Dror Ortho-Design, Inc 10-Q for FY2024 Q2
Dror Ortho-Design, Inc. (DROR)
About this 10-Q
Dror Ortho-Design, Inc filed this 10-Q on August 14, 2024, covering the quarter ended June 30, 2024 (FY2024 Q2).
Headline figures
Quarter ended June 30, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Net loss
- $1.51M
- compared with a net loss of $285.78K 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)
For the quarterly period ended
OR
For the transition period from ____ to ____
Commission File No.
(Exact name of registrant as specified in its charter)
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| (Address of principal executive office) | (Zip Code) |
Registrant’s telephone number, including
area code:
N/A
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Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||
Indicate by check mark 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 and every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the
preceding 12 months (or for such shorter period that the registrant has been required to submit and post 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.
| Large 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. ☐
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is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
The number of shares outstanding of the registrant’s Common
Stock as of August 13, 2024 was
Dror Ortho-Design, Inc.
Quarter Ended June 30, 2024
TABLE OF CONTENTS
| Page | |||
| PART I. FINANCIAL INFORMATION | 1 | ||
| Item 1. | Financial Statements (Unaudited) | 1 | |
| Notes to Unaudited Condensed Consolidated Financial Statements | 5 | ||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 12 | |
| Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 18 | |
| Item 4. | Controls and Procedures | 18 | |
| PART II. OTHER INFORMATION | 19 | ||
| Item 1. | Legal Proceedings | 19 | |
| Item 1A. | Risk Factors | 19 | |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 20 | |
| Item 3. | Defaults Upon Senior Securities | 20 | |
| Item 4. | Mine Safety Disclosures | 20 | |
| Item 5. | Other Information | 20 | |
| Item 6. | Exhibits | 21 | |
| Signatures | 22 | ||
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PART I - FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
DROR ORTHO-DESIGN, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. dollars)
| June 30, 2024 | December 31, 2023 | |||||||
| Unaudited | Audited | |||||||
| Assets | ||||||||
| Current Assets: | ||||||||
| Cash | $ | $ | ||||||
| Other receivables and prepaid expenses | ||||||||
| Total Current Assets | ||||||||
| Noncurrent Assets: | ||||||||
| Property and equipment at cost, net of accumulated depreciation | ||||||||
| Total Assets | ||||||||
| Liabilities And Stockholders’ Equity | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses and other payables | ||||||||
| Total Current Liabilities | ||||||||
| Noncurrent Liabilities: | ||||||||
| Accrued severance | ||||||||
| Total Liabilities | ||||||||
| Commitments and Contingencies (Note 3) | ||||||||
| Stockholders’ Equity | ||||||||
| Preferred A Stock, $ | ||||||||
| Common stock, $ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Stockholders’ Equity | ||||||||
| Total Liabilities and Stockholders’ Equity | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
1
DROR ORTHO-DESIGN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(U.S. dollars, except share and per share amounts)
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, 2024 | June 30, 2023 | June 30, 2024 | June 30, 2023 | |||||||||||||
| Unaudited | Unaudited | |||||||||||||||
| Operating Expenses | ||||||||||||||||
| Research and development | ||||||||||||||||
| General and administrative expenses | ||||||||||||||||
| Share-based compensation | ||||||||||||||||
| Total Operating Expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Financial Expenses, net | ( | ) | ( | ) | ||||||||||||
| Total other expense | ( | ) | ( | ) | ||||||||||||
| Loss before provision for income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Provision for income taxes | ||||||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss per common share | ||||||||||||||||
| ( | ) | ( | ) | ( | ) | ( | ) | |||||||||
| Weighted-average common stock outstanding | ||||||||||||||||
| * |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
2
DROR ORTHO-DESIGN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(U.S. dollars, except share amounts)
(Unaudited)
| Series A Preferred Stock | Common Stock | Treasury Stock | Additional Paid-In | Accumulated | Total Stockholders’ | |||||||||||||||||||||||||||||||
| Shares* | Amount | Shares* | Amount | Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||||||||||||||
| Balance at January 1, 2024 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | |||||||||||||||||||||||||||||||||
| Net loss | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Balance at March 31, 2024 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | |||||||||||||||||||||||||||||||||
| Net loss | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Balance at June 30, 2024 | $ | $ | — | $ | — | ( | ) | |||||||||||||||||||||||||||||
| Balance at January 1, 2023 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||
| Return of founders shares to the Company as part of claim settlement | — | ( | ) | ( | ) | — | — | — | ||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | |||||||||||||||||||||||||||||||||
| Net loss | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Balance at March 31, 2023 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | |||||||||||||||||||||||||||||||||
| Net loss | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Balance at June 30, 2024 | $ | $ | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| * |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
DROR ORTHO-DESIGN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(U.S. dollars)
| For the Six Months Ended June 30, | ||||||||
| 2024 | 2023 | |||||||
| (Unaudited) | ||||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Stock-based compensation expense | ||||||||
| Depreciation | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Receivables and prepaid expenses | ( | ) | ||||||
| Accounts payable | ( | ) | ( | ) | ||||
| Accrued expenses and other payables | ( | ) | ||||||
| Founders claim accrual | ( | ) | ||||||
| Accrued severance | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchase of property and equipment | ( | ) | ||||||
| Net cash used in by investing activities | ( | ) | ||||||
| Net decrease in cash | ( | ) | ( | ) | ||||
| Cash, beginning of period | ||||||||
| Cash, end of period | $ | $ | ||||||
| Supplemental cash flow information: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for taxes | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
DROR ORTHO-DESIGN, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 – Organization and Basis of Presentation
Organization
Dror Ortho-Design, Inc., a Delaware corporation (the “Company”), was incorporated as Novint Technologies, Inc. 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. On August 14, 2023, following the Share Exchange (as defined below), the Company changed its name from “Novint Technologies, Inc.” to “Dror Ortho-Design, Inc.” Following the Share Exchange, the Company succeeded the business of Dror Ortho-Design, Ltd. (“Private Dror”) as its sole line of business. The Company is involved in the research and development of an orthodontic alignment platform and has not yet reached the sales stage for its product.
