Dror Ortho-Design, Inc 10-Q for FY2022 Q3
Dror Ortho-Design, Inc. (DROR)
About this 10-Q
Dror Ortho-Design, Inc filed this 10-Q on November 14, 2022, covering the quarter ended September 30, 2022 (FY2022 Q3).
Headline figures
Quarter ended September 30, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Net loss
- $36.46K
- compared with a net loss of $27.21K a year earlier
- Diluted EPS
- $0.00
- compared with $0.00 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly
period ended
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ____ to ____
Commission File No.
(Exact Name of Registrant as Specified in Its Charter)
| (State or Other Jurisdiction of Incorporation or Organization) | (IRS Employer Identification No.) | |
| (Address of Principal Executive Offices) | (Zip Code) | |
| Registrant’s Telephone Number, including Area Code: | ||
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
| Title of each class | ||
Indicate by check whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Larger Accelerated Filer ☐ | Accelerated Filer ☐ |
| Smaller Reporting Company | |
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐
On November 14, 2022, the Registrant had shares of common stock outstanding.
TABLE OF CONTENTS
NOVINT TECHNOLOGIES, INC.
FORM 10-Q
2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
| Novint Technologies, Inc. |
| CONDENSED BALANCE SHEETS |
| September 30, | December 31, | |||||||
| 2022 | 2021 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivables - related party | ||||||||
| Prepaid expenses | ||||||||
| Total Current Assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Accrued Royalties | ||||||||
| Total Current Liabilities | ||||||||
| TOTAL LIABILITIES | ||||||||
| STOCKHOLDERS’ DEFICIT | ||||||||
| Preferred stock, $ par value; shares authorized, shares issued and outstanding as of September 30, 2022 and December 31, 2021 | ||||||||
| Common stock, $ par value; shares authorized, shares issued and outstanding as of September 30, 2022 and December 31, 2021 | ||||||||
| Additional paid in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| TOTAL STOCKHOLDERS’ DEFICIT | ( | ) | ( | ) | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | $ | ||||||
The accompanying notes are an integral part of these financial statements.
3
| Novint Technologies, Inc. | ||||||
| CONDENSED STATEMENTS OF OPERATIONS | ||||||
| (Unaudited) | ||||||
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
| Operating Expenses | ||||||||||||||||
| Professional fees | ||||||||||||||||
| General and administrative expenses | ||||||||||||||||
| Total Operating Expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other expense: | ||||||||||||||||
| Interest expense, net | ( | ) | ( | ) | ( | ) | ||||||||||
| Total other expense | ( | ) | ( | ) | ( | ) | ||||||||||
| Loss before provision for income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Provision for income taxes | ||||||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss per share | ||||||||||||||||
| Basic and Diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted-average common shares outstanding | ||||||||||||||||
| Basic and Diluted | ||||||||||||||||
The accompanying notes are an integral part of these financial statements.
4
| Novint Technologies, Inc. | |||||||||||||
| CONDENSED STATEMENTS OF STOCKHOLDERS’ DEFICIT | |||||||||||||
| (Unaudited) | |||||||||||||
| Three Months Ended September 30, 2022 | ||||||||||||||||||||
| Additional | ||||||||||||||||||||
| Common Stock | Paid-in | Accumulated | ||||||||||||||||||
| Shares | Amount | Capital | (Deficit) | Total | ||||||||||||||||
| Balances, June 30, 2022 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Net Loss for the Three Months | — | ( | ) | ( | ) | |||||||||||||||
| Balances, September 30, 2022 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Nine Months Ended September 30, 2022 | ||||||||||||||||||||
| Additional | ||||||||||||||||||||
| Common Stock | Paid-in | Accumulated | ||||||||||||||||||
| Shares | Amount | Capital | (Deficit) | Total | ||||||||||||||||
| Balances, December 31, 2021 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Net Loss for the Nine Months | — | ( | ) | ( | ) | |||||||||||||||
| Balances, September 30, 2022 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Three Months Ended September 30, 2021 | ||||||||||||||||||||
| Additional | ||||||||||||||||||||
| Common Stock | Paid-in | Accumulated | ||||||||||||||||||
| Shares | Amount | Capital | (Deficit) | Total | ||||||||||||||||
| Balances, June 30, 2021 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Net Loss for the Three Months | — | ( | ) | ( | ) | |||||||||||||||
| Balances, September 30, 2021 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Nine Months Ended September 30, 2021 | ||||||||||||||||||||
| Additional | ||||||||||||||||||||
| Common Stock | Paid-in | Accumulated | ||||||||||||||||||
| Shares | Amount | Capital | (Deficit) | Total | ||||||||||||||||
| Balances, December 31, 2020 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Net Loss for the Nine Months | — | ( | ) | ( | ) | |||||||||||||||
| Balances, September 30, 2021 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
The accompanying notes are an integral part of these financial statements.
