual cost on a

first

-in,

first

-out basis. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The cost basis of the Company’s inventory is reduced for any products that are considered excessive or obsolete based upon assumptions about future demand and market conditions.

The Company includes demonstration units within inventories. Demonstration units are carried at cost and amortized over an estimated economic life of

two

years. Amortization expense related to demonstration units is recorded in Products cost of revenue or in the respective operating expense line based on which function and purpose for which the demonstration units are being used. Proceeds from the sale of demonstration units are recorded as revenue and all costs incurred to refurbish the systems prior to sale are charged to cost of revenue.

As of

December 31, 2018

and

2017,

demonstration inventories, net of accumulated depreciation, included in finished goods inventory balance was

$2.9

million and

$1.9

million, respectively.

Property and Equipment

Property and equipment are stated at cost, net of accumulated depreciation. Depreciation expense recognized is on a straight-line basis over the estimated useful lives of the assets, generally as follows:

		Useful Lives
Leasehold improvements		Lesser of useful life or term of lease
Office equipment and furniture (in years)		3
Machinery and equipment (in years)		3

Upon sale or retirement of property and equipment, the costs and related accumulated depreciation and amortization are removed from the balance sheet and the resulting gain or loss is reflected in operating expenses. Maintenance and repairs are charged to operations as incurred.

Depreciation expense related to property and equipment for

2018,

2017

and

2016,

was

$1.2

million,

$1.0

million and

$0.8

million respectively. Amortization expense for vehicles leased under capital leases is included in depreciation expense.

Goodwill and Intangible Assets

Goodwill and intangible assets with indefinite useful lives are

not

amortized, but are tested for impairment at least annually during the

fourth

fiscal quarter, or if circumstances indicate their value

may

longer be recoverable. Goodwill represents the excess of the purchase price over the fair value of net identifiable assets and liabilities.

The Company continues to operate in

one

segment, which is considered to be the sole reporting unit and, therefore, goodwill was tested for impairment at the enterprise level. As of

December 31, 2018,

there has been

impairment of goodwill. All acquired intangible assets have been fully amortized as of

December 31, 2018.

Warranty Obligations

The Company offers post-warranty services to its customers through extended service contracts that cover replacement parts and labor for a term of one, two, or

three

years. For sales to distributors, the Company generally provides a

month warranty for parts only, with labor being provided to the end customer by the distributor.

The Company also offers services on a time-and-materials basis for detachable hand piece replacements, parts and labor. These post-warranty services serve as additional sources of recurring revenue from the Company’s installed product base.

Deferred Sales Commissions

Incremental costs of obtaining a contract, including sales commissions, are capitalized and amortized on a straight-line basis over the expected customer relationship period. The Company uses the portfolio method to recognize the amortization expense related to these capitalized costs related to initial contracts and such expense is recognized over a period associated with the revenue of the related portfolio, which is generally

two

three

years for the Company’s product and service arrangements.

Total capitalized costs for the year ended

December 31, 2018

was

$5.2

million and are included in other long-term assets in the Company’s consolidated balance sheet. Amortization of this asset was

$1.8

million during the year ended

December 31, 2018

and is included in sales and marketing expense in the Company’s consolidated statements of operations.

Cost of Revenue

Cost of revenue consists primarily of material, finished and semi-finished products purchased from

third

-party manufacturers, labor, stock-based compensation expenses, overhead involved in the Company's internal manufacturing processes, service contracts technology license amortization and royalties, costs associated with product warranties and any inventory write-downs.

The Company's system sales include a control console, universal graphic user interface, control system software, high voltage electronics and a combination of applications (referred to as hand pieces). Hand pieces are programmed to have a limited number of uses to ensure the safety of the device to patients. The Company sells refurbished hand pieces, or "refills," of its

Titan

and

truSculpt

products and provides for the cost of refurbishment of these hand pieces as part of cost of revenue. When customers purchase a replacement hand piece or are provided a replacement hand piece under a warranty or service contract, the Company ships the customer a previously refurbished unit. Upon the receipt of the expended hand piece from the customer, the Company capitalizes the expended hand piece as inventory at the estimated fair value. Cost of revenue includes the costs incurred to refurbish hand pieces.

Research and Development Expenditures

Research and development costs are expensed as incurred and include costs related to research, design, development, testing of products, salaries, benefits and other headcount related costs, facilities, material,

third

party contractors, regulatory affairs, clinical and development costs.

Advertising Costs

Advertising costs are included as part of sales and marketing expense and are expensed as incurred. Advertising expenses for

2018,

2017

and

2016

were

$2.8

million,

$1.8

million and

$1.3

million, respectively.

Stock-based Compensation

The Company accounts for share-based employee compensation plans using the fair value recognition and measurement provisions under U.S. GAAP. The Company’s share-based compensation cost is measured at the grant date, based on the fair value of the award, and is recognized as expense on a straight-line basis over the requisite service period. The Company estimates expected forfeitures at the time of grant and revises, if necessary, in subsequent periods if actual forfeitures differ from those estimated.

Expected Term

: The expected term represents the weighted-average period that the stock options are expected to be outstanding prior to being exercised. The Company determines expected term based on historical exercise patterns and its expectation of the time it will take for employees to exercise options still outstanding.

Expected Volatility:

The underlying stock price volatility of our stock. The Company estimates volatility based on a

blend of our historical volatility and the implied volatility of freely traded options of our stock in the open market.

Risk-Free Interest Rate:

The risk-free interest rate is based on the U.S. treasury yield curve in effect at the time of grant for the expected term of the stock option.

●

The fair value of stock options ("options") on the grant date is estimated using the Black-Scholes option-pricing model using the single-option approach. The Black-Scholes option pricing model requires the use of highly subjective and complex assumptions, including the option's expected term and the price volatility of the underlying stock, to determine the fair value of award. The Company recognizes the expense associated with options using a single award approach over the requisite service period. The Company accounts for all stock options awarded to non-employees at the fair value of the consideration received or the fair value of the equity instrument issued, as calculated using the Black-Scholes model.

●

The fair value of restricted stock units is determined based on the closing quoted

-day moving average price of the Company’s common stock on the day of the grant.

●

The fair value of Performance Stock Units (“PSUs”) that have operational measurement goals, are measured at the

-day moving average price of the Company’s stock on the date of grant. PSUs with market-based measurement goals are valued using the Monte-Carlo simulation option-pricing model. The Monte-Carlo simulation option-pricing model uses the same input assumptions as the Black-Scholes model, however, it further incorporates into the fair-value determination the possibility that the market condition

may

not

be satisfied.

See Note

- Stockholders’ Equity, Stock Plans and Stock-Based Compensation Expense for a detailed discussion of the Company’s stock plans and share-based compensation expense.

Income Taxes

The Company is subject to taxes on earnings in both the U.S. and various foreign jurisdictions. As a global taxpayer, significant judgments and estimates are required in evaluating our uncertain tax positions and determining our provision for income taxes on earnings. The Company recognizes tax benefits from uncertain tax positions only if it is more likely than

not

that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such positions are then measured based on the largest benefit that has a greater than

50%

likelihood of being realized upon ultimate settlement.

The Company’s effective tax rates have differed from the statutory rate primarily due to changes in the valuation allowance, foreign operations, research and development tax credits, state taxes, and certain benefits realized related to stock option activity. The Company’s current effective tax rate does

not

assume U.S. taxes on undistributed profits of foreign subsidiaries. These earnings could become subject to incremental foreign withholding or U.S. federal and state taxes, should they either be deemed or actually remitted to the U.S. The Company’s future effective tax rates could be adversely affected by earnings being lower in countries where the Company has lower statutory rates and being higher in countries where the Company has higher statutory rates, or by changes in tax laws, accounting principles, interpretations thereof, net operating loss carryback, research and development tax credits, and due to changes in the valuation allowance of its U.S. deferred tax assets. In addition, the Company is subject to the examination of our income tax returns by the Internal Revenue Service and other tax authorities. The Company regularly assesses the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes.

Undistributed earnings of the Company’s foreign subsidiaries at

December 31, 2018

are considered to be indefinitely reinvested and, accordingly,

provision for federal and state income taxes has been provided thereon. Due to the Transition Tax and Global Intangible Low-Tax Income (“GILTI”) regimes as enacted by the

2017

Tax Act, those foreign earnings will

not

be subject to federal income taxes when actually distributed in the form of a dividend or otherwise. The Company, however, could still be subject to state income taxes and withholding taxes payable to various foreign countries. The amounts of taxes which the Company could be subject to are

not

material to the accompanying financial statements.

December

2017,

the SEC staff issued Staff Accounting Bulletin

No.

118,

Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“SAB

118”

), which allows companies to record provisional amounts during a measurement period

not

to extend beyond

one

year of the enactment date. Since the

2017

Tax Act was passed late in the

fourth

quarter of

2017,

and ongoing guidance and accounting interpretation was yet to be issued, the Company’s accounting of the transition tax and deferred tax re-measurements was incomplete as of

December

31,

2017.

The Company filed its

2017

Federal corporate income tax return in the

fourth

quarter of

2018.

The Company’s final analysis and impact of the

2017

Tax Act is reflected in the tax provision and related tax disclosures for the year ended

December

31,

2018.

There was a net increase of approximately

$0.4

million to the originally estimated

$7.3

million remeasurement of deferred tax assets. The Company considers the

$0.4

million true-up to be an immaterial change in estimate which has been reflected within the measurement period in accordance with SAB

118.

January

2018,

the FASB released guidance on the accounting for tax on the GILTI provisions of the

2017

Tax Act. The GILTI provisions impose a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations. The guidance indicates that either accounting for deferred taxes related to GILTI inclusions or treating any taxes on GILTI inclusions as a period cost are both acceptable methods subject to an accounting policy election. The Company has elected to treat any taxes on GILTI inclusions as a period cost.

Computation of Net Income (

Loss)

per Share

Basic net income per share is computed using the weighted average number of shares outstanding during the period. Diluted net income per share is computed using the weighted average number of the Company’s shares and dilutive potential shares outstanding during the period. Dilutive potential shares primarily consist of employee stock options, restricted stock units, and shares to be purchased by employees under the Company’s employee stock purchase plan.

GAAP requires that employee equity share options, non-vested shares, and similar equity instruments granted by the Company be treated as potential common shares outstanding in computing diluted earnings per share. Diluted shares outstanding include the dilutive effect of equity awards, which is calculated based on the average share price for each fiscal period using the treasury stock method. Under the treasury stock method, the amount the employee must pay for exercising stock options and the amount of compensation cost for future service that the Company has

not

yet recognized are assumed to be used to repurchase shares. Diluted earnings per share (“EPS”) is same as basic when the Company incurs a loss.

Comprehensive Income (Loss)

Comprehensive income (loss) includes all changes in stockholders’ equity except those resulting from investments or contributions by stockholders. For the periods presented, the accumulated other comprehensive income (loss) consisted solely of the unrealized gains or losses on the Company's available for- sale investments, net of tax.

Foreign Currency

The U.S. Dollar is the functional currency of the Company’s subsidiaries. Monetary assets and liabilities are re-measured into U.S. Dollars at the applicable period end exchange rate. Sales and operating expenses are re-measured at average exchange rates in effect during each period. Gains or losses resulting from foreign currency transactions are included in net income (loss) and are insignificant for each of the

three

years ended

December 31, 2017.

The effect of exchange rate changes on cash and cash equivalents was insignificant for each of the

three

years presented in the period ended

December 31, 2018.

Segments

The Company operates in

one

segment. Management uses

one

measurement of profitability and does

not

segregate its business for internal reporting. As of

December 31, 2018,

and

2017,

89%

and

98%

of long-lived assets were in the United States, respectively. Revenue is attributed to a geographic region based on the location of the end customer. See Note

– Segment Information and Revenue by Geography and Products for details relating to revenue by geography.

Note 2 - Investment Securities

12 Months Ended

Dec. 31, 2018

Cash, Cash Equivalents, and Marketable Securities [Text Block]

NOTE

—INVESTMENT SECURITIES

The following tables summarize cash, cash equivalents and marketable securities (in thousands):

	December 31,
	201 8		20 1 7
Cash and cash equivalents:
Cash	$	21,969	$	14,058
Cash equivalents:
Money market funds		4,083		126
Total cash and cash equivalents		26,052		14,184

Marketable securities:
U.S. government notes		1,397		11,870
U.S. government agencies		2,677		—
Municipal securities		200		200
Commercial paper		2,433		1,833
Corporate debt securities		2,816		7,825
Total marketable securities		9,523		21,728

Total cash, cash equivalents and marketable securities	$	35,575	$	35,912

The following table summarizes unrealized gains and losses related to the Company’s marketable investments (in thousands):

December 31, 201 8	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Market Value
Cash and cash equivalents	$	26,052	$	—	$	—		$	26,052

Marketable investments
U.S. government notes		1,397		—		—			1,397
U.S. government agencies		2,677		—		—			2,677
Municipal securities		200		—		—			200
Commercial paper		2,433		—		—			2,433
Corporate debt securities		2,825		—		(9	)		2,816
Total marketable securities		9,532				(9	)		9,523

Total cash, cash equivalents and marketable securities	$	35,584	$		$	(9	)	$	35,575

December 31, 201 7	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Market Value
Cash and cash equivalents	$	14,184	$	—	$	—		$	14,184

Marketable investments
U.S. government notes		11,885		—		(15	)		11,870
Municipal securities		201		—		(1	)		200
Commercial paper		1,836		—		(3	)		1,833
Corporate debt securities		7,838		2		(15	)		7,825
Total marketable securities		21,760		2		(34	)		21,728

Total cash, cash equivalents and marketable securities	$	35,944	$	2	$	(34	)	$	35,912

investments were in a continuous unrealized loss position for longer than

months as of

December 31, 2018

and

2017.

The unrealized losses on the available-for-sale investments are related to corporate securities and government securities. The Company determined these unrealized losses to be temporary. Factors considered in determining whether a loss is temporary included the length of time and extent to which the investment’s fair value has been less than the cost basis; the financial condition and near-term prospects of the investee; extent of the loss related to credit of the issuer; the expected cash flows from the security; the Company’s intent to sell the security; and whether or

not

the Company will be required to sell the security before the recovery of its amortized cost.

The following table summarizes the estimated fair value of the Company’s marketable investments classified by the contractual maturity date of the security as of

December 31, 2018 (

in thousands):

	Amount
Due in less than one year	$	9,121
Due in 1 to 3 years		402
Total marketable securities	$	9,523

Fair Value Measurements

The following table summarizes financial assets measured and recognized at fair value on a recurring basis and classified under the appropriate level of the fair value hierarchy as described above (in thousands):

December 31, 201 8	Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market funds	$	4,083	$	—	$	—	$	4,083
Short term marketable investments:
Available-for-sale securities		—		9,523		—		9,523
Total assets at fair value	$	4,083	$	9,523	$	—	$	13,606

December 31, 201 7	Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market funds	$	126	$	—	$	—	$	126
Commercial paper		—		—		—		—
Short term marketable investments:
Available-for-sale securities		—		21,728		—		21,728
Total assets at fair value	$	126	$	21,728	$	—	$	21,854

The Company’s Level

financial assets are money market funds with fair values that are based on quoted market prices. The Company’s Level

investments include U.S. government-backed securities and corporate securities that are valued based upon observable inputs that

may

include benchmark yields, reported trades, broker/dealer quotes, issuer spreads,

two

-sided markets, benchmark securities, bids, offers and reference data including market research publications. The average remaining maturity of the Company’s Level

investments as of

December 31, 2018

is less than

months and all of these investments are rated by S&P and Moody’s at A or better. The Company recognizes transfers between levels of the fair value hierarchy as of the end of the reporting period. There were

transfers within the hierarchy during the years ended

December 31, 2018

2017.

Note 3 - Balance Sheet Detail

12 Months Ended

Dec. 31, 2018

Supplemental Balance Sheet Disclosures [Text Block]

NOTE

—BALANCE SHEET DETAIL

Inventories

Inventories consist of the following (in thousands):

	December 31,
	201 8		201 7
Raw materials	$	16,991	$	19,160
Work in process		2,306		2,744
Finished goods		8,717		6,878
Total	$	28,014	$	28,782

Property and Equipment, net

Property and equipment, net, consists of the following (in thousands):

	December 31,
	201 8		201 7
Leasehold improvements	$	660	$	640
Office equipment and furniture		2,835		2,370
Machinery and equipment		7,304		6,277
		10,799		9,287
Less: Accumulated depreciation		(8,127)		(7,191)
Property and equipment, net	$	2,672	$	2,096

Included in machinery and equipment are financed vehicles used by the Company’s North American sales employees. As of

December 31, 2018

and

2017,

the gross capitalized value of the leased vehicles was

$1.9

million and

$1.6

million and the related accumulated depreciation was

$1.1

million and

$0.7

million, respectively. Included in Property and equipment is construction in progress of

$0.4

million that is yet to be depreciated.

Goodwill and Other

Intangible Assets

Goodwill and other intangible assets comprise a patent sublicense acquired from Palomar in

2006,

intangible assets and goodwill related to the acquisition of Iridex’s aesthetic business unit, and, customer relationships in the Benelux countries acquired from a former distributor in

2013.

The components of intangible assets at

December 31, 2018

and

2017

were as follows (in thousands):

	Gross Carrying Amount		Accumulated Amortization & Impairment Amount		Net Amount
December 31, 201 8
Patent sublicense	$	1,218	$	1,218	$	—
Customer relationship intangible related to acquisition		2,510		2,510		—
Other identified intangible assets related to acquisition		780		780		—
Other intangible		155		155		—
Goodwill		1,339		—		1,339
Total	$	6,002	$	4,663	$	1,339
December 31, 201 7
Patent sublicense	$	1,218	$	1,218	$	—
Customer relationship intangible related to acquisition		2,510		2,510		—
Other identified intangible assets related to acquisition		780		780		—
Other intangible		155		155		—
Goodwill		1,339		—		1,339
Total	$	6,002	$	4,663	$	1,339

The Company did

not

incur any amortization expense for intangible assets in

2018.

Amortization expense in the

2017

and

2016

fiscal years for intangible assets was

$2,000

and

$141,000,

respectively. Intangible assets were fully amortized and there were

additions as of

December 31, 2018.

