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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, 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 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 compliance
monitoring system that will allow for health care
professionals to remotely monitor patient health conditions
and provide patient health management. On October 17, 2011
the Company announced that it had received Section 510(k)
clearance from the United States Food and Drug Administration
for its Health-e-Connect 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 (2012 - $8,328,660; 2011 - $5,276,669), is currently
unable to self-finance its operations, has a working capital
deficit of $12,469,812 (2010 - $10,983,062), accumulated
deficit of $45,860,727 (2011 - $37,532,065), 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 $12,497,723 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 $6 million (As of
December 31, 2012 the total balance outstanding was
$4,534,287). 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 2013. 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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