5
| Novint Technologies, Inc. | ||||||
| CONDENSED STATEMENTS OF CASH FLOWS | ||||||
| (Unaudited) | ||||||
| For the Period Ended September 30, | ||||||||
| 2022 | 2021 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses and other current assets | ( | ) | ||||||
| Accounts receivables – related party | ( | ) | ||||||
| Accounts payable and accrued expenses | ( | ) | ( | ) | ||||
| Accrued Royalties | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Net cash used in financing activities | ||||||||
| Net decrease in cash | ( | ) | ( | ) | ||||
| Cash and cash equivalents, beginning of year | ||||||||
| Cash and cash equivalents, end of period | $ | $ | ||||||
| Supplemental cash flow information: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for taxes | $ | $ | ||||||
The accompanying notes are an integral part of these financial statements.
6
NOVINT TECHNOLOGIES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(Unaudited)
NOTE 1 – DESCRIPTION OF BUSINESS
Novint Technologies, Inc. (the “Company” or “Novint”) was originally incorporated in the State of New Mexico in April 1999. On February 26, 2002, the Company changed its state of incorporation to Delaware by merging with Novint Technologies, Inc., a Delaware corporation. This merger was accounted for as a reorganization of the Company.
Nature of Business
The Company is engaged in the business of sales of 3D haptics products and equipment. Haptics refers to one’s sense of touch. The Company’s focus is in the consumer interactive computer gaming market. Additionally, the Company conducts project work in other areas. The Company sells its haptics products primarily to consumers through online retail marketplaces.
Going Concern and Management’s Plans
These financial statements have been prepared
on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course
of business. The Company has incurred recurring losses and at September 30, 2022, had an accumulated deficit of $
Based on management’s current assessment, the Company does not expect any material impact on its liquidity due to the COVID-19 pandemic. While the Company is experiencing limited financial impacts at this time, given the global economic slowdown, and the other risks and uncertainties associated with the pandemic, it could have a material adverse effect on our business, financial condition, results of operations and growth prospects. In addition, to the extent the ongoing COVID-19 pandemic adversely affects our business and results of operations, it may also have the effect of heightening many of the other risks and uncertainties faced by the Company.
NOTE 2 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed financial statements were prepared using generally accepted accounting principles (“U.S. GAAP”) for interim financial information and the instructions to Form 10-Q and Article 8 of Regulation S-X set forth by the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all information or notes required by U.S. GAAP for complete financial statements and should be read in conjunction with the Company’s annual financial statements included within the Company’s Special Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC on March 23, 2022. In the opinion of management, the unaudited condensed financial statements included herein contain all adjustments necessary to present fairly the Company’s financial position and the results of its operations and cash flows for the interim periods presented. Such adjustments are of a normal recurring nature. The results of operations for the three and nine months ended September 30, 2022 may not be indicative of results for the full year.
