UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549




FORM
10-K




ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934




For the
fiscal year ended December 31, 2008


Commission
file number 000-30414




ALR TECHNOLOGIES
INC.


(Exact
Name of Registrant as Specified in its Charter)




Nevada
            
            88-0225807(State
      of Incorporation)
            
            (I.R.S.
      Employer Identification No.)3350,
      Riverwood Parkway.Suite
      1900Atlanta,
      Georgia
            
            30339(Address
      of Principal Executive Offices)
            
            (Zip
      Code)




(678)
      881-0002


(Registrant’s
telephone number, including area code)




None
            
            NoneSecurities
      Registered Pursuant to Section 12(b) of the Act
            
            Name
      of each exchange on which
registered




Securities
      Registered Pursuant to Section 12(g) of
              the
      Act: Common Stock




Indicate
      by check mark if the registrant is a well-known seasoned issuer, as
      defined in Rule 405 of the Securities
      Act.           Yes[
       ]
            No
      [X]




Indicate
      by check mark if the registrant is not required to file reports pursuant
      to Section 13 or 15(d) of the Exchange Act.   Yes[
       ]
            No
      [X]




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 ]  No [  ]




Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of Registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [  ]





Indicate
by check mark whether the Registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company.
(Check one):




Large
      accelerated filer [  ]
            Accelerated
      filer [  ]
            Non-accelerated
      filer [  ]
            Smaller
      reporting company [X]




Indicate
      by check mark whether the Registrant is a shell company (as defined in
      Rule 12b-2 of the Exchange Act).    Yes[
       ]
            No
      [X]









As of
March 19, 2009, the aggregate market value of the Registrant’s stock held by
non-affiliates was approximately $4,564,707 (computed by reference to the
closing sales price of the Registrant’s common stock as of March 19, 2009). For
this computation, the Registrant has excluded the market value of all shares of
common stock reported as beneficially owned by executive officers and directors
of the Registrant; such exclusion shall not be deemed to constitute an admission
that any such person is an affiliate of the Registrant.




Number of
shares of Common Stock, $0.001 par value per share, outstanding as of March 19,
2009: 76,078,446












































































































2









TABLE OF
      CONTENTSPagePART
    IItem
      1.
            Description
      of Business.
            4Item
      1A.
            Risk
      Factors.
            12Item
      2.
            Description
      of Property.
            14Item
      3.
            Legal
      Proceeding.
            14Item
      4.
            Submission
      of Matters to a Vote of Security Holders.
            14PART
      IIItem
      5.
            Market
      For Common Equity, Related Stockholder Matters and Small Business
      Issuer
            15Item
      6.
            Selected
      Financial Data
            16Item
      7.
            Management’s
      Discussion and Analysis or Plan of Operation.
            16Item
      8.
            Financial
      Statements.
            24Item
      9.
            Changes
      In and Disagreements With Accountants on Accounting and
      Financial Disclosure.
            49Item
      9A.
            Controls
      and Procedures.
            49PART IIIItem
      10.
            Directors,
      Executive Officers, Promoters, Control Persons; Compliance with
      Section 16(a) of the Exchange Act.
            51Item
      11.
            Executive
      Compensation.
            54Item
      12.
            Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters.
            56Item
      13.
            Certain
      Relationships and Related Transactions.
            58Item
      14.
            Principal
      Accountant Fees and Services.
            59PART IVItem
      15.
            Exhibits
            60











































3





PART
I






ITEM
1.     BUSINESS.






Background






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 from Mo Betta Corp. to ALR Technologies Inc.




Prior
to April 1998, the Company was inactive. In April 1998, the Company changed its
business purpose to marketing a pharmaceutical compliance device which was owned
by A Little Reminder (ALR) Inc. (“ALR”).




On
October 21, 1998, the Company entered into an agreement with ALR whereby the
Company would have the non-exclusive right to distribute certain products of ALR
described below.




In
April 1999, the Company acquired 99.9% (36,533,130) of the issued and
outstanding Class A shares of common stock of ALR in exchange for 36,533,130
shares of the Company’s common stock thereby making ALR a subsidiary corporation
of the Company. ALR also had outstanding 124,695 shares of Class B common stock,
none of which was owned by the Company.




ALR
was incorporated pursuant to the Company Act of British Columbia on May 24,
1996. ALR continued its jurisdiction under the laws of Canada on September 23,
1996 and to the State of Wyoming on July 31, 1998.




ALR
owned one subsidiary corporation, Timely Devices, Inc. (“TDI”). TDI was founded
in Edmonton, Alberta, Canada on July 27, 1994. ALR owns all of the total
outstanding shares of TDI. TDI had only one class of common stock outstanding.
On July 31, 2000, the Company sold all of its shares of ALR. As a result of this
sale, the Company is no longer using the technology that was used by its
previously owned subsidiaries and does not have any assembly capability. The
Company now does its own marketing and has designed products based on new
technology. The manufacturing and assembling of these products has been
contracted out.




In
December 1998, the common shares of the Company began trading on the Bulletin
Board operated by the National Association of Securities Dealers Inc. under the
symbol “MBET.” Subsequently the symbol was changed to “ALRT.”




On
April 15, 2008, the Company incorporated a wholly-owned subsidiary in Canada
under the name Canada Alrtech Health Systems Inc.





4


Products





The
Company has developed a compliance and healthcare progress monitoring system and
a line of medication compliance reminder devices 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 for non-compliant
patients.  The primary target market is the healthcare professional to
provide a comprehensive patient compliance system for their patients with
chronic disease or at risk for developing chronic disease.  Also
targeted are self-insured corporations to provide the compliance monitoring to
their employees with chronic conditions. Secondary markets exist for vision care
and contact lens replacement reminders, reminders for vitamins, nutrition and
weight management programs and reminders for medications for companion
animals.





The
primary business development focus for the Company is its proprietary ALRT
Health-E-Connect SystemTM health management compliance monitoring system
that contains several independent features that can be combined or used
independently depending on the specific need for a disease population
group.





The
comprehensive system, the ALRT
Health-E-Connect SystemÔ
allows health care professionals to program compliance reminders for patients
with chronic conditions such as diabetes, COPD and other disease
states.  The compliance reminders can be in the form of text alerts on
the Constant Health
CompanionÔcompliance reminder
product or via text messages on the patients cell phone or email
alerts.  The health professional can also monitor the patient’s
compliance with medications, treatments or with the use of diagnostic readings
from the glucometers and other equipment. The ALRT Health-E-Connect
SystemTM,
the unique software system that provides communications links and remote
monitoring for health professionals or caregivers to utilize, also allows for
services from physicians that health insurance payers reimbursement the
physicians for.





Constant Health
CompanionTM(CHC)





The
Company has developed the CHC with the intent of adding to our reminder system a
feature for giving specific instructions.  Thus, the
actions/medications that need to be taken at a specific time will be displayed
on the LCD screen.  With the enhancements allowing for the remote
monitoring of compliance data and diagnostic data now complete the full
commercial introduction will be first quarter of 2008. This model is PC
programmable and contains a LCD display. Additional memory will allow the
Reminder to store the list medications used by the patient and an emergency
contact list. The product users can also be subscribed to the home monitoring
system that allows registered recipients to monitor compliance.  The
product saves a compliance profile of the patient for up to 12
months.





Other
primary features include:


-
                PC
      programmable, easy to set, easy to use-
                Reminds
      with audio beeping sound and displays actions to take on LCD
      screen-
                Reminder
      selection: daily, 48 hour, weekly, etc.-
                Retains
      database of key contacts, phone numbers, medication details,
      etc.-
                Saves
      up to one year of compliance data-
                Language
      selection; English, French, Portuguese, Spanish-
                Digital
      clock-
                Serial
      and USB capable-
                Clip
      for carrying on belt, and stand for setting on shelf or
      counter-
                12-Month
      Warranty-
                Low
      battery indicator; replaceable batteries included-
                Dimensions:
      3 11/16 inch by 2 3/8 inch by 11/16 inch in
  depth





5




The
monitoring capabilities with the CHC have been in pilot testing for more than
two years and commercial introduction will commence in the second quarter of to
coincide with the introduction of the CHC. In addition to the reminder
capability of the CHC, this system will provide the additional feature of
allowing for the remote monitoring of reminder acknowledgments. This feature
will enable a treatment center or other caregiver to intervene if it is deemed
that the patient is not taking their medications as prescribed. The Home
Monitoring System will also allow a treatment center and other health care
professionals to remotely change a patient’s reminder timing and/or the
actions/doses/medications to take at the time of each reminder. This interactive
system was designed and developed in response to the needs of patients with
special and critical needs, such as heart disease patients, organ transplant
recipients, cancer patients, severe diabetics, HIV patients and patients with
other chronic diseases.  Busy lifestyle and complex medications or
disease management regimen contribute greatly to a person’s
non-compliance.  Benefits include the following:





-
              Reminds
      patient when to take medications-
              Displays
      the medications or actions to take at the time of each
      reminder-
              Saves
      up to one year of compliance data-
              Easy
      to retrieve and determine level of compliance-
              Insurance
      provider can base co-pay or insurance premium on level of
      compliance-
              Improved
      compliance may result in hundreds or thousands of dollars in cost savings
      eachyear
      per patient-
              Users
      of the CHC can subscribe, or the insurance provider subscribes the user to
      themonitoring
      service-
              The
      patient, caregiver and/or insurance provider could retrieve the data after
      a set period of time to determine the patient’s level of
      compliance-
              Compliance
      can be checked regularly to assess how well certain medication approaches
      are working-
              Medication
      co-pays can be determined by the plan members compliance grade
      achieved;-
              either
      less co-pay if graded compliant; and-
              or
      more co-pay if graded noncompliant-
              CHC
      is PC programmable, easy to set, easy to use-
              Can
      be set by the patient, care-giver, or a disease management company
      and-
              Can
      be set and mailed to the
patient





6





ALALRT Health-E-Connect
      SystemTM
      for Diabetes Monitoring
                  
                  The
      ALRT
      Health-E-Connect SystemTM
      for diabetes monitoring is designed to complement the Company’s Constant
      Health CompanionTM(CHC) patient
      compliance system.  The System is a communications software
      platform that will enable health professionals to remotely monitor the
      health progress specifically relating to diabetic patients. This will
      facilitate more effective and timely communication of care to these
      patients.
                  
                  Diabetes
      is a leading cause of death, serious illness and disability across North
      America.  In the United States, it is estimated that 21 million
      people have diabetes and an additional 54 million Americans have
      pre-diabetes.  The Canadian Diabetes Association estimates that
      currently over 2 million Canadians have diabetes and this number is
      expected to rise to 3 million by the end of the decade. Medical costs due
      to diabetes and its complications are enormous. In the United States, such
      costs are estimated to be over $130 billion a year and in Canada,
      healthcare costs associated with diabetes is $13.2 billion
      annually.
                  
                  Diabetes
      is a lifelong chronic disease with no cure.  However, diabetics
      can take steps to control their disease and reduce the risk of developing
      the associated serious complications thereby controlling healthcare
      costs.  The Canadian Diabetes Association Clinical Practice
      Guidelines Expert Committee reports that “Successful diabetes care depends
      on the daily commitment of person with diabetes mellitus to
      self-management through the balance of lifestyle and
      medication.  Diabetes care should be organized around a multi-
      and interdisciplinary diabetes healthcare team that can establish and
      sustain a communication network between the person with diabetes and the
      necessary healthcare and community systems.”  The Company’s
      ALRT
      Health-E-Connect SystemTM
      for diabetes monitoring provides an affordable and easy to use
      communication network as recommended by the Committee.
                  
                  The
      Company’s ALRT
      Health-E-Connect SystemTM
      adapted to the Canadian market will also be available. ERS Endocrine
      Research Inc. (“ERS”) Vancouver, Canada has conducted a pilot project and
      is now starting a clinical trial.  The system allows upload of
      data directly from glucometers for review remotely by health professionals
      and caregivers.


ALRT Health-E-Connect
SystemTM
for Respiratory Health Management





The
Company has the first and only nebulizer compressor monitoring system in the
world. This system enables physicians and caregivers to monitor the use of the
nebulizer; the time of day used and the duration of time used. This monitoring
is especially important to the millions of people who suffer from COPD and have
to take nebulized medications daily. The system consists of the CHC connected to
nebulizer models that include the connectivity and a transmission modem. The
Company has patents pending for this system. Primary benefits and features of
this system include:





7





-
              Monitors
      use of a nebulizer-
              Time
      of day used-
              Duration
      of use-
              Displays
      to the user the amount of time the nebulizer is in use-
              Gives
      alerts when patient misses a treatment-
              Makes
      compliance data available-
              Allows
      for timely intervention when needed-
              Connects
      to many types of nebulizer compressors-
              Reminds
      with audio beeping sound and displays actions to take on LCD
      screen-
              Data
      can be transmitted with the touch of a button-
              Allows
      patients and caregivers to monitor treatments, alerts for missed
      medications or not enough time using the nebulizer-
              Data
      available daily, weekly, monthly or quarterly-
              Language
      selection; English, French, Spanish-
              Digital
      clock-
              12-Month
      Warranty-
              Low
      battery indicator; replaceable batteries
  included





The
CHC connects to a custom port at the nebulizer compressor switch. The port is
very small and this system can be adapted to all types of nebulizers at minimal
cost.





The
CHC system will also provide monitoring of peak flow meters and allow for remote
monitoring of the peak flow scores from the meter by a healthcare
professional.





Benefits
of Healthcare Compliance Reminders and Monitoring





The
problem of medication non-compliance is prevalent in the United States. In March
of 2004, Medical Care
estimated that $300 billion was spent annually as a direct or indirect result of
medication non-compliance.Monitoring
compliance of disease management activities, such as treatments, medications and
diagnostic tests, allows for alerting designated parties when a patient is
noncompliant. It also facilitates intervention if the patient is deemed at risk.
Often, physicians and caregivers do not detect noncompliance until the next
medical appointment.  More timely intervention should result in
substantial health benefits to the patient and significant cost savings. The
ongoing monitoring of compliance data will also allow for evaluation of
compliance behavior over time, resulting in behavior modification or education
efforts when appropriate.





The
Company believes that its products for setting timely healthcare compliance
reminders/alerts will improve patient-compliance with doctor’s orders for taking
medications and other treatments.  Greater compliance with medication
and treatment regimens is likely to enhance the patient’s ability to realize the
full benefits.  If people do not receive the intended benefit of their
medications and health management regimens, their condition may fail to
improve.  Additional complications may develop and compromise the
patient’s health further.  This may lead to substantially increased
costs of healthcare in general.  Industry data indicate that 50% or
more of people on medications do not take them as prescribed, and that this
non-compliance contributes to 10% of hospitalizations and billions of dollars
spent annually in excessive and preventable healthcare
costs.  Reminding a person to take an action is the first step in our
system; monitoring their actions and their data is the second and intervention
when needed is the important follow-up.




8





The
Company’s comprehensive ALRT
Health-E-Connect SystemTM
is the only one currently available that combines portability, compliance
reminders, compliance monitoring and communications network for health
professionals.





Reimbursement
for Health Professionals





The
ALRT
Health-E-Connect SystemTM
allows for services to be provided by physicians that are reimbursed by health
insurance companies. The reimbursement is a breakthrough as physicians will now
be paid to provide these important new services to their patients with chronic
conditions.





Business
Development and Marketing Strategy





The
Company is focusing the majority of its efforts in introducing and marketing our
ALRT
Health-E-Connect SystemTM
and CHC system for medical clinics and health professionals to provide direct
care to patients and be reimbursed by the patients health benefit plan as well
as to health plan payers due to the significant ROI they can achieve by keeping
employees/plan members with conditions such as diabetes healthy.  To
reach these market targets we are utilizing independent sales consultants who
have relationships with the target organizations as well as developing
partnerships with health care service companies.





The
Company is first targeting customers located in United States because of the
large market potential but will also be establishing selling
operations/agreements for sales and distribution in Canada, Europe, Australia
and selected countries in Asia and South America.





