EDGAR 10-K Filing

Company CIK: 1087022
Filing Year: 2021
Filename: 1087022_10-K_2021_0001721868-21-000179.json

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ITEM 1. BUSINESS
ITEM 1. BUSINESS.
Background
ALR TECHNOLOGIES INC. (the “Company” or “ALRT”) was incorporated under the laws of the State of Nevada on March 24, 1987 as Mo Betta Corp. In April 1998, the Company changed its business purpose to marketing a pharmaceutical compliance device.
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.” On December 28, 1998, the Company changed its name from Mo Betta Corp. to ALR Technologies Inc. Subsequently the symbol was changed to “ALRT.”
In 2011, the Company located its headquarters at 7400 Beaufont Springs Drive, Suite 300, Richmond, Virginia, 23225.
During 2011, the Company received FDA clearance and achieved HIPAA compliance for its Diabetes Management System. With these key achievements and successful clinical trials completed, the Company began implementing its commercialization strategy which included a pilot program with patients in Kansas in 2014. The Company obtained significant findings from this pilot program which led to the development of its Insulin Dosage Adjustment, for which it received FDA clearance in 2017, and Predictive A1C, for which it has submitted for worldwide patent application under the patent cooperation treaty to the World Intellectual Property Organization. The Company is actively seeking to commence revenue generating activities.
Products
ALRT has developed its Diabetes Solution product by utilizing internet-based technologies to facilitate the health care provider’s ability to monitor their diabetes patients’ health and ensure adherence to health maintenance activities.
The ALRT Diabetes Solution is a remote monitoring and care facilitation platform that allows patients to upload the blood glucose data from their meters of a weekly basis. The ALRT System processes and converts each data set to a Predictive A1C value and shares it with the patient’s physician. The System provides the physician with therapy advancement suggestions based on current clinical practice guidelines. Patients receive therapy assessments and adjustments in much shorter cycles, keeping A1Cs at target, mitigating diabetes complications and lowering costs of care.
ALRT previously conducted a clinical trial utilizing manual blood glucose data analysis and follow-up care. The trial demonstrated that remote diabetes care is associated with significant lowering of A1C levels. The study concluded that continuing intervention using an internet-based glucose monitoring system is an effective way of improving glucose control compared to conventional care. A second clinical trial demonstrated that this type of Internet-based Blood Glucose Monitoring System (IBGMS) was associated with comparable reductions in A1C levels with that of more expensive Continuing Glucose Monitoring Systems (CGMS). The Company is planning further trials to demonstrate the added value of the predictive A1C and therapy advancement features of the ALRT System.
In the future, the Company may seek to adapt its Diabetes Solution to be used in the management of other chronic diseases. The Company may be required to obtain additional clearance from the FDA prior to commencing selling activities in the United States for other chronic health conditions.
Diabetes is a leading cause of death, serious illness and disability across North America. By the year 2030, it is expected that 1 in 10 adults, globally, will have diabetes (diagnosed and undiagnosed instances). We believe diabetes is a global pandemic.
Data from the American Diabetes Association shows 30 million Americans have diabetes and 84 million have prediabetes. That’s 1 in 3 Americans coping with the disease or serious threat of it. The total cost of diagnosed diabetes is staggering at $327 billion annually ($237 billion in direct medical costs and $90 billion in reduced productivity), putting serious drag on an already strained health care system. Taking a broader view, the global cost of diabetes was estimated at a whopping $825 billion annually in 2016.
Diabetes is a lifelong chronic disease with no cure. However, people with diabetes can take steps to control their disease and reduce the risk of developing the associated serious complications, thereby controlling health care costs. The Canadian Diabetes Association Clinical Practice Guidelines Expert Committee reports that, “Successful diabetes care depends on the daily commitment of persons with diabetes mellitus to self-manage through the balance of lifestyle and medication. Diabetes care should be organized around a multi- and interdisciplinary diabetes health care team that can establish and sustain a communication network between the person with diabetes and the necessary health care and community systems”. Diabetes incidence rates, economic costs and human costs are increasing even though we know how to control the disease. The Diabetes Control and Complication Trial conducted from 1983 to 1993 outlined management as follows:
· Testing blood glucose levels four or more times per day;
· Injecting insulin at least three times a day or using an insulin pump;
· Adjust insulin dose according to food intake and exercise;
· Following a diet and exercise plan; and
· Monthly visits to health care team.
We believe there are five causes for diabetes to not be controlled:
1. Patient non-adherence;
2. Unreliable data;
3. Data overload;
4. Clinical inertia; and
5. Insulin under prescription.
As noted in Patrick Connole, “UnitedHealth care, Other Large Insurers Seek Better Adherence to Diabetes Care”, Health Plan Week, February 11, 2013 Volume 23 Issue 5, 80% of United States patients with diabetes do not follow their prescribed care plan. Central to conventional diabetes care is patient self-management.
Unreliable Data
As noted in Gonder-Frederick, L.A., et al, “Self-Measurement of Blood Glucose: Accuracy of Self-Reporting Data and Adherence to Recommended Regimen” Diabetes Care, Volume 11, no. 7, July 1988, 77% of patient data contain errors.
Data Overload
Health care professionals (the “HCPs”) face a lack of timely and reliable blood glucose data, resulting in delays to advance therapy and sub-optimal insulin dosing. The amount of patient data for clinicians to analyze is too vast and significant during 15-minute clinical appointments and the information they have is unreliable.
Clinical Inertia
As noted in Khunti, K., et al, “Clinical Inertia in People with Type 2 Diabetes: A Retrospective Cohort Study of More than 80,000 People.” Diabetes Care, Volume 36, no. 11, July 2013, across over 80,000 patients, when A1C goals were not met, therapy intensification was late across every measure. It took on average 19 months to escalate patients with an average A1C of 8.7% from single medication to dual therapy and 82 months to escalate patients with an average A1C of 8.8% from dual medication to triple therapy. Furthermore, they found that it took approximately 20 years to advance patients with an average A1C of over 9% to insulin. At the end of the study, less than 50% of the patients had their treatment intensified.
Furthermore, in Treatment intensification for patients with type 2 diabetes and poor glycaemic control by Fu and Sheenan, it was noted that out of 11,525 patients investigated with an A1C greater than 8% patients received intensification as follows:
· 37% within 6 months;
· 11% within 6-12 months; and
· 52% never.
Failure to respond to higher than targeted A1C with treatment intensification puts patients with escalated A1C at risk for complications and diabetes-associated co-morbidities.
Insulin Under Prescription
Insulin dosing is complex requiring review of large amounts of data, which takes significant amounts of time. We believe HCPs routinely under prescribe insulin to ensure they avoid insulin dosage adjustments, which could result in hypoglycemia for their patients.
Cleveland Clinic Study
A team at Cleveland Clinic examined historical electronic medical record data of more than 7,300 patients with type 2 diabetes and concluded that there is a pervasiveness of clinical inertia for the management of type 2 diabetes in real-world clinical practice settings.
The selected patients had an A1C value of ≥ 7% on a stable regimen of two oral anti-diabetic agents for at least 6 months (from 2005 to 2016). The median time to treatment intensification after A1C was above target was longer than one year. For patients with an A1C of ≥ 9%, therapy was not intensified in 44% of patients.
According to lead study author Dr. Kevin Pantalone of Cleveland Clinic’s Endocrinology & Metabolism Institute, “Short of a patient reporting non-adherence to their existing regimen of diabetes therapies, it is hard to imagine a reason why treatment intensification was not observed more frequently, when indicated, particularly in patients with an A1C ≥ 9%. In general, if intensification does not occur, the A1C can be expected to stay the same or get worse, it is not magically going to get better”. (emphasis added)
ALRT Diabetes System for Diabetes Monitoring
ALR has created the Diabetes Solution to address the diabetes marketplace globally. The Company’s Diabetes Solution consists of hardware, software and diabetes test supplies. We designed the Diabetes Solution to be focused on the HCP and is agnostic and proactive. Our software operates on iOS, Android, Windows and MacOS systems. Enrollment into the ALRT Diabetes Solution will include a branded glucose meter, diabetes test strips, lancets and a carrying case. Our technology collects all the blood glucose data from the glucose meters, uploads it to a secure account and ships diabetes test strips as required. The patient data is aggregated to a Predictive A1C value for a comprehensive view of the treatment plan and patient adherence to the plan, with the data available (and messaged) to authorized people.
The ALRT Diabetes Management Solution addresses the five causes for not controlling diabetes with:
· Active patient monitoring;
· Direct meter uploads;
· Machine intelligent data processing;
· Predictive A1C; and
· Insulin dosage adjustment.
Active Patient Monitoring
Industry data indicates 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 health care 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.
The ALRT system monitors patient uploads and the underlying data providing more timely access to patient blood glucose data. Our system initiates interventions by notifying the HCP of out-of-range results, or failure to upload data in accordance with the requirements of the care plan. The ALRT system does not rely upon the patient for uploading data. The ALRT Diabetes Solution provides the notifications and audit trail needed for achieving best practice results. Its performance tracking allows care teams to identify areas in treatment plans that require change of improvement.
Direct Meter Uploads
Data is uploaded via Bluetooth directly from the glucometer into the ALRT application. This ensures that the data is accurate and reliable based on the results of testing.
Machine Intelligent Data Processing
Our machine intelligence processes large amounts of data, notifies relevant stakeholders and flags patients for review making collaboration real time. Across segments and populations, this also provides significant data points on use of diabetes test strips and insulin, which may be significant for businesses in those industries.
Predicative A1C
Predictive A1C is a patent-pending unique feature for monitoring the effectiveness of care plans. This technology utilizes data diagnostics to compare targeted A1C with indicated results. Weekly patient blood glucose data is evaluated, and HCPs are notified as needed for care plan review when blood glucose values exceed parameters set by the HCPs. Our platform provides HCPs with patient prioritization reports and alerts based on the Predictive A1C measures and other related diagnostics. Predictive A1C was designed to assist HCPs in addressing clinical inertia in diabetes care.
Insulin Dose Adjustment
Insulin Dose Adjustment is an FDA-cleared feature that makes optimal insulin adjustment suggestions to HCPs based on dosing guidelines from organizations like American Diabetes Association. This ensures that HCPs are making timely insulin dosage assessments based on the blood testing results uploaded. ALRT’s next phase of technology advancement will produce an algorithm for advancing non-insulin diabetes therapies according to clinical practice guidelines.
Background
In August 2010, the Company received the results of a clinical trial conducted by Dr. Hugh Tildesley using the ALRT Health-e-Connect System. The trial showed A1C dropping from 8.8% to 7.6% for the Intervention Group using ALRT’s Health-e-Connect System as part of a diabetes management program. The A1C test is important in diabetes treatment management as a long-term measure of control over blood glucose for diabetes patients. According to the Center for Disease Control and Prevention, “In general, every percentage drop in A1C blood test results (e.g., from 8% to 7%), can reduce the risk of microvascular complications (eye, kidney and nerve diseases) by 40%”. The trial served as the basis for an article titled Effect of Internet Therapeutic Intervention on A1C Levels in Patients with Type 2 Diabetes Treated with Insulin, which was published in the August 2010 Diabetes Care publication.
In July 2011, the follow-up results of the Dr. Tildesley clinical trial were published in the Canadian Journal of Diabetes. Dr. Tildesley conducted a 12-month study using Health-e-Connect System as an Internet Based Blood Glucose Monitoring System (IBGMS) to provide intensive blood glucose control to determine the effects of internet-based blood glucose monitoring on A1C levels in patients with type 2 diabetes treated with insulin. Dr Tildesley concluded that, “While IBGMS intervention was not a substitute for the patient-physician interaction in a clinical setting, it significantly improved A1C and, over time, we observed better glycemic control and patient satisfaction”.
In October 2011, the Company received 510(k) clearance from the U.S. Food and Drug Administration (FDA) for its Diabetes Management System (then known as the Health-e-Connect System) for remote monitoring of patients in support of effective diabetes management programs. The 510(k) clearance enables the Company to commence with the United States marketing and sales launch of its Health-e-Connect System.
In September 2014, the Company initiated its pilot program with one of the Kansas City Metropolitan Physician Association clinics to deploy its Diabetes Management System. Data from the KCMPA pilot program indicated that a number of patients had achieved reductions in their A1C levels. Furthermore, the data indicated that patients that left the pilot program had increases in A1C subsequent.
On February 18, 2015, the Company filed a 510(k) application with the FDA to add a remote insulin dosing recommendation feature to the Company’s Diabetes Management System. The Company utilized the publicly available algorithm of the AACE and ADA. This feature allows the Company to regularly run a patient’s blood glucose data (and other key data) through the AACE and ADA algorithm. When the algorithm indicated that the patient’s dose may not be optimal, the Diabetes Management System would provide the health care provider that a dose change may be warranted and what the change would be based on AACE and ADA guidelines. The decision about the dose change would rest entirely with the health care provider. However, this new feature may make a significant contribution to improving the outcomes of diabetes patients if it allowed HCPs to keep their patients at the optimal dose for longer periods. On September 18, 2017, the Company received clearance from the FDA for its Insulin Dosage Adjustment feature within the Company’s Diabetes Management System.
On June 20, 2017, the Company’s Chief Executive Officer filed a worldwide patent application under the Patent Cooperation Treaty to the World Intellectual Property Office for Predictive A1C feature. The Company holds the rights to use the Predictive A1C feature. During the 2019 year, the Company and the Chairman have entered into the National Phase for the applications by applying to target member countries.
During 2019, the Company added automated patient management to the Diabetes Management Solution. The Company is also seeking to have a private label glucometer, diabetes test strips, lancets and carrying cases produced as part of the Diabetes Management Solution. The Company is in talks with a manufacturer that has global operations.
During 2019, the Company initiated support for continuous glucose monitoring (“CGM”) systems with the ALRT Diabetes Management Solution. CGM has become the standard of care for patients with type 1 diabetes and is quickly gaining favor with type 2 diabetes patients who use insulin.
Reimbursement for Health Professionals
The Company continues to work to obtain confirmation that the Diabetes Management System will allow for services to be provided by physicians that will be reimbursed by health insurance companies. The reimbursement will be a breakthrough, as physicians will be paid to provide these important new services to their patients with chronic conditions.
Business Development and Marketing Strategy
The Company is focusing its efforts on introducing and marketing its Diabetes Management Solution for medical clinics, hospitals and HCPs to provide direct care to patients and be reimbursed by the patients’ health benefit plans, as well as to employers due to the significant return on investment they can achieve by keeping employees/plan members healthy.
The Company is first targeting customers located in the United States because of the large market potential but will also seek to obtain regulatory clearance and establish selling operations/agreements for sales and distribution in Canada, Europe, Australia, Singapore, and selected countries in Asia and South America.
Other Products
The Company does not have any other products outside of the Diabetes Management Solution.
Manufacturers
The Company does not have any designated manufacturers at this time. The Company is in discussions with an international manufacturer of glucometers, diabetes test supplies and lancets for ALRT branded offerings.
Selling Activities
The Company is actively seeking alliances with health care organizations, pharmaceutical companies, insulin providers and other health care companies that can act as catalysts to effect positive change for containing health care costs and improving health outcomes. We will work with these types of organizations to introduce the ALRT Diabetes Management System to their network and seek to start significant pilot projects that will lead to revenue-generating arrangements.
Patents and Trademarks
· 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 D447,074 received on August 28, 2001 for Ornamental Design of a Medication Alert Device in the shape of a stylized paw.
· US Patent 6,934,220 received on August 23, 2005 entitled Portable Programmable Medical Alert Device.
· US Patent 7,607,431 issued October 27, 2009 for patient compliance and remote monitoring of patient’s use of nebulizer compressors.
The Company has the following patent applications pending:
· Provisional Patent Application serial number 61/271,852 filed on July 27, 2009. Title is Patient Care Coordination System Including Home Use of Medical Apparatus.
The Company’s Chairman and Chief Executive Officer has the following patent applications under the PCT:
· PCT/CA2017/050753 dated June 27, 2017. Title is “method and system for monitoring a diabetes treatment plan”.
This patent application has been submitted to Canada, the United States of America, Europe, Singapore and Australia. The Company holds an exclusive license to the patent applications.
Competition
The Company competes with other corporations that produce diabetes compliance devices, monitoring systems and wellness applications, many of whom have greater financial, marketing and other resources than we do. A few companies currently offer compliance monitoring systems, but either a) at much higher prices, b) have fewer benefits than our system, or c) they do not have FDA clearance. The Company’s competition includes, but is not limited to, Livongo, Glooko, WellDoc, Medtronics, iGlucose and Microsoft HealthVault.
We feel none of these companies currently offer a comprehensive compliance system that offers the full spectrum of benefits and features that our Diabetes Management System does with the potential cost efficiencies. We believe that while some of the competitors address the issues of unreliable data and patient non-adherence, none of the competition address data overload, clinical inertia or insulin under prescription from our perspective.
Employees and Independent Contractors
The Company has one employee, 18 personnel under independent contractor and consulting arrangements and 3 contract sales agents. The consultants of the Company have contracts that outline their roles and responsibilities as independent contractor, as well as outline the confidentiality requirements for all matters pertaining to the Company.
Recent Developments
On February 11, 2020, the Company entered into an agreement with Singapore General Hospital to jointly undertake a novel remote diabetes management pilot to prove the efficacy of the ALRT Diabetes Solution in insulin-treated diabetes patients.
On February 14, 2020, the Company entered into a debt settlement agreement with an unrelated party whereby the parties agreed to settle the amount of $80,000, consisting of $60,000 accounts payable and $20,000 for the provision of services under a Services Agreement dated January 1, 2020, with the issuance of 2,000,000 restricted shares of common stock of the Company.
On April 1, 2020, the Company granted one consultant the option to acquire 10,000,000 shares of common stock at a price of $0.035 per share for a term of five years.
On May 12, 2020, the Company amended the option to acquire 40,000,000 shares of common stock granted on June 12, 2019 to extend the period of vesting from May 31, 2020 to December 31, 2020. None of these options have vested to date.
On May 18, 2020, the Company granted one consultant the option to acquire 500,000 shares of common stock of the Company at a price of $0.035 per share until May 17, 2024.
On May 20, 2020, the Company signed agreements with clinics of Centrus Health Kansas City to conduct a clinical pilot with four Centrus Health primary care clinics. The pilot is intended to demonstrate the clinical usefulness of the ALRT Diabetes Solution in improving diabetes patient outcomes while reducing the cost of care.
On June 1, 2020, the Company granted one consultant the option to acquire 10,000,000 shares of common stock of the Company at a price of $0.035 per share until May 31, 2025 subject to the consultant contributing to the successful launch of the ALRT Diabetes Solution in Canada, including the enrolment of at least 20,000 patients.
On June 5, 2020, the Company granted one sales agent the option to acquire 10,000,000 shares of common stock of the Company at a price of $0.035 per share until May 31, 2025 subject to the agent enrolling 20,000 patients into the ALRT Diabetes Solution by May 31, 2021.
On June 30, 2020, the Company entered into an agreement with Bionime Corporation (“Bionime”) to market and sell the ALRT Diabetes Solution to diabetes patients of private physicians in Singapore. ALRT offers a comprehensive approach to diabetes and includes Bionime’s Rightest GM700SB blood glucose meter and test strips. Bionime's marketing team will call on the private physician practices in Singapore and the larger private practice groups. The doctors will provide an enrollment package that contains a Bionime blood glucose meter and all testing supplies. Refills of testing supplies will be picked up by patients at their doctor’s office on a quarterly basis. Patients will be instructed to download the free ALRT App for mobile phones or tablets, compatible with Android and iOS devices, and use Bluetooth to upload their blood glucose readings from their meters once per week. The cost of the ALRT Diabetes Solution offering will be less than the cost of test supplies available in pharmacy chains.
On August 24, 2020, the Company issued 242,800 restricted shares of common stock at a price of $0.05 per share for proceeds of $12,140.
On August 26, 2020, the Company entered into a Memorandum of Understanding with Diabetes Singapore, establishing the collaboration between to the two parties to raise the diabetes management standard in Singapore. The collaboration intends to develop a diabetes management program for current and prospective members of Diabetes Singapore. The parties held a launch event in October 2020 and are working towards a definitive agreement.
On September 1, 2020, the Company granted 13 individuals the option to acquire an aggregate 74,500,000 options at an exercise price of $0.05 per share; 22,000,000 stock options, which vested at the time of grant, will expire on May 17, 2024 and 52,500,000 stock options, which vest upon achievement of performance conditions, will expire on May 31, 2025. None of the stock options with performance vesting conditions have vested.
On September 21, 2020, the Company entered into two shares for debt agreements with the Chairman and his spouse to issue an aggregate 240,000,000 restricted shares of common stock at a price of $0.05 per share for a purchase price of $12,000,000 in exchange for the retirement of $12,000,000 of liabilities. As part of this debt settlement agreements, the Chairman and the Company agreed to cancel the convertible debenture offering announced on September 25, 2017, and as further updated on June 13, 2018, September 20, 2018 and April 18, 2019.
On October 12, 2020, the Company granted eight individuals the option to acquire an aggregate of 34,800,000 shares of common stock at an exercise price of $0.05 per share until May 31, 2025; 18,300,000 of the options vested at the time of grant while 16,500,000 of the options will vest upon the achievement of performance conditions.
On December 4, 2020, the Company filed a Form S-1 Registration Statement to distribute subscription rights to purchase up to an aggregate 127,522,227 shares of our common stock at a price of $0.05 per share for maximum aggregate offering proceeds of $6,376,111. On January 29, 2021 the Company issued 14,496,635 unrestricted shares of common stock related to proceeds received of $724,832.
On January 28, 2021 the Company’s board of directors approved the grant of options to acquire an aggregate of 47,000,000 shares of common stock at an exercise price of $0.05 per share with expiry dates between May 17, 2024 and December 31, 2025. All of the options granted have vesting conditions, of which 12,000,000 are time-based vesting conditions and 35,000,000 are performance based vesting conditions.
On February 8, 2021, the Company issued 800,000 shares of common stock for proceeds of $12,000 for the exercise of options at $0.015 per share.
On February 22, 2021 the Company granted three individuals the option to acquire an aggregate of 5,000,000 shares of common stock at an exercise price of $0.05 per share until May 17, 2024. All of the options granted will not vest until immediately before expiry.
Additional Financing
Convertible Debenture Financing
On September 25, 2017, the Company announced that it had authorized a private placement up to $5 million for the issuance of convertible debentures that are convertible into shares of common stock of the Company at a price of $0.05 per share (the “Note”).
On June 13, 2018, the Chairman and Chief Executive Officer of the Company accepted a proposal from the Board of Directors of the Company to purchase the $5,000,000 convertible debenture financing (the “Financing”). The Note will be convertible for a period of 5 years, will bear interest at a rate of 8 percent per annum and will be repayable in four equal semi-annual instalments commencing 42 months after its issuance until maturity. The Note will be transferable or saleable by the Chairman or other holder thereof, in whole or in part, at any time without notice to the Company.
On September 20, 2018, the parties agreed to increase the proposed Financing from $5,000,000 to $7,000,000. On October 25, 2018, the parties agreed to increase the proposed Financing from $7,000,000 to $8,500,000 (the “Amended Financing”). On April 18, 2019, the parties agreed to increase the proposed financing from $8,500,000 to $22,000,000. The Company had reserved up to 500,000,000 shares of common stock with respect to the possible exercise of the Note.
The convertible debenture financing was never formalized and cancelled by mutual agreement by the Company and the Chairman concurrent with a debt settlement agreement undertaken on September 21, 2020.
Line of Credit Financing
On December 11, 2019, the Company and the Chairman entered into an amendment agreement to increase the borrowing limit on the line of credit provided by the Chairman to the Company from $8,500,000 to $10,300,000. The terms of amounts to be advanced under the amendment are consistent with the line of credit.
Rights Offering
On December 4, 2020, the Company filed a Form S-1 Registration Statement to distribute subscription rights to purchase up to an aggregate 127,522,227 shares of our common stock at a price of $0.05 per share. On January 28, 2021 the Company issued 14,496,635 unrestricted shares of common stock related to proceeds received of $724,832.

