Dror Ortho-Design, Inc. 10-Q

Item 1. Financial Statements Novint Technologies, Inc. CONDENSED BALANCE SHEETS June 30, December 31, 2023 2022 (Unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 27,216 $ 55,081 Prepaid expenses 1,959 5,348 Total Current Assets 29,175 60,429 TOTAL ASSETS $ 29,175 $ 60,429 LIABILITIES AND STOCKHOLDERS’ DEFICIT CURRENT LIABILITIES: Accounts payable and accrued expenses $ 126,543 $ 101,153 Accrued royalties 708,132 683,132 Note payable – related party 50,000 — Total Current Liabilities 884,675 784,285 TOTAL LIABILITIES 884,675 784,285 STOCKHOLDERS’ DEFICIT Preferred stock, $ 0.0001 par value; 12,500,000 shares authorized, 0 shares issued and outstanding as of June 30, 2023 and December 31, 2022 — — Common stock, 0.0001 par value; 500,000,000 shares authorized, 202,308,728 shares issued and outstanding as of June 30, 2023 and December 31, 2022 20,231 20,231 Additional paid in capital 41,059,293 41,059,293 Accumulated deficit ( 41,935,024 ) ( 41,803,380 ) TOTAL STOCKHOLDERS’ DEFICIT ( 855,500 ) ( 723,856 ) TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT $ 29,175 $ 60,429 The accompanying notes are an integral part of these financial statements. 3 Novint Technologies, Inc. CONDENSED STATEMENTS OF OPERATIONS (Unaudited) For the Three Months Ended June 30, For the Six Months Ended June 30, 2023 2022 2023 2022 Revenue $ — $ — $ — $ — Operating Expenses Professional fees 58,106 13,857 82,534 39,503 General and administrative expenses 23,159 23,001 49,110 46,655 Total Operating Expenses 81,265 36,858 131,644 86,158 Loss from operations ( 81,265 ) ( 36,858 ) ( 131,644 ) ( 86,158 ) Other expense: Interest expense, net — — — ( 14 ) Total other expense — — — ( 14 ) Loss before provision for income taxes ( 81,265 ) ( 36,858 ) ( 131,644 ) ( 86,172 ) Provision for income taxes — — — — Net loss $ ( 81,265 ) $ ( 36,858 ) $ ( 131,644 ) $ ( 86,172 ) Net loss per share Basic and Diluted $ ( 0.00 ) $ ( 0.00 ) $ ( 0.00 ) $ ( 0.00 ) Weighted-average common shares outstanding Basic and Diluted 202,308,728 202,308,728 202,308,728 202,308,728 The accompanying notes are an integral part of these financial statements. 4 Novint Technologies, Inc. CONDENSED STATEMENTS OF STOCKHOLDERS’ DEFICIT (Unaudited) Three Months Ended June 30, 2023 Additional Common Stock Paid-in Accumulated Shares Amount Capital (Deficit) Total Balances, March 31, 2023 202,308,728 $ 20,231 $ 41,059,293 $ ( 41,853,759 ) $ ( 774,235 ) Net Loss for the Three Months — — — ( 81,265 ) ( 81,265 ) Balances, June 30, 2023 202,308,728 $ 20,231 $ 41,059,293 $ ( 41,935,024 ) $ ( 855,500 ) Six Months Ended June 30, 2023 Additional Common Stock Paid-in Accumulated Shares Amount Capital (Deficit) Total Balances, December 31, 2022 202,308,728 $ 20,231 $ 41,059,293 $ ( 41,803,380 ) $ ( 723,856 ) Net Loss for the Six Months — — — ( 131,644 ) ( 131,644 ) Balances, June 30, 2023 202,308,728 $ 20,231 $ 41,059,293 $ ( 41,935,024 ) $ ( 855,500 ) Three Months Ended June 30, 2022 Additional Common Stock Paid-in Accumulated Shares Amount Capital (Deficit) Total Balances, March 31, 2022 202,308,728 $ 20,231 $ 41,059,293 $ ( 41,673,944 ) $ ( 594,420 ) Net Loss for the Three Months — — — ( 36,858 ) ( 36,858 ) Balances, June 30, 2022 202,308,728 $ 20,231 $ 41,059,293 $ ( 41,710,802 ) $ ( 631,278 ) Six Months Ended June 30, 2022 Additional Common Stock Paid-in Accumulated Shares Amount Capital (Deficit) Total Balances, December 31, 2021 202,308,728 $ 20,231 $ 41,059,293 $ ( 41,624,630 ) $ ( 545,106 ) Net Loss for the Six Months — — ( 86,172 ) ( 86,172 ) Balances, June 30, 2022 202,308,728 $ 20,231 $ 41,059,293 $ ( 41,710,802 ) $ ( 631,278 ) The accompanying notes are an integral part of these financial statements. 5 Novint Technologies, Inc. CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) For the Six Months Ended June 30, 2023 2022 Cash flows from operating activities: Net loss $ ( 131,644 ) $ ( 86,172 ) Adjustments to reconcile net loss to net cash used in operating activities: Expenses paid by related party 30,000 Changes in operating assets and liabilities: Prepaid expenses and other current assets 3,389 3,227 Accounts receivables — 1,360 Accounts payable and accrued expenses 25,390 ( 4,433 ) Accrued royalties 25,000 25,000 Net cash used in operating activities ( 47,865 ) ( 61,018 ) Cash flows from investing activities: — — Net cash provided by investing activities — — Cash flows from financing activities: Proceeds from related party promissory note 20,000 — Net cash provided by financing activities 20,000 — Net decrease in cash ( 27,865 ) ( 61,018 ) Cash and cash equivalents, beginning of year 55,081 185,935 Cash and cash equivalents, end of period $ 27,216 $ 124,917 Supplemental cash flow information: Cash paid for interest $ — $ 14 Cash paid for taxes $ 458 $ — The accompanying notes are an integral part of these financial statements. 