##### Table of Contents



United States
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-QSB
 þ
    
    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended: September 30, 2006
 o
    
    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission File No. 000-51783
 
 NOVINT TECHNOLOGIES, INC.
  Delaware
    
    85-0461778(State of Incorporation)
    
    (IRS Employer ID. No.)4109 Bryan Avenue NW, Albuquerque, NM
    
    87114(Address of Principal Executive Offices)
    
    (Zip Code)
 : (
 þ o
 o þ




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TABLE OF CONTENTS
 PART I  FINANCIAL INFORMATION
    
    
    2Item 1. Financial Statements
    
    
    2Item 2. Managements Discussion and Analysis or Plan of Operation
    
    
    19Item 3. Controls and Procedures
    
    
    23PART II  OTHER INFORMATION
    
    
    23Item 1. Legal Proceedings
    
    
    23Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    23Item 3. Defaults Upon Senior Securities
    
    
    24Item 4. Submission of Matters to a Vote of Security Holders
    
    
    24Item 5. Other Information
    
    
    25Item 6. Exhibits
    
    
    25ITEM 13. EXHIBITSSIGNATURES
    
    
    28Exhibit 10.43EXHIBIT 31EXHIBIT 32




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PART 1  FINANCIAL INFORMATION
 
 Item 1. Financial Statements.
 Novint Technologies, Inc.
 BALANCE SHEET
 September 30, 2006(Unaudited)ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    823,113Prepaid expenses and other current assets
    
    
    44,625Accounts receivable, net
    
    
    490Deferred financing costs
    
    
    74,354Costs and estimated earnings in excess of billings on contracts
    
    
    59,098Total current assets
    
    
    1,001,680PROPERTY AND EQUIPMENT:Office equipment
    
    
    48,841Software
    
    
    7,246Computer equipment
    
    
    217,068273,155Less: Accumulated depreciation
    
    
    238,536Net property and equipment
    
    
    34,619INTANGIBLE ASSETS, NET
    
    
    132,232Total assets
    
    $
    1,168,531
  2




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Novint Technologies, Inc.
 BALANCE SHEET
(Continued)
 September 30, 2006(Unaudited)LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)CURRENT LIABILITIES:Accounts payable and accrued expenses
    
    $
    402,085Accrued payroll related liabilities
    
    
    167,235Accrued expenses, related party
    
    
    56,250Billings in excess of costs and estimated earnings on
uncompleted contracts
    
    
    8,300Convertible Notes payable
    
    
    358,081Total current liabilities
    
    
    991,951COMMITMENTS AND CONTINGENCIESSTOCKHOLDERS EQUITY (DEFICIT):Preferred stock, Series A: $0.01 par value;
authorized 4,000 shares, 0 issued and outstanding
    
    
    Common stock, authorized 50,000,000 shares, $0.01 par value;
19,072,641 issued and outstanding
    
    
    190,727Additional paid-in capital
    
    
    10,892,036Accumulated deficit
    
    
    (10,901,578
    )Accumulated other comprehensive loss
    
    
    (4,605
    )Total stockholders equity (deficit)
    
    
    176,580Total liabilities and stockholders equity (deficit)
    
    $
    1,168,531
  3




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Novint Technologies, Inc.
 STATEMENTS OF OPERATIONS
 For the
    
    
    For the
    
    
    For the
    
    
    For theThree Months
    
    
    Three Months
    
    
    Nine Months
    
    
    Nine MonthsEnded
    
    
    Ended
    
    
    Ended
    
    
    EndedSeptember 30, 2006
    
    
    September 30, 2005
    
    
    September 30, 2006
    
    
    September 30, 2005(Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)RevenueProject
    
    $
    56,212
    
    
    $
    64,313
    
    
    $
    137,562
    
    
    $
    292,118Product
    
    
    (231
    )
    
    
    2,059
    
    
    
    1,980
    
    
    
    30,420Total revenue
    
    
    55,981
    
    
    
