[X]
|
QUARTERLY REPORT UNDER TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2013
|
OR
|
|
[ ]
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|
Large Accelerated Filer
|
[ ]
|
Accelerated Filer
|
[ ]
|
||
Non-accelerated Filer
|
[ ]
|
Smaller Reporting Company
|
[X]
|
||
(Do not check if smaller reporting company)
|
Financial Statements.
|
||
Condensed Consolidated Balance Sheets
(unaudited)
|
3
|
|
Condensed Consolidated Statements of Operations
(unaudited)
|
4
|
|
Condensed Consolidated Statements of Cash Flows
(unaudited)
|
5
|
|
6
|
||
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
|
17
|
|
Quantitative and Qualitative Disclosures About Market Risk.
|
27
|
|
Controls and Procedures.
|
27
|
|
Legal Proceedings.
|
28
|
|
Risk Factors.
|
28
|
|
Defaults Upon Senior Securities.
|
28
|
|
Exhibits.
|
29
|
|
30
|
||
31
|
October 21, 1998
|
||||||||||
Three months Ended
|
Six months Ended
|
(Inception)
|
||||||||
June 30
|
June 30
|
to June 30,
|
||||||||
2013
|
2012
|
2013
|
2012
|
2013
|
||||||
Revenue
|
||||||||||
Sales
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
2,994,931
|
Cost of sales
|
-
|
-
|
-
|
-
|
3,325,639
|
|||||
Gross Margin
|
-
|
-
|
-
|
-
|
(330,708)
|
|||||
Operating Expenses
|
||||||||||
Depreciation
|
-
|
-
|
-
|
-
|
52,694
|
|||||
Market development
|
-
|
41,814
|
-
|
84,376
|
927,940
|
|||||
General and administration
|
233,930
|
261,681
|
506,671
|
417,505
|
13,851,789
|
|||||
Product development
|
123,464
|
103,331
|
248,587
|
225,406
|
4,364,346
|
|||||
Professional fees
|
162,016
|
28,970
|
225,343
|
69,313
|
2,238,967
|
|||||
Total Operating Expenses
|
519,410
|
435,796
|
980,601
|
796,600
|
21,435,736
|
|||||
Operating Loss
|
(519,410)
|
(435,796)
|
(980,601)
|
(796,600)
|
(21,766,444)
|
|||||
Other Expenses
|
||||||||||
Interest
|
306,633
|
2,648,985
|
607,880
|
3,131,674
|
25,379,917
|
|||||
Loss on write-off equipment
|
- |
-
|
- |
-
|
36,623
|
|||||
Other items
|
298
|
328
|
(17,250)
|
(39,900)
|
248,974
|
|||||
Total Other Expenses
|
306,931
|
2,649,313
|
590,630
|
3,091,774
|
25,665,514
|
|||||
Net Loss
|
$
|
(826,341)
|
$
|
(3,085,109)
|
$
|
(1,571,231)
|
$
|
(3,888,374)
|
$
|
(47,431,958)
|
Net loss per share, basic and diluted
|
$
|
(0.00)
|
$
|
(0.01)
|
$
|
(0.01)
|
$
|
(0.02)
|
||
Weighted average shares outstanding,
- basic and diluted
|
237,477,909
|
213,977,909
|
237,472,353
|
213,977,909
|
October 21, 1998
|
||||||
Six Months Ended
|
(Inception)
|
|||||
June 30,
|
to June 30,
|
|||||
2013
|
2012
|
2013
|
||||
OPERATING ACTIVITIES
|
||||||
Net loss
|
$
|
(1,571,231)
|
$
|
(3,888,374)
|
$
|
(47,947,958)
|
Depreciation
|
-
|
-
|
52,694
|
|||
Loss on write-off of equipment
|
-
|
-
|
36,623
|
|||
Stock-based compensation-product development costs
|
2,998
|
1,749
|
682,042
|
|||
Stock-based compensation-interest expenses
|
-
|
2,616,602
|
13,330,984
|
|||
Stock-based compensation-selling, general and
administration
|
57,963
|
13,992
|
3,351,108
|
|||
Stock-based compensation-professional fees
|
111,928
|
20,989
|
156,743
|
|||
Other non-cash items included in net loss
|
-
|
-
|
294,020
|
|||
Non-cash imputed interest expenses
|
87,904
|
83,163
|
3,254,980
|
|||
Unpaid Interest expense on line of credit