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ITEM 1A. RISK FACTORS
ITEM 1A. RISK FACTORS
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.

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ITEM 1B. UNRESOLVED STAFF COMMENTS
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.

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ITEM 2. PROPERTIES
ITEM 2. PROPERTIES
None.

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ITEM 3. LEGAL PROCEEDINGS
ITEM 3. LEGAL PROCEEDINGS.
Included in promissory notes payable and accrued interest payable, are the following recognized liabilities, which have involved legal proceedings:
1. Mr. H. Gordon Niblock
During 2009, the following judgment was rendered against the Company: Niblock Financial Systems, Inc. et al v. ALR Technologies Inc. Forsyth County, North Carolina file number 0-9-CVS-2220. The judgment against the Company was in the amount of $600,000 in favor of Niblock Financial Systems, Inc. and $550,000 in favor of H. Gordon Niblock, plus court costs and attorney’s fees. The judgment was rendered as a result of the Company’s failure to pay amounts due under several promissory notes. On September 30, 2009, subject to the entry of that judgment, the Company reached a Settlement Agreement with the two plaintiffs, resulting in a cash payment, a credit to the judgment and an assignment of the Judgment to Christine Kan.
As part of the Settlement Agreement, Mr. Stan Cruitt, a Director of the Company at the time assigned unsecured advances payable by the Company totaling $425,000 with no stated terms of interest or repayment to the plaintiffs. As part of the Settlement Agreement, the Company agreed to the following repayment terms:
· $300,000 repayable at a rate of $25,000 per month evidenced by a promissory note; and
· $125,000 repayable in whole by January 15, 2011.
The plaintiffs (Niblock Financial Systems, Inc. et al) filed a motion of default against the Company (ALR Technologies Inc.) in the Superior Court of Forsyth County, North Carolina (case number 10-CVS-685) for failure to meet the repayment terms of the $300,000 promissory note. On October 26, 2010, case number 10-CVS-685 was heard and the court found in favor of the plaintiff, meaning the Company was ordered to repay in full principal of $300,000 along with $11,000 of accrued interest from the original settlement date, being September 30, 2009. During the 2017 fiscal year, the Company determined it would be appropriate to accrue interest of 8% on the principal outstanding from the judgment date onward. Previously, the Company had recorded imputed interest on the amount, as there was no legal requirement for the Company to pay interest on the principal. As a result, during the 2017 fiscal year, the Company reversed the imputed interest, recorded the accrued interest and recorded the difference as a recovery of expense.
On December 18, 2013, the Company was served with a civil summons from H. Gordon Niblock in respect of a complaint for breach of agreement to repay the promissory note of $125,000 due by January 15, 2011, plus interest at the legal rate of 8% per annum from the date of maturity of the note until the amount is repaid plus reasonable attorney fees of the proceedings. On February 5, 2014, case number 13-CVS-7736 for the plaintiff’s motion for entry of default and default judgment was heard in the Superior Court Division of Forsyth Country, North Carolina. The court found in favor of the plaintiff, ruling that the Company was in default of its agreement with the plaintiff and that the plaintiff is eligible to seek affirmative relief against the defendant.
On September 23, 2020, the Superior Court of Forsyth County, North Carolina issued a Civil Summons in regards to the amount owing for payment of $551,576, consisting of the principal amount of $300,000 and accrued interest of $251,576, as of the date of the Civil Summons.
On October 30, 2020, the Superior Court of Forsyth County, North Carolina, issued an Order for Mediated Settlement Conference in Superior Court and Trial Calendar Notice. The deadline for Completion of the Mediated Settlement Conference is May 3, 2021. The tentative trial date in the absence of a mediated settlement is June 28, 2021.
Except as described above, as at the date of this Report on Form 10-K, there are no other material pending legal proceedings, other than ordinary routine litigation incidental to the business, to which the registrant or any of its subsidiaries is a party or of which any of their property is the subject. Please refer to Note 8, Commitments and Contingencies, of the consolidated financial statements for a description of outstanding judgments against the Company.
2) Ms. Irene Ho
The Company owes a promissory note to Ms. Irene Ho that was demanded for repayment on December 14, 2010. This amount has not been repaid and interest continues to accrue at the legal rate. The total principal and interest owing to Ms. Irene Ho is approximately $606,000.
3) Mr. Stan Link
Mr. Stan Link holds a note from the Company, which is in arrears. The matter was reduced to a Consent Judgment in the amount of $43,608 on April 13, 2009. This full amount is still outstanding and continues to accrue interest at the stated rate of the note. The total principal and interest owing to Mr. Stan Link is approximately $85,000.

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ITEM 4. MINE SAFETY DISCLOSURE
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
PART II

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
The Company’s common stock is quoted on the Bulletin Board (OTCQB) operated by the Federal Industry Regulatory Authority (FINRA) under the symbol “ALRT”. The following table sets forth the high and low sales prices for our common stock for each quarter within the last two fiscal years:
Quarter Ended High Bid [1] Low Bid [1]
December 31, 0.08 0.05
September 30, 2020 0.09 0.04
June 30, 2020 0.07 0.03
March 31, 2020 0.05 0.02
December 31, 0.04 0.01
September 30, 2019 0.05 0.03
June 30, 2019 0.04 0.04
March 31, 2019 0.05 0.02
[1] These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.
At December 31, 2020, there were 511,020,709 common shares of the Company issued and outstanding.
As at December 31, 2020, there were 131 registered holders of record of the Company’s common shares and an undetermined number of beneficial holders.
No cash dividends have been declared by the Company nor are 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.
Securities Authorized from Issuance under Equity Compensation Plans
The Company does not have any equity compensation plans, and accordingly, the Company does not have any securities authorized for issuance under an equity compensation plan.
Recent Sales of Unregistered Securities
On February 14, 2020, the Company entered into a debt settlement agreement with an unrelated party whereby the parties agreed to settle the amount of $80,000, consisting of $60,000 accounts payable and $20,000 for the provision of services under a Services Agreement dated January 1, 2020, with the issuance of 2,000,000 restricted shares of common stock of the Company. The restricted shares of common stock were issued on March 11, 2020.
On September 21, 2020, the Company entered into two shares for debt agreements with the Chairman and his spouse to issue an aggregate of 240,000,000 restricted shares of common stock at a price of $0.05 per share for a purchase price of $12,000,000 in exchange for the retirement of $12,000,000 of liabilities.
There were no other issuances of securities that were not under a registration statement during the year ended December 31, 2020 and the subsequent period to the date of this Form 10-K.
Purchases of Equity Securities by the Company and Affiliated Purchasers
Neither the Company nor an affiliated purchaser of the Company purchased common shares of the Company in the year ended December 31, 2020.