Accrued Liabilities

Accrued liabilities consist of the following (in thousands):

	December 31,
	201 8		201 7
Accrued payroll and related expenses	$	9,377	$	12,567
Sales and marketing accruals		2,379		3,710
Accrued sales tax		2,935		2,920
Warranty liability		4,666		3,508
Other accrued liabilities		3,943		4,143
Total	$	23,300	$	26,848

Product Remediation Liability

During the

fourth

quarter of

2018,

the Company recognized a liability for a product remediation plan related to of

one

of its legacy systems. This was related to a voluntary action initiated by the Company to replace a component in

one

of the Company’s legacy products. The developed remediation plan consists primarily of replacement of a component in the system. The accrued liability consisted of cost of materials and labor costs to replace the component in all units that are under the Company's standard warranty or are covered under the existing extended warranty contracts. . The Company recorded approximately

$5.0

million related to this remediation, of which

$1.1

million was utilized in the

fourth

quarter. Approximately

$0.8

million out of the

$5.0

million is included in accrued liabilities and

$3.2

million is separately recorded as extended warranties.

Note 4 - Warranty and Extended Services Contracts

12 Months Ended

Dec. 31, 2018

Product Warranty Disclosure [Text Block]

NOTE

—

ARRANTY AND EXTENDED SERVICES CONTRACT

The Company has a direct field service organization in North America (including Canada). Internationally, the Company provides direct service support in Australia, Belgium, France, Germany, Hong Kong, Japan, and Switzerland, as well as through

third

-party service providers in Spain and the United Kingdom. In several other countries, where the Company does

not

have a direct presence, the Company provides service through a network of distributors and

third

-party service providers.

After the original warranty period, maintenance and support are offered on an extended service contract basis or on a time and materials basis. The Company provides for the estimated cost to repair or replace products under standard warranty at the time of sale. Costs incurred in connection with extended service contracts are recognized at the time when costs are incurred, except the

one

-time extended service contracts charge of

$3.2

million related to the cost to replace a component in

one

of the Company's legacy products.. The following table provides the changes in the product standard warranty accrual for the years ended

December 31, 2018

and

2017

(in thousands):

	December 31,
	201 8			201 7
Balance at beginning of year	$	3,508		$	2,461
Add: Accruals for warranties issued during the period		9,205			7,583
Less: Warranty related expenses during the period		(8,045	)		(6,536	)
Balance at end of year	$	4,668		$	3,508

Note 5 - Deferred Revenue

12 Months Ended

Dec. 31, 2018

Revenue from Contract with Customer [Text Block]

NOTE

—

DEFERRED REVENUE

The Company records deferred revenue when revenue is to be recognized subsequent to invoicing. For extended service contracts, the Company generally invoices customers at the beginning of the extended service contract term. The Company’s extended service contracts typically have one,

two

three

year terms. Deferred revenue also includes payments for installation, training and extended marketing support service. Approximately

79%

of the Company’s deferred revenue balance of

$12.6

million as of

December 31, 2018

will be recognized over the next

months.

The following table provides changes in the deferred contract revenue balance for the years ended

December 31, 2018

and

2017

(in thousands):

	December 31,
	201 8			201 7
Balance at beginning of year	$	10,719		$	9,431
Add: Payments received		14,882			14,369
Less: Revenue recognized		(13,746	)		(13,081	)
Balance at end of year	$	11,855		$	10,719

Costs for extended service contracts in

2018,

2017

and

2016

were

$7.8

million,

$6.0

million and

$6.7

million, respectively. The

$7.8

million in

2018

includes a

one

-time extended service contract cost of

$3.2

million to replace a component in

one

of the Company's legacy products (See Note

Note 6 - Stockholders' Equity, Stock Plans and Stock-based Compensation Expense

12 Months Ended

Dec. 31, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

NOTE

—STOCKHOLDERS’ EQUITY, STOCK PLANS AND STOCK-BASED COMPENSATION EXPENSE

As of

December 31, 2018,

the Company had the following stock-based employee compensation plans:

2004

Equity Incentive Plan and

1998

Stock Plan

1998,

the Company adopted the

1998

Stock Plan, or

1998

Plan, under which

4,650,000

shares of the Company’s common stock were reserved for issuance to employees, directors and consultants.

January 12, 2004,

the Board of Directors adopted the

2004

Equity Incentive Plan. A total of

1,750,000

shares of common stock were originally reserved for issuance pursuant to the

2004

Equity Incentive Plan. In addition, the shares reserved for issuance under the

2004

Equity Incentive Plan included shares reserved but un-issued under the

1998

Plan and shares returned to the

1998

Plan as the result of termination of options or the repurchase of shares. In

2012

the stockholders approved a “fungible share” provision whereby each full-value award issued under the

2004

Equity Incentive Plan results in a requirement to subtract

2.12

shares from the shares reserved under the Plan.

Options granted under the

1998

Plan and

2004

Equity Incentive Plan

may

be incentive stock options or non-statutory stock options. Stock purchase rights

may

also be granted under the

2004

Equity Incentive Plan. Incentive stock options

may

only be granted to employees. The Board of Directors determines the period over which options become exercisable. Options granted under the Plan to employees generally vest over a

four

-year term from the vesting commencement date and become exercisable

25%

on the

first

anniversary of the vesting commencement date and an additional

1/48th

on the last day of each calendar month until all of the shares have become exercisable. During

2013

and

2012

the officers of the Company were granted options that vest over a

three

-year term at the rate of

one

third

on the

one

-year anniversary of the vesting commencement date and

1/36th

thereafter. In

2014

the officers of the Company were granted RSUs and PSUs but were

not

granted any options. The contractual term of the options granted in

2013

and

2012

was

seven

years.

In accordance with the

2004

Equity Incentive Plan, prior to

2012,

the Company’s non-employee directors were granted

$60,000

of grant fair value (determined by dividing the award amount by the

-day moving average stock price on the day of the award), fully vested, stock awards annually on the date of the Company’s Annual Meeting of stockholders. Following Board of Directors action on

October 31, 2017,

the Company’s nonemployee directors receive

$60,000

of RSUs granted annually that cliff-vest on the

one

-year anniversary of the grant date. In the years ended

December 31, 2018,

2017

and

2016,

the Company issued

13,392,

21,605

and

45,350

RSUs, respectively, to its non-employee directors. Included in the

2016

grants, was

6,500

RSUs granted to

one

of the Company's non-employee directors for consulting services to the Company, which vest over a period of

four

years from the grant date.

In the years ended

December 31, 2018,

2017

and

2016

the Company’s Board of Directors granted

120,273,

270,707

and

229,865

RSUs, respectively, to its executive officers and certain members of the Company’s management. The RSUs granted to the employees vest at the rate of

one

fourth

on the

one

-year anniversary of the grant date, and

one

fourth

in each of the subsequent

three

years. The annual RSUs granted to the executive officers vests at the rate of

one

third

on the

one

-year anniversary of the grant date, and

one

third

in each of the subsequent

two

years. In addition, on

December 15, 2017,

the Company’s Board granted

100,000

RSUs to the President and Chief Executive Officer, which vest according to the following schedule:

15%,

25%

and

45%

on the first, second,

third

and

fourth

anniversary of the grant date, respectively. The Company measured the fair market values of the underlying stock on the dates of grant and recognizes the stock-based compensation expense over the vesting period. On the vesting date, the Company issues fully paid up common stock, net of stock withheld to settle the recipient’s minimum statutory tax liability.

In the years ended

December 31, 2018,

2017

and

2016

the Company’s Board of Directors granted its executive officers and certain senior management employees

49,498,

117,418

and

204,976

of PSUs, respectively. All PSUs vesting was subject to the recipient’s continued service and achievement of pre-established goals that were operational (in

2018,

2017

and

2016

). The operational PSU goals were related to revenue growth, operating income improvement and specific product releases. On the vest date of the PSUs, the Company issues fully-paid up common stock, based on the degree of achievement of the pre-established targets, net of the stock withheld to settle the recipient’s minimum statutory tax liability.

50%

of the U.S. domestic metric was achieved while international metric was

not

achieved in

2018.

2004

Employee Stock Purchase Plan

January

12,

2004,

the Board of Directors adopted the

2004

Employee Stock Purchase Plan. Under the

2004

Employee Stock Purchase Plan, or

2004

ESPP, eligible employees are permitted to purchase common stock at a discount through payroll deductions. The

2004

ESPP offering and purchase periods are for approximately

six

months. The

2004

ESPP has an evergreen provision based on which shares of common stock eligible for purchase are increased on the

first

day of each fiscal year by an amount equal to the lesser of:

600,000

shares;

ii.

2.0%

of the outstanding shares of common stock on such date; or

iii.

an amount as determined by the Board of Directors.

The Company’s Board of Directors did

not

increase the shares available for future grant on

January 1, 2019,

2018

and

2017.

The price of the common stock purchased is the lower of

85%

of the fair market value of the common stock at the beginning or end of a

six

month offering period. In the years ended

December 31, 2018,

2017and

2016,

under the

2004

ESPP, the Company issued

64,511,

78,479

and

79,922

shares, respectively. At

December 31, 2018,

627,073

shares remained available for future issuance.

Option Activity

Activity under the

1998

Plan and

2004

Equity Incentive Plan is summarized as follows:

				Options Outstanding
	Shares Available For Grant			Number of Shares			Weighted- Average Exercise Price		Weighted-Average Remaining Contractual Life (in years)		Aggregate Intrinsic Value (in $ millions ) (1)
Balances as of December 31, 2015		1,263,425			2,148,797		$	9.31		3.4	$	7.9
Options granted		(162,000	)		162,000		$	11.55
Options exercised		—			(1,051,138	)	$	8.89
Options cancelled (expired or forfeited)		143,187			(143,187	)	$	12.93
Stock awards granted		(1,018,005	)		—			—
Stock awards cancelled (expired or forfeited)		495,050			—			—

Balances as of December 31, 2016		721,657			1,116,472		$	9.56		3.7	$	8.7

Options granted		(278,250	)		278,250		$	31.00
Options exercised		—			(488,398	)	$	8.96
Options cancelled (expired or forfeited)		66,405			(66,405	)	$	16.54
Stock awards granted		(873,881	)		—			—
Stock awards cancelled (expired or forfeited)		258,935			—			—
Additional shares reserved (2)		1,600,000			—			—
Balances as of December 31, 2017		1,494,866			839,919		$	16.46		3.99	$	24.4
Options granted		(21,010	)		21,010		$	50.65
Options exercised		—			(271,902	)	$	9.99
Options cancelled (expired or forfeited)		81,322			(81,322	)	$	21,55
Stock awards granted		(562,070	)
Stock awards cancelled (expired or forfeited)		148,197
Balances as of December 31, 2018		1,141,305			507,705		$	20.52		3.52	$	2.00
Exercisable as of December 31, 2018					335,348		$	14.68		2.73	$	1.87
Vested and expected to vest, net of estimated forfeitures, as of December 31, 2018					485,469		$	19.88		3.42	$	19.86

( 1 )	Based on the closing stock price of $17.02 of the Company’s stock on December 31, 201 8 , $ 45.35 on December 30, 201 7 , $ 17.35 on December 31 201 6 and $ 12.79 on December 31, 201 5 .
( 2 )	Approved by the board of directors and stockholders in 2017. .

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the aggregate difference between the Company’s closing stock price on the last trading day of the fiscal year and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on

December 31, 2018.

The aggregate intrinsic amount changes based on the fair market value of the Company’s common stock. Total intrinsic value of options exercised in

2018,

2017

and

2016

was

$8.3

million,

$8.0

million, and

$3.6

million, respectively. The options outstanding and exercisable at

December 31, 2018

were in the following exercise price ranges:

Exercise Prices				Number Outstanding	Contractual Life (in years)	Number Outstanding
	$6.88	–	$7.44	28,832	0.58	28,832
		$8.80		97,268	1.44	97,268
	$9.65	–	$10.79	54,564	3.01	49,544
	$10.80	–	$11.24	57,521	3.18	47,293
	$11.67	–	$17.90	72,583	2.44	48,855
	$18.55	–	$25.70	71,250	5.21	28,512
		$39.30		72,000	5.83	23,230
		$43.40		6,510	6.45	—
		$47.40		38,927	5.86	10,564
		$53.90		8,250	5.30	1,250

Stock

Awards

(RSU

and

PSU)

Activity

Table

Information with respect to RSUs and PSUs activity is as follows (in thousands):

	Number of			Weighted-Average Grant- Date Fair		Aggregate Fair Value (1)			Aggregate Intrinsic Value (2)
	Shares			Value		(in thousands)			(in thousands)
Outstanding at December 31, 2015		371,630		$	12.39				$	4,753
Granted		480,191		$	10.80
Vested (3)		(172,990	)	$	12.56	$	1,906	(5)
Forfeited		(233,514	)	$	11.36
Outstanding at December 31, 2016		445,317		$	11.15				$	7,726
Granted		412,208		$	28.74
Vested (3)		(224,799	)	$	10.91	$	5,168	(6)
Forfeited		(122,139	)	$	13.56
Outstanding at December 31, 2017		510,587		$	24.88				$	23,155
Granted		265,124		$	44.57
Vested (3)		(231,515	)	$	21.10	$	9,483	(6)
Forfeited		(69,905	)	$	20.01
Outstanding at December 31, 2018		474,291		$	38.44				$	8,072

(

)

Represents

the

value

the

Company’s

stock

the

date

that

the

restricted

stock

units

and

performance

stock

units

vest.

	( 2 )	Based on the closing stock price of the C o m pan y ’ s stock of $ 17.02 on December 31, 2018 , $ 45.35 on December 31, 2017 , $ 17.35 on December 31 , 2016 and $12.79 on December 30 , 2015 .
	( 3 )	The number of restricted stock units vested includes shares tha t the Company withheld on behalf of the employees to satisfy the statutory tax withholding requirements.
	( 4 )	On the grant date, the fair value for these vested awards was $ 2.2 million.

(

)

the

grant

date,

the

fair

value

for

these

vested

awards

was

$2.5

million.

(

)

the

grant

date,

the

fair

value

for

these

vested

awards

was

$4.9

million.

Stock-Based Compensation

Stock-based compensation expense for the years ended

December 31, 2018,

2017

and

2016

was as follows (in thousands):

	Year Ended December 31,
	201 8		201 7		201 6
Stock options	$	838	$	815	$	989
RSUs		4,648		1,813		1,508
PSUs		1,105		2,093		967
ESPP		566		389		249
Total stock-based compensation expense	$	7,157	$	5,110	$	3,713

As of

December 31, 2018,

the unrecognized compensation cost, net of expected forfeitures, was

$12.8

million for stock options and stock awards, which will be recognized over an estimated weighted-average remaining amortization period of

2.63

years. For the ESPP, the unrecognized compensation cost, net of expected forfeitures, was

$272,000,

which will be recognized over an estimated weighted-average amortization period

0.33

years.

The Company issues new shares of common stock upon the exercise of stock options, vesting of RSUs and PSUs, and the issuance of ESPP shares. The amount of cash received from these issuances (excluding PSUs), net of taxes withheld and paid, in

2018,

2017and

2016

was

$1.3

million,

$4.0

million and

$9.5

million.

Total stock-based compensation expense recognized during the year ended

December 31, 2018,

2017

and

2016

was recorded in the Consolidated Statement of Operations as follows (in thousands):

	Year Ended December 31,
	201 8		201 7		201 6
Cost of revenue	$	743	$	660	$	341
Sales and marketing		2,105		1,642		1,179
Research and development		824		936		596
General and administrative		3,485		1,872		1,597
Total stock-based compensation expense	$	7,157	$	5,110	$	3,713

Valuation Assumptions and Fair Value of Stock Options and ESPP Grants

The Company uses the Black-Scholes option pricing model to estimate the fair value of options granted under its equity incentive plans and rights to acquire stock granted under its employee stock purchase plan. The Company based the weighted average estimated values of employee stock option grants and rights granted under the employee stock purchase plan, as well as the weighted average assumptions used in calculating these values, on estimates at the date of grant, as follows:

	Stock Options									Stock Purchase Plan
	201 8			201 7			201 6			201 8			201 7			201 6

Expected term (in years) (1)		3.7			3.70			3.83			0.50			0.50			0.50
Risk-free interest rate (2)		2.6	%		1.73	%		1.09	%		2.34	%		1.14	%		0.46	%
Volatility (3)		44	%		40	%		40	%		61	%		42	%		39	%
Dividend yield (4)		—	%		—	%		—	%		—	%		—	%		—	%

Weighted average estimated fair value at grant date	$	18.0		$	9.98		$	3.72		$	9.6		$	8.21		$	3.22

( 1 )	The expected term represents the period during which the Company’s stock-based awards are expected to be outstanding. The estimated term is based on historical experience of similar awards, giving consideration to the contractual terms of the awards, vesting requirements, and expectation of future employee behavior, including post-vesting terminations. The expected term of groups of employees that have similar historical exercise patterns has been considered separately for valuation purposes.
( 2 )	The risk-free interest rate is based on U.S. Treasury debt securities with maturities close to the expected term of the option as of the date of grant.
( 3 )	Estimated volatility is based on historical volatility. The Company also considers implied volatility when there is sufficient volume of freely traded options with comparable terms and exercise prices in the open market.

The Company periodically estimates forfeiture rates based on its historical experience within separate groups of employees and adjusts the stock-based payment expense accordingly. The forfeiture rates used in

2018

ranged from

17%.

Non-Em

ployee Stock-Based Compensation

Stock-based compensation expense related to stock options granted to non-employees is recognized based on the fair value of the stock options, determined using the Black-Scholes option pricing model, as they are earned. The awards generally vest over the time period the Company expects to receive services from the nonemployee. The Company revalues stock options granted to non-employees at each reporting date as the underlying equity instruments vest.

The Company granted

3,384

RSUs to

one

non-employee during the year ended

December 31, 2018,

7,745

stock options and

2,478

RSUs during the year ended

2017,

and

zero

shares during the year ended

2016.

The

7,745

stock options granted in

2017

vests over

years at

25%

on the

first

anniversary of the grant date and

1/48th

each month thereafter.