The Company’s stock is quoted on the OTC Pink Market under the symbol “DROR.”
Reverse Recapitalization
On July 5, 2023, Private Dror
entered into a share exchange agreement with the Company and on August 14, 2023, the share exchange was consummated (the “Share
Exchange”). As a result of the Share Exchange, the shareholders of Private Dror exchanged all
The Share Exchange was accounted for as a recapitalization, with Private Dror deemed to be the accounting acquirer and the Company the accounting acquiree. Accordingly, Private Dror’s historical financial statements for periods prior to the consummation of the Share Exchange have become those of the registrant. Assets and liabilities and the historical operations reported for periods prior to the Share Exchange are those of Private Dror other than equity items. All references to Common Stock, Series A Preferred Stock, share and per share amounts have been retroactively restated to reflect the reverse recapitalization as if the transaction had taken place as of the beginning of the earliest period presented.
Pursuant to the Share Exchange,
the Company issued shares of its Common Stock and Series A Preferred Stock to Private Dror’s stockholders, at an exchange ratio
of
As of August 14, 2023, the
fair value of the net liabilities of the Company was $
Going Concern and Management’s Plans
The financial statements are
presented on a going concern basis. The Company has not yet generated any revenues, has suffered recurring losses from operations with
an accumulated deficit of $
5
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements were prepared using accounting principles generally accepted in the United States of America (“U.S GAAP”) for interim financial information and the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, these unaudited condensed consolidated financial statements do not include all information or notes required by U.S. GAAP for annual consolidated financial statements and should be read in conjunction with the Company’s annual financial statements for the year ended December 31, 2023, included within the Company’s Current Report on Form 10-K, as amended, originally filed with the SEC on April 1, 2024.
As the Company completed a reverse recapitalization on August 14, 2023, the financial information for the periods prior to the reverse recapitalization reflect those of Private Dror. From August 14, 2023 forward, the financial information presented is the consolidated financial information of the Company and its subsidiary.
In the opinion of management, the unaudited consolidated 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 six months ended June 30, 2024, 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 or 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 revenue and expenses during the reporting periods. Actual results could vary from those estimates. Management utilizes various other estimates, including but not limited to accrued royalties, accrued expenses, the valuation of stock-based compensation, the valuation allowance for deferred tax assets and other contingencies. The results of any changes in accounting estimates are reflected in the financial statements in the period in which the changes become evident. Estimates and assumptions are reviewed periodically and the effects of revisions are reflected in the period that they are determined to be necessary.
Functional Currency
The Company accounts for foreign
currency transactions pursuant to ASC 830, “Foreign Currency Matters.” The functional currency of the Company and its subsidiary
is the United States Dollar (“U.S. Dollar”) as the U.S. Dollar is the currency of the primary economic environment in which
the Company operates. The accompanying financial statements have been expressed in the U.S. Dollar. Transactions denominated in currencies
other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction.
Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency
using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the statements of operations.
The exchange rate of the U.S. Dollar to the Israeli Shekel was
Cash
The Company’s cash is
held with financial institutions in the United States and Israel. Management believes that the financial institutions that hold the Company’s
cash are financially sound and, accordingly, minimal credit risk exists with respect to these investments. Account balances held in the
Unites States may, at times, exceed the Federal Deposit Insurance Corporation (“FDIC”) insurance limit. As of June 30, 2024
and December 31, 2023, the Company had $
6
Research and Development
The Company expenses all research and development costs as they are incurred. Research and development includes, but is not limited to, expenditures in connection with in-house research and development as well as proprietary products and technology, and includes salaries and related costs, consulting fees, and professional services.
Basic and Diluted Net Loss Per Common Share
The Company computes net loss per share in accordance with ASC 260, “Earnings per Share,” which requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic loss per ordinary share is computed by dividing the loss for the period applicable to common shareholders by the weighted average number of shares of Common Stock outstanding during the period. Diluted net loss per common share is computed by dividing the net loss by the weighted average number of common stock outstanding for the period and, if dilutive, potential common stock outstanding during the period. Potentially dilutive securities consist of the incremental common stock issuable upon exercise of Common Stock equivalents such as stock options, warrants and convertible debt instruments. Potentially dilutive securities are excluded from the computation if their effect is anti-dilutive. As a result, the basic and diluted per share amounts for all periods presented are identical.
For the three and six months
ended June 30, 2024 and 2023, the Company incurred net losses which cannot be diluted; therefore, basic and diluted loss per common share
is the same. Each share of Series A Preferred Stock is convertible into
| June 30, | ||||||||
| 2024 | 2023 | |||||||
| Series A Preferred Stock | ||||||||
| Warrants | ||||||||
| Stock Options | ||||||||
| Shares excluded from the calculation of diluted loss per share | ||||||||
Reclassification
General and administrative
expenses totaling $
Recently Issued Accounting Pronouncements
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures related to improvements to income tax disclosures. The amendments in this update require enhanced jurisdictional and other disaggregated disclosures for the effective tax rate reconciliation and income taxes paid. The amendments in this update are effective for fiscal years beginning after December 15, 2024. The adoption of this pronouncement is not expected to have a material impact on the Company's consolidated financial statements.
