<SUBMISSION>
<ACCESSION-NUMBER>0001002014-06-000890
<TYPE>10QSB
<PUBLIC-DOCUMENT-COUNT>3
<PERIOD>20060930
<FILING-DATE>20061114
<DATE-OF-FILING-DATE-CHANGE>20061114
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>ALR TECHNOLOGIES INC
<CIK>0001087022
<ASSIGNED-SIC>3669
<IRS-NUMBER>880225807
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>10QSB
<ACT>34
<FILE-NUMBER>000-30414
<FILM-NUMBER>061215404
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>114M REYNOLDA VILLAGE
<CITY>WINSTON-SALEM
<STATE>NC
<ZIP>27106
<PHONE>(336) 722-2254
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>114M REYNOLDA VILLAGE
<CITY>WINSTON-SALEM
<STATE>NC
<ZIP>27106
</MAIL-ADDRESS>
</FILER>
<DOCUMENT>
<TYPE>10QSB
<SEQUENCE>1
<FILENAME>alr10qsb093006.htm
<DESCRIPTION>ALR TECHNOLOGIES INC. FORM 10-QSB FOR 09-30-2006
<TEXT>
<HTML>
<HEAD>
<TITLE>Current Report for ALR Technologies Inc.</TITLE>
</HEAD>
<BODY>

<P>=========================================================================================================================================</P>
<B><P>&nbsp;</P>
<P ALIGN="CENTER">UNITED STATES<BR>
SECURITIES AND EXCHANGE COMMISSION<BR>
Washington, DC 20549</P>
<P ALIGN="CENTER">FORM 10-QSB</P></B>
<P ALIGN="CENTER"><CENTER><TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH=680>
<TR><TD WIDTH="6%" VALIGN="TOP">
<P>[X] </TD>
<TD WIDTH="94%" VALIGN="TOP">
<P>Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 <BR>
<B>FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2006</B> </TD>
</TR>
<TR><TD WIDTH="6%" VALIGN="TOP" HEIGHT=6>
<FONT SIZE=1><P>&nbsp;</FONT></TD>
<TD WIDTH="94%" VALIGN="TOP" HEIGHT=6>
<FONT SIZE=1><P>&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="6%" VALIGN="TOP">
<P>OR</TD>
<TD WIDTH="94%" VALIGN="TOP">
<P>&nbsp;</TD>
</TR>
<TR><TD WIDTH="6%" VALIGN="TOP" HEIGHT=6>
<FONT SIZE=1><P>&nbsp;</FONT></TD>
<TD WIDTH="94%" VALIGN="TOP" HEIGHT=6>
<FONT SIZE=1><P>&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="6%" VALIGN="TOP">
<P>[ &nbsp; ] </TD>
<TD WIDTH="94%" VALIGN="TOP">
<P>Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 <BR>
For the transition period from to</TD>
</TR>
</TABLE>
</CENTER></P>

<B><P ALIGN="CENTER">COMMISSION FILE NUMBER 0-30414 </P>
<FONT SIZE=5><P ALIGN="CENTER">ALR TECHNOLOGIES INC. <BR>
</B></FONT>(Exact name of registrant as specified in its charter)</P>
<P ALIGN="CENTER"><CENTER><TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH=680>
<TR><TD WIDTH="61%" VALIGN="TOP">
<B><P ALIGN="CENTER">NEVADA</B></TD>
<TD WIDTH="39%" VALIGN="TOP">
<B><P ALIGN="CENTER">88-0225807</B></TD>
</TR>
<TR><TD WIDTH="61%" VALIGN="TOP">
<P ALIGN="CENTER">(State of other jurisdiction of incorporation or<BR>
organization) </TD>
<TD WIDTH="39%" VALIGN="TOP">
<P ALIGN="CENTER">(IRS Employer Identification<BR>
Number)</TD>
</TR>
</TABLE>
</CENTER></P>

<B><P ALIGN="CENTER"><BR>
114M Reynolda Village<BR>
Winston-Salem, North Carolina 27106<BR>
</B>(Address of principal executive offices)</P>
<B><P ALIGN="CENTER">(336) 722-2254<BR>
</B>(Registrant's telephone number, including area code)</P>
<P>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] &nbsp; No [ &nbsp; ]</P>
<P>Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of October 30, 2006: 76,078,446</P>
<P>The Registrant is a Shell company. Yes [ &nbsp; ] &nbsp; No [X]</P>
<P>=========================================================================================================================================</P>
<B><P ALIGN="CENTER">&nbsp;</P>

<page>
<hr>

<FONT SIZE=2><P ALIGN="CENTER">PART I. FINANCIAL INFORMATION</P>
<P>ITEM 1. &nbsp; &nbsp; INTERIM FINANCIAL STATEMENTS</P></B></FONT>
<P ALIGN="CENTER"><CENTER><TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH=680>
<TR><TD VALIGN="BOTTOM" COLSPAN=5 HEIGHT=17>
<B><FONT SIZE=1><P ALIGN="CENTER">ALR TECHNOLOGIES INC. </B></FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM" COLSPAN=5 HEIGHT=17>
<FONT SIZE=1><P ALIGN="CENTER"> Balance Sheets </FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM" COLSPAN=5 HEIGHT=17>
<FONT SIZE=1><P ALIGN="CENTER"> ($ United States) </FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM" COLSPAN=5 HEIGHT=17>
<FONT SIZE=1><P ALIGN="CENTER"> September 30, 2006 and 2005 <hr size=3 noshade></FONT></TD>
</TR>
<TR><TD WIDTH="53%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="CENTER">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">September 30</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<B><FONT SIZE=1><P>&nbsp;</B></FONT></TD>
<TD WIDTH="21%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">December 31</FONT></TD>
</TR>
<TR><TD WIDTH="53%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="CENTER">&nbsp;<hr></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><br><hr></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">2006<hr></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<B><FONT SIZE=1><P ALIGN="RIGHT"><br><hr></B></FONT></TD>
<TD WIDTH="21%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">2005<hr></FONT></TD>
</TR>
<TR><TD WIDTH="53%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="CENTER">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">(Unaudited)</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<B><FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</B></FONT></TD>
<TD WIDTH="21%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">(Audited)</FONT></TD>
</TR>
<TR><TD WIDTH="53%" VALIGN="BOTTOM" HEIGHT=17>
<B><FONT SIZE=1><P> Assets </B></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P>&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<B><FONT SIZE=1><P>&nbsp;</B></FONT></TD>
<TD WIDTH="21%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P>&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="53%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P> Current assets: </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<B><FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</B></FONT></TD>
<TD WIDTH="21%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="53%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P> Cash </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">            1,527 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="21%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">                263 </FONT></TD>
</TR>
<TR><TD WIDTH="53%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P> Accounts receivable, net of allowance of $Nil </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<B><FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</B></FONT></TD>
<TD WIDTH="21%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="53%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P> &nbsp; &nbsp; (December 31, 2005 - $1,025) </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">                17,755 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<B><FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</B></FONT></TD>
<TD WIDTH="21%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">                  3,114 </FONT></TD>
</TR>
<TR><TD WIDTH="53%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P> Inventories (note 3) </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">                69,067 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<B><FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</B></FONT></TD>
<TD WIDTH="21%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">                34,959 </FONT></TD>
</TR>
<TR><TD WIDTH="53%" VALIGN="BOTTOM" HEIGHT=6>
<FONT SIZE=1><P> Prepaid expenses<hr></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=6><hr></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=6>
<FONT SIZE=1><P ALIGN="RIGHT">5,000<hr></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=6>
<B><FONT SIZE=1><P ALIGN="RIGHT"><hr></B></FONT></TD>
<TD WIDTH="21%" VALIGN="BOTTOM" HEIGHT=6>
<FONT SIZE=1><P ALIGN="RIGHT">-<hr></FONT></TD>
</TR>
<TR><TD WIDTH="53%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P>&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">                93,349 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<B><FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</B></FONT></TD>
<TD WIDTH="21%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">                38,336 </FONT></TD>
</TR>
<TR><TD WIDTH="53%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P> Fixed assets, net of accumulated depreciation <hr></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><hr></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">6,773 <hr></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<B><FONT SIZE=1><P ALIGN="RIGHT"><hr></B></FONT></TD>
<TD WIDTH="21%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">8,553 <hr></FONT></TD>
</TR>
<TR><TD WIDTH="53%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=1><hr size=3 noshade></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=1><P ALIGN="RIGHT">$<hr size=3 noshade></FONT></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=1><P ALIGN="RIGHT">           100,122 <hr size=3 noshade></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=1><P ALIGN="RIGHT">$<hr size=3 noshade></FONT></TD>
<TD WIDTH="21%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=1><P ALIGN="RIGHT">            46,889<hr size=3 noshade> </FONT></TD>
</TR>
<TR><TD WIDTH="53%" VALIGN="BOTTOM" HEIGHT=7>
<B><FONT SIZE=1><P> Liabilities and Shareholders' Deficiency </B></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=7><P></P></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=7>
<FONT SIZE=1><P ALIGN="RIGHT"> </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=7>
<B><FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</B></FONT></TD>
<TD WIDTH="21%" VALIGN="BOTTOM" HEIGHT=7>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="53%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P> Current liabilities: </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<B><FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</B></FONT></TD>
<TD WIDTH="21%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="53%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P> Accounts payable and accrued liabilities </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">       1,380,122 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="21%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">          1,053,596 </FONT></TD>
</TR>
<TR><TD WIDTH="53%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P> Accounts payable and accrued liabilities due to </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="21%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="53%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P> &nbsp; &nbsp; related parties </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">           1,768,313 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="21%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">            1,361,239 </FONT></TD>
</TR>
<TR><TD WIDTH="53%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P> Customer deposits </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">                25,597 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="21%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">                      - </FONT></TD>
</TR>
<TR><TD WIDTH="53%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P> Promissory notes payable to relatives </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="21%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="53%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P> &nbsp; &nbsp; of directors (note 4) </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">           3,038,747 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="21%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">            2,715,000 </FONT></TD>
</TR>
<TR><TD WIDTH="53%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P> Promissory notes payable to directors (note 4) </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">              135,390 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="21%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">               129,514 </FONT></TD>
</TR>
<TR><TD WIDTH="53%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P> Promissory notes payable (note 4)<hr> </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><hr></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">           2,577,412<hr> </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT"><hr></FONT></TD>
<TD WIDTH="21%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">            2,507,412<hr> </FONT></TD>
</TR>
<TR><TD WIDTH="53%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><hr></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><hr></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">           8,925,581<hr> </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<B><FONT SIZE=1><P ALIGN="RIGHT"><hr></B></FONT></TD>
<TD WIDTH="21%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">            7,766,761 <hr></FONT></TD>
</TR>
<TR><TD WIDTH="53%" VALIGN="BOTTOM" HEIGHT=6>
<B><FONT SIZE=1><P> Shareholders' deficiency </B></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=6><P></P></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=6>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=6>
<B><FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</B></FONT></TD>
<TD WIDTH="21%" VALIGN="BOTTOM" HEIGHT=6>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="53%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P> Capital stock (note 5) </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<B><FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</B></FONT></TD>
<TD WIDTH="21%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="53%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P> &nbsp; &nbsp; 350,000,000 common shares with a par </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<B><FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</B></FONT></TD>
<TD WIDTH="21%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="53%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P> &nbsp; &nbsp; value of $0.001 per share authorized </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<B><FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</B></FONT></TD>
<TD WIDTH="21%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="53%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P> &nbsp; &nbsp; 76,078,446 issued </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<B><FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</B></FONT></TD>
<TD WIDTH="21%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="53%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P> &nbsp; &nbsp; (December 31, 2005 - 76,078,446) </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">                76,078 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="21%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">                 76,078</FONT></TD>
</TR>
<TR><TD WIDTH="53%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P> Additional paid-in capital </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">         12,407,084 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="21%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">           11,773,181 </FONT></TD>
</TR>
<TR><TD WIDTH="53%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P> Deficit </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">      (21,345,785)</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="21%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">        (19,606,295)</FONT></TD>
</TR>
<TR><TD WIDTH="53%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P> Accumulated other comprehensive income: </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="21%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="53%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P> &nbsp; &nbsp; Cumulative translation adjustment <hr></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><hr></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">                37,164<hr>  </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT"><hr></FONT></TD>
<TD WIDTH="21%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">                 37,164<hr> </FONT></TD>
</TR>
<TR><TD WIDTH="53%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><hr></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><hr></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">        (8,825,459)<hr></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT"><hr></FONT></TD>
<TD WIDTH="21%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">          (7,719,872)<hr></FONT></TD>
</TR>
<TR><TD WIDTH="53%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P> Basis of presentation (note 1) </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="21%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="53%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P> Commitments (note 5) </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<B><FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</B></FONT></TD>
<TD WIDTH="21%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="53%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P> Related party transactions (notes 4, 5 and 7)</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="21%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="53%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P> Contingency (note 6) </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="21%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="53%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=1><hr size=3 noshade></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=1><P ALIGN="RIGHT">$<hr size=3 noshade></FONT></TD>
<TD WIDTH="19%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=1><P ALIGN="RIGHT">           100,122 <hr size=3 noshade></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=1><P ALIGN="RIGHT">$<hr size=3 noshade></FONT></TD>
<TD WIDTH="21%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=1><P ALIGN="RIGHT">            46,889<hr size=3 noshade> </FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<FONT SIZE=2><P ALIGN="CENTER">See accompanying notes to interim financial statements</P>
<P ALIGN=CENTER>F-1</P></FONT>
<P ALIGN="CENTER">- 2 -</P>
<page>
<hr>



