PhotoMedex to Acquire Photo Therapeutics, Expand Global Dermatology Presence

Business Wire, August 4, 2008

The additional $7 million of purchase price the stockholders of Photo Therapeutics may receive will be earned at the rate of $2.80 for each dollar of gross profit Photo Therapeutics generates in excess of $7.1 million for the period July 1, 2008 through June 30, 2009. To achieve the maximum $7 million payout pursuant to the purchase agreement, Photo Therapeutics will need to achieve approximately $15 million of sales during the earnout period to deliver sufficient gross profit to meet the requirements under the purchase agreement, assuming costs are consistent with past levels.

Among other terms, the convertible notes will mature 5 years after the closing of the first tranche and have an 8% per annum coupon payable semiannually in cash or additional notes, at the option of PhotoMedex. The conversion price of the first tranche notes will initially be $0.73736, representing an amount equal to 115% of the 30-day weighted average market price on the trading day prior to this announcement, and subject to adjustment. The conversion price of the second tranche notes will initially be the lower of 150% of the first tranche conversion price or the 30-day weighted average market price calculated based on the date of the second tranche issuance, subject to adjustment. At the closing of each of the first and second tranches, PhotoMedex also will issue 8-year warrants to Perseus, L.L.C. equal to 30% of the number of shares into which the convertible notes issued at such tranche are convertible. These warrants will have an exercise price equal to the conversion price applicable to the convertibles notes issued in such tranche, subject in each case to adjustment. Perseus, L.L.C. will also receive an additional 327,521 shares of common stock at the first tranche closing as part of its investment, subject to adjustment. The share and price numbers above are expressed prior to giving effect to any reverse stock split.

Conference Call

PhotoMedex will hold a conference call to discuss this announcement and answer questions today beginning at 4:30 p.m. Eastern time.

To participate in the conference call, dial 888-256-9154 (and confirmation code 9676495) approximately 5 to 10 minutes prior to the scheduled start time. If you are unable to participate, a replay of the call will be available from 7:30 p.m. Eastern time Monday, August 4 through 12 midnight Eastern time Monday, August 18, by dialing 888-203-1112 and using confirmation code 9676495.

The live broadcast of this conference call also will be available online by going to www.photomedex.com and clicking on the link to Investor Relations, and at www.streetevents.com. The online replay will be available shortly after the conclusion of the call at those sites.

About PhotoMedex

PhotoMedex offers a wide range of products and services across multiple specialty areas, including dermatology, urology, gynecology, orthopedics and other surgical specialties. PhotoMedex is a leader in the development, manufacturing and marketing of medical laser products and services. PhotoMedex also develops and markets products based on its patented, clinically proven Copper Peptide technology for skin health, hair care and wound care. PhotoMedex sells directly to dermatologists, plastic and cosmetic surgeons, spas and salons and through licenses with strategic partners into the consumer market, including a long-term worldwide license agreement with Neutrogena([R]), a Johnson & Johnson company. ProCyte brands include Neova([R]), Ti-Silc([R]), VitalCopper([R]), Simple Solutions([R]) and AquaSante([R]).