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

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
ITEM 7. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
The Company’s business is focused on enhancement of adherence to disease and health care management programs through artificial intelligence, machine learning, patient monitoring and improved communications. The Company’s primary business markets are health care providers, the providers of health insurance, and the providers of disease and case management services, including the home care industry.
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 health care results. These market segments are the health insurance providers, and the medical clinics and physicians who provide the care for people with chronic disease. Our focus is on penetrating the full cycle of health care services, including medical clinics, hospitals and health plans with diabetics being the initial patient targets.
Revenue
The Company did not generate any revenue in 2020 or 2019. For the past several years, the Company has been devoting its efforts to developing and commercializing its Diabetes Solution product, which is a diabetes management system that combines patient monitoring, patient adherence, care team communications, automated patient management and insulin dosage suggestions.
In October 2011, the Company announced that it had received FDA clearance to sell its Diabetes Management System in the United States. In 2012, the Company obtained HIPAA clearance for its Diabetes Management System. The Company since demonstrated that the average patient’s A1C was reduced by 1.2% over six months in both a clinical trial and a pilot program. Subsequently, the Company developed and obtained FDA clearance for Insulin Dose Adjustment and integrated into Predictive A1C, a patent pending innovation that the Company has exclusive right to utilize. The Company is ready to launch the Diabetes Management System commercially and is seeking a suitable opportunity.
Product Development
During the 2020 fiscal year, the majority of the Company’s product development efforts were expended to:
· Further develop its Diabetes Solution;
· Prepare for additional functionality to enhance care facilitation activity;
· Increase compatibility and usability of the Diabetes Solution;
· Integrate with payment processors in Singapore to prepare for customer enrollment;
· Initiate development of its Diabetes Solution for compatibility with CGM technologies; and
· Implement advances as a result of user feedback.
The Company is currently focusing its efforts on the commercial launch plans of the Diabetes Solution and undertaking development activities that will support the user experience in preparation for enrolling large populations of customers.
Product development and research costs were $1,433,000 in 2020 and $1,625,000 in 2019. Included in product development costs were stock-based compensation costs of $1,156,000 in 2020 and $1,243,000 in 2019.
Operating Capital
The Company has no revenues and has not generated any revenues since creating its Diabetes Solution. The Company is funding operations through the line of credit financing it has available. The majority of the Company’s expenditures go towards product development, professional fees and administrative activities. The Company incurs significant amounts of interest expense from its debts outstanding and, from time to time, the grant of stock options in exchange for either 1) deferred payment, 2) agreements of note extensions, and 3) increased borrowing limits provided. All stock options granted related to the debts of the Company have been recorded at their fair value using the Black-Scholes option pricing model and are expensed over the agreed upon term of the debt instrument where applicable. Where the debt of the Company is a line of credit arrangement with no fixed terms of repayment, the stock option expense is fully recognized at the time of grant.
There is no certainty of the timing or amount of cash flows from sales, and if sales do begin, there is no certainty that it will reach the level necessary to cover operating costs and costs to service the Company’s debts. The Company has limited resources and is seeking to penetrate markets with indirect competition with much greater resources. The Company is seeking to displace generally accepted processes for diabetes management, which means it is directly entering into an unestablished market. Management is evaluating alternatives to penetrate both existing and new marketplaces in order to generate cash flows. Management believes the business plan of the Company will give it the best opportunity to achieve commercial feasibility. There is substantial uncertainty over the Company’s ability to execute the plan, the level of success associated with the execution of its business plan or the actual timeline to execute the plan. If the actual timeline for the execution of the business plan is substantially longer than planned, it could jeopardize the Company’s long-term success. For these reasons the Company is seeking additional financing.
The Company has operating lines of credit with a borrowing limit of $12,300,000. As at December 31, 2020, the Company had borrowing available of approximately $761,000 on its lines of credit. The Company does not have any other facilities readily available at this time and has continued to receive funding under the terms of the existing line of credit that has reached the borrowing limit from the Chief Executive Officer. Management will seek to acquire additional financing to allow the Company to become a commercially viable enterprise, whereby it can generate sufficient cash flow from the sales of its Diabetes Management System to support its cost of operations, overhead and repay its obligations.
On November 4, 2020, the Company filed a preliminary Form S-1 Registration Statement to distribute subscription rights to purchase up to an aggregate 127,522,227 shares of common stock at a price of $0.05 per share for maximum aggregate offering proceeds of $6,376,111. To date, the Company has collected $724,000 related to the rights offering and has until April 22, 2021 before the rights period expires.
There is no certainty that the Company will ever be able to achieve the level of sales necessary to cover operating costs or achieve the level of sales before the borrowing limits on the lines of credit financing are reached. The Company will require additional financing in the future for which there is no guarantee it will receive. Furthermore, even if the Company is able to achieve sufficient cash flows to support operations, it will need to service its debt obligations, which as of December 31, 2020 were $21,889,000. A total of approximately $15,820,000 is owed to the Chairman and his family.
Operating Issues
The Company has expended significant efforts introducing the Diabetes Management System to specified retail chains, pharmaceutical manufacturers, contract research organizations, health management organizations, pharmacy benefits managers and certain clinics treating specific disease conditions. The Company has not had sales for several years. During the 2019 and 2020 fiscal years, the Company has devoted 100% of its efforts to developing the Diabetes Management System for commercial launch. Management plans for the Company to become a commercially viable enterprise through the sale of Diabetes Management subscriptions.
Operating Issues
If management is not successful in its plans, the Company may be required to raise additional funds from its existing and prospective shareholders or debtholders, which it may not be able to accomplish on satisfactory terms for the Company.
Management Compensation
During 2020, the Company’s sole officer, Mr. Sidney Chan, earned $20,800 per month, which was recorded as an increase to the borrowings on the line of credit provided by Mr. Chan to the Company. Mr. Chan’s compensation during the 2019 fiscal year was $15,800 per month. During the 2019 fiscal year, Mr. Chan was granted the option to acquire 120,000,000 shares of common stock in connection with increasing the borrowing limit on the Company’s line of credit by $1,800,000.
The Company issues stock options as compensation from time to time. No directors of the Company earn service fees for their position as director of the Company. Those directors that hold a position as officer or consultant of the Company earn fees for those services provided. During 2020, the Company granted incentive to Ken Robulak for the option to acquire 8,000,000 (2019 - 6,650,000) shares of common stock of the Company at a price of $0.05 (2019 - $0.035) per share for five years. The options granted to Mr. Robulak during 2020 were subject to performance vesting conditions.
Each of Dr. Alfonso Salas, Ronald Cheng and Peter Stafford were not granted options during 2020. During 2019, they were granted options as follows:
· Dr. Alfonso Salas was granted the option to acquire 5,000,000 shares of common stock of the Company at a price of $0.035 per share for five years; and
· Mr. Cheng and Mr. Stafford were each granted the option to acquire 4,500,000 shares of common stock of the Company at a price of $0.035 per share for a term of five years.
Capital Structure
As of the date of this Form 10-K:
Common Stock
Authorized: 	10,000,000,000 shares of common stock with a par value of $0.001 per share.
Issued: 	511,020,709 shares of common stock are issued and outstanding.
Preferred Stock
Authorized 	500,000,000 shares of preferred stock with a par value of $0.001 per share.
Issued: 	No shares of preferred stock have been issued.
Stock Options
Options to acquire 5,362,701,500 shares of common stock are outstanding.
Results of Operations
Year ended December 31, 2020 compared to Year ended December 31, 2019
Amount ($)
Increase /
(Decrease)
Percentage (%) Increase / (Decrease)
Operating Expenses
Selling, general and administrative $ 1,440,000 $ 1,596,000 (156,000) (10)
Product development
1,433,000
1,625,000 (192,000) (12)
Professional fees
953,000
523,000 430,000
3,800,000
3,744,000 56,000
Other Item
Interest expense
2,116,000
5,261,000 (3,145,000) (60)
Other income
(26,000)
- (26,000)
Net Loss $ (5,916,000) $ (9,005,000) (3,089,000) (34)
The net loss for the Company’s years ended December 31, 2020 and 2019 was significantly impacted by the grant of options to obtain additional debt financing as follows:
Year Ended
December 31,
Year Ended
December 31,
Options Granted as Consideration 139,800,000 254,050,000
Value of Options Granted as Consideration $ 2,828,000 $ 6,125,000
Percentage of Net Loss 48% 68%
The net loss for the year ended December 31, 2020 was 34% ($3,090,000) lower than the net loss at December 31, 2019 primarily as a result of 1) options granted to creditors of the Company in exchange for an increased borrowing limit in the prior year, and 2) options modified held by creditors of the Company in the prior year. There were no options granted to creditors during the year ended December 31, 2020. Net loss before interest expense and stock-based compensation was $108,000 (13%) higher during the year ended December 31, 2020, as compared to the year ended December 31, 2019. The increase was primarily related to increased personnel costs related to new personnel engaged by the Company and increased compensation paid to existing personnel.
Year Ended
December 31,
Year Ended
December 31,
Amount ($)
Increase /
(Decrease)
Percentage (%) Increase / (Decrease)
Loss Before Interest $ 3,800,000 $ 3,744,000 56,000
Stock-based compensation included in selling, general and administrative expense, professional fees and product development expense 2,828,000 2,881,000 (53,000) (2)
Loss Before Interest and Stock-based Compensation $ 972,000 $ 863,000 109,000 13%
General and Administrative
General and administrative costs incurred consist of salaries and consulting fees of management personnel, stock-based compensation for options granted to management personnel, travel and trade show costs, rent of the Company’s corporate office, website development costs and general costs incurred through day-to-day operations.
During the year, the Company had a decrease in the selling, general and administrative expenses, primarily driven by a decrease in stock-based compensation. The components of general and administrative expense and the changes therein can be seen as follows:
Selling, General and Administrative: Amount ($)
Increase /
(Decrease)
Management salaries and consulting fees $ 379,000 $ 261,000 118,000
Stock-based compensation
930,000
1,245,000 (315,000)
Travel and trade shows
10,000
41,000 (31,000)
Rent of corporate office
1,000
1,000 -
Website and information technology
18,000
18,000 -
Transfer agent, filing fees and quotation costs
75,000
17,000 58,000
Other general and administrative costs
27,000
13,000 14,000
Total
$ 1,440,000 $ 1,596,000 (156,000)
The decrease in stock-based compensation accounted for 202% of the decrease of general and administrative expenses in the current year, as compared to the prior year. The Company grants stock options to personnel to incentivize them to join the Company and to provide certain services to the Company. Aside from the change of selling, general and administrative expenses related to stock-based compensation, which is non-cash-based, selling general and administrative costs incurred during 2020 increased by $159,000 over the 2019 fiscal year as the Company:
· paid increased compensation to certain personnel during 2020;
· retained a market development personnel during 2020;
· had its common shares upgraded to trade on the OTCQB; and
· prepared a Form S1 Registration Statement for its rights offering.
We anticipate that cash-based operating expenses for 2021 will increase as compared to amounts in 2020, as the Company will become more active in efforts to commercialize its Diabetes Solution.
Product Development
Product development costs consists of a) services provided by contractors of the Company, b) expenses incurred for product development, and c) stock-based compensation for options granted to members of the product development team. Product development costs of the Company were consistent with the prior year with changes of the components as follows:
Product Development: Amount ($)
Increase /
(Decrease)
Personnel consulting fees $ 260,000 $ 367,000 (107,000)
Stock-based compensation
1,156,000
1,244,000 (88,000)
Purchases and other amounts
17,000
14,000 3,000
Total
$ 1,433,000 $ 1,625,000 (192,000)
For the 2020 fiscal year, the Company was anticipating similar or slightly reduced product development expenses, as compared to 2019, before any changes from stock-based compensation expense. Development costs excluding stock-based compensation decreased by $104,000 during the 2020 fiscal year, as compared to the 2019 fiscal year. We anticipate that cash-based product development expenses for 2021 will increase as compared to amounts in 2020, as the Company anticipates retaining additional personnel to support its efforts to commercialize its Diabetes Solution.
Interest Expense
During the year, the Company incurred a decrease in interest expense as compared to the prior year as a result of there being no stock options issued for outstanding stock options modified related to the Company’s financing arrangements as had occurred during the year ended December 31, 2019. Interest expense was incurred from the following sources for the years ended December 31, 2020 and 2019:
Interest Expense: Amount ($)
Increase /
(Decrease)
Interest expense incurred on promissory notes $ 529,000 $ 529,000 -
Interest expense incurred on lines of credit
1,464,000
1,366,000 98,000
Imputed interest on zero interest loans
123,000
122,000 1,000
Stock-based compensation of extension of line of credit and modification of stock options
-
3,244,000 (3,244,000)
Total
$ 2,116,000 $ 5,261,000 (3,145,000)
Interest on Promissory Notes
There were no repayments, issuances or changes to balances in any of the promissory notes from December 31, 2019 to 2020. During the year ended December 31, 2020, the Company settled $2,319,000 in accrued interest on one of the promissory notes issued to the spouse of the Chairman through the issuance of shares of common stock in September 2020.
Interest on Lines of Credit
The Company has two line of credit facilities with balances as follows:
Lines of Credit: Amount ($)
Increase /
(Decrease)
Line of credit provided by Sidney Chan $ 9,539,000 $ 9,757,000 (218,000)
Line of credit provided by Christine Kan
2,000,000
2,000,000 -
Total
$ 11,539,000 $ 11,757,000 (218,000)
The Company incurred interest expense on the lines of credit as follows:
Lines of Credit: Year Ended
December 31,
Year Ended
December 31,
Amount ($)
Increase /
(Decrease)
Interest expense incurred on line of credit from
Sidney Chan during the year
$ 1,224,000 $ 1,126,000 98,000
Interest expense incurred on line of credit from
Christine Kan during the year
240,000
240,000 -
Total
$ 1,464,000 $ 1,366,000 98,000
During the 2020 fiscal year, the Company borrowed an additional $821,000 from its line of credit facilities (interest rates of 1% per month on the borrowed balance) while settling principal of $1,039,000 through the issuance of shares of common stock in September 2020.
In addition to incurring interest for a full year on the amounts borrowed to the end of the 2019 fiscal year, the increase in borrowing during the majority of 2020 resulted in significantly higher interest incurred on the lines of credit for the year ended December 31, 2020.
Imputed Interest
During the 2020 and 2019 fiscal years, the Company had certain zero interest promissory notes and accounts payable in excess of one year. Pursuant to the Company’s accounting policy, these zero interest amounts are considered to be financing items in nature and are assigned a deemed interest rate (1% per month). The interest incurred on these is expensed as imputed interest; instead of increasing the liabilities of the Company, imputed interest expense is allocated to equity under the financial statement line item additional paid-in capital. The Company’s zero interest instruments were as follows as at December 31, 2020 and 2019:
Zero Interest Instruments: Amount ($)
Increase /
(Decrease)
Accounts payable (older than one year) $ 765,000 $ 760,000 5,000
Promissory notes to unrelated parties
271,000
271,000 -
Total
$ 1,036,000 $ 1,031,000 5,000
The Company incurred imputed interest as follows:
Imputed Interest Expense: Amount ($)
Increase /
(Decrease)
Accounts payable (older than one year) $ 90,000 $ 90,000 -
Promissory notes to unrelated parties
33,000
32,000 1,000
Total
$ 123,000 $ 122,000 1,000
Moving forward, we anticipate the expense to be consistent with the current year until such time as the Company has sufficient funds available to repay these old accounts payable and zero interest promissory notes.
Professional Fees
Professional fees expense consists of consulting and advisory fees of certain professionals retained, audit fees, legal fees and stock-based compensation for options granted to professionals. By component of professional fees, the variance can be seen as follows:
Professional Fees: Amount ($)
Increase /
(Decrease)
Legal fees $ 70,000 $ 35,000 35,000
Professional advisors retained
98,000
53,000 45,000
Corporate auditor
44,000
43,000 1,000
Stock-based compensation
741,000
392,000 349,000
Total
$ 953,000 $ 523,000 430,000
The increase in professional fees for the 2020 fiscal year as compared to the prior year can be attributed to the Company granting stock-based compensation to its service providers, as opposed to cash-based compensation. The Company increased its cash-based professional fees by $81,000 from the prior year as a result of increased business activity in the current year, the Company’s initiatives in Singapore, preparation of the Form S-1 Registration Statements and increased general corporate legal costs.
We had anticipated cash-based professional fees to increase for the 2020 fiscal year as compared to the 2019 fiscal year, as in the prior year we benefited from the timing of certain professional engagements, which had limited expense in the 2019 fiscal year. For 2021, we expect the cash-based professional fees to increase as compared to the 2020 fiscal year, as we anticipate retaining additional professionals to support commercialization and financing initiatives; however, this could vary significantly if business milestones are reached.
Liquidity and Capital Resources
Cash Balances
The Company’s cash balance was $66,190 at December 31, 2020 and $1,838 at December 31, 2019.
Short- and Long-Term Liquidity
Working Capital As At
December 31,
As At
December 31,
Amount ($)
Increase /
(Decrease)
Percentage (%) Increase / (Decrease)
Current Assets $ 129,000 $ 2,000 127,000 6,350
Current Liabilities
21,889,000
31,090,000 (9,201,000) (30)
Working Deficiency $ (21,760,000) $ (31,088,000) (9,074,000)
The Company has a severe working capital deficiency. It does not have the ability to service its current liabilities for the next twelve months and is reliant on its line of credit facilities to meet its ongoing operations. The Company has $761,000 remaining to borrow on its line of credit facilities and will require additional funding for the 2021 fiscal year based on its operating requirements. Until the Company has revenue-producing activities that exceed its operating requirements, it will be unable to service its current liabilities and the working capital deficit will continue to increase. As of the date of this management discussion and analysis, the Company has not commenced revenue-generating activities, nor does it know when they will commence. There is substantial doubt about the Company’s ability to repay its current liabilities in the near term or any time in the future, which could ultimately lead to business failure.
Current Liabilities
The Company has current liabilities of $21,889,000 as at December 31, 2020 as compared to $31,090,000 as at December 31, 2019. Current liabilities were as follows:
December 31, December 31, Change
($)
Change
(%)
Accounts payable and accrued liabilities $ 1,114,000 $ 1,128,000 (14,000) (1)
Promissory notes to related parties
3,032,000
3,032,000 - -
Promissory notes to arm’s length parties
2,254,000
2,254,000 - -
Interest payable
3,575,000
5,365,000 (1,790,000) (33)
Lines of credit
11,914,000
19,311,000 (7,397,000) (38)
Total current liabilities $ 21,889,000 $ 31,090,000 (9,201,000) (30)
Accounts Payable and Accrued Liabilities
Accounts payable and accrued liabilities consists of trade payables and accrued liabilities of the Company. Accounts payable totaling approximately $765,000 and accrued liabilities totaling $181,000 are more than one year old with the majority of these being more than ten years old.
Promissory Notes to Related Parties and Promissory Notes Payable to Arm’s Length Parties
The Company has promissory notes with 20 individuals or corporations that relate to historical amounts borrowed. There has been no new activity for several years. All of these promissory notes are past due and continue to accrue interest at their respective legal rates of interest (mostly 1% per month).
Interest Payable	
Interest payable relates to the unpaid interest expense incurred on the promissory notes to related parties and promissory notes to arm’s length parties. The change from December 31, 2020 to December 31, 2019 relates to:
1) the interest expense incurred on both types of promissory notes during the 2020 fiscal year; and
2) the settlement of certain amounts of interest payable in exchange for shares of common stock.
Lines of Credit
As of December 31, 2020, the Company has borrowed total principal of $11,539,000 (2019 - $11,757,000). During the December 31, 2020 year, the Company incurred interest expense of $1,464,000 (2019 - $1,366,000).
Line of Credit from Ms. Christine Kan
The Company obtained a line of credit of US$1,000,000 from Ms. Christine Kan (the spouse of the Chairman of the Board and Chief Executive Officer of the Company) in March 2010 (the terms of which were finalized in May 2010). The loan was unsecured with interest payable on funds borrowed at 1% per month. These proceeds were to be put towards working capital and the continued development of the Company’s product line. On January 3, 2011, the creditor granted the Company an increase in the borrowing limit from $1,000,000 to $2,000,000. As of December 31, 2020, the Company has borrowed $2,000,000 (2019 - $2,000,000) and has accrued interest outstanding of $60,000 (2019 - $1,976,000). During the 2020 fiscal year, the Company borrowed $nil (2019 - $nil), incurred interest of $240,000 (2019 - $240,000) and extinguished accrued interest of $2,156,000 (2019 - $nil) through the issuance of shares of common stock.
Line of Credit from Mr. Sidney Chan
On March 6, 2011, the Company obtained a $2,500,000 line of credit from Mr. Sidney Chan (the Chairman of the Board and Chief Executive Officer of the Company). Under the terms of the arrangement, the amount borrowed by the Company bears simple interest at a rate of 1% per month. The amount borrowed is secured by a general security agreement over the assets of the Company and is due on demand. Originally, the line of credit was for a comprehensive marketing program, but subsequently was amended to be for general corporate purposes. On April 1, 2014, Mr. Chan and the Company executed an amending agreement whereby Mr. Chan increased the borrowing limit of the line of credit he has provided to the Company from $4,000,000 to $5,500,000. On May 29, 2015, the borrowing limit was further increased to $7,000,000. On July 1, 2016, the borrowing limit was further increased to $8,500,000 and, on December 11, 2019, increased further to $10,300,000. As of December 31, 2020, the Company has borrowed $9,539,000 (2019 - $9,757,000) and has accrued interest outstanding of $315,000 (2019 - $5,577,000). During 2020, the Company borrowed $821,000 (2019 - $733,000), incurred interest of $1,224,000 (2019 - $1,126,000) and extinguished principal of $1,039,000 (2019 - $nil) and accrued interest of $6,486,000 (2019 - $nil) through the issuance of shares of common stock.
Short- and Long-Term Liquidity
The Company has incurred significant operating losses over the past several fiscal years (2020 - $5,916,000; 2019 - $9,005,000), is currently unable to self-finance its operations, has a working capital deficit of $21,760,000 (2019 - $31,088,000), an accumulated deficit of $93,572,000 (2019 - $87,655,000), limited resources, no source of operating cash flow, no assurances that sufficient funding will be available to conduct further product development and operations, and no assurance the Company’s current projects will be commercially viable or profitable.
All of the Company’s debt financing is past due or due on demand. The Company will seek to replace this financing with funds generated by operations, replacement debt, or from equity financings through private placements or the exercise of options. While certain of the Company’s creditors have agreed not to demand immediate payment. There is no assurance that they will continue to do so in the future. As the Company is past due or in default on its promissory notes payable and accrued interest payable, there is substantial risk of future legal action against the Company. The Company has faced consent judgments and demand notices against it for overdue promissory notes. 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.