The

3,384

RSUs granted in

2018

vests over

years at

25%

each anniversary of the grant date. These RSUs and stock options were granted in exchange for consulting services to be rendered and are measured and recognized as they are earned.

Stock Awards Withholdings

For Stock Awards granted to employees, the number of shares issued on the date the Stock Awards vest is net of the tax withholding requirements paid on behalf of the employees. In

2018,

2017

and

2016,

the Company withheld

77,049,

64,490,

and

56,157shares

of common stock, respectively, to satisfy its employees’ tax obligations of

$3,130,360,

$1,

1,471,000

and

$619,000,

respectively. The Company paid this amount in cash to the appropriate taxing authorities. Although shares withheld are

not

issued, they are treated as common stock repurchases for accounting and disclosure purposes, as they reduce the number of shares that would have been issued upon vesting.

Note 7 - Income Taxes

12 Months Ended

Dec. 31, 2018

Income Tax Disclosure [Text Block]

NOTE

—INCOME TAXES

The Company files income tax returns in the U.S. federal and various state and local jurisdictions and foreign jurisdictions. The Company’s income (loss) before provision for income taxes consisted of the following (in thousands):

	Year Ended December 31,
	201 8			201 7		201 6
U.S.	$	(14,177	)	$	11,203	$	2,207
Foreign		662			757		513
Income (loss) before income taxes	$	(13,515	)	$	11,960	$	2,720

The components of the provision (benefit) for income taxes are as follows (in thousands):

	Year Ended December 31,
	201 8		201 7		201 6
Current:
Federal	$	(15)	$	148	$	—
State		123		71		16
Foreign		303		511		131
Total Current		411		730		147
Deferred:
Federal		15,674		(17,393)		(24)
State		1,230		(1,348)		(2)
Foreign		(60)		(22)		22
Total Deferred		16,844		(18,763)		(4)
Tax provision	$	17,255	$	(18,033)	$	143

The Company’s deferred tax asset consists of the following (in thousands):

	December 31,
	201 8		201 7
Net operating loss carryforwards	$	11,227	$	8,604
Stock-based compensation		1,040		1,179
Other accruals and reserves		1,924		1,663
Credits		10,857		11,781
Foreign		457		399
Accrued warranty		1,863		847
Depreciation and amortization		2,024		1,592
Other		282		303
Deferred tax asset before valuation allowance		29,674		26,368
Valuation allowance		(27,865)		(7,242)
Deferred tax asset after valuation allowance		1,809		19,126
Deferred tax liability		(1,269)		—
Deferred tax liability on goodwill		(83)		(71)
Net deferred tax asset	$	457	$	19,055

The differences between the U.S. federal statutory income tax rates to the Company’s effective tax rate are as follows:

	Year Ended December 31,
	201 8			2017*		2016*
U.S. federal statutory income tax rate		21.00	%	34.00	%	34.00	%
State tax rate		(4.95)		(5.59)		(14.56)
Meals and entertainment		(2.66)		2.15		7.56
Stock-based compensation		13.66		(21.55)		14.36
SAB 118 Change in Estimate		(2.43)		—
Foreign rate differential		0.11		(0.50)		(0.16)
Other		(1.21)		0.65		(2.15)
General business credit		4.31		(2.72)		(9.25)
Change in Federal Tax Rate		—		60.98		—
Valuation allowance		(155.49)		(218.17)		(24.57)
Effective tax rate		(127.66)	%	(150.75)	%	5.23	%

Other balance in

2017

and

2016

was reclassified for consistency with current year.

The Company assesses the ability to realize its net deferred tax assets by evaluating all available evidence, both positive and negative, including (

) cumulative results of operations in recent years, (

) sources of recent income (loss), (

) estimates of future taxable income and (

) the length of net operating loss and tax credit carryforward periods. Such assessment is required on a jurisdiction-by-jurisdiction basis. In making such assessment, significant weight is given to evidence that can be objectively verified.

The Company’s deferred tax assets are primarily comprised of U.S. Net Operating Loss (“NOL”), tax credit and other deferred tax assets relating to book-to-tax temporary differences. The Company had recorded and maintained a full valuation allowance against those net deferred tax assets to reduce them to their estimated net realizable value through

September 30, 2017.

As of

December 31, 2017,

the Company determined that it is more likely than

not

that a portion of the net deferred tax assets would be realized for federal and U.S. states, except California, and therefore recorded a net valuation allowance release of

$26.3

million.

As of each reporting date, the Company’s management considers new evidence, both positive and negative, that could impact management’s view with regard to future realization of deferred tax assets. As of

December 31, 2018,

in part because in the current year, the Company achieved

three

years of cumulative pre-tax losses in the U.S. federal tax jurisdiction, management determined that sufficient negative evidence exists as of

December 31, 2018,

to conclude that it is more likely than

not

that certain of its net deferred taxes would

not

be realizable, and therefore, recorded a valuation allowance in the amount of

$16.9

million accordingly.

December 31, 2018,

the Company had approximately

$45.7

million and

$20.5

million of federal and state net operating loss carryforwards, respectively, available to offset future taxable income. The federal and state net operating loss carryforwards, if

not

utilized will generally begin to expire in

2029

through

2038.

$11.8

million of total federal net operating loss carryforwards were generated post

December 31, 2017

and have

expiration. At

December 31, 2018,

the Company had research and development tax credits available to offset federal, California and Massachusetts tax liabilities in the amount of

$6.7

million,

$7.4

million and

$0.3

million, respectively. Federal credits will begin to expire in

2024,

California state tax credits have

expiration, and Massachusetts tax credits begin to expire in

2021.

The utilization of NOL carryforwards and tax credits

may

be subject to a substantial annual limitation due to the ownership change limitations provided by Section

382

of the U.S. Internal Revenue Code (“IRC”), and similar state provisions. The annual limitation

may

result in the expiration of NOL carryforwards and tax credits before utilization. The Company completed an IRC Section

382

analysis through

December 31, 2018

and determined that there were

significant limitations to the utilization of NOL or tax credit carryforwards. As such, the NOL and tax credit carryforwards presented are

not

expected to expire unutilized, unless there is a future ownership change as determined by Section

382

of the IRC.

Undistributed earnings of the Company’s foreign subsidiaries at

December 31, 2018

are considered to be indefinitely reinvested and, accordingly,

provision for federal and state income taxes has been provided thereon. Due to the Transition Tax and GILTI regimes as enacted by the

2017

Tax Act, those foreign earnings will

not

material to the accompanying financial statements.

December

2017,

the SEC staff issued Staff Accounting Bulletin

No.

118,

Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“SAB

118”

), which allows companies to record provisional amounts during a measurement period

not

to extend beyond

one

year of the enactment date. Since the

2017

Tax Act was passed late in the

fourth

quarter of

2017,

and ongoing guidance and accounting interpretation was yet to be issued, the Company’s accounting of the transition tax and deferred tax re-measurements was incomplete as of

December

31,

2017.

The Company filed its

2017

Federal corporate income tax return in the

fourth

quarter of

2018.

The Company’s final analysis and impact of the

2017

Tax Act is reflected in the tax provision and related tax disclosures for the year ended

December

31,

2018.

There was a net increase of approximately

$0.3

million to the originally estimated

$7.3

million remeasurement of deferred tax assets. The Company considers the

$0.3

million true-up to be an immaterial change in estimate which has been reflected within the measurement period in accordance with SAB

118.

January

2018,

the FASB released guidance on the accounting for tax on the GILTI provisions of the

2017

Uncertain Tax Positions

The Company establishes reserves for uncertain tax positions based on the largest amount that is more-likely-than-

not

to be sustained. An uncertain income tax position will

not

be recognized if it has less than a

50%

likelihood of being sustained. The Company performs a

two

-step approach to recognizing and measuring uncertain tax positions. The

first

step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than

not

that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The

second

step is to measure the tax benefit as the largest amount that is more than

50%

likely of being realized upon settlement.

Although the Company believes it has adequately reserved for its uncertain tax positions,

assurance can be given that the final tax outcome of these matters will

not

be different. The Company adjusts these reserves in light of changing facts and circumstances, such as the closing of a tax audit or the refinement of an estimate. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will impact the provision for income taxes in the period in which such determination is made. The provision for income taxes includes the impact of reserve provisions and changes to reserves that are considered appropriate, as well as the related net interest and penalties.

The Company files U.S., state, and foreign income tax returns in jurisdictions with varying statutes of limitations. The

2005

through

2018

tax years generally remain subject to examination by U.S. federal and California state tax authorities due to the Company’s net operating loss and credit carryforwards. For significant foreign jurisdictions, the

2011

through

2017

tax years generally remain subject to examination by their respective tax authorities.

The following table summarizes the activity related to the Company’s gross unrecognized tax benefits in

December

31,

2016

December 31, 2018 (

in thousands):

	Year Ended December 31,
	201 8		201 7		201 6
Balance at beginning of year	$	1,519	$	707	$	651
Decreases related to prior year tax positions		(70)		643		—
Increases related to current year tax positions		114		169		56
Balance at end of year	$	1,563	$	1,519	$	707

It is the Company’s policy to recognize interest and penalties related to income tax matters in income tax expense. As of

December 31, 2018,

the Company had accrued interest and penalties of

$107,000

related to uncertain tax positions.

Note 8 - Net Loss Per Share

12 Months Ended

Dec. 31, 2018

Earnings Per Share [Text Block]

NOTE

—NET LOSS PER SHARE

Basic net income (loss) per share is computed using the weighted-average number of shares outstanding during the period. In periods of net income, diluted shares outstanding include the dilutive effect of in-the-money equity awards (stock options, restricted stock units, performance stock units and employee stock purchase plan contributions), which is calculated based on the average share price for each fiscal period using the treasury stock method. In accordance with ASC

260,

the assumed proceeds under the treasury stock method include the average unrecognized compensation expense of in-the money stock options and restricted stock units. This results in the assumed buyback of additional shares, thereby reducing the dilutive impact of equity awards.

Diluted earnings per share is the same as basic earnings per share for the periods in which the Company had a net loss because the inclusion of outstanding common stock equivalents would be anti-dilutive.

The following table sets forth the computation of basic and diluted net income (loss) and the weighted average number of shares used in computing basic and diluted net income (loss) per share (in thousands, except per share data):

	Year Ended December 31,
	201 8		201 7		201 6
Numerator:
Net Income(loss)	$	(30,770)	$	29,993	$	2,577
Denominator:
Weighted average shares of common stock outstanding used in computing net income (loss) per share, basic		13,771		13,873		13,225
Dilutive effect of incremental shares and share equivalents		—		855		528
Weighted average shares of common stock outstanding used in computing net income (loss) per share, diluted		13,771		14,728		13,753
Net income(loss) per share:
Net income (loss) per share, basic	$	(2.23)	$	2.16	$	0.19
Net income (loss) per share, diluted	$	(2.23)	$	2.04	$	0.19

The following numbers of shares outstanding, prior to the application of the treasury stock method, were excluded from the computation of diluted net income (loss) per common share for the period presented because including them would have had an anti-dilutive effect (in thousands):

	Year Ended December 31,
	201 8		201 7		201 6
Options to purchase common stock		664		42		220
Restricted stock units		432		9		24
Employee stock purchase plan shares		133		—		—
Performance stock units		43		—		—
Total		1,272		51		244

Note 10 - Segment Information and Revenue by Geography and Products

12 Months Ended

Dec. 31, 2018

Segment Reporting Disclosure [Text Block]

NOTE

—SEGMENT

INFORMATION AND REVENUE BY

GEOGRAPH

Y AND PRODUCTS

Segment reporting is based on the “management approach,” following the method that management organizes the Company’s reportable segments for which separate financial information is made available to, and evaluated regularly by, the chief operating decision maker in allocating resources and in assessing performance. The Company’s chief operating decision maker is its Chief Executive Officer ("CEO"), who makes decision on allocating resources and in assessing performance. The CEO reviews the Company's consolidated results as

one

operating segment. In making operating decisions, the CEO primarily considers consolidated financial information, accompanied by disaggregated information about revenues by geography and product. All of the Company’s principal operations and decision-making functions are located in the U.S. The Company’s CEO views its operations, manages its business, and uses

one

measurement of profitability for the

one

operating segment - which sells aesthetic medical equipment and services, and distributes skincare products, to qualified medical practitioners. Substantially all of the Company’s long-lived assets are located in the U.S.

The following table presents a summary of revenue by geography for the year ended

December 31, 2018

and

2017

(in thousands):

	Year Ended December 31,
	201 8		201 7		201 6
Revenue mix by geography:
United States	$	101,862	$	94,581	$	65,513
Japan		17,819		17,264		14,727
Asia, excluding Japan		15,467		13,719		13,445
Europe		8,875		8,317		7,539
Rest of the world		18,696		17,612		16,832
Total Consolidated revenue	$	162,720	$	151,493	$	118,056
Revenue mix by product category:
Systems	$	132,594	$	125,883	$	92,721
Consumables		4,162		2,435		2,498
Skincare		5,778		4,342		3,809
Total product revenue		142,535		132,660		99,028
Service		20,185		18,833		19,028
Total Consolidated revenue	$	162,720	$	151,493	$	118,056

Note 11 - Commitments and Contingencies

12 Months Ended

Dec. 31, 2018

Commitments and Contingencies Disclosure [Text Block]

NOTE

—COMMITMENTS AND CONTINGENCIES

OPERATING LEASES

Facility Leases

As of

December 31, 2018,

the Company was committed to minimum lease payments for facilities and other leased assets under long-term non-cancelable operating leases as follows (in thousands):

Year Ending December 31,	Amount
2019	$	3,011
2020		2,939
2021		2,564
2022		2,495
2023 and thereafter		214
Future minimum rental payments	$	11,223

Gross rent expense recognized in the years ended

December 31, 2018,

2017

and

2016

was

$2.9

million,

$1.5

million and

$1.6

million, respectively.

Vehicle

Leases

As of

December 31, 2018,

the Company was committed to minimum lease payments for vehicles leased under long-term non-cancelable capital leases as follows (in thousands):

Year Ending December 31,	Amount
2019	$	576
2020		287
2021		152
Future minimum lease payments	$	1,015

Purchase Commitments

The Company maintains certain open inventory purchase commitments with its suppliers to ensure a smooth and continuous supply for key components. The Company’s liability in these purchase commitments is generally restricted to a forecasted time-horizon as agreed between the parties. These forecasted time-horizons can vary among different suppliers. Although open purchase orders are considered enforceable and legally binding, the terms generally allow the Company the option to cancel, reschedule, and adjust their requirements based on the Company's business needs prior to the delivery of goods or performance of services The Company’s open inventory purchase commitments with its suppliers as of

December 31, 2018

were

$1.7

million and

$7.2

million respectively, for

2019

and

2020.

Indemnifications

In the normal course of business, the Company enters into agreements that contain a variety of representations, warranties, and indemnification obligations. For example, the Company has entered into indemnification agreements with each of its directors and executive officers and certain key employees. The Company’s exposure under its various indemnification obligations is unknown and

not

reasonably estimable as they involve future claims that

may

be made against the Company. As such, the Company has

not

accrued any amounts for such obligations.

Contingencies

The Company is named from time to time as a party to other legal proceedings, product liability, commercial disputes, employee disputes, and contractual lawsuits in the ordinary course of business. These matters are subject to many uncertainties and outcomes that are

not

predictable and that

may

not

be known for extended periods of time. A liability and related charge are recorded to earnings in the Company’s consolidated financial statements for legal contingencies when the loss is considered probable and the amount can be reasonably estimated. The assessment is re-evaluated each accounting period and is based on all available information, including discussion with outside legal counsel. If a reasonable estimate of a known or probable loss cannot be made, but a range of probable losses can be estimated, the low-end of the range of losses is recognized if

amount within the range is a better estimate than any other. If a material loss is reasonably possible, but

not

probable and can be reasonably estimated, the estimated loss or range of loss is disclosed in the notes to the consolidated financial statements. The Company expenses legal fees as incurred.

As of

December 31, 2018

and

December 31, 2017,

the Company had accrued

$171,000

and

$91,000,

respectively related to various pending commercial and product liability lawsuits. The Company does

not

believe that a material loss in excess of accrued amounts is reasonably possible.

Note 12 - Debt	12 Months Ended
Note 12 - Debt	Dec. 31, 2018
Notes to Financial Statements
Debt Disclosure [Text Block]	NOTE 1 2 — DEBT Loan and Security Agreement On May 30, 2018, the Company and Wells Fargo Bank, N.A. (“Wells Fargo”) entered into a Loan and Security Agreement (the “Original Revolving Line of Credit”) in the original principal amount of $25 million. The Original Revolving Line of Credit terminates on May 30, 2021. As of December 31, 2018, there were no borrowings under the Original Revolving Line of Credit. Covenants The Original Revolving Line of Credit contained financial and other covenants as well as the maintenance of a leverage ratio not to exceed 2.5 to 1.0 and a Trailing Twelve Month ("TTM") adjusted EBITDA of not less than $10 million. A violation of any of the covenants could result in a default under the Original Revolving Line of Credit that would permit the lenders to restrict the Company’s ability to further access the revolving line of credit for loans and letters of credit and require the immediate repayment of any outstanding loans under the Loan and Security Agreement. During the third quarter of 2018, the Company was notified that it was in violation of certain financial covenants in the Original Revolving Line of Credit. Upon receipt of this notice, the Company entered into discussions with Wells Fargo to amend and revise certain terms of the Original Revolving Line of Credit. Following the end of the Company's third quarter, on or about November 2, 2018, the Company entered into a First Amendment and Waiver to the Loan and Security Agreement with Wells Fargo (the “First Amended Revolving Line of Credit”). The First Amended Revolving Line of Credit provided for an original principal amount of $15 million, with the ability to request an additional $10 million and a waiver of any existing defaults under the Original Revolving Line of Credit as long as the Company is in compliance with the terms of the Revised Revolving Line of Credit. Similar to the Original Revolving Line of Credit, the First Amended Revolving Line of Credit contained revised financial and other covenants as well as the maintenance of a leverage ratio not to exceed 2.0 to 1.0 and a graduated scale of TTM adjusted EBITDA of not less than $1 million as of the last day of the 2018 third fiscal quarter; $2.5 million as of the last day of the 2018 fourth fiscal quarter; $4 million as of the last day of the 2019 first and second fiscal quarters; $6.5 million as of the last day of the 2019 third fiscal quarter; and $10 million as of the last day of each fiscal quarter. Subsequent to December 2018, the Company again determined that it was in violation of certain financial covenants in the First Amended Revolving Line of Credit. The Company again entered into discussions with Wells Fargo to amend and revise certain terms of the First Amended Revolving Line of Credit. On or about, March 11, 2019 the Company entered into a Second Amendment and Waiver to the Loan and Security Agreement with Wells Fargo (the “Second Amended Revolving Line of Credit”). The Second Amended Revolving Line of Credit requires the Company to maintain a minimum cash balance of $15 million at Wells Fargo, but removes all other covenants so long as no money is drawn on the line of credit. The Company may draw down on the line of credit at the time it reaches and maintains TTM adjusted EBITDA of not less than $10 million, and a leverage ratio not to exceed 2.5 to 1.0. As of the date of this filing, there were no borrowings under either the Second Amended Revolving Line of Credit, First Amended Revolving Line of Credit, or the Original Revolving Line of Credit, and the Company is in compliance with all financial covenants of the Revised Revolving Line of Credit.

