ALR TECHNOLOGIES INC. (Form: 10-Q, Received: 02/26/2018 12:07:52)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X]	QUARTERLY REPORT UNDER TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2017

	OR

[ ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 000-30414

ALR TECHNOLOGIES INC.

(Exact name of registrant as specified in its charter)

NEVADA

(State or other jurisdiction of incorporation or organization)

88-0225807

(I.R.S. Employer Identification No.)

7400 Beaufont Springs Drive Suite 300

Richmond, VA 23225

(Address of principal executive offices, including zip code.)

(804) 554-3500

(Telephone number, including area code)

Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the last 90 days. YES [ ] NO [X]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (SS 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES [X] NO [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer, “accelerated filer,” “non-accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer	[ ]	Accelerated Filer	[ ]
Non-accelerated Filer	[ ]	Smaller Reporting Company	[X]
(Do not check if smaller reporting company)

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

APPLICABLE ONLY TO CORPORATE ISSUERS:

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: 242,777,909 as of February 26, 2018.

ALR TECHNOLOGIES INC.

TABLE OF CONTENTS

*PART I. FINANCIAL INFORMATION*

Item 1.	Financial Statements.
	Condensed Consolidated Balance Sheets (unaudited)	4
	Condensed Consolidated Statements of Operations (unaudited)	5
	Condensed Consolidated Statements of Cash Flows (unaudited)	6
	Notes to Condensed Consolidated Financial Statements (unaudited)	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	18

Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	29

Item 4.	Controls and Procedures.	29


	*PART II. OTHER INFORMATION*

Item 1.	Legal Proceedings.	30

Item 1A.	Risk Factors.	30

Item 3.	Defaults Upon Senior Securities.	30

Item 5.	Other Information.	30

Item 6.	Exhibits.	31

Signatures		32

PART I. FINANCIAL INFORMATION

ITEM 1.

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

ALR TECHNOLOGIES INC.

Condensed Consolidated Financial Statements

September 30, 2017 and 2016

(unaudited)

Index	Page

Condense d Consolidated Balance Sheets	4

Condensed Consolidated Statements of Operations	5

Condensed Consolidated Statements of Cash Flows	6

Notes to Condensed Consolidated Financial Statements	7 – 17

ALR TECHNOLOGIES INC.

Condensed Consolidated Balance Sheets

($ United States)


	September 30 2017			December 31, 2016
	(unaudited)

Assets
Current assets:
Cash	$	3,014		$	2,607
Prepaid expenses and other		—			1,429
Total assets	$	3,014		$	4,036

Liabilities and Stockholders' Deficit
Current liabilities:
Accounts payable and accrued liabilities	$	1,030,868		$	942,967
Lines of credit from related parties		14,827,681			13,375,562
Related party promissory notes payable		2,891,966			2,891,966
Unrelated party promissory notes payable		2,394,353			2,394,353
Interest payable on promissory notes payable		4,008,567			3,629,913
Total liabilities		25,153,435			23,234,761

Stockholders' Deficit
Preferred stock:
Authorized: 500,000,000 (December 31, 2016 - 500,000,000) shares of preferred stock with a par value of $0.001 per share
Shares issued and outstanding: No (December 31, 2016 - No) shares of preferred stock were issued and outstanding
Common stock:
Authorized: 2,000,000,000 (December 31, 2016 - 2,000,000,000) shares of common stock with a par value of $0.001 per share
Shares issued and outstanding: 242,777,909 shares of common stock (December 31, 2016 - 242,777,909 shares of common stock)		242,777			242,777
Additional paid-in capital		48,332,589			48,212,548
Accumulated deficit		(73,725,787	)		(71,686,050	)
Stockholders’ deficit		(25,150,421	)		(23,230,725	)
Total liabilities and stockholders’ deficit	$	3,014		$	4,036

See accompanying notes to the condensed consolidated financial statements.

ALR TECHNOLOGIES INC.

Condensed Consolidated Statements of Operations

($ United States)

(Unaudited)

	Three months ended						Nine months ended
	September 30,						September 30,
	2017			2016			2017			2016

Expenses
General, selling and administration	$	75,744		$	75,520		$	240,051		$	277,384
Product development costs		79,538			124,497			263,988			457,482
Professional fees		85,073			41,472			147,807			79,459
Loss from operations		240,355			241,489			651,846			814,325

Other Expense
Interest		468,334			7,761,309			1,387,891			8,614,457
Total other expense		468,334			7,761,309			1,387,891			8,614,457
Net loss	$	(708,689	)	$	(8,002,798	)	$	(2,039,737	)	$	(9,428,782	)
Loss per share - basic and diluted	$	(0.00	)	$	(0.03	)	$	(0.01	)	$	(0.04	)

Weighted average shares outstanding - basic and diluted		242,777,909			242,777,909			242,777,909			242,777,909

See accompanying notes to the condensed consolidated financial statements.

ALR TECHNOLOGIES INC.

Condensed Consolidated Statements of Cash Flows

($ United States)

(Unaudited)


	Nine Months Ended
	September 30,
	2017			2016

OPERATING ACTIVITIES
Net loss	$	(2,039,737	)	$	(9,428,782	)
Stock-based compensation-product development costs		2,877			13,096
Stock-based compensation-selling, general and administration		1,263			1,924
Stock-based compensation-interest expense		—			7,318,539
Stock-based compensation-professional fees		—			1,325
Non-cash imputed interest expenses		115,901			111,318
Accrued interest on line of credit		893,336			815,753
Changes in operating assets and liabilities:
Decrease in prepaid expenses		1,429			1,565
Increase in accounts payable and accrued liabilities		87,901			2,808
Increase in interest payable		378,654			367,953

Net cash used in operating activities		(558,376	)		(794,501	)

FINANCING ACTIVITIES
Proceeds from borrowings on line of credit		558,783			742,492

Net cash provided by financing activities		558,783			742,492

Change in cash		407			(52,009	)
Cash, beginning of period		2,607			52,688

Cash, end of period	$	3,014		$	679

See accompanying notes to the condensed consolidated financial statements.

ALR TECHNOLOGIES INC.

Notes to Condensed Consolidated Financial Statements

($ United States)

(Unaudited)

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. The Company has developed a compliance monitoring system that will allow for health care professionals to remotely monitor patient health conditions and provide patient health management. On October 17, 2011 the Company announced that it had received Section 510(k) clearance from the United States Food and Drug Administration for its Diabetes Management System. The Company is currently seeking pilot programs to deploy its product.

These consolidated financial statements have been prepared in accordance with Generally Accepted Accounting Principles in the United States of America (“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 nine month periods ended September 30, 2017 and 2016 of $2,039,737 and $9,428,782. In addition, losses incurred for the years ended December 31, 2016 and 2015 were $10,093,733 and $6,298,813. As of September 30, 2017, the Company is currently unable to self-finance its operations, has a working capital deficit of $25,150,421 (December 31, 2016 - $23,230,725), accumulated deficit of $73,725,787 (December 31, 2016 - $71,686,050), 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, interest, lines of credit and promissory notes payable totaling $25,153,436 currently due, due on demand or considered delinquent. There is no assurance that the Company will not face additional legal action from creditors regarding delinquent accounts payable, payroll payable, promissory notes and interest payable. Any one or a combination of these above conditions could result in the failure of the business and cause the Company to cease operations.

The Company’s ability to continue as a going-concern is dependent upon the continued financial support of its creditors and its ability to obtain financing to fund working capital and overhead requirements, fund the development of the Company’s product line and ultimately, the Company’s ability to achieve profitable operations and repay overdue obligations. Management has obtained short-term financing from related parties through lines of credit facilities with available borrowing in principal amount up to $10,500,000 (As of September 30, 2017 the total principal balance outstanding was $10,187,002). The resolution of whether the Company is able to continue as a going concern is dependent upon the realization of management’s plans. The Company plans to raise needed capital through the exercise of share options, increase to existing debt facilities or the acquisition of new debt facilities, 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.

ALR TECHNOLOGIES INC.

Notes to Condensed Consolidated Financial Statements

($ United States)

(Unaudited)

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 rate. The Company will seek to obtain creditors’ consents to delay repayment of the outstanding promissory notes payable and related interest thereto, until it is able to replace this financing with funds generated by operations, recapitalization with replacement debt or from equity financings through private placements. While some of the Company’s creditors have agreed to extend repayment deadlines in the past, there is no assurance that they will continue to do so in the future. In the past, creditors have successfully commenced legal action against the Company to recover debts outstanding. In those instances, the Company was able to obtain financing from related parties to cover the verdict or settlement; however, there is no assurance that the Company would be able to obtain the same financing in the future. If the Company is unsuccessful in obtaining financing to cover any potential verdicts or settlements, the Company will be required to cease operations.

The Company’s activities will necessitate significant uses of working capital beyond 2017. 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 and future debt arrangements it obtains.

While the Company strongly believes that its capital resources will be sufficient in the near term, there is no assurance that the Company’s activities will generate sufficient revenues to sustain its operations without additional capital or if additional capital is needed, that such funds, if available, will be obtainable on terms satisfactory to the Company.

2. Significant Accounting Policies

The unaudited condensed consolidated financial statements as of September 30, 2017 and for the period then ended have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and note disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading.

In the opinion of management, all adjustments necessary to present fairly the financial position as of September 30, 2017 and December 31, 2016 and the results of operations, and cash flows as of September 30, 2017 and 2016, and for the periods then ended, have been made. Those adjustments consist of normal and recurring adjustments.

These unaudited condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2016.

The results of operations for the nine month period ended September 30, 2017, are not necessarily indicative of the results to be expected for the full year.

ALR TECHNOLOGIES INC.

Notes to Condensed Consolidated Financial Statements

($ United States)

(Unaudited)

3. Promissory notes and interest 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				September 30, 2017		December 31, 2016
				September 30, 2017		December 31, 2016

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	$	875,619	$	875,619

	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
Total Promissory Notes Payable to Related Parties			$	2,891,966	$	2,891,966

ALR TECHNOLOGIES INC.

