ThZeal - The Zeal

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED June 30, 2008

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

Commission File No. 000-51783

Novint Technologies, Inc.

(Exact name of small business issuer as specified in it charter)

Delaware		85-0461778
(State or other jurisdiction of incorporation or		(IRS Employer Identification
organization)		No.)

4601 Paradise Boulevard NW, Suite B,

Albuquerque, New Mexico 87114

(Address of principal executive offices)

(866) 298-4420

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

	Large Accelerated filer o	Non-Accelerated Filer o
	Accelerated Filer o	Smaller Reporting Company x

The registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes o No x

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each issuer's classes of common stock, as of the latest practicable date: 32,235,062 issued and outstanding as of August 11, 2008.

NOVINT TECHNOLOGIES, INC.

TABLE OF CONTENTS

TO QUARTERLY REPORT ON FORM 10-Q

FOR PERIOD ENDED JUNE 30, 2008

		Page
PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements	F-2
	Balance Sheets	F-2
	Statement of Operations	F-3
	Statement of Changes in Stockholders’ Equity	F-4
	Statements of Cash Flows	F-5
	Notes to Financial Statements	F-6
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	10
Item 4.	Controls and Procedures	10

PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	10
Item 1A.	Risk Factors	11
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	11
Item 3.	Defaults Upon Senior Securities	11
Item 4.	Submission of Matters to a Vote of Security Holders	11
Item 5.	Other Information	11
Item 6.	Exhibits	12
Signatures		15
Exhibits

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Novint Technologies, Inc.

BALANCE SHEETS

	June 30, 2008			December 31, 2007
	(Unaudited)
ASSETS

CURRENT ASSETS:
Cash and cash equivalents	$	2,401,404		$	2,704,367
Accounts receivable, net		40,301			80,724
Prepaid expenses and other current assets		1,081,553			257,787
Inventory		1,375,039			474,461
Deposit on purchase of inventory		363,111			469,644

Total current assets		5,261,408			3,986,983

PROPERTY AND EQUIPMENT, NET		495,880			443,576
DEFERRED FINANCING COSTS		430,878			-
PREPAID EXPENSES - NET OF CURRENT PORTION		866,409			125,706
SOFTWARE DEVELOPMENT COSTS, NET		627,413			644,308
INTANGIBLE ASSETS, NET		854,029			405,299
DEPOSITS		16,224			43,063

Total assets	$	8,552,241		$	5,648,935

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable	$	879,419		$	230,677
Accrued payroll related liabilities		227,551			195,549
Accrued expenses		220,993			238,060
Accrued expenses - related parties		28,917			22,564
Deferred revenue		41,693			44,966

Total current liabilities		1,398,573			731,816

LONG TERM LIABILITIES:
Convertible notes payable, net of unamortized debt
discount of $4,799,274		362,924			-

Total liabilities		1,761,497			731,816

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
Common stock, authorized 150,000,000 shares, $0.01
par value; 32,097,032 and 31,898,955 shares issued
and outstanding, respectively		320,972			318,990
Additional paid-in capital		31,342,817			25,348,138
Accumulated deficit		(24,868,440	)		(20,745,404	)
Accumulated other comprehensive loss		(4,605	)		(4,605	)

Total stockholders' equity		6,790,744			4,917,119

Total liabilities and stockholders' equity	$	8,552,241		$	5,648,935

The accompanying notes are an integral part of these financial statements.

F-2

Novint Technologies, Inc.

STATEMENTS OF OPERATIONS

	For the Three Months Ended						For the Six Months Ended
	June 30, 2008			June 30, 2007			June 30, 2008			June 30, 2007
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Revenue:
Project	$	18,150		$	30,173		$	45,729		$	158,904
Product		65,949			35,490			110,199			35,490
Total revenue		84,099			65,663			155,928			194,394


Cost of goods sold:
Project		12,940			16,254			34,127			123,735
Product		70,270			41,445			129,153			41,445
Total cost of goods sold		83,210			57,699			163,280			165,180


Gross profit (loss)		889			7,964			(7,352	)		29,214

Operating expenses
Research and development		281,405			387,071			594,931			622,641
General and administrative		1,277,371			1,019,277			2,605,571			2,570,567
Depreciation and amortization		119,042			67,929			218,190			109,117
Sales and marketing		114,166			224,697			246,015			318,049
Total operating expenses		1,791,984			1,698,974			3,664,707			3,620,374

Loss from operations		(1,791,095	)		(1,691,010	)		(3,672,059	)		(3,591,160	)

Other (income) expense
Interest income		(1,539	)		(79,913	)		(13,791	)		(107,548	)
Interest expense		30,448			36			31,152			143,720
Debt discount related to convertible debts		435,823			-			435,823			-
Other (income) expense		-			-			(2,207	)		-

Net other (income) expense		464,732			(79,877	)		450,977			36,172


Net loss	$	(2,255,827	)	$	(1,611,133	)	$	(4,123,036	)	$	(3,627,332	)

Loss per share, basic and diluted:
Net loss	$	(0.07	)	$	(0.05	)	$	(0.13	)	$	(0.13	)

Weighted-average common shares
outstanding, basic and diluted		31,949,234			30,817,996			31,926,032			27,105,868

The accompanying notes are an integral part of these financial statements.

F-3

Novint Technologies, Inc.

STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

For the Six Months Ended June 30, 2008

											Accumulated
					Additional						Other
	Common Stock				Paid-in			Accumulated			Comprehensive
	Shares		Amount		Capital			(Deficit)			Loss			Total

Balances, December 31, 2007		31,898,955	$	318,990	$	25,348,138		$	(20,745,404	)	$	(4,605	)	$	4,917,119

Common stock issued for services		7,664		77		7,123			-			-			7,200
Common stock issued related to conversion
of convertible debts		72,900		729		72,170			-			-			72,899
Common stock issued for settlement of
accrued liabilities		114,963		1,150		112,750			-			-			113,900
Common stock issued related to cashless
options		2,550		26		(26	)		-			-			-
Options vested for employees services		-		-		237,106			-			-			237,106
Options vested to consultants for services		-		-		282,000			-			-			282,000
Warrants issued for financing costs		-		-		48,459			-			-			48,459
Debt discount and beneficial conversion
feature related to convertible notes		-		-		5,235,097			-			-			5,235,097
Net loss		-		-					(4,123,036	)		-			(4,123,036	)

Balances, June 30, 2008 (Unaudited)		32,097,032	$	320,972	$	31,342,817		$	(24,868,440	)	$	(4,605	)	$	6,790,744

The accompanying notes are an integral part of these financial statements.