Note 13 - Related Parties	12 Months Ended
Note 13 - Related Parties	Dec. 31, 2018
Notes to Financial Statements
Related Party Transactions Disclosure [Text Block]	NOTE 13 —RELATED PARTIES In 2018 and 2017, the Company paid $63,000 and $196,000, respectively, to a former board member Mr. Dave Gollnick for product development, clinical sales and marketing support services. In addition, as of December 31, 2016, the Company granted Mr. Gollnick 6,500 RSUs with a grant-date fair value of $87,100, that vest over three years at the rate of 33.33% per year on each of the three anniversaries from the vesting commencement date of October 28, 2016, subject to him continuing to provide consulting and/ or board services to the Company. The Company’s Audit Committee approved the extension of Mr. Gollnick’s consulting agreement through December 31, 2018 at the rate of $200 per hour for a maximum of 40 hours per week. The Company signed an agreement with a real estate firm, T3 Advisors, effective September 2017, to assist the Company in real estate related issues (including strategic planning and search for new facilities). One of T3 Advisors’ Senior Vice President "Mr. Austin Barrett" is related to Greg Barrett – a member of the Company’s board of directors. In 2018 and 2017, the Company incurred $192,000 and $38,000 respectively, related to T3 Advisors Real estate brokerage services.

Note 14 - Correction of Prior Period Immaterial Error	12 Months Ended
Note 14 - Correction of Prior Period Immaterial Error	Dec. 31, 2018
Notes to Financial Statements
Accounting Changes and Error Corrections [Text Block]	NOTE 14—CORRECTION OF PRIOR PERIOD IMMATERIAL ERROR During the three months ended June 30, 2018, management discovered that the Company had not recorded the tax effect of the adoption of ASC Topic 606 in the balance sheet of the unaudited condensed consolidated financial statements as of March 31, 2018. Upon adoption of ASC Topic 606, the Company recorded an increase to retained earnings of $5.0 million for contracts still in force as of January 1, 2018. The tax effect of the ASC Topic 606 adoption was $1.2 million. The Company evaluated the impact of the error on prior periods and determined that the effect was not material to the financial statements as of and for the three months ended March 31, 2018 and six months ended June 30, 2018. The Company corrected the error in the unaudited condensed consolidated financial statements as of and for the six months ended June 30, 2018. The correction of the error increased the Company's deferred tax liability by $1.2 million and decreased retained earnings by $1.2 million (Note 1 ) as of January 1, 2018. The Company’s condensed consolidated statements of operations, comprehensive income (loss) and cash flows for the three months ended March 31, 2018, the three, six and nine months ended September 30, 2018, and the consolidated statements for the year ended December 31, 2018 were not affected by this correction of the error. Accordingly, the Company's loss per share for the three months ended March 31, 2018, the three, six and nine months ended September 30, 2018, and the year ended December 31, 2018 remains unchanged.

Note 15 - Subsequent Events	12 Months Ended
Note 15 - Subsequent Events	Dec. 31, 2018
Notes to Financial Statements
Subsequent Events [Text Block]	NOTE 1 5 —SUBSEQUENT EVENT S The Company evaluates events or transactions that occur after the balance sheet date through to the date which the financial statements are issued, for potential recognition or disclosure in its consolidated financial statements in accordance with Subsequent Events. Effective January 4, 2019, James A. Reinstein resigned from his position as Chief Executive Officer and as a member of the Company's board of directors. Effective as of that same date, the board of directors appointed the Company’s current Chief Operating Officer, R. Jason Richey to serve as Interim President and Chief Executive Officer of the Company while the board of directors conducts a search for the Company’s next Chief Executive Officer. In connection with Mr. Reinstein's resignation, the Company entered into a Separation Agreement and release with him. Pursuant to the Separation Agreement, Mr. Reinstein will serve as a consultant to the Company for six months to assist with transition matters. In accordance with the Separation Agreement and General Release filed as Exhibit 10.2 to Form 8 -K filed on January 9, 2019, Mr. Reinstein will receive a cash payment of approximately $0.6 million, equivalent to (i) twelve ( 12 ) months of his annual base salary as in effect on the Separation Date, and (ii) 100% of his actual bonus for the prior fiscal year, consistent with the 2018 MBP program payout, less applicable withholdings. The payment was made to Mr. Reinstein within thirty ( 30 ) days after the effective date. He will also vest in outstanding equity awards of 4,667 shares through April 4, 2019.

Supplementary Financial Data (Unaudited)

12 Months Ended

Dec. 31, 2018

Quarterly Financial Information [Text Block]

SUPPLEMENTARY FINANCIAL DATA (UNAUDITED)

(In thousands, except per share amounts)

Quarter ended:	Dec. 31, 201 8			Sept. 30, 201 8			June 30, 201 8			March 31, 201 8			Dec. 31, 201 7			Sept. 30, 201 7			June 30, 201 7		March 31, 201 7
Net revenue	$	45,469		$	40,573		$	42,553		$	34,125		$	47,632		$	38,173		$	36,389	$	29,299
Cost of revenue		26,683			18,688			20,176			16,791			20,299			15,963			15,343		13,778
Gross profit		18,786			21,885			22,377			17,334			27,333			22,210			21,046		15,521
Operating expenses:
Sales and marketing		15,318			14,479			15,535			13,088			15,362			13,148			12,787		10,773
Research and development		3,464			3,244			4,095			3,556			3,481			3,467			2,981		2,945
General and administrative		5,494			5,160			4,902			5,439			3,947			3,379			3,548		3,216
Lease termination income		—			—			—			—			—			(4,000	)		—		—
Total operating expenses		24,276			22,883			24,532			22,083			22,790			15,994			19,316		16,934
Income (loss) from operations		(5,490	)		(998	)		(2,155	)		(4,749	)		4,543			6,216			1,730		(1,413	)
Interest and other income, net		(44	)		(49	)		(129	)		98			138			197			276		273
Income (loss) before income taxes		(5,534	)		(1,047	)		(2,284	)		(4,651	)		4,681			6,413			2,006		(1,140	)
Income tax provision		20,760			(174	)		(712	)		(2,619	)		(18,199	)		225			59		(118	)
Net income (loss)	$	(26,293	)	$	(873	)	$	(1,572	)	$	(2,032	)	$	22,880		$	6,188		$	1,947	$	(1,022	)
Net income (loss) per share—basic	$	(1.89	)	$	(0.06	)	$	(0.11	)	$	(0.15	)	$	1.66		$	0.44		$	0.14	$	(0.07	)
Net income (loss) per share—diluted	$	(1.89	)	$	(0.06	)	$	(0.11	)	$	(0.15	)	$	1.57		$	0.42		$	0.13	$	(0.07	)
Weighted average number of shares used in per share calculations:
Basic		13,932			13,851			13,709			13,587			13,744			13,973			13,935		13,840
Diluted		13,932			13,851			13,709			13,587			14,569			14,767			14,629		13,840

Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2018

Accounting Policies [Abstract]

Consolidation, Subsidiaries or Other Investments, Consolidated Entities, Policy [Policy Text Block]

Description of Operations and Principles of Consolidation

excel, enlighten, Juliet, Secret RF, truSculpt

and

xeo

Titan, truSculpt

and

truSculpt iD

, as well as single use disposable tips applicable to

Juliet

and

Secret RF

(“Consumables” revenue); and (iii) the distribution of

third

Titan , truSculpt

and

truSculpt iD

) and service labor for the repair and maintenance of products that are out of warranty, all of which are classified as “Service” revenue.

Use of Estimates, Policy [Policy Text Block]

Use of Estimates

Risks and Uncertainties, Policy [Policy Text Block]

isks and Uncertainties

not

Comparability of Prior Year Financial Data, Policy [Policy Text Block]

Comparability

The Company adopted the new revenue standard effective

January 1, 2018,

using the modified retrospective method. Prior period financial statements were

not

retrospectively restated. The consolidated balance sheet as of

December 31, 2018

and results of operations for

December 31, 2018

were prepared using an accounting standard that was different than that in effect for the year ended

December 31, 2017.

As a result the consolidated balance sheets as of

December 31, 2018

and

December 31, 2017

are

not

directly comparable, nor are the consolidated statement of operations for the years ended

December 31, 2018

and

December 31, 2017.

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Pronouncements

Not

Yet Adopted

February 2016,

the FASB issued ASU

2016

02,

"Leases," (also known as ASC Topic

842

July 2018,

the FASB issued ASU

2018

11,

"Targeted Improvements," which gives the option to apply the transition provisions of ASU

2016

at its adoption date instead of at the earliest comparative period presented in its financial statements. In addition, ASU

2018

provides a practical expedient that permits lessors to

not

separate nonlease components from the associated lease component if certain conditions are met. Also in

July 2018,

the FASB issued ASU

2018

10,

"Codification Improvements to ASC Topic

842,

Leases," which clarifies certain aspects of ASU

2016

02.

The Company will adopt ASU

2016

on a modified retrospective basis on its adoption date of

January 1, 2019

with practical expedients, instead of at the earliest comparative period presented in the Company’s financial statements.

The Company will adopt ASC Topic

842

- Leases on

January 1, 2019,

not

to reassess under the new standard the Company’s prior conclusions about lease identification, lease classification and initial direct costs. The Company did

not

elect the practical expedient to use hindsight in determining the lease term.

Upon the adoption of ASC Topic

842,

the Company will recognize additional operating liabilities ranging from

$10.0

million to

$11.0

million, with corresponding ROU assets of the same amount based on the present value of the remaining minimum rental payments under current leasing standards for existing operating leases.

not

recognize ROU assets or lease liabilities, and this includes

not

recognizing ROU assets or lease liabilities for existing short-term leases of those assets in transition. The Company also will

not

elect the practical expedient to

not

separate lease and non-lease components for all of our leases.

Recently Adopted Accounting Pronouncements

May 2014,

the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)

2014

09,

606,

is effective for annual and interim reporting periods beginning after

December 15, 2017,

with early adoption permitted for public companies effective for annual and interim reporting periods beginning after

December 15, 2016.

The Company adopted the new revenue standard in the

first

quarter of fiscal year

2018

using the modified retrospective method. The Company recognized the cumulative effect of applying the new revenue standard as an adjustment to retained earnings. The comparative information has

not

been restated and continues to be reported under the accounting standards in effect for the periods presented.

See “Revenue Recognition,” for additional accounting policy and transition disclosures.

January 26, 2017,

the FASB issued Accounting Standards Update

No.

2017

04,

Intangibles—Goodwill and Other (Topic

350

): Simplifying the Test for Goodwill Impairment. The new guidance requires only a

one

-step quantitative impairment test, whereby a goodwill impairment loss will be measured as the excess of a reporting unit’s carrying amount over its fair value (

not

to exceed the total goodwill allocated to that reporting unit). The new guidance eliminates Step

of the current

two

350

The amendment is effective for the Company for its fiscal years beginning after

December 15, 2019.

The amendment is required to be adopted prospectively. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after

January 1, 2017 (

350

). The Company early adopted ASU

2017

04—Intangibles—Goodwill

and Other (Topic

350

): Simplifying the Test for Goodwill Impairment, on

October 1, 2018.

There was

material impact upon adoption of the new standard to the financial statements.

See ” Goodwill and Other Intangible Assets” in Note

– Balance Sheet Detail.

June 2018,

the FASB issued ASU

No.

2018

07,

"Compensation -Stock Compensation (Topic

718

): Improvement to Nonemployee Share-Based Payment Accounting". The new guidance changes the accounting for nonemployee awards including: (

606.

The amendments in the new guidance are effective for annual and interim reporting periods beginning after

December 15, 2018,

with early adoption permitted for public companies, but

earlier than an entity’s adoption date of ASC Topic

606.

The Company will adopt the new standard effective

January 1, 2019

and the Company does

not

expect to have a material impact upon adoption of the new standard to the financial statements.

Revenue from Contract with Customer [Policy Text Block]

Revenue

The Company adopted ASC Topic

606,

"Revenue from Contracts with Customers," on

January 1, 2018,

applying the modified retrospective method to all agreements that were

not

completed as of

January 1, 2018.

Results for reporting periods beginning after

January 1, 2018

are presented under ASC Topic

606,

while prior period amounts are

not

606.

Upon adoption of ASC Topic

606,

the Company recorded an increase to retained earnings, net of deferred tax liability, of

$3.8

million (Note

) for contracts still in force as of

January 1, 2018

for the following items in the

first

quarter of

2018:

●

$237,000

●

$151,000

increase in deferred revenue balances, related to the accretion of financing costs for multi-year post-warranty service contracts for customers who pay more than

one

year in advance of receiving the service. The Company estimated interest expense for such advance payments under the new revenue standard.

●

$210,000

decrease in accrued liabilities.

●

$4.7

2.5

years. The Company expensed such costs when incurred under the prior guidance.

●

$1.2

million deferred tax liability related to the direct tax effect of the ASC Topic

606

adoption.

The following table summarizes the effects of adopting ASC Topic

606

on the Company’s consolidated balance sheet as of

December 31, 2018:

	As reported under ASC Topic 606		Adjustments		Balances under Prior GAAP
	(In thousands)

Other long-term assets	$	5,971	$	5,217	$	754
Deferred revenue		12,566		(106)		12,460
Retained earnings (deficit)		(24,010)		4,176		(19,834)

The following table summarizes the effects of adopting ASC Topic

606

on Company’s consolidated income statement for the year ended

December 31, 2018:

	As reported under Topic 606		Adjustments		Balances under Prior GAAP
	(In thousands)
Products revenue	$	142,535	$	274	$	61
Service revenue		20,185		280		19,905
Sales and marketing		58,420		540		58,960
Interest and other income, net*		(123)		297		174

* Included in interest and other income, net, is the estimated interest expense for advance payment related to service contracts under the new revenue standard.

Adoption of the standard had

impact on total net cash from or used in operating, investing, or financing activities within the consolidated statements of cash flows.

As part of the Company's adoption of ASC Topic

606,

the Company elected to use the following practical expedients: (i)

not

one

year or less; (ii) to expense costs as incurred for costs to obtain a contract when the amortization period would have been

one

year or less; (iii)

not

to recast revenue for contracts that begin and end in the same fiscal year; and (iv)

not

to assess whether promised goods or services are performance obligations if they are immaterial in the context of the contract with the customer.

Revenue recognition

Revenue recognition- Period before

January 1, 2018 -

ASC Topic

606

Adoption

The Company recognized revenue under ASC Topic

605

prior to the adoption of ASC Topic

606

effective

January 1 2018.

Under ASC

605,

the Company recognized products revenue when title and risk of ownership was transferred, provided that:

● Persuasive evidence of an arrangement exists;

● The price is fixed or determinable;

● Delivery has occurred or services have been rendered; and

● Collectability is reasonably assured.

not

reasonably assured, the Company recognizes revenue upon receipt of cash payment. Sales to customers and distributors do

not

Multiple-element Arrangements

A multiple-element arrangement includes the sale of

one

or more tangible product offerings with

one

605

25.

Because the Company has neither vendor specific objective evidence (“VSOE”) nor

third

not

limited to, features and functionality of the system, geographies, type of customer and market conditions

With respect to the sale of its earlier generation of the

truSculpt

product, the Company includes unlimited refills as part of the

truSculpt

standard warranty and the Company does

not

account for the

truSculpt

warranty as a separate deliverable under the multiple-element arrangement revenue guidance. Upon a

truSculpt

Customer Marketing Arrangements

Service Revenue

not

under a service contact, is recognized as the services are provided. Service revenue for the years ended

December 31, 2017

and

2016

was

$18.8

million, and

$19.0

million.

Bill and Hold Arrangement

Under ASC

605

2017

the Company segregated certain products for

one

order at the request of a customer for a limited period of time at a

third

$938,000

for a bill-and-hold transaction in

2017.

There were

such transactions in

2016.

Revenue recognition- Period after

January 1, 2018 -

ASC Topic

606

Adoption

12%

of the Company’s total revenue for the

twelve

months ended

December 31, 2018.

one

performance obligation), system accessories (hand pieces), training, other accessories, extended service contracts and marketing services.

Nature of Products and Services

Systems

one

or more hand pieces. However, depending on the application, the laser or other energy based module is sometimes contained in the hand piece such as with the Company’s

Pearl

and

Pearl Fractional

applications instead of within the console.

The Company does

not

identify calibration and installation services for systems other than

enlighten

as performance obligations because such services are immaterial in the context of the contract. The related costs to complete calibration and installation for systems other than

enlighten

are immaterial. Calibration and installation services for

enlighten

systems are identified as separate performance obligations.

not

been credit approved, as the performance obligations in the contract are satisfied. For systems sold through credit approved distributors, revenue is recognized at the time of shipment.

The Company typically receives payment for its system consoles and other accessories within

days of shipment. Certain international distributor arrangements allow for longer payment terms.