<P ALIGN="CENTER"><TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH=680>
<TR><TD VALIGN="BOTTOM" COLSPAN=9 HEIGHT=17>
<P ALIGN="CENTER"></P>
<B><FONT SIZE=2><P ALIGN="CENTER">ALR TECHNOLOGIES INC. </B></FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM" COLSPAN=9 HEIGHT=17>
<FONT SIZE=2><P ALIGN="CENTER"> Statement of Loss and Deficit </FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM" COLSPAN=9 HEIGHT=17>
<FONT SIZE=2><P ALIGN="CENTER">($ United States)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM" COLSPAN=9 HEIGHT=17>
<FONT SIZE=2><P ALIGN="CENTER"> Three Month and Nine Month Periods Ended September 30, 2006 and 2005 </FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM" COLSPAN=9 HEIGHT=17>
<FONT SIZE=2><P ALIGN="CENTER"> (Unaudited)<hr size=3 noshade></FONT></TD>
</TR>
<TR><TD WIDTH="31%" VALIGN="BOTTOM" HEIGHT=15>
<B><FONT SIZE=2><P>&nbsp;</B></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=15>
<B><FONT SIZE=2><P>&nbsp;</B></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=15>
<B><FONT SIZE=2><P>&nbsp;</B></FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=15>
<B><FONT SIZE=2><P>&nbsp;</B></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=15>
<B><FONT SIZE=2><P>&nbsp;</B></FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=15>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=15>
<B><FONT SIZE=2><P>&nbsp;</B></FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=15>
<B><FONT SIZE=2><P>&nbsp;</B></FONT></TD>
</TR>
<TR><TD WIDTH="31%" VALIGN="BOTTOM" HEIGHT=15>
<B><FONT SIZE=2><P>&nbsp;</B></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=15><P></P></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=15>
<B><FONT SIZE=2><P>&nbsp;</B></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=15>
<B><FONT SIZE=2><P>&nbsp;</B></FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=15>
<B><FONT SIZE=2><P>&nbsp;</B></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=15>
<B><FONT SIZE=2><P>&nbsp;</B></FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=15>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=15>
<B><FONT SIZE=2><P>&nbsp;</B></FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=15>
<B><FONT SIZE=2><P>&nbsp;</B></FONT></TD>
</TR>
<TR><TD WIDTH="31%" VALIGN="BOTTOM" HEIGHT=17>
<B><FONT SIZE=2><P>&nbsp;</B></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="32%" VALIGN="BOTTOM" COLSPAN=3 HEIGHT=17>
<FONT SIZE=2><P ALIGN="CENTER"> Three Months Ended </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="32%" VALIGN="BOTTOM" COLSPAN=3 HEIGHT=17>
<FONT SIZE=2><P ALIGN="CENTER"> Nine Months Ended </FONT></TD>
</TR>
<TR><TD WIDTH="31%" VALIGN="BOTTOM" HEIGHT=17>
<B><FONT SIZE=2><P>&nbsp;</B></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="32%" VALIGN="BOTTOM" COLSPAN=3 HEIGHT=17>
<FONT SIZE=2><P ALIGN="CENTER">September 30<hr></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="32%" VALIGN="BOTTOM" COLSPAN=3 HEIGHT=17>
<FONT SIZE=2><P ALIGN="CENTER">September 30<hr></FONT></TD>
</TR>
<TR><TD WIDTH="31%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><hr></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17><hr></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">2006<hr></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<B><FONT SIZE=2><P ALIGN="RIGHT"><hr></B></FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">2005<hr></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><hr></FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">2006<hr></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<B><FONT SIZE=2><P ALIGN="RIGHT"><hr></B></FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">2005<hr></FONT></TD>
</TR>
<TR><TD WIDTH="31%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="31%" VALIGN="BOTTOM" HEIGHT=17>
<B><FONT SIZE=2><P>Revenue</B></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="31%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2> &nbsp; &nbsp; Sales</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">             17,756 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">           11,081 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">          236,108 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">    313,017 </FONT></TD>
</TR>
<TR><TD WIDTH="31%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2> &nbsp; &nbsp; Cost of sales</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">                    650 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">                4,060 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">               49,174 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">            71,100 </FONT></TD>
</TR>
<TR><TD WIDTH="31%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><br><hr></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17><br><hr></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT"><br><hr></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT"><br><hr></FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT"><br><hr></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT"><br><hr></FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT"><br><hr></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT"><br><hr></FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT"><br><hr></FONT></TD>
</TR>
<TR><TD WIDTH="31%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><hr></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17><hr></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">               17,106 <hr></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT"><hr></FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">                7,021<hr> </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT"><hr></FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">             186,934<hr> </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT"><hr></FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">          241,917 <hr></FONT></TD>
</TR>
<TR><TD WIDTH="31%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="31%" VALIGN="BOTTOM" HEIGHT=17>
<B><FONT SIZE=2><P>Expenses</B></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="31%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P> &nbsp; &nbsp; Depreciation</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">                    593 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">                   745 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">                1,780 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">              2,234 </FONT></TD>
</TR>
<TR><TD WIDTH="31%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P> &nbsp; &nbsp; Development costs</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">             124,879 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">            128,424 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">            332,281 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">          281,438 </FONT></TD>
</TR>
<TR><TD WIDTH="31%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P> &nbsp; &nbsp; Foreign exchange loss</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">                 2,182 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">              10,493 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">               9,450 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">              7,711 </FONT></TD>
</TR>
<TR><TD WIDTH="31%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P> &nbsp; &nbsp; Interest</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">             218,578 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">            150,796 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">           570,785 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">          638,622 </FONT></TD>
</TR>
<TR><TD WIDTH="31%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P> &nbsp; &nbsp; Professional fees</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">               13,737 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">              18,947 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">             71,786 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">            91,612 </FONT></TD>
</TR>
<TR><TD WIDTH="31%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P> &nbsp; &nbsp; Rent</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">               10,273 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">                9,667 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">             30,766 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">            26,110 </FONT></TD>
</TR>
<TR><TD WIDTH="31%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P> &nbsp; &nbsp; Selling, general and administration<hr></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17><hr></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">             212,521 <hr></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT"><hr></FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">            160,080 <hr></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT"><hr></FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">           909,576<hr> </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT"><hr></FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">          461,537<hr> </FONT></TD>
</TR>
<TR><TD WIDTH="31%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><hr></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17><hr></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">             582,763<hr> </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT"><hr></FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">            479,152 <hr></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT"><hr></FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">        1,926,424 <hr></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT"><hr></FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">       1,509,264<hr> </FONT></TD>
</TR>
<TR><TD WIDTH="31%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P>Loss and comprehensive loss</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">           (565,657)</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">           (472,131)</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">       (1,739,490)</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">      (1,267,347)</FONT></TD>
</TR>
<TR><TD WIDTH="31%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P>Deficit, beginning of year<hr></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17><hr></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">      (20,780,128) <hr></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT"><hr></FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">      (18,608,825) <hr></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT"><hr></FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">     (19,606,295) <hr></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT"><hr></FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">     (17,813,609) <hr></FONT></TD>
</TR>
<TR><TD WIDTH="31%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P>Deficit, end of year<hr size=3 noshade></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">$<hr size=3 noshade></FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT"> (21,345,785) <hr size=3 noshade></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">$<hr size=3 noshade></FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">    (19,080,956) <hr size=3 noshade></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">$<hr size=3 noshade></FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT"> (21,345,785) <hr size=3 noshade></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">$<hr size=3 noshade></FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT"> (19,080,956) <hr size=3 noshade></FONT></TD>
</TR>
<TR><TD WIDTH="31%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=18><P></P></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">   </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">   </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">   </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">   </FONT></TD>
</TR>
<TR><TD WIDTH="31%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="31%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P>Loss per share, basic and diluted<hr size=3 noshade></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">$<hr size=3 noshade></FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">         (0.01) <hr size=3 noshade> </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">$<hr size=3 noshade></FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">           (0.01) <hr size=3 noshade> </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">$<hr size=3 noshade></FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">         (0.02) <hr size=3 noshade> </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">$<hr size=3 noshade></FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">  (0.02) <hr size=3 noshade> </FONT></TD>
</TR>
<TR><TD WIDTH="31%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=18><P></P></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">   </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">   </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">   </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">   </FONT></TD>
</TR>
<TR><TD WIDTH="31%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P>Weighted average shares outstanding,</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="31%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P>- basic and diluted<hr size=3 noshade></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=18><hr size=3 noshade></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">        76,078,446 <hr size=3 noshade></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT"><hr size=3 noshade></FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">        66,796,678 <hr size=3 noshade></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT"><hr size=3 noshade></FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">        76,078,446<hr size=3 noshade> </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT"><hr size=3 noshade></FONT></TD>
<TD WIDTH="15%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">        69,924,600 <hr size=3 noshade></FONT></TD>
</TR>
</TABLE>
</P>

<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">See accompanying notes to interim financial statements</P>
<P ALIGN="CENTER">F-2</P>
<P ALIGN="CENTER">-3-</P>
<page>
<hr>