F-4

Novint Technologies, Inc.
STATEMENTS OF CASH FLOWS

	For the Six Months Ended
	June 30,			June 30,
	2008			2007
	(Unaudited)			(Unaudited)
Cash flows from operating activities:
Net loss	$	(4,123,036	)	$	(3,627,332	)
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities
Depreciation and amortization		218,190			109,117
Amortization of capitalized finance cost and debt discount		464,017			-
Common stock issued for services		7,200			358,502
Options issued to employees and consultant for services		519,106			636,509
Changes in operating assets and liabilities:
Accounts receivable		40,423			(9,807	)
Prepaid expenses		(807,866	)		(131,329	)
Inventory		(900,578	)		(11,924	)
Deposit on purchase of inventory		106,533			-
Prepaid expenses		(740,703	)		-
Deposits		26,839			30,614
Accounts payable and accrued liabilities		131,647			252,408
Accrued expenses related party		24,353			(54,915	)
Costs and estimated earnings in excess of billings on contracts, net		-			(10,818	)
Deferred revenues		(3,273	)		21,746
Billings in excess of costs and estimated earnings on contracts, net		-			(5,500	)
Net cash (used in) operating activities		(5,037,148	)		(2,442,729	)

Cash flows from (to) investing activities:
Intangible expenditures		(22,539	)		(97,006	)
Capital outlay for software development costs		(59,549	)		(320,920	)
Capital outlay for investment in marketable securities		-			(1,980,900	)
Property and equipment purchases		(103,323	)		(78,283	)
Net cash (used in) investing activities		(185,411	)		(2,477,109	)

Cash flows from (to) financing activities:
Proceeds from exercise of options		-			132,636
Proceeds from issuance of common stock		-			10,080,000
Offering costs		(315,501	)		(370,010	)
Proceeds from convertible notes payable		5,235,097			-
Net cash provided by financing activities		4,919,596			9,842,626

Net increase (decrease) in cash and cash equivalents		(302,963	)		4,922,788
Cash and cash equivalents at beginning of period		2,704,367			255,468

Cash and cash equivalents at end of period	$	2,401,404		$	5,178,256

Supplemental information:
Interest paid	$	-		$	-
Income taxes paid	$	-		$	-
Non-cash investing and financing activities:
Debt discount and deferred financing cost related to convertible notes
payable recorded against paid-in capital	$	5,235,097		$	-
Payment of offering costs with 60,000 warrants	$	48,459		$	-
Deferred financing cost recognize and netted against paid-in capital	$	-		$	54,354
Purchase of licenses with common stock	$	-		$	10,001
Conversion of convertible debts with common stock	$	72,899		$	-
Payment of notes payable and accrued interest with common stock	$	-		$	358,081
Payment of accrued liabilities with common stock	$	113,900		$	74,000
Receivable related to stock options exercised	$	-		$	75,000

The accompanying notes are an integral part of these financial statements.

F-5

Novint Technologies, Inc.

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2008 AND 2007

(Unaudited)

NOTE 1 — BASIS OF PRESENTATION AND NATURE OF BUSINESS

Basis of Presentation

The unaudited financial statements have been prepared by Novint Technologies, Inc. (the “Company“ or “Novint”), in accordance with generally accepted accounting principles for interim financial information and with the instructions for Form 10-Q and Regulation S-X as promulgated by the Securities and Exchange Commission (“SEC”). Accordingly, these financial statements do not include all of the disclosures required by generally accepted accounting principles in the United States of America for complete financial statements. These unaudited interim financial statements should be read in conjunction with the audited financial statements and the notes thereto included on Form 10-KSB for the period ended December 31, 2007. In the opinion of management, the unaudited interim financial statements furnished herein include all adjustments, all of which are of a normal recurring nature, necessary for a fair statement of the results for the interim period presented. The results of the three and six months ended June 30, 2008 are not necessarily indicative of the results to be expected for the full year ending December 31, 2008.

Reclassifications

Certain prior year amounts were reclassified to conform to the June 30, 2008 presentation.

Nature 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. The Company currently is engaged in the development and 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’s operations are based in New Mexico with sales of its haptics products primarily to consumers through the Company’s website at www.novint.com and retail outlets.

Management’s Plans

As of June 30, 2008, the Company had total current assets of $5,261,408 and total current liabilities of $1,398,573, resulting in a working capital surplus of $3,862,835. As of June 30, 2008, the Company had cash totaling $2,401,404. During the six months ended June 30, 2008 as further discussed in Note 4, the Company raised approximately $5,235,000 from the issuance of convertible notes and warrants through a subscription agreement. The Company believes that it has sufficient capital to sustain its operations for twelve months; however, it will require additional working capital in order to fully execute on its business plans with respect to the haptics technology and the further development of the Novint Falcon and related software and accessories.

F-6

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Software Development Costs

The Company accounts for its software development costs in accordance with Statement of Financial Accounting Standards (SFAS) Number 86, Accounting for the Costs of Computer Software to be Sold, Leased, or Otherwise Marketed. This statement requires that, once technological feasibility of a developing product has been established, all subsequent costs incurred in developing that product to a commercially acceptable level be capitalized and amortized ratably over the estimated life of the product, which is generally 5 years. The Company has capitalized software development costs in connection with its haptics technology beginning in 2000. Amortization is computed on the straight-line basis over the estimated life (5 years) of the haptics technology. As of June 30, 2008, the Company’s capitalized software development costs totaled $627,413 (net of $266,919 of accumulated amortization). The estimated annual amortization expense related to the capitalized software development cost is approximately $155,000 per year. Amortization expense related to software development costs for the three and six months ended June, 2008 and 2007 totaled $39,225 and $76,983, and $18,735 and $34,548, respectively.

The Company follows Statement of Position (SOP) No. 98-1, Accounting for the Costs of Computer Software Developed or Obtained for Internal Use, which requires capitalization of certain costs incurred during the development of internal use software. Through June 30, 2008, capitalizable costs incurred have not been significant for any development projects. Accordingly, the Company has charged all related costs to research and development expense in the periods incurred.

Property and Equipment

Property and equipment is stated at cost. Depreciation on property and equipment is calculated on a straight-line depreciation method over the estimated useful lives of the assets, which range from 3 to 5 years for software and computer equipment, and 5 years for office equipment. Repairs and maintenance costs are expensed as incurred. Depreciation expense was $26,849 and $51,019, and $11,181 and $17,597 for the three and six months ended June 30, 2008 and 2007, respectively.

Intangible Assets

Intangible assets consist of licensing agreements of $1,228,044 and patents of $40,706, and are carried at cost less accumulated amortization of $414,721. Amortization is computed using the straight-line method over the economic life of the assets, which range between 3 and 12 years. For the three and six months ended June 30, 2008 and 2007, the Company recognized amortization expense of approximately $52,968 and $90,188, and $38,013 and $56,972, respectively, related to intangible assets.

Annual amortization of intangible assets remaining at June 30, 2008, is as follows:

Year Ended December 31,
2008		253,562
2009		343,471
2010		253,871
2011		2,500
2012 and after		625
Total	$	854,029

Revenue and Cost Recognition

The Company recognizes revenue from the sale of software products under the provisions of SOP 97-2, Software Revenue Recognition, as amended by SOP 98-4 and SOP 98-9. SOP 97-2 generally requires that revenue recognized from software arrangements be allocated to each element of the arrangement based on the relative vendor specific objective evidence of fair values of the elements, such as software products, upgrades, enhancements, post contract customer support, installation or training. Under SOP 97-2, if the determination of vendor specific objective evidence of fair value for each element of the arrangement does not exist, all revenue from the arrangement is deferred until such time that evidence does exist or until all elements of the arrangement are delivered.

