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1. Basis of Presentation, Nature of Operations and Going Concern
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12 Months Ended |
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Dec. 31, 2011
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| Basisof Presentation Natureof Operationsand Going Concern |
1. Basis
of Presentation, Nature of Operations and Going
Concern
ALR
Technologies Inc. (the “Company”) was
incorporated under the laws of the state of Nevada on March
24, 1987 as Mo Betta Corp. On October 21, 1998 the Company
acquired a subsidiary, which was subsequently disposed of,
through a reverse take-over acquisition. On December 28,
1998, the Company changed its name to ALR Technologies Inc.
On April 15, 2008, the Company incorporated a wholly-owned
subsidiary in Canada under the name Canada ALRTech Health
Systems Inc.The Company has developed a line of medication
compliance reminder devices and compliance monitoring
systems that will assist people with taking their
medications and treatments on time and allow for health
care professionals to remotely monitor and intervene as
necessary if a person is noncompliant. On October 17, 2011
the Company announced that it had received 510(k) clearance
from the United States Food and Drug Administration for its
Health-e-Connect (HeC) System. The Company is currently
assessing the marketplace for its product in preparation
for its commercial launch.
These
consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in
the United States of America (“U.S. GAAP”) on a
going-concern basis, which presumes the realization of
assets and the discharge of liabilities and commitments in
the normal course of operations for the foreseeable future.
Several adverse conditions cast substantial doubt on the
validity of this assumption. The Company has
incurred significant losses over the past several fiscal
years (2011 - $5,276,669;
2010 - $2,075,129), is currently unable to self-finance its
operations, has a working capital deficit of $10,983,062
(2010 - $8,613,509), accumulated deficit of $37,532,066
(2010 - $32,255,397), limited resources, no source of
operating cash flow, and no assurance that sufficient
funding will be available to conduct continued product
development activities. If the Company is able to finance
its required product development activities, there is no
assurance the Company’s current projects will be
commercially viable or profitable. The Company
has debts comprised of accounts payable, payroll payable,
advances, interest, lines of credit and promissory notes
payable totaling $10,997,680 currently due, due on demand
or considered delinquent. There is no assurance that the
Company will not face additional legal action from
creditors regarding delinquent accounts payable, payroll
payable, advances, promissory notes and interest payable.
Any one or a combination of these above conditions could
result in the failure of the business and cause the Company
to cease operations
The
Company’s ability to continue as a going-concern is
dependent upon the continued financial support of its
creditors and its ability to obtain financing to fund
working capital and overhead requirements, fund the
development of the Company’s product line and
ultimately, the Company’s ability to achieve
profitable operations and repay overdue obligations.
Management has obtained short-term financing from related
parties through lines of credit facilities with available
borrowing up to $4.5 million (As of December 31, 2011 the
total balance outstanding was $2,812,166). The resolution
of whether the Company is able to continue as a going
concern is dependent upon the realization of
management’s plans. If additional financing is
required, the Company plans to raise needed capital through
the exercise of share options and by future common share
private placements. There can be no assurance that the
Company will be able to raise any additional debt or equity
capital from the sources described above, or that the
lenders in the line of credit arrangements will maintain
the availability of borrowing from the line. If management
is unsuccessful in obtaining short-term financing or
achieving long-term profitable operations, the Company will
be required to cease operations.
All
of the Company’s debt is either due on demand or is
in default and is now due on demand, while continuing to
accrue interest at its stated rate. The Company will seek
to obtain creditors’ consents to delay repayment of
the outstanding promissory notes payable and related
interest thereto, until it is able to replace this
financing with funds generated by operations,
recapitalization with replacement debt or from equity
financings through private placements. While some of the
Company’s creditors have agreed to extend repayment
deadlines in the past, there is no assurance that they will
continue to do so in the future. In the past, creditors
have successfully commenced legal action against the
Company to recover debts outstanding. In those instances,
the Company was able to obtain financing from related
parties to cover the verdict or settlement; however, there
is no assurance that the Company would be able to obtain
the same financing in the future. If the Company is
unsuccessful in obtaining financing to cover any potential
verdicts or settlements, the Company will be required to
cease operations.
The
Company’s activities will necessitate significant
uses of working capital beyond 2012. Additionally, the
Company’s capital requirements will depend on many
factors, including the success of the Company’s
continued product development and distribution efforts. The
Company plans to continue financing its operations with the
lines of credit it has available.
While
the Company strongly believes that its capital
resources will be sufficient in the near term, there
is no assurance that the Company’s activities will
generate sufficient revenues to sustain its operations
without additional capital or if additional capital is
needed, that such funds, if available, will be obtainable
on terms satisfactory to the Company.
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