UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

[X]	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
	ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2017

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 Dr, Suite 300

Richmond, Virginia 23225

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

(804) 554-3500

(telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:	Securities registered pursuant to section 12(g) of the Act:
NONE	Common Stock

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

Indicate by check mark if the registrant is required to file reports pursuant to Section 13 or Section 15(d) of the Act: YES [X] NO [ ]

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [ ] NO [X]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§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 [ ] NO [X]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]

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

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

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

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter. $0.00 as at June 30, 2017.

Indicate the number of shares outstanding of each of the registrant’s classes of common equity, as of the latest practicable date. As at March 30, 2018, 242,777,909 shares of the registrant’s common stock were outstanding.

TABLE OF CONTENTS

		Page No.
	PART I
Item 1.	Business	3
Item 1A.	Risk Factors	11
Item 1B.	Unresolved Staff Comments	11
Item 2.	Properties	11
Item 3.	Legal Proceedings	12
Item 4.	Mine Safety Disclosure	13
	PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	13
Item 6.	Selected Financial Data	13
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	14
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 8.	Financial Statements and Supplementary Data	27
Item 9.	Changes In and Disagreements With Accountants on Accounting and Financial Disclosure	52
Item 9A.	Controls and Procedures	52
Item 9B.	Other Information	54
	PART III
Item 10.	Directors, Executive Officers and Corporate Governance	55
Item 11.	Executive Compensation	60
Item 12.	Security Ownership of Certain Beneficial Owners and Management and  Related Stockholder Matters	65
Item 13.	Certain Relationships and Related Transactions, and Director Independence	67
Item 14.	Principal Accountant Fees and Services	68
	PART IV
Item 15.	Exhibits, Financial Statement Schedules	69
	Signatures	70

PART I

ITEM 1. BUSINESS.

Background

ALR TECHNOLOGIES, INC. (the “Company” or “ALRT”) was incorporated under the laws of the State of Nevada on March 24, 1987 as Mo Betta Corp. In April 1998, the Company changed its business purpose to marketing a pharmaceutical compliance device.

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

In December 1998, the common shares of the Company began trading on the Bulletin Board operated by the National Association of Securities Dealers Inc. under the symbol “MBET.” On December 28, 1998, the Company changed its name from Mo Betta Corp. to ALR Technologies Inc. Subsequently the symbol was changed to “ALRT.”

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

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

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

On April 15, 2008, the Company incorporated a wholly-owned subsidiary in Canada under the name Canada ALRTech Health Systems Inc. This inactive subsidiary was dissolved on October 4, 2016. Accordingly ALRTech Health Systems Inc. has been deconsolidated from such date.

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

During 2011, the Company received FDA clearance and achieved HIPPA compliance for its Diabetes Management System. With these key achievements and successful clinical trials completed, the Company began implementing its commercialization strategy which included a pilot program with patients in Kansas in 2014. The Company obtained significant findings from this pilot program which led to the development of its Insulin Dosage Adjustment, for which it received FDA clearance in 2017, and Predictive A1C, for which it has submitted for worldwide patent application under the patent cooperation treaty to the World Intellectual Property Organization. The Company is actively seeking to commence revenue generating activities.

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Products

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

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 for Diabetes Monitoring

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

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

Diabetes is a lifelong chronic disease with no cure. However, people with diabetes can take steps to control their disease and reduce the risk of developing the associated serious complications, thereby controlling healthcare costs. The Canadian Diabetes Association Clinical Practice Guidelines Expert Committee reports that “Successful diabetes care depends on the daily commitment of persons with diabetes mellitus to self-manage through the balance of lifestyle and medication. Diabetes care should be organized around a multi- and interdisciplinary diabetes healthcare team that can establish and sustain a communication network between the person with diabetes and the necessary healthcare and community systems.”

However, as noted in Patrick Connole, “UnitedHealthcare, Other Large Insurers Seek Better Adherence to Diabetes Care”, Health Plan Week, February 11, 2013 Volume 23 Issue 5, 80% of United States patients with diabetes do not follow their prescribed care plan.

Furthermore, in Treatment intensification for patients with type 2 diabetes and poor glycaemic control by Fu and Sheenan, it was noted that out 11,525 patients investigated with an A1c greater than 8% patients received intensification as follows:

• 37% within 6 months;
• 11% within 6-12 months, and
• 52% never

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ALRT Diabetes Management System (continued)

A study in 2013 by Khunti, Wolden, Thorstead, Anderson and Davies entitled Clinical inertia in people with type 2 diabetes: a retrospective cohort study of more than 80,000 people found that patients it took on average 19 months to escalate patients with an average A1c of 8.7% from single medication to dual therapy and 82 months to escalate patients with an average A1c of 8.8% from dual medication to triple therapy. Furthermore, they found that it took approximately 20 years to advance patients with an average A1c of over 9% to insulin. At the end of the study, less than 50% of the patients had their treatment intensified.

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

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

In August 2010, the Company received the results of a clinical trial conducted by Dr. Hugh Tildesley using the ALRT Health-e-Connect System. The trial showed A1c dropping from 8.8% to 7.6% for the Intervention Group using ALRT’s Health-e-Connect System as part of a diabetes management program. The A1c test is important in diabetes treatment management as a long-term measure of control over blood glucose for diabetes patients. According to Center for Disease Control and Prevention, “In general, every percentage drop in A1c blood test results (e.g. from 8% to 7%), can reduce the risk of microvascular complications (eye, kidney and nerve diseases) by 40%.”The trial served as the basis for an article titled “Effect of Internet Therapeutic Intervention on A1c Levels in Patients with Type 2 Diabetes Treated with Insulin” was published in the August 2010 Diabetes Care publication.

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

In October 2011, the Company received 510(k) clearance from the U.S. Food and Drug Administration (FDA) for its Diabetes Management System (then known as the Health-e-Connect System) for remote monitoring of patients in support of effective diabetes management programs. The 510(k) clearance enables the Company to commence with the United States marketing and sales launch of its Health-e-Connect System.

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

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ALRT Diabetes Management System (continued)

In September 2014, the Company initiated its pilot program with one of the Kansas City Metropolitan Physician Association clinics to deploy its Diabetes Management System for up to 200 patients that fit certain criteria. As a result of the pilot program findings and general industry trends, the Company proceeded with developing three new innovations:

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

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

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

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

On February 18, 2015, the Company filed a 510(k) application with the FDA to add a remote insulin dosing recommendation feature to the Company’s Diabetes Management System. The company utilized the publicly available algorithm of the AACE & ADA. This feature allows the company to regularly run a patient’s blood glucose data (and other key data) through the AACE and ADA algorithm. When the algorithm indicated that the patient’s dose may not be optimal, the Diabetes Management System would provide the heathcare provider that a dose change may be warranted and what the change would be based on AACE and ADA guidelines. The decision about the dose change would rest entirely with the healthcare provider. However, this new feature may make a significant contribution to improving the outcomes of diabetes patients if it allowed healthcare provider to keep their patients at the optimal dose for longer periods.

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

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

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

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Potential Benefits of ALRT Diabetes Management System

Our Diabetes Management System resolves the expensive and complex care requirements with diabetes by taking an unique approach.  While the science of diabetes care is well established and understood, there are disconnects in applying theory into practice.  Our System is designed to connect the gap between the theory and practice of diabetes care. We believe the main gaps between theory and practice are:

1. Type 2 diabetes patients are well known for non-adherence to care plans; however, central to conventional diabetes care is patient self-management. A natural contradiction.
2. From review of published papers, we came to the conclusion that healthcare providers are also responsible for unacceptable outcomes in diabetes care.

However, the challenges faced by healthcare providers are not related to their ability, rather:

1. they face a lack of timely and reliable blood glucose data, resulting in delays to advance therapy and sub-optimal insulin dosing.
2. when reliable blood glucose data is available, there is "too much information" for a healthcare provider to analyse in a 15 minute clinical visit.

Based on our clinical trials and pilot, the platform will improve patient outcomes and with the new features will be able to track performance of the healthcare providers as well as patients. Patients utilizing the ALRT Diabetes Management System can realize many benefits. They can expect:

· More timely health care provider attention and action to existing or developing health conditions.

· Maximization of benefits from health management activities and medication.

· Improved health outlook.

Health care providers can expect:

· More timely access to patient blood glucose data and trends

· Better understanding of factors that affect patient condition and efficacy of prescribed health management program.

· Increased ability to influence patient compliance behavior.

· Higher reimbursements resulting from better documentation of post-consultation health care services and potential improvements in diabetes quality scores

Employer, Insurers, and other entities that help manage patient’s health also benefit when their health care providers or patients use the ALRT Diabetes Management System from:

· Improved health outlook for high cost diabetes patients.

· Healthier and more productive employees.

· Reduced number of claims and claims amounts for redundant or ineffective health management activities and medication.

· Regular monitoring, supervision, and disease-related information provided to high-cost patients.

· More effective wellness and disease management programs.

· Ability to base co-pay amount or premium amount on level of compliance.

Our system monitors compliance of disease management activities, such as treatments, medications and diagnostic tests, alerts designated parties when a patient is noncompliant. Our system also facilitates intervention if the patient is deemed at-risk. Often, physicians and caregivers do not detect noncompliance until the next medical appointment when a patient comes to the clinic. We believe more timely intervention should result in substantial health benefits to the patient and significant cost savings. The ongoing monitoring of compliance data will also allow for evaluation of compliance behavior over time, resulting in behavior modification or education efforts when appropriate.

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Potential Benefits of ALRT Diabetes Management System (continued)

Industry data indicates that 50% or more of people on medications do not take them as prescribed, and that this non-compliance contributes to 10% of hospitalizations and billions of dollars spent annually in excessive and preventable healthcare costs. Reminding a person to take an action is the first step in our system; monitoring their actions and their data is the second and intervention when needed is the important follow-up.

With a specific focus on diabetes treatment plans, a recent study from the Temple University School of Pharmacy indicates that the U.S. could save over $9 billion annually by improving patient adherence. Currently, there is inadequate oversight around the buying, selling and appropriate use of diabetes self-glucose testing supplies. Attempts at oversight are fragmented, primarily paper-based, and rely on unverifiable patient reporting. We feel that policies requiring electronic verification of test supply utilization prior to providing refills of test strips, will improve accountability. The ALRT Diabetes Management System has the capability to monitor and document the results of testing to verify that accountability.

We believe the ALRT Diabetes Management System can provide solutions to overcome numerous obstacles and inefficiencies in the healthcare system, potentially saving the United States billions of dollars while providing improved healthcare levels, as measured by A1c, for its citizens.

Reimbursement for Health Professionals

The Company continues to work to obtain confirmation that the Diabetes Management System will allow for services to be provided by physicians that will be reimbursed by health insurance companies. The reimbursement will be a breakthrough as physicians will be paid to provide these important new services to their patients with chronic conditions.

Business Development and Marketing Strategy

The Company is focusing the majority of its efforts in introducing and marketing its Health-e-Connect System for medical clinics and health professionals to provide direct care to patients and be reimbursed by the patients’ health benefit plans as well as to employers due to the significant return on investment they can achieve by keeping employees/plan members healthy.

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

8

Other Products

The Company’s main product is its Diabetes Management System.

Selling Activities

The Company is actively seeking alliances with health care organizations, pharmaceutical companies, insulin providers and other health care companies that can act as catalysts to effect positive change for containing health care costs and improving health outcomes. We will work with these types of organizations to introduce the ALRT Diabetes Management System to their network and seek to start significant pilot projects that will lead to revenue generating arrangements.

Manufacturers

The Company does not have any designated manufacturers at this time.

Patents and Trademarks

- US Patent D446, 740 received on August 21, 2001 for Ornamental design of a Medication Alert Device in the shape of a heart.

- US Patent D446,739 received on August 21, 2001 for Ornamental Design of a Medication Alert Device in the shape of a dog bone.

- US Patent D447,074 received on August 28, 2001 for Ornamental Design of a Medication Alert Device in the shape of a stylized paw.

- US Patent 6,934,220 received on August 23, 2005 entitled Portable Programmable Medical Alert Device.

- US Patent 7,607,431 issued October 27, 2009 for patient compliance and remote monitoring of patient’s use of nebulizer compressors.

The Company has the following patent applications pending:

- Provisional Patent Application serial number 61/271,852 filed on July 27, 2009. Title is Patient Care Coordination System Including Home Use of Medical Apparatus.

The Company has the following patent applications under the PCT:

- PCT/CA2017/050753 dated June 27, 2017. Title is “method and system for monitoring a diabetes treatment plan”.

Competition

The Company competes with other corporations that produce diabetes compliance devices and monitoring systems, some of whom have greater financial, marketing and other resources than we do. A few companies currently offer compliance monitoring systems but either a) at much higher prices b) have fewer benefits than our system or c) they do not have FDA clearance. The Company’s competition includes, but is not limited to, Glooko, WellDoc, Medtronics, iGlucose and Microsoft Healthvault.

We feel none of these companies currently offer a comprehensive compliance system that offers the full spectrum of benefits and features that our Diabetes Management System does with the potential cost efficiencies.

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Employees and Independent Contractors

The Company has no employees and 17 personnel under independent contractor and consulting arrangements. The consultants of the Company have contracts which outline their roles and responsibilities as independent contractor, as well as outlines the confidentiality requirements for all matters pertaining to the Company.

Recent Developments

On January 15, 2016, the Company announced that it has not been successful in finding follow on financing and accordingly reduced its operating budget by reducing its United States based sales and marketing program and diabetes care facilitation workforce. On January 31, 2016, the Company received the resignation of Mr. William Smith from the positions of President and member of the board of directors of the Company.