|
265,777
|
178,033
|
888,062
|
|||
Equity instruments issued to settle liabilities
|
-
|
-
|
1,871,718
|
|||
Changes in operating assets and liabilities:
|
|
|||||
(Increase) decrease in prepaid expenses
|
12,058
|
(7,233)
|
(4,771)
|
|||
Increase (decrease) in accounts payable and accrued
liabilities
|
80,064
|
(54,363)
|
1,586,002
|
|||
Increase in interest payable
|
252,910
|
246,285
|
4,528,826
|
|||
Income tax receivable | - | - | 8,727 | |||
Net cash used in operating activities
|
(699,629)
|
(789,157)
|
(17,394,199)
|
|||
INVESTING ACTIVITIES
|
||||||
Purchase of equipment
|
-
|
-
|
(43,078)
|
|||
Net cash used in investing activities
|
-
|
- |
(43,078)
|
|||
FINANCING ACTIVITIES
|
|
|||||
Other financing activities
|
-
|
-
|
(115,472)
|
|||
Expenditures to repurchase shares
|
-
|
-
|
(342,038)
|
|||
Proceeds from issuance of shares
|
- |
-
|
1,512,403
|
|||
Increase in advances payable
|
10,000
|
5,000
|
3,162,071
|
|||
Repayment of promissory notes payable
|
-
|
-
|
(970,879)
|
|||
Proceeds from borrowings on line of credit
|
709,640
|
778,192
|
4,803,609
|
|||
Proceeds from issuance of promissory notes
|
-
|
- |
9,418,676
|
|||
Net cash provided by financing activities
|
719,640
|
783,192
|
17,468,370
|
|||
Change in cash
|
20,011
|
(5,965)
|
31,093
|
|||
Cash, beginning of period
|
11,082
|
11,002
|
-
|
|||
Cash, end of period
|
$
|
31,093
|
$
|
5,037
|
$
|
31,093
|
Supplemental information:
|
||||||
Shares issued to settle liabilities
|
30,000
|
6,837,473
|
||||
Cash paid for interest
|
-
|
1,223,335
|
Balance, December 31, 2011
|
$
|
1,930,695
|
|
Interest incurred on promissory notes payable
|
505,571
|
||
Repayment of interest payable through line of credit
|
(6,500)
|
||
Repayment of interest payable through exercise of options
|
(860,244)
|
||
Other
|
(201)
|
||
Balance, December 31, 2012
|
1,569,321
|
||
Interest incurred on promissory notes payable
|
252,910
|
||
Balance, June 30, 2013 (unaudited)
|
$
|
1,822,231
|
June 30,
2013
|
December 31,
2012
|
||||
(unaudited)
|
|||||
Relatives of directors
|
$
|
739,810
|
$
|
586,697
|
|
Non-related parties
|
1,082,421
|
982,624
|
|||
$
|
1,822,231
|
$
|
1,569,321
|
Balance, December 31, 2011
|
$
|
100,527
|
Advances accrued
|
60,000
|
|
Advances repaid from proceeds of line of credit
|
(54,914)
|
|
Balance, December 31, 2012
|
105,613
|
|
Advances accrued
|
30,000
|
|
Advances repaid from proceeds of line of credit
|
(20,000)
|
|
Balance, June 30, 2013 (unaudited)
|
$
|
115,613
|
June 30,
2013
|
December 31,
2012
|
||||
(unaudited)
|
|||||
Advances payable to:
|
|||||
Company controlled by former Director
|
$
|
65,524
|
$
|
65,524
|
|
Former Director
|
50,089
|
40,089
|
|||
$
|
115,613
|
$
|
105,613
|
June 30,
2013
|
December 31,
2012
|
||||
(unaudited)
|
|||||
Promissory notes payable:
|
|||||
Relatives of Directors
|
$
|
2,861,966
|
$
|
2,861,966
|
|
Unrelated Lenders
|
2,424,353
|
2,424,353
|
|||
$
|
5,286,319
|
$
|
5,286,319
|
Relatives of Directors
|
June 30,
2013
(unaudited)
|
December 31, 2012
|
||||
Promissory notes payable to relatives of directors collateralized
by a general security agreement on all the assets of the Company,
due on demand:
|
||||||
i.