The Company does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying consolidated financial statements.
7
NOTE 3 – COMMITMENTS AND CONTINGENCIES
The Company partially financed their research and development
expenditures under grant programs sponsored by the Israel Innovation Authority (“IIA”) of the Ministry of Economy and Industry
(formerly the Office of Chief Scientist) for the support of research and development activities conducted in Israel. At the time the grants
were received from the IIA, successful development of the related projects was not assured. In exchange for participation in the programs
by the IIA, the Company agreed to pay
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.
Registration Rights Agreement
In connection with the
Private Placement, on August 14, 2023, the Company entered into a registration rights agreement with the Private Placement Investors
(together with all attachments and exhibits thereto, as each may be amended or modified from time to time, the “Registration
Rights Agreement” of “RRA”), pursuant to which the Company agreed to register, among other registrable securities
(as further described in the RRA), on Form S-1 (or, if the Company is then eligible, on Form S-3) with the Securities and Exchange
Commission (the “SEC”): (i) the Private Placement Shares, (ii) the shares of Common Stock underlying the shares of
Series A Preferred Stock, (iii) the shares of Common Stock underlying the Private Placement Warrants issued to the Private Placement
Investors (the “Warrant Shares”), and (iv) the shares of the Company’s common stock underlying the securities
issued to the investors who, on or about December 6, 2021, participated in the $
Under the RRA, among other
things, if a registration statement filed registering the resale of the Registrable Securities is not filed by the 45th calendar
date following the date of the RRA and if such registration statement is not declared effective by the SEC by the 135th calendar day (or,
in the event of a “full review” by the SEC, the 165th calendar day) following the date of the RRA, then the Company
is liable to pay as partial liquidated damages in amount equal to the product of
Pursuant to Section 6(e) of the
Registration Rights Agreement, the provisions of the Registration Rights Agreement may be amended by obtaining the written consent of
the Company and the Private Placement Investors holding
The Company is currently negotiating the amount of liquidated damages that would have been accrued with the investors, which will not exceed
the most conservative estimate of approximately $
8
War in Israel
In October 2023, Israel was attacked by a terrorist organization and entered a state of war. As of the date of these consolidated financial statements, the war in Israel is ongoing and continues to evolve. The Company’s research and development activities are located in Israel. Currently, such activities in Israel remain largely unaffected. During the six months ended June 30, 2024, the impact of this war on the Company’s results of operations and financial condition was immaterial. Management will continue to monitor the effect of the war on the Company’s financial position and results of operations.
NOTE 4 – FOUNDERS CLAIM ACCRUAL
The Company recorded a provision
in respect of a claim made against Private Dror by its founders. The claim related to amounts claimed as a repayment of loan balances
and other amounts including salary and benefit related balances. In January 2023, Private Dror signed an agreement with the founders,
settling all-outstanding claims at $
NOTE 5 – STOCKHOLDERS’ EQUITY
All references to Common Stock, share and per share amounts have been retroactively restated to reflect the reverse recapitalization as if the transaction had taken place as of the beginning of the earliest period presented.
Common Stock
On December 28, 2023, the Company’s stockholders approved
the adoption of the Company’s Amended and Restated Certificate of Incorporation (the “Restated Charter”) and an amendment
to the Restated Charter to increase the number of authorized shares of the Company’s common stock, par value $
Series A Preferred Stock
The Company is authorized
to issue up to
Warrants
Prior to the Share Exchange, there were
9
On April 17, 2024, the Board
of Directors approved the issuance of
If at the time of the warrant’s
exercise there is no effective registration statement registering, or no current prospectus available for, the resale of the shares of
Common Stock underlying the warrant, then the holder will have the right to exercise warrant by means of a cashless exercise. In addition,
if (i) the volume-weighted average price of the Company’s Common Stock for 20 consecutive trading days is at least
Equity Incentive Plan
Prior to the Share Exchange,
there were
The Company treated the exchange
of the original options for the new options as a modification in accordance with ASC 718. The Company calculated the fair value of the
original options prior to the Share Exchange and the fair value of the new options at the time of the Share Exchange. The increase in
value due to the modification was $
On June 17, 2024, the Company issued
Stock-based compensation expense
for the three months ended June 30, 2024 and 2023 amounted to $
10
NOTE 6 – RELATED PARTY TRANSACTIONS
Director Consulting Services
On June 1, 2022, the Company
entered into a consulting agreement (the “Englander Consulting Agreement”) with Yehuda Englander, a director of the Company,
pursuant to which, in consideration for certain financial and strategic consulting services, Mr. Englander will receive a cash fee of
NIS
On February 7, 2024, the Company
entered into a consulting agreement (the “Ravad Consulting Agreement”) with Chaim Ravad, a director of the Company, pursuant
to which, in consideration for certain services provided as a board member, Mr. Ravad will receive a cash fee of $
Shareholder Consulting Services
On August 8, 2023, the Company
entered into a consulting agreement (the “Oriole Consulting Agreement”) with Oriole Avenue Inc. (“Oriole”), an
entity owned by Yaacov Bodner, a stockholder of the Company, pursuant to which, in consideration for certain shareholder, investors relations
and general consultancy services, Oriole is entitled to receive cash payments equal in the aggregate to $
NOTE 7 – SUBSEQUENT EVENTS
None
11