Use of Estimates and Assumptions
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The most significant estimates and assumptions made in the preparation of the financial statements relate to accrued royalties and contingent consideration. The Company bases estimates and assumptions on historical experience, when available, and on various factors that it believes to be reasonable under the circumstances. Management evaluates its estimates and assumptions on an ongoing basis. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid
investments purchased with maturities of three months or less to be cash equivalents. The Company maintains cash balances at financial
institutions that are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to federally insured limits
of $
7
Revenue and Cost Recognition
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606), and has since issued amendments thereto (collectively referred to as “ASC 606”). The core principle of ASC 606 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services, and the guidance defines a five-step process to achieve this core principle. The five-step process to achieve this principle is as follows: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract(s), (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract(s), and (v) recognize revenue when, or as, the entity satisfies a performance obligation. ASC 606 also mandates additional disclosure about the nature, amount, timing and uncertainty of revenues and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract.
Revenue from product sales relates to the sale of the Falcon 3D Touch Haptic Controller (the “Falcon”), which is a human-computer user interface and related accessories. The Falcons are manufactured by an unrelated party. Revenue from product sales is recognized when products are shipped to the customer and the Company has earned the right to receive and retain reasonable assured payments for the products sold and delivered. Consequently, if revenue recognition requirements are not met, such sales will be recorded as deferred revenue until revenue recognition requirements are met.
Accounts Receivable
Accounts receivable are stated at the amounts
management expects to collect. An allowance for doubtful accounts is recorded based on a combination of historical experience,
aging analysis and information on specific accounts. Account balances are written off against the allowance after all means of
collection have been exhausted and the potential for recovery is considered remote. As of September 30, 2022 and December 31, 2021,
the company has recorded $
Accounts Receivable – Related Party
Accounts receivable from related party
arise from proceeds from the sale of the Company’s products that were collected by a director of the Company on behalf of
the Company. As of September 30, 2022 and December 31, 2021, the total accounts receivable from the related party was $
Income Taxes
The Company accounts for income taxes under the asset and liability method as provided in ASC Topic 740, “Income Taxes”. Under this method, deferred tax assets are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using enacted tax rates in effect for the year in which the differences are expected to be recovered or settled. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized based on the weight of available evidence, including expected future earnings. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Statements of Operations in the period that includes the enactment date.
As of September 30, 2022, the Company assessed its income tax expense based on its projected future taxable income for the year ending December 31, 2022 and therefore recorded no amount of income tax expense for the nine months ended September 30, 2022. In addition, the Company has significant deferred tax assets available to offset income tax expense due to net operating loss carry forwards, which currently are subject to a full valuation allowance based on the Company’s assessment of future taxable income. For further information, see our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.
Fair Value of Financial Instruments
The Company follows the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) for disclosures about fair value of its financial instruments and to measure the fair value of its financial instruments. The FASB ASC establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The three levels of fair value hierarchy are described below:
| Level 1 | Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. |
| Level 2 | Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. |
| Level 3 | Pricing inputs that are generally observable inputs and not corroborated by market data. |
Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.
The carrying amounts of the Company’s financial assets and liabilities, including cash, prepaid expenses, accounts payable, accrued expenses, payroll and related liabilities, and advances approximate their fair values because of the short maturity of these instruments.
Recently Issued Accounting Pronouncements
The Company has reviewed the recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the SEC and they did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statement presentation or disclosures.
8
NOTE 3 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses are as follows:
| September 30, | December 31, | |||||||
| 2022 | 2021 | |||||||
| Trade payables | $ | $ | ||||||
| Accrued expenses | ||||||||
| Total accounts payable and accrued expenses | $ | $ | ||||||
NOTE 4 – ACCRUED ROYALTIES
Accrued royalties relate to the Company’s
licensing agreements with various parties providing gaming software to the Company. These licensing agreements have royalty fees
ranging from
NOTE 5 – COMMITMENTS AND CONTINGENCIES
From time to time in the normal course of business, the Company is subject to routine litigation incidental to its business. Although there can be no assurances as to the ultimate disposition of any such matters, it is the opinion of management, based upon the information available at this time, that there are no matters, individually or in the aggregate, that will have a material adverse effect on the results of operations and financial condition of the Company.