6 NOVINT TECHNOLOGIES, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS JUNE 30, 2023 (Unaudited) NOTE 1 – DESCRIPTION OF BUSINESS Novint Technologies, Inc. (the “Company” or “Novint”) was originally incorporated in the State of New Mexico in April 1999. On February 26, 2002, the Company changed its state of incorporation to Delaware by merging with Novint Technologies, Inc., a Delaware corporation. This merger was accounted for as a reorganization of the Company. Nature of Business The Company is engaged in the business of sales of 3D haptics products and equipment. Haptics refers to one’s sense of touch. The Company’s focus is in the consumer interactive computer gaming market. Additionally, the Company seeks to conduct custom project work in other related areas. The Company sells its haptics products primarily to consumers through online retail marketplaces. Going Concern and Management’s Plans These financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred recurring losses and at June 30, 2023, had an accumulated deficit of $ 41,935,024 . For the six months ended June 30, 2023, the Company sustained a net loss of $ 131,644 . These factors, among others, indicate that there is substantial doubt about the Company’s ability to continue as a going concern for the twelve months following the date these financial statements were issued. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that may be necessary should the Company be unable to continue as a going concern. The Company’s continuation as a going concern is contingent upon its ability to obtain additional financing, and to generate revenue and cash flow to meet its obligations on a timely basis. Management intends to seek additional funding through debt or equity financing during the next twelve months to support the activities necessary to generate sales revenue and profits. We continue to monitor the COVID-19 pandemic and its effect on our business and results of operations. We cannot predict the duration, scope or severity of the COVID-19 pandemic or its future impact on our business, results of operations, cash flows and financial condition. NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Use of Estimates and Assumptions The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The most significant estimates and assumptions made in the preparation of the financial statements relate to accrued royalties. Actual results could differ from those estimates. Basis of Presentation The accompanying unaudited condensed financial statements were prepared using generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, these unaudited condensed financial statements do not include all information or notes required by generally accepted accounting principles for annual financial statements and should be read in conjunction with the Company’s annual financial statements included within the Company’s Special Report on Form 10-K for the year ended December 31, 2022, as filed with the SEC on March 31, 2023. In the opinion of management, the unaudited condensed financial statements included herein contain all adjustments necessary to present fairly the Company’s financial position and the results of its operations and cash flows for the interim periods presented. Such adjustments are of a normal recurring nature. The results of operations for the three and six months ended June 30, 2023 may not be indicative of results for the full year. 7 Cash and Cash Equivalents The Company considers all highly liquid investments purchased with maturities of three months or less to be cash equivalents. The Company maintains cash balances at financial institutions that are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to federally insured limits. At times, balances may exceed FDIC insured limits. The Company has not experienced any losses in such accounts. Revenue and Cost Recognition In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606), and has since issued amendments thereto (collectively referred to as “ASC 606”). The