On June 21, 2016, the Company accepted a proposal from Sidney Chan, the Chairman and Chief Executive Officer of the Company, to amend the existing credit agreement between the two parties to increase the borrowing limit on the line of credit provided to the Company from $7,000,000 to $8,500,000. All other terms and conditions remain unaltered. Mr. Chan and the Company had previously entered into a credit agreement on March 6, 2011, which was subsequently amended by amending agreements dated October 24, 2011, June 15, 2012, December 28, 2012, April 1, 2014 and May 29, 2015 whereby Mr. Chan agreed to make available to the Company a credit line equal to an aggregate of $7,000,000 for the Company’s corporate purposes. Under the terms of the arrangement, the amount borrowed by the Company bears simple interest at a rate of 1% per month. The amount borrowed is secured by a general security agreement over the assets of the Company and is due on demand.

Under the terms of the proposal, in exchange for Mr. Chan making available the additional loan of $1,500,000 to the Company, the Company would be required to:

· reduce the exercise price of the 466,666,667 shares of common stock under option to Mr. Chan from $0.015 to $0.002;

· grant Mr. Chan the right and option to purchase, an additional 3,783,334,200 shares of common stock at a price of $0.002 per share for a term of five years from the date of execution of the amended credit agreement.

· reduce the exercise price of the 93,333,400 shares of common stock under option to the spouse of Mr. Chan, Ms. Christine Kan, from $0.015 to $0.002;

· grant Ms. Kan the right and option to purchase, an additional 606,667,100 shares of common stock at a price of $0.002 per share for a term of five years from the date of execution of the amended credit agreement

On December 20, 2016, certain stockholders who beneficially owned 122,998,482, or approximately 50.66%, of the combined voting power of the common stock consented in writing to increase the number of authorized shares of common stock from two billion shares (2,000,000,000) to ten billion shares (10,000,000,000) shares, par value $0.001 per share. The Company filed a preliminary information statement with the SEC (“Securities and Exchange Commission”) but has not filed its definitive statement due to its deficient reporting status.

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

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

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Recent Developments – Subsequent to December 31, 2017

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

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

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

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

ITEM 1A. RISK FACTORS

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

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

None.

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ITEM 3. LEGAL PROCEEDINGS.

Accounts payable and accrued liabilities as of December 31, 2017 include $180,666 (December 31, 2016 - $180,666) of amounts owing to a supplier, which the Company has previously disputed and has refused to provide payment. The amount payable stems from services provided during 2004. The vendor has not sought any actions to collect the amounts and management does not expect to ever pay this amount. Management asserts that the Company has no obligation to the vendor as the vendor did not perform the work sought as expected and the Company never took possession of the end product. The outcome of this matter cannot be determined at this time. Any additional liability realized, if any, will be recognized once the amount is determinable. Any gain on settlement of the account payable will be recorded in the period that an agreement with the supplier is reached and the amount becomes determinable.

Included in notes payable and accrued interest payable, are the following recognized liabilities which have involved legal proceedings:

1)        Mr. H. Gordon Niblock

During 2009, the following judgment was rendered: Niblock Financial Systems, Inc. et al v. ALR Technologies, Inc. Forsyth County North Carolina File Number 0-9-CVS-2220. The judgment against the Company was in the amount of $600,000 in favor of Niblock Financial Systems, Inc. and $550,000 in favor of H. Gordon Niblock, plus court costs and attorney’s fees. The judgment was rendered as a result of the Company’s failure to pay amounts due under several promissory notes. On September 30, 2009, subject to the entry of that judgment, the Company reached a Settlement Agreement with the two plaintiffs, resulting in a cash payment, a credit to the judgment and an assignment of the Judgment to Christine Kan.

As part of the Settlement Agreement Mr. Stan Cruitt, a Director of the Company at the time assigned unsecured advances payable by the Company totaling $425,000 with no stated terms of interest or repayment to the plaintiffs. As part of the Settlement Agreement, the Company agreed to the following repayment terms:

- $300,000 repayable at a rate of $25,000 per month evidenced by a promissory note and

- $125,000 repayable in whole by January 15, 2011.

The plaintiffs (Niblock Financial Systems, Inc. et al) filed a motion of default against the Company (ALR Technologies, Inc.) in the Superior Court of Forsyth County, North Carolina (case number 10-CVS-685) for failure to meet the repayment terms of the $300,000 promissory note. On October 26, 2010, case 10-CVS-685 was heard and the court found in favor of the plaintiff, meaning the Company was ordered to repay full principal of $300,000 along with $11,000 of accrued interest from the original settlement date, being September 30, 2009. During the 2017 fiscal year, the Company determined it would be appropriate to accrue interest of 8% on the principal outstanding from the judgement date onward. Previously, the Company had recorded imputed interest on the amount as there was no legal requirement for the Company to pay interest on the principal. As a result, during the 2017 fiscal year the Company reversed the imputed interest, recorded the accrued interest and recorded the difference as a recovery of expense.

On December 18, 2013, the Company was served with a civil summons from H. Gordon Niblock in respect of a complaint for breach of agreement to repay the promissory note of $125,000 due on by January 15, 2011, plus interest at the legal rate of eight percent per annum from the date of maturity of the note until the amount is repaid plus reasonable attorney fees of the proceedings. On February 5, 2014, case 13-CVS-7736 for the plaintiff’s motion for entry of default and default judgment was heard in the Superior Court Division of Forsyth Country, North Carolina. The court found in favor of the plaintiff, ruling that the Company was in default of its agreement with the Plaintiff and that the Plaintiff is eligible to seek affirmative relief against the defendant.

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ITEM 3. LEGAL PROCEEDINGS (continued).

1)        Mr. H. Gordon Niblock (continued)

The Company has not made any repayments under the terms of the settlement agreement for either the loans (and accrued interest) totaling $678,000 or any costs of the judgment reached against the Company.

2)        Ms. Irene Ho

The Company owes a promissory note to Ms. Irene Ho which was demanded for repayment on December 14, 2010. This amount has not been repaid and interest continues to accrue at the legal rate. The total principal and interest owing to Ms. Irene Ho is approximately $486,000.

3)        Mr. Stan Link

Mr. Stan Link holds a note from the Company, which is in arrears. The matter was reduced to a Consent Judgment in the amount of $43,608 on April 13, 2009. This full amount is still outstanding and continues to accrue interest at the stated rate of the note. The total principal and interest owing to Mr. Stan Link is approximately $67,000.

On March 27, 2017 the United States District Court granted the motion to dismiss a complaint filed by MyHealth, Inc. against the Company in case 2:16-CV-00535-RWS. The court ordered, adjudged and decreed that My Health, Inc.’s complaints against ALR Technologies, Inc. were dismissed with prejudice. MyHealth, Inc. originally filed a motion of appeal, which subsequently MyHealth, Inc. dismissed. On May 19, 2016 MyHealth, Inc filed a complaint against the Company that it engaged in willful and knowing patent infringement against MyHealth, Inc.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

13

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

The Company’s Common Stock is quoted on the Bulletin Board (OTCQB) operated by the Federal Industry Regulatory Authority (“FINRA”) under the symbol “ALRT.” The following table sets forth the high and low sales prices for our common stock for each quarter within the last two fiscal years:.

Quarter Ended	High Bid [1]	Low Bid [1]
December 31, 2017	0.07	0.03
September 30, 2017	0.15	0.00
June 30, 2017	0.00	0.00
March 31, 2017	0.00	0.00
December 31, 2016	0.00	0.00
September 30, 2016	0.00	0.00
June 30, 2016	0.00	0.00
March 31, 2016	0.00	0.00

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

At December 31, 2017, there were 242,777,909 common shares of the Company issued and outstanding.

As at December 31, 2017, there were 136 registered holders of record of the Company’s common shares and an undetermined number of beneficial holders.

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

Securities Authorized From Issuance under Equity Compensation Plans

The Company does not have any equity compensation plans and accordingly the Company does not have any securities authorized for issuance under an equity compensation plan.

Recent Sales of Unregistered Securities

There were no issuance of securities that were not under a registration statement during the year ended December 31, 2017 and the subsequent period to the date of this Form 10K.

Purchases of Equity Securities by the Company and Affiliated Purchasers

Neither the Company nor an affiliated purchaser of the Company purchased common shares of the Company in the year ended December 31, 2017.

ITEM 6. SELECTED FINANCIAL DATA

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

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General

The Company’s business is focused on enhancement of adherence to disease and healthcare management programs through monitoring, reminders and improved communications. The Company’s primary business markets are the providers of health insurance and the providers of disease and case management services, including the home care industry.

The largest potential for sustainable long term growth and value generation lies with the market segments that have the most influence on the end-user and the most to gain from improved healthcare results. These market segments are the health insurance providers, and the medical clinics and physicians who provide the care for people with chronic disease. Our focus is on penetrating the full cycle of health care services including medical clinics, hospitals and health plans with diabetics being the initial patient targets.

Revenue

The Company did not generate any revenue in 2017 or 2016. For the past several years, the Company has been devoting its efforts to developing and commercializing its Diabetes Management System, a patient monitoring, compliance and communications platform to allow health professionals and case managers to communicate as needed to the patient and/or to other health professionals. In October 2011, the Company announced that it had received FDA clearance to sell its Diabetes Management System in the United States. Since receiving FDA clearance, the Company’s senior leadership team has been presenting how the Diabetes Management System uniquely supports mutual priorities around improved patient care, healthcare cost-containment, accountability, and job creation based on the results from the clinical trials conducted and applied to studies surrounding diabetes management by numerous sources.

Product Development

During the 2017 fiscal year, the majority of the Company’s product development efforts were expended to:

· further development its IDA;

· respond to questions from the FDA for its 510K clearance application for IDA;

· design, develop and advance Predictive A1c;

· submit its Predictive A1c PCT application to the World Intellectual Property Organization;

· prepare for additional functionality to enhance care facilitation activity;

· implement advances as a result of user feedback, and

· other general advances of the Diabetes Management System.

            With the completion of the Diabetes Management System, the Company is currently focusing its efforts on the commercial launch plans of the product and conducting research activities for future attributes and applications for the Diabetes Management System.

Product development and research costs were $416,304 in 2017 and $565,804 in 2016.

15

Operating Capital

The Company has no revenues and has not generated any revenues since creating its Diabetes Management System. The Company is funding operations through the line of credit financing it has available. The majority of the Company’s expenditures go towards product development, professional fees and administrative activities. The Company incurs significant amounts of interest expense from its debts outstanding and from time to time, the grant of stock options in exchange for either 1) deferred payment 2) agreements of note extensions and 3) increased borrowing limits provided. All stock options granted related to the debts of the Company have been recorded at their fair value using the Black-Scholes option pricing model and are expensed over the agreed upon term of the debt instrument where applicable. Where the debt of the Company is a line of credit arrangement with no fixed terms of repayment, the stock option expense is fully recognized at the time of grant.

There is no certainty of the timing or amount of cash flows from sales, and if sales do begin, there is no certainty that it will reach the level necessary to cover operating costs and costs to service the company’s debts. The Company has limited resources and is seeking to penetrate markets with indirect competition with much greater resources. The Company is seeking to displace generally accepted processes for diabetes management which means it is directly entering into an unestablished market. Management is evaluating alternatives to penetrate both existing and new marketplaces in order to generate cash flows. Management believes the business plan of the Company will give it the best opportunity to achieve commercial feasibility but due to the current acceptance levels of the Diabetes Management System, there is substantial uncertainty over the Company’s ability to execute the plan, the level of success associated with the execution of its business plan or the actual timeline to execute the plan. If the actual timeline for the execution of the business plan is substantially longer than planned, it could jeopardize the Company’s long term success. For these reasons the Company is seeking additional financing.

The Company has an operating lines of credit with a borrowing limit of $10,500,000. As at December 31, 2017, the Company had borrowing available of approximately $102,000 on its line of credit. The Company does not have any other facilities readily available at this time. Management will seek to acquire additional financing to allow the Company to become a commercially viable enterprise, whereby it can generate sufficient cash flow from the sales of its HeC product to support its cost of operations, overhead and repay its obligations.

There is no certainty that the Company will ever be able to achieve the level of sales necessary to cover operating costs or achieve the level of sales before the borrowing limits on the lines of credit financing are reached. The Company will require additional financing in the future for which there is no guarantee it will receive, furthermore, even if the Company is able to achieve sufficient cash flows to support operations, it will need to service its debt obligations, which as of December 31, 2017 were $25,979,490. A total of approximately $20,500,000 is owed to the Chairman and his family.

Operating Issues

The Company has expended significant efforts introducing the Diabetes Management System to specified retail chains, pharmaceutical manufacturers, contract research organizations, health management organizations, pharmacy benefits managers and certain clinics treating specific disease conditions. The Company has not had sales for several years. During the 2016 and 2017 fiscal years, the Company has devoted 100% of its efforts to developing the Diabetes Management System for commercial launch. Management plans for the Company to become a commercially viable enterprise through sale of Diabetes Management subscriptions.

If management is not successful in its plans, they may be required to raise additional funds from its existing and prospective shareholders or debtholders, which it may not be able to accomplish on satisfactory terms for the Company.

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Management Compensation

During 2017, the Company’s sole officer was paid from the line of credit financing available as follows:

- Sidney Chan, Chief Executive Officer, accrues $15,800 per month, all of which was recorded as an increase to the borrowings on the lines of credit provided to the Company.

Mr. Chan’s compensation was the same for the 2016 fiscal year. Effective January 31, 2016 William Smith resigned from his position was President. During the 2016 fiscal year, William Smith was paid $15,500.