|
Interest at 1% per month
|
$
|
845,619
|
$
|
845,619
|
|
ii.
|
Interest at 1.25% per month
|
51,347
|
51,347
|
|||
iii.
|
Interest at the U.S. bank prime rate plus 1%
|
500,000
|
500,000
|
|||
Promissory notes payable, unsecured, to relatives of a director,
bearing interest at 1% per month, due on demand
|
1,465,000
|
1,465,000
|
||||
$
|
2,861,966
|
$
|
2,861,966
|
Unrelated Lenders
|
June 30,
2013
(unaudited)
|
December 31,
2012
|
||||
Unsecured promissory notes payable to unrelated lenders:
|
||||||
|
||||||
i.
|
Interest at 1% per month, repayable on March 31, 2009,
due on demand
|
$
|
450,000
|
$
|
450,000
|
|
|
||||||
ii.
|
Interest at 1% per month, with $50,000 repayable on December 31,
2004, $75,000 repayable on August 18, 2007, $75,000 repayable
on November 19, 2007 and the balance due on demand. All are due
on demand, accruing interest at the same rate.
|
887,455
|
887,455
|
|||
|
||||||
iii.
|
Interest at 0.625% per month, with $50,000 repayable on October
5, 2004, $40,000 repayable on December 31, 2004, and $60,000
repayable on July 28, 2006, all due on demand
|
150,000
|
150,000
|
|||
iv.
|
Non-interest-bearing, repayable on July 17, 2005, due on demand
|
270,912
|
270,912
|
|||
v.
|
Non-interest-bearing loan repayable at $25,000 per month
beginning October 2009, none repaid to date
|
310,986
|
310,986
|
|||
vi.
|
Non-interest-bearing loan, due January 15, 2012
|
125,000
|
125,000
|
|||
Promissory notes payable, secured by a guarantee from a director and
relative of a director, bearing interest at 1% per month, with $200,000
repayable on July 31, 2003, all due on demand
|
230,000
|
230,000
|
||||
$
|
2,424,353
|
$
|
2,424,353
|
-
|
$252,785 (2012: $252,785) incurred on promissory notes payables as shown in note 3(c);
|
-
|
$265,777 (2012: $178,033) incurred on lines of credit payable
|
-
|
$87,904 (2012: $83,163) 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;
|
-
|
$Nil (2012: $2,616,602) incurred in connection with stock options granted to creditors providing the lines of credit to the Company
|
Creditor
|
Interest
Rate
|
Borrowing
Limit
|
Repayment
Terms
|
Principal
Outstanding
|
Accrued
Interest
|
Total
|
Security
|
Purpose
|
Chairman
|
1% per
Month
|
$4,000,000
|
Due on
Demand
|
$ 2,803,776
|
$ 259,543
|
$ 3,063,319
|
General
Security over
Assets
|
Operations,
Product
Development
|
Spouse of
Chairman
|
1% per
Month
|
$2,000,000
|
Due on
Demand
|
2,000,000
|
416,385
|
2,416,385
|
General
Security over
Assets
|
Operations,
Product
Development
|
Total
|
$ 4,803,776
|
$ 675,928
|
$ 5,479,704
|
Six Months Ended
|
Year Ended
|
|||||
June 30, 2013 (unaudited)
|
December 31, 2012
|
|||||
Number of
|
Weighted Average
|
Number of
|
Weighted Average
|
|||
Options
|
Exercise Price
|
Options
|
Exercise Price
|
|||
Outstanding, beginning of period
|
125,000,000
|
$
|
0.03
|
62,800,000
|
$
|
0.04
|
Granted
|
6,800,000
|
0.03
|
84,700,000
|
0.03
|
||
Exercised
|
(1,000,000)
|
0.03
|
(22,500,000)
|
(0.05)
|
||
Expired
|
-
|
|
-
|
-
|