Our
initial target market consists of patients with diabetes and also those with
COPD (chronic obstructive pulmonary disease).  People with conditions
such as cystic fibrosis, transplant patients, congestive heart failure, coronary
artery disease, and cancer can benefit from our system. The CHC System helps
patients remember when and how to take their medication and execute therapy
tasks. Another large market consists of healthcare provider employees such as
case-managers, nurses, and other caregivers. The CHC System reports compliance
data to caregivers, allowing them to assist their patients in following the
proper medication and therapy schedules. Finally, a current market exists for
the managers of caregivers. The CHC System helps the managers assess their
caregivers’ effectiveness in overseeing their patients.





The
Company is focusing its marketing efforts on the ALRT
Health-E-Connect SystemTM
and CHC System. Currently, the Company provides the only tool in the market that
comprehensively addresses the problem of medication non-compliance from a
multi-lateral front.  The Company’s CHC System reminds patients of
their medication regimens and therapies, provides caregivers the ability to
track the patient compliance, thereby allowing timely intervention, and provides
information to the managers to assess the caregivers effectiveness.




9





Aside
from the CHC System, the Company also offers a range of medication reminder
products addressing the issue of medication non-compliance of various medication
regimens. These medication reminder products are offered to individual patients
through pharmacies and the Internet. Pharmaceutical companies have also
purchased the devices to distribute to patients using their medications in an
effort to improve their medication compliance.





The
ALRT
Health-E-Connect SystemTM  is
low-cost, power-efficient, and the only comprehensive system on the market that
addresses the growing issue of medication non-compliance with portability and
low cost as well as the monitoring capability. Our System fills a critical gap
in the healthcare system by providing continuous oversight of patients. The Company believes that
by addressing the issue of non-compliance, the Company will help patients live
longer, healthier lives while also decreasing healthcare costs. The comprehensive
compliance data provided to caregivers will assist them in improving their
patients healthcare practices and enhance their own operating
efficiency.





The
Company has limited financial resources to mount an effective marketing program
for all of our products, but the Company is in process of developing
partnerships with two health care service companies who each will utilize their
medical dealer networks to gain usage of our system.





The
Company does not have significant international operations at this time but one
of the partnerships the Company is in negotiations with has significant
international market share.  The Company’s products are manufactured
by contract manufacturers in China. The Company plans to market internationally
in the future after the Company establishes its products adequately in the
United States.


Selling
Activities


The
Company is in negotiations with two health services companies that both have
extensive medical dealer networks and one also has significant international
operations and market share.
 
 The
Company has also commissioned agents who call on the medical industry and self
insured corporations.




Manufacturers






New
Challenge Ltd. (NC) is ALRT’s main and only manufacturer for the CHC units.
Hortek Technology Limited is ALRT’s main and only manufacturer of the CHC modem
and CHC hub. New Challenge Ltd. and Hortek Technology Limited do not have
exclusive manufacturing arrangements with ALRT. The Company is free to increase
the number of suppliers. The contract manufacturers do not have access to the
proprietary firmware code embedded in the CHC unit and the CHC modem. The modem
is FCC approved.




10




Patents
and Trademarks






The Company has the following patent applications pending:




-       
      A provisional patent application entitled Medical Reminder Device and
      Patient Case.  Management was filed on July 23, 2007. Serial
      number 60/961,452-      
      A Non-provisional Patent Application claiming the benefit of Provisional
      Patent.  Application 60/652,237 was filed on February 10, 2006.
      Title is Medical Reminder.  Device suited for use with
      Nebulizers.-      
      Provisional Patent Application serial number 60/652,237 was filed February
      11, 2005 for Medical Reminder device suited for use with
      Nebulizer.




The Company has received
      the following patents:-      
      US Patent 6,934,220 received on August 23, 2005 entitled Portable
      Programmable  Medical Alert Device.-       US
      Patent D446,740 received on August 21, 2001 for Ornamental design of
      a Medication Alert Device in the shape of a
    heart.-       US
      Patent D446,739 received on August 21, 2001 for Ornamental Design of a
      Medication Alert  Device in the shape of a dog
  bone.-       US
      Patent D4467,074 received on August 28, 2001 for Ornamental Design of a
      Medication Alert  Device in the shape of a stylized
      paw.





Competition


The
Company competes with other corporations that produce medication compliance
devices and monitoring systems, some of whom have greater financial, marketing
and other resources than we do, but none currently offer a comprehensive
compliance system that offers the full spectrum of benefits and features that
our system does.
 
 A
few companies currently offer compliance monitoring systems but as much higher
price points and with fewer benefits than our system.   Patient
compliance with medications is also being addressed with methods such as
information pamphlets, compliance packaging, as well as other forms of devices.
The devices include clocks, labels, organization systems, pagers as well as
electronic remote diagnostic monitoring systems.  None of these offer
comprehensive compliance reminders, monitoring and messaging. The health care
home monitoring opportunity has been recognized by other companies and several
are now either currently selling or are developing systems that could be
competitive with the ALRT systems. The Company does not see any competition
though in the near future against the Company’s nebulizer monitoring system. The
Company’s home monitoring systems will also be priced significantly below the
competitive products now offered.  The portability of the ALR system
will also set it apart from competition.
  11




Employees




The
Company presently contracted nine persons and they are paid as consultants, two
of whom are officers of the Company. The Company intends to hire additional
employees and consultants on an as-needed basis.






ITEM
1A.     RISK FACTORS.




Limited
History of Operations and Reliance on Expertise of Certain Persons. The
Company has a limited history of operations. The management of the Company and
the growth of the Company’s business rely on certain key individuals who may not
be easily replaced if they should leave the Company.




Market
Acceptance.The Company’s success
and growth will depend upon the Company’s ability to market its existing
products. The Company’s success may depend in part upon the market’s acceptance
of, and the Company’s ability to deliver and support its products. See “Business
- Products.”




Liquidity; Need
for Additional Financing; Going Concern Comments. The Company believes
that it will need additional cash during the next twelve months to finance
operations and to repay $12,445,689 of accounts payable and accrued liabilities
and promissory notes payable outstanding as at December 31, 2008. Assuming the
Company has no sales and is unable to sell any securities or arrange additional
debt financing, the Company believes that it can continue operations through to
the end of the second quarter of fiscal 2009. If the Company is unable to
generate a positive cash flow before its cash is depleted, it will be required
to curtail operations substantially, and seek additional capital. There is no
assurance that the Company will be able to obtain additional capital if
required, if capital is available, or to obtain it on terms favorable to the
Company. The Auditors’ Report on the Company’s consolidated financial statements
for the year ended December 31, 2008 includes an explanatory paragraph that
states that the Company has suffered recurring losses, negative cash flow from
operations and has a net working capital deficiency at December 31, 2008,
factors which raise substantial doubt about the Company’s ability to continue as
a going concern. The consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty.




Technology
Risk. The Company and its competitors utilize different applications of
known technology. Should a competitor develop a technological breakthrough that
cannot be adapted to the Company’s systems or develop a more effective
application of existing technology, the Company’s products would be at risk of
becoming obsolete.











12




Competition.
Some of the Company’s competitors may have substantially greater financial,
technical and marketing resources than the Company. In addition, the Company’s
products compete indirectly with numerous other products. The Company’s products
compete with clocks, pagers, labels and information systems, all of which,
indirectly, remind a person to take his medication. As the markets for the
Company’s products expand, the Company expects that additional competition will
emerge and that existing competitors may commit more resources to those
markets.




Product
Defects. In the event any of the Company’s products prove defective, the
Company may be required to redesign or recall products. While the Company has
not had a recall to date, a redesign or recall could cause the Company to incur
significant expenses, disrupt sales and adversely affect the reputation of the
Company and its products, any one or a combination of which could have a
material adverse affect on the Company’s financial performance.




Product
Reliability. The Company’s disease management medication compliance and
monitoring products have not been in service for a sufficient time to determine
their long term reliability. Failure of a substantial number of the Company
products would result in severe damage to the Company reputation.




Patents and
Trademarks. The Company has applied for certain patents and trademarks.
While the Company believes that patent rights are important and will protect the
Company’s proprietary rights in the patented technologies, there can be no
assurance that any future patent application will ultimately mature as an issued
patent, or that any present or future patents of the Company will prove valid or
provide meaningful protection from competitors. See “Business - Patents and
Trademarks.”




Reliance upon
Directors and Officers. The Company is largely dependent, at the present,
upon the personal efforts and abilities of its officers and directors. See
“Business” and “Management.”




Issuance of
Additional Shares.Although the Company
presently has no commitments, contracts or intentions to issue any additional
shares to other persons, other than in the exercise of options and warrants, the
Company may in the future attempt to issue shares to acquire products, equipment
or properties, or for other corporate purposes. Any additional issuance by the
Company, from its authorized but un-issued shares, would have the effect of
diluting the interest of existing shareholders.




Indemnification
of Officers and Directors for Securities Liabilities.The
Company’s Bylaws provide that the Company will indemnify any Director, Officer,
agent and/or employee as to those liabilities and on those terms and conditions
as are specified in laws of the State of Nevada. Further, the Company may
purchase and maintain insurance on behalf of any such persons whether or not the
corporation would have the power to indemnify such person against the liability
insured against. The foregoing could result in substantial expenditures by the
Company and prevent any recovery from such Officers, Directors, agents and
employees for losses incurred by the Company as a result of their actions.
Further, the Company has been advised that in the opinion of the Securities and
Exchange Commission, indemnification is against public policy as expressed in
the Securities Act of 1933, as amended, and is, therefore,
unenforceable.




13




Cumulative
Voting, Pre-emptive Rights and Control.There are no pre-emptive
rights in connection with the Company’s Common Stock. Shareholders may be
further diluted in their percentage ownership of the Company in the event
additional shares are issued by the Company in the future. Cumulative voting in
the election of Directors is not provided for. Accordingly, the holders of a
majority of the shares of Common Stock, present in person or by proxy, will be
able to elect all of the Company’s Board of Directors.




No Dividends
Anticipated. At the present time the Company does not anticipate paying
dividends, cash or otherwise, on its Common Stock in the foreseeable future.
Future dividends will depend on earnings, if any, of the Company, its financial
requirements and other factors.




Penny Stock
- Additional Sales Practice Requirements. The Company’s common stock is
covered by a Securities and Exchange Commission rule that imposes additional
sales practice requirements on broker-dealers who sell such securities to
persons other than established customers and accredited investors, generally
institutions with assets in excess of $5,000,000 or individuals with net worth
in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly
with their spouse. For transactions covered by the rule, the broker-dealer must
make a special suitability determination for the purchaser and transaction prior
to the sale. Consequently, the rule may affect the ability of broker-dealers to
sell the Company’s securities and also may affect the ability of purchasers of
the Company’s stock to sell their shares in the secondary market.






ITEM
2.     DESCRIPTION OF PROPERTIES.




The
Company does not currently own any real property.






ITEM
3.     LEGAL PROCEEDINGS.




Three
debt holders of the Company have taken legal action against the Company for loan
and interest that were past due which amounts outstanding as of December 31,
2008 were $876,949, $1,002,536 and $42,000 respectively.






ITEM
4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS.




There were no matters submitted to the Shareholders during the year ended
December 31, 2008.











14




PART
II




ITEM
5.     MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED
STOCKHOLDERS’ MATTERS.




The
Company’s Common Stock was quoted on the Bulletin Board operated by the Federal
Industry Regulatory Authority (“FINRA”) under the symbol “ALRT.” Summary trading
by quarter for the 2008 and 2007 fiscal years are as follows:




Fiscal
      Quarter
            High Bid
      [1]
            Low Bid
      [1]2008Fourth
      quarter
            0.080
            0.021Third
      Quarter
            0.100
            0.040Second
      Quarter
            0.130
            0.060First
      Quarter
            0.200
            0.0602007Fourth
      Quarter
            0.250
            0.141Third
      Quarter
            0.195
            0.140Second
      Quarter
            0.190
            0.040First
      Quarter
            0.120
            0.040




[1] These
quotations reflect inter-dealer prices, without retail mark-up, mark-down or
commission and may not represent actual transactions.




At
December 31, 2008, there were 76,078,446 common shares of the Company issued and
outstanding.




At
December 31, 2008, there were three holders of record holding 28,712,858 common
shares, including common shares held by brokerage clearing houses, depositories
or otherwise, in unregistered form. The beneficial owners of such shares are not
known by the Company.




No
cash dividends has been declared by the Company nor is any intended to be
declared. The Company is not subject to any legal restrictions respecting the
payment of dividends, except that they may not be paid to render the Company
insolvent. Dividend policy will be based on the Company’s cash resources and
needs and it is anticipated that all available cash will be needed for working
capital.




There are no securities authorized for issuance under any equity compensation
plans.




Securities Authorized From Issuance Under Equity Compensation
Plans




The
Company does not have any equity compensation plans and accordingly the Company
has no securities authorized for issuance thereunder.




15


ITEM
6.  SELECTED FINANCIAL DATA
  We are a smaller
reporting company as defined by Rule 12b-2 of the Exchange Act and are not
required to provide the information under this item.


ITEM
7. MANAGEMENT  DISCUSSION AND ANALYSIS OR PLAN OF
OPERATIONS
 
 General
 
 The
Company’s business is focused on enhancement of disease and healthcare
management programs through improved medication adherence through our patient
reminder products, monitoring of medication compliance, and intervention systems
when lack of compliance puts the patient at risk. The Company’s primary business
markets are the providers of health insurance and the providers of disease and
case management services, including the home care industry. Health and disease
management and home care cannot achieve desired results unless the targeted
individuals are compliant with their medications and unless there is timely
intervention when they are not compliant and deemed at risk.
 
 The
largest potential for sustainable long term growth and value generation lies
with the market segments that have the most influence on the end-user and the
most to gain from improved healthcare results. These market segments are the
health insurance providers the medical clinics and physicians who provide the
care for people with chronic disease.  Our focus is currently on
medical clinics as well as the self insured corporations and their provider
partners with the diabetics and those with respiratory disease being the initial
targets. The health insurance provider industry has the potential of reducing
costs substantially through successful patient compliance programs. Industry
data reports indicate that over $300 billion annually in health care costs are
due to people not taking medications as directed.


16


The
disease management compliance and home health monitoring markets that our
products and services address are in the early stages of development. This
situation provides significant upside potential due to it being new market with
cost savings benefits to be achieved by the groups we are
targeting.  Many in the US and around the world can benefit from such
systems and products.  Substantial savings could be realized by the
industry and once a segment of the industry adopts comprehensive health
management compliance then growth could develop rapidly.  The
attention being given to rising healthcare costs and the aging of the US
population with “baby boomers” now approaching retirement age is fueling
attention to this opportunity, as well as the growing prevalence of
diabetes.




Revenue




Revenues
for the year ended December 31, 2008 decreased by $181,948 to $12,848 in 2008
from $194,796 for 2007. The Company has been devoting its efforts for the past
two years to developing the Constant Health Companion (CHC) patient compliance
system and more specifically for this past year, 2008, to developing a
communications platform to allow health professionals and case managers to
communicate as needed to the patient and/or to other health professionals. A
considerable amount of focus was also placed on completion of the ALRT Diabetes
Health Management System. The market needs dictated the Company’s development
efforts and as such the Company did not initiate selling efforts of the CHC
system which the Company expect will generate substantial sales revenue. The
Company’s focus on the CHC also resulted in no active selling efforts of the
Company’s other compliance reminder products but the Company did receive
reorders for these products from existing customers.




Product
Development


With
the completions of the diabetes and respiratory monitoring system and commercial
launch in planning with the two companies we are in negotiations with, the
Company expects to add additional home monitoring capabilities, including
monitoring the essential diagnostic readings such as blood pressure, peak flow,
weight, A1c and more are in development with completion expected later in 2009
or 2010.
 
 The
Company has filed patents to cover its compliance monitoring systems that work
specifically with nebulizers and patent applications are also being prepared to
cover other elements of our comprehensive HealthEConnect system. The Company has
been granted patents that cover the primary ease-of-use feature and one button
programming. One-button programming is an important element in many of our
Compliance Reminder products.




Operating
Capital




The
Company’s revenue from sales is not at a level to pay for operating costs and as
such the management have volunteered to have their compensation deferred until
cash flow allows for payment and creditors have agreed to additional stock
option grants in return for deferred payment on interest in some cases and
agreements of note extensions in other cases. Although cash flow from sales of
products and services are expected to improve through 2009, there is no
certainty of this, and if sales do continue to increase there is no certainly
that it will reach the level necessary to cover operating costs and debt
load.




17




Management
Compensation




Management
has accepted deferred payment on compensation, deferred payment on interest on
loans they have made to the Company and have paid Company bills and expenses
without repayment; all to help ensure the Company’s survival. In return, the
Company’s directors have rewarded the participating personnel with stock
options.




Operating Issues




The
Company has expended significant efforts introducing its human medication and
treatment reminder products to specified retail chains, pharmaceutical
manufacturers, Contract Research Organizations, Health Management Organizations,
Pharmacy Benefits Managers and certain clinics treating specific disease
conditions. Sales to December 31, 2008 have not been sufficient for the Company
to realize its investment in its inventories. Management plans to recover its
investment through sales of Constant Health Companion and the ALRT Diabetes
Health Management System.




If
management is not successful in its plans, they may be required to raise
additional funds from its existing and prospective shareholders.




Results of Operations




December
31, 2008 compared to December 31, 2007




Sales
for the year ended December 31, 2008 were $12,848 and cost of goods sold was
$1,199 as compared to $194,796 and $25,558 respectively for the year ended
December 31, 2007. Sales were down in fiscal 2008 as a result of the decision to
de-emphasize sales and marketing activities of focus resources on development of
the Constant Health Companion (CHC) and development of business network of pilot
programs.




Product
development costs were $414,546 for the year ended December 31, 2008 versus
$270,966 for the year ended December 31, 2007. Product development costs include
$228,001 (December 31, 2007 - $47,391) for a non-cash amount related to the
value of stock options committed to be issued for services in the year. This
increase relates primarily to the development of the ALRT
Health-E-Connect SystemTM
reaching the final stage.




Interest
expense was $773,363 for the year ended December 31, 2008 as compared with
$691,357 for the year ended December 31, 2007 as the Company continued to rely
on loans for funding the Company’s operation. Included in the total reported
interest is a non-cash amounts $71,190 (2007 -$12,458) related to stock options
committed to be issued in consideration of promissory notes.




The
Company incurred professional fees of $101,138 for the year ended December 31,
2008 as compared with $97,381 for the year ended December 31, 2007.




Rent
increased slightly in fiscal 2008 to $49,202 from $42,485 for the year ended
December 31, 2007.




18




The
selling, general and administrative expenses were $605,567 for the year ended
December 31, 2008 as compared to $643,909 for the year ended December 31, 2007.
These totals include $Nil  (December 31, 2007 - $39,838) for a
non-cash amount related to the value of stock options committed to be issued for
selling, general and administrative services in the year. The cash portion of
the selling, general and administrative expenses were increased by only
$1,497.




Accounts
receivable were $5,048 at December 31, 2008 as compared with $4,221 at December
31, 2007.




Accounts payable and accrued
liabilities decreased to $1,088,256 at December 31, 2008 from $1,119,545 at
December 31, 2007 while payroll payable decreased to $18,050 at December 31,
2008 from $18,458 at December 31, 2007.




During
the year ended December 31, 2008, the Company arranged $519,328 in debt
financing in comparison with $75,000 during the year ended December 31,
2007.




Liquidity
and Capital Resources




Cash
Balances




At
December 31, 2008, the Company’s cash balance was $7,901 compared to $2,973 at
December 31, 2007.




Short
and Long Term Liquidity




With
respect to the Company’s short-term liquidity, the Company’s “current ratio”
(current assets divided by current liabilities) as of December 31, 2008 was
0.01, unchanged from December 31, 2007. The greater the current ratio, the
greater is the short-term liquidity of the Company.




The Company raised $519,328 debt financing in 2008 for working
capital.




The
Company plans additional debt financing in the short run. These proceeds will be
put toward working capital.




All
of the Company’s debt financing is due on demand. The Company will seek to
obtain creditors’ consent to delay repayment of these loans 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 not to demand immediate
payment or 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 cease operations.




19




Cash
Used in Operating Activities




Cash
used by the Company in operating activities during the year ended December 31,
2008 totalled $511,047. The Company incurred a net loss of $1,899,110 for the
year ended December 31, 2008 as compared to a loss of $1,579,506 for the year
ended December 31, 2007. Cash used by the Company in operating activities during
the year ended December 31, 2007 totalled $80,444.





Cash
Proceeds from Financing Activities




During
the year ended December 31, 2008, the Company arranged $519,328 in debt
financing. In consideration for these loans, the Company has committed to issue
options to acquire a total of 2,278,000 shares of the Company at $0.25 per share
exercisable for a period of five years. The fair value of these options has been
estimated and recognized in the financial statements in interest
expense.




During
the year ended December 31, 2007, the Company arranged $75,000 in debt
financing. In consideration for these loans, the Company has committed to issue
options to acquire a total of 300,000 shares of the Company at $0.25 per share
exercisable for a period of ten years.  The fair value of these
options has been estimated and recognized in the financial statements in
interest expense.




Critical
Accounting Policies




The
preparation of consolidated financial statements in conformity with US 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. The Company believes the accounting polices that are
most critical to its financial condition and results of operations and involve
management’s judgment and/or evaluation of inherent uncertain factors are as
follows:




Basis of
Presentation. The consolidated 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 consolidated
financial statements. As described elsewhere in this annual report, at December
31, 2008 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. 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 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.




20




Inventories. Inventories are recorded at
the lower of cost, determined on a weighted average cost basis, and net
realizable value.




Options and
warrants issued in consideration for debt. 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.




Revenue
recognition. 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.




Stock-based
compensation.  The Company follows Statement of Financial
Accounting Standards No. 123R, “Share Based Payment” (“SFAS
123R”).  SFAS 123R requires companies to estimate the fair value of
share-based payment awards on the date of grant using an option pricing
model.  The value of the portion of the award that is ultimately
expected to vest is recognized as an expense over the requisite service period
in the Company’s consolidated financial statements.  Stock-based
compensation recognized during the period is based on the value of the portion
of the stock-based payment awards that are ultimately expected to vest during
the period.  The Company estimates the fair value of the stock options
using the Black-Scholes valuation model, consistent with the provisions of SFAS
123R.  The Black-Scholes valuation model requires the input of highly
subjective assumptions, including the option’s expected life and the price
volatility of the underlying stock. The expected stock price volatility
assumption was determined using historical volatility of the Company’s common
stock.




Recent Accounting
Pronouncements




In December 2007, the FASB
issued SFAS No. 141(R), “Business Combinations” (SFAS 141(R)), which replaces
SFAS 141. SFAF 141(R) requires assets and liabilities acquired in a business
combination, contingent consideration and certain acquired contingencies to be
measured at their fair values as of the date of acquisition. SFAS 141(R) also
requires that acquisition-related costs and restructuring costs be recognized
separately from the business combination. SFAS 141(R) is effective for business
combinations entered into after January 1, 2009.




21





In
December 2007, the FASB issued SFAS No. 160, “Non-Controlling Interests in
Consolidated Financial Statements, an Amendment of ARB No. 51”. SFAS 160
clarifies the accounting for non-controlling interests and establishes
accounting and reporting standards for the non-controlling interest in a
subsidiary, including classification as a component of equity. SFAS 160 is
effective for fiscal years beginning after December 15, 2008. The Company does
not currently have any minority interests.





In March
2008, the FASB issued SFAS No. 161, "Disclosures about Derivative Instruments
and Hedging Activities - an amendment of FASB Statement No. 133," as amended and
interpreted, which requires enhanced disclosures about an entity's derivative
and hedging activities and thereby improves the transparency of financial
reporting.  Disclosing the fair values of derivative instruments and their
gains and losses in a tabular format provides a more complete picture of the
location in an entity's financial statements of both the derivative positions
existing at period end and the effect of using derivatives during the reporting
period.  Entities are required to provide enhanced disclosures about: (a)
how and why an entity uses derivative instruments, (b) how derivative
instruments and related hedged items are accounted for under Statement 133
and its related interpretations, and (c) how derivative instruments and related
hedged items affect an entity's financial position, financial performance, and
cash flows.  SFAS No. 161 is effective for financial statements issued for
fiscal years and interim periods beginning after November 15, 2008.  The
Company does not expect that the adoption of SFAS No. 161 will have a material
impact on its financial position.





In May
2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles.” SFAS No. 162 identifies the sources of accounting
principles and provides entities with a framework for selecting the principles
used in preparation of financial statements that are presented in
conformity with generally accepted accounting principles. The current generally
accepted accounting principles hierarchy has been criticized because it is
directed to the auditor rather than the entity, it is complex, and it ranks FASB
Statements of Financial Accounting Concepts, which are subject to the same level
of due process as FASB Statements of Financial Accounting Standards, below
industry practices that are widely recognized as generally accepted but that are
not subject to due process. The Board believes the generally accepted accounting
principles hierarchy should be directed to entities because it is the entity
(not its auditors) that is responsible for selecting accounting principles for
financial statements that are presented in conformity with generally accepted
accounting principles. The adoption of FASB 162 is not expected to have a
material impact on the Company’s consolidated financial position.





In June
2008, the FASB issued FASB SP EITF 03-6-1, “Determining Whether Instruments
Granted in Share-Based Payment Transactions are Participating Securities.” SP
EITF 03-6-1 addresses whether instruments granted in share-based payment
transactions are participating securities prior to vesting and, therefore, need
to be included in the computation of earnings per share under the two-class
method as described in SFAS No. 128, “Earnings per Share.”  SP EITF 03-6-1
is effective for financial statements issued for fiscal years beginning on or
after December 15, 2008 and earlier adoption is prohibited.  The
Company is required to adopt SP EITF 03-6-1 in the first quarter of 2009 and
does not expect SP EITF 03-6-1 to have a material impact on the Company’s
financial position.




22





In
September 2006, the FASB issued SFAS No. 157, “Fair Value
Measurements”.  This statement defines fair value, establishes a
framework for measuring fair value in generally accepted accounting principles
and expands disclosures about fair value measurements. This statement does not
require any new fair value measurements; however, for some entities the
application of this statement will change current practice. The Company adopted
SFAS No. 157 effective January 1, 2008 and did not have a material impact on the
Company’s consolidated financial statements.




In June
2006, the FASB issued Interpretation No. 48, “Accounting for Uncertainty in
Income Taxes – an Interpretation of SFAS No. 109”. The interpretation clarifies
the accounting for uncertainty in income taxes recognized in an enterprise's
financial statements in accordance with SFAS No. 109, “Accounting for Income
Taxes”. The evaluation of a tax position in accordance with this interpretation
is a two-step process. Under the recognition step, an enterprise determines
whether it is more likely than not that a tax position will be sustained upon
examination based on the technical merits of the position. Under the measurement
step, a tax position that meets the more-likely-than-not recognition threshold
is measured to determine the amount of benefit to recognize in the financial
statements. The tax position is measured at the largest amount of benefit that
is greater than 50% likely of being realized upon ultimate settlement. The
Company adopted FIN 48 effective January 1, 2007.




In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
Financial Assets and Financial Liabilities”.  This statement permits
companies to choose to measure many financial instruments and certain other
items at fair value. This statement expands the use of fair value measurement
and applies to companies that elect the fair value option.  The fair
value option established by this statement permits all entities to choose to
measure eligible items at fair value at specified election dates.  The
Company adopted SFAS No. 159 effective January 1, 2008 and did not have a
material impact on the Company’s consolidated financial position, results of
operations or cash flows.


















23


ITEM
8.      FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA.









ALR
TECHNOLOGIES INC.





Consolidated Financial
Statements


December
31, 2008




















Index                                                                                                                    Page





Report of Registered Independent
Public Accounting
Firm                                                                  F-1





Consolidated Financial
Statements





ConsolidatedBalance
Sheets                                                                                                                 
F-2





ConsolidatedStatements of Loss and
Comprehensive
Loss                                                                   F-3





Consolidated Statements of
Stockholders’
Deficiency                                                                             F-4





ConsolidatedStatements of Cash
Flows                                                                                                     F-5





Notes to ConsolidatedFinancial
Statements                                                                                         F-6
– F-24














24



















REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM








The
Board of Directors and Stockholders of ALR Technologies Inc.





We have
audited the accompanying consolidated balance sheets of ALR Technologies Inc. as
of December 31, 2008 and 2007 and the related consolidated statements of loss
and comprehensive loss, stockholders’ deficiency and cash flows for the years
then ended. These financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on these financial
statements based on our audits.





We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States of America). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.





In our
opinion, these consolidated financial statements present fairly, in all material
respects, the financial position of the Company as of December 31, 2008 and 2007
and the results of its operations and its cash flows for the years then ended in
conformity with accounting principles generally accepted in the United States of
America.





The
accompanying consolidated financial statements have been prepared assuming that
the Company will continue as a going concern. The Company has suffered recurring
losses, negative cash flows from operations and has a net working capital
deficiency, factors which raise substantial doubt about the Company’s ability to
continue as a going concern. Management’s plans in regard to these matters are
described in note 1. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.











SMYTHE
RATCLIFFE LLP








Chartered
Accountants





Vancouver,
Canada


March 25,
2009






















F-1
 25








ALR TECHNOLOGIES INC.
              Consolidated
      Balance Sheets
              ($
      United States)
              December
      31, 2008 and 20072008
            
            
            2007Assets(note 6)Current
      assets:Cash
            $
            7,901
            
            $
            2,973Accounts receivable, net of
      allowance of $748(2007 -
      $2,530)
            
            5,048
            
            
            4,221Inventories (note
      3)
            
            -
            
            
            78,922Prepaid expenses and
      others (note
      4)
            
            57,536
            
            
            -Deferred
      interest expense (note 6)
            
            50,400
            
            
            -Total
      current assets
            
            120,885
            
            
            86,116Equipment, net of accumulated
      depreciation (note 5)
            
            6,109
            
            
            4,480Total
      assets
            $
            126,994
            
            $
            90,596Liabilities
      and Stockholders' DeficiencyCurrent
      liabilities:Accounts payable and accrued
      liabilities
            $
            1,088,256
            
            $
            1,119,545Payroll
      payable
            
            18,050
            
            
            18,458Interest payable (note
      6)
            
            2,613,008
            
            
            1,942,463Advances payable (note
      6)
            
            2,289,982
            
            
            1,832,729Promissory notes payable (note
      6)
            
            6,436,393
            
            
            5,946,578Total current liabilities and
      total liabilities
            
            12,445,689
            
            
            10,859,773Contingencies
      and Commitments (notes 8 and 10)Stockholders'
      DeficiencyCommon stock (note
      7)Authorized: 350,000,000 shares
      with a par value of $0.001 per shareShares
      outstanding: 76,078,466
            
            76,078
            
            
            76,078Additional paid-in
      capital
            
            13,300,827
            
            
            12,951,235Deficit
            
            (25,695,600
            )
            
            (23,796,490
            )Stockholders’
      deficiency
            
            (12,318,695
            )
            
            (10,769,177
            )Total
      liabilities and stockholders’ deficiency
            $
            126,994
            
            $
            90,596Basis of presentation (note
      1)See accompanying notes to
      consolidated financial
statements








F-2
 26





ALR TECHNOLOGIES INC.


