What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-02-19 compared with 2024-04-01 · 137 added, 137 removed, 169 unchanged (62% of the section changed)

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requires, references in this MD&A to “Dror,” “we”, “us”, “our”, and the “Company”

are intended to refer to (i) following the Share Exchange (as defined below), the business and operations of Dror Ortho-Design, Inc.

are intended to refer to (i) following the Share Exchange (as defined below), the business and operations of Dror Ortho-Design,

and its consolidated subsidiaries, and (ii) prior to the Share Exchange, Dror Ortho-Design Ltd.

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wholly owned subsidiary of Dror Ortho-Design, Inc.).

All dollar amounts in this

registration statement refer to U.S.

All dollar amounts in

this registration statement refer to U.S.

dollars unless otherwise indicated.

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.

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 and convertible preferred stock (the “Share Exchange”).

On August 14, 2023 the Share Exchange

was consummated and we changed our name to “Dror Ortho-Design, Inc.”

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 and convertible preferred stock (the “Share

On August 14, 2023 the Share Exchange was consummated and we changed our name to “Dror Ortho-Design, Inc.”

Following the Share Exchange,

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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.

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

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in the process of preparing the prototype for FDA approval.

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.

Our predecessor first

generation Aerodentis System is a Class II medical device, which was cleared by FDA for commercialization in the U.S.

the 510(k) notification process for movement and alignment of teeth during orthodontic treatment of malocclusion in April 2020.

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

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5, 2023, we entered into a Share Exchange Agreement (as amended by that certain Amendment to Share Exchange Agreement, dated August 14,

2023, the “Share Exchange Agreement”) with Private Dror and all shareholders of Private Dror.

Pursuant to the Share Exchange

Agreement, on August 14, 2023, the shareholders of Private Dror transferred all of their ordinary shares in Private Dror to us in exchange

for 7,576,999 newly issued shares of our Series A Convertible Preferred Stock, par value $0.0001 per share (the “Series A Preferred

Stock”), and 106,782,187 shares of our Common Stock.

As a result of these share exchanges, Private Dror became a wholly owned subsidiary

of the Company.

2023, the “Share Exchange Agreement”) , and on August 13, 2023, the share exchange (the “Share Exchange”) was

consummated with Private Dror and all shareholders of Private Dror.

Pursuant to the Share Exchange Agreement, on August 14, 2023, the

shareholders of Private Dror transferred all of their ordinary shares in Private Dror to us in exchange for 7,576,999 newly issued shares

of our Series A Convertible Preferred Stock, par value $0.0001 per share (the “Series A Preferred Stock”), and 106,782,187

shares of our Common Stock.

As a result of the Share Exchange, Private Dror became a wholly owned subsidiary of the Company.

Pursuant to the terms and

conditions of the Share Exchange Agreement:

● The shareholders of Private Dror transferred 235,088 ordinary

shares of Private Dror to us in exchange for 7,576,999 shares of Series A Convertible Preferred Stock and 106,782,187 shares of Common

Stock (the “Share Exchange”).

● In connection with the Share Exchange, we assumed all of Private

Dror’s obligations under Private Dror’s outstanding share options.

● All outstanding Series A-4 Warrants to purchase Private Dror’s

ordinary shares were assumed by the Company and converted into Share Exchange Warrants (as defined below).

● Simultaneously with the Share Exchange, the board of directors

and certain officers of the Company resigned, and a new board of directors, comprised of Private Dror’s legacy board of directors,

and new officers were appointed for the Company.

The Company’s new board of directors consists of Eliyahu (Lee) Haddad, Chaim Hurvitz,

Moshe Shvets, Chaim Ravad and Yehuda Englander.

In addition, immediately following the Share Exchange, Mr.

Haddad was appointed as the

Company’s chief executive officer, Mr.

Shvets as Chief Technology Officer, and Mr.

The shareholders of Private

Dror transferred 235,088 ordinary shares of Private Dror to us in exchange for 7,576,999 shares of Series A Convertible Preferred

Stock and 106,782,187 shares of Common Stock (the “Share Exchange”).

In connection with the

Share Exchange, we assumed all of Private Dror’s obligations under Private Dror’s outstanding share options.

All outstanding Series

A-4 Warrants to purchase Private Dror’s ordinary shares were assumed by the Company and converted into Share Exchange Warrants

(as defined below).

Simultaneously with the

Share Exchange, the board of directors and certain officers of the Company resigned, and a new board of directors, comprised of Private

Dror’s legacy board of directors, and new officers were appointed for the Company.

The Company’s new board of directors

consists of Eliyahu (Lee) Haddad, Chaim Hurvitz, Moshe Shvets, Chaim Ravad and Yehuda Englander.

In addition, immediately following

the Share Exchange, Mr.

Haddad was appointed as the Company’s chief executive officer, Mr.

Shvets as Chief Technology Officer,

Hurvitz as chairman of the board of directors.