|
-
|
Outstanding, end of period
|
130,800,000
|
$
|
0.04
|
125,000,000
|
$
|
0.03
|
Exercisable, end of period
|
128,400,000
|
$
|
0.04
|
125,000,000
|
$
|
0.03
|
June 30, 2013
|
December 31, 2012
|
|||||||||
Expiry Date
|
Options
|
Exercise
Price
|
Intrinsic
Value
|
Options
|
Exercise
Price
|
Intrinsic
Value
|
||||
March 7, 2015
|
20,000,000
|
$
|
0.05
|
$
|
-
|
20,000,000
|
$
|
0.05
|
$
|
-
|
March 31, 2015
|
1,200,000
|
$
|
0.25
|
$
|
-
|
1,200,000
|
$
|
0.25
|
$
|
-
|
March 6, 2016
|
35,750,000
|
$
|
0.05
|
$
|
-
|
35,750,000
|
$
|
0.05
|
$
|
-
|
May 4, 2016
|
1,000,000
|
$
|
0.05
|
$
|
-
|
1,000,000
|
$
|
0.05
|
$
|
-
|
May 23, 2016
|
100,000
|
$
|
0.05
|
$
|
-
|
100,000
|
$
|
0.05
|
$
|
-
|
May 27, 2017
|
700,000
|
$
|
0.05
|
$
|
-
|
700,000
|
$
|
0.05
|
$
|
-
|
May 31, 2017
|
500,000
|
$
|
0.05
|
$
|
-
|
500,000
|
$
|
0.05
|
$
|
-
|
August 16, 2017
|
500,000
|
$
|
0.05
|
$
|
-
|
500,000
|
$
|
0.05
|
$
|
-
|
December 28, 2017
|
14,250,000
|
$
|
0.05
|
$
|
-
|
14,250,000
|
$
|
0.05
|
$
|
-
|
December 28, 2017
|
51,000,000
|
$
|
0.03
|
$
|
0.01
|
51,000,000
|
$
|
0.03
|
$
|
0.01
|
January 28, 2018
|
2,300,000
|
$
|
0.05
|
$
|
-
|
-
|
$
|
-
|
$
|
-
|
March 26, 2018
|
500,000
|
$
|
0.03
|
$
|
0.01
|
-
|
$
|
-
|
$
|
-
|
April 9, 2018
|
1,000,000
|
$
|
0.03
|
$
|
0.01
|
-
|
$
|
-
|
$
|
- |
May 1, 2018
|
2,000,000
|
$
|
0.03
|
$
|
0.01
|
-
|
$
|
-
|
$
|
- |
Total
|
130,800,000
|
$
|
0.04
|
-
|
125,000,000
|
$
|
0.04
|
Weighted Average
Remaining Contractual
Life
|
3.54
|
3.98
|
June 30,
2013
(unaudited)
|
December 31,
2012
|
||
Risk-free interest rate
|
2.52%
|
2.52%
|
|
Expected life
|
5 years
|
5 years
|
|
Expected dividends
|
0%
|
0%
|
|
Expected volatility
|
298%
|
306%
|
|
Forfeiture rate
|
0%
|
0%
|
Three months
ended
June 30,
2013
|
Three months
ended
June 30,
2012
|
Six months
ended
June 30,
2013
|
Six months
ended
June 30,
2012
|
||||||
Market development
|
|||||||||
Unrelated parties
|
$
|
-
|
$
|
20,989
|
$
|
-
|
$
|
20,989
|
|
Interest expense:
|
|||||||||
Related parties
|
$
|
-
|
$
|
2,616,602
|
$
|
-
|
$
|
2,616,602
|
|
Product development fees
|
|||||||||
Unrelated parties
|
$
|
1,499
|
$
|
1,749
|
$
|
2,998
|
$
|
1,749
|
|
Professional fees:
|
|||||||||
Unrelated parties
|
$
|
99,937
|
$
|
-
|
$
|
111,928
|
$
|
-
|
|
General and administrative:
|
|||||||||
Unrelated parties
|
$
|
5,996
|
$
|
13,992
|
$
|
57,963
|
$
|
13,992
|
Sidney Chan
|
$
|
180,000
|
Lawrence Weinstein
|
$
|
156,000
|
·
|
Ms. Kan has been granted the option to acquire 20,000,000 shares of common stock of the Company exercisable at $0.05 per share expiring November 29, 2015.
|
·
|
A second modification of the terms of the option to acquire 10,000,000 shares of common stock previously granted to Ms. Kan on March 7, 2010 and previously modified August 8, 2010. The terms have been modified as follows:
|
-
|
Increased the option to acquire common shares from 10,000,000 to 20,000,000
|
-
|
Reduced the exercise price option from $0.10 per share to $0.05 per share.
