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1. Basis of Presentation, Nature of Operations and Going Concern
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3 Months Ended |
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Mar. 31, 2012
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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 December 28, 1998, the
Company changed its name to ALR Technologies Inc. The
Company has developed a line of medication compliance
reminder devices and compliance monitoring systems that
will assist people with taking their medications and
treatments on time and allow for health care professionals
to remotely monitor and intervene as necessary if a person
is noncompliant. On October 17, 2011 the Company announced
that it had received 510(k) clearance from the United
States Food and Drug Administration for its
Health-e-Connect (HeC) System. The Company is currently in
preparation for the commercial launch of its HeC
System.
These
condensed consolidated financial statements have been
prepared in accordance with accounting principles generally
accepted in the United States of America (“U.S.
GAAP”) on a going-concern basis, which presumes the
realization of assets and the discharge of liabilities and
commitments in the normal course of operations for the
foreseeable future.
Several
adverse conditions cast substantial doubt on the validity
of this assumption. The Company has incurred
significant losses over the three month period ended March
31, 2012 and 2011 of $803,265 and $1,965,771,
respectively. In addition, losses incurred for
the years ended December 31, 2011 and 2010 were $5,276,669
and $2,075,128 respectively. As of March 31, 2012, the
Company is currently unable to self-finance its operations,
has a working capital deficit of $11,512,582 ($10,983,062
at December 31, 2011), an accumulated stockholders’
deficit of $11,512,582 ($10,983,062 at December 31, 2011),
limited resources, no source of operating cash flow, and no
assurance that sufficient funding will be available to
conduct continued product development activities required.
If the Company is able to finance its required product
development activities, there is no assurance the
Company’s current projects will be commercially
viable or profitable. The Company has debts
comprised of accounts payable, advances, interest, lines of
credit and promissory notes payable totalling $11,535,868
currently due, due on demand or considered delinquent.
There is no assurance that the Company will not face legal
action from creditors regarding delinquent accounts
payable, payroll payable, advances, promissory notes and
interest payable. Any one or a combination of these above
conditions could result in the failure of the business and
cause the Company to cease operations.
The
Company’s ability to continue as a going-concern is
dependent upon the continued financial support of its
creditors and its ability to obtain financing to fund
working capital and overhead requirements, fund the
development of the Company’s product line and
ultimately, the Company’s ability to achieve
profitable operations and repay overdue obligations.
Management has obtained short-term financing from related
parties through lines of credit facility with available
borrowing up to $4.5 million (As of March 31, 2012 the
total balance outstanding was $2,930,122). The resolution
of whether the Company is able to continue as a going
concern is dependent upon the realization of
management’s plans. If additional financing is
required, the Company plans to raise needed capital through
the exercise of share options and by future common share
private placements. There can be no assurance that the
Company will be able to raise any additional capital from
the sources described above, or that the lender in the line
of credit arrangement will maintain the availability of
borrowing from the line. If management is unsuccessful in
obtaining short-term financing or achieving long-term
profitable operations, the Company will not be able to
continue operations.
All
of the Company’s debt is either due on demand or is
in default and is now due on demand and continues to accrue
interest at its stated rates. Certain overdue creditors
have demanded repayment and have not yet been repaid by the
Company as there is no cash available to make the
repayments. The Company will make the necessary repayments
when funds are generated and available from operations or
from equity financings through private placements. While
some of the Company’s creditors have agreed to extend
repayment deadlines in the past, there is no assurance that
they will continue to do so in the future. In the past,
creditors have successfully commenced legal action against
the Company to recover debts outstanding. In those
instances, the Company was able to obtain financing from
related parties to cover the verdict or settlement;
however, there is no assurance that the Company would be
able to obtain the same financing in the future. If the
Company is unsuccessful in obtaining financing to cover any
potential verdicts or settlements, the Company could be
required to cease operations.
The
Company’s activities will necessitate significant
uses of working capital beyond 2012. Additionally, the
Company’s capital requirements will depend on many
factors, including the success of the Company’s
continued product development and distribution efforts. The
Company plans to continue financing its operations with the
line of credit it currently has available.
While
the Company strongly believes that its capital
resources will be sufficient in the near term, there
is no assurance that the Company’s activities will
generate sufficient revenues to sustain its operations
without additional capital, or if additional capital is
needed, that such funds, if available, will be obtainable
on terms satisfactory to the Company.
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