NOTE 6 – STOCKHOLDERS’ EQUITY
Preferred Stock
The Company is currently authorized to issue up to shares of $ par value preferred stock. shares of preferred stock are currently outstanding. The Board of Directors may designate the authorized but unissued shares of the Preferred Stock with such rights and privileges as the Board of Directors may determine. As such, the Board of Directors may issue preferred shares and designate the conversion, voting and other rights and preferences without notice to the shareholders and without shareholder approval.
Common Stock
The Company is currently authorized to
issue up to shares of $ par value common stock. All issued shares of
The Company had shares of common stock issued and outstanding as of September 30, 2022, and December 31, 2021.
NOTE 7 – SUBSEQUENT EVENTS
The Company has evaluated subsequent events through the date these financial statements were issued. The Company confirms non-occurrence of any subsequent agreements or events.
9
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the audited Financial Statements and accompanying notes thereto included in the Company’s Annual Report on Form 10-K as of and for the fiscal year ended December 31, 2021. Unless otherwise noted, all the financial information in this Report is financial information for the Company.
General
The Company is engaged in the business of the sale of 3D haptics products and equipment. Haptics refers to one’s sense of touch. The Company’s focus is in the consumer interactive computer gaming market, but the Company also does project work in other areas. The Company sells its haptics products primarily to consumers through online retail marketplaces.
Results of Operations for the Three Months Ended September 30, 2022 and 2021
Revenues
| Three months ended September 30, | |||||||||||||
| 2022 | 2021 | Change | |||||||||||
| Revenue | $ | — | $ | 913 | $ | (913 | ) | ||||||
The Company recorded revenue of $0 and $913 for the three-month period ended September 30, 2022 and September 30, 2021. The Company incurred revenue in the three-month period ended September 30, 2021 from the sale of Falcon 3D Touch Haptic Controllers. The Company expects to continue to incur significant expenses and operating losses for the foreseeable future. The Company’s net losses may fluctuate significantly from quarter to quarter and year to year.
Operating Expenses
| Three months ended September 30, | ||||||||||||
| 2022 | 2021 | Change | ||||||||||
| Operating Expenses | $ | 36,456 | $ | 28,074 | $ | 8,382 | ||||||
Operating expenses increased by $8,382 or 30% to $36,456 for the three months ended September 30, 2022, compared with $28,074 for the three months ended September 30, 2021. This increase was due primarily to an increase in Professional fees that were incurred during the three months ended September 30, 2022.
Other Expense
| Three months ended September 30, | ||||||||||||
| 2022 | 2021 | Change | ||||||||||
| Other Expense | $ | — | $ | 50 | $ | (50 | ) | |||||
Other expense decreased by $50 or 100% to $0 during the three months ended September 30, 2022 compared with $50 during the three months ended September 30, 2021. Other expense for the three months ended September 30, 2021 consisted of interest expense related to finance charges on credit cards.
Results of Operations for the Nine Months Ended September 30, 2022 and 2021
Revenues
| Nine months ended September 30, | |||||||||||||
| 2022 | 2021 | Change | |||||||||||
| Revenue | $ | 0 | $ | 2,568 | $ | (2,568 | ) | ||||||
The Company recorded revenue of $0 and $2,568 for the nine-month period ended September 30, 2022 and September 30, 2021. The Company incurred revenue in the nine-month period ended September 30, 2021 from the sales of Falcon 3D Touch Haptic Controller. The Company expects to continue to incur significant expenses and operating losses for the foreseeable future. The Company’s net losses may fluctuate significantly from quarter to quarter and year to year.
Operating Expenses
| Nine months ended September 30, | ||||||||||||
| 2022 | 2021 | Change | ||||||||||
| Operating Expenses | $ | 122,614 | $ | 114,486 | $ | 8,128 | ||||||
Operating expenses increased by $8,128 or 7% to $122,614 for the nine months ended September 30, 2022, compared with $114,486 for the nine months ended September 30, 2021. This increase was primarily due to an increase in Professional fees that were incurred during the nine months ended September 30, 2022.
