ITEM 1. BUSINESS.
Novint Timeline
and Detailed Business Description
Novint Technologies
(Other OTC: NVNT) (“Novint” or the “Company”) was incorporated in the State of New Mexico as Novint Technologies,
Inc. in April 1999. On February 26, 2002, the company changed its state of incorporation to Delaware by merging into Novint Technologies,
Inc., a Delaware corporation. The Company went public in 2001 with the goal of commercializing haptics technology by developing
a revolutionary haptic game controller for computer video gaming and other computer applications based on technology licensed from
Sandia National Laboratories, one of three National Nuclear Security Administration research and development laboratories in the
United States, managed and operated by the National Technology and Engineering Solutions of Sandia.. Haptics technologies allow
people to use their sense of touch to interact with computers. The Company was based in Albuquerque, New Mexico, near Sandia National
Labs.
During its first eight
years of operations, the Company derived revenue primarily from developing professional applications for customers, including contracts
with companies such as Aramco, Lockheed Martin, Chrysler, Chevron and Sandia National Labs. However, the Company intended to eventually
generate most of its revenues from the sale of the revolutionary consumer Falcon product (described in the sections below), the
associated “grips,” or handles that are shaped to mirror the application that the product is being used to simulate,
(e.g., a gun handle, a sword handle, or a steering wheel) and the sale or license of specially enabled computer games designed
to be used with the Falcon.
In 2007, the Company
commercially released, the Novint Falcon game controller, which allows users to experience video games and other computer applications
using a realistic and detailed sense of touch referred to as a “haptic” feel. Holding its handle, users feel the shapes,
textures, weight, dimension and force feedback effects in software games that have been enabled to work with the Falcon. These
“feelings” that are felt in the hand of the user that is holding the Falcon controller are generated by tiny nano vibrations
that create sensations that simulate the real-life sensation of touch. As opposed to providing simple vibrations and feedback like
Rumble Strip based joysticks developed by Immersion Corporation (IMMR), the Falcon uses patented nano-vibrations to create different
“textures and “feels” while a person is holding onto the controller. For example, a person can tell the difference
between a piece of rubber or wool as he holds the handle of the Falcon and runs over the different materials on the screen. When
firing a gun, the person gets a kickback and feeling based on the type of gun that is being fired. When a person is hit onscreen,
the personfeels what type of hit and from what direction the hit came. When a person catches a baseball in a glove, the person
actually feels like the ball is landing in the glove.. The feelings are almost surreal and frightening at times. It is difficult
to describe the experience without actually feeling it firsthand and this has been one of the issues that has prevented significant
sales traction for the product. The Falcon and its haptics technology, games and applications provide the crucial missing “third
sense” to human computer interaction. In late 2006, BusinessWeek wrote that “Novint’s haptic controller, the
Falcon, looks set to revolutionize gaming.”
In 2007, the Company
began shipping the Falcon to commercial retailers and distributors in the U.S. The product was available through retailers, including
Fry’s, Tiger Direct, and J&R Music Store. Additionally, in the fourth quarter of 2007, Novint opened its online store
for the sale of the Falcon and computer games integrated to work with the Falcon. Customers could download games for use with the
Falcon by going to the Company’s website and purchasing the haptics enabled games. The Company developed many of its own
gaming titles. Also, the licensed a number of better-known game titles. The Company’s programmers haptically enabled these
titles to take advantage of the haptic feedback and sensations using the Falcon controller. Novint’s programmers added t
haptic parts to the play of the programming code of these games using manual customization. Since inception, the Company commercialized
over 45 titles available for use with the Falcon controller.
The licensing agreements
with various gaming software providers have all expired and are treated as terminated. Novint is free to sell or provide as an
accompanying software bonus along with the Falcon, a library of games that the Company developed internally and that is not subject
to any license agreement or royalty obligation. The license agreement referenced in Note 3, which accounts for the contingent accrued
royalties shown on the Company’s Balance Sheet for the year ended December 31, 2021, is an agreement dated January 4, 2004
as amended on July 24, 2007, between Novint Technologies, Inc. and Force Dimension, LLC, based in Switzerland. The Company treats
the agreement as terminated on the basis that believes that Force Dimension, LLC committed a material breach of the agreement by
failing to deliver the deliverables as specified in the agreement. Therefore, no further royalties are due. The Company’s
determination that Force Dimension committed a material breach is based on extensive due diligence including examining documents
and interviews with prior management and employees,. However, based on ASC 405-20, the contingent liability for unpaid royalties
remains on the Company’s Balance Sheet for the year ended December 31, 2021 because there was never an official termination.
Although the Company
sold thousands of Falcon units, sales of the Falcon controller struggled without ever reaching a critical mass, continuing to this
day. The Company released dozens of software titles that were optimized to work with the Falcon as described above, however, the
titles were not released fast enough and the cost of acquiring rights and haptically enabling the software was too large of a challenge
for the Company. Additionally, the Company was not successful in finding a large company to work with to help market the Falcon
more effectively and assist with the huge software development efforts that were necessary.
From time to time the
Company has engaged in discussions with larger commercial partners and has performed R&D under contract for larger companies
with the end goal of leading to commercial product development. None of these efforts has led to commercial product deployments
and there can be no assurances that the Company will be able to find partners for its products. In addition, pursuant to the 2015
patent sale and licensing agreement described below, there are certain extensive restrictions on the ability of the Company to
engage commercial partners on a go forward basis. However, the Company retains the right to enter into manufacturing arrangements
to produce certain Falcon products for others or have manufacturer’s produce certain Falcon products on behalf of Novint.
The permitted Falcon products are limited to the Company’s Falcon products based solely on their current or developed designs
existing at the time of the 2015 patent sale and licensing agreement, as well as the unreleased next generation designs of the
Company’s Xio products.
Force Tek Transaction
In April 2011, Novint
merged with Force Tek Technologies, LLC (“Force Tek”), a company started by serial entrepreneur Shannon Vissman that
developed a full arm controller with forced feedback that could be used for gaming. Novint and Force Tek initially met at a gaming
conference where the companies recognized the potential of merging their complementary technologies into a single unified gaming
controller that had much of the haptic feedback of the Falcon but in a portable controller that fits on a user’s arm. After
the merger with Novint, Shannon Vissman and Ryan Christoff joined the Company’s Board of Directors (the “Board”),
replacing Brian Long and Jan Richardson. On October 24, 2011, Tom Anderson resigned as CEO and Shannon Vissman of Force Tek became
CEO. In connection with the merger, all debt of the Company was either paid off or converted to equity. Mr. Vissman, and to a lesser
extent Mr. Christoff, provided equity funding of approximately $3 million at a fixed price per share for the combined company,
which continued to be known as Novint. This funding was used to merge R&D teams and to create a next generation game controller
with the combined technologies, called the Xio, while continuing to support the Company’s limited sales of the Falcon controller
and related accessories and software. The integration work for the Xio was never completed, though various prototypes were developed.
During this time, Novint did some custom haptic projects, including work for the US army related to Xio prototypes, but it never
amounted to a large business and the company was unsuccessful in obtaining any commercial production contracts as a result of this
work.
In connection with
the merger, the Company assumed the license agreement dated April 6, 2009 among Force Tek, as licensee, and Inverse Technology
Corporation and Kinetecs, Inc., as licensors. Pursuant to the license, Force Tek paid an initial payment and incurred an obligation
to pay royalties based on sales of products that utilize the licensed technology, which may be used in Novint’s Xio product that
has been in development, in which case the Company would be required to pay royalties on commercial sales of the Xio product. There
can be no assurances that Novint will successfully commercialize the Xio product.
In August 2013, Brian
Long, Jan Richardson, Tom Anderson and Shannon Vissman resigned from the Board, leaving Ryan Christoff as the sole Board member.
Ryan appointed Orin Hirschman and Martin Chopp to the serve on the Board alongside him. The Company then raised $55,180 in senior
secured debt to continue operations. Since that time, Novint has worked to preserve cash and reduce expenses while continuing to
sell small amounts of Falcons along with related accessories and software titles, with a goal of allowing the Company to maximize
its resources. Simultaneously, the Company initiated a process to explore ways to further realize value from Novint’s patent
portfolio, the Falcon hardware and related software, and the Company’s next generation Xio product.
In June 2015, after
an extensive process, Novint sold 5 patents and sublicensed 5 patents to an undisclosed technology company for a $750,000 upfront
payment, and a potential second payment of $750,000 upon waiver of assignment from the DOE to Sandia. The second payment was paid
in July 2016. Net of broker fees, legal expenses and payments to Sandia to release their rights to the IP, Novint received a total
of $699,714 in the transaction. Novint retained a non-transferable license that allows it to continue selling certain Falcon products
based solely on their current or developed designs existing at the time of the 2015 patent sale and licensing agreement and next
generation devices, such as the Xio..
Since that time, Novint
has continued selling small amounts of Falcons and related software and accessories while engaging in discussions with potential
partners on Falcon and Xio and studying other ways to realize value from these products. Management believes that Novint was too
early in trying to pioneer the market for a consumer haptic controller. One of the major disadvantages of the original Falcon design
highlighted by customers and potential commercial partners was its size and weight and the need for the controller to be sitting
on a desktop. The next generation product that Novint has developed but not completed, the Xio, addresses this issue by being lightweight
and strapping onto the hand and forearm. The product has not been completed for commercial release and there can be no assurances
that the product will be completed or commercially released in the future.
Principal Products
– Falcon
The Falcon is an extensible,
grounded (e.g., desktop), three-dimensional (3D) haptic interaction device. It is a compact robotic device with characteristics
optimized for real-time force-feedback and tactile interaction. The Falcon was specifically developed for consumer applications
with an emphasis on interactive gaming. The performance characteristics of the device, however, are such that it has seen some
wider application in fields such as education, medicine, scientific visualization, robotics and tele-robotics.
The current consumer
version of the Falcon consists of the Main Unit, a Stand and a “Grip” or end effector. The Main Unit is capable of
generating high-fidelity, high-bandwidth, 3D forces and accurately sensing 3D position in real-time within its working envelope.
The Main Unit has on-board computational capabilities and is programmed by and communicates with a host computer or system via
a bi-directional USB communication interface. It is typically powered using an external DC power supply.
The Main Unit has a
modular, quick connect/disconnect, electromechanical interface (i.e., the Grip Interface) that allows various Grips to be mounted
to it. This interface allows a Grip to be mechanically connected to the Main Unit and provides electrical power and communication
with the Grip. When the Falcon is utilized as a haptic interaction device, it is the Grip that the end-user actually grasps and
uses to interact with the device.
The Grips themselves
can have arbitrary shapes and functions. A Grip simply has to adhere to the mechanical and electrical constraints of the Grip Interface.
Grips typically use on-board computational elements to report their state to the Main Unit via the serial communication channel
of the Grip Interface. Two typical consumer Grips are a general-purpose spherical interface and a pistol shaped Grip typically
used for game play and interaction. These Grips have various buttons and communicate their identity as well as button state via
the Grip Interface to the Main Unit. The Main Unit is modularly mounted on a Stand. Consumer units are typically shipped with a
“U” stand. The Falcon Main Unit can be mounted, however, on any stand or object that provides the appropriate mechanical
interface and fasteners.
The Falcon communicates
with a host computer or system via a bi-directional USB communication interface at a 1 KHz data rate. Drivers and APIs/SDKs on
the host side allow haptic interaction to be incorporated or added to various applications across various markets.
Subsequent to the introduction
of the current consumer Falcon haptic interface device, there have been a variety of improvements, features and options to the
design of the device that the Company has implemented on a limited number of units for specific customers. Other significant changes
have been designed for the device as product improvements or model variations. These changes to the device design have not yet
made it to the consumer version of the device but could do so given the appropriate timing and markets. For example, the current
capstan cable drive mechanism for the Falcon utilizes a single spring tensioner. Under high-speed motions, this approach results
in unequal cable tension between the cable on one side of the capstan and the other. This can lead to some slippage of the cable
relative to the capstan when motor direction is abruptly reversed after a high-speed run. A drive system that helps guarantee balanced
cable tension is one of the pre-planned product improvements for the Falcon. Another example would be the potential to decrease
the electronics cost. The current consumer Falcon utilizes a Digital Signal Processor (DSP), along with other electronics elements,
to implement the Falcon’s processing and communication system. Significant effort has been undertaken in designs where an
ASIC is used for a major portion of these processing and communication requirements. This design will allow more economical production
of the Falcon for larger volume production runs.
There are other areas
of potential improvement to the Falcon. The current consumer Falcon is relatively compact compared to other arm mechanisms. The
radial twist employed in the “arm” design decreases the radial cross section of the device. Physical layout of the
electronics is also optimized to decrease size. In addition, the U-shaped base helps to decrease the apparent size of the device.
Nonetheless, further decreasing the apparent and real volume of the device is desirable for increased consumer acceptance. Ideally,
this decrease would also reduce the cost of goods sold for the Falcon. Novint has outlined a fundamental approach where most of
the encasing plastic for the Falcon Main Unit will be removed and the underlying plastic frame for the Falcon will be modified
to be the exterior of the device as well as supporting the device mechanisms and electronics. This will significantly decrease
the apparent size and volume of the Falcon. It also provides significant additional shape, color and opacity options to the look
of the Falcon Main Unit including clear plastic options where the internal mechanisms and electronics are visible.
A significant amount
of effort has been taken in the design of potential consumer Grips. One major class of effort has revolved around variations in
general purpose Grips for ergonomic and functional improvements. A significant number of custom variations of the Falcon have been
designed and built over time. Typically, these developments have been for customers in the “professional” sectors (e.g.,
medicine, telerobotics, and scientific visualization). These variations have been based on the current consumer Falcon design and
can easily be incorporated into the standard shipping Falcon line when appropriate.
Novint has made several
custom variations to the Falcon for specific customers and use cases. As part of its custom efforts, Novint developed improved
control algorithms for the Falcon Main Unit that allow higher peak forces to be generated or lower forces to be maintained for
longer periods of time. These developments were embodied in custom units referred to as “Super Falcons”. Fundamentally,
these improvements involved changes the timing and pulse-width modulation motor control used in the control algorithms run on the
Falcon Main Unit’s DSP. No changes to Falcon hardware are required. This allows a “Super Falcon” to be sold to
consumers when appropriate. In addition, several fundamentally new Grip designs for the Falcon have been developed for custom customer
applications. Consumer versions of these designs are possible.
The Novint Falcon was
designed, primarily, with consumer gaming applications in mind. The Novint Falcon was designed to be used for both PC and console
gaming. All that is required to interface to the device is some form of serial interface (wired or wireless). Novint has also created
in-lab prototypes of the Falcon that would be directly connected to gaming consoles.
In addition to the
Falcon device, Novint has developed and sold software and demonstrations for all gaming genres including Action, Adventure, Fighting,
Racing, Simulation, Sport, Strategy, Parlor, Massively Multiplayer Online (MMO) and Miscellaneous (e.g., board games, pinball).
Also, Novint has created a number of haptically enabled software applications that would allow the Falcon to be utilized for many
non-gaming uses. For example, Novint has developed medical simulation software for various injection procedures including Epidural
injections, Synvisc™ injection, Depo-Medrol™ injection and other injections. Novint has also developed software applications
that allow a user to feel as well as see medical data. For example, CT Scan data can be probed using the Falcon and the difference
between soft tissue and bone can be felt. Novint’s medical applications have typically been used both for medical marketing
and procedure familiarization or training. In addition, Novint has developed specific software that works with the Falcon for marketing
purposes. For example, Novint modified a game for Anheuser-Busch to use during its on-site marketing campaigns. Novint has also
developed software applications where a Falcon’s motion is controlled via software or in real time using another (remote)
Falcon.
Other Haptic Companies
and Competition
Recent developments
over the last several years create the potential for more consumer interest in haptic devices and controllers. In 2016, Facebook
released the Oculus Rift Virtual Reality (VR) headset at a sub $1,000 price point, which a consumer can wear on his/her head and
experience virtual reality. HTC started selling a similar headset. Both companies sell companion hand controllers. These controllers
are small and lightweight, but offer limited haptic feedback compared to the Falcon.
Over the last few years,
and in particular in very recent periods, there have been a number of start-up companies working on new haptic controllers, including
handheld devices that are similar to those controllers sold by Facebook and HTC, as well as more elaborate wearable haptic controllers
including gloves. These devices are more similar to Novint’s next generation Xio design and are much more elaborate than
the handheld controllers that are currently on the market. The sudden surge in development in this area suggests that the field
is beginning to gain more interest following the commercial releases of the Oculus Rift and HTC products as well as similar headsets
that are being introduced by other companies.
There are many companies
producing virtual reality and haptic devices that are competitive or may be competitive in the future with the Falcon and Xio.
Some of the products and companies that may be competitive include:
| ● | Immersion Corporation (NASDAQ: IMMR) is primarily a 1D or 2D haptics hardware company (a Haptic
computer interaction in which forces are mechanically displayed to a user in 1 or 2 directions of movement; examples are force
feedback joysticks and force feedback mice). Immersion is a public company, which has acquired other haptics device companies such
as Cybernet, Haptech and Virtual Technologies. |
| ● | VRgluv from VRgluv in Atlanta is a new product that is a glove for controlling virtual reality
systems such as the Occulus Rift and HTC Vive. The glove has sensors throughout as well as force feedback and appears to be provide
a very robust user experience. The company’s product appears be directly competitive with Novint’s Xio product. |
| ● | Microsoft has several haptic devices that simply vibrate and rumble, such as the control pads for
their Xbox systems. Microsoft may be working on various haptic controllers to complement the company’s Hololens Virtual Reality
headset that it has begun selling. |
| ● | Logitech sells haptics mice, wheels, and joysticks that the company licensed from Immersion and
that are primarily used for gaming. Logitech’s haptics products are two-dimensional and do not offer as many features as
our products possess. |
Employees
As of March 23, 2022,
we do not have any full-time employees in our workforce.
Corporate and Available Information
Novint Technologies
was incorporated in the State of New Mexico as Novint Technologies, Inc. in April 1999. On February 26, 2002, the company changed
its state of incorporation to Delaware by merging into Novint Technologies, Inc., a Delaware corporation. Our principal executive
offices are located at 100 Merrick Road–Suite 400W, Rockville Center, NY 11570. Our telephone number is (866) 298-4420, and
our website address is www.novint.com.
The information contained
in, or accessible through our website does not constitute a part of and is not deemed or otherwise incorporated by reference in
this Annual Report on Form 10-K. Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K,
and all amendments to those reports, are available to you free of charge through the “Investors — SEC Filings”
section of our website as soon as reasonably practicable after such materials have been electronically filed with, or furnished
to, the Securities and Exchange Commission. Our shares of common stock are listed on Other OTC under the symbol “NVNT.”