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1. Basis of Presentation, Nature of Operations and Going Concern
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6 Months Ended |
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Jun. 30, 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
unaudited 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 six month period ended June 30,
2012 and 2011 of $3,888,374 and $3,327,728 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 June 30, 2012, the Company is currently unable to
self-finance its operations, has a working capital deficit of
$12,134,941 ($10,983,062 at December 31, 2011), an
accumulated stockholders’ deficit of $12,134,941
($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 $12,150,826 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
June 30, 2012 the total balance outstanding was $3,768,397).
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 of 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 product launch 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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