The Company issues stock options as compensation from time to time. No directors of the Company earn service fees for their position as Director of the Company. Those Directors that hold a position as Officer or consultant of the Company earn fees for those services provided. During 2016 the Company:

· did not grant any incentive options to its directors for services;

· granted Mr. Chan the option to acquire shares of common stock in exchange for increasing the borrowing limit on the line of credit he has provided to the Company.

During 2017, the Company granted Ken Robulak the option to acquire 2,350,000 shares of common stock of the Company at a price of $0.015 per share for a term of five years.

Capital Structure

As of the date of this Form 10K:

Authorized Common Stock

2,000,000,000 shares of common stock with a par value of $0.001 per share.

On December 20, 2016, certain stockholders who beneficially owned 122,998,482, or approximately 50.66%, of the combined voting power of the common stock consented in writing to increase the number of authorized shares of common stock from two billion shares (2,000,000,000) to ten billion shares (10,000,000,000) shares, par value $0.001 per share. The Company has not completed its Definitive 14C filing with the SEC due to its status as being deficient with its reporting requirements. The Company considers this action to be effective since it was approved by the shareholders of the Company.

Issued Common Stock

242,777,909 shares of common stock are issued and outstanding.

Authorized Preferred Stock

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

Issued Preferred Stock

No shares of preferred stock have been issued

Stock Options

Options to acquire 4,963,851,500 shares of common stock are outstanding.

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Results of Operations

December 31, 2017 compared to December 31, 2016

					Amount ($)	Percentage (%)
		2017		2016	Increase /	Increase /
					(Decrease)	(Decrease)
Operating Expenses
General and administrative	$	405,556	$	354,948	50,608	14
Product development		416,304		565,804	(149,500)	(26)
Professional fees		244,430		108,275	136,155	126
		1,066,290		1,029,027	37,263	4
Other items
Interest expenses		1,861,971		9,064,706	(7,202,735)	(79)
Recovery of expense		(86,236)		-	(86,236)	~
Net Loss	$	2,842,025	$	10,093,733	(7,251,708)	(72)

The net loss for the Company’s year ended December 31, 2017 and December 31, 2016 was significantly impacted by the grant of options to obtain additional debt financing as follows:

	Year Ended December 31, 2017	Year Ended December 31, 2016
Options Granted as Consideration	-	4,390,001,300
Value of Options Granted as Consideration	$nil	$ 7,318,539
Percentage of Net Loss	N/A	73%

The net loss for the year ended December 31, 2016 was 72% ($7,251,708) higher than the net loss at December 31, 2017 as a result of the grant of options with a fair value of $7,318,539 during 2016 as consideration for receiving an increase in the borrowing limit of the line of credit facility the Company has available. The fair value from the grant of the options in 2016 accounted for 101% of the total change in net loss as compared to 2017. At the operating expenses level, the Company had a slight increase in net loss attributed to professional expenses incurred to bring the Company compliant with its financial reporting requirements with the SEC and to defend itself from the action brought forward by MyHealth.

General and Administrative

General and administrative costs incurred consist of salaries and consulting fees of management personnel, stock-based compensation for options granted to management personnel, travel and trade show costs, rent of the Company’s corporate office, website development costs and general costs incurred through day-to-day operations.

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Results of Operations (continued)

During the year the Company had a significant reduction in the general and administrative expenses incurred by type of general and administrative cost, the variance can be seen as follows:

					Amount ($)
		2017		2016	Increase /
					(Decrease)
General and administrative:
Management salaries & consulting fees	$	226,000	$	256,000	(30,000)
Stock based compensation		81,000		3,000	78,000
Travel and trade-shows		46,000		52,000	(6,000)
Rent of corporate office		9,000		9,000	-
Website & information technology		20,000		24,000	(4,000)
Other general & administrative costs		23,000		11,000	12,000
Total	$	406,000	$	355,000	51,000

Once adjusting for stock-based compensation expense related to the grant of stock options, the cash-based general & administrative expenditure decreased by approximately $27,000 during the 2017 fiscal year as compared to the 2016 fiscal year. During the 2016 fiscal year, the Company by reduced its sales and marketing team in the United States. The Company incurred approximately $30,000 of costs in 2016 related to the sales and marketing team which it did not incur in 2017. We anticipate that cash based operating expenses for 2018 will be similar to the amounts in 2017, before any new endeavors or projects.

Product development

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 increase from the prior year is related to the extent of services required by the development team of the Company and for additional developers and testers retained. For the 2017 fiscal year, the Company was anticipating reduction in product development costs from 2016. The actual results were a reduction is operating expenses by 26%, which would have been 37% if stock-based compensation was not included. The reduction was a result of 1) a reduction in the number of service providers and 2) a reduction in the amount of certain service providers for 510K applications.

For the 2018 fiscal year, the Company is anticipating similar or slightly reduced overall development expenditures before any stock based compensation expense incurred in 2017.

Interest expense

Interest expense was incurred from the following sources for years ended December 31, 2017 and 2016:

					Amount ($) Increase / (Decrease)
Interest Expense:		2017		2016
Interest expense incurred on promissory notes		677,000		494,000	$	183,000
Interest expense incurred on lines of credit		1,202,000		1,102,000		100,000
Imputed interest on zero interest loans		155,000		148,000		7,000
Stock options granted for promissory notes		-		7,319,000		(7,319,000)
Other		(172,000)		2,000		(174,000)
Total	$	1,862,000	$	9,065,000	$	(7,203,000)

Interest on Promissory Notes

Interest on promissory notes was the same as the prior year as there were no repayments, issuances or changes, in any of the promissory notes from December 31, 2016 to December 31, 2017, with the exception of the accrued interest of $172,491 being transferred from imputed interest to accrued interest related to one promissory note for $300,000 dating back to 2010. The Company determined that it was more appropriate to record accrued interest of 8% on this loan, as opposed to imputed interest of 12%. The difference of 4% totaling $86,000 was recorded as a recovery of expense during the 2017 fiscal year.

19

Results of Operations (continued)

Interest Expense (continued)

Interest on Lines of Credit

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

		Dec 31		Dec 31	Amount ($) Increase /
Lines of Credit:		2017		2016
Line of Credit provided by Sidney Chan	$	8,398,000	$	7,628,000	$	770,000
Line of Credit provided by Christine Kan		2,000,000		2,000,000		-
Total	$	10,398,000	$	9,628,000	$	770,000

Interest on Lines of Credit

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

		Year Ended		Year Ended		Amount ($)
Interest Expense on Line of Credit :		2017		2016		Increase /
Interest expense incurred on line of credit from Sidney Chan during the year	$	962,000	$	862,000	$	100,000
Interest expense incurred on line of credit from Christine Kan during the year		240,000		240,000		-
Total	$	1,202,000	$	1,102,000	$	100,000

During the 2017 fiscal year, the Company had borrowed an additional $770,000 from its line of credit facilities (interest rates of 1% per month on the borrowed balance). In addition to incurring interest for a full year on the amounts borrowed during the 2016 fiscal year, this borrowing during 2017 resulted in significantly higher interest incurred on the lines of credit for the year ended. During 2018, the Company is anticipating financing its operations through line of credit borrowing facilities which as a result, its interest expense related to the line of credit facilities further increased.

Imputed Interest

During the 2017 and 2016 fiscal years, the Company had certain zero interest promissory notes and accounts payable in excess of one year. Pursuant to the company’s accounting policy, these zero interest amounts are considered to be financing items in nature and are assigned a deemed interest rate (1% per month). The interest incurred on these is expensed as imputed interest; instead of increasing the liabilities of the Company, imputed interest expense is allocated to equity under the financial statement line item “additional paid-in capital”. The Company’s zero interest instruments were as follows as at December 31, 2017 and 2016: 

					Amount ($) (Decrease)
Zero Interest Instruments:		2017		2016
Accounts Payable (older than one year)	$	727,000	$	665,000	$	62,000
Promissory Notes to unrelated parties		571,000		571,000		-
Total	$	1,298,000	$	1,236,000	$	62,000

The Company incurred imputed interest as follows:

					Amount ($) Increase / (Decrease)
Imputed Interest Expense:		2017		2016
Accounts Payable (older than one year)	$	87,000	$	80,000	$	7,000
Promissory Notes to unrelated parties		68,000		68,000		-
Total	$	155,000	$	148,000	$	-

Moving forward, we anticipate the expense to be significant lower as promissory notes totaling $300,000 are now accruing interest at rate of 8% per annum and will be excluded from imputed interest.

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Results of Operations (continued)

Interest Expense (continued)

Stock Based Compensation

On July 1, 2016, the Company and the Chief Executive Officer of the Company agreed to amend the existing credit agreement to increase the borrowing limit on the line of credit provided to the Company from $7,000,000 to $8,500,000 (Note 4). In exchange for Mr. Chan making available the additional loan of $1,500,000 to the Company, the Company:

· reduced the exercise price of the 560,000,200 shares of common stock under option to Mr. Chan and his spouse from $0.015 to $0.002;

· granted Mr. Chan and his spouse the right and option to purchase, an additional 4,390,001,300 shares of common stock at a price of $0.002 per share for a term of five years

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

During the 2017 fiscal year, the Company did not grant any options as compensation for financing and therefore does not anticipate any related interest expense.

Professional Fees

Professional fees expense consist of consulting and advisory fees of certain professionals retained, audit fees, legal fees, diabetes care facilitators fees and stock-based compensation for options granted to professionals. By type of professional fee expense, the variance can be seen as follows:

					Amount ($)
Professional Fees:		2017		2016	Increase /
					(Decrease)
Legal Fees		38,000		50,000	(12,000)
Diabetes care facilitators		-		7,000	(7,000)
Professional advisors retained		94,000		51,000	43,000
Corporate auditor - Year-end and quarterly review		60,000		-	60,000
Stock based compensation		52,000		-	51,000
Total	$	244,000	$	108,000	136,000

The increase in professional fees for the 2017 year from the prior year can be attributed to

a) the Company granting stock-based compensation to its service providers;

b) the Company retaining consultants to generate business opportunities with government agencies and other regulatory bodies; and

c) the Company committing to becoming in compliance its SEC reporting requirements and initiating its 2015 and 2016 audit and review engagements.

During the 2018 fiscal year, the Company is anticipating the cash based professional fees to decrease as its audit fees will be significantly lower since the 2017 expenses represent multiple years of engagements. The Company has granted significant stock options with vesting terms which could vest during the 2018 fiscal year based on sales programs generated.

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Results of Operations (continued)

Liquidity and Capital Resources

Cash Balances

The Company’s cash balance was $3,111 at December 31, 2017 and $2,607 at December 31, 2016.

Short and Long Term Liquidity

Working Capital
		As At December 31, 2017		As At December 31, 2016	Amount ($) Increase / (Decrease)	Percentage (%) Increase / (Decrease)
Current Assets	$	3,000	$	4,000	1,000	(25)
Current Liabilities	$	25,979,000	$	23,235,000	2,746,000	12
Working Deficiency	$	(25,976,000)	$	(23,231,000)	(2,745,000)	12

The Company has a severe working capital deficiency. It does not have ability to service is current liabilities for the next twelve months and is reliant on its line of credit facilities to meet its on-going operations. Until the Company has revenue producing activities that exceed its operating requirements, it will be unable to service its current liabilities and the working capital deficit will continue to increase. As of the date of this management discussion and analysis, the Company has not commenced revenue generating activities, nor does it know when they will commence. There is substantial doubt about the Company’s ability to repay its current liabilities in the near term or anytime in the future which could ultimately lead to business failure.

Current Liabilities

The Company has current liabilities of $25,979,000 as at December 31, 2017 as compared to $20,676,000 as at December 31, 2016. Current liabilities were as follows:

		December 31, 2017		December 31, 2016	Change ($)	Change (%)
Accounts payable and accrued liabilities	$	1,038,000	$	943,000	95,000	10
Interest payable	$	4,307,000	$	3,630,000	677,000	15
Line of credit	$	15,348,000	$	13,376,000	1,972,000	19
Promissory notes to related parties	$	2,892,000	$	2,892,000	-	-
Promissory notes to arm’s length parties	$	2,394,000	$	2,394,000	-	-
Total current liabilities	$	25,979,000	$	23,235,000	2,744,000	12

Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities consists of the trade payables and unclassified vendors of the Company.

Interest Payable

Interest payable relates to the accumulated, unpaid interest expense incurred on the promissory notes to related parties and promissory notes to arm’s length parties. The change from December 31, 2017 to December 31, 2016 is equal to 1) the interest expense incurred on both categories of promissory notes during the 2016 fiscal year and 2) the transfer of $172,000 from accumulated imputed interest to interest payable related to one promissory note.

Promissory Notes to Related Parties and Promissory Notes Payable to Arm’s Length Parties

The Company has promissory notes with 20 individuals or corporations that relate to historical amounts borrowed. There has been no new activity for several years. All of these promissory notes are past due and continue to accrue interest at their respective legal rates of interest (mostly 1% per month).

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Current Liabilities (continued)

Line of Credit

As of December 31, 2017, the Company has borrowed a total of $10,398,000 (2016 - $9,628,000) and has outstanding accrued interest of $4,950,000 (2016 - $3,747,000). During 2017, the Company borrowed $770,000 (2016 - $1,001,000) and incurred interest of $1,202,000 (2016 - $1,102,000).