Notes to Condensed Consolidated Financial Statements

($ United States)

(Unaudited)

3. Promissory notes and interest 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				September 30,		December 31,
				2017		2016

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.	Interest at 0.667% per month, with $125,000 due January 15, 2011		125,000		125,000

Promissory notes payable, secured by a guarantee from the Chief Executive Officer, bearing interest at 1% per month				200,000		200,000
Total Promissory Notes Payable to Unrelated Parties			$	2,394,353	$	2,394,353

c) Interest payable

A summary of the interest payable activity is as follows:


	Interest Payable

Balance, December 31, 2015	$	3,135,743
Interest incurred on promissory notes payable		494,171

Balance, December 31, 2016		3,629,913
Interest incurred on promissory notes payable		378,654

Balance, September 30, 2017	$	4,008,567

ALR TECHNOLOGIES INC.

Notes to Condensed Consolidated Financial Statements

($ United States)

(Unaudited)

3. Promissory notes and interest payable (continued)

c) Interest payable (continued)


	September 30,		December 31,
	2017		2016

Related parties (relatives of the Chairman)		2,180,748	$	1,956,403
Non-related parties		1,827,819		1,673,511

		4,008,567	$	3,629,913

Historically, all interest payable incurred is from interest incurred at the stated rate of promissory notes issued by the Company. 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 nine months ended September 30, 2017, the Company incurred interest expense of $1,387,890 (2016: $8,614,457) substantially as follows:

-	$378,654 (2016: $371,278) incurred on promissory notes payables as shown in note 3(b);
-	$892,902 (2016: $815,753) incurred on lines of credit payable, and
-	$115,901 (2016: $111,197) 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 (2016: $7,318,539) incurred on stock options granted to creditors (note 6(a)).

ALR TECHNOLOGIES INC.

Notes to Condensed Consolidated Financial Statements

($ United States)

(Unaudited)

4. Lines of Credit

As of September 30, 2017, the Company had two lines of credit as follows:

Creditor	Interest Rate	Borrowing Limit	Repayment Terms	Amount Outstanding	Accrued Interest	Total	Security	Purpose
Chairman	1% per Month	$ 8,500,000	Due on Demand	$ 8,187,002	$ 3,204,294	$ 11,391,296	General Security over Assets	General Corporate Requirements
Wife of Chairman	1% per Month	$ 2,000,000	Due on Demand	2,000,000	1,436,385	3,436,385	General Security over Assets	General Corporate Requirements
Total		$10,500,000		$ 10,187,002	$ 4,640,679	$ 14,827,681

As of December 31, 2016, the Company had two lines of credit as follows:

Creditor	Interest Rate	Borrowing Limit	Repayment Terms	Amount Outstanding	Accrued Interest	Total	Security		Purpose
Chairman	1% per Month	$ 8,500,000	Due on Demand	$ 7,628,219	$ 2,490,958	$ 10,119,177		General Security over Assets	General Corporate Requirements
Wife of Chairman	1% per Month	$ 2,000,000	Due on Demand	2,000,000	1,256,385	3,256,385		General Security over Assets	General Corporate Requirements
Total		$10,500,000		$ 9,628,219	$ 3,747,343	$ 13,375,562

5. Capital Stock

Authorized Capital Stock

Common Stock

On January 27, 2017, the Company’s Board of Directors approved a 100:1 reverse share split of the Company’s common stock. Subsequently, on February 22, 2018, the Company’s Board of Directors proposed a reversal of such share split. The initial reverse share split and subsequent reversal are pending approval from the Securities and Exchange Commission (“SEC”) and other regulatory bodies.

On December 21, 2016, the Company’s shareholders holding a majority of the issued capital stock consented in writing to increase the authorized shares of common stock of the Company from two billion shares (2,000,000,000) to ten billion shares (10,000,000,000) shares. The increase in the authorized shares of common stock of the Company is pending approval from the SEC.

ALR TECHNOLOGIES INC.

Notes to Condensed Consolidated Financial Statements

($ United States)

(Unaudited)

5. Capital Stock (continued)

Authorized Capital Stock

ii.

Preferred Stock

500,000,000 shares of preferred stock with a par value of $0.001 per share.

b) Issued Capital Stock

During the period ended September 30, 2017:

There were no capital stock issuances.

During the year ended December 31, 2016:

There were no capital stock issuances.

6. Additional paid-in capital

Stock options

A summary of stock option activity is as follows:

	Nine Months Ended			Year Ended
	September 30, 2017			December 31, 2016
	Number of		Weighted Average	Number of		Weighted Average
	Options		Exercise Price	Options		Exercise Price
Outstanding, beginning of period	4,962,301,500	$	0.003	579,000,200	$	0.015
Granted	-		-	4,390,001,300		0.002
Cancelled	(900,000)	$	(0.152)	(6,700,000)		(0.030)
				-		-
Outstanding, end of period	4,961,401,500	$	0.003	4,962,301,500	$	0.003

Exercisable, end of period	4,955,751,500	$	0.003	4,960,101,500	$	0.003

During the period ended September 30, 2017:

The Company recorded $4,140 in compensation expense related to vesting of stock options granted in previous years.

ALR TECHNOLOGIES INC.

Notes to Condensed Consolidated Financial Statements

($ United States)

(Unaudited)

6. Additional paid-in capital (continued)

a) Stock options (continued)

During the year ended December 31, 2016:

On July 1, 2016, the Company and the Chief Executive Officer of the Company 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 (Note 4). 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;

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

The interest expense recognized related to the option grant was $7,318,539.

The Company recorded a further $18,014 in compensation expense related to vesting of stock options granted in previous years.

Options Outstanding:

The options outstanding at September 30, 2017 and December 31, 2016 were as follows:

	September 30, 2017				December 31, 2016
Expiry Date	Options		Exercise Price	Intrinsic Value	Options		Exercise Price	Intrinsic Value

May 27, 2017	-	$	-	-	400,000	$	0.050	-
May 31, 2017	-	$	-	-	500,000	$	0.250
August 16, 2017	-	$	-	-	250,000	$	0.050	-
December 28, 2017 *	1,000,000	$	0.030	-	1,000,000	$	0.030	-
January 28, 2018 *	1,500,000	$	0.015	-	1,500,000	$	0.015	-
March 26, 2018	500,000	$	0.015	-	500,000	$	0.015	-
April 9, 2018	1,000,000	$	0.015	-	1,000,000	$	0.015	-
May 21, 2019	500,000	$	0.015	-	500,000	$	0.015	-
July 25, 2019	1,000,000	$	0.015	-	1,000,000	$	0.015	-
August 1, 2019	1,250,000	$	0.015	-	1,250,000	$	0.015	-
August 26, 2019	1,500,000	$	0.015	-	1,500,000	$	0.015	-
January 30, 2020	2,900,000	$	0.015	-	2,900,000	$	0.015	-
May 29, 2020	450,000,100	$	0.002		560,000,200	$	0.002
July 1, 2021	4,390,001,300	$	0.002		4,390,001,300	$	0.002
Total	4,961,401,500	$	0.003	-	4,962,301,500	$	0.003	-
Weighted Average Remaining Contractual Life	3.62				4.37

* - Subsequently expired, unexercised.

ALR TECHNOLOGIES INC.

Notes to Condensed Consolidated Financial Statements

($ United States)

(Unaudited)

6. Additional paid-in capital (continued)

a) Stock options (continued)

The expense incurred related to stock options was allocated as follows:

	Three Months Ended September 30, 2017 (unaudited)		Three Months Ended September 30, 2016 (unaudited)		Nine Months Ended September 30, 2017 (unaudited)		Nine Months Ended September 30, 2016 (unaudited)

Interest expense	$	—	$	7,318,539	$	—	$	7,318,539
Product development		932		1,538		2,877		13,096
Professional		—		—		—		1,325
General, selling and administration		186		498		1,263		1,924

	$	1,118	$	7,320,575	$	4,140	$	7,334,884

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:

	September 30, 2017		December 31, 2016

Risk-free interest rate		n/a		1.68	%
Expected life		n/a		5 years
Expected dividends		n/a		0	%
Expected volatility		n/a		194	%
Forfeiture rate		n/a		0	%

The weighted average fair value for the options granted during the nine months ended September 30, 2017 was $nil (2016: $nil).

ALR TECHNOLOGIES INC.

Notes to Condensed Consolidated Financial Statements

($ United States)

(Unaudited)

7. Related party transactions and balances

	Three months ended September 30, 2017 (unaudited)		Three months ended September 30, 2016 (unaudited)		Nine months ended September 30, 2017 (unaudited)		Nine months ended September 30, 2016 (unaudited)

Related party transaction included within interest expense:
Interest expenses on promissory notes issued to relatives of the Chairman & Chief Executive Officer of the Company	$	74,782	$	73,882	$	224,345	$	213,645
Interest expense on lines of credit payable to the Chairman & Chief Executive Officer of the Company and his spouse		303,595		279,262		893,336		815,753
Interest expense from the grant of stock options to the Chairman & Chief Executive Officer		—		7,318,539		—		7,318,539
Related party transactions including within selling, general and administration expenses :
Consulting fees to the Chairman & Chief Executive Officer of the Company accrued on the line of credit available to the Company		47,400		47,400		142,200		142,200
Consulting fees paid to the former President of the Company		—		—		—		15,500

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.

8. Commitments and contingencies

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 $1,104,368 (2016 - $1,076,168), of these promissory notes and related accrued interest have been fully recognized and recorded by the Company.

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 $180,000 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 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:

ALR TECHNOLOGIES INC.

Notes to Condensed Consolidated Financial Statements

($ United States)

(Unaudited)

8. Commitments and contingencies (continued)

Commitments (continued)

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

9. Subsequent Events

On November 27, 2017, the Company’s Board of Directors approved the grant of the option to acquire 8,700,000 shares of common stock of the Company at a price of $0.015 per share for a term of five years. 2,200,000 of the approved options were to a director of the Company and 6,500,000 were to consultants of the Company.

On January 31, 2018, the Company’s Board of Directors approved the following grants:

the option to acquire 47,000,000 shares of common stock of the Company at a price of $0.015 per share for a term of five years to 9 consultants of the Company, and

the option to acquire 200,000 shares of common stock of the Company at a price of $0.015 per share until April 19, 2019 to 1 consultant of the Company.

Of the options granted with a term of five years, options to acquire a total of 11,000,000 shares of common stock were granted to three relatives of the Chairman of the Board.