core principle of ASC 606 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services, and the guidance defines a five-step process to achieve this core principle. The five-step process to achieve this principle is as follows: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract(s), (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract(s), and (v) recognize revenue when, or as, the entity satisfies a performance obligation. ASC 606 also mandates additional disclosure about the nature, amount, timing and uncertainty of revenues and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. The Company accounts for revenue from sales of the Falcon 3D Touch Haptic Controller (the “Falcon”) under the provisions of ASC 606. The Falcon allows the user to experience the sense of touch when using a computer, while holding its interchangeable handle. The Falcons are manufactured by an unrelated party. Revenue is recognized when products are shipped to the customer and the Company has earned the right to receive and retain reasonable assured payments for the products sold and delivered. Consequently, if revenue recognition requirements are not met, such sales will be recorded as deferred revenue until revenue recognition requirements are met. Income Taxes The Company accounts for its income taxes under the provisions of ASC Topic 740, “Income Taxes”. The method of accounting for income taxes under ASC 740 is an asset and liability method which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Statements of Operations in the period that includes the enactment date. Fair Value of Financial Instruments The Company follows the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) for disclosures about fair value of its financial instruments and to measure the fair value of its financial instruments. The FASB ASC establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The three levels of fair value hierarchy are described below: Level 1 Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. Level 2 Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 3 Pricing inputs that are generally observable inputs and not corroborated by market data. Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable. The carrying amounts of the Company’s financial assets and liabilities, including cash, prepaid expenses, accounts payable, and accrued expenses and related liabilities approximate their fair values because of the short maturity of these instruments. 8 Recently Issued Accounting Pronouncements The Company has reviewed the recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the SEC and determined that these pronouncements do not have a material impact on the Company’s current or anticipated consolidated financial statement presentation or disclosures. NOTE 3 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES Accounts payable and accrued expenses are as follows: June 30, December 31, 2023 2022 Trade payables $ 125,951 $ 100,561 Accrued expenses 592 592 Total accounts payable and accrued expenses $ 126,543 $ 101,153 NOTE 4 – ACCRUED ROYALTIES Accrued royalties relate to the Company’s licensing agreements with various parties that provided gaming software to the Company. These licensing agreements contain obligations to pay royalty fees ranging from 5 % to 50 % of either gross or net revenue, and a flat fee per end user of $ 0.50 , subject to an obligation to pay minimum annual royalties of $ 50,000 as specified in the licensing agreements. Accrued royalties as of June 30, 2023 and December 31, 2022, including unpaid annual minimum royalties, were $ 708,132 and $ 683,132 , respectively. If contested by the licensors, the Company may be required to pay these amounts, thus the Company continues to report the remaining obligation under the licensing agreements as a liability on the Company’s Balance Sheet. The Company does not believe that it remains obligated to pay these royalties. NOTE 5 – COMMITMENTS AND CONTINGENCIES From time to time in the normal course of business, the Company may be subject to routine litigation incidental to its business. Although there can be no assurances as to the ultimate disposition of any such matters, it is the opinion of management, based upon the information available at this time, that there are no matters, individually or in the aggregate, that would have a material adverse effect on the results of operations and financial condition of the Company. NOTE 6 – NOTE