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of the results of operations and financial condition of Dror-Ortho Design, Inc. (the “Company”) as of June 30, 2024 and for the six months ended June 30, 2024 and 2023 should be read in conjunction with our financial statements and the notes to those financial statements that are included elsewhere in this Quarterly Report on Form 10-Q. This discussion and analysis should be read in conjunction with the Company’s audited financial statements and related disclosures as of December 31, 2023, which are included in the Form 10-K filed with the Securities and Exchange Commission (“SEC”) on April 1, 2024. References in this Management’s Discussion and Analysis of Financial Condition and Results of Operations to “us”, “we”, “our” and similar terms refer to the Company.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains “forward-looking statements,” which include information relating to future events, future financial performance, financial projections, strategies, expectations, competitive environment and regulation. Words such as “may,” “should,” “could,” “would,” “predicts,” “potential,” “continue,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” and similar expressions, as well as statements in future tense, identify forward-looking statements. Forward-looking statements should not be read as a guarantee of future performance or results and may not be accurate indications of when such performance or results will be achieved. Forward-looking statements are based on information we have when those statements are made or management’s good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include, but are not limited to:
| ● | our operations and financial performance depend on global and regional economic conditions. Inflation, fluctuations in currency exchange rates, changes in consumer confidence and demand, and weakness in general economic conditions and threats, or actual recessions, could materially affect our business, results of operations, and financial condition.; |
| ● | the Company is in the development stage, is not generating revenues and has no operating history in the manufacturing and distribution of orthodontic medical devices or platforms for consumer use; |
| ● | our products and technologies may not be accepted by the intended commercial consumers of our products, which could harm our future financial performance; |
| ● | we expect continued operating losses and cannot be certain of our future profitability; |
| ● | our net revenues will depend primarily on our Platform and any decline in sales or average selling price of our Platform may adversely affect net revenues, gross margin and net income; |
| ● | the Company will face competition from large internationally established aligner companies whose products have been widely accepted; |
| ● | our growth and future success may depend on our ability to enhance our Platform or to develop, obtain regulatory clearance for, successfully introduce, and achieve market acceptance of new products and services; |
| ● | we are subject to operating risks, including excess or constrained capacity and operational inefficiencies, which could adversely affect our results of operations; |
| ● | our products and information technology systems are critical to our business. Issues with product development or enhancements, IT system integration, implementation, updates and upgrades could disrupt our operations and have a material impact on our business and operating results; |
| ● | complying with regulations enforced by FDA and other regulatory authorities is expensive and time consuming, and failure to comply could result in substantial penalties; |
| ● | we may not receive the necessary authorizations to market our Platform or any future new products, and any failure to timely do so may adversely affect our ability to grow our business. |
| ● | certain modifications to our products may require new 510(k) clearance or other marketing authorizations; |
| ● | ongoing changes in healthcare regulation could negatively affect our revenues, business and financial condition; |
| ● | we are subject to certain federal, state, and foreign fraud and abuse laws, health information privacy and security laws, and transparency laws, which, if violated, could subject us to substantial penalties. Additionally, any challenge to or investigation into our practices under these laws could cause adverse publicity and be costly to respond to, and thus could harm our business; |
12
| ● | our success depends in part on our proprietary technology, and if we are unable to successfully enforce our intellectual property rights, our competitive position may be harmed; |
| ● | the relative lack of U.S. public company experience of our management team may put us at a competitive disadvantage; |
| ● | our Common Stock is not listed on any stock exchange and there is a limited market for shares of our Common Stock. Even if a market for our common stock develops, our Common Stock could be subject to wide fluctuations; and |
| ● | other risks and uncertainties outlined in section entitled “Risk Factors” and other risks detailed from time to time in our filings with the SEC or otherwise. |
The foregoing does not represent an exhaustive list of matters that may be covered by the forward-looking statements contained herein or risk factors that we are faced with that may cause our actual results to differ from those anticipated in our forward-looking statements. For a discussion of these and other risks that relate to our business and financial performance, you should carefully review the risks and uncertainties described under the heading “Item 1A. Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K filed on April 1, 2024, and those described from time to time in our future reports filed with the Securities and Exchange Commission. Moreover, new risks regularly emerge, and it is not possible for us to predict or articulate all risks we face, nor can we assess the impact of all risks on our business or the extent to which any risk, or combination of risks, may cause actual results to differ from those contained in any forward-looking statements. All forward-looking statements included in this Form 10-Q are based on information available to us on the date of this Quarterly Report on Form 10-Q. Except to the extent required by applicable laws or rules, we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
Overview
We were incorporated as Novint Technologies, Inc. in the State of New Mexico in April 1999. On February 26, 2002, we changed our state of incorporation to Delaware by merging with Novint Technologies, Inc., a Delaware corporation. On July 5, 2023, we entered into a share exchange agreement with the shareholders of Dror Ortho-Design, Ltd. (“Private Dror”), pursuant to which, the shareholders of Private Dror agreed to exchange all of their outstanding ordinary shares Private Dror for shares of our Common Stock, par value $0.0001 per share (the “Common Stock”) and convertible preferred stock, par value $0.0001 per share (the “Series A Preferred Stock”, and such transaction, the “Share Exchange”). On August 14, 2023, the Share Exchange was consummated and we changed our name to “Dror Ortho-Design, Inc.”