Line of Credit from Ms. Christine Kan

The Company obtained a line of credit of US$1,000,000 from Ms. Christine Kan (the spouse of the Chairman of the Board and Chief Executive Officer of the Company) on March 2010 (the terms of which were finalized in May 2010). The loan was unsecured with interest payable on funds borrowed at 1% per month. These proceeds were to be put towards working capital and the continued development of the Company’s product line. On January 3, 2011, the Creditor granted the Company an increase in the borrowing limit from $1,000,000 to $2,000,000. As of December 31, 2017, the Company has borrowed $2,000,000 (2016 - $2,000,000) and has accrued interest outstanding of $1,496,000 (2016 - $1,256,000). During the 2017 fiscal year, the Company borrowed $nil (2016 - $nil) and incurred interest of $240,000 (2016 - $240,000).

Line of Credit from Mr. Sidney Chan

On March 6, 2011, the Company obtained a $2,500,000 line of credit from Sidney Chan (the Chairman of the Board and Chief Executive Officer of the Company). Under the terms of the arrangement, the amount borrowed by the Company bears simple interest at a rate of 1% per month. The amount borrowed is secured by a general security agreement over the assets of the Company and is due on demand. Originally, the line of credit was for a comprehensive marketing program, but subsequently was amended to be for general corporate purposes. On April 1, 2014, Mr. Chan and the Company executed an amending agreement whereby Mr. Chan increased the borrowing limit of the line of credit he has provided to the Company from $4,000,000 to $5,500,000. On May 29, 2015, the borrowing limit was further increased to $7,000,000. On July 1, 2016, the borrowing limit was further increased to $8,500,000. As of December 31, 2017, the Company has borrowed $8,398,000 (2016 - $7,628,000) and has accrued interest outstanding of $3,453,000 (2016 - $2,491,000). During 2017 the Company borrowed $770,000 (2016 - $1,102,000) and incurred interest of $962,000 (2016 - $962,000).

Short and Long Term Liquidity

The Company has incurred significant operating losses over the past several fiscal years (2017 - $2,842,025; 2016 - $10,093,733), is currently unable to self-finance its operations, has a working capital deficit of $25,976,379 (2016 - $23,230,725), an accumulated deficit of $74,528,075 (2016 - $71,686,050), limited resources, no source of operating cash flow, no assurances that sufficient funding will be available to conduct further product development and operations and no assurance the Company’s current projects will be commercially viable or profitable.

All of the Company’s debt financing is past due or due on demand. The Company will seek to replace this financing with funds generated by operations, replacement debt or from equity financings through private placements or the exercise of options. While certain of the Company’s creditors have agreed not to demand immediate payment. There is no assurance that they will continue to do so in the future. As the Company is past due or in default on its promissory notes payable and accrued interest payable, there is substantial risk of future legal action against the Company. The Company has faced consent judgements and demand notices against it for overdue promissory notes. Failure to obtain either replacement financing or creditor consent to delay the repayment of existing financing could result in the Company having to cease operations.

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Short and Long Term Liquidity (continued)

Tabular Disclosure of Contractual Obligations:

	Payments due by period
				Less						More
				than 1		1-3		3-5		Than 5
		Total		year		years		years		Years
Accounts payable & accrued liabilities	$	1,038,000	$	1,038,000	$	-	$	-	$	-
Interest payable	$	4,307,000	$	4,307,000		-		-		-
Line of credit	$	15,348,000	$	15,348,000		-		-		-
Promissory notes to related parties	$	2,892,000	$	2,892,000		-		-		-
Promissory notes to arm’s length parties	$	2,394,000	$	2,394,000		-		-		-
	$	25,979,000	$	25,979,000	$	-	$	-	$	-

Cash Flows
		Year Ended		Year Ended
		December 31, 2017		December  31, 2016
Cash Flows used in Operating Activities	$	(770,000)	$	(1,051,000)
Cash Flows provided by Financing Activities		770,000		1,001,000
Net decrease in Cash During Period	$	-	$	(50,000)

Cash Used in Operating Activities

Cash used by the Company in operating activities during the year ended December 31, 2017 totaled $770,000 as compared to $1,051,000 for year ended December 31, 2016. The Company’s cash used in operating activities can be reconciled from net loss as follows:

Cash Used in Operating Activities Reconciliation		2017			2016
Net loss	$		(2,842,025)	$		(10,093,733)
Stock-based compensation incurred for interest, product development, professionals and management personnel			200,230			7,336,554
Non-cash imputed interest expenses			154,848			148,426
Recovery of expense			(86,236)
Increase (decrease) in prepaid expenses from realization (purchase) of prepaid expenses			(1,429)			136
Net purchases (net repayments) with balances owing in accounts payable and accrued liabilities			95,107			(39,102)
Accrued interest on lines of credit			1,202,250			1,102,242
Accrued interest from promissory notes			504,872			494,170
Cash used in operating activities			(769,526)			(1,051,307)

Cash Proceeds from Financing Activities

During the year ended December 31, 2017, the Company borrowed $770,000 (2016 - $1,001,000) by drawing down on its operating line of credit from the Chairman of the Company.

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Off-Balance Sheet Arrangements

There are no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Critical Accounting Policies

The preparation of our financial statements in conformity with US generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reported periods. Actual results may differ from these estimates under different assumptions or conditions. The Company believes the accounting polices that are most critical to its financial condition and results of operations and involve management’s judgment and/or evaluations of inherent uncertain factors are as follows:

Options and warrants issued in consideration for debt. The Company allocates the proceeds received from long-term debt between the liability and the options and warrants issued in consideration for the debt, based on their relative fair values, at the time of issuance. The amount allocated to the options or warrants is recorded as additional paid in capital and as a discount to the related debt. The discount is amortized to interest expense on a yield basis over the term of the related debt.

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

Recent Accounting Pronouncements

Adopted

In August 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-15, “Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern” (“ASU 2014-15”). ASU 2014-15 requires management to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern for each annual and interim reporting period. If substantial doubt exists, additional disclosure is required. This new standard was effective for the Company for annual and interim periods beginning after December 15, 2016. Adoption of this pronouncement did not have a material impact on the Company’s consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-09, Compensation — Stock Compensation: Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”). The new guidance will change how companies account for certain aspects of share-based payments to employees. Under existing accounting guidance, tax benefits and certain tax deficiencies arising from the vesting of share-based payments are recorded in additional paid-in-capital. The new guidance will require such benefits or deficiencies to be recognized as income tax benefits or expenses in the statement of operations. Companies are required to apply the new guidance prospectively. This new standard was effective for the Company for annual and interim periods beginning after December 15, 2016. Adoption of this pronouncement did not have a material impact on the Company’s consolidated financial statements.

25

Issued

In August 2016, the FASB issued Accounting Standards Update ("ASU") No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The new standard will make eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. The standard will be effective for the Company beginning January 1, 2018, with early application permitted. The standard will require adoption on a retrospective basis unless it is impracticable to apply, in which case we would be required to apply the amendments prospectively as of the earliest date practicable.

In May 2017, the FASB issued ASU 2017-09, Stock Compensation: Scope of Modification Accounting. The amendments in this update provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. ASU 2017-09 is effective for fiscal years and interim periods beginning after December 15, 2017, which will be effective for the Company for the quarter ending December 31, 2018. Early adoption is permitted. The Company is assessing the impact, if any, of implementing this guidance on its consolidated financial position, results of operations and liquidity.

In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), and Derivative and Hedging (Topic 815). The amendments in Part I of this update change the classification analysis of certain equity-linked financial instruments (or embedded features) with down-round features. When determining whether certain financial instruments should be classified as liabilities or equity instruments, a down-round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity's own stock. The amendments also clarify existing disclosure requirements for equity-classified instruments. As a result, a freestanding equity-linked financial instrument (or embedded conversion option) no longer would be accounted for as a derivative liability at fair value as a result of the existence of a down-round feature. For freestanding equity classified financial instruments, the amendments require entities that present earnings per share ("EPS") in accordance with Topic 260 to recognize the effect of the down-round feature when it is triggered. That effect is treated as a dividend and as a reduction of income available to common shareholders in basic EPS. Convertible instruments with embedded conversion options that have down-round features are now subject to the specialized guidance for contingent beneficial conversion features (in Subtopic 470-20, Debt-Debt with Conversion and Other Options), including related EPS guidance (in Topic 260). The amendments in Part II of this update recharacterize the indefinite deferral of certain provisions of Topic 480 that now are presented as pending content in the Accounting Standards Codification, to a scope exception. Those amendments do not have an accounting effect. ASU 2017-11 is effective for fiscal years and interim periods beginning after December 15, 2018, which will be effective for the Company for the quarter ending December 31, 2019. Early adoption is permitted. The Company is assessing the impact, if any, of implementing this guidance on its consolidated financial position, results of operations and liquidity.

The Company has implemented all new accounting pronouncements that are in effect and may impact its financial statements. The Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or statement of operations.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

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

26

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

ALR TECHNOLOGIES INC.

Financial Statements

December 31, 2017 and 2016

Index	Page
Report of Independent Registered Public Accounting Firm	F-1
Balance Sheets	F-2
Statements of Operations	F-3
Statements of Changes in Stockholders’ Deficit	F-4
Statements of Cash Flows	F-5
Notes to Financial Statements	F-6 – F-24

27

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors of ALR Technologies Inc.

We have audited the accompanying balance sheets of ALR Technologies Inc. (the “Company”) as at December 31, 2017 and 2016 and the related statements of operations, changes in stockholders’ deficit and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, based on our audits, these financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2017 and 2016 and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, to date the Company has reported losses since inception from operations, negative cash flows from operations, working capital deficiencies, has promissory notes payable and related interest payable past due and has no established commercial viability of its products. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in this regard are described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

“DMCL”

Dale Matheson Carr-Hilton LaBonte LLP

Chartered PROFESSIONAL Accountants

Vancouver, Canada

March 29, 2018

 

F-1

ALR TECHNOLOGIES INC.

Balance Sheets

($ United States)

December 31, 2017 and 2016

	2017			2016
Assets
Current assets:
Cash	$	3,111		$	2,607
Prepaid expenses		—			1,429
Total assets	$	3,111		$	4,036
Liabilities and Stockholders' Deficit
Current liabilities:
Accounts payable and accrued liabilities	$	1,038,073		$	942,967
Promissory notes payable due to related parties		2,891,966			2,891,966
Promissory notes payable due to unrelated parties		2,394,353			2,394,353
Interest payable		4,307,256			3,629,913
Lines of credit from related parties		15,347,842			13,375,562
Total liabilities		25,979,490			23,234,761
Stockholders' Deficit
Preferred stock:
Authorized: 500,000,000 shares of preferred stock (2016 - 500,000,000) with a par value of $0.001 per share
Shares issued and outstanding: No shares of preferred stock (2016: No) were issued and outstanding
Common stock
Authorized: 10,000,000,000 shares of common stock (2016 – 2,000,000,000) with a par value of $0.001 per share
Shares issued and outstanding: 242,777,909 shares of common stock (2016 - 242,777,909 shares of common stock).		242,777			242,777
Additional paid-in capital		48,308,919			48,212,548
Accumulated deficit		(74,528,075	)		(71,686,050	)
Stockholders’ deficit		(25,976,379	)		(23,230,725	)
Total liabilities and stockholders’ deficit	$	3,111		$	4,036

See accompanying notes to financial statements

F-2

ALR TECHNOLOGIES INC.

Statements of Operations

($ United States)

Years Ended December 31, 2017 and 2016

		2017			2016
Operating Expenses
Product development	$	416,304		$	565,804
Professional fees		244,430			108,275
Selling, general and administration		405,556			354,948
Operating Loss		1,066,290			1,029,027
Recovery of expense		(86,236	)		—
Interest expense		1,861,971			9,064,706
Net Loss	$	(2,842,025	)	$	(10,093,733	)
Weighted average number of shares of common stock outstanding, basic and diluted		242,777,909			242,777,909
Loss per share, basic and diluted	$	(0.01	)	$	(0.04	)

See accompanying notes to financial statements

F-3

ALR TECHNOLOGIES INC.

Statements of Changes in Stockholders’ Deficit

($ United States)

From December 31, 2016 to December 31, 2017

	Common Stock				Additional						Total
	Number of				Paid-in			Accumulated			Stockholders’
	Shares		Amount		Capital			Deficit			Deficit
Balance, December 31, 2015		242,777,909	$	242,777	$	40,727,569		$	(61,592,317	)	$	(20,621,972	)
Imputed interest		—		—		148,426			—			148,426
Stock options granted as compensation		—		—		7,336,554			—			7,336,554
Net loss for the year		—		—		—			(10,093,733	)		(10,093,733	)
Balance, December 31, 2016		242,777,909		242,777		48,212,548			(71,686,050	)		(23,230,725	)
Imputed interest (reversal)		—		—		(103,858	)		—			(103,858	)
Stock options granted as compensation		—		—		200,229			—			200,229
Net loss for the year		—		—		—			(2,842,025	)		(2,842,025	)
Balance, December 31, 2017		242,777,909	$	242,777	$	48,308,919		$	(74,528,075	)	$	(25,976,379	)

See accompanying notes to financial statements

F-4

ALR TECHNOLOGIES INC.

Statements of Cash Flows

($ United States)

Years Ended December 31, 2017 and 2016

		2017			2016
OPERATING ACTIVITIES
Net loss	$	(2,842,025	)	$	(10,093,733	)
Stock-based compensation-product development		66,800			14,268
Stock-based compensation-interest expenses		—			7,318,539
Stock-based compensation-selling, general and admin		80,937			3,170
Stock-based compensation-professional fees		52,492			577
Unpaid interest expense on line of credit		1,202,250			1,102,243
Non-cash imputed interest expense		154,848			148,426
Non-cash gain on reversal of expense		(86,236	)		—
Changes in assets and liabilities:
Decrease in prepaid expenses		1,429			136
Increase in accounts payable and accrued liabilities		95,106			(39,103	)
Increase in interest payable		504,873			494,170
Net cash used in operating activities		(769,526	)		(1,051,307	)
FINANCING ACTIVITIES
Proceeds from lines of credit		770,030			1,001,226
Net cash provided by financing activities		770,030			1,001,226
Change in cash		504			(50,081	)
Cash, beginning of year		2,607			52,688
Cash, end of year	$	3,111		$	2,607

See accompanying notes to financial statements

F-5

ALR TECHNOLOGIES INC.