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Forward Looking Statements

The following information must be read in conjunction with the unaudited Consolidated Financial Statements and Notes thereto included in Item 1 of this Quarterly Report and the audited Consolidated Financial Statements and Notes thereto and Management’s Discussion and Analysis or Plan of Operations contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. Except for the description of historical facts contained herein, the Form 10-Q contains certain forward-looking statements concerning future applications of the Company’s technologies and the Company’s proposed services and future prospects, that involve risk and uncertainties, including the possibility that the Company will: (i) be unable to commercialize services based on its technology, (ii) ever achieve profitable operations, or (iii) not receive additional financing as required to support future operations, as detailed herein and from time to time in the Company’s future filings with the Securities and Exchange Commission and elsewhere. Such statements are based on management’s current expectations and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Our financial statements are stated in United States dollars and are prepared in accordance with United States generally accepted accounting principles.

In this quarterly report, unless otherwise specified, all references to “common shares” refer to the common shares in our capital stock.

As used in this quarterly report, the terms “we”, “us”, “our”, the “Company” and “ALRT” mean ALR Technologies Inc, unless otherwise indicated.

Overview

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.

On October 21, 1998, the Company entered into an agreement with A Little Reminder Inc. (“ALR”) whereby the Company would have the non-exclusive right to distribute certain products of ALR described below.

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

ALR was incorporated pursuant to the Company Act of British Columbia on May 24, 1996. ALR owned one subsidiary corporation, Timely Devices, Inc. (“TDI”). TDI was founded in Edmonton, Alberta, Canada on July 27, 1994. ALR owned all of the total outstanding shares of TDI. TDI had only one class of common stock outstanding.

On July 31, 2000, the Company sold all of its shares of ALR. From that point onward, the Company focused on developing its own technology, products and performed its own marketing.

On April 15, 2008, the Company incorporated a wholly-owned subsidiary in Canada under the name Canada ALRTech Health Systems Inc. This subsidiary was wound up during 2016.

In late 2011, the Company relocated its headquarters to 7400 Beaufont Springs Drive, Suite 300, Richmond, Virginia, 23225.

During 2011, the Company received FDA clearance and achieved HIPPA 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.

During 2017, the Company received FDA clearance for IDA and submitted worldwide patent application under the patent cooperation treaty to the World Intellectual Property Organization for its Predictive A1C innovation. The Company is actively seeking to commence revenue generating activities for its Diabetes Management System.

Recent Developments

On January 27, 2017, the Company’s Board of Directors approved a 100:1 reverse share split of the Company’s common stock. The Company cannot complete its stock split due to its deficient reporting status with the SEC. Subsequently, on February 22, 2018, the Company’s Board of Directors proposed a reversal of such share split. The initial reverse share split and subsequent reversal are pending approval from the SEC and other regulatory bodies.

Recent Developments – Subsequent to September 30, 2017

On January 31, 2018, the Company’s Board of Directors approved the following grants:

the option to acquire 47,000,000 shares of common stock of the Company at a price of $0.015 per share for a term of five years to 9 consultants of the Company, and

the option to acquire 200,000 shares of common stock of the Company at a price of $0.015 per share until April 19, 2019 to 1 consultant of the Company.

Of the options granted with a term of five years, options to acquire a total of 11,000,000 shares of common stock were granted to three relatives of the Chairman of the Board.

Products

ALR Technologies products utilize internet-based technologies to facilitate healthcare provider’s ability to monitor their patient’s health and ensure adherence to health maintenance activities.

Products (continued)

The ALRT Diabetes Management System is a remote monitoring and care facilitation program that allows patients to upload the blood glucose data from their glucometers. ALRT Health Data Monitors monitor that data and, based on clinician approved protocols, provide advice, support and interventions when patients show blood glucose readings that are out of an acceptable range or if they are failing to test their blood glucose as prescribed. The ALRT System has been successfully proven in a clinical trial that demonstrated this type of remote 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).

In the future, the Company may seek to adapt its System 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 disease states.

ALRT Diabetes Management System

Diabetes is a leading cause of death, serious illness and disability across North America. In the United States, it is estimated that 26 million people have diabetes, with 4.5 million people being classified as insulin dependent. By the year 2030, it is expected that 1 in 10 adults, globally, will have diabetes (diagnosed and undiagnosed instances). By the year 2050, it is expected that 1 in 3 United States adults will have diabetes (diagnosed and undiagnosed instances). We believe diabetes is a global pandemic.

As a result, medical costs due to diabetes and its complications are enormous. In the United States, such costs are estimated to be over $245 billion a year. In Canada, where it is estimated there are 2 million people with diabetes, healthcare costs associated with diabetes is estimated to be more than $13 billion annually.

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 healthcare 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 healthcare team that can establish and sustain a communication network between the person with diabetes and the necessary healthcare and community systems.”

However, as noted in Patrick Connole, “UnitedHealthcare, 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.

Furthermore, in Treatment intensification for patients with type 2 diabetes and poor glycaemic control by Fu and Sheenan, it was noted that out 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

ALRT Diabetes Management System (continued)

A study in 2013 by Khunti, Wolden, Thorstead, Anderson and Davies entitled Clinical inertia in people with type 2 diabetes: a retrospective cohort study of more than 80,000 people found that patients 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.

The Company’s Diabetes Management System provides an affordable and easy to use tool to provide the communication network as recommended by the Committee. Our Diabetes Management System includes a communications software platform that also enables health professionals to remotely monitor the health progress to patients with diabetes. This facilitates more timely and effective communication and coordination of care to these patients. This also results in positive behavior patterning, or re-patterning, of the patients.

The Diabetes Management System and the Company’s universal upload cable, are compatible with the majority of the major brands of glucose meters available for sale in the United States.

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 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” 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.

On July 28, 2014, the Company entered into a pilot service agreement with Kansas City Metropolitan Physician Association (KCMPA), one of the nation's premier Accountable Care Organizations (ACO). Under the agreement, KCMPA, which made diabetes management a key focus of its Quality Improvement Plan, enrolled up to 200 of its patients with Type 2 diabetes into ALRT's Diabetes Management System. The pilot service agreement was effective nine months from the beginning date of patient enrollment and the intent was to allow 6 months of use for each patient enrolled in the system. The pilot program between ALRT and KCMPA represented the first commercial deployment of ALRT's Diabetes Management System. On September 9, 2014, the Company began enrolling patients with Type 2 diabetes and A1c levels above 8 percent into the pilot program trialing the Diabetes Management System.

ALRT Diabetes Management System (continued)

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 for up to 200 patients that fit certain criteria. As a result of the pilot program findings and general industry trends, the Company proceeded with developing three new innovations:

Insulin Dosage Adjustment uses both American Diabetes Association (ADA) and American Association of Clinical Endocrinologists (AACE) guidelines for adjusting insulin, and

Predictive A1c, which converts blood glucose data uploaded into our Diabetes Management Systems and converts the large amount of data into a predicted or simulated A1C

Diabetes Therapy Review allows the healthcare providers to change care plans for patients on a timely basis based on the results of Predictive A1c and overall how patients are managing their diabetes

On January 1, 2015, the Center for Medicaid and Medicare Services began reimbursing physicians for the non-face-to-face management of Medicare patients with two or more serious chronic diseases. Physicians would be paid a per-patient-per-month fee for “Chronic Care Management” and the examination of data from a remote monitoring platform is considered a reimbursable activity by CMS. Therefore, the company modified its System to conform to the requirements of the CMS reimbursement. These modifications permit the company to market to medical groups throughout the United States with a product that will help physicians to draw down this new reimbursement as well as to potentially improve the outcomes of their patients.

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 & 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 heathcare 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 healthcare provider. However, this new feature may make a significant contribution to improving the outcomes of diabetes patients if it allowed healthcare provider to keep their patients at the optimal dose for longer periods.

Preliminary data from the KCMPA pilot program indicated that a number of patients had achieved reductions in their A1c levels. On April 17, 2015, the company signed a commercial contract with one of the KCMPA clinics, the Clay-Platte Family Medicine Clinic, to provide remote monitoring services. The Company has provided these services to date to Clay-Platte at no charge as it has provided the Company with continuous users as a sample population for its own strategic planning and business plan. The Company continues to actively provide services to Clay-Platte for certain of its patients.

On June 20, 2017, the Company filed a worldwide patent application under the PCT for its Predictive A1c feature to the World Intellectual Property Office.

On September 18, 2017, the Company received clearance from the FDA for its Insulin Dosage Adjustment feature within the Company’s Diabetes Management System.

Critical Accounting Policies and Going Concern

Our discussion and analysis of our results of operations and liquidity and capital resources are based on our unaudited condensed consolidated financial statements for the nine months ended September 30, 2017 and 2016, which have been prepared in accordance with GAAP.

The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and disclosure of contingent assets and liabilities. We base our estimates on historical and anticipated results, trends, and various other assumptions that we believe are reasonable under the circumstances, including assumptions as to future events. These estimates form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. By their nature, estimates are subject to an inherent degree of uncertainty. Actual results may materially differ from our estimates.

The Company’s condensed consolidated financial statements have been prepared 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. See note 1 of the condensed consolidated financial statements.

Due to our being a development stage company and not having generated significant revenues, in the Notes to our financial statements, we have included disclosure regarding concerns about our ability to continue as a going concern.

Consolidated Results of Operations

		Nine Months Ended September 30


					Percentage		Amount
		2017		2016	Increase /		Increase /
					(Decrease)		(Decrease)
Operating Expenses
General, selling and administrative	$	240,051	$	277,384	(13)	$	(37,333)
Product development		263,988		457,482	(42)		(193,494)
Professional fees		147,807		79,459	86		68,348
Total Operating Expenses		651,846		814,325	(20)		(162,479)

Other Items
Interest expenses		1,387,891		8,614,457	(84)		(7,226,566)
Net Loss	$	2,039,737	$	9,428,782	(78)	$	(7,389,045)

The significant change in net loss for the Company’s nine months ended September 30, 2017 as compared to September 30, 2016 was primarily from the grant of options to obtain additional debt financing during 2016:

	*Nine Months Ended September 30, 2017*	*Nine Months Ended September 30, 2016*
Options Granted as Consideration	-	4,390,001,300
Value of Options Granted as Consideration	$ -	$ 7,318,539
Percentage of Net Loss	N/A	78%

Approximately 99% of the reduction of the net loss for the nine months ended to September 30, 2016 as compared to the nine months ended September 30, 2017 can be attributed to the grant of these options for additional debt financing.