Skincare products

The Company sells

third

-party manufactured skincare products in Japan. The

third

-party skincare products are purchased from the

third

Consumables (Other accessories)

The Company treats its customers' purchases of replacement

Titan

truSculpt

and

truSculpt iD

hand pieces as Consumable revenue, which provides the Company with a source of recurring revenue from existing customers. The Company’s recently launched

Juliet

and

Secret RF

truSculpt

product are accounted for in accordance with the Company’s standard warranty and service contract policies.

Extended contract services

The Company offers post-warranty services to its customers through extended service contracts that cover parts and labor for a term of one, two, or

three

Training

Sales of system to customers include training on the system to be provided within

180

not

required for customers to use the systems.

Customer Marketing Support

In North America, the Company offers marketing and consulting phone support to its customers who purchase

truSculpt

and

truSculpt iD

systems. These customer marketing support services include a practice development model and marketing training, performed remotely with ongoing phone consultations for

six

months from date of purchase. The Company considers customer marketing support a separate performance obligation, and recognizes revenue over the

six

-month term of the contracts.

Significant Judgments

The Company combines

two

not

The Company determines standalone selling price ("SSP") for each performance obligation as follows:

Systems: The SSPs for systems are based on directly observable sales in similar circumstances to similar customers. When SSP is

not

directly observable, the Company estimates SSP using the expected cost plus margin approach.

Training: SSP is based on observable price when sold on a standalone basis.

Extended warranty/Service contracts: SSP is based on observable price when sold on a standalone basis (by customer type).

Customer Marketing Support: SSP is estimated based on cost plus a margin.

Loyalty Program

The Company launched a customer loyalty program during the

third

quarter of

2018

fifth

(

) day of the following quarter. All unused rewards are forfeited.

The fair value of the reward earned by loyalty program members is included in accrued liabilities and recorded as a reduction of net sales at the time the reward is earned.

Cash and Cash Equivalents Marketable Investments and Long-term Investments [Policy Text Block]

Cash Equivalents, and

Marketable Investments

three

months or less from date of purchase are classified as cash equivalents; all highly liquid investments with stated maturities of greater than

three

one

Fair Value Measurement, Policy [Policy Text Block]

Fair Value of Financial Instruments

) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (

) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of

three

broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level

) and the lowest priority to unobservable inputs (Level

). The

three

levels of the fair value hierarchy are described below in accordance with ASC

820:

●

Level

Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities.

●

Level

not

active. Level

also includes assets and liabilities that are valued using models or other pricing methodologies that do

not

●

Level

Unobservable inputs that are supported by little or

Marketable Securities, Policy [Policy Text Block]

Impairment of Marketable Investments

other-than-temporary impairments in the years ended

December 31, 2018,

2017,

and

2016.

Allowances for Sales Returns and Doubtful Accounts [Policy Text Block]

Allowance for Sales Returns and Doubtful Accounts

In cases where the Company is aware of circumstances that

may

Concentration Risk, Credit Risk, Policy [Policy Text Block]

Concentration of Credit Risk and Other Risks and Uncertainties

three

major financial institutions in the U.S. In addition, the Company has operating cash balances in banks in each of the international locations in which it operates. Deposits in these banks

may

not

experienced any losses on its deposits of cash and cash equivalents.

twelve

months.

December 31, 2018

and

2017,

there was

one

customer who represented

4.9%

of the Company’s net accounts receivable. During the years ended

December 31, 2018,

2017,

and

2016,

domestic revenue accounted for

62%,

65%,

and

55%,

respectively, of total revenue, while international revenue accounted for

37%,

38%,

and

45%,

respectively, of total revenue.

single customer represented more than

10%

of total revenue for any of the years ended

December 31, 2018,

2017,

and

2016.

Supplier concentration

The Company relies on

third

parties for the supply of components of its products, as well as

third

-party logistics providers. In instances where these parties fail to perform their obligations, the Company

may

be unable to find alternative suppliers or satisfactorily deliver its products to its customers.

Inventory, Policy [Policy Text Block]

Inventories

Inventories are stated at the lower of cost and net realizable value, cost being determined on a standard cost basis which approximates actual cost on a

first

-in,

first

The Company includes demonstration units within inventories. Demonstration units are carried at cost and amortized over an estimated economic life of

two

As of

December 31, 2018

and

2017,

demonstration inventories, net of accumulated depreciation, included in finished goods inventory balance was

$2.9

million and

$1.9

million, respectively.

Property, Plant and Equipment, Policy [Policy Text Block]

Property and Equipment

		Useful Lives
Leasehold improvements		Lesser of useful life or term of lease
Office equipment and furniture (in years)		3
Machinery and equipment (in years)		3

Depreciation expense related to property and equipment for

2018,

2017

and

2016,

was

$1.2

million,

$1.0

million and

$0.8

million respectively. Amortization expense for vehicles leased under capital leases is included in depreciation expense.

Goodwill and Intangible Assets, Intangible Assets, Policy [Policy Text Block]

Goodwill and Intangible Assets

Goodwill and intangible assets with indefinite useful lives are

not

amortized, but are tested for impairment at least annually during the

fourth

fiscal quarter, or if circumstances indicate their value

may

longer be recoverable. Goodwill represents the excess of the purchase price over the fair value of net identifiable assets and liabilities.

The Company continues to operate in

one

segment, which is considered to be the sole reporting unit and, therefore, goodwill was tested for impairment at the enterprise level. As of

December 31, 2018,

there has been

impairment of goodwill. All acquired intangible assets have been fully amortized as of

December 31, 2018.

Standard Product Warranty, Policy [Policy Text Block]

Warranty Obligations

The Company offers post-warranty services to its customers through extended service contracts that cover replacement parts and labor for a term of one, two, or

three

years. For sales to distributors, the Company generally provides a

month warranty for parts only, with labor being provided to the end customer by the distributor.

Deferred Charges, Policy [Policy Text Block]

Deferred Sales Commissions

two

three

years for the Company’s product and service arrangements.

Total capitalized costs for the year ended

December 31, 2018

was

$5.2

million and are included in other long-term assets in the Company’s consolidated balance sheet. Amortization of this asset was $

$1.3

million during the year ended

December 31, 2018

and is included in sales and marketing expense in the Company’s consolidated statements of operations.

Cost of Sales, Policy [Policy Text Block]

Cost of Revenue

Cost of revenue consists primarily of material, finished and semi-finished products purchased from

third

Titan

and

truSculpt

Research and Development Expense, Policy [Policy Text Block]

Research and Development Expenditures

third

party contractors, regulatory affairs, clinical and development costs.

Advertising Costs, Policy [Policy Text Block]

Advertising Costs

Advertising costs are included as part of sales and marketing expense and are expensed as incurred. Advertising expenses for

2018,

2017

and

2016

were

$2.8

million,

$1.8

million and

$1.3

million, respectively.

Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block]

Stock-based Compensation

Expected Term

Expected Volatility:

The underlying stock price volatility of our stock. The Company estimates volatility based on a

blend of our historical volatility and the implied volatility of freely traded options of our stock in the open market.

Risk-Free Interest Rate:

The risk-free interest rate is based on the U.S. treasury yield curve in effect at the time of grant for the expected term of the stock option.

●

The fair value of restricted stock units is determined based on the closing quoted

-day moving average price of the Company’s common stock on the day of the grant.

●

The fair value of Performance Stock Units (“PSUs”) that have operational measurement goals, are measured at the

may

not

be satisfied.

See Note

- Stockholders’ Equity, Stock Plans and Stock-Based Compensation Expense for a detailed discussion of the Company’s stock plans and share-based compensation expense.

Income Tax, Policy [Policy Text Block]

Income Taxes

not

50%

likelihood of being realized upon ultimate settlement.

not

Undistributed earnings of the Company’s foreign subsidiaries at

December 31, 2018

are considered to be indefinitely reinvested and, accordingly,

provision for federal and state income taxes has been provided thereon. Due to the Transition Tax and Global Intangible Low-Tax Income (“GILTI”) regimes as enacted by the

2017

Tax Act, those foreign earnings will

not

material to the accompanying financial statements.

December

2017,

the SEC staff issued Staff Accounting Bulletin

No.

118,

Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“SAB

118”

), which allows companies to record provisional amounts during a measurement period

not

to extend beyond

one

year of the enactment date. Since the

2017

Tax Act was passed late in the

fourth

quarter of

2017,

and ongoing guidance and accounting interpretation was yet to be issued, the Company’s accounting of the transition tax and deferred tax re-measurements was incomplete as of

December

31,

2017.

The Company filed its

2017

Federal corporate income tax return in the

fourth

quarter of

2018.

The Company’s final analysis and impact of the

2017

Tax Act is reflected in the tax provision and related tax disclosures for the year ended

December

31,

2018.

There was a net increase of approximately

$0.4

million to the originally estimated

$7.3

million remeasurement of deferred tax assets. The Company considers the

$0.4

million true-up to be an immaterial change in estimate which has been reflected within the measurement period in accordance with SAB

118.

January

2018,

the FASB released guidance on the accounting for tax on the GILTI provisions of the

2017

Earnings Per Share, Policy [Policy Text Block]

Computation of Net Income (

Loss)

per Share

not

yet recognized are assumed to be used to repurchase shares. Diluted earnings per share (“EPS”) is same as basic when the Company incurs a loss.

Comprehensive Income, Policy [Policy Text Block]

Comprehensive Income (Loss)

Foreign Currency Transactions and Translations Policy [Policy Text Block]

Foreign Currency

three

years ended

December 31, 2017.

The effect of exchange rate changes on cash and cash equivalents was insignificant for each of the

three

years presented in the period ended

December 31, 2018.

Segment Reporting, Policy [Policy Text Block]

Segments

The Company operates in

one

segment. Management uses

one

measurement of profitability and does

not

segregate its business for internal reporting. As of

December 31, 2018,

and

2017,

89%

and

98%

of long-lived assets were in the United States, respectively. Revenue is attributed to a geographic region based on the location of the end customer. See Note

– Segment Information and Revenue by Geography and Products for details relating to revenue by geography.

Note 1 - Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2018

Schedule of New Accounting Pronouncements and Changes in Accounting Principles [Table Text Block]

	As reported under ASC Topic 606		Adjustments		Balances under Prior GAAP
	(In thousands)

Other long-term assets	$	5,971	$	(5,217)	$	754
Deferred revenue		12,566		(106)		12,460
Retained earnings (deficit)		(24,010)		4,610		(19,400)

	As reported under Topic 606		Adjustments		Balances under Prior GAAP
	(In thousands)
Products revenue	$	142,535	$	274	$	142,261
Service revenue		20,185		280		19,905
Sales and marketing		58,420		540		58,960
Interest and other income, net*		(123)		297		174

Property, Plant, and Equipment Useful Lives [Table Text Block]

		Useful Lives
Leasehold improvements		Lesser of useful life or term of lease
Office equipment and furniture (in years)		3
Machinery and equipment (in years)		3

Note 2 - Investment Securities (Tables)

12 Months Ended

Dec. 31, 2018

Investment [Table Text Block]

	December 31,
	201 8		20 1 7
Cash and cash equivalents:
Cash	$	21,969	$	14,058
Cash equivalents:
Money market funds		4,083		126
Total cash and cash equivalents		26,052		14,184

Marketable securities:
U.S. government notes		1,397		11,870
U.S. government agencies		2,677		—
Municipal securities		200		200
Commercial paper		2,433		1,833
Corporate debt securities		2,816		7,825
Total marketable securities		9,523		21,728

Total cash, cash equivalents and marketable securities	$	35,575	$	35,912

Unrealized Gain (Loss) on Investments [Table Text Block]

December 31, 201 8	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Market Value
Cash and cash equivalents	$	26,052	$	—	$	—		$	26,052

Marketable investments
U.S. government notes		1,397		—		—			1,397
U.S. government agencies		2,677		—		—			2,677
Municipal securities		200		—		—			200
Commercial paper		2,433		—		—			2,433
Corporate debt securities		2,825		—		(9	)		2,816
Total marketable securities		9,532				(9	)		9,523

Total cash, cash equivalents and marketable securities	$	35,584	$		$	(9	)	$	35,575

December 31, 201 7	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Market Value
Cash and cash equivalents	$	14,184	$	—	$	—		$	14,184

Marketable investments
U.S. government notes		11,885		—		(15	)		11,870
Municipal securities		201		—		(1	)		200
Commercial paper		1,836		—		(3	)		1,833
Corporate debt securities		7,838		2		(15	)		7,825
Total marketable securities		21,760		2		(34	)		21,728

Total cash, cash equivalents and marketable securities	$	35,944	$	2	$	(34	)	$	35,912

Investments Classified by Contractual Maturity Date [Table Text Block]

	Amount
Due in less than one year	$	9,121
Due in 1 to 3 years		402
Total marketable securities	$	9,523

Fair Value Measurements, Recurring and Nonrecurring [Table Text Block]

December 31, 201 8	Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market funds	$	4,083	$	—	$	—	$	4,083
Short term marketable investments:
Available-for-sale securities		—		9,523		—		9,523
Total assets at fair value	$	4,083	$	9,523	$	—	$	13,606

December 31, 201 7	Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market funds	$	126	$	—	$	—	$	126
Commercial paper		—		—		—		—
Short term marketable investments:
Available-for-sale securities		—		21,728		—		21,728
Total assets at fair value	$	126	$	21,728	$	—	$	21,854

Tabular disclosure of financial instruments measured at fair value, including those classified in shareholders' equity measured on a recurring or nonrecurring basis. Disclosures include, but are not limited to, fair value measurements recorded and the reasons for the measurements, level within the fair value hierarchy in which the fair value measurements are categorized and transfers between levels 1 and 2. Nonrecurring fair value measurements are those that are required or permitted in the statement of financial position in particular circumstances.

+ References + Details

Note 3 - Balance Sheet Detail (Tables)

12 Months Ended

Dec. 31, 2018

Schedule of Inventory, Current [Table Text Block]

	December 31,
	201 8		201 7
Raw materials	$	16,991	$	19,160
Work in process		2,306		2,744
Finished goods		8,717		6,878
Total	$	28,014	$	28,782

Property, Plant and Equipment [Table Text Block]

	December 31,
	201 8		201 7
Leasehold improvements	$	660	$	640
Office equipment and furniture		2,835		2,370
Machinery and equipment		7,304		6,277
		10,799		9,287
Less: Accumulated depreciation		(8,127)		(7,191)
Property and equipment, net	$	2,672	$	2,096

Schedule of Intangible Assets and Goodwill [Table Text Block]

	Gross Carrying Amount		Accumulated Amortization & Impairment Amount		Net Amount
December 31, 201 8
Patent sublicense	$	1,218	$	1,218	$	—
Customer relationship intangible related to acquisition		2,510		2,510		—
Other identified intangible assets related to acquisition		780		780		—
Other intangible		155		155		—
Goodwill		1,339		—		1,339
Total	$	6,002	$	4,663	$	1,339
December 31, 201 7
Patent sublicense	$	1,218	$	1,218	$	—
Customer relationship intangible related to acquisition		2,510		2,510		—
Other identified intangible assets related to acquisition		780		780		—
Other intangible		155		155		—
Goodwill		1,339		—		1,339
Total	$	6,002	$	4,663	$	1,339

Schedule of Accrued Liabilities [Table Text Block]

	December 31,
	201 8		201 7
Accrued payroll and related expenses	$	9,377	$	12,567
Sales and marketing accruals		2,379		3,710
Accrued sales tax		2,935		2,920
Warranty liability		4,666		3,508
Other accrued liabilities		3,943		4,143
Total	$	23,300	$	26,848

Note 6 - Stockholders' Equity, Stock Plans and Stock-based Compensation Expense (Tables)

12 Months Ended

Dec. 31, 2018

Share-based Compensation, Stock Options, Activity [Table Text Block]

				Options Outstanding
	Shares Available For Grant			Number of Shares			Weighted- Average Exercise Price		Weighted-Average Remaining Contractual Life (in years)		Aggregate Intrinsic Value (in $ millions ) (1)
Balances as of December 31, 2015		1,263,425			2,148,797		$	9.31		3.4	$	7.9
Options granted		(162,000	)		162,000		$	11.55
Options exercised		—			(1,051,138	)	$	8.89
Options cancelled (expired or forfeited)		143,187			(143,187	)	$	12.93
Stock awards granted		(1,018,005	)		—			—
Stock awards cancelled (expired or forfeited)		495,050			—			—

Balances as of December 31, 2016		721,657			1,116,472		$	9.56		3.7	$	8.7

Options granted		(278,250	)		278,250		$	31.00
Options exercised		—			(488,398	)	$	8.96
Options cancelled (expired or forfeited)		66,405			(66,405	)	$	16.54
Stock awards granted		(873,881	)		—			—
Stock awards cancelled (expired or forfeited)		258,935			—			—
Additional shares reserved (2)		1,600,000			—			—
Balances as of December 31, 2017		1,494,866			839,919		$	16.46		3.99	$	24.4
Options granted		(21,010	)		21,010		$	50.65
Options exercised		—			(271,902	)	$	9.99
Options cancelled (expired or forfeited)		81,322			(81,322	)	$	21,55
Stock awards granted		(562,070	)
Stock awards cancelled (expired or forfeited)		148,197
Balances as of December 31, 2018		1,141,305			507,705		$	20.52		3.52	$	2.00
Exercisable as of December 31, 2018					335,348		$	14.68		2.73	$	1.87
Vested and expected to vest, net of estimated forfeitures, as of December 31, 2018					485,469		$	19.88		3.42	$	19.86

Schedule of Share-based Compensation, Shares Authorized under Stock Option Plans, by Exercise Price Range [Table Text Block]

Exercise Prices				Number Outstanding	Contractual Life (in years)	Number Outstanding
	$6.88	–	$7.44	28,832	0.58	28,832
		$8.80		97,268	1.44	97,268
	$9.65	–	$10.79	54,564	3.01	49,544
	$10.80	–	$11.24	57,521	3.18	47,293
	$11.67	–	$17.90	72,583	2.44	48,855
	$18.55	–	$25.70	71,250	5.21	28,512
		$39.30		72,000	5.83	23,230
		$43.40		6,510	6.45	—
		$47.40		38,927	5.86	10,564
		$53.90		8,250	5.30	1,250

Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity [Table Text Block]