Following the Share Exchange, we succeeded to the business of Private Dror as its sole line of business. The Share Exchange is being accounted for as a recapitalization, with Private Dror deemed to be the accounting acquirer and the Company the acquired company. Accordingly, Private Dror’s historical financial statements for periods prior to the consummation of the Share Exchange have become those of the Company. Operations reported for periods prior to the Share Exchange are those of Private Dror.
Our Company
We have reimagined the way people can correct their smile.
We plan to disrupt the aligner market by offering millions of people a revolutionary alternative. We believe that people do not need to change their lifestyle to correct their smile as they are required to do with existing aligner solutions.
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Existing aligner solutions generally share the same treatment principles, which are different from our solution. In most cases, patients seeking to improve their smile need to undergo a 12-to-15 month process of wearing plastic aligners, which need to be worn the entire day and should only be removed while eating or drinking. Patients are prescribed a series of 20 to 30 aligners that are intended to forcefully move teeth progressively closer to their intended final position. This process causes pain every time a new aligner is used and restricts blood circulation, which counterproductively slows down tooth movement. All-day aligner solutions are also intrusive, as patients need to conduct their lives at work or school wearing the plastic aligners. In addition, most existing aligner therapies require multiple visits to an orthodontist to monitor the progress of treatment plans through intraoral scanning, physical examination and patient testimony.
We believe that recent rapid advancements in technology have made traditional aligner solutions no longer the most effective treatment option for smile correction. Our Company has developed a proprietary AI-based platform to correct people’s smiles in a discreet and less painful manner (the “Platform”). The Platform uses only one smart aligner to gently move teeth into their optimum position with pulsating air while the patient is sleeping or at home.
We have several patents for the technology used in the Platform and is currently in the process of preparing the prototype for clearance by the FDA.
Our predecessor first generation Aerodentis System is a Class II medical device, which was cleared by FDA for commercialization in the U.S. pursuant to the 510(k) notification process for movement and alignment of teeth during orthodontic treatment of malocclusion in April 2020. The Company is preparing to apply for 510(k) clearance for the Platform as a Class II medical device, which constitutes an updated version of the currently cleared device. Such updated Platform contains new and/or different components than the original device, which is why a new 510(k) clearance is required prior to marketing the Platform in the U.S. We have not yet filed a 510(k) submission for the Platform, and it has, thus, not been found by the FDA to be substantially equivalent to the first generation Aerodentis System.
The Company currently does not generate revenues to fund operations and anticipates that it will continue to incur significant losses as it continues to develop the Platform. Please refer to “Risk Factors - We are in the development stage, are not generating revenues and have no operating history in the manufacturing and distribution of orthodontic medical devices or platforms for consumer use.” Included in our Annual Report on Form 10-K for the year ended December 31, 2023 for additional information. The Company intends to spend approximately $2.5 million over the next 18 months on software and hardware development as well as the accompanying regulatory approvals and IP protection associated with such software and hardware projects.
Recent Developments
Pursuant to the terms of the Share Exchange, the Company entered into to a Securities Purchase Agreement, by and between the Company and certain purchasers identified therein (the “Private Placement Investors”), dated as of August 14, 2023 (the “Securities Purchase Agreement”), pursuant to which, the Private Placement Investors received shares of Common Stock (the “Private Placement Shares”), shares of Series A Preferred Stock and warrants to purchase Common Stock (the “Private Placement Warrants”).
In connection with the Private Placement, on August 14, 2023, the Company entered into a registration rights agreement with the Private Placement Investors (the “Registration Rights Agreement”), pursuant to which the Company agreed to register, among other registrable securities (as further described in the Registration Rights Agreement), on Form S-1 (or, if the Company is then eligible, on Form S-3) with the SEC: (i) the Private Placement Shares, (ii) the shares of Common Stock underlying the shares of Series A Preferred Stock (the “Conversion Shares”), (iii) the shares of Common Stock underlying the Private Placement Warrants issued to the Private Placement Investors (the “Warrant Shares”), and (iv) the shares of the Company’s common stock underlying the securities issued to the investors who, on or about December 6, 2021, participated in the $3,000,000 financing (the “December 2021 Shares” and, together with the Private Placement Shares, the Conversion Shares, the Warrant Shares, the “Registrable Securities” ).
On August 13, 2024, the Company and certain of the Private Placement Investors entered into an Amendment to the Registration Rights Agreement (“Registration Rights Agreement Amendment”), pursuant to which, (i) the date in which a registration statement registering the resale of the Registrable Securities (the “Registration Statement”) is required to be filed pursuant to the Registration Rights Agreement was amended to February 9, 2024, and (ii) the date in which the Registration Statement is required to be declared effective by the SEC pursuant to the Registration Rights Agreement was amended to June 14, 2024. In consideration for entering into the Registration Rights Agreement Amendment, the Company agreed to pay the Private Placement Investors the liquidated damages equal to the amount that would otherwise have accrued pursuant to the Registration Rights Agreement, without giving effect to the Registration Rights Agreement Amendment.
Going Concern
The Company’s unaudited condensed consolidated 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. During the six months ended June 30, 2024, the Company’s cash used in operations was $1,513,366 leaving a cash balance of $1,834,477 as of June 30, 2024. Because the Company does not have sufficient resources to fund our operations for the next twelve months from the date of this filing, management has substantial doubt about the Company’s ability to continue as a going concern.
General
The Company is involved in the research and development of an orthodontic alignment platform. The Company has several patents for the technology used in the platform and is currently in the process of preparing the prototype for FDA approval.
