0001721868-18-000662.txt : 20181113 0001721868-18-000662.hdr.sgml : 20181113 20181113140356 ACCESSION NUMBER: 0001721868-18-000662 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 47 CONFORMED PERIOD OF REPORT: 20180930 FILED AS OF DATE: 20181113 DATE AS OF CHANGE: 20181113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALR TECHNOLOGIES INC. CENTRAL INDEX KEY: 0001087022 STANDARD INDUSTRIAL CLASSIFICATION: COMMUNICATIONS EQUIPMENT, NEC [3669] IRS NUMBER: 880225807 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-30414 FILM NUMBER: 181177111 BUSINESS ADDRESS: STREET 1: 7400 BEAUFONT SPRINGS DRIVE STREET 2: SUITE 300 CITY: RICHMOND STATE: VA ZIP: 23225 BUSINESS PHONE: (804) 554-3500 MAIL ADDRESS: STREET 1: 7400 BEAUFONT SPRINGS DRIVE STREET 2: SUITE 300 CITY: RICHMOND STATE: VA ZIP: 23225 FORMER COMPANY: FORMER CONFORMED NAME: ALR TECHNOLOGIES INC DATE OF NAME CHANGE: 19990524 10-Q 1 f2salr10q110618.htm

 

 

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, 2018
    
  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 [ X ] NO [ ]

 

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 November 13, 2018.

 

 

 
 

ALR TECHNOLOGIES INC.

TABLE OF CONTENTS

 

 

PART I. FINANCIAL INFORMATION  
    
Item 1. Financial Statements.  
  Condensed Balance Sheets (unaudited) 4
  Condensed Statements of Operations (unaudited) 5
  Condensed Statements of Cash Flows (unaudited) 6
  Notes to Condensed Financial Statements (unaudited) 7
      
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. 19
      
Item 3. Quantitative and Qualitative Disclosures About Market Risk. 30
      
Item 4. Controls and Procedures. 30
      
      
  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 FINANCIAL STATEMENTS.

 

 

 

ALR TECHNOLOGIES INC.

Condensed Financial Statements

September 30, 2018 and 2017

(unaudited)

 

Index Page
   
Condensed Balance Sheets 4
   
Condensed Statements of Operations 5
   
Condensed Statements of Cash Flows 6
   
Notes to Condensed Financial Statements 7 – 18

 

 

 
 

ALR TECHNOLOGIES INC.

Condensed Balance Sheets

($ United States)

 

 

   September 30,
2018
  December 31, 2017
   (unaudited)   
       
Assets          
Current assets:          
Cash  $4,401   $3,111 
Total assets  $4,401   $3,111 
           
Liabilities and Stockholders' Deficit          
Current liabilities:          
Accounts payable and accrued liabilities  $1,005,090   $1,038,073 
Related party promissory notes payable   2,891,966    2,891,966 
Non-related party promissory notes payable   2,394,353    2,394,353 
Interest payable on promissory notes payable   4,703,909    4,307,256 
Lines of credit from related parties   16,795,266    15,347,842 
Total liabilities   27,790,584    25,979,490 
           
Stockholders' Deficit          
Preferred stock:          
Authorized: 500,000,000 (December 31, 2017 - 500,000,000) shares of preferred stock with a par value of $0.001 per share          
Shares issued and outstanding: Nil (December 31, 2017 - Nil) shares of preferred stock were issued and outstanding          
Common stock:          
Authorized: 10,000,000,000 (December 31, 2017 - 10,000,000,000) 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, 2017 - 242,777,909 shares of common stock)   242,777    242,777 
Additional paid-in capital   49,964,949    48,308,919 
Accumulated deficit   (77,993,909)   (74,528,075)
Stockholders’ deficit   (27,786,183)   (25,976,379)
Total liabilities and stockholders’ deficit  $4,401   $3,111 

  

See accompanying notes to the condensed financial statements.

 4 

 

ALR TECHNOLOGIES INC.

Condensed Statements of Operations

($ United States)

(Unaudited)

 

  Three months ended   Nine months ended
  September 30,   September 30,
  2018   2017   2018   2017
                        
Expenses                      
General, selling and administration $ 81,131   $ 75,744   $ 1,236,878   $ 240,051
Product development costs   55,396     79,538     351,194     263,988
Professional fees   8,693     85,073     430,827     147,807
Loss from operations   145,220     240,355     2,018,900     651,846
                       
Other Expense                      
Interest   487,671     468,334     1,446,934     1,387,891
Total other expense   487,672     468,334     1,446,934     1,387,891
Net loss $ (632,891)   $ (708,689)   $ (3,465,834)   $ (2,039,737)
Loss per share - basic and diluted $ (0.00)   $ (0.00)   $ (0.01)   $ (0.01)
                        

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 financial statements.

 5 

 

ALR TECHNOLOGIES INC.

Condensed Statements of Cash Flows

($ United States)

(Unaudited)

 

 

   Nine Months Ended
   September 30,
   2018  2017
       
OPERATING ACTIVITIES          
Net loss  $3,465,834   $2,039,737 
Stock-based compensation-product development costs   185,940    2,877 
Stock-based compensation-selling, general and administration   977,683    1,263 
Stock-based compensation-professional fees   401,151      
Non-cash imputed interest expenses   91,256    115,901 
Accrued interest on line of credit   959,025    893,336 
Changes in operating assets and liabilities:          
Decrease in prepaid expenses   —      1,429 
Increase (decrease) in accounts payable and accrued liabilities   (32,983)   87,901 
Increase in interest payable   396,653    387,654 
           
Net cash used in operating activities   (487,109)   (558,376)
           
FINANCING ACTIVITIES          
Proceeds from borrowings on line of credit   488,399    558,783 
           
Net cash provided by financing activities   488,399    558,783 
           
Decrease in cash   1,290    407 
Cash, beginning of period   3,111    2,607 
           
Cash, end of period  $4,401   $3,014 

 

 

See accompanying notes to the condensed financial statements.

 6 

 

ALR TECHNOLOGIES INC.

Notes to Condensed 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 condensed financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”) in US 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 months ended September 30, 2018 and 2017 of $3,465,834 and $2,039,737. In addition, losses incurred for the years ended December 31, 2017 and 2016 were $2,842,025 and $10,093,733. As of September 30, 2018, the Company is unable to self-finance its operations, has a working capital deficit of $27,786,183 (December 31, 2017 - $25,976,379), accumulated deficit of $77,993,909 (December 31, 2017 - $74,528,075), 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 payable, lines of credit and promissory notes payable totaling $27,790,584 currently due, due on demand or considered delinquent. There is no assurance that the Company will not face additional legal action from creditors regarding the above debts. 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. The Company has obtained short-term financing from its chairman’s family through lines of credit facilities with available borrowing in the principal amount up to $10,500,000 (as of September 30, 2018 the total principal balance outstanding was $10,886,648) (note 5). During 2018, the Company has continued to receive financing from the Chairman in excess of the borrowing limit of the line of credit it has available. The amounts received by the Company from the Chairman have been borrowed under the same terms as the line of credit. The Company and the Chairman have not entered into a new agreement for the amount of borrowing available but have agreed to work towards a convertible promissory note financing.

 

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.

  

 7 

 

ALR TECHNOLOGIES INC.

Notes to Condensed 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 2018. 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 financial statements as of September 30, 2018 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, 2018 and December 31, 2017 and the results of operations and cash flows as of September 30, 2018 and 2017, and for the periods then ended, have been made. Those adjustments consist of normal and recurring adjustments.

 

These unaudited condensed 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, 2017.

 

The results of operations for the nine months ended September 30, 2018 are not necessarily indicative of the results to be expected for the full year.

 

 8 

 

ALR TECHNOLOGIES INC.

Notes to Condensed Financial Statements

($ United States)

(Unaudited)

 

 

3.        Accounts Payable and Accrued Liabilities

 

A summary of the accounts payable and accrued liabilities is as follows:

 

 

September 30,

2018

December 31,

2017

 
 
           
  Accounts payables $ 780,168 $ 782,307
  Accrued liabilities   224,922   255,766
           
  $ 1,005,090 $ 1,038,073

 

4.       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,

2018

December 31,

2017

 
         
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 US 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

 

 9 

 

ALR TECHNOLOGIES INC.

Notes to Condensed Financial Statements

($ United States)

(Unaudited)

 

 

4.       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,

2018

December 31,

2017

 
         
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. Interest at 0.667% per month, 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, 2016  $3,629,913 
Interest incurred on promissory notes payable   504,873 
Transfer from implicit interest to interest payable on promissory notes   172,470 
      
Balance, December 31, 2017   4,307,256 
Interest incurred on promissory notes payable   396,653 
      
Balance, September 30, 2018  $4,703,909 

 10 

 

ALR TECHNOLOGIES INC.

Notes to Condensed Financial Statements

($ United States)

(Unaudited)

 

 

4.       Promissory Notes and Interest Payable (continued)

 

c)       Interest payable (continued)

 

   September 30,
2018
  December 31,
2017
       
       
Related parties (relatives of the Chairman)  $2,479,873   $2,255,529 
Non-related parties   2,224,036    2,051,727 
           
   $4,703,909   $4,307,256 

 

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, 2018, the Company incurred interest expense of $1,446,935 (2017 - $1,387,891) substantially as follows:

 

·$396,653 (2017 - $378,653) incurred on promissory notes payables as shown in notes 4(a) and 4(b);
·$959,025 (2017 - $892,902) incurred on lines of credit payable; and
·$91,526 (2017 - $115,901) 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.

 

 

 11 

 

ALR TECHNOLOGIES INC.

Notes to Condensed Financial Statements

($ United States)

(Unaudited)

 

 

5.        Lines of Credit

 

As of September 30, 2018, 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

8,886,648 4,232,233 13,118,881

General

Security

over Assets

General

Corporate Requirements

Wife of Chairman

1% per

Month

2,000,000

Due on

Demand

2,000,000 1,676,385 3,676,385

General

Security

over Assets

General

Corporate Requirements

Total   $10,500,000   10,886,648 5,908,618 16,795,266    

 

The Chairman has continued to provide financing to the Company in excess of the line of credit borrowing limit available under the same terms as the existing line of credit facility.

