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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

[X]
QUARTERLY REPORT UNDER TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2012
   
 
OR
   
[   ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 000-30414

ALR TECHNOLOGIES INC.
(Exact name of registrant as specified in its charter)

NEVADA
(State or other jurisdiction of incorporation or organization)

7400 Beaufont Springs Drive Suite 300
Richmond, VA   23225
(Address of principal executive offices, including zip code.)

(804) 554-3500
(Telephone number, including area code)

Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 last 90 days.   YES [X]     NO [   ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (SS 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   YES [X]     NO [   ]

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,” “non-accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 
Large Accelerated Filer
[   ]
 
Accelerated Filer
[   ]
 
Non-accelerated Filer
[   ]
 
Smaller Reporting Company
[X]
 
(Do not check if smaller reporting company)
     

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES [   ]     NO [X]

APPLICABLE ONLY TO CORPORATE ISSUERS:

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: 213,977,907 as of May 9, 2012.






 
 

 


ALR TECHNOLOGIES INC. AND SUBSIDIARY
Development Stage Company


 
   
Financial Statements.
 
 
3
 
4
 
5
 
6
     
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
22
     
Quantitative and Qualitative Disclosures About Market Risk.
30
     
Controls and Procedures.
30
     
     
   
     
Legal Proceedings.
30
     
Risk Factors.
30
     
Defaults Upon Senior Securities.
30
     
Exhibits.
31
     
32
   
33














 
-2-

 




ALR TECHNOLOGIES INC. AND SUBSIDIARY
Development Stage Company
($ United States)

 
   
March 31
 
December 31
   
2012
 
2011
   
(Unaudited)
   
ASSETS
       
CURRENT ASSETS:
       
Cash
$
5,771
$
11,002
Prepaid expenses and deposits
 
17,515
 
3,615
Total Assets
$
23,286
$
14,617
         
         
LIABILITIES AND STOCKHOLDERS’ DEFICIT
       
CURRENT LIABILITIES: 
       
Accounts payable and accrued liabilities
$
826,497
$
867,972
Interest payable
 
2,057,086
 
1,930,695
Advances payable
 
105,527
 
100,527
Lines of credit from related parties
 
3,260,439
 
2,812,166
Related parties promissory notes payable
 
2,861,966
 
2,861,966
Promissory notes payable
 
2,424,353
 
2,424,353
Total Liabilities
 
11,535,868
 
10,997,679
         
STOCKHOLDERS’ DEFICIT:
       
Capital stock
       
           
 
Authorized: 350,000,000 shares of common stock with a par value
of $0.001 per share
       
           
 
Shares issued and outstanding : 213,977,907 shares
(2011 – 213,977,907 shares)
 
213,977
 
213,977
Additional paid-in capital
 
26,608,771
 
26,335,026
Accumulated deficit
 
(38,335,330)
 
(37,532,065)
Total Stockholders’ Deficit
 
(11,512,582)
 
(10,983,062)
Total Liabilities and Stockholders’ Deficit
$
23,286
$
14,617









See accompanying notes to the condensed consolidated financial statements.

 
-3-

 


ALR TECHNOLOGIES INC. AND SUBSIDIARY
Development Stage Company
($ United States)
(Unaudited)

         
       
October 21, 1998
   
Three Months Ended
 
(Inception)
   
March 31
 
to March 31,
   
2012
 
2011
 
2012
 
           
Revenue
           
Sales
$
-
$
-
$
2,994,931
Cost of sales
 
-
 
-
 
3,325,639
Gross Loss
 
-
 
-
 
(330,708)
Operating Expenses
           
Depreciation
 
-
 
-
 
52,694
Selling, general and administration
 
155,824
 
115,860
 
12,650,979
Market development
 
42,562
 
3,381
 
728,077
Product development costs
 
122,075
 
59,700
 
3,546,090
Professional fees
 
40,343
 
82,410
 
1,930,748
Total Operating Expenses
 
360,804
 
261,351
 
18,908,588
Operating Loss
 
(360,804)
 
(261,351)
 
(19,239,296)
Other Expenses (Income)
           
Interest expenses
 
482,689
 
1,703,954
 
18,793,515
Write down of equipment
 
-
 
-
 
36,623
Other expenses (income)
 
(40,228)
 
466
 
265,895
Total Other Expenses
 
442,461
 
1,704,420
 
19,096,033
Net Loss
$
(803,265)
$
(1,965,771)
$
(38,335,329)
Loss per share, basic and diluted
$
0.00
$
0.01
   
             
Weighted average shares outstanding,
- basic and diluted
 
213,977,909
 
213,558,731
   
















See accompanying notes to the condensed consolidated financial statements.

 
-4-

 


ALR TECHNOLOGIES INC. AND SUBSIDIARY
Development Stage Company
($ United States)
(Unaudited)

 
       
October 21, 1998
   
Three Months Ended
 
(Inception)
   
March 31
 
to March 31,
   
2012
 
2011
 
2012
OPERATING ACTIVITIES
           
Net loss
$
(803,265)
$
(1,965,771)
$
(38,335,329)
Depreciation
 
-
 
-
 
52,694
Gain on disposal of equipment
 
-
 
-
 
36,623
Stock-based compensation-product development costs
 
-
 
-
 
528,618
Stock-based compensation-interest expenses
 
231,948
 
1,493,702
 
8,185,025
Stock-based compensation-selling, general and administration
 
-
 
-
 
3,223,816
Stock-based compensation-professional fees
 
-
 
43,936
 
44,815
Other non-cash items included in net loss
 
-
 
-
 
294,020
Non-cash imputed interest expenses
 
41,797
 
44,699
 
3,039,625
Unpaid Interest expense on line of credit
 
82,142
 
-
 
297,695
Equity instruments issued to settle liabilities
 
-
 
-
 
1,871,718
Changes in operating assets and liabilities:
           
Decrease in receivables
         
8,725
(Increase) decrease in prepaid expenses
 
(13,900)
 
-
 
(17,515)
Increase (decrease) in accounts payable and accrued liabilities
 
(41,475)
 
19,596
 
1,330,249
Increase in advances payable
 
5,000
 
52,182
 
3,151,985
Increase in interest payable
 
126,391
 
154,182
 
3,903,270
Net cash used in operating activities
 
(371,362)
 
(157,474)
 
(12,383,966)
             
INVESTING ACTIVITIES
           
Purchase of equipment
 
-
 
-
 
(43,078)
Net cash used in investing activities
 
-
 
-
 
(43,078)
 
           
FINANCING ACTIVITIES
           
Other financing activities
 
-
 
-
 
(115,472)
Expenditures to repurchase shares
 
-
 
-
 
(342,038)
Proceeds from issuance of shares
 
-
 
-
 
1,512,402
Repayment of promissory notes payable
 
-
 
-
 
(970,879)
Proceeds from borrowings on line of credit
 
366,131
 
164,303
 
12,348,802
Net cash provided by financing activities
 
366,131
 
164,303
 
12,432,815
 
           
Net increase (decrease) in cash
 
(5,231)
 
6,829
 
5,771
Cash, beginning of period
 
11,002
 
1,829
 
-
Cash, end of period
$
5,771
$
8,658
$
5,771
Supplemental information:
           
Shares issued to settle liabilities
 
-
 
-
 
6,807,473
Cash paid for interest
 
-
 
5,857
 
1,223,335
Interest expense incurred in connection with options granted in
exchange for increase in borrowing limit on existing line of credit
financing
     
1,493,702
 
1,493,702
Interest expense incurred in connection with options granted as
compensation for receiving line of credit financing
 
231,948
     
6,480,723

See accompanying notes to the condensed consolidated financial statements.

 
-5-

 

ALR TECHNOLOGIES INC. AND SUBSIDIARY
Development Stage Company
($ United States)
(Unaudited)


1.     Basis of Presentation, Nature of Operations and Going Concern

ALR Technologies Inc. (the “Company”) was incorporated under the laws of the state of Nevada on March 24, 1987 as Mo Betta Corp. On December 28, 1998, the Company changed its name to ALR Technologies Inc. The Company has developed a line of medication compliance reminder devices and compliance monitoring systems that will assist people with taking their medications and treatments on time and allow for health care professionals to remotely monitor and intervene as necessary if a person is noncompliant. On October 17, 2011 the Company announced that it had received 510(k) clearance from the United States Food and Drug Administration for its Health-e-Connect (HeC) System. The Company is currently in preparation for the commercial launch of its HeC System.

These condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) on a going-concern basis, which presumes the realization of assets and the discharge of liabilities and commitments in the normal course of operations for the foreseeable future.