Tabular Disclosure of Contractual Obligations:
Payments Due by Period
Total Less
Than
Year
1-3
Years
3-5
Years
More
Than
Years
Accounts payable and accrued liabilities $ 1,114,000 $ 1,114,000 $ - $ - $ -
Promissory notes to related parties
3,032,000
3,032,000
-
-
-
Promissory notes to arm’s length parties
2,254,000
2,254,000
-
-
-
Interest payable
3,575,000
3,575,000
-
-
-
Line of credit
11,914,000
11,914,000
-
-
-
$ 21,889,000 $ 21,889,000
-
-
-
Cash Flows
Year Ended
December 31,
Year Ended
December 31,
Cash flows used in Operating Activities $ (969,000) $ (735,000)
Cash flows provided by Financing Activities
1,033,000
733,000
Net Increase (Decrease) in Cash During Period $ 64,000 $ (2,000)
Cash Used in Operating Activities
Cash used by the Company in operating activities during the year ended December 31, 2020 totaled $969,000 as compared to $735,000 for year ended December 31, 2019. The Company’s cash used in operating activities can be reconciled from net loss as follows:
Cash Used in Operating Activities Reconciliation
Net loss $ (5,916,000) $ (9,005,000)
Stock-based compensation incurred for interest, product development, professional fees and management personnel
2,828,000
6,125,000
Non-cash imputed interest expense
123,000
122,000
Fair value of shares issued for services
20,000
-
Net purchases with balances owing in accounts payable and accrued liabilities
46,000
128,000
Retainers and prepaid services
(63,000)
-
Accrued interest on lines of credit
1,464,000
1,366,000
Accrued interest from promissory notes
529,000
529,000
Cash used in operating activities $ (969,000) $ (735,000)
Cash used in operating activities was as follows:
Cash Used in Operating Activities Reconciliation
Development team compensation $ 267,000 $ 377,000
Administrative personnel compensation
359,000
137,000
Professional fees and professionals retained
212,000
131,000
Public company costs
75,000
17,000
Other
56,000
73,000
Cash used in operating activities $ (969,000) $ (735,000)
Cash Proceeds from Financing Activities
During the year ended December 31, 2020, the Company borrowed $821,000 (2019 - $733,000) on its operating line of credit from the Chairman of the Company and received share subscriptions of $200,000 (2019 - $nil). The amounts borrowed on the lines of credit in 2020 and 2019 were at certain times draw downs in excess of the borrowing limit available to the Company. Subsequent to the shares for debt settlement with the Chairman, and as at December 31, 2020, the amounts borrowed on the line of credit were below the borrowing limit.
Off-Balance Sheet Arrangements
There are no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
Critical Accounting Policies
The preparation of our consolidated financial statements in conformity with generally accepted accounting principles in the United States of America (“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 as of the date of the consolidated 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 policies that are most critical to its financial condition and results of operations, and involve management’s judgment and/or evaluations of inherent uncertain factors are as follows:
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.
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 option pricing 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
Issued
The Company has implemented all new accounting pronouncements that are in effect and may impact its financial statements. The Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or statement of operations.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The Company is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is not required to provide the information under this item.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ALR TECHNOLOGIES INC.
Consolidated Financial Statements
December 31, 2020 and 2019
Index Page
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Changes in Stockholders’ Deficit
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements -
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of ALR Technologies Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of ALR Technologies Inc. (the "Company") as of December 31, 2020 and 2019, the related consolidated statements of operations, changes in stockholders' deficit, and cash flows, for the years then ended, and the related notes (collectively referred to as the "financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, 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.
Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has not generated revenues since inception, has incurred losses in developing its business, and further losses are anticipated. The Company requires additional funds to meet its obligations and the costs of its operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in this regard are described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting in accordance with the standards of the PCAOB. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion in accordance with the standards of the PCAOB.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.
ALR TECHNOLOGIES INC.
Consolidated Balance Sheets
($ United States)
December 31, 2020 and 2019
Assets
Current assets:
Cash $ 66,190 $ 1,838
Prepaid expenses 62,659 -
Total assets $ 128,849 $ 1,838
Liabilities and Stockholders' Deficit
Current liabilities:
Accounts payable and accrued liabilities $ 1,113,720 $ 1,128,081
Promissory notes payable to related parties 3,031,966 3,031,966
Promissory notes payable to unrelated parties 2,254,353 2,254,353
Interest payable 3,575,326 5,364,997
Lines of credit from related parties 11,914,092 19,310,707
Total liabilities 21,889,457 31,090,104
Stockholders' Deficit
Preferred stock:
Authorized: 500,000,000 shares of preferred stock (2019 - 500,000,000) with a par value of $0.001 per share
Shares issued and outstanding: Nil shares of preferred stock (2019 - Nil) were issued and outstanding - -
Common stock:
Authorized: 10,000,000,000 shares of common stock (2019 - 10,000,000,000) with a par value of $0.001 per share
Shares issued and outstanding: 511,020,709 shares of common stock (2019 - 268,777,909 shares of common stock) 511,020 268,777
Obligation to issue shares 200,000 -
Additional paid-in capital 71,100,134 56,298,702
Accumulated deficit (93,571,762 ) (87,655,745 )
Stockholders’ deficit (21,760,608 ) (31,088,266 )
Total liabilities and stockholders’ deficit $ 128,849 $ 1,838
See accompanying notes to consolidated financial statements
ALR TECHNOLOGIES INC.
Consolidated Statements of Operations
($ United States)
Years Ended December 31, 2020 and 2019
Operating Expenses
Product development $ 1,433,027 $ 1,625,075
Professional fees 953,350 523,389
Selling, general and administrative 1,439,634 1,595,936
Operating Loss (3,826,011 ) (3,744,400 )
Other Items
Interest expense (2,116,466 ) (5,261,137 )
Other income 26,460 -
Total Other Items (2,090,006 ) (5,261,137 )
Net Loss $ (5,916,017 ) $ (9,005,537 )
Weighted average number of shares of common stock outstanding, basic and diluted 337,033,584 256,668,320
Loss per share, basic and diluted $ (0.02 ) $ (0.04 )
See accompanying notes to consolidated financial statements
ALR TECHNOLOGIES INC.
Consolidated Statements of Changes in Stockholders’ Deficit
($ United States)
From December 31, 2019 to December 31, 2020
Common Stock
Number of Shares Amount Obligation to Issue Shares Additional Paid-in Capital Accumulated Deficit Total Stockholders’ Deficit
Balance, December 31, 2018 242,777,909 $ 242,777 $ - $ 50,012,445 $ (78,650,208 ) $ (28,394,986 )
Issuance of common stock for exercise of stock options 26,000,000 26,000 - 39,000 - 65,000
Imputed interest - - - 122,488 - 122,488
Stock options granted as compensation - - - 6,124,769 - 6,124,769
Net loss for the year - - - - (9,005,537 ) (9,005,537 )
Balance, December 31, 2019 268,777,909 268,777 - 56,298,702 (87,655,745 ) (31,088,266 )
Issuance of common stock for settlement of debt 242,000,000 242,000 - 11,838,000 - 12,080,000
Issuance of common stock for cash 242,800 - 11,897 - 12,140
Share subscriptions collected - - 200,000 - - 200,000
Imputed interest - - - 123,518 - 123,518
Stock options granted as compensation - - - 2,828,017 - 2,828,017
Net loss for the year - - - - (5,916,017 ) (5,916,017 )
Balance, December 31, 2020 511,020,709 $ 511,020 $ 200,000 $ 71,100,134 $ (93,571,762 ) $ (21,760,608 )
See accompanying notes to consolidated financial statements
ALR TECHNOLOGIES INC.
Consolidated Statements of Cash Flows
($ United States)
Years Ended December 31, 2020 and 2019
OPERATING ACTIVITIES
Net loss $ (5,916,017 ) $ (9,005,537 )
Stock-based compensation-product development 1,156,195 1,243,644
Stock-based compensation-selling, general and administrative 930,258 1,244,636
Stock-based compensation-professional fees 741,564 392,677
Stock-based compensation-interest expense - 3,243,812
Interest expense on line of credit 1,464,077 1,365,967
Non-cash imputed interest expense 123,518 122,488
Shares issued for services 20,000 -
Write-off of accounts payable (26,460 ) -
Changes in assets and liabilities
Increase in prepaid expenses (62,659 ) -
Increase in accounts payable and accrued liabilities 72,099 128,813
Increase in interest payable 528,871 528,870
Net cash used in operating activities (968,554 ) (734,630 )
FINANCING ACTIVITIES
Proceeds from lines of credit 820,766 733,090
Proceeds from share subscriptions received 200,000 -
Proceeds from sales of shares of common stock 12,140 -
Net cash provided by financing activities 1,032,906 733,090
Change in cash 64,352 (1,540 )
Cash, beginning of year 1,838 3,378
Cash, end of year $ 66,190 $ 1,838
See accompanying notes to consolidated financial statements
ALR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2020 and 2019
($ United States)
1. Basis of presentation, nature of operations and going concern
ALR Technologies Inc. (the “Company”) was incorporated under the laws of the State of Nevada on March 24, 1987. On May 16, 2020, the Company incorporated a wholly owned subsidiary, ALR Technologies Sg Pte. Ltd., under the Companies Act of Singapore. The Company has developed its Diabetes Management Solution, which is a comprehensive approach to diabetes care consisting of data collection, predictive A1C, insulin dosage adjustment suggestions, performance tracking, remote monitoring and diabetes test supplies. The Company is seeking commercial opportunities to deploy the Diabetes Management Solution in the United States of America, Canada and Singapore.
These consolidated financial statements have been prepared in accordance with U.S. GAAP in U.S. dollars and on a going concern basis, which presumes the realization of assets and the discharge of liabilities and commitments in the normal course of operations for the foreseeable future. Several adverse conditions cast substantial doubt on the validity of this assumption. The Company has incurred significant losses over the past several fiscal years (2020 - $5,916,017; 2019 - $9,005,537), is currently unable to self-finance its operations, has a working capital deficit of $21,760,608 (2019 - $31,088,266), accumulated deficit of $93,571,762 (2019 - $87,655,745), limited resources, no source of operating cash flow and no assurance that sufficient funding will be available to conduct continued product development activities. If the Company is able to finance its required product development activities, there is no assurance the Company’s current projects will be commercially viable or profitable. The Company has debts comprised of accounts payable and accrued liabilities, interest payable, lines of credit and promissory notes payable totaling $21,889,457 (2019 - $31,090,104) currently due, due on demand or considered delinquent. There is no assurance that the Company will not face additional legal action from creditors regarding delinquent accounts payable, promissory notes payable and interest payable. Any one or a combination of the above conditions could result in the failure of the business and cause the Company to cease operations.
The Company’s ability to continue as a going concern is dependent upon the continued financial support of its creditors and its ability to obtain financing to fund working capital and overhead requirements, fund the development of the Company’s product line, and ultimately, the Company’s ability to achieve profitable operations and repay overdue obligations. Management has obtained short-term financing from related parties through line of credit facilities with available borrowing in principal amount up to $12,300,000. As of December 31, 2020, the total principal balance outstanding was $11,539,125. The resolution of whether the Company is able to continue as a going concern is dependent upon the realization of management’s plans. When additional financing is required, the Company plans to raise needed capital through the exercise of share options and by future common share private placements. There can be no assurance that the Company will be able to raise any additional debt or equity capital from the sources described above or that the lenders in the line of credit arrangements will maintain the availability of borrowing from the line. If management is unsuccessful in obtaining short-term financing or achieving long-term profitable operations, the Company will be required to cease operations.
In March 2020, the World Health Organization declared coronavirus, COVID-19, a global pandemic. This contagious disease outbreak, which has continued to spread, and any related adverse public health developments, has adversely affected workforces, economies and financial markets globally, potentially leading to an economic downturn. The impact on the Company is not currently determinable, but management continues to monitor the situation. Management does not expect that COVID-19 will have a significant impact on the Company; however, it could have a potential impact the Company’s ability to raise money, market its products to attract customers or procure equipment and parts for its glucose monitoring system.
ALR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2020 and 2019
($ United States)
1. Basis of presentation, nature of operations and going concern (continued)
All of the Company’s debt is either due on demand or is in default, while continuing to accrue interest at its stated rates. The Company will seek to obtain creditors’ consents to delay repayment of the outstanding promissory notes payable and related interest thereto, until it is able to replace this financing with funds generated by operations, recapitalization with replacement debt or from equity financings through private placements. While some of the Company’s creditors have agreed to extend repayment deadlines in the past, there is no assurance that they will continue to do so in the future. In the past, creditors have successfully commenced legal action against the Company to recover debts outstanding. In those instances, the Company was able to obtain financing from related parties to cover the verdict or settlement; however, there is no assurance that the Company would be able to obtain the same financing in the future. If the Company is unsuccessful in obtaining financing to cover any potential verdicts or settlements, the Company will be required to cease operations.
The Company’s activities will necessitate significant uses of working capital beyond 2020. Additionally, the Company’s capital requirements will depend on many factors, including the success of the Company’s continued product development and distribution efforts. The Company plans to continue financing its operations with the lines of credit it has available.
2. Significant accounting policies
a) Basis of consolidation
These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, ALR Technologies Sg Pte. Ltd., which was incorporated on May 16, 2020 in Singapore and is currently inactive. All significant intercompany balances and transactions have been eliminated on consolidation.
b) Stock-based compensation
The Company follows the fair value method of accounting for stock-based compensation. The Company estimates 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. The Company estimates the fair value of the stock options using the Black-Scholes option pricing model. The Black-Scholes option pricing model requires the input of highly subjective assumptions, including the option’s expected life and the price volatility of the underlying stock.
ALR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2020 and 2019
($ United States)
2. Significant accounting policies (continued)
c) Income taxes
Income taxes are accounted for under the asset and liability method. Deferred income tax assets and liabilities are recognized for the differences between the consolidated 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.
The Company follows the accounting requirements associated with uncertainty in income taxes using the provisions of Financial Accounting Standards Board Accounting Standards Codification 740 Income Taxes. Using that guidance, tax positions initially need to be recognized in the consolidated financial statements when it is more-likely-than-not the positions will be sustained upon examination by the tax authorities. It also provides guidance for derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. As of December 31, 2020, the Company has no uncertain tax positions that qualify for either recognition or disclosure in the financial statements.
d) Use of estimates
The preparation of consolidated 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 consolidated financial statements, the measurement of stock-based compensation, the fair value of financial instruments, and the reported amounts of revenues and expenses during the reporting period. Management believes the estimates are reasonable; however, actual results could differ from those estimates.
e) Loss per share
Basic 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 share when the effect would be anti-dilutive.
ALR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2020 and 2019
($ United States)
2. Significant accounting policies (continued)
f) 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 U.S. GAAP 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.
g) Fair value of financial instruments
The Company’s financial instruments include cash, accounts payable, promissory notes payable, interest payable and lines of credit. The fair values of these financial instruments approximate their carrying values due to the relatively short periods to maturity of these instruments. For fair value measurement, U.S. GAAP establishes a three-tier hierarchy that prioritizes the inputs used in the valuation methodologies in measuring fair value:
Level 1 - observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2 - includes other inputs that are directly or indirectly observable in the marketplace.
Level 3 - unobservable inputs that are supported by little or no market activity.
Cash is measured at level 1 inputs.
h) Recently adopted and issued accounting pronouncements
Issued
The Company has implemented all new accounting pronouncements that are in effect and may impact its financial statements. The Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or statements of operations.
ALR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2020 and 2019
($ United States)
3. Interest, advances and promissory notes payable
a) Promissory notes payable to related parties
A summary of the promissory notes payable to related parties is as follows:
Promissory Notes Payable to Related Parties December 31, 2020 December 31, 2019
Promissory notes payable to relatives of directors collateralized by a general security agreement over all the assets of the Company, past maturity:
i. Interest at 1% per month $ 720,619 $ 720,619
ii. Interest at 1.25% per month 51,347 51,347
iii. Interest at the U.S. bank prime rate plus 1% 100,000 100,000
iv. Interest at 0.5% per month 695,000 695,000
Promissory notes payable, unsecured, to relatives of a director, bearing interest at 1% per month, past maturity 1,465,000 1,465,000
Total Promissory Notes Payable to Related Parties $ 3,031,966 $ 3,031,966
All amounts past maturity continue to accrue interest at their stated rate and are considered due on demand.
ALR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2020 and 2019
($ United States)
3. Interest, advances and promissory notes payable (continued)
b) Promissory notes payable to unrelated parties
A summary of the promissory notes payable to unrelated parties is as follows:
Promissory Notes Payable to Unrelated Parties December 31, 2020 December 31, 2019
Unsecured promissory notes payable to unrelated lenders, past maturity:
i. Interest at 1% per month $ 1,337,456 $ 1,337,456
i. Interest at 0.667% per month 435,985 435,985
ii. Interest at 0.625% per month 150,000 150,000
iii. Non-interest-bearing 270,912 270,912
Promissory notes payable, secured by a guarantee from the Chief Executive Officer, bearing interest at 1% per month past maturity 60,000 60,000
Total Promissory Notes Payable to Unrelated Parties $ 2,254,353 $ 2,254,353
All amounts past maturity continue to accrue interest at their stated rate and are considered due on demand.
ALR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2020 and 2019
($ United States)
3. Interest, advances and promissory notes payable (continued)
c) Interest payable
A summary of the interest payable activity is as follows:
Balance, December 31, 2018 $ 4,836,127
Interest incurred on promissory notes payable 528,870
Balance, December 31, 2019 5,364,997
Interest incurred on promissory notes payable 528,871
Interest payable retired through issuance of shares (2,318,542 )
Balance, December 31, 2020 $ 3,575,326
Interest payable is due to related and non-related parties as follows:
December 31, 2020 December 31, 2019
Related parties (relatives of the Chairman) $ 873,666 $ 2,876,280
Non-related parties 2,701,660 2,488,717
$ 3,575,326 $ 5,364,997
The payment terms, security and any interest payable are based on the underlying promissory notes payable that the Company has outstanding.
d) Interest expense
During the year ended December 31, 2020, the Company incurred interest expense of $2,116,466 (2019 - $5,261,137) as follows:
· $1,464,077 (2019 - $1,365,967) incurred on lines of credit payable as shown in note 4;
· $528,871 (2019 - $528,870) incurred on promissory notes (note 3(a)) and other payables;
· $123,518 (2019 - $122,488) incurred from the calculation of imputed interest on accounts payable outstanding for longer than one year, advances payable and promissory notes payable, which had no stated interest rate; and
· $nil (2019 - $3,243,812) incurred related to 1) the grant of options as consideration for receiving an increase to the borrowing limit on the line of credit between the Company and the Chairman, and 2) the modification of options held by the Chairman and his spouse that were granted in connection with financing provided to the Company.
ALR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2020 and 2019
($ United States)
4. Lines of credit
As of December 31, 2020, the Company has two lines of credit as follows:
Creditor Interest Rate Borrowing Limit Repayment Terms Principal Borrowed Accrued Interest Total Outstanding Security Purpose
Chairman and CEO 1% per Month $10,300,000 Due on Demand $ 9,539,125 $ 314,967 $ 9,854,092 General Security over Assets General Corporate Requirements
Wife of Chairman 1% per Month 2,000,000 Due on Demand 2,000,000 60,000 2,060,000 General Security over Assets General Corporate Requirements
Total
$ 12,300,000
$ 11,539,125 $ 374,967 $ 11,914,092
On September 21, 2020, the Company, the Chairman and the Chairman’s spouse agreed to retire principal of $1,038,967 and accrued interest of $8,642,491 pursuant to two shares for debt agreements (note 5(b)).
As of December 31, 2019, the Company has two lines of credit as follows:
Creditor Interest Rate Borrowing Limit Repayment Terms Principal Borrowed Accrued Interest Total Outstanding Security Purpose
Chairman and CEO 1% per Month $10,300,000 Due on Demand $ 9,757,325 $ 5,576,997 $ 15,334,322 General Security over Assets General Corporate Requirements
Wife of Chairman 1% per Month 2,000,000 Due on Demand 2,000,000 1,976,385 3,976,385 General Security over Assets General Corporate Requirements
Total
$ 12,300,000
$ 11,757,325 $ 7,553,382 $ 19,310,707
On December 11, 2019, the Company and the Chairman entered into an amendment agreement to increase the borrowing limit on the line of credit provided by the Chairman to the Company from $8,500,000 to $10,300,000. The terms of amounts to be advanced under the amendment are consistent with the line of credit. In connection with the line of credit, the Company granted the Chairman the option to acquire 120,000,000 shares of common of the Company at a price of $0.015 per share for a term of five years (note 6).
5. Capital stock
a) Authorized share capital
i. Common stock
10,000,000,000 shares of common stock with a par value of $0.001 per share.
ii. Preferred stock
500,000,000 shares of preferred stock with a par value of $0.001 per share.
ALR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2020 and 2019
($ United States)
5. Capital stock (continued)
b) Issued share capital
During the year ended December 31, 2020:
i) On February 11, 2020, the Company issued 2,000,000 restricted shares of common stock at a price of $0.04 per share with a value of $80,000 in exchange for the retirement of $60,000 of accounts payable and $20,000 for the provision of services.
ii) On August 24, 2020, the Company issued 242,800 restricted shares of common stock at a price of $0.05 per share for proceeds of $12,140.
iii) On September 21, 2020, the Company entered into two shares for debt agreements with the Chairman and his spouse to issue an aggregate 240,000,000 restricted shares of common stock at a price of $0.05 per share for a purchase price of $12,000,000 in exchange for the retirement of $12,000,000 of liabilities comprised of:
· Promissory Notes - Accrued interest 	- $ 2,318,542
· Line of Credit - Accrued interest 	- $ 8,642,491
· Line of Credit - Principal 	- $ 1,038,967
iv) On December 4, 2020, the Company filed a Form S-1 Registration Statement to distribute subscription rights to purchase up to an aggregate 127,522,227 shares of common stock at a price of $0.05 per share for maximum aggregate offering proceeds of $6,376,111 (note 13). The Company collected subscriptions of $200,000 related to management’s right to allocate unsubscribed shares of common stock.
During the year ended December 31, 2019:
On June 19, 2019, the Company issued 26,000,000 shares of common stock of the Company to two individuals for the exercise of stock options as follows:
· 25,000,000 shares at an exercise price of $0.002 per share for a purchase price of $50,000. As consideration, the Company retired accrued interest owing to the Chairman on his line of credit totaling $50,000; and
· 1,000,000 shares at an exercise price of $0.015 per share for a purchase price of $15,000. As consideration, the Company retired accounts payable totaling $15,000.
ALR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2020 and 2019
($ United States)
6. Additional paid-in capital
Stock options
A summary of stock option activity is as follows:
Year Ended
December 31, 2020 Year Ended
