Filed Pursuant to Rule 424(b)(3)

Registration No. 333-265166

 

 

PROSPECTUS/INFORMATION STATEMENT

 

Information Statement regarding Action by Written Consent of STOCKHOLDERS of ALR Technologies Inc.

 

and

 

Prospectus for up to 551,966,844 Ordinary Shares of ALR Technologies SG Ltd.

 

Merger of ALRT Delaware, Inc. with and into ALR Technologies Inc.

 

NOTICE OF STOCKHOLDER ACTION BY WRITTEN CONSENT

 

WE ARE NOT ASKING YOU FOR A PROXY 

AND YOU ARE REQUESTED NOT TO SEND US A PROXY

 

To the Stockholders of ALR Technologies Inc.:

 

NOTICE IS HEREBY GIVEN that the Board of Directors (the “Board”) of ALR Technologies Inc., a Nevada corporation (“ALR Nevada,” “we,” “us,” “our,” or the “Company”), has approved, and the holders of a majority of the outstanding shares of our common stock, par value $0.001 per share (the “ALR Nevada Shares”), have executed a written consent in lieu of a special meeting approving, a merger agreement (“Merger Agreement”) with ALR Technologies SG Ltd., a Singapore company limited by shares (“ALR Singapore”), and its wholly-owned subsidiary, ALRT Delaware, Inc., a Delaware corporation (“ALR Delaware”), pursuant to which ALR Delaware will merge with and into ALR Nevada (the “Reincorporation Merger”), and ALR Nevada will be the surviving entity and a wholly-owned subsidiary of ALR Singapore. At the closing of the Reincorporation Merger, ALR Singapore will issue ordinary shares (the “ALR Singapore Ordinary Shares”) to ALR Nevada’s shareholders.

 

The stockholder action by written consent was taken pursuant to Section 78.320 of the Nevada Revised Statutes (“NRS”), which permits any action that may be taken at a meeting of the stockholders to be taken by written consent by the holders of the number of shares of voting stock required to approve the action at a meeting. Pursuant to the NRS, approval of the Reincorporation Merger requires the affirmative vote or written consent of the holders of a majority of the outstanding shares of common stock of the Company. The Board set the close of business on May 11, 2022 as the record date for determining the stockholders of the Company entitled to consent in writing to adopt the Reincorporation Merger and the Merger Agreement and to receive this prospectus/information statement.

 

 

 

 

 

 

Please be advised that on May 11, 2022, Sidney Chan and his spouse, Christine Kan, collectively holding approximately 70.7% of our issued and outstanding shares of stock (the “Majority Stockholder”), executed a written consent (the “Written Consent”) approving the Merger Agreement and the Reincorporation Merger. Accordingly, the delivery of the Written Consent was sufficient to approve the Merger Agreement and the transactions contemplated thereby, including the Reincorporation Merger, on behalf of the stockholders of the Company. No other votes of stockholders of the Company are required or necessary to approve the Reincorporation Merger, and none are being solicited hereunder. Pursuant to Rule 14c-2 under the Exchange Act, this corporate action will not be effected until twenty (20) calendar days after the filing and mailing of the prospectus/information statement to our stockholders, or as soon as practicable thereafter. This prospectus/information statement is being furnished to all stockholders of the Company for informational purposes only, to inform stockholders of these corporate actions before they take effect. We anticipate mailing the Notice of Stockholder Action by Written Consent to the Stockholders on or about October 4, 2022. We anticipate that the Reincorporation Merger will become effective on or about November 5, 2022.

 

WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND A PROXY.

 

More information about the Company, ALR Singapore, ALR Delaware and the proposed transaction is contained in this prospectus/information statement. We urge you to read the accompanying prospectus/information statement carefully and in its entirety. A copy of the Merger Agreement is attached as Annex A to this document. You should also carefully consider the matters discussed under “risk factors” beginning on page 10.

 

We look forward to the successful consummation of the Reincorporation Merger, and thank you for your consideration and continued support.

 

Sidney Chan

Chief Executive Officer

ALR Technologies Inc.

 

September 29, 2022

 

 

 

 

 

 

IMPORTANT NOTE ABOUT THIS PROSPECTUS/INFORMATION STATEMENT

 

The sections entitled “Questions and Answers” and “Summary” below highlight selected information from this prospectus/information statement, but they do not include all of the information that may be important to you. To better understand the Merger Agreement and the Reincorporation Merger, and for a more complete description of legal terms thereof, you should carefully read this entire prospectus/information statement, including the section entitled “Risk Factors” and the Merger Agreement, a copy of which is attached as Annex A hereto and incorporated by reference, as well as any documents that are incorporated by reference into this prospectus/information statement, which contain important business and financial information about the Company that is not included in or delivered with the document. See “Where You Can Find More Information.”

 

No one has been authorized to provide you with information that is different from that contained in, or incorporated by reference into, this prospectus/information statement. You should not assume that the information contained in, or incorporated by reference into, this prospectus/information statement is accurate as of any date other than, in the case of this prospectus/information statement, the date on the front cover of this prospectus/information statement and, in the case of information incorporated by reference, the respective dates of such referenced documents. Neither the mailing of this prospectus/information statement to Company stockholders, nor the issuance by ALR Singapore of ALR Singapore Ordinary Shares in connection with the Reincorporation Merger, will create any implication to the contrary.

 

 

Our ALR Nevada Shares are currently quoted on the OTCQB tier (the “OTCQB”) of the OTC Markets Group, under the symbol “ALRT.” We will seek approval from the OTCQB to trade the ALR Singapore Ordinary Shares under the same symbol upon effectiveness of the Reincorporation Merger or as soon thereafter as reasonably practicable; however no assurance can be given that such approvals will be granted.

 

See the “Risk Factors” beginning on page 10 of this prospectus/information statement for a discussion of certain risks that you should consider as shareholders of the Company with respect to the Reincorporation Merger, and the ownership of the ALR Singapore Ordinary Shares.

 

 

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS/INFORMATION STATEMENT IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

 

 

 

This prospectus/information statement is dated September 29, 2022, and is first being sent or given to
our stockholders on or about October 4, 2022.

  

table of contents 

 

 

Page     

 

Forward Looking Statements 1
Questions and Answers 3
Summary of Prospectus/Information Statement 6
Risk Factors 10
Reincorporation Merger 25
Historical Consolidated Financial Statements and Pro Forma Financial Information 67
Management’s Discussion and Analysis of  Financial Condition and Results of Operations 68
Market Value of Securities 88
Business 88
Management 99
Executive Compensation 102
Principal Shareholders 108
Certain Relationships and Transactions 110
Service of Process and Enforcement of Civil Liabilities 112
Annual Shareholder Meeting 112
Legal Matters 112
Experts 112
Transfer Agent and Registrar 112
Where You Can Find Additional Information 112
Index to Financial Statements 113
Annex Index 114
 

 

 

In this prospectus/information statement, unless otherwise indicated or the context otherwise requires, all references to “ALR Technologies, Inc.” or “ALRT,” the “Company,” “we,” “our,” “ours,” “us” or similar terms refer to ALR Technologies, Inc., a Nevada corporation, together with its subsidiaries, prior to the Reincorporation Merger. The trademarks, trade names and service marks appearing in this prospectus/information statement are property of their respective owners. The term “you” means you, the reader and a stockholder of the Company. The term “ALR Singapore” refers to ALR Technologies SG Ltd., a Singapore company limited by shares, whose shares you are expected to own after we change the corporate jurisdiction of the Company from Nevada to Singapore pursuant to the Reincorporation Merger.

 

 

 

 

 

 

Forward Looking Statements

 

This prospectus/information statement and documents incorporated by reference herein contain forward-looking statements. Many of the forward-looking statements contained in this prospectus/information statement can be identified by the use of words such as “anticipate,” “believe,” “could,” “expect,” “should,” “plan,” “intend,” “will,” “estimate” and “potential,” among others, or the negatives thereof.

 

Such forward-looking statements include, but are not limited to, statements regarding our intent, belief or current expectations. Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available to our management. Such statements are subject to risks and uncertainties, and actual results may differ materially from those expressed or implied in the forward-looking statements due to various factors, including but not limited to, those identified under “Risk Factors” in this prospectus/information statement. These risks and uncertainties include factors relating to:

 

  our operation as a development-stage company with limited operating history and a history of operating losses;

  our need for substantial additional funding to continue the development of our product candidates before we can expect to become profitable from sales of our products and the possibility that we may be unable to raise additional capital when needed;

  the outcome of our review of strategic options and of any action that we may pursue as a result of such review;

  the chance that we may become exposed to costly and damaging liability claims resulting from the testing of our product candidates in the clinic or in the commercial stage;

  the chance our clinical trials may not be completed on schedule, or at all, as a result of factors such as delayed enrollment or the identification of adverse effects;

  uncertainty surrounding whether any of our product candidates will receive regulatory approval, which is necessary before they can be commercialized;

  if our product candidates obtain regulatory approval, our product candidates being subject to expensive, ongoing obligations and continued regulatory overview;

  enacted and future legislation may increase the difficulty and cost for us to obtain marketing approval and commercialization;

  dependence on governmental authorities and health insurers establishing adequate reimbursement levels and pricing policies;

  our products may not gain market acceptance, in which case we may not be able to generate product revenues;

  our reliance on our current strategic relationships and the potential success or failure of strategic relationships, joint ventures or mergers and acquisitions transactions;

  our reliance on third parties to conduct our nonclinical and clinical trials and on third-party, single-source suppliers to supply or produce our product candidates;

  our ability to obtain, maintain and protect our intellectual property rights and operate our business without infringing or otherwise violating the intellectual property rights of others;

 

  our ability to comply with the requirements under our loan facilities, including repayment of amounts currently outstanding and overdue, and amounts outstanding when due;
     
  our ability to remain on the OTCQB as a trading market for our common stock;

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  the chance that certain intangible assets related to our product candidates will be impaired; and

  other risk factors discussed under “Risk Factors.”

Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update them in light of new information or future developments or to release publicly any revisions to these statements in order to reflect later events or circumstances or to reflect the occurrence of unanticipated events.

 

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Questions and Answers

 

The following questions and answers are intended to briefly address some questions that you may have regarding the Reincorporation Merger and the Merger Agreement. We urge you to carefully read the remainder of this prospectus/information statement because these questions and answers may not address all questions or provide all information that might be important to you with respect to the Reincorporation Merger and the Merger Agreement. Additional important information is also contained in the annexes and the documents incorporated by reference into this prospectus/information statement. You may obtain the information incorporated by reference into this information statement/prospectus without charge by following the instructions under “Where You Can Find More Information.”

 

 

  Q: Why am I receiving these materials?

 

  A: Our board of directors determined that it would be in the best interest of the Company to change our jurisdiction of incorporation from Nevada to Singapore (the “Reincorporation”). On May 17, 2022, ALR Nevada entered into the Merger Agreement to effect the Reincorporation. The Merger Agreement is described in this prospectus/information statement and is attached as Annex A hereto. You are receiving this document in connection with the issuance of ALR Singapore Ordinary Shares to the stockholders of ALR Nevada in accordance with the terms of the Merger Agreement. The delivery of the Written Consent by the Majority Stockholder is sufficient to approve the Merger Agreement and the transactions contemplated thereby, including the Reincorporation Merger, on behalf of the stockholders of ALR Nevada. You are not being asked for a proxy, and you are requested not to send a proxy. This Notice of Stockholder Action by Written Consent shall constitute notice to you from the Company that the Reincorporation Merger has been approved by the holders of a majority of the voting power of the Company common stock by written consent in lieu of a meeting in accordance with Section 78.320 of the NRS.

  

  Q: Why has the Board proposed the Reincorporation?

 

  A: We believe that the Reincorporation from Nevada to Singapore will provide the Company with additional corporate flexibility, result in cost savings, and that Singapore is a jurisdiction more familiar to most of our current and potential new investors, ultimately resulting in improved access to capital markets. Through ALR Singapore (our historic subsidiary that after the Reincorporation will become the parent company of ALR Nevada), we already have a growing substantial business presence in Singapore, which we anticipate will continue to grow after the Reincorporation Merger. The Company’s primary executive officer, Sidney Chan, resides in Singapore with his wife, Christine Kan, who is a resident of Singapore and will serve as Vice President of ALR Singapore. Sidney and Christine beneficially own 70% of the shares of common stock of ALR Nevada. A significant percentage of the Company’s employees and operating assets are based in Singapore and the Company has other shareholders residing in Singapore who hold significant amounts of Company stock. Singapore, as a member of the Association of Southeast Asian Nations (“ASEAN”), is located in close proximity to suppliers of continuous glucose monitoring devices and blood glucose meters. Based on the relationships of our CEO, we believe we have improved access to personnel to grow the business in Singapore. More than 70% of the tangible property and real property leases of the Company are located in Singapore, and substantially all of the Company’s income is attributable to Singapore customers.

 

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  Q: What will be the effect of the Reincorporation Merger?

 

  A: Upon effectiveness of the Reincorporation Merger, ALR Delaware will be merged with and into ALR Nevada, with ALR Nevada surviving the Reincorporation Merger as a wholly-owned subsidiary of ALR Singapore. ALR Delaware’s corporate existence will cease.

 

  Q: What will stockholders of ALR Nevada receive in the Reincorporation Merger?

 

  A: At the effective time the Reincorporation Merger (the “Effective Time”), each outstanding ALR Nevada Share will be cancelled and the holders thereof will receive or be allotted and issued an equal number of ALR Singapore Ordinary Shares. Currently there are 551,966,844 shares of common stock of ALR Nevada issued and outstanding. Each of the 362,000,000 compensatory incentive stock options (“ALR Nevada Options”) and 5,160,501,500 finance options (“ALR Nevada Warrants”) to purchase ALR Nevada Shares currently outstanding, whether vested or unvested, will be cancelled. In exchange for such cancellation, the holders of the ALR Nevada Options will receive, on a one for one basis, options to subscribe for an aggregate of 362,000,000 ALR Singapore Ordinary Shares (the “ALR Singapore Options”), and the holders of the ALR Nevada Warrants will receive, on a one for one basis, warrants to subscribe for an aggregate of 5,160,501,500 ALR Singapore Ordinary Shares (the “ALR Singapore Warrants”).

 

  Q: Will the ALR Singapore Ordinary Shares continue to be publicly traded?

 

  A: The ALR Nevada Shares are currently authorized for trading on the OTCQB under the symbol “ALRT”.  ALR Singapore intends to submit an application so that ALR Singapore Ordinary Shares would continue to be quoted on the OTCQB tier of the OTC Markets Group under the symbol “ALRT”. Neither ALR Nevada nor ALR Singapore can assure you that the ALR Singapore Ordinary Shares will be approved for quotation on the OTCQB or under the symbol “ALRT”.
     
  Q: When will the Reincorporation Merger be completed?

 

  A: ALR Nevada and ALR Singapore are working to complete the Reincorporation Merger as soon as possible. Certain conditions must be satisfied or waived before the parties can complete the Reincorporation Merger. See “The Merger Agreement— Conditions to Consummation of the Reincorporation.” Assuming timely satisfaction or waiver of the closing conditions, the Reincorporation Merger is expected to close in the third or fourth quarter of 2022.

 

  Q: Should ALR Nevada stockholders deliver their shares of common stock now?

 

  A: No. After the Reincorporation Merger is completed, any ALR Nevada Shares you hold as of the Effective Time, either electronically in book entry form, or represented by share certificates, automatically will be converted into the right to receive the ALR Singapore Ordinary Shares (the “Merger Consideration”). After the Effective Time, the Company will notify all stockholders of record of ALR Nevada Shares that the Reincorporation has become effective, and will cause it’s exchange agent, Pacific Stock Transfer, to mail to each such holder of record of ALR Nevada Shares entitled to receive the Merger Consideration a letter of transmittal with respect to book-entry shares (to the extent applicable) and certificates, and instructions for use in effecting the surrender of book-entry shares or certificates in exchange for the Merger Consideration.

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  Q: Will the stockholders of ALR Nevada be entitled to dissenter’s rights of appraisal?

 

  A: Under Section 92A.380 of the NRS, if the Reincorporation Merger is completed, subject to compliance with the requirements of Sections 92A.300 to 92A.500 of the NRS, holders of ALR Nevada Shares (other than the Majority Stockholder), will have the right to dissent and demand payment in an amount that the Company estimates to be the fair value of each dissenter’s shares. Each dissenter will then have the right to contest the Company’s estimate of fair value. In order to exercise your dissenters’ rights, you must demand payment in writing no later than 30 days after the mailing of this prospectus/information statement, and comply precisely with other procedures set forth in Sections 92A.300 to 92A.500 of the NRS, which are included as Annex B to the prospectus/information statement. This prospectus/information statement shall constitute notice to you from the Company of the availability of dissenters’ rights under Sections 92A.300 to 92A.500 of the NRS.

 

  Q: What are the expected U.S. federal income tax consequences for an ALR Nevada stockholders, and for ALR Singapore and ALR Nevada, as a result of the Reincorporation Merger?

 

  A: Each U.S. Holder (as defined below in “Reincorporation Merger—U.S. Federal Income Tax Considerations”) of ALR Nevada Shares will realize taxable gain (but not loss) to the extent the fair market value of its ALR Singapore Ordinary Shares exceeds such U.S. Holder’s adjusted tax basis in its ALR Nevada Shares on the date of the Reincorporation Merger. If this exchange results in realized gain, the realized gain will be taxable as short term capital gain if the U.S. Holder has held its ALR Nevada Shares for one year or shorter at the time of the Reincorporation Merger or as long term capital gain to the extent the U.S. Holder has held the ALR Nevada Shares for over one year at the time of the Reincorporation Merger. Long term capital gain is taxable at a maximum rate of 20% whereas short term capital gains are taxable at ordinary effective income tax rates. A corporate U.S. Holder’s capital gains, long-term and short-term, are taxed at ordinary income tax rates (currently, a maximum rate of 21%).

 

Non-U.S. Holders of ALR Nevada will generally not be subject to U.S. tax upon their exchange of ALR Nevada Shares for ALR Singapore Ordinary Shares, except in limited circumstances discussed below. 

 

ALR Nevada will continue being subject to U.S. federal income tax on its worldwide income after the Reincorporation Merger. We believe ALR Singapore will not be treated as a U.S. corporation under Section 7874 of the Code, and consequently should only be subject to U.S. tax on its U.S. source income.

 

  Q: What happens if the Reincorporation Merger is not consummated?

 

  A: If the Reincorporation Merger is not completed for any reason, you will not receive or be allotted or issued any ALR Singapore Ordinary Shares for any shares of ALR Nevada common stock that you hold. In such case, the common shares of ALR Nevada will remain outstanding and will continue to be traded on the OTCQB, and ALR Nevada will remain a publicly traded corporation organized under the laws of the State of Nevada. Ownership of the Company’s wholly-owned subsidiary, ALR Singapore, represented by one ALR Singapore Ordinary Share, will revert and be transferred back to ALR Nevada by KAD (as defined below), such that ALR Singapore will continue to be a wholly-owned subsidiary of ALR Nevada.