Several adverse conditions cast substantial doubt on the validity of this assumption.  The Company has incurred significant losses over the three month period ended March 31, 2012 and 2011 of $803,265 and $1,965,771, respectively.  In addition, losses incurred for the years ended December 31, 2011 and 2010 were $5,276,669 and $2,075,128 respectively. As of March 31, 2012, the Company is currently unable to self-finance its operations, has a working capital deficit of $11,512,582 ($10,983,062 at December 31, 2011), an accumulated stockholders’ deficit of $11,512,582 ($10,983,062 at December 31, 2011), limited resources, no source of operating cash flow, and no assurance that sufficient funding will be available to conduct continued product development activities required. If the Company is able to finance its required product development activities, there is no assurance the Company’s current projects will be commercially viable or profitable.  The Company has debts comprised of accounts payable, advances, interest, lines of credit and promissory notes payable totalling $11,535,868 currently due, due on demand or considered delinquent. There is no assurance that the Company will not face legal action from creditors regarding delinquent accounts payable, payroll payable, advances, promissory notes and interest payable. Any one or a combination of these above conditions could result in the failure of the business and cause the Company to cease operations.

The Company’s ability to continue as a going-concern is dependent upon the continued financial support of its creditors and its ability to obtain financing to fund working capital and overhead requirements, fund the development of the Company’s product line and ultimately, the Company’s ability to achieve profitable operations and repay overdue obligations. Management has obtained short-term financing from related parties through lines of credit facility with available borrowing up to $4.5 million (As of March 31, 2012 the total balance outstanding was $2,930,122). The resolution of whether the Company is able to continue as a going concern is dependent upon the realization of management’s plans. If additional financing is required, the Company plans to raise needed capital through the exercise of share options and by future common share private placements. There can be no assurance that the Company will be able to raise any additional capital from the sources described above, or that the lender in the line of credit arrangement will maintain the availability of borrowing from the line. If management is unsuccessful in obtaining short-term financing or achieving long-term profitable operations, the Company will not be able to continue operations.




 
-6-

 

ALR TECHNOLOGIES INC. AND SUBSIDIARY
Development Stage Company
Notes to Condensed Consolidated Financial Statements
($ United States)
(Unaudited)


1.     Basis of Presentation, Nature of Operations and Going Concern (continued)

All of the Company’s debt is either due on demand or is in default and is now due on demand and continues to accrue interest at its stated rates. Certain overdue creditors have demanded repayment and have not yet been repaid by the Company as there is no cash available to make the repayments. The Company will make the necessary repayments when funds are generated and available from operations or from equity financings through private placements. While some of the Company’s creditors have agreed to extend repayment deadlines in the past, there is no assurance that they will continue to do so in the future. In the past, creditors have successfully commenced legal action against the Company to recover debts outstanding. In those instances, the Company was able to obtain financing from related parties to cover the verdict or settlement; however, there is no assurance that the Company would be able to obtain the same financing in the future. If the Company is unsuccessful in obtaining financing to cover any potential verdicts or settlements, the Company could be required to cease operations.

The Company’s activities will necessitate significant uses of working capital beyond 2012. Additionally, the Company’s capital requirements will depend on many factors, including the success of the Company’s continued product development and distribution efforts. The Company plans to continue financing its operations with the line of credit it currently has available.

While the Company strongly believes that its capital resources will be sufficient in the near term, there is no assurance that the Company’s activities will generate sufficient revenues to sustain its operations without additional capital, or if additional capital is needed, that such funds, if available, will be obtainable on terms satisfactory to the Company.


2.     Significant Accounting Policies

The unaudited condensed consolidated balance sheet as of March 31, 2012, which was derived from unaudited condensed financial statements, and the unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading.

In the opinion of management, all adjustments necessary to present fairly our financial position, results of operations, and cash flows as of March 31, 2012 and 2011, and for the periods then ended, have been made. Those adjustments consist of normal and recurring adjustments.

These unaudited condensed consolidated financial statements should be read in conjunction with a reading of the financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2011, as filed with the U.S. Securities and Exchange Commission.

The results of operations for the three month period ended March 31, 2012, are not necessarily indicative of the results to be expected for the full year.


 
-7-

 

ALR TECHNOLOGIES INC. AND SUBSIDIARY
Development Stage Company
Notes to Condensed Consolidated Financial Statements
($ United States)
(Unaudited)


2.           Significant Accounting Policies (continued)

a)  Development stage company

Since its inception, the Company has devoted substantially all of its efforts to business planning, research and development, recruiting management and technical staff, developing operating assets and raising capital. Accordingly, the Company is considered to be in the development stage as defined in ASC 915 Development Stage Entities. While the Company generated revenues from its previous generation of products, the Company has not generated any revenues from its current principal operations, and there is no assurance of future revenues.

b)  Principles of consolidation

These unaudited condensed consolidated financial statements include the accounts of the Company and its integrated wholly-owned subsidiary, ALRTech Health Systems Inc. (incorporated in British Columbia, Canada on April 15, 2008). All significant inter-company balances and transactions have been eliminated.

c)  Options and warrants issued in consideration for debt

The Company allocates the proceeds received from debt between the liability and the options and warrants issued in consideration for the debt, based on their relative fair values, at the time of issuance. The amount allocated to the options or warrants is recorded as additional paid in capital and as a discount to the related debt. The discount is amortized to interest expense on a yield basis over the term of the related debt.

d)  Stock-based compensation

The Company follows the fair value method of accounting for stock-based compensation. The Company estimates the fair value of share-based payment awards on the date of grant using an option pricing model.  The value of the portion of the award that is ultimately expected to vest is recognized as an expense over the requisite service period in the Company’s condensed consolidated financial statements.  The Company estimates the fair value of the stock options using the Black-Scholes valuation model.  The Black-Scholes valuation model requires the input of highly subjective assumptions, including the option’s expected life and the price volatility of the underlying stock.

e)  Income taxes

Income taxes are accounted for under the asset and liability method. Deferred income tax assets and liabilities are recognized for the differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis, and operating loss carry-forwards that are available to be carried forward to future years for tax purposes.

Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. When it is not considered to be more likely than not that a deferred income tax asset will be realized, a valuation allowance is provided for the excess.


 
-8-

 

ALR TECHNOLOGIES INC. AND SUBSIDIARY
Development Stage Company
Notes to Condensed Consolidated Financial Statements
($ United States)
(Unaudited)


2.     Significant Accounting Policies (continued)

The Company follows the accounting requirements associated with uncertainty in income taxes using the provisions of Financial Accounting Standards Board (“FASB”) ASC 740, Income Taxes.  Using that guidance, tax positions initially need to be recognized in the financial statements when it is more-likely-than-not the positions will be sustained upon examination by the tax authorities.  It also provides guidance for derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. As of March 31, 2012, the Company has no uncertain tax positions that qualify for either recognition or disclosure in the financial statements.

f)  Loss per share

Basic loss per share is calculated by dividing net loss by the weighted average number of common shares outstanding during the three month periods ended March 31, 2012 and 2011. Diluted loss per share is calculated by dividing the net loss by the sum of the weighted average number of common shares outstanding and the dilutive equivalent shares outstanding during the period. Equivalent shares consist of the shares issuable upon exercise of stock options and warrants calculated using the treasury stock method. Common equivalent shares are not included in the calculation of the weighted average number of shares outstanding for diluted loss per common shares when the effect would be anti-dilutive.

g)  Use of estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period.  Management believes the estimates are reasonable; however, actual results could differ from those estimates.

h)  Fair value

The Company follows guidance for accounting for fair value measurements of financial assets and financial liabilities and for fair value measurements of nonfinancial items that are recognized or disclosed at fair value in the financial statements on a recurring basis. Additionally, the Company adopted guidance for fair value measurement related to nonfinancial items that are recognized and disclosed at fair value in the financial statements on a nonrecurring basis. The guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:

•  Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

•  Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

•  Level 3 inputs are unobservable inputs for the asset or liability.


 
-9-

 

ALR TECHNOLOGIES INC. AND SUBSIDIARY
Development Stage Company
Notes to Condensed Consolidated Financial Statements
($ United States)
(Unaudited)


2.     Significant Accounting Policies: (continued)

The level in the fair value hierarchy within which a fair measurement in its entirety falls is based on the lowest level input that is significant to the fair value measurement in its entirety.  The Company believes the carrying value of cash, prepaid expenses, accrued interest payable, advances, lines of credit and promissory notes approximate fair value because they are short term in duration, due on demand or have a market-based interest rate.

i)   Recent accounting pronouncements

Adopted

In May 2011, the FASB issued ASU 2011-04, “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and International Financial Reporting Standards (IFRS) of Fair Value Measurement – Topic 820.”  ASU 2011-04 is intended to provide a consistent definition of fair value and improve the comparability of fair value measurements presented and disclosed in financial statements prepared in accordance with U.S. GAAP and IFRS.  The amendments include those that clarify the FASB’s intent about the application of existing fair value measurement and disclosure requirements, as well as those that change a particular principle or requirement for measuring fair value or for disclosing information about fair value measurements.  This update is effective for annual and interim periods beginning after December 15, 2011 and is thus effective for us beginning with interim periods in our fiscal year ended December 31, 2012.  The adoption of this guidance did not materially impact our condensed consolidated financial statements.

Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants, and the United States Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future financial statements.