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Results of Operations
Comparison of the Three Months Ended June 30, 2024, and the Three Months Ended June 30, 2023
The following table sets forth the results of operations of the Company for the three months ended June 30, 2024 and June 30, 2023:
Three Months Ended June 30, | ||||||||||||||||
| 2024 | 2023 | Change $ | Change % | |||||||||||||
| Research and development | $ | 389,216 | $ | 140,590 | $ | 248,626 | 177 | % | ||||||||
| General and administrative | $ | 333,274 | $ | 151,347 | $ | 181,927 | 120 | % | ||||||||
| Share-based compensation | $ | 774,428 | $ | 5,088 | $ | 769,340 | 15,121 | % | ||||||||
| Financial income (expenses), net | $ | (9,872 | ) | $ | 11,243 | $ | (21,115 | ) | (188 | )% | ||||||
Research and development expenses
Research and development expenses were $389,216 for the three months ended June 30, 2024, compared to $140,590 for the three months ended June 30, 2023. The increase in research and development expenses of $248,626 or 177%, was primarily due to increased activities relating to the development of our new product.
General and administrative expenses
General and administrative expenses were $333,274 for the three months ended June 30, 2024, compared to $151,347 for the three months ended June 30, 2023. The increase in general and administrative expenses of $181,927 or 120%, was primarily due to an increase in salaries and related expenses, as well as professional fees during the three months ended June 30, 2024.
Share-based Compensation Expenses
Share-based compensation expenses were $774,428 for the three months ended June 30, 2024, compared to $5,088 for the three months ended June 30, 2023. The increase in share-based compensation expenses of $769,340 or 15,121%, was primarily due to the modification of the outstanding stock options as part of the Share Exchange.
Financial income (expenses), net
Financial expense was $9,872 for the three months ended June 30, 2024, compared to $11,243 of income for the three months ended June 30, 2023. The decrease in financial income, net of $21,115 or 188%, was primarily due to exchange rate differences resulting from the translation of NIS based assets and liabilities to U.S. Dollars.
Comparison of the Six Months Ended June 30, 2024, and the Six Months Ended June 30, 2023
The following table sets forth the results of operations of the Company for the six months ended June 30, 2024 and June 30, 2023:
Six Months Ended June 30, | ||||||||||||||||
| 2024 | 2023 | Change $ | Change % | |||||||||||||
| Research and development | $ | 762,873 | $ | 439,362 | $ | 323,511 | 74 | % | ||||||||
| General and administrative | $ | 718,838 | $ | 316,444 | $ | 402,394 | 127 | % | ||||||||
| Share-based compensation | $ | 1,311,625 | $ | 10,120 | $ | 1,301,505 | 12,861 | % | ||||||||
| Financial income (expenses), net | $ | (21,917 | ) | $ | 14,540 | $ | 13,067 | 396 | % | |||||||
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Research and development expenses
Research and development expenses were $762,873 for the six months ended June 30, 2024, compared to $439,362 for the six months ended June 30, 2023. The increase in research and development expenses of $323,511 or 74%, was primarily due to increased activities relating to the development of our new product.
General and administrative expenses
General and administrative expenses were $718,838 for the six months ended June 30, 2024, compared to $316,444 for the six months ended June 30, 2023. The increase in general and administrative expenses of $402,394 or 127%, was primarily due to an increase in salaries and related expenses, as well as professional fees during the six months ended June 30, 2024.
Share-based Compensation Expenses
Share-based compensation expenses were $1,311,625 for the six months ended June 30, 2024, compared to $10,120 for the six months ended June 30, 2023. The increase in share-based compensation expenses of $1,301,505 or 12,861%, was primarily due to the modification of the outstanding stock options as part of the Share Exchange.
Financial income (expenses), net
Financial expense was $21,917 for the six months ended June 30, 2024, compared to $14,540 of income for the six months ended June 30, 2023. The decrease in financial income, net of $36,457 or 251%, was primarily due to exchange rate differences resulting from the translation of NIS based assets and liabilities to U.S. Dollars.
Liquidity and Capital Resources
Sources of Liquidity
We do not have revenues to fund operations. We anticipate that we will continue to incur significant losses as we continue to develop our product. Historically, our primary source of cash has been proceeds from the sale of equity instruments. We raised $5.225 million through a private placement sale of shares to new investors concurrent with the Share Exchange. We intend to spend approximately $1.5 million over the next 18 months on software and hardware development as well as the accompanying regulatory approvals and IP protection associated with such software and hardware projects.
We will need to raise additional capital to fund operating losses and grow our operations. There can be no assurance however that we will be able to raise additional capital when needed, or at terms deemed acceptable, if at all. Such factors raise substantial doubt about our ability to sustain operations for at least one year from the issuance of the interim condensed consolidated financial statements included in this Quarterly Report on Form 10-Q. The accompanying financial statements do not include any adjustments related to the recoverability and classification of asset amounts or the classification of liabilities that might be necessary should we be unable to continue as a going concern. For additional information, see the section above titled “MD&A—Going Concern.”
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Cash Flows
| Six months ended June 30, | ||||||||
| 2024 | 2023 | |||||||
| Cash used in | ||||||||
| Operating activities | $ | (1,487,517 | ) | $ | (1,005,894 | ) | ||
| Investing activities | (25,849 | ) | - | |||||
| Financing activities | - | - | ||||||
| Net decrease in cash and cash equivalents | $ | (1,513,366 | ) | $ | (1,005,894 | ) | ||
Operating activities
Net cash used in operating activities was $1,487,517 for the six months ended June 30, 2024 as compared to $1,005,894 for the six months ended June 30, 2023. The amount for the six months ended June 30, 2024 primarily consisted of a net loss of $3,335,531 offset by non-cash charges of $1,833,468 (including: depreciation of $1,565, Liquidated damages - Registration Rights Agreement of $520,278 and share-based compensation expense of $1,311,625), and an increase in working capital excluding cash of $14,730. The amount for the six months ended June 30, 2023 primarily consisted of a net loss of $751,386, partially offset by non-cash charges of $10,455 (including: depreciation of $335 and share-based compensation expense of $10,120), and a decrease in working capital excluding cash of $264,963.
Investing Activities
During the six months ended June 30, 2024, net cash used in investing activities was $25,849 relating to the purchase of fixed assets. During the six months ended June 30, 2023, there was no cash provided by or used in investing activities.
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
The SEC defined a company’s critical accounting policies as the ones that are most important to the portrayal of our financial condition and results of operations and which require us to make our most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain.
Based on this definition, we have identified the critical accounting policies and judgments addressed below. We also have other key accounting policies that are significant to understanding our results.
Research and Development
We expense all research and development costs as they are incurred. Research and development includes expenditures in connection with in-house research and development salaries and staff costs, consulting fees, as well as proprietary products and technology.
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Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates or 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 revenue and expenses during the reporting periods. Actual results could vary from those estimates. Management utilizes various other estimates, including but not limited to accrued royalties, estimated lives of long-lived assets, the valuation of stock-based compensation, the valuation allowance for deferred tax assets and other contingencies. The results of any changes in accounting estimates are reflected in the financial statements in the period in which the changes become evident. Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected in the period that they are determined to be necessary.
Recent 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.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
Item 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our principal executive officer and principal financial officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in the Securities Exchange Act of 1934, as amended (the “Exchange Act”), Rule 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Quarterly Report on Form 10-Q, have concluded that, based on such evaluation, our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to our management, including our principal executive officer and principal financial officer as appropriate, to allow timely decisions regarding required disclosure.
Change in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during our last fiscal quarter ended June 30, 2024 that have materially affected, or are reasonably likely to affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, we may be involved in litigation that arises through the normal course of business. As of the date of this filing, we are not a party to any material litigation nor are we aware of any such threatened or pending litigation.
There are no proceedings in which any of our directors, officers, affiliates or any registered or beneficial stockholders is an adverse party or has a material interest adverse to our interest.
Item 1A. Risk Factors
The following description of risk factors includes any material changes to, and supersedes the description of, the risk factors addressed below associated with our business, financial condition and results of operations previously disclosed in “Item 1A. Risk Factors” of our Annual Report for the year ended December 31, 2023 on Form 10-K, as filed with the SEC on April 1, 2024 as amended on April 25, 2024. Our business, financial condition and operating results can be affected by a number of factors, whether currently known or unknown, including but not limited to those described below, any one or more of which could, directly or indirectly, cause our actual financial condition and operating results to vary materially from past, or from anticipated future, financial condition and operating results. Any of these factors, in whole or in part, could materially and adversely affect our business, financial condition, operating results and stock price.
The following discussion of risk factors contains forward-looking statements. This risk factor may be important to understanding other statements in this Form 10-Q. The following information should be read in conjunction with the condensed consolidated financial statements and related notes in Part I, Item 1, “Financial Statements” and Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Form 10-Q.
The Company’s financial statements have been prepared on a going concern basis and do not include adjustments that might be necessary if the Company is unable to continue as a going concern. Management has substantial doubt about the Company’s ability to continue as a going concern.
The Company’s unaudited condensed consolidated 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. During the six months ended June 30, 2024, the Company’s cash used in operations was $1,513,366 leaving a cash balance of $1,834,477 as of June 30, 2024. Because the Company does not have sufficient resources to fund our operations for the next twelve months from the date of this filing, management has substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset amounts or the classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
The Company will need to raise additional capital to finance its losses and negative cash flows from operations and may continue to be dependent on additional capital raising as long as its products do not reach commercial profitability. There are no assurances that the Company would be able to raise additional capital on terms favorable to it. If the Company is unsuccessful in commercializing its products and raising capital, it will need to reduce activities, curtail, or cease operations.
We conduct our operations in Israel. Conditions in Israel, including the recent attack by Hamas and other terrorist organizations from the Gaza Strip and Israel’s war against them, may affect our operations.
Because our wholly-owned subsidiary is incorporated under the laws of the State of Israel, all of our operations are conducted in Israel and all of our employees and management personnel are located in Israel, our business and operations are directly affected by economic, political, geopolitical and military conditions in Israel. Since the establishment of the State of Israel in 1948, a number of armed conflicts have occurred between Israel and its neighboring countries and terrorist organizations active in the region. These conflicts have involved missile strikes, hostile infiltrations and terrorism against civilian targets in various parts of Israel, which have negatively affected business conditions in Israel.
In October 2023, Hamas terrorists infiltrated Israel’s southern border from the Gaza Strip and conducted a series of attacks on civilian and military targets. Hamas also launched extensive rocket attacks on the Israeli population, industrial centers located along Israel’s border with the Gaza Strip and in other areas within the State of Israel. Following the attack, Israel’s security cabinet declared war against Hamas and a military campaign against these terrorist organizations commenced in parallel to their continued rocket and terror attacks. Moreover, the clash between Israel and Hezbollah in Lebanon may escalate in the future into a greater regional conflict.