    66,372
    
    
    
    139,542
    
    
    
    322,538Cost of goods sold:Project
    
    
    37,132
    
    
    
    27,115
    
    
    
    100,699
    
    
    
    137,311Product
    
    
    
    
    
    
    2,783
    
    
    
    
    
    
    
    17,264Total cost of goods sold
    
    
    37,132
    
    
    
    29,898
    
    
    
    100,699
    
    
    
    154,575Gross margin
    
    
    18,849
    
    
    
    36,474
    
    
    
    38,843
    
    
    
    167,963Costs and expensesResearch and development
    
    
    87,802
    
    
    
    366,311
    
    
    
    251,346
    
    
    
    1,018,105General and administrative
    
    
    922,241
    
    
    
    337,338
    
    
    
    1,943,231
    
    
    
    1,256,568Depreciation and amortization
    
    
    25,812
    
    
    
    29,630
    
    
    
    75,710
    
    
    
    87,945Sales and marketing
    
    
    37,975
    
    
    
    29,524
    
    
    
    124,410
    
    
    
    103,162Total costs and expenses
    
    
    1,073,830
    
    
    
    762,803
    
    
    
    2,394,697
    
    
    
    2,465,780Loss from operations
    
    
    (1,054,981
    )
    
    
    (726,329
    )
    
    
    (2,355,854
    )
    
    
    (2,297,817
    )Other (income) expenseInterest income
    
    
    (139
    )
    
    
    
    
    
    
    (139
    )
    
    
    (2,923
    )Interest expense
    
    
    5,747
    
    
    
    75,698
    
    
    
    206,656
    
    
    
    125,093Total other expenses
    
    
    5,608
    
    
    
    75,698
    
    
    
    206,517
    
    
    
    122,170Net loss
    
    
    (1,060,589
    )
    
    
    (802,027
    )
    
    
    (2,562,371
    )
    
    
    (2,419,987
    )Preferred stock accretion
    
    
    
    
    
    
    (7,503
    )
    
    
    (170,974
    )
    
    
    (21,887
    )Net loss available to common stockholders
    
    $
    (1,060,589
    )
    
    $
    (809,530
    )
    
    $
    (2,733,345
    )
    
    $
    (2,441,874
    )Loss per share, basic and diluted:Net loss
    
    $
    (0.06
    )
    
    $
    (0.06
    )
    
    $
    (0.15
    )
    
    $
    (0.17
    )Net loss available to common stockholders
    
    $
    (0.06
    )
    
    $
    (0.06
    )
    
    $
    (0.16
    )
    
    $
    (0.17
    )Weighted-average common shares outstanding,
basic and diluted
    
    
    18,201,060
    
    
    
    14,118,861
    
    
    
    16,944,987
    
    
    
    14,118,861
  4




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Novint Technologies, Inc.
 STATEMENT OF CASH FLOWS
 For theNine Months EndedSeptember 30, 2006
    
    
    September 30, 2005(Unaudited)
    
    
    (Unaudited)Cash flows from operating activities:Net loss
    
    $
    (2,562,371
    )
    
    $
    (2,419,987
    )Adjustments to reconcile net loss to net cash used in
operating activitiesDepreciation and amortization
    
    
    75,710
    
    
    
    87,944Common stock issued for services
    
    
    105,938
    
    
    
    514,650Options and warrants issued to consultants and employees for services
    
    
    843,332
    
    
    
    51,405Reprice of warrants previously granted in debt offering
    
    
    155,748
    
    
    
    Amortization of unearned compensation
    
    
    
    
    
    
    148,297Reserve for contract loss
    
    
    
    
    
    
    (6,775
    )Changes in operating assets and liabilities:Accounts receivable
    
    
    74,650
    
    
    
    26,935Prepaid expenses
    
    
    (27,097
    )
    
    
    (74,866
    )Deferred financing costs
    
    
    (70,322
    )
    
    
    (125,000
    )Accounts payable and accrued expenses
    
    
    296,534
    
    
    
