DROR 10-Q
Dror Ortho-Design, Inc. (DROR)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly
period ended
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ____ to ____
Commission File No.
(Exact Name of Registrant as Specified in Its Charter)
| (State or Other Jurisdiction of Incorporation or Organization) | (IRS Employer Identification No.) | |
| (Address of Principal Executive Offices) | (Zip Code) | |
| ( | ||
| Registrant’s Telephone Number, including Area Code: | ||
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
| Title of each class |
| Common Stock, $.0001 Par Value Per Share |
Indicate by check whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Larger Accelerated Filer ☐ | Accelerated Filer ☐ |
| Smaller Reporting Company | |
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐
On May 12, 2023, the Registrant had shares of common stock outstanding.
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TABLE OF CONTENTS
NOVINT TECHNOLOGIES, INC.
FORM 10-Q
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
| Novint Technologies, Inc. |
| CONDENSED BALANCE SHEETS |
| March 31, | 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 | ||||||||
| Total Current Liabilities | ||||||||
| TOTAL LIABILITIES | ||||||||
| STOCKHOLDERS’ DEFICIT | ||||||||
| Preferred stock, $ par value; shares authorized, shares issued and outstanding as of March 31, 2023 and December 31, 2022 | ||||||||
| Common stock, $ par value; shares authorized, shares issued and outstanding as of March 31, 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.
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| Novint Technologies, Inc. | ||||||
| CONDENSED STATEMENTS OF OPERATIONS | ||||||
| (Unaudited) | ||||||
| For the Three
Months Ended March 31, |
||||||||
| 2023 | 2022 | |||||||
| Revenue | $ | $ | ||||||
| Operating Expenses | ||||||||
| Professional fees | ||||||||
| General and administrative expenses | ||||||||
| Total Operating Expenses | ||||||||
| Loss from operations | ( |
) | ( |
) | ||||
| Other expense: | ||||||||
| Interest expense | ( |
) | ||||||
| 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 March 31, 2023 | ||||||||||||||||||||
| Additional | ||||||||||||||||||||
| Common Stock | Paid-in | Accumulated | ||||||||||||||||||
| Shares | Amount | Capital | (Deficit) | Total | ||||||||||||||||
| Balances, December 31, 2022 | $ | $ | $ | ( |
) | $ | ( |
) | ||||||||||||
| Net Loss | - | ( |
) | ( |
) | |||||||||||||||
| Balances, March 31, 2023 | ( |
) | ( |
) | ||||||||||||||||
| Three Months Ended March 31, 2022 | ||||||||||||||||||||
| Additional | ||||||||||||||||||||
| Common Stock | Paid-in | Accumulated | ||||||||||||||||||
| Shares | Amount | Capital | (Deficit) | Total | ||||||||||||||||
| Balances, December 31, 2021 | $ | $ | $ | ( |
) | $ | ( |
) | ||||||||||||
| Net Loss | - | ( |
) | ( |
) | |||||||||||||||
| Balances, March 31, 2022 | ( |
) | ( |
) | ||||||||||||||||
The accompanying notes are an integral part of these financial statements.
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| Novint Technologies, Inc. | ||||||
| CONDENSED STATEMENTS OF CASH FLOWS | ||||||
| (Unaudited) | ||||||
| For the Three Months Ended March 31, |
||||||||
| 2023 | 2022 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( |
) | $ | ( |
) | ||
| 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 | ( |
) | ( |
) | ||||
| Net cash used in investing activities | ||||||||
| Net cash used in financing activities | ||||||||
| Net decrease in cash | ( |
) | ( |
) | ||||
| Cash and cash equivalents, beginning of year | ||||||||
| Cash and cash equivalents, end of period | $ | $ | ||||||
| Supplemental cash flow information: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for taxes | $ | $ | ||||||
The accompanying notes are an integral part of these financial statements.
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NOVINT TECHNOLOGIES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2023
(Unaudited)
NOTE 1 – DESCRIPTION OF BUSINESS
Novint Technologies, Inc. (the “Company”, “Novint”, “we” or “us”) 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 currently is engaged in the development and sale of 3D haptics products and equipment. Haptics refers to one’s sense of touch. The Company’s focus is on the consumer interactive computer gaming market but the Company also does project work in other areas. The Company’s operations are based in New Mexico with sales of its haptics products primarily to consumers through retail outlets.
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 March 31, 2023, had an accumulated deficit of $
The novel coronavirus, known as the global COVID-19 pandemic, was first identified in December 2019. We continue to monitor the COVID-19 pandemic and its effect on our business and results of operations; however, 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 and contingent consideration. 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.
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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 months ended March 31, 2023 may not be indicative of results for the full year.
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 on deposit 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 the following five-step process to achieve this core principle:(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 recognizes revenue from sales of the Falcon 3D Touch Haptic Controller (the “Falcon”), which is a human-computer user interface, and related accessories. 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. |
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Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.
The carrying amounts of the Company’s financial assets and liabilities, including cash, prepaid expenses, accounts payable, accrued expenses and related liabilities approximate their fair values because of the short maturity of these instruments.
Recently Issued Accounting Pronouncements
The Company has reviewed the recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the SEC and 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:
| March 31, | 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 providing gaming software. These licensing agreements have royalty
fees ranging from
NOTE 5 – COMMITMENTS AND CONTINGENCIES
From time to time, in the normal course of business, the Company is subject to routine litigation incidental to its business. Although there can be no assurances as to the ultimate disposition of any such matters, it is the opinion of management, based upon the information available at this time, that there are no matters, individually or in the aggregate, that will have a material adverse effect on the results of operations and financial condition of the Company.