Consolidated
Statements of Loss and Comprehensive Loss


($ United
States)


Years
Ended December 31, 2008 and 2007





2008
                
                
                2007RevenueSales
                $
                12,848
                
                $
                194,796Cost of
      sales
                
                1,199
                
                
                25,55811,649
                
                
                169,238Expenses (note 9)Depreciation
                
                1,724
                
                
                1,700Development
      costs
                
                414,546
                
                
                270,966Foreign exchange
      (gain) loss
                
                (55,026
                )
                
                38,110Interest
                
                773,363
                
                
                691,357Professional
      fees
                
                101,138
                
                
                97,381Rent
                
                49,202
                
                
                42,485Selling, general and
      administration
                
                605,567
                
                
                643,9091,890,514
                
                
                1,785,908Loss before other
      items
                
                (1,878,865)
                
                
                (1,616,670
                )Loss
      on write down of inventories
                
                (20,245)
                
                
                -Other income (note
      14)
                
                -
                
                
                37,164Net
      loss and comprehensive loss for year
                $
                (1,899,110)
                
                $
                (1,579,506
                )Loss per share, basic and
      diluted
                $
                (0.02)
                
                $
                (0.02
                )Weighted
      average number of common shares outstanding, basic and
      diluted
                
                76,078,446
                
                
                76,078,446




See
accompanying notes to consolidated financial statements










F-3
 27










ALR
      TECHNOLOGIES INC.Consolidated
      Statements of Stockholders’ Deficiency($ United
      States)Years
      Ended December 31, 2008 and 2007Common
      Stock
                  
                  Additional
                  
                  
                  Accumulated
      Other
                  
                  TotalNumber
                  
                  
                  
                  Paid-in
                  
                  
                  Comprehensive
                  
                  Stockholders'of
      Shares
                  
                  Amount
                  
                  Capital
                  Deficit
                  
                  Income
      (Loss)
                  
                  DeficiencyBalance, December 31,
      2006
                  76,078,446
                  $
                  76,078
                  
                  $12,851,548
                  $(22,216,984
                  )
                  $
                  37,164
                  
                  $(9,252,194
                  )Stock-based
      compensation (note 7)
                  -
                  
                  -
                  
                  99,687
                  -
                  
                  
                  -
                  
                  99,687Accumulated
      other comprehensive income of former subsidiary
                  -
                  
                  -
                  
                  -
                  -
                  
                  
                  (37,164
                  )
                  (37,164
                  )Net
    loss
                  
                  
                  
                  
                  
                  (1,579,506
                  )
                  
                  
                  
                  (1,579,506
                  )Balance, December 31,
      2007
                  76,078,446
                  
                  76,078
                  
                  12,951,235
                  (23,796,490
                  )
                  
                  -
                  
                  (10,769,177
                  )Stock-based
      compensation (note 7)
                  
                  
                  
                  
                  349,592
                  
                  
                  
                  
                  
                  349,592Net
    loss
                  -
                  
                  -
                  
                  -
                  (1,899,110
                  )
                  
                  -
                  
                  (1,899,110
                  )Balance, December 31,
      2008
                  76,078,446
                  $
                  76,078
                  
                  $13,300,827
                  $(25,695,600
                  )
                  $
                  -
                  
                  $(12,318,695
                  )See accompanying notes to
      consolidated financial statements











F-4
 28











ALR
TECHNOLOGIES INC.


Consolidated
Statements of Cash Flows


($ United
States)


Years
Ended December 31, 2008 and 2007





2008
                  
                  
                  2007Cash flows from operating
      activities:Cash received from
      customers
                  $
                  12,021
                  
                  $
                  192,976Cash paid to suppliers and
      employees
                  
                  (511,409
                  )
                  
                  (266,693
                  )Interest
      paid
                  
                  (11,659
                  )
                  
                  (6,727
                  )Net cash used in operating
      activities (note 12)
                  
                  (511,047
                  )
                  
                  (80,444
                  )Cash
      flows from investing activity:Purchase of fixed
      assets
                  
                  (3,353
                  )
                  
                  -Net
      cash used in investing activity
                  
                  (3,353
                  )
                  
                  -Cash flows from financing
      activity:Proceeds from promissory notes
      payable
                  
                  519,328
                  
                  
                  75,000Net
      cash provided in financing activity
                  
                  519,328
                  
                  
                  75,000Increase (decrease) in cash
      during the year
                  
                  4,928
                  
                  
                  (5,444
                  )Cash, beginning of
      year
                  
                  2,973
                  
                  
                  8,417Cash, end of
      year
                  $
                  7,901
                  
                  $
                  2,973Non-cash financing and operating
      activities:Financing
      cost of stock optionsissued
      in consideration forpromissory
      notes payable ($50,400 deferred)
                  $
                  121,591
                  
                  $
                  12,458Compensation
      cost of stock optionsissued
      for product development
                  $
                  228,001
                  
                  $
                  47,391Compensation
      cost ofstock
      options issuedfor
      services
                  $
                  -
                  
                  $
                  39,838




See
accompanying notes to consolidated financial statements





















F-5
 29
 ALR
TECHNOLOGIES INC.
 Notes
to Consolidated Financial Statements
 ($
United States)
 Years
Ended December 31, 2008 and 2007





1.
            Basis
      of presentation:





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 from Mo Betta Corp. 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 heath care professionals to
remotely monitor and intervene as necessary if a person is
non-compliant.





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 operating losses
over the past several fiscal years (2008 - $1,899,110; 2007 - $1,579,506), is
currently unable to self-finance operations, has working capital deficit of
$12,324,804 (2007 - $10,773,657), a deficit of $25,695,600 (2007 - $23,796,490),
limited resources, no source of operating cash flow and no assurances that
sufficient funding will be available to conduct further product development and
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 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.





If the
going concern assumption were not appropriate for these financial statements
then adjustments would be necessary in the carrying value of assets and
liabilities, the reported expenses and the balance sheet classifications
used.  Such adjustments could be material.





2.
            Significant
      accounting policies:





a)
            Principles
      of consolidation





These
consolidated financial statements include the accounts of the Company and its
fully integrated wholly-owned subsidiary, ALRTech Health Systems Inc.
(incorporated in British Columbia, Canada April 15, 2008). All significant
inter-company balances and transactions have been eliminated.







30





ALR
TECHNOLOGIES INC.
 Notes
to Consolidated Financial Statements
 ($
United States)
 Years
Ended December 31, 2008 and 2007


2.           Significant accounting policies:(continued)





b)
            Foreign
      currency transactions





The
Company's functional and reporting currency is the United States dollar.
Transactions in foreign currencies are translated into United States dollars at
the rates in effect on the transaction dates. Exchange gains or losses arising
on translation or settlement of foreign currency monetary items are included in
the consolidated statement of loss.





c)
            Fair
      value of financial instruments





For
financial instruments consisting of cash, accounts receivable, and accounts
payable and accrued liabilities included in the Company’s financial statements,
the carrying amounts are reasonable estimates of fair value due to their short
term maturities.





d)
            Allowance
      for doubtful accounts





The
Company maintains an allowance for doubtful accounts for estimated losses
resulting from the inability or unwillingness of its customers to make required
payments. When the Company becomes aware that a specific customer is unable or
unwilling to meet its financial obligations, the Company records a specific
allowance to reflect the level of credit risk in the customer’s outstanding
receivable balance.





e)
            Inventories





Inventories
are recorded at the lower of cost, determined on a weighted average cost basis,
and net realizable value.





f)
            Equipment





Equipment
is recorded at cost.  Depreciation is provided using the following
method and annual rates:





Asset
            Method
            RateComputer
      equipment
            Declining
      balance
            30%Office
      equipment
            Declining
      balance
            20%





g)
            Options
      and warrants issued in conjunction with
debt





The
Company allocates the proceeds received from long-term debt between the
liability and the attached options and warrants issued in conjunction with 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 its face
value as interest expense on a yield basis over the term of the related
debt.







31











ALR
TECHNOLOGIES INC.
 Notes
to Consolidated Financial Statements
 ($
United States)
 Years
Ended December 31, 2008 and 2007





2.           Significant accounting policies:(continued)





h)
            Revenue
      recognition





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
expires.





i)
            Stock-based
      compensation





The
Company follows Statement of Financial Accounting Standards No. 123R, “Share
Based Payment” (“SFAS 123R”).  SFAS 123R requires companies to
estimate the fair value of share-based payment awards on the date of grant using
an option pricing model.  The value of the portion of the award that
is ultimately expected to vest is recognized as an expense over the requisite
service period in the Company’s consolidated financial
statements.  Stock-based compensation recognized during the period is
based on the value of the portion of the stock-based payment awards that are
ultimately expected to vest during the period.  The Company estimates
the fair value of the stock options using the Black-Scholes valuation model,
consistent with the provisions of SFAS 123R.  The Black-Scholes
valuation model requires the input of highly subjective assumptions, including
the option’s expected life and the price volatility of the underlying stock. The
expected stock price volatility assumption was determined using historical
volatility of the Company’s common stock.





j)
            Income
      taxes





Income
taxes are accounted for under the asset and liability method. Deferred income
tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax basis and operating
loss carry forwards that are available to be carried forward to future years for
tax purposes.





Deferred
income tax assets and liabilities are measured using enacted tax rates expected
to apply to taxable income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred income tax assets
and liabilities of a change in tax rates is recognized in income in the period
that includes the enactment date. When it is not considered to be more likely
than not that a deferred income tax asset will be realized, a valuation
allowance is provided for the excess.





Although
the Company has significant loss carried forwards available to reduce deferred
income for tax purposes, no amount has been reflected on the balance sheet for
deferred income taxes as any deferred income tax asset has been fully offset by
a valuation allowance.

















32











ALR
TECHNOLOGIES INC.
 Notes
to Consolidated Financial Statements
 ($
United States)
 Years
Ended December 31, 2008 and 2007





2.           Significant accounting policies:(continued)





k)
            Loss
      per share





Basic net
loss per common share is calculated by dividing net loss by the weighted average
number of common shares outstanding during the year. Diluted loss per common
share is calculated by dividing the net loss by the sum of the weighted average
number of common shares outstanding and the dilutive common equivalent shares
outstanding during the year. Common equivalent shares consist of the shares
issuable upon exercise of stock options and warrants calculated using the
treasury stock method. Common equivalent shares are not included in the
calculation of the weighted average number of shares outstanding for diluted
loss per common shares when the effect would be anti-dilutive.





l)
            Use
      of estimates





The
preparation of financial statements in conformity with U.S. GAAP requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements, and the reported amounts of revenues and
expenses during the reporting period. Significant areas requiring management
estimates include the recoverable amount of the Company's inventories; the fair
value of common shares issued as full and final settlement of promissory notes
payable, and accounts payable and accrued liabilities; compensation costs of
stock options issued to employees and non-employees for services or modification
of previous stock option commitments; and financing costs of stock options
issued in consideration of promissory notes payable, the extension of their due
dates and the modification of previous stock option or warrant
commitments.  Management believes the estimates are reasonable;
however, actual results could differ from those estimates.





m)
            Commitments
      and contingencies





Liabilities
for loss contingencies, arising from claims, assessments, litigation, fines and
penalties, and other sources are recorded when it is probable that a liability
has been incurred and the amount of the assessment and/or remediation can be
reasonably estimated. Recoveries from third parties that are probable of
realization are separately recorded, and are not offset against the related
liability, in accordance with FASB Interpretation No. 39, “Offsetting of Amounts
Related to Certain Contracts.”





n)
            Segmented
      information





The
Company primarily operates in one reportable segment in the United States of
America.





o)
            Credit
      risk





Accounts
receivable are potentially subject to concentrations of credit risk. The Company
conducts its business primarily inside of North America. The risk with respect
to accounts receivable is mitigated by credit evaluations that the Company
performs on its customers. The Company has a single customer representing 47%
and 65% of the Company’s annual sales revenue during the years ended December
31, 2008 and 2007, respectively.  The Company performs credit
evaluations of its customers’ financial condition and generally does not require
collateral from its customers.  These evaluations require significant
judgment and are based on a variety of factors including, but not limited to,
current economic trends, historical payments, bad debt write-off experience and
financial review of the customer.








33





ALR
TECHNOLOGIES INC.
 Notes
to Consolidated Financial Statements
 ($
United States)
 Years
Ended December 31, 2008 and 2007




2.           Significant accounting policies:(continued)





p)
            Comprehensive
      income





Comprehensive
income is the overall change in the net assets of the Company for a period,
other than changes attributable to transactions with stockholders. It is made up
of net income and other comprehensive income.  Other comprehensive
income consists of net income and other gains and losses affecting stockholders'
equity that under generally accepted accounting principles are excluded from net
income. The Company has no items of other comprehensive income (loss) in any
period presented. Therefore, as presented in the Company's consolidated
statements of operations, net loss equals comprehensive loss.





q)
            Recently
      issued and adopted accounting
pronouncements





i.
            Issued





In
December 2007, the FASB issued SFAS No. 141(R), “Business Combinations” (SFAS
141(R)), which replaces SFAS 141. SFAF 141(R) requires assets and liabilities
acquired in a business combination, contingent consideration and certain
acquired contingencies to be measured at their fair values as of the date of
acquisition. SFAS 141(R) also requires that acquisition-related costs and
restructuring costs be recognized separately from the business combination. SFAS
141(R) is effective for business combinations entered into after January 1,
2009.





In
December 2007, the FASB issued SFAS No. 160, “Non-Controlling Interests in
Consolidated Financial Statements, an Amendment of ARB No. 51”. SFAS 160
clarifies the accounting for non-controlling interests and establishes
accounting and reporting standards for the non-controlling interest in a
subsidiary, including classification as a component of equity. SFAS 160 is
effective for fiscal years beginning after December 15, 2008. The Company does
not currently have any minority interests.





In March
2008, the FASB issued SFAS No. 161, "Disclosures about Derivative Instruments
and Hedging Activities - an amendment of FASB Statement No. 133," as amended and
interpreted, which requires enhanced disclosures about an entity's derivative
and hedging activities and thereby improves the transparency of financial
reporting.  Disclosing the fair values of derivative instruments and their
gains and losses in a tabular format provides a more complete picture of the
location in an entity's financial statements of both the derivative
positions existing at period-end and the effect of using derivatives during the
reporting period.  Entities are required to provide enhanced disclosures
about: (a) how and why an entity uses derivative instruments; (b) how derivative
instruments and related hedged items are accounted for under Statement 133 and
its related interpretations; and (c) how derivative instruments and related
hedged items affect an entity's financial position, financial performance and
cash flows.  SFAS No. 161 is effective for financial statements issued for
fiscal years and interim periods beginning after November 15, 2008.  The
Company does not expect that the adoption of SFAS No. 161 will have a material
impact on its consolidated financial position.




















34





ALR
TECHNOLOGIES INC.
 Notes
to Consolidated Financial Statements
 ($
United States)
 Years
Ended December 31, 2008 and 2007




2.           Significant accounting policies:(continued)





q)
            Recently
      issued and adopted accounting pronouncements
  (continued)





i.
            Issued
      (continued)





In May
2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles.” SFAS No. 162 identifies the sources of accounting
principles and provides entities with a framework for selecting the principles
used in preparation of financial statements that are presented in
conformity with generally accepted accounting principles. The current generally
accepted accounting principles hierarchy has been criticized because it is
directed to the auditor rather than the entity, it is complex, and it ranks FASB
Statements of Financial Accounting Concepts, which are subject to the same level
of due process as FASB Statements of Financial Accounting Standards, below
industry practices that are widely recognized as generally accepted but
that are not subject to due process. The Board believes the generally
accepted accounting principles hierarchy should be directed to entities because
it is the entity (not its auditors) that is responsible for selecting accounting
principles for financial statements that are presented in conformity with
generally accepted accounting principles. The adoption of FASB 162 is not
expected to have a material impact on the Company’s consolidated financial
position.





