Dror Ortho-Design, Inc 10-Q for FY2023 Q2
Dror Ortho-Design, Inc. (DROR)
About this 10-Q
Dror Ortho-Design, Inc filed this 10-Q on August 14, 2023, covering the quarter ended June 30, 2023 (FY2023 Q2).
Headline figures
Quarter ended June 30, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Net loss
- $81.27K
- compared with a net loss of $36.86K 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 |
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the quarterly period ended
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| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ____ to ____
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Securities registered pursuant to Section 12(g) of the Act:
| Title of each class | ||
| Common Stock, $.0001 Par Value Per Share |
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TABLE OF CONTENTS
NOVINT TECHNOLOGIES, INC.
FORM 10-Q
2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
| Novint Technologies, Inc. |
| CONDENSED BALANCE SHEETS |
| June 30, | December 31, | |||||||
| 2023 | 2022 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Prepaid expenses | ||||||||
| Total Current Assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Accrued royalties | ||||||||
| Note payable – related party | ||||||||
| Total Current Liabilities | ||||||||
| TOTAL LIABILITIES | ||||||||
| STOCKHOLDERS’ DEFICIT | ||||||||
| Preferred stock, $ par value; shares authorized, shares issued and outstanding as of June 30, 2023 and December 31, 2022 | ||||||||
| Common stock, par value; shares authorized, shares issued and outstanding as of June 30, 2023 and December 31, 2022 | ||||||||
| 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 June 30, | For the Six Months Ended June 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| 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.
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Novint Technologies, Inc.
CONDENSED STATEMENTS OF STOCKHOLDERS’ DEFICIT
(Unaudited)
| Three Months Ended June 30, 2023 | ||||||||||||||||||||
| Additional | ||||||||||||||||||||
| Common Stock | Paid-in | Accumulated | ||||||||||||||||||
| Shares | Amount | Capital | (Deficit) | Total | ||||||||||||||||
| Balances, March 31, 2023 | $ | $ | $ | ( |
) | $ | ( |
) | ||||||||||||
| Net Loss for the Three Months | — | ( |
) | ( |
) | |||||||||||||||
| Balances, June 30, 2023 | $ | $ | $ | ( |
) | $ | ( |
) | ||||||||||||
| Six Months Ended June 30, 2023 | ||||||||||||||||||||
| Additional | ||||||||||||||||||||
| Common Stock | Paid-in | Accumulated | ||||||||||||||||||
| Shares | Amount | Capital | (Deficit) | Total | ||||||||||||||||
| Balances, December 31, 2022 | $ | $ | $ | ( |
) | $ | ( |
) | ||||||||||||
| Net Loss for the Six Months | — | ( |
) | ( |
) | |||||||||||||||
| Balances, June 30, 2023 | $ | $ | $ | ( |
) | $ | ( |
) | ||||||||||||
| Three Months Ended June 30, 2022 | ||||||||||||||||||||
| Additional | ||||||||||||||||||||
| Common Stock | Paid-in | Accumulated | ||||||||||||||||||
| Shares | Amount | Capital | (Deficit) | Total | ||||||||||||||||
| Balances, March 31, 2022 | $ | $ | $ | ( |
) | $ | ( |
) | ||||||||||||
| Net Loss for the Three Months | — | ( |
) | ( |
) | |||||||||||||||
| Balances, June 30, 2022 | $ | $ | $ | ( |
) | $ | ( |
) | ||||||||||||
| Six Months Ended June 30, 2022 | ||||||||||||||||||||
| Additional | ||||||||||||||||||||
| Common Stock | Paid-in | Accumulated | ||||||||||||||||||
| Shares | Amount | Capital | (Deficit) | Total | ||||||||||||||||
| Balances, December 31, 2021 | $ | $ | $ | ( |
) | $ | ( |
) | ||||||||||||
| Net Loss for the Six Months | ( |
) | ( |
) | ||||||||||||||||
| Balances, June 30, 2022 | $ | $ | $ | ( |
) | $ | ( |
) | ||||||||||||
The accompanying notes are an integral part of these financial statements.
5
Novint Technologies, Inc.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
| For the Six Months Ended June 30, | ||||||||
| 2023 | 2022 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( |
) | $ | ( |
) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Expenses paid by related party | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Accounts receivables | ||||||||
| Accounts payable and accrued expenses | ( |
) | ||||||
| Accrued royalties | ||||||||
| Net cash used in operating activities | ( |
) | ( |
) | ||||
| Cash flows from investing activities: | — | — | ||||||
| Net cash provided by investing activities | ||||||||
| Cash flows from financing activities: | ||||||||
| Proceeds from related party promissory note | ||||||||
| Net cash provided by 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.
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NOVINT TECHNOLOGIES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2023
(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 seeks to conduct custom project work in other related 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 June 30, 2023, had an accumulated
deficit of $
We continue to monitor the COVID-19 pandemic and its effect on our business and results of operations. We cannot predict the duration, scope or severity of the COVID-19 pandemic or its future impact on our business, results of operations, cash flows and financial condition.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates and Assumptions
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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. Actual results could differ from those estimates.
