Annual report pursuant to Section 13 and 15(d)

Organization and Nature of Business

Organization and Nature of Business
12 Months Ended
Dec. 31, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Organization and Nature of Business Organization and Nature of Business
Soliton, Inc. (the “Company”) was organized under the laws of the State of Delaware on March 27, 2012. The Company operates in one segment as a medical device company organized to develop and commercialize products utilizing its proprietary Rapid Acoustic Pulse ("RAP") technology platform. The Company is a pre-revenue stage company with its first products being developed for the removal of tattoos and the reduction of cellulite. The Company received clearance from the U.S. Food & Drug Administration ("FDA") for its tattoo removal indication in June of 2019 and for temporary improvement in the appearance of cellulite in January 2021. The Company is based in Houston, Texas. Upon completion of the development of its products and regulatory clearances to market such products, the Company anticipates revenue will be driven by the sale of its RAP console and disposable cartridges to dermatologists, plastic surgeons and other physician offices, as well as medi-spas under the supervision of a doctor.
Material Uncertainties
The Company is an early stage and emerging growth company ("EGC") and has not generated any revenues to date. As such, the Company is subject to all of the risks associated with early stage and emerging growth companies. Since inception, the Company has incurred losses and negative cash flows from operating activities.
For the years ended December 31, 2020 and 2019, the Company incurred net losses of $14.5 million and $13.8 million, respectively, and had net cash flows used in operating activities of $11.5 million and $10.6 million, respectively. At December 31, 2020, the Company had an accumulated deficit of $70.6 million, positive working capital of $29.4 million and cash of $31.8 million. The Company does not expect to experience positive cash flows from operating activities in the near future and anticipates incurring operating losses for the next few years as it supports the commercial launch of its products and continues to invest in research and development for additional indications in the Company's pipeline. The Company expects its cash, cash equivalents and restricted cash on hand of $31.8 million as of December 31, 2020 will be sufficient to fund the Company's operations into the third quarter of 2022 but not beyond.
These factors raise uncertainties about the Company's ability to fund operations in future years. If the Company needs additional capital or financing to continue to execute its business plan or a change to its business plan, including obtaining additional regulatory clearance for its products currently under development and commercializing and generating revenues from products under development, there is no assurance that additional capital or financing will be available when needed or that management will be able to raise capital or obtain financing on terms acceptable to the Company. A failure to raise sufficient capital or obtain financing could adversely impact the Company’s ability to achieve its intended business objectives and meet its financial obligations beyond the third quarter of 2022. The accompanying financial statements do not include any adjustments to reflect this uncertainty.