	Number of			Weighted-Average Grant- Date Fair		Aggregate Fair Value (1)			Aggregate Intrinsic Value (2)
	Shares			Value		(in thousands)			(in thousands)
Outstanding at December 31, 2015		371,630		$	12.39				$	4,753
Granted		480,191		$	10.80
Vested (3)		(172,990	)	$	12.56	$	1,906	(5)
Forfeited		(233,514	)	$	11.36
Outstanding at December 31, 2016		445,317		$	11.15				$	7,726
Granted		412,208		$	28.74
Vested (3)		(224,799	)	$	10.91	$	5,168	(6)
Forfeited		(122,139	)	$	13.56
Outstanding at December 31, 2017		510,587		$	24.88				$	23,155
Granted		265,124		$	44.57
Vested (3)		(231,515	)	$	21.10	$	9,483	(6)
Forfeited		(69,905	)	$	20.01
Outstanding at December 31, 2018		474,291		$	38.44				$	8,072

Schedule of Compensation Cost for Share-based Payment Arrangements, Allocation of Share-based Compensation Costs by Plan [Table Text Block]

	Year Ended December 31,
	201 8		201 7		201 6
Stock options	$	838	$	815	$	989
RSUs		4,648		1,813		1,508
PSUs		1,105		2,093		967
ESPP		566		389		249
Total stock-based compensation expense	$	7,157	$	5,110	$	3,713

Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Table Text Block]

	Year Ended December 31,
	201 8		201 7		201 6
Cost of revenue	$	743	$	660	$	341
Sales and marketing		2,105		1,642		1,179
Research and development		824		936		596
General and administrative		3,485		1,872		1,597
Total stock-based compensation expense	$	7,157	$	5,110	$	3,713

Valuation Assumptions and Fair Value of Stock Options and ESPP Grants [Table Text Block]

	Stock Options									Stock Purchase Plan
	201 8			201 7			201 6			201 8			201 7			201 6

Expected term (in years) (1)		3.7			3.70			3.83			0.50			0.50			0.50
Risk-free interest rate (2)		2.6	%		1.73	%		1.09	%		2.34	%		1.14	%		0.46	%
Volatility (3)		44	%		40	%		40	%		61	%		42	%		39	%
Dividend yield (4)		—	%		—	%		—	%		—	%		—	%		—	%

Weighted average estimated fair value at grant date	$	18.0		$	9.98		$	3.72		$	9.6		$	8.21		$	3.22

Note 7 - Income Taxes (Tables)

12 Months Ended

Dec. 31, 2018

Schedule of Income before Income Tax, Domestic and Foreign [Table Text Block]

	Year Ended December 31,
	201 8			201 7		201 6
U.S.	$	(14,177	)	$	11,203	$	2,207
Foreign		662			757		513
Income (loss) before income taxes	$	(13,515	)	$	11,960	$	2,720

Schedule of Components of Income Tax Expense (Benefit) [Table Text Block]

	Year Ended December 31,
	201 8		201 7		201 6
Current:
Federal	$	(15)	$	148	$	—
State		123		71		16
Foreign		303		511		131
Total Current		411		730		147
Deferred:
Federal		15,674		(17,393)		(24)
State		1,230		(1,348)		(2)
Foreign		(60)		(22)		22
Total Deferred		16,844		(18,763)		(4)
Tax provision	$	17,255	$	(18,033)	$	143

Schedule of Deferred Tax Assets and Liabilities [Table Text Block]

	December 31,
	201 8		201 7
Net operating loss carryforwards	$	11,227	$	8,604
Stock-based compensation		1,040		1,179
Other accruals and reserves		1,924		1,663
Credits		10,857		11,781
Foreign		457		399
Accrued warranty		1,863		847
Depreciation and amortization		2,024		1,592
Other		282		303
Deferred tax asset before valuation allowance		29,674		26,368
Valuation allowance		(27,865)		(7,242)
Deferred tax asset after valuation allowance		1,809		19,126
Deferred tax liability		(1,269)		—
Deferred tax liability on goodwill		(83)		(71)
Net deferred tax asset	$	457	$	19,055

Schedule of Effective Income Tax Rate Reconciliation [Table Text Block]

	Year Ended December 31,
	201 8			2017*		2016*
U.S. federal statutory income tax rate		21.00	%	34.00	%	34.00	%
State tax rate		(4.95)		(5.59)		(14.56)
Meals and entertainment		(2.66)		2.15		7.56
Stock-based compensation		13.66		(21.55)		14.36
SAB 118 Change in Estimate		(2.43)		—
Foreign rate differential		0.11		(0.50)		(0.16)
Other		(1.21)		0.65		(2.15)
General business credit		4.31		(2.72)		(9.25)
Change in Federal Tax Rate		—		60.98		—
Valuation allowance		(155.49)		(218.17)		(24.57)
Effective tax rate		(127.66)	%	(150.75)	%	5.23	%

Schedule of Unrecognized Tax Benefits Roll Forward [Table Text Block]

	Year Ended December 31,
	201 8		201 7		201 6
Balance at beginning of year	$	1,519	$	707	$	651
Decreases related to prior year tax positions		(70)		643		—
Increases related to current year tax positions		114		169		56
Balance at end of year	$	1,563	$	1,519	$	707

Note 8 - Net Loss Per Share (Tables)

12 Months Ended

Dec. 31, 2018

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	Year Ended December 31,
	201 8		201 7		201 6
Numerator:
Net Income(loss)	$	(30,770)	$	29,993	$	2,577
Denominator:
Weighted average shares of common stock outstanding used in computing net income (loss) per share, basic		13,771		13,873		13,225
Dilutive effect of incremental shares and share equivalents		—		855		528
Weighted average shares of common stock outstanding used in computing net income (loss) per share, diluted		13,771		14,728		13,753
Net income(loss) per share:
Net income (loss) per share, basic	$	(2.23)	$	2.16	$	0.19
Net income (loss) per share, diluted	$	(2.23)	$	2.04	$	0.19

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block]

	Year Ended December 31,
	201 8		201 7		201 6
Options to purchase common stock		664		42		220
Restricted stock units		432		9		24
Employee stock purchase plan shares		133		—		—
Performance stock units		43		—		—
Total		1,272		51		244

Note 11 - Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2018

Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block]

Year Ending December 31,	Amount
2019	$	3,011
2020		2,939
2021		2,564
2022		2,495
2023 and thereafter		214
Future minimum rental payments	$	11,223

Schedule of Future Minimum Lease Payments for Capital Leases [Table Text Block]

Year Ending December 31,	Amount
2019	$	576
2020		287
2021		152
Future minimum lease payments	$	1,015

Supplementary Financial Data (Unaudited) (Tables)

12 Months Ended

Dec. 31, 2018

Quarterly Financial Information [Table Text Block]

Quarter ended:	Dec. 31, 201 8			Sept. 30, 201 8			June 30, 201 8			March 31, 201 8			Dec. 31, 201 7			Sept. 30, 201 7			June 30, 201 7		March 31, 201 7
Net revenue	$	45,469		$	40,573		$	42,553		$	34,125		$	47,632		$	38,173		$	36,389	$	29,299
Cost of revenue		26,683			18,688			20,176			16,791			20,299			15,963			15,343		13,778
Gross profit		18,786			21,885			22,377			17,334			27,333			22,210			21,046		15,521
Operating expenses:
Sales and marketing		15,318			14,479			15,535			13,088			15,362			13,148			12,787		10,773
Research and development		3,464			3,244			4,095			3,556			3,481			3,467			2,981		2,945
General and administrative		5,494			5,160			4,902			5,439			3,947			3,379			3,548		3,216
Lease termination income		—			—			—			—			—			(4,000	)		—		—
Total operating expenses		24,276			22,883			24,532			22,083			22,790			15,994			19,316		16,934
Income (loss) from operations		(5,490	)		(998	)		(2,155	)		(4,749	)		4,543			6,216			1,730		(1,413	)
Interest and other income, net		(44	)		(49	)		(129	)		98			138			197			276		273
Income (loss) before income taxes		(5,534	)		(1,047	)		(2,284	)		(4,651	)		4,681			6,413			2,006		(1,140	)
Income tax provision		20,760			(174	)		(712	)		(2,619	)		(18,199	)		225			59		(118	)
Net income (loss)	$	(26,293	)	$	(873	)	$	(1,572	)	$	(2,032	)	$	22,880		$	6,188		$	1,947	$	(1,022	)
Net income (loss) per share—basic	$	(1.89	)	$	(0.06	)	$	(0.11	)	$	(0.15	)	$	1.66		$	0.44		$	0.14	$	(0.07	)
Net income (loss) per share—diluted	$	(1.89	)	$	(0.06	)	$	(0.11	)	$	(0.15	)	$	1.57		$	0.42		$	0.13	$	(0.07	)
Weighted average number of shares used in per share calculations:
Basic		13,932			13,851			13,709			13,587			13,744			13,973			13,935		13,840
Diluted		13,932			13,851			13,709			13,587			14,569			14,767			14,629		13,840

Note 1 - Summary of Significant Accounting Policies (Details Textual) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Jan. 01, 2019	Jan. 01, 2018
Cumulative Effect of New Accounting Principle in Period of Adoption		$ 3,813,000
Deferred Revenue	$ 11,855,000	10,719,000	$ 9,431,000
Revenue from Contract with Customer, Including Assessed Tax	162,720,000	151,493,000	118,056,000
Impairment of Long-Lived Assets Held-for-use	0	0	0
Inventory, Finished Goods, Gross, Total	2,900,000	1,900,000
Depreciation, Total	$ 1,200,000	1,000,000	800,000
Number of Operating Segments	1
Advertising Expense	$ 2,800,000	1,800,000	1,300,000
Income Tax Expense (Benefit), Continuing Operations, Adjustment of Deferred Tax (Asset) Liability	400,000	7,300,000
Selling and Marketing Expense [Member]
Capitalized Contract Cost, Amortization	1,800,000
Other Noncurrent Assets [Member]
Capitalized Contract Cost, Net, Total	5,200,000
UNITED STATES
Revenue from Contract with Customer, Including Assessed Tax	$ 101,862,000	$ 94,581,000	$ 65,513,000
Percentage of Assets	89.00%	98.00%
Customer Concentration Risk [Member] \| Accounts Receivable [Member]
Concentration Risk, Percentage	4.90%	4.90%
Customer Concentration Risk [Member] \| Sales Revenue, Net [Member] \| UNITED STATES
Concentration Risk, Percentage	62.00%	62.00%	55.00%
Customer Concentration Risk [Member] \| Sales Revenue, Net [Member] \| Outside the United States [Member]
Concentration Risk, Percentage	37.00%	38.00%	45.00%
Service [Member]
Revenue from Contract with Customer, Including Assessed Tax	$ 20,185,000	$ 18,833,000	$ 19,028,000
Bill and Hold Arrangement [Member]
Revenue from Contract with Customer, Including Assessed Tax		938,000	$ 0
Retained Earnings [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption		$ 3,813,000
Accounting Standards Update 2014-09 [Member]
Deferred Revenue					$ (237,000)
Extended Product Warranty Accrual, Ending Balance					151,000
Variable Consideration					210,000
Capitalized Contract Cost, Net, Total					4,700,000
Deferred Tax Liabilities, Net, Noncurrent					1,200,000
Accounting Standards Update 2014-09 [Member] \| Retained Earnings [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption					$ 3,800,000
Minimum [Member] \| Distributors [Member]
Standard Warranty Period	1 year 60 days
Minimum [Member] \| Subsequent Event [Member] \| Accounting Standards Update 2016-02 [Member]
Finance Lease, Liability, Total				$ 10,000,000
Operating Lease, Right-of-Use Asset				10,500,000
Maximum [Member] \| Distributors [Member]
Standard Warranty Period	1 year 120 days
Maximum [Member] \| Subsequent Event [Member] \| Accounting Standards Update 2016-02 [Member]
Finance Lease, Liability, Total				11,000,000
Operating Lease, Right-of-Use Asset				$ 11,000,000

Note 1 - Summary of Significant Accounting Policies - Summary of Effects of Adopting Topic 606 on the Condensed Consolidated Financial Statements (Details) - USD ($)

3 Months Ended

12 Months Ended

Dec. 31, 2018

Sep. 30, 2018

Jun. 30, 2018

Mar. 31, 2018

Dec. 31, 2017

Sep. 30, 2017

Jun. 30, 2017

Mar. 31, 2017

Dec. 31, 2018

Dec. 31, 2017

Dec. 31, 2016

Jan. 01, 2018

Other long-term assets

$ 5,971,000

$ 374,000

$ 5,971,000

$ 374,000

Retained earnings (deficit)

11,855,000

10,719,000

11,855,000

10,719,000

$ 9,431,000

(24,010,000)

2,947,000

(24,010,000)

2,947,000

162,720,000

151,493,000

118,056,000

15,318,000

$ 14,479,000

$ 15,535,000

$ 13,088,000

15,362,000

$ 13,148,000

$ 12,787,000

$ 10,773,000

58,420,000

52,070,000

41,563,000

Accounting Standards Update 2014-09 [Member]

(44,000)

$ (49,000)

$ (129,000)

$ 98,000

$ 138,000

$ 197,000

$ 276,000

$ 273,000

(123,000)

^[1]

884,000

323,000

Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | Accounting Standards Update 2014-09 [Member]

$ (237,000)

Other long-term assets

(5,217,000)

Retained earnings (deficit)

(106,000)

4,610,000

Calculated under Revenue Guidance in Effect before Topic 606 [Member]

^[1]

297,000

Other long-term assets

754,000

Retained earnings (deficit)

12,460,000

$ (19,400,000)

(19,400,000)

^[1]

174,000

Product [Member]

142,535,000

132,660,000

99,028,000

Product [Member] | Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | Accounting Standards Update 2014-09 [Member]

58,420,000

274,000

Product [Member] | Calculated under Revenue Guidance in Effect before Topic 606 [Member]

540,000

142,261,000

58,960,000

20,185,000

$ 18,833,000

$ 19,028,000

Service [Member] | Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | Accounting Standards Update 2014-09 [Member]

Service [Member] | Calculated under Revenue Guidance in Effect before Topic 606 [Member]

280,000

Balances, shares available for grant (in shares)

$ 19,905,000

[1]	Included in interest and other income, net, is the estimated interest expense for advance payment related to service contracts under the new revenue standard.

Note 2 - Investment Securities - Cash, Cash Equivalents and Marketable Securities (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Cash	$ 21,969	$ 14,058
Cash equivalents	26,052	14,184
Marketable securities	9,523	21,728
Total cash, cash equivalents and marketable securities	35,575	35,912
US Treasury and Government [Member]
Marketable securities	1,397	11,870
US Government Agencies Debt Securities [Member]
Marketable securities	2,677
US States and Political Subdivisions Debt Securities [Member]
Marketable securities	200	200
Corporate Debt Securities [Member]
Marketable securities	2,816	7,825
Money Market Funds [Member]
Cash equivalents	4,083	126
Commercial Paper [Member]
Cash equivalents	$ 2,433	$ 1,833

Note 2 - Investment Securities - Unrealized Gains and Losses Related to Marketable Investments (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Cash and cash equivalents, Amortized Cost	$ 26,052	$ 14,184	$ 13,775	$ 10,868
Cash and cash equivalents, Fair Market Value	26,052	14,184
Marketable investments, Amortized Cost	9,532	21,760
Marketable investments, Gross Unrealized Gains		2
Marketable investments, Gross Unrealized Losses	(9)	(34)
Marketable investments, Fair Market Value	9,523	21,728
Marketable investments, Gross Unrealized Losses	9	34
Total cash, cash equivalents and marketable securities, Amortized Cost	35,584	35,944
Total cash, cash equivalents and marketable securities, Fair Market Value	35,575	35,912
US Treasury and Government [Member]
Marketable investments, Amortized Cost	1,397	11,885
Marketable investments, Gross Unrealized Gains
Marketable investments, Gross Unrealized Losses		(15)
Marketable investments, Fair Market Value	1,397	11,870
Marketable investments, Gross Unrealized Losses		15
US Government Agencies Debt Securities [Member]
Marketable investments, Amortized Cost	2,677
Marketable investments, Gross Unrealized Gains
Marketable investments, Gross Unrealized Losses
Marketable investments, Fair Market Value	2,677
Marketable investments, Gross Unrealized Losses
US States and Political Subdivisions Debt Securities [Member]
Marketable investments, Amortized Cost	200	201
Marketable investments, Gross Unrealized Gains
Marketable investments, Gross Unrealized Losses		(1)
Marketable investments, Fair Market Value	200	200
Marketable investments, Gross Unrealized Losses		1
Commercial Paper, Not Included with Cash and Cash Equivalents [Member]
Marketable investments, Amortized Cost	2,433	1,836
Marketable investments, Gross Unrealized Gains
Marketable investments, Gross Unrealized Losses		(3)
Marketable investments, Fair Market Value	2,433	1,833
Marketable investments, Gross Unrealized Losses		3
Corporate Debt Securities [Member]
Marketable investments, Amortized Cost	2,825	7,838
Marketable investments, Gross Unrealized Gains		2
Marketable investments, Gross Unrealized Losses	(9)	(15)
Marketable investments, Fair Market Value	2,816	7,825
Marketable investments, Gross Unrealized Losses	$ 9	$ 15

Note 2 - Investment Securities - Maturities of Available-for-sale Securities (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Due in less than one year	$ 9,121
Due in 1 to 3 years	402
Total marketable securities	$ 9,523	$ 21,728