Notes to Financial Statements

For the Years Ended December 31, 2017 and 2016

($ United States)

1.       Basis of presentation, nature of operations and going concern

ALR Technologies Inc. (the “Company”) was incorporated under the laws of the state of Nevada on March 24, 1987. 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 Health-e-Connect System. The Company is currently seeking pilot programs to deploy its product.

These consolidated financial statements have been prepared in accordance with Generally Accepted Accounting Principles in the United States of America (“U.S. GAAP”) in U.S dollars and on a going-concern basis, which presumes the realization of assets and the discharge of liabilities and commitments in the normal course of operations for the foreseeable future. Several adverse conditions cast substantial doubt on the validity of this assumption. The Company has incurred significant losses over the past several fiscal years (2017 - $2,842,025; 2016 - $10,093,733), is currently unable to self-finance its operations, has a working capital deficit of $25,976,379 (2016 - $23,230,725), accumulated deficit of $74,528,075 (2016 - $71,686,050), limited resources, no source of operating cash flow, and no assurance that sufficient funding will be available to conduct continued product development activities. If the Company is able to finance its required product development activities, there is no assurance the Company’s current projects will be commercially viable or profitable. The Company has debts comprised of accounts payable, interest, lines of credit and promissory notes payable totaling $25,979,490 currently due, due on demand or considered delinquent. There is no assurance that the Company will not face additional legal action from creditors regarding delinquent accounts payable, payroll payable, promissory notes and interest payable. Any one or a combination of these above conditions could result in the failure of the business and cause the Company to cease operations.

The Company’s ability to continue as a going-concern is dependent upon the continued financial support of its creditors and its ability to obtain financing to fund working capital and overhead requirements, fund the development of the Company’s product line and ultimately, the Company’s ability to achieve profitable operations and repay overdue obligations. Management has obtained short-term financing from related parties through lines of credit facilities with available borrowing in principal amount up to $10,500,000. As of December 31, 2017 the total principal balance outstanding was $10,398,249. The resolution of whether the Company is able to continue as a going concern is dependent upon the realization of management’s plans. If additional financing is required, the Company plans to raise needed capital through the exercise of share options and by future common share private placements. There can be no assurance that the Company will be able to raise any additional debt or equity capital from the sources described above, or that the lenders in the line of credit arrangements will maintain the availability of borrowing from the line. If management is unsuccessful in obtaining short-term financing or achieving long-term profitable operations, the Company will be required to cease operations.

On October 4, 2016, the Company’s wholly-owned inactive Canadian subsidiary, ALRTech Health Systems Inc. was dissolved and appropriately deconsolidated from such date.

F-6

ALR TECHNOLOGIES INC.

Notes to Financial Statements

For the Years Ended December 31, 2017 and 2016

($ United States)

1.       Basis of presentation, nature of operations and going concern (continued)

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

The Company’s activities will necessitate significant uses of working capital beyond 2017. Additionally, the Company’s capital requirements will depend on many factors, including the success of the Company’s continued product development and distribution efforts. The Company plans to continue financing its operations with the lines of credit it has available.

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

a) Stock-based compensation

The Company follows the fair value method of accounting for stock-based compensation. The Company estimates the fair value of share-based payment awards on the date of grant using an option pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as an expense over the requisite service period in the Company’s consolidated financial statements. The Company estimates the fair value of the stock options using the Black-Scholes Option Pricing Model. The Black-Scholes Option Pricing Model requires the input of highly subjective assumptions, including the option’s expected life and the price volatility of the underlying stock.

F-7

ALR TECHNOLOGIES INC.

Notes to Financial Statements

For the Years Ended December 31, 2017 and 2016

($ United States)

2.       Significant accounting policies (continued)

b) Income taxes

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

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

The Company follows the accounting requirements associated with uncertainty in income taxes using the provisions of Financial Accounting Standards Board (“FASB”) ASC 740, Income Taxes. Using that guidance, tax positions initially need to be recognized in the financial statements when it is more-likely-than-not the positions will be sustained upon examination by the tax authorities. It also provides guidance for derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. As of December 31, 2017, the Company has no uncertain tax positions that qualify for either recognition or disclosure in the financial statements.

c) Use of estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, the measurement of stock-based compensation, the fair value of financial instruments and the reported amounts of revenues and expenses during the reporting period. Management believes the estimates are reasonable; however, actual results could differ from those estimates.

d) Loss per share

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

F-8

ALR TECHNOLOGIES INC.

Notes to Financial Statements

For the Years Ended December 31, 2017 and 2016

($ United States)

2.       Significant accounting policies (continued)

e) Comprehensive income

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

f) Fair value of financial instruments

The Company’s financial instruments include cash, accounts payable, promissory notes payable and lines of credit. The fair values of these financial instruments approximate their carrying values due to the relatively short periods to maturity of these instruments. For fair value measurement, U.S. GAAP establishes a three-tier hierarchy which prioritizes the inputs used in the valuation methodologies in measuring fair value:

Level 1 — observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 — include other inputs that are directly or indirectly observable in the marketplace.

Level 3 — unobservable inputs which are supported by little or no market activity.

g)      Recently adopted and issued accounting pronouncements

i.       Adopted

In August 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-15, “Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern” (“ASU 2014-15”). ASU 2014-15 requires management to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern for each annual and interim reporting period. If substantial doubt exists, additional disclosure is required. This new standard was effective for the Company for annual and interim periods beginning after December 15, 2016. Adoption of this pronouncement did not have a material impact on the Company’s consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-09, Compensation — Stock Compensation: Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”). The new guidance will change how companies account for certain aspects of share-based payments to employees. Under existing accounting guidance, tax benefits and certain tax deficiencies arising from the vesting of share-based payments are recorded in additional paid-in-capital. The new guidance will require such benefits or deficiencies to be recognized as income tax benefits or expenses in the statement of operations. Companies are required to apply the new guidance prospectively. This new standard was effective for the Company for annual and interim periods beginning after December 15, 2016. Adoption of this pronouncement did not have a material impact on the Company’s consolidated financial statements.

F-9

ALR TECHNOLOGIES INC.

Notes to Financial Statements

For the Years Ended December 31, 2017 and 2016

($ United States)

2.       Significant accounting policies (continued)

h)       Recently adopted and issued accounting pronouncements

ii. Issued

In August 2016, the FASB issued Accounting Standards Update ("ASU") No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The new standard will make eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. The standard will be effective for the Company beginning January 1, 2018, with early application permitted. The standard will require adoption on a retrospective basis unless it is impracticable to apply, in which case we would be required to apply the amendments prospectively as of the earliest date practicable.

In May 2017, the FASB issued ASU 2017-09, Stock Compensation: Scope of Modification Accounting. The amendments in this update provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. ASU 2017-09 is effective for fiscal years and interim periods beginning after December 15, 2017, which will be effective for the Company for the quarter ending December 31, 2018. Early adoption is permitted. The Company is assessing the impact, if any, of implementing this guidance on its consolidated financial position, results of operations and liquidity.

In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), and Derivative and Hedging (Topic 815). The amendments in Part I of this update change the classification analysis of certain equity-linked financial instruments (or embedded features) with down-round features. When determining whether certain financial instruments should be classified as liabilities or equity instruments, a down-round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity's own stock. The amendments also clarify existing disclosure requirements for equity-classified instruments. As a result, a freestanding equity-linked financial instrument (or embedded conversion option) no longer would be accounted for as a derivative liability at fair value as a result of the existence of a down-round feature. For freestanding equity classified financial instruments, the amendments require entities that present earnings per share ("EPS") in accordance with Topic 260 to recognize the effect of the down-round feature when it is triggered. That effect is treated as a dividend and as a reduction of income available to common shareholders in basic EPS. Convertible instruments with embedded conversion options that have down-round features are now subject to the specialized guidance for contingent beneficial conversion features (in Subtopic 470-20, Debt-Debt with Conversion and Other Options), including related EPS guidance (in Topic 260). The amendments in Part II of this update recharacterize the indefinite deferral of certain provisions of Topic 480 that now are presented as pending content in the Accounting Standards Codification, to a scope exception. Those amendments do not have an accounting effect. ASU 2017-11 is effective for fiscal years and interim periods beginning after December 15, 2018, which will be effective for the Company for the quarter ending December 31, 2019. Early adoption is permitted. The Company is assessing the impact, if any, of implementing this guidance on its consolidated financial position, results of operations and liquidity.

F-10

ALR TECHNOLOGIES INC.

Notes to Financial Statements

For the Years Ended December 31, 2017 and 2016

($ United States)

2.       Significant accounting policies (continued)

h)       Recently adopted and issued accounting pronouncements

ii. Issued

The Company has implemented all new accounting pronouncements that are in effect and may impact its financial statements. The Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or statement of operations.

3.       Promissory notes and interest payable

a)       Promissory notes payable to related parties:

A summary of the promissory notes payable to related parties is as follows:

Promissory Notes Payable to Related Parties				December 31, 2017		December 31, 2016
Promissory notes payable to relatives of directors collateralized by a general security agreement on all the assets of the Company, due on demand:
	i.	Interest at 1% per month	$	580,619	$	580,619
	ii.	Interest at 1.25% per month		51,347		51,347
	iii.	Interest at the U.S. bank prime rate plus 1%		100,000		100,000
	iv.	Interest at 0.5% per month		695,000		695,00
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

F-11

ALR TECHNOLOGIES INC.

Notes to Financial Statements

For the Years Ended December 31, 2017 and 2016

($ United States)

3.       Interest, advances and promissory notes payable (continued)

b)       Promissory notes payable to unrelated parties

A summary of the promissory notes payable to unrelated parties is as follows:

Promissory Notes Payable to Unrelated Parties				December 31,		December 31,
				2017		2016
Unsecured promissory notes payable to unrelated lenders:
	i.	Interest at 1% per month, repayable on March 31, 2009, due on demand	$	450,000	$	450,000
	ii.	Interest at 1% per month, with $50,000 repayable on December 31, 2004, $75,000 repayable on August 18, 2007, $75,000 repayable on November 19, 2007 and the balance due on demand. All are due on demand, accruing interest at the same rate.		887,455		887,455
	iii.	Interest at 0.625% per month, with $50,000 repayable on October 5, 2004, $40,000 repayable on December 31, 2004, and $60,000 repayable on July 28, 2006, all due on demand		150,000		150,000
	iv.	Non-interest-bearing, repayable on July 17, 2005, due on demand		270,912		270,912
	v.	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		230,000
Total Promissory Notes Payable to Unrelated Parties			$	2,394,353	$	2,394,353

F-12

ALR TECHNOLOGIES INC.

Notes to Financial Statements

For the Years Ended December 31, 2017 and 2016

($ United States)

3.       Interest, advances and promissory notes payable (continued)

c)       Interest payable

A summary of the interest payable activity is as follows:

Balance, December 31, 2015	$	3,135,742
Interest incurred on promissory notes payable		494,171
Balance, December 31, 2016		3,629,913
Interest incurred on promissory notes payable		504,873
Transfer from implicit interest to interest payable on promissory note		172,470
Balance, December 31, 2017	$	4,307,256

As at December 31, 2017, the interest of $172,471 was transferred from imputed interest to interest payable as the Company determined it was more appropriate to treat interest amounts recorded as a liability for one promissory note which had no stated interest rate. The difference between the rate at which interest was imputed and the rate at which interest was deemed reasonable for accrual purposes, totaling $86,236, has been recorded as a recovery of expense.

	December 31,		December 31,
	2017		2016
Related parties (relatives of the Chairman)	$	2,255,529	$	1,956,403
Non-related parties		2,051,727		1,673,511
	$	4,307,256	$	3,629,913

The payment terms, security and any interest payable are based on the underlying promissory notes payable that the Company has outstanding.

e)       Interest expense

During the year ended December 31, 2017, the Company incurred interest expense of $1,861,971 (2016: $9,064,906) substantially as follows:

- $504,873 (2016: $494,170), including interest incurred on promissory notes (note 3(a)) and other payables;

- $1,202,250 (2016: $1,102,242) incurred on lines of credit payable as shown in note 4;

- $154,848 (2016: $148,426) incurred from the calculation of imputed interest on accounts payable outstanding for longer than one year, advances payable and promissory notes payable, which had no stated interest rate; and

- $nil (2016: $7,318,539) incurred on stock options granted to creditors (note 6(a)).

F-13

ALR TECHNOLOGIES INC.

Notes to Financial Statements

For the Years Ended December 31, 2017 and 2016

($ United States)

4.        Lines of credit

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

Creditor	Interest Rate	Borrowing Limit	Repayment Terms	Principal Borrowed	Accrued Interest	Total Outstanding	Security	Purpose
Chairman and CEO	1% per Month	$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

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

Creditor	Interest Rate	Borrowing Limit	Repayment Terms	Principal Borrowed	Accrued Interest	Total Outstanding	Security	Purpose
Chairman and CEO	1% per Month	$7,000,000	Due on Demand	$   7,628,219	$  2,490,958	$10,119,177	General Security over Assets	General Corporate Requirements
Wife of Chairman	1% per Month	$2,000,000	Due on Demand	$   2,000,000	$  1,256,385	$ 3,016,385	General Security over Assets	General Corporate Requirements
Total		$9,000,000		$   9,628,219	$  3,747,343	$13,375,562

On July 1, 2016, the Company and the Chief Executive Officer of the Company agreed to amend the existing credit agreement to increase the borrowing limit on the line of credit provided to the Company from $7,000,000 to $8,500,000.