<P ALIGN="CENTER"><TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH=680>
<TR><TD VALIGN="BOTTOM" COLSPAN=7 HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="CENTER">ALR TECHNOLOGIES INC.</B></FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM" COLSPAN=7 HEIGHT=18>
<FONT SIZE=2><P ALIGN="CENTER">Interim Statement of Shareholders' Deficiency and Comprehensive Loss</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM" COLSPAN=7 HEIGHT=18>
<FONT SIZE=2><P ALIGN="CENTER">($ United States)</FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM" COLSPAN=7 HEIGHT=18>
<FONT SIZE=2><P ALIGN="CENTER"> Three Month and Nine Month Periods Ended September 30, 2006 and 2005 </FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM" COLSPAN=7 HEIGHT=18>
<FONT SIZE=2><P ALIGN="CENTER"> (Unaudited) </FONT></TD>
</TR>
<TR><TD WIDTH="32%" VALIGN="BOTTOM" HEIGHT=19>
<B><FONT SIZE=2><br><hr size=3 noshade></B></FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=19>
<B><FONT SIZE=2><br><hr size=3 noshade></B></FONT></TD>
<TD WIDTH="8%" VALIGN="BOTTOM" HEIGHT=19>
<B><FONT SIZE=2><br><hr size=3 noshade></B></FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=19>
<B><FONT SIZE=2><br><hr size=3 noshade></B></FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=19>
<B><FONT SIZE=2><br><hr size=3 noshade></B></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=19>
<FONT SIZE=2><br><hr size=3 noshade></FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=19>
<B><FONT SIZE=2><br><hr size=3 noshade></B></FONT></TD>
</TR>
<TR><TD WIDTH="32%" VALIGN="BOTTOM" HEIGHT=19>
<B><FONT SIZE=2><P>&nbsp;</B></FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=19>
<B><FONT SIZE=2><P>&nbsp;</B></FONT></TD>
<TD WIDTH="8%" VALIGN="BOTTOM" HEIGHT=19>
<B><FONT SIZE=2><P>&nbsp;</B></FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=19>
<B><FONT SIZE=2><P>&nbsp;</B></FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=19>
<B><FONT SIZE=2><P>&nbsp;</B></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=19>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=19>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="32%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P>&nbsp;</B></FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P>&nbsp;</B></FONT></TD>
<TD WIDTH="8%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P>&nbsp;</B></FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P>&nbsp;</B></FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P>&nbsp;</B></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">Accumulated</FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="32%" VALIGN="BOTTOM" HEIGHT=20>
<B><FONT SIZE=2><P>&nbsp;</B></FONT></TD>
<TD WIDTH="18%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=20>
<U><FONT SIZE=2><P ALIGN="CENTER">Capital Stock</U></FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P ALIGN="RIGHT">Additional</FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P ALIGN="RIGHT">Other</FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P ALIGN="RIGHT">Total</FONT></TD>
</TR>
<TR><TD WIDTH="32%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P>&nbsp;</B></FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">Number</FONT></TD>
<TD WIDTH="8%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P>&nbsp;</B></FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">Paid-in</FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">Comprehensive</FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">Shareholders'</FONT></TD>
</TR>
<TR><TD WIDTH="32%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><hr></B></FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">of Shares<hr></FONT></TD>
<TD WIDTH="8%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">Amount<hr></FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">Capital<hr></FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">Deficit<hr></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">Income<hr></FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">Deficiency<hr></FONT></TD>
</TR>
<TR><TD WIDTH="32%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P>&nbsp;</B></FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P>&nbsp;</B></FONT></TD>
<TD WIDTH="8%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P>&nbsp;</B></FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P>&nbsp;</B></FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P>&nbsp;</B></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="32%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P>Balance, December 31, 2005</FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">76,078,446 </FONT></TD>
<TD WIDTH="8%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">$76,078 </FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">$11,773,181 </FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">$(19,606,295)</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">$ &nbsp; &nbsp; &nbsp; &nbsp; 37,164 </FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">$(7,719,872)</FONT></TD>
</TR>
<TR><TD WIDTH="32%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="8%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="32%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P>Financing cost of stock</FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="8%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="32%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P>options issued in</FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="8%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="32%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P>consideration of</FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="8%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="32%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P>promissory notes payable:</FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="8%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="32%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2> &nbsp; &nbsp; relative of a director</FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">               - </FONT></TD>
<TD WIDTH="8%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">          - </FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">        81,109 </FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">                   - </FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">                   - </FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">         81,109 </FONT></TD>
</TR>
<TR><TD WIDTH="32%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2> &nbsp; &nbsp; non-related parties</FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">               - </FONT></TD>
<TD WIDTH="8%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">          - </FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">        24,631 </FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">                   - </FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">                   - </FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">         24,631 </FONT></TD>
</TR>
<TR><TD WIDTH="32%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="8%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="32%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P>Compensating cost of stock</FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="8%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="32%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P>options issued or vested for services:</FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="8%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="32%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2> &nbsp; &nbsp; directors and officer </FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">               - </FONT></TD>
<TD WIDTH="8%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">          - </FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">      326,842 </FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">                   - </FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">                   - </FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">       326,842 </FONT></TD>
</TR>
<TR><TD WIDTH="32%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2> &nbsp; &nbsp; employees and consultants</FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">               - </FONT></TD>
<TD WIDTH="8%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">          - </FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">      201,321 </FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">                   - </FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">                   - </FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">       201,321 </FONT></TD>
</TR>
<TR><TD WIDTH="32%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="8%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="32%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P>Loss and comprehensive loss<hr></FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">               - <hr></FONT></TD>
<TD WIDTH="8%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">          - <hr></FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">                - <hr></FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">    (1,739,490) <hr></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">                   -<hr> </FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">  (1,739,490) <hr></FONT></TD>
</TR>
<TR><TD WIDTH="32%" VALIGN="BOTTOM" HEIGHT=19>
<FONT SIZE=2><P>Balance, September 30, 2006<hr size=3 noshade></FONT></TD>
<TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=19>
<FONT SIZE=2><P ALIGN="RIGHT">76,078,446<hr size=3 noshade> </FONT></TD>
<TD WIDTH="8%" VALIGN="BOTTOM" HEIGHT=19>
<FONT SIZE=2><P ALIGN="RIGHT">$76,078 <hr size=3 noshade></FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM" HEIGHT=19>
<FONT SIZE=2><P ALIGN="RIGHT">$12,407,084 <hr size=3 noshade></FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=19>
<FONT SIZE=2><P ALIGN="RIGHT">$(21,345,785) <hr size=3 noshade></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=19>
<FONT SIZE=2><P ALIGN="RIGHT">$ &nbsp; &nbsp; &nbsp; &nbsp; 37,164 <hr size=3 noshade></FONT></TD>
<TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=19>
<FONT SIZE=2><P ALIGN="RIGHT">$(8,825,459) <hr size=3 noshade></FONT></TD>
</TR>
</TABLE>
</P>

<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">&nbsp;</P>
<FONT SIZE=2><P ALIGN="CENTER">See accompanying notes to interim financial statements</P>
<P ALIGN="CENTER">&nbsp;F-3</FONT></P>
<P ALIGN="CENTER">-4-</P>
<page>
<hr>