 

  Q: Who do I call if I have further questions about the Reincorporation Merger or the Merger Agreement?

 

  A: ALR Nevada stockholders who have questions about the Reincorporation Merger or who desire additional copies of this prospectus/information statement or other additional materials should contact:

ALR Technologies, Inc.
Attn:

Ken Robulak (North America) (804-554-3500)

Anthony Ngai (Outside North America) (65 3129 2924)
7400 Beaufont Springs Dr., Suite 300

Richmond, Virginia 23225 

 

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Summary of Prospectus/Information Statement

 

This summary highlights selected information from this prospectus/information statement and may not contain all of the information that is important to you. To better understand the Reincorporation Merger and the Company’s stockholder actions that are the subject of the Written Consent, you should read this entire prospectus/information statement carefully, including the Merger Agreement attached as Annex A and the other annexes to which you are referred herein. For more information, please see the section entitled “Where You Can Find More Information” in this prospectus/information statement.

 

Our Business

 

ALRT is a data management company that developed a comprehensive approach to diabetes care that includes: (i) a Food and Drug Administration (“FDA”) cleared and Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) compliant diabetes management system (the “Diabetes Solution”) that collects data directly from blood glucose meters (“BGM”) (and which was subsequently modified to integrate with continuous glucose monitoring (“CGM”) devices), (ii) a patent pending Predictive A1C algorithm to track treatment success between lab reports, and (iii) an FDA-cleared Insulin Dosing Adjustment program that provides the physician with therapy advancement suggestions based on current clinical practice guidelines. From this technology portfolio, the Company has developed the Diabetes Solution for human health, and the GluCurve, a modified version of the Diabetes Solution, for animal health (“GluCurve”).

 

In the future, the Company may seek to adapt its Diabetes Solution to be used in the management of other chronic diseases. The Company may be required to obtain additional clearance from the FDA, or other regulatory agencies, prior to commencing selling activities in the United States, or from comparable regulatory bodies in other countries, for other chronic health conditions.

 

The Reincorporation Merger

 

On May 11, 2022, our board of directors approved this prospectus/information statement, and confirmed their determination that it would be in the best interest of the Company to change our jurisdiction of incorporation from Nevada to Singapore (as previously defined, the “Reincorporation”). Our Majority Stockholder has executed the Written Consent approving the Reincorporation.

 

We are proposing to effect that change by effecting a reincorporation merger, pursuant to which the Company will become a wholly-owned subsidiary of ALR Singapore, and the stockholders of the Company will exchange their shares of common stock and options to purchase common stock, on a one-for-one basis, for ordinary shares and options to purchase ordinary shares of ALR Singapore, as applicable.

 

In order to facilitate the Reincorporation Merger and to comply with Singapore law, (i) ownership of the Company’s wholly-owned subsidiary, ALR Singapore, represented by one ALR Singapore Ordinary Share, was transferred (pending completion of the Reincorporation) to KAD Holdings Pte. Ltd. (“KAD”), a Singapore private company owned by trust entities controlled by our CEO, Sidney Chan, and (ii) ALR Singapore formed a new Delaware subsidiary corporation, ALR Delaware.

 

Upon consummation of the Reincorporation Merger and effectiveness of the requisite filings with the Nevada and Delaware Secretaries of State, ALR Delaware will be merged with and into ALR Nevada, with ALR Nevada surviving the Reincorporation Merger as a wholly-owned subsidiary of ALR Singapore, and ALR Delaware’s corporate existence will cease. ALR Nevada will continue its corporate existence as the primary asset of ALR Singapore. ALR Nevada will remain a corporation organized under Nevada law.

 

Upon effectiveness of the Reincorporation Merger, each outstanding ALR Nevada Share will be cancelled and the holders thereof will receive or be allotted and issued an equal number of ALR Singapore Ordinary Shares. Accordingly, subject to the de minimis impact of the one ALR Singapore Ordinary Share transferred to KAD as described above, the owners of ALR Nevada prior to the Reincorporation will own ALR Singapore Ordinary Shares, in the substantially the same amounts and percentages as they held ALR Nevada Shares. In addition, each of the 362,000,000 compensatory ALR Nevada Options, and 5,160,501,500 ALR Nevada Warrants currently outstanding, whether vested or unvested, will be cancelled. In exchange for such cancellations, the holders of the ALR Nevada Options will receive, on a one for one basis, an aggregate of 362,000,000 ALR Singapore Options, and the holders of the ALR Nevada Warrants will receive, on a one for one basis, an aggregate of 5,160,501,500 ALR Singapore Warrants.

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Continuation of the Company Business Unchanged

 

For holders of ALR Nevada Shares, much will remain unchanged following the Reincorporation Merger. There will be some differences in your shareholder rights, given the differences between the laws of Nevada and Singapore as they relate to companies incorporated in these jurisdictions. The attached prospectus/information statement includes sections outlining these differences, including “Description of ALR Singapore Share Capital” on page 40, and “Comparison of Corporate Law” on page 48. Upon closing the Reincorporation Merger, ALR Nevada stockholders will have their ALR Nevada Shares exchanged on a one-for-one basis for ordinary shares of ALR Singapore Ordinary Shares. For U.S. federal income tax purposes, U.S. Holders (as defined below in “Reincorporation Merger—U.S. Federal Income Tax Considerations”) of ALR Nevada Shares will recognize gain (but not loss) as a result of the Reincorporation Merger. The registration statement of which this prospectus/information statement forms a part is registering the exchange of ALR Nevada Shares for ALR Singapore Ordinary Shares on a one-for-one basis. The Reincorporation Merger also provides for the exchange of outstanding options to purchase shares of Common Stock of ALR Nevada on a one-for-one basis, for options to subscribe for ALR Singapore Ordinary Shares. It is anticipated that the ALR Singapore Ordinary Shares will be approved for trading on the OTCQB tier, and ALR Singapore will seek to have the ALR Singapore Ordinary Shares trade under the same ticker symbol under which the ALR Nevada Shares are currently traded (ALRT); however no assurance can be given that such approvals will be granted. Provided the requested approvals are granted, it is anticipated that the ALR Singapore Ordinary Shares will begin trading on the OTCQB as soon as possible following the Effective Time. 

 

The consolidated assets and liabilities of ALR Singapore and ALR Nevada, as its wholly-owned subsidiary, immediately after the Reincorporation Merger, will be identical on a consolidated basis to the assets and liabilities of ALR Nevada immediately prior to the Reincorporation. The officers and directors of ALR Nevada immediately before the Reincorporation becomes effective will also serve as officers and directors of ALR Singapore upon Reincorporation. In addition, pursuant to Singapore law, ALR Singapore is required to appoint certain officers and to have at least one director who is ordinarily resident in Singapore. Therefore, prior to the Reincorporation, and continuing upon effectiveness of the Reincorporation, ALR Singapore will appoint Benjamin Szeto, as Secretary and Chief Legal Counsel, and Christine Kan, the spouse of CEO Sidney Chan, as Vice President. Additionally, Ms. Kan, who is currently serving as a director of ALR Singapore, will continue to serve ALR Singapore as a locally resident director following the Reincorporation. Biographical information regarding Mr. Szeto and Ms. Kan is set forth on page 90 of this prospectus. The Reincorporation will not result in any material change to our business and will not have any effect on the relative equity interests of our stockholders. After the Reincorporation, it is also anticipated that at least initially, the officers and directors of ALR Nevada, as the wholly-owned subsidiary of ALR Singapore, will remain the same as prior to the Reincorporation.

 

Principal Reasons for the Reincorporation

 

We believe that the Reincorporation from Nevada to Singapore will provide the Company with additional corporate flexibility, result in cost savings, and that Singapore is a jurisdiction more familiar to most of our current and potential new investors, ultimately resulting in improved access to capital markets. Through ALR Singapore (our historic subsidiary that after the Reincorporation will become the parent company of ALR Nevada), we already have a growing substantial business presence in Singapore, which we anticipate will continue to grow after the Reincorporation Merger. The Company’s primary executive officer, Sidney Chan, resides in Singapore with his wife, Christine Kan, who is a resident of Singapore and will serve as Vice President of ALR Singapore. Sidney and Christine beneficially own 70% of the shares of common stock of ALR Nevada. A significant percentage of the Company’s employees and operating assets are based in Singapore and the Company has other stockholders residing in Singapore who hold significant amounts of Company stock. Singapore, as a member of the Association of Southeast Asian Nations (“ASEAN”), is located in close proximity to suppliers of continuous glucose monitoring devices and blood glucose meters. Based on the relationships of our CEO, we believe we have improved access to personnel to grow the business in Singapore. More than 70% of the tangible property and premises leases of the Company is located in Singapore, and substantially all of the Company’s income is attributable to Singapore customers.

 

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Shareholder Approvals and Regulatory Filings

 

In order for the Company to carry out the Reincorporation Merger, it will be necessary for us to comply with the provisions of the corporate laws of Nevada, Delaware, and Singapore. Under Nevada corporate law, we are required to obtain approval from the holders of a majority of the outstanding shares of Common Stock of ALR Nevada, in order to carry out the Reincorporation Merger, and to file Articles of Merger with the Secretary of State of Nevada. This Prospectus/information statement is being delivered to all stockholders of ALR Nevada in connection with securing approval of the Reincorporation Merger by way of Written Consent Resolutions of the requisite number of stockholders of ALR Nevada. Under Delaware law, we are required to obtain the consent or approval of a majority of the outstanding shares of common stock of ALR Delaware, and to file a Certificate of Merger with the Delaware Secretary of State, in order to complete the Reincorporation Merger of ALR Delaware with and into ALR Nevada.

 

Sidney Chan and Christine Kan, who together currently hold approximately 70.7% of our outstanding ALR Nevada Shares, have executed Written Consent Resolutions of the shareholders of ALR Nevada approving the Reincorporation Merger.

 

ALR Singapore, which owns the one share of common stock of ALR Delaware issued and outstanding, has also approved the Reincorporation Merger.

 

Under Singapore law, prior to the Effective Time, ALR Singapore is required to convene meetings by its board of director(s) and shareholder(s) in order have its board of director(s) and shareholder(s) pass resolutions to, among other things, be converted from a private limited company to a public (unlisted) limited company and to approve the issuance and allotment of ALR Singapore Ordinary Shares to the stockholders of ALR Nevada in exchange for ALR Nevada Shares.

 

Dissenters’ Rights

 

Any holder of ALR Nevada Shares that has not consented to the Reincorporation Merger may exercise dissenters’ rights under Nevada law, rather than receive the Merger Consideration in the Reincorporation Merger. The provisions of Nevada law governing dissenters’ rights are complex, and you should study them carefully if you wish to exercise your dissenters’ rights. A copy of Sections 92A.300 through 92A.500 of the NRS is attached to this prospectus/information statement as Annex B. For a more detailed discussion of dissenters’ rights under Nevada law, please see the section entitled “The Reincorporation Merger—Dissenters’ Rights” beginning on page 28 of this prospectus/information statement.

 

Foreign Private Issuer

 

Upon the effectiveness of the registration statement of which this prospectus forms a part, ALR Singapore will report under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as a non-U.S. public company with foreign private issuer status. So as long as ALR Singapore continues to qualify as a foreign private issuer under the Exchange Act, ALR Singapore will be exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic public companies, including:

 

  the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act;

 

  the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and

 

  the rules under the Exchange Act requiring the filing with the Securities and Exchange Commission, or SEC, of quarterly reports on Form 10-Q containing unaudited financial and other specified information, or current reports on Form 8-K, upon the occurrence of specified significant events.

 

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However, in lieu of filing annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, as a foreign private issuer, ALR Singapore will be required to file with the SEC annual reports on Form 20-F and, from time to time, reports on Form 6-K. In addition, ALR Singapore will not be required to file annual reports and financial statements with the SEC as promptly as U.S. domestic companies whose securities are registered under the Exchange Act, and are not required to comply with Regulation FD, which restricts the selective disclosure of material information.

 

Certain Tax Consequences for ALR Nevada, ALR Singapore, and the Stockholders of ALR Nevada

 

ALR Nevada will continue to be subject to U.S. federal income tax on its worldwide income after the Reincorporation Merger. We believe ALR Singapore will not be treated as a U.S. corporation under Section 7874 of the Code, and consequently should only be subject to U.S. tax on its U.S. source income.

 

As discussed below in “Reincorporation Merger—U.S. Federal Income Tax Considerations,” we believe it is reasonable to conclude for U.S. federal income tax purposes that U.S. Holders (as defined below in “Reincorporation Merger—U.S. Federal Income Tax Considerations”) of ALR Nevada Shares will recognize gain (but not loss) as a result of the Reincorporation Merger. Pursuant to the Reincorporation Merger, the ALR Nevada stockholders may be regarded as having disposed of ALR Nevada Shares, ALR Nevada Options or ALR Nevada Warrants in exchange for ALR Singapore Ordinary Shares, or ALR Singapore Options or Warrants, and a profit may result to such stockholders as a result of the disposal. Under current Singapore income tax laws, only gains of an income nature and that are sourced or received in Singapore are taxable (subject to any applicable exemptions available).

 

Please refer to “Taxation” for a description of certain material U.S. federal and Singapore tax consequences of the Reincorporation Merger to our stockholders. Determining the actual tax consequences to you may be complex and will depend on your specific situation. Accordingly, the tax consequences summarized above may not apply to all holders of our ALR Nevada Shares and you should consult your own tax advisors regarding the particular U.S. (federal, state and local), Singapore, and other non-U.S. tax consequences of the Reincorporation Merger and ownership and disposition of ALR Nevada Shares in light of your particular situation.

 

Accounting Treatment of the Reincorporation

 

The Reincorporation Merger will be accounted for as a legal reorganization as there will be no change in control and there will be no change in the ultimate ownership interest, immediately before and after the transaction. Under US Generally Accepted Accounting Principles as issued by the Financial Accounting Standards Board, the Reincorporation Merger represents a non-substantive exchange and will be accounted for in a manner consistent with a transaction between entities of common control.

 

The assets and liabilities in our consolidated financial statements after the Reincorporation Merger will be reflected at their historical value in our consolidated financial statements at the time of the Reincorporation Merger. In addition, the Reincorporation Merger will not impact the Company’s capitalization. The historical comparative figures of ALR Singapore will be those of ALR Nevada.

 

How the Reincorporation will Affect Your Rights as a Shareholder

 

You will hold substantially the same relative equity and voting interests in ALR Singapore following the Reincorporation from Nevada to Singapore, that you now hold in ALR Nevada. However, the rights of shareholders under Singapore law differ in certain substantive ways from the rights of shareholders under Nevada law.

 

In particular, upon effectiveness of the Reincorporation Merger, the threshold for fundamental changes in Nevada (such as a merger, conversion, sale lease or exchange of assets) only requires approval by a majority of the voting power of stockholders, whereas fundamental changes in Singapore (such as an amalgamation, reduction of capital or amendment of the Constitution) requires approval by at least 75% of the voting power of shareholders.

 

With regard to the transfer of shares, under Nevada law shares are transferable unless restricted in the articles of incorporation, the bylaws, any agreement among the stockholders, or between the corporation and one or more stockholders. Under Singapore law, the restriction of the right to transfer shares is a foundational requirement for the incorporation of private companies (but not for public companies which would be the status of ALR Singapore upon completion of the Reincorporation Merger).

 

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Further, in Nevada distributions to stockholders are typically dividends made in cash or in property (but not the corporation’s own shares). Under Singapore law, dividends may be paid out in cash or in kind (which includes payment of dividends in the form of the company’s own shares).

 

In addition, under Nevada law there are dissenters’ rights available where a corporation takes on certain actions (e.g. a merger where stockholder approval is required, a conversion or an exchange, or an action obligating the stockholder to accept money or scrip instead of fractional shares in exchange for the cancellation of all the stockholder’s outstanding shares); however, Singapore law does not provide for such dissenters’ rights. Under Singapore law any aggrieved minority shareholder may make an application to the courts for personal remedies in cases of oppression or injustice by the majority shareholders or the company.

 

Additional examples of other changes in shareholder rights which will result from the Reincorporation Merger are described in “Description of ALR Singapore’s Share Capital” and “Comparison of Corporate Law.”

 

OTCQB Quotation

 

We will submit an application so that ALR Singapore Ordinary Shares will be considered for quotation on the OTCQB tier of the OTC Markets Group under the symbol “ALRT,” the same symbol under which our common shares of ALR Nevada are currently quoted; however no assurance can be given that such approvals will be granted.

 

Risk Factors

 

You should carefully consider the risks and uncertainties described below and the other information in this prospectus/information statement. The business, financial condition or results of operations of the ALR Singapore and the Company following the Reincorporation could be materially and adversely affected if any of these risks occurs, and as a result, the market price of our shares could decline and you could lose all or part of your investment. This prospectus/information statement also contains forward-looking statements that involve risks and uncertainties. See “Forward-Looking Statements.” The actual results of the ALR Singapore and the Company following the Reincorporation could differ materially and adversely from those anticipated in these forward-looking statements as a result of certain factors.

 

Risks Related to Our Business and Operations

 

Although our financial statements have been prepared on a going concern basis, our management and independent auditors in their report accompanying our consolidated financial statements for the year ended December 31, 2021, believe that our recurring losses from operations and other factors have raised substantial doubt about our ability to continue as a going concern as of December 31, 2021.

 

Our audited financial statements for the fiscal year ended December 31, 2021 were prepared on a going concern basis in accordance with U.S. GAAP. The going concern basis assumes that we will continue in operation for the next 12 months and will be able to realize our assets and discharge our liabilities and commitments in the normal course of business, thus our financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Our recurring losses, anticipated future losses, negative cash flow, need for additional capital and the uncertainties surrounding our ability to raise such funding, raises substantial doubt about our ability to continue as a going concern. In order for us to continue operations beyond the next 12 months and be able to discharge our liabilities and commitments in the normal course of business, we must complete the development and deployment of our product, and sell our products directly to end-users, establish profitable operations through increased sales, decrease expenses, generate cash from operations or raise additional funds when needed. We intend to improve our financial condition and ultimately improve our financial results by increasing revenues through introduction of our product into new markets, continuing to expand and develop our field sales force and distributor relationships both domestically and internationally, forming strategic arrangements within the health & wellness and medical industries, educating medical professionals and patients as to the benefits of our diabetes management services, and reducing expenses. If we are unable to increase sales, reduce expenses or raise sufficient additional capital we may be unable to continue to fund our operations, develop our products, realize value from our assets, or discharge our liabilities in the normal course of business. If we become unable to continue as a going concern, we could have to liquidate our assets, and potentially realize significantly less than the values at which they are carried on our financial statements, and stockholders could lose all or part of their investment in our common stock.

 

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We have experienced net losses for each of the past three years, and we could experience additional losses and have difficulty achieving profitability in the future.