NOTE 6 – STOCKHOLDERS’ DEFICIT
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 up to shares of $ par value common stock. All issued shares of
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NOTE 7 – SUBSEQUENT EVENTS
The Company has evaluated events subsequent to March 31, 2023, 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.
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.
Overview
Novint Technologies, Inc. (“Novint”, the “Company”, “we”, “our”, “us”) 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.
Nature of Business
The Company currently is engaged in the sale of 3D haptics products and equipment. Haptics refers to one’s sense of touch. The Company’s focus is on the consumer interactive computer gaming market, but the Company conducts project work in non-gaming areas as well.
Our principal product is the Falcon, an extensible, grounded (e.g., desktop), three-dimensional (3D) haptic interaction device with characteristics optimized for real-time force-feedback and tactile interaction. Additionally, we have developed but not yet commercialized the Xio product, a next generation, full arm, game controller with forced feedback. Currently, we are focused on engaging in discussions with potential partners and studying other ways to realize value from the Falcon and Xio products.
Results of Operations for the Three Months Ended March 31, 2023 and 2022
Revenues
| Three months ended March 31, | ||||||||||||
| 2023 | 2022 | Change | ||||||||||
| Revenue | $ | — | $ | — | $ | — | ||||||
The Company recorded revenue of $0 and $0 for the three-month period ended March 31, 2023 and March 31, 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 March 31, | ||||||||||||
| 2023 | 2022 | Change | ||||||||||
| Operating Expenses | $ | 50,379 | $ | 49,300 | $ | 1,079 | ||||||
Operating expenses increased by $1,079 or 2% to $50,379 for the three months ended March 31, 2023, from $49,300 for the three months ended March 31, 2022. This increase was primarily due to an increase in professional fees incurred during the three months ended March 31, 2023.
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Other Expense
| Three months ended March 31, | ||||||||||||
| 2023 | 2022 | Change | ||||||||||
| Other Expense | $ | — | $ | 14 | $ | (14 | ) | |||||
Other expense decreased by $14 or 100% to $0 during the three months ended March 31, 2023 compared with $14 during the three months ended March 31, 2022. Other expense for the three months ended March 31, 2022 consisted of interest expense related to finance charges on credit cards which was fully paid off during the period ended March 31, 2022.
Liquidity and Capital Resources
The following table summarizes select Balance Sheet and working capital amounts as of March 31, 2023 and December 31, 2022:
| March 31, | December 31, | |||||||||||
| 2023 | 2022 | Change | ||||||||||
| Cash | $ | 23,356 | $ | 55,081 | $ | (31,725 | ) | |||||
| Working capital deficit | $ | (774,235 | ) | $ | (723,856 | ) | $ | (50,379 | ) | |||
At March 31, 2023, the Company had a working capital deficit of approximately $774,235. Accumulated deficit amounted to $41,853,759 and $41,803,380 at March 31, 2023 and December 31, 2022, respectively. Net loss for the three months ended March 31, 2023 and 2022 was $50,379 and $49,314, respectively. Net cash used in operating activities was $31,725 and $38,788 for the three months ended March 31, 2023 and 2022, respectively. Operations since inception have been funded primarily with the proceeds from equity and debt offerings. As of March 31, 2023, the Company had cash of $23,356.
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 March 31, 2023, had an accumulated deficit of $41,853,759; (iii) the Company sustained an operating loss of $50,379 for the period ended March 31, 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 2023. The Company anticipates that it will continue to issue equity and/or debt securities as a source of liquidity, until it begins to generate positive cash flow to support its operations. Any future sales of securities to finance operations will dilute existing stockholders’ ownership. The Company cannot guarantee when or if it will generate positive cash flow.
The audit report prepared by our independent registered public accounting firm relating to the Company’s consolidated financial statements for the year ended December 31, 2022 included an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern.
Cash Flow Activities
The following table summarizes the Company’s cash flows for the periods set forth below:
| Three months ended March 31, | ||||||||||||
| 2023 | 2022 | Change | ||||||||||
| Net cash used in operating activities | $ | 31,725 | $ | 38,788 | $ | 7,063 | ||||||
Net cash used in operating activities for the three months ended March 31, 2023 was $31,725 compared with net cash used in operating activities of $38,788 for the three months ended March 31, 2022. The decrease in net cash used in operating activities was primarily due to an increase of $6,289 in accounts payable and accrued expenses for the three months ended March 31, 2023, compared to a decrease in accounts payable and accrued expenses of $3,131 for the three months ended March 31, 2022.
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Net cash used in operating activities for the three months ended March 31, 2023 was $38,788, representing a net loss of $50,379 partially offset by an increase of $12,500 in accrued royalties and by an increase of $6,289 in accounts payable and accrued expenses.
Effects of Inflation
We do not believe that inflation has had a material impact on our business, sales, or operating results during the periods presented.
Off-Balance Sheet Arrangements
We currently do not have any off-balance sheet arrangements or financing activities with special-purpose entities.
Critical Accounting Policies and Use of Estimates
Critical accounting policies are those policies which are both important to the presentation of a company’s financial condition and results and require management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. There have been no recent significant changes to our accounting policies and use of estimates during the three months ended March 31, 2023. For a further discussion of our critical accounting policies, see our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
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 March 31, 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 March 31, 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 March 31, 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.* | |
| 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* |
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| 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.
| May 12, 2023 | NOVINT TECHNOLOGIES, INC. | |
| By: | /s/ Orin Hirschman | |
| Name: Orin Hirschman | ||
| Title: President (Principal Executive Officer and Principal Financial Officer) | ||
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