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Any hostilities involving Israel, or the interruption or curtailment of trade within Israel or between Israel and its trading partners, could adversely affect our operations and results of operations and could make it more difficult for us to raise capital. Parties with whom we may do business have sometimes declined to travel to Israel during periods of heightened unrest or tension, forcing us to make alternative arrangements when necessary. The conflict situation in Israel could cause situations where medical product certifying or auditing bodies could not be able to visit manufacturing facilities of our subcontractors in Israel in order to review our certifications or clearances, thus possibly leading to temporary suspensions or even cancellations of our product clearances or certifications. The conflict situation in Israel could also result in parties with whom we have agreements involving performance in Israel claiming that they are not obligated to perform their commitments under those agreements pursuant to force majeure provisions in such agreements.
There have been travel advisories imposed as related to travel to Israel, and restrictions on travel or delays and disruptions as related to imports and exports may be imposed in the future. An inability to receive supplies and materials, shortages of materials or difficulties in procuring our materials, among others, may adversely impact our ability to commercialize and manufacture our product candidates and products in a timely manner. This could cause a number of delays and/or issues for our operations, including delay of the review of our product candidates by regulatory agencies, which in turn would have a material adverse impact on our ability to commercialize our product candidates.
The Israel Defense Force (the “IDF”), the national military of Israel, is a conscripted military service, subject to certain exceptions. Several employees of our vendors are subject to military service in the IDF and have been or may be called to serve. It is possible that there will be further military reserve duty call-ups in the future, which may affect our business due to a shortage of skilled labor and loss of institutional knowledge, and necessary mitigation measures we may take to respond to a decrease in labor availability, such as overtime and third-party outsourcing, which may have unintended negative effects and adversely impact our results of operations, liquidity or cash flows.
It is currently not possible to predict the duration or severity of the ongoing conflict or its effects on our business, operations and financial conditions. The ongoing conflict is rapidly evolving and developing, and could disrupt our business and operations, interrupt our sources and availability of supplies, and hamper our ability to raise additional funds or sell our securities, among others.
Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities.
There were no unregistered sales of the Company’s equity securities during the three months ended June 30, 2024, other than those previously reported in a Current Report on Form 8-K.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Mine Safety Disclosures
Not Applicable.
Item 5. Other Information
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Item 6. Exhibits
| Exhibit No. | Description | |
| 31.1* | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 31.2* | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 32.1** | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 32.2** | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 101 INS* | Inline XBRL Instance Document | |
| 101 SCH* | Inline XBRL Taxonomy Extension Schema Document | |
| 101 CAL* | Inline XBRL Taxonomy Calculation Linkbase Document | |
| 101 DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101 LAB* | Inline XBRL Taxonomy Labels Linkbase Document | |
| 101 PRE* | Inline XBRL Taxonomy Presentation Linkbase Document | |
| 104* | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
| * | Filed herewith. |
| ** | Furnished herewith. |
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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.
| DROR-ORTHO DESIGN, INC. | ||
| Date: August 14, 2024 | By: | /s/ Eliyahu (Lee) Haddad |
| Name: | Eliyahu (Lee) Haddad | |
| Title: |
(Principal Executive Officer and Principal Financial and Accounting Officer) | |
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Exhibit 31.1
CERTIFICATIONS UNDER SECTION 302
I, Eliyahu (Lee) Haddad, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Dror-Ortho Design, Inc. (the “registrant”); |
| 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. | The registrant’s other certifying officer and I are 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 our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, 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 our 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 our 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. | The registrant’s other certifying officer and I have disclosed, based on our 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, 2024 | |
| /s/ Eliyahu (Lee) Haddad | |
| Eliyahu (Lee) Haddad | |
|
Chief Executive Officer (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATIONS UNDER SECTION 302
I, Eliyahu (Lee) Haddad, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Dror-Ortho Design, Inc. (the “registrant”); |
| 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. | The registrant’s other certifying officer and I are 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 our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, 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 our 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 our 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. | The registrant’s other certifying officer and I have disclosed, based on our 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, 2024 | |
| /s/ Eliyahu (Lee) Haddad | |
| Eliyahu (Lee) Haddad | |
| Chief Financial Officer | |
| (Principal Financial and Accounting Officer) |
Exhibit 32.1
CERTIFICATION FURNISHED PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
This certification is furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350) and accompanies the Quarterly Report on Form 10-Q (the “Form 10-Q”) for the quarter ended June 30, 2024, of Dror-Ortho Design, Inc. (the “Company”). I, Eliyahu (Lee) Haddad, the Chief Executive Officer of the Company, certify that, based on my knowledge:
| (1) | The Form 10-Q fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and |
| (2) | The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the periods covered in this report. |
| Date: August 14, 2024 | By: | /s/ Eliyahu (Lee) Haddad |
| Eliyahu (Lee) Haddad | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) |
Exhibit 32.2
CERTIFICATION FURNISHED PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
This certification is furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350) and accompanies the Quarterly Report on Form 10-Q (the “Form 10-Q”) for the quarter ended June 30, 2024, of Dror-Ortho Design, Inc. (the “Company”). I, Eliyahu (Lee) Haddad, the Chief Financial Officer of the Company, certify that, based on my knowledge:
| (1) | The Form 10-Q fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and |
| (2) | The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the periods covered in this report. |
| Date: August 14, 2024 | By: | /s/ Eliyahu (Lee) Haddad |
| Eliyahu (Lee) Haddad | ||
| Chief Financial Officer | ||
| (Principal Financial and Accounting Officer) |