<P ALIGN="CENTER"><CENTER><TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH=680>
<TR><TD VALIGN="BOTTOM" COLSPAN=17 HEIGHT=12>
<FONT SIZE=1>
<B><P ALIGN="CENTER">ALR TECHNOLOGIES INC. </B></FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM" COLSPAN=17 HEIGHT=12>
<FONT SIZE=1><P ALIGN="CENTER"> Interim Statement of Cash Flows </FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM" COLSPAN=17 HEIGHT=12>
<FONT SIZE=1><P ALIGN="CENTER"> ($ United States) </FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM" COLSPAN=17 HEIGHT=10>
<FONT SIZE=1><P ALIGN="CENTER"> Three Month and Nine Month Periods Ended September 30, 2006 and 2005 </FONT></TD>
</TR>
<TR><TD VALIGN="BOTTOM" COLSPAN=17 HEIGHT=10>
<FONT SIZE=1><P ALIGN="CENTER"> (Unaudited) <hr size=3 noshade></FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="BOTTOM" HEIGHT=10>
<FONT SIZE=1><P>&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=10><P></P></TD>
<TD WIDTH="31%" VALIGN="BOTTOM" COLSPAN=6 HEIGHT=10>
<FONT SIZE=1><P ALIGN="CENTER"> Three Months Ended </FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=10>
<FONT SIZE=1><P>&nbsp;</FONT></TD>
<TD WIDTH="31%" VALIGN="BOTTOM" COLSPAN=6 HEIGHT=10>
<FONT SIZE=1><P ALIGN="CENTER"> Nine Months Ended </FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="BOTTOM" HEIGHT=10>
<FONT SIZE=1><P>&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=10><P></P></TD>
<TD WIDTH="31%" VALIGN="BOTTOM" COLSPAN=6 HEIGHT=10>
<U><FONT SIZE=1><P ALIGN="CENTER"> September 30 </U></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=10>
<FONT SIZE=1><P>&nbsp;</FONT></TD>
<TD WIDTH="31%" VALIGN="BOTTOM" COLSPAN=6 HEIGHT=10>
<U><FONT SIZE=1><P ALIGN="CENTER"> September 30 </U></FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="BOTTOM" HEIGHT=9>
<FONT SIZE=1><hr></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=9><hr></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=9>
<FONT SIZE=1><P ALIGN="RIGHT">2006<hr></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=9>
<FONT SIZE=1><P ALIGN="RIGHT"><hr></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=9>
<FONT SIZE=1><P ALIGN="RIGHT">2005<hr></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=9>
<FONT SIZE=1><hr></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=9>
<FONT SIZE=1><P ALIGN="RIGHT">2006<hr></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=9>
<FONT SIZE=1><P ALIGN="RIGHT"><hr></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=9>
<FONT SIZE=1><P ALIGN="RIGHT">2005<hr></FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P>Cash flows from operating activities (note 8):</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1> &nbsp; &nbsp; Cash received from customers</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">         6,044 </FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">         209,454 </FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">       247,064 </FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">        250,907 </FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1> &nbsp; &nbsp; Cash paid to suppliers and employees</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">            (235,991)</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">            (148,608)</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">            (632,463)</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">           (617,529)</FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1> &nbsp; &nbsp; Interest paid<hr></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17><hr></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">                   (954) <hr></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT"><hr></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">                (1,183) <hr> </FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT"><hr></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">                (7,084) <hr></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT"><hr></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">             (87,809) <hr></FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P>Net cash provided by (used in) operating activities<hr></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17><hr></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">            (230,901) <hr></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT"><hr></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">                59,663 <hr></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT"><hr></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">            (392,483) <hr></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT"><hr></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">           (454,431) <hr></FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P>Cash flows from financing activities:</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1> &nbsp; &nbsp; Promissory notes payable</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">              223,747 </FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">                         - </FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">              393,747 </FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">            500,000 </FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="BOTTOM" HEIGHT=6>
<FONT SIZE=1> &nbsp; &nbsp; Repayment of promissory notes payable<hr></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=6><hr></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=6>
<FONT SIZE=1><P ALIGN="RIGHT">                         -<hr></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=6>
<FONT SIZE=1><P ALIGN="RIGHT"><hr></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=6>
<FONT SIZE=1><P ALIGN="RIGHT">              (60,000) <hr></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=6>
<FONT SIZE=1><P ALIGN="RIGHT"><hr></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=6>
<FONT SIZE=1><P ALIGN="RIGHT">                         -<hr></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=6>
<FONT SIZE=1><P ALIGN="RIGHT"><hr></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=6>
<FONT SIZE=1><P ALIGN="RIGHT">             (60,000) <hr></FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="BOTTOM" HEIGHT=9>
<FONT SIZE=1><hr></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=9><hr></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=9>
<FONT SIZE=1><P ALIGN="RIGHT">              223,747 <hr></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=9>
<FONT SIZE=1><P ALIGN="RIGHT"><hr></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=9>
<FONT SIZE=1><P ALIGN="RIGHT">              (60,000) <hr> </FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=9>
<FONT SIZE=1><P ALIGN="RIGHT"><hr></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=9>
<FONT SIZE=1><P ALIGN="RIGHT">              393,747<hr> </FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=9>
<FONT SIZE=1><P ALIGN="RIGHT"><hr></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=9>
<FONT SIZE=1><P ALIGN="RIGHT">             440,000 <hr></FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P>Cash flows from investing activities:</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1> &nbsp; &nbsp; Purchase of fixed assets<hr></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17><hr></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">                        - <hr></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT"><hr></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">                         - <hr></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT"><hr></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">                         - <hr></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT"><hr></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">               (1,601) <hr></FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><hr></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17><hr></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">                         - <hr></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT"><hr></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">                         -<hr> </FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT"><hr></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">                         - <hr></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT"><hr></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">              (1,601) <hr></FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P>Increase (decrease) in cash during the period</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">                (7,154) </FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">                   (337) </FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">                  1,264 </FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">             (16,032) </FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P>Cash, beginning of period<hr></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17><hr></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">                  8,681 <hr></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT"><hr></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">                      937 <hr></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT"><hr></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">                     263 <hr></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT"><hr></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">              16,632<hr> </FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=1><P>Cash, end of period<hr size=3 noshade></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=18>
<FONT SIZE=1><P ALIGN="RIGHT">$<hr size=3 noshade></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=18>
<FONT SIZE=1><P ALIGN="RIGHT">            1,527 <hr size=3 noshade></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=18>
<FONT SIZE=1><P ALIGN="RIGHT">$<hr size=3 noshade></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=18>
<FONT SIZE=1><P ALIGN="RIGHT">              600<hr size=3 noshade> </FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=18>
<FONT SIZE=1><P ALIGN="RIGHT">$<hr size=3 noshade></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=18>
<FONT SIZE=1><P ALIGN="RIGHT">           1,527<hr size=3 noshade> </FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=18>
<FONT SIZE=1><P ALIGN="RIGHT">$<hr size=3 noshade></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=18>
<FONT SIZE=1><P ALIGN="RIGHT">          600<hr size=3 noshade> </FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P>Non-cash financing activities:</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="BOTTOM" HEIGHT=6>
<FONT SIZE=1><P>Common shares issued as full</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=6><P></P></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=6>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=6>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=6>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=6>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=6>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=6>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=6>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P>and final settlement of</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P>promissory notes payable to:</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1> &nbsp; &nbsp; Director and officer</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1> &nbsp; &nbsp; Non-related parties</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">                   - </FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">                   - </FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">                    - </FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">            50,000 </FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P>Common shares issued as full</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">                         - </FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">                         - </FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">                         - </FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">              580,000 </FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P>and final settlement of</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P>accounts payable and</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P>accrued liabilities payable to:</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1> &nbsp; &nbsp; Director and officer</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1> &nbsp; &nbsp; Relatives of directors</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">                         - </FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">                         - </FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">                         - </FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">              170,000 </FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1> &nbsp; &nbsp; A company controlled by</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">                         - </FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">                         - </FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">                         - </FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">              897,500 </FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1> &nbsp; &nbsp; &nbsp; &nbsp; a relative of a director</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1> &nbsp; &nbsp; Non-related parties</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">                         - </FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">                         - </FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">                         - </FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">              27,500 </FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P>Financing cost of stock options</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">                         - </FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">                         - </FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">                         - </FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">                25,000 </FONT></TD>
</TR>
</TR>
<TR><TD WIDTH="34%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P>issued in consideration for</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P>promissory notes payable</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P>Compensation cost of</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">                62,109 </FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">                  7,946 </FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">              105,740 </FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">                85,231 </FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P>stock options issued for:</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=15>
<FONT SIZE=1> &nbsp; &nbsp; Services</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=15><P></P></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=15>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=15>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=15>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=15>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=15>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=15>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=15>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="BOTTOM" HEIGHT=12>
<FONT SIZE=1> &nbsp; &nbsp; Product development</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=12><P></P></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=12>
<FONT SIZE=1><P ALIGN="RIGHT">                54,398 </FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=12>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=12>
<FONT SIZE=1><P ALIGN="RIGHT">                24,100 </FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=12>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=12>
<FONT SIZE=1><P ALIGN="RIGHT">              438,736 </FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=12>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=12>
<FONT SIZE=1><P ALIGN="RIGHT">              116,828 </FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="BOTTOM" HEIGHT=6>
<FONT SIZE=1><P>Financing cost of stock</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=6><P></P></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=6>
<FONT SIZE=1><P ALIGN="RIGHT">                         - </FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=6>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=6>
<FONT SIZE=1><P ALIGN="RIGHT">                63,882</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=6>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=6>
<FONT SIZE=1><P ALIGN="RIGHT">                89,427</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=6>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=6>
<FONT SIZE=1><P ALIGN="RIGHT">              104,952</FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P>stock options issued in</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P>consideration of extended</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=17>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=15>
<FONT SIZE=1><P>loan repayment terms</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=15><P></P></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=15>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=15>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=15>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=15>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=15>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=15>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=15>
<FONT SIZE=1><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="BOTTOM" HEIGHT=11>
<FONT SIZE=1><hr></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=11><hr></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=11>
<FONT SIZE=1><P ALIGN="RIGHT">                         - <hr></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=11>
<FONT SIZE=1><P ALIGN="RIGHT"><hr></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=11>
<FONT SIZE=1><P ALIGN="RIGHT">                         - <hr></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=11>
<FONT SIZE=1><P ALIGN="RIGHT"><hr></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=11>
<FONT SIZE=1><P ALIGN="RIGHT">                         - <hr></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=11>
<FONT SIZE=1><P ALIGN="RIGHT"><hr></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=11>
<FONT SIZE=1><P ALIGN="RIGHT">              137,493 <hr></FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="BOTTOM" HEIGHT=18><hr size=3 noshade></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=18>
<FONT SIZE=1><P ALIGN="RIGHT">$<hr size=3 noshade></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=18>
<FONT SIZE=1><P ALIGN="RIGHT">        116,507 <hr size=3 noshade></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=18>
<FONT SIZE=1><P ALIGN="RIGHT">$<hr size=3 noshade></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=18>
<FONT SIZE=1><P ALIGN="RIGHT">            92,928 <hr size=3 noshade></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=18>
<FONT SIZE=1><P ALIGN="RIGHT">$<hr size=3 noshade></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=18>
<FONT SIZE=1><P ALIGN="RIGHT">           633,903 <hr size=3 noshade></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=18>
<FONT SIZE=1><P ALIGN="RIGHT">$<hr size=3 noshade></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=18>
<FONT SIZE=1><P ALIGN="RIGHT">        2,194,504 <hr size=3 noshade></FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<FONT SIZE=1><P ALIGN="CENTER">See accompanying notes to interim financial statements</P>
<P ALIGN=CENTER>F-4</P></FONT>
<P ALIGN=CENTER>-5-</P>

<page>
<hr>

<B><P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">ALR TECHNOLOGIES INC.<BR>
</B>Notes to Interim Financial Statements<BR>
($ United States)<BR>
Nine Months Ended September 30, 2006 and 2005 <BR>
(Unaudited)</P>
<B><P>&nbsp;</P>
<P>1. &nbsp; Basis of presentation</P>
</B><P ALIGN="JUSTIFY">These financial statements have been prepared in accordance with U.S. generally accepted accounting principles 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.</P>
<P ALIGN="JUSTIFY">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 repay its current obligations and fund working capital and its ability to achieve profitable operations. All of the Company's debt financing is either due on demand or is overdue and now due on demand. The Company will seek to obtain creditors' consents to delay repayment of these outstanding promissory notes payable until it is able to replace this financing 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. Management plans to obtain financing through the issuance of shares on the exercise of options and warrants and through future common share private placements. Management hopes to realize sufficient sales in future periods to achieve profitable operations. The resolution of the going concern issue is dependent upon the realization of management's plans. There can be no assurance provided that the Company will be able to raise sufficient debt or equity capital, from the sources described above, on satisfactory terms. If management is unsuccessful in obtaining financing or in achieving profitable operations, the Company will be required to cease operations. The outcome of these matters cannot be predicted at this time.</P>
<P ALIGN="JUSTIFY">The financial statements do not give effect to any adjustments which could be necessary should the Company be unable to continue as a going concern and, therefore, be required to realize its assets and discharge its liabilities in other than the normal course of business and at amounts differing from those reflected in the financial statements.</P>
<B><P>&nbsp;</P>
<P>2. &nbsp; Significant accounting policies</P>
</B><P ALIGN="JUSTIFY">The information included in the accompanying interim financial statements is unaudited and should be read in conjunction with the annual audited financial statements and notes thereto contained in the Company's Report on Form 10-KSB for the fiscal year ended December 31, 2005. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for fair presentation of the results of operations for the interim periods presented have been reflected herein. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for the entire fiscal year.</P>
<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">F-5</P>
<P ALIGN="CENTER">-6-</P>
<page>
<hr>


<B><P ALIGN="CENTER">ALR TECHNOLOGIES INC.<BR>
</B>Notes to Interim Financial Statements<BR>
($ United States)<BR>
Nine Months Ended September 30, 2006 and 2005<BR>
(Unaudited)</P>
<FONT SIZE=3><P>(a) &nbsp; Stock-based compensation:</P>
<P ALIGN="JUSTIFY">Prior to January 1, 2006, the Company applied APB Opinion No. 25 in accounting for its stock options issued to directors and employees. Effective January 1, 2006, the Company applies FASB No. 123R in accounting all its stock options issued. Had the Company determined compensation costs for stock options issued to employees and directors prior to January 1, 2006 based on the fair value of its stock options under SFAS No. 123, the Company's loss and loss per share for the three and nine month periods ended September 30, 2005 would have been the pro forma amounts below:<BR>
</P></FONT>
<P ALIGN="CENTER"><TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH=680>
<TR><TD WIDTH="33%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P>&nbsp;</B></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=18><P></P></TD>
<TD WIDTH="30%" VALIGN="BOTTOM" COLSPAN=3 HEIGHT=18>
<FONT SIZE=2><P ALIGN="CENTER"> Three Months Ended </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="32%" VALIGN="BOTTOM" COLSPAN=3 HEIGHT=18>
<FONT SIZE=2><P ALIGN="CENTER"> Nine Months Ended </FONT></TD>
</TR>
<TR><TD WIDTH="33%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P>&nbsp;</B></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=18><P></P></TD>
<TD WIDTH="30%" VALIGN="BOTTOM" COLSPAN=3 HEIGHT=18>
<FONT SIZE=2><P ALIGN="CENTER">September 30<hr></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="32%" VALIGN="BOTTOM" COLSPAN=3 HEIGHT=18>
<FONT SIZE=2><P ALIGN="CENTER">September 30<hr></FONT></TD>
</TR>
<TR><TD WIDTH="33%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><hr></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=18><hr></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">2006<hr></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT"><hr></B></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">2005<hr></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><hr></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">2006<hr></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P ALIGN="RIGHT"><hr></B></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">2005<hr></FONT></TD>
</TR>
<TR><TD WIDTH="33%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=18><P></P></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="33%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P>Loss as reported</B></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">(565,657)</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">  (472,131)</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">$  (1,739,490)</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">  (1,267,347)</FONT></TD>
</TR>
<TR><TD WIDTH="33%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2> &nbsp; &nbsp; Add:</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=18><P></P></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="33%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2> &nbsp; &nbsp; &nbsp; &nbsp; Employee stock-based</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=18><P></P></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="33%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2> &nbsp; &nbsp; &nbsp; &nbsp; compensation, as recorded</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=18><P></P></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">                    - </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">                    - </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">                     - </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">                     - </FONT></TD>
</TR>
<TR><TD WIDTH="33%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2> &nbsp; &nbsp; Deduct:</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=18><P></P></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="33%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2> &nbsp; &nbsp; &nbsp; &nbsp; Employee stock-based </FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=18><P></P></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="33%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2> &nbsp; &nbsp; &nbsp; &nbsp; compensation, fair value method<hr></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=18><hr></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">                    -<hr></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT"><hr></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">         (5,691) <hr>  </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT"><hr></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">                     -<hr></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT"><hr></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">           (5,691) <hr></FONT></TD>
</TR>
<TR><TD WIDTH="33%" VALIGN="BOTTOM" HEIGHT=19>
<FONT SIZE=2>Proforma<hr size=3 noshade></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=19>
<FONT SIZE=2><P ALIGN="RIGHT">$<hr size=3 noshade></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=19>
<FONT SIZE=2><P ALIGN="RIGHT">  (565,657) <hr size=3 noshade></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=19>
<FONT SIZE=2><P ALIGN="RIGHT">$<hr size=3 noshade></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=19>
<FONT SIZE=2><P ALIGN="RIGHT">  (477,822) <hr size=3 noshade></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=19>
<FONT SIZE=2><P ALIGN="RIGHT">$<hr size=3 noshade></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=19>
<FONT SIZE=2><P ALIGN="RIGHT">  (1,739,490) <hr size=3 noshade></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=19>
<FONT SIZE=2><P ALIGN="RIGHT">$<hr size=3 noshade></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=19>
<FONT SIZE=2><P ALIGN="RIGHT">  (1,273,038) <hr size=3 noshade></FONT></TD>
</TR>
<TR><TD WIDTH="33%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P>Loss per share, basic and diluted:</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=18><P></P></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="33%" VALIGN="BOTTOM" HEIGHT=19>
<FONT SIZE=2> &nbsp; &nbsp; As reported<hr size=3 noshade></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=19>
<FONT SIZE=2><P ALIGN="RIGHT">$<hr size=3 noshade></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=19>
<FONT SIZE=2><P ALIGN="RIGHT">        (0.01) <hr size=3 noshade></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=19>
<FONT SIZE=2><P ALIGN="RIGHT">$<hr size=3 noshade></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=19>
<FONT SIZE=2><P ALIGN="RIGHT">       (0.01) <hr size=3 noshade></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=19>
<FONT SIZE=2><P ALIGN="RIGHT">$<hr size=3 noshade></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=19>
<FONT SIZE=2><P ALIGN="RIGHT">          (0.02) <hr size=3 noshade></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=19>
<FONT SIZE=2><P ALIGN="RIGHT">$<hr size=3 noshade></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=19>
<FONT SIZE=2><P ALIGN="RIGHT">         (0.02) <hr size=3 noshade></FONT></TD>
</TR>
<TR><TD WIDTH="33%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2> &nbsp; &nbsp; Proforma<hr size=3 noshade></FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P ALIGN="RIGHT">$<hr size=3 noshade></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P ALIGN="RIGHT">        (0.01) <hr size=3 noshade></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P ALIGN="RIGHT">$<hr size=3 noshade></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P ALIGN="RIGHT">       (0.01) <hr size=3 noshade></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P ALIGN="RIGHT">$<hr size=3 noshade></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P ALIGN="RIGHT">         (0.02) <hr size=3 noshade></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P ALIGN="RIGHT">$<hr size=3 noshade></FONT></TD>
<TD WIDTH="14%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P ALIGN="RIGHT">         (0.02) <hr size=3 noshade></FONT></TD>
</TR>
</TABLE>
</P>