Note 2 - Investment Securities - Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Cash equivalents	$ 26,052	$ 14,184
Available-for-sale securities	9,523	21,728
Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	9,523	21,728
Total assets at fair value	13,606	21,854
Fair Value, Measurements, Recurring [Member] \| Fair Value, Inputs, Level 1 [Member]
Available-for-sale securities
Total assets at fair value	4,083	126
Fair Value, Measurements, Recurring [Member] \| Fair Value, Inputs, Level 2 [Member]
Available-for-sale securities	9,523	21,728
Total assets at fair value	9,523	21,728
Fair Value, Measurements, Recurring [Member] \| Fair Value, Inputs, Level 3 [Member]
Available-for-sale securities
Total assets at fair value
Money Market Funds [Member] \| Fair Value, Measurements, Recurring [Member]
Cash equivalents	4,083	126
Money Market Funds [Member] \| Fair Value, Measurements, Recurring [Member] \| Fair Value, Inputs, Level 1 [Member]
Cash equivalents	4,083	126
Money Market Funds [Member] \| Fair Value, Measurements, Recurring [Member] \| Fair Value, Inputs, Level 2 [Member]
Cash equivalents
Money Market Funds [Member] \| Fair Value, Measurements, Recurring [Member] \| Fair Value, Inputs, Level 3 [Member]
Cash equivalents
Commercial Paper [Member] \| Fair Value, Measurements, Recurring [Member]
Cash equivalents
Commercial Paper [Member] \| Fair Value, Measurements, Recurring [Member] \| Fair Value, Inputs, Level 1 [Member]
Cash equivalents
Commercial Paper [Member] \| Fair Value, Measurements, Recurring [Member] \| Fair Value, Inputs, Level 2 [Member]
Cash equivalents
Commercial Paper [Member] \| Fair Value, Measurements, Recurring [Member] \| Fair Value, Inputs, Level 3 [Member]
Cash equivalents

Note 3 - Balance Sheet Detail (Details Textual) - USD ($)	3 Months Ended	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Capital Leased Assets, Gross, Total	$ 1,900,000	$ 1,900,000	$ 1,600,000
Capital Leases, Lessee Balance Sheet, Assets by Major Class, Accumulated Depreciation	1,100,000	1,100,000	700,000
Property, Plant and Equipment, Net, Ending Balance	2,672,000	2,672,000	2,096,000
Amortization of Intangible Assets, Total		0	2,000	$ 141,000
Loss Contingency Accrual, Product Liability, Net, Total	5,000,000	5,000,000
Product Liability Accrual, Period Expense	1,100,000
Extended Product Warranty Accrual, Current	3,159,000	3,159,000
Accrued Liabilities, Current [Member]
Loss Contingency Accrual, Product Liability, Net, Total	800,000	800,000
Construction in Progress [Member]
Property, Plant and Equipment, Net, Ending Balance	$ 0.40	$ 0.40

Note 3 - Balance Sheet Detail - Inventories (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Raw materials	$ 16,991	$ 19,160
Work in process	2,306	2,744
Finished goods	8,717	6,878
Total	$ 28,014	$ 28,782

Note 3 - Balance Sheet Detail - Property and Equipment (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Property, plant and equipment, gross	$ 10,799	$ 9,287
Less: Accumulated depreciation	(8,127)	(7,191)
Property and equipment, net	2,672	2,096
Leasehold Improvements [Member]
Property, plant and equipment, gross	660	640
Equipment and Furniture [Member]
Property, plant and equipment, gross	2,835	2,370
Machinery and Equipment [Member]
Property, plant and equipment, gross	$ 7,304	$ 6,277

Note 3 - Balance Sheet Detail - Goodwill and Other Intangible Assets (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Accumulated amortization and impairment amount	$ 4,663	$ 4,663
Goodwill	1,339	1,339
Goodwill	1,339	1,339
Total	6,002	6,002
Total	1,339	1,339
Patents [Member]
Gross carrying amount	1,218	1,218
Accumulated amortization and impairment amount	1,218	1,218
Net amount
Customer Relationships [Member]
Gross carrying amount	2,510	2,510
Accumulated amortization and impairment amount	2,510	2,510
Net amount
Other Intangible Assets [Member]
Gross carrying amount	780	780
Accumulated amortization and impairment amount	780	780
Net amount
Other Intangible [Member]
Gross carrying amount	155	155
Accumulated amortization and impairment amount	155	155
Net amount

Note 3 - Balance Sheet Detail - Accrued Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Accrued payroll and related expenses	$ 9,377	$ 12,567
Sales and marketing accruals	2,379	3,710
Accrued sales tax	2,935	2,920
Warranty liability	4,666	3,508
Other accrued liabilities	3,943	4,143
Total	$ 23,300	$ 26,848

Note 4 - Warranty and Extended Services Contracts - Summary of Warranties (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Balance at beginning of year	$ 3,508	$ 2,461
Add: Accruals for warranties issued during the period	9,205	7,583
Less: Warranty related expenses during the period	(8,045)	(6,536)
Balance at end of year	$ 4,668	$ 3,508

Note 5 - Deferred Revenue (Details Textual) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Revenue, Remaining Performance Obligation, Percentage	79.00%
Revenue, Remaining Performance Obligation, Amount	$ 12,600
Deferred Revenue Costs Incurred	7,800	$ 6,000	$ 6,700
Extended Product Warranty Accrual, Current	$ 3,159

Note 6 - Stockholders' Equity, Stock Plans and Stock-based Compensation Expense (Details Textual) - USD ($)		12 Months Ended
	Dec. 15, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2013	Oct. 31, 2017	Dec. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period, Intrinsic Value		$ 8,300,000	$ 8,000,000	$ 3,600,000
Proceeds from Issuance of Shares under Incentive and Share-based Compensation Plans, Including Stock Options, Net		$ 1,300,000	$ 4,000,000	$ 9,500,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross		21,010	278,250	162,000
Shares Paid for Tax Withholding for Share Based Compensation		77,049	64,490	56,157
Adjustments Related to Tax Withholding for Share-based Compensation		$ 3,130,360	$ 11,471,000	$ 619,000
Minimum [Member]
Share Based Compensation, Forfeiture Rate			0.00%
Maximum [Member]
Share Based Compensation, Forfeiture Rate			17.00%
Non-employees [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross			7,745
Employee Stock Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period					3 years
Option Granted Contractual Term					7 years
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Total		$ 12,800,000
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition		2 years 229 days
Employee Stock Option [Member] \| Non-employees [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period		4 years
Employee Stock Option [Member] \| Non-employees [Member] \| Vesting on First Anniversary of Grant Date [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage		25.00%
Employee Stock Option [Member] \| Non-employees [Member] \| Vesting Each Month After First Anniversary of Grant Date [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage		0.02083%
Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period		265,124	412,208	480,191
Share Price		$ 17.02	$ 45.35	$ 17.35			$ 12.79
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period, Fair Value		$ 4,900,000	$ 2,500,000	$ 2,200,000
Restricted Stock Units (RSUs) [Member] \| Non-employees [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period		4 years
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period		3,384	2,478	0
Restricted Stock Units (RSUs) [Member] \| Non-employees [Member] \| Vesting Each Anniversary of Grant Date [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage		25.00%
Performance Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Granted		49,498	117,418	204,976
Stock Purchase Plan [Member]
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Total		$ 272,000
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition		120 days
1998 Stock Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized		4,650,000
Two Thousand Four Equity Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized		1,750,000
Number of Stock Awards Counted for Every Share Granted or Canceled		2.12
Share Based Compensation by Share Based Payment Fully Vested Stock Awards Grant Date Fair Value					$ 60,000
Stock Issued During Period, Shares, Restricted Stock Award, Net of Forfeitures, Total		13,392	21,605	45,350
Two Thousand Four Equity Incentive Plan [Member] \| Employee Stock Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period		4 years
Option Exercisable in Hundredths		25.00%
Share Price		$ 17.02	$ 45.35	$ 17.35			$ 12.79
Two Thousand Four Equity Incentive Plan [Member] \| Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period				4 years
Share Based Compensation by Share Based Payment Fully Vested Stock Awards Grant Date Fair Value						$ 60,000
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period				6,500
Share-based Compensation Arrangement by Share-based Payment Award, Shares Issued in Period		120,273	270,707	229,865
Two Thousand Four Equity Incentive Plan [Member] \| Restricted Stock Units (RSUs) [Member] \| President and Chief Executive Officer [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Shares Issued in Period	100,000
Two Thousand Four Equity Incentive Plan [Member] \| Restricted Stock Units (RSUs) [Member] \| President and Chief Executive Officer [Member] \| Share-based Compensation Award, Tranche One [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage	15.00%
Two Thousand Four Equity Incentive Plan [Member] \| Restricted Stock Units (RSUs) [Member] \| President and Chief Executive Officer [Member] \| Share-based Compensation Award, Tranche Two [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage	15.00%
Two Thousand Four Equity Incentive Plan [Member] \| Restricted Stock Units (RSUs) [Member] \| President and Chief Executive Officer [Member] \| Share-based Compensation Award, Tranche Three [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage	25.00%
Two Thousand Four Equity Incentive Plan [Member] \| Restricted Stock Units (RSUs) [Member] \| President and Chief Executive Officer [Member] \| Share-based Compensation Award, Tranche Four [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage	45.00%
2004 Employee Stock Purchase Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Additional Shares Authorized		600,000
Share-based Compensation Arrangement by Share-based Payment Award, Purchase Price of Common Stock, Percent		85.00%
Stock Issued During Period, Shares, Employee Stock Ownership Plan		64,511	78,479	79,922
Common Stock, Capital Shares Reserved for Future Issuance		627,073

Note 6 - Stockholders' Equity, Stock Plans and Stock-based Compensation Expense - Activity Under the 2004 Equity Incentive Plan (Details) - USD ($)
$ / shares in Units, $ in Thousands

12 Months Ended

Dec. 31, 2018

Dec. 31, 2017

Dec. 31, 2016

Dec. 31, 2015

1,494,866

721,657

1,263,425

Balances, stock options outstanding (in shares)

839,919

1,116,472

2,148,797

Balances, weighted-average exercise price (in dollars per share)

$ 16.46

$ 9.56

$ 9.31

Balances, options outstanding weighted-average remaining contractual life (Year)

3 years 189 days

3 years 361 days

3 years 255 days

3 years 146 days

Balances, aggregate intrinsic value

^[1]

$ 2,000

$ 24,400

$ 8,700

$ 7,900

Options granted, shares available for grant (in shares)

(21,010)

(278,250)

(162,000)

Options granted, stock options outstanding (in shares)

21,010

278,250

162,000

Options granted, weighted-average exercise price (in dollars per share)

$ 50.65

$ 31

$ 11.55

Options exercised, stock options outstanding (in shares)

(271,902)

(488,398)

(1,051,138)

Options exercised, weighted-average exercise price (in dollars per share)

$ 9.99

$ 8.96

$ 8.89

Options cancelled (expired or forfeited), shares available for grant (in shares)

81,322

66,405

143,187

Options cancelled (expired or forfeited), stock options outstanding (in shares)

(81,322)

(66,405)

(143,187)

Options cancelled (expired or forfeited), weighted-average exercise price (in dollars per share)

$ 2,155

$ 16.54

$ 12.93

Stock awards granted, shares available for grant (in shares)

(562,070)

(873,881)

(1,018,005)

Stock awards cancelled (expired or forfeited), shares available for grant (in shares)

148,197

258,935

495,050

Additional shares reserved, shares available for grant (in shares)

^[2]

1,600,000

Balances, shares available for grant (in shares)

1,141,305

1,494,866

721,657

1,263,425

Balances, stock options outstanding (in shares)

507,705

839,919

1,116,472

2,148,797

Balances, weighted-average exercise price (in dollars per share)

$ 20.52

$ 16.46

$ 9.56

$ 9.31

Exercisable, stock options outstanding (in shares)

335,348

Exercisable, weighted-average exercise price (in dollars per share)

$ 14.68

Exercisable, options outstanding weighted-average remaining contractual life (Year)

2 years 266 days

Exercisable, aggregate intrinsic value

^[1]

$ 1,870

Vested and expected to vest (in shares)

485,469

Vested and expected to vest, weighted-average exercise price (in dollars per share)

$ 19.88

Vested and expected to vest, weighted-average remaining contractual life (Year)

3 years 153 days

Vested and expected to vest, aggregate intrinsic value

^[1]

$ 19,860

[1]	Based on the closing stock price of $17.02 of the Company’s stock on December 31, 2018, $45.35 on December 30, 2017, $17.35 on December 31 2016 and $12.79 on December 31, 2015.
[2]	Approved by the board of directors and stockholders in 2017..

Note 6 - Stockholders' Equity, Stock Plans and Stock-based Compensation Expense - Options Outstanding and Exercisable Price Ranges (Details)	12 Months Ended
	Dec. 31, 2018 $ / shares shares
Exercise Price Range 1 [Member]
Range of exercise prices, lower limit (in dollars per share) \| $ / shares	$ 6.88
Range of exercise prices, upper limit (in dollars per share) \| $ / shares	$ 7.44
Options outstanding, number outstanding (in shares)	28,832
Options outstanding, weighted-average remaining contractual life (Year)	211 days
Options exercisable, number outstanding (in shares)	28,832
Exercise Price Range 2 [Member]
Options outstanding, number outstanding (in shares)	97,268
Options outstanding, weighted-average remaining contractual life (Year)	1 year 160 days
Options exercisable, number outstanding (in shares)	97,268
Range of exercise prices (in dollars per share) \| $ / shares	$ 8.80
Exercise Price Range 3 [Member]
Range of exercise prices, lower limit (in dollars per share) \| $ / shares	9.65
Range of exercise prices, upper limit (in dollars per share) \| $ / shares	$ 10.79
Options outstanding, number outstanding (in shares)	54,564
Options outstanding, weighted-average remaining contractual life (Year)	3 years 3 days
Options exercisable, number outstanding (in shares)	49,544
Exercise Price Range 4 [Member]
Range of exercise prices, lower limit (in dollars per share) \| $ / shares	$ 10.80
Range of exercise prices, upper limit (in dollars per share) \| $ / shares	$ 11.24
Options outstanding, number outstanding (in shares)	57,521
Options outstanding, weighted-average remaining contractual life (Year)	3 years 65 days
Options exercisable, number outstanding (in shares)	47,293
Exercise Price Range 5 [Member]
Range of exercise prices, lower limit (in dollars per share) \| $ / shares	$ 11.67
Range of exercise prices, upper limit (in dollars per share) \| $ / shares	$ 17.90
Options outstanding, number outstanding (in shares)	72,583
Options outstanding, weighted-average remaining contractual life (Year)	2 years 160 days
Options exercisable, number outstanding (in shares)	48,855
Exercise Price Range 6 [Member]
Range of exercise prices, lower limit (in dollars per share) \| $ / shares	$ 18.55
Range of exercise prices, upper limit (in dollars per share) \| $ / shares	$ 25.70
Options outstanding, number outstanding (in shares)	71,250
Options outstanding, weighted-average remaining contractual life (Year)	5 years 76 days
Options exercisable, number outstanding (in shares)	28,512
Exercise Price Range 7 [Member]
Options outstanding, number outstanding (in shares)	72,000
Options outstanding, weighted-average remaining contractual life (Year)	5 years 302 days
Options exercisable, number outstanding (in shares)	23,230
Range of exercise prices (in dollars per share) \| $ / shares	$ 39.30
Exercise Price Range 8 [Member]
Options outstanding, number outstanding (in shares)	6,510
Options outstanding, weighted-average remaining contractual life (Year)	6 years 164 days
Options exercisable, number outstanding (in shares)
Range of exercise prices (in dollars per share) \| $ / shares	$ 43.40
Exercise Price Range 9 [Member]
Options outstanding, number outstanding (in shares)	38,927
Options outstanding, weighted-average remaining contractual life (Year)	5 years 313 days
Options exercisable, number outstanding (in shares)	10,564
Range of exercise prices (in dollars per share) \| $ / shares	$ 47.40
Exercise Price Range 10 [Member]
Options outstanding, number outstanding (in shares)	8,250
Options outstanding, weighted-average remaining contractual life (Year)	5 years 109 days
Options exercisable, number outstanding (in shares)	1,250
Range of exercise prices (in dollars per share) \| $ / shares	$ 53.90

Note 6 - Stockholders' Equity, Stock Plans and Stock-based Compensation Expense - Restricted Stock Units Activity (Details) - Restricted Stock Units (RSUs) [Member] - USD ($)
$ / shares in Units, $ in Thousands

12 Months Ended

Dec. 31, 2018

Dec. 31, 2017

Dec. 31, 2016

Dec. 31, 2015

Outstanding, number of shares (in shares)

510,587

445,317

371,630

Outstanding, weighted-average grant date fair value (in dollars per share)

$ 24.88

$ 11.15

$ 12.39

Outstanding, aggregate intrinsic value

^[1]

$ 8,072

$ 23,155

$ 7,726

$ 4,753

Granted, number of shares (in shares)

265,124

412,208

480,191

Granted, weighted-average grant date fair value (in dollars per share)

$ 44.57

$ 28.74

$ 10.80

Vested, number of shares (in shares)

^[2]

(231,515)

(224,799)

(172,990)

Vested, weighted-average grant date fair value (in dollars per share)

^[2]

$ 21.10

$ 10.91

$ 12.56

Vested, aggregate fair value

^[2],[4]

$ 9,483

^[3]

$ 5,168

^[5]

$ 1,906

^[6]

Forfeited, number of shares (in shares)

(69,905)

(122,139)

(233,514)

Forfeited, weighted-average grant date fair value (in dollars per share)

$ 20.01

$ 13.56

$ 11.36

Outstanding, number of shares (in shares)

474,291

510,587

445,317

Outstanding, weighted-average grant date fair value (in dollars per share)

$ 38.44

$ 24.88

$ 11.15

[1]	Based on the closing stock price of the Company's stock of $ 17.02 on December 31, 2018, $45.35 on December 31, 2017, $17.35 on December 31, 2016 and $12.79 on December 30, 2015.
[2]	The number of restricted stock units vested includes shares that the Company withheld on behalf of the employees to satisfy the statutory tax withholding requirements.
[3]	On the grant date, the fair value for these vested awards was $4.9 million.
[4]	Represents the value of the Company's stock on the date that the restricted stock units and performance stock units vest.
[5]	On the grant date, the fair value for these vested awards was $2.5 million.
[6]	On the grant date, the fair value for these vested awards was $2.2 million.