SOP 97-2 was amended in December 1998 by SOP 98-9, Modification of SOP 97-2 Software Revenue Recognition with Respect to Certain Transactions. SOP 98-9 clarified what constitutes vendor specific objective evidence of fair value and introduced the concept of the “residual method” for allocating revenue to elements in a multiple element arrangement.

F-7

The Company’s revenue recognition policy is as follows:

Project revenue consists of programming services provided to unrelated parties under fixed-price contracts. Revenues from fixed price programming contracts are recognized in accordance with SOP 81-1, Accounting for Performance of Construction-Type and Certain Production-Type Contracts, and Accounting Research Bulletin (ARB) 45, Long-Term Construction-Type Contracts, using the percentage-of-completion method, measured by the percentage of costs incurred to date compared with the total estimated costs for each contract. The Company accounts for these measurements in the accompanying balance sheets under costs and estimated earnings in excess of billings on contracts, and billings in excess of costs and estimated earnings on contracts. Provisions for estimated losses on uncompleted contracts are made and recorded in the period in which the loss is identified. As of June 30, 2008 the Company did not have any costs and estimated earnings in excess of billings on contracts or any billings in excess of costs and estimated earnings on contracts. All contracts were 100% complete as of June 30, 2008.

Revenue from product sales relates to the sale of the Falcon haptics interface, which is a human-computer user interface (the “Falcon”) 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 the product sales is recognized when the 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 all these revenue from product sales requirements are not met, such sales will be recorded as deferred revenue until such time as all revenue recognition requirements are met.

As of June 30, 2008, the Company had recorded $41,693 of deferred revenue, which represents fees received for product and project revenues that have not met all revenue recognition requirements.

Emerging Issues Task Force (EITF) 00-10, Accounting for Shipping and Handling Fees and Costs, require amounts billed to a customer in a sales transaction related to shipping and handling, if any, to be classified and accounted for as revenues earned for the goods provided whereas shipping and handling costs incurred by a company are required to be classified as cost of sales. The Company’s costs associated with shipping product items to the Company’s customers are included in the Company’s Cost of Goods Sold, which for the three and six months ended June 30, 2008 and 2007 approximated $16,800 and $24,900, and $0 and $0, respectively.

Arrangements made with certain customers, including slotting fees and co-operative advertising, are accounted for in accordance with EITF No. 01-9, Accounting for Consideration Given by a Vendor to a Customer (Including a Reseller of the Vendor's Products). These incentives are recognized as a reduction in revenue or as a selling, general, and administrative expense, respectively, when payment is made to a customer (or at the time the Company has incurred the obligation, if earlier) unless the Company receives a benefit over a period of time and the Company meets certain other criteria, such as retailer performance, recoverability and enforceability, in which case the incentive is recorded as an asset and is amortized as a reduction of revenue over the term of the arrangement.

EITF 01-14, Income Statement Characterization of Reimbursements Received for “Out-of-Pocket” Expenses Incurred, requires reimbursements received for out-of-pocket expenses incurred while providing services to be characterized in the statements of operations as revenue. The Company’s out-of-pocket expenses incurred in connection with their project revenues are recognized in revenues based on a computed overhead rate that is included in their project labor costs to derive a project price.

In accordance with EITF 99-19, Reporting Revenue Gross as a Principal versus Net as an Agent, the Company recognizes its product sales on a gross basis. The Company is responsible for fulfillment, including the acceptability of the product ordered. The Company has risks and rewards of ownership such as the risk of loss for collection, delivery or returns. Title passes to the customer upon receipt of the product by the customer. In accordance with the Company’s agreement with its customer, further obligation is limited to the terms defined in its warranty.

The Company’s customers are provided a one (1) year limited warranty on the Falcon. This warranty guarantees that the products shall be free from defects in material and workmanship. Additionally, the Company offers its customers of the Falcon a 30 day money back guarantee. The Company continually evaluates its reserve accounts for both the limited warranty and 30 day money back guarantee based on its historical activities.

As of June 30, 2008, the Company has accrued $8,190 as warranty reserve.

F-8

Loss per Common Share

Statement of Financial Accounting Standards No. 128, Earnings Per Share, (SFAS 128) provides for the calculation of “Basic” and “Diluted” earnings per share. Basic earnings per share includes no dilution and is computed by dividing net loss available to common shareholders by the weighted average number of common shares outstanding for the period. All potentially dilutive securities have been excluded from the computations since they would be antidilutive. However, these dilutive securities could potentially dilute earnings per share in the future. As of June 30, 2008 and 2007, the Company had a total of 23,029,456 and 26,245,724 in potentially dilutive securities, respectively.

Stock Option Plans

The Company adopted SFAS No. 123 (Revised 2004), Share Based Payment (“SFAS No. 123R”), under the modified-prospective transition method on January 1, 2006. SFAS No. 123R requires companies to measure and recognize the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value. Share-based compensation recognized under the modified-prospective transition method of SFAS No. 123R includes share-based compensation based on the grant-date fair value determined in accordance with the original provisions of SFAS No. 123, Accounting for Stock-Based Compensation, for all share-based payments granted prior to and not yet vested as of January 1, 2006 and share-based compensation based on the grant-date fair-value determined in accordance with SFAS No. 123R for all share-based payments granted after January 1, 2006.

The Company recognized $237,106 and $190,620 in employee share-based compensation expense for the six months ended June 30, 2008 and 2007, respectively. The fair value of the stock options was estimated using the Black-Scholes option pricing model. In calculating the fair value of options for stock based compensation for the six months ended June 30, 2008, the following assumptions were used: closing price of the common stock at the date of grant, risk-free rates ranged from 4.00% to 5.25%, volatility of the options ranged from 73% to 157%, estimated lives of 3 to 10 years and exercise prices ranged from $0.66 to $1.20 per share.

Research and Development

Research and development costs are expensed as incurred and amounted to $281,405 and $594,931, and $387,071 and $622,641 for the three and six months ended June 30, 2008 and 2007, respectively.

Recently Issued Accounting Pronouncements

The Company has adopted all recently issued accounting pronouncements. The adoption of the accounting pronouncements, including those not yet effective is not anticipated to have a material effect on the financial position or results of operations of the Company.

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities - an amendment of FASB Statement No. 133” (“SFAS No. 161”). SFAS No. 161 amends and expands the disclosure requirements of SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” (“SFAS No. 133”). The objective of SFAS No. 161 is to provide users of financial statements with an enhanced understanding of how and why an entity uses derivative instruments, how derivative instruments and related hedged items are accounted for under SFAS No. 133 and its related interpretations, and how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. SFAS No. 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. SFAS No. 161 applies to all derivative financial instruments, including bifurcated derivative instruments (and nonderivative instruments that are designed and qualify as hedging instruments pursuant to paragraphs 37 and 42 of SFAS No. 133) and related hedged items accounted for under SFAS No. 133 and its related interpretations. SFAS No. 161 also amends certain provisions of SFAS No. 131. SFAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. SFAS No. 161 encourages, but does not require, comparative disclosures for earlier periods at initial adoption. The Company has not yet determined the effect on its consolidated financial statements, if any, upon adoption of SFAS No. 161.