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In connection with the closing

of the Share Exchange, pursuant to the Purchase Agreement, the Company sold (1) the Private Placement Shares and shares of Series A Preferred

Stock, or a combination thereof, at an effective purchase price of $0.011 per Private Placement Share or share of Common Stock underlying

such shares of Series A Preferred Stock and (2) Private Placement Warrants to the Private Placement Investors in connection with the Private

The Company received aggregate gross proceeds of $5,025,000 in connection with the first closing of the Private Placement on

August 14, 2023 and an additional $200,000 in connection with a second closing of on September 13, 2023.

of the Share Exchange, pursuant to the Purchase Agreement, the Company sold in a private placement (the “Private Placement”)

186,363,631 shares of common stock (the Private Placement Shares), 2,886,364 shares of Series A Preferred Stock and warrants to purchase

shares of common stock (the “Private Placement Warrants”), or a combination thereof, at an effective purchase price of $0.011

per Private Placement Share or share of Common Stock underlying such shares of Series A Preferred Stock to certain investors (the “Private

Placement Investors”) in connection with the Private Placement.

The Company received aggregate gross proceeds of $5,025,000 in

connection with the first closing of the Private Placement on August 14, 2023 and an additional $200,000 in connection with a second

closing of the Private Placement on September 13, 2023.

The Company and the Private

Placement Investors also entered into a Registration Rights Agreement, pursuant to which the Company agreed to register, among other registrable

securities, on Form S-1 (or, if the Company is then eligible, on Form S-3) with the SEC:

(i) the Private Placement Shares, (ii) Conversion

Shares issuable in connection with the Purchase Agreement, (iii) the shares of Common Stock underlying the Private Placement Warrants

issued to the Private Placement Investors, and (iv) the shares of Common Stock and Conversion Shares underlying the shares of Series A

Preferred Stock issued to the investors in the December 2021 Transaction in connection with the Share Exchange.

The Company filed a registration

statement on Form S-1 covering the aforementioned securities with the SEC on February 9, 2024.

Placement Investors also entered into a Registration Rights Agreement, pursuant to which the Company agreed to register, among other

registrable securities, on Form S-1 (or, if the Company is then eligible, on Form S-3) with the SEC:

(i) the Private Placement Shares,

(ii) Conversion Shares issuable in connection with the Purchase Agreement, (iii) the shares of Common Stock underlying the Private Placement

Warrants issued to the Private Placement Investors, and (iv) the shares of Common Stock and Conversion Shares underlying the shares of

Series A Preferred Stock issued to the investors in the December 2021 Transaction in connection with the Share Exchange.

filed a registration statement on Form S-1 covering the aforementioned securities with the SEC on February 9, 2024.

Going Concern

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and negative cash flows from operations since our inception.

As of December 31, 2023, we had cash of approximately $3.3 million, positive

working capital of $3.2 million, an accumulated deficit of approximately $13.7 million and used cash in operations during the twelve months

ended December 31, 2023 of approximately $2.4 million.

The Company does not currently have sufficient available liquidity to fund its

operations for at least the next 12 months.

As of December 31, 2024, we had cash of approximately $549,000, working capital

deficit of approximately $268,000, an accumulated deficit of approximately $19.5 million and used cash in operations during the twelve

months ended December 31, 2024 of approximately $2.7 million.

The Company does not currently have sufficient available liquidity to fund

its operations for at least the next 12 months.

Such factors raise substantial doubt about our ability to sustain operations for at least

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Comparison of the Years Ended December 31, 2024 and 2023

The following table sets forth

the results of our operations for the years ended December 31, 2023 and 2022:

The following table sets

forth the results of our operations for the years ended December 31, 2024 and 2023:

Years Ended December 31,

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Share-based compensation

Financial income, net

Gain on retirement of royalty accrual

Research and Development Expenses

Other income (expense), net

$ (1,362,768 )

Research and Development Expenses

were $1,004,443 for the year ended December 31, 2023, compared to $850,860 for the year ended December 31, 2022.

The increase in research

and development expenses of $153,763 or 18%, was primarily due to increased outsourced consulting activities relating to the development

of our new product and an increase in salaries.

Research and development

expenses were $1,540,097 for the year ended December 31, 2024, compared to $1,063,470 for the year ended December 31, 2023.

in research and development expenses of $476,627 or 45%, was primarily due to increased outsourced consulting activities relating to

the development of our new product and an increase in salaries.

General and Administrative Expenses

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expenses were $1,437,832 for the year ended December 31, 2024, compared to $1,061,399 for the year ended December 31, 2023.

in general and administrative expenses of $305,773 or 38%, was primarily due to an increase in professional fees relating to public company

compliance following the Share Exchange as well as an increase in salaries and related expenses during the year ended December 31, 2023.