 

As of December 31, 2017, the Company had two lines of credit as follows:

 

Creditor Interest Rate Borrowing Limit Repayment Terms Principal Borrowed Accrued Interest

Total

Outstanding

Security Purpose
Chairman 1% per Month $8,500,000 Due on Demand $8,398,249 $3,453,208 $11,851,457 General Security over Assets General Corporate Requirements
Wife of Chairman 1% per Month 2,000,000 Due on Demand 2,000,000 1,496,385 3,496,385 General Security over Assets General Corporate Requirements
Total   $10,500,000   $10,398,249 $4,949,593 $15,347,842    

 

6.       Capital Stock

 

a)Authorized capital stock

 

i.Common stock

 

During the period ended September 30, 2018:

 

None.

 

During the year ended December 31, 2017:

 

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 reverse share split. The initial reverse share split and subsequent reversal are pending approval from regulatory bodies. On May 3, 2018, the Company filed a stock split with the State of Nevada to affect the reversal of the reverse share split.

 

 12 

 

ALR TECHNOLOGIES INC.

Notes to Condensed Financial Statements

($ United States)

(Unaudited)

 

 

6.       Capital Stock (continued)

 

a)Authorized capital stock (continued)

 

i.Common stock (continued)

 

On December 21, 2017, 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 regulatory bodies.

 

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, 2018:

 

There were no capital stock issuances for the nine months ended September 30, 2018.

 

During the year ended December 31, 2017:

 

There were no capital stock issuances for the year ended December 31, 2017.

 

7.        Additional Paid-in Capital

 

Stock options

 

A summary of stock option activity is as follows:

 

  Nine Months Ended Year Ended
  September 30, 2018 December 31, 2017
  Number of Weighted Average Number of Weighted Average
  Options Exercise Price Options Exercise Price
Outstanding, beginning of period 4,963,851,500 $ 0.002 4,962,301,500 $ 0.002
Granted 52,200,000 $ 0.015 6,500,000 $ 0.002
Cancelled    (1,500,000) $ 0.015 (4,950,000) $ (0.061)
Outstanding, end of period 5,014,551,500 $ 0.004 4,963,851,500 $ 0.002
              
Exercisable, end of period 4,987,551,500 $ 0.004 4,958,201,500 $ 0.002
               

 

 

 13 

 

ALR TECHNOLOGIES INC.

Notes to Condensed Financial Statements

($ United States)

(Unaudited)

 

 

7.        Additional Paid-in Capital (continued)

 

Stock options (continued)

 

During the period ended September 30, 2018:

 

On January 31, 2018, the Company granted 9 consultants and advisors the option to acquire a total of 47,000,000 shares of common stock of the Company at a price of $0.015 per share for a term of five years and 1 advisor the option to acquire 200,000 shares of common stock of the Company at a price of $0.03 per share until April 18, 2019. Options to acquire 24,000,000 shares of common stock will vest based on achievements of performance milestones by one consulting group. The fair value of the options granted totalled $2,722,605, of which, $1,338,207 related to vested options was recorded as compensation expense and $1,384,399 related to options with performance vesting conditions was not recorded.

 

On June 3, 2018, the Company received notification that an option holder would be exercising their option to acquire 1,000,000 shares of common stock of the Company at a price of $0.015 by extinguishing $15,000 of accounts payable owed by the Company to the option holder. The Company has not yet issued the shares as certain of the options still had vesting conditions at September 30, 2018.

 

On June 13, 2018, the Company granted one consultant the option to acquire a total of 5,000,000 shares of common stock of the Company at a price of $0.015 per share for a term of five years. The fair value of the options granted totalled $189,968.

 

The Company recorded $35,956 in compensation expense related to vesting of stock options granted in previous years.

 

During the year ended December 31, 2017:

 

On November 27, 2017, the Company:

·granted 10 individuals the option to acquire a total of 6,500,000 shares of common stock of the Company at a price of $0.015 per share for a term of five years; 2,350,000 of the approved options were to a director of the Company and 4,150,000 were to consultants of the Company; and
·extended the life of the option held by 4 consultants to acquire an aggregate 2,200,000 shares of common stock to November 27, 2022.

 

The Company recorded compensation expense of $194,970 related to the grant of options. There was no compensation expense related to the extension of life of the options.

 

The Company recorded a further $5,259 in compensation expense related to vesting of stock options granted in previous years.

 

 14 

 

ALR TECHNOLOGIES INC.

Notes to Condensed Financial Statements

($ United States)

(Unaudited)

 

 

7.        Additional Paid-in Capital (continued)

 

Stock options (continued)

 

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

 

 

Three Months

Ended

September 30, 2018

Three Months

Ended

September 30, 2017

Nine Months

Ended

September 30, 2018

Nine Months

Ended

September 30, 2017

                 
General, selling and administration $ 107 $ 187 $ 977,683 $ 1,263
Product development   536   933   185,940   2,877
Professional   -   -   401,151   -
                 
  $ 643 $ 1,119 $ 1,564,774 $ 4,140

 

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,
2018
  December 31,
2017
       
Risk-free interest rate   2.52%   2.34%
Expected life   5 years    5 years 
Expected dividends   0%   0%
Expected volatility   309%   330%
Forfeiture rate   0%   0%

 

The weighted average fair value for the options granted during the nine months ended September 30, 2018 was $0.06 (December 31, 2017 - $0.03).

 

 15 

 

ALR TECHNOLOGIES INC.

Notes to Condensed Financial Statements

($ United States)

(Unaudited)

 

 

7.        Additional Paid-in Capital (continued)

 

Stock options (continued)

 

Options outstanding:

 

The options outstanding at September 30, 2018 and December 31, 2017 were as follows:

 

    September 30, 2018   December 31, 2017
Expiry Date   Options Exercise Price Intrinsic Value   Options Exercise Price Intrinsic Value
                         
April 18, 2019   200,000 $ 0.030 $ 0.023   -   - $ -
May 21, 2019   500,000 $ 0.030 $ 0.023   500,000 $ 0.030 $ 0.01
July 25, 2019   1,000,000 $ 0.015 $ 0.038   1,000,000 $ 0.030 $ 0.01
August 1, 2019   1,250,000 $ 0.015 $ 0.038   1,250,000 $ 0.030 $ 0.01
January 30, 2020   2,400,000 $ 0.015 $ 0.038   2,400,000 $ 0.030 $ 0.01
May 29, 2020   560,000,200 $ 0.002 $ 0.051   560,000,200 $ 0.002 $ 0.038
July 1, 2021   4,390,001,300 $ 0.002 $ 0.051   4,390,001,300 $ 0.002 $ 0.038
November 27, 2022   8,700,000 $ 0.015 $ 0.038   8,700,000 $ 0.015 $ 0.025
January 31, 2023   47,000,000 $ 0.015 $ 0.038   - $ - $ -
June 13, 2023   5,000,000 $ 0.015 $ 0.038            
Total   5,014,551,500 $ 0.004       4,963,851,500 $ 0.002 $ 0.038

Weighted Average Remaining

Contractual Life

  2.62           3.38    

 

 16 

 

ALR TECHNOLOGIES INC.

Notes to Condensed Financial Statements

($ United States)

(Unaudited)

 

 

8.       Related Party Transactions and Balances

 

   

Three months ended

September 30, 2018

 

Three months ended

September 30, 2017

 

Nine months

ended

September 30, 2018

 

Nine months

ended

September 30, 2017

    $   $   $   $
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   74,782   224,344   224,344
Interest expense on lines of credit payable to the Chairman & Chief Executive Officer of the Company and his spouse   324,519   303,595   959,025   893,336

 

Related party transactions including within general, selling 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

 

 

 

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.

 

9.       Commitments and Contingencies

 

a)       Contingencies

 

The Company has had three judgments against it relating to overdue promissory notes and accrued interest and a fourth creditor has demanded repayment of an overdue promissory note and accrued interest. To date, the Company has not repaid any of these promissory notes and related accrued interest and could be subject to further action. The legal liability, totaling $1,141,968 (December 31, 2017 - $1,113,768), of these promissory notes and related accrued interest have been fully recognized and recorded by the Company. The Company has accrued interest of $190,472 (December 31, 2017 - $172,471) related to one of these promissory notes.

 

 17 

 

ALR TECHNOLOGIES INC.

Notes to Condensed Financial Statements

($ United States)

(Unaudited)

 

 

9.       Commitments and Contingencies (continued)

 

b)      Commitments

 

The Company has a consulting arrangement with 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:

 

i.                    Incentive revenue bonus

 

Mr. Chan will be entitled to a 1% net sales commission from the sales of any of the Company’s products at any time during his life, regardless if Mr. Chan is still under contract with the Company.

 

ii.                  Sale of business

 

If more than 50% of the Company’s stock or assets are sold, Mr. Chan will be compensated for entering into non-compete agreements based on the selling price of the Company or its assets as follows:

 

·2% of sales price up to $24,999,999 plus;
·3% of sales price between $25,000,000 and $49,999,999 plus;
·4% of sales price between $50,000,000 and $199,999,999 plus; and
·5% of sales price in excess of $200,000,000.

 

 

10.       Subsequent Event

 

On October 1, 2018, the Company granted two consultants the option to acquire a total of 300,000 shares of common stock of the Company at a price of $0.015 per share for a term of five years.

 

 

 18 

 

ITEM 2.MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

 

Forward-Looking Statements

 

The following information must be read in conjunction with the unaudited Financial Statements and Notes thereto included in Item 1 of this Quarterly Report and the audited Financial Statements and Notes thereto and Management Discussion and Analysis or Plan of Operations contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. 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 (“SEC”) 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.