3.     Interest, Advances and Promissory Notes Payable

On September 4, 2009, the Company received a Notice of Credit to Judgment from the Superior Court of the State of North Carolina, whereby the Company was ordered to pay two creditors holding promissory notes payable (the “plaintiffs”) an aggregate amount of $1,988,000 for principal, interest and legal fees incurred. Subsequent to the verdict, the Company, two directors, a relative of a director (the “Purchaser”) and the plaintiffs entered into a settlement agreement (the “Settlement Agreement”) whereby a relative of a director acquired $1,313,000 of debts from the plaintiffs in a private transaction. The remaining $675,000 due to the plaintiffs was exchanged for common shares of the Company as part of a separate debt for shares settlement (note 6). As part of the Settlement Agreement, a second director, not related to the Purchaser, assigned unsecured advances payable of the Company with no stated terms of interest, totalling $425,000, to the plaintiffs. As part of the Settlement Agreement, the Company agreed to the following repayment terms:

-      $300,000 repayable at a rate of $25,000 per month (note 6); and
-      $125,000 repayable in whole by January 15, 2011 (unpaid)

 
-10-

 

ALR TECHNOLOGIES INC. AND SUBSIDIARY
Development Stage Company
Notes to Condensed Consolidated Financial Statements
($ United States)
(Unaudited)


3.     Interest, Advances and Promissory Notes Payable (continued)

a)     Interest payable

A summary of the interest payable activity is as follows:

Balance, December 31, 2010
$
1,426,294 
 
Interest incurred on promissory notes payable
 
505,568 
 
Transfer of balance to accounts payable
 
(1,167)
Balance, December 31, 2011
 
1,930,695 
Interest incurred on promissory notes payable
 
126,391
Balance, March 31, 2012
$
2,057,086

Interest payable is to the following:

   
March 31
 
December 31
   
2012
 
2011
 
Relatives of directors
$
1,217,473
$
1,140,916
 
Non-related parties
 
839,613
 
789,779
 
$
2,057,086
$
1,930,695

Historically, all interest payable incurred is from interest incurred at the stated rate of promissory notes issued by the Company. The payment terms, security and any interest payable are based on the underlying promissory notes payable that the Company has outstanding.

b)     Advances payable

A summary of the advances payable activity is as follows:

Balance, December 31, 2010
$
213,678
Advances accrued
 
234,600
Advances reclassified as accounts payable
 
(64,259)
Advances repaid from proceeds of line of credit
 
(283,492)
Balance, December 31, 2011
 
100,527
Advances accrued
 
5,000
Balance, March 31, 2012
$
105,527

Advances payable are to the following:

   
March 31
 
December 31
   
2012
 
2011
Advances payable to:
       
 
Companies controlled by directors
$
65,527
$
65,527
 
Current and former directors
 
40,000
 
35,000
 
$
105,527
$
100,527

Advances payable are unsecured, have no stated terms of interest and are due on demand.

 
-11-

 

ALR TECHNOLOGIES INC. AND SUBSIDIARY
Development Stage Company
Notes to Condensed Consolidated Financial Statements
($ United States)
(Unaudited)


3.     Interest, Advances and Promissory Notes Payable (continued)

c)     Promissory notes payable to related parties

A summary of the promissory notes payable activity is as follows:

Balance, December 31, 2011 and March 31, 2012
$
2,861,966

On December 14, 2010, a creditor demanded repayment of a promissory note of $200,000 and accumulated interest of approximately $365,000. To date, this amount has not been repaid.

On October 27, 2010, the Company had a default judgment ruled against them which results in being held legally liable for an additional $11,000 of costs. The Company has accrued the liability relating to this judgment as of March 31, 2012.

Promissory notes payable are to the following:

Relatives of Directors
 
March 31,
2012
 
December 31, 2011
         
Promissory notes payable to relatives of directors collateralized by a
general security agreement on all the assets of the Company, due on
demand:
       
             
 
i.
Interest at 1% per month
$
845,619
$
845,619
             
 
ii.
Interest at 1.25% per month
 
51,347
 
51,347
             
 
iii.
Interest at the U.S. bank prime rate plus 1%
 
500,000
 
500,000
         
Promissory notes payable, unsecured, to relatives of a director,
bearing interest at 1% per month, due on demand
 
1,465,000
 
1,465,000
 
$
2,861,966
$
2,861,966

d)     Promissory notes payable to unrelated lenders:

Balance, December 31, 2010
$
2,413,368
 
Increase in promissory note payable
 
10,985
Balance, December 31, 2011 and March 31, 2012
$
2,424,353







 
-12-

 

ALR TECHNOLOGIES INC. AND SUBSIDIARY
Development Stage Company
Notes to Condensed Consolidated Financial Statements
($ United States)
(Unaudited)


3.     Interest, Advances and Promissory Notes Payable (continued)

Unrelated Lenders
 
March 31,
2012
 
December 31,
2011
         
Unsecured promissory notes payable to unrelated lenders:
       
             
 
i.
Interest at 1% per month, repayable on March 31, 2009, due
on demand
$
450,000
$
450,000
             
 
ii.
Interest at 1% per month, with $50,000 repayable on
December 31, 2004, $75,000 repayable on August 18, 2007,
$75,000 repayable on November 19, 2007 and the balance due
on demand. All are due on demand, accruing interest at the
same rate.
 
887,455
 
887,455
             
 
iii.
Interest at 0.625% per month, with  $50,000 repayable on
October 5, 2004$, 40,000 repayable on December 31, 2004,
and $60,000 repayable on July 28, 2006, all due on demand
 
150,000
 
150,000
             
 
iv.
Non-interest-bearing, repayable on July 17, 2005, due on
demand
 
270,912
 
270,912
             
 
v.
Non-interest-bearing loan repayable at $25,000 per month
beginning October 2009, none repaid to date
 
310,986
 
310,986
             
 
vi.
Non-interest-bearing loan, due January 15, 2012
 
125,000
 
125,000
           
Promissory notes payable, secured by a guarantee from a director and
relative of a director, bearing interest at 1% per month, with $200,000
repayable on July 31, 2003, all due on demand
 
230,000
 
230,000
 
$
2,424,353
$
2,424,353

e)     Interest expense

During the three months ended March 31, 2012, the Company incurred interest expense of $482,689 (2011: $1,703,954) substantially as follows:

-
$126,391 (2011: $126,780) incurred on promissory notes payables as shown in note 3(c);
-
$82,142 (2011: $38,774) incurred on lines of credit payable
-
$41,797 (2011: $44,698) incurred from the calculation of imputed interest on accounts payable outstanding for longer than one year, advances payable and promissory notes payable, which had no stated interest rate;
-
$231,948 (2011: $1,493,702) incurred in connection with stock options granted to creditors providing the lines of credit to the Company

 
-13-

 

ALR TECHNOLOGIES INC. AND SUBSIDIARY
Development Stage Company
Notes to Condensed Consolidated Financial Statements
($ United States)
(Unaudited)


4.     Lines of Credit

The Company has two lines of credit as follows:

Creditor
Interest
Rate
Borrowing
Limit
Repayment
Terms
Principal
Outstanding
Accrued
Interest
Total
Security
Purpose
Chairman
1% per
Month
$2,500,000
Due on
Demand
$  1,194,792
$   82,087
$ 1,276,879
General Security
over Assets
Sales and Marketing
Program
Wife of Chairman
1% per
Month
$2,000,000
Due on
Demand
$  1,735,330
$ 248,230
$ 1,983,560
General Security
over Assets
Operations, Product
Development
Total
     
$  2,930,122
$ 330,317
$ 3,260,439
   

On March 6, 2011, the Chairman of the Company established a line of credit of up to $2.5 million with the Company for the exclusive purpose of funding the costs of a comprehensive sales and marketing campaign.

On May 25 2010, the Company finalized negotiations with a relative of the Chairman for a line of credit borrowing arrangement of $1 million. All funds borrowed bear interest at 1% per month, are due on demand and are secured by all the assets of the Company. On January 3, 2011, the Company entered into an agreement with this creditor to increase the borrowing limit from $1 million to $2 million.

As consideration for the two lines of credit, the Company has granted 60,000,000 options (note 5(c)).


5.     Capital Stock

a)     Authorized share capital

350,000,000 shares of common stock with a par value of $0.001 per share

b)     Issued share capital

On March 6, 2011, 450,000 stock options, with an exercise price of $0.10 per share, were exercised for a reduction in advances payable totalling $45,000.

On October 12, 2011, the Company announced that it had set aside 10,000,000 common shares (to be issued directly or upon the exercise incentive stock options) to allocate to individuals joining the Company in the future, such as future directors, consultants and members of management. The shares will be issued to such persons, at such price or prices as determined by the Board of Directors, or a Committee thereof duly authorized by the Board.

c)     Stock options

During the three months ended March 31, 2012:

Pursuant to the terms of the option agreement with the Chairman of the Company, as described below, 1,933,848 stock options have vested for which the Company had recognized expense of $231,948, representing the fair value as calculated using the Black-Scholes model.