5.       Capital stock

a) Authorized share capital

i. Common Stock

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 approved a reversal of such share split. The initial reverse share split and subsequent reversal are pending approval from the Securities and Exchange Commission (“SEC”) and other regulatory bodies.

F-14

ALR TECHNOLOGIES INC.

Notes to Financial Statements

For the Years Ended December 31, 2017 and 2016

($ United States)

5.       Capital stock (continued)

a) Authorized share capital (continued)

i. Common Stock (continued)

During the year ended December 31, 2016:

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

ii. Preferred Stock

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

b) Issued share capital

During the years ended December 31, 2017 and December 31, 2016:

There was no activity during the period.

6.        Additional paid-in capital

Stock options

A summary of stock option activity is as follows:

	Year Ended			Year Ended
	December 31, 2017			December 31, 2016
		Weighted Average			Weighted Average
	Number of Options	Exercise Price		Number of Options	Exercise Price
Outstanding, beginning of period	4,962,301,500	$	0.013	579,000,200	$	0.015
Granted	6,500,000		0.002	4,390,001,300		0.002
Cancelled	(4,950,000)		(0.061)	(6,700,000)		(0.030)
Outstanding, end of period	4,963,851,500	$	0.002	4,962,301,500	$	0.004
Exercisable, end of period	4,958,201,500	$	0.002	4,960,101,500	$	0.004

F-15

ALR TECHNOLOGIES INC.

Notes to Financial Statements

For the Years Ended December 31, 2017 and 2016

($ United States)

6.        Additional paid-in capital (continued)

Stock options (continued)

During the year ended December 31, 2017:

On November 27, 2017, the Company’s Board of Directors approved

· the grant of the option to 10 individuals 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.

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

The Company recorded compensation expense of $194,970 related to the grant of options.

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

During the year ended December 31, 2016:

On July 1, 2016, the Company and the Chief Executive Officer of the Company agreed to amend the existing credit agreement to increase the borrowing limit on the line of credit provided to the Company from $7,000,000 to $8,500,000 (Note 4). In exchange for Mr. Chan making available the additional loan of $1,500,000 to the Company, the Company:

· reduced the exercise price of the 560,000,200 shares of common stock under option to Mr. Chan and his spouse from $0.015 to $0.002;

· granted Mr. Chan and his spouse the right and option to purchase, an additional 4,390,001,300 shares of common stock at a price of $0.002 per share for a term of five years

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

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

F-16

ALR TECHNOLOGIES INC.

Notes to Financial Statements

For the Years Ended December 31, 2017 and 2016

($ United States)

6.        Additional paid-in capital (continued)

Stock options (continued)

Outstanding

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

	December 31, 2017				December 31, 2016
Expiry Date	Options		Exercise Price	Intrinsic Value	Options		Exercise Price		Intrinsic Value
May 27, 2017	-	$	0.030	-	400,000	$		0.030		-
May 31, 2017	-	$	0.050	-	500,000	$		0.050		-
August 16, 2017	-	$	0.030	-	250,000	$		0.030		-
December 28, 2017	-	$	0.030	-	1,000,000	$		0.030		-
January 28, 2018 *	1,200,000	$	0.030	-	1,500,000	$		0.030		-
March 26, 2018	500,000	$	0.030	-	500,000	$		0.030		-
April 9, 2018	500,000	$	0.030	-	1,000,000	$		0.030		-
May 21, 2019	500,000	$	0.030	-	500,000	$		0.030		-
July 25, 2019	1,000,000	$	0.030	-	1,000,000	$		0.030		-
August 1, 2019	1,250,000	$	0.030	-	1,250,000	$		0.030		-
August 26, 2019	-	$	0.030	-	1,500,000	$		0.030		-
January 30, 2020	2,400,000	$	0.030	-	2,900,000	$		0.030		-
May 29, 2020	560,000,200	$	0.002	-	560,000,200	$		0.002		-
July 21, 2021	4,390,001,300	$	0.002	-	4,390,001,300	$		0.002		-
November 27, 2022	6,500,000	$	0.020	-		$		0.020		-
Total	4,963,851,500	$	0.002	-	4,962,301,500	$		0.002		-
Weighted Average Remaining Contractual Life			3.35				4.38

* Subsequently expired, unexercised.

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:

F-17

ALR TECHNOLOGIES INC.

Notes to Financial Statements

For the Years Ended December 31, 2017 and 2016

($ United States)

6.        Additional paid-in capital (continued)

Stock options (continued)

	December 31, 2017	December 31, 2016
Risk-free interest rate	2.34%	1.68%
Expected life	5 years	5 years
Expected dividends	0%	0%
Expected volatility	330%	210%
Forfeiture rate	0%	0%

The weighted average fair value for the options granted during 2017 was $0.03 (2016: $0.002).

The fair value of the stock options granted and vested was allocated as follows:

		December 31, 2017		December 31, 2016
Interest expense	$	-	$	7,318,539
Product development expense		66,800		14,267
Professional expense		52,492		577
Selling, general and administration expenses:		80,937		3,170
	$	200,229	$	7,336,553

F-18

ALR TECHNOLOGIES INC.

Notes to Financial Statements

For the Years Ended December 31, 2017 and 2016

($ United States)

7.       Related party transactions and balances

		Year End December 31, 2017		Year End December 31, 2016
Related party transaction included within interest expense:
Interest expenses on promissory notes issued to relatives of the Chairman & Chief Executive Officer of the Company	$	299,125	$	288,426
Interest expense on lines of credit payable to the Chairman & Chief Executive Officer of the Company and his spouse	$	1,202,250	$	1,102,242
Stock based compensation related to stock options granted to the Chairman & Chief Executive Officer for increasing the borrowing limit on the line of credit available to the Company	$	-	$	7,318,539
Related party transactions including within selling, general and administration expenses:
Consulting fees to the Chairman & Chief Executive Officer of the Company accrued on the line of credit available to the Company	$	189,600	$	189,600
Stock-based compensation related to stock options granted a Director of the Company	$	70,489	$	-
Consulting fees paid to the President of the Company	$	-	$	15,500

Interest on promissory notes payable to related parties, management compensation and compensation paid to a relative of a director have been recorded at the exchange amount, which is the amount agreed to by the parties. Options granted to related parties have been recorded at their estimated fair value.

8.       Commitments and contingencies

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 $1,113,768, of these promissory notes and related accrued interest have been fully recognized and recorded by the Company. The Company has accrued additional interest of $172,471 related to one of these promissory notes.

F-19

ALR TECHNOLOGIES INC.

Notes to Financial Statements

For the Years Ended December 31, 2017 and 2016

($ United States)

8.       Commitments and contingencies (continued)

b) Commitments

The Company has a consulting arrangement with Mr. Sidney Chan, Chief Executive Officer and Chairman of the Board of Directors of the Company. Under the terms of the contract, Mr. Chan will be paid $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

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

F-20

ALR TECHNOLOGIES INC.

Notes to Financial Statements

For the Years Ended December 31, 2017 and 2016

($ United States)

9.       Financial instruments

The Company’s financial instruments consist of cash, accounts payable, interest payable, promissory notes payable to unrelated parties and promissory notes payable to related parties.

a) Fair value

The fair values of cash and certain accounts payable and accrued liabilities approximate their carrying values due to the relatively short periods to maturity of these instruments.

Certain accounts payable have been outstanding longer than one year. The Company has recorded imputed interest at a rate of 1% per month over the period the payables have been outstanding for longer than one year, with a corresponding amount recognized in additional paid-in capital. The calculated amount represents the implicit compensation for the use of funds beyond a reasonable term for regular trade payables.

For the purposes of fair value analysis, promissory notes payable to related parties and promissory notes payable to unrelated parties can be separated into two classes of financial liabilities.

i.       Interest-bearing promissory notes, lines of credit and related interest payable

ii.       Non-interest-bearing promissory notes past due

The interest-bearing promissory notes payable are all delinquent and have continued to accrue interest at their stated rates. The Company currently does not have the funds to extinguish these debts and will continue to incur interest until such time as the liabilities are extinguished. There is not an active market for delinquent loans for a Company with a similar financial position. Management asserts the carrying values of the promissory notes and related interest payable are a reasonable estimate of fair value as they represent the Company’s best estimate of their legal obligation for these debts. As there is no observable market for interest rates on similar promissory notes, the fair value was estimated using level 2 inputs in the fair value hierarchy.

The Company has one non-interest-bearing promissory notes payable past due. There is not an active market for default loans not bearing interest nor is there an observable market for lending to companies with a financial position similar to the Company. The Company has recorded imputed interest at a rate of 1% per month over the life of the promissory notes, with a corresponding amount recognized in additional paid-in capital representing the implicit compensation for the use of funds.  Management asserts the payment date for these amounts cannot be reasonably determined. Management further asserts there is not a determinable interest rate for arm’s-length borrowings based on the current financial position of the Company and asserts the carrying value is the best estimate of the Company’s legal liability and represents the fair value for the promissory note. This would be considered a level 2 input in the fair value hierarchy.

F-21

ALR TECHNOLOGIES INC.

Notes to Financial Statements

For the Years Ended December 31, 2017 and 2016

($ United States)

9.       Financial instruments (continued)

b) Credit risk

Financial instruments that potentially subject the Company to credit risk consist of cash. The Company only has an immaterial cash balance and is not exposed to significant credit risk.

c) Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices.  Market risk comprises two types of risk: interest rate risk and foreign currency risk.

i.       Interest rate risk

Interest rate risk consists of two components:

a)        Cash flow risk

To the extent that payments made or received on the Company’s monetary assets and liabilities are affected by changes in the prevailing market interest rates, the Company is exposed to interest rate cash flow risk.

The Company is exposed to interest rate cash flow risk on promissory notes payable of $500,000, which incur a variable interest rate of prime plus 1%. A hypothetical change of 1% on interest rates would increase or decrease net loss and comprehensive loss by $5,000.

b)       Price risk

To the extent that changes in prevailing market interest rates differ from the interest rate on the Company’s monetary assets and liabilities, the Company is exposed to price risk.

The Company’s promissory notes payable consist of $500,000 of variable interest rate notes and $4,786,319 of fixed interest rate notes. All of these notes are past due and are currently due on demand while interest continues to accrue. Due to the delinquency of the fixed interest rate promissory notes payable, there is no active market for these instruments and fluctuations in market interest rates do not have a significant impact on their estimated fair values as of December 31, 2017.

At December 31, 2017, the effect on the net loss and comprehensive loss of a hypothetical change of 1% in market interest rate cannot be reasonably determined.

F-22

ALR TECHNOLOGIES INC.

Notes to Financial Statements

For the Years Ended December 31, 2017 and 2016

($ United States)

9.       Financial instruments (continued)

c) Foreign currency risk

The Company incurs certain accounts payable and expenses in Canadian dollars and is exposed to fluctuations in changes in exchange rates between the US and Canadian dollars. As at December 31, 2017, the effect on net loss and comprehensive loss of a hypothetical change of 10% between the US and Canadian dollar would not be material. The Company has not entered into any foreign currency contracts to mitigate risk.

10.       Income taxes

The provision for income taxes differs from the result that would be obtained by applying the statutory tax rate of 34% (2016 - 34%) to income before income taxes. The difference results from the following items:

		December 31, 2017		December 31, 2016
Computed expected benefit of income taxes	$	(966,289)	$	(3,431,869)
Stock-based compensation		68,036		2,494,428
Non-deductible interest expense		52,648		50,465
Increase in valuation allowance		845,604		886,976
Income tax provision	$	-	$	-

The components of the net deferred income tax asset, the statutory tax rate and the amount of the valuation allowance are as follows:

		December 31, 2017		December 31, 2016
Net operating loss carried forward	$	39,717,436	$	34,924,072
Tax rate		34%		34%
Deferred income tax assets		13,503,928		11,874,184
Valuation allowance		(13,503,928)		(11,874,184)
Net deferred income tax asset	$	-	$	-

F-23

ALR TECHNOLOGIES INC.

Notes to Financial Statements

For the Years Ended December 31, 2017 and 2016

($ United States)

10.       Income taxes (continued)

The potential benefit of the deferred income tax asset has not been recognized in these financial statements since it cannot be assured that it is more likely than not that such benefit will be utilized in future years. The Company believes that the available objective evidence creates sufficient uncertainty regarding the realizability of the deferred income tax assets such that a full valuation allowance has been recorded.

The operating losses amounting to $39,717,436 for utilization in the United States of America, the jurisdiction where they were incurred, will expire between 2019 and 2037 if they are not used. The following table lists the fiscal year in which the loss was incurred and the expiration date of the operating loss carry-forwards:

Fiscal Year		Amount	Expiry Date
1999	$	88,022	2019
2000		4,425,866	2020
2001		3,681,189	2021
2002		2,503,951	2022
2003		2,775,900	2023
2004		1,250,783	2024
2005		1,304,283	2025
2006		1,532,322	2026
2007		1,479,818	2027
2008		1,599,919	2028
2009		1,723,146	2029
2010		822,678	2030
2011		1,746,615	2031
2012		1,638,421	2032
2013		2,568,328	2033
2014		2,855,631	2034
2015		2,927,200	2035
2016		2,471,978	2036
2017		2,487,072	2037
Total	$	39,717,436

11.       Subsequent events

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.