In June
2008, the FASB issued FASB SP EITF 03-6-1, “Determining Whether Instruments
Granted in Share-Based Payment Transactions are Participating Securities.” SP
EITF 03-6-1 addresses whether instruments granted in share-based payment
transactions are participating securities prior to vesting and, therefore, need
to be included in the computation of earnings per share under the two-class
method as described in SFAS No. 128, “Earnings per Share.”  SP EITF 03-6-1
is effective for financial statements issued for fiscal years beginning on or
after December 15, 2008 and earlier adoption is prohibited.  The
Company is required to adopt SP EITF 03-6-1 in the first quarter of 2009 and
does not expect SP EITF 03-6-1 to have a material impact on the Company’s
consolidated financial position.





ii.
            Adopted





In
September 2006, the FASB issued SFAS No. 157, “Fair Value
Measurements”.  This statement defines fair value, establishes a
framework for measuring fair value in generally accepted accounting principles
and expands disclosures about fair value measurements. This statement does not
require any new fair value measurements; however, for some entities the
application of this statement will change current practice. The Company adopted
SFAS No. 157 effective January 1, 2008 and it did not have a material impact on
the Company’s consolidated financial statements.





























35




ALR
TECHNOLOGIES INC.
 Notes
to Consolidated Financial Statements
 ($
United States)
 Years
Ended December 31, 2008 and 2007




2.           Significant accounting policies:(continued)





q)
            Recently
      issued and adopted accounting pronouncements
  (continued)





ii.
            Adopted
      (continued)





In June
2006, the FASB issued Interpretation No. 48, “Accounting for Uncertainty in
Income Taxes – an Interpretation of SFAS No. 109”. The interpretation clarifies
the accounting for uncertainty in income taxes recognized in an enterprise's
financial statements in accordance with SFAS No. 109, “Accounting for Income
Taxes”. The evaluation of a tax position in accordance with this interpretation
is a two-step process. Under the recognition step, an enterprise determines
whether it is more likely than not that a tax position will be sustained upon
examination based on the technical merits of the position. Under the measurement
step, a tax position that meets the more-likely-than-not recognition threshold
is measured to determine the amount of benefit to recognize in the financial
statements. The tax position is measured at the largest amount of benefit that
is greater than 50% likely of being realized upon ultimate settlement. The
Company adopted FIN 48 effective January 1, 2007.





In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
Financial Assets and Financial Liabilities”.  This statement permits
companies to choose to measure many financial instruments and certain other
items at fair value. This statement expands the use of fair value measurement
and applies to companies that elect the fair value option.  The fair
value option established by this statement permits all entities to choose to
measure eligible items at fair value at specified election dates.  The
Company adopted SFAS No. 159 effective January 1, 2008 and did not have a
material impact on the Company’s consolidated financial position, results of
operations or cash flows.





3.
            Inventories:





2008
            
            
            2007Inventories, at
      cost
            $
            263,520
            
            $
            322,197Provision for decline of
      value
            
            (263,520
            )
            
            (243,275
            )$
            Nil
            
            $
            78,922





The
Company's inventories consists of product parts and 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.  As of December 31, 2008, management had recorded a
provision of $263,520 (2007 - $243,275) in respect of its Med Reminder
inventory.





4.
            Prepaid
      expenses and others:





The
Company's prepaid expenses include $32,500 in prepaid sales commission expenses
and $25,036 in other receivables from a non-related party.








F-12
 36
 ALR
TECHNOLOGIES INC.
 Notes
to Consolidated Financial Statements
 ($
United States)
 Years
Ended December 31, 2008 and 2007





5.
            Equipment:





2008Accumulated
            
            Net
    bookCost
            
            depreciation
            
            valueComputer
      equipment
            $
            25,549
            $
            20,426
            $
            5,123Office
      equipment
            
            5,566
            
            4,580
            
            986$
            31,115
            $
            25,006
            $
            6,1092007Accumulated
            
            Net
    bookCost
            
            depreciation
            
            ValueComputer
      equipment
            $
            22,196
            $
            18,950
            $
            3,246Office
      equipment
            
            5,566
            
            4,332
            
            1,234$
            27,762
            $
            23,282
            $
            4,480





6.
            Interest,
      advances and promissory notes
payable:





During
the year ended December 31, 2008, the Company entered into an agreement with a
non-related party whereby the Company received a total of $450,000 over a
four-month period starting from March 2008 in exchange for promissory notes
payable. The promissory notes are due for repayment on September 30, 2009
with interest at 1% per month and are unsecured. As further consideration,
1,800,000 options exercisable into common shares of the Company at an exercise
price of $0.25 per share until March 31, 2013 were issued. The stock-based
compensation arising from this stock option has been estimated to be $104,534
using the Black-Scholes option pricing model and amortized as interest expense
over the loan period. As of December 31, 2008, the unamortized interest was
$50,400.





During
the year ended December 31, 2008, a relative of a director repaid $50,000 to a
loan holder and assumed the loan repayable at demand with the interest rate of
1% per month.  As further consideration, 200,000 options exercisable
into common shares of the Company at an exercise price of $0.25 per share for a
period of five years were issued.  This same relative provided
additional loans repayable at demand totalling $69,328 to the Company at the
interest rate of 1% per month.  As further consideration, 278,000
options exercisable into common shares of the Company at an exercise price of
$0.25 per share for a period of five years were issued. All of these loans are
secured by a floating charge against the assets of the
Company.  Compensation costs related to these options, being the fair
value of the options, has been charged to interest expense.





During
the year ended December 31, 2008, a promissory notes repayable in Canadian
dollars to a director decreased by $29,513 due to favorable exchange rate
changes with the United States dollar.








F-13
 37
 ALR
TECHNOLOGIES INC.
 Notes
to Consolidated Financial Statements
 ($
United States)
 Years
Ended December 31, 2008 and 2007





6.           Interest, advances and promissory
notes payable:(continued)





During
the year ended December 31, 2007, the Company received a total of $75,000 from a
non-related party in exchange for promissory notes payable. The promissory note
is due on demand with interest at 1% per month and is unsecured. As further
consideration, 300,000 options exercisable into common shares of the Company at
an exercise price of $0.25 per share until May 31, 2017 were
issued.  The fair value of these options was estimated and has been
charged to interest expense.





2008
                        
                        2007Interest payable
      to:Relatives of
      directors
                        $
                        1,257,586
                        $
                        897,968Companies
      controlled by directors
                        
                        5,790
                        
                        5,790Directors
                        
                        69,545
                        
                        71,729Non-related
      parties
                        
                        1,280,087
                        
                        966,976$
                        2,613,008
                        $
                        1,942,463








2008
                      
                      2007Advances payable
      to:Relatives of
      directors
                      $
                      19,335
                      $
                      15,468Companies
      controlled by directors
                      
                      1,089,663
                      
                      821,156Directors
                      
                      1,180,984
                      
                      996,105$
                      2,289,982
                      $
                      1,832,729











F-14
 38
 ALR
TECHNOLOGIES INC.
 Notes
to Consolidated Financial Statements
 ($
United States)
 Years
Ended December 31, 2008 and 2007





6.           Interest, advances and promissory
notes payable:(continued)





2008
                    
                    2007Promissory
      notes payable to relatives of directors:Promissory
      notes payable to a relative of a director, secured by a General Security
      Agreement bearing interest at the rate of 1% per month, due
on
                      demand$
                    2,029,328
                    $
                    1,910,000Promissory
      notes payable to a relative of a director, secured by a
      General
                      Security
      Agreement bearing interest at the rate of 1.25% per month, due on
      demand
                    
                    251,347
                    
                    251,347Promissory
      notes payable to relatives of a director, secured by a General Security
      Agreement bearing interest at the U.S. bank prime rate plus 1%, due on
      demand
                    
                    500,000
                    
                    500,000Promissory
      notes payable, unsecured, from relatives of a director, bearing interest
      at 0.625% per month, with $50,000 repayable on October 5, 2004 and $60,000
      repayable on July 28, 2006, which did not occur; currently due on demand
      with the same interest rate
                    
                    110,000
                    
                    110,000Promissory
      notes payable, unsecured, from relatives of a director, bearing
      interest at 1% per month, due on demand
                    
                    295,000
                    
                    295,0003,185,675
                    
                    3,066,347Promissory
      notes payable to directors:Promissory
      notes payable to a director, unsecured, bearing interest at 1%
      permonth,
      due on demand (Cdn $151,000)
                    
                    123,306
                    
                    152,819Promissory
      notes payable to unrelated parties:Promissory
      notes payable, unsecured, bearing interest at 1% per month, repayable on
      September 30, 2009
                    
                    450,000
                    
                    -Promissory
      notes payable, unsecured, bearing interest at 1% per month,
      with$50,000
      repayable on December 31, 2004, $75,000 repayable on August 18, 2007 and
      $75,000 repayable on November 19, 2007, which did not occur; currently all
      due on demand with the same interest rate
                    
                    2,136,500
                    
                    2,186,500Promissory
      notes payable, unsecured, bearing interest at 0.625% per month,
      with $40,000 repayable on December 31, 2004, which did not occur;
      currently all due on demand with the same interest rate
                    
                    40,000
                    
                    40,000Promissory
      notes payable, secured by a guarantee from a director and relative of a
      director, bearing interest at 1% per month, with $200,000 repayable on
      July 31, 2003, which did not occur; currently all due on
      demand
                    
                    230,000
                    
                    230,000Promissory
      note payable, unsecured, non-interest bearing, repayable on July
      17,2005,
      which did not occur; currently due on demand
                    
                    270,912
                    
                    270,9123,127,412
                    
                    2,727,412$
                    6,436,393
                    $
                    5,946,578





F-15
 39
 ALR
TECHNOLOGIES INC.
 Notes
to Consolidated Financial Statements
 ($
United States)
 Years
Ended December 31, 2008 and 2007





7.
            Capital
      stock





Stock
options:





During
the year ended December 31, 2008, the Company granted 6,128,000 options. Of the
total granted, 3,000,000 were granted with vesting conditions based on certain
performance targets.  Even though a final measure of the value of
compensation cost does not occur until performance is complete, the estimated
fair value of these options was recognized as at December 31, 2008 in the amount
of $84,210 and charged to product development costs.  This amount has
been prorated based on the expected performance period.  In
consideration of providing loan advances aggregating $569,328 to the Company,
2,278,000 options were granted and vested immediately. Compensation costs
related to these options, being the fair value of the options, has been
estimated to be $121,591 of which $71,191 has been charged to interest expense
and $50,400 has been classified as deferred interest expenses. The balance of
the 850,000 stock options were granted for services and vested immediately.
Compensation costs related to these options, being the fair value of the
options, have been estimated to be $143,791 and have been charged to product
development costs. The weighted average per share fair value of options issued
in the period was $0.13 per option. The fair value of the options was determined
using the Black-Scholes option pricing model, using the expected life of the
options of 5 years, volatility factors of 188%, risk-free interest rate of 2.72%
and NIL dividend rate. The Company applies NIL forfeiture rate in calculating
stock-based compensation expenses.





These
expenses were allocated as follows:





2008
                                                      
                                                      2007Product
      development:Directors and
      officers
                                                      $
                                                      129,467
                                                      $
                                                      -Non-employees
                                                      
                                                      98,534
                                                      
                                                      47,391228,001
                                                      
                                                      47,391Interest
      expense:Relatives of
      directors
                                                      
                                                      17,057
                                                      
                                                      -Non-employees
                                                      
                                                      54,134
                                                      
                                                      12,45871,191
                                                      
                                                      12,458Services:Non-employees
                                                      
                                                      -
                                                      
                                                      39,838$
                                                      299,192
                                                      $
                                                      99,687





During
the year ended December 31, 2008, the Company cancelled 9,500,000 stock options
from a director and 1,000,000 stock options from non-employees, all of which
were not vested nor recorded as stock-based compensation expense prior to
cancellation.  The remaining 2,000,000 stock options that were vested
immediately were cancelled as per settlement agreement with a former
consultant.








F-16
 40
 ALR
TECHNOLOGIES INC.
 Notes
to Consolidated Financial Statements
 ($
United States)
 Years
Ended December 31, 2008 and 2007





7.
            Capital stock:(continued)





A summary
of the status of the stock options as of December 31, 2008 and 2007, and changes
during the years ended on those dates are presented below:





2008
              2007Number of
                Options
              
              Weighted
      Average
                Exercise
      Price
              Number of
                Options
              
              Weighted
      Average
                Exercise
      PriceOptions outstanding, beginning of
      year
              118,196,463
              
              $
              0.25
              115,876,463
              
              $
              0.25Granted
              6,128,000
              
              $
              0.25
              2,900,000
              
              $
              0.25Cancelled
              (12,500,000
              )
              $
              0.25
              -
              
              $
              0.25Expired
              (5,249,000
              )
              $
              0.25
              (580,000
              )
              $
              0.25Options outstanding, end of
      year
              106,575,463
              
              $
              0.25
              118,196,463
              
              $
              0.25





















F-17
 41
 ALR
TECHNOLOGIES INC.
 Notes
to Consolidated Financial Statements
 ($
United States)
 Years
Ended December 31, 2008 and 2007





7.
            Capital stock:(continued)





The
aggregate intrinsic value in the table above represents the total pre-tax
intrinsic value for in-the-money options, based on the $0.05 closing stock price
of the Company’s common stock on the NASDAQ over the counter market on December
31, 2008, which would have been received by the option holders had all option
holders exercised their options as of that date. As of December 31, 2008, none
of the stock options outstanding were in-the-money.





Stock
options outstanding are as follows:





2008
            
            2007Exercise
            
            Number
      of
            Number
      of Options
            
            Exercise
            Number
      of
            Number
      of OptionsExpiry
      Date
            
            Price
            
            Options
            Exercisable
            
            Price
            Options
            ExercisableJanuary
      9, 2008
            
            -
            
            -
            -
            $
            0.25
            400,000
            400,000January
      13, 2008
            
            -
            
            -
            -
            $
            0.25
            200,000
            200,000January
      14, 2008
            
            -
            
            -
            -
            $
            0.25
            265,000
            265,000January
      22, 2008
            
            -
            
            -
            -
            $
            0.25
            200,000
            200,000March
      18, 2008
            
            -
            
            -
            -
            $
            0.25
            400,000
            400,000April
      2, 2008
            
            -
            
            -
            -
            $
            0.25
            120,000
            120,000May
      15, 2008
            
            -
            
            -
            -
            $
            0.25
            100,000
            100,000May
      18, 2008
            
            -
            
            -
            -
            $
            0.25
            25,000
            25,000June
      4, 2008
            
            -
            
            -
            -
            $
            0.25
            800,000
            800,000December
      2, 2008
            
            -
            
            -
            -
            $
            0.25
            80,000
            80,000December
      9, 2008
            
            -
            
            -
            -
            $
            0.25
            100,000
            100,000December
      18, 2008
            
            -
            
            -
            -
            $
            0.25
            86,000
            86,000December
      30, 2008
            
            -
            
            -
            -
            $
            0.25
            500,000
            500,000December
      31, 2008
            
            -
            
            -
            -
            $
            0.25
            1,973,000
            1,973,000March
      31, 2009
            $
            0.25
            
            220,000
            220,000
            $
            0.25
            220,000
            220,000June
      30, 2009
            $
            0.25
            
            61,322,463
            59,822,463
            $
            0.25
            63,322,463
            59,822,463October 10,
      2009
            $
            0.25
            
            40,000
            40,000
            $
            0.25
            40,000
            40,000October 19,
      2009
            $
            0.25
            
            40,000
            40,000
            $
            0.25
            40,000
            40,000December 1,
      2009
            $
            0.25
            
            200,000
            200,000
            $
            0.25
            200,000
            200,000December 31,
      2009
            $
            0.25
            
            760,000
            760,000
            $
            0.25
            760,000
            760,000January 5,
      2010
            $
            0.25
            
            30,000
            30,000
            $
            0.25
            30,000
            30,000January 7,
      2010
            $
            0.25
            
            4,870,000
            4,870,000
            $
            0.25
            4,870,000
            4,870,000March 17,
      2010
            $
            0.25
            
            600,000
            600,000
            $
            0.25
            600,000
            600,000April 13,
      2010
            $
            0.25
            
