NOTES
TO CONDENSED FINANCIAL STATEMENTS
September
30, 2021
(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 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 in the consumer interactive computer gaming market, but the Company also does project work in other 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 September 30, 2021, had
an accumulated deficit of $41,566,194. For the period ended September 30, 2021, the Company sustained a net loss of $112,073.
These factors, among others, indicate that there is substantial doubt about the Company’s ability to continue as a going
concern for the next twelve months from the date the 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 source new inventory and generate revenue from product sales. The
Company will continue to seek and raise additional funding through debt or equity financing during the next twelve months.
We
may be at risk as a result of the current COVID-19 pandemic. Risks that could affect our business include the duration and scope
of the COVID-19 pandemic and the impact on the demand for our products; actions by governments, businesses and individuals taken
in response to the pandemic; the length of time of the COVID-19 pandemic and the possibility of its reoccurrence; the timing required
to develop effective treatments and a vaccine in the event of future outbreaks; the eventual impact of the pandemic and actions
taken in response to the pandemic on global and regional economies; and the pace of recovery when the COVID-19 pandemic subsides.
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, 2020, as filed with the SEC on March 24, 2021.
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 nine months ended September 30, 2021 may
not be indicative of results for the full year.
Reclassification
of Prior Presentations
Accrued
Royalties amounts for prior quarter and years have been reclassified for consistency with current quarter’s presentation.
These reclassifications had no effect on reported liabilities and reported results of operations. $583,132
of Accrued Royalties previously reported with Accounts Payable and Accrued
Expenses for the year ended December 31, 2020 have been reclassified on the Balance Sheet. Similarly, a reclassification of $37,500 to the Statements of Cash Flows for nine months ended September 30, 2020, has been
made to identify the non-cash expense. These changes in reclassification does not affect previously reported totals on the Balance
Sheets and on the cash flows from operating activities in the Statements of Cash Flows.
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.
Revenue
from product sales relates to the sale 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 from product sales 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.
Accounts
Receivable
Accounts
receivables are stated at the amounts management expects to collect. An allowance for doubtful accounts is recorded based on a
combination of historical experience, aging analysis and information on specific accounts. Account balances are written off against
the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. As of September
30, 2021, the company has recorded $0 in accounts receivable. Management has determined that $0 allowance is required at September
30, 2021 and December 31, 2020.
Accounts
Receivable – Related Party
Accounts
receivable from related party arise from the sale of the Company’s product that were collected by a director of the Company
on behalf of the Company. As of September 30, 2021, the total accounts receivable from a related party was $1,360.
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,
accrued expenses, payroll and related liabilities, and advances 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 they did not or are not believed by management to have a material impact
on the Company’s present or future consolidated financial statement presentation or disclosures.
NOTE
3 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts
payable and accrued expenses are as follows:
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
Trade payables
|
|
$
|
99,313
|
|
|
$
|
117,313
|
|
|
Accrued expenses
|
|
|
2,075
|
|
|
|
2,224
|
|
|
Total accounts payable and accrued expenses
|
|
$
|
101,388
|
|
|
$
|
119,537
|
|
NOTE
4 – COMMITMENTS AND CONTINGENCIES
The
Company has licensing agreements with various parties providing gaming software. These licensing agreements have royalty fees
ranging from 5% to 50% of either gross or net revenue, and a flat per user end fee of $0.50. Under one or more of these agreements,
there was an annual aggregate minimum payment due of $50,000 which has been recorded as accrued royalties but remains unpaid.
Accrued royalty fees as of September 30, 2021 and December 31, 2020, were $620,632 and $583,132, respectively. If contested, the
Company may be found to be in breach of obligations to pay these amounts (although the Company believes this obligation is no
longer ongoing), thus the remaining obligation under this agreement will remain as a liability.
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
5 – STOCKHOLDERS’ EQUITY
Preferred
Stock
The
Company is currently 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 currently authorized to issue up to 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 September 30, 2021, and December 31, 2020.
NOTE
6 – SUBSEQUENT EVENTS
The
Company has evaluated subsequent events through the date these financial statements were issued. The Company confirms non-occurrence
of any subsequent agreements or events.