 
-14-

 

ALR TECHNOLOGIES INC. AND SUBSIDIARY
Development Stage Company
Notes to Condensed Consolidated Financial Statements
($ United States)
(Unaudited)


5.     Capital Stock (continued)

c)     Stock options (continued)

During the year ended December 31, 2011:

On January 3, 2011, the Company granted a creditor, who is a relative of a Director and Officer of the Company, 20,000,000 stock options of the Company exercisable at $0.05 per share expiring November 29, 2015. The stock options were granted in exchange for providing an increase in the borrowing limit on its line of credit from $1,000,000 to $2,000,000.

Also as consideration for providing this additional financing, the Company has modified the terms of 10,000,000 stock options granted to the Creditor on March 7, 2010 and previously modified August 8, 2010. The terms have been modified as follows:

-    Increased the number of stock options granted from 10,000,000 to 20,000,000
-  Reduced the exercise price of the 20,000,000 stock options granted from $0.10 per share to $0.05 per share.

The Company valued the stock-based compensation resulting from these transactions at $1,493,702.

On March 6, 2011, the Chairman of the Company established a line of credit of up to $2.5 million with the Company for the exclusive purpose of funding the costs of a comprehensive marketing campaign. Under a related agreement, also dated as of March 6, 2011, the Chairman was granted 20,000,000 stock options of the Company exercisable at $0.125 per share, expiring March 5, 2016. Such options will vest on the basis of eight (8) options for each one ($1.00) dollar of principal borrowed to meet the costs of the sales and marketing program. The Company valued the stock-based compensation resulting from this grant at $2,400,000. During the year ended December 31, 2011, 7,624,488 stock options have vested for which the Company had recognized expense of $914,491, representing the fair value as calculated using the Black-Scholes model. To date, including those that vested in 2012 as described above, 9,171,513 stock options have vested.

Also on March 6, 2011, the Company granted 250,000 stock options to a consultant. The stock options were exercisable at $0.10 per share for five years from the date of grant. Furthermore, 200,000 stock options granted to a consultant on July 1, 2010, were modified as follows:

-  All 200,000 stock options are to vest immediately
-  The exercise price of the option was reduced from $0.25 per share to $0.10 per share.

All 450,000 of these stock options were exercised immediately after the Board of Directors approved the above described transaction. The Company valued the stock-based compensation resulting from these transactions at $44,455.

On May 4, 2011, the Company granted 1,000,000 stock options to an officer of the Company for services provided in getting the Company’s FDA submission completed. The options are exercisable at $0.20 per share for five years from the date of grant. The Company valued the stock-based compensation resulting from this grant at $210,000 and allocated this to selling, general and administration expenses.


 
-15-

 

ALR TECHNOLOGIES INC. AND SUBSIDIARY
Development Stage Company
Notes to Condensed Consolidated Financial Statements
($ United States)
(Unaudited)


5.     Capital Stock (continued)

c)     Stock options (continued)

On May 24, 2011, the Company granted 100,000 stock options to a consultant of the Company for services rendered. The options are exercisable at $0.20 per share for five years from the date of grant. The Company valued the stock-based compensation resulting from this grant at $21,000.

A summary of stock option activity is as follows:

 
Three Months Ended
Year Ended
 
March 31, 2012
December 31, 2011
 
Number of
 
Weighted Average
Number of
 
Weighted Average
 
Options
 
Exercise Price
Options
 
Exercise Price
Outstanding, beginning of period
62,800,000
$
0.08
13,555,000
$
0.13
Granted
-
 
-
51,350,000
 
0.08
Exercised
-
 
-
(450,00)
 
(0.10)
Expired
-
$
-
(1,655,000)
$
(0.25)
             
Outstanding, end of period
62,800,000
$
0.08
62,800,000
$
0.08
             
Exercisable, end of period
52,358,336
$
0.06
50,424,488
$
0.07

The options outstanding at March 31, 2012 and December 31, 2011 were as follows:

 
March 31, 2012
December 31, 2011
Expiry Date
Options
 
Exercise
Price
 
Intrinsic
Value
Options
 
Exercise
Price
 
Intrinsic
Value
                     
March 7, 2015
20,000,000
$
0.05
 
0.03
20,000,000
$
0.05
$
0.03
March 31, 2015
1,200,000
$
0.25
 
-
1,200,000
 
0.25
 
-
November 29, 2015
20,000,000
$
0.05
 
0.03
20,000,000
 
0.05
 
0.03
March 6, 2016
20,000,000
$
0.13
 
-
20,000,000
 
0.13
 
-
May 4, 2016
1,000,000
$
0.20
 
-
1,000,000
 
0.20
 
-
May 23, 2016
100,000
$
0.20
 
-
100,000
 
0.20
 
-
May 31, 2017
500,000
$
0.25
 
-
500,000
 
0.25
 
-
Total
62,800,000
$
0.08
 
-
62,800,000
$
0.08
   
Weighted Average Remaining
Contractual Life
3.53
       
3.78
       

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value for in-the-money options, based on the $0.08 (December 31, 2011: $0.08) closing stock price of the Company’s common stock on the NASDAQ over-the-counter market (OTC) on March 31, 2012. As of March 31, 2012, 40,000,000 (December 31, 2011: 40,000,000) of the stock options outstanding were in-the-money.


 
-16-

 

ALR TECHNOLOGIES INC. AND SUBSIDIARY
Development Stage Company
Notes to Condensed Consolidated Financial Statements
($ United States)
(Unaudited)


5.     Capital Stock (continued)

c)     Stock options (continued)

The Company uses the fair value method for determining stock-based compensation for all options granted during the fiscal periods. The fair value was determined using the Black-Scholes option pricing model based on the following weighted average assumptions (no options were granted during the period ended March 31, 2012):

 
March 31, 2012
 
December 31, 2011
       
Risk-free interest rate
-
 
1.45%
Expected life
-
 
5 years
Expected dividends
-
 
0%
Expected volatility
-
 
308%
Forfeiture rate
-
 
0%

The weighted average fair value for the options granted during the three months ended March 31, 2012 was $nil (2011: $0.07).

The compensation cost of the stock options granted was allocated as follows:

   
Three months ended
March 31, 2012
 
Three months ended
March 31, 2011
Interest expense:
       
 
Unrelated parties
$
231,948
$
1,493,702
 
Related parties
 
-
 
-
Professional fees:
       
 
Unrelated parties
$
-
$
43,936


6.     Contingencies

Accounts payable and accrued liabilities as of March 31, 2012 include $180,666 (December 31, 2011 - $180,666) of amounts owing to a supplier, which the Company is in the process of disputing. The outcome of this matter cannot be determined at this time. Any adjustment will be recorded in the period that an agreement with the supplier is reached and the amount becomes determinable.

The Company has had three judgments made against it relating to overdue promissory notes and accrued interest and a fourth creditor has demanded repayment of an overdue promissory note and accrued interest. To date, the Company has not repaid any of these promissory notes and related accrued interest and could be subject to further action. The legal liability of these promissory notes and accrued interest have been fully recognized and recorded by the Company.


 
-17-

 

ALR TECHNOLOGIES INC. AND SUBSIDIARY
Development Stage Company
Notes to Condensed Consolidated Financial Statements
($ United States)
(Unaudited)


7.     Related Party Transactions

Related party transactions included the following:

   
Three months ended
March 31, 2012
 
Three months ended
March 31, 2011
Development costs:
       
Consulting services rendered by an individual whom
is a director and officer of the Company
$
15,000
$
15,000
         
Interest expense:
       
Promissory notes issued to relatives of Chairman
 
78,617
 
153,319
Lines of credit from Chairman and relatives of
Chairman
 
82,142
 
-
Stock options granted to Chairman of the Company
 
231,948
 
-
Stock options granted to relatives of the Chairman
 
-
 
1,493,702
         
Selling, general and administration:
       
Consulting services rendered by an individual whom
is a director and officer of the Company
$
47,400
$
47,400

Except as discussed in the next paragraph, all transactions with related parties were incurred in the normal course of operations and measured at the exchange amount, which is the amount of consideration established and agreed upon by the transacting parties.

Interest on promissory notes payable to related parties, management compensation and compensation paid to a relative of a director have been recorded at the exchange amount, which is the amount agreed to by the parties. Options granted to related parties have been recorded at their estimated fair value as disclosed note 3(c).


8.     Commitments

The Company has annual compensation arrangements with the following individuals:

 
Sidney Chan
$
180,000 
 
Lawrence Weinstein
$
156,000
 
Dr. Jaroslav Tichy
$
60,000

The contracts are automatically renewed annually and may be terminated by the Company at any time, effective thirty or sixty days after delivery of notice, without any further compensation.

The terms of Mr. Chan’s contract provides for monthly consulting fees of $15,000 per month and vehicle allowance of $800 per month as Chief Executive Officer of the Company. The contract also provides for a commission of 1% of net sales during the term of the agreement. The initial term of the contract is for one year and automatically renews for continuous one year terms.