    375,665Accrued interest
    
    
    6,061
    
    
    
    Accrued royalties
    
    
    (30,000
    )
    
    
    (7,500
    )Costs and estimated earnings in excess of billings
on contracts, net
    
    
    (59,098
    )
    
    
    (59,855
    )Billings in excess of costs and estimated earnings
on contracts, net
    
    
    (4,370
    )
    
    
    (19,427
    )Net cash used by operating activities
    
    
    (1,195,285
    )
    
    
    (1,508,514
    )Cash flows from investing activities:Property and equipment acquisitions
    
    
    (11,731
    )
    
    
    (3,354
    )Acquisition of intangibles
    
    
    (22,498
    )
    
    
    (1,600
    )Net cash provided (used) by investing activities
    
    
    (34,229
    )
    
    
    (4,954
    )Cash flows from financing activities:Proceeds from notes payable
    
    
    340,000
    
    
    
    630,000Repayment of notes payable
    
    
    (240,000
    )
    
    
    Payment of offering costs
    
    
    (14,500
    )
    
    
    Proceeds from sale of common stock
    
    
    1,925,000
    
    
    
    Net cash provided by financing activities
    
    
    2,010,500
    
    
    
    630,000Net increase (decrease) in cash and cash equivalents
    
    
    780,986
    
    
    
    (883,468
    )Cash and cash equivalents at beginning of period
    
    
    42,127
    
    
    
    1,329,428Cash and cash equivalents at end of period
    
    $
    823,113
    
    
    $
    445,960Supplemental information:Non-cash: Issuance of common stock in connection with accrued
research and development liabilities
    
    $
    465,000
    
    
    $
    Non-cash: Issuance of common stock in connection with note
payable and accrued interest
    
    $
    983,846
    
    
    $
    Research and Development paid with Note Payable
    
    $
    
    
    
    $
    418,436Fair value accretion on conditionally redeemable, convertible preferred stock
    
    $
    170,974
    
    
    $
    7,090
  5




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Novint Technologies, Inc.
 NOTES TO FINANCIAL STATEMENTS
 SEPTEMBER 30, 2006 AND 2005 (Unaudited)
 NOTE 1  BASIS OF PRESENTATION AND NATURE OF BUSINESS
 Basis of Presentation
  Reclassifications
  Nature of Business
  Going Concern and Managements Plans
   6




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NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Software Development Costs
  Property and Equipment
  Intangible Assets
   Year Ended December 31,2006
    
    
    19,4112007
    
    
    78,2302008
    
    
    9,0542009
    
    
    7,7712010 and after
    
    
    17,766Total
    
    $
    132,232
 7




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Revenue and Cost Recognition
          8




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Loss per Common Share
 , Earnings Per Share
 Stock Option Plans
   Net loss available to common shareholders, as reported
    
    $
    (2,441,874
    )Add: Stock-based employee compensation expense included in reported net income
    
    
    148,297Deduct: Total stock-based employee compensation expense determined under fair
value-based method for all awards
    
    
    (247,281
    )Pro forma net loss available to common shareholders
    
    $
    (2,540,858
    )Loss available to common shareholders per share, basic and diluted:As reported
    
    $
    (0.17
    )Pro forma
    
    $
    (0.18
    )
  Classification and Measurement of Freestanding Financial Instruments
Originally Issued in Exchange for Employee Services under FASB Statement No. 123(R)
 9




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Application of EITF Issue No. 00-19 to
Freestanding Financial Instruments Originally Issued as Employee Accounting for Derivative Instruments and Hedging
 Research and Development
  Recent Accounting Pronouncements
  Accounting Changes and
Error Corrections Accounting Changes Reporting Accounting Changes in Interim Financial Statements
   NOTE 3  COSTS AND ESTIMATED EARNINGS IN EXCESS OF BILLINGS ON CONTRACTS AND BILLINGS IN EXCESS OF
COSTS AND ESTIMATED EARNINGS ON CONTRACTS
  Costs and estimated earnings incurred on uncompleted contracts
    