Basis of Presentation
The accompanying unaudited condensed financial statements were prepared using generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, these unaudited condensed financial statements do not include all information or notes required by generally accepted accounting principles for annual 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, 2022, as filed with the SEC on March 31, 2023.
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 six months ended June 30, 2023 may not be indicative of results for the full year.
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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. At times, balances may exceed FDIC insured limits. The Company has not experienced any losses in such accounts.
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.
The Company accounts for revenue from sales of the Falcon 3D Touch Haptic Controller (the “Falcon”) under the provisions of ASC 606. The Falcon allows the user to experience the sense of touch when using a computer, while holding its interchangeable handle. The Falcons are manufactured by an unrelated party. Revenue 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.
Income Taxes
The Company accounts for its income taxes under the provisions of ASC Topic 740, “Income Taxes”. The method of accounting for income taxes under ASC 740 is an asset and liability method which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. 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. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. 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.
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, and accrued expenses and related liabilities approximate their fair values because of the short maturity of these instruments.
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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 determined that these pronouncements do not have a material impact on the Company’s current or anticipated consolidated financial statement presentation or disclosures.
NOTE 3 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses are as follows:
| June 30, | December 31, | |||||||
| 2023 | 2022 | |||||||
| 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 that provided gaming software to the Company.
These licensing agreements contain obligations to pay royalty fees ranging from
NOTE 5 – COMMITMENTS AND CONTINGENCIES
From time to time in the normal course of business, the Company may be 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 would have a material adverse effect on the results of operations and financial condition of the Company.
NOTE 6 – NOTE PAYABLE – RELATED PARTY
On
June 22, 2023, the Company issued and sold a promissory note with principal amount of $
Please see below for the Company’s future minimum payments reconciled to the Notes payable – related party balance on the Balance Sheet.
| Years ending June 30, | Maturity
of Note Payable – Related Party |
|||
| 2024 | $ | |||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| Total | $ | |
||
| Less: debt issuance costs | ||||
| Total | $ | |||
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NOTE 7 – STOCKHOLDERS’ EQUITY
Preferred Stock
The Company is 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 authorized to issue shares of par value common stock. All issued shares of
NOTE 8 – SUBSEQUENT EVENTS
The Company has evaluated subsequent events through the date these financial statements were issued. In the opinion of management, there were no subsequent events that would require disclosure or adjustments to the accompanying financial statements through the date the financial statements were issued other than the following:
On
July 5, 2023, the Company entered into a Share Exchange Agreement (the “Exchange Agreement”) by and among the Company,
Dror Ortho-Design Ltd., a company incorporated under the laws of the State of Israel (“Dror”) and the shareholders of
Dror. In August of 2023 the Exchange Agreement was amended (the “Exchange Amendment”). The Exchange Agreement and
Exchange Amendment together constitute the “Dror Transaction”. One closing condition of the Dror Transaction is the
purchase of securities by outside investors (the “Private Placement Investors”) through a related securities purchase
agreement (the “Private Placement”). The Private Placement shall be a sale and issuance of shares of the Company’s
common stock and shares of the Company’s preferred stock in exchange for up to a minimum of $
Following completion of the Dror Transaction, the Dror shareholders and Private Placement Investors shall gain a majority of the Company’s voting rights and will therefor gain control of the Company. Dror shall also become a wholly owned subsidiary of the Company. As a shell company, the Company does meet the definition of a business under ASC 805 – Business Combinations and for accounting purposes the Dror Transaction is considered to be a “reverse recapitalization”.
Pursuant
to the terms and conditions of the Dror Transaction, the shareholders of Dror agreed to transfer ordinary
shares of Dror (the “Dror Shares”) to the Company in exchange for shares of the Company’s Preferred Stock using an
exchange ratio of
The closing of the transactions contemplated under the Share Exchange Agreement is subject to certain closing conditions described therein (the “Closing Conditions”). There is no assurance that the Closing Conditions will be satisfied. The closing of the Share Exchange is expected to occur no later than three (3) business days after the fulfillment or waiver of the Closing Conditions or on such other date and time as the parties may mutually determine.
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, 2022. 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. The Company seeks to conduct custom project work in other related areas The Company sells its haptics products primarily to consumers through online retail marketplaces.
10
Results of Operations for the Three Months Ended June 30, 2023 and 2022
Revenues
| Three months ended June 30, | ||||||||||||
| 2023 | 2022 | Change | ||||||||||
| Revenue | $ | — | $ | — | $ | — | ||||||
The Company recorded revenue of $0 and $0 for the three-month period ended June 30, 2023 and June 30, 2022. 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 June 30, | ||||||||||||
| 2023 | 2022 | Change | ||||||||||
| Operating Expenses | $ | 81,265 | $ | 36,858 | $ | 44,407 | ||||||
Operating expenses increased by $44,407 or 120% to $81,265 for the three months ended June 30, 2023, compared with $36,858 for the three months ended June 30, 2022. This increase was due primarily to increased professional fees related to the Company’s pursuit of a potential financing transaction.
Other Expense
| Three months ended June 30, | ||||||||||||
| 2023 | 2022 | Change | ||||||||||
| Other Expense | $ | — | $ | — | $ | — | ||||||
The Company recorded other expense of $0 and $0 for the three-month period ended June 30, 2023 and June 30, 2022.