 

We had an accumulated deficit of $102,015,077 and $93,571,762 at December 31, 2021 and December 31, 2020, respectively. We recorded net losses of approximately $8,443,215, $5,916,017, and $9,005,537 for the years ended December 31, 2021, 2020, and 2019, respectively. In order to achieve profitability, we must control our costs and increase net revenue through new sales. Failure to increase our net revenue and decrease our costs could cause our stock price to decline and could have material adverse effect on our business, financial condition, and results of operations.

 

We may be unable to maintain compliance with OTCQB Standards for Continued Eligibility which could cause our common stock to be demoted from OTCQB. This could result in the lack of a market for our common stock, cause a decrease in the value of an investment in us, and adversely affect our business, financial condition and results of operations.

 

Our common stock is currently quoted on OTCQB tier of the electronic quotation service operated by OTC Markets Group. To maintain the listing of our common stock on OTCQB, we are required to meet certain listing requirements, including, among others (i) have audited annual financials by a Public Company Accounting Oversight Board auditor; (ii) meet minimum bid price test of $0.01; (iii) maintain SEC reporting standards or equivalent alternative reporting standards; and (iv) not be in bankruptcy. If we fail to meet OTCQB Standards for Continued Eligibility, the trading of the stock will most likely take place on a lower tier of the over-the-counter market, such as those established for financially distressed companies or those in bankruptcy. There is no assurance that we will meet the minimum Standards for Continued Eligibility. An investor is likely to find it less convenient to sell, or to obtain accurate quotations in seeking to buy, our common stock on the OTC Pink, and many investors may not buy or sell our common stock due to difficulty in accessing OTC Pink, or over-the-counter markets, generally, due to policies preventing them from trading in securities not listed on a national exchange, not maintaining SEC reporting requirements, or other reasons.

 

Because the SEC imposes additional sales practice requirements on brokers who deal in shares of penny stocks, some brokers may be unwilling to trade our securities. This means that you may have difficulty reselling your shares, which may cause the value of your investment to decline.

 

Our shares are classified as penny stocks and are covered by Section 15(g) of the Exchange Act, which imposes additional sales practice requirements on broker-dealers who sell our securities in this offering or in the aftermarket. For sales of our securities, broker-dealers must make a special suitability determination and receive a written agreement prior from you to making a sale on your behalf. Because of the imposition of the foregoing additional sales practices, it is possible that broker-dealers will not want to make a market in our common stock. This could prevent you from reselling your shares and may cause the value of your investment to decline.

 

We could need to raise additional capital in the future, and if we are unable to secure adequate funds on terms acceptable to us, we could be unable to execute our business plan.

 

To remain competitive, we must continue to make significant investments in the development of our products, in obtaining regulatory clearances to introduce our product into new markets, in the expansion of our sales and marketing activities, and in the expansion of our operating and management infrastructure as we increase sales domestically and internationally. If cash generated from our operations is insufficient to fund such growth, we could be required to raise additional funds through the issuance of equity or debt securities in the public or private markets, or through a collaborative arrangement or sale of assets. Additional financing opportunities may not be available to us, or if available, may not be on favorable terms. The availability of financing opportunities will depend, in part, on market conditions, and the outlook for our business. Any future issuance of equity securities or securities convertible into equity securities could result insubstantial dilution to our stockholders, and the securities issued in such a financing could have rights, preferences or privileges senior to those of our common stock. In addition, if we raise additional funds through debt financing, we could be subject to debt covenants that place limitations on our operations. We could not be able to raise additional capital on reasonable terms, or at all, or we could use capital more rapidly than anticipated. If we cannot raise the required capital when needed, we may not be able to satisfy the demands of existing and prospective customers, we could lose revenue and market share and we may have to curtail our capital expenditures. The following factors, among others, could affect our ability to obtain additional financing on favorable terms, or at all:

 

  our results of operations;

 

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  general economic conditions and conditions in the medical and health management industries;

 

  the perception of our business in the capital markets;

 

  our ratio of debt to equity;

 

  our financial condition;

 

  our business prospects; and

 

  interest rates.

 

If we are unable to obtain sufficient capital in the future, we could have to curtail our capital expenditures. Any curtailment of our capital expenditures could result in a reduction in net revenue, reduced quality of our products, increased manufacturing costs for our products, harm to our reputation, or reduced manufacturing efficiencies, and could have a material adverse effect on our business, financial condition, and results of operations.

 

Our success depends, in part, on securing and developing relationships with, and on the efforts of, third-party distributors to sell and distribute our Diabetes Solution and GluCurve products.

 

We will rely on a variety of third-party distributors, such as independent health care organizations, medical suppliers, group purchasing organizations, pharmaceutical companies, insulin providers and other health care companies to introduce the ALRT Diabetes Solution and GluCurve products to their networks. The Company does not have any third-party distributors which have generated sales for the Company to date. Such third parties have significant discretion in determining the efforts and resources they apply to the marketing, sale and implementation of our products, and we will face significant challenges and risks in expanding, training, and managing such third parties. Third parties may not commit the necessary resources to market and sell our products to the level of our expectations, and, regardless of the resources they commit, they may not be successful. From time to time, we may face competition or pricing pressure from one or more of our non-exclusive distributors in certain geographic areas where those distributors are selling inventory to the same customer base to whom we are selling. Additionally, most distributor agreements may be terminated with limited notice, and we may not be able to replace any terminating distributor in a timely manner or on terms agreeable to us, if at all. If we are not able to secure and grow our distribution network we will not reach the revenues and profits needed to sustain our business. If we are not able to maintain our distribution network, if our distribution network is not successful in marketing and selling our products, or if we experience a significant reduction in, cancellation, or change in the size and timing of orders from our distributors, our revenues could decline significantly, and such factors could otherwise have material adverse effect on our business, financial condition, and results of operations.

 

Our inability to distinguish our Diabetes Solution and GluCurve from other diabetes treatment compliance devices or solutions could limit the market acceptance of our products and our market share.

 

Our Diabetes Solution and GluCurve represents a relatively new entry into the market for diabetes compliance solutions. Our future success will depend on our ability to increase demand for our products by demonstrating to a broad spectrum of healthcare providers the potential performance advantages and efficiencies of our Diabetes Solution and GluCurve over traditional methods of treatment management and over competitive management solutions, and our inability to do so could have a material adverse effect on our business, financial condition, and results of operations. Historically, we have experienced long sales cycles because healthcare professionals have been, and could continue to be, slow to adopt new technologies on a widespread basis. As a result, we generally are required to invest a significant amount of time and resources to educate healthcare administrators and other purchasers about the benefits of our product in comparison to competing products and technologies before completing a sale, if any.

 

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Factors that could inhibit adoption of our Diabetes Solution and GluCurve by healthcare professionals include concerns about the efficacy and reliability of our product. In order to invest in our product, a healthcare administrator generally needs to invest time to understand the technology, consider how physicians may respond to the new technology, assess the financial impact the investment could have on medical practice and become comfortable introducing and using our products. Absent an immediate competitive motivation, a healthcare administrator may not feel compelled to invest the time required to learn about the potential benefits of using our products. Healthcare professionals may not accept or adopt our products until they see additional clinical evidence supporting the safety and efficiency of our product, or recommendations supporting our product by influential health care providers or practitioners. In addition, economic pressure, caused, for example, by an economic slowdown, changes in health care reimbursement or by competitive factors in a specific market, could make healthcare organizations reluctant to purchase substantial capital equipment or invest in new technologies. Acceptance by healthcare providers will depend on the recommendations of specialists, as well as other factors, including the relative effectiveness, reliability and efficiency of our systems as compared to other methods for managing diabetes treatment.

 

Any failure in our efforts to train health practitioners could result in the misuse of our products, reduce the market acceptance of our products and have a material adverse effect on our business, financial condition, and results of operations.

 

There is a learning process involved for health practitioners to become proficient users of our Diabetes Solution and GluCurve. It is critical to the success of our sales efforts to adequately train a sufficient number of practitioners. Following completion of training, we rely on health practitioners and administrators to advocate the benefits of our products in the broader marketplace. Convincing practitioners to dedicate the time and energy necessary for adequate training and implementation is challenging, and we cannot provide assurance that we will be successful in these efforts. If practitioners are not properly trained, they could misuse or ineffectively use our Diabetes Solution and GluCurve, or could be less likely to appreciate our Diabetes Solution and GluCurve. This could also result in unsatisfactory patient outcomes, negative publicity, FDA regulatory action, or lawsuits against us, any of which could negatively affect our reputation and sales of our Diabetes Solution and GluCurve.

 

If future data proves to be inconsistent with our clinical results or if competitors’ products present more favorable results, our revenues could decline and our business, financial condition, and results of operations could be materially and adversely affected.

 

If new studies or comparative studies generate results that are not as favorable as our studies and results to date, our revenues could decline. Additionally, if future studies indicate that our competitors’ products are more effective or reliable than ours, our revenues could decline. Furthermore, healthcare professionals could choose not to purchase our Diabetes Solution or GluCurve until they receive additional published long-term clinical evidence and recommendations from prominent health professionals that indicate our Diabetes Solution and GluCurve products are effective for clinical applications.

 

We face competition from other companies, many of which have substantially greater resources than we do. If we do not successfully develop and commercialize current and future products that remain competitive with products or alternative technologies developed by others, we could lose revenue opportunities and customers, and our ability to grow our business would be impaired.

 

A number of competitors have substantially greater capital resources, larger customer bases, larger technical, sales and marketing forces and stronger reputations with target customers than ours. We compete with a number of domestic and foreign companies in the human health and animal health segments that market diabetes treatment management products, including those which bundle hardware, software and testing supplies, as well as companies that market integrated treatment solutions in the healthcare market. The marketplace is highly fragmented and very competitive. We expect that the rapid technological changes occurring in the health care industry could lead to the entry of new competitors, particularly if artificial intelligence driven software gains market acceptance in the field. If we do not compete successfully, our revenue and market share could decline and our business, financial condition, and results of operations could be adversely affected. Our long-term success depends upon our ability to (i) distinguish our products through improving our product performance and pricing, protecting our intellectual property, improving our customer support, accurately timing the introduction of new products, and developing sustainable distribution channels worldwide; and (ii) develop and successfully commercialize new products, new or improved technologies, and additional applications for our Diabetes Solution. There is no assurance that we will be able to distinguish our Diabetes Solution and GluCurve, commercialize any new products, new or improved technologies, or additional applications for our intellectual property.

 

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If our customers cannot obtain third-party reimbursement for their use of our products, they could be less inclined to purchase our products and our business, financial condition, and results of operations could be adversely affected.

 

Our products are generally purchased by medical professionals who have various billing practices and patient mixes. Such practices range from primarily private pay to those who rely heavily on third-party payers, such as private insurance or government programs. In the United States, third-party payers review and frequently challenge the prices charged for medical products and/or services. In many foreign countries, the prices for diabetes treatment services are predetermined through government regulation. Payers could deny coverage and reimbursement on various grounds, including if they determine that the procedure was not medically necessary or that the device used in the procedure was investigational. Accordingly, both coverage and reimbursement can vary significantly from payer to payer. For the portion of physicians who rely heavily on third-party reimbursement, the inability to obtain reimbursement for services using our products could deter them from purchasing or using our products. We cannot predict the effect that future health care reforms or changes in financing for health plans could have on our business. Any such changes could have an adverse effect on the ability of a physician or medical institution to generate a profit using our current or future products. In addition, such changes could act as disincentives for capital investments by medical professionals.

 

We could incur problems in manufacturing our products.

 

Any CGM or BGM sold as part of our Diabetes Solution or GluCurve products would be manufactured by third party suppliers. In order to grow our business, we must expand our supply chain to meet any demand we may experience. We could encounter difficulties in securing additional supply of our products, including problems involving supplier production capacity and yields, quality control and assurance, component supply, and shortages of qualified personnel. We will be reliant on the performance of the third-party suppliers to manufacture the CGM and BGM in accordance with the specifications and schedules required. Failure of the third-party suppliers to provide CGM and BGM as required by the Company could have an adverse impact on the Company and its distribution relationships.

 

In addition, before we can scale up commercial manufacture of our products, we must ensure that our third-party manufacturing facilities, processes, and quality systems, and the manufacture of the BGM or CGM bundled with our products, comply with any applicable regulations governing facility compliance, quality control, and documentation policies and procedures. While CGM or BGM purchased from third party manufacturers will have higher regulatory compliance requirements if distributed for human health, as opposed to those products distributed for animal health, any deviation in the quality system for the BGM or CGM used in animal health could lead to an adverse impact of our business.

 

In addition, our supplier manufacturing facilities are subject to periodic inspections by the FDA, or comparable regulatory authorities from other jurisdictions, as well as various state agencies and foreign regulatory agencies. From time to time, we could experience significant supply delays while our suppliers ensure compliance with these requirements. Our success will depend in part upon our ability to supply our products in compliance with the FDA’s QSR and other regulatory requirements. Although we have not experienced quality issues with components of our products supplied by third parties, we expect to encounter periodic quality control issues. Our future success depends on our ability to supply products on a timely basis with acceptable purchase costs, while at the same time ensuring good quality control and complying with applicable regulatory requirements, and an inability to do so could have a material adverse effect on our business, financial condition, and results of operations.

 

Product liability claims against us could be costly and could harm our reputation.

 

The sale of medical devices involves the risk of product liability claims against us. We have no current product sales and therefore no current liability insurance coverage. In the future, claims could exceed our then current product liability insurance coverage limits. Our insurance policies will be subject to various standard coverage exclusions, including damage to the product itself, losses from recall of our product, and losses covered by other forms of insurance such as workers compensation. We cannot be certain that we will be able to successfully defend any claims against us, nor can we be certain that our insurance will cover all liabilities resulting from such claims. In addition, we cannot provide assurance that we will be able to obtain such insurance in the future on terms acceptable to us, or at all. Regardless of merit or eventual outcome, any product liability claim brought against us could result in harm to our reputation, decreased demand for our products, costs related to litigation, product recalls, loss of revenue, an increase in our product liability insurance rates, or the inability to secure coverage in the future, and could have a material adverse effect on our business, financial condition, and results of operations.

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Rapidly changing standards and competing technologies could harm demand for our products, result in significant additional costs, and have a material adverse effect on our business, financial condition, and results of operations.

 

The markets in which our products compete are subject to rapid technological change, evolving industry standards, changes in the regulatory environment, and frequent introductions of new devices and evolving techniques in diabetes treatment and patient management. Competing products could emerge that render our products uncompetitive or obsolete. The process of developing new medical devices is inherently complex and requires regulatory approvals or clearances that can be expensive, time-consuming, and uncertain. We cannot guarantee that we will successfully identify new product opportunities, identify new and innovative applications of our technology, or be financially or otherwise capable of completing the research and development required to bring new products to market in a timely manner. An inability to expand our product offerings or the application of our technology could limit our growth. In addition, we could incur higher manufacturing costs if manufacturing processes or standards change, and we could need to replace, modify, design, or build and install equipment, all of which would require additional capital expenditures.

 

We could be unable to effectively manage and implement our growth strategies, which could have a material adverse effect on our business, financial condition, and results of operations.

 

Our growth strategy includes expanding the market for our Diabetes Solution and GluCurve products, and developing new applications and enhancements for our products. Expansion of our existing market, product line and entry into new medical applications divert the use of our resources and systems, require additional resources that might not be available (or available on acceptable terms), require additional country-specific regulatory approvals, result in new or increasing competition, could require longer implementation times or greater start-up expenditures than anticipated, and could otherwise fail to achieve the desired results in a timely fashion, if at all. These efforts could also require that we successfully commercialize new technologies in a timely manner, price them competitively and cost-effectively, and manufacture and deliver sufficient volumes of new products of appropriate quality on time. We could be unable to increase our sales and earnings by expanding our product offerings in a cost-effective manner, and we could fail to accurately predict future customer needs and preferences or to produce viable technologies. In addition, we could invest heavily in research and development of products that do not lead to significant revenue. Even if we successfully innovate and develop new products and product enhancements, we could incur substantial costs in doing so. In addition, promising new products could fail to reach the market or realize only limited commercial success because of efficacy or safety concerns, failure to achieve positive clinical outcomes, or uncertainty over third-party reimbursement.

 

We could be subject to breaches of our information technology systems, which could damage our reputation and customer relationships. Such breaches could subject us to significant reputational, financial, legal, and operational consequences.

 

We will rely on information systems (“IS”) in our current or future business to obtain, rapidly process, analyze and manage data to, among other things:

 

  facilitate the purchase and distribution of thousands of inventory items through numerous distributors;

 

  receive, process and ship orders on a timely basis;

 

  accurately bill and collect from thousands of customers;

 

  process payments to suppliers; and

 

  provide technical support to our customers.

 

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A cyber-attack that bypasses our IS security, or employee error, malfeasance or other disruptions that cause an IS security breach, could lead to a material disruption of our IS and/or the loss of business information. Such an attack could result in, among other things:

 

  the theft, destruction, loss, misappropriation or release of confidential data and intellectual property;

 

  operational or business delays;

 

  liability for a breach of personal financial and health information belonging to our customers and their patients or to our employees; and

 

  damage to our reputation,

 

any of which could have a material adverse effect on our business, financial condition, and results of operations. In the event of an attack, we would be exposed to a risk of loss or litigation and possible liability, including under laws that protect the privacy of personal information.

 

Litigation against us could be costly and time-consuming to defend and could materially and adversely affect our business, financial condition, and results of operations.

 

We expect to be involved from time to time involved in various claims, litigation matters and regulatory proceedings incidental to our business, including claims for damages arising out of the use of our products or services and claims relating to intellectual property matters, employment matters, commercial disputes, competition, sales and trading practices, environmental matters, personal injury, and insurance coverage. Some of these lawsuits include claims for punitive as well as compensatory damages. The defense of these lawsuits could divert our management’s attention, and we could incur significant expenses in defending these lawsuits. In addition, we could be required to pay damage awards or settlements or become subject to unfavorable equitable remedies. Moreover, any insurance or indemnification rights that we could have may be insufficient or unavailable to protect us against potential loss exposures.

 

If we lose our key management personnel, or are unable to attract or retain qualified personnel, it could adversely affect our ability to execute our growth strategy.

 

Our success is dependent, in part, upon our ability to hire and retain management, engineers, marketing and sales personnel, technical, research and other personnel who are in high demand and are often subject to competing employment opportunities. Our success will depend on our ability to retain our current management, engineers, marketing and sales, technical, research and other personnel and to attract and retain qualified like personnel in the future. Competition for senior management, engineers, marketing and sales personnel, and other specialized technicians is intense and we may not be able to retain our personnel. If we lose the services of any executive officers, key contractors or key employees, our ability to achieve our business objectives could be harmed and our business, financial condition, and results of operations could be materially and adversely affected. In general, our officers could terminate their employment at any time without notice for any reason.

 

If we fail to comply with the reporting obligations of the Exchange Act and Section 404 of the Sarbanes-Oxley Act, or if we fail to maintain adequate internal control over financial reporting, our business, financial condition, and results of operations, and investors’ confidence in us, could be materially and adversely affected.