Consolidated Results of Operations (continued)

General, selling and administrative expenses. General, selling and administrative costs 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 costs, information technology costs and general costs incurred through day-to-day operations. From the nine month period ended September 30, 2017 as compared to the nine month period ended September 30, 2016, there was both a significant reduction and in the total expense incurred primarily as a result in a reduction of management and consultants retained by the Company. Effective January 31, 2016, the Company discontinued certain sales, marketing and management activities. By type of general and administrative cost, the change in amounts incurred can be seen as follows:

	Nine Months Ended September 30,		Nine Months Ended September 30,		Amount Increase / (Decrease) ($)
	2017		2016

General, selling and administrative:
Salaries & consulting fees	$	151,000		191,000		(40,000	)
Stock based compensation		1,000		3,000		(2,000	)
Travel and trade-shows		33,000		22,000		11,000
Rent of corporate offices		7,000		7,000		—
Website & information technology		15,000		19,000		(4,000	)
Other general & administrative costs		33,000		35,000		(2,000	)
Total	$	240,000		277,000		(37,000	)

The cash-based general & administrative expenditure decreased by approximately $37,000 during Q3 2017 as compared to the Q3 2016.

Product development costs. Substantially all of the product development costs incurred related to 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. The change in balance from the previous year relates primarily to 1) a reduction in the number of development personnel under contract 2) a change in pay for certain development personnel 3) the favourable impact of the exchange rate for the US dollar as compared to other currencies and 4) a reduction in the external consulting services related to the Insulin Dosage Adjustment 510K application and quality systems from the previous year.

Professional fees. Professional costs incurred consist of consulting and advisory fees of certain professionals retained, audit fees, legal fees, diabetes care facilitators and stock-based compensation for options granted to professionals. During the period, there was a significant decrease in professional fees. By type of general and administrative cost, the variance can be seen as follows:

	Nine Months Ended September 30, 2017			Nine Months Ended	Amount Increase / (Decrease) ($)
				September 30,
				2016
Professional fees:
Professionals retained	$	53,000	$	40,000	13,000
Audit and quarterly review fees		60,000		-	60,000
Legal Fees		35,000		30,000	5,000
Stock based compensation		-		1,000	(1,000)
Diabetes care facilitators		-		8,000	(8,000)
Total	$	148,000	$	79,000	69,000

Consolidated Results of Operations (continued)

Professional fees. (continued)

The increase in professional fees can be attributed substantially to 1) the Company initiating the process to become current with the reporting requirements of the SEC and accruing its estimated audit and review fees for its overdue filings for 2015, 2016 and 2017 2) the Company retaining a regulatory consultant and 3) the Company successfully defending the patent infringement complaint filed against it. The complaint against the Company was dismissed by the US District Court during Q1 2017. In January 2016, the Company discontinued its US based diabetes care facilitator program.

Interest expense. Interest expense was from the following sources for the nine months ended September 30, 2017 and 2016:

	Nine months ended September 30, 2017		Nine months ended September 30, 2016
Interest expense
Interest expense incurred on promissory notes	$	379,000	$	369,000
Interest expense incurred on lines of credit		893,000		815,000
Imputed interest on zero interest loans		116,000		111,000
Stock options granted for increase in borrowing limit		—		7,319,000
Total	$	1,388,000	$	8,614,000

Interest on Promissory Notes

There was not any changes in the amount of promissory notes outstanding from September 30, 2016 to September 30, 2017. During the previous year, the Company received a reduction of interest payable on loans issued to related parties, which provided a reduction in expenses incurred during 2016. The Company anticipates interest expense related to the promissory notes payable to be consistent with the results for the nine months ended September 30, 2017 moving forward.

Interest on Lines of Credit

The Company has two line of credit facilities that had balances as follows:

	September 30, 2017		September 30, 2016		Amount ($) Increase / (Decrease)
Lines of Credit:

Line of Credit provided by Sidney Chan	$	8,187,000	$	7,369,000	$	818,000
Line of Credit provided by Christine Kan		2,000,000		2,000,000		—
Total	$	10,187,000	$	9,369,000	$	818,000

The Company incurred interest on the lines of credit as follows:

Interest Expense on Line of Credit:		Nine Months		Nine Months		Amount ($)
		Ended September 30,		Ended September 30,		Increase / (Decrease)
		2017		2016

Interest expense incurred on line of credit from Sidney Chan during the year	$	713,000	$	636,000	$	77,000
Interest expense incurred on line of credit from Christine Kan during the year		180,000		180,000		-
Total	$	893,000	$	816,000	$	77,000

The Company has continued to rely on its line of credit to fund its operations.

Consolidated Results of Operations (continued)

Interest expense. (continued)

Imputed Interest

During the 2017 and 2016 periods, 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 and the instead of increasing the liabilities of the Company, it is allocated to equity under the financial statement line item “additional paid-in capital”.

	Three Months Ended September 30


				Percentage			Amount
		2017	2016	Increase /			Increase /
				(Decrease)			(Decrease)
Operating Expenses
General, selling and administrative	$	75,744	75,520	0		$	224
Product development		79,538	124,497	(36	)		(44,959	)
Professional fees		85,073	41,472	105			43,601
Total Operating Expenses		240,355	241,489	0			(1,134	)

Other Items
Interest expenses		468,334	7,761,309	(94	)		(7,292,975	)
Net Loss	$	708,689	8,002,798	(91	)	$	(7,294,109	)

The net loss for the three months ended September 30, 2017 decreased by 91% ($7,294,109) as compared to the same period in the prior year as a result of the Q3 2016 grant of option to acquire shares of common stock of the Company with a fair value of $7,318,539 as consideration for receiving an increase in the borrowing limit of the primary line of credit facility the Company has available. There was not similar transaction during current period end. The fair value of the options granted in 2016 accounted for 100% of the decrease in net loss from the prior year.

Liquidity and Capital Resources

Working Capital
		As At September 30, 2017			As At December 31, 2016		Amount ($) Increase / (Decrease)		Percentage (%) Increase / (Decrease)
Current Assets	$	3,014		$	4,036		(1,022	)	(25	)
Current Liabilities	$	25,153,435		$	23,234,761		1,918,674		8
Working Capital (Deficiency)	$	(25,150,421	)	$	(23,230,725	)	(1,919,696	)	8

The Company has a severe working capital deficiency. It does not have ability to service is current liabilities for the next twelve months and is reliant on its line of credit facilities to meet its on-going operations. 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 anytime in the future which could ultimately lead to business failure.

Current Assets

The Company’s current assets as at September 30, 2017 consist of cash. The Company’s current assets as at December 31, 2016 consisted of cash and prepaid expenses.

Current Liabilities

The Company has current liabilities of $25,153,000 as at September 30, 2017 as compared to $23,235,000 as at December 31, 2016. Current liabilities were as follows:

	September 30, 2017		December 31, 2016		Change $		Change %
Accounts payable and accrued liabilities	$	1,030,000	$	943,000		87,000		9	%
Interest payable		4,009,000		3,630,000		379,000		10	%
Lines of credit to related parties		14,828,000		13,376,000		1,452,000		11	%
Promissory notes payable to related parties		2,892,000		2,892,000		—		0	%
Promissory notes payable		2,394,000		2,394,000		—		0	%
Total current liabilities	$	25,153,000	$	23,235,000		1,918,000		8	%

The fluctuations in accounts payables occurred as a result of operating activities and the accrual for auditor fees for the 2015 10K, 2016 10Qs, 2016 10K and 2017 10Qs.

The increase in interest payable of $379,000 relates to accrued interest incurred on promissory notes at their stated rates of interest. All of the promissory notes and related interest payable are overdue.

The increase in the lines of credit payable of approximately $1,452,000 is attributable to borrowings of

$559,000 to fund operations, product development activities, professionals retained, overhead and its business development programs.

$893,000 of unpaid interest incurred on the principal of the borrowed amounts.

*Cash Flows*
	Nine Months Ended			Nine Months Ended
	September 30, 2017			September 30, 2016
Cash Flows used in Operating Activities	$	(559,000	)	$	(794,000	)
Cash Flows provided by Financing Activities	$	559,000		$	742,000
Net change in Cash During Period	$	—		$	(52,000	)

Cash Balances and Working Capital

As of September 30, 2017, the Company’s cash balance was $3,014 compared to $2,607 as of December 31, 2016.

Cash Proceeds from Financing Activities

Cash sourced by the Company from financing activities during the nine month period September 30, 2017 was $559,000 in comparison with $794,000 sourced during the same period last year. The funds sourced from lines of credit provided by Chairman of the Board and a relative of the Chairman of the Board. The loans received in 2017 and 2016 covered the operating, product development and market development requirements for the Company repaid certain accounts payable.

Cash Used in Operating Activities

Cash used by the Company in operating activities during the nine month period ended September 30, 2017 was $559,000 in comparison with $794,000 used during the same period last year. The Company’s expenditures from operations were used as follows (approximate amounts):

	Nine Months Ended		Nine Months Ended
	September 30, 2017		September 30, 2016
Product Development Consulting and Expenses	$	261,000	$	444,000
Management and Employees Compensation	$	151,000	$	191,000
Professional Fees	$	73,000	$	79,000
Travel and Trade Shows	$	33,000	$	25,000
Other	$	41,000	$	55,000
Cash used in Operations	$	559,000	$	794,000

The majority of the expenditures were to repay accounts payable owing to certain consultants, pay product development costs, pay professional fees and selling and administration costs associated with operating the business.

Short and Long Term Liquidity

As of September 30, 2017, the Company does not have the current financial resources and committed financing to enable it to meet its administrative overhead, product development budgeted costs and debt obligations over the next 12 months.