 
-18-

 

ALR TECHNOLOGIES INC. AND SUBSIDIARY
Development Stage Company
Notes to Condensed Consolidated Financial Statements
($ United States)
(Unaudited)


8.     Commitments (continued)

The terms of Mr. Weinstein’s contract provides for periodic increases in the amount of monthly compensation following the first year as President and Chief Operating Officer of the Company. After the initial year, Mr. Weinstein will earn no less than $13,000 per month as agreed upon by Mr. Weinstein and the other directors. The initial term of the contract is for one year and automatically renews for continuous one year terms.

The terms of Mr. Tichy’s contract provide for monthly consulting fees of $5,000 per month in his services as VP Product Development. The initial term of the contract is for one year and automatically renews for continuous one year terms.

In addition, if more than 50% of the Company’s stock or assets are sold, Messrs. Chan and Tichy will be compensated for entering into non-compete agreements based on the selling price of the Company or its assets as follows:

2% of sales price up to $24,999,999 plus
3% of sales price between $25,000,000 and $49,999,999 plus
4% of sales price between $50,000,000 and $199,999,999 plus
5% of sales price in excess of $200,000,000

Any other amounts distributed to each key employee are to be determined by the Board of Directors.


9.     Financial Instruments

The Company’s financial instruments consist of cash, accounts payable and accrued liabilities, advances payable, interest payable and promissory notes payable.

Fair value

The fair values of cash and certain accounts payable and accrued liabilities approximate their carrying values due to the relatively short periods to maturity of these instruments.

Certain accounts payable have been outstanding longer than one year. The Company has recorded imputed interest at a rate of 1% per month over the period the payables have been outstanding for longer than one year, with a corresponding amount recognized in additional paid-in capital. The calculated amount represents the implicit compensation for the use of funds beyond a reasonable term for regular trade payables.

For the purposes of fair value analysis, promissory notes payable can be separated into three classes of financial liabilities.

i.      Interest-bearing promissory notes, lines of credit and related interest payable
ii.     Non-interest-bearing promissory notes past due




 
-19-

 

ALR TECHNOLOGIES INC. AND SUBSIDIARY
Development Stage Company
Notes to Condensed Consolidated Financial Statements
($ United States)
(Unaudited)


9.     Financial Instruments (continued)

Fair value (continued)

The interest-bearing promissory notes payable are all delinquent and have continued to accrue interest at their stated rates. The Company currently does not have the funds to extinguish these debts and will continue to incur interest until such time as the liabilities are extinguished. There is not an active market for delinquent loans for a Company with a similar financial position. Management asserts the carrying values of the promissory notes and related interest payable are a reasonable estimate of fair value as they represent the Company’s best estimate of their legal obligation for these debts. As there is no observable market for interest rates on similar promissory notes, the fair value was estimated using level 2 inputs in the fair value hierarchy.

The Company has three non-interest-bearing promissory note payable past due. The first is several years delinquent and there have been no renegotiated repayment terms. There is not an active market for default loans not bearing interest nor is there an observable market for lending to companies with a financial position similar to the Company. The Company has recorded imputed interest at a rate of 1% per month over the life of the promissory notes, with a corresponding amount recognized in additional paid-in capital representing the implicit compensation for the use of funds.  Management asserts the payment date for these amounts cannot be reasonably determined. Management further asserts there is not a determinable interest rate for arm’s-length borrowings based on the current financial position of the Company and asserts the carrying value is the best estimate of the Company’s legal liability and represents the fair value for the promissory note. This would be considered a level 2 input in the fair value hierarchy.

The fair value of advances payable cannot be determined as they are related party amounts that have no stated terms of repayment. There is no market for similar instruments. The Company has recorded imputed interest at a rate of 1% per month over the life of the advances payable, with a corresponding amount recognized in additional paid-in capital representing the implicit compensation for the use of funds.

Credit risk

Financial instruments that potentially subject the Company to credit risk consist of cash. The Company only has an immaterial cash balance and is not exposed to significant credit risk.

Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices.  Market risk comprises two types of risk: interest rate risk and foreign currency risk.

i.      Interest rate risk

Interest rate risk consists of two components:

a)     To the extent that payments made or received on the Company’s monetary assets and liabilities are affected by changes in the prevailing market interest rates, the Company is exposed to interest rate cash flow risk.



 
-20-

 

ALR TECHNOLOGIES INC. AND SUBSIDIARY
Development Stage Company
Notes to Condensed Consolidated Financial Statements
($ United States)
(Unaudited)


9.     Financial Instruments (continued)

Market risk (continued)

The Company is exposed to interest rate cash flow risk on promissory notes payable of $500,000, which incurs a variable interest rate of prime plus 1%. A hypothetical change of 1% on interest rates would increase or decrease net loss and comprehensive loss by $5,000.

b)     To the extent that changes in prevailing market interest rates differ from the interest rate on the Company’s monetary assets and liabilities, the Company is exposed to interest rate price risk.

The Company’s promissory notes payable consist of $500,000 of variable interest rate notes and $4,786,319 of fixed interest rate notes. All of these notes are past due and are currently due on demand while interest continues to accrue. Due to the delinquency of the fixed interest rate promissory notes payable, there is no active market for these instruments and fluctuations in market interest rates do not have a significant impact on their estimated fair values as of March 31, 2012.

At March 31, 2012, the effect on the net loss and comprehensive loss of a hypothetical change of 1% in market interest rate cannot be reasonably determined.

Foreign currency risk

The Company incurs certain accounts payable, advances payable and expenses in Canadian dollars and is exposed to fluctuations in changes in exchange rates between the US and Canadian dollars. As at March 31, 2012, the effect on net loss and comprehensive loss of a hypothetical change of 10% between the US and Canadian dollar would not be material. The Company has not entered into any foreign currency contracts to mitigate this risk.


10.   Comparative Figures

Certain comparative figures have been reclassified to conform to the current period’s presentation.


11.   Subsequent Events

In preparing these financial statements, the Company has evaluated events and transactions for potential recognition or disclosure through May 15, 2012, the date the financial statements were issued, and identified no events or transactions that required recognition or disclosure.






 
-21-

 

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

Forward Looking Statements

The following information must be read in conjunction with the unaudited Financial Statements and Notes thereto included in Item 1 of this Quarterly Report and the audited  Consolidated Financial Statements and Notes thereto and Management’s Discussion and Analysis or Plan of Operations contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011. Except for the description of historical facts contained herein, the Form 10-Q contains certain forward-looking statements concerning future applications of the Company’s technologies and the Company’s proposed services and future prospects, that involve risk and uncertainties, including the possibility that the Company will: (i) be unable to commercialize services based on its technology, (ii) ever achieve profitable operations, or (iii) not receive additional financing as required to support future operations, as detailed herein and from time to time in the Company’s future filings with the Securities and Exchange Commission and elsewhere. Such statements are based on management’s current expectations and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Our financial statements are stated in United States dollars and are prepared in accordance with United States generally accepted accounting principles.

In this quarterly report, unless otherwise specified, all references to “common shares” refer to the common shares in our capital stock.

As used in this quarterly report, the terms “we”, “us”, “our”, the “Company” and “ALRT” mean ALR Technologies Inc, unless otherwise indicated.

Overview

ALR Technologies Inc. was incorporated under the laws of the State of Nevada on March 24, 1987 as Mo Betta Corp. On December 28, 1998, the Company changed its name to ALR Technologies Inc. Also in in December 1998, the common shares of the Company began trading on the “Over the Counter Bulletin Board”. Today the Company trades under the symbol “ALRT.”

On April 15, 2008, the Company incorporated a wholly-owned subsidiary in Canada under the name Canada Alrtech Health Systems Inc.

Recent Developments

On May 25, 2010, the Company finalized negotiations with Christine Kan, wife of the Chairman of the Board and CEO, for a line of credit borrowing arrangement for $1M. All funds borrowed bear interest at 1% per month, are due on demand and are secured by all the assets of the Company. To date, the Company has borrowed $249,444. The Company granted this creditor 10,000,000 stock options exercisable at $0.10 per share. During August 2010, the term of the option was extended to March 8, 2015.

Effective July 1, 2010, the following management changes occurred


 
-22-

 

-  
Lawrence Weinstein was appointed as President, Chief Operating Officer (“COO”) and a Director of the Company
-  
Sidney Chan transitioned to Chairman of the Board while retaining the position of Chief Executive Officer
-  
Stan Cruitt retired as Chairman of the Board

When Mr. Weinstein took office, he received 2,000,000 common shares of the Company at $0.025 per share as compensation for his initial three month term ended September 30, 2010 as President and COO. The common shares were issued to Mr. Weinstein in August 2010.

Also on July 1, 2010, the Company granted a total of 1,400,000 stock options to two creditors and a consultant of the Company. The stock options are exercisable at $0.25 per share and expire on June 30, 2015. The stock options granted have varying vesting terms for the different recipients.