|
·
|
the option was vested immediately; and
|
·
|
the exercise price per share was reduced from $0.25 per share to $0.10 per share.
|
·
|
50,000,000 shares of common stock at an exercise price of $0.03 per share to expire on December 28, 2017; and,
|
·
|
14,250,000 shares of common stock at an exercise price of $0.05 per share to expire on December 28, 2017
|
Recipient
|
Number of Options
|
Mr. Andrew Klips
|
200,000
|
Mr. Alfonso Salas
|
250,000
|
Mr. Glen Reyes
|
200,000
|
Mr. Ken Robulak
|
350,000
|
Mr. Lawrence Weinstein
|
1,000,000
|
Mr. Sidney Chan
|
35,750,000
|
Total
|
37,750,000
|
Recipient
|
Number of Options
|
Mr. Kent Stoneking
|
500,000
|
Ms. Barbara Dubiel
|
300,000
|
Mr. Barrett D. Ehrlich
|
100,000
|
Mr. Andrew Klips
|
300,000
|
Mr. Steven Brassard
|
300,000
|
Mr. Mark Geoffrey Uy
|
200,000
|
Mr. Johnny Tlardera
|
200,000
|
Mr. John Lester Tolentino
|
200,000
|
Mr. Norbert Ricafranca
|
200,000
|
Total
|
2,300,000
|
Compensation Committee
|
Nomination Committee
|
Mr. Kenneth Robulak, Chair
|
Mr. Kenneth Robulak, Chair
|
Dr. Alfonso Salas
|
Dr. Alfonso Salas
|
Mr. Sidney Chan
|
Mr. Sidney Chan
|
1.
|
Diabetes prevalence is exploding in the United States and worldwide. Technologies and services that can assist patients, providers, caregivers and healthcare payers in better addressing diabetes care will be in high demand;
|
2.
|
The patient load of primary care physicians in the United States will increase dramatically with the new healthcare law, and these physicians will require support from new technologies as well as assistance from care managers, family members and others in order to provide quality care. A new primary care model will emerge which will take advantage of new technologies; and
|
3.
|
Healthcare payers in the United States and worldwide will aggressively adopt technologies and services that will improve quality and lower costs of chronic diseases. In the highly competitive U.S. market, major healthcare plans have shown particularly strong interest in remote monitoring platforms that can accomplish these quality and cost goals.
|
1.
|
retained key personnel who have experience in marketing to our key customer segments, such as health plans, and key executives who understand the care needs of diabetes patients;
|
2.
|
developed pricing models for the various customer segments, including risk sharing pricing arrangements for health plans, which then may reward the Company for its success in improving quality lowering costs; and
|
3.
|
increased its sales efforts by aggressively meeting with key customer targets on a regular basis.
|
Three Months Ended
June 30
|
Six Months Ended
June 30
|
|||||||||
2013
|
2012
|
Percentage
Increase/
(Decrease)
|
2013
|
2012
|
Percentage
Increase/
(Decrease)
|
|||||
Revenue
|
$ | - | $ |
-
|
0% | $ |
-
|
$ |
-
|
0% |
Cost of sales
|
- | - | 0% | - | - | 0% | ||||
Depreciation | - | - | 0% | - | - | 0% | ||||
Market development
|
|
-
|
|
41,814
|
(100%)
|
|
-
|
|
84,376
|
(100%)
|
General and administrative
|
233,930
|
261,681
|
(11%)
|
506,671
|
417,505
|
(21%)
|
||||
Product development
|
123,464
|
103,331
|
19%
|
248,587
|
225,406
|
10%
|
||||
Professional fees
|
162,016
|
28,970
|
459%
|
225,343
|
69,313
|
225%
|
||||
Interest expenses
|
306,633
|
2,648,985
|
(88%)
|
607,880
|
3,131,674
|
(81%)
|
||||
Other income | 298 | 328 | (9%) | (17,250) | 39,900 | (56%) | ||||
Net Loss
|
$
|
826,341
|
$
|
3,085,109
|
(73%)
|
$
|
1,571,231
|
$
|
3,888,374
|
(60%)
|
-
|
the Company’s stock based compensation expense for the quarter was less than during Q2 2013 than compared to Q2 2012
|
-
|
the Company placed greater reliance on 3
rd
party consulting firms during Q2 2012 which resulted in higher rates, whereas during Q2 2013, the Company advanced in its business plan and had appointed individuals to the following positions:
|
o
|
Director, Commercialization & External Affairs
|
o
|
Director, Sales & Marketing
|
o
|
Director, Diabetes Care Facilitators
|
Six months ended
June 30, 2013
|
Six months ended
June 30, 2012
|
|||
Interest expense incurred on promissory notes
|
$
|
252,785
|
$
|
252,785
|
Interest expense incurred on lines of credit
|
265,777
|
178,033
|
||
Imputed interest on zero interest loans
|
87,904
|
83,163
|
||
Stock options granted for promissory notes
|
-
|
2,616,602
|
||
Other
|
1,414
|
1,091
|
||
Total
|
$
|
607,880
|
$
|
3,131,674
|
1.