All of the Company’s debt financing are due on demand or overdue. The Company will seek to obtain creditors’ consents to delay repayment of these loans until it is able to replace these financings with funds generated by operations, replacement debt or from equity financings through private placements or the exercise of options and warrants. While the Company’s creditors have agreed to extend repayment deadlines in the past, there is no assurance that they will continue to do so in the future. The Company has faced litigation from creditors in the past and is currently being sued by one creditor. There is no assurance that additional creditors will not make claims against the Company in the future. Failure to obtain either replacement financing or creditor consent to delay the repayment of existing financing could result in the Company having to curtail operations.

Tabular Disclosure of Contractual Obligations:

	Payments due by period
				Less than		1-3		3-5		More Than
		Total		1 year		years		years		5 Years

Accounts payable & accrued liabilities	$	1,030,000	$	1,030,000	$	—	$	—	$	—
Interest payable		4,009,000		4,009,000		—		—		—
Line of credit		14,828,000		14,828,000		—		—		—
Promissory notes to related parties		2,892,000		2,892,000
Promissory notes to arm’s length parties		2,394,000		2,394,000		—		—		—
	$	25,153,000	$	25,153,000	$	—	$	—	$	—

The Company will continue to use the funds available from the line of credit to cover administrative overhead and product development requirements until such time it can establish cash flows from operations. In the next six months, the Company anticipates the amount borrowed from the line of credit to increase as compared to the past six months as it expects to commercially launch its Diabetes Management System during this period. At September 30, 2017, there was approximately $313,000 available to borrow on the line of credit. The Company anticipates it will require new sources of funding to continue operating as it will not likely be generating sufficient revenues to meet its operating requirements. To obtain financing, the Company may require to issue shares, equity instruments, debt instruments or a combination thereof.

Off Balance Sheet Arrangements

The Company has no off balance sheet financing arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources, that is material to investors.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.

The Company is a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and is not required to provide the information under this item.

ITEM 4.

CONTROLS AND PROCEDURES.

Under the supervision and with the participation of our management, including the Principal Executive Officer and Principal Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures as required by Exchange Act Rule 13a-15(b) as of the end of the period covered by this report. Based on this assessment, we found our internal and disclosure controls over financial reporting to be not effective for the following reasons:

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

While the Company is working to remedy these deficiencies as its business activities evolve, there were no changes in our internal or disclosure controls over financial reporting during the quarter ended September 30, 2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS.

There were no other changes from the period beginning July 1, 2017 to the date of this 10Q.

ITEM 1A.

RISK FACTORS.

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES.

As at September 30, 2017, the Company had promissory notes payable and related interest payable, totalling $9,294,886 in default.

ITEM 5.

OTHER INFORMATION.

None.

ITEM 6.

EXHIBITS.

Exhibit		Incorporated by reference			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	10/17/11
3.7	Amendment to Bylaws, dated April 10, 2012	8-K	4/16/12
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
99.01	Distribution Agreement with Mo Betta Corp.	10-SB	12/10/99	99.1
99.02	Pooling Agreement.	10-SB	12/10/99	99.2
99.03	Amended Pooling Agreement.	10-SB	12/10/99	99.3
99.04	Lock-Up Agreement.	10-SB	12/10/99	99.4
99.19	Audit Committee Charter.	10-KSB	3/31/14	99.19
99.20	Disclosure Committee Charter.	10-KSB	4/14/03	99.20
99.30	Nomination Committee Charter	10-KSB	3/31/14	99.30
99.40	Compensation Committee Charter	10-KSB	3/31/14	99.40

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the Registrant has duly caused this amended report to be signed on its behalf by the undersigned, thereunto duly authorized, on this 26th day of February, 2018.

	ALR TECHNOLOGIES, INC.
	(Registrant)

	BY:	SIDNEY CHAN
		Sidney Chan
		Principal Executive Officer, Principal Accounting Officer, Principal Financial Officer, Secretary/Treasurer and Director

ALR TECHNOLOGIES INC.
CODE OF ETHICS

TOPICS

	1.		Statement of Policy
	2.		Implementation and Enforcement
	3.		Relations with Competitors and Other Third Parties
	4.		Insider Trading, Securities Compliance and Public Statements
	5.		Financial Reporting
	6.		Human Resources
	7.		Environmental, Health and Safety
	8.		Conflicts of Interest
	9.		International Trade
	10.		Government Relations
	11.		Contractors, Consultants, and Temporary Workers
	12.		Conclusion

1. STATEMENT OF POLICY

The Company has adopted eight Corporate Values (Focus, Respect, Excellence, Accountability, Teamwork, Integrity, Very Open Communications and Enjoying Our Work) to provide a framework for all employees in conducting ourselves in our jobs. These policies are not intended to substitute for those Values, but will serve as guidelines in helping you to conduct the Company's business in accordance with our Values. Compliance requires meeting the spirit, as well as the literal meaning, of the law, the policies and the Values. It is expected that you will use common sense, good judgment, high ethical standards and integrity in all your business dealings.

If you encounter a situation you are not able to resolve by reference to these policies, ask for help. Contact Sidney Chan, Chairman and Chief Executive Officer, who has been identified as responsible for overseeing compliance with these policies.

Violations of the law or the Company's policies will subject employees to disciplinary action, up to and including termination of employment. In addition, individuals involved may subject themselves and the Company to severe penalties including fines and possible imprisonment. Compliance with the law and high ethical standards in the conduct of Company business should be a top priority for each employee, officer and director.

2. IMPLEMENTATION AND ENFORCEMENT.

Sidney Chan, our Chairman and Chief Executive Officer, has been appointed as Compliance Officer of the Company, responsible for overseeing compliance with, and enforcement of, all Company policies.

Employees are expected to be familiar with these policies as they apply to their duties. They should consult with their managers if they need assistance in understanding or interpreting these policies. Each employee is required to follow these policies and to comply with their terms. A refusal by any employee to agree to be bound by these policies shall be grounds for discipline up to and including dismissal.

Any employee who, in good faith, has reason to believe a Company operation or activity is in violation of the law or of these policies must call the matter to the attention of Sidney Chan, our Chairman and Chief Executive Officer. If you have reason to believe that it would be inappropriate to report the operation or activity to Mr. Chan, you should report it to Stanley Cruitt, our President. All reports will be reviewed and investigated and as necessary under the circumstances, and the reporting employee should provide sufficient information to enable a complete investigation to be undertaken.

Any employee who makes an allegation in good faith reasonably believing that a person has violated these policies or the law, will be protected against retaliation.

3. RELATIONS WITH COMPETITORS AND OTHER THIRD PARTIES.

The Company's policy is to comply fully with competition and antitrust laws throughout the world. These laws generally prohibit companies from using illegal means to maintain, obtain or attempt to obtain a monopoly in a market. They also prohibit companies from engaging in unfair trade practices. "Unfair trade practices" include fixing prices, dividing markets, agreeing with competitors not to compete, or agreeing to boycott certain customers. It is advised that you consult with the Sidney Chan before attending a meeting with a party who may be viewed as a competitor.

4. INSIDER TRADING, SECURITIES COMPLIANCE AND PUBLIC STATEMENTS.

Securities laws prohibit anyone who is in possession of material, non-public information ("Insider Information") about a company from purchasing or selling stock of that company, or communicating the information to others. Information is considered "material" if a reasonable investor would consider it to be important in making a decision to buy or sell that stock. Some examples include financial results and projections, new products, acquisitions, major new contracts or alliances prior to the time that they are publicly announced. Employees who become aware of such Inside Information about the Company must refrain from trading in the shares of the Company until the Inside Information is publicly announced.

Employees must also refrain from disclosing that information to persons who do not have a Company need to know, whether they are inside the Company or outside, such as spouses, relatives or friends.

The Company makes regular formal disclosures of its financial performance and results of operations to the investment community. We also regularly issue press releases. Other than those public statements, which go through official Company channels, employees are prohibited from communicating outside the Company about the Company's business, financial performance or future prospects. Such communications include questions from securities analysts, reporters or other news media, but also include seemingly innocent discussions with family, friends, neighbors or acquaintances.

5. FINANCIAL REPORTING.

The Company is required to maintain a variety of records for purposes of reporting to the government. The Company requires all employees to maintain full compliance with applicable laws and regulations requiring that its books of account and records be accurately maintained. Specifics of these requirements are available from Sidney Chan.

6. HUMAN RESOURCES.

The Company is committed to providing a work environment that is free from unlawful harassment and discrimination, and respects the dignity of its employees. The Company has policies covering various aspects of its relationship with its employees, as well as employees' relationships with each other. For more detailed information, you should consult Sidney Chan. Each employee is expected to be familiar with these policies and to abide by them.

7. ENVIRONMENTAL, HEALTH AND SAFETY.

The Company is committed to protecting the health and safety of our employees, as well as the environment in general. The Company expects employees to obey all laws and regulations designed to protect the environment, and the health and safety of our employees, and to obtain and fully observe all permits necessary to do business.

At the very least, all employees should be familiar with and comply with safety regulations applicable to their work areas. The Company will make, to the extent possible, reasonable accommodations for the known physical or mental limitations of our employees. Employees who require an accommodation should contact Sidney Chan. The Company will then engage in an interactive process to determine what reasonable accommodations may exist.

8. CONFLICTS OF INTEREST.

Each employee is expected to avoid any activity, investment or association that interferes with the independent exercise of his or her judgment in the Company's best interests ("Conflicts of Interest"). Conflicts of Interest can arise in many situations. They occur most often in cases where the employee or the employee's family obtains some personal benefit at the expense of the Company's best interests.

No employee, or any member of employee's immediate family, shall accept money, gifts of other than nominal value, unusual entertainment, loans, or any other preferential treatment from any customer or supplier of the Company where any obligation may be incurred or implied on the giver or the receiver or where the intent is to prejudice the recipient in favor of the provider. Likewise, no employee shall give money, gifts of other than nominal value, unusual entertainment or preferential treatment to any customer or supplier of the Company, or any employee or family members thereof, where any obligation might be incurred or implied, or where the intent is to prejudice the recipient in favor of the Company. No such persons shall solicit or accept kickbacks, whether in the form of money, goods, services or otherwise, as a means of influencing or rewarding any decision or action taken by a foreign or domestic vendor, customer, business partner, government employee or other person whose position may affect the Company's business.

No employee shall use Company property, services, equipment or business for personal gain or benefit.

