Solta Medical Inc. provides aesthetic and therapeutic solutions for patients. It offers Thermage a non-invasive radiofrequency procedure for tightening and contouring skin; and Fraxel which delivers invasive clinical solutions to resurface aging and sun damaged skin. This procedure can be performed on any part of the body where treatment of wrinkles is desired. The company is headquartered in Hayward California. Solta Medical Inc has a market cap of $60.7 million; its shares were traded at around $1.27 with and P/S ratio of 1.1.
Highlight of Business Operations:System sales increased $6.4 million, or 145%, from $4.4 million to $10.8 million for the three months ended March 31, 2008 and 2009, respectively. Sales of treatment tips and other consumables increased $0.7 million, or 7%, from $11.4 million to $12.1 million for the three months ended March 31, 2008 and 2009, respectively. These increases were due to the contributions from the sale of Fraxel products.
Sales and Marketing. Sales and marketing expenses consist primarily of personnel costs and costs related to customer-attended workshops and trade shows and advertising, as well as marketing and customer service expenses. Sales and marketing expenses increased $3.1 million, or 41%, from $7.4 million to $10.5 million for the three months ended March 31, 2008 and 2009, respectively. The increase was primarily attributable to increased headcount and related personnel and travel and entertainment expenses of $1.5 million as a result of our expansion of the U.S. sales force during 2008 and from the Reliant acquisition, an increase of $0.8 million in discretionary marketing expenses and an increase of $0.4 million in allocated expenses.
Research and Development. Research and development expenses consist primarily of personnel costs, clinical and regulatory costs, material costs and regulatory and quality assurance costs not directly related to the manufacturing of our products. Research and development expenses increased $1.2 million, or 43%, from $2.7 million to $3.9 million for the three months ended March 31, 2008 and 2009, respectively. The increase in research and development expenses was primarily from increased allocated expenses of $0.5 million, increased headcount and related personnel and infrastructure expenses of $0.4 million, and higher spending on clinical studies and other R&D project costs of $0.2 million.
General and Administrative. General and administrative expenses consist primarily of personnel costs, legal and accounting fees, information technology costs, human resources costs and other general operating expenses. General and administrative expenses decreased $0.3 million, or 5%, from $4.6 million to $4.3 million for the three months ended March 31, 2008 and 2009, respectively. During the three months ended March 31, 2008, we reached an advanced stage of negotiations with a potential acquisition target and had performed significant due diligence on the project before negotiations were terminated. The $1.0 million in outside advisory fees incurred in the first quarter of 2008 in pursuing this acquisition did not recur in the first quarter of 2009. In addition, allocated expenses decreased $0.6 million from the first quarter of 2008 to the first quarter of 2009. These decreases were partially offset by higher personnel expenses of $0.5 million from the increased headcount following the Reliant acquisition and $0.3 million higher accounting and audit fees.
On March 31, 2009, we had working capital of $13.0 million, which consists primarily of $9.0 million in cash and cash equivalents and $8.1 million in marketable investments. In the fourth quarter of 2008, in anticipation of the acquisition of Reliant Technologies, Inc., we drew down on funds from a margin account with JP Morgan Chase, collateralized by our marketable investments. Pursuant to the terms of credit offered by JP Morgan Chase, we may borrow up to 75% of the market value of our investment account at an interest rate of the 30-day Libor rate plus 100 basis points. As of March 31, 2009, the margin account had a liability balance of $5.6 million, collateralized by $7.5 million of the total $8.1 million of our marketable investments.
Net Cash Used in Operating Activities. Net cash used in operating activities was $7.3 million in the three months ended March 31, 2009, compared with net cash used of $2.0 million in the same period a year ago. During the first quarter of 2009, $2.5 million net cash was used in net loss after adjusting for non-cash items. An additional $4.8 million of net cash was used in changes in assets and liabilities. Cash used in changes in assets and liabilities was primarily from $7.6 million of increased accounts receivable, $2.2 million in payments for restructuring charges and $2.0 million in decreased accounts payable, partially offset by $4.9 million of net cash provided as a result of a decrease in inventory and $1.5 million increase in accrued and other liabilities. The increase in accounts receivable and decrease in inventories were due to a higher percentage of sales volume that occurred in the latter part of the quarter.
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