F-24

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

None

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of the Company’s management, including the principal executive officer and principal financial officer, as of the end of the period covered by this report, the Company conducted an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures, as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”).

The Company’s disclosure controls and procedures are designed to provide reasonable assurance that the information required to be included in the Company’s reports to Securities and Exchange Commission (“SEC”) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms relating to ALR Technologies Inc., including the Company’s consolidated subsidiaries, and was made known to them by others within those entities, particularly during the period when this report was being prepared. Based on that evaluation, the Principal Executive Officer and Principal Financial Officer have concluded that these disclosure controls and procedures are effective at these reasonable assurance levels.

Limitations on the Effectiveness of Controls

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

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

CEO and CFO Certifications

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

52

Management’s Report on Internal Control over Financial Reporting

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

Management’s Report on Internal Control over Financial Reporting (continued)

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

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

The Company’s management assessed the effectiveness of our internal control over financial reporting as of December 31, 2017. In making this assessment, the management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on the management’s assessment, as of December 31, 2017, the Company’s internal control over financial reporting was not effective based on those criteria.

Based on this assessment, we found our internal control over financial reporting to be not effective for the following reason:

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

Management of the Company believes that the material weaknesses set forth in (1) did not affect the Company’s financial results. The Company retains a consultant who has the technical expertise and knowledge to implement the proper segregation of duties and the development of effective internal controls over financial reporting. The Company is developing internal controls over financial reporting to meet its current and projected future needs.

In addition, management believes that preparing and implementing sufficient written policies and checklists will remedy that following material weaknesses: (i) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of the US GAAP and SEC disclosure requirements.

53

We will continue to monitor and evaluate the effectiveness of our internal controls and procedures and our internal controls over financial reporting on an ongoing basis and are committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow.

Changes in Internal Control over Financial Reporting

There were no changes in the Company’s internal control over financial reporting during the quarter ended December 31, 2017 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None

54

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE.

As of the date of this Form 10K, the names, ages and positions held by each of the officers and directors of the Company are as follows:

Name	Age	Position Held
Sidney Chan	67	Chairman of the Board of Directors, Chief Executive Officer and Chief Financial Officer
Kenneth James Robulak	69	A member of the Board of Directors
Dr. Alfonso Salas	57	A member of the Board of Directors
Ronald Cheng	68	A member of the Board of Directors
Peter Stafford	80	A member of the Board of Directors

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

Sidney Chan – Chairman of the Board of Directors, Chief Executive Officer

and Chief Financial Officer.

Director since December 1999, Chairman of the Board of Directors since July 2010, Chief Executive Officer & Principal Accounting Officer since April 2000.

Mr. Chan joined ALR Technologies Inc. in August 1997. He has assisted the Company’s financing, product development and corporate development. Mr. Chan has led the Company’s product development of the HeC. Mr. Chan possesses in-depth knowledge of the equity markets and investment industry, as well as a strong fundamental background in the responsibilities of corporate development and operations. Mr. Chan is an engineer and obtained his Bachelor of Engineering (Mining) degree with distinction in Mineral Economics from McGill University in 1973.

Kenneth James Robulak - A member of the Board of Directors of the Company

Director since August 21, 2012

From December 14, 1999 to January 31, 2001, Mr. Robulak was a member of our board of directors and from April 4, 2000 to January 31, 2001 Mr. Robulak was our chief financial officer, secretary, treasurer and vice president. Mr. Robulak resigned as officer and director of the Company on January 31, 2001. At the time of his resignation, Mr. Robulak did not have any disagreements with us relating to our operations, policies, or practices. Since July 2007, Mr. Robulak has worked as a marketing consultant to Teco Metal Products, LLC, a technology based manufacturing Company with operations in Dallas, Texas and Guadalajera, Mexico. Mr. Robulak earned a Bachelor of Commerce degree in finance and marketing and is a Fellow of the Institute of Canadian Bankers.

55

Dr. Alfonso Salas – A member of the Board of Directors of the Company

Director since August 21, 2012

Dr. Salas graduated with distinction from Universidad Metroplitana of Barranquilla, Colombia in 1983 with a Doctor of Medicine degree. He began practicing in Santa Marta, Columbia in rural medical facilities and the opened a private practice in 1984. He then worked as a physician with a number of shipping companies and became Medical Director in the office of the Ministry of Social Security and Labor of Columbia in 1991 doing medical assessments for work related accidents. In 1993 Dr. Salas was appointed Director of a Medical Service Plan of Columbia and with a support staff of more than thirty people, maintained a caseload, provided assessment procedures and referral services to hospitals, clinics, and specialists and organized and monitored clinical trials and clinical research in the pharmaceutical and medical field. Since 1995 Dr. Salas has operated his own business in Vancouver, British Columbia, providing medical based consulting services for corporations with a focus on budgeting, research and medical services.

Peter Stafford – A member of the Board of Directors of the Company

Director since August 1, 2014

Mr. Stafford is a retired lawyer and business consultant, having practised with Fasken Martineau DuMoulin LLP, a major Canadian based international law firm, and its predecessor firms, from 1966 to 2013, except for several years spent as in-house counsel for clients of the firm. Mr. Stafford's experience is in the areas of corporate and securities law, including mergers and acquisitions. Mr. Stafford joined one of the predecessor firms of Fasken Martineau in 1966 and was a senior partner and former chair of the Business Law department of the Firm’s Vancouver office. From 1985 to 1986, Mr. Stafford was Vice-President, General Counsel and Secretary of the Bank of British Columbia and from 1987 to 1989 he was Vice-President and Chief Counsel to Kaiser Resources Ltd., a finance and investment company. From 1989 until his retirement from full-time practice in 2006, Mr. Stafford served as senior partner in Faskin Martineu DuMoulin LLP, including leading the start of its Johannesburg, South Africa office in 2003. Since August 2013, Mr. Stafford has served as director, secretary and audit committee chair of Russell Breweries Inc. (TSX-V: RB). He was a director and subsequently secretary of WEX Pharmaceuticals Inc. (TSX listed) from September 2001 to its amalgamation in May 2011, a director and board chair of BC Bancorp (TSX listed) from October 1986 until its merger with Canadian Western Bank in November 1996, a director of Nissho Iwai (Canada) Ltd. a subsidiary of Nissho Iwai Corp. (now Sojitz Corp.) from June 1997 until October 2003 and a director of China One Corporation (TSX-V listed) from March 2007 until it was acquired in December 2008. Mr Stafford also served as Director of two private companies, Pikes Peak Resources Inc. from 2007 to 2012 and Paraguay Minerals Inc., from 2007 to date. Mr. Stafford obtained his Bachelor of Arts from the University of Cape Town in 1957 and obtained an LL. B from the University of South Africa in 1960.

Ronald Cheng – A member of the Board of Directors of the Company

Director since January 30, 2015

Ronald Cheng is a lawyer retired from Osler, Hoskin and Harcourt LLP, a major Canadian based international law firm, where he practiced as a partner from 1980 until his retirement in March 2014. He regularly appeared as counsel before the Canadian International Trade Tribunal, Canadian federal courts and on NAFTA and WTO matters and advised on NAFTA and other trade agreements. He represented and provided strategic advice to corporations including startups, trade associations and governments in anti-dumping, countervail and safeguard litigation, customs matters, commodity tax and government procurement disputes, as well import and export monitoring and controls. Mr. Cheng was listed in the Lexpert® Guides to Leading US/Canada Cross-border Litigation Lawyers and with highest listings in other leading legal directories such as Chambers, Martindale-HubbellÒ and Best LawyersÒ. Mr. Cheng received his Bachelor of Arts from Amherst College in 1972 and a Juris Doctor degree from the University of Toronto in 1974. Mr. Cheng is an active member of the Canadian Bar Association, American Bar Association, International Bar Association and Inter Pacific Bar Association.

56

Involvement in Certain Legal Proceedings

During the past ten years, Messrs. Chan, Robulak, Salas, Stafford and Cheng have not been the subject of the following events: 

1.         A petition under the Federal bankruptcy laws or any state insolvency law was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing;

2.         Convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses);

3.         The subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from, or otherwise limiting, the following activities;

i)          Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator,  floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;

ii)         Engaging in any type of business practice; or

iii)        Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws;

4.         The subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in paragraph 3.i in the preceding paragraph or to be associated with persons engaged in any such activity;

5.         Was found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated;

6.         Was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated; 

57

Involvement in Certain Legal Proceedings (continued)

7.         Was the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of:

i)          Any Federal or State securities or commodities law or regulation; or

ii)         Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or

iii)        Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or

8.         Was the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. 

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

Based solely upon a review of Forms 3, 4 and 5 furnished to the Company during the fiscal year 2017, all officers, directors and affiliates have filed their Forms 3, 4 and 5, on a timely basis except as follows:

· Peter Stafford and Ron Cheng failed to file a form 4 in a timely manner for their reduction of the exercise price to acquire 500,000 shares of common stock from $0.03 to $0.015 per share. Both Mr. Stafford and Mr. Cheng have since filed their Form 4 for the modification, and

· Ken Robulak failed to file a form 4 in a timely manner for his grant to acquire 2,350,000 shares of common stock at a price of $0.015 per share for five year. Mr. Robulak has filed his Form 4 since.

Audit Committee and Charter

The Company has an audit committee and audit committee charter. The Company’s audit committee is composed of Mr. Sidney Chan, Mr. Kenneth Robulak and Dr. Alfonso Salas. Mr. Robulak and Dr. Salas are deemed independent. Mr. Chan, as Chief Executive Officer is not independent. Mr. Robulak acts as the Chair of the Audit Committee. The Company’s audit committee is responsible for: (1) selection and oversight of its independent accountant; (2) establishing procedures for the receipt, retention and treatment of complaints regarding accounting, internal controls and auditing matters; (3) establishing procedures for the confidential, anonymous submission by company employees of concerns regarding accounting and auditing matters; (4) engaging outside advisors; and, (5) funding for the outside auditory and any outside advisors engagement by the audit committee.

Audit Committee Financial Expert

The board has determined that Messrs. Chan and Robulak and Dr. Salas qualify as audit committee financial experts

58

Nomination and Compensation Committees

The Company has a standing nomination committee composed of Mr. Sidney Chan, Mr. Kenneth Robulak and Dr. Alfonso Salas. Mr. Robulak acts as the Chair of the nomination committee.

The Company has a standing compensation committee composed of Mr. Sidney Chan, Mr. Kenneth Robulak and Dr. Alfonso Salas. Mr. Robulak acts as the Chair of the compensation committee.

Code of Ethics

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

Disclosure Committee

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

59

ITEM 11. EXECUTIVE COMPENSATION.

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

Summary Compensation Table

						Non-Equity	Non-qualified
				Stock	Option	Incentive	Deferred	All
Name and		Salary	Bonus	Awards	Awards	Plan	Earnings	Other	Total
Principal Position	Year	(US$)	(US$)	(US$)	(US$)	(US$)	(US$)	(US$)	(US$)
(a)	(b)	(c)	(d)	(e)	(f)	(g)	(h)	(i)	(j)
Sidney Chan [1] [2]	2017	180,000	0	0	0	0	0	9,600	189,600
Chief Executive Officer	2016	180,000	0	0	0	0	0	9,600	189,600
& Chief Financial	2015	180,000	0	0	0	0	0	9,600	189,600
Officer
Mr. William Smith [3]	2017	0	0	0	0	0	0	0	0
Former President	2016	15,000	0	0	0	0	0	500	15,500
	2015	180,000	0	0	0	0	0	0	186,000

[1]	All other compensation includes automobile allowance.
[2]	Salaries and other annual compensation for fiscal 2017, 2016 and 2015 totaling $189,600 for each year are paid as an increase in the line of credit payable by the Company to Mr. Chan. Options granted and vested to Sidney Chan for providing a line of credit are not included in the table above.
[3]	Resigned as President and member of the Board of Directors effective January 31, 2016. Other compensation is an office and administrative allowance.

60

Outstanding Equity Awards at December 31, 2017

							Equity Incentive Plan Awards: Number of Unearned Shares, Units that have not vested
	Number of Securities Underlying Unexercised Options Exercisable		Equity Incentive Plan Awards: Securities Underlying Unexercised Unearned Options
		Number of Securities Underlying Unexercised Options Unexercisable
				Option Exercise Price	Option Expiration Date	Number of Shares Or Units of Stock that have not Vested
Name
(a)	(b)	(c)	(d)	(e)	(f)	(g)	(h)
Sidney Chan	4,950,001,500	0	0	$0.002	2020/21	0	0
Dr. Alfonso Salas	-	0	0	-	-	0	0
Kenneth Robulak	3,350,000	0	0	$0.015	2022	0	0
Ronald Cheng	500,000	0	0	$0.015	2019	0	0
Peter Stafford	500,000	0	0	$0.015	2019	0	0

Mr. Sidney Chan

On March 6, 2011, Mr. Chan was granted the option to acquire 20,000,000 shares of common stock of the Company, exercisable at $0.125 per share. For each dollar, the Company borrows on the line of credit from Mr. Chan, eight stock options became exercisable. The option to acquire the 20,000,000 shares was set to expire on March 5, 2016.

On June 27, 2012, the option granted to Mr. Chan on March 6, 2011 to acquire 20,000,000 shares of common stock was modified as follows:

- The options in respect of shares not vested was to vest immediately

- The exercise price of the option was reduced from $0.125 per share to $0.07 per share and subsequently reduced to $0.05 per share on December 28, 2012

On June 27, 2012, the Company granted Mr. Chan the option to acquire 15,750,000 shares of common stock of the Company with an exercise price of $0.07 per share until March 6, 2016. On December 28, 2012, the exercise price of this option granted on June 27, 2012 was reduced to $0.05 per share.