10
Other Expense
| Nine months ended September 30, | ||||||||||||
| 2022 | 2021 | Change | ||||||||||
| Other Expense | $ | 14 | $ | 155 | $ | (141 | ) | |||||
Other expense decreased by $141 or 91% to $14 during the nine months ended September 30, 2022 compared with $155 during the nine months ended September 30, 2021. Other expense for the nine months ended September 30, 2022 and September 30, 2021 consisted of interest expense related to finance charges on credit cards.
Liquidity and Capital Resources
The following table summarizes select balance sheet and working capital amounts as of September 30, 2022 and December 31, 2021:
| As of | As of | |||||||||||
| September 30, | December 31, | Change | ||||||||||
| 2022 | 2021 | Increase (Decrease) | ||||||||||
| Cash | $ | 97,708 | $ | 185,935 | $ | (88,227 | ) | |||||
| Working capital deficit | $ | (667,734 | ) | $ | (545,106 | ) | $ | (122,628 | ) | |||
The Company had a stockholders’ deficit of approximately $41,747,258 and $41,624,630 at September 30, 2022 and December 31, 2021, respectively. Net loss for the nine months ended September 30, 2022 and 2021 was $122,628 and $112,073, respectively. Net cash used in operating activities was $88,227 and $93,010 for the nine months ended September 30, 2022 and 2021, respectively. Operations since inception have been funded primarily with the proceeds from equity and debt offerings. As of September 30, 2022, the Company had cash of $97,708.
The Company’s management has evaluated whether there is substantial doubt about the Company’s ability to continue as a going concern and has determined that substantial doubt existed as of the date of this filing. This determination was based on the following factors: (i) the Company’s available cash as of the date of this filing will not be sufficient to fund its anticipated level of operations for the next 12 months; (ii) the Company has incurred recurring losses and at September 30, 2022, had an accumulated deficit of $41,747,258; (iii) the Company sustained an operating loss of $122,614 for the period ended September 30, 2022; and (iv) if the Company fails to obtain the needed capital, it will be forced to delay, scale back, or eliminate some or all of its programs or perhaps cease operations. In the opinion of management, these factors, among others, raise substantial doubt about the ability of the Company to continue as a going concern.
There is no assurance that the Company will be successful in any capital-raising efforts that it may undertake to fund operations during 2022. The Company anticipates that it will continue to issue equity and/or debt securities as a source of liquidity, until it begins to generate positive cash flow to support its operations. Any future sales of securities to finance operations will dilute existing stockholders’ ownership. The Company cannot guarantee when or if it will generate positive cash flow.
The audit report prepared by our independent registered public accounting firm relating to the Company’s consolidated financial statements for the year ended December 31, 2021 included an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern.
Cash Flow Activities
The following table summarizes the Company’s cash flows for the periods set forth below:
| Nine months ended September 30, | ||||||||||||
| 2022 | 2021 | Change | ||||||||||
| Net cash used in operating activities | $ | 88,227 | $ | 93,010 | $ | (4,783 | ) | |||||
Net cash used in operating activities for the nine months ended September 30, 2022 was $88,227, compared with net cash used in operating activities of $93,010 for the nine months ended September 30, 2021. The decrease in net cash used in operating activities during the nine months ended September 30, 2022 was due primarily to an increase in net loss to $122,628, partially offset by an increase of $37,500 in accrued royalties.
Net cash used in operating activities for the nine months ended September 30, 2021 was $93,010, primarily due to a net loss of $112,073, partially offset by an increase of $37,500 in accrued royalties and a decrease of $1,072 in prepaid expenses and other current assets.
Effects of Inflation
We do not believe that inflation has had a material impact on our business, sales, or operating results during the periods presented.
Off-Balance Sheet Arrangements
We currently do not have any off-balance sheet arrangements or financing activities with special-purpose entities.
Critical Accounting Policies and Use of Estimates
Critical accounting policies are those policies which are both important to the presentation of a company’s financial condition and results and require management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. There have been no recent significant changes to our accounting policies and use of estimates during the nine months ended September 30, 2022. For a further discussion of our critical accounting policies, see our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 filed with the SEC on March 23, 2022.