On January 3, 2011, the Company entered into an agreement with Christine Kan to amend the original agreement for additional financing through its existing line of credit borrowing arrangement. Ms. Kan has granted the Company an increase in the borrowing limit from $1,000,000 to $2,000,000. In exchange for providing the increased borrowing limit,

·   
Ms. Kan has been granted 20,000,000 stock options of the Company exercisable at $0.05 per share expiring November 29, 2015.
·   
A second modification of the terms of 10,000,000 stock options previously granted to Ms. Kan on March 7, 2010 and previously modified August 8, 2010. The terms have been modified as follows:
-  
Increased the number of stock options granted from 10,000,000 to 20,000,000
-  
Reduced the exercise price of the 20,000,000 stock options granted from $0.10 per share to $0.05 per share.

On March 6, 2011, the Chairman of the Company, Mr. Sidney Chan, established a line of credit of up to $2.5 million with the Company for the exclusive purpose of funding the costs of a comprehensive marketing campaign. Under a related agreement, also dated as of March 6, 2011, Mr. Chan has been granted 20,000,000 stock options of the Company exercisable at $0.125 per share, expiring March 5, 2016. Such options will vest on the basis of eight (8) options for each one ($1.00) dollar borrowed under the line of credit to meet the costs of the sales and marketing program. On October 24, 2011, the March 6, 2011 agreement was amended to allow the Company to borrow the remaining funds available for general corporate matters. As at December 31, 2011, 7,624,488 stock options had vested as a result of borrowings.

Also on March 6, 2011, the Company granted 250,000 stock options to Mr. Peter Stafford. The stock options were exercisable at $0.10 per share for five years from the date of grant. Furthermore, 200,000 stock options previously granted to Mr. Steven Brassard on July 1, 2010, were modified as follows:

·  
all 200,000 stock options are to vest immediately.
·  
the exercise price of the option was reduced from $0.25 per share to $0.10 per share.

All 450,000 of these stock options have been exercised.

On May 4, 2011, the Company granted 1,000,000 stock options to Mr. Larry Weinstein, President of the Company, for services provided in getting the Company’s FDA submission completed. The options are exercisable at $0.20 per share for five years from the date of grant. The Company valued the stock-based compensation resulting from this grant at $210,000 and allocated this to selling, general and administration expenses.

On May 24, 2011, the Company granted 100,000 stock options to Mr. Ken Robulak, consultant of the Company, for services rendered. The options are exercisable at $0.20 per share for five years from the date of grant. The Company valued the stock-based compensation resulting from this grant at $21,000.


 
-23-

 

On October 12, 2011, the Company announced that it had modified its by-laws to allow the Board of Directors to appoint Directors for any empty seat. Also on October 12, 2011, the Company announced that it had set aside 10,000,000 common shares (to be issued directly or upon the exercise incentive stock options) to allocate to individuals joining the Company in the future, such as future directors, consultants and members of management. The shares will be issued to such persons, at such price or prices as determined by the Board of Directors, or a Committee thereof duly authorized by the Board.

On October 17, 2011, the Company announced that it had received 510(k) clearance from the U.S. Food and Drug Administration (FDA) for the HeC System for remote monitoring of patients in support of effective diabetes management problems. 

On November 1, 2011 the Company moved from its previous office at 3350 Riverwood Parkway, Suite 1900 Atlanta, Georgia 30339 to its new office located at 7400 Beaufont Springs Drive Suite 300 Richmond, VA 23225.

On April 10, 2012, our board of directors approved an amendment to our bylaws to provide that action of shareholders may be taken without a meeting of shareholders provided that a record thereof is made in writing and signed by holders of a majority of each class of our outstanding shares.

Description of Business

ALR Technologies is a leader in the emerging field of Chronic Disease Management utilizing in-home, patient-focused technology. ALR Technologies products utilize internet based technologies to facilitate health care providers the ability to monitor their patient’s health and ensure adherence to health maintenance activities.

The Company’s Health-e-Connect (HeC) system is an internet based product initially intended for patients with diabetes and their health care providers to improve communication and monitoring of patients’ health management programs. One aspect of the system is that HeC will incorporate data uploaded from patients’ glucose meters into the ALRT database to quickly assess user adherence and performance compared to provider set targets, such as prescriptions and guidelines. This provides patients and caregivers the ability to track patient performance and adherence, thereby allowing timely intervention, which would consist of contact by the caregiver to patient. By providing this ongoing monitoring and feedback, the HeC system is expected to enhance outcomes of patients’ health as measured by A1c and lower costs borne by the US health care system related to this chronic disease.

The HeC system has received United States FDA 510(k) clearance for sale. The Company is currently focusing its efforts on introducing and marketing its HeC system for patients and health care providers in the United States. The Company has limited financial resources and is actively seeking agency and marketing relationships to reach widespread adoption. In addition, the Company is working to establish health insurance company reimbursement for HeC services.

The Company’s HeC System for diabetes management provides an affordable and easy to use tool to provide the communication network as recommended by the Committee. HeC includes a communications software platform that also enables health professionals to remotely monitor the health progress specifically relating to patients with diabetes. This facilitates more effective and timely communication of care to these patients.

The HeC system is compatible with the majority of glucose meters available for sale in the United States and also through the Company’s universal upload cable. Once development and testing is completed, the universal cable will be offered to customers who’ve adopted the HeC system.

Since receiving FDA clearance, the Company’s senior leadership team has been presenting how the HeC system uniquely supports mutual priorities around improved patient care, healthcare cost-containment, accountability, and job creation based on the results from the clinical trials conducted and applied to studies surrounding diabetes management by numerous sources.


 
-24-

 

In the future, the Company may seek to adapt its HeC system to be used in the management of other chronic diseases. The Company would be required to obtain additional clearance from the FDA prior to commencing selling activities in the United States for other purposes.

Critical Accounting Policies and Going Concern

Our discussion and analysis of our results of operations and liquidity and capital resources are based on our unaudited condensed consolidated financial statements for the nine months ended March 15, 2012 and 2011, which have been prepared in accordance with GAAP.

The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and disclosure of contingent assets and liabilities.  We base our estimates on historical and anticipated results, trends, and various other assumptions that we believe are reasonable under the circumstances, including assumptions as to future events. These estimates form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. By their nature, estimates are subject to an inherent degree of uncertainty. Actual results may materially differ from our estimates.

The Company’s condensed consolidated financial statements have been prepared on a going-concern basis, which presumes the realization of assets and the discharge of liabilities and commitments in the normal course of operations for the foreseeable future.  See note 1 of the condensed consolidated financial statements.

Due to our being a development stage company and not having generated significant revenues, in the Notes to our financial statements, we have included disclosure regarding concerns about our ability to continue as a going concern.

Consolidated Results of Operations

 
Three Months Ended March 31
         
Percentage
   
2012
 
2011
Increase /
         
(Decrease)
Revenue
 
-
 
-
 
Cost of Sales 
         
Gross Profit
         
           
Depreciation
 
-
 
-
-
General and administrative
 
155,824
 
115,860
34
Market development
 
42,562
 
3,381
1159
Product development costs
 
122,075
 
59,700
104
Professional fees
 
40,343
 
82,410
(51)
           
Other items
         
Interest expenses
 
482,689
 
1,703,954
(72)
Gain on settlement of debt
 
(40,228)
 
-
-
Other expenses
 
-
 
466
-
Net Loss
$
803,265
$
1,965,771
(59)

General and administrative expenses were $155,824 for the three month period ended March 31, 2012 as compared with $115,860 for the same period in the prior year.  The increase of $39,964 for the three month period can be attributed primarily to the following:

-    
the Company incurred approximately $17,000 in connection with retaining an investor relations consulting firm.
-    
the Company incurred approximately $22,000 in connection with retaining consultants to assist in the strategic implementation of the Company’s business plan.


 
-25-

 

Market development costs were $42,562 for the three month period ended March 31, 2012 as compared with $3,380 for the same period in the previous year. The Company has retained a public relations and communications firm for the launch of its HeC product line. The costs incurred during 2012 substantially relate to fees paid for such services.

Product development costs were $122,075 for the three month period ended March 31, 2012 as compared with $59,700 for the same period in the previous year. The increase is primarily two fold:

1.    
during the three month period ended March 2012 as compared to the same period in 2011, the Company had increased the size and service level of its development team.
2.    
the Company spent approximately $25,000 more on purchases in connection with new product development.

Professional fees were $40,343 for the three month period ended March 31, 2012 as compared with $82,410 for the same period in the previous year. The decrease can be substantially attributed to stock options being granted and modified during the three months ended March 31, 2011 as follows:

§
On March 6, 2011, the Company granted 250,000 stock options to a consultant. The stock options were exercisable at $0.10 per share for five years from the date of grant.
§
Also on March 6, 2011, 200,000 stock options granted to a consultant on July 1, 2011, were modified to vest immediately and have a reduction in exercise price from $0.25 to $0.10 per share.