Note 6 - Stockholders' Equity, Stock Plans and Stock-based Compensation Expense - Stock-based Compensation Expense (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Allocated share-based compensation expense	$ 7,157	$ 5,110	$ 3,713
Employee Stock Option [Member]
Allocated share-based compensation expense	838	815	989
Restricted Stock Units (RSUs) [Member]
Allocated share-based compensation expense	4,648	1,813	1,508
Performance Shares [Member]
Allocated share-based compensation expense	1,105	2,093	967
ESPP [Member]
Allocated share-based compensation expense	$ 566	$ 389	$ 249

Note 6 - Stockholders' Equity, Stock Plans and Stock-based Compensation Expense - Stock-based Compensation Expense by Department (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Allocated share-based compensation expense	$ 7,157	$ 5,110	$ 3,713
Cost of Sales [Member]
Allocated share-based compensation expense	743	660	341
Selling and Marketing Expense [Member]
Allocated share-based compensation expense	2,105	1,642	1,179
Research and Development Expense [Member]
Allocated share-based compensation expense	824	936	596
General and Administrative Expense [Member]
Allocated share-based compensation expense	$ 3,485	$ 1,872	$ 1,597

Note 6 - Stockholders' Equity, Stock Plans and Stock-based Compensation Expense - Valuation Assumptions and Fair Value of Stock Option and ESPP Grants (Details) - $ / shares

12 Months Ended

Dec. 31, 2018

Dec. 31, 2017

Dec. 31, 2016

Employee Stock Option [Member]

Expected term (in years) (Year)

^[1]

3 years 255 days

3 years 302 days

Risk-free interest rate

^[2]

2.60%

1.73%

1.09%

Volatility

^[3]

44.00%

40.00%

Dividend yield

^[4]

Weighted average estimated fair value at grant date (in dollars per share)

$ 18

$ 9.98

$ 3.72

Stock Purchase Plan [Member]

Expected term (in years) (Year)

^[1]

182 days

Risk-free interest rate

^[2]

2.34%

1.14%

0.46%

Volatility

^[3]

61.00%

42.00%

39.00%

Dividend yield

^[4]

Weighted average estimated fair value at grant date (in dollars per share)

$ 9.60

$ 8.21

$ 3.22

[1]	The expected term represents the period during which the Company's stock-based awards are expected to be outstanding. The estimated term is based on historical experience of similar awards, giving consideration to the contractual terms of the awards, vesting requirements, and expectation of future employee behavior, including post-vesting terminations. The expected term of groups of employees that have similar historical exercise patterns has been considered separately for valuation purposes.
[2]	The risk-free interest rate is based on U.S. Treasury debt securities with maturities close to the expected term of the option as of the date of grant.
[3]	Estimated volatility is based on historical volatility. The Company also considers implied volatility when there is sufficient volume of freely traded options with comparable terms and exercise prices in the open market.
[4]	The Company has not historically issued any dividends and does not expect to do so in the foreseeable future.

Note 7 - Income Taxes (Details Textual) - USD ($)	12 Months Ended
Note 7 - Income Taxes (Details Textual) - USD ($)	Dec. 31, 2018	Dec. 31, 2017
Income Tax Expense (Benefit), Continuing Operations, Adjustment of Deferred Tax (Asset) Liability	$ 400,000	$ 7,300,000
Open Tax Year	2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Unrecognized Tax Benefits, Income Tax Penalties and Interest Accrued, Total	$ 107,000
Federal and US State Except California [Member]
Valuation Allowance, Deferred Tax Asset, Increase (Decrease), Amount		$ (26,300,000)
Domestic Tax Authority [Member]
Valuation Allowance, Deferred Tax Asset, Increase (Decrease), Amount	16,900,000
Operating Loss Carryforwards, Total	45,700,000
Operating Loss Carryforwards Without Expiration	11,800,000
Domestic Tax Authority [Member] \| Research Tax Credit Carryforward [Member]
Tax Credit Carryforward, Amount	$ 6,700,000
Domestic Tax Authority [Member] \| Earliest Tax Year [Member]
Operating Loss Carryforwards Expiration Year 1	2029
Domestic Tax Authority [Member] \| Earliest Tax Year [Member] \| Research Tax Credit Carryforward [Member]
Tax Credit Carryforward Expiration Year	2024
State and Local Jurisdiction [Member]
Operating Loss Carryforwards, Total	$ 20,500,000
State and Local Jurisdiction [Member] \| Research Tax Credit Carryforward [Member] \| California Franchise Tax Board [Member]
Tax Credit Carryforward, Amount	7,400,000
State and Local Jurisdiction [Member] \| Research Tax Credit Carryforward [Member] \| Massachusetts Department of Revenue [Member]
Tax Credit Carryforward, Amount	$ 300,000
State and Local Jurisdiction [Member] \| Earliest Tax Year [Member] \| Research Tax Credit Carryforward [Member] \| Massachusetts Department of Revenue [Member]
Tax Credit Carryforward Expiration Year	2021

Note 7 - Income Taxes - Income (Loss) Before Provision for Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
U.S.									$ (14,177)	$ 11,203	$ 2,207
Foreign									662	757	513
Income (loss) before income taxes	$ (5,534)	$ (1,047)	$ (2,284)	$ (4,651)	$ 4,681	$ 6,413	$ 2,006	$ (1,140)	$ (13,515)	$ 11,960	$ 2,720

Note 7 - Income Taxes - Income Tax Provision (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Federal									$ (15)	$ 148
State									123	71	16
Foreign									303	511	131
Total Current									411	730	147
Federal									15,674	(17,393)	(24)
State									1,230	(1,348)	(2)
Foreign									(60)	(22)	22
Total Deferred									16,844	(18,763)	(4)
Tax provision	$ 20,760	$ (174)	$ (712)	$ (2,619)	$ (18,199)	$ 225	$ 59	$ (118)	$ 17,255	$ (18,033)	$ 143

Note 7 - Income Taxes - Deferred Tax Assets (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Net operating loss carryforwards	$ 11,227	$ 8,604
Stock-based compensation	1,040	1,179
Other accruals and reserves	1,924	1,663
Credits	10,857	11,781
Foreign	457	399
Accrued warranty	1,863	847
Depreciation and amortization	2,024	1,592
Other	282	303
Deferred tax asset before valuation allowance	29,674	26,368
Valuation allowance	(27,865)	(7,242)
Deferred tax asset after valuation allowance	1,809	19,126
Deferred tax liability	(1,269)
Deferred tax liability on goodwill	(83)	(71)
Net deferred tax asset	$ 457	$ 19,055

Note 7 - Income Taxes - Reconciliation of Effective Tax Rate (Details)

12 Months Ended

Dec. 31, 2018

Dec. 31, 2017

Dec. 31, 2016

U.S. federal statutory income tax rate

21.00%

34.00%

State tax rate

(4.95%)

(5.59%)

(14.56%)

Meals and entertainment

^[1]

(2.66%)

2.15%

7.56%

Stock-based compensation

13.66%

(21.55%)

14.36%

SAB 118 Change in Estimate

(2.43%)

Foreign rate differential

0.11%

(0.50%)

(0.16%)

Other

^[1]

(1.21%)

0.65%

(2.15%)

General business credit

4.31%

(2.72%)

(9.25%)

Change in Federal Tax Rate

60.98%

Valuation allowance

(155.49%)

(218.17%)

(24.57%)

Effective tax rate

(127.66%)

(150.75%)

5.23%

[1]	Other balance in 2017 and 2016 was reclassified for consistency with current year.

Note 7 - Income Taxes - Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Unrecognized tax benefits	$ 1,519	$ 707	$ 651
Decreases related to prior year tax positions	(70)
Increases related to prior year tax positions		643
Increases related to current year tax positions	114	169	56
Unrecognized tax benefits	$ 1,563	$ 1,519	$ 707

Note 8 - Net Loss Per Share - Net Loss Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Net income (loss)	$ (26,293)	$ (873)	$ (1,572)	$ (2,032)	$ 22,880	$ 6,188	$ 1,947	$ (1,022)	$ (30,770)	$ 29,993	$ 2,577
Weighted average shares of common stock outstanding used in computing net income (loss) per share, basic (in shares)	13,932	13,851	13,709	13,587	13,744	13,973	13,935	13,840	13,771	13,873	13,225
Dilutive effect of incremental shares and share equivalents (in shares)										855	528
Weighted average shares of common stock outstanding used in computing net income (loss) per share, diluted (in shares)	13,932	13,851	13,709	13,587	14,569	14,767	14,629	13,840	13,771	14,728	13,753
Net income (loss) per share—basic (in dollars per share)	$ (1.89)	$ (0.06)	$ (0.11)	$ (0.15)	$ 1.66	$ 0.44	$ 0.14	$ (0.07)	$ (2.23)	$ 2.16	$ 0.19
Net income (loss) per share—diluted (in dollars per share)	$ (1.89)	$ (0.06)	$ (0.11)	$ (0.15)	$ 1.57	$ 0.42	$ 0.13	$ (0.07)	$ (2.23)	$ 2.04	$ 0.19

The amount of net income (loss) for the period per each share of common stock or unit outstanding during the reporting period.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 944
-SubTopic 220
-Section S99
-Paragraph 1
-Subparagraph (SX 210.7-04(19))
-URI http://asc.fasb.org/extlink&oid=114873790&loc=SL114874131-224263

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 260
-SubTopic 10
-Section 45
-Paragraph 7
-URI http://asc.fasb.org/extlink&oid=109260490&loc=d3e1337-109256

Reference 3: http://www.xbrl.org/2003/role/exampleRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 260
-SubTopic 10
-Section 55
-Paragraph 52
-URI http://asc.fasb.org/extlink&oid=109256448&loc=d3e4984-109258

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 220
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SX 210.5-03(21))
-URI http://asc.fasb.org/extlink&oid=115205541&loc=SL114868664-224227

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 11
-URI http://asc.fasb.org/extlink&oid=109234566&loc=d3e22694-107794

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 260
-SubTopic 10
-Section 50
-Paragraph 1
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=6371337&loc=d3e3550-109257

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 260
-SubTopic 10
-Section 45
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=109260490&loc=d3e1252-109256

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 220
-Section S99
-Paragraph 1
-Subparagraph (SX 210.9-04(23))
-URI http://asc.fasb.org/extlink&oid=114873765&loc=SL114874048-224260

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 260
-SubTopic 10
-Section 45
-Paragraph 60B
-Subparagraph (d)
-URI http://asc.fasb.org/extlink&oid=109260490&loc=SL5780133-109256

+ Details

The amount of net income (loss) for the period available to each share of common stock or common unit outstanding during the reporting period and to each share or unit that would have been outstanding assuming the issuance of common shares or units for all dilutive potential common shares or units outstanding during the reporting period.

+ References

Reference 1: http://www.xbrl.org/2003/role/exampleRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 260
-SubTopic 10
-Section 55
-Paragraph 52
-URI http://asc.fasb.org/extlink&oid=109256448&loc=d3e4984-109258

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 260
-SubTopic 10
-Section 45
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=109260490&loc=d3e1252-109256

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 260
-SubTopic 10
-Section 50
-Paragraph 1
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=6371337&loc=d3e3550-109257

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 220
-Section S99
-Paragraph 1
-Subparagraph (SX 210.9-04(23))
-URI http://asc.fasb.org/extlink&oid=114873765&loc=SL114874048-224260

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 11
-URI http://asc.fasb.org/extlink&oid=109234566&loc=d3e22694-107794

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 260
-SubTopic 10
-Section 45
-Paragraph 7
-URI http://asc.fasb.org/extlink&oid=109260490&loc=d3e1337-109256

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 220
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SX 210.5-03(21))
-URI http://asc.fasb.org/extlink&oid=115205541&loc=SL114868664-224227

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 260
-SubTopic 10
-Section 45
-Paragraph 60B
-Subparagraph (d)
-URI http://asc.fasb.org/extlink&oid=109260490&loc=SL5780133-109256

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 944
-SubTopic 220
-Section S99
-Paragraph 1
-Subparagraph (SX 210.7-04(19))
-URI http://asc.fasb.org/extlink&oid=114873790&loc=SL114874131-224263

+ Details

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References + Details

Note 8 - Net Loss Per Share - Antidilutive Securities Excluded From Computation of Earnings Per Share (Details) - shares shares in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Antidilutive Securities (in shares)	1,272	51	244
Employee Stock Option [Member]
Antidilutive Securities (in shares)	664	42	220
Restricted Stock Units (RSUs) [Member]
Antidilutive Securities (in shares)	432	9	24
ESPP [Member]
Antidilutive Securities (in shares)	133
Performance Shares [Member]
Antidilutive Securities (in shares)	43

Note 10 - Segment Information and Revenue by Geography and Products - Revenue by Geographic Region (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Revenue from Contract with Customer, Including Assessed Tax	$ 162,720	$ 151,493	$ 118,056
Products [Member]
Revenue from Contract with Customer, Including Assessed Tax	132,594	125,883	92,721
Hand Piece Refills [Member]
Revenue from Contract with Customer, Including Assessed Tax	4,162	2,435	2,498
Skincare [Member]
Revenue from Contract with Customer, Including Assessed Tax	5,778	4,342	3,809
Total Product Revenue [Member]
Revenue from Contract with Customer, Including Assessed Tax	142,535	132,660	99,028
Service [Member]
Revenue from Contract with Customer, Including Assessed Tax	20,185	18,833	19,028
UNITED STATES
Revenue from Contract with Customer, Including Assessed Tax	101,862	94,581	65,513
JAPAN
Revenue from Contract with Customer, Including Assessed Tax	17,819	17,264	14,727
Asia, Excluding Japan [Member]
Revenue from Contract with Customer, Including Assessed Tax	15,467	13,719	13,445
Europe [Member]
Revenue from Contract with Customer, Including Assessed Tax	8,875	8,317	7,539
Rest of World [Member]
Revenue from Contract with Customer, Including Assessed Tax	$ 18,696	$ 17,612	$ 16,832

Note 11 - Commitments and Contingencies (Details Textual) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Operating Leases, Rent Expense, Total	$ 2,900,000	$ 1,500,000	$ 1,600,000
Contractual Obligation, Due in Next Fiscal Year	1,700,000
Contractual Obligation, Due in Second Year	7,200,000
Estimated Litigation Liability	$ 171,000	$ 91,000

Note 11 - Commitments and Contingencies - Minimum Lease and Other Leased Assets Under Long-term Non-cancellable Operating Leases (Details) $ in Thousands	Dec. 31, 2018 USD ($)
2019	$ 3,011
2020	2,939
2021	2,564
2022	2,495
2023 and thereafter	214
Future minimum rental payments	$ 11,223

Note 11 - Commitments and Contingencies - Minimum Lease Payments for Leased Vehicles Under Long-term Non-cancellable Capital Leases (Details) $ in Thousands	Dec. 31, 2018 USD ($)
2019	$ 576
2020	287
2021	152
Future minimum lease payments	$ 1,015

Note 12 - Debt (Details Textual) - Wells Fargo [Member] $ in Thousands	Nov. 02, 2018 USD ($)	May 30, 2018 USD ($)	Dec. 31, 2019 USD ($)	Sep. 30, 2019 USD ($)	Jun. 30, 2019 USD ($)	Dec. 31, 2018 USD ($)	Sep. 30, 2018 USD ($)
Revolving Line of Credit [Member]
Line of Credit Facility, Maximum Borrowing Capacity		$ 25,000
Long-term Line of Credit, Total							$ 0
Leverage Ratio, Maximum		2.5
Debt Instrument, Minimum Adjusted EBITDA		$ 10,000
Revised Revolving Line of Credit [Member]
Line of Credit Facility, Maximum Borrowing Capacity	$ 15,000
Leverage Ratio, Maximum	2
Debt Instrument, Minimum Adjusted EBITDA						$ 2,500	$ 1,000
Line of Credit Facility, Additional Requestable Maximum Borrowing Capacity	$ 10,000
Debt Instrument, Debt Covenant, Minimum Unrestricted Cash Balance	$ 15,000
Revised Revolving Line of Credit [Member] \| Scenario, Forecast [Member]
Debt Instrument, Minimum Adjusted EBITDA			$ 10,000	$ 6,500	$ 4,000

Note 13 - Related Parties (Details Textual) - USD ($)	12 Months Ended
Note 13 - Related Parties (Details Textual) - USD ($)	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period	265,124	412,208	480,191
Director [Member] \| Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period			6,500
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Fair Value			$ 87,100
Director [Member] \| Restricted Stock Units (RSUs) [Member] \| Vesting Commencing on August 15, 2016 [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period			3 years
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage			33.33%
Director [Member] \| Product Development, Clinical Sales and Marketing Support Services [Member]
Related Party Transaction, Amounts of Transaction	$ 63,000	$ 196,000
T3 Advisors [Member] \| Real Estate Brokerage Services [Member]
Related Party Transaction, Amounts of Transaction	$ 192,000	$ 38,000

Note 14 - Correction of Prior Period Immaterial Error (Details Textual) - USD ($)	Jan. 01, 2018	Dec. 31, 2018	Dec. 31, 2017
Retained Earnings (Accumulated Deficit), Ending Balance		$ (24,010,000)	$ 2,947,000
Accounting Standards Update 2014-09 [Member]
Cumulative Effect on Retained Earnings, before Tax	$ 5,000,000
Cumulative Effect on Retained Earnings, Tax	1,200,000
Deferred Tax Liabilities, Net, Noncurrent	1,200,000
Accounting Standards Update 2014-09 [Member] \| Errors Related to Not Recording Tax Effect of ASC 606 [Member]
Deferred Tax Liabilities, Net, Noncurrent	1,200,000
Retained Earnings (Accumulated Deficit), Ending Balance	$ (1,200,000)

Supplementary Financial Data (Unaudited) - Supplementary Financial Data (Details) - USD ($)
$ / shares in Units, shares in Thousands, $ in Thousands

3 Months Ended

12 Months Ended

Dec. 31, 2018

Sep. 30, 2018

Jun. 30, 2018

Mar. 31, 2018

Dec. 31, 2017

Sep. 30, 2017

Jun. 30, 2017

Mar. 31, 2017

Dec. 31, 2018

Dec. 31, 2017

Dec. 31, 2016

Net revenue

$ 45,469

$ 40,573

$ 42,553

$ 34,125

$ 47,632

$ 38,173

$ 36,389

$ 29,299

26,683

18,688

20,176

16,791

20,299

15,963

15,343

13,778

Gross profit

18,786

21,885

22,377

17,334

27,333

22,210

21,046

15,521

$ 80,382

$ 86,110

$ 68,135