F-9

NOTE 3 — INTANGIBLE ASSETS

Intangible assets consisted of the following at June 30, 2008:

Licensing agreements	$	1,228,043
Patent		40,707
Less accumulated amortization		(414,721	)
	$	854,029

NOTE 4- CONVERTIBLE NOTES PAYABLE

In March 2008, the Company closed on a $2,025,000 private placement of debt securities under Regulation D promulgated under the Securities Act of 1933 pursuant to the terms of a subscription agreement among the Company and the subscribers’ signatory thereto (the "Subscription Agreement"). From April 2008 through June 2008, the Company closed an additional $3,210,097 for an aggregate Subscription Agreement amount of $5,235,097. Each Subscriber acquired an unsecured convertible note in the principal amount invested and a warrant to purchase shares of the Company’s common stock with an exercise price of $1.00 per share. In each case, the number of shares of common stock underlying the warrant equals the principal amount of the unsecured convertible note. Each warrant is exercisable for a term of five (5) years. The unsecured convertible notes have a three (3) year maturity, require payment of principal and interest in full on the maturity date, and accrue interest at a rate of seven percent (7%) beginning on the first anniversary of their respective dates of issuance. At the option of the holder, principal outstanding under a note may be converted into common stock at the conversion rate then in effect, initially $1.00 per share. Upon conversion, the holder will receive common stock at the conversion price of $1.00 per share and additional warrants to purchase shares of common stock at an exercise price of $1.50 per share. The number of shares of common stock underlying the additional warrants shall equal one-half (1/2) the principal and interest amounts converted. The additional warrants shall be exercisable for a term of five (5) years. Certain existing shareholders of the Company are entitled to purchase notes and warrants under the terms of the Subscription Agreement and the Company was required to create a second offering of these notes and warrants. The Company has recorded $459,073 as deferred financing costs associated with the closing that occurred on June 30, 2008. This amount represents $197,049 accrued for legal expenses associated with the private placement, $149,403 paid to an investment banking company and $112,621 for the value of warrants to purchase 143,403 shares of the Company’s common stock at $1.00 per share for 5 years owed to the same investment banking company. These amounts are being amortized to interest expense over the term of the notes.

The Company has determined the convertible debenture contains a beneficial conversion feature and qualifies for treatment under Emerging Issues Task Force No. 00-27. The estimated fair value of the detachable warrants of $4,462,663 has been determined using Black-Scholes option pricing model using the following assumptions: stock price volatility of 124% to 125%, risk free interest rate of 3.77%; dividend yield of 0% and 3 year term. The face amount of the convertible debenture of $5,235,097 was proportionately allocated to the debenture and the warrants in the amount of $2,849,425 and $2,385,672, respectively. The convertible debentures’ proportionate allocated value of $2,849,425 was then further allocated between the debenture and the beneficial conversion feature, and the entire remaining value of $2,849,425 was allocated to the beneficial conversion feature. The combined total value of the warrant and beneficial conversion feature of $5,235,097 has been accounted for as a debt discount that is being amortized and treated as interest expense over the term of the convertible debenture under the effective interest method.

NOTE 5 — COMMITMENTS AND CONTINGENCIES

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.

The Company has licensing agreements with various parties providing gaming software. These licensing agreements have royalty provisions which require royalty fees ranging from 5% to 50% of either gross revenue or net revenue and one licensing agreement has a royalty provision of $0.50 per end user. Royalty fees paid or accrued for the six months ended June 30, 2008 and 2007 related to these licensing agreements approximated $1,474,872 and $0, respectively, of which $1,732,818 remains as prepaid expenses as of June 30, 2008. Based upon reaching certain milestones, the Company may be required to pay additional amounts.

F-10

NOTE 6 — STOCKHOLDERS’ EQUITY

Sale of Common Stock and Warrant

During January 2007, the Company sold 500,000 shares of common stock and warrants for 500,000 shares of common stock to 8 investors for a total of $500,000. The warrants have an exercise price of $1.00 per share and life of five years.

Unit Subscription Agreement

On March 5, 2007, the Company entered into a Unit Subscription Agreement (the “Agreement”) with 42 accredited investors (the “Purchasers”) pursuant to which the Company issued and sold $9,000,000 of Units, at a price of one dollar per Unit. Each Unit consists of one share of common stock, and one five-year warrant to purchase one share of common stock at an exercise price of $1.50. Accordingly, an aggregate of 9,000,000 shares of its common stock, and warrants to purchase 9,000,000 shares of common stock were issued (the “Financing”). The Financing closed on March 5, 2007. Under the terms of the Unit Subscription Agreement the Company may sell an additional 1,000,000 Units for $1,000,000 to a strategic investor, of which the Company closed on the sale of 580,000 units for $580,000 on May 11, 2007. Gross proceeds from the Financing to the Company were $9,000,000, of which $320,010 was paid to certain individuals who served as placement agents for the transaction and approximately $50,000 was paid to counsel for the Purchasers in connection with the transaction. In addition, the Company had netted a previously capitalized deferred offering cost totaling $54,354 towards the gross proceeds from the Financing. The Company granted warrants to purchase 320,000 shares of common stock with an exercise price of $1.50 to certain individuals who served as placement agents in the financing and options to purchase 173,419 shares of common stock with an exercise price of $1.00 to AF Double Eagle upon the closing of the Financing. These warrants and options have been accounted for as related offering costs. Mr. Tom Anderson, the Company’s Chief Executive Officer, invested $25,000 in the Financing.

As part of the terms of the Agreement, the Company entered into an Investor Rights Agreement among the Purchasers pursuant to which the Company has agreed to file a registration statement to register for resale of the shares of common stock sold in the Financing, including the shares of common stock underlying the warrants, within 55 days following the closing of the Financing. Subject to certain exceptions, in the event the registration statement is not filed within such 55 day period or does not become effective within certain time periods set forth in the Investor Rights Agreement, the Company would be required to pay each purchaser in the Financing an amount in cash equal to 0.0333% of the sum of (i) the purchase amount paid by the Purchaser and (ii) the amount paid upon exercise of the warrants for each day the filing or effectiveness of the registration statement is delayed and, pursuant to the terms of the warrants, the Purchasers would be entitled to exercise their warrants pursuant to a cashless exercise formula. In addition, the Company has agreed not to grant any registration rights that are senior to the registration rights of the Purchasers for a period of two years from the closing date without the prior written consent of a majority of the Purchasers. The Company filed a Form SB-2 registration statement as required by the Agreement on May 24, 2007 and it became effective on June 19, 2007 within the required timeline of the Agreement.