|
Compensation expense of $231,948 was recognized as a result of stock options vesting pursuant to the Company borrowing funds on a line of credit borrowing arrangement with the Chairman and Chief Executive Officer of the Company
|
2.
|
On June 27, 2012, the 20,000,000 stock options granted to the Chairman and Chief Executive Officer of the Company on March 6, 2011 were modified as follows:
|
a.
|
All stock options remaining unvested were immediately vested
|
b.
|
The exercise price was reduced from $0.125 per share to $0.07 per share
|
c.
|
The compensation expense related to the immediate vesting of the options was $1,252,386 and related to the medication of stock options was $1,280.
|
3.
|
Furthermore, on June 27, 2012, the Company granted the Chairman 15,750,000 stock options with an exercise price of $0.07 per share and expiry date on March 6, 2016. The compensation expense related to these stock options was $1,130,988.
|
Working Capital
|
||||||
June 30, 2013
|
December 31, 2012
|
Percentage Increase /
(Decrease)
|
||||
Current Assets
|
$
|
35,864
|
$
|
27,911
|
28%
|
|
Current Liabilities
|
13,786,116
|
12,497,725
|
10%
|
|||
Working Capital Deficit
|
$
|
(13,750,252)
|
$
|
(12,469,814)
|
10%
|
June 30,
2013
|
December 31,
2012
|
Change
$
|
Change
%
|
||||
Accounts payable and accrued liabilities
|
$
|
1,082,249
|
$
|
1,002,185
|
$
|
80,064
|
8 %
|
Interest payable
|
1,822,231
|
1,569,321
|
252,910
|
16 %
|
|||
Advances payable
|
115,613
|
105,613
|
10,000
|
9 %
|
|||
Lines of credit to related parties
|
5,479,704
|
4,534,287
|
945,417
|
21 %
|
|||
Promissory notes payable to related parties
|
2,861,966
|
2,861,966
|
0
|
0 %
|
|||
Promissory notes payable
|
2,424,353
|
2,424,353
|
0
|
0 %
|
|||
Total current liabilities
|
$
|
13,786,116
|
$
|
12,497,725
|
$
|
1,288,391
|
10 %
|
-
|
$709,640 to fund operations, product development activities, overhead and its sales and marketing program.
|
-
|
$265,777 of unpaid interest incurred on the principal of the borrowed amounts (less $30,000 used as consideration for the exercise of 1,000,000 stock options)
|
Six Months Ended
|
Six Months Ended
|
|||
June 30, 2013
|
June 30, 2012
|
|||
Cash Flows used in Operating Activities
|
$
|
(699,629)
|
$
|
(784,157)
|
Cash Flows provided by (used in) Investing Activities
|
$
|
-
|
$
|
-
|
Cash Flows provided by Financing Activities
|
$
|
719,640
|
$
|
778,192
|
Net (decrease) increase in Cash During Period
|
$
|
20,011
|
$
|
(5,965)
|
Six Months Ended
|
Six Months Ended
|
|||
June 30, 2013
|
June 30, 2012
|
|||
Market Development Activities
|
$
|
-
|
$
|
84,000
|
Product Development Consulting and Expenses
|
$
|
231,000
|
$
|
188,000
|
Personnel (Contactors & Consultants)
|
$
|
224,000
|
$
|
227,000
|
Professional Fees
|
$
|
92,000
|
$
|
69,000
|
Employee Wages
|
$
|
84,000
|
$
|
84,000
|
Travel and Trade Shows
|
$
|
68,000
|
$
|
78,000
|
Other
|
$
|
17,879
|
$
|
54,000
|
Recovery of Expenses
|
$
|
(17,250)
|
$
|
157
|
Cash used in Operations
|
$
|
699,629
|
$
|
784,157
|
Payments due by period
|
||||||||||
Less than
|
1-3
|
3-5
|
More than
|
|||||||
Total
|
1 year
|
years
|
years
|
5 Years
|
||||||
Accounts payable & accrued liabilities
|
$
|
1,082,249
|
$
|
1,082,249
|
$
|
-
|
$
|
-
|
$
|
-
|
Interest payable
|
1,822,231
|
1,822,231
|
-
|
-
|
-
|
|||||
Advances payable
|
115,613
|
115,613
|
-
|
-
|
-
|
|||||
Line of credit
|
5,479,704
|
5,479,704
|
-
|
-
|
-
|
|||||
Promissory notes to related parties
|
2,861,966
|
2,861,966
|
||||||||
Promissory notes to arm’s length parties
|
2,424,353
|
2,424,353
|
-
|
-
|
-
|
|||||
$
|
13,786,116
|
$
|
13,786,116
|
$
|
-
|
$
|
-
|
$
|
-
|
1)
|
insufficient written policies and procedures for reporting requirements and accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements; and
|
Incorporated by reference
|
|||||
Exhibit
No.
|
Document Description
|
Form
|
Date
|
Number
|
Filed
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
|
3.5
|
|
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
|
|
14.1
|
Code of Ethics.
|
10-KSB
|
4/14/03
|
14.1
|
|
31.1
|
Certification of Principal Executive Officer and Principal
Financial Officer pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002.
|
X
|
|||
32.1
|
Certification of Chief Executive Officer and Chief Financial
Officer pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
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
|
|
99.5
|
Audit Committee Charter.
|
10-KSB
|
4/14/03
|
99.1
|
|
99.6
|
Disclosure Committee Charter.
|
10-KSB
|
4/14/03
|
99.2
|
|
99.7
|
Compensation Committee Charter.
|
10-Q
|
8/14/13
|
99.7
|
X
|
99.8
|
Nomination Committee Charter.
|
10-Q
|
8/14/13
|
99.8
|
X
|
101.INS
|
XBRL Instance Document.
|
X
|
|||
101.SCH
|
XBRL Taxonomy Extension – Schema.
|
X
|
|||
101.CAL
|
XBRL Taxonomy Extension – Calculations.
|
X
|
|||
101.DEF
|
XBRL Taxonomy Extension – Definitions.
|
X
|
|||
101.LAB
|
XBRL Taxonomy Extension – Labels.
|
X
|
|||
101.PRE
|
XBRL Taxonomy Extension – Presentation.
|
X
|
ALR TECHNOLOGIES, INC.
|
||
(Registrant)
|
||
|
||
BY:
|
SIDNEY CHAN
|
|
Sidney Chan
|
||
Principal Executive Officer, Principal Accounting Officer, Principal Financial Officer, Secretary/Treasurer and Director
|
Incorporated by reference
|
|||||
Exhibit
No.
|
Document Description
|
Form
|
Date
|
Number
|
Filed
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
|
3.5
|
|
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
|
|
14.1
|
Code of Ethics.
|
10-KSB
|
4/14/03
|
14.1
|
|
31.1
|
Certification of Principal Executive Officer and Principal
Financial Officer pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002.
|
X
|
|||
32.1
|
Certification of Chief Executive Officer and Chief Financial
Officer pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
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
|
|
99.5
|
Audit Committee Charter.
|
10-KSB
|
4/14/03
|
99.1
|
|
99.6
|
Disclosure Committee Charter.
|
10-KSB
|
4/14/03
|
99.2
|
|
99.7
|
Compensation Committee Charter.
|
10-Q
|
8/14/13
|
99.7
|
X
|
99.8
|
Nomination Committee Charter.
|
10-Q
|
8/14/13
|
99.8
|
X
|
101.INS
|
XBRL Instance Document.
|
X
|
|||
101.SCH
|
XBRL Taxonomy Extension – Schema.
|
X
|
|||
101.CAL
|
XBRL Taxonomy Extension – Calculations.
|
X
|
|||
101.DEF
|
XBRL Taxonomy Extension – Definitions.
|
X
|
|||
101.LAB
|
XBRL Taxonomy Extension – Labels.
|
X
|
|||
101.PRE
|
XBRL Taxonomy Extension – Presentation.
|
X
|
1.
|
I have reviewed this
Form 10-Q for the period ending June 30, 2013 of ALR Technologies Inc.