11
Forward Looking Statements and Certain Factors That May Affect Future Results of Operations
The Securities and Exchange Commission encourages companies to disclose forward-looking information so that investors can better understand a company’s future prospects and make informed investment decisions. This Quarterly Report on Form 10-Q contains such “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.All statements in this report, other than statements of historical fact, are forward-looking statements for purposes of these provisions, including any projections of earnings, revenues or other financial items, any statements of the plans and objectives of management for future operations, any statements concerning proposed new products or services, any statements regarding future economic conditions or performance, and any statements of assumptions underlying any of the foregoing. All forward-looking statements included in this report are made as of the date hereof and are based on information available to us as of such date. We assume no obligation to update any forward-looking statement. In some cases, forward-looking statements can be identified by the use of terminology such as “may,” “will,” “expects,” “plans,” “anticipates,” “intends,” “believes,” “estimates,” “potential,” or “continue,” or the negative thereof or other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements contained herein are based upon reasonable assumptions at the time made, there can be no assurance that any such expectations or any forward-looking statement will prove to be correct. Our actual results will vary, and may vary materially, from those projected or assumed in the forward-looking statements. Future financial condition and results of operations, as well as any forward-looking statements, are subject to inherent risks and uncertainties, many of which we cannot predict with accuracy and some of which we might not anticipate, including, without limitation, product liability claims; infringement of our technology or assertion that our technology infringes the rights of other parties; termination of supplier relationships, or failure of suppliers to perform; inability to successfully manage growth; concentration of our revenue among a few customers, products or procedures; development of new products and technology that could render our products obsolete; market acceptance of new products; introduction of products in a timely fashion; price and product competition, availability of labor and materials, cost increases, and fluctuations in and obsolescence of inventory; volatility of the market price of our common stock; foreign currency fluctuations; changes in key personnel; work stoppage or transportation risks; integration of business acquisitions; and other factors referred to in our reports filed with the SEC. All subsequent forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. In light of these assumptions, risks and uncertainties, the results and events discussed in the forward-looking statements contained in this Quarterly Report or in any document incorporated by reference might not occur. Stockholders are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this Quarterly Report. We are not under any obligation, and we expressly disclaim any obligation, to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise. All subsequent forward-looking statements attributable to us or to any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section.
Item 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
We maintain disclosure controls and procedures (Disclosure Controls) within the meaning of Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Our Disclosure Controls are designed to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act, such as this Quarterly Report on Form 10-Q, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Our Disclosure Controls are also designed to ensure that such information is accumulated and communicated to our management, including our Chief Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our Disclosure Controls, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily applied its judgment in evaluating and implementing possible controls and procedures. As of the end of the period covered by this Quarterly Report on Form 10-Q, we evaluated the effectiveness of the design and operation of our Disclosure Controls, which was done under the supervision and with the participation of our management, including our Chief Executive Officer and Principal Financial Officer. Based on the evaluation of our Disclosure Controls, our Chief Executive Officer and Principal Financial Officer has concluded that, as of September 30, 2022, our Disclosure Controls were not effective due to a material weakness in the Company’s internal control over financial reporting. The ineffectiveness of our internal control over financial reporting at September 30, 2022 was due to an insufficient degree of segregation of duties among our accounting and financial reporting personnel. During the remainder of 2022, we intend to work to remediate the material weaknesses identified above, which could include the addition of accounting and financial reporting personnel and/or the engagement of accounting and personnel consultants on a limited-time basis until we add a sufficient number of personnel.
Change in Internal Control over Financial Reporting
Except as described above, there were no changes in our internal control over financial reporting that occurred during the three months ended September 30, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
None
Item 1A. RISK FACTORS
Not required to be provided by smaller reporting companies.
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
None
Item 3. DEFAULTS UPON SENIOR SECURITIES
None.
Item 5. OTHER INFORMATION
None.