These two transactions resulted in stock based compensation of approximately $43,000 being recognized during the three months ended March 31, 2011.

Interest expense was 482,689 for the three month period ended March 31, 2012 as compared with 1,703,954 for the same period in the prior year.

Interest expense was from the following sources for the three months ended March 31, 2012 and 2011:

   
Three months ended
March 31, 2012
 
Three months ended
March 31, 2011
Interest expense incurred on promissory notes
$
126,391
$
126,433
Interest expense incurred on lines of credit
 
82,142
 
38,774
Imputed interest on zero interest loans
 
41,797
 
44,496
Stock options granted for promissory notes
 
231,948
 
1,493,702
Other
 
411
 
549
Total
$
482,689
$
1,703,954

Interest on Promissory Notes
There were not any substantial changes in the amount of promissory notes outstanding from March 31, 2011 to March 31, 2012.

Interest on Lines of Credit
As at March 31, 2011, the Company had borrowed an additional $1,800,000 against its line of credit facilities (interest rates of 1% per month on the borrowed balance) as compared to March 31, 2012. This difference in borrowing resulted in significantly higher interest incurred on the lines of credit for the three period ended March 31, 2012.

Imputed Interest
The balance of zero interest promissory notes, advances payable and accounts payable in excess of one year remained consistent for the three months ended March 31, 2012 and the same periods ended March 31, 2011.


 
-26-

 

Stock Based Compensation
During the three months ended March 31, 2011, the Company granted 50 million options to two creditors and modified the terms on an existing 10 million stock options to one of those creditors.

Q1 2011

1.  
On January 3, 2011, the Company was granted an increase in its line of credit borrowing limit from $1,000,000 to $2,000,000.  In exchange for providing the increased borrowing limit, the Creditor granted 20,000,000 stock options of the Company exercisable at $0.05 per share expiring November 29, 2015. The fair value of these options, as calculated using the Black-Scholes model was $995,065

2.  
Also as consideration for providing this additional financing, the Company modified the terms of 10,000,000 stock options granted to the Creditor on March 7, 2010 and previously modified August 8, 2010. The terms have been modified as follows:
 
   ·    Increased the number of stock options granted from 10,000,000 to 20,000,000
   ·   Reduced the exercise price of the 20,000,000 stock options granted from $0.10 per share to $0.05 per share.

The fair value of the modified options, as calculated using the Black-Scholes model was $995,065. The Company had originally recorded $409,512 (at grant) during the three months ended March 31, 2011 and recorded additional compensation expense of $87,247 (upon modification) relating to these options during the third quarter of 2011. Therefore, the Company recognized an additional $498,306 during that period.

3.  
On March 6, 2011, the Company granted 20,000,000 stock options exercisable at $0.125 per share, expiring March 5, 2016. Such options will vest on the basis of eight (8) options for each one ($1.00) dollar borrowed under the line of credit to meet the costs of the sales and marketing program. The Company valued the stock-based compensation resulting from this grant at $2,400,000. No stock options vested on this line of credit during the three months ended March 31, 2011.

During Q1, 2012, the Company did not grant any additional stock options. As consideration for advances of $241,731 provided by Mr. Chan during the period, 1,933,848 stock options vested. These stock options had a fair value of $231,948.

Liquidity and Capital Resources

Working Capital
           
   
March 31,
2012
 
December 31,
2011
 
Percentage
Increase / (Decrease)
Current Assets
$
23,286
$
14,617
 
59%
Current Liabilities
 
11,535,868
 
10,997,679
 
5%
Working Capital Deficit
$
(11,512,582)
$
(10,983,062)
 
(5%)

Current Assets

The Company’s current assets as at March 31, 2012 and December 31, 2011 consist of cash and prepaid expenses.

Current Liabilities

The Company has current liabilities of $11,535,868 as at March 31, 2012 as compared to $10,997,679 as at December 31, 2011. Current liabilities were as follows:



 
-27-

 


   
March 31,
2012
 
December 31, 2011
 
Change
$
Change
%
Accounts payable and accrued liabilities
$
826,497
$
867,972
$
(41,475)
(5)%
Interest payable
 
2,057,086
 
1,930,695
 
126,391
7 %
Advances payable
 
105,527
 
100,527
 
5,000
5 %
Lines of credit to related parties
 
3,260,439
 
2,812,166
 
448,273
16 %
Promissory notes payable to related parties
 
2,861,966
 
2,861,966
 
0
0 %
Promissory notes payable
 
2,424,353
 
2,424,353
 
0
0 %
Total current liabilities
$
11,535,868
$
10,997,679
$
538,189
5 %

The increase in interest payable of 126,391 relates to accrued interest incurred on promissory notes at their stated rates of interest.  All of the promissory notes and related interest payable are overdue.

The fluctuations in accounts payables, advances payable and promissory notes payable occurred as part of operations. The Company did settle accounts payable of $65,000 in exchange for $25,200 during the first quarter.

The increase in the lines of credit payable of $448,273 is attributable to borrowings of

     -
$366,131 to fund operations, product development activities, overhead and its sales and marketing program.
     -
$82,142 of unpaid interest incurred on the principal of the borrowed amounts

Cash Flows
 
Three Months Ended
 
Three Months Ended
   
March 31, 2012
 
March 31, 2011
Cash Flows used in Operating Activities
$
(371,362)
$
(157,474)
Cash Flows provided by (used in) Investing Activities
 
-
 
-
Cash Flows provided by Financing Activities
 
366,131
 
164,303
Net (decrease) increase in Cash During Period
$
(5,231)
$
6,829

Cash Balances and Working Capital

As of March 31, 2012, the Company’s cash balance was $5,771 compared to $11,002 as of December 31, 2011.

Cash Provided by (Used in) Operating Activities

Cash used by the Company in operating activities during the three months period ended March 31, 2012 was $371,362 in comparison with $157,474 used during the same period last year. The Company’s expenditures from operations were used as follows (approximate amounts):

   
Three Months Ended
 
Three Months Ended
   
March 31, 2012
 
March 31, 2011
Market Development Activities
$
42,000
$
3,000
Product Development Consulting and Expenses
 
108,000
 
40,000
Professional Fees
 
40,000
 
40,000
Employee Wages
 
42,000
 
45,000
Travel and Trade Shows
 
25,000
 
15,000
Consulting
 
39,000
 
-
Compensation
 
47,000
 
-
Extinguishment of Payables
 
25,000
 
-
Other
 
3,362
 
14,474
Cash used in Operations
$
371,362
$
157,474


 
-28-

 

The majority of the expenditures were to repay advances payable, overdue accounts payable owing to certain consultants, pay product development costs, pay accrued professional fees and selling and administration costs associated with operating the business.

Cash Proceeds from Financing Activities

Cash sourced by the Company from financing activities during the three month period ended March 31, 2012 was $366,131 in comparison with $161,303 sourced during the same period last year. The funds sourced from lines of credit provided by Chairman of the Board and a relative of the Chairman of the Board. The loans received in 2012 and 2011 covered the operating, product development and market development requirements for the Company repaid certain advances and accounts payable.

Short and Long Term Liquidity

As of March 31, 2012, the Company does not have the current financial resources and committed financing to enable it to meet its administrative overhead, product development budgeted costs and debt obligations over the next 12 months.

All of the Company’s debt financing are due on demand or overdue. The Company will seek to obtain creditors’ consents to delay repayment of these loans until it is able to replace these financings with funds generated by operations, replacement debt or from equity financings through private placements or the exercise of options and warrants. While the Company’s creditors have agreed to extend repayment deadlines in the past, there is no assurance that they will continue to do so in the future. The Company has faced litigation from creditors in the past and is currently being sued by one creditor. There is no assurance that additional creditors will not make claims against the Company in the future. Failure to obtain either replacement financing or creditor consent to delay the repayment of existing financing could result in the Company having to curtail operations.

Tabular Disclosure of Contractual Obligations:
 
Payments due by period
       
Less
         
More
       
than 1
 
1-3
 
3-5
 
Than 5
   
Total
 
year
 
years
 
years
 
Years
Current Liabilities
$
11,535,868
$
11,535,868
$
-
$
-
$
-
Premises Lease
 
9,400
 
9,400
 
-
 
-
 
-
 
$
11,545,268
$
11,545,268
$
-
$
-
$
-

As at March 31, 2012, the Company has borrowed $11,535,868. The Company will continue to use the funds available from the line of credit to cover administrative overhead and product development requirements until such time it can establish cash flows from operations. In the next six months, the Company anticipates the amount borrowed from the line of credit to increase as compared to the past six months as it expects to commercially launch its HeC product during this period.

Off Balance Sheet Arrangements

The Company has no off balance sheet financing arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources, that is material to investors.




 
-29-

 

ITEM 3.           QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

The Company is a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and is not required to provide the information under this item.

ITEM 4.           CONTROLS AND PROCEDURES.

Under the supervision and with the participation of our management, including the Principal Executive Officer and Principal Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures as required by Exchange Act Rule 13a-15(b) as of the end of the period covered by this report.