 

As a public company, we are required to comply with the periodic reporting obligations of the Exchange Act, including preparing annual reports, quarterly reports, and current reports. Our failure to prepare and disclose this information in a timely manner and meet our reporting obligations in their entirety could subject us to penalties under federal securities laws, expose us to lawsuits, and restrict our ability to access financing on favorable terms, or at all.

 

In addition, pursuant to Section 404 of the Sarbanes-Oxley Act, we are required to evaluate and provide a management report of our systems of internal control over financial reporting. During the course of the evaluation of our internal control over financial reporting, we could identify areas requiring improvement and could be required to design enhanced processes and controls to address issues identified through this review. This could result in significant delays and costs to us and require us to divert substantial resources, including management time, from other activities. In addition, if we fail to maintain the adequacy of our internal control over financial reporting, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with the Sarbanes-Oxley Act. Moreover, effective internal controls are necessary for us to produce reliable financial reports and are important to help prevent fraud. Any failure to maintain compliance with the requirements of Section 404 on a timely basis could result in the loss of investor confidence in the reliability of our financial statements, which in turn could, negatively impact the trading price of our stock, and adversely affect investors’ confidence in the Company and our ability to access capital markets for financing.

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Risks Related To Our Intellectual Property

 

If the patents that we own or license, or our other intellectual property rights, do not adequately protect our technologies, we could lose market share to our competitors and be unable to operate our business profitably.

 

Our future success depends, in part, on our ability to obtain and maintain patent protection for our products and technology, to preserve our trade secrets and to operate without infringing the intellectual property of others. We rely on patents to establish and maintain proprietary rights in our technology and products. We currently possess patent applications with respect to our products and technology. However, we cannot ensure that any patents will be issued, that the scope of any patent protection will be effective in helping us address our competition, or that any of our patents will be held valid if subsequently challenged. It is also possible that our competitors could independently develop similar or more desirable products, duplicate our products, or design products that circumvent our patents. The laws of foreign countries may not protect our products or intellectual property rights to the same extent as the laws of the United States. In addition, there have been recent changes in the patent laws and rules of the U.S. Patent and Trademark Office, and there could be future proposed changes that, if enacted, have a significant impact on our ability to protect our technology and enforce our intellectual property rights. If we fail to protect our intellectual property rights adequately, our competitive position could be adversely affected, and there could be a material adverse effect on our business, financial condition, and results of operations.

 

If third parties claim that we infringe their intellectual property rights, we could incur liabilities and costs and have to redesign or discontinue selling certain products, which could have a material adverse effect on our business, financial condition, and results of operations.

 

We face substantial uncertainty regarding the impact that other parties’ intellectual property positions will have on systems for diabetes treatment monitoring. The medical technology industry has in the past been characterized by a substantial amount of litigation and related administrative proceedings regarding patents and intellectual property rights. From time to time, we expect to receive, notices of claims of infringement, misappropriation, or misuse of other parties’ proprietary rights. Some of these claims could lead to litigation. We may not prevail in any future intellectual property infringement litigation given the complex technical issues and inherent uncertainties in litigation. Any claims, with or without merit, could be time-consuming and distracting to management, result in costly litigation, or cause product shipment delays. Adverse determinations in litigation could subject us to significant liability and could result in the loss of proprietary rights. A successful lawsuit against us could also force us to cease selling or redesign products that incorporate the infringed intellectual property. Additionally, we could be required to seek a license from the holder of the intellectual property to use the infringed technology, and it is possible that we may not be able to obtain a license on acceptable terms, or at all.

 

Risks Related To Our Regulatory Environment

 

Changes in government regulation or the inability to obtain or maintain necessary government approvals could have a material adverse effect on our business, financial condition, and results of operations.

 

The regulatory environment for human health differs significantly from the regulatory environment for animal health. In general, the regulatory environment for human health is significantly more extensive, resulting in longer lead times to be granted clearance to market products for sale. In many instances the regulatory market for animal health products does not require the formal grant of clearance to market products for sale for animal health. Commercializing the GluCurve for animal health would not provide an indication that the Company will be successful in obtaining clearance to market the Diabetes Solution for human health. If we are able to secure clearance to market the Diabetes Solution, there is no certainty how long it will take to secure such clearance and it may take significantly longer than we can reasonable expect or forecast. Conversely, by bringing the GluCurve to market without going through the same level of rigor as the Diabetes Solution, could result in increased risk of quality system issues, product liability and overall business risk.

 

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The Diabetes Solution for human health will be subject to extensive government regulation, both in the United States and in other countries. To clinically test, manufacture, and market products for human use, we must comply with regulations and safety standards set by the FDA and comparable state and foreign agencies. Regulations adopted by the FDA and comparable foreign agencies are wide-ranging and govern, among other things, product design, development, manufacture and control testing, labeling control, storage, advertising, and sales. Generally, products must meet regulatory standards as safe and effective for their intended use before being marketed for human applications. The clearance process is expensive, time-consuming, and uncertain. Failure to comply with applicable regulatory requirements of the FDA and applicable foreign agencies can result in an enforcement action which could include a variety of sanctions, including fines, injunctions, civil penalties, recall or seizure of our products, operating restrictions, partial suspension, or total shutdown of production and criminal prosecution. The failure to receive or maintain requisite approvals for the use of our products or processes, or significant delays in obtaining such approvals, could prevent us from developing, manufacturing, and marketing products and services necessary for us to remain competitive.

 

If we develop new products and applications or make any significant modifications to our existing products or labeling, we will need to obtain additional regulatory clearances or approvals. Any modification that could significantly affect a product’s safety or effectiveness, or that would constitute a change in its intended use, will require a new regulatory clearance, or could require a Premarket approval (PMA) application. The FDA and comparable foreign agencies require each manufacturer to make this determination initially, but the FDA and comparable foreign agencies can review any such decision and can disagree with a manufacturer’s determination. If the FDA or comparable foreign agency disagrees with a manufacturer’s determination, the FDA and comparable foreign agencies can require the manufacturer to cease marketing and/or recall the modified device until clearance or Premarket approval (PMA) is obtained. If clearance, or the foreign equivalent, is denied and a Premarket approval (PMA) application is required, we could be required to submit substantially more data and conduct human clinical testing and would very likely be subject to a significantly longer review period.

 

In the US, the clearance to market a medical device for human health is 510(k) clearance. Products sold in international markets for human use are also subject to the regulatory requirements of each respective country or region. The regulations of the European Union require that a device have a CE Mark, indicating conformance with European Union laws and regulations before it can be sold in the European Union. The regulatory international review process varies from country to country. We expect to rely on our compliance consultants in any foreign countries in which we may market our products to comply with the regulatory laws of such countries. Failure to comply with the laws of such countries could prevent us from selling products in such countries. In addition, unanticipated changes in existing regulatory requirements or the adoption of new requirements could impose significant costs and burdens on us, which could increase our operating expenses.

 

Changes in health care regulations in the U.S. and elsewhere could adversely affect the demand for our products as well as the way in which we conduct our business. For example, in 2010, President Obama signed the Affordable Care Act into law, which included various reforms impacting Medicare coverage and reimbursement, including revision to prospective payment systems, any of which could adversely impact any Medicare reimbursements received by our end-user customers. New legislation may be enacted as President Biden and Congress consider further reform. In addition, as a result of the focus on health care reform, there is risk that Congress could implement changes in laws and regulations governing health care service providers, including measures to control costs, and reductions in reimbursement levels. We cannot be sure that government or private third-party payers will cover and reimburse the treatments using our products, in whole or in part, in the future, or that payment rates will be adequate. If healthcare providers cannot obtain adequate coverage and reimbursement for our products, or the procedures in which they are used, our business, results of operations, and financial condition could suffer.

 

We could be subject to or otherwise affected by federal and state health care laws, including fraud and abuse and health information privacy and security laws, and we could face substantial penalties if we are unable to fully comply with such regulations.

 

We are directly or indirectly, through our customers, subject to extensive regulation by both the federal government and the states and foreign countries in which we conduct our business. The laws that directly or indirectly affect our ability to operate our business include, but are not limited to, the following:

 

  the Federal Food, Drug, and Cosmetic Act, which regulates the design, testing, manufacture, labeling, marketing, distribution, and sale of prescription drugs and medical devices;

 

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  state food and drug laws;

 

  the federal Anti-Kickback Statute, which prohibits persons from knowingly and willfully soliciting, offering, receiving, or providing remuneration, directly or indirectly, to induce the referral for the furnishing of, or the purchase, order, or recommendation of, a good or service, for which payment could be made under FHCPs such as Medicare, Medicaid, and TRICARE;

 

  state law equivalents to the federal Anti-Kickback Statute, which may not be limited to government reimbursed items;

 

  state laws that prohibit fee-splitting arrangements;

 

  the federal Civil False Claims Act, which imposes liability on any person or entity that knowingly presents, or causes to be presented, a false or fraudulent claim for payment to the government, including FHCPs;

 

  state false claims laws that prohibit anyone from presenting, or causing to be presented, claims for payment to third-party payers that are false or fraudulent;

 

  federal crimes for knowingly and willfully executing a scheme to defraud any health care benefit program or making false statements in connection with the delivery of or payment for items or services under a health care benefit program;

 

  federal law prohibiting offering remuneration to a Medicare or Medicaid beneficiary to influence the beneficiary’s selection of a particular provider, practitioner, or supplier;

 

  the federal Stark Law, which, in the absence of a statutory or regulatory exception, prohibits: (i) the referral of Medicare or Medicaid patients by a physician to an entity for the provision of designated health care services, if the physician or a member of the physician’s immediate family has a direct or indirect financial relationship, including an ownership interest in, or a compensation arrangement with, the entity and (ii) submitting a bill to Medicare or Medicaid for services rendered pursuant to a prohibited referral;

 

  state law equivalents to the Stark Law, which may not be limited to government reimbursed items;

 

  the Physician Payments Sunshine Act, which requires us to report annually to CMS certain payments and other transfers of value we make to U.S.-licensed physicians, dentists, and teaching hospitals;

 

  the FCPA, which generally prohibits companies and their intermediaries from paying anything of value to foreign officials to influence any decision of the foreign official in his/her official capacity or to secure any other improper advantage to obtain or retain business;

 

  HIPAA and HITECH and their implementing regulations, which govern the use, disclosure, and safeguarding of PHI;

 

  state privacy laws that protect the confidentiality of patient information;

 

  Medicare and Medicaid laws and regulations that prescribe the requirements for coverage and payment, including the amount of such payment; state laws that prohibit the practice of medicine by non-physicians; and

 

  the Federal Trade Commission Act and similar laws regulating advertising and consumer protection.

 

If our past, present, or future operations are found to be in violation of any of the laws described above or the other governmental laws or regulations to which we or our customers are subject, we could be subject to the applicable penalty associated with the violation, which could include civil and criminal penalties, damages, fines, exclusion from FHCPs, and the curtailment or restructuring of our operations. If we are required to obtain permits or license under these laws that we do not already possess, we could become subject to substantial additional regulation or incur significant expense. Any penalties, damages, fines, or curtailment or restructuring of our operations could be significant. The risk of potential non-compliance is increased by the fact that many of these laws have not been fully interpreted by applicable regulatory authorities or the courts, and their provisions are open to a variety of interpretations and additional legal or regulatory change. Any action against us for violation of these laws, even if we successfully defend against it, could cause us to incur significant legal expenses, divert our management’s attention from the operation of our business, damage our reputation, and cause a material adverse effect on our business, financial condition, and results of operations.

 

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Product sales or introductions could be delayed or canceled as a result of the regulatory requirements applicable to diabetes testing products, treatment management systems, or both, for human use, which could delay the launch of the Diabetes Solution, cause our sales or profitability to decline and have a material adverse effect on our business, financial condition, and results of operations.

 

The process of obtaining and maintaining regulatory approvals and clearances to market a medical device for human use from the FDA and similar regulatory authorities abroad can be costly and time-consuming, and we cannot provide assurance that such approvals and clearances will be granted. Pursuant to FDA regulations, unless exempt, the FDA permits commercial distribution of a new medical device only after the device has received 510(k) clearance or is the subject of an approved Premarket approval (PMA). The FDA will clear marketing of medical device through the 510(k) process if it is demonstrated that the new product is substantially equivalent to other 510(k)-cleared products. The pre-market approval process is more costly, lengthy and uncertain than the 510(k) process, and must be supported by extensive data, including data from preclinical studies, and human clinical trials.

 

Because we cannot provide assurance that any new products, or any product enhancements, that we develop for human use will be subject to the shorter 510(k) clearance process, significant delays in the introduction of any new products or product enhancement could occur. We cannot provide assurance that the FDA will not require a new product or product enhancement to go through the lengthy and expensive PMA process. Delays in obtaining regulatory clearances and approvals could:

 

  delay or eliminate commercialization of products we develop;

 

  require us to perform costly procedures;

 

  diminish any competitive advantages that we may attain; and

 

  reduce our ability to collect revenues or royalties.

 

Although we have obtained 510(k) clearance from the FDA to market our Diabetes Solution, we cannot provide assurance that the clearance of these systems will not be withdrawn or that we will not be required to obtain new clearances or approvals for modifications or improvements to our products. The Company may require FDA clearance and the clearance of similar regulatory authorities abroad to market the Diabetes Solution with CGM or BGM for human use.

 

Our products for human health are subject to recalls and other regulatory actions after receiving FDA clearance or approval.

 

The FDA and similar governmental bodies in other countries have the authority to require the recall of our products for human health in the event of material deficiencies or defects in design or manufacture. A government mandated or voluntary recall by us could occur as a result of component failures, manufacturing errors, or design defects, including defects in labeling. Any recall would divert management’s attention and financial resources and harm our reputation with customers. Any recall involving our Diabetes Solution would be particularly harmful to us. However, any recall could have a material adverse effect on our business, financial condition, and results of operations.

 

Risks Related To Our Stock

 

The liquidity and trading volume of our common stock could be low, and our ownership is concentrated.

 

The liquidity and trading volume of our common stock has at times been low in the past and could again be low in the future. If the liquidity and trading volume of our common stock is low, this could adversely impact the trading price of our shares, our ability to issue stock and our stockholders’ ability to obtain liquidity in their shares. In addition, our Chairman and sole executive officer Sidney Chan and his affiliates own in excess of 70% of outstanding common stock as at the date of this Registration Statement.

 

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As a result, Mr. Chan and his affiliates will be able to affect the outcome of, or exert significant influence over, all matters requiring stockholder approval, including the election and removal of directors and any change in control. In particular, this concentration of ownership of our common stock could have the effect of delaying or preventing a change in control of our Company or otherwise discouraging or preventing a potential acquirer from attempting to obtain control of our Company. This, in turn, could have a negative effect on the market price of our common stock. It could also prevent our stockholders from realizing a premium over the market prices for their shares of common stock. Moreover, the interests of this concentration of ownership may not always coincide with our interests or the interests of other stockholders. The concentration of ownership also contributes to the low trading volume and volatility of our common stock.

 

Our stock price has been, and could continue to be, volatile.

 

There has been significant volatility in the market price and trading volume of equity securities, which is often unrelated to the financial performance of the companies issuing the securities. These broad market fluctuations could negatively affect the market price of our stock. The market price and volume of our common stock could fluctuate, and in the past has fluctuated, more dramatically than the stock market in general. You may not be able to resell your shares at or above the price you paid for them due to fluctuations in the market price of our stock caused by changes in our operating performance or prospects or other factors. Some factors, in addition to the other risk factors identified above, that could have a significant effect on our stock market price include but are not limited to the following:

 

  actual or anticipated fluctuations in our operating results or future prospects;

 

  our announcements or our competitors’ announcements of new products;

 

  the public’s reaction to our press releases, our other public announcements, and our filings with the SEC;

 

  strategic actions by us or our competitors, such as acquisitions or restructurings;

 

  new laws or regulations or new interpretations of existing laws or regulations applicable to our business;

 

  changes in accounting standards, policies, guidance, interpretations, or principles;

 

  changes in our growth rates or our competitors’ growth rates;

 

  developments regarding our patents or proprietary rights or those of our competitors;

 

  our inability to raise additional capital as needed;

 

  concerns or allegations as to the safety or efficacy of our products;

 

  changes in financial markets or general economic conditions;

 

  sales of stock by us or members of our management team, our Board, our significant stockholders, or certain institutional stockholders; and

 

  changes in stock market analyst recommendations or earnings estimates regarding our stock, other comparable companies or our industry generally.

 

You could experience substantial dilution of your investment as a result of subsequent exercises of our outstanding options, vesting of restricted stock units, future sales of our equity, or the future grant of equity by us.

 

You could experience substantial dilution of your investment as a result of subsequent exercises of outstanding warrants and outstanding options issued as compensation for services performed by employees, directors, consultants, and others, future sales of our equity, or the grant of future equity-based awards. As of August 31, 2022, an aggregate of 5,522,501,500 shares of common stock were authorized for issuance pursuant to the exercise of outstanding ALR Nevada Options and ALR Nevada Warrants having a weighted-average exercise price of $0.006 per share. To the extent that such options and warrants are exercised, our existing stockholders will experience dilution. We rely heavily on equity awards to motivate current contractors and employees and to attract new employees. The grant of future equity awards by us to our contractors, employees and other service providers could further dilute our stockholders’ interests in the Company.

 

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Anti-takeover provisions in our charter, bylaws, other agreements, and under Nevada law could discourage, delay, or prevent a change in control of the Company.

 

Provisions in our restated certificate of incorporation and amended and restated bylaws could discourage, delay, or prevent a merger or acquisition involving us that our stockholders may consider favorable. These provisions include but are not limited to the right of our Board to issue preferred stock without stockholder approval, no stockholder ability to fill director vacancies, elimination of the rights of our stockholders to act by written consent and call special stockholder meetings, super-majority vote requirements for certain amendments to our certificate of incorporation and stockholder proposals for amendments to our bylaws, prohibition against stockholders from removing directors other than “for cause” and rules regarding how stockholders may present proposals or nominate directors for election at stockholder meetings.

 

We are also subject to the anti-takeover provisions of the Nevada Revised Statues. Under these provisions, if anyone becomes an “interested stockholder,” we may not enter into a “business combination” with that person for two years without special approval, which could discourage a third-party from making a takeover offer and could delay or prevent a change in control of us. An “interested stockholder” generally means (subject to certain exceptions as described in the Nevada General Corporation Law) someone owning voting stock of our Company and who is an officer, director, or employee of our Company during the past two years, or who is an acquiring person in a contemplated transaction.

 

Because we do not intend to pay dividends, our stockholders will benefit from an investment in our common stock only if it appreciates in value.

 

We intend to retain our future earnings, if any, to finance the expansion of our business and do not expect to pay any cash dividends in the foreseeable future. As a result, the success of an investment in our common stock will depend entirely upon any future appreciation. There is no guarantee that our common stock will appreciate in value or even maintain the price at which our stockholders purchased their shares.