12
Item 6. EXHIBITS
EXHIBIT INDEX
| Number | Description | |
| 31.1 | Certification of the President and Chief Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a), as adopted pursuant to section 302 of the Sarbanes- Oxley Act of 2002 (filed herewith). | |
| 32.1 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes- Oxley Act of 2002 (filed herewith). | |
| 101. INS | XBRL Instance Document (submitted electronically herewith). | |
| 101. SCH | XBRL Taxonomy Extension Schema Document (submitted electronically herewith). | |
| 101. CAL | XBRL Taxonomy Extension Calculation Linkbase Document (submitted electronically herewith). | |
| 101. LAB | XBRL Taxonomy Extension Label Linkbase Document (submitted electronically herewith). | |
| 101. PRE | XBRL Taxonomy Extension Presentation Linkbase Document (submitted electronically herewith). | |
| 101. DEF | XBRL Taxonomy Extension Definition Linkbase Document (submitted electronically herewith). | |
| 3.1 | Amend and Restated Certificate of Incorporation* | |
| 3.2 (6) | Amended and Restated Bylaws* | |
| 3.3 (1) | Articles of Merger* | |
| 3.4 (1) | Certificate of Merger* | |
| 4.1 (1) | Articles of Incorporation (See Exhibit 3.1) * | |
| 4.2 (3) | Form of Common Stock Purchase Warrant, April 2006* | |
| 4.3 (7) | Form of Common Stock Purchase Warrant, March 2007* | |
| 10.1 (1) | License Agreement with Sandia; Amendments* | |
| 10.2 (1) | Lease for 9620 San Mateo* | |
| 10.3 (1) | Employment Agreement with Tom Anderson* | |
| 10.4 (1) | Employment Agreement with Walter Aviles* | |
| 10.5 (10) | Amended and Restated 2004 Stock Incentive Plan* | |
| 10.6 (1) | Shareholders Agreement* |
13
| 10.7 (1) | Lock Up Agreement* | |
| 10.8 (1) | Miscellaneous Technical Services Agreement between Aramco Services Company and Novint Technologies, Inc.* | |
| 10.9 (1) | Contract Addendum between Aramco Services Company and Novint Technologies, Inc.* | |
| 10.10 (1) | Amendment to Contract between Aramco Services Company and Novint Technologies, Inc.* | |
| 10.11 (1) | Amendment to Contract between Aramco Services Company and Novint Technologies, Inc.* | |
| 10.12 (1) | Statement of Work between Chevron Corporation and Novint Technologies, Inc.* | |
| 10.13 (1) | Purchase Order from DaimlerChrylser Corporation* | |
| 10.14 (1) | Purchase Order # 94059 from LockheedMartin Corporation* | |
| 10.15 (1) | Purchase Order # 96996 from LockheedMartin Corporation* | |
| 10.16 (1) | Purchase Order # 97860 from LockheedMartin Corporation* | |
| 10.17 (1) | Purchase Order # Q50601685 from LockheedMartin Corporation* | |
| 10.18 (1) | Purchase Order # QQ060592 from LockheedMartin Corporation* | |
| 10.19 (1) | Purchase Order # Q50608809 from LockheedMartin Corporation* | |
| 10.20 (1) | Purchase Order # 24232 from Sandia National Laboratories* | |
| 10.21 (1) | Purchase Order # 27467 from Sandia National Laboratories* | |
| 10.22 (1) | Purchase Order # 117339 from Sandia National Laboratories* | |
| 10.23 (1) | Purchase Order # 250810 from Sandia National Laboratories* | |
| 10.24 (1) | Undersea Exploration Modeling Agreement between Woods Hole Oceanographic Institute and Novint Technologies, Inc.* | |
| 10.25 (1) | Purchase Order for Lunar Design, Inc. dated April 7, 2005* | |
| 10.26 (1) | Sublicense Agreement between Manhattan Scientifics and Novint Technologies, Inc.* |
14
| 10.27 (1) | License and Royalty Agreement between Manhattan Scientifics and Novint Technologies, Inc.* | |
| 10.28 (1) | Research Development and License Agreement between Manhattan Scientifics and Novint Technologies, Inc.* | |
| 10.29 (1) | Intellectual Property License Agreement with Force Dimension LLC* | |
| 10.30 (1) | Purchase Order with Lockheed Martin dated April 1, 2005* | |