Employees may not: (1) act on behalf of, or own a substantial interest in, any company or firm that does business, or competes, with the Company; (2) conduct business on behalf of the Company with any company or firm in which the employee or a family member has a substantial interest or affiliation. Exceptions require advance written approval from the Legal Department.

Employees should not create the appearance that they are personally benefitting in any outside endeavor as a result of their employment by the Company, or that the Company is benefitting by reason of their outside interests. Any employee who is not sure whether a proposed action would present a conflict of interest or appear unethical should consult with Sidney Chan.

9. INTERNATIONAL TRADE.

The Company must comply with a variety of laws around the world regarding its activities. In some cases, the law prohibits the disclosure of information, whether the disclosure occurs within the U.S. or elsewhere, and whether or not the disclosure is in writing.

Payments or gifts to non-U.S. government officials are prohibited by law and by Company policy. The Foreign Corrupt Practices Act precludes payments to non-U.S. government officials for the purpose of obtaining or retaining business, even if the payment is customary in that country. This law applies anywhere in the world to U.S. citizens, nationals, residents, businesses or employees of U.S. businesses. Because ALR TECHNOLOGIES INC. is a U.S. company, this law applies to the Company and all of its subsidiaries. Any questions on this policy should be directed to Sidney Chan.

10. GOVERNMENT RELATIONS.

The Company is prohibited by law from making any contributions or expenditures in connection with any U.S. national election. This includes virtually any activity that furnishes something of value to an election campaign for a federal office. Use of the Company's name in supporting any political position or ballot measure, or in seeking the assistance of any elected representative, requires the specific approval of the Chairman and Chief Executive Officer of the Company. Political contributions or expenditures are not to be made out of Company funds in any foreign country, even if permitted by local law, without the consent of the Company's Chairman and Chief Executive Officer.

U.S. law also prohibits giving, offering, or promising anything of value to any public official in the U.S. or any foreign country to influence any official act, or to cause an official to commit or omit any act in violation of his or her lawful duty. Company employees are expected to comply with these laws.

11. VENDORS, CONTRACTORS, CONSULTANTS AND TEMPORARY WORKERS.

Vendors, contractors, consultants or temporary workers who are acting on the Company's behalf, or on Company property, are expected to follow the law, Company policies and honor Company Values. Violations will subject the person or firm to sanctions up to and including loss of the contract, contracting or consulting agreement, or discharge from temporary assignment.

12. CONCLUSION.

This Code of Ethics is not intended to cover every possible situation in which you may find yourself. It is meant to give you the boundaries within which the Company expects you to conduct yourself while representing ALR TECHNOLOGIES INC. You may find yourself in a situation where there is no clear guidance given by this Code of Ethics. If that occurs, return to the foundations stated earlier: common sense, good judgment, high ethical standards and integrity. And refer to the Company's Values. In addition, there are many resources upon which you may rely: your management chain, Human Resources, Legal or other ALR TECHNOLOGIES INC. departments, and the CEO. Together we can continue to make ALR TECHNOLOGIES INC. a company that sets a standard for managing high-tech companies.

______________________________________
Employee

ALR TECHNOLOGIES INC.
VALUES

FOCUS We exist only because we are involved in marketing and assembling pharmaceutical compliance devices.

RESPECT We value all people, treating them with dignity at all times.

EXCELLENCE We strive for "Best in Class" in everything we do.

ACCOUNTABILITY We do what we say we will do and expect the same from others.

TEAMWORK We believe that cooperative action produces superior results.

INTEGRITY We are honest with ourselves, each other, our customers, our partners and our shareholders

VERY OPEN COMMUNICATION We share information, ask for feedback, acknowledge good work, and encourage diverse ideas.

ENJOYING OUR WORK We work hard, are rewarded for it, and maintain a good sense of perspective, humor and enthusiasm.

Reportable Violations - Anonymous Reporting Program

	Accounting Error
	Accounting Omissions
	Accounting Misrepresentations
	Auditing Matters
	Compliance/Regulation Violations
	Corporate Scandal
	Domestic Violence
	Discrimination
	Embezzlement
	Environmental Damage
	Ethics Violation
	Fraud
	Harassment
	Industrial Accidents
	Misconduct
	Mistreatment
	Poor Customer Service
	Poor Housekeeping
	Sabotage
	Securities Violation
	Sexual Harassment
	Substance Abuse
	Theft
	Threat of Violence
	Unfair Labor Practice
	Unsafe Working Conditions
	Vandalism
	Waste
	Waste of Time and Resources
	Workplace Violence

EXHIBIT 31.1

CERTIFICATION

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Sidney Chan, certify that:

I have reviewed this Form 10-Q for the quarter ended September 30, 2017 of ALR Technologies, Inc.

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;

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 Company as of, and for, the periods presented in this report;

The Company's other certifying officer(s) 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 Company and have

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 Company, 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

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;

Evaluated the effectiveness of the Company'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

Disclosed in this report any change in the Company's internal control over financial reporting that occurred during the Company's most recent fiscal quarter (the Company's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting; and

The Company's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company's auditors and the audit committee of the Company's board of directors (or persons performing the equivalent functions):

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 Company's ability to record, process, summarize and report financial information; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting.

Date: February 26, 2018

By: /s/ Sidney Chan

Sidney Chan

Chief Executive Officer and Chief Financial Officer

EXHIBIT 32.1

CERTIFICATION

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C SECTION 1350)

In connection with the Quarterly Report of ALR Technologies Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2017, as filed with the Securities and Exchange Commission (the “Report”), I, Sidney Chan, Chief Executive Officer of the Company, hereby certify as of the date hereof, solely for purposes of Title 18, Chapter 63, Section 1350 of the United States Code, that to my knowledge:

The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, and

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated.

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

This Certification has not been, and shall not be deemed, “filed” with the Securities and Exchange Commission.

Date: February 26, 2018

By: /s/ Sidney Chan

Sidney Chan

Chief Executive Officer and Chief Financial Officer

Audit Committee Charter

Introduction

The Audit Committee Charter (the “ Charter ”) was adopted by the by the Board of Directors (the “ Board ”) of ALR Technologies, Inc. in 2001 and amended February 2014.

General

The Audit Committee (the “ Committee ”) is a committee of the Board. The Company’s Bylaws (the “Bylaws”) generally govern the functions of the Board. Part 2.10 of the Articles provides that the Board may appoint one or more committees consisting of such member or members of the Board as they think fit and may delegate to any such committees any powers of the Board with certain restrictions.

Nothing in this Charter is intended to expand applicable standards of liability for the directors of the Company under United States laws.

Limitation of the Committee's Role

While the Committee has the responsibilities and duties set forth in this Charter, it is not the duty of the Committee to plan or conduct audits or to determine that the Company's financial statements and disclosures are complete and accurate and are prepared in accordance with generally accepted accounting principles and applicable rules and regulations. These are the responsibilities of management.

Mandate

The mandate of the Committee is to assist the Board in fulfilling its financial and disclosure oversight responsibilities. The Committee's primary responsibilities and duties under this mandate are to:

Ensure full, fair, accurate, timely and understandable financial disclosure is provided in reports and documents the Company files with and/or submits to regulatory authorities, presents to its shareholders and/or publicly discloses;
Ensure that such reports and documents comply with rules and regulations set by applicable laws, regulations and stock exchange policies;
Review qualifications, independence and performance of the Company's auditor (the “Auditor”);
Assess the appropriateness of the Company's accounting policies and practices and effectiveness of internal controls and procedures in compliance with the Sarbanes-Oxley Act of 2002; and
Monitor for compliance with the Company’s Code of Business Conduct and Code of Ethics for Senior Financial Officers.

Structure and Operations

Composition

The Committee shall have a minimum of three members. The Board of Directors of the Company will seek to have each member of the audit committee independent from management, free from any interest and any business or other relationship that, in the opinion of the Board, would or would reasonably be perceived to materially interfere with the director’s ability to act in the best interests of the Company (other than relationships and interests arising from shareholding). If the Board of Directors of the Company has three or more independent members who holds the necessary qualifications as outlined below, then the audit committee will be comprised of all independent members. If the board of directors of the Company does not have three independent qualified members, the board will use their discretion to ensure the audit committee is composed of the best suited members.

The independence of each member shall be determined by the Board based upon the requirements of applicable laws and regulations with respect to audit committee independence, including independence requirements of Rule 10A-3 of the U.S. Securities Exchange Act of 1934, as amended.

If an audit committee member simultaneously serves on the audit committees of more than three public companies, the board must determine that such simultaneous service would not impair the ability of such member to effectively serve on the listed company's audit committee and must disclose such determination.

Qualifications

Members of the Committee must be able to read and understand a complete set of financial statements with the breadth and complexity of issues that can reasonably be expected to be found in the Company's financial statements. To the extent practical, at least one member of the Committee must be a “financial expert” as adopted by the SEC in its final rules under the Sarbanes-Oxley Act of 2002.

Appointment and Removal

Members shall be appointed by the Board at the first meeting of the Board following either

the Company’s annual general meeting of shareholders, or

a resolution from the majority of the shareholders waiving the Company’s annual general meeting

and shall serve until the next annual general meeting or next resolution waiving the annual general meeting. Members shall serve until such member's successor is appointed or until such member's earlier resignation. Members may be removed, with or without cause, by a majority vote of the Board.

Chair

Members shall nominate and elect a Chair by majority vote of members. The Chair shall call, set the agendas for and chair meetings of the Committee.

Sub-Committees

The Committee may form and delegate authority to sub-committees consisting of one or more members.

Meetings

The Committee shall meet at least once in each fiscal year, or more frequently as circumstances dictate. Further, the Committee shall meet with the Auditor at least once in each fiscal year to review the Company's audited financial statements.

A quorum of the Committee shall consist of a majority of members of the Committee. An act of a majority of those present at a meeting at which there is a quorum, shall be an act of the Committee.

Members may also approve a decision by a consent resolution in writing signed by all members and such a decision shall be an act of the Committee.

The Auditor shall be given reasonable notice of and be entitled to attend and speak at a meeting of the Committee if the matter before the Committee concerns the Company's audited financial statements and, if the Committee feels it is necessary or appropriate, at other meetings of the Committee. If requested by the Auditor, the Chair shall call a meeting of the Committee to consider any matter that the Auditor believes should be brought to the attention of the Committee.

