Quarterly report pursuant to Section 13 or 15(d)

Note 5 - Commitments and Contingencies

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Note 5 - Commitments and Contingencies
6 Months Ended
Jun. 30, 2019
Notes to Financial Statements  
Commitments Contingencies and Guarantees [Text Block]
Note
5
 - Commitments and Contingencies
 
On
April 5, 2012,
the Company entered into a Patent and Technology License Agreement with The University of Texas M.D. Anderson Cancer Center (“MD Anderson”). Pursuant to the agreement, the Company obtained a royalty-bearing, worldwide, exclusive license to intellectual property including patent rights related to the patents and technology the Company uses. Under the agreement, Soliton agreed to pay a nonrefundable license documentation fee
30
days after the effective date of the agreement. Additionally, Soliton agreed to pay a nonrefundable annual maintenance fee starting on the
third
anniversary of the effective date of the agreement, which escalates each anniversary. Additionally, the Company agreed to a running royalty percentage of net sales. The Company also agreed to make certain milestone and sublicensing payments, including a
$250,000
milestone payment in
June 2019
after the Company received U.S. Food & Drug Administration ("FDA") clearance for our RAP device for tattoo removal.
 
MD Anderson has the right to terminate the agreement upon advanced notice in the event of a default by Soliton. The agreement will expire upon the expiration of the licensed intellectual property. The rights obtained by the Company pursuant to the agreement are made subject to the rights of the U.S. government to the extent that the technology covered by the licensed intellectual property was developed under a funding agreement between MD Anderson and the U.S. government. All out-of-pocket expenses incurred by MD Anderson in filing, prosecuting and maintaining the licensed patents have been and shall continue to be assumed by the Company.
 
As the inventor of the intellectual property licensed from MD Anderson, Dr. Capelli, the Company's Chief Executive Officer, is entitled to
50%
of the license income (which is determined after MD Anderson recoups any costs associated therewith) that the Company is required to pay to MD Anderson pursuant to the Company's license agreement with MD Anderson.
 
Leases
 
The Company leases space for its corporate office. The lease agreement provides for a
five
-year term beginning on
July 15, 2015,
for rent payments of
$8,053
per month. Total rent expense under this office space lease arrangement for each of the
three
months ended
June 30, 2019
and
2018
was
$24,158
.
Total rent expense for the
six
months ended
June 30, 2019
and
2018
was
$48,316
and
$40,951,
respectively.
 
Future minimum lease payments as of
June 30, 2019
were as follows:
 
 
Year Ending December 31,
 
Amount
 
         
2019
  $
51,977
 
2020
   
106,153
 
Thereafter
   
44,749
 
Total future minimum lease payments
  $
202,879
 
 
Letters of Credit
 
The Company has an irrevocable letter of credit which supports our obligations to pay or perform according to the requirements of an underlying agreement with a certain vendor. Such letter of credit has an initial term of
one
year, renews automatically for an additional year and can only be modified or canceled with the approval of the beneficiary. As of
June 30, 2019,
the letter of credit was
not
used.
 
Legal Proceedings
 
In the normal course of business, from time-to-time, the Company
may
be subject to claims in legal proceedings. However, the Company does
not
believe it is currently a party to any pending legal actions. Notwithstanding, legal proceedings are subject-to inherent uncertainties, and an unfavorable outcome could include monetary damages, and in such event, could result in a material adverse impact on the Company's business, financial position, results of operations or cash flows.