 

Risks Related to the Change in Our Jurisdiction of Incorporation

 

The Constitution of ALR Singapore will be the constitutive document of ALR Singapore upon the Reincorporation Merger, assuming effectiveness of the Reincorporation Merger. The Constitution and Singapore law will contain provisions that differ from those in our current constitutive documents and laws of Nevada and, therefore, your rights as a shareholder of ALR Singapore could differ materially from the rights you currently possess as a shareholder of ALR Nevada. The proposed form of the Constitution of ALR Singapore that will govern ALR Singapore following the effectiveness of the Reincorporation Merger is filed as Annex C to this prospectus/information statement.

 

ALR Singapore is organized under the laws of the Republic of Singapore and its shareholders may have more difficulty in protecting their interest than they would as shareholders of a corporation incorporated in the United States, and ALR Singapore may have more difficulty attracting and retaining qualified board members and executives.

 

ALR Singapore’s corporate affairs are governed by its Constitution and by the Singapore Companies Act. The rights of ALR Singapore’s shareholders and the responsibilities of the members of the ALR Singapore’s board of directors under Singapore law are different from those applicable to a corporation incorporated in the United States. Therefore, ALR Singapore’s shareholders may have more difficulty in protecting their interest in connection with actions taken by ALR Singapore’s management or members of the ALR Singapore’s board of directors than they would as shareholders of a corporation incorporated in the United States.

 

In addition, being a public company organized in Singapore may make it more expensive for ALR Singapore to obtain director and officer liability insurance, and ALR Singapore may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These factors could also make it more difficult for us to attract and retain qualified members of the ALR Singapore’s board of directors, particularly to serve on committees of the ALR Singapore’s board of directors, and qualified executive officers.

 

As a foreign private issuer, ALR Singapore will be exempt from a number of U.S. securities laws and rules promulgated thereunder and will be permitted to publicly disclose less information than U.S. public companies must. This may limit the information available to holders of the ALR Singapore Ordinary Shares.

 

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ALR Singapore will qualify as a “foreign private issuer,” as defined in the SEC’s rules and regulations. Consequently, ALR Singapore will not be subject to all of the disclosure requirements applicable to public companies organized within the United States. For example, ALR Singapore will be exempt from certain rules under the Exchange Act that regulate disclosure obligations and procedural requirements related to the solicitation of proxies, consents or authorizations applicable to a security registered under the Exchange Act. In addition, ALR Singapore’s officers and directors are exempt from the reporting and “short-swing” profit recovery provisions of Section 16 of the Exchange Act and related rules with respect to their purchases and sales of ALR Singapore’s securities. For example, some of ALR Singapore’s key executives may sell a significant amount of ALR Singapore Ordinary Shares and such sales will not be required to be disclosed as promptly as public companies organized within the United States would have to disclose. Accordingly, once such sales are eventually disclosed, the price of ALR Singapore Ordinary Shares may decline significantly. Moreover, ALR Singapore will not be required to file periodic reports and financial statements with the SEC as frequently or as promptly as U.S. public companies. ALR Singapore will also not be subject to Regulation FD under the Exchange Act, which regulation generally prohibits U.S. public companies from selectively disclosing material nonpublic information to certain persons without concurrently making a widespread public disclosure of such information. Accordingly, there may be less publicly available information concerning ALR Singapore than there is for U.S. public companies.

 

As a foreign private issuer, ALR Singapore will file an annual report on Form 20-F within four months of the close of each fiscal year ended December 31 and furnish reports on Form 6-K relating to certain material events promptly after ALR Singapore publicly announces these events. However, because of the above exemptions for foreign private issuers, which ALR Singapore intends to rely on, ALR Singapore shareholders will not be afforded the same information generally available to investors holding shares in public companies that are not “foreign private issuers,” as defined in the SEC’s rules and regulations.

 

ALR Singapore may lose its foreign private issuer status in the future, which could result in significant additional costs and expenses.

 

As a “foreign private issuer,” ALR Singapore would not be required to comply with all of the periodic disclosure and current reporting requirements of the Exchange Act and related rules and regulations. Under those rules, the determination of foreign private issuer status is made annually on the last business day of an issuer’s most recently completed second fiscal quarter, and, accordingly, the next determination will be made with respect to ALR Singapore on June 30, 2023.

 

Notwithstanding the foregoing, in the future, ALR Singapore could lose its foreign private issuer status if a majority of its ordinary shares are held by residents in the United States and it fails to meet any one of the additional “business contacts” requirements. Although ALR Singapore intends to follow certain practices that are consistent with U.S. regulatory provisions applicable to U.S. companies, ALR Singapore’s loss of foreign private issuer status would make such provisions mandatory. The regulatory and compliance costs to ALR Singapore under U.S. securities laws if it is deemed a U.S. domestic issuer may be significantly higher. If ALR Singapore is not a foreign private issuer, ALR Singapore will be required to file periodic reports and prospectuses on U.S. domestic issuer forms with the SEC, which are more detailed and extensive than the forms available to a foreign private issuer. For example, ALR Singapore would become subject to the Regulation FD, aimed at preventing issuers from making selective disclosures of material information. ALR Singapore also may be required to modify certain of its policies to comply with good governance practices associated with U.S. domestic issuers. Such conversion and modifications will involve additional costs.

 

Singapore law may impede a takeover of ALR Singapore by a third-party.

 

The Singapore Code on Take-overs and Mergers contains provisions that may delay, deter or prevent a future takeover or change in control of ALR Singapore for so long as it remains a public company with more than 50 shareholders. Any person acquiring an interest, whether by a series of transactions over a period of time or not, either on their own or together with parties acting in concert with such person, in 30% or more of ALR Singapore’s voting shares, or, if such person holds, either on their own or together with parties acting in concert with such person, between 30% and 50% (both inclusive) of ALR Singapore’s voting shares, and such person (or parties acting in concert with such person) acquires additional voting shares representing more than 1% of ALR Singapore’s voting shares in any six-month period, must, except with the consent of the Securities Industry Council in Singapore, extend a mandatory takeover offer for the remaining voting shares in accordance with the provisions of the Singapore Code on Take-overs and Mergers. While the Singapore Code on Take-overs and Mergers seeks to ensure equality of treatment among shareholders, its provisions may discourage or prevent certain types of transactions involving an actual or threatened change of control of ALR Singapore. These legal requirements may impede or delay a takeover of ALR Singapore by a third-party.

 

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We may still be treated as a U.S. corporation and taxed on our worldwide income after the Reincorporation.

 

 Certain transactions whereby a U.S. corporation migrates to a foreign jurisdiction can be considered an abuse of the U.S. tax rules because thereafter, the foreign entity is not subject to U.S. tax on its worldwide income. Section 7874(b) of the Internal Revenue Code of 1986, as amended (the “Code”), was enacted in 2004 to address this potential abuse. Section 7874(b) of the Code provides generally that certain corporations that migrate from the United States will nonetheless remain subject to U.S. tax on their worldwide income unless the migrating entity has substantial business activities in the foreign country to which it is migrating when compared to its total business activities.

 

 Under Section 7874 of the Code, a corporation created or organized outside of the United States (i.e., a foreign corporation) will be treated as a U.S. corporation for U.S. federal income tax purposes (and, therefore, a U.S. tax resident and subject to U.S. federal income tax on its worldwide income) when (i) the foreign corporation acquires, directly or indirectly, substantially all of the assets held, directly or indirectly, by a U.S. corporation (ii) after the acquisition, the stockholders of the acquired U.S. corporation hold at least 80% (by vote or value) of the shares of the foreign corporation by reason of holding shares of the U.S. acquired corporation, and (iii) after the acquisition, the foreign corporation’s expanded affiliated group does not have substantial business activities in the foreign corporation’s country of organization or incorporation when compared to the expanded affiliated group’s total business activities.  For this purpose, “expanded affiliated group” means the foreign corporation and all subsidiaries in which the foreign corporation owns, directly or indirectly, more than 50% of the stock (by vote or value).  Pursuant to the Reincorporation Merger, ALR Singapore will indirectly acquire all of the assets of ALR Nevada and (ii) the stockholders of ALR Nevada will own essentially 100% of the shares of ALR Singapore.  Therefore, ALR Singapore will be treated as a U.S. corporation for U.S. federal income tax purposes pursuant to Code Section 7874, unless the ALR Singapore expanded affiliated group is treated as having substantial business activities in Singapore.

 

 U.S. Treasury regulation section 1.7874-3 provides that an expanded affiliated group will be treated as having substantial business activities in the relevant foreign country when compared to its total business activities if, in general, at least 25% of the expanded affiliated group’s employees (by number and compensation), tangible asset value, and gross income are based, located and derived, respectively, in the relevant foreign country (the “25% Test”).

 

 If more than 25% of the employees, asset value and gross income of the ALR Singapore expanded affiliated group are located in Singapore, it is expected that the Reincorporation will result in ALR Singapore being treated as a foreign corporation under Section 7874.  However, if for some reason ALR Singapore does not meet the 25% Test, ALR Singapore would likely be treated as a U.S. corporation under Section 7874 for U.S. federal income tax purposes.

 

We may be classified as a Passive Foreign Investment Company as a result of the Reincorporation.

 

Sections 1291 to 1298 of the Code contain the Passive Foreign Investment Company (“PFIC”) rules. These rules generally provide for punitive treatment to “U.S. Holders” (as defined below in “Reincorporation Merger--Certain United States Federal Income Tax Consequences”) of PFICs. A foreign corporation is classified as a PFIC if more than 75% of its gross income is passive income  or more than 50% of its assets produce passive income or are held for the production of passive income. These rules would not apply if the Section 7874(b) rules, as noted above, deem ALR Singapore to be considered as a U.S. corporation for U.S. federal income tax purposes.

 

For purposes of the PFIC asset test, cash is treated as a passive asset. For purposes of the PFIC asset test, the active business assets held by ALR Singapore’s wholly-owned subsidiaries (e.g. ALR Nevada) will be deemed to be held by ALR Singapore. It is uncertain at this time whether ALR Singapore will be classified as a PFIC in the future. If we are classified as a PFIC after the Reincorporation Merger, then the holders of shares of our Company who are U.S. taxpayers may be subject to PFIC provisions which may impose U.S. taxes, in addition to those normally applicable, on the sale of their shares of our Company or on distribution from our Company.

 

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Reincorporation Merger

 

Reincorporation Merger

 

On May 11, 2022, our board of directors made a final determination that it would be in the best interest of the Company to effect the Reincorporation, thereby changing our jurisdiction of incorporation from Nevada to Singapore. The board is seeking approval from the holders of common stock of the Company to effect the Reincorporation.

 

We are proposing to effect that change by effecting the Reincorporation Merger, pursuant to which the Company will become a wholly-owned subsidiary of a Singapore company, and the stockholders of the Company will exchange their shares of common stock and options or warrants to purchase shares of common stock, on a one-for-one basis, for ordinary shares and options or warrants to subscribe for ordinary shares of the Singapore parent company, as applicable.

 

In order to facilitate the Reincorporation Merger and to comply with Singapore law, (i) ownership of ALR Singapore, which was previously a wholly-owned subsidiary of the Company, was transferred to KAD, a Singapore private company owned by trust entities controlled by our CEO, Sidney Chan, and (ii) ALR Singapore formed a new Delaware subsidiary corporation, ALRT Delaware.

 

Upon effectiveness of the Reincorporation Merger, ALR Delaware will be merged with and into ALR Nevada, with ALR Nevada surviving the Reincorporation Merger as a wholly-owned subsidiary of ALR Singapore. ALR Delaware will cease to exist.

 

At the closing of the Reincorporation Merger, each of the 551,966,844 outstanding share of Common Stock of ALR Nevada will be cancelled and the holders thereof will receive or be allotted and issued an equal number of ordinary shares of ALR Singapore. In addition, each of the 362,000,000 compensatory ALR Nevada Options, and 5,160,501,500 ALR Nevada Warrants currently outstanding, whether vested or unvested, will be cancelled. In exchange for such cancellations, the holders of the ALR Nevada Options will receive, on a one for one basis, an aggregate of 362,000,000 ALR Singapore Options, and the holders of the ALR Nevada Warrants will receive, on a one for one basis, an aggregate of 5,160,501,500 ALR Singapore Warrants.

 

Continuation of the Company Business Unchanged

 

For holders of ALR Technologies, Inc. common stock, much will remain unchanged following the Reincorporation Merger. There will be some differences in your stockholder rights, given the differences between the laws of Nevada and Singapore as they relate to companies incorporated in those jurisdictions. The attached prospectus/information statement includes a detailed chart outlining these differences in the section titled “Reincorporation Merger--Comparison of Corporate Law,” which begins on page 48. Upon effectiveness of the Reincorporation Merger, ALR Nevada stockholders will have their ALR Nevada Shares, ALR Nevada Options, and ALR Nevada Warrants exchanged, on a one-for-one basis, for ALR Singapore Ordinary Shares, ALR Singapore Options, or ALR Singapore Warrants, as applicable. For U.S. federal income tax purposes, U.S. Holders (as defined below in “Reincorporation Merger—U.S. Federal Income Tax Considerations”) of ALR Nevada Shares will recognize gain (but not loss) as a result of the Reincorporation Merger.

 

The registration statement of which this prospectus/information statement forms a part is registering the exchange of 551,966,844 issued and outstanding ALR Nevada Shares, for ALR Singapore Ordinary Shares, on a one-for-one basis. In addition, the Reincorporation Merger provides for the exchange of the ALR Nevada Options for ALR Singapore Options, and the ALR Nevada Warrants for ALR Singapore Warrants, also on a one-for-one basis. It is anticipated that the ALR Singapore Ordinary Shares will be approved for trading on the OTCQB tier, and ALR Singapore will seek to have the ALR Singapore Ordinary Shares trade under the same ticker symbol under which the ALR Nevada Shares are currently traded (ALRT); however no assurance can be given that such approvals will be granted. Provided the requested approvals are granted, it is anticipated that the ALR Singapore Ordinary Shares will begin trading on the OTCQB as soon as possible following the Effective Time.

 

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The consolidated assets and liabilities of ALR Singapore and ALR Nevada, as its wholly-owned subsidiary, immediately after the Reincorporation Merger, will be identical to the assets and liabilities of ALR Nevada immediately prior to the Reincorporation. The officers and directors of ALR Nevada immediately before the Reincorporation becomes effective will also serve as officers and directors of ALR Singapore upon Reincorporation. In addition, pursuant to Singapore law, ALR Singapore is required to appoint certain officers and to have at least one director who is ordinarily resident in Singapore. Therefore, prior to the Reincorporation, and continuing upon effectiveness of the Reincorporation, ALR Singapore will appoint Benjamin Szeto, as Secretary and Chief Legal Counsel, and Christine Kan, the spouse of CEO Sidney Chan, as Vice President. Additionally, Ms. Kan, who is currently serving as a director of ALR Singapore, will continue to serve as a locally resident director following the Reincorporation. Biographical information regarding Mr. Szeto and Ms. Kan is set forth on page 90 of this prospectus. After the Reincorporation, it is also anticipated that at least initially, the officers and directors of ALR Nevada, as the wholly-owned subsidiary of ALR Singapore, will remain the same as prior to the Reincorporation. The Reincorporation will not result in any material change to our business and will not have any effect on the relative equity interests of our stockholders.

 

Principal Reasons for the Reincorporation

 

We believe that the Reincorporation from Nevada to Singapore will provide the Company with additional corporate flexibility, result in cost savings, and that Singapore is a jurisdiction more familiar to most of our current and potential new investors, ultimately resulting in improved access to capital markets. Through ALR Singapore (our historic subsidiary that after the Reincorporation will become the parent company of ALR Nevada), we already have a growing substantial business presence in Singapore, which we anticipate will continue to grow after the Reincorporation Merger. ALR Singapore will be a tax resident of Singapore, subject to Singapore tax obligations. The Company’s primary executive officer, Sidney Chan, resides in Singapore with his wife, Christine Kan, who is a resident of Singapore and will serve as Vice President of ALR Singapore and member of its board of directors. Sidney and Christine beneficially own 70% of the shares of common stock of ALR Nevada. A significant percentage (38%) of the Company’s employees will be based in Singapore at closing. Furthermore, employees based in Singapore will account for approximately 35% of total employee compensation paid by ALR Singapore and its affiliates. More than 70% of the tangible property and premises leases of the Company is located in Singapore, and substantially all of the Company’s income is attributable to Singapore customers. Singapore, as a member of the ASEAN is located in close proximity to suppliers of continuous glucose monitoring devices and blood glucose meters. Based on the relationships of our CEO, we believe we have improved access to personnel to grow the business in Singapore.

 

Background Considerations Leading to the Reincorporation

 

As early as 2016, our board of directors recognized the potential value and need to operate the Company in jurisdictions outside the United States. The Company has long believed that its products and services would have an international reach. The board has also recognized the value of fostering financing and investment sources outside the United States.

 

Since 2016, board discussions continued on the subject of redomiciling outside the United States, including considerations in 2018 of a potential move to Canada.

 

More focused efforts on a migration of the Company to Singapore began in March 2020. By the fall of that year, the Company retained outside legal and accounting advisers pursue the Singapore migration. These efforts have included analysis the impact such a migration would have on U.S. tax obligations, trading of the Company’s shares on the OTC market, access to capital, access to customers, and access to strategic business partners.

 

Since November 2020, the Singapore migration project has been a regular topic of discussion at board meetings. In the spring of 2021, the Company considered legal options to effect a merger with ALR Singapore employing a “fairness hearing” before a qualified regulatory agency that would have agreed to take review jurisdiction over the proposed reincorporation merger. A fairness hearing determination would have provided the Company an exemption from registration with the SEC of the shares of ALR Singapore to be issued in the Reincorporation Merger. Having fully explored the option for a fairness hearing, and not finding a government agency qualified to assume jurisdiction, the Company determined that it would proceed with registering the shares of ALR Singapore to be issued to its shareholders in the Reincorporation Merger.

 

Since the spring of 2021, the Company’s focus on the migration has been to work with advisors to assess US tax implications of the transaction, and to complete and approve the registration statement of which this prospectus/information statement forms a part.

 

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Amendment or Termination

 

The Reincorporation Merger may be amended, modified or supplemented at any time prior to closing. Our board of directors may terminate the Reincorporation Merger and abandon or delay the Reincorporation Merger at any time prior to its effectiveness without obtaining the approval of our stockholders in case of immaterial amendments, modifications or supplementations. Upon the Effective Time amendments, modifications or supplements may be made subject to applicable Singapore law.

 

Representation and Warranties

 

The Merger Agreement contains customary representations and warranties of the Company, ALR Singapore and ALR Delaware for a transaction of this type relating to, among other things:

 

  corporate organization and valid existence;

 

  corporate power;

 

  capitalization;

 

  authority to enter into the Merger Agreement and the related agreements;

 

  execution, delivery and enforceability of the Merger Agreement and the related agreements; and

 

  no conflicts.