<B><P>&nbsp;</P>
<FONT SIZE=3><P>3. &nbsp; Inventories</P>
</B><P ALIGN="JUSTIFY">The Company's inventories consists solely of finished goods inventories. The Company has expended significant efforts introducing its Human Prescription Reminders ("Med Reminders") to disease management companies, home care companies, pharmaceutical manufacturers, health management organizations, pharmacy benefits managers and certain clinics treating specific disease conditions. Sales to September 30, 2006 have not been sufficient for the Company to realize its investment in these inventories. Management plans to recover its investment in inventories through sales via the channels indicated above and through international markets. As of September 30, 2006, management had recorded a provision of $243,275 (December 31, 2005 - $243,275) in respect of its Med Reminder inventory. Further information on this provision is included in the notes to the Company's December 31, 2005 financial statements.</P>
<P>The alternate use of this inventory is limited and, accordingly, if management is not successful in its plans, further write-downs to its investment in inventories may be required in the near term. The outcome of this matter cannot be predicted at this time.</P>
</FONT><P ALIGN="CENTER">F-6</P>
<P ALIGN="CENTER">-7-</P>
<page>
<hr>

<B><P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">ALR TECHNOLOGIES INC.<BR>
</B>Notes to Interim Financial Statements<BR>
($ United States)<BR>
Nine Months Ended September 30, 2006 and 2005<BR>
(Unaudited)</P>
<B><P>&nbsp;</P>
<P>4. &nbsp; Promissory notes payable</P>
</B><P ALIGN="JUSTIFY">During the nine month period ended September 30, 2006, the Company received $100,000 and $223,747 from two relatives of a director in exchange for promissory notes payable. The promissory notes are due on demand, bearing interest at 1.0% and 1.25% per month respectively and are unsecured. As further consideration, 400,000 and 900,000 options exercisable into common shares of the Company at an exercise price of $0.25 per share until January 4, 2011 and September 8, 2011 respectively were issued (see note 5(b)).</P>
<P ALIGN="JUSTIFY">During the nine month period ended September 30, 2006, the Company received a total of $50,000 and $20,000 from two non-related parties in exchange for promissory notes payable. The promissory notes are due on demand, bear interest at 1.0% per month and are unsecured. As further consideration, 200,000 and 80,000 options exercisable into common shares of the Company at an exercise price of $0.25 per share until April 7, 2011 and April 27, 2011 respectively were issued (see note 5(b)).</P>
<P ALIGN="JUSTIFY">During the nine month period ended September 30, 2006, a promissory note repayable in Canadian dollars to a director was increased by $5,876 due to unfavorable exchange rate changes.</P>
<B><P>5. &nbsp; Capital stock</P>
</B><P>a) &nbsp; Authorized common shares</P>
<P ALIGN="JUSTIFY">On November 16, 2004 the Company's Board of Directors filed a Definitive Information Statement (the "Information Statement") pursuant to Section 14(c) of the Securities Exchange Act with the Securities and Exchange Commission and mailed the statement to the Company's shareholders. The Information Statement was filed and mailed in connection with the Board of Directors approval to amend the Company's Articles of Incorporation to increase its authorized capital to 350,000,000 shares of common stock with a par value of $0.001 per share. The amendment became effective on January 6, 2005. As the Board of Directors had the unrestricted ability to increase the authorized share capital to levels that would allow for the exercise of the committed option grants described in Note 5(b) below, those options outstanding prior to the effective date were considered to have been granted for accounting purposes. </P>
<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">&nbsp;F-7</P>
<P ALIGN="CENTER">-8-</P>
<page>
<hr>


<B><P ALIGN="CENTER">ALR TECHNOLOGIES INC.<BR>
</B>Notes to Interim Financial Statements<BR>
($ United States)<BR>
Nine Months Ended September 30, 2006 and 2005<BR>
(Unaudited)</P>
<B><P>5. &nbsp; Capital stock (continued)</P>
</B><P>b) &nbsp; Stock options:</P>
<P>The Company has irrevocably committed to grant options to purchase common shares of the Company as follows:</P>
<P ALIGN="CENTER"><TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH=680>
<TR><TD WIDTH="31%" VALIGN="BOTTOM" HEIGHT=6>
<B><FONT SIZE=2><P>&nbsp;</B></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=6><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=6>
<B><FONT SIZE=2><P>&nbsp;</B></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=6>
<B><FONT SIZE=2><P>&nbsp;</B></FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=6>
<B><FONT SIZE=2><P>&nbsp;</B></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=6>
<B><FONT SIZE=2><P>&nbsp;</B></FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=6>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=6>
<B><FONT SIZE=2><P>&nbsp;</B></FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=6>
<B><FONT SIZE=2><P>&nbsp;</B></FONT></TD>
</TR>
<TR><TD WIDTH="31%" VALIGN="BOTTOM" HEIGHT=20>
<B><FONT SIZE=2><P>&nbsp;</B></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=20><P></P></TD>
<TD WIDTH="32%" VALIGN="BOTTOM" COLSPAN=3 HEIGHT=20>
<FONT SIZE=2><P ALIGN="CENTER"> Nine Months Ended </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="32%" VALIGN="BOTTOM" COLSPAN=3 HEIGHT=20>
<FONT SIZE=2><P ALIGN="CENTER"> Nine Months Ended </FONT></TD>
</TR>
<TR><TD WIDTH="31%" VALIGN="BOTTOM" HEIGHT=20>
<B><FONT SIZE=2><P>&nbsp;</B></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=20><P></P></TD>
<TD WIDTH="32%" VALIGN="BOTTOM" COLSPAN=3 HEIGHT=20>
<FONT SIZE=2><P ALIGN="CENTER">September 30, 2006<hr></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="32%" VALIGN="BOTTOM" COLSPAN=3 HEIGHT=20>
<FONT SIZE=2><P ALIGN="CENTER">September 30, 2005<hr></FONT></TD>
</TR>
<TR><TD WIDTH="31%" VALIGN="BOTTOM" HEIGHT=20>
<B><FONT SIZE=2><P>&nbsp;</B></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=20><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P ALIGN="CENTER">&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P ALIGN="RIGHT">Weighted</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P ALIGN="CENTER">&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P ALIGN="RIGHT">Weighted</FONT></TD>
</TR>
<TR><TD WIDTH="31%" VALIGN="BOTTOM" HEIGHT=20>
<B><FONT SIZE=2><P>&nbsp;</B></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=20><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P ALIGN="CENTER">&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P ALIGN="RIGHT">Average</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P ALIGN="CENTER">&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P ALIGN="RIGHT">Average</FONT></TD>
</TR>
<TR><TD WIDTH="31%" VALIGN="BOTTOM" HEIGHT=20>
<B><FONT SIZE=2><P>&nbsp;</B></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=20><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P ALIGN="RIGHT">Number of</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P ALIGN="CENTER">&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P ALIGN="RIGHT">Exercise</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P ALIGN="RIGHT">Number of</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P ALIGN="CENTER">&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P ALIGN="RIGHT">Exercise</FONT></TD>
</TR>
<TR><TD WIDTH="31%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><hr></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=20><hr></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P ALIGN="RIGHT">Shares<hr></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=20>
<B><FONT SIZE=2><P ALIGN="RIGHT"><hr></B></FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P ALIGN="RIGHT">Price<hr></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><hr></FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P ALIGN="RIGHT">Shares<hr></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=20>
<B><FONT SIZE=2><P ALIGN="RIGHT"><hr></B></FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P ALIGN="RIGHT">Price<hr></FONT></TD>
</TR>
<TR><TD WIDTH="31%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=20><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="31%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P>Outstanding, beginning of period</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=20><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P ALIGN="RIGHT"> 109,101,463 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P ALIGN="RIGHT">     0.25 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P ALIGN="RIGHT">   76,541,463 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P ALIGN="RIGHT">0.25 </FONT></TD>
</TR>
<TR><TD WIDTH="31%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P>Granted</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=20><P></P></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P ALIGN="RIGHT">     3,920,000 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P ALIGN="RIGHT">0.25</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P ALIGN="RIGHT">   35,150,000 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P ALIGN="RIGHT">         0.25 </FONT></TD>
</TR>
<TR><TD WIDTH="31%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P>Expired or cancelled<hr></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=20><hr></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P ALIGN="RIGHT">    (2,770,000) <hr></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P ALIGN="RIGHT"><hr></FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P ALIGN="RIGHT">          0.25 <hr></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P ALIGN="RIGHT"><hr></FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P ALIGN="RIGHT">    (1,060,000) <hr></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P ALIGN="RIGHT"><hr></FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=20>
<FONT SIZE=2><P ALIGN="RIGHT">         0.25<hr> </FONT></TD>
</TR>
<TR><TD WIDTH="31%" VALIGN="BOTTOM" HEIGHT=21>
<FONT SIZE=2><P>Outstanding, end of period<hr size=3 noshade></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=21><hr size=3 noshade></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=21>
<FONT SIZE=2><P ALIGN="RIGHT"> 110,251,463 <hr size=3 noshade></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=21>
<FONT SIZE=2><P ALIGN="RIGHT">$<hr size=3 noshade></FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=21>
<FONT SIZE=2><P ALIGN="RIGHT">     0.25 <hr size=3 noshade></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=21>
<FONT SIZE=2><P ALIGN="RIGHT"><hr size=3 noshade></FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM" HEIGHT=21>
<FONT SIZE=2><P ALIGN="RIGHT"> 110,631,463 <hr size=3 noshade></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=21>
<FONT SIZE=2><P ALIGN="RIGHT">$<hr size=3 noshade></FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=21>
<FONT SIZE=2><P ALIGN="RIGHT">  0.25 <hr size=3 noshade></FONT></TD>
</TR>
</TABLE>
</P>