December 31, 2019
Number of Options Weighted Average Exercise Price Number of Options Weighted Average Exercise Price
Outstanding, beginning of year 5,236,401,500 0.003 5,014,851,500 $ 0.002
Granted 139,800,000 0.047 254,050,000 $ 0.028
Exercised - - (26,000,000 ) $ (0.003 )
Cancelled (13,500,000 ) (0.034 ) (6,500,000 ) $ (0.015 )
Outstanding, end of year 5,362,701,500 0.004 5,236,401,500 $ 0.003
Exercisable, end of year 5,202,701,500 0.003 5,154,901,500 $ 0.003
During the year ended December 31, 2020:
On April 1, 2020, the Company granted one consultant the option to acquire 10,000,000 shares of common stock at a price of $0.035 per share for a term of five years. The fair value of the options granted totaling $391,843 was fully recorded at grant.
On May 12, 2020, the Company amended the option to acquire 40,000,000 shares of common stock granted on June 12, 2019 to extend the period of vesting from May 31, 2020 to December 31, 2020. None of these options have vested to date.
On May 18, 2020, the Company granted one consultant the option to acquire 500,000 shares of common stock of the Company at a price of $0.035 per share until May 17, 2024. The fair value of the options granted totaling $18,725 was fully recorded at grant.
On June 1, 2020, the Company granted one consultant the option to acquire 10,000,000 shares of common stock of the Company at a price of $0.035 per share until May 31, 2025 subject to performance vesting conditions. The fair value of the options granted totaling $621,853 was not recorded, as it cannot be determined that it is more likely than not that the performance condition will be met.
ALR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2020 and 2019
($ United States)
6. Additional paid-in capital (continued)
Stock options (continued)
During the year ended December 31, 2020: (continued)
On June 5, 2020, the Company granted one sales agent the option to acquire 10,000,000 shares of common stock of the Company at a price of $0.035 per share until May 31, 2025 subject to the agent enrolling 20,000 patients into the ALRT Diabetes Solution by May 31, 2021. The fair value of the options granted totaling $494,868 was not recorded, as it cannot be determined that it is more likely than not that the performance condition will be met.
On September 1, 2020, the Company granted thirteen individuals the option to acquire an aggregate 74,500,000 options at an exercise price of $0.05 per share; 22,000,000 stock options, which vested at the time of grant, will expire on May 17, 2024 and 52,500,000 stock options, which vest upon achievement of performance conditions, will expire on May 31, 2025. None of the stock options with performance vesting conditions have vested. The fair value of the options granted totals $3,854,619, of which $1,137,397 related to the stock options that have vested was recorded and $2,717,222 related to the options that have not vested was not recorded.
On October 12, 2020, the Company granted eight individuals the option to acquire an aggregate 34,800,000 options at an exercise price of $0.05 per share until May 31, 2025; 18,300,000 vested at the time of grant and 16,500,000 of the stock options granted will vest upon achievement of performance conditions. None of the stock options with performance vesting conditions have vested. The fair value of the options granted totals $2,434,053, of which $1,279,973 related to the stock options that have vested was recorded and $1,154,080 related to the options that have not vested was not recorded.
During the year ended December 31, 2020, the Company recorded a further $79 in compensation expense relating to the vesting of stock options granted in previous years.
During the year ended December 31, 2019:
On February 4, 2019, the Company granted a consultant the option to acquire a total of 2,500,000 shares of common stock of the Company at a price of $0.035 per share for a term of five years. The fair value of the options granted totaled $99,723 and was fully recorded at grant.
On March 15, 2019, the Company granted an option to acquire 9,150,000 shares of common stock of the Company at a price of $0.035 per share for a term of five years. The option to acquire 2,500,000 shares of common stock was granted to one consultant and the option to acquire 6,650,000 shares of common stock was granted to one director. The fair value of the options granted totaled $364,058 and was fully recorded at grant.
ALR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2020 and 2019
($ United States)
6. Additional paid-in capital (continued)
Stock options (continued)
During the year ended December 31, 2019: (continued)
On April 12, 2019, the Company modified options to acquire 564,350,200 shares of common stock of the Company by extending the expiry date to April 12, 2024. The options modified had:
· exercise prices ranging from $0.002 to $0.03 per share; and
· expiration dates ranging from April 19, 2019 to May 29, 2020 immediately prior to the modification.
The fair value related to the extension of the life of the options totaled $1,150,060 and was recorded at the modification date.
On May 6, 2019, the Company granted options to acquire 13,000,000 shares of common stock of the Company at a price of $0.035 per share for a term of five years to three directors of the Company. The fair value of the options granted totaled $467,845 and was fully recorded at grant.
On May 17, 2019, the Company granted options to acquire 27,900,000 shares of common stock of the Company at a price of $0.035 per share for a term of five years to eleven consultants, one director and one employee of the Company. The fair value of the options granted totaled $1,059,856 and was fully recorded at grant.
On May 31, 2019, the Company granted options to acquire 10,000,000 shares of common stock of the Company at a price of $0.035 per share for a term of one year to one consultant. The option to acquire 10,000,000 shares will vest based on achievements of performance milestones. The fair value of the options granted totaling $399,722 was not recorded, as it cannot be determined that it is more likely than not that the performance conditions will be met. These options expired on May 30, 2020.
On June 12, 2019, the Company granted options to acquire 40,000,000 shares of common stock of the Company at a price of $0.05 per share until May 15, 2024 to three sales agents. The option to acquire 40,000,000 shares will vest based on achievements of performance milestones. The fair value of the options granted totaling $1,595,316 was not recorded, as it cannot be determined that it is more likely than not that the performance conditions will be met.
On June 17, 2019, the Company granted options to acquire 5,000,000 shares of common stock of the Company at a price of $0.035 per share for a term of five years to one advisor. The fair value of the options granted totaled $189,865 and was fully recorded at grant.
On June 17, 2019, the Company granted options to acquire 5,000,000 shares of common stock of the Company at a price of $0.05 per share for a term of five years to a sales agent. The option to acquire 5,000,000 shares will vest based on achievements of performance milestones. The fair value of the options granted totaled $189,833 was not recorded, as it cannot be determined that it is more likely than not that the performance conditions will be met.
ALR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2020 and 2019
($ United States)
6. Additional paid-in capital (continued)
Stock options (continued)
During the year ended December 31, 2019: (continued)
On June 24, 2019, options granted on January 31, 2018 to acquire 24,000,000 shares of common stock at a price of $0.015 for a term of five years that were subject to vest based on the achievement of certain performance milestones were modified as follows:
· the option to acquire 4,000,000 shares of common stock was cancelled; and
· the performance conditions were modified.
No compensation expense was reversed related to the cancellation of the unvested options as no compensation expense related to these options had been previously recorded. No compensation expense related to the modification of the options was recorded, as the change in vesting conditions did not make it more likely than not that the performance conditions will be met.
On July 15, 2019, the Company granted a consultant options to acquire 7,500,000 shares of common stock of the Company at a price of $0.035 per share exercisable until February 3, 2024. The fair value of the options granted totaled $318,530 and was fully recorded at grant.
On August 16, 2019, the Company granted a consultant the option to acquire an aggregate 2,500,000 shares of common stock of the Company at a price of $0.05 per share. The option to acquire 2,500,000 shares will vest based on achievements of performance milestones. The fair value of the options granted totaling $108,655 was not recorded, as it cannot be determined that it is more likely than not that the performance conditions will be met.
On September 6, 2019, the Company granted a consultant the option to acquire 1,000,000 shares of common stock of the Company at a price of $0.05 per share for a term of five years. The option to acquire 1,000,000 shares will vest based on achievements of performance milestones. The fair value of the options granted totaling $40,863 was not recorded, as it cannot be determined that it is more likely than not that the performance conditions will be met.
On September 17, 2019, the Company granted a consultant the option to acquire 5,000,000 shares of common stock of the Company at a price of $0.035 per share for a term of five years. The fair value of the options granted totaled $194,850 and was fully recorded at grant.
On October 3, 2019, the Company granted two advisors the option to acquire an aggregate 3,500,000 shares of common stock of the Company at a price of $0.035 per share for a term of five years. Options to acquire 2,500,000 shares of common stock will vest upon the advisor entering into a full-time role with the Company. The fair value of the options granted totaled $136,399 of which $38,971 has been recorded related to the vested options.
ALR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2020 and 2019
($ United States)
6. Additional paid-in capital (continued)
Stock options (continued)
On October 24, 2019, the Company granted two advisors the option to acquire an aggregate 2,000,000 shares of common stock of the Company at a price of $0.035 per share for a term of five years. The fair value of the options granted totaled $63,940 and was fully recorded at grant.
On December 11, 2019, the Company granted one creditor the option to acquire 120,000,000 shares of common stock of the Company at a price of $0.015 per share for a term of five years in connection with receiving line of credit financing (note 4). The fair value of the options granted totaled $2,158,441 and was fully recorded upon the Company entering into the financing agreement with the creditor.
During the year ended December 31, 2019, the Company recorded a further $18,630 in compensation expense related to vesting of stock options granted in previous years.
ALR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2020 and 2019
($ United States)
6. Additional paid-in capital (continued)
Stock options (continued)
Outstanding
The options outstanding at December 31, 2020 and 2019 were as follows:
December 31, December 31,
Expiry Date Options Exercise Price Intrinsic Value Options Exercise Price Intrinsic Value
May 30, 2020 - $ - $ - 10,000,000 $ 0.035 $ -
July 1, 2021 4,365,001,300 $ 0.002 $ 0.069 4,365,001,300 $ 0.002 $ 0.015
November 27, 2022 6,950,000 $ 0.015 $ 0.056 7,200,000 $ 0.015 $ 0.002
January 31, 2023 40,500,000 $ 0.015 $ 0.056 40,500,000 $ 0.015 $ 0.002
June 13, 2023 5,000,000 $ 0.015 $ 0.056 5,000,000 $ 0.015 $ 0.002
October 1, 2023 300,000 $ 0.050 $ 0.021 300,000 $ 0.050 $ -
February 3, 2024 10,000,000 $ 0.035 $ 0.036 10,000,000 $ 0.035 $ -
March 14, 2024 9,150,000 $ 0.035 $ 0.036 9,150,000 $ 0.035 $ -
April 12, 2024 560,000,200 $ 0.002 $ 0.069 560,000,200 $ 0.002 $ 0.015
April 12, 2024 3,900,000 $ 0.015 $ 0.056 4,150,000 $ 0.015 $ 0.002
April 12, 2024 200,000 $ 0.030 $ 0.041 200,000 $ 0.030 $ -
May 6, 2024 13,000,000 $ 0.035 $ 0.036 13,000,000 $ 0.035 $ -
May 17, 2024 40,000,000 $ 0.050 $ 0.021 40,000,000 $ 0.050 $ -
May 17, 2024 25,400,000 $ 0.035 $ 0.036 27,900,000 $ 0.035 $ -
May 17, 2024 22,000,000 $ 0.050 $ 0.021 - $ - $ -
June 17, 2024 5,000,000 $ 0.050 $ 0.021 5,000,000 $ 0.050 $ -
June 17, 2024 5,000,000 $ 0.035 $ 0.036 5,000,000 $ 0.035 $ -
August 16, 2024 2,500,000 $ 0.050 $ 0.021 2,500,000 $ 0.050 $ -
September 6, 2024 1,000,000 $ 0.050 $ 0.021 1,000,000 $ 0.050 $ -
September 17, 2024 5,000,000 $ 0.035 $ 0.036 5,000,000 $ 0.035 $ -
October 3, 2024 3,500,000 $ 0.035 $ 0.036 3,500,000 $ 0.035 $ -
October 24, 2024 2,000,000 $ 0.035 $ 0.036 2,000,000 $ 0.035 $ -
December 11, 2024 120,000,000 $ 0.015 $ 0.056 120,000,000 $ 0.015 $ 0.002
April 1, 2025 10,000,000 $ 0.035 $ 0.036 - $ - $ -
May 31, 2025 20,000,000 $ 0.035 $ 0.036 - $ - $ -
May 31, 2025 87,300,000 $ 0.050 $ 0.021 - $ - $ -
Total 5,362,701,500 $ 0.004 $ 0.066 5,236,401,500 $ 0.003 $ 0.014
Weighted Average Remaining Contractual Life
1.05
1.96
ALR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2020 and 2019
($ United States)
6. Additional paid-in capital (continued)
Stock options (continued)
The fair value of the stock options granted and vested was allocated as follows:
December 31, 2020 December 31, 2019
Product development expense $ 1,156,195 $ 1,243,644
Professional expense 741,564 392,677
Selling, general and administrative expenses 930,258 1,244,636
Interest - 3,243,812
$ 2,828,017 $ 6,124,769
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 weighted average assumptions:
December 31, 2020 December 31, 2019
Risk-free interest rate 0.20 % 1.84 %
Expected life 4.6 years 5 years
Expected dividends 0 % 0 %
Expected volatility 312 % 306 %
Forfeiture rate 0 % 0 %
The weighted average fair value for the options granted during 2020 was $0.06 (2019 - $0.03).
ALR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2020 and 2019
($ United States)
7. Related party transactions and balances
Year Ended December 31, 2020 Year Ended December 31, 2019
Related party transactions included within interest expense:
Interest expense on promissory notes issued to relatives of the Chairman and Chief Executive Officer of the Company $ 315,926 $ 321,626
Interest expense on lines of credit payable to the Chairman and Chief Executive Officer of the Company and his spouse $ 1,464,077 $ 1,365,967
Interest expense related to the modification of stock options held by the Chairman and Chief Executive Officer of the Company and his spouse related to financing provided $ - $ 1,085,371
Interest expense related to stock options granted to the Chairman and Chief Executive Officer of the Company related to the increase of the borrowing limit of a line of credit $ - $ 2,158,441
Related party transactions included within selling, general and administrative expenses:
Consulting fees to the Chairman and Chief Executive Officer of the Company accrued on the line of credit available to the Company $ 249,600 $ 189,600
Selling, general and administrative expenses related to the grant of stock options to four directors of the Company $ - $ 770,421
Selling, general and administrative expenses related to the modification of stock options to three directors of the Company $ - $ 29,204
Consulting fees to a relative of the Chairman and Chief Executive Officer of the Company $ - $ 120,000
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.
ALR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2020 and 2019
($ United States)
8. Commitments and contingencies
a) Contingencies
The Company has had three judgments against it relating to overdue promissory notes and accrued interest, and a fourth creditor has demanded repayment of an overdue promissory note and accrued interest. To date, the Company has not repaid any of these promissory notes and related accrued interest and could be subject to further action. The legal liability, totaling $1,226,567, of these promissory notes and related accrued interest have been fully recognized and recorded by the Company. The Company has accrued interest of $244,472 related to one of these promissory notes.
On September 23, 2020, the Superior Court of Forsyth County, North Carolina issued a Civil Summons in regards to one of the above noted judgement of $551,576, consisting of the principal amount of $300,000 and accrued interest of $251,576, as of the date of the Civil Summons. An Order for Mediated Settlement Conference in Superior Court and Trial Calendar Notice was issued and a tentative trial date in the absence of a mediated settlement has been set for June 28, 2021.
b) Commitments
The Company has a consulting arrangement with Mr. Sidney Chan, Chief Executive Officer and Chairman of the Board of Directors of the Company. Under the terms of the contract, Mr. Chan will be paid $240,000 per annum for services as Chief Executive Officer. The contract can be terminated at any time with thirty days’ notice and the payment of two years’ annual compensation. Should the contract be terminated, all debts owed to Mr. Chan and his spouse must be immediately repaid. The initial term of the contract is for one year and automatically renews for continuous one-year terms. Also, under the terms of the contract are the following:
i. Incentive revenue bonus
Mr. Chan will be entitled to a 1% net sales commission from the sales of any of the Company’s products at any time during his life, regardless if Mr. Chan is still under contract with the Company.
ii. Sale of business
If more than 50% of the Company’s stock or assets are sold, Mr. Chan 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 $200,000,000.
ALR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2020 and 2019
($ United States)
9. Financial instruments
The Company’s financial instruments consist of cash, accounts payable, interest payable, promissory notes payable to unrelated parties, promissory notes payable to related parties and lines of credit from related parties.
a) Fair value
The fair values of cash and certain accounts payable approximate their carrying values due to the relatively short periods to maturity of these instruments.
Certain accounts payable have been outstanding longer than one year. The Company has recorded imputed interest at a rate of 1% per month over the period the payables have been outstanding for longer than one year, with a corresponding amount recognized in additional paid-in capital. The calculated amount represents the implicit compensation for the use of funds beyond a reasonable term for regular trade payables.
For the purposes of fair value analysis, promissory notes payable to related parties and promissory notes payable to unrelated parties can be separated into two classes of financial liabilities:
i. Interest-bearing promissory notes, lines of credit and related interest payable; and
ii. Non-interest-bearing promissory notes past due.
The interest-bearing promissory notes payable are all delinquent and have continued to accrue interest at their stated rates. The Company currently does not have the funds to extinguish these debts and will continue to incur interest until such time as the liabilities are extinguished. There is not an active market for delinquent loans for a Company with a similar financial position. Management asserts the carrying values of the promissory notes and related interest payable are a reasonable estimate of fair value, as they represent the Company’s best estimate of their legal obligation for these debts. As there is no observable market for interest rates on similar promissory notes, the fair value was estimated using Level 2 inputs in the fair value hierarchy.
The Company has one non-interest-bearing promissory note payable past due. There is not an active market for default loans not bearing interest nor is there an observable market for lending to companies with a financial position similar to the Company. The Company has recorded imputed interest at a rate of 1% per month over the life of the promissory notes, with a corresponding amount recognized in additional paid-in capital representing the implicit compensation for the use of funds. Management asserts the payment date for these amounts cannot be reasonably determined. Management further asserts there is not a determinable interest rate for arm’s length borrowings based on the current financial position of the Company and asserts the carrying value is the best estimate of the Company’s legal liability and represents the fair value for the promissory note. This would be considered a Level 2 input in the fair value hierarchy.
ALR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2020 and 2019
($ United States)
9. Financial instruments (continued)
b) Credit risk
The financial instrument that potentially subjects the Company to credit risk consists of cash. The Company only has an immaterial cash balance and is not exposed to significant credit risk.
c) Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market prices. Market risk comprises two types of risk: interest rate risk and foreign currency risk.
i. Interest rate risk
Interest rate risk consists of two components:
1) Cash flow risk
To the extent that payments made or received on the Company’s monetary assets and liabilities are affected by changes in the prevailing market interest rates, the Company is exposed to interest rate cash flow risk.
The Company is exposed to interest rate cash flow risk on promissory notes payable of $500,000, which incur a variable interest rate of prime plus 1%. A hypothetical change of 1% on interest rates would increase or decrease net loss and comprehensive loss by $5,000.
2) Price risk
To the extent that changes in prevailing market interest rates differ from the interest rate on the Company’s monetary assets and liabilities, the Company is exposed to price risk.
The Company’s promissory notes payable consist of $100,000 of variable interest rate notes and $5,186,319 of fixed interest rate notes. All of these notes are past due and are currently due on demand while interest continues to accrue. Due to the delinquency of the fixed interest rate promissory notes payable, there is no active market for these instruments and fluctuations in market interest rates do not have a significant impact on their estimated fair values as of December 31, 2020.
At December 31, 2020, the effect on net loss and comprehensive loss of a hypothetical change of 1% in market interest rate cannot be reasonably determined.
ALR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2020 and 2019
($ United States)
9. Financial instruments (continued)
c) Market risk (continued)
ii. Foreign currency risk
The Company incurs certain accounts payable and expenses in Canadian dollars and is exposed to fluctuations in changes in exchange rates between the U.S. and Canadian dollars. As at December 31, 2020, the effect on net loss and comprehensive loss of a hypothetical change of 10% between the U.S. and Canadian dollars would not be material. The Company has not entered into any foreign currency contracts to mitigate risk.
10. Income taxes
The provision for income taxes differs from the result that would be obtained by applying the statutory tax rate of 21% (2019 - 21%) to income before income taxes. The difference results from the following items:
December 31,
December 31,
Computed expected benefit of income taxes $ (1,242,363 ) $ (1,891,163 )
Stock-based compensation 593,885 1,286,201
Non-deductible interest expense 79,418 25,722
Expiry of tax credits 929,432 18,486
True up of prior year balances 1,214,608 37,917
Increase (decrease) in valuation allowance (1,574,980 ) 522,837
Income tax provision $ - $ -
The components of the net deferred income tax asset, the statutory tax rate and the amount of the valuation allowance are as follows:
December 31,
December 31,
Net operating loss carried forward $ 37,125,837 $ 44,625,741
Tax rate 21 % 21 %
Deferred income tax assets 7,796,426 9,371,406
Valuation allowance (7,796,426 ) (9,371,406 )
Net deferred income tax asset $ - $ -
ALR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2020 and 2019
($ United States)
10. Income taxes (continued)
The potential benefit of the deferred income tax asset has not been recognized in these consolidated financial statements since it cannot be assured that it is more likely than not that such benefit will be utilized in future years. The Company believes that 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.
The operating losses amounting to $37,126,000 for utilization in the United States of America, the jurisdiction where they were incurred, will expire between 2021 and 2040 if they are not used. The following table lists the fiscal year in which the loss was incurred and the expiration date of the operating loss carryforwards:
Fiscal Year Amount Expiry Date
$ 3,681,000
2,504,000
2,776,000
1,251,000
1,304,000
1,532,000
1,480,000
1,600,000
1,723,000
823,000
1,747,000
1,639,000
1,403,000
2,595,000
1,619,000
1,171,000
928,000
720,000
3,921,000
2,709,000
Total $ 37,126,000
ALR TECHNOLOGIES INC.
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2020 and 2019
($ United States)
11. Operating segments
The Company has one operating segment, development of diabetes hardware and software. The Company’s geographical segments are summarized as follows:
December 31,
December 31,
Current and Total Assets
Other $ 7,632
-
Singapore
20,000 $ -
United States
101,217
1,838
$ 128,849 $ 1,838
Net Loss
Singapore $ - $ -
United States
(5,916,017)
(9,005,537)
$ (5,916,017) $ (9,005,537)
12. Supplemental information with respect to cash flows
December 31,
December 31,
Common stock issued to retire accounts payable $ 60,000 $ -
Common stock issued to retire interest payable $ 2,318,542 $ -
Common stock issued to retire line of credit payable $ 9,681,458 $ -
13. Subsequent events
a) The Company collected subscriptions of $524,832 pursuant to its registration statement and issued a total of 14,496,635 shares of common stock. Included in this issuance was 4,000,000 shares of common stock to satisfy its obligation to issue shares of common stock. The Company has until April 22, 2021 to sell the remaining 113,025,592 shares of common stock.
b) The Company received proceeds of $12,000 pursuant to the exercise of options to acquire 800,000 shares of common stock at a price of $0.015 per share.
c) On January 28, 2021, the Company’s board of directors approved the grant of the option to acquire an aggregate 47,000,000 shares of common stock at a price of $0.05 per share to eight individuals. All of the shares will vest according to performance or time-based conditions. Options to acquire 37,000,000 shares of common stock will expire December 31, 2025 and options to acquire 10,000,000 shares of common stock will expire May 17, 2024. As of the date of the audit report, none of the options granted had vested.
d) On February 22, 2021, the Company’s board of directors approved the grant of the option to acquire an aggregate 5,000,000 shares of common stock at a price of $0.05 per share until May 17, 2024 to three individuals. As of the date of the audit report, none of the options granted had vested.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.

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ITEM 9A. CONTROLS AND PROCEDURES
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 the Securities and Exchange Commission (the “SEC”) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms relating to ALR Technologies Inc., and was made known to them by others within those entities, particularly during the period when this report was being prepared. Based on that evaluation, the Principal Executive Officer and Principal Financial Officer have concluded that these 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 or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system will be met. 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. Further, 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.
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.
The Company’s management assessed the effectiveness of our internal control over financial reporting as of December 31, 2020. In making this assessment, the management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on management’s assessment, as of December 31, 2020, the Company’s internal control over financial reporting was not effective based on those criteria.
Based on this assessment, we found our internal control over financial reporting to be not effective for the following reason:
(1) insufficient written policies and procedures for reporting requirements and accounting and financial reporting with respect to the requirements and application of U.S. GAAP and SEC disclosure requirements.
Management of the Company believes that the material weaknesses set forth in (1) did not affect the Company’s financial results. The Company retains a consultant who has the technical expertise and knowledge to implement the proper segregation of duties and the development of effective internal controls over financial reporting. The Company will advance its internal controls over financial reporting to meet its future needs at the appropriate time.
In addition, management believes that preparing and implementing sufficient written policies and checklists will remedy the following material weaknesses: (i) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of the U.S. GAAP and SEC disclosure requirements.
We will continue to monitor and evaluate the effectiveness of our internal controls and procedures and our internal controls over financial reporting on an ongoing basis and are committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow.
Changes in Internal Control over Financial Reporting
There were no changes in the Company’s internal control over financial reporting during the year ended December 31, 2020 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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ITEM 9B. OTHER INFORMATION
ITEM 9B. OTHER INFORMATION
None.
PART III

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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
As of the date of this Form 10-K, the names, ages and positions held by each of the officers and directors of the Company are as follows:
Name Age Position Held
Sidney Chan Chairman of the Board of Directors, Chief Executive Officer and
Chief Financial Officer
Kenneth James Robulak A member of the Board of Directors
Dr. Alfonso Salas A member of the Board of Directors
Ronald Cheng A member of the Board of Directors
Peter Stafford A member of the Board of Directors
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.
Sidney Chan - Chairman of the Board of Directors, Chief Executive Officer
and Chief Financial Officer
Director since December 1999, Chairman of the Board of Directors since July 2010, Chief Executive Officer & Principal Accounting Officer since April 2000
Mr. Chan joined ALR Technologies Inc. in August 1997. He has assisted the Company’s financing, product development and corporate development. Mr. Chan has led the Company’s product development of the Diabetes Management Solution. Mr. Chan possesses in-depth knowledge of the equity markets and investment industry, as well as a strong fundamental background in the responsibilities of corporate development and operations. Mr. Chan is an engineer and obtained his Bachelor of Engineering (Mining) degree with distinction in Mineral Economics from McGill University in 1973.
Kenneth James Robulak - A member of the Board of Directors of the Company
Director since August 21, 2012
From December 14, 1999 to January 31, 2001, Mr. Robulak was a member of our Board of Directors, and from April 4, 2000 to January 31, 2001 Mr. Robulak was our Chief Financial Officer, Secretary, Treasurer and Vice President. Mr. Robulak resigned as officer and director of the Company on January 31, 2001. At the time of his resignation, Mr. Robulak did not have any disagreements with us relating to our operations, policies or practices. Since July 2007, Mr. Robulak has worked as a marketing consultant to Teco Metal Products, LLC, a technology-based manufacturing company with operations in Dallas, Texas, and Guadalajara, Mexico. Mr. Robulak earned a Bachelor of Commerce degree in finance and marketing and is a Fellow of the Institute of Canadian Bankers.
Dr. Alfonso Salas - A member of the Board of Directors of the Company
Director since August 21, 2012
Dr. Salas graduated with distinction from Universidad Metroplitana of Barranquilla, Colombia, in 1983 with a Doctor of Medicine degree. He began practicing in Santa Marta, Colombia, in rural medical facilities and then opened a private practice in 1984. He then worked as a physician with a number of shipping companies and became Medical Director in the office of the Ministry of Social Security and Labor of Colombia in 1991 doing medical assessments for work related accidents. In 1993 Dr. Salas was appointed Director of a Medical Service Plan of Colombia and with a support staff of more than thirty people, maintained a caseload, provided assessment procedures and referral services to hospitals, clinics and specialists, and organized and monitored clinical trials and clinical research in the pharmaceutical and medical field. Since 1995 Dr. Salas has operated his own business in Vancouver, British Columbia, providing medical based consulting services for corporations with a focus on budgeting, research and medical services.
Peter Stafford - A member of the Board of Directors of the Company
Director since August 1, 2014
Mr. Stafford is a retired lawyer and business consultant, having practiced with Fasken Martineau DuMoulin LLP, a premier Canadian based international law firm, and its predecessor firms, from 1966 to 2013, except for several years spent as in-house counsel for clients of the firm. Mr. Stafford's experience is in the areas of corporate and securities law, including mergers and acquisitions. Mr. Stafford joined one of the predecessor firms of Fasken Martineau in 1966 and was a senior partner and former chair of the Business Law department of the Firm’s Vancouver office. From 1985 to 1986, Mr. Stafford was Vice-President, General Counsel and Secretary of the Bank of British Columbia, and from 1987 to 1989 he was Vice-President and Chief Counsel to Kaiser Resources Ltd., a finance and investment company. From 1989 until his retirement from full-time practice in 2006, Mr. Stafford served as senior partner in Faskin Martineau DuMoulin LLP, including leading the start of its Johannesburg, South Africa, office in 2003. Since August 2013, Mr. Stafford has served as director, secretary and audit committee chair of Russell Breweries Inc. (TSX-V: RB). He was a director and subsequently secretary of WEX Pharmaceuticals Inc. (TSX listed) from September 2001 to its amalgamation in May 2011, a director and board chair of BC Bancorp (TSX listed) from October 1986 until its merger with Canadian Western Bank in November 1996, a director of Nissho Iwai (Canada) Ltd., a subsidiary of Nissho Iwai Corp. (now Sojitz Corp.), from June 1997 until October 2003 and a director of China One Corporation (TSX-V listed) from March 2007 until it was acquired in December 2008. Mr. Stafford also served as director of two private companies, Pikes Peak Resources Inc. from 2007 to 2012 and Paraguay Minerals Inc. from 2007 to date. Mr. Stafford obtained his Bachelor of Arts from the University of Cape Town in 1957 and obtained an LL. B from the University of South Africa in 1960.
Ronald Cheng - A member of the Board of Directors of the Company
Director since January 30, 2015
Mr. Cheng is a lawyer retired from Osler, Hoskin and Harcourt LLP, a major Canadian based international law firm, where he practiced as a partner from 1980 until his retirement in March 2014. He regularly appeared as counsel before the Canadian International Trade Tribunal, Canadian federal courts and on NAFTA and WTO matters and advised on NAFTA and other trade agreements. He provided strategic advice to corporations including startups, trade associations and governments in anti-dumping, countervail and safeguard litigation, customs matters, commodity tax and government procurement disputes, as well as import and export monitoring and controls. Mr. Cheng was listed in the Lexpert® Guide to Leading US/Canada Cross-border Litigation Lawyers and with highest listings in other leading legal directories such as Chambers, Martindale-Hubbell and Best Lawyers. Mr. Cheng received his Bachelor of Arts from Amherst College in 1970 and a Juris Doctor degree from the University of Toronto in 1975.
Involvement in Certain Legal Proceedings
During the past ten years, Messrs. Chan, Robulak, Salas, Stafford and Cheng have not been the subject of the following events:
1. A petition under the federal bankruptcy laws or any state insolvency law was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such 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 at or within two years before the time of such filing;
2. Convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses);
3. The 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, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;
ii) Engaging in any type of business practice; or
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 commodities laws;
4. 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 in paragraph 3.i in the preceding paragraph or to be associated with persons engaged in any such activity;
5. Was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any federal or state securities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated;
6. Was 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;
7. Was the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of:
i) Any federal or state securities or commodities law or regulation; or
ii) Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or
iii) Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
8. Was the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
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 year 2020, all officers, directors and affiliates have filed their Forms 3, 4 and 5 on a timely basis.
Audit Committee and Charter
The Company has an audit committee and audit committee charter. The Company’s audit committee is composed of Mr. Sidney Chan, Mr. Kenneth Robulak and Dr. Alfonso Salas. Mr. Robulak and Dr. Salas are deemed independent. Mr. Chan, as Chief Executive Officer, is not independent. Mr. Robulak acts as the Chair of the Audit Committee. 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 engaged by the audit committee.
Audit Committee Financial Expert
The board has determined that Messrs. Chan and Robulak and Dr. Salas qualify as audit committee financial experts.
Nomination and Compensation Committees
The Company’s Nomination Committee is composed of Mr. Sidney Chan, Mr. Kenneth Robulak and Dr. Alfonso Salas. Mr. Robulak acts as the Chair of the Nomination Committee. Mr. Robulak and Dr. Salas are deemed independent. Mr. Chan, as Chief Executive Officer, is not independent.
The Company’s Compensation Committee is composed of Mr. Sidney Chan, Mr. Kenneth Robulak and Dr. Alfonso Salas. Mr. Robulak acts as the Chair of the Compensation Committee. Mr. Robulak and Dr. Salas are deemed independent. Mr. Chan, as Chief Executive Officer, is not independent.
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
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.