| 10.31 (1) | Purchase Order with Lockheed Martin dated April 4, 2005* | |
| 10.32 (1) | Purchase Order with Lockheed Martin dated April 21, 2005* | |
| 10.33 (1) | Purchase Order with Deakin University dated April 6, 2004* | |
| 10.34 (1) | Purchase Order with Robarts Research dated September 24, 2004* | |
| 10.35 (1) | Purchase Order with University of New Mexico dated March 16, 2004* | |
| 10.36 (1) | Amendment to Agreement with Force Dimension Dated May 5, 2005* | |
| 10.37 (1) | Amendment to contract between Aramco Services Company and Novint Technologies, Inc* | |
| 10.38 (2) | Purchase Order with Lockheed Martin dated February 16, 2006* | |
| 10.39 (2) | Amendment to Intellectual Property License Agreement with Force Dimension LLC dated March 9, 2006* | |
| 10.40 (2) | Purchase Order with Lockheed Martin dated March 3, 2006* | |
| 10.41 (3) | Form of Subscription Agreement for Securities, April 2006* | |
| 10.42 (4) | Board of Directors Agreement between V. Gerald Grafe and Novint Technologies, Inc.* | |
| 10.44 (5) | Manufacturing Agreement dated December 19, 2006 by and between Novint Technologies, Inc. and VTech Communications Ltd.* | |
| 10.45 (5) | Novint Purchase Order 1056. (Portions of this exhibit have been omitted pursuant to a request for confidential treatment.) * | |
| 10.46 (7) | Form of Unit Subscription Agreement, March 2007* | |
| 10.47 (7) | Form of Investor Rights Agreement, March 2007* | |
| 10.48 (8) | Amendment No. 1 to Unit Subscription Agreement dated March 2, 2007* | |
| 10.49 (8) | Amendment No. 2 to Unit Subscription Agreement dated March 30, 2007* | |
| 10.50 (8) | Amendment No. 1 to Investor Rights Agreement dated March 30, 2007* | |
| 10.51 (10) | Purchase Order with The Falk Group, LLC dated January 16, 2007* | |
| 10.52 (11) | Tournabout Intellectual Property Acquisition Agreement dated July 17, 2007* | |
| 10.53 (12) | Lease Agreement dated May 29, 2007* | |
| 10.54 (12) | Lease Agreement dated June 21, 2007* |
| 14 (2) | Code of Ethics* |
* Previously filed with the SEC as indicated, and hereby incorporated herein by reference.
15
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| November 14, 2022 | NOVINT TECHNOLOGIES, INC. | |
| By: | /s/ Orin Hirschman | |
| Name: Orin Hirschman | ||
Title: President (Principal Executive Officer and Principal Financial Officer) | ||
16
Novint Technologies, Inc. 10-Q
Exhibit 31.1
CERTIFICATION PURSUANT TO RULE 13a-14(a) AND 15d-14(a),
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Orin Hirschman, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Novint Technologies, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiary, is made known to me by others within that entity, particularly during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: November 14, 2022
| /s/ Orin Hirschman | |
| Orin Hirschman | |
| President (Principal Executive Officer and Principal Financial Officer) |
Novint Technologies, Inc. 10-Q
Exhibit 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Novint Technologies, Inc. (the “Company”) on Form 10-Q for the quarter ending September 30, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Orin Hirschman as Principal Executive Officer and Principal Financial Officer of the Company certify, pursuant to and for the purpose of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: November 14, 2022
| /s/ Orin Hirschman | |
| Orin Hirschman | |
| President (Principal Executive Officer and Principal Financial Officer) |
A signed original of this written statement required by Section 906 has been provided to Novint Technologies, Inc. and will be retained by Novint Technologies, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.