            400,000
            400,000
            $
            0.25
            400,000
            400,000June 15,
      2010
            $
            0.25
            
            400,000
            400,000
            $
            0.25
            400,000
            400,000July 8,
      2010
            $
            0.25
            
            500,000
            500,000
            $
            0.25
            500,000
            500,000September 12,
      2010
            $
            0.25
            
            19,200,000
            7,125,000
            $
            0.25
            26,700,000
            7,125,000September 30,
      2010
            $
            0.25
            
            700,000
            700,000
            $
            0.25
            700,000
            700,000October 17,
      2010
            $
            0.25
            
            350,000
            350,000
            $
            0.25
            350,000
            350,000November 16,
      2010
            $
            0.25
            
            400,000
            400,000
            $
            0.25
            400,000
            400,000December 13,
      2010
            $
            0.25
            
            220,000
            220,000
            $
            0.25
            220,000
            220,000January 4,
      2011
            $
            0.25
            
            400,000
            400,000
            $
            0.25
            400,000
            400,000February
      9, 2011
            $
            -
            
            -
            -
            $
            0.25
            2,000,000
            2,000,000Carried
      forward:
            
            
            
            90,652,463
            77,077,463
            
            
            107,401,463
            84,326,463





F-18
 42
 ALR
TECHNOLOGIES INC.
 Notes
to Consolidated Financial Statements
 ($
United States)
 Years
Ended December 31, 2008 and 2007





7.
            Capital stock:(continued)





Brought
      forward:
            
            
            
            90,652,463
            77,077,463
            
            
            107,401,463
            84,326,463April 7,
      2011
            $
            0.25
            
            200,000
            200,000
            $
            0.25
            200,000
            200,000April 27,
      2011
            $
            0.25
            
            80,000
            80,000
            $
            0.25
            80,000
            80,000September 8,
      2011
            $
            0.25
            
            990,000
            990,000
            $
            0.25
            990,000
            990,000November 20,
      2011
            $
            0.25
            
            300,000
            300,000
            $
            0.25
            300,000
            300,000December 19,
      2011
            $
            0.25
            
            2,695,000
            2,695,000
            $
            0.25
            2,695,000
            2,695,000December 20,
      2011
            $
            0.25
            
            3,630,000
            3,630,000
            $
            0.25
            3,630,000
            3,630,000January
      16, 2013
            $
            0.25
            
            2,750,000
            750,000
            $
            -
            -
            -January
      23, 2013
            $
            0.25
            
            1,000,000
            -
            $
            -
            -
            -January
      29, 2013
            $
            0.25
            
            100,000
            100,000
            $
            -
            -
            -March
      31, 2013
            $
            0.25
            
            1,800,000
            1,800,000
            $
            -
            -
            -September
      27, 2013
            $
            0.25
            
            272,000
            272,000
            $
            -
            -
            -December,31,
      2013
            $
            0.25
            
            206,000
            206,000
            $
            -
            -
            -April 18,
      2017
            $
            0.25
            
            400,000
            400,000
            $
            0.25
            400,000
            400,000May 17,
      2017
            $
            0.25
            
            250,000
            250,000
            $
            0.25
            750,000
            250,000May 31,
      2017
            $
            0.25
            
            1,250,000
            800,000
            $
            0.25
            1,750,000
            800,000106,575,463
            89,550,463
            
            
            118,196,463
            93,671,463





The options exercisable at December 31, 2008 were in the following
exercise price ranges:





2008
                  
                  2007Exercise
      Price
                  $
                  0.25
                  $
                  0.25Weighted
      Average Exercise Price
                  $
                  0.25
                  $
                  0.25Aggregate
      Intrinsic Value
                  $
                  0.00
                  $
                  0.00Weighted,
      Average RemainingContractual Life in Years
                  
                  1.31
                  
                  2.44











F-19
 43
 ALR
TECHNOLOGIES INC.
 Notes
to Consolidated Financial Statements
 ($
United States)
 Years
Ended December 31, 2008 and 2007





7.
            Capital stock:(continued)





The
Company uses the fair value method for determining stock-based compensation for
all options granted during the fiscal periods. The fair value was determined
using the Black-Scholes option pricing model based on the following
assumptions:





Options
      Granted
            Risk-Free
      Interest Rate
            Expected
      Life
            Expected
      Dividends
            
            Expected
      VolatilityDecember 31,
      2008
            1.55%
            5
      years
            -
            
            197.14%September 29,
      2008
            2.70%
            5
      years
            -
            
            197.22%March 31,
      2008
            2.46%
            5
      years
            -
            
            190.21%January 29,
      2008
            2.87%
            5
      years
            -
            
            185.98%January 23,
      2008
            2.64%
            5
      years
            -
            
            185.71%January
      16, 2008
            3.00%
            5
      years
            -
            
            186.05%June 29,
      2007
            5.02%
            10
      years
            -
            
            193.65%May 17,
      2007
            4.76%
            10
      years
            -
            
            192.64%





Stock-based
compensation charges of $71,191 (2007 - $12,458) was allocated to interest
expense; $nil (2007 - $39,838) was allocated to selling, general and
administration costs; and $228,001 (2007 - $47,391) was allocated to product
development costs.





Unvested
options at December 31, 2008 consist of 17,025,000 options, which will vest
based on achieving certain sales and performance targets, including 9,750,000 to
three directors and 250,000 to a relative of a director of the
Company.  Compensation cost related to the 17,025,000 unvested options
granted between 2004 to 2008, which value is estimated to be $890,169 will
be recorded in the period in which the sales or performance targets are
achieved or probable of being achieved.





8.
            Contingencies





Accounts
payable and accrued liabilities as of December 31, 2008 include $180,666 (2007 -
$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.





During
the year ended December 31, 2008, a non-related promissory note holder commenced
legal action against the Company to enforce repayment of all outstanding notes
payable and accrued interest.  As at December 31, 2008, the total
outstanding notes payable and interest payable owed to this creditor was
$42,000.  The Company has agreed to settle this balance and is
currently awaiting final approval by a Superior Court judge.





Subsequent
to December 31, 2008, two other non-related promissory note holders commenced
legal action against the Company to enforce repayment of all outstanding notes
payable and interest due to them and to extend the expiration date of 13,508,000
options held by these creditors, exercisable at $0.25 per shares, to December
31, 2017.  As at December 31, 2008, the total outstanding notes
payable and interest payable due to them was $1,879,485.  The Company
expects to pay these amounts in 2009.







44


ALR
TECHNOLOGIES INC.
 Notes
to Consolidated Financial Statements
 ($
United States)
 Years
Ended December 31, 2008 and 2007





9.
            Related
      party transactions:





2008
                          
                          2007Product development
      costs:Directors and
      officers
                          $
                          60,000
                          $
                          60,000Relatives of
      directors
                          
                          -
                          
                          6,998Stock-based compensation in
      product development:Directors and
      officers
                          
                          129,467
                          
                          -Interest
      expense:Directors and
      officers
                          
                          21,490
                          
                          24,703Relatives of
      directors
                          
                          347,218
                          
                          355,799Company controlled by a
      director
                          
                          457
                          
                          5,790Stock-based compensation in
      interest expense:Relatives of
      directors
                          
                          17,057
                          
                          -Compensation:Directors and
      officers
                          
                          319,800
                          
                          319,800Relatives of
      directors
                          
                          36,000
                          
                          36,000$
                          931,489
                          $
                          809,090





All
transactions with related parties were incurred in the normal course of
operations and measured at the exchange amount, which is the amount of
consideration established and agreed upon by the transacting
parties.





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 by the parties. Options granted to related
parties have been recorded at their estimated fair value as disclosed in note
7.





10.
            Commitments:





During
2000, the Company entered into three-year contracts with certain executive
officers and directors providing the following annual compensation.





Sidney
      Chan
              $
              144,000Stanley
      Cruitt
              $
              156,600Dr. Jaroslav
      Tichy
              $
              60,000





The
contracts are automatically renewed annually after the initial three-year term,
and may be terminated by the Company at any time, effective thirty days after
delivery of notice, without any further compensation.








F-21
 45
 ALR
TECHNOLOGIES INC.
 Notes
to Consolidated Financial Statements
 ($
United States)
 Years
Ended December 31, 2008 and 2007





10.           Commitments:
(continued)





The terms
of Mr. Chan's contract also provides for a commission of 1% of net sales during
the term of the agreement as well as a bonus payment on commencement of
commercial production of the Pet Reminder. In addition, if more than 50% of the
Company's stock or assets are sold, Messrs. Chan, Cruitt and Tichy will be
compensated for entering into non-compete agreements based on the selling price
of the Company or its assets as follows:





2% of
sales price up to $24,999,999 plus


3% of
sales price between $25,000,000 and $49,999,999 plus


4% of
sales price between $50,000,000 and $199,999,999 plus


5% of
sales price in excess of $200,000,000





The terms
of Mr. Cruitt's contract was amended in 2008 as a result of his resignation as
President on June 16, 2008. Mr. Cruitt was originally entitled to 4,000,000
options with a five-year term exercisable at $0.25 per share of which 2,000,000
stock options vested immediately and the remaining 2,000,000 options subject to
sales and performance targets were cancelled in 2008.





11.
            Financial
instruments:





The fair
values of cash, accounts receivable, and accounts payable and accrued
liabilities approximate their carrying values due to the relatively short
periods to maturity of these instruments. The fair value of the promissory notes
payable approximate their carrying value because they bear interest at rates
that are not significantly different from current market rates. It is not
possible to arrive at a fair value for the promissory notes payable as the
payment dates are not readily determinable.




















F-22
 46
 ALR
TECHNOLOGIES INC.
 Notes
to Consolidated Financial Statements
 ($
United States)
 Years
Ended December 31, 2008 and 2007





12.
            Reconciliation
      of net loss to net cash used by operating
  activities:





2008
                              
                              
                              2007Net
    loss
                              $
                              (1,899,110
                              )
                              $
                              (1,579,506
                              )Adjustments to reconcile loss to
      net cash used byoperating
      activities:Depreciation
                              
                              1,724
                              
                              
                              1,700Foreign
      exchange (gain) loss on notes payable
                              
                              (29,513
                              )
                              
                              23,239Accumulated
      other comprehensive income
                              
                              -
                              
                              
                              (37,164
                              )Compensation
      costs of options issued for services
                              
                              -
                              
                              
                              39,838Compensation
      costs of options issued for product development
                              
                              228,001
                              
                              
                              47,391Financing
      costs of options issued for promissory notes payable
                              
                              71,191
                              
                              
                              12,458Non-cash
      working capital items:
                              
                              
                              
                              
                              -(Increase)
      decrease in accounts receivable
                              
                              (827
                              )
                              
                              710Decrease
      (increase) in inventories
                              
                              78,922
                              
                              
                              (6,882
                              )(Increase)
      decrease in prepaid expenses and deposits
                              
                              (57,536
                              )
                              
                              3,498Increase
      in accounts payable and accrued liabilities
                              
                              1,096,101
                              
                              
                              1,439,871Decrease
      in customer deposits
                              
                              -
                              
                              
                              (25,597
                              )Net
      cash used by operating activities
                              $
                              (511,047
                              )
                              $
                              (80,444
                              )





13.
            Income taxes:





The
provision for income taxes differs from the result, which would be obtained by
applying the statutory tax rate of 34% (2007 - 34%) to income before income
taxes. The difference results from the following items:





2008
                        
                        
                        2007Computed
      expected benefit ofincome taxes
                        $
                        (645,697
                        )
                        $
                        (537,032
                        )Non-deductible
      expenses
                        
                        101,724
                        
                        
                        33,894Increase
      in valuation allowance
                        
                        543,973
                        
                        
                        503,138Income tax
      provision
                        $
                        -
                        
                        $
                        -





Pursuant
to SFAS 109, the potential benefit of net operating loss carry forwards has not
been recognized in these financial statements since the Company cannot be
assured that it is more likely than not that such benefit will be utilized in
future years. The components of the net deferred income tax asset, the statutory
tax rate, the effective tax rate and the amount of the valuation allowance are
as follows:





2008
                        
                        
                        2007Net
      operating loss carriedforward
                        $
                        20,642,008
                        
                        $
                        19,042,089Tax
    rate
                        
                        34
                        %
                        
                        34
                        %Deferred income tax
      assets
                        
                        7,018,283
                        
                        
                        6,474,310Valuation
      allowance
                        
                        (7,018,283
                        )
                        
                        (6,474,310
                        )Net deferred income
      taxasset
                        $
                        -
                        
                        $
                        -




F-23




47




ALR
TECHNOLOGIES INC.
 Notes
to Consolidated Financial Statements
 ($
United States)
 Years
Ended December 31, 2008 and 2007




13.           Income taxes:(continued)





A
valuation allowance has been established and, accordingly, no benefit has been
recognized for the Company's deferred income tax assets. The Company believes
that, based on a number of factors, the available objective evidence creates
sufficient uncertainty regarding the realizability of the deferred income tax
assets such that a full valuation allowance has been recorded. These factors
include the Company's current history of net losses and the expected near-term
future losses. The Company will continue to assess the realizability of the
future income tax assets based on actual and forecasted operating results. The
operating losses amounting to $20,642,008 will expire between 2019 and 2028 if
they are not utilized. The following table lists the fiscal year in which the
loss was incurred and the expiration date of the operating loss
carry-forwards:





Fiscal
      Year
              
              Amount
              
              Expiry
      Date1999
              $
              88,022
              
              20192000
              
              4,425,866
              
              20202001
              
              3,681,189
              
              20212002
              
              2,503,951
              
              20222003
              
              2,775,900
              
              20232004
              
              1,250,783
              
              20242005
              
              1,304,238
              
              20252006
              
              1,532,322
              
              20262007
              
              1,479,818
              
              20272008
              
              1,599,919
              
              2028Total
              $
              20,642,008





14.
            Other
      income:





There was
no other income recorded for the year ended December 31, 2008. Accumulated other
comprehensive income of $37,164 was recorded for the year ended December 31,
2007 due to write-off of accumulated translation adjustment relating to disposal
of a subsidiary in prior years.





15.
            Subsequent
      events:





a)
            Subsequent
      to the year-end, the Company agreed to grant options to a relative of a
      director to purchase 275,000 common shares of the Company at a price of
      $0.25 per share for a period of five years in consideration of providing
      loans to the Company.





b)
            Legal
      action was commenced by non-related parties to enforce repayment of notes
      payable (note 8).








F-24
 48










ITEM
9.     CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.




There
were no changes in and disagreements with accountants on accounting and
financial disclosure for the years ended December 31, 2008 and
2007.







ITEM
9A.    CONTROLS AND PROCEDURES




Evaluation
of Disclosure Controls and Procedures




Under the supervision and with the participation of the Company’s
management, including the principal executive officer and principal financial
officer, as of the end of the period covered by this report, the Company
conducted an evaluation of the effectiveness of the design and operation of the
Company’s disclosure controls and procedures, as defined in Rule 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”). The
Company’s disclosure controls and procedures are designed to provide reasonable
assurance that the information required to be included in the Company’s reports
to Securities and Exchange Commission (“SEC”) is recorded, processed, summarized
and reported within the time periods specified in SEC rules and forms relating
to ALR Technologies Inc., including the Company’s consolidated subsidiaries, and
was made known to them by others within those entities, particularly during the
period when this report was being prepared. Based on this evaluation, the
Company’s principal executive officer and principal financial officer concluded
that, as of the period covered by this report, the Company’s disclosure controls
and procedures are effective at these reasonable assurance levels.




Limitations
on the Effectiveness of Controls




The
Company’s management, including the CEO and CFO, does not expect that the
Company’s Disclosure Controls and internal controls will prevent all errors and
all fraud. A control system, no matter how well conceived and operated, can
provide only reasonable, not absolute, assurance that the objectives of the
control system are met. Further, the design of a control system must reflect the
fact that there are resource constraints, and the benefits of controls must be
considered relative to their costs. Because of the inherent limitations in all
control systems, no evaluation of controls can provide absolute assurance that
all control issues and instances of fraud, if any, within the Company have been
detected. These inherent limitations include the realities that judgments in
decision-making can be faulty, and that breakdowns can occur because of a simple
error or mistake. Additionally, controls can be circumvented by the individual
acts of some persons, by collusion of two or more people, or by management or
board override of the control.