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ITEM 11. EXECUTIVE COMPENSATION
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 Table
Name and
Principal Position
Year Salary
and
Fees
(US$)
Bonus
(US$)
Stock
Awards
(US$)
Option
Awards
(US$)
Non-equity
Incentive
Plan
(US$)
Non-qualified
Deferred
Earnings
(US$)
All
Other
(US$)
Total
(US$)
(a) (b) (c) (d) (e) (f) (g) (h) (i) (j)
Sidney Chan [1] [2][3]
Chief Executive Officer & Chief Financial Officer
240,000 0 9,600 249,600
180,000 0 9,600 189,600
180,000 0 9,600 189,600
[1] All other compensation includes automobile allowance.
[2] Salaries and other annual compensation for fiscal 2020, 2019 and 2018 are paid as an increase in the line of credit payable by the Company to Mr. Chan. Options granted and vested to Sidney Chan for providing a line of credit are not included in the table above.
[3] Effective January 1, 2020, the consulting fees earned by the Chief Executive Officer increased from $180,000 per annum to $240,000 per annum.
-
Outstanding Equity Awards at December 31, 2020
Name Number of
Securities
Underlying
Unexercised
Options
Exercisable
Number of
Securities
Underlying
Unexercised
Options
Unexercisable
Equity Incentive
Plan Awards:
Securities
Underlying
Unexercised
Unearned
Options
Option
Exercise
Price
Option
Expiration
Date
Number of
Shares
or Units of Stock
that have not
Vested
Equity Incentive
Plan Awards:
Number of
Unearned Shares,
Units that
have not Vested
(a) (b) (c) (d) (e) (f) (g) (h)
Sidney Chan1 5,045,001,500 $0.002 / $0.015 2021 / 2024
Dr. Alfonso Salas 5,000,000 $0.035
Kenneth Robulak 18,000,000 $0.015 - $0.05 2022 - 2025
Ronald Cheng 5,000,000 $0.015 / $0.035
Peter Stafford 5,000,000 $0.015 / $0.035
1 Includes 700,000,500 exercisable options held by Mr. Chan’s spouse. All options to Mr. Chan and his spouse were granted as consideration for financing provided to the Company.
Sidney Chan
On March 6, 2011, Mr. Chan was granted the option to acquire 20,000,000 shares of common stock of the Company, exercisable at $0.125 per share. For each dollar the Company borrows on the line of credit from Mr. Chan, eight stock options became exercisable. The option to acquire the 20,000,000 shares was set to expire on March 5, 2016.
On June 27, 2012, the option granted to Mr. Chan on March 6, 2011 to acquire 20,000,000 shares of common stock was modified as follows:
· The options in respect of shares not vested was to vest immediately; and
· The exercise price of the option was reduced from $0.125 per share to $0.07 per share and subsequently reduced to $0.05 per share on December 28, 2012.
On June 27, 2012, the Company granted Mr. Chan the option to acquire 15,750,000 shares of common stock of the Company with an exercise price of $0.07 per share until March 6, 2016. On December 28, 2012, the exercise price of this option granted on June 27, 2012 was reduced to $0.05 per share.
On December 28, 2012, the Company granted Mr. Chan the option to acquire:
· 14,250,000 shares of common stock of the Company at an exercise price of $0.05 per share; and
· 50,000,000 shares of common stock of the Company at an exercise price of $0.03 per share.
The options in respect of the 64,250,000 shares vest immediately and were set to expire on December 28, 2017.
Sidney Chan (continued)
On April 1, 2014, the Company and Mr. Chan agreed to increase the borrowing limit on the line of credit available by $1,500,000 in exchange for:
· granting Mr. Chan the option to acquire 83,333,400 shares of common stock of the Company at a price of $0.03 per share for a term of five years;
· modifying the exercise price of Mr. Chan’s option to acquire 35,750,000 shares of common stock of the Company, granted in June 2012, from $0.05 per share to $0.03 per share;
· modifying the exercise price of Mr. Chan’s option to acquire 14,250,000 shares of common stock of the Company, granted in December 2012, from $0.05 per share to $0.03 per share;
· modifying the exercise price of the option granted in January 2011 to the spouse of Mr. Chan (Ms. Kan) to acquire 20,000,000 shares of common stock of the Company from $0.05 per share to $0.03 per share; and
· granting Ms. Kan the option to acquire 26,666,700 shares of common stock of the Company at an exercise price of $0.03 per share for a term of five years.
On May 29, 2015, the Company and Mr. Chan agreed to amend the existing credit agreement to increase the borrowing limit on the line of credit provided to the Company from $5,500,000 to $7,000,000. In exchange for Mr. Chan making available the additional loan of $1,500,000 to the Company, the Company:
· reduced the exercise price of the 230,000,100 shares of common stock under option to Mr. Chan and his spouse from $0.03 to $0.015;
· extended the expiry date of the 230,000,100 shares of common stock under option to Mr. Chan to be five years from the date of execution of the amended credit agreement; and
· granted Mr. Chan the right and option to purchase an additional 329,999,967 shares of common stock at a price of $0.015 per share for a term of five years from the date of execution of the amended credit agreement.
On July 1, 2016, the Company and Mr. Chan agreed to amend the existing credit agreement to increase the borrowing limit on the line of credit provided to the Company from $7,000,000 to $8,500,000. In exchange for Mr. Chan making available the additional loan of $1,500,000 to the Company, the Company:
· reduced the exercise price of the 560,000,200 shares of common stock under option to Mr. Chan and his spouse from $0.015 to $0.002; and
· granted Mr. Chan and his spouse the right and option to purchase an additional 4,390,001,300 shares of common stock at a price of $0.002 per share for a term of five years.
On April 12, 2019, the Company and Mr. Chan agreed to modify the option held by Mr. Chan and his spouse to acquire 560,000,200 shares of common stock exercisable at $0.015 per share by extending the life of the options to April 12, 2024.
On June 19, 2019, the Chairman exercised his option to acquire 25,000,000 shares of common stock at a price of $0.002 in exchange for the settlement of accrued interest of $50,000 owed by the Company to the Chairman.
On December 12, 2019, the Company and Mr. Chan agreed to amend the existing credit agreement to increase the borrowing limit on the line of credit provided to the Company from $8,500,000 to $10,300,000. In exchange for Mr. Chan making available the $1,800,000 increase of the borrowing limit of the line of credit, the Company granted Mr. Chan the option to acquire 120,000,000 shares of common stock at an exercise price of $0.015 per share for a term of five years.
Sidney Chan (continued)
On September 21, 2020, the Company entered into two shares for debt agreements with Mr. Chan and his spouse to issue an aggregate of 240,000,000 restricted shares of common stock at a price of $0.05 per share for a purchase price of $12,000,000 in exchange for the retirement of $12,000,000 of liabilities.
Dr. Alfonso Salas
On May 6, 2019, the Company granted Dr. Salas the option to acquire 4,000,000 shares of common stock at a price of $0.035 per share for a term of five years. On May 17, 2019, the Company granted Dr. Salas the option to acquire 1,000,000 shares of common stock at a price of $0.035 per share for a term of five years.
Peter Stafford
On August 1, 2014, the Company granted Mr. Stafford the option to acquire 500,000 shares of common stock at a price of $0.03 for a term of five years. On July 2, 2015, the exercise price of the option to acquire 500,000 shares of common stock of the Company was reduced from $0.03 per share to $0.015 per share.
On April 12, 2019, the Company and Mr. Stafford agreed to modify the option to acquire 500,000 shares of common stock exercisable at $0.015 per share by extending the life of the options to April 12, 2024.
On May 6, 2019, the Company granted Mr. Stafford the option to acquire 4,500,000 shares of common stock at a price of $0.035 per share for a term of five years.
Kenneth Robulak
On July 25, 2014, the Company granted Mr. Robulak the option to acquire 1,000,000 shares of common stock at a price of $0.03 for a term of five years. On July 2, 2015, the exercise price of the option to acquire 1,000,000 shares of common stock was reduced from $0.03 per share to $0.015 per share. On November 27, 2017, the Company granted Mr. Robulak the option to acquire 2,350,000 shares of common stock at a price of $0.015 for a term of five years.
On March 15, 2019, the Company granted Mr. Robulak the option to acquire 6,650,000 shares of common stock at a price of $0.035 per share for a term of five years.
On April 12, 2019, the Company and Mr. Robulak agreed to modify the option to acquire 1,000,000 shares of common stock exercisable at $0.015 per share by extending the life of the options to April 12, 2024.
On October 12, 2020 the Company granted Mr. Robulak the option to acquire 8,000,000 shares of common stock o the Company exercisable at $0.05 per share until May 31, 2025. The options will vest upon achievement of performance conditions.
Ronald Cheng
On August 1, 2014, the Company granted Mr. Cheng the option to acquire 500,000 shares of common stock at a price of $0.03 for a term of five years. On July 2, 2015, the exercise price of the option to acquire 500,000 shares of common stock of the Company was reduced from $0.03 per share to $0.015 per share.
On April 12, 2019, the Company and Mr. Cheng agreed to modify the option to acquire 500,000 shares of common stock exercisable at $0.015 per share by extending the life of the options to April 12, 2024.
On May 6, 2019, the Company granted Mr. Cheng the option to acquire 4,500,000 shares of common stock at a price of $0.035 per share for a term of five years.
Option Exercises and Stock Vested for the Year Ended December 31, 2020
Name Number of
Shares Acquired
on Exercise
(#)
Value Realized
on Exercise
($)
Number of
Shares Acquired
on Vesting
(#)
Value
Realized on
Vesting
($)
(a) (b) (c) (d) (e)
Sidney Chan 0
Peter Stafford 0
Alfonso Salas 0
Ronald Cheng 0
Kenneth Robulak 0
The Company does not have any long-term incentive plans, except as disclosed below. The Company has contractual compensation arrangements with the following individuals:
Sidney Chan
The Company has a consulting arrangement with Mr. Sidney Chan, Chief Executive Officer and Chairman of the Board of Directors of the Company. Under the terms of the contract, Mr. Chan will be paid $240,000 per annum for services, receive a vehicle allowance of $800 per month, receive health care insurance and receive club allowances. The contract can be terminated at any time with thirty days’ notice and the payment of two years’ annual salary. Should the contract be terminated, all debts owed to Mr. Chan and his spouse must be immediately repaid. The initial term of the contract is for one year and automatically renews for continuous one-year terms. Also, under the terms of the contract are the following:
i. Incentive revenue bonus
Mr. Chan will be entitled to a 1% net sales commission from the sales of any of the Company’s products at any time during his life, regardless if Mr. Chan is still under contract with the Company.
ii. Sale of business
If more than 50% of the Company’s stock or assets are sold, Mr. Chan 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 $200,000,000.
Compensation of Directors
The Board of Directors consists of five members, Mr. Sidney Chan, Mr. Kenneth James Robulak, Dr. Alfonso Salas, Mr. Peter Stafford and Mr. Ronald Cheng. Mr. Robulak, Dr. Salas, Mr. Cheng and Mr. Stafford are independent directors.
The Company’s Board of Directors unanimously resolved that members receive no cash compensation for their services; however, they are reimbursed for travel expenses incurred in serving on the Board of Directors. Independent directors are compensated from time to time through the grant of options to purchase shares of common stock of the Company. Directors who are also officers or consultants of the Company are compensated for those positions, as disclosed under Executive Compensation for those positions.
No additional amounts are payable to the members of the Company’s Board of Directors for committee participation or special assignments.
Name Fees
Earned or
Paid in
Cash
(US$)
Stock
Awards
(US$)
Option
Awards
(US$)
Non-equity
Incentive Plan
Compensation
(US$)
Non-qualified
Deferred
Compensation
Earnings
(US$)
All Other
Compensation
(US$)
Total
(US$)
(a) (b) (c) (d) (e) (f) (g) (h)
Sidney Chan 0
Kenneth Robulak# 559,554 559,554
Peter Stafford 0
Dr. Alfonso Salas 0
Ronald Cheng 0
# The Company granted Mr. Robulak the option to acquire 8,000,000 shares of common stock of the Company at a price of $0.05 per share until May 31, 2025. The options will vest subject to fulfillment of performance conditions. The options had a fair value of $559,554 calculated using the Black Scholes option pricing model. To date, no options have vested.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Securities Authorized for Issuance under Equity Compensation Plans
The following table sets out information as at the end of the Company’s financial year ended December 31, 2020 with respect to compensation plans under which equity securities of the Company are authorized for issuance.
Plan Category Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights Weighted Average Exercise Price of Outstanding Options, Warrants and Rights Number of Securities Remaining Available for Future Issuance under Equity Compensation Plan (excluding securities reflected in column)
Equity compensation plans approved by security holders
Equity compensation plans not approved by security holders 5,362,701,500 $0.003 4,126,277,791
Total 5,362,701,500 $0.003 4,126,277,791
Security Ownership of Certain Beneficial Owners
The following table sets forth, as of December 31, 2020, the beneficial shareholdings of persons or entities holding 5% 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.
Direct Amount of
Percent
Name of Beneficial Owner Beneficial Owner
Position of Class
Sidney Chan 5,428,499,982[1]
Chief Executive Officer, Chief Financial Officer, Member and Chairman of the Board of Directors 92.5%
Dr. Alfonso Salas 6,577,738[2]
Member of the Board of Directors 0.1%
Kenneth Robulak 19,190,000[3]
Member of the Board of Directors 0.3%
Peter Stafford 5,500,000[4]
Member of the Board of Directors 0.1%
Ronald Cheng 6,205,800[5]
Member of the Board of Directors 0.1%
All Officers and Directors
as a group (5 people) * 5,465,973,520
93.1%
[1] Mr. Chan owns 189,845,000 shares of common stock and holds the following options to acquire shares of common stock:
· 3,758,334,200 at an exercise price of $0.002 per share until June 21, 2021;
· 466,666,800 at an exercise price of $0.002 per share until April 12, 2024; and
· 120,000,000 at an exercise price of $0.015 per share until December 11, 2024.
Mr. Chan’s spouse owns 193,653,482 shares of common stock and holds the following options to acquire shares of common stock at an exercise price of $0.002 per share:
· 606,667,100 until June 21, 2021; and
· 93,333,400 until April 12, 2024.
[2] Dr. Salas owns 1,577,738 shares of common stock and holds the following options to acquire shares of common stock exercisable at a price of $0.035 per share:
· 4,000,000 until May 6, 2024; and
· 1,000,000 until May 17, 2024.
[3] Mr. Robulak owns 1,190,000 shares of common stock and holds the following options to acquire shares of common stock as follows:
· 2,350,000 at an exercise price of $0.015 until November 27, 2022;
· 6,650,000 at an exercise price of $0.035 until March 15, 2024;
· 1,000,000 at an exercise price of $0.015 until April 12, 2024; and
· 8,000,000 at an exercise price of $0.05 until May 31, 2025.
[4] Mr. Stafford owns 500,000 shares of common stock and holds the following options to acquire shares of common stock as follows:
· 500,000 at an exercise price of $0.015 per share until April 12, 2024; and
· 4,500,000 at an exercise price of $0.035 per share until May 6, 2024.
[5] Mr. Cheng owns 1,205,800 shares of common stock and holds the following options to acquire shares of common stock as follows:
· 500,000 at an exercise price of $0.015 per share until April 12, 2024; and
· 4,500,000 at an exercise price of $0.035 per share until May 6, 2024.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
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.
Year Ended December 31, 2020
During the 2020 fiscal year, the Company:
· incurred interest expense of $316,000 on $3,032,000 of promissory notes due to relatives of Sidney Chan;
· incurred interest expense of $1,464,000 on $11,539,000 of amounts borrowed and outstanding on the lines of credit payable to Sidney Chan and Christine Kan.
· issued 240,000,000 shares of common stock to Sidney Chan and Christine Kan to settle interest owing on promissory notes and line of credits amount payable aggregating $12,000,000
As at December 31, 2020, Company owed:
· accrued interest on promissory notes owed to relatives of Sidney Chan of $874,000, and
· accrued interest on the lines of credit of $375,000.
Year Ended December 31, 2019
During the 2019 fiscal year, the Company:
· incurred interest expense of $299,100 on $2,892,000 of promissory notes due to relatives of Sidney Chan,
· pursuant to a private transaction, had promissory notes principal of $140,000 assigned from an arm’s length party to Christine Kan, bringing promissory notes due to relatives of Sidney Chan to $3,032,000, and
· incurred interest expense of $1,366,000 on $11,757,300 of amounts borrowed and outstanding on the lines of credit payable to Sidney Chan and Christine Kan.
As at December 31, 2019, Company owed:
· accrued interest on promissory notes owed to relatives of Sidney Chan of $2,876,300, and
· accrued interest on the lines of credit of $7,553,400.
Director Independence
The following directors are considered independent pursuant to § 229.407 (Item 407) Corporate governance and sit on the following board committees where indicated:
· Kenneth Robulak, Audit Committee Chair, Nomination Committee Chair, Compensation Committee Chair
· Alfonso Salas, Audit Committee, Nomination Committee, Compensation Committee
· Peter Stafford (no committee appointment)
· Ronald Cheng (no committee appointment)
Sidney Chan is not considered independent pursuant to § 229.407 (Item 407) Corporate governance and sits on the Audit Committee, Nomination Committee and Compensation Committee.

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
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 were:
$ 20,000 Dale Matheson Carr-Hilton LaBonte LLP
$ 20,000 Dale Matheson Carr-Hilton LaBonte LLP
(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:
$ 24,000 Dale Matheson Carr-Hilton LaBonte LLP
$ 12,000 Dale Matheson Carr-Hilton LaBonte LLP
(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 were:
$ 2,000 Dale Matheson Carr-Hilton LaBonte LLP
$ 2,000 Dale Matheson Carr-Hilton LaBonte LLP
(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) were:
$ 0 Dale Matheson Carr-Hilton LaBonte LLP
$ 0 Dale Matheson Carr-Hilton LaBonte LLP
(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

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
Incorporated by reference
Exhibit
Filed
No. Document Description Form Date Number herewith
3.1 Initial Articles of Incorporation. 10-SB 12/10/99 3.1
3.2 Bylaws. 10-SB 12/10/99 3.2
3.3 Articles of Amendment to the Articles of Incorporation, dated October 22, 1998. 10-SB 12/10/99 3.3
3.4 Articles of Amendment to the Articles of Incorporation, dated December 7, 1998. 10-SB 12/10/99 3.4
3.5 Articles of Amendment to the Articles of Incorporation, dated January 6, 2005. 8-K 1/20/05 3.1
3.6 Amendment to Bylaws, dated October 13, 2011 8-K 10/13/11 3.6
3.7 Amendment to Bylaws, dated April 10, 2012 8-K 4/16/12 3.7 X
10.1 Consulting Agreement with Endocrine Research Society Inc. 10KSB 10/01/13 10.1 X
14.1 Code of Ethics. 10-KSB 4/14/03 14.1
31.1 Certification Pursuant to Rule 13a-14(a) or 15d-14(a) of the U.S. Securities Exchange Act of 1934 of the Principal Executive Officer and Principal Financial Officer
X
32.1 Section 1350 Certification of the Principal Executive Officer and Principal Financial Officer
X
99.1 Distribution Agreement with Mo Betta Corp. 10-SB 12/10/99 99.1
99.2 Pooling Agreement. 10-SB 12/10/99 99.2
99.3 Amended Pooling Agreement. 10-SB 12/10/99 99.3
99.4 Lock-Up Agreement. 10-SB 12/10/99 99.4
99.19 Audit Committee Charter. 10-KSB 3/31/14 99.1 X
99.20 Disclosure Committee Charter. 10-KSB 4/14/03 99.2
99.30 Nomination Committee Charter 10-KSB 8/15/13 99.3
99.40 Compensation Committee Charter 10-KSB 8/15/13 99.4