NOTE 7 — RELATED PARTIES

On February 18, 2004, the Company granted to a significant shareholder, for future services, 125,000 options to purchase common stock at an exercise price of $0.66 per share. The options have a 5-year annual vesting provision. Options granted to consultants are valued each reporting period to determine the amount to be recorded as consultant expense in the respective period. As the options vest, they will be valued one last time on the vesting date and an adjustment will be recorded for the difference between the value already recorded and the current value on date of vesting. At June 30, 2008, the Company calculated the value of the options using the Black-Scholes model based on the following assumptions: a risk-free rate of 4.00%, volatility of 120%, estimated life of 10 years and a fair market value of $1.01 per share. At March 31, 2004, the Company calculated the initial value of the options using the Black-Scholes model based on the following assumptions: a risk-free rate of 4.05%, volatility of 91%, estimated life of 10 years and a fair market value of $1.00 per share. The vesting schedule is prorated over the reporting period, and $10,917 and $18,851, respectively, was recorded as consultant expense during the six months ended June 30, 2008 and 2007.

F-11

In March 2004, Normandie New Mexico Corporation, which is owned by the former Chief Executive Officer (CEO) of Manhattan Scientific (a significant shareholder) who is also a member of the Company’s Board of Directors, entered into an agreement with the Company to provide consulting services in relation to business development and marketing support. Fees per the agreement are $6,250 per month. For the six months ended June, 2008 and 2007, the Company had paid $37,500 and $112,500, respectively, for these services. As of June 30, 2008, the Company owed $-0- to Normandie New Mexico under the agreement.

On June 10, 2004, the Company granted 250,000 options to purchase common stock to one of the member of the Company’s Board of Directors for future consulting services at an exercise price of $0.66 per share. The options have a 5-year annual vesting provision. At June 30, 2004, the Company calculated the initial value of these options using the Black-Scholes model based on the following assumptions: a risk-free rate of 4.81%, volatility of 100%, estimated life of 10 years and a fair market value of $1.00 per share. At June 30, 2008, the Company calculated the value of the options using the Black-Scholes model based on the following assumptions: a risk-free rate of 4.00%, volatility of 120%, estimated life of 10 years and a fair market value of $1.01 per share. The vesting schedule is prorated over the reporting period, and approximately $26,000 and $21,000, respectively, was recorded as consulting expense during the six months ended June 30, 2008 and 2007.

One of the members of the Company’s Board of Directors provided legal services to the Company. Total legal expense incurred by the Company for such legal services by this director totaled $100,935 and $79,030 for the six months ended June 30, 2008 and 2007, respectively. At the beginning of 2008, the Company granted this board member options to purchase 100,000 shares of common stock with an exercise price of $.89 per share for service performed and to be performed in relation to the Company’s patents. As of June 30, 2008, 6,709 options had vested and the Company recorded $8,206 in expense related to these vested options.

F-12

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Forward Looking Statements

Certain statements in the Management’s Discussion and Analysis (“MD&A”), other than purely historical information, including estimates, projections, statements relating to our business plans, objectives and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.

As used in this Form 10-Q, unless the context requires otherwise, “we” or “us” or the “Company” or “Novint” means Novint Technologies, Inc.

OVERVIEW

We were initially incorporated in the State of New Mexico as Novint Technologies, Inc. in April 1999. On February 26, 2002, we changed our state of incorporation to Delaware by merging into Novint Technologies, Inc., a Delaware corporation. We have no subsidiaries and operate our business under Novint Technologies, Inc. We are a haptics technology company (haptics refers to your sense of touch). We develop, market and sell applications and technologies that allow people to use their sense of touch to interact with computers.

We have derived revenues from 3D touch hardware sales, 3D touch software sales, and the development of professional applications for our customers. We launched our Falcon product in June 2007, and are selling it in our on-line store and in a number of retailers and other websites. We launched an on-line game store in November 2007. We also have completed a number of professional application contracts with customers who desire custom developed software.

Novint focuses the majority of its efforts to exploit opportunities in the consumer console and PC interactive games market. Using our haptics technology, games and applications will have the crucial missing “third sense”, touch, to human computer interaction. Users will be able to directly and intuitively feel the shape, texture, and physical properties of virtual objects using our computer touch software. Our haptic technology and related hardware for consumers is now the primary focus of our operations whereas in the past it had been professional applications. We will devote a majority of our resources to further developing this market and seeking new business relationships with video game developers and publishers and hardware manufacturers. We began selling our haptic product, the Novint Falcon, in June 2007 through our website at www.novint.com. We currently are selling one haptic hardware product which is a haptic game controller device called the Novint Falcon marketed in a bundled package which includes several games. We launched an on-line game store in late 2007, where consumers can purchase and download a variety of game titles. Although our sales of the Novint Falcon and games since product launch have been limited, we anticipate sales of the Novint Falcon and games to increase resulting from increased sales and distributions to retailers and release of new software and games in 2008. One of the most significant drivers of revenue for Novint will be games and content. This is true not only in the revenue we get from the games themselves, but largely because this is a criterion we see many of our customers desiring in order to justify the Falcon hardware purchase. For example, if the Novint Falcon has many games available to play on it, a customer can purchase a single piece of hardware and then over time purchase multiple games that give a unique gaming experience, making the initial hardware purchase valuable over a larger amount of time and across a larger number of games. Given our recent licensing deals with Valve, Electronic Arts, and Codemasters, and therefore dozens of AAA level games that will be supported by the Falcon, we believe these new licensed games, when released, will drive additional revenue that we have not seen before the AAA games were released.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

High-quality financial statements require rigorous application of accounting policies. Our policies are discussed in our financial statements for the quarter ended June 30, 2008 and are considered by management to be critical for an understanding of our financial statements because their application places the most significant demands on management’s judgment, with financial reporting results relying on estimation about the effect of matters that are inherently uncertain. We review the accounting policies we use in reporting our financial results on a regular basis. As part of such review, we assess how changes in our business processes and products may affect how we account for transactions. We have not changed our critical accounting policies or practices during 2008. New accounting policies and practices were implemented in 2007 as necessary based on the launch of our haptics product sales in June 2007.

REVENUE AND COST RECOGNITION — We recognize revenue from the sale of software products under the provisions of Statement of Position (“SOP”) 97-2, Software Revenue Recognition, as amended by SOP 98-4 and SOP 98-9. SOP 97-2 generally requires that revenue recognized from software arrangements be allocated to each element of the arrangement based on the relative vendor specific objective evidence of fair values of the elements, such as software products, upgrades, enhancements, post contract customer support, installation, or training. Under SOP 97-2, if the determination of vendor specific objective evidence of fair value for each element of the arrangement does not exist, all revenue from the arrangement is deferred until such time that evidence does exist or until all elements of the arrangement are delivered.