    $
    132,842Billings on uncompleted contracts
    
    
    (73,744
    )Costs and estimated earnings in excess of billings on uncompleted contracts
    
    $
    59,098
  Billings on uncompleted contracts
    
    $
    73,744Costs and estimated earnings incurred on uncompleted contracts
    
    
    65,444Billings in excess of costs and estimated earnings on uncompleted contracts
    
    $
    8,300
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NOTE 4  INTANGIBLE ASSETS
  Licensing agreements
    
    $
    880,000Patent
    
    
    10,734Software development costs
    
    
    102,556Less accumulated amortization
    
    
    (861,058
    )$
    132,232
 NOTE 5  NOTES PAYABLE
  NOTE 6  CONVERTIBLE NOTES PAYABLE
  NOTE 7  COMMITMENTS AND CONTINGENCIES
    11




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NOTE 8  STOCKHOLDERS EQUITY
 Conditionally Redeemable, Convertible Preferred Stock
    Stock Options
   Shares
    
    
    
    
    
    
    Weighted-Under
    
    
    Price per
    
    
    AverageOption
    
    
    Share
    
    
    Exercise PriceOptions outstanding at 12/31/05
    
    
    8,003,341
    
    
    $
    0.01-$0.66
    
    
    $
    0.26Granted
    
    
    1,898,830
    
    
    $
    1.00-$1.20
    
    
    $
    1.01Exercised
    
    
    (58,505
    )
    
    $
    0.01-$0.66
    
    
    $
    0.07Canceled
    
    
    (5,000
    )
    
    $
    0.66
    
    
    $
    0.66Options outstanding at 9/30/06
    
    
    9,838,666
    
    
    $
    0.01-$1.20
    
    
    $
    0.40Exercisable at 9/30/06
    
    
    6,316,569
    
    
    $
    0.01-$1.20
    
    
    $
    0.19
  OutstandingWeightedAverage
    
    
    ExercisableWeighted-
    
    
    Remaining
    
    
    
    
    
    
    WeightedAverage
    
    
    Contractual
    
    
    
    
    
    
    AverageExercise Price
    
    Number
    
    
    Exercise Price
    
    
    Life (years)
    
    
    Number
    
    
    Exercise Price$0.01
    
    
    284,911
    
    
    $
    0.01
    
    
    
    1.80
    
    
    
    284,911
    
    
    $
    0.01$0.05
    
    
    4,600,000
    
    
    $
    0.05
    
    
    
    5.71
    
    
    
    4,600,000
    
    
    $
    0.05$0.50
    
    
    1,173,031
    
    
    $
    0.50
    
    
    
    7.39
    
    
    
    456,364
    
    
    $
    0.50$0.66
    
    
    1,881,894
    
    
    $
    0.66
    
    
    
    7.95
    
    
    
    670,394
    
    
    $
    0.66$1.00
    
    
    1,768,830
    
    
    $
    1.00
    
    
    
    4.48
    
    
    
    304,900
    
    
    $
    1.00$1.01
    
    
    80,000
    
    
    $
    1.01
    
    
    
    5.00
    
    
    
    
    
    
    $
    1.01$1.20
    
    
    50,000
    
    
    $
    1.20
    
    
    
    4.92
    
    
    
    
    
    
    $
    1.20Total
    
    
    9,838,666
    
    
    $
    0.40
    
    
    
    6.76
    
    
    
    6,316,569
    
    
    $
    0.19
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NOTE 9  EQUITY TRANSACTIONS
             15




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NOTE 10 WARRANTS
  16




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September 30, 2006Wtd AvgShares
    
    
    Ex PriceOutstanding at December 31, 2005
    
    
    3,138,000
    
    
    $
    1.29Granted
    
    
    1,337,500
    
    
    
    2.00Exercised
    
    
    
    
    
    
    Forfeited
    
    
    (
    )
    
    
    Outstanding at September 30, 2006
    
    
    4,475,500
    
    
    $
    1.50Exercisable at September 30, 2006
    
    
    4,475,500
    
    
    $
    1.50Weighted average fair value of warrants granted
    
    
    
    
    
    $
    1.50
  Warrants OutstandingWeighted-
    
    
    
    
    
    
    Warrants ExercisableNumber
    
    
    Average
    
    
    Weighted-
    
    
    
    
    
    
    Weighted-Outstanding
    
    
    Remaining
    
    
    Average
    
    
    Number
    
    
    AverageRange of
    
    at
    
    
    Contractual
    
    
    Exercise
    
    
    Exercisable
    
    
    ExerciseExercise Prices
    
    6/30/06
    
    
    Life
    
    
    Price
    
    
    at 6/30/06
    
    
    Price$0.25
    
    
    600,000
    
    
    7.01 years
    
    $
    0.25
    
    
    
    600,000
    
    
    $
    0.25$0.50
    
    
    250,000
    
    
    
    7.10
    
    
    
    0.50
    
    
    
    250,000
    
    
    
    0.50$1.00
    
    
    838,500
    
    
    
    4.20
    
    
    
    1.00
    
    
    
    588,500
    
    
    
    1.00$2.00
    
    
    2,787,000
    
    
    
    2.39
    
    
    
    2.00
    
    
    
    2,787,000
    
    
    
    2.00$0.25 to $2.00
    
    
    4,475,500
    
    
    
    
    
    
    
    
    
    
    
    4,225,500
    NOTE 11  RELATED PARTIES
  17




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NOTE 12  SUBSEQUENT DISCLOSURE
     18




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Item 2. Managements Discussion and Analysis or Plan of Operation.
 MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  1. OVERVIEW
    2. RESULTS OF OPERATIONS
 THREE MONTHS ENDED SEPTEMBER 30, 2006 COMPARED TO THE THREE MONTHS ENDED SEPTEMBER 30, 2005
    19
    Table of Contents  NINE MONTHS ENDED SEPTEMBER 30, 2006 COMPARED TO THE NINE MONTHS ENDED SEPTEMBER 30, 2005.
           20
    Table of Contents  LIQUIDITY AND CAPITAL RESOURCES
     CRITICAL ACCOUNTING POLICIES AND ESTIMATES
      21
    Table of Contents  RECENT ACCOUNTING PRONOUNCEMENTS
  Accounting Changes and
Error Corrections Accounting Changes Reporting Accounting Changes in Interim Financial Statements
 22
    Table of Contents  Item 3. Controls and Procedures
   
 PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
   23
    Table of Contents  Item 3. Defaults Upon Senior Securities.
  
 Item 4. Submission of Matters to a Vote of Security Holders.
  24
    Table of Contents  Item 5.
    
    Other Information.
 Amendment to 2004 Stock Incentive Plan
  
 Item 6.
    
    Exhibits
 Number
    
    Description3.1*
    
    Articles of Incorporation3.2*
    
    Bylaws3.3*
    
    Articles of Merger3.4*
    
    Certificate of Merger4.1*
    
    Articles of Incorporation (See Exhibit 3.1)4.2 **
    
    Form of Common Stock Purchase Warrant, April 2006.10.1*
    
    License Agreement with Sandia; Amendments10.2*
    
    Lease for 9620 San Mateo10.3*
    
    Employment Agreement with Tom Anderson10.4*
    
    Employment Agreement with Walter Aviles10.5*
    
    2004 Stock Incentive Plan10.6*
    
    Shareholders Agreement10.7*
    
    Lock Up Agreement10.8*
    
    Miscellaneous Technical Services Agreement between Aramco Services Company and Novint Technologies,
Inc.10.9*
    
    Contract Addendum between Aramco Services Company and Novint Technologies, Inc.10.10*
    
    Amendment to Contract between Aramco Services Company and Novint Technologies, Inc.10.11*
    