PAYABLE – RELATED PARTY On June 22, 2023, the Company issued and sold a promissory note with principal amount of $ 50,000 (the “AIGH Note”) to AIGH Investment Partners, LLC (“AIGH”) and received proceeds of $ 50,000 .. AIGH is controlled by the Company’s President (Principal Chief Executive Officer and Principal Chief Financial Officer). The AIGH Note is non-interest bearing and matures upon the sooner to occur of i) a financing transaction generating gross proceeds to the Company of $ 1,000,000 or greater, or ii) December 22, 2023 . The Company recognized interest expense of $ 0 and $ 0 for the six months ended June 30, 2023 and 2022, respectively. Please see below for the Company’s future minimum payments reconciled to the Notes payable – related party balance on the Balance Sheet. Years ending June 30, Maturity of Note Payable – Related Party 2024 $ 50,000 2025 — 2026 — 2027 — 2028 — Total $ 50,000 Less: debt issuance costs — Total $ 50,000 9 NOTE 7 – STOCKHOLDERS’ EQUITY Preferred Stock The Company is authorized to issue up to 12,500,000 shares of $ 0.0001 par value preferred stock. No 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 500,000,000 shares of $ 0.0001 par value common stock. All issued shares of common stock are entitled to vote on a 1 share/1 vote basis . The Company had 202,308,728 shares of common stock issued and outstanding as of June 30, 2023, and December 31, 2022. NOTE 8 – SUBSEQUENT EVENTS The Company has evaluated subsequent events through the date these financial statements were issued. In the opinion of management, there were no subsequent events that would require disclosure or adjustments to the accompanying financial statements through the date the financial statements were issued other than the following: On July 5, 2023, the Company entered into a Share Exchange Agreement (the “Exchange Agreement”) by and among the Company, Dror Ortho-Design Ltd., a company incorporated under the laws of the State of Israel (“Dror”) and the shareholders of Dror. In August of 2023 the Exchange Agreement was amended (the “Exchange Amendment”). The Exchange Agreement and Exchange Amendment together constitute the “Dror Transaction”. One closing condition of the Dror Transaction is the purchase of securities by outside investors (the “Private Placement Investors”) through a related securities purchase agreement (the “Private Placement”). The Private Placement shall be a sale and issuance of shares of the Company’s common stock and shares of the Company’s preferred stock in exchange for up to a minimum of $ 5,000,000 . Following completion of the Dror Transaction, the Dror shareholders and Private Placement Investors shall gain a majority of the Company’s voting rights and will therefor gain control of the Company. Dror shall also become a wholly owned subsidiary of the Company. As a shell company, the Company does meet the definition of a business under ASC 805 – Business Combinations and for accounting purposes the Dror Transaction is considered to be a “reverse recapitalization”. Pursuant to the terms and conditions of the Dror Transaction, the shareholders of Dror agreed to transfer 285,153 ordinary shares of Dror (the “Dror Shares”) to the Company in exchange for shares of the Company’s Preferred Stock using an exchange ratio of 36.77270 (the “Share Exchange”). Additionally, the Company agreed to assume all of Dror’s obligations under Dror’s outstanding share options (the “Dror Options”) and exchange such Dror Options for options to purchase a proportionate number of shares of common stock of the Company. The company also agreed to assume all outstanding Dror Series A-4 Warrants to purchase Dror’s ordinary shares and convert such Dror warrants into five-year warrants to acquire shares of the Company’s common stock at an exercise price of $ 0.033 per share. The Share Exchange Agreement contains certain mutual representations and warranties, covenants and indemnification provisions customary for transactions of this type. The closing of the transactions contemplated under the Share Exchange Agreement is subject to certain closing conditions described therein (the “Closing Conditions”). There is no assurance that the Closing Conditions will be satisfied. The closing of the Share Exchange is expected to occur no later than three (3) business days after the fulfillment or waiver of the Closing Conditions or on such other date and time as the parties may mutually determine.