Our revenue recognition policy is as follows:

Project revenue consists of programming services provided to unrelated parties under fixed-price contracts. Revenues from fixed price programming contracts are recognized in accordance with SOP 81-1, Accounting for Performance of Construction-Type and Certain Production-Type Contracts, and Accounting Research Bulletin 45, Long-Term Construction-Type Contracts, using the percentage-of-completion method, measured by the percentage of costs incurred to date compared with the total estimated costs for each contract. The Company accounts for these measurements in the accompanying balance sheets under costs and estimated earnings in excess of billings on contracts, and billings in excess of costs and estimated earnings on contracts. Provisions for estimated losses on uncompleted contracts are made and recorded in the period in which the loss is identified. As of June 30, 2008, the Company did not have any costs and estimated earnings in excess of billings on contracts, and no billings in excess of costs and estimated earnings on contracts. All contracts were 100% complete as of June 30, 2008.

As of June 30, 2008, the Company had recorded $41,693 of deferred revenue, which represents fees received for product and project revenues that have not met all revenue recognition requirements.

As of June 30, 2008, the Company has accrued $8,190 as warranty reserve.

IMPAIRMENT — In accordance with Statement of Financial Accounting (“SFAS”) 144, Accounting for the Impairment or Disposal of Long-Lived Assets, we review our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

SOFTWARE DEVELOPMENT COSTS — We account for our software development costs in accordance with SFAS 86, Accounting for the Costs of Computer Software to be Sold, Leased, or Otherwise Marketed. This statement requires that, once technological feasibility of a developing product has been established, all subsequent costs incurred in developing that product to a commercially acceptable level be capitalized and amortized ratably over the estimated life of the product, which is 5 years. We have capitalized software development costs in connection with our haptic software beginning in 2000. Amortization is computed on the straight-line basis over the estimated life (5 years) of the haptics technology.

STOCK BASED COMPENSATION - We account for stock based compensation in accordance with SFAS 123(R), Share-Based Payment, which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors, including employee stock options and employee stock purchases, related to a Employee Stock Purchase Plan based on the estimated fair values. We have used stock option awards in the past and continue to use them as a means of rewarding our employees and directors for their continued commitment and efforts in helping us execute our overall business plans.

Additionally, the Company has adopted all recently issued accounting pronouncements. The adoption of the accounting pronouncements, including those not yet effective is not anticipated to have a material effect on the financial position or results of operations of the Company.

RESULTS OF OPERATIONS

THREE MONTHS ENDED JUNE 30, 2008 COMPARED TO THE THREE MONTHS ENDED JUNE 30, 2007.

REVENUES. During the quarter ended June 30, 2008, we had revenues of $84,099 as compared to revenues of $65,663 during the quarter ended June 30, 2007, an increase of approximately 28%. We launched our Falcon product in June 2007, and launched the on-line game store in November 2007. Prior to this launch, all of our revenues were derived from the development of professional applications. In 2008 our revenues were mainly derived from consumer products, which is a much different focus.

Our revenues in the quarter ended June 30, 2008 were derived from both the sales of our haptics products and projects. During the quarter ended June 30, 2008, we had revenues from the sale of our haptics technology products of $65,949, as compared to revenues of $35,490 during the quarter ended June 30, 2007, an increase of approximately 86%. During the quarter ended June 30, 2008, we had revenues from projects of $18,150, as compared to revenues of $30,173 during the quarter ended June 30, 2007, a decrease of approximately 40%. We will continue to provide development of professional applications in future years, but the primary focus remains on revenues derived from consumer products.

COST OF GOODS SOLD AND GROSS PROFIT (LOSS). Cost of goods sold for our haptics technology products includes the cost of the haptics technology products sold and the costs associated with shipping product to customers. The cost of goods sold for our development of professional applications includes materials purchased for resale to customers and the direct labor incurred for delivering on projects. Costs of goods sold were $83,210 for the quarter ended June 30, 2008, compared to $57,699 for the quarter ended June 30, 2007. Our overall gross profit percentage was approximately 1 % for the quarter ended June 30, 2008, which is a result of our gross profit from our development of professional applications approximately 29%, and gross loss from the sale of our haptics technology product approximated (7) %, compared to a gross profit percentage of 12% for the quarter ended June 30, 2007, which is a result of our gross profit from our development of professional applications approximately 46%, and gross loss from the sale of our haptics technology product approximated (17) %. Our gross profit from the development of professional applications decreased from year to year as the nature of the work being done is at a lower margin,. Our gross loss experienced from the sale of our haptics technology product continues to be impacted by efforts to drive market penetration—freight costs to meet the demands of product distribution, costs to place product into major retail chains, third-party warehousing costs, and lower pricing for retailer and distributors; however, we have begin to see improvement in many of these costs as our processes are worked out.

RESEARCH AND DEVELOPMENT EXPENSES. Research and development totaled $281,405 for the quarter ended June 30, 2008 compared to $387,071 for the quarter ended June 30, 2007, a decrease of $105,666 or 27%. Our research and development for 2008 decreased slightly as our software and games are being launched. We will continue to develop new software associated with the haptics technology product, as well as specialized grips for use with the product.

GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses totaled $1,277,371 for the quarter ended June 30, 2008, compared to $1,019,277 for the quarter ended June 30, 2007, an increase of $258,094 or 25%. The increase in general and administrative expenses compared to the prior year was primarily related to the addition of infrastructure to support the business that launched in June 2007. Business and professional fees decreased approximately $141,000, royalty expense increased approximately $14,000, and payroll and other overhead expenses increased approximately $385,000 as new employees, insurance, office space, warehousing, and other expenses were added to support the business. We anticipate such expenses to stabilize as we continue to market and promote the product.

DEPRECIATION AND AMORTIZATION EXPENSE. Depreciation and amortization expense totaled $119,042 for the quarter ended June 30, 2008 compared to $67,929 for the quarter ended June 30, 2007, an increase of $51,113 or 75%. This has increased as we have increased our investment in fixed assets, intangibles, and capitalized software.

SALES AND MARKETING EXPENSE. Sales and marketing expense totaled $114,166 for the quarter ended June 30, 2008 compared to $224,697 for the quarter ended June 30, 2007, a decrease of $110,531 or 49%. In 2007, we had programs focused on the launch of the Falcon, which occurred in June 2007, and in 2008 expenses continued for website development, trade show expenses and an “Evangelist Program” to encourage early adopters to tell others about the product. Promotional efforts will continue in 2008 with print advertising, trade shows, branding, and promotion through the website.

LOSS FROM OPERATIONS: We had a loss from operations of $1,791,095 for the quarter ended June 30, 2008, compared to a loss from operations of $1,691,010 for the quarter ended June 30, 2007. Our net losses have increased slightly as a result the changes in our operating expenses as described above.

NET LOSS. We had a net loss of $2,255,827, or $0.07 per share, for the quarter ended June 30, 2008, compared to $1,611,133, or $0.05 per share, for the quarter ended June 30, 2007. There was an increase in the net loss of $644,694, which is a result of an increase in the loss from operations of approximately $100,000, a decrease in interest income of approximately $78,000, and an increase in interest expense and debt discount related to convertible debt of approximately $466,000.

SIX MONTHS ENDED JUNE 30, 2008 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 2007.

REVENUES. During the six months ended June 30, 2008, we had revenues of $155,928 as compared to revenues of $194,394 during the six months ended June 30, 2007, a decrease of approximately 20%. We launched our Falcon product in June 2007, and launched the on-line game store in November 2007. Prior to this launch, all of our revenues were derived from the development of professional applications. In 2008 our revenues were mainly derived from consumer products, which is a much different focus.