Share-based Compensation Expenses

in general and administrative expenses of $376,433 or 35%, was primarily due to an increase in professional fees relating to public

company compliance following the Share Exchange as well as an increase in salaries and related expenses during the year ended December

Share-based Compensation Expenses

were $2,253,793 for the year ended December 31, 2023, compared to $19,908 for the year ended December 31, 2022.

The increase in general

and administrative expenses of $2,233,885 or 11221%, was primarily due to the modification of the outstanding stock options as part of

the Share Exchange.

Financial (Income) Expenses, Net

Financial income was $90,147

Share-based compensation

expenses were $2,246,033 for the year ended December 31, 2024, compared to $2,253,793 for the year ended December 31, 2023.

in share-based compensation expenses of $7,760 or 0%, was considered not material.

Other income (expenses), net

Other expense was $551,989

for the year ended December 31, 2024, compared to $810,779 of income for the year ended December 31, 2023.

The increase in financial income,

net of $88,405 or 5075%, was primarily due to exchange rate differences resulting from the translation of NIS based assets and liabilities

to US dollars.

Gain on retirement of royalty accrual

Gain on retirement of royalty

accrual was $720,632 for the year ended December 31, 2023, which resulted from the retirement of outstanding royalty accrual due to the

expiration of the relevant Statute of Limitations.

There was not retirement of royalty accrual for the year ended December 31, 2022.

The decrease in other income,

net of $1,362,768 or 168%, was primarily due to liquidated damages accrual of $520,000, no retirement of royalty accrual and exchange

rate differences resulting from the translation of NIS based assets and liabilities to U.S.

Liquidity and Capital Resources

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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 $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.

We raised $5.225 million through the Private Placement

and sale of the Private Placement Shares to new investors concurrent with the Share Exchange.

We intend to spend approximately $1 million

over the next 12 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 audited financial statements included in this Annual Report.

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

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 audited financial statements included in this Annual Report.

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.”

Private Placement

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Financing activities

Foreign exchange differences on cash

Net increase (decrease) in cash and cash equivalents

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Share-based compensation expense of $2,246,033,

gain on retirement of royalty accrual of $720,632 and depreciation expense of $670), and a decrease in operating assets and liabilities

depreciation expense of $4,035 and foreign exchange differences of $26,703), and an increase in operating assets and liabilities excluding

cash of $757,358.

The amount for the year ended December 31, 2023 primarily consisted of a net loss of $3,567,883 offset by non-cash charges

of $1,443,684 (including:

Share-based compensation expense of $2,253,793, depreciation expense of $670, partially offset by gain on retirement

of royalty accrual of $720,632 and gain on foreign exchange differences of $90,147), and a decrease in operating assets and liabilities

excluding cash of $269,963.

The amount for the year ended December 31, 2022 primarily consisted of a net loss of $1,683,499, partially

offset by non-cash charges of $20,578 (including:

Share-based compensation expense of $ 19,908 and depreciation of $670), and a decrease

in operating assets and liabilities excluding cash of $145,743.

Cash Provided by Investing Activities

During the year ended December

31, 2024, net cash used by investing activities was $25,849 relating to the purchase of fixed assets.

During the year ended December

31, 2023, net cash provided by investing activities was $17,966 relating to the cash received in the Share Exchange.

During the year ended

December 31, 2022, there was no cash provided by or used in investing activities.

Cash Provided by Financing Activities

During the year ended December

31, 2023, net cash provided by financing activities was $4,653,204 relating to the net proceeds from the private placement raise.

the year ended December 31, 2022, there was no cash provided by or used in financing activities.

31, 2024, there was no cash provided by financing activities.

During the year ended December 31, 2023, net cash provided by financing

activities was $4,653,204 relating to the net proceeds from the private placement raise.

Effects of Inflation

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Off-Balance Sheet Arrangements

We currently do not have any

off-balance sheet arrangements or financing activities with special-purpose entities.

We currently do not have

any off-balance sheet arrangements or financing activities with special-purpose entities.

Critical Accounting Policies and Use of Estimates

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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.

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,

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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.

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.

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

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This input is used in determining an award’s fair value.

The practical expedient in this Update allows a

non-public entity to determine the current price of a share underlying an equity classified share-based award using the reasonable application

of a reasonable valuation method.

The practical expedient in this Update is effective prospectively for all qualifying awards granted

or modified during fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15,

Early application, including application in an interim period, is permitted for financial statements that have not yet been issued

or made available for issuance as of October 25, 2021.

The implementation of this standard did not have a material effect on our financial

The practical expedient in this Update allows

a non-public entity to determine the current price of a share underlying an equity classified share-based award using the reasonable

application of a reasonable valuation method.

The practical expedient in this Update is effective prospectively for all qualifying awards

granted or modified during fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December

Early application, including application in an interim period, is permitted for financial statements that have not yet been

issued or made available for issuance as of October 25, 2021.

The implementation of this standard did not have a material effect on our

financial statements.

Quantitative and Qualitative Disclosures About Market

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis