Dror Ortho Design Inc (DROR)

[OMOLIVES]

!!Ok...here you go..take your time.

Starting in order..all a given:

-Novint sells 5 patents and sub-license 5 patents to Facebook in 2015/2016.
-Novint is in discussion with 2 major OEM's for development of -XIO/Falcon..testing performed.
-Novint amended their certifictae of organization on 12/26/2017.
-Novint files the first form 10 in November 2019 showing audited financials for 2017 and 2018.
-Ryan Christoff registers "Novint.net" in December 2019.
-Orin Hirschman requests the Form 10 effectiveness to be expediated in February 2020.
-Novint's Form 10 becomes effective in February.
-Covid 19 shuts everything down in March.

Now let's look at the patents, and what Novint was allowed to do with such...after such.

In June 2015, after an extensive process, Novint sold 5 patents and sublicensed 5 patents to an undisclosed technology company for $750,000 upfront, 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 Falcons and next generation devices such as the Xio that are based on the company’s existing and anticipated designs.

Now we have to go back earlier, prior to the Forcetek merger,and look at the relationship between Novint and Sandia. This is very important in understanding the patent issues with regards to the non transferable license. So let's just go back to 2009:

https://www.sec.gov/Archives/edgar/data/1282980/000114420409020859/v146269_10k.htm

We want to pin this:

A significant portion of our intellectual property rights is based on our license from Sandia National Laboratories (“Sandia”). The Sandia license is a 12-year exclusive license for human-computer haptics interfaces.

To understand this better...let's go back to the original Sb-2 circa 2004:

Tom Anderson, our CEO, President and Chairman of the Board, is one of the earliest pioneers in 3D touch software. He has led Novint over the past five years and has been esponsible for overseeing all aspects of its business development including leading Novint to a break-even point on cash flow. He began his work on computer touch more than eight years ago at Sandia National Laboratories using the first PHANTOM (the first haptic device of its kind) ever sold. Mr. Anderson was the inventor and principal investigator during the five-year computer touch project at Sandia responsible for developing the technology and applying it to important problems. Mr. Anderson then worked to obtain an exclusive license to the Sandia Technology for Novint Technologies. Mr. Anderson has a BS in Electrical Engineering, Magna Cum Laude, from the University of New Mexico, and an MS in Electrical Engineering from the University of Washington, where he studied both computer interface technology and business management.

This is where you may have seen write ups' in the past referring to Novint as a spin off of Sandia labs...and it is true that Novint was born out of Sandia labs. So the difficult part is understanding what was sold and was was sub-licensed. With that said this should be pinned:

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. Out of the USD1.5 Million...Novint received $699,714.

The Novint Falcon is intertwined with the Sandia license/patents. The Falcon(patent #8806974-exp 2030) is also connected to Force Dimension through a license. This will be important ...and I'll note such later. There is only one patent that is known "not" to be connected to the Sandia license. That would be the original XIO(patent#9299230-exp 2034)

The Falcon(patent #8806974) was not included in any sale or sub-license. But it is apparent that such is intertwined given that it has a non transferable license given by Facebook. Again, this will become more important later.

So now we look at the patents:

https://assignment.uspto.gov/patent/index.html#/patent/search/resultAssignor?assignorName=NOVINT%20TECHNOLOGIES%20INC.

The patents that correlate to Sandia are as follows:
http://legacy-assignments.uspto.gov/assignments/assignment-pat-39200-249.pdf

6724400 application filed Aug 29, 2000
6833826 application filed Aug 14, 2000
6954899 application filed Feb 16, 2001
6208349 application filed Apr 14, 1997
7917869 application filed Mar 16, 2004

When you give up all rights to intellectual property..typically..you give up all rights. There is no sub license. It is complete.

These are the Novint patents..and this gets a bit tricky':
http://legacy-assignments.uspto.gov/assignments/assignment-pat-35873-409.pdf

At first glance it seems pretty straight forward. The first 5 patents were associated with Sandia and made up the sale. The second 5 patents(as above) were sub-licensed. But as you can tell....there were more than just 10 properties..and some of those proerties were not pattented at said time of transaction. It should also be known that it would be more prudent to sell a patent that has a shorter expiration date and sub-license a patent that has a longer expiration date. But, this was a package deal...so let's consider other options.

Now we turn to the Falcon(patent #8806974-exp 2030) and the XIO(patent#9299230-exp 2034). The Falcon is/was licensed from Force Dimension and is part of this slight dispute:

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 June 30, 2020 and December 31, 2019, was $558,132 and $533,132, 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.

So said amount is is held under total liabilities of roughly $663,000..leaving a net of $100,000 against $374,303 in cash. The current Falcon's patent expired due a lapse in maintenance fees back in August of 2018(roughly third week). Patent laws regarding lapse in maintenance fees and reinstatement have changed recently. You can go past two years and still revive said patent.