Our revenues in the six months ended June 30, 2008 were derived from both the sales of our haptics products and projects. During the six months ended June 30, 2008, we had revenues from the sale of our haptics technology products of $110,199, as compared to revenues of $35,490 during the six months ended June 30, 2007, an increase of approximately 211%. During the six months ended June 30, 2008, we had revenues from projects of $45,729, as compared to revenues of $158,904 during the six months ended June 30, 2007, a decrease of approximately 71%. We will continue to provide development of professional applications in future years, but the primary focus remains on revenues derived from consumer products.

COST OF GOODS SOLD AND GROSS PROFIT (LOSS). Cost of goods sold for our haptics technology products includes the cost of the haptics technology products sold and the costs associated with shipping product to customers. The cost of goods sold for our development of professional applications includes materials purchased for resale to customers and the direct labor incurred for delivering on projects. Costs of goods sold were $163,280 for the six months ended June 30, 2008, compared to $165,180 for the six months ended June 30, 2007. Our overall gross loss percentage was approximately (5)% for the six months ended June 30, 2008, which is a result of our gross profit from our development of professional applications approximately 25%, and gross loss from the sale of our haptics technology product approximated (17) %, compared to a gross profit percentage of 15% for the six months ended June 30, 2007, which is a result of our gross profit from our development of professional applications approximately 22%, and gross loss from the sale of our haptics technology product approximated (17) %. Our gross profit from the development of professional applications has remained consistent from year to year. Our gross loss experienced from the sale of our haptics technology product continues to be impacted by efforts to drive market penetration—freight costs to meet the demands of product distribution, costs to place product into major retail chains, third-party warehousing costs, and lower pricing for retailer and distributors; however, we have begun to see improvement in many of these costs as our processes are worked out.

RESEARCH AND DEVELOPMENT EXPENSES. Research and development totaled $594,931 for the six months ended June 30, 2008 compared to $622,641 for the six months ended June 30, 2007, a decrease of $27,710 or 4%. Our research and development for 2008 decreased slightly as our software and games are being launched. We will continue to develop new software associated with the haptics technology product, as well as specialized grips for use with the product.

GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses totaled $2,605,571 for the six months ended June 30, 2008, compared to $2,570,567 for the six months ended June 30, 2007, an increase of $35,004 or 1%. The slight increase in general and administrative expenses compared to the prior year was primarily related to the addition of infrastructure to support the business that launched in June 2007, offset by the reduction in business and professional fees. Business and professional fees decreased approximately $663,000, royalty expense increased approximately $36,000, and payroll and other overhead expenses increased approximately $662,000 as new employees, insurance, office space, warehousing, and other expenses were added to support the business. We anticipate such expenses to stabilize as we continue to market and promote the product.

DEPRECIATION AND AMORTIZATION EXPENSE. Depreciation and amortization expense totaled $218,190 for the six months ended June 30, 2008 compared to $109,117 for the six months ended June 30, 2007, an increase of $109,073 or 100%. This has increased as we have increased our investment in fixed assets, intangibles, and capitalized software.

SALES AND MARKETING EXPENSE. Sales and marketing expense totaled $246,015 for the six months ended June 30, 2008 compared to $318,049 for the six months ended June 30, 2007, a decrease of $72,034 or 23%. In 2007, we had programs focused on the launch of the Falcon, which occurred in June 2007, and in 2008 expenses continued for website development, trade show expenses and an “Evangelist Program” to encourage early adopters to tell others about the product. Promotional efforts will continue in 2008 with print advertising, trade shows, branding, and promotion through the website.

LOSS FROM OPERATIONS: We had a loss from operations of $3,672,059 for the six months ended June 30, 2008, compared to a loss from operations of $3,591,160 for the six months ended June 30, 2007. Our net losses have increased slightly as a result the changes in our operating expenses as described above.

NET LOSS. We had a net loss of $4,123,036, or $0.13 per share, for the six months ended June 30, 2008, compared to $3,627,332, or $0.13 per share, for the six months ended June 30, 2007. There was an increase in the net loss of $495,704, which is a result of an increase in the loss from operations of approximately $81,000, a decrease in interest income of approximately $94,000, an increase in other income of approximately $2,000, and an net increase in interest expense and debt discount related to convertible debt of approximately $323,000.

LIQUIDITY AND CAPITAL RESOURCES

As of June 30, 2008, we had a total cash balance of $2,401,404. Our cash flow from operating activities for the six months ended June 30, 2008 resulted in a deficit of $5,037,148 compared with a deficit of $2,442,729 in the same period of the prior year. Our cash flow from investing activities for the six months ended June 30, 2008 resulted in a deficit of $185,411 compared with a deficit of $2,477,109 in the same period of the prior year. Our cash flow from financing activities for the six months ended June 30, 2008 resulted in a surplus of $4,919,596 compared to a surplus of $9,842,626 in the same period of the prior year. Overall, our cash decreased by $302,963 during the six months ended June 30, 2008.

As of June 30, 2008, the Company had total current assets of $5,261,408 and total current liabilities of $1,398,573, resulting in a working capital surplus of $3,862,835. As of June 30, 2008, the Company had cash totaling $2,401,404. During the six months ended June 30, 2008, the Company raised approximately $5,235,000 from the issuance of convertible notes and warrants through a subscription agreement. The Company believes that it has sufficient capital to sustain its operations for twelve months; however, it will require additional working capital in order to fully execute on its business plans with respect to the haptics technology and the further development of the Novint Falcon and related software and accessories.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not Applicable.

ITEM 4. CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

As of the end of the period covered by this quarterly report, we carried out an evaluation, under the supervision of, and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective to enable us to record, process, summarize and report information required to be included in our reports that we file or submit under the Exchange Act within the time periods required.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended) during the quarter ended June 30, 2008 that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We know of no material, existing or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial stockholder, is an adverse party or has a material interest adverse to our company.

ITEM 1A. RISK FACTORS

Not applicable.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

In April, May and June 2008, we issued warrants to purchase an aggregate 59,954 shares of common stock at an exercise price of $1.00 per share to associates at Equity Source Partners as placement agent fees. The six recipients of the warrants were accredited investors within the meaning of Regulation D of the Securities Act. We relied upon the exemption from registration as set forth in Section 4(2) of the Securities Act for the issuance of these securities. The holders took the securities for investment purposes without a view to distribution and had access to information concerning Novint and our business prospects, as required by the Securities Act. In addition, there was no general solicitation or advertising for the issuance of the securities. The holders were permitted access to our management for the purpose of acquiring investment information. Due to the holders’ status as accredited investors and their dealings with development companies generally, we deem the holders sophisticated for the purposes of Section 4(2) of the Securities Act.