<P ALIGN="JUSTIFY">The number of options outstanding and exercisable and the remaining contractual lives (in years) of the options at September 30, 2006 were as follows: </P>
<P ALIGN="CENTER"><CENTER><TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH=560>
<TR><TD VALIGN="BOTTOM" COLSPAN=14 HEIGHT=18>
<FONT SIZE=2><P ALIGN="CENTER"> Options Outstanding <hr></FONT></TD>
</TR>
<TR><TD WIDTH="22%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=18>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=18>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="22%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT"> Number of </FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=18>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT"> Contractual </FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=18>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="23%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT"> Number of </FONT></TD>
</TR>
<TR><TD WIDTH="22%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=18>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=18>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="22%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT"> Options </FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=18>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT"> Lives </FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=18>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="23%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT"> Options </FONT></TD>
</TR>
<TR><TD WIDTH="22%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT"> Exercise Price <hr></FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=18>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="22%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT"> Outstanding <hr></FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=18>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT"> Remaining <hr></FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=18>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="23%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT"> Exercisable <hr></FONT></TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=18></TD>
<TD WIDTH="4%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=18>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="22%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=18>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=18>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=18>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="22%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P>$</FONT></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=18>
<FONT SIZE=2><P ALIGN="CENTER"> &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; 0.25</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="22%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=18>
<FONT SIZE=2><P ALIGN="JUSTIFY">110,251,463 </FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="20%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=18>
<FONT SIZE=2><P ALIGN="JUSTIFY"> 0.66 to 4.94 </FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="22%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">    86,413,963 </FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="JUSTIFY">During the nine month period ended September 30, 2006, the Company irrevocably committed to grant 1,580,000 options, in consideration of promissory notes payable (note 4). All of the options vested immediately and are exercisable into the Company's common shares at an exercise price of $0.25 for a period of five years. Financing cost related to the gross proceeds of the promissory notes allocated to options, based on the relative fair value of the options, has been estimated to be $105,740 and has been charged to interest expense. The weighted average per share fair value of the options issued in the period was $0.07. The fair value of the options was determined using the Black Scholes option pricing model, using the expected life of the options, weighted average volatility factors of 193%, weighted average risk free interest rates of 4.53% and no assumed dividend rate.&nbsp;</P>
<P ALIGN="CENTER">F-8</P>
<P ALIGN="CENTER">-9-</P>
<page>
<hr>

<B><P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">ALR TECHNOLOGIES INC.<BR>
</B>Notes to Interim Financial Statements<BR>
($ United States)<BR>
Nine Months Ended September 30, 2006 and 2005<BR>
(Unaudited)<B>&nbsp;</P>
<P>5. &nbsp; Capital stock (continued)</P>
</B><P>b) &nbsp; Stock options (continued):</P>
<P ALIGN="JUSTIFY">During the nine month period ended September 30, 2006, the Company granted 2,340,000 options to consultants in exchange for services. All of the options are exercisable into common shares of the Company at an exercise price of $0.25 per share for a period of five years subject to certain vesting terms. Of the total, 90,000 options were vested immediately, 2,000,000 options will be vested equally over a ten-month period and 250,000 will be vested pending on the Company achieving various performance milestones in connection with a new product being developed by the Company.</P>
<P ALIGN="JUSTIFY">During the nine month period ended September 30, 2006, 90,000 options were vested immediately upon granting. The compensation cost related to these options, being the fair value of the options, has been estimated to be $8,597 and has been charged to selling, general and administrative expense. The weighted average per share fair value of the options issued and vested in the period was $0.10. The fair value of the options was determined using the Black Scholes options pricing model, using the expected life of the options, a weighted average volatility factor of 192%, a weighted average risk free interest rate of 4.71% and no assumed dividend rate.</P>
<P ALIGN="JUSTIFY">During the nine month period ended September 30, 2006, 8,512,500 options were vested on the achievement of certain performance targets. The compensation cost related to these options, being the fair value of the options, has been estimated to be $519,567 of which $430,140 and $89,427 has been charged to selling, general and administrative expense and product development costs respectively. The weighted average per share fair value of the options issued and vested in the period was $0.06. The fair value of the options was determined using the Black Scholes options pricing model, using the expected life of the options, a weighted average volatility factor of 195%, a weighted average risk free interest rate of 4.05% and no assumed dividend rate.</P>
<P ALIGN="JUSTIFY">Unvested options at September 30, 2006 consist of 23,837,500 options which will vest based on achieving certain sales and performance targets, including 17,000,000 to two directors and 2,250,000 to an officer of the Company. Compensation cost related to the unvested options is recorded over the service period or in the period in which the sales or performance targets are achieved or probable of being achieved.</P>
<B><P>&nbsp;6. &nbsp; Contingency</P>
</B><P ALIGN="JUSTIFY">Accounts payable and accrued liabilities as of September 30, 2006 includes $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. The gain on settlement of the account payable, if any, will be recorded in the period that an agreement with the supplier is reached and the amount becomes determinable.</P>
<P ALIGN="CENTER">F-9</P>
<P ALIGN="CENTER">-10-</P>
<page>
<hr>

<B><P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">ALR TECHNOLOGIES INC.<BR>
</B>Notes to Interim Financial Statements<BR>
($ United States)<BR>
Nine Months Ended September 30, 2006 and 2005<BR>
(Unaudited)</P>
<B><P>7. &nbsp; Related party transactions</P>
</B><P ALIGN="JUSTIFY">Related party transactions for the nine months ended September 30, 2006 and 2005 included the following:<BR>
</P>
<P ALIGN="CENTER"><CENTER><TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH=600>
<TR><TD WIDTH="59%" VALIGN="BOTTOM" HEIGHT=5>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=5><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=5>
<FONT SIZE=2><P ALIGN="RIGHT">2006<hr></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=5>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=5>
<FONT SIZE=2><P ALIGN="RIGHT">2005<hr></FONT></TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="BOTTOM" HEIGHT=7>
<FONT SIZE=2><P> 1,000,000 common shares issued to a relative of a  </FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=7><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=7>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=7>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=7>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="BOTTOM" HEIGHT=10>
<FONT SIZE=2><P> director for full and final settlement of outstanding </FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=10><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=10>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=10>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=10>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="BOTTOM" HEIGHT=13>
<FONT SIZE=2><P> promissory note payable </FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=13>
<FONT SIZE=2><P>$</FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=13>
<FONT SIZE=2><P ALIGN="RIGHT">         - </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=13>
<FONT SIZE=2><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=13>
<FONT SIZE=2><P ALIGN=RIGHT>      50,000 </FONT></TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="BOTTOM" HEIGHT=5>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=5><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=5>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=5>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=5>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="BOTTOM" HEIGHT=7>
<FONT SIZE=2><P> 3,400,000 common shares issued to a director and </FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=7><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=7>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=7>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=7>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="BOTTOM" HEIGHT=12>
<FONT SIZE=2><P> an officer for full and final settlement of outstanding </FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=12><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=12>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=12>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=12>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="BOTTOM" HEIGHT=15>
<FONT SIZE=2><P> promissory note payable and accounts payable and </FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=15><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=15>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=15>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=15>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="BOTTOM" HEIGHT=10>
<FONT SIZE=2><P> accrued liabilities </FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=10><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=10>
<FONT SIZE=2><P ALIGN="RIGHT">                    - </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=10>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=10>
<FONT SIZE=2><P ALIGN="RIGHT">        170,000 </FONT></TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="BOTTOM" HEIGHT=9>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=9><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=9>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=9>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=9>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="BOTTOM" HEIGHT=12>
<FONT SIZE=2><P> 18,500,000 common shares issued to a relative of a </FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=12><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=12>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=12>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=12>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="BOTTOM" HEIGHT=15>
<FONT SIZE=2><P> director for full and final settlement of outstanding </FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=15><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=15>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=15>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=15>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P> accounts payable and accrued liabilities </FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=18><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">                    - </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">        925,000 </FONT></TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="BOTTOM" HEIGHT=9>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=9><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=9>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=9>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=9>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="BOTTOM" HEIGHT=12>
<FONT SIZE=2><P> Financing cost related to options irrevocably </FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=12><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=12>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=12>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=12>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="BOTTOM" HEIGHT=5>
<FONT SIZE=2><P> committed to be issued to directors and relatives of  </FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=5><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=5>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=5>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=5>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="BOTTOM" HEIGHT=12>
<FONT SIZE=2><P> directors in consideration of promissory notes </FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=12><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=12>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=12>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=12>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="BOTTOM" HEIGHT=10>
<FONT SIZE=2><P> payable or their due date extension </FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=10><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=10>
<FONT SIZE=2><P ALIGN="RIGHT">          81,109 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=10>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=10>
<FONT SIZE=2><P ALIGN="RIGHT">        145,855 </FONT></TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="BOTTOM" HEIGHT=13>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=13><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=13>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=13>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=13>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="BOTTOM" HEIGHT=5>
<FONT SIZE=2><P> Financing cost related to vested options irrevocably </FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=5><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=5>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=5>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=5>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="BOTTOM" HEIGHT=7>
<FONT SIZE=2><P> committed to be issued to directors and officers </FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=7><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=7>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=7>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=7>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="BOTTOM" HEIGHT=12>
<FONT SIZE=2><P> in consideration of services </FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=12><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=12>
<FONT SIZE=2><P ALIGN="RIGHT">        326,842 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=12>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=12>
<FONT SIZE=2><P ALIGN="RIGHT">                    - </FONT></TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="BOTTOM" HEIGHT=13>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=13><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=13>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=13>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=13>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="BOTTOM" HEIGHT=15>
<FONT SIZE=2><P> Interest on promissory notes payable </FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=15><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=15>
<FONT SIZE=2><P ALIGN="RIGHT"> 258,816 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=15>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=15>
<FONT SIZE=2><P ALIGN="RIGHT">        211,046 </FONT></TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="BOTTOM" HEIGHT=6>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=6><P></P></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=6>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=6>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=6>
<FONT SIZE=2><P ALIGN="RIGHT">&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="BOTTOM" HEIGHT=9>
<FONT SIZE=2><P> Management compensation for directors and officer<hr> </FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=9><hr></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=9>
<FONT SIZE=2><P ALIGN="RIGHT"> 286,050<hr></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=9>
<FONT SIZE=2><P ALIGN="RIGHT"><hr></FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=9>
<FONT SIZE=2><P ALIGN="RIGHT">        304,650 <hr></FONT></TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="BOTTOM" HEIGHT=21>
<FONT SIZE=2><hr size=3 noshade></FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=21>
<FONT SIZE=2><P>$<hr size=3 noshade></FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=21>
<FONT SIZE=2><P ALIGN="RIGHT">      952,817 <hr size=3 noshade></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=21>
<FONT SIZE=2><P ALIGN="RIGHT">$<hr size=3 noshade></FONT></TD>
<TD WIDTH="17%" VALIGN="BOTTOM" HEIGHT=21>
<FONT SIZE=2><P ALIGN="RIGHT">1,806,551 <hr size=3 noshade></FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="JUSTIFY"><BR>
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 be the parties. Options irrevocably committed to related parties have been recorded at their estimated fair value as disclosed note 5(b).</P>
<P ALIGN="JUSTIFY">Accounts payable and accrued liabilities includes $1,768,313 (December 31, 2005 - $1,361,239) owing to related parties.</P>
<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">F-10</P>
<P ALIGN="CENTER">-11-</P>
<page>
<hr>