;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and,
|
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
August 14, 2013
|
SIDNEY CHAN
|
Sidney Chan
|
||
Principal Executive Officer and Principal Financial Officer
|
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
2.
|
The information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
SIDNEY CHAN
|
|
Sidney Chan
|
|
Chief Executive Officer and Chief Financial Officer
|
1)
|
the Company’s annual general meeting of shareholders, or
|
2)
|
a resolution from the majority of the shareholders waiving the Company’s annual general meeting
|
1.
|
Review the overall compensation policies and practices and also the competitiveness of compensation packages offered for executives and other employees of the Company; Review the compensation of the Chief Executive Officer to ensure that the compensation properly reflects the duties and responsibilities of the Chief Executive Officer and that his interests are aligned with the interests of stakeholders and shareholders of the Company;
|
2.
|
Review the compensation of senior management in consultation with the Chief Executive Officer as appropriate or necessary;
|
3.
|
Review agreements made between senior management and the Company where these exist and as these address compensation, termination, retirement or any special circumstances;
|
4.
|
Review compensation of directors in light of time commitments, responsibilities and risks and comparative fees paid to directors of other similar medical technology or pre-commercialization companies;
|
5.
|
Review compensation of officers in light of time commitments, responsibilities and risks and comparative fees paid to officers of other similar medical technology or pre-commercialization companies;
|
6.
|
Assess the need for a bonus plan for the Company;
|
7.
|
Assess the need for incentives as provided in the Stock Option Plan; and
|
8.
|
Review the human resources practices and compensation packages proposed or implemented for employees.
|
1.
|
Review disclosure relating to executive compensation in an Information Circular;
|
2.
|
Stay abreast of trends in compensation matters in the industry generally;
|
3.
|
Assess the adequacy of the Mandate each year and recommend changes, if needed; and
|
4.
|
Assess the Committee's own performance once each year.
|
1.
|
The Committee shall have the power to engage a compensation consultant, set terms of reference and negotiate and approve such consultant’s fees; and
|
2.
|
The Committee shall have the authority to obtain advice from independent legal counsel in its sole discretion.
|
1)
|
the Company’s annual general meeting of shareholders, or
|
2)
|
a resolution from the majority of the shareholders waiving the Company’s annual general meeting
|
1.
|
Review the size and composition of the Board with a view to promoting effectiveness and efficiency of the Board;
|
2.
|
Review the appropriateness of the Board Mandate;
|
3.
|
Review the appropriateness of the committees of the Board, their mandates and the appointment of directors to the various committees;
|
4.
|
Review the directorships held by Board members and officers of the Company in other public or private companies;
|
5.
|
Identify, review qualifications and propose nominees for the position of director to be elected at an upcoming annual general meeting or to be appointed to fill a vacancy between annual general meetings;
|
6.
|
Consider and evaluate nominees, if any, proposed by shareholders of the Company for the position of director(s) to be elected at an upcoming annual general meeting or to be appointed to fill a vacancy between annual general meetings;
|
7.
|
Consider and, if required, recommend to the Board that a particular director be asked to retire or be removed as a director in accordance with policies set and approved by the Board from time to time;
|
8.
|
Review the qualifications required of the Chairman of the Board, the appropriateness of the responsibilities and duties set out in the Chairman of the Board Mandate and propose a director for the position;
|
9.
|
Review the succession plans for Chief Executive Officer and senior management; and
|
10.
|
Identify, review the qualifications and propose nominees for the position of directors and officers of ALR Technologies, Inc.
|
1.
|
Prepare and provide appropriate orientation for new Board members;
|
2.
|
Stay abreast of trends in corporate governance matters in the industry generally;
|
3.
|
Assess the adequacy of the Committee’s Mandate each year and recommend changes, if indicated; and
|
4.
|
Assess the Committee's own performance once each year.
|
1.
|
The Committee shall have the power to engage a corporate governance consultant, set terms of reference, and negotiate and approve such consultant’s fees; and
|
2.
|
The Committee shall have the authority to obtain advice from independent legal counsel in its sole discretion.
|