In June 2008, we issued 72,899 shares of common stock and warrants to purchase 36,450 shares of common stock at an exercise price of $1.50 per share to four investors upon their conversion of notes. The four recipients of the common stock and warrants were accredited investors within the meaning of Regulation D of the Securities Act. We relied upon the exemption from registration as set forth in Section 4(2) of the Securities Act for the issuance of these securities. The holders took the securities for investment purposes without a view to distribution and had access to information concerning Novint and our business prospects, as required by the Securities Act. In addition, there was no general solicitation or advertising for the issuance of the securities. The holders were permitted access to our management for the purpose of acquiring investment information. Due to the holders’ status as accredited investors and, we deem the holders sophisticated for the purposes of Section 4(2) of the Securities Act.

In June 2008, we issued 49,020 shares of common stock and warrants to purchase 49,020 shares of common stock at an exercise price of $1.50 per share to Aidan Foley upon the exercise of a unit option. We relied upon the exemption from registration as set forth in Section 4(2) of the Securities Act for the issuance of these securities. The shareholder took the securities for investment purposes without a view to distribution and had access to information concerning Novint and our business prospects, as required by the Securities Act. In addition, there was no general solicitation or advertising for the issuance of the securities. The shareholder was permitted access to our management for the purpose of acquiring investment information. Due to the shareholder’s dealings with development companies generally, we deem the shareholder sophisticated for the purposes of Section 4(2) of the Securities Act.

In June 2008, we issued 3,297 shares of common stock to Ralph Anderson in payment for services rendered on our audit committee. We relied upon the exemption from registration as set forth in Section 4(2) of the Securities Act for the issuance of these shares. The shareholder took the shares for investment purposes without a view to distribution and had access to information concerning Novint and our business prospects, as required by the Securities Act. In addition, there was no general solicitation or advertising for the issuance of the shares. The shareholder was permitted access to our management for the purpose of acquiring investment information. Due to the shareholder’s status on our audit committee and his dealings with companies similar to ours, we deem the shareholder sophisticated for the purposes of Section 4(2) of the Securities Act.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5. OTHER INFORMATION

(a)

None.

(b)	There were no changes to the procedures by which security holders may recommend nominees to our board of directors.

ITEM 6. EXHIBITS

EXHIBIT INDEX

Number		Description
3.1 (9)		Amend and Restated Certificate of Incorporation

3.2 (6)		Amended and Restated Bylaws

3.3 (1)		Articles of Merger

3.4 (1)		Certificate of Merger

4.1 (1)		Articles of Incorporation (See Exhibit 3.1)

4.2 (3)		Form of Common Stock Purchase Warrant, April 2006

4.3 (7)		Form of Common Stock Purchase Warrant, March 2007

4.4 (13)		Form of Note, April 2008

4.5 (13)		Form of Common Stock Purchase Warrant, April 2008

4.6 (14)		Form of Note, May 2008

4.7 (14)		Form of Common Stock Purchase Warrant, May 2008

4.8 (15)		Form of Note, June 2008

4.9 (15)		Form of Common Stock Purchase Warrant, June 2008

10.1 (1)		Employment Agreement with Tom Anderson

10.2 (1)		Employment Agreement with Walter Aviles

10.3 (10)		Amended and Restated 2004 Stock Incentive Plan

10.4 (2)		Purchase Order with Lockheed Martin dated February 16, 2006

10.5 (2)		Amendment to Intellectual Property License Agreement with Force Dimension LLC dated March 9, 2006

10.6 (2)		Purchase Order with Lockheed Martin dated March 3, 2006

10.7 (3)		Form of Subscription Agreement for Securities, April 2006.

10.8 (4)		Board of Directors Agreement between V. Gerald Grafe and Novint Technologies, Inc.

10.9 (5)		Manufacturing Agreement dated December 19, 2006 by and between Novint Technologies, Inc. and VTech Communications Ltd.

10.10 (5)		Novint Purchase Order 1056. (Portions of this exhibit have been omitted pursuant to a request for confidential treatment.)

10.11 (7)		Form of Unit Subscription Agreement, March 2007

10.12 (7)		Form of Investor Rights Agreement, March 2007

10.13 (8)		Amendment No. 1 to Unit Subscription Agreement dated March 2, 2007

10.14 (8)		Amendment No. 2 to Unit Subscription Agreement dated March 30, 2007

10.15 (8)		Amendment No. 1 to Investor Rights Agreement dated March 30, 2007

10.16 (10)		Purchase Order with The Falk Group, LLC dated January 16, 2007

10.17 (11)		Tournabout Intellectual Property Acquisition Agreement dated July 17, 2007

10.18 (12)		Lease Agreement dated May 29, 2007

10.19 (12)		Lease Agreement dated June 21, 2007

10.20 (13)		Form of Subscription Agreement, April 2008

10.21 (14)		Form of Subscription Agreement, May 2008

10.22 (15)		Form of Subscription Agreement, June 2008

14 (2)		Code of Ethics

31		Certification Pursuant To Section 302 Of The Sarbanes-Oxley Act Of 2002 — Chief Executive Officer and Chief Financial Officer

32		Certification Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 Of The Sarbanes-Oxley Act Of 2002 — Chief Executive Officer and Chief Financial Officer


(1)		Filed with the Issuer’s Registration Statement on Form SB-2 on May 17, 2004, and as subsequently amended, and incorporated herein by reference.

(2)		Filed with the Issuer’s Annual Report on Form 10-KSB, filed with the Commission on April 17, 2006, and incorporated herein by reference.

(3)		Filed with the Issuer’s Periodic Report on Form 10-QSB, filed with the Commission on May 22, 2006, and incorporated herein by reference.

(4)		Filed with the Issuer’s Current Report on Form 8-K, filed with the Commission on September 22, 2006, and incorporated herein by reference.

(5)		Filed with the Issuer’s Current Report on Form 8-K, filed with the Commission on December 20, 2006, and incorporated herein by reference.

(6)		Filed with the Issuer’s Current Report on Form 8-K, filed with the Commission on March 1, 2007.

(7)		Filed with the Issuer’s Current Report on Form 8-K, filed with the Commission on March 9, 2007.

(8)		Filed with the Issuer’s Periodic Report on Form 10-QSB, filed with the Commission on May 15, 2007.

(9)		Filed with the Issuer’s Current Report on Form 8-K, filed with the Commission on June 21, 2007.

(10)		Filed with the Issuer’s Registration Statement on Form SB-2 on May 24, 2007.

(11)		Filed with the Issuer’s Current Report on Form 8-K, filed with the Commission on July 23, 2007.

(12)		Filed with the Issuer’s Registration Statement on Form SB-2 on July 27, 2007.

(13)		Filed with the Issuer’s Current Report on Form 8-K, filed with the Commission on April 15, 2008.

(14)		Filed with the Issuer’s Current Report on Form 8-K, filed with the Commission on May 12, 2008.

(15)		Filed with the Issuer’s Current Report on Form 8-K, filed with the Commission on June 13, 2008.

All other exhibits are filed herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	NOVINT TECHNOLOGIES, INC.
	(Registrant)

Date: August 14, 2008	By:	/s/ Tom Anderson
		Tom Anderson
		Chief Executive Officer