On December 28, 2012, the Company granted Mr. Chan the option to acquire:

• 14,250,000 shares of common stock of the Company at an exercise price of $0.05 per share
• 50,000,000 shares of common stock of the Company at an exercise price of $0.03 per share

The options in respect of the 64,250,000 shares vest immediately and expire on December 28, 2017

On April 1, 2014, the Company and Mr. Chan agreed to increase the borrowing limit on the line of credit available by $1,500,000 in exchange for:

• granting Mr. Chan the option to acquire 83,333,400 shares of common stock of the Company at a price of $0.03 per share for a term of five years,
• modifying the exercise price of Mr. Chan’s option to acquire 35,750,000 shares of common stock of the Company, granted June 2012, from $0.05 per share to $0.03 per share,
• modifying the exercise price of Mr. Chan’s option to acquire 14,250,000 shares of common stock of the Company, granted December 2012, from $0.05 per share to $0.03 per share,
• modifying the exercise price of the option granted January 2011 to the spouse of Mr Chan (Ms. Kan), to acquire 20,000,000 shares of common stock of the Company from $0.05 per share to $0.03 per share, and
• granting Ms. Kan the option to acquire 26,666,700 shares of common stock of the Company at an exercise price of $0.03 per share for a term of five years.

61

Outstanding Equity Awards at December 31, 2017 (continued)

On May 29, 2015, the Company and Mr. Chan agreed to amend the existing credit agreement to increase the borrowing limit on the line of credit provided to the Company from $5,500,000 to $7,000,000. In exchange for Mr. Chan making available the additional loan of $1,500,000 to the Company, the Company:

· reduced the exercise price of the 230,000,100 shares of common stock under option to Mr. Chan and his spouse from $0.03 to $0.015;

· extended the expiry date of the 230,000,100 shares of common stock under option to Mr. Chan to be five years from the date of execution of the amended credit agreement;

· granted Mr. Chan the right and option to purchase, an additional 329,999,967 shares of common stock at a price of $0.015 per share for a term of five years from the date of execution of the amended credit agreement.

On July 1, 2016, the Company and Mr. Chan agreed to amend the existing credit agreement to increase the borrowing limit on the line of credit provided to the Company from $7,000,000 to $8,500,000. In exchange for Mr. Chan making available the additional loan of $1,500,000 to the Company, the Company:

· reduced the exercise price of the 560,000,200 shares of common stock under option to Mr. Chan and his spouse from $0.015 to $0.002;

· granted Mr. Chan and his spouse the right and option to purchase, an additional 4,390,001,300 shares of common stock at a price of $0.002 per share for a term of five years

Dr. Alfonso Salas

Dr. Salas was granted an option to acquire 250,000 shares of common stock at an exercise price of $0.07 per share, for five years which expire on August 21, 2017. On December 28, 2017, the exercise price was re-priced from $0.07 to $0.05 per share. On April 1, 2014, the exercise price of the option to acquire 250,000 shares of common stock was reduced from $0.05 to $0.03 per share. On July 25, 2014, the Company granted Dr. Salas the option to acquire 1,000,000 shares of common stock at a price of $0.03 for a term of five years. On August 15, 2014, the option to acquire 1,250,000 shares was exercised.

Mr. Peter Stafford

On August 1, 2014, the Company granted Mr. Stafford the option to acquire 500,000 shares of common stock at a price of $0.03 for a term of five years. On July 2, 2015, the exercise price of the option to acquire 500,000 shares of common stock of the Company was reduced from $0.03 per share to $0.015 per share.

Mr. Kenneth Robulak

On July 25, 2014, the Company granted Mr. Robulak the option to acquire 1,000,000 shares of common stock at a price of $0.03 for a term of five years. On July 2, 2015, the exercise price of the option to acquire 1,000,000 shares of common stock was reduced from $0.03 per share to $0.015 per share. On November 27, 2017, the Company granted Mr. Robulak the option to acquire 2,350,000 shares of common stock at a price of $0.015 for a term of five years.

Mr. Ronald Cheng

On August 1, 2014, the Company granted Mr. Cheng the option to acquire 500,000 shares of common stock at a price of $0.03 for a term of five years. On July 2, 2015, the exercise price of the option to acquire 500,000 shares of common stock of the Company was reduced from $0.03 per share to $0.015 per share.

 -

62

Option Exercises and Stock Vested for the year ended December 31, 2017

	Number of		Number of	Value
	Shares Acquired	Value Realized	Shares Acquired	Realized on
	On Exercise	On Exercise	On Vesting	Vesting
Name	(#)	($)	(#)	($)
(a)	(b)	(c)	(d)	(e)
Sidney Chan	0	0	0	0
William Smith	0	0	0	0
Peter Stafford	0	0	0	0
Alfonso Salas	0	0	0	0
Ronald Cheng	0	0	0	0
Kenneth Robulak	0	0	0	0

The Company does not have any long-term incentive plans except as disclosed below. The Company has contractual compensation arrangements with the following individuals:

Sidney Chan

The Company has a consulting arrangement with Mr. Sidney Chan, Chief Executive Officer and Chairman of the Board of Directors of the Company. Under the terms of the contract, Mr. Chan will be paid $180,000 per annum for services, receive a vehicle allowance of $800 per month, receive health care insurance and receive club allowances. The contract can be terminated at any time with thirty days’ notice and the payment of two years annual salary. Should the contract be terminated, all debts owed to Mr. Chan and his spouse must be immediately repaid. The initial term of the contract is for one year and automatically renews for continuous one year terms. Also under the terms of the contract are the following:

i. Incentive Revenue Bonus

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

ii. Sale of Business

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

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

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

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

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

63

Compensation of Directors

The Board of Directors consists of five members, Mr. Sidney Chan, Mr. Kenneth James Robulak, Dr. Alfonso Salas, Mr. Peter Stafford and Mr. Ronald Cheng. Mr. Kenneth Robulak, Dr. Alfonso Salas, Mr. Cheng and Mr. Stafford are independent directors.

The Company’s Board of Directors unanimously resolved that members receive no cash compensation for their services; however, they are reimbursed for travel expenses incurred in serving on the Board of Directors. Independent directors are compensated from time to time through the grant of options to purchase shares of common stock of the Company. Directors whom are also Officers or consultants of the Company are compensated for those positions as disclosed under Executive Compensation for those positions.

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

	Fees				Nonqualified
	Earned or			Non-Equity	Deferred
	Paid in	Stock	Option	Incentive Plan	Compensation	All Other
	Cash	Awards	Awards	Compensation	Earnings	Compensation	Total
Name	(US$)	(US$)	(US$)	(US$)	(US$)	(US$)	(US$)
(a)	(b)	(c)	(d)	(e)	(f)	(g)	(h)
Sidney Chan	0	0	0	0	0	0	0
Kenneth Robulak	0	0	70,489	0	0	0	70,489
Mr. Peter Stafford	0	0	0	0	0	0	0
Dr. Alfonso Salas	0	0	0	0	0	0	0
Mr. Ronald Cheng	0	0	0	0	0	0	0
Mr. William Smith	0	0	0	0	0	0	0

64

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Securities Authorized for Issuance under Equity Compensation Plans

The following table sets out information as at the end of the Company’s financial year ended December 31, 2016 with respect to compensation plans under which equity securities of the Company are authorized for issuance.

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights	Weighted-average exercise price of outstanding options, warrants and rights	Number of securities remaining available for future issuance under equity compensation plan (excluding securities reflected in column)
Equity compensation plans approved by security holders	0	0	0
Equity compensation plans not approved by security holders	4,963,851,500	$0.002	4,793,370,591
Total:	4,963,851,500	$0.002	4,793,370,591

Security Ownership of Certain Beneficial Owners

The following table sets forth, as of December 31, 2017, the beneficial shareholdings of persons or entities holding five percent or more of the Company’s common stock, each director individually, each named executive officer and all directors and officers of the Company as a group. Each person has sole voting and investment power with respect to the shares of Common Stock shown, and all ownership is of record and beneficial.

	Direct Amount of		Percent
Name of Beneficial Owner	Beneficial Owner	Position	of Class
Sidney Chan	5,068,498,982[1]	Chief Executive Officer, Chief Financial Officer, Member and Chairman of the Board of Directors	97.4%
Dr. Alfonso Salas	1,577,738[2]	Member of the Board of Directors	0.0%
Kenneth Robulak	4,540,000[3]	Member of the Board of Directors	0.1%
Peter Stafford	1,000,000[4]	Member of the Board of Directors	0.0%
Ronald Cheng	1,705,800[5]	Member of the Board of Directors	0.0%
All Officers and Directors
as a group (5 people)*	5,077,322,520		97.5%

65

Security Ownership of Certain Beneficial Owners (continued)

[1] Mr. Chan owns 14,845,000 shares of common stock and holds the following options to acquire shares of common stock at an exercise price of $0.002 per share:

· 466,666,800 until May 29, 2020

· 3,783,334,200 until July 1, 2021

Mr. Chan’s spouse owns 103,653,482 shares of common stock and holds the following options to acquire shares of common stock at an exercise price of $0.03 per share:

· 93,333,400 until May 29, 2020

· 606,667,100 until July 1, 2021

[2] Dr. Salas owns 1,577,738 shares of common stock.

[3] Mr. Robulak owns 1,190,000 shares of common stock. Mr. Robulak holds the option to acquire

· 1,000,000 shares of common stock at a price of $0.015 per share until July 19, 2019 and

· 2,350,000 shares of common stock at a price of $0.015 per share until November 27, 2022.

[4] Mr. Stafford owns 500,000 shares of common stock. Mr. Stafford holds the option to acquire 500,000 shares of common stock at a price of $0.015 per share until August 1, 2019.

[5] Mr. Cheng owns 1,205,800 shares of common stock. Mr. Cheng holds the option to acquire 500,000 shares of common stock at a price of $0.015 per share until August 1, 2019.

Changes in Control

Mr. Chan and his wife hold the option options to acquire 4,950,001,500 shares of common stock, all of which are exercisable. If the options were to be exercised by Mr. Chan and his wife, they would own over 50% of the common shares of the Company.

66

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

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

Year Ended December 31, 2017

During the 2017 fiscal year, the Company incurred interest expense of $299,125 on $2,891,966 of promissory notes due to relatives of Sidney Chan and interest expense of $1,202,250 on $10,398,249 of amounts outstanding on the lines of credit payable to Sidney Chan and Christine Kan. As at December 31, 2017, the accrued interest on promissory notes owed to relatives of Sidney Chan was $2,255,529. As at December 31, 2017, the accrued interest on the lines of credit was $4,949,593.

Year Ended December 31, 2016

During the 2016 fiscal year, the Company incurred interest expense of $288,526 on $2,891,966 of promissory notes due to relatives of Sidney Chan and interest expense of $1,102,242 on $9,628,219 of amounts outstanding on the lines of credit payable to Sidney Chan and Christine Kan. As at December 31, 2016, the accrued interest on promissory notes owed to relatives of Sidney Chan was $1,956,403. As at December 31, 2016, the accrued interest on the lines of credit was $3,747,343.

Director Independence

The following directors are considered independent pursuant to § 229.407 (Item 407) Corporate governance and sit on the following board committees where indicated:

Kenneth Robulak, Audit Committee Chair, Nomination Committee Chair, Compensation Committee Chair

Alfonso Salas, Audit Committee, Nomination Committee, Compensation Committee

Peter Stafford (no committee appointment)

Ronald Cheng (no committee appointment)

Sidney Chan is not considered independent pursuant to § 229.407 (Item 407) Corporate governance and sits on the Audit Committee, Nomination Committee and Compensation Committee.

67

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

(1)       Audit Fees

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

2017	$ 20,000	Dale Matheson Carr-Hilton LaBonte LLP
2016	$ 20,000	Dale Matheson Carr-Hilton LaBonte LLP

(2)       Audit-Related Fees

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

2017	$ 12,000	Dale Matheson Carr-Hilton LaBonte LLP
2016	$ 12,000	Dale Matheson Carr-Hilton LaBonte LLP

(3)       Tax Fees

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

2017	$  2,000	Dale Matheson Carr-Hilton LaBonte LLP
2016	$  2,000	Dale Matheson Carr-Hilton LaBonte LLP

(4)       All Other Fees

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

2017	$       0	Dale Matheson Carr-Hilton LaBonte LLP
2016	$       0	Dale Matheson Carr-Hilton LaBonte LLP

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

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

68

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

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

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SIGNATURES

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

	ALR TECHNOLOGIES, INC.
	(Registrant)
DATE: March 30, 2018	BY:	“Sidney Chan”
		Sidney Chan
		Chairman, Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer and a member of the Board of Directors

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

Signatures	Title	Date
“Sidney Chan”	Chairman, Principal Executive Officer, Principal	March 30, 2018
Mr. Sidney Chan	Financial Officer, Principal Accounting Officer and
	a member of the Board of Directors
“Peter Stafford”	Member of the Board of Directors	March 30, 2018
Mr. Peter Stafford
“Kenneth J. Robulak”	Member of the Board of Directors	March 30, 2018
Mr. Kenneth J. Robulak
“Alfonso Salas”	Member of the Board of Directors	March 30, 2018
Dr. Alfonso Salas
“Ronald Cheng”	Member of the Board of Directors	March 30, 2018
Mr. Ronald Cheng

70