49




The design of any system of controls
also is based in part upon certain assumptions about the likelihood of future
events, and there can be no assurance that any design will succeed in achieving
its stated goals under all potential future conditions; over time, controls may
become inadequate because of changes in conditions, or the degree of compliance
with the policies or procedures may deteriorate. Because of the inherent
limitations in a cost-effective control system, misstatements due to error or
fraud may occur and not be detected.




CEO
and CFO Certifications




Appearing
immediately following the Signatures section of this report there are
Certifications of the CEO and the CFO. The Certifications are required in
accordance with Section 302 of the Sarbanes-Oxley Act of 2002 (the Section 302
Certifications). This Item of this report, which you are currently reading is
the information concerning the Evaluation referred to in the Section 302
Certifications and this information should be read in conjunction with the
Section 302 Certifications for a more complete understanding of the topics
presented.




Management’s
Report on Internal Control over Financial Reporting




The
Company’s management is responsible for establishing and maintaining adequate
internal control over financial reporting, as such term is defined in Exchange
Act Rule 13a-15(f). The Company’s internal control over financial reporting is a
process designed to provide reasonable assurance to our management and board of
directors regarding the reliability of financial reporting and the preparation
of the consolidated financial statements for external purposes in accordance
with accounting principles generally accepted in the United States of
America.




The
Company’s internal control over financial reporting includes those policies and
procedures that (i) pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect the transactions and dispositions of the
assets of the Company; (ii) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of consolidated financial statements
in accordance with accounting principles generally accepted in the United States
of America, and that receipts and expenditures of the Company are being made
only in accordance with authorizations of management and directors of the
Company; and (iii) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the Company’s
assets that could have a material effect on the consolidated financial
statements.




Because
of its inherent limitations, internal controls over financial reporting may not
prevent or detect misstatements. All internal control systems, no matter how
well designed, have inherent limitations, including the possibility of human
error and the circumvention of overriding controls. Accordingly, even effective
internal control over financial reporting can provide only reasonable assurance
with respect to financial statement preparation. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may
deteriorate.




50




The
Company’s management assessed the effectiveness of our internal control over
financial reporting as of December 31, 2008. In making this assessment, the
company used the criteria set forth by the Committee of Sponsoring Organizations
of the Treadway Commission (COSO) in Internal Control-Integrated
Framework. Based on the Company’s assessment, the Company believe that,
as of December 31, 2008, the Company’s internal control over financial reporting
was effective based on those criteria.




This annual report does not include
an attestation report of the Company’s registered public accounting firm
regarding internal control over financial reporting. Management’s report was not
subject to attestation by our registered public accounting firm pursuant to
temporary rules of the Securities and Exchange Commission that permit the
Company to provide only management’s report in this annual
report.




Changes
in Internal Controls over Financial Reporting




In
connection with the evaluation required by paragraph (d) of Rule 13a-15 under
the Exchange Act, there was no changes in the Company’s internal control over
financial reporting that occurred during the last fiscal quarter that has
materially affected, or is reasonably likely to materially affect, the Company’s
internal control over financial reporting. We have evaluated our internal
control over financial reporting and there have been no changes in our internal
controls or in other factors that could affect those controls.






PART
III






ITEM10.    
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH
SECTION 16(a) OF THE EXCHANGE ACT.




The name, age and position held by each of the directors and officers of the
Company are as follows:




Name
            Age
            Position
      HeldSidney
      Chan
            58
            President,
      Chief Executive Officer, Chief Financial Officer,and
      a member of the Board ofDirectorsStanley
      Cruitt
            59
            Chairman
      and a member of the Board of DirectorsDr.
      Jaroslav Tichy
            68
            Vice-President
      of Technology and a member of the Board ofDirectors




All
directors have a term of office expiring at the next annual general meeting of
the Company, unless re-elected or earlier vacated in accordance with the By-laws
of the Company. All officers have a term of office lasting until their removal
or replacement by the board of directors.




51




Sidney
Chan – President, Chief Executive, Chief Financial Officer and a member of the
Board of Directors of the Company.




Mr.
Chan has made a significant contribution to the Company since first becoming
involved in August 1997. He has assisted the Company’s financing and its
evolution into a public company. Most importantly, he has also directed the
Company’s product development. Mr. Chan has extensive relationships with Hong
Kong area based technology and electronic manufacturers, helping assure the
availability of low cost manufacturing and materials procurement. Mr. Chan is an
engineer and obtained his Bachelor of Engineering (Mining) degree with
distinction in Mineral Economics from McGill University in 1973




Stanley
Cruitt - Chairman and a member of the Board of Directors of the
Company.




Stan
Cruitt joined the Company as President in 2000, bringing with him more than 20
years of experience in the pharmaceutical industry. He became President at a key
point in the Company’s history, when ALRT was evaluating its products and
considering innovative uses for medication and health management compliance
throughout the healthcare community. Mr. Cruitt has extensive experience in the
pharmaceutical industry, where he has held numerous positions ranging from
serving as a marketing research analyst with Merck to top marketing and
management positions with Ciba and Novartis.  In 1996, Newsweek and
Advertising Age recognized him as one of the top marketers in the United States.
Mr. Cruitt’s experience at building brands, markets and business is a needed fit
for the Company. Mr. Cruitt received his undergraduate degree from Southern
Illinois University and received academic honors during graduate
study.




Dr. Jaroslav V. Tichy - Vice President, Technology and a member of
the Board of Directors of the Company




Since
December, 2000, Dr. Tichy has been Vice President of Technology for the Company.
From 1984 through 2000, Dr. Tichy was a Systems Design Specialist with
Weir-Jones Engineering Consultants Ltd. Dr. Tichy has conducted research and
lectured in a wide range of areas including asynchronous switching theory,
signal theory and pattern recognition. In addition, he has been involved in a
number of development projects including analog, digital and mixed circuit
design, digital signal processing and microprocessor and microcontroller based
systems. Dr. Tichy received both his PhD and MSc. degrees in computer technology
from the Technical University in Brno Czech Republic.




Involvement
in Certain Legal Proceedings




To
the Company’s knowledge, during the past five years, its officers and directors:
has not filed a petition under the federal bankruptcy laws or any state
insolvency law, nor had a receiver, fiscal agent or similar officer appointed by
a court for the business or present of such a person, or any partnership in
which he was a general partner at or within two years before the time of such
filing, or any corporation or business association of which he was an executive
officer within two years before the time of such filing; were not convicted in a
criminal proceeding or named subject of a pending criminal proceeding (excluding
traffic violations and other minor offences); were not the




52




subject
of any order, judgment or decree, not subsequently reversed, suspended or
vacated, of any court of competent jurisdiction, permanently or temporarily
enjoining him from or otherwise limiting the following activities: (i) acting as
a futures commission merchant, introducing broker, commodity trading advisor,
commodity pool operator, floor broker, leverage transaction merchant, associated
person of any of the foregoing, or as an investment advisor, underwriter, broker
or dealer in securities, or as an affiliated person, director of any investment
company, or engaging in or continuing any conduct or practice in connection with
such activity; (ii) engaging in any type of business practice; (iii) engaging in
any activity in connection with the purchase or sale of any security or
commodity or in connection with any violation of federal or state securities
laws or federal commodity laws; were not the subject of any order, judgment or
decree, not subsequently reversed, suspended or vacated, of any federal or state
authority barring, suspending or otherwise limiting for more than 60 days the
right of such person to engage in any activity described above under this Item,
or to be associated with persons engaged in any such activity; were not found by
a court of competent jurisdiction in a civil action or by the Securities and
Exchange Commission to have violated any federal or state securities law and the
judgment in subsequently reversed, suspended or vacate; and were not found by a
court of competent jurisdiction in a civil action or by the Commodity Futures
Trading Commission to have violated any federal commodities law, and the
judgment in such civil action or finding by the Commodity Futures Trading
Commission has not been subsequently reversed, suspended or
vacated.




Compliance
with Section 16(a) of the Exchange Act.




Based
solely upon a review of Forms 3, 4 and 5 furnished to the Company during the
fiscal years 2008 and 2007, no officer or director except one director failed to
file their Form 3, 4 and 5 on a timely basis.




On
June 29, 2007, Stan Cruitt, Chairman and director of the Company sold 750,000
common shares at the price of $0.15 per share and filed his Form 4 on July 5,
2007. Mr. Cruitt further sold 760,000 common shares at the price of $0.16 per
share and filed his Form 4 on March 27, 2008.




Audit Committee and Charter




The
Company has an audit committee and audit committee charter. The Company’s audit
committee is comprised of all three directors. None of directors are deemed
independent. Two directors also hold positions as officers of the Company. A The
Company’s audit committee is responsible for: (1) selection and oversight of its
independent accountant; (2) establishing procedures for the receipt, retention
and treatment of complaints regarding accounting, internal controls and auditing
matters; (3) establishing procedures for the confidential, anonymous submission
by company employees of concerns regarding accounting and auditing matters; (4)
engaging outside advisors; and, (5) funding for the outside auditory and any
outside advisors engagement by the audit committee.




53




Audit
Committee Financial Expert




The
Company has no financial expert. It believes the cost related to retaining a
financial expert at this time is prohibitive. Further, because of the Company’s
limited operations, management believes the services of a financial expert are
not warranted.




Code
of Ethics




The
Company has adopted a corporate code of ethics. The Company believes its code of
ethics is reasonably designed to deter wrongdoing and promote honest and ethical
conduct; provide full, fair, accurate, timely and understandable disclosure in
public reports; comply with applicable laws; ensure prompt internal reporting of
code violations; and provide accountability for adherence to the
code.




Disclosure
Committee and Charter




The
Company has a disclosure committee and disclosure committee charter. The
Company’s disclosure committee is comprised of all of its officers and
directors. The purpose of the committee is to provide assistance to the
Principal Executive Officer and the Principal Financial Officer in fulfilling
their responsibilities regarding the identification and disclosure of material
information about the Company and the accuracy, completeness and timeliness of
the Company’s financial reports.






ITEM
11.     EXECUTIVE COMPENSATION.




The
following table sets forth information with respect to compensation paid by the
Company to officers and directors during the three most recent fiscal
years.




Summary Compensation
      TableNon-
            NonqualifiedEquity
            Deferred
            AllIncentive
            Compensa-
            OtherStock
            Option
            Plan
            tion
            Compen-Name
      and
            
            Salary
            Bonus
            Awards
            Awards
            Compensation
            Earnings
            sation
            TotalPrincipal
      Position
            Year
            (US$)
            (US$)
            (US$)
            (US$)
            (US$)
            (US$)
            (US$)
            (US$)(a)
            (b)
            (c)
            (d)
            (e)
            (f)
            (g)
            (h)
            (i)
            (j)Sidney
      Chan [2]
            2008
            144,000
            0
            0
            0
            0
            0
            9,600
            153,600President
      and Chief
            2007
            144,000
            0
            0
            0
            0
            0
            9,600
            153,600Executive
      Officer &
            2006
            144,000
            0
            0
            142,105
            0
            0
            9,600
            295,705Chief
      Financial OfficerStanley
      Cruitt [3]
            2008
            156,00
            0
            0
            0
            0
            0
            9,600
            166,200Chairman
      (former
            2007
            156,000
            0
            0
            0
            0
            0
            9,600
            166,200President)
            2006
            156,000
            0
            0
            147,662
            0
            0
            9,600
            313,862Dr.
      Jaroslav Tichy [4]
            2008
            60,000
            0
            0
            0
            0
            0
            0
            60,000Vice
      President,
            2007
            60,000
            0
            0
            0
            0
            0
            0
            60,000Technology
            2006
            60,000
            0
            0
            137,595
            0
            0
            0
            197,595






54


[1]
              Automobile
      allowance[2]
              At
      December 31, 2008, salaries and other annual compensation for fiscal 2008,
      2007 and 2006 totalling $604,800 remain unpaid and are included in
      advances payable.[3]
              At
      December 31, 2008, salaries and other annual compensation for fiscal 2008,
      2007 and 2006 totaling $664,800 remain unpaid and are included in advances
      payable.  Stan Cruitt resigned as President on June 16,
      2008.[4]
              At
      December 31, 2008, salaries and other annual compensation for fiscal 2008,
      2007 and 2006 totaling $240,000 remain unpaid and are included in advances
      payable.




The
Company has irrevocably committed to grant a total of 13,845,000 stock options
to Sidney Chan, President, Chief Executive Officer, Chief Financial Officer and
Director of the issuer, 8,860,976 stock options to Stanley Cruitt, Chairman and
Director of the issuer, 5,702,249 options to Dr. Jaroslav Tichy, Vice President
Technology of the issuer. The exercise price of the options is $0.25 per share
and they will be exercisable for a period of five years to ten years from the
commitment date.




The
Company does not have a non-qualified incentive stock option plan. In the future
the Company intends to adopt such a plan to satisfy its contractual commitments
to Messrs. Chan, Cruitt and Tichy.




The
Company does not have any long-term incentive plans.




During
2000, the Company entered into three year contracts with its named executive
officers providing the following annual compensation.




Sidney
      Chan
            $
            144,000Stanley
      Cruitt  (resigned as President on June 16, 2008)
            $
            156,600Dr.
      Jaroslav Tichy
            $
            60,000




The
contracts are automatically renewed annually after the initial three-year term,
and  may be terminated by the Company at any time, effective thirty
days after delivery of notice, without any further compensation.




The
terms of Mr. Chan’s contract also provides for a commission of 1.0% of net sales
during the term of the agreement as well as a bonus payment on commencement of
commercial production of the Pet Reminder.  In addition, if more than
50% of the Company’s stock or assets are sold, Messrs. Chan, Cruitt and Tichy
will be compensated for entering into a non-compete agreements based on the
selling price of the Company or its assets as follows:




55




2% of
sales price up to $24,999,999 plus


3% of
sales price between $25,000,000 and $49,999,999 plus


4% of
sales price between $50,000,000 and $199,999,999 plus


5% of
sales price in excess of $200,000,000




The terms of Mr. Cruitt’s contract
was amended in 2008 as a result of his resignation as President on June 16,
2008.  Mr. Cruitt was originally entitled to 4,000,000 options with an
original five-year term exercisable at $0.25 per share of which 2,000,000
options vested immediately and the remaining 2,000,000 options subject to sales
and performance targets were cancelled in 2008.




Compensation
of Directors




There
are no standard or other arrangements pursuant to which the Company’s directors
were compensated in their capacity as such during the 2008 fiscal
year.




The
Company’s Board of Directors unanimously resolved that members receive no
compensation for their services, however, they are reimbursed for travel
expenses incurred in serving on the Board of Directors.




No
additional amounts are payable to the members of the Company’s Board of
Directors for committee participation or special assignments.




Effective August 25, 2006, the Board
of Directors consist three members, Mr. Sidney Chan, President, Chief Executive
Officer, Chief Financial Officer of the Company, Mr. Stanley Cruitt, Chairman of
the Company, and Dr. Jaroslav Tichy. There are no independent
directors.




Directors’
      CompensationFeesEarned
            
            
            
            Nonqualifiedor
            
            
            Non-Equity
            DeferredPaid
      in
            Stock
            Option
            Incentive
      Plan
            Compensation
            All
      OtherCash
            Awards
            Awards
            Compensation
            Earnings
            Compensation
            TotalName
            (US$)
            (US$)
            (US$)
            (US$)
            (US$)
            (US$)
            (US$)(a)
            (b)
            (c)
            (d)
            (e)
            (f)
            (g)
            (h)Sidney
      Chan
            144,000
            0
            0
            0
            0
            9,600
            153,600Stanley
      Cruitt
            156,600
            0
            0
            0
            0
            9,600
            166,200Dr.
      Jaroslav Tichy
            60,000
            0
            0
            0
            0
            0
            60,000







ITEM
12.     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.