Results of Operations for the Six Months Ended June 30, 2023 and 2022
Revenues
| Six months ended June 30, | ||||||||||||
| 2023 | 2022 | Change | ||||||||||
| Revenue | $ | — | $ | — | $ | — | ||||||
The Company recorded revenue of $0 and $0 for the three-month period ended June 30, 2023 and June 30, 2022. 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
| Six months ended June 30, | ||||||||||||
| 2023 | 2022 | Change | ||||||||||
| Operating Expenses | $ | 131,644 | $ | 86,158 | $ | 45,486 | ||||||
Operating expenses increased by $45,486 or 53% to $131,644 for the six months ended June 30, 2023, compared with $86,158 for the six months ended June 30, 2022. This increase was due primarily to increased professional fees related to the Company’s pursuit of a potential financing transaction.
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Other Expense
| Six months ended June 30, | ||||||||||||
| 2023 | 2022 | Change | ||||||||||
| Other Expense | $ | — | $ | (14 | ) | $ | (14 | ) | ||||
Other expense decreased by $14 or 100% to $0 during the six months ended June 30, 2023 compared with $0 during the six months ended June 30, 2022. Other expense for the six months ended June 30, 2022 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 June 30, 2023 and December 31, 2022:
| As of | As of | |||||||||||
| June 30, | December 31, | Change | ||||||||||
| 2023 | 2022 | Increase (Decrease) | ||||||||||
| Cash | $ | 27,216 | $ | 55,081 | $ | (27,865 | ) | |||||
| Working capital deficit | $ | (855,500 | ) | $ | (723,856 | ) | $ | (131,644 | ) | |||
The Company had a stockholders’ deficit of $41,935,024 and $41,803,380 at June 30, 2023 and December 31, 2022, respectively. Net loss for the six months ended June 30, 2023 and 2022 was $131,644 and $86,172, respectively. Net cash used in operating activities was $47,865 and $61,018 for the six months ended June 30, 2023 and 2022, respectively. Operations since inception have been funded primarily with the proceeds from equity and debt offerings. As of June 30, 2023, the Company had cash of $27,216.
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 June 30, 2023, had an accumulated deficit of $41,935,024; (iii) the Company sustained an operating loss of $131,644 for the six months ended June 30, 2023; 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 the Company’s independent registered public accounting firm relating to the Company’s financial statements for the year ended December 31, 2022 included an explanatory paragraph expressing substantial doubt about the Company’s 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:
| Six months ended June 30, | ||||||||||||
| 2023 | 2022 | Change | ||||||||||
| Net cash used in operating activities | $ | (47,865 | ) | $ | (61,018 | ) | $ | 13,153 | ||||
| Net cash provided by investing activities | — | — | — | |||||||||
| Net cash provided by financing activities | 20,000 | — | — | |||||||||
Net cash used in operating activities for the six months ended June 30, 2023 was $47,865 compared with net cash used in operating activities of $61,018 for the six months ended June 30, 2022. The increase in net cash used in operating activities during the six months ended June 30, 2023 was due primarily to an increase in net loss of $45,472, and partially offset by an increase of $25,390 in the change in accounts payable and accrued expenses.
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Net cash used in operating activities for the six months ended June 30, 2023 was $47,865, representing a net loss of $131,644, partially offset by an increase of $25,390 in accounts payable and accrued expenses, an increase in accrued royalties of $25,000 and a decrease in prepaid expenses of $3,389.
Net cash from financing activities for the six months ended June 30, 2023 was $20,000 representing proceeds from a related party promissory note. The remaining portion of the related party promissory note payment was $30,000 of expenses paid for by a related party, which is an operating activity. There were no cash flows from financing activities for the six months ended June 30, 2022.
Effects of Inflation
Management does not believe that inflation has had a material impact on the Company’s business, sales, or operating results during the periods presented.
Off-Balance Sheet Arrangements
The Company currently does 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 six months ended June 30, 2023. For a further discussion of our critical accounting policies, see the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed with the SEC on March 31, 2023.
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 recalls and 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; delays in obtaining regulatory approvals or the failure to maintain such approvals; 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, including our Registration Statement on Form 10. All subsequent forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. Additional factors that may have a direct bearing on our operating results are discussed in Item 1A “Risk Factors” in our Registration Statement on Form 10. 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.
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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 June 30, 2023, 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 June 30, 2023 was due to an insufficient degree of segregation of duties among our accounting and financial reporting personnel. During the remainder of 2023, 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 June 30, 2023 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.
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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* |
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| 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.* |
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| 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.
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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.
| August 14, 2023 | NOVINT TECHNOLOGIES, INC. | |
| By: | /s/ Orin Hirschman | |
| Name: Orin Hirschman | ||
| Title: President (Principal Executive
Officer and Principal Financial Officer) | ||
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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: August 14, 2023
| /s/ Orin Hirschman | |
| Orin Hirschman | |
| President (Principal Executive Officer and Principal Financial Officer) |
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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 June 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: August 14, 2023
| /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.
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