 

 19 

 

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 2017.

 

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 that 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 (“IDA”).

 

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 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.

 

On May 3, 2018, the Company affected a reversal of the previously approved and reserved share split by filing completing the filing with the State of Nevada.

 

On June 3, 2018, the Company received notification that an option holder would be exercising their option to acquire 1,000,000 shares of common stock of the Company at a price of $0.015 by extinguishing $15,000 of accounts payable owed by the Company to the option holder. The transaction has not been completed and the Company has not yet issued the shares as certain of the options still had vesting conditions.

 

On June 13, 2018, the Company announced that its board of directors have elected to migrate or re-domicile the Company from the United States of America to Canada (the “Migration”). Accordingly, the Board has instructed Management to work with legal counsel to present a suitable Migration plan for the Company that is in compliance with all applicable regulatory authorities.

 

On June 13, 2018 the Chief Executive Officer of the Company accepted a proposal from the board of directors of the Company to purchase a $5,000,000 convertible debenture financing (the “Financing”). The convertible debenture will be convertible for a period of five years into common shares of the Company’s capital stock at a price of $0.05 per share. The convertible debenture will bear interest at a rate of 8 percent per annum and will be repayable in 4 equal semi-annual instalments starting 42 months after its issuance until maturity. The convertible debenture will be transferable or saleable by the Chairman or other holder thereof, in whole or in part, at any time without notice to the Company. On September 20, 2018, the parties agreed to increase the Financing to $7,000,000. On October 25, 2018, the parties agreed to further increase the Financing to $8,500,000.

 

The Company and the Chairman have begun developing on a definitive agreement to implement the convertible debenture with the customary terms, conditions and representations of a commercial lending agreement based on the terms agreed upon. The closing of the issue and sale of the convertible debenture will not occur until such time that is 30 days subsequent to the confirmation of the Company’s first commercial sale of its diabetes management software program

 

 20 

 

 

 

On August 27, 2018, the Company entered into a Memorandum of Understanding with Aspire Cerebro Advertising Ltd. to bring the ALRT Diabetes Solution to India’s estimated 100 million diabetes patients. The arrangement would connect private healthcare facilities in India with global pharmaceuticals companies and glucose test suppliers through the ALRT Diabetes Solution. The parties are developing their plan to introduce the ALRT Diabetes Solution to the Indian marketplace.

 

On October 1, 2018, the Company entered into a Collaboration Agreement with IDEAS DWC LLC to bring the ALRT Diabetes Management Solution to market to countries located in the Middle East and North Africa (“MENA”) region. Countries located in the MENA region defined in the Collaboration Agreement include Afghanistan, Algeria, Bahrain, Egypt, Iran, Iraq, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Pakistan, Palestine, Qatar, Saudi Arabia, Sudan, Syria, United Arab Emirates and Yemen. The parties are developing their plan to introduce the ALRT Diabetes Solution to the MENA region.

 

Products

 

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

 

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 of 11,525 patients investigated with an A1c greater than 8% patients received intensification as follows:

·37% within 6 months;
·11% within 6-12 months; and
·52% never.

 

 21 

 

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 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 the Center for Disease Control and Prevention, “In general, every percentage drop in A1c blood test results (e.g., from 8% to 7%), can reduce the risk of microvascular complications (eye, kidney and nerve diseases) by 40%”. The trial served as the basis for an article titled Effect of Internet Therapeutic Intervention on A1c Levels in Patients with Type 2 Diabetes Treated with Insulin, which was published in the August 2010 Diabetes Care publication.

 

In July 2011, the follow-up results of the Dr. Tildesley clinical trial were published in the Canadian Journal of Diabetes. Dr. Tildesley conducted a 12-month study using Health-e-Connect System as an Internet-Based Blood Glucose Monitoring System (IBGMS) to provide intensive blood glucose control to determine the effects of internet-based blood glucose monitoring on A1c levels in patients with type 2 diabetes treated with insulin. Dr Tildesley concluded that, “While IBGMS intervention was not a substitute for the patient–physician interaction in a clinical setting, it significantly improved A1c and, over time, we observed better glycaemic control and patient satisfaction”.

 

In October 2011, the Company received 510(k) clearance from the US 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.

 

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;
·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; and
·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.

 

 22 

 

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 and ADA. This feature allows the Company to regularly run a patient’s blood glucose data (and other key data) through the AACE and ADA algorithm. When the algorithm indicated that the patient’s dose may not be optimal, the Diabetes Management System would provide the 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 providers 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 financial statements for the nine months ended September 30, 2018 and 2017, which have been prepared in accordance with GAAP.

 

The preparation of these condensed 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 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 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.

 

 23 

 

Results of Operations

 

   Nine Months
Ended
  Nine Months
Ended
  Amount (%)  Amount ($)
   September 30  September 30  Increase /  Increase /
   2018  2017  (Decrease)  (Decrease)
Operating Expenses                    
General, selling and administrative  $1,236,878    240,051    415    996,827 
Product development   351,194    263,988    33    87,206 
Professional fees   430,828    147,807    191    283,020 
Total Operating Expenses   2,018,900    651,846    210    1,367,053 
                     
Other Items                    
Interest expenses   1,446,934    1,387,891    4    59,044 
Net Loss  $3,465,834    2,039,737    70    1,426,097 

 

The net loss for the Company’s nine months ended September 30, 2018 was significantly impacted by the grant of options to incentivize personnel as follows as compared to the same period on the previous year:

 

   Nine Months Ended September 30, 2018  Nine Months Ended September 30, 2017
Options Granted as Compensation   52,200,000    —   
Value of Options Granted as Consideration   1,528,977   $—   
Percentage of Net Loss   44%   N/A 

 

 

The net loss for the nine months ended September 30, 2018 was 70% ($1,426,097) higher than the net loss at September 30, 2017, as a result of the grant of options with a fair value recognized of $1,528,977 as consideration for services received. The fair value from the grant of the options in the nine months ended September 30, 2018 accounted for 107% of the total change in net loss as compared to 2017. Of the 52,200,000 options to acquire shares of common stock granted, 24,000,000 (a fair value of approximately $1.4M) did not vest (and was not recorded) during the period.

 

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 months ended September 30, 2018 as compared to the nine months ended September 30, 2017, there was both a significant increase and variance in the total expense incurred related primarily to the grant of stock options. By type of general and administrative cost, the variance can be seen as follows:

 

   Nine Months Ended
September 30,
  Nine Months Ended
September 30,
  Amount ($)
Increase /
(Decrease)
   2018  2017   
          
General, selling and administrative:               
Salaries and consulting fees  $184,000    169,000    15,000 
Stock-based compensation   978,000    1,000    977,000 
Travel and trade shows    34,000    33,000    1,000 
Rent of corporate offices   1,000    7,000    (6,000)
Website and information technology    11,000    15,000    (4,000)
Other general and administrative costs   28,000    15,000    13,000 
Total  $1,236,000    240,000    996,000 

 

 24 

 

During the nine months ended September 30, 2018, aside from the grant of stock options, the Company slightly increased its general and administrative operating expenditures as compared to the same period in 2017. The cash-based general and administrative expenditure increased by approximately $19,000 during the nine months ended September 30, 2018 as compared to 2017 as a result of increased filing fees to bring the reporting status current.

 

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 an increase in external consulting services related to the grant of stock options to development personnel under contract.

 

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 increase in professional fees. By type of professional cost, the variance can be seen as follows:

 

   Nine Months Ended
September 30,
2018
  Nine Months Ended
September 30,
2017
  Amount ($)
Increase /
(Decrease)
          
          
Professional fees:               
Professionals retained  $22,000    53,000    (31,000)
Legal fees   8,000    35,000    (27,000)
Stock-based compensation   401,000    —      401,000 
Audit and quarterly review fees   —      60,000    (60,000)
Total  $431,000    148,000    283,000 

 

The increase in professional fees can be attributed to the Company granting stock options to certain professionals during the period.

 

Interest expense. Interest expense was from the following sources for the nine months ended September 30, 2018 and 2017:

 

   Nine Months Ended
September 30,
2018
  Nine Months Ended
September 30,
2017
Interest expense          
Interest expense incurred on promissory notes  $397,000   $379,000 
Interest expense incurred on lines of credit   959,000    893,000 
Imputed interest on zero interest loans   91,000    116,000 
Total  $1,447,000   $1,388,000 

 

Interest on Promissory Notes

There were not any substantial changes in the amount of promissory notes outstanding from September 30, 2017 to September 30, 2018. During the previous year, the Company transferred amounts from imputed interest to interest on promissory notes and continued recording interest on the outstanding principal during the current period. Related to its promissory notes outstanding, the Company anticipates interest expense to be consistent with the results for the nine months ended September 30, 2018 moving forward.

 

 25 

 

Interest on Lines of Credit

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

 

   September 30,
2018
  September 30,
2017
  Amount ($)
Increase /
(Decrease)
Lines of Credit:         
          
Line of credit provided by Sidney Chan  $8,887,000   $8,187,000   $700,000 
Line of credit provided by Christine Kan   2,000,000    2,000,000    —   
Total  $10,887,000   $10,187,000   $700,000 
                

 

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

 

Interest Expense on Line of Credit:

Nine Months

Ended

September 30,

2018

Nine Months

Ended

September 30,

2017

 

Amount ($)

Increase /

 
 
(Decrease)  
               
Interest expense incurred on line of credit from Sidney Chan during the year $ 779,000 $ 713,000

 

$

66,000  
Interest expense incurred on line of credit from Christine Kan during the year   180,000   180,000   -  
Total $ 959,000 $ 893,000 $ 66,000  

 

Imputed Interest

During the 2018 and 2017 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 instead of increasing the liabilities of the Company, it is allocated to equity under the financial statement line item additional paid-in capital. The change from the prior year is related to the discussion included under Interest on Promissory Notes above.

 

Results of Operations (continued)

 

 

Three Months

Ended

September 30

 

Three Months

Ended

September 30

     
   

Amount (%)

Increase /

 

Amount ($)

Increase /

  2018   2017 (Decrease)   (Decrease)
Operating Expenses                  
General, selling and administrative $ 81,131   $ 75,744 7   $ 5,387
Product development   55,396     79,538 (30)     (24,142)
Professional fees   8,693     85,073 (90)     (76,381)
Total Operating Expenses   145,220     240,355 (40)     (95,136)
                   
Other Items                  
Interest expenses   487,672     468,334 4     19,338
Net Loss $ 632,891   $ 708,689 (11)   $ (75,798)

 

 26 

 

The net loss for the three months ended September 30, 2018 decreased by 11% ($75,798), as compared to the same period in the prior year as a result of decreased professional services retained and additional product development activities outside of general consultants retained. In the prior year, the Company incurred $60,000 of fees related to initiating the process to become current with its reporting requirements. There was not similar transaction during the three months ended September 30, 2018.

 

Liquidity and Capital Resources

 

Working Capital  As at
September 30,
2018
  As at
December 31,
2017
  Amount ($)
Increase / (Decrease)
  Percentage (%)
Increase / (Decrease)
Current Assets  $4,000   $3,000    1,000    33 
Current Liabilities  $27,791,000   $25,979,000    (1,812,000)   7 
Working Capital (Deficiency)  $(27,787,000)  $(25,976,000)   (1,811,000)   7 

 

The Company has a severe working capital deficiency. It does not have the ability to service its current liabilities for the next twelve months and is reliant on its line of credit facilities to meet its ongoing operations. 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 nominal current assets as at September 30, 2018 consist substantially of cash. The Company’s current assets as at December 31, 2017 consist substantially of cash.

 

Current Liabilities

 

The Company has current liabilities of $27,790,000 as at September 30, 2018 as compared to $25,979,000 as at December 31, 2017. Current liabilities were as follows:

 

   September 30,
2018
  December 31,
2017
  Change
$
  Change
%
Accounts payable and accrued liabilities  $1,005,000    1,038,000    (33,000)   (3)
Lines of credit to related parties   16,795,000    15,348,000    1,447,000    9 
Promissory notes payable to related parties   2,892,000    2,892,000    —      —   
Promissory notes payable   2,394,000    2,394,000    —      —   
Interest payable   4,704,000    4,307,000    397,000    9 
Total current liabilities  $27,790,000    25,979,000    1,811,000    7 

 

The increase in interest payable of $397,000 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 fluctuations in accounts payable occurred as part of operations.

 

The increase in the lines of credit payable of approximately $1,447,000 is attributable to borrowings of:

-$488,000 to fund operations, product development activities, overhead, and its sales and marketing program; and
-$959,000 of unpaid interest incurred on the principal of the borrowed amounts.

 

 27 

 

Cash Flows

 

   Nine Months Ended
September 30, 2018
  Nine Months Ended
September 30, 2017
       
Cash Flows used in Operating Activities  $(487,000)  $(559,000)
Cash Flows provided by Financing Activities   488,000    559,000 
Net change in Cash During Period  $1,000   $—   

 

Cash Balances and Working Capital

 

As of September 30, 2018, the Company’s cash balance was $4,401 compared to $3,111 as of December 31, 2017.

 

Cash Used in Operating Activities

 

Cash used by the Company in operating activities during the nine months ended September 30, 2018 was $487,000 in comparison with $559,000 used during the same period last year. The Company’s expenditures from operations were used as follows (approximate amounts):

 

   Nine Months Ended
September 30, 2018
  Nine Months Ended
September 30, 2017
       
Product development consulting and expenses  $165,000   $190,000 
Management and employees compensation   184,000    169,000 
Professional fees and related accounts payables   70,000    148,000 
Travel and trade shows   34,000    33,000 
Other   34,000    19,000 
Cash used in Operations  $487,000   $559,000 

 

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

 

Cash Proceeds from Financing Activities

 

Cash sourced by the Company from financing activities during the nine months ended September 30, 2018 was $488,000 in comparison with $559,000 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 2018 and 2017 covered the operating, product development and market development requirements for the Company repaid certain accounts payable.

 

Short- and Long-Term Liquidity

 

As of September 30, 2018, 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 is 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.

 

 28 

 

Tabular Disclosure of Contractual Obligations:

 

   Payments due by period
   Total  Less than
1 year
  1-3
years
  3-5
years
  More Than
5 Years
                
                
Accounts payable and accrued liabilities  $1,005,000   $1,005,000   $—     $—     $—   
Line of credit   16,795,000    16,795,000    —      —      —   
Promissory notes to related parties   2,892,000    2,892,000    —      —      —   
Promissory notes to arm’s length parties   2,394,000    2,394,000    —      —      —   
Interest payable   4,704,000    4,704,000    —      —      —   
   $27,790,000   $27,790,000   $—     $—     $—   

 

The Company will continue to use the funds available from the lines 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 lines of credit to increase as compared to the past six months, as it expects to commercially launch its Diabetes Management System during this period.

 

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.

 

 29 

 

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:

 

1)insufficient written policies and procedures for reporting requirements and accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements.

 

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, 2018 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, 2018 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, 2018, the Company had promissory notes payable and related interest payable, totalling $9,900,000 in default.

 

ITEM 5.OTHER INFORMATION.

 

The Company failed to file one (1) Form 8-K documents:

 

1.On October 1, 2018 we failed to file a Form 8-K when we granted the option to two consultants to acquire a total of 400,000 shares of common stock at a price of $0.015 for a term of five years.

 

 

 30 

 

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    
10.1 Consulting Agreement with Endocrine Research Society Inc. 10-KSB 10/01/13 10.1  
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  
 31 

 

 

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 13th day of November 2018.

 

  ALR TECHNOLOGIES, INC.
  (Registrant)
   
  BY: SIDNEY CHAN
    Sidney Chan
    Principal Executive Officer, Principal Accounting Officer, Principal Financial Officer, Secretary/Treasurer and Director

 

 

 32 

 

 

EX-31.1 2 f2salr10q110618ex31_1.htm CERTIFICATION

EXHIBIT 31.1

 

CERTIFICATION

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

 

I, Sidney Chan, certify that:

 

1.   I have reviewed this Form 10-Q for the quarter ended September 30, 2018 of ALR Technologies, Inc.

 

2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;

 

4.   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

 

a.   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the 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

 

b.   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c.   Evaluated the effectiveness of the 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

 

d.   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

 

5.   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):

 

a.   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial information; and

 

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

 

Date: November 13, 2018

 

By: /s/ Sidney Chan

Sidney Chan

Chief Executive Officer and Chief Financial Officer

EX-32.1 3 f2salr10q110618ex32_1.htm CERTIFICATION

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, 2018, 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:

 

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

 

2.   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: November 13, 2018

 

By: /s/ Sidney Chan 

Sidney Chan

Chief Executive Officer and Chief Financial Officer

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Additional paid-in capital Accumulated deficit Stockholders' deficit Total liabilities and stockholders' deficit Preferred stock: par value (in Dollars per share) Preferred stock: Authorized Preferred stock: issued Preferred stock: outstanding Common stock, par value (in Dollars per share) Common stock Authorized Common stock Shares, issued Common stock Shares, outstanding Income Statement [Abstract] Operating Expenses General, selling and administration Product development costs Professional fees Loss from operations Other expenses Interest Total other expenses Net loss Loss per share, basic and diluted Weighted average number of shares of common stock outstanding, basic and diluted Statement of Cash Flows [Abstract] OPERATING ACTIVITIES Stock-based compensation-product development costs Stock-based compensation-selling, general and administration Stock-based compensation-professional fees Non-cash imputed interest expense Accrued interest on line of credit Changes in assets and liabilities: Decrease in prepaid expenses Increase (decrease) in accounts payable and accrued liabilities Increase in interest payable Net cash used in operating activities FINANCING ACTIVITIES Proceeds from borrowings on line of credit Net cash provided by financing activities Decrease in cash Cash, beginning of year Cash, end of year Basisof Presentation Natureof Operationsand Going Concern [Abstract] Basis of Presentation Nature of Operations and Going Concern Accounting Policies [Abstract] Significant Accounting Policies Payables and Accruals [Abstract] Accounts Payable and Accrued Liabilities Interest Advancesand Promissory Notes Payable [Abstract] Promissory notes interest payable Linesof Credit Related Party [Abstract] Lines of Credit Stockholders' Equity Note [Abstract] Capital Stock Additional Paid in Capital [Abstract] Additional paid in capital Related Party Transactions [Abstract] Related party transactions and balances Compensation Related Costs [Abstract] Commitments and contingencies Subsequent Events [Abstract] Subsequent Event Accounts Payable And Accrued Liabilities Schedule of accounts payable and accrued liabilities Schedule of Promissory Notes Payable - Relatives of Board of Directors Schedule of Activity of Promissory Notes Payable to Unrelated Lenders Schedule of Interest Payable Schedule Line of Credit Related Party Schedule of Share-based Compensation, Stock Options, Activity Schedule of Fair Value of Stock Options Granted-Allocation Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions Schedule of Options Outstanding Related Party Transactions And Balances Schedule of related party transactions Working Capital Deficit Net Income (Loss) Attributable to Parent Accounts Payable And Accrued Liabilities Accounts payables Accrued liabilities Total Promissory Notes Payable - Relatives of Board of Directors [Abstract] 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 ii.Interest at 1.25% per month iii.Interest at the U.S. bank prime rate plus 1% Promissory notes payable, unsecured, to relatives of a director, bearing interest at 1% per month, due on demand Total Related Promissory Notes Unsecured Promissory Notes Payable to Unrelated Leaders [Abstract] Unsecured promissory notes payable to unrelated lenders: i. Interest at 1% per month, repayable on March 31, 2009, due on demand 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. 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 iv. Non-interest-bearing, repayable on July 17, 2005, due on demand v. Non-interest-bearing loan repayable at $25,000 per month beginning October 2009, none repaid to date vi. Interest at 0.667% per month, with $125,000 due January 15, 2011 Promissory notes payable, secured by a guarantee from the Chief Executive Officer, bearing interest at 1% per month Total Promissory Notes Payable to Unrelated Parties Summary of Interest Payable Activity [Abstract] Beginning Balance Interest incurred on promissory notes payable Transfer from implicit interest to interest payable on promissory note Ending Balance Interest Payable [Abstract] Relatives of directors Non-related parties Total Statement [Table] Statement [Line Items] Interest Rate Borrowing Limit Repayment Terms Principal Borrowed Accrued Interest Total Outstanding Security Purpose Summary of Stock Option Activity [Abstract] Outstanding, beginning of period Average Exercise Price, beginning Exercisable, end of period Exercisable, end of period Granted Granted, per share Cancelled Cancelled per share Expired Expired pe share Exercisable Exercisable per share Outstanding, end of period Average Exercise price, ending Fair Value of Stock Options [Abstract] General, selling and administration Product development Professional Total Fair Value Method Stock-Based Compensation [Abstract] Risk-free interest rate Expected life Expected dividends Expected volatility Forfeiture rate Options Outstanding [Abstract] Options Outstanding Exercise Price Weighted Average Remaining Contractual Life Related party transaction included within interest expense: Interest expenses on promissory notes issued to relatives of the Chairman & Chief Executive Officer of the Company Interest expense on lines of credit payable to the Chairman & Chief Executive Officer of the Company and his spouse 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 The entire disclosure for the basis of presentation. The entire disclosure for the nature of an entity's business, the major products or services it sells or provides and its principal markets, including the locations of those markets. If the entity operates in more than one business, the disclosure also indicates the relative importance of its operations in each business and the basis for the determination (for example, assets, revenues, or earnings). If there is a substantial doubt about an entity's ability to continue as a going concern for a reasonable period of time (generally a year from the balance sheet date), disclose: (a) pertinent conditions and events giving rise to the assessment of substantial doubt about the entity's ability to continue as a going concern for a reasonable period of time, (b) the possible effects of such conditions and events, (c) management's evaluation of the significance of those conditions and events and any mitigating factors, (d) possible discontinuance of operations, (e) The cost of borrowed funds accounted for as interest that was charged against earnings during the period. Carrying value as of the balance sheet date of [accrued] interest payable to relatives of directors on all forms of debt, including trade payables, that has been incurred and is unpaid. Carrying value as of the balance sheet date of [accrued] interest payable to non-related parties on all forms of debt, including trade payables, that has been incurred and is unpaid. The carrying value as of the balance sheet date of the current portion of long-term obligations drawn from a line of credit from a related party, which is a commitment to make loans up to a specific amount. Examples of items that might be included in the application of this element may consist of letters of credit, standby letters of credit, and revolving credit arrangements, under which borrowings can be made up to a maximum amount as of any point in time conditional on satisfaction of specified terms before, as of and after the date of drawdowns on the line. Includes short-term obligations that would normally be classified as current liabilities but for which (a) postbalance sheet date issuance of a long term obligation to refinance the short term obligation on a long term basis, or (b) the enterprise has entered into a financing agreement that clearly permits the enterprise to refinance the short-term obligation on a long term basis and the following conditions are met (1) the agreement does not expire wi Including the current and noncurrent portions, aggregate carrying amount of all types of notes payable, as of the balance sheet date, with initial maturities beyond one year or beyond the normal operating cycle, if longer Including the current and noncurrent portions, aggregate carrying amount of all types of notes payable, as of the balance sheet date, with initial maturities beyond one year or beyond the normal operating cycle, if longer Including the current and noncurrent portions, aggregate carrying amount of all types of notes payable, as of the balance sheet date, with initial maturities beyond one year or beyond the normal operating cycle, if longer Including the current and noncurrent portions, aggregate carrying amount of all types of notes payable, as of the balance sheet date, with initial maturities beyond one year or beyond the normal operating cycle, if longer Including the current and noncurrent portions, aggregate carrying amount of all types of notes payable, as of the balance sheet date, with initial maturities beyond one year or beyond the normal operating cycle, if longer Tabular disclosure of short-term or long-term contractual arrangements with lenders, who are related parties, including letters of credit, standby letters of credit, and revolving credit arrangements, under which borrowings can be made up to maximum amount as of any point in time conditional on satisfaction of specified terms before, as of and after the date of drawdowns on the line. The entire disclosure for activity in the reporting period of notes payable to unrelated lenders. Tabular disclosure interest expense. Schedule of options outstanding. Monies owed by promissory notes payable to relatives of members of the board of directors. The number of shares under options that were cancelled during the reporting period. The aggregate costs incurred (1) in a planned search or critical investigation aimed at discovery of new knowledge with the hope that such knowledge will be useful in developing a new product or service, a new process or technique, or in bringing about a significant improvement to an existing product or process; or (2) to translate research findings or other knowledge into a plan or design for a new product or process or for a significant improvement to an existing product or process whether intended for sale or the entity's use, during the reporting period charged to research and development projects, including the costs of developing computer software up to the point in time of achieving technological feasibility, and costs allocated in accounting for a business combination to in-process projects deemed to have no alternative future use. The aggregate amount of noncash, equity-based employee remuneration. This may include the value of stock or unit options, amortization of restricted stock or units, and ad The aggregate amount of noncash, equity-based remuneration. This may include the value of stock or unit options, amortization of restricted stock or units, and adjustment for officers' compensation. As noncash, this element is an add back when calculating net cash generated by operating activities using the indirect method. The aggregate total costs related to selling a firm's product and services, as well as all other general and administrative expenses. Direct selling expenses (for example, credit, warranty, and advertising) are expenses that can be directly linked to the sale of specific products. Indirect selling expenses are expenses that cannot be directly linked to the sale of specific products, for example telephone expenses, Internet, and postal charges. General and administrative expenses include salaries of non-sales personnel, rent, utilities, communication, etc. These cost are then translated into this noncash element which is an add back when calculating net cash generated by operating activities using the indirect method. The increase (decrease) during the reporting period in interest payable on line of credit to related party, which represents the amount owed to holders of line of credit for interest earned on credit extended to the reporting entity. An entity's working capital is the difference between current assets minus current liabilities. If current liabilities exceed current assets there is a deficit in working capital. Assets [Default Label] Liabilities, Current Stockholders' Equity Attributable to Parent Liabilities and Equity Operating Income (Loss) Other Expenses Net Cash Provided by (Used in) Operating Activities Net Cash Provided by (Used in) Financing Activities Cash and Cash Equivalents, Period Increase (Decrease) Cash and Cash Equivalents, at Carrying Value PromissoryNotesRelatedParty TotalPromissoryNotesPayableToUnrelatedParties Interest Payable Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price SellingGeneralAndAdministrationExpenses EX-101.PRE 10 alrt-20180930_pre.xml XBRL PRESENTATION FILE XML 11 R1.htm IDEA: XBRL DOCUMENT v3.10.0.1
Document And Entity Information - shares
9 Months Ended
Sep. 30, 2018
Nov. 13, 2018
Document and Entity Information [Abstract]    
Entity Registrant Name ALR Technologies Inc.  
Document Type 10-Q  
Current Fiscal Year End Date --12-31  
Entity Common Stock, Shares Outstanding   242,777,909
Amendment Flag false  
Entity Central Index Key 0001087022  
Entity Current Reporting Status Yes  
Entity Voluntary Filers No  
Entity Filer Category Smaller Reporting Company  
Entity Well-known Seasoned Issuer No  
Document Period End Date Sep. 30, 2018  
Document Fiscal Year Focus 2018  
Document Fiscal Period Focus Q3  
XML 12 R2.htm IDEA: XBRL DOCUMENT v3.10.0.1
Consolidated Balance Sheets - USD ($)
Sep. 30, 2018
Dec. 31, 2017
Current assets:    
Cash $ 4,401 $ 3,111
Total assets 4,401 3,111
Current liabilities:    
Accounts payable and accrued liabilities 1,005,090 1,038,073
Related party promissory notes payable 2,891,966 2,891,966
Nonrelated party promissory notes payable 2,394,353 2,394,353
Interest payable on promissory notes payable 4,703,909 4,307,256
Lines of credit from related parties 16,795,266 15,347,842
Total liabilities 27,790,584 25,979,490
Stockholders' Deficit    
Preferred stock: Authorized: 500,000,000 (December 31, 2017 - 500,000,000) shares of preferred stock with a par value of $0.001 per share Shares issued and outstanding: Nil (December 31, 2017 - Nil) shares of preferred stock were issued and outstanding
Common stock Authorized: 10,000,000,000 (December 31, 2017 - 10,000,000,000) 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, 2017 - 242,777,909 shares of common stock). 242,777 242,777
Additional paid-in capital 49,964,949 48,308,919
Accumulated deficit (77,993,909) (74,528,075)
Stockholders' deficit (27,786,183) (25,976,379)
Total liabilities and stockholders' deficit $ 4,401 $ 3,111
XML 13 R3.htm IDEA: XBRL DOCUMENT v3.10.0.1
Consolidated Balance Sheets (Parentheticals) - $ / shares
Sep. 30, 2018
Dec. 31, 2017
Statement of Financial Position [Abstract]    
Preferred stock: par value (in Dollars per share) $ 0.001 $ 0.001
Preferred stock: Authorized 500,000,000 500,000,000
Preferred stock: issued 0 0
Preferred stock: outstanding 0 0
Common stock, par value (in Dollars per share) $ 0.001 $ 0.001
Common stock Authorized 10,000,000,000 10,000,000,000
Common stock Shares, issued 242,777,909 242,777,909
Common stock Shares, outstanding 242,777,909 242,777,909
XML 14 R4.htm IDEA: XBRL DOCUMENT v3.10.0.1
Consolidated Statements of Operations - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Operating Expenses        
General, selling and administration $ 81,131 $ 75,744 $ 1,236,878 $ 240,051
Product development costs 55,396 79,538 351,194 263,988
Professional fees 8,693 85,073 430,827 147,807
Loss from operations 145,220 240,355 2,018,900 651,846
Other expenses        
Interest 487,671 468,334 1,446,934 1,387,891
Total other expenses 487,672 468,334 1,446,934 1,387,891
Net loss $ (632,891) $ (708,689) $ (3,465,834) $ (2,039,737)
Loss per share, basic and diluted $ 0 $ 0 $ (0.01) $ (0.01)
Weighted average number of shares of common stock outstanding, basic and diluted 242,777,909 242,777,909 242,777,909 242,777,909
XML 15 R5.htm IDEA: XBRL DOCUMENT v3.10.0.1
Consolidated Statements of Cash Flows - USD ($)
9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
OPERATING ACTIVITIES    
Net loss $ (3,465,834) $ (2,039,737)
Stock-based compensation-product development costs 185,940 2,877
Stock-based compensation-selling, general and administration 977,683 1,263
Stock-based compensation-professional fees 401,151  
Non-cash imputed interest expense 91,256 115,901
Accrued interest on line of credit 959,025 893,336
Changes in assets and liabilities:    
Decrease in prepaid expenses 1,429
Increase (decrease) in accounts payable and accrued liabilities (32,983) 87,901
Increase in interest payable 396,653 387,654
Net cash used in operating activities (487,109) (558,376)
FINANCING ACTIVITIES    
Proceeds from borrowings on line of credit 488,399 558,783
Net cash provided by financing activities 488,399 558,783
Decrease in cash 1,290 407
Cash, beginning of year 3,111 2,607
Cash, end of year $ 4,401 $ 3,014
XML 16 R6.htm IDEA: XBRL DOCUMENT v3.10.0.1
Basis of Presentation, Nature of Operations and Going Concern
9 Months Ended
Sep. 30, 2018
Basisof Presentation Natureof Operationsand Going Concern [Abstract]  
Basis of Presentation Nature of Operations and Going Concern

1.       Basis of Presentation, Nature of Operations and Going Concern

 

ALR Technologies Inc. (the “Company”) was incorporated under the laws of the state of Nevada on March 24, 1987. 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 condensed financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”) in US 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 months ended September 30, 2018 and 2017 of $3,465,834 and $2,039,737. In addition, losses incurred for the years ended December 31, 2017 and 2016 were $2,842,025 and $10,093,733. As of September 30, 2018, the Company is unable to self-finance its operations, has a working capital deficit of $27,786,183 (December 31, 2017 - $25,976,379), accumulated deficit of $77,993,909 (December 31, 2017 - $74,528,075), 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 payable, lines of credit and promissory notes payable totaling $27,790,584 currently due, due on demand or considered delinquent. There is no assurance that the Company will not face additional legal action from creditors regarding the above debts. 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. The Company has obtained short-term financing from its chairman’s family through lines of credit facilities with available borrowing in the principal amount up to $10,500,000 (as of September 30, 2018 the total principal balance outstanding was $10,886,648) (note 5). During 2018, the Company has continued to receive financing from the Chairman in excess of the borrowing limit of the line of credit it has available. The amounts received by the Company from the Chairman have been borrowed under the same terms as the line of credit. The Company and the Chairman have not entered into a new agreement for the amount of borrowing available but have agreed to work towards a convertible promissory note financing.

 

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.

  

 

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 2018. 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.

 

XML 17 R7.htm IDEA: XBRL DOCUMENT v3.10.0.1
Significant accounting policies
9 Months Ended
Sep. 30, 2018
Accounting Policies [Abstract]  
Significant Accounting Policies

2.       Significant Accounting Policies

 

The unaudited condensed financial statements as of September 30, 2018 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, 2018 and December 31, 2017 and the results of operations and cash flows as of September 30, 2018 and 2017, and for the periods then ended, have been made. Those adjustments consist of normal and recurring adjustments.

 

These unaudited condensed 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, 2017.

 

The results of operations for the nine months ended September 30, 2018 are not necessarily indicative of the results to be expected for the full year.

XML 18 R8.htm IDEA: XBRL DOCUMENT v3.10.0.1
Accounts Payable and Accrued Liabilities
9 Months Ended
Sep. 30, 2018
Payables and Accruals [Abstract]  
Accounts Payable and Accrued Liabilities

3.        Accounts Payable and Accrued Liabilities

 

A summary of the accounts payable and accrued liabilities is as follows:

 

 

September 30,

2018

December 31,

2017

 
 
           
  Accounts payables $ 780,168 $ 782,307
  Accrued liabilities   224,922   255,766
           
  $ 1,005,090 $ 1,038,073

 

XML 19 R9.htm IDEA: XBRL DOCUMENT v3.10.0.1
Promissory notes interest payable
9 Months Ended
Sep. 30, 2018
Interest Advancesand Promissory Notes Payable [Abstract]  
Promissory notes interest payable

4.       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,

2018

December 31,

2017

 
         
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 US 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

 

 

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,

2018

December 31,

2017

 
         
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. Interest at 0.667% per month, 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, 2016   $ 3,629,913  
Interest incurred on promissory notes payable     504,873  
Transfer from implicit interest to interest payable on promissory notes     172,470  
         
Balance, December 31, 2017     4,307,256  
Interest incurred on promissory notes payable     396,653  
         
Balance, September 30, 2018   $ 4,703,909  

 

    September 30,
2018
  December 31,
2017
         
         
Related parties (relatives of the Chairman)   $ 2,479,873     $ 2,255,529  
Non-related parties     2,224,036       2,051,727  
                 
    $ 4,703,909     $ 4,307,256  

 

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, 2018, the Company incurred interest expense of $1,446,935 (2017 - $1,387,891) substantially as follows:

 

  · $396,653 (2017 - $378,653) incurred on promissory notes payables as shown in notes 4(a) and 4(b);

 

  · $959,025 (2017 - $892,902) incurred on lines of credit payable; and

 

  · $91,526 (2017 - $115,901) 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.

 

 

 

 

 

XML 20 R10.htm IDEA: XBRL DOCUMENT v3.10.0.1
Lines of Credit
9 Months Ended
Sep. 30, 2018
Linesof Credit Related Party [Abstract]  
Lines of Credit

5.        Lines of Credit

 

As of September 30, 2018, 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

8,886,648 4,232,233 13,118,881

General

Security

over Assets

General

Corporate Requirements

Wife of Chairman

1% per

Month

2,000,000

Due on

Demand

2,000,000 1,676,385 3,676,385

General

Security

over Assets

General

Corporate Requirements

Total   $10,500,000   10,886,648 5,908,618 16,795,266    

 

The Chairman has continued to provide financing to the Company in excess of the line of credit borrowing limit available under the same terms as the existing line of credit facility.

 

As of December 31, 2017, the Company had two lines of credit as follows:

 

Creditor Interest Rate Borrowing Limit Repayment Terms Principal Borrowed Accrued Interest

Total

Outstanding

Security Purpose
Chairman 1% per Month $8,500,000 Due on Demand $8,398,249 $3,453,208 $11,851,457 General Security over Assets General Corporate Requirements
Wife of Chairman 1% per Month 2,000,000 Due on Demand 2,000,000 1,496,385 3,496,385 General Security over Assets General Corporate Requirements
Total   $10,500,000   $10,398,249 $4,949,593 $15,347,842    

 

XML 21 R11.htm IDEA: XBRL DOCUMENT v3.10.0.1
Capital Stock
9 Months Ended
Sep. 30, 2018
Stockholders' Equity Note [Abstract]  
Capital Stock

6.       Capital Stock

 

  a) Authorized capital stock

 

  i. Common stock

 

During the period ended September 30, 2018:

 

None.

 

During the year ended December 31, 2017:

 

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 reverse share split. The initial reverse share split and subsequent reversal are pending approval from regulatory bodies. On May 3, 2018, the Company filed a stock split with the State of Nevada to affect the reversal of the reverse share split.

  

On December 21, 2017, 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 regulatory bodies.

 

  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, 2018:

 

There were no capital stock issuances for the nine months ended September 30, 2018.

 

During the year ended December 31, 2017:

 

There were no capital stock issuances for the year ended December 31, 2017.

XML 22 R12.htm IDEA: XBRL DOCUMENT v3.10.0.1
Additional paid in capital
9 Months Ended
Sep. 30, 2018
Additional Paid in Capital [Abstract]  
Additional paid in capital

7.        Additional Paid-in Capital

 

Stock options

 

A summary of stock option activity is as follows:

 

  Nine Months Ended Year Ended
  September 30, 2018 December 31, 2017
  Number of Weighted Average Number of Weighted Average
  Options Exercise Price Options Exercise Price
Outstanding, beginning of period 4,963,851,500 $ 0.002 4,962,301,500 $ 0.002
Granted 52,200,000 $ 0.015 6,500,000 $ 0.002
Cancelled    (1,500,000) $ 0.015 (4,950,000) $ (0.061)
Outstanding, end of period 5,014,551,500 $ 0.004 4,963,851,500 $ 0.002
             
Exercisable, end of period 4,987,551,500 $ 0.004 4,958,201,500 $ 0.002
               

  

During the period ended September 30, 2018:

 

On January 31, 2018, the Company granted 9 consultants and advisors the option to acquire a total of 47,000,000 shares of common stock of the Company at a price of $0.015 per share for a term of five years and 1 advisor the option to acquire 200,000 shares of common stock of the Company at a price of $0.03 per share until April 18, 2019. Options to acquire 24,000,000 shares of common stock will vest based on achievements of performance milestones by one consulting group. The fair value of the options granted totalled $2,722,605, of which, $1,338,207 related to vested options was recorded as compensation expense and $1,384,399 related to options with performance vesting conditions was not recorded.

 

On June 3, 2018, the Company received notification that an option holder would be exercising their option to acquire 1,000,000 shares of common stock of the Company at a price of $0.015 by extinguishing $15,000 of accounts payable owed by the Company to the option holder. The Company has not yet issued the shares as certain of the options still had vesting conditions at September 30, 2018.

 

On June 13, 2018, the Company granted one consultant the option to acquire a total of 5,000,000 shares of common stock of the Company at a price of $0.015 per share for a term of five years. The fair value of the options granted totalled $189,968.

 

The Company recorded $35,956 in compensation expense related to vesting of stock options granted in previous years.

 

During the year ended December 31, 2017:

 

On November 27, 2017, the Company:

  · granted 10 individuals the option to acquire a total of 6,500,000 shares of common stock of the Company at a price of $0.015 per share for a term of five years; 2,350,000 of the approved options were to a director of the Company and 4,150,000 were to consultants of the Company; and

 

  · extended the life of the option held by 4 consultants to acquire an aggregate 2,200,000 shares of common stock to November 27, 2022.

 

The Company recorded compensation expense of $194,970 related to the grant of options. There was no compensation expense related to the extension of life of the options.

 

The Company recorded a further $5,259 in compensation expense related to vesting of stock options granted in previous years.

 

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

 

 

Three Months

Ended

September 30, 2018

Three Months

Ended

September 30, 2017

Nine Months

Ended

September 30, 2018

Nine Months

Ended

September 30, 2017

                 
General, selling and administration $ 107 $ 187 $ 977,683 $ 1,263
Product development   536   933   185,940   2,877
Professional   -   -   401,151   -
                 
  $ 643 $ 1,119 $ 1,564,774 $ 4,140

 

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,
2018
  December 31,
2017
         
Risk-free interest rate     2.52 %     2.34 %
Expected life     5 years       5 years  
Expected dividends     0 %     0 %
Expected volatility     309 %     330 %
Forfeiture rate     0 %     0 %

 

The weighted average fair value for the options granted during the nine months ended September 30, 2018 was $0.06 (December 31, 2017 - $0.03).

 

 

Options outstanding:

 

The options outstanding at September 30, 2018 and December 31, 2017 were as follows:

 

    September 30, 2018   December 31, 2017
Expiry Date   Options Exercise Price Intrinsic Value   Options Exercise Price Intrinsic Value
                         
April 18, 2019   200,000 $ 0.030 $ 0.023   -   - $ -
May 21, 2019   500,000 $ 0.030 $ 0.023   500,000 $ 0.030 $ 0.01
July 25, 2019   1,000,000 $ 0.015 $ 0.038   1,000,000 $ 0.030 $ 0.01
August 1, 2019   1,250,000 $ 0.015 $ 0.038   1,250,000 $ 0.030 $ 0.01
January 30, 2020   2,400,000 $ 0.015 $ 0.038   2,400,000 $ 0.030 $ 0.01
May 29, 2020   560,000,200 $ 0.002 $ 0.051   560,000,200 $ 0.002 $ 0.038
July 1, 2021   4,390,001,300 $ 0.002 $ 0.051   4,390,001,300 $ 0.002 $ 0.038
November 27, 2022   8,700,000 $ 0.015 $ 0.038   8,700,000 $ 0.015 $ 0.025
January 31, 2023   47,000,000 $ 0.015 $ 0.038   - $ - $ -
June 13, 2023   5,000,000 $ 0.015 $ 0.038            
Total   5,014,551,500 $ 0.004       4,963,851,500 $ 0.002 $ 0.038

Weighted Average Remaining

Contractual Life

  2.62           3.38    

 

 

XML 23 R13.htm IDEA: XBRL DOCUMENT v3.10.0.1
Related party transactions and balances
9 Months Ended
Sep. 30, 2018
Related Party Transactions [Abstract]  
Related party transactions and balances

8.       Related Party Transactions and Balances

 

   

Three months ended

September 30, 2018

 

Three months ended

September 30, 2017

 

Nine months

ended

September 30, 2018

 

Nine months

ended

September 30, 2017

    $   $   $   $
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   74,782   224,344   224,344
Interest expense on lines of credit payable to the Chairman & Chief Executive Officer of the Company and his spouse   324,519   303,595   959,025   893,336

 

Related party transactions including within general, selling 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

 

 

 

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.

 

XML 24 R14.htm IDEA: XBRL DOCUMENT v3.10.0.1
Commitments and contingencies
9 Months Ended
Sep. 30, 2018
Compensation Related Costs [Abstract]  
Commitments and contingencies

9.       Commitments and Contingencies

 

a)       Contingencies

 

The Company has had three judgments against it relating to overdue promissory notes and accrued interest and a fourth creditor has demanded repayment of an overdue promissory note and accrued interest. To date, the Company has not repaid any of these promissory notes and related accrued interest and could be subject to further action. The legal liability, totaling $1,141,968 (December 31, 2017 - $1,113,768), of these promissory notes and related accrued interest have been fully recognized and recorded by the Company. The Company has accrued interest of $190,472 (December 31, 2017 - $172,471) related to one of these promissory notes.

  

b)      Commitments

 

The Company has a consulting arrangement with 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:

 

i.                    Incentive revenue bonus

 

Mr. Chan will be entitled to a 1% net sales commission from the sales of any of the Company’s products at any time during his life, regardless if Mr. Chan is still under contract with the Company.

 

ii.                  Sale of business

 

If more than 50% of the Company’s stock or assets are sold, Mr. Chan will be compensated for entering into non-compete agreements based on the selling price of the Company or its assets as follows:

 

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

 

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

 

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

 

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

 

XML 25 R15.htm IDEA: XBRL DOCUMENT v3.10.0.1
Subsequent Event
9 Months Ended
Sep. 30, 2018
Subsequent Events [Abstract]  
Subsequent Event

10.       Subsequent Event

 

On October 1, 2018, the Company granted two consultants the option to acquire a total of 300,000 shares of common stock of the Company at a price of $0.015 per share for a term of five years.

 

XML 26 R16.htm IDEA: XBRL DOCUMENT v3.10.0.1
Accounts Payable and Accrued Liabilities (Tables)
9 Months Ended
Sep. 30, 2018
Accounts Payable And Accrued Liabilities  
Schedule of accounts payable and accrued liabilities
 

September 30,

2018

December 31,

2017

 
 
           
  Accounts payables $ 780,168 $ 782,307
  Accrued liabilities   224,922   255,766
           
  $ 1,005,090 $ 1,038,073
XML 27 R17.htm IDEA: XBRL DOCUMENT v3.10.0.1
Promissory notes interest payable (Tables)
9 Months Ended
Sep. 30, 2018
Interest Advancesand Promissory Notes Payable [Abstract]  
Schedule of Promissory Notes Payable - Relatives of Board of Directors
Promissory Notes Payable to Related Parties

September 30,

2018

December 31,

2017

 
         
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 US 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
Schedule of Activity of Promissory Notes Payable to Unrelated Lenders
Promissory Notes Payable to Unrelated Parties

September 30,

2018

December 31,

2017

 
         
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. Interest at 0.667% per month, 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
Schedule of Interest Payable

    Interest
Payable
     
Balance, December 31, 2016   $ 3,629,913  
Interest incurred on promissory notes payable     504,873  
Transfer from implicit interest to interest payable on promissory notes     172,470  
         
Balance, December 31, 2017     4,307,256  
Interest incurred on promissory notes payable     396,653  
         
Balance, September 30, 2018   $ 4,703,909  

 

    September 30,
2018
  December 31,
2017
         
         
Related parties (relatives of the Chairman)   $ 2,479,873     $ 2,255,529  
Non-related parties     2,224,036       2,051,727  
                 
    $ 4,703,909     $ 4,307,256  

XML 28 R18.htm IDEA: XBRL DOCUMENT v3.10.0.1
Lines of Credit (Tables)
9 Months Ended
Sep. 30, 2018
Linesof Credit Related Party [Abstract]  
Schedule Line of Credit Related Party
Creditor

Interest

Rate

Borrowing

Limit

Repayment

Terms

Amount

Outstanding

Accrued

Interest

Total Security Purpose
Chairman

1% per

Month

$8,500,000

Due on

Demand

8,886,648 4,232,233 13,118,881

General

Security

over Assets

General

Corporate Requirements

Wife of Chairman

1% per

Month

2,000,000

Due on

Demand

2,000,000 1,676,385 3,676,385

General

Security

over Assets

General

Corporate Requirements

Total   $10,500,000   10,886,648 5,908,618 16,795,266    

 

The Chairman has continued to provide financing to the Company in excess of the line of credit borrowing limit available under the same terms as the existing line of credit facility.

 

As of December 31, 2017, the Company had two lines of credit as follows:

 

Creditor Interest Rate Borrowing Limit Repayment Terms Principal Borrowed Accrued Interest

Total

Outstanding

Security Purpose
Chairman 1% per Month $8,500,000 Due on Demand $8,398,249 $3,453,208 $11,851,457 General Security over Assets General Corporate Requirements
Wife of Chairman 1% per Month 2,000,000 Due on Demand 2,000,000 1,496,385 3,496,385 General Security over Assets General Corporate Requirements
Total   $10,500,000   $10,398,249 $4,949,593 $15,347,842    

 

XML 29 R19.htm IDEA: XBRL DOCUMENT v3.10.0.1
Additional paid in capital (Tables)
9 Months Ended
Sep. 30, 2018
Stockholders' Equity Note [Abstract]  
Schedule of Share-based Compensation, Stock Options, Activity

 

  Nine Months Ended Year Ended
  September 30, 2018 December 31, 2017
  Number of Weighted Average Number of Weighted Average
  Options Exercise Price Options Exercise Price
Outstanding, beginning of period 4,963,851,500 $ 0.002 4,962,301,500 $ 0.002
Granted 52,200,000 $ 0.015 6,500,000 $ 0.002
Cancelled    (1,500,000) $ 0.015 (4,950,000) $ (0.061)
Outstanding, end of period 5,014,551,500 $ 0.004 4,963,851,500 $ 0.002
             
Exercisable, end of period 4,987,551,500 $ 0.004 4,958,201,500 $ 0.002
               

 

Schedule of Fair Value of Stock Options Granted-Allocation
 

Three Months

Ended

September 30, 2018

Three Months

Ended

September 30, 2017

Nine Months

Ended

September 30, 2018

Nine Months

Ended

September 30, 2017

                 
General, selling and administration $ 107 $ 187 $ 977,683 $ 1,263
Product development   536   933   185,940   2,877
Professional   -   -   401,151   -
                 
  $ 643 $ 1,119 $ 1,564,774 $ 4,140
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions
    September 30,
2018
  December 31,
2017
         
Risk-free interest rate     2.52 %     2.34 %
Expected life     5 years       5 years  
Expected dividends     0 %     0 %
Expected volatility     309 %     330 %
Forfeiture rate     0 %     0 %
Schedule of Options Outstanding

 

    September 30, 2018   December 31, 2017
Expiry Date   Options Exercise Price Intrinsic Value   Options Exercise Price Intrinsic Value
                         
April 18, 2019   200,000 $ 0.030 $ 0.023   -   - $ -
May 21, 2019   500,000 $ 0.030 $ 0.023   500,000 $ 0.030 $ 0.01
July 25, 2019   1,000,000 $ 0.015 $ 0.038   1,000,000 $ 0.030 $ 0.01
August 1, 2019   1,250,000 $ 0.015 $ 0.038   1,250,000 $ 0.030 $ 0.01
January 30, 2020   2,400,000 $ 0.015 $ 0.038   2,400,000 $ 0.030 $ 0.01
May 29, 2020   560,000,200 $ 0.002 $ 0.051   560,000,200 $ 0.002 $ 0.038
July 1, 2021   4,390,001,300 $ 0.002 $ 0.051   4,390,001,300 $ 0.002 $ 0.038
November 27, 2022   8,700,000 $ 0.015 $ 0.038   8,700,000 $ 0.015 $ 0.025
January 31, 2023   47,000,000 $ 0.015 $ 0.038   - $ - $ -
June 13, 2023   5,000,000 $ 0.015 $ 0.038            
Total   5,014,551,500 $ 0.004       4,963,851,500 $ 0.002 $ 0.038

Weighted Average Remaining

Contractual Life

  2.62           3.38    

 

 

XML 30 R20.htm IDEA: XBRL DOCUMENT v3.10.0.1
Related party transactions and balances (Tables)
9 Months Ended
Sep. 30, 2018
Related Party Transactions And Balances  
Schedule of related party transactions

 

   

Three months ended

September 30, 2018

 

Three months ended

September 30, 2017

 

Nine months

ended

September 30, 2018

 

Nine months

ended

September 30, 2017

    $   $   $   $
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   74,782   224,344   224,344
Interest expense on lines of credit payable to the Chairman & Chief Executive Officer of the Company and his spouse   324,519   303,595   959,025   893,336

 

Related party transactions including within general, selling 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

 

XML 31 R21.htm IDEA: XBRL DOCUMENT v3.10.0.1
Basis of Presentation, Nature of Operations and Going Concern (Details Narrative) - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Dec. 31, 2017
Basisof Presentation Natureof Operationsand Going Concern [Abstract]          
Working Capital Deficit $ 27,786,183   $ 27,786,183   $ 25,976,379
Net Income (Loss) Attributable to Parent $ (632,891) $ (708,689) $ (3,465,834) $ (2,039,737)  
XML 32 R22.htm IDEA: XBRL DOCUMENT v3.10.0.1
Accounts Payable and Accrued Liabilities (Details) - USD ($)
Sep. 30, 2018
Dec. 31, 2017
Accounts Payable And Accrued Liabilities Details Abstract    
Accounts payables $ 780,168 $ 788,681
Accrued liabilities 224,922 255,766
Total $ 1,005,090 $ 1,038,073
XML 33 R23.htm IDEA: XBRL DOCUMENT v3.10.0.1
Interest, advances and promissory notes payable (Details) - Promissory Notes Payable - Relatives of Board of Directors - USD ($)
Sep. 30, 2018
Dec. 31, 2017
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 Related Promissory Notes $ 2,891,966 $ 2,891,966
XML 34 R24.htm IDEA: XBRL DOCUMENT v3.10.0.1
Interest, advances and promissory notes payable (Details) - Unsecured Promissory Notes Payable to Unrelated Leaders - USD ($)
Sep. 30, 2018
Dec. 31, 2017
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
XML 35 R25.htm IDEA: XBRL DOCUMENT v3.10.0.1
Interest, advances and promissory notes payable (Details) - Summary of Interest Payable Activity - USD ($)
9 Months Ended 12 Months Ended
Sep. 30, 2018
Dec. 31, 2017
Summary of Interest Payable Activity [Abstract]    
Beginning Balance $ 4,307,256 $ 3,629,913
Interest incurred on promissory notes payable   504,873
Transfer from implicit interest to interest payable on promissory note 396,653 172,470
Ending Balance $ 4,703,909 $ 4,307,256
XML 36 R26.htm IDEA: XBRL DOCUMENT v3.10.0.1
Interest, advances and promissory notes payable (Details) - Interest Payable - USD ($)
Sep. 30, 2018
Dec. 31, 2017
Dec. 31, 2016
Interest Payable [Abstract]      
Relatives of directors $ 2,479,873 $ 2,255,529  
Non-related parties 2,224,036 2,051,727  
Total $ 4,703,909 $ 4,307,256 $ 3,629,913
XML 37 R27.htm IDEA: XBRL DOCUMENT v3.10.0.1
Lines of Credit (Details) - USD ($)
9 Months Ended 12 Months Ended
Sep. 30, 2018
Dec. 31, 2017
Borrowing Limit $ 10,500,000 $ 10,500,000
Principal Borrowed 10,886,648 10,398,249
Accrued Interest 5,908,618 4,949,593
Total Outstanding $ 16,795,266 $ 15,347,842
Chairman and CEO    
Interest Rate 1.00% 1.00%
Borrowing Limit $ 8,500,000 $ 8,500,000
Repayment Terms Due on Demand Due on Demand
Principal Borrowed $ 8,886,648 $ 8,398,249
Accrued Interest 4,232,233 3,453,208
Total Outstanding $ 13,118,881 $ 11,851,457
Security General Security over Assets General Security over Assets
Purpose General Corporate Requirements General Corporate Requirements
Wife of Chairman    
Interest Rate 1.00% 1.00%
Borrowing Limit $ 2,000,000 $ 2,000,000
Repayment Terms Due on Demand Due on Demand
Principal Borrowed $ 2,000,000 $ 2,000,000
Accrued Interest 1,676,385 1,496,385
Total Outstanding $ 3,676,385 $ 3,496,385
Security General Security over Assets General Security over Assets
Purpose General Corporate Requirements General Corporate Requirements
XML 38 R28.htm IDEA: XBRL DOCUMENT v3.10.0.1
Additional paid in capital - Summary of Stock Option Activity (Details) - USD ($)
9 Months Ended 12 Months Ended
Sep. 30, 2018
Dec. 31, 2017
Summary of Stock Option Activity [Abstract]    
Outstanding, beginning of period 4,963,851,500 4,962,301,500
Average Exercise Price, beginning $ 0.002 $ 0.002
Exercisable, end of period $ 0.004 $ 0.002
Granted 52,200,000 6,500,000
Granted, per share $ 0.015 $ 0.002
Cancelled (1,500,000) (4,950,000)
Cancelled per share $ 0.015 $ (0.061)
Exercisable $ 498,755,150,000 $ 495,820,150,000
Exercisable per share $ 0.004 $ 0.002
Outstanding, end of period 5,014,551,500 4,963,851,500
Average Exercise price, ending $ 0.004 $ 0.002
XML 39 R29.htm IDEA: XBRL DOCUMENT v3.10.0.1
Additional paid in capital - Fair Value of Stock Options (Details) - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Fair Value of Stock Options [Abstract]        
General, selling and administration $ 107 $ 187 $ 977,683 $ 1,263
Product development 536 933 185,940 2,877
Professional 401,151
Total $ 643 $ 1,119 $ 1,564,774 $ 4,140
XML 40 R30.htm IDEA: XBRL DOCUMENT v3.10.0.1
Additional paid in capital - Fair Value Method Stock-Based Compensation (Details) - USD ($)
$ / shares in Units, $ in Thousands
9 Months Ended 12 Months Ended
Sep. 30, 2018
Dec. 31, 2017
Fair Value Method Stock-Based Compensation [Abstract]    
Risk-free interest rate 2.52% 2.34%
Expected life 5 years 5 years
Expected dividends $ 0 $ 0
Expected volatility 309.00% 330.00%
Forfeiture rate $ 0 $ 0
XML 41 R31.htm IDEA: XBRL DOCUMENT v3.10.0.1
Additional paid in capital - Options Outstanding (Details) - $ / shares
9 Months Ended 12 Months Ended
Sep. 30, 2018
Dec. 31, 2017
Dec. 31, 2016
Options Outstanding [Abstract]      
Options Outstanding 5,014,551,500 4,963,851,500 4,962,301,500
Exercise Price $ 0.004 $ 0.002  
Weighted Average Remaining Contractual Life 2 years 7 months 13 days 3 years 4 months 17 days  
XML 42 R32.htm IDEA: XBRL DOCUMENT v3.10.0.1
Related Party Transactions (Details) - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Related Party Transactions [Abstract]        
Interest expenses on promissory notes issued to relatives of the Chairman & Chief Executive Officer of the Company $ 74,782 $ 74,782 $ 224,344 $ 224,344
Interest expense on lines of credit payable to the Chairman & Chief Executive Officer of the Company and his spouse 324,519 303,595 959,025 893,336
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
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