<B><P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">ALR TECHNOLOGIES INC.<BR>
</B>Notes to Interim Financial Statements<BR>
($ United States)<BR>
Nine Months Ended September 30, 2006 and 2005<BR>
(Unaudited)</P>
<B><P>8. &nbsp; Reconciliation of net loss to net cash used in operating activities</P></B>
<P ALIGN="CENTER"><CENTER><TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH=680>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="29%" VALIGN="BOTTOM" COLSPAN=3 HEIGHT=18>
<FONT SIZE=2><P ALIGN="CENTER"> Three Months Ended </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P>&nbsp;</B></FONT></TD>
<TD WIDTH="29%" VALIGN="BOTTOM" COLSPAN=3 HEIGHT=18>
<FONT SIZE=2><P ALIGN="CENTER"> Nine Months Ended </FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P>&nbsp;</B></FONT></TD>
<TD WIDTH="29%" VALIGN="BOTTOM" COLSPAN=3 HEIGHT=18>
<FONT SIZE=2><P ALIGN="CENTER"> September 30 <hr></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<B><FONT SIZE=2><P>&nbsp;</B></FONT></TD>
<TD WIDTH="29%" VALIGN="BOTTOM" COLSPAN=3 HEIGHT=18>
<FONT SIZE=2><P ALIGN="CENTER"> September 30 <hr></FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">2006<hr></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">2005<hr></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">2006<hr></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN="RIGHT">2005<hr></FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P>&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P>Net loss for the period</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>$    (565,657)</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>$    (472,131)</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>$ (1,739,490)</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>$ (1,267,347)</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P>Add items not affecting cash:</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P>Depreciation</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>              593 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>              745 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>             1,780 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>             2,234 </FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P>Foreign exchange on note payable</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>           2,163 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>           6,844 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>             5,876 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>             4,592 </FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P>Common shares issued as full and final</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2> &nbsp; &nbsp; settlement of outstanding accounts</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2> &nbsp; &nbsp; payable and accrued liabilities</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>                 - </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>                 - </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>                   - </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>         197,500 </FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P>Compensation cost of options</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2> &nbsp; &nbsp; issued for services</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>          54,398 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>         21,100 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>         438,736 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>         116,828 </FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P>Compensation cost of options</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2> &nbsp; &nbsp; product development</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>                 - </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>         63,882 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>           89,427 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>         104,952 </FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P>Financing of option issued in consideration</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2> &nbsp; &nbsp; for promissory notes payable</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>           62,109 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>           7,946 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>         105,740 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>           85,231 </FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P>Financing of option irrevocably issued in </FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2> &nbsp; &nbsp; consideration for loan extension</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>                 - </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>                 - </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>                   - </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>         137,493 </FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P>Non-cash working capital items:</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2> &nbsp; &nbsp; Receivable and advances</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>        (11,712)</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>       198,373 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>        (14,641)</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>            3,345 </FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2> &nbsp; &nbsp; Inventories</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>        (17,543)</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>       (22,305)</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>        (34,108)</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>        (21,546)</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2> &nbsp; &nbsp; Prepaid expenses</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>          (5,000)</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>         22,000 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>          (5,000)</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>                   - </FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2> &nbsp; &nbsp; Accounts payable and accrued liabilities</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>         249,748 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>       233,209 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>         733,600 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>      (674,758)</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2> &nbsp; &nbsp; Interest payable</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>                 - </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>                 - </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>                 - </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>         922,500 </FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2> &nbsp; &nbsp; Customer deposit</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>                 - </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>                 - </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>           25,597 </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>        (65,455)</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><hr></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><hr></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><hr></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=18>
<FONT SIZE=2><hr></FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=19>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=19>
<FONT SIZE=2><P ALIGN=RIGHT>$    (230,901)<hr size=3 noshade></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=19>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=19>
<FONT SIZE=2><P ALIGN=RIGHT>$       59,663 <hr size=3 noshade></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=19>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=19>
<FONT SIZE=2><P ALIGN=RIGHT>$    (392,483) <hr size=3 noshade></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=19>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=19>
<FONT SIZE=2><P ALIGN=RIGHT>$    (454,431) <hr size=3 noshade></FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="BOTTOM" HEIGHT=19>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=19>
<FONT SIZE=2><P ALIGN=RIGHT>   </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=19>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=19>
<FONT SIZE=2><P ALIGN=RIGHT>   </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=19>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=19>
<FONT SIZE=2><P ALIGN=RIGHT>   </FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=19>
<FONT SIZE=2><P ALIGN=RIGHT>&nbsp;</FONT></TD>
<TD WIDTH="13%" VALIGN="BOTTOM" HEIGHT=19>
<FONT SIZE=2><P ALIGN=RIGHT>   </FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">F-11</P>
<P ALIGN="CENTER">-12-</P>
<page>
<hr>


<B><P>&nbsp;</P>
<P>ITEM 2. &nbsp; &nbsp; MANAGEMENTS DISCUSSION AND ANALYSIS</P>
<P>Forward Looking Statements</P>
</B><P ALIGN="JUSTIFY">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-KSB for the year ended December 31, 2005. Except for the description of historical facts contained herein, the Form 10-QSB 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.</P>
<B><P>Critical Accounting Policies</P>
</B><P ALIGN="JUSTIFY">The preparation of our financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reported periods. Actual results may differ from these estimates under different assumptions or conditions. We believe the accounting polices that are most critical to our financial condition and results of operations and involve management's judgment and/or evaluation of inherent uncertain factors are as follows: </P><DIR>
<DIR>

<B><I><P ALIGN="JUSTIFY">Basis of Presentation.</B></I> The financial statements have been prepared on the going concern basis, which assumes the realization of assets and liquidation of liabilities in the normal course of operations. If the Company were not to continue as a going concern, it would likely not be able to realize on its assets at values comparable to the carrying value or the fair value estimates reflected in the balances set out in the preparation of the financial statements. As described in note 1 to the interim financial statements, at September 30, 2006, there are certain conditions that exist which raise substantial doubt about the validity of this assumption. The Company's ability to continue as a going concern is dependent upon continued financial support of its creditors and its ability to obtain financing to repay its current obligations and fund working capital and its ability to achieve profitable operations. The Company will seek to obtain creditors consent to delay repayment of its outstanding promissory notes payable until it is able to replace this financing with funds generated from operations, replacement debt or from equity financing 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. Management plans to obtain financing through the issuance of additional debt, the issuance of shares on the exercise of options and warrants and through future common share private placements. Management hopes to realize sufficient sales in future years to achieve profitable operations. Failure to achieve management's plans may result in the Company curtailing operations or writing assets and liabilities down to liquidation values, or both. &nbsp;</P></DIR>
</DIR>
<P>&nbsp;</P>
<P ALIGN="CENTER">-13-</P>
<page>
<hr>


<DIR>
<DIR>

<B><I><P ALIGN="JUSTIFY">Inventories.</B></I> Inventories are recorded at the lower of cost, determined on a weighted average cost basis, and net realizable value. Net realizable value reflects the current estimated net selling price or value in use of the item in inventory in a non-forced sale. The Company assesses the need for inventory write-downs based on its assessment of the estimated net realizable value using assumptions about future demand and market conditions. When the results of these assumptions differs from the Company's projections, an additional inventory write-down may be required.</P>
<B><I><P ALIGN="JUSTIFY">Options and warrants issued in consideration for debt.</I> </B>The Company allocates the proceeds received from long term 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. Options and warrants are valued using an option pricing model which requires estimates of the expected lives of the awards, volatility, risk-free interest rates and dividend rates. Changes in these assumptions will impact the allocation of the consideration, including the amounts ultimately charged against income as interest expense.</P>
<B><I><P ALIGN="JUSTIFY">Revenue recognition.</B></I> The Company recognizes sales revenue at the time of delivery when title has transferred to the customer, persuasive evidence of an arrangement exists, the fee is fixed and determinable and the sales proceeds are collectible. Provisions are recorded for product returns based on historical experience. Sales revenue, in transactions for which the Company does not have sufficient historical experience, are recognized when the return privilege period has expired. Changes in sales terms could materially impact the extent and timing of revenue recognition.</P></DIR>
</DIR>

<B><P>Results of Operations</P>
</B><P ALIGN="JUSTIFY">Management is focusing the majority of its efforts on introducing and marketing its line of medication reminders and compliance systems to the health management industry. ALRT Med Reminders are being marketed and sold directly to disease management companies, health insurance providers, pharmaceutical manufacturers, retail pharmacy chains and to organizations representing specific therapeutic categories. The Company is first targeting customers located in United States because of market potential but has also established selling operations/agreements for sales and distribution in Canada, Europe, Australia and South America.</P>
<P ALIGN="JUSTIFY">Contracts with companies that will provide selling support to medical supply companies and health services providers as well as contracts with companies that sell directly to institutions and large medical practices were completed in 2004. Additional contracts are planned for as the Company completes development of its home health monitoring system. The Company will also utilize advertising/promotion and publicity activities to pharmaceutical manufacturers, contract research organizations, independent pharmacies and consumers.</P><DIR>
<DIR>

<B><P ALIGN="JUSTIFY">Sales revenue</B> was $17,756 in the quarter ended September 30, 2006 and $236,108 for the nine months ended September 30, 2006 as compare to $11,081 in the quarter ended September 30, 2005 and $313,017 during the nine months ended September 30, 2005. The decrease in sales is mainly due to the Company's decision to phase out older generation of its products and concentrate its effort to develop ALRT500.&nbsp;</P></DIR>
</DIR>
<P>&nbsp;</P>
<P ALIGN="CENTER">-14-</P>
<page>
<hr>