Based on this assessment, we found our internal and disclosure controls over financial reporting to be not effective for the following reasons:

1) 
lack of a functioning audit committee and lack of a majority of independent directors on the Company’s board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures;

2) 
insufficient written policies and procedures for reporting requirements and accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements; and

The Company is working to remedy these deficiencies as its business activities evolve.

There were no changes in our internal control over financial reporting during last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.



ITEM 1.           LEGAL PROCEEDINGS.

Incorporated by reference from Item 3 of our Form 10-K filed with the SEC on April 2, 2012.

ITEM 1A.        RISK FACTORS.

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

ITEM 3.           DEFAULTS UPON SENIOR SECURITIES.

As at March 31, 2012, the Company had promissory notes payable and related interest payable, totalling $7,343,405 in default.





 
-30-

 

ITEM 6.           EXHIBITS

Exhibit
 
Incorporated by reference
Filed
No.
Document Description
Form
Date
Number
herewith
3.1
Initial Articles of Incorporation.
10-SB
12/10/99
3.1
 
3.2
Bylaws.
10-SB
12/10/99
3.2
 
3.3
Articles of Amendment to the Articles of Incorporation, dated October 22, 1998.
10-SB
12/10/99
3.3
 
3.4
Articles of Amendment to the Articles of Incorporation, dated December 7, 1998.
10-SB
12/10/99
3.4
 
3.5
Articles of Amendment to the Articles of Incorporation, dated January 6, 2005.
8-K
1/20/05
3.1
 
3.6
Amended Bylaws.
8-K
4/17/12
3.6
 
10.1
Indemnity Agreement with Marcus Da Silva.
8-K
8/14/00
10.1
 
10.2
Purchase and Sales Agreement with Marcus Da Silva.
8-K
8/14/00
10.2
 
10.3
Project Agreement with Tandy Electronics (Far East) Ltd.
10-KSB
4/17/01
10.1
 
14.1
Code of Ethics.
10-KSB
4/14/03
14.1
 
31.1
Certification of Principal Executive and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
     
X
32.1
Certification of Chief Executive and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
     
X
99.1
Distribution Agreement with Mo Betta Corp.
10-SB
12/10/99
99.1
 
99.2
Pooling Agreement.
10-SB
12/10/99
99.2
 
99.3
Amended Pooling Agreement.
10-SB
12/10/99
99.3
 
99.4
Lock-Up Agreement.
10-SB
12/10/99
99.4
 
99.5
Termination Agreement with Michael Best.
10-SB
12/10/99
99.5
 
99.6
Termination Agreement with Norman van Roggen.
10-SB
12/10/99
99.6
 
99.7
Assignment Agreement.
10-SB
12/10/99
99.7
 
99.8
Distributorship Agreement.
10-SB/A
1/14/00
99.8
 
99.9
Settlement Agreement with 706166 Alberta Ltd., 745797 Alberta Ltd., Lorne Drever, Debbie MacNutt, Dean Drever, Sandra Ross and Sidney Chan.
8-K
2/02/00
99.1
 
99.10
Agreement to Provide Services with Horizon Marketing & Research, Inc.
10-KSB
4/17/01
99.1
 
99.11
Agreement to Provide Services with Dr. Jaroslav Tichy.
10-KSB
4/17/01
99.11
 
99.12
Agreement to Provide Services with Knight’s Financial Limited regarding Christine Kan.
10-KSB
4/17/01
99.12
 
99.13
Agreement to Provide Services with Knight’s Financial Limited regarding Sidney Chan.
10-KSB
4/17/01
99.13
 
99.14
Agreement to Provide Services with Bert Honsch.
10-KSB
4/17/01
99.14
 
99.15
Agreement to Provide Services with Kenneth Berkholtz.
10-KSB
4/17/01
99.15
 
99.16
Agreement to Provide Services with Jim Cleary.
10-KSB
4/17/01
99.16
 
99.17
Settlement agreement with Ken Robulak.
10-KSB
4/17/01
99.17
 
99.18
Agreement to Provide Services with RJF Management Resource Associates, LLC.
10-KSB
4/15/02
99.18
 
99.19
Audit Committee Charter.
10-KSB
4/14/03
99.1
 
99.20
Disclosure Committee Charter.
10-KSB
4/14/03
99.2
 
101.INS
XBRL Instance Document.
     
X
101.SCH
XBRL Taxonomy Definition – Schema.
     
X
101.CAL
XBRL Taxonomy Definition – Calculations.
     
X
101.DEF
XBRL Taxonomy Definition – Definitions.
     
X
101.LAB
XBRL Taxonomy Definition – Labels.
     
X
101.PRE
XBRL Taxonomy Definition – Presentation.
     
X


 
-31-

 


Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the Registrant has duly caused this amended report to be signed on its behalf by the undersigned, thereunto duly authorized, on this 9th day of May, 2012.

 
ALR TECHNOLOGIES, INC.
 
(Registrant)
   
 
BY:
SIDNEY CHAN
   
Sidney Chan
   
Principal Executive Officer, Principal Accounting Officer, Principal Financial Officer, Secretary/Treasurer and Director





























 
-32-

 


Exhibit
 
Incorporated by reference
Filed
No.
Document Description
Form
Date
Number
herewith
3.1
Initial Articles of Incorporation.
10-SB
12/10/99
3.1
 
3.2
Bylaws.
10-SB
12/10/99
3.2
 
3.3
Articles of Amendment to the Articles of Incorporation, dated October 22, 1998.
10-SB
12/10/99
3.3
 
3.4
Articles of Amendment to the Articles of Incorporation, dated December 7, 1998.
10-SB
12/10/99
3.4
 
3.5
Articles of Amendment to the Articles of Incorporation, dated January 6, 2005.
8-K
1/20/05
3.1
 
3.6
Amended Bylaws.
8-K
4/17/12
3.6
 
10.1
Indemnity Agreement with Marcus Da Silva.
8-K
8/14/00
10.1
 
10.2
Purchase and Sales Agreement with Marcus Da Silva.
8-K
8/14/00
10.2
 
10.3
Project Agreement with Tandy Electronics (Far East) Ltd.
10-KSB
4/17/01
10.1
 
14.1
Code of Ethics.
10-KSB
4/14/03
14.1
 
31.1
Certification of Principal Executive and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
     
X
32.1
Certification of Chief Executive and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
     
X
99.1
Distribution Agreement with Mo Betta Corp.
10-SB
12/10/99
99.1
 
99.2
Pooling Agreement.
10-SB
12/10/99
99.2
 
99.3
Amended Pooling Agreement.
10-SB
12/10/99
99.3
 
99.4
Lock-Up Agreement.
10-SB
12/10/99
99.4
 
99.5
Termination Agreement with Michael Best.
10-SB
12/10/99
99.5
 
99.6
Termination Agreement with Norman van Roggen.
10-SB
12/10/99
99.6
 
99.7
Assignment Agreement.
10-SB
12/10/99
99.7
 
99.8
Distributorship Agreement.
10-SB/A
1/14/00
99.8
 
99.9
Settlement Agreement with 706166 Alberta Ltd., 745797 Alberta Ltd., Lorne Drever, Debbie MacNutt, Dean Drever, Sandra Ross and Sidney Chan.
8-K
2/02/00
99.1
 
99.10
Agreement to Provide Services with Horizon Marketing & Research, Inc.
10-KSB
4/17/01
99.1
 
99.11
Agreement to Provide Services with Dr. Jaroslav Tichy.
10-KSB
4/17/01
99.11
 
99.12
Agreement to Provide Services with Knight’s Financial Limited regarding Christine Kan.
10-KSB
4/17/01
99.12
 
99.13
Agreement to Provide Services with Knight’s Financial Limited regarding Sidney Chan.
10-KSB
4/17/01
99.13
 
99.14
Agreement to Provide Services with Bert Honsch.
10-KSB
4/17/01
99.14
 
99.15
Agreement to Provide Services with Kenneth Berkholtz.
10-KSB
4/17/01
99.15
 
99.16
Agreement to Provide Services with Jim Cleary.
10-KSB
4/17/01
99.16
 
99.17
Settlement agreement with Ken Robulak.
10-KSB
4/17/01
99.17
 
99.18
Agreement to Provide Services with RJF Management Resource Associates, LLC.
10-KSB
4/15/02
99.18
 
99.19
Audit Committee Charter.
10-KSB
4/14/03
99.1
 
99.20
Disclosure Committee Charter.
10-KSB
4/14/03
99.2
 
101.INS
XBRL Instance Document.
     
X
101.SCH
XBRL Taxonomy Definition – Schema.
     
X
101.CAL
XBRL Taxonomy Definition – Calculations.
     
X
101.DEF
XBRL Taxonomy Definition – Definitions.
     
X
101.LAB
XBRL Taxonomy Definition – Labels.
     
X
101.PRE
XBRL Taxonomy Definition – Presentation.
     
X


 
-33-