Security
Ownership of Certain Beneficial Owners




The
following table sets forth, as of December 31, 2008, the beneficial
shareholdings of persons or entities holding five percent or more of the
Company’s common stock, each director individually, each named executive officer
and all directors and officers of the Company as a group.  Each person
has sole voting and investment power with respect to the shares of Common Stock
shown, and all ownership is of record and beneficial.




56




Direct Amount
      of
            
            
            PercentName of Beneficial
      Owner
            Beneficial
      Owner
            
            Position
            of
  ClassSidney
      Chan
            27,500,000
            [1]
            President,
      Chief Executive Officer, Chief Financial
            36.15%Officer
      and a member of the Board of DirectorsStanley
      Cruitt
            11,890,000
            
            Chairman
      and a member of the Board of
            15.63%DirectorsDr.
      Jaroslav Tichy
            500,000
            
            Vice
      President of Technology
            0.66%All Officers and Directors
      as a
      group
            39,890,000
            
            
            52.44%(3 persons)





[1]
            1,000,000
      shares are held in the name of Sidney Chan, 500,000 shares are held in the
      name of KRS Retraction Limited, and 26,000,000 shares are owned by
      Christine Kan, Mr. Chan’s wife.


In consideration of services,
promissory notes payable or the extension of their due dates and accounts
payable and accrued liabilities, the Company has irrevocably committed to issue
stock options to directors and their relatives.  As of December 31,
2008, stock options remain outstanding are as follows:





(1)   13,845,000
stock options to Sidney Chan, President, Chief Executive Officer, Chief
Financial and a Director of the Company:





(2)   20,170,336
stock options to Christine Kan, his wife;





(3)  1,543,146
options to a company controlled by Mr. Chan and Mrs. Kan;





(4)  8,860,976
stock options to Stanley Cruitt, Chairman and a Director of the
Company;





(5)   280,000
options to Annie Cruitt, Stanley Cruitt’s wife;





(6)  5,702,249
options to Dr. Jaroslav Tichy, Vice President, Technology and a director of the
Company; and





(7)  4,677,000
stock options to other relatives of a director.




57





The
exercise price of the options is $0.25 per share and the options are exercisable
for a period of five to ten years from the commitment date.




Changes
in Control




To
the knowledge of management, there are no present arrangements or pledges of
securities of the Company which may result in a change in control of the
Company.






ITEM
13.     CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS.




Year
Ended December 31, 2008




All
transactions with related parties were incurred in the normal course of
operations and measured at the exchange amount, which is the amount of
consideration and agreed upon by the transaction parties.




During
the year ended December 31, 2008, Christine Kan, wife of Sidney Chan, President,
Chief Executive Officer, Chief Financial Officer and Director of the Company
loaned the Company a total of $119,328. The loan bears interest at 1% percent
per month and is secured by a floating charge against the assets of the
Company.




During
the year ended December 31, 2008, the promissory note denominated in Canadian
dollars payable to Sidney Chan, President, Chief Executive Officer, Chief
Financial Officer and Director of the Company was decreased by $29,513 due to
favourable exchange rates.




During
the year ended December 31, 2008, the Company irrevocably committed to issue the
following stock options to common shares of the Company:




a.
            750,000
      stock options to Jaroslav Tichy in consideration of services in product
      development.  All the options are vested at the time of
      commitment and the fair value of these options estimated to be $129,467
      was charged to product development costs.   The options are
      exercisable into the Company’s shares for a period of five years from the
      commitment date;b.
            478,000
      stock options to Christine Kan, a relative of Sidney Chan, in
      consideration of providing loans totalling $119,328 to the
      Company.  All the options are vested at the time of commitment
      and the fair value of these options estimated to be $17,057 was charged to
      interest expense.  The options are exercisable into the
      Company’s shares for the period of five years from commitment
      date.




Year
Ended December 31, 2007




During
the year ended December 31, 2007, the promissory note denominated in Canadian
dollars payable to Sidney Chan, President, Chief Executive Officer, Chief
Financial Officer and Director of the Company was increased by $23,239 due to
unfavourable exchange rates.




58




During
the year ended December 31, 2007, the Company irrevocably committed to issue the
following stock options to common shares of the Company:




a.
            250,000
      stock options to Kathleen Chan, a relative of Sidney Chan, in
      consideration of services.  These options are subject to certain
      vesting conditions and are exercisable into the Company’s common shares
      for a period of ten years from the commitment
  date.








ITEM
14.     PRINCIPAL ACCOUNTING FEES AND SERVICES




(1)
Audit Fees




The
aggregate fees billed for each of the last two fiscal years for professional
services rendered by the principal accountant for the Company’s audit of annual
consolidated financial statements and review of consolidated financial
statements included in the Company’s Form 10-Qs or services that are normally
provided by the accountant in connection with statutory and regulatory filings
or engagements for those fiscal years was:




2008
            $35,000
            Smythe
      Ratcliffe LLP2007
            $35,000
            Smythe
      Ratcliffe LLP2008
            $ 0.00
            Telford
      Sadovnick, P.L.L.C.2007
            $3,000
            Telford
      Sadovnick, P.L.L.C.




(2)
Audit-Related Fees




The
aggregate fees billed in each of the last two fiscal years for assurance and
related services by the principal accountants that are reasonably related to the
performance of the audit or review of the Company’s consolidated financial
statements and are not reported in the preceding paragraph:




2008
            $15,000
            Smythe
      Ratcliffe LLP2007
            $4,770
            Smythe
      Ratcliffe LLP2008
            $0.00
            Telford
      Sadovnick, P.L.L.C.2007
            $11,845
            Telford
      Sadovnick, P.L.L.C.




(3)
Tax Fees




The
aggregate fees billed in each of the last two fiscal years for professional
services rendered by the principal accountant for tax compliance, tax advice,
and tax planning was:




2008
            $
      0.00
            Smythe
      Ratcliffe LLP2007
            $
      0.00
            Smythe
      Ratcliffe LLP2008
            $
      0.00
            Telford
      Sadovnick, P.L.L.C.2007
            $
      0.00
            Telford
      Sadovnick, P.L.L.C.


59





(4)
      All Other Fees




The
aggregate fees billed in each of the last two fiscal years for the products and
services provided by the principal accountant, other than the services reported
in paragraphs (1), (2), and (3) was:




2008
            $
      3,160
            Smythe
      Ratcliffe LLP2007
            $
      0.00
            Smythe
      Ratcliffe LLP2008
            $0.00
            Telford
      Sadovnick, P.L.L.C.2007
            $
      0.00
            Telford
      Sadovnick, P.L.L.C.




(5)    
The Company’s audit committee’s pre-approval policies and procedures described
in paragraph (c)(7)(i) of Rule 2-01 of Regulation S-X were that the audit
committee pre-approve all accounting related activities prior to the performance
of any services by any accountant or auditor.




(6)    
The percentage of hours expended on the principal accountant’s engagement to
audit the Company’s consolidated financial statements for the most recent fiscal
year that were attributed to work performed by persons other than the principal
accountant’s full time, permanent employees was 0%.






PART IV




ITEM 15.    
EXHIBITS.




Incorporated by
      referenceFiledExhibit No.
      Description
            Form
            Date
            Number
            herewith3.1
            Initial
      Articles of Incorporation.
            10-SB
            12/10/99
            3.13.2
            Bylaws.
            10-SB
            12/10/99
            3.23.3
            Articles
      of Amendment to the Articles of
            10-SB
            12/10/99
            3.3Incorporation,
      dated October 22, 1998.3.4
            Articles
      of Amendment to the Articles of
            10-SB
            12/10/99
            3.4Incorporation,
      dated December 7, 1998.3.5
            Articles
      of Amendment to the Articles of
            8-K
            1/20/05
            3.1Incorporation,
      dated January 6, 2005.10.1
            Indemnity
      Agreement with Marcus Da Silva.
            8-K
            8/14/00
            10.110.2
            Purchase
      and Sales Agreement with
            8-K
            8/14/00
            10.2Marcus
      Da Silva.  60
 10.3
            Project
      Agreement with Tandy
            10-KSB
            4/17/01
            10.1Electronics
      (Far East) Ltd.14.1
            Code
      of Ethics.
            10-KSB
            4/14/03
            14.131.1
            Certification
      of Principal Executive
            
            
            
            XOfficer
      and  Principal Financial Officer pursuant to Rule 13a-14
      andRule
      15d-14(a), promulgated under theSecurities
      and Exchange Act of 1934, as amended.32.1
            Certification
      pursuant to 18 U.S.C.
            
            
            
            XSection
      1350, as adopted pursuantto
      Section 906 of the Sarbanes-Oxley Act of 2002 (Chief
      Executive Officerand
      Chief Executive Officer ).99.1
            Distribution
      Agreement between Mo Betta Corp.
            10-SB
            12/10/99
            99.1and
      ALR.99.2
            Pooling
      Agreement.
            10-SB
            12/10/99
            99.299.3
            Amended
      Pooling Agreement.
            10-SB
            12/10/99
            99.399.4
            Lock-Up
      Agreement.
            10-SB
            12/10/99
            99.4





99.5
            Termination
      Agreement with Michael Best.
            10-SB
            12/10/99
            99.599.6
            Termination
      Agreement with Norman van Roggen.
            10-SB
            12/10/99
            99.699.7
            Assignment
      Agreement.
            10-SB
            12/10/99
            99.799.8
            Distributorship
      Agreement.
            10-SB/A
            1/14/00
            99.899.9
            Settlement
      Agreement with 706166
            8-K
            2/02/00
            99.1Alberta
      Ltd., 745797 Alberta Ltd., Lorne Drever, Debbie MacNutt, Dean
      Drever,Sandra
      Ross and Sidney Chan.99.1
            Agreement
      to Provide Services with
            10-KSB
            4/17/01
            99.1Horizon
      Marketing & Research, Inc.                61
  99.11
            Agreement
      to Provide Services with Dr.
            10-KSB
            4/17/01
            99.11Jaroslav Tichy.99.12
            Agreement
      to Provide Services with
            10-KSB
            4/17/01
            99.12Knight’s
      Financial Limited regarding Christine Kan.99.13
            Agreement
      to Provide Services with
            10-KSB
            4/17/01
            99.13Knight’s
      Financial Limited regarding Sidney Chan.99.14
            Agreement
      to Provide Services with Bert Honsch.
            10-KSB
            4/17/01
            99.1499.15
            Agreement
      to Provide Services with Kenneth
            10-KSB
            4/17/01
            99.15Berkholtz.99.16
            Agreement
      to Provide Services with Jim Cleary.
            10-KSB
            4/17/01
            99.1699.17
            Settlement
      agreement with Ken Robulak.
            10-KSB
            4/17/01
            99.1799.18
            Agreement
      to Provide Services with RJF
            10-KSB
            4/15/02
            99.18Management
      Resource Associates, LLC.99.19
            Audit
      Committee Charter.
            10-KSB
            4/14/03
            99.199.20
            Disclosure
      Committee Charter.
            10-KSB
            4/14/03
            99.2



































































62




SIGNATURES






Pursuant
to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized, on this 31st day of
March, 2009.




ALR
TECHNOLOGIES, INC.


(Registrant)




BY: 
 SIDNEY
CHAN


Sidney Chan


President, Chief Executive Officer, Chief Financial Officer and a member of the
Board of Directors




Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following person on behalf of the Registrant and in the
capacities.




Signatures
            Title
            DateSIDNEY CHAN
            President,
      Chief Executive Officer and
            March
      31, 2009Sidney
      Chan
            Chief
      Financial Officerand
      a member of the Boardof
      DirectorsSTANLEY CRUITT
            Chairman
      and a member of the Board of
            March
      31, 2009Stanley
      Cruitt
            DirectorsVice
      President of Technology and  member
            March
      31, 2009Dr.
      Jaroslav Tichy
            of
      the Board of Directors















63




EXHIBIT INDEX










Incorporated by
      referenceFiledExhibit No.
      Description
            Form
            Date
            Number
            herewith3.1
            Initial
      Articles of Incorporation.
            10-SB
            12/10/99
            3.13.2
            Bylaws.
            10-SB
            12/10/99
            3.23.3
            Articles
      of Amendment to the Articles of
            10-SB
            12/10/99
            3.3Incorporation,
      dated October 22, 1998.3.4
            Articles
      of Amendment to the Articles of
            10-SB
            12/10/99
            3.4Incorporation,
      dated December 7, 1998.3.5
            Articles
      of Amendment to the Articles of
            8-K
            1/20/05
            3.1Incorporation,
      dated January 6, 2005.10.1
            Indemnity
      Agreement with Marcus Da Silva.
            8-K
            8/14/00
            10.110.2
            Purchase
      and Sales Agreement with
            8-K
            8/14/00
            10.2Marcus
      Da Silva.10.3
            Project
      Agreement with Tandy
            10-KSB
            4/17/01
            10.1Electronics
      (Far East) Ltd.14.1
            Code
      of Ethics.
            10-KSB
            4/14/03
            14.131.1
            Certification
      of Principal Executive
            
            
            
            XOfficer
      and  Principal Financial Officer pursuant to Rule 13a-14
      andRule
      15d-14(a), promulgated under theSecurities
      and Exchange Act of 1934, as amended.32.1
            Certification
      pursuant to 18 U.S.C.
            
            
            
            XSection
      1350, as adopted pursuantto
      Section 906 of the Sarbanes-Oxley Act of 2002 (Chief
      Executive Officerand
      Chief Executive Officer ).99.1
            Distribution
      Agreement between Mo Betta Corp.
            10-SB
            12/10/99
            99.1and
      ALR.  64
 99.2
            Pooling
      Agreement.
            10-SB
            12/10/99
            99.299.3
            Amended
      Pooling Agreement.
            10-SB
            12/10/99
            99.399.4
            Lock-Up
      Agreement.
            10-SB
            12/10/99
            99.4





99.5
            Termination
      Agreement with Michael Best.
            10-SB
            12/10/99
            99.599.6
            Termination
      Agreement with Norman van Roggen.
            10-SB
            12/10/99
            99.699.7
            Assignment
      Agreement.
            10-SB
            12/10/99
            99.799.8
            Distributorship
      Agreement.
            10-SB/A
            1/14/00
            99.899.9
            Settlement
      Agreement with 706166
            8-K
            2/02/00
            99.1Alberta
      Ltd., 745797 Alberta Ltd., Lorne Drever, Debbie MacNutt, Dean
      Drever,Sandra
      Ross and Sidney Chan.99.1
            Agreement
      to Provide Services with
            10-KSB
            4/17/01
            99.1Horizon
      Marketing & Research, Inc.99.11
            Agreement
      to Provide Services with Dr.
            10-KSB
            4/17/01
            99.11Jaroslav Tichy.99.12
            Agreement
      to Provide Services with
            10-KSB
            4/17/01
            99.12Knight’s
      Financial Limited regarding Christine Kan.99.13
            Agreement
      to Provide Services with
            10-KSB
            4/17/01
            99.13Knight’s
      Financial Limited regarding Sidney Chan.99.14
            Agreement
      to Provide Services with Bert Honsch.
            10-KSB
            4/17/01
            99.1499.15
            Agreement
      to Provide Services with Kenneth
            10-KSB
            4/17/01
            99.15Berkholtz.99.16
            Agreement
      to Provide Services with Jim Cleary.
            10-KSB
            4/17/01
            99.1699.17
            Settlement
      agreement with Ken Robulak.
            10-KSB
            4/17/01
            99.1799.18
            Agreement
      to Provide Services with RJF
            10-KSB
            4/15/02
            99.18Management
      Resource Associates, LLC.99.19
            Audit
      Committee Charter.
            10-KSB
            4/14/03
            99.199.20
            Disclosure
      Committee Charter.
            10-KSB
            4/14/03
            99.2











65