<B><P ALIGN="JUSTIFY">&nbsp;</P><DIR>
<DIR>

<P ALIGN="JUSTIFY">Development costs </B>were $124,879 in the quarter ended September 30, 2006 and $332,281 for the nine months ended September 30, 2006 from $128,424 in the third quarter of 2005 and $281,438 for the nine months ended September 30, 2005. Development costs incurred in the nine months ended September 30, 2006 related to the allocation of additional programming resources required for the development of the ALRT500 LCD (Liquid Crystal Display) Med Reminders and the ALRT Interactive Response System (AIRS). Development costs for the quarter and nine months ended September 30, 2006 include $Nil and $89,427 respectively of non-cash compensation costs related to options issued for services in the period. </P>
<B><P ALIGN="JUSTIFY">Interest expense </B>was $218,578 for the quarter ended September 30, 2006 and $570,785 for the nine months ended September 30, 2006 as compared with $150,796 for the quarter ended September 30, 2005 and $638,622 for the nine months ended September 30, 2005. During the quarter and nine months ended September 30, 2006, the Company incurred non-cash interest expense of $62,109 and $105,740 respectively being options issued in consideration for promissory notes payable. Interest expense for the quarter and nine months ended September 30, 2005, included non-cash interest expense of $7,946 and $85,231 respectively. The Company continues to rely on debt financing and cost to obtain extensions on debt obligations.</P>
<B><P ALIGN="JUSTIFY">Professional fees </B>were $13,737 for the quarter ended September 30, 2006 and $71,786 for the nine months ended September 30, 2006 as compared with $18,947 and $91,612 for the comparable periods in 2005. Fees were lower in the third quarter of 2006 primarily due to lower accounting services obtained in the period.</P>
<B><P ALIGN="JUSTIFY">The selling, general and administrative expenses </B>were $212,521 for the quarter ended September 30, 2006 and $909,576 for the nine months ended September 30, 2006 as compared to $160,080 and $461,537 for the comparable periods in 2005. Included in selling, general and administrative expenses was $54,398 for the quarter ended September 30, 2006 and $438,736 for the nine months ended September 30, 2006, relating to options issued in exchange for services as compared to $21,100 for the quarter ended September 30, 2005 and $116,828 for the nine months ended September 30, 2005. The increase relates primarily to the options issued previously for services were vested during the nine months ended September 30, 2006.</P>
<B><P ALIGN="JUSTIFY">The loss </B>of $565,657 for the quarter ended September 30, 2006 and $1,739,490 during the nine months ended September 30, 2006 increased from a loss of $472,130 and $1,267,347 for the comparable periods in 2005. The largest component of this increase was due to increase in non-cash interest and compensation costs related to options previously issued for product development and services were vested during the nine months ended September 30, 2006.</P></DIR>
</DIR>

<B><P>Liquidity and Capital Resources</P>
<I><P>Cash Balances and Working Capital</P>
</B></I><P ALIGN="JUSTIFY">As of September 30, 2006, the Company's cash balance was $1,527 compared to $8,681 at June 30, 2006, $92 as at March 31, 2006 and $263 as at December 31, 2005. As of September 30, 2006, the Company had a working capital deficiency of $8,832,232 as compared to a working capital deficiency of $7,728,425 as at December 31, 2005.</P>
<B><P>&nbsp;</P>
</B><P ALIGN="CENTER">-15-</P>
<page>
<hr>

<B><P>&nbsp;</P>
<P>Short and Long Term Liquidity</P>
</B><P ALIGN="JUSTIFY">As at September 30, 2006, the Company does not have the current financial resources and committed financing to enable it to meet its overheads, purchase commitments and debt obligations over the next 12 months.</P>
<P ALIGN="JUSTIFY">All of the Company's debt financing is either due on demand or has a maturity date of less than one year. 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. 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.</P>
<B><P>Cash Used in Operating Activities</P>
</B><P ALIGN="JUSTIFY">Cash used by the Company in operating activities during the quarter and nine months ended September 30, 2006 were $230,901 and $392,483 as compared with $59,663 cash generated in the third quarter of 2005 and $454,431 cash used during the nine months ended September 30, 2005. The decrease in cash used in operations relates primarily to decrease in cash amounts paid to debt-holders.</P>
<B><P>Cash Proceeds from Financing Activities</P>
</B><P ALIGN="JUSTIFY">During nine months ended September 30, 2006, the Company received loans totalling $323,747 from two relatives of a director and an additional $70,000 from two unrelated parties.</P>
<B><P>Off Balance Sheet Arrangements.</P>
</B><P ALIGN="JUSTIFY">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.</P>
<B><P>ITEM 3. &nbsp; &nbsp; CONTROLS AND PROCEDURES</P>
<P ALIGN="JUSTIFY">(a) <I>Evaluation of Disclosure Controls and Procedures:</B></I> Disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time period specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports filed under the Exchange Act is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon and as of the date of that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports our files and submits under the Exchange Act is recorded, processed, summarized and reported as and when required. </P>
<P ALIGN="CENTER">-16-</P>
<page>
<hr>

<B><P ALIGN="JUSTIFY">(b) <I>Changes in Internal Control over Financial Reporting:</B></I> There were no changes in our internal control over financial reporting identified in connection with our evaluation of these controls as of the end of the period covered by this report that have affected those controls subsequent to the date of the evaluation referred to in the previous paragraph, including any correction action with regard to deficiencies and material weakness. </P>
<P ALIGN="JUSTIFY">There were no changes in our internal controls or in other factors that could these controls subsequent to the date of their evaluation, including any deficiencies or material weaknesses of internal controls that would require corrective action. </P>
<B><P>&nbsp;</P>
<P ALIGN="CENTER">PART II - OTHER INFORMATION</P>
<P>ITEM 1. &nbsp; &nbsp; LEGAL PROCEEDINGS</P>
</B><P>There were no legal proceedings in the quarter except as disclosed in Note 6.</P>
<B><P>ITEM 2. &nbsp; &nbsp; CHANGES IN SECURITIES</P>
</B><P>There were no changes in securities.</P>
<B><P>ITEM 3. &nbsp; &nbsp; DEFAULTS UPON SENIOR SECURITIES</P>
</B><P>There were no defaults upon senior securities in the period.</P>
<B><P>ITEM 4. &nbsp; &nbsp; SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS.</P>
</B><P>No matters were submitted to security holders for a vote during the period.</P>
<B><P>ITEM 5. &nbsp; &nbsp; OTHER MATTERS</P>
</B><P>None</P>
<B><P>ITEM 6. &nbsp; &nbsp; EXHIBITS</P>
</B><P>The following Exhibits are attached hereto:</P>
<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH=680>
<TR><TD WIDTH="16%" VALIGN="TOP">
<B><P>Exhibit No.<hr size=3 noshade></B> </TD>
<TD WIDTH="84%" VALIGN="TOP">
<B><P>Document Description<hr size=3 noshade></B> </TD>
</TR>
<TR><TD WIDTH="16%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="84%" VALIGN="TOP">
<P>&nbsp;</TD>
</TR>
<TR><TD WIDTH="16%" VALIGN="TOP" HEIGHT=49>
<P>31.1</TD>
<TD WIDTH="84%" VALIGN="TOP" HEIGHT=49>
<P>Certification of Principal Executive Officer and Principal Financial Officer pursuant to Rule 13a-15(a) and Rule 15d-15(a), promulgated under the Securities Exchange Act of 1934, as amended.</TD>
</TR>
<TR><TD WIDTH="16%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="84%" VALIGN="TOP">
<P>&nbsp;</TD>
</TR>
<TR><TD WIDTH="16%" VALIGN="TOP" HEIGHT=46>
<P>32.1</TD>
<TD WIDTH="84%" VALIGN="TOP" HEIGHT=46>
<P>Certification of Chief Executive Officer and Chief Financial Officer Pursuant To 18 U.S.C. Section 1350, as adopted pursuant to Section 302 Of The Sarbanes-Oxley Act of 2002.</TD>
</TR>
</TABLE>

<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">-17-</P>
<page>
<hr>


<B><P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">SIGNATURES</P>
</B><P>In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on this 13<SUP>th</SUP> day of November, 2006.</P>
<P ALIGN="CENTER"><CENTER><TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH=680>
<TR><TD WIDTH="44%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="56%" VALIGN="TOP" COLSPAN=2>
<B><P>ALR TECHNOLOGIES INC.</B></TD>
</TR>
<TR><TD WIDTH="44%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="56%" VALIGN="TOP" COLSPAN=2>
<P>(Registrant)</TD>
</TR>
<TR><TD WIDTH="44%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="56%" VALIGN="TOP" COLSPAN=2>
<P>&nbsp;</TD>
</TR>
<TR><TD WIDTH="44%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="5%" VALIGN="TOP">
<P>BY:</TD>
<TD WIDTH="51%" VALIGN="TOP">
<U><P>SIDNEY CHAN</U></TD>
</TR>
<TR><TD WIDTH="44%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="5%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="51%" VALIGN="TOP">
<P>Sidney Chan, Chairman, Chief Executive Officer and a member of the Board of Directors</TD>
</TR>
<TR><TD WIDTH="44%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="5%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="51%" VALIGN="TOP">
<P>&nbsp;</TD>
</TR>
<TR><TD WIDTH="44%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="5%" VALIGN="TOP">
<P>BY:</TD>
<TD WIDTH="51%" VALIGN="TOP">
<U><P>STANLEY CRUITT</U></TD>
</TR>
<TR><TD WIDTH="44%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="5%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="51%" VALIGN="TOP">
<P>Stanley Cruitt, President and a Member of the Board of Directors</TD>
</TR>
</TABLE>
</CENTER></P>

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<P ALIGN="CENTER">-18-</P>
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<DOCUMENT>
<TYPE>EX-31.1
<SEQUENCE>2
<FILENAME>exh311.htm
<DESCRIPTION>EXHIBIT 31.1
<TEXT>
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<TITLE>Exhibit 31.1</TITLE>
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<FONT SIZE=3><P>Exhibit 31.1</P>

<B><P ALIGN="CENTER">SARBANES-OXLEY SECTION 302(a) CERTIFICATION </P>

<P>Principal Executive Officer and Principal Financial Officer</P>
</B>
<P>I, Sidney Chan, certify that: </P>
<DIR>
<DIR>

<P>1. &nbsp; I have reviewed this <B>10-QSB for the period ending September 30, 2006</B>, of ALR Technologies Inc..; </P>

<P>2. &nbsp; Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;</P>

<P>3. &nbsp; Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;</P>

<P>4. &nbsp; The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: </P>
<DIR>
<DIR>

<P>a. &nbsp; Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;</P>

<P>b. &nbsp; Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;</P>

<P>c. &nbsp; Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and</P>

<P>d. &nbsp; Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and </P>
</DIR>
</DIR>
</DIR>

<P>5. &nbsp; The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): </P>
<DIR>
<DIR>

<P>a. &nbsp; All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and</P>

<P>b. &nbsp; Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. </P>
</DIR>
</DIR>
</DIR>
</FONT>
<P ALIGN=CENTER><TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH=700>
<TR><TD WIDTH="53%" VALIGN="TOP">
<FONT SIZE=3><P>Date: &nbsp; &nbsp; November 13, 2006</FONT></TD>
<TD WIDTH="47%" VALIGN="TOP">
<U><FONT SIZE=3><P>SIDNEY CHAN</U></FONT></TD>
</TR>
<TR><TD WIDTH="53%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="47%" VALIGN="TOP">
<FONT SIZE=3><P>Sidney Chan, Principal Executive Officer and Principal Financial Officer</FONT></TD>
</TR>
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<FONT SIZE=3></FONT>

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<TYPE>EX-32.1
<SEQUENCE>3
<FILENAME>exh321.htm
<DESCRIPTION>EXHIBIT 32.1
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<P>Exhibit 32.1</P>

<P>&nbsp;</P>
<B><P ALIGN="CENTER">CERTIFICATION PURSUANT TO<br>
18 U.S.C. Section 1350,<br>
AS ADOPTED PURSUANT TO<br>
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002</P>
</B>
<P>&nbsp;</P>
<P>In connection with the Quarterly Report of<B> ALR TECHNOLOGIES INC.</B> (the "Company") on Form 10-QSB for the period ended <B>September 30, 2006</B> as filed with the Securities and Exchange Commission on the date here of (the "report"), I, Sidney Chan, Chief Executive Officer and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:</P>
<DIR>
<DIR>


<P>1. &nbsp; The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and</P>

<P>2. &nbsp; The information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Company.</P>

<P>&nbsp;</P></DIR>
</DIR>

<P>Dated this 13<SUP>th</SUP> day of November, 2006.</P>

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<TD WIDTH="54%" VALIGN="TOP">
<U><P>SIDNEY CHAN</U></TD>
</TR>
<TR><TD WIDTH="46%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="54%" VALIGN="TOP">
<P>Sidney Chan</TD>
</TR>
<TR><TD WIDTH="46%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="54%" VALIGN="TOP">
<P>Chief Executive Officer and Chief Financial Officer</TD>
</TR>
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