 

Conditions to Consummation of the Reincorporation

 

The Reincorporation will not be completed under Nevada law and Singapore law, unless various conditions are satisfied or, if allowed by law, waived, including the following:

 

  A Registration Statement on Form F-4, of which this prospectus/information statement is a part, for the ALR Singapore Ordinary Shares to be issued to the stockholders of ALR Nevada having been declared effective by the SEC, and no stop order with respect thereto shall be in effect;

  we are not subject to any governmental decree, order or injunction that prohibits the consummation of the Reincorporation;

 

  the representations and warranties of each of the parties to the Merger Agreement shall be true and correct in all material respects as of the date of Merger Agreement and at the time of closing of the Reincorporation Merger;

 

  each of the parties to the Merger Agreement shall have complied with and duly performed in all material respects its covenants in the Merger Agreement;

 

  there is no adverse material change in our business and affairs, or event, occurrence or development which would materially and adversely affect our ability to complete the Reincorporation Merger;

​ 

  we obtain all consents, rulings and approvals that are necessary, desirable or appropriate in connection with the Reincorporation including approvals from the OTC Markets Group for quotation of the ALR Singapore Ordinary Shares on the OTCQB;

 

  a new constitution (or an amended and restated constitution) of ALR Singapore has been adopted by the directors and shareholders of ALR Singapore, and all other actions required under the laws of Singapore has been taken to convert ALR Singapore from a private company limited by shares to a public company limited by shares; and

 

  holders of no more than 1% of the outstanding ALR Nevada Shares as of immediately prior to the Effective Time, in the aggregate, shall have exercised, or remain entitled to exercise, statutory dissenters’ rights pursuant to the NRS with respect to such ALR Nevada Shares.

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Dissenters’ Rights

 

Under Nevada law, ALR Nevada stockholders that have not consented to the Reincorporation Merger have the right to dissent from the Reincorporation Merger and to receive payment in cash for the “fair value” of their ALR Nevada Shares.

 

ALR Nevada stockholders electing to exercise dissenters’ rights must comply with the provisions of the Sections 92A.300 through NRS 92A.500 of the NRS in order to perfect their rights. The following is intended as a brief summary of the material provisions of the procedures that an ALR Nevada stockholder must follow in order to dissent from the Reincorporation Merger and perfect dissenters’ rights. This summary, however, is not a complete statement of all applicable requirements and is qualified in its entirety by reference to the applicable Nevada statutes, the full text of which is set forth in Annex B to this prospectus/information statement.

 

This prospectus/information statement also functions as a dissenters’ notice pursuant to NRS 92A.430. In addition, a copy of the dissenters’ rights provisions of NRS 92A.300 through 92A.500 are attached to this prospectus/information statement as Annex B.

 

A stockholder who wishes to assert dissenters’ rights must, within 30 days from the date this prospectus/information statement is delivered to such stockholder, deliver to the Company:

 

  Written notice of the stockholder’s demand for payment for the stockholders ALR Nevada Shares if the Reincorporation Merger is completed;

 

  The stockholder’s stock certificates representing the ALR Nevada Shares held by such stockholder; and

 

  Certification that the stockholder acquired beneficial ownership of the ALR Nevada Shares before the date this prospectus/information was mailed to stockholders.

 

A stockholder wishing to deliver a notice asserting dissenters’ rights should hand-deliver or mail the notice, his or her stock certificates, and the certification to the following address:

 

ALR Technologies Inc.

7400 Beaufont Springs Dr, Suite 300

Richmond, Virginia 23225

Attn:

Ken Robulak (North America) (804-554-3500)

Anthony Ngai (Outside North America) (65 3129 2924)

 

A stockholder who wishes to exercise dissenters’ rights generally must dissent with respect to all of the shares the stockholder owns. However, if a record stockholder is a nominee for several beneficial stockholders, some of whom wish to dissent and some of whom do not, then the record holder may dissent with respect to all the shares beneficially owned by any one person by notifying the Company in writing of the name and address of each person on whose behalf the record stockholder asserts dissenters’ rights. A beneficial stockholder may assert dissenters’ rights directly by submitting to the Company the record stockholder’s written consent to the dissent not later than the time the beneficial stockholder asserts dissenter’s rights, and by dissenting with respect to all the shares of which such stockholder is the beneficial stockholder or which such stockholder has the power to direct the vote.

 

A stockholder who does not, prior to lapse of 30 days from the date this prospectus/information statement is delivered, deliver to the Company a written notice of the stockholder’s intent to demand payment for the “fair value” of the shares will lose the right to exercise dissenters’ rights.

 

Any stockholder electing to exercise dissenters’ rights must not have signed a stockholder written consent approving the Reincorporation Merger.

 

A stockholder wishing to exercise dissenters’ rights must file the payment demand within the prescribed time period and deliver share certificates as required in the notice. Failure to do so will cause that stockholder to lose his or her dissenters’ rights.

 

A stockholder who has complied with the requirements summarized in the previous paragraphs may nevertheless decline to exercise dissenters’ rights and withdraw from the appraisal process by notifying the Company within such 30-day period. If the stockholder does not withdraw from the appraisal process by such date, he or she may not do so thereafter unless the Company consents to such withdrawal in writing.

 

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Within 30 days after the Effective Time, the Company will pay each dissenter with properly perfected dissenters’ rights the Company’s estimate of the “fair value” of the stockholder’s shares, plus accrued interest from the Effective Time of the Reincorporation Merger. The payment will be accompanied by specified financial information as required by NRS 92A.460 and a statement as to the Company’s estimate of the fair value of the shares and the interest payable with respect to the shares.

 

With respect to a dissenter who did not beneficially own ALR Nevada Shares prior to the public announcement of the Reincorporation Merger, ALR Nevada is not required to make the payment until the dissenter has agreed to accept the payment in full satisfaction of the dissenter’s demands or demand appraisal under NRS 92A.460.

 

“Fair value” is defined in NRS 92A.320 as the value of the ALR Nevada Shares immediately before the Effective Time of the Reincorporation Merger, excluding any appreciation or depreciation in anticipation of the Reincorporation Merger unless exclusion would be inequitable. The “fair value” may be less than, equal to or greater than the value of the consideration that an ALR Nevada stockholder would be entitled to receive under the Merger Agreement. The rate of interest will be the rate of interest provided under applicable law.

 

Within 30 days of the Company’s payment (or offer of payment in the case of shares acquired after public announcement of the Reincorporation Merger) to a dissenting stockholder, a dissenter dissatisfied with the Company’s estimate of the fair value of the shares may notify the Company of the dissenter’s own estimate of the fair value and demand payment of that amount. If the Company does not accept the dissenter’s estimate and the parties do not otherwise settle on a fair value, then the Company must, within 60 days of receiving the estimate and demand, petition a court to determine the fair value of the shares and accrued interest.

 

In view of the complexity of the Nevada statutes governing dissenters’ rights, ALR Nevada stockholders who wish to dissent from the Reincorporation Merger and pursue dissenters’ rights should consult their legal advisors.

 

The failure of an ALR Nevada stockholder to comply strictly with the Nevada statutory requirements will result in a loss of dissenters’ rights. A copy of the relevant statutory provisions is attached as Annex B. You should refer to Annex B for a complete statement concerning dissenters’ rights and the foregoing summary of such rights is qualified in its entirety by reference to Annex B.

 

Applicable Law

 

As of the Effective Time, the legal jurisdiction of incorporation of ALR Singapore will be Singapore. The legal jurisdiction of ALR Nevada, as the Company’s wholly-owned subsidiary, will continue to be Nevada. All matters of corporate law affecting ALR Singapore will be determined under Singapore law. ALR Singapore will continue to be subject to the reporting requirements of the Exchange Act. In addition, ALR Singapore will continue to be subject to the rules and regulations of the OTC Markets Group. The legal jurisdiction of incorporation of ALR Nevada, as a subsidiary of ALR Singapore, will not be affected by the Reincorporation and will not change for the time being.

 

Assets, Liabilities, Obligations, Etc.

 

Upon effectiveness of the Reincorporation, all of the assets, property, rights, liabilities and obligations of ALR Nevada and its subsidiary, ALR Singapore, immediately prior to the Reincorporation, will continue to be assets, property, rights, liabilities and obligations of ALR Nevada and ALR Singapore after the Reincorporation, inasmuch as ALR Nevada will become the wholly-owned subsidiary of ALR Singapore at the Effective Time. In order to facilitate the Reincorporation Merger and to comply with Singapore law, (i) ownership of the Company’s wholly-owned subsidiary, ALR Singapore, represented by one ALR Singapore Ordinary Share, was transferred to KAD.

 

Capital Stock

 

Upon effectiveness of the Reincorporation Merger, all of the issued and outstanding ALR Nevada Shares will be converted into the right to receive or be allotted and issued ALR Singapore Ordinary Shares. Immediately following the Effective Time, and subject to the effect of the exercise of any dissenters’ rights by any applicable ALR Nevada stockholders, 551,966,844 ALR Singapore Ordinary Shares will be issued to the stockholders, excluding the 362,000,000 ALR Singapore Ordinary Shares to be issuable upon exercise of the ALR Singapore Options granted as of the Effective Time, and excluding the 5,160,501,500 ALR Singapore Ordinary Shares to be issuable upon exercise of the ALR Singapore Warrants granted as of the Effective Time. All of the issued and outstanding ALR Nevada Shares are, and upon the Reincorporation, the issued ALR Singapore Ordinary Shares will be, fully paid.

 

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Exchange of Shares in the Reincorporation Merger

 

Upon completion of the Reincorporation Merger, each issued and outstanding ALR Nevada Share, other than ALR Nevada Shares held by ALR Nevada or owned by ALR Singapore, or any direct or indirect subsidiary of ALR Nevada or ALR Singapore will be converted into the right to receive or be allotted and issued one ALR Singapore Ordinary Share.

 

Pacific Stock Transfer has been appointed by ALR Singapore to handle the exchange of ALR Nevada Shares for the Merger Consideration. Prior to the Effective Time, ALR Singapore will deposit or cause to be deposited with the exchange agent in trust for the benefit of holders of ALR Nevada Shares, certificates or evidence of ALR Singapore Ordinary Shares in book-entry form representing the number of ALR Singapore Ordinary Shares sufficient to deliver the aggregate Merger Consideration deliverable in respect of ALR Nevada Shares and cash sufficient to make payments in lieu of any applicable fractional ALR Singapore Ordinary Shares.

 

ALR Nevada stockholders will not receive any fractional ALR Singapore Ordinary Shares in the Reincorporation Merger. Instead, an ALR Nevada stockholder who otherwise would have received a fractional ALR Singapore Ordinary Share will be entitled to receive, from the exchange agent pursuant to the Merger Agreement, a cash payment without interest, rounded to the nearest whole cent, in lieu of such fractional share equal to the fractional share interest to which such stockholder would otherwise be entitled (after taking into account all ALR Nevada Shares exchanged by such stockholder and rounded to the nearest whole cent).

 

Promptly following the Effective Time, ALR Singapore will send or cause the exchange agent to send to each holder of record of ALR Nevada Shares whose shares were converted into the right to receive the Merger Consideration, a letter of transmittal with respect to book-entry shares (to the extent applicable) and certificates, and instructions for use in effecting the surrender of book-entry shares or certificates in exchange for the Merger Consideration.

 

On the surrender of certificates (or effective affidavits of loss in lieu of a certificate) or book-entry shares to the exchange agent, together with a duly completed and validly executed letter of transmittal, or, in the case of book-entry shares, receipt of an “agent’s message” by the exchange agent, and such other documents as may customarily be required by the exchange agent, the holder of such certificates (or effective affidavits of loss in lieu thereof) or book-entry shares will be entitled to receive in exchange the Merger Consideration, together with any fractional share cash amount payable with respect to such shares following the Effective Time. No interest will be paid or accrued on any amount payable on due surrender of certificates (or effective affidavits of loss in lieu thereof) or book-entry shares.

 

ALR Singapore, ALR Nevada, Merger Sub and their respective agents (including the exchange agent) are entitled to deduct and withhold any applicable taxes from any Merger Consideration that would otherwise be payable pursuant to the Merger Agreement.

 

After the Effective Time, ALR Nevada will not register any transfer of ALR Nevada Shares.

 

Existing holders of ALR Singapore Ordinary Shares need not take any action with respect to their share certificates or other interest in ALR Singapore Ordinary Shares.

 

Voting

 

Following the Reincorporation, our stockholders will continue to hold the same relative equity and voting interests that they held prior to the Reincorporation.

 

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Business and Operations

 

The Reincorporation, when effective, will result in a change in the legal jurisdiction of incorporation of our publicly traded Company, as of the Effective Time, but our business, operations, and employees will remain essentially the same. However, as indicated below, Benjamin Szeto, who is currently the Secretary and Chief Legal Counsel of ALR Singapore, and Christine Kan, who is currently the Vice President of ALR Singapore, will continue to serve in those capacities as employees. They will be joined by Sidney Chan as Chairman of the Board of Directors, Principal Executive Officer, Principal Financial Officer, and Principal Accounting Officer of ALR Singapore. ALR Singapore currently rents office space in Singapore.

 

Board of Directors and Executive Officers

 

When the Reincorporation is completed, executive officers and directors of ALR Nevada immediately prior to the Effective Time will also serve as executive officers and directors of ALR Singapore. In addition, pursuant to Singapore law, ALR Singapore is required to appoint certain officers and to have at least one director who is ordinarily resident in Singapore. Therefore, prior to the Reincorporation, and continuing upon effectiveness of the Reincorporation, ALR Singapore will appoint Benjamin Szeto, as Secretary and Chief Legal Counsel, and Christine Kan, the spouse of CEO Sidney Chan, as Vice President. Additionally, Ms. Kan, who is currently serving as a director of ALR Singapore, will continue to serve as a locally resident director following the Reincorporation. Biographical information regarding Mr. Szeto and Ms. Kan is set forth on page 90 of this prospectus. After the Reincorporation, it is also anticipated that at least initially, the officers and directors of ALR Nevada, as the wholly-owned subsidiary of ALR Singapore, will remain the same as prior to the Reincorporation.

 

In summary, prior to the Reincorporation, ALR Nevada’s sole executive officer is Sidney Chan (Chairman of the Board of Directors, Secretary, Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer). ALR Nevada’s current board of directors is comprised of Sidney Chan (Chairman), Peter Stafford, Kenneth J. Robulak, Dr. Alfonso Salas, and Ronald Cheng.

 

After the Reincorporation, the executive officers of ALR Singapore will be Sidney Chan (Chairman of the Board of Directors, Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer); Benjamin Szeto, Secretary and Chief Legal Counsel; and Christine Kan, Vice President. After the Reincorporation, the directors of ALR Singapore will be Sidney Chan (Chairman), Peter Stafford, Kenneth J. Robulak, Dr. Alfonso Salas, Ronald Cheng, and Christine Kan.

 

Accounting Treatment of the Reincorporation

 

The Reincorporation Merger will be accounted for as a legal reorganization as there will be no change in control and there will be no change in the ultimate ownership interest, immediately before and after the transaction. Under US Generally Accepted Accounting Principles as issued by the Financial Accounting Standards Board, the Reincorporation Merger represents a non-substantive exchange and will be accounted for in a manner consistent with a transaction between entities of common control.

 

The assets and liabilities in our consolidated financial statements after the Reincorporation Merger will be reflected at their historical value in our consolidated financial statements at the time of the Reincorporation Merger. In addition, the Reincorporation Merger will not impact the Company’s capitalization. The historical comparative figures of ALR Singapore will be those of ALR Nevada.

 

Effective Time

 

The Merger Agreement requires the parties to consummate the Reincorporation Merger as promptly as practicable after all of the conditions to the consummation of the Reincorporation Merger contained in the Merger Agreement are satisfied or waived. To effect the Reincorporation, we will file Articles of Merger with the Secretary of State of Nevada, and a Certificate of Merger with the Secretary of State of Delaware.

 

In anticipation of the consummation of the Reincorporation Merger, ALR Singapore has passed resolutions, as required by the Companies Act of Singapore (Cap 50) to, among other things, convert ALR Singapore from a private entity (with less than 50 shareholders) to a public limited company, adopt a new Constitution (appropriate for a public limited company), adjust the original name of the Company to remove reference to “Pte.” and make corresponding changes to reflect the Company’s public status, and approve the issuance and allotment of new shares to the new shareholders (who are currently existing shareholders of the Company) of ALR Singapore. A copy of the form of Constitution reflecting the foregoing is included as Annex C to this prospectus/information statement.

 

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In the event the conditions to the Reincorporation Merger are not satisfied, the Reincorporation may be abandoned or delayed. In addition, the Reincorporation may be abandoned or delayed for any reason by the consent of the Company, ALR Singapore, and ALR Delaware (without the need for any action on the part of their respective shareholders), even if all other conditions to the Reincorporation might be satisfied.

 

Approvals and Regulatory Filings

 

In the United States, ALR Singapore must comply with applicable federal and state securities laws in connection with the issuance of ALR Singapore Ordinary Shares and the filing of this prospectus/information statement with the SEC.

 

In order for the Company to carry out the Reincorporation Merger, it will be necessary for us to comply with the provisions of the corporate law of Nevada, Delaware, and Singapore, including obtaining all necessary approvals, filing Articles of Merger with the Secretary of State of Nevada and filing a Certificate of Merger with the Secretary of State of Delaware.

 

Our Majority Stockholder and ALR Singapore, which owns all of the issued and outstanding shares of common stock of ALR Delaware, have each approved the Reincorporation Merger.

 

Under Singapore law, ALR Singapore is required to pass resolutions to approve the issuance and allotment of ALR Singapore Ordinary Shares to the shareholders of ALR Nevada in exchange for ALR Nevada Shares, and to become a public limited company organized under the laws of Singapore.

 

Effect on Shares

 

In order to facilitate the Reincorporation Merger and to comply with Singapore law, (i) ownership of the Company’s wholly-owned subsidiary, ALR Singapore, represented by one ALR Singapore Ordinary Share, was transferred (pending completion of the Reincorporation) to KAD, a Singapore private company owned by trust entities controlled by our CEO, Sidney Chan, and (ii) ALR Singapore formed a new Delaware subsidiary corporation, ALR Delaware.

 

Upon effectiveness of the Reincorporation Merger, ALR Delaware will be merged with and into ALR Nevada, with ALR Nevada surviving the Reincorporation Merger as a wholly-owned subsidiary of ALR Singapore, and ALR Delaware’s corporate existence will cease. ALR Nevada will continue its corporate existence as the primary asset of ALR Singapore. ALR Nevada will remain a corporation organized under Nevada law.

 

Upon effectiveness of the Reincorporation Merger, each outstanding ALR Nevada Share will be cancelled and the holders thereof will receive or be allotted and issued an equal number of ALR Singapore Ordinary Shares. Accordingly, with the exception of the one ALR Singapore Ordinary Share transferred to KAD as described above, the owners of ALR Nevada prior to the Reincorporation will own 100% of the shares of ALR Singapore, in the same amounts and percentages as they held ALR Nevada. Currently there are 551,966,844 shares of common stock of ALR Nevada issued and outstanding. Each of the 362,000,000 ALR Nevada Options, and 5,160,501,500 ALR Nevada Warrants to purchase ALR Nevada Shares currently outstanding, whether vested or unvested, will be cancelled. In exchange for such cancellation, the holders of the ALR Nevada Options will receive, on a one for one basis, options to acquire an aggregate of 362,000,000 ALR Singapore Ordinary Shares, and the holders of the ALR Nevada Warrants will receive, on a one for one basis, warrants to acquire an aggregate of 5,160,501,500 ALR Singapore Ordinary Shares.