But why do that if said patent is mainly dependant on the Sandia patents(now Facebook)? Why do that if there is a stated minor dispute regarding the Force Dimension license? Why do that if a new patent application is filed that supercedes such. And why do that if Facebook has offered Novint a non transferable license. The patent is also assigned to both parties(Force Dimension and Novint). So why wouldn't Novint just pay the small amount of money to maintain said patent knowing that they had over $600,000 in cash available to do such? No speculation..just important questions....and we must refer also to the non transferable license with Facebook. Novint only gives up the right to sue..but Facebook does not.


The XIO patent has a licensing agreement with ... https://www.sec.gov/Archives/edgar/data/1282980/000114420411021212/v218101_ex10-2.htm

That was the original Force Tek agreement that comes with royalty payments to Inverse Technology Corporation/Kinetecs, Inc. For what it is worth, the XIO is based off of a physical therapy/training device(protronics). As shown in early videos, it was meant to be a plug and play..and pins tracking and force feedback. And , of course, Novint has a non transferable license to develope this..along with the falcon based on current and anticipated designs. The XIO was and is.."not" dependent on any Sandia(now Facebook) intellectual property. It could if it chooses to be though.

Now to finish up with the patent issue regarding sold and sub licensed. Given that the numbers seem to not match up...let's review this:

-Novint sells 5 patents and sub-license 5 patents to Facebook in 2015/2016 for a total of USD1.5 million in two payments.

-Novint received a total of $699,714(net)..and Sandia received the other half. The total assigned list of applications and patents total 15:

http://legacy-assignments.uspto.gov/assignments/assignment-pat-39692-688.pdf (5 all patents and directly related to Sandia)
http://legacy-assignments.uspto.gov/assignments/assignment-pat-35873-409.pdf (10 of which 5 are patents and 5 are applications)

-Novint was born out of Sandia(Tom Anderson)
-Sandia received restricted stock pre IPO as part of agreement
-Sandia received half of the USD1.5 million
-Novint received half of the USD1.5 million

Now go here and get pissed off .. https://assignment.uspto.gov/patent/index.html#/patent/search/resultAssignor?assignorName=NOVINT%20TECHNOLOGIES%20INC.

As soon as you get it...there is a trip wire and pause. So refer to what I stated previously to get a better understanding. Again, refer to this pin(specifically..human-computer haptics interfaces):

A significant portion of our intellectual property rights is based on our license from Sandia National Laboratories (“Sandia”). The Sandia license is a 12-year exclusive license for human-computer haptics interfaces.

So ..look at this again:

http://legacy-assignments.uspto.gov/assignments/assignment-pat-39692-688.pdf (5 all patents and directly related to Sandia)
http://legacy-assignments.uspto.gov/assignments/assignment-pat-35873-409.pdf (10 of which 5 are patents and 5 are applications)

From all of this, you should come to a conclusion of what was sold and what was sub-licensed. You must refer to the Novint and Sandia relationship.

So where are we currently? Review the most recent time frame until now:

-Novint sells 5 patents and sub-license 5 patents to Facebook in 2015/2016.
-Novint is in discussion with 2 major OEM's for development of -XIO/Falcon..testing in 2017.
-Novint amended their certificate of organization on 12/26/2017 via Deleware.
-Novint files the first form 10 in November 2019 showing audited financials for 2017 and 2018.
-Ryan Christoff registers "Novint.net" in December 2019.
-Orin Hirschman requests the Form 10 effectiveness to be expediated in February 2020.
-Novint's Form 10 becomes effective in February.
-Covid 19 shuts everything down in March.
-Novint becomes fully current on May 14th 2020
-Force Dimension luanches it's high definition haptics control and rendering technology for entertainment in August(first time ever)
https://www.forcedimension.com/company/about
-Orin Hirschman attends keytronic's investor conference call in August
https://www.keytronic.com/what-we-do/markets/
https://seekingalpha.com/article/4366716-key-tronic-corporation-ktcc-ceo-craig-gates-on-q4-2020-results-earnings-call-transcript

As I said..no speculation...just understand what is going forward. No Company can acquire or take control of Novint and still maintain any license or possible royalties. The license is non-transferable. They can acquire.. and or.. merge with another Company as long as they(Novint) remain in control. They can also just move forward and acquire a team and start development. Or they can do both by acquiring/merging with another Company in the same space. By this means..they acquire a team as well(bundled) So..going forward...if they just throw away all possibilities with said arrangement with Facebook...throw away the Falcon...and throw away the XIO...throw away any possible royalty payments..then they can do what ever they want. Now who would do that? It would have to be pretty big to do anything of the sort.

Good luck.