The Committee may meet separately with either the Auditor or management to discuss any matter that the Committee or either the Auditor or management believes would be appropriate to discuss in a separate meeting.

The Committee may invite any director or employee or any other person whom it deems necessary to consult to its meetings. The Committee may also exclude from its meetings any person it deems necessary to exclude in order to carry out its oversight responsibilities.

Minutes

The Chair shall ask one of the members present at a meeting to act as secretary and to record minutes of the meeting. Alternatively, the Chair may appoint a secretary who is not a member to record minutes of the meeting.

The Committee shall promptly submit minutes of its meetings to the Board.

Remuneration

Members shall be entitled to receive such remuneration by acting as members as the Board may determine from time to time.

Responsibilities and Duties

Introduction

The Committee shall have the responsibilities and duties outlined in this section. This outline serves as a guide only with the understanding that the Committee may accept additional responsibilities and duties delegated to it by the Board from time to time related to the purposes of the Committee as outlined in this Charter and may change its procedures as appropriate in light of changing legislative or regulatory and business or other conditions.

Independence of the Auditor

The Committee will:

Ask the Auditor to report directly to the Committee;
Ask the Auditor to disclose in writing any relationship with the Company or services performed for the Company that may affect the objectivity or independence of the Auditor;
Take, or recommend that the Board take, the necessary action to ensure the objectivity or independence of the Auditor; and
Review and approve the Company's hiring policies regarding partners, employees or former partners or employees of the Auditor as the objectivity or independence of the Auditor could be affected by such policies.

Performance and completion of work by the Auditor

The Committee will:

Be responsible for selection, engagement, evaluation and retention of the Company’s Auditor
Be responsible for oversight of work done by the Auditor engaged specifically for the purpose of preparing or issuing audit reports on the year-end financial statements and on the internal controls and procedures or related work (including resolution of disagreements between the Auditor and management regarding financial reporting);
Review the performance of the Auditor annually and recommend either re-appointment of the Auditor or appointment of a new auditor and Auditor compensation to the Board;
Review reports of the Auditor from all applicable regulatory bodies on an annual basis
Pre-approve all auditing services, including fees and terms thereof, to be provided by the Auditor;
Pre-approve non-audit services, including fees and terms thereof, to be provided by the Auditor unless such non-audit services:

Are reasonably expected not to constitute, in the aggregate, more than 5% of the total amount of Auditor compensation paid during the fiscal year in which the non-audit services are provided; and

Were not recognized by management to be non-audit services at the time of the engagement.

Management shall promptly bring non-audit services that have not been pre-approved by the Committee to the attention of the Committee. Such non-audit services shall be approved either by the Committee or by one or more members of the Committee to whom authority to grant such approvals has been delegated by the Committee.

Approval by the Committee of a non-audit service to be performed by the Auditor shall be disclosed to investors of the Company in periodic reports required by section 13(a) of the U.S. Securities Exchange Act of 1934, as amended.

Oversight of Integrity of Financial Statements

The Committee will review the following with the Auditor and/or management:

Material judgments made in connection with the preparation of the Company's financial statements, including changes in the selection or application of accounting policies and practices;
The adequacy of the Company's internal controls and procedures as discussed under the heading Internal Controls and Procedures below;
Related party transactions;
The summary of accounting policies and notes to the financial statements;
Correspondence with regulatory agencies relating to the Company’s regular filings or annual tax returns;
The impact of off-balance-sheet structures on the financial statements;
Major financial risk exposure and steps taken by management to control such exposure;
The effect of legislation or changes in regulations and accounting initiatives on the financial statements; and
Matters regarding a particular audit:

The management inquiry letter prepared and submitted by the Auditor and managements’ response to the inquiry letter;

The schedule of unadjusted differences;

The summary of adjusting entries;

A review of the audit in detail with the Auditor at a formal meeting after the audit has been completed and the Auditor has issued an audit opinion;

Any difficulties encountered in the course of the audit, including any restrictions on the scope of activities or the inability to obtain specific information, and any significant disagreements with management;

The adoption of, or changes to, the Company's accounting policies and practices or internal controls and procedures as recommended by the Auditor; and

The Auditor’s management letter issued after the completion of the annual audit.

Internal Controls and Procedures

The Company is a “small reporting company” as of the year ending December 31, 2013. The Company does not require an integrated audit over the internal controls over financial reporting and preparation of the financial statements of the Company as required by Section 404 of the Sarbanes-Oxley Act of 2002. However, the Committee will:

Review management’s assessment over the Company’s internal control over financial reporting and their incidental findings during the course of the audit;
Review and policies with respect to the risk assessment and risk management
Review with management their assessments over the internal control over financial reporting;
Review with management the scope and plans for addressing deficiencies, if any, in internal controls and procedures; and
Advise the Board of any material weaknesses in internal controls and procedures and the steps being taken to remediate such weaknesses.

Public Disclosure

The committee will:

Ensure that adequate procedures are in place for a review of the interim and audited financial statements and management discussion and analysis (“MD&A”) before these are submitted to the Board for final approval;
Review and approve, by meeting of the members or audit committee resolution, the interim unaudited and by meeting the annual audited financial statements, MD&A and news releases that contain financial information before these are submitted to the Board for final approval and released to regulatory authorities, stock exchange(s), shareholders and the public;
Review disclosures made by the Company's Chief Executive Officer and Chief Financial Officer during their certification process of the Company's financial statements about deficiencies in internal controls and procedures or any fraud involving an employee(s) whose responsibility includes applying or overseeing internal controls; and
Review the Proxy Statement, if applicable, prepared for the Company’s annual general meeting.

Code of Ethics for Senior Financial Officers

The Committee will monitor compliance with the Code of Ethics and report material violations that it becomes aware of to the Board. The Committee will also recommend appropriate remedial action to the Board. A request for a waiver of any provisions of the Code of Ethics shall be in writing and shall be addressed to and reviewed by the Committee. Any change in or waiver of the Code of Ethics must however be approved by the Board.

Legal Issues or Compliance

The Committee will:

Review the Form 10-K, Form 10-Q, MD&A and news releases that contain financial information, and if appropriate consult with external legal counsel and/or management, before these are submitted to the Board for final approval; and
Review with management and confirm that the Company is in compliance with laws and regulations in the jurisdictions in which the Company operates and as these relate to financial reporting.

Fraud and Illegal Acts

The Committee will investigate information received on possible improper or fraudulent behavior and generally monitor for compliance with the Company’s Code of Business Conduct. The Committee will report its findings to the Board along with recommendations, if any, for action.

Reporting of Financial Concerns

A person, either an employee or third party, may express a concern regarding any questionable bookkeeping or accounting practices, issues with internal controls and procedures or auditing or reporting matters either in person or anonymously to the Chair of the Committee in writing, by telephone or fax or by email.

The Committee will:

Receive and treat such expressions of concern in confidence;
Review as soon as possible the concern and address the same as the Committee deems necessary;
Retain records relating to a concern for a period the Committee judges to be appropriate; and
Prepare a report for the Board once per quarter or otherwise upon request from the Board with a summary of concerns received, outstanding and unresolved concerns, how such concerns are being handled, the results of any investigations and any corrective actions taken.

All of the foregoing shall be in a manner that the persons submitting such concerns in good faith shall have no fear of adverse consequences.

Authority

The Committee shall have the authority to:

Engage independent counsel and other advisors as it determines necessary to carry out its duties;
Set and pay the compensation for any advisors employed by the Committee; and
Communicate directly with the internal and external auditors.

Continuous Improvement

Members of the Committee should read information concerning financial disclosure provided by the Auditor and if appropriate review with management.

Manner of Carrying Out its Mandate

The Committee will:

Provide an avenue for and encourage frequent and open communication between the Auditor, management and the Board;
Report regularly their findings to the Board with respect to the integrity of the Company’s financial statements, compliance with legal or regulatory requirements and the performance and independence of the Company’s Auditors
Study or investigate any matter of interest or concern, which the Committee, in its sole discretion, deems appropriate for study or investigation by the Committee;
Discuss with the Auditor, without the presence of management, the Company's critical accounting policies and practices, internal control systems and processes and completeness and accuracy of the Company's financial statements once each year;
Request that the Auditor, a manager or the Company’s external legal counsel attend meetings of the Committee or meet with any member of, or advisors to, the Committee to the extent it deems necessary or appropriate;
Respond to requests for information or complaints regarding questionable bookkeeping or accounting practices, issues with internal controls and procedures or auditing or reporting matters discussed under the heading Reporting of Financial Concerns below;
Stay abreast of trends in accounting and financial reporting and review with the Auditor and management as required;
Assess the adequacy of the Charter once each year and recommend changes, if indicated, to the Board;
Assess the Committee's own performance once each year and
Review the qualifications of the accounting and financial personnel.

ALR TECHNOLOGIES INC.

DISCLOSURE COMMITTEE

CHARTER

Disclosure Policy

All financial disclosures made by the Corporation to its security holders or the investment community should (i) be accurate, complete and timely, (ii) fairly present, in all material respects, the Corporation's financial condition, results of operations and cash flows, and (iii) meet any other legal, regulatory or stock exchange requirements.

Committee Purpose

The Corporation's Disclosure Committee (the "Committee") shall assist the Corporation's officers and directors (collectively, the "Senior Officers") fulfilling the Corporation's and their responsibilities regarding (i) the identification and disclosure of material information about the Corporation and (ii) the accuracy, completeness and timeliness of the Corporation's financial reports.

Responsibilities

Subject to the supervision and oversight of Senior Officers, the Committee shall be responsible for the following tasks:

- Review and, as necessary, help revise the Corporation's controls and other procedures ("Disclosure Controls and Procedures") to ensure that (i) information required by the Corporation to be disclosed to the Securities and Exchange Commission (the "SEC"), and other written information that the Corporation will disclose to the public is recorded, processed, summarized and reported accurately and on a timely basis, and (ii) such information is accumulated and communicated to management, including the Senior Officers, as appropriate to allow timely decisions regarding required disclosure.

- Assist in documenting, and monitoring the integrity and evaluating the effectiveness of, the Disclosure Controls and Procedures.