    Amendment to Contract between Aramco Services Company and Novint Technologies, Inc.10.12*
    
    Statement of Work between Chevron Corporation and Novint Technologies, Inc.10.13*
    
    Purchase Order from DaimlerChrylser Corporation
 25
    Table of Contents  Number
    
    Description10.14*
    
    Purchase Order # 94059 from LockheedMartin Corporation10.15*
    
    Purchase Order # 96996 from LockheedMartin Corporation10.16*
    
    Purchase Order # 97860 from LockheedMartin Corporation10.17*
    
    Purchase Order # Q50601685 from LockheedMartin Corporation10.18*
    
    Purchase Order # QQ060592 from LockheedMartin Corporation10.19*
    
    Purchase Order # Q50608809 from LockheedMartin Corporation10.20*
    
    Purchase Order #24232 from Sandia National Laboratories10.21*
    
    Purchase Order #27467 from Sandia National Laboratories10.22*
    
    Purchase Order #117339 from Sandia National Laboratories10.23*
    
    Purchase Order #250810 from Sandia National Laboratories10.24*
    
    Undersea Exploration Modeling Agreement between Woods Hole Oceanographic Institute and Novint
Technologies, Inc.10.25*
    
    Purchase Order for Lunar Design, Inc. dated April 7, 200510.26*
    
    Sublicense Agreement between Manhattan Scientifics and Novint Technologies, Inc.10.27*
    
    License and Royalty Agreement between Manhattan Scientifics and Novint Technologies, Inc.10.28*
    
    Research Development and License Agreement between Manhattan Scientifics and Novint Technologies, Inc.10.29*
    
    Intellectual Property License Agreement with Force Dimension LLC10.30*
    
    Purchase Order with Lockheed Martin dated April 1, 200510.31*
    
    Purchase Order with Lockheed Martin dated April 4, 200510.32*
    
    Purchase Order with Lockheed Martin dated April 21, 200510.33*
    
    Purchase Order with Deakin University dated April 6, 200410.34*
    
    Purchase Order with Robarts Research dated September 24, 200410.35*
    
    Purchase Order with University of New Mexico dated March 16, 200410.36*
    
    Amendment to Agreement with Force Dimension Dated May 5, 200510.37*
    
    Amendment to contract between Aramco Services Company and Novint Technologies, Inc.10.38#
    
    Purchase Order with Lockheed Martin dated February 16, 200610.39#
    
    Amendment to Intellectual Property License Agreement with Force Dimension LLC dated March 9, 200610.40#
    
    Purchase Order with Lockheed Martin dated March 3, 200610.41**
    
    Form of Subscription Agreement for Securities, April 2006.10.42##
    
    Board of Directors Agreement between V. Gerald Grafe and Novint Technologies, Inc.
 26
    Table of Contents  Number
    
    Description10.43
    
    Addendum No. 1 to the 2004 Stock Incentive Plan14#
    
    Code of Ethics31
    
    Certification Pursuant To Section 302 Of The Sarbanes-Oxley Act Of 200232
    
    Certification Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 Of The
Sarbanes-Oxley Act Of 2002
 
 *
    
    Filed with the Issuers Registration Statement on Form SB-2 on May 17, 2004, and as
subsequently amended, and incorporated herein by reference.#
    
    Filed with the Issuers Annual Report on Form 10-KSB, filed with the Commission on April 17,
2006, and incorporated herein by reference.**
    
    Filed with the Issuers Periodic Report on Form 10-QSB, filed with the Commission on May 22,
2006, and incorporated herein by reference.##
    
    Filed with the Issuers Current Report on Form 8-K, filed with the Commission on September
22, 2006, and incorporated herein by reference.  27
    Table of Contents  SIGNATURES
  NOVTIN TECHNOLOGIES, INC.By:
    /s/  TOM ANDERSONTom Anderson
Chief Executive Officer,
President and Chief Financial
OfficerNovember 17, 2006 28