 

Federal Securities Law Consequences; Resale Restrictions

 

All ALR Singapore Ordinary Shares after the Reincorporation Merger received by the holders of our issued and outstanding shares of ALR Nevada pursuant to the Reincorporation will be freely transferable, except that shares of ALR Singapore received by persons who are deemed to be “affiliates” (as defined under the Securities Act of 1933, as amended (the “Securities Act”)), of our Company prior to the Reincorporation may be resold by them only in transactions permitted by the resale provisions of Rule 144 promulgated under the Securities Act, or as otherwise permitted under the Securities Act. Persons who may be deemed to be affiliates of ALR Singapore generally include individuals or entities that control, are controlled by, or are under common control with, ALR Singapore, and may include certain officers and directors of such persons as well as principal shareholders of such persons.

 

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ALR Nevada is a reporting company under the Exchange Act, and is required to file an annual report under form 10-K to provide a comprehensive overview of our Company’s business. Upon consummation of the Reincorporation Merger, our Company will be deemed to be a foreign private issuer as defined in Rule 3b-4(c) under the Exchange Act, and will be permitted to file annual reports on form 20-F instead of form 10-K. In addition, as a foreign private issuer, our reincorporated Company will no longer be required to file quarterly reports on form 10-Q.

 

Interests of Certain Persons in the Reincorporation

 

No person who has been a director or executive officer of the Company at any time since the beginning of the last fiscal year, or any associate of any such person, has any substantial interest in the Reincorporation, except for any interest arising from his or her ownership of securities of the Company. No such person is receiving any extra or special benefit not shared on a pro rata basis by all other holders of shares of the Company.

 

Material Tax Considerations Relating to the Reincorporation

 

This section contains a general discussion of certain material tax consequences of: (1) the Reincorporation; (2) post-Reincorporation ownership and disposition of ALR Singapore Ordinary Shares; and (3) our post-Reincorporation operations.

 

The discussion under the caption “- U.S. Federal Income Tax Considerations” addresses certain material U.S. federal income tax consequences to: (1) the Company of the Reincorporation and post-Reincorporation operations; and (2) to U.S. holders (as defined below) of the Reincorporation and of owning and disposing of ALR Singapore Ordinary Shares received in the Reincorporation.

 

The discussion under the caption “- Singapore Tax Considerations” addresses certain material Singapore tax consequences to: (1) shareholders resulting from the Reincorporation and from ownership and disposition of the common shares and (2) the Company resulting from the Reincorporation and from subsequent operations.

 

In proposing and approving the Reincorporation Merger, our board of directors considered the U.S. and Singapore tax consequences to both U.S. Holders and Non-U.S. Holders (as defined below) as well as controlling and non-controlling shareholders.

 

The below discussion is not a substitute for an individual analysis of the tax consequences of the Reincorporation, post-Reincorporation ownership and disposition of ALR Singapore Ordinary Shares or post-Reincorporation operations of the Company. You should consult your own tax advisors regarding the particular U.S. (federal, state and local), Singapore, and other non-U.S. tax consequences of these matters in light of your particular situation.

 

U.S. Federal Income Tax Considerations

 

The following is a general summary of certain U.S. federal income tax considerations applicable to stockholders resulting from the Reincorporation Merger and the ownership and disposition of ALR Singapore Ordinary Shares.

 

This summary is for general information purposes only and does not purport to be a complete analysis or listing of all potential U.S. federal income tax considerations that may apply to a stockholder. For example, it does not take into account the individual facts and circumstances of any particular stockholder that may affect the U.S. federal income tax considerations applicable to such holder, nor does it address the state and local, federal estate and gift, federal alternative minimum tax, or foreign tax consequences to a stockholder relating to the Reincorporation Merger and the ownership and disposition of ALR Singapore Ordinary Shares acquired thereby. Accordingly, this summary is not intended to be, and should not be construed as, legal or U.S. federal income tax advice with respect to any particular stockholder. Each stockholder is urged to consult its own tax advisor regarding the U. S. federal tax consequences which may apply as a result of the Reincorporation and the ownership and disposition of ALR Nevada Shares and ALR Singapore Ordinary Shares.

 

No ruling from the Internal Revenue Service (the “IRS”) has been requested, or will be obtained, regarding the U.S. federal income tax consequences to stockholders as a result of the of the Reincorporation Merger. This summary is not binding on the IRS, and the IRS is not precluded from taking a position that is different from, and contrary to, the positions taken in this summary. In addition, because the authorities on which this summary are based are subject to various interpretations, the IRS and the U.S. courts could disagree with one or more of the positions taken in this summary.

 

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This summary is based on the Code, Treasury Regulations (whether final, temporary, or proposed), published rulings of the IRS, published administrative positions of the IRS, and U.S. court decisions that are applicable and, in each case, as in effect and available, as of the date of this information statement/prospectus. Any of the authorities on which this summary is based could be changed in a material and adverse manner at any time, and any such change could be applied on a retroactive or prospective basis, which could affect the U.S. federal income tax considerations described in this summary. This summary does not discuss the potential effects, whether adverse or beneficial, of any proposed legislation that, if enacted, could be applied on a retroactive or prospective basis.

 

As used in this summary, the term “U.S. Holder” means a beneficial owner of ALR Nevada Shares (or, after the Reincorporation Merger has been consummated, a beneficial owner of ALR Singapore Ordinary Shares) that is, for U.S. federal income tax purposes:

 

(a) an individual who is a citizen or resident of the U.S.; 

 

(b) a corporation, or other entity classified as a corporation that is created or organized in or under the laws of the U.S. or any state in the U.S., including the District of Columbia; 

 

(c) an estate if the income of such estate is subject to U.S. federal income tax regardless of the source of such income; or 

 

(d) a trust if (i) such trust has validly elected to be treated as a U.S. person for U.S. federal income tax purposes; or (ii) is subject to the supervision of a court within the United States and the control of one or more U.S. persons as described in the Code. 

 

For purposes of this summary, a “Non-U.S. Holder” is a beneficial owner of ALR Nevada Shares (or, after the Reincorporation Merger, a beneficial owner of ALR Singapore Ordinary Shares) that is neither a U.S. Holder nor a partnership.

 

This summary does not address the U.S. federal income tax considerations of the Reincorporation Merger to stockholders that are subject to special provisions under the Code, including: (a) stockholders that are tax-exempt organizations, qualified retirement plans, individual retirement accounts, or other tax-deferred accounts; (b) stockholders that are financial institutions, underwriters, insurance companies, real estate investment trusts, or regulated investment companies; (c) stockholders that are broker-dealers, dealers, or traders in securities or currencies that elect to apply a mark-to-market accounting method; (d) stockholders that have a “functional currency” other than the U.S. dollar; (e) stockholders that own ALR Nevada Shares (or after the Reincorporation Merger is consummated, ALR Singapore Ordinary Shares) as part of a straddle, hedging transaction, conversion transaction, constructive sale, or other arrangement involving more than one position; (f) Stockholders that acquired ALR Nevada Shares (or after the Reincorporation Merger is consummated, ALR Singapore Ordinary Shares) in connection with the exercise of employee stock options or otherwise as compensation for services; (g) Stockholders that hold ALR Nevada Shares (or after the Reincorporation Merger is consummated, ALR Singapore Ordinary Shares) other than as a capital asset within the meaning of Section 1221 of the Code (generally, property held for investment purposes); and (h) partnerships and other pass-through entities (and investors in such partnerships and entities).

 

This summary also does not address the U.S. federal income tax considerations applicable to stockholders who are: (a) U.S. expatriates or former long-term residents of the U.S.; or (b) persons that use or hold, will use or hold, or that are or will be deemed to use or hold ALR Nevada Shares (or after the Reincorporation Merger is consummated, ALR Singapore Ordinary Shares) in connection with carrying on a business in Singapore. Stockholders that are subject to special provisions under the Code, including stockholders described immediately above, should consult their own tax advisor regarding the U.S. federal, U.S. federal alternative minimum, U.S. federal estate and gift, U.S. state and local, and foreign tax consequences relating to the Reincorporation Merger and the ownership and disposition of ALR Singapore Ordinary Shares received pursuant to the Reincorporation Merger.

 

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Finally, this summary does not address the U.S. federal income tax consequences of transactions effected prior or subsequent to, or concurrently with the Reincorporation Merger, including, without limitation: any vesting, conversion, assumption, disposition, exercise, exchange or other transaction involving any rights to acquire ALR Nevada Shares or ALR Singapore Ordinary Shares, including any options or warrants of ALR Nevada and any transaction, other than the Reincorporation Merger, in which securities of ALR Nevada or ALR Singapore are acquired.

 

If an entity that is classified as a partnership (or “pass-through” entity) for U.S. federal income tax purposes holds ALR Nevada Shares (or after the Reincorporation Merger is consummated, ALR Singapore Ordinary Shares), the U.S. federal income tax consequences to such partnership and the partners of such partnership of participating in the Reincorporation Merger and the ownership of ALR Singapore Ordinary Shares received pursuant to the Reincorporation Merger generally will depend on the activities of the partnership and the status of such partners. Partners of entities that are classified as partnerships for U.S. federal income tax purposes should consult their own tax advisors regarding the U.S. federal income tax consequences of the Reincorporation Merger and the ownership and disposition of ALR Singapore Ordinary Shares received thereby.

 

This discussion provides general information only and is not intended to be tax advice to any particular stockholder. Any U.S. Federal, state, or local tax advice included in this discussion was not intended or written to be used, and it cannot be used by any stockholder, for the purpose of avoiding any penalties that may be imposed by any U.S. Federal, state or local governmental taxing authority or agency. Investors should consult their own independent tax advisors in determining the application to them of the U.S. federal income tax consequences set forth below, and any other U.S. federal, state, local foreign or other tax consequences to them of the purchase, ownership and disposition of ALR Nevada Shares and ALR Singapore Ordinary Shares. Investors should note that no rulings have been or will be sought from the IRS with respect to any of the U.S. federal income tax consequences discussed below and no assurance can be given that the IRS will not take positions contrary to the conclusions stated below.

 

Consequences of the Reincorporation Merger to U.S. Holders

 

It is intended that the Reincorporation Merger qualify as a tax-free “reorganization” within the meaning of Section 368(a) of the Code. However, Section 367(a) of the Code and the Treasury Regulations thereunder prevent ALR Singapore from being treated as a corporation for certain U.S. federal income tax purposes, thereby disqualifying a stockholder’s exchange of ALR Nevada Shares for ALR Singapore Ordinary Shares from typical Code Section 368(a) treatment.

 

Accordingly, each U.S. Holder will realize taxable gain (but not loss) to the extent the fair market value of its ALR Singapore Ordinary Shares exceeds such U.S. Holder’s adjusted tax basis in his/her/its ALR Nevada Shares on the date of the Reincorporation Merger. If this exchange results in realized gain, the realized gain will be taxable as short term capital gain if the U.S. Holder has held his/her/its ALR Nevada Shares for one year or shorter at the time of the Reincorporation Merger, or as long term capital gain to the extent the U.S. Holder has held the ALR Nevada Shares for over one year at the time of the Reincorporation Merger. Long -term capital gain is taxable at a maximum rate of 20%, whereas short term capital gains are taxable at ordinary effective income tax rates. A corporate U.S. Holder’s capital gains, long-term and short-term, are taxed at ordinary income tax rates (currently, a maximum rate of 21%).

 

After the Reincorporation Merger, each U.S. Holder will hold his/her/its ALR Singapore Ordinary Shares with a tax basis equal to the fair market value of the ALR Singapore Ordinary Shares determined as of the date of the Reincorporation Merger.

 

As discussed on page 26 above, the U.S. tax consequences of the Reincorporation Merger, including to U.S. Holders, were considered by our board of directors in proposing and approving the Reincorporation Merger.

 

The U.S. Anti-Inversion Rules

 

ALR Singapore will be incorporated under the laws of Singapore. Generally, corporations incorporated outside of the United States are not treated as U.S. corporations for U.S. federal income tax purposes. However, as described below, Section 7874 of the Code treats certain corporations incorporated outside the United States as U.S. corporations for U.S. federal income tax purposes. ALR Singapore believes that it will be treated as a foreign corporation for U.S. federal income tax purposes as a result of the Reincorporation Merger.

 

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Under Section 7874 of the Code, a corporation created or organized outside of the United States (i.e., a foreign corporation) will be treated as a U.S. corporation for U.S. federal income tax purposes (and, therefore, a U.S. tax resident and subject to U.S. federal income tax on its worldwide income) when (i) the foreign corporation acquires, directly or indirectly, substantially all of the assets held, directly or indirectly, by a U.S. corporation (ii) after the acquisition, the stockholders of the acquired U.S. corporation hold at least 80% (by vote or value) of the shares of the foreign corporation by reason of holding shares of the U.S. acquired corporation, and (iii) after the acquisition, the foreign corporation’s expanded affiliated group does not have substantial business activities in the foreign corporation’s country of organization or incorporation when compared to the expanded affiliated group’s total business activities.  For this purpose, “expanded affiliated group” means the foreign corporation and all subsidiaries in which the foreign corporation owns, directly or indirectly, more than 50% of the stock (by vote or value). Pursuant to the Reincorporation Merger, ALR Singapore will directly acquire all of the assets of ALR Nevada and (ii) the current stockholders of ALR Nevada will own essentially 100% of the shares of ALR Singapore. Therefore, ALR Singapore will be treated as a U.S. corporation for U.S. federal income tax purposes pursuant to Code Section 7874 unless the ALR Singapore expanded affiliated group is treated as having substantial business activities in Singapore.

 

U.S. Treasury Regulation section 1.7874-3 provides that an expanded affiliated group will be treated as having substantial business activities in the relevant foreign country when compared to its total business activities if, in general, at least 25% of the expanded affiliated group’s employees (by number and compensation), tangible asset value, and gross income are based, located and derived, respectively, in the relevant foreign country.

 

It is expected that the 25% Test is met related to ALR Singapore’s employees, assets, and income. Consequently, it is expected that the Reincorporation Merger will result in ALR Singapore being treated as a foreign corporation under Section 7874.  However, the application of these rules remains uncertain given the limited guidance and jurisprudence on how they will be applied in a given case.

 

In the event that ALR Singapore is treated as a U.S. domestic corporation for US income tax purposes after the Reincorporation, significant and complicated tax consequences will result, and this summary does not attempt to describe all such consequences.  Generally, however, in that case ALR Singapore would be subject to U.S. federal income tax on its worldwide income, regardless of the source of that income, and would be required to file returns in the U.S.  Given that ALR Singapore will also be considered a resident of Singapore, it is unclear how the foreign tax credit rules in either country will operate.  Accordingly, if the exceptions to Code section 7874 are not satisfied, it is possible that ALR Singapore would be subject to double taxation with respect to all or part of its taxable income in the future.  Dividends that may be paid from ALR Singapore to its shareholders may be subject to withholding tax in one or both countries if Section 7874 applied to ALR Singapore.

 

The remainder of this discussion assumes that ALR Singapore will meet the 25% Test, and will be respected as a foreign corporation under Section 7874 of the Code.

 

Consequences to U.S. Holders after the Reincorporation Merger

 

 Subject to the Passive Foreign Investment Company provisions discussed below, U.S. Holders will be required to include in gross income the gross amount of any distribution received on the ALR Singapore Ordinary Shares to the extent that the distribution is paid out of the earnings and profits of ALR Singapore as determined for U.S. federal income purposes.  We refer to such a distribution herein as a dividend.

 

 To the extent that the amount of any distribution exceeds ALR Singapore’s earnings and profits, the distribution would generally first be treated as a tax-free return of capital (with a corresponding reduction in the adjusted tax basis of a U.S. holder’s ALR Singapore common shares), and thereafter would be taxed as a capital gain.

 

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 Dividends paid in a currency other than U.S. dollars will be included in a U.S. Holder’s gross income in a U.S. dollar amount based on the spot exchange rate in effect on the date of actual or constructive receipt, whether or not the payment is converted into U.S. dollars at that time. The U.S. Holder will have a tax basis in such currency equal to such U.S. dollar amount, and any gain or loss recognized upon a subsequent sale or conversion of the foreign currency for a different U.S. dollar amount will be U.S. source ordinary income or loss. If the dividend were converted into U.S. dollars on the date of receipt, a U.S. Holder generally should not be required to recognize foreign currency gain or loss in respect of the dividend income.

 

 Dividends paid by ALR Singapore to a U.S. Holder that is an individual should be ordinary dividends, subject to tax at the recipient’s ordinary income rates.  If a U.S. Holder is a corporation, and to the extent the U.S. corporate Holder controls 10% of more of the shares of ALR Singapore, Section 245A of the Code might provide an exemption from U.S. taxation.

 

 A U.S. Holder would generally recognize a taxable gain or loss on any sale or other taxable disposition of ALR Singapore Ordinary Shares in an amount equal to the difference between the amount realized from such sale or other taxable disposition and the U.S. Holder’s adjusted tax basis in such shares. Such recognized gain or loss generally would be a capital gain or loss. Capital gains of non-corporate U.S. Holders (including individuals) generally would be subject to U.S. federal income tax at preferential rates if the U.S. Holder has held the ALR Singapore Ordinary Shares for more than one year as of the date of the sale or other taxable disposition. The deductibility of capital losses is subject to limitations. Any gain or loss recognized by a U.S. Holder on the sale or other taxable disposition of ALR Singapore Ordinary Shares generally would be treated as U.S. source gain or loss.

 

Passive Foreign Investment Company Provisions

 

 The treatment of U.S. Holders of ALR Singapore Ordinary Shares in some cases could be materially different from that described above if, at any relevant time, ALR Singapore were classified as a passive foreign investment company (“PFIC”). 

 

Sections 1291 to 1298 of the Code contain the PFIC rules. These rules generally provide for punitive treatment to U.S. Holders of PFICs. A foreign corporation is classified as a PFIC if more than 75% of its gross income is passive income or more than 50% of its assets produce passive income or are held for the production of passive income. These rules would not apply if the Section 7874(b) rules, as noted above, deem ALR Singapore to be considered as a U.S. corporation for U.S. federal income tax purposes.

 

For purposes of the PFIC asset test, cash is treated as a passive asset. For purposes of the PFIC asset test, the active business assets held by ALR Singapore’s wholly-owned subsidiaries (e.g. ALR Nevada) will be deemed to be held by ALR Singapore. It is uncertain at this time whether ALR Singapore will be classified as a PFIC in the future. If we are classified as a PFIC after the Reincorporation Merger, then the holders of shares of our Company who are U.S. taxpayers may be subject to PFIC provisions which may impose U.S. taxes, in addition to those normally applicable, on the sale of their shares of our Company or on distributions from our Company. Specifically, any gain on the sale of PFIC shares or dividends that exceed 125% of the average distribution over the prior three years, will be allocated pro rata over each day that the U.S. Holder beneficially owned such shares. Any portion that is allocated to a prior taxation year will be taxed at the highest marginal rate applicable to such U.S. Holder in such prior taxation year, and an interest charge will be added as though the tax was due, but unpaid, in such prior year.