- Review the Corporation's (i) Annual Report on Form 10-KSB, Quarterly Reports on Form 10-QSB, and Current Reports on Form 8-K, proxy statement, material registration statements, and any other information filed with the SEC (collectively, the "Reports"), (ii) press releases containing financial information, earnings guidance, forward-looking statements, information about material transactions, or other information material to the Corporation's security holders, (iii) correspondence broadly disseminated to shareholders, and (iv) other relevant communications or presentations (collectively, the "Disclosure Statements").

- Discuss information relative to the Committee's responsibilities and proceedings, including (i) the preparation of the Disclosure Statements and (ii) the evaluation of the effectiveness of the Disclosure Controls and Procedures.

Other Responsibilities

The Committee shall have such other responsibilities, consistent with the Committee's purpose, as any Senior Officer may assign to it from time to time.

Disclosure Control Considerations

The Committee shall base the review and revision of the Disclosure Controls and Procedures on the following factors:

- Control Environment: The directives of the Board and Audit Committee; the integrity and ethical values of the Corporation's officers and employees, including the "tone at the top"; the Corporation's Code of Conduct; and the philosophy and operating style of management, including how employees are organized and how authority is delegated.

- Risk Assessment: The identification and analysis of relevant risks to achieving the goal of accurate and timely disclosure, forming a basis for determining how the risks should be managed.

- Control Activities: The procedures to ensure that necessary actions are taken to address and handle risks to achievement of objectives.

- Information and Communication: The accumulation, delivery and communication of financial information throughout (i.e., up, down and across) the organization.

- Monitoring: The assessment of the quality of the financial reporting systems over time through ongoing monitoring and separate evaluations, including through regular management supervision and reporting of deficiencies upstream.

Organization

The members of the Committee will be comprised of the Corporations officers and directors.

The Committee may designate two or more individuals, at least one of whom shall be knowledgeable about financial reporting and another about law, who can, acting together, review Disclosure Statements when time does not permit full Committee review.

The Senior Officers at their option may, at any time and from time to time, assume any or all of the responsibilities of the Disclosure Committee identified in this Charter, including, for example, approving Disclosure Statements when time does not permit the full Committee (or the designated individuals) to meet or act.

Chair

The Chief Financial Officer of the Corporation shall act as the Chair of the Committee (unless and until another member of the Committee shall be so appointed by any Senior Officer).

Meetings and Procedures

The Committee shall meet or act as frequently and as formally or informally as circumstances dictate to (i) ensure the accuracy, completeness and timeliness of the Disclosure Statements and (ii) evaluate the Disclosure Controls and Procedures and determine whether any changes to the Disclosure Controls and Procedures are necessary or advisable in connection with the preparation of the Reports or other Disclosure Statements, taking into account developments since the most recent evaluation, including material changes in the Corporation's organization and business lines and any material change in economic or industry conditions.

The Committee shall adopt, whether formally or informally, such procedures as it deems necessary to facilitate the fulfillment of its responsibilities.

Full Access

The Committee shall have full access to all of Corporation's books, records, assets, facilities and personnel, including the internal auditors, in connection with fulfilling its responsibilities.

Charter Review

The Committee shall review and assess this Charter annually, and recommend any proposed changes to the Senior Officers for approval.

Interpretation

Any questions of interpretation regarding this Charter, or the Committee's responsibilities or procedures, shall be determined initially by the Chair and, to the extent necessary, ultimately by the Senior Officers.

Nomination Committee Charter

Introduction

The Nominating Committee Charter (the “Charter”) was adopted by the Board of Directors (the “Board”) of ALR Technologies, Inc. (the “Company”) in June 2013.

General

The Nominating Committee (the “Committee”) is a committee of the Board. The Company’s Bylaws (the “ Bylaws ”) generally govern the functions of the Board. Part 2.10 of the Bylaws provides that the Board may appoint one or more committees consisting of such member or members of the Board as the Board sees fit and may delegate to any such committees any powers of the Board with certain restrictions as outlined in the Bylaws

Nothing in this Charter is intended to expand applicable standards of liability for the directors of the Company under United States or Canadian laws.

Mandate

The Committee’s mandate (the “Mandate”) is to assist the Board in providing effective corporate governance.

Structure and Operations

Composition

The Committee shall have a minimum of three members.

The majority shall be independent from management, free from any interest and any business or other relationship that, in the opinion of the Board, would or could reasonably be perceived to materially interfere with the director’s ability to act in the best interests of the Company (other than relationships and interests arising from shareholding).

Appointment and Removal

Members shall be appointed by the Board at the first meeting of the Board following either

the Company’s annual general meeting of shareholders, or

a resolution from the majority of the shareholders waiving the Company’s annual general meeting

and shall serve until the next annual general meeting or next resolution waiving the annual general meeting.

Members shall serve until such member's successor is appointed or until such member's earlier resignation. Members may be removed, with or without cause, by a majority vote of the Board. The Committee does not have a policy with regard to the consideration of any director candidates recommended by shareholders and the Board is of the view that it is appropriate for the Company to not have such a policy at this time.

Chair

Members of the Committee shall nominate and elect a Chair by majority vote of members. The Chair shall call, set the agendas for and chair meetings of the Committee.

Meetings

The Committee shall meet at least once each year or more frequently as circumstances dictate.

Members shall be given 24 hours advance notice of a meeting and an agenda for the meeting. Such notice may be given by telephone, fax or e-mail.

A quorum shall consist of a majority of members of the Committee. An act of a majority of those present at a meeting at which there is a quorum, shall be an act of the Committee.

Members may also approve a decision by a consent resolution in writing signed by all members and such a decision shall be an act of the Committee.

Minutes

The Committee shall promptly submit minutes of its meetings to the Board.

Responsibilities and Duties

Introduction

Manner of Carrying Out its Mandate

The Committee will discuss and agree upon a specific set of activities with timelines for the ensuing year and make recommendation to the Board as required:

Review the size and composition of the Board with a view to promoting effectiveness and efficiency of the Board;

Review the appropriateness of the Board Mandate;

Review the appropriateness of the committees of the Board, their mandates and the appointment of directors to the various committees;

Review the directorships held by Board members and officers of the Company in other public or private companies;

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;

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;

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;

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;

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.

The Committee will have following additional responsibilities and will discuss with or make recommendations to the Board as required:

Prepare and provide appropriate orientation for new Board members;

Stay abreast of trends in corporate governance matters in the industry generally;

Assess the adequacy of the Committee’s Mandate each year and recommend changes, if indicated; and

Assess the Committee's own performance once each year.

Powers

The Committee shall have the following powers:

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

The Committee shall have the authority to obtain advice from independent legal counsel in its sole discretion.

Compensation Committee Charter

Introduction

The Compensation Committee Charter (the “ Charter ”) was adopted by the Board of Directors (the “Board”) of ALR Technologies, Inc. (the “ Company ”) in June 2013.

General

The Compensation Committee (the “ Committee ”) is a committee of the Board. The Company’s Bylaws (the “ Bylaws ”) generally govern the functions of the Board. Part 2.10 of the Bylaws provides that the Board may appoint one or more committees consisting of such member or members of the Board as the Board sees fit and may delegate to any such committees any powers of the Board with certain restrictions as outlined in the Bylaws.

Nothing in this Charter is intended to expand applicable standards of liability for the directors of the Company under United States laws.

Mandate

The Committee’s mandate (the “Mandate”) is to monitor on behalf of and provide guidance to the Board on trends in compensation policies and practices and make specific recommendation on appropriate compensation packages for directors, executives and employees that will be competitive directly with compensation packages offered by medical technology or pre-commercialization companies and also industries that source executives and employees directly from the same talent pool.

Structure and Operations

Composition

The Committee shall have a minimum of three members. At least one of the members shall be generally familiar with compensation and human resources matters.

The majority of the members shall be independent from management, free from any interest and any business or other relationship that, in the opinion of the Board, would or would reasonably be perceived to materially interfere with the director’s ability to act in the best interests of the Company (other than relationships and interests arising from shareholding).

Qualifications

General qualifications of directors are acceptable.

Appointment and Removal

Members shall be appointed by the Board at the first meeting of the Board following either

the Company’s annual general meeting of shareholders, or

a resolution from the majority of the shareholders waiving the Company’s annual general meeting

and shall serve until the next annual general meeting or next resolution waiving the annual general meeting.

Members shall serve until such member's successor is appointed or until such member's earlier resignation. Members may be removed, with or without cause, by a majority vote of the Board.

Chair

Members of the Committee shall nominate and elect a Chair by majority vote of members. The Chair shall call, set the agendas for and chair meetings of the Committee.

Meetings

The Committee shall meet at least once each year, or more frequently as circumstances dictate.

Members shall be given 24 hours advance notice of a meeting and an agenda for the meeting. Such notice may be given by telephone, fax or e-mail.

A quorum shall consist of a majority of members of the Committee. An act of a majority of those present at a meeting at which there is a quorum, shall be an act of the Committee.

Members may also approve a decision by a consent resolution in writing signed by all members and such a decision shall be an act of the Committee.

Minutes

The Committee shall promptly submit minutes of its meetings to the Board.

Responsibilities and Duties

Introduction

Manner of Carrying Out its Mandate

The Committee will discuss and agree upon a specific set of activities with timelines for the ensuing year and make recommendation to the Board as required:

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;

Review the compensation of senior management in consultation with the Chief Executive Officer as appropriate or necessary;

Review agreements made between senior management and the Company where these exist and as these address compensation, termination, retirement or any special circumstances;

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;

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;

Assess the need for a bonus plan for the Company;

Assess the need for incentives as provided in the Stock Option Plan; and

Review the human resources practices and compensation packages proposed or implemented for employees.

The Committee will have the following additional responsibilities and will discuss with or make recommendation to the Board as required:

Review disclosure relating to executive compensation in an Information Circular;

Stay abreast of trends in compensation matters in the industry generally;

Assess the adequacy of the Mandate each year and recommend changes, if needed; and

Assess the Committee's own performance once each year.

Powers

The Committee shall have the following powers:

The Committee shall have the power to engage a compensation consultant, set terms of reference and negotiate and approve such consultant’s fees; and

The Committee shall have the authority to obtain advice from independent legal counsel in its sole discretion.