 

Consequences of the Reincorporation Merger for Non-U.S. Holders

 

This section applies to you if you are a Non-U.S. Holder of ALR Nevada Shares. ALR Nevada’s controlling shareholders are Non-U.S. Holders.

 

Treatment of Gain Recognized, if Any, as a Result of the Reincorporation Merger. If gain is recognized by a Non-U.S. Holder upon an exchange of ALR Nevada Shares for ALR Singapore Ordinary Shares in the Reincorporation Merger, subject to the discussion below under “— Considerations for Non-U.S. HoldersInformation Reporting and Backup Withholding,” the Non-U.S. Holder generally would not be subject to U.S. federal income tax on any gain realized upon such exchange unless:

 

    the Non-U.S. Holder is an individual who is present in the United States for a period or periods aggregating 183 days or more during the calendar year in which the sale or disposition occurs and certain other conditions are met;

 

    such gain is effectively connected with a trade or business conducted by the Non-U.S. Holder in the United States (and, if required by an applicable income tax treaty, is treated as attributable to a permanent establishment or fixed base maintained by the Non-U.S. Holder in the United States); or

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    the ALR Nevada Shares constitute United States real property interests by reason of ALR Nevada’s status, at any time during the shorter of the five-year period ending on the date of the exchange or the period that the Non-U.S. Holder held ALR Nevada Shares, as a United States Real Property Holding Company (“USRPHC”) for U.S. federal income tax purposes and, as a result, such gain is treated as effectively connected with a trade or business conducted by the Non-U.S. Holder in the United States.

 

A Non-U.S. Holder described in the first bullet point above will be subject to U.S. federal income tax at a rate of 30% (or such lower rate as specified by an applicable income tax treaty) on the amount of such gain, which generally may be offset by U.S.-source capital losses.

 

A Non-U.S. Holder whose gain is described in the second or third bullet point above generally will be taxed on a net income basis at the rates and in the manner generally applicable to United States persons unless an applicable income tax treaty provides otherwise. If the Non-U.S. Holder is a corporation for U.S. federal income tax purposes whose gain is described in the second bullet point above, such gain would also be included in its effectively connected earnings and profits (as adjusted for certain items), which may be subject to a branch profits tax (at a 30% rate or such lower rate as provided under an applicable income tax treaty). Generally, a corporation is a USRPHC if the fair market value of its United States real property interests equals or exceeds 50% of the sum of the fair market value of its worldwide real property interests and its other assets used or held for use in a trade or business, as determined for U.S. federal income tax purposes. However, ALR Nevada believes that it currently is not, and has not been at any time during the five-year testing period, a United States real property holding corporation.

 

Information Reporting and Backup WithholdingAmounts paid to a Non-U.S. Holder that are treated as the proceeds of the sale or other disposition by the Non-U.S. Holder of ALR Nevada Shares effected by or through a U.S. office of a broker generally will be subject to information reporting and backup withholding (at the applicable rate) unless the Non-U.S. Holder establishes an exemption by properly certifying its non-U.S. status on an IRS Form W-8BEN or IRS Form W-8BEN-E (or other applicable or successor form) and certain other conditions are met. Information reporting and backup withholding generally will not apply to any payment of the proceeds from a sale or other disposition of ALR Nevada Shares effected outside the United States by a non-U.S. office of a broker. However, unless such broker has documentary evidence in its records that the Non-U.S. Holder is not a United States person and certain other conditions are met, or the Non-U.S. Holder otherwise establishes an exemption, information reporting will apply to a payment of the proceeds of the disposition of ALR Nevada Shares effected outside the United States by such a broker if it has certain relationships within the United States.

 

Backup withholding is not an additional tax. Rather, the U.S. federal income tax liability (if any) of persons subject to backup withholding will be reduced by the amount of tax withheld. If backup withholding results in an overpayment of taxes, a refund generally may be obtained, provided that the required information is timely furnished to the IRS.

 

Singapore Tax Consideration

 

The statements made herein regarding taxation are general in nature and based on certain aspects of the tax laws of Singapore and administrative guidelines issued by the relevant authorities in force as of the date of this document and are subject to any changes in such laws or administrative guidelines, or in the interpretation of these laws or guidelines, occurring after such date, which changes could be made on a retrospective basis. These laws and guidelines are also subject to various interpretations and the relevant tax authorities or the courts could later disagree with the explanations or conclusions set out below. The statements are not intended to be and do not constitute legal or tax advice and no assurance can be given that courts or fiscal authorities responsible for the administration of such laws will agree with the interpretation adopted therein. You should consult an independent tax advisor regarding all Singapore income and other tax consequences applicable in light of your particular circumstances. The statements below are based on the assumption that ALR Singapore is a tax resident in Singapore for Singapore income tax purposes.

 

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  (1) Material Singapore Income Tax Considerations for ALR Nevada Shareholders from the Reincorporation

 

Pursuant to the Reincorporation, the ALR Nevada shareholders may be regarded as having disposed of ALR Nevada Shares, ALR Nevada Options, or ALR Nevada Warrants in exchange for a like number of ALR Singapore Ordinary Shares, ALR Singapore Options, or ALR Singapore Warrants, and a profit may result to such shareholders as a result of the disposal. Under current Singapore income tax laws, only gains of an income nature and that are sourced or received in Singapore are taxable (subject to any applicable exemptions available). There are no taxes imposed on capital gains under current Singapore laws. As the precise status of each prospective investor will vary from one another, each prospective investor should consult an independent tax advisor on the Singapore income tax and other tax consequences that will apply to their individual circumstances.

 

  (2) Material Singapore Income tax Considerations for the potential Shareholders of ALR Singapore from the Ownership and Disposition of ALR Singapore Ordinary Shares

 

Dividend Distributions with Respect to Ordinary Shares

 

Singapore has a one-tier corporate income tax system. Under the one-tier corporate income tax system, the tax paid by a company that is tax resident in Singapore is a final tax. Any dividends paid by a company that is tax resident in Singapore are exempt from Singapore income tax in the hands of the Company’s shareholders. As ALR Singapore will be a tax resident of Singapore, the dividends payable by ALR Singapore will be one-tier tax-exempt dividends and will be exempt from Singapore income tax in the hands of our shareholders, regardless of their legal form or tax residence status. There will be no tax credits attached to the dividends payable by ALR Singapore. There is no withholding tax on payment of dividends to non-resident shareholders.

 

Capital Gains upon Disposition of Ordinary Shares

 

Under current Singapore tax law, there is no tax on capital gains. As such, any profits from the disposal of ALR Singapore Ordinary Shares that are capital in nature would not be taxable in Singapore. However, there are no specific laws or regulations which deal with the characterization of whether a gain is income or capital in nature. If the gains from the disposal of ordinary shares are construed to be of an income nature (which could be the case if, for instance, the gains arise from activities which the Inland Revenue Authority of Singapore regards as carrying on a trade or business in Singapore), the disposal profits would be taxable as income rather than capital gains. As the precise status of each prospective investor will vary from one another, each prospective investor should consult an independent tax advisor on the Singapore income tax and other tax consequences that will apply to their individual circumstances.

 

Subject to certain conditions being satisfied, gains derived by a company from the disposal of our ordinary shares between the period of June 1, 2012 and May 31, 2027 (inclusive of both dates) will not be subject to Singapore income tax, if the divesting company holds a minimum shareholding of 20% of ALR Singapore Ordinary Shares and these shares have been held for a continuous minimum period of 24 months.

 

In addition, shareholders who apply, or who are required to apply, the Singapore Financial Reporting Standard 39 (“FRS 39”) or Financial Reporting Standard 109 (“FRS 109”), for the purposes of Singapore income tax may be required to recognize gains or losses (not being gains or losses in the nature of capital) in accordance with the provisions of FRS 39 or FRS 109 (as modified by the applicable provisions of Singapore income tax law) even though no sale or disposal of ALR Singapore Ordinary Shares is made. Singapore corporate shareholders who may be subject to such tax treatment should consult their own accounting and tax advisors regarding the Singapore income tax consequences of their acquisition, holding and disposal of our ordinary shares.

 

Stamp Duty

 

There is no Singapore stamp duty payable in respect of the issuance or holding of our ordinary shares. Singapore stamp duty will be payable if there is an instrument of transfer of our ordinary shares executed in Singapore or if there is an instrument of transfer executed outside of Singapore which is received in Singapore. Under Singapore law, stamp duty is not applicable to electronic transfers of our shares effected on a book entry basis outside Singapore. We therefore expect that no Singapore stamp duty will be payable in respect of ALR Singapore Ordinary Shares received by, or allotted and issued to, U.S. holders in this offering assuming that they are acquired solely in book entry form through the facility outside Singapore established by its transfer agent and registrar outside Singapore.

 

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Where shares evidenced in certificated form are transferred and an instrument of transfer is executed (whether physically or in the form of an electronic instrument) in Singapore or outside Singapore and which is received in Singapore, Singapore stamp duty is payable on the instrument of transfer for the sale of our ordinary shares at the rate of 0.2% of the consideration for, or market value of, the transferred shares, whichever is higher. The Singapore stamp duty is borne by the purchaser unless there is an agreement to the contrary. Where the instrument of transfer is executed outside of Singapore and is received in Singapore, Singapore stamp duty must be paid within 30 days of receipt of the instrument of transfer in Singapore. Electronic instruments that are executed outside Singapore are treated as received in Singapore in any of the following scenarios: (a) it is retrieved or accessed by a person in Singapore; (b) an electronic copy of it is stored on a device (including a computer) and brought into Singapore; or (c) an electronic copy of it is stored on a computer in Singapore. Where the instrument of transfer is executed in Singapore, Singapore stamp duty must be paid within 14 days of the execution of the instrument of transfer.

 

Goods and Services Tax

 

The issue or transfer of ownership of our ordinary shares would be exempt from Singapore goods and services tax, or GST. Hence, no GST would be incurred on the subscription or subsequent transfer of our ordinary shares.

 

The sale of our ordinary shares by a GST-registered investor belonging in Singapore for GST purposes to another person belonging in Singapore is an exempt supply not subject to GST. Any input GST incurred by the GST-registered investor in making the exempt supply is generally not recoverable from the Singapore Comptroller of GST.

 

Where our ordinary shares are sold by a GST-registered investor in the course of or furtherance of a business carried on by such investor contractually to and for the direct benefit of a person belonging outside Singapore, the sale should generally, subject to satisfaction of certain conditions, be considered a taxable supply subject to GST at 0%. Subject to the normal rules for input tax claims, any input GST incurred by the GST-registered investor in making such a supply in the course of or furtherance of a business carried out by such investor may be fully recoverable from the Singapore Comptroller of GST.

 

Each prospective investor should consult an independent tax advisor on the recoverability of input GST incurred on expenses in connection with the purchase and sale of our ordinary shares if applicable.

 

Services consisting of arranging, brokering, underwriting or advising on the issue, allotment or transfer of ownership of our ordinary shares rendered by a GST-registered person to an investor belonging in Singapore for GST purposes in connection with the investor’s purchase, sale or holding of our ordinary shares will be subject to GST at the standard rate of 7%. Similar services rendered by a GST-registered person contractually to and for the direct benefit of an investor belonging outside Singapore should generally, subject to the satisfaction of certain conditions, be subject to GST at 0%.

 

Estate Duty

 

Singapore estate duty has been abolished with effect from February 15, 2008 in relation to the estate of any person whose death has occurred on or after February 15, 2008.

 

Description of ALR Singapore’s Share Capital

 

The following description of ALR Singapore’s share capital summarizes certain provisions of ALR Singapore’s Constitution that, subject to approval at a general meeting and continuance of the Company in Singapore, will be effective as of the Effective Time. Such summaries do not purport to be complete and are subject to, and are qualified in their entirety by reference to, all of the provisions of the Constitution in effect from the continuance of the Company in Singapore, a copy of which is included as Annex C to this prospectus/information statement. We urge you to read the form of Constitution of ALR Singapore included as Annex C to this prospectus/information statement.

 

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General

 

For the purposes of this section, references to “shareholders” or “members” mean those persons whose names and number of shares are entered in ALR Singapore’s electronic register of members. Only persons who are registered in ALR Singapore’s electronic register of members are recognized under Singapore law as shareholders of ALR Singapore with legal standing to institute shareholder actions against ALR Singapore or otherwise seek to enforce their rights as shareholders.

 

Share Capital

 

Immediately following the Effective Time, our share capital will consist of 551,966,844 ordinary shares, excluding 362,000,000 ordinary shares issuable upon exercise of ALR Singapore Options granted as of the Effective Time, and 5,160,501,500 ordinary shares issuable upon exercise of ALR Singapore Warrants granted as of the Effective Time, and no preference shares issued and outstanding. All of the Company’s issued and outstanding shares are, and upon the Redomestication, ALR Singapore’s then issued and outstanding common shares will be, fully paid.

 

New Shares

 

Under the Companies Act, Chapter 50 of Singapore (the “Companies Act”), new shares may be issued only with the prior approval of ALR Singapore’s shareholders in a general meeting. General approval may be sought from ALR Singapore’s shareholders in a general meeting for the issue of shares. Approval, if granted, will lapse at the expiry of the period approved by shareholders or otherwise at the earliest of (i) the conclusion of the next annual general meeting (ii) the expiration of the period within which the next annual general meeting is required by law to be held, or, (iii) the subsequent revocation or modification of approval by ALR Singapore’s shareholders acting at a duly convened general meeting.

 

Subject to ALR Singapore’s shareholders providing such general authority to the directors to issue new shares, the provisions of the Singapore Companies Act, and ALR Singapore’s Constitution, all new shares are under the control of the directors who may allot and issue new shares to such persons on such terms and conditions and with the rights and restrictions as they may think fit to impose.

 

Ordinary Shares

 

The class of issued ordinary shares, which have identical rights rank equally with one another. There is no concept of par value or authorized share capital under Singapore law. All shares issued are fully paid and existing shareholders are not subject to any calls on shares (unless there are any unpaid shares). Although Singapore law does not recognize the concept of “non-assessability” with respect to newly-issued shares, any purchaser or subscriber of shares who has fully paid up all amounts due with respect to such shares will not be subject under Singapore law to any personal liability to contribute to the assets or liabilities of the Company in such purchaser’s or subscriber’s capacity solely as a holder of such shares. This interpretation is substantively consistent with the concept of “non-assessability” under most, if not all, U.S. state corporations laws. All shares are in registered form.

 

Transfer of Ordinary Shares

 

Subject to applicable securities laws in relevant jurisdictions and ALR Singapore’s Constitution, ALR Singapore’s ordinary shares are freely transferable. The shares may be transferred by a duly signed instrument of transfer in any usual or common form or in a form approved by the directors. The directors may decline to register any transfer unless, among other things, evidence of payment of any stamp duty payable with respect to the transfer is provided together with other evidence of ownership and title as the directors may reasonably require to show the right of the transferor to make the transfer. ALR Singapore will replace lost or destroyed certificates for shares upon notice to ALR Singapore and upon, among other things, the applicant furnishing evidence and indemnity as the directors may require and the payment of all applicable fees.

 

Preference Shares

 

Under the Companies Act, different classes of shares in a company incorporated in Singapore may be issued only if (a) the issue of the class or classes of shares is provided for in the Constitution of the Company and (b) the Constitution of the Company sets out in respect of each class of shares the rights attached to that class of shares.

 

ALR Singapore’s Constitution provides that ALR Singapore may issue shares of a different class with such preferential, deferred, qualified, special or other rights, privileges, conditions or restrictions as to dividends, capital, voting or otherwise attached to them, as ALR Singapore’s directors may determine.

 

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ALR Singapore may, subject to the prior approval in a general meeting of its shareholders, issue preference shares which are, or at its option, subject to redemption provided that such preference shares may not be redeemed out of capital unless (i) all the directors have made a solvency statement in relation to such redemption, and (ii) ALR Singapore has lodged a copy of the statement with the Singapore Registrar of Companies. Further, the shares must be fully paid-up before they are redeemed.

 

Voting Rights

 

As provided under ALR Singapore’s Constitution and the Companies Act, voting at any meeting of shareholders is by show of hands unless a poll has been demanded prior to the declaration of the result of the show of hands by, among others, (i) the chairman or (ii) at least one shareholder present in person or by proxy or by attorney or, in the case of a corporation, by a representative entitled to vote thereat, in each case representing in the aggregate not less than 5% of the total voting rights of all shareholders having the right to vote at the general meeting, provided that no poll shall be demanded in respect of an election of a chairman or relating to any adjournment of such meeting. On a poll every shareholder who is present in person or by proxy or by attorney, or in the case of a corporation, by a representative, has one vote for every share held by such shareholder. Only those shareholders who are registered in ALR Singapore’s register of members as holders of shares will be entitled to vote at any meeting of shareholders. Proxies need not be shareholders.

 

Dividend Rights

 

Subject to any preferential rights of holders of any outstanding preference shares, holders of ALR Singapore’s ordinary shares will be entitled to receive dividends and other distributions in cash, shares or property as may be declared by ALR Singapore from time to time. ALR Singapore may, by ordinary resolution, declare dividends at a general meeting of shareholders. A final dividend may be declared out of profits disclosed by the accounts presented to the annual general meeting, and requires approval of ALR Singapore’s shareholders. However, ALR Singapore’s board of directors can declare interim dividends without approval of ALR Singapore’s shareholders.

 

Pursuant to Singapore law and ALR Singapore’s Constitution, no dividend may be paid except out of ALR Singapore’s profits. Any dividends would be limited by the amount of available distributable reserves, which, under Singapore law, will be assessed on the basis of ALR Singapore’s standalone unconsolidated accounts, which will be based upon IFRS. Under Singapore law, it is also possible to effect a capital reduction exercise to return cash and/or assets to ALR Singapore’s shareholders.

 

ALR Singapore’s board of directors will review the dividend policy regularly and the declaration and payment of any future dividends will be at the discretion and approval of the board of directors and subject to the continuing determination by the board of directors that such dividends are in the Company’s best interests. Future dividend payments will also depend upon such factors as ALR Singapore’s earnings level, capital requirements, contractual restrictions, cash position, overall financial condition and any other factors deemed relevant by ALR Singapore’s board of directors.

 

Also, because ALR Singapore is a holding company, its ability to pay cash dividends on its ordinary shares may be limited by restrictions on its ability to obtain sufficient funds through dividends from its subsidiaries and will depend upon such factors as earnings levels, capital requirements, contractual restrictions, ALR Singapore’s overall financial condition, available distributable reserves and any other factors deemed relevant by ALR Singapore’s board of directors.

 

Amendment to Constitution

 

An amendment to the Constitution of ALR Singapore can only be made through a special resolution (i.e. with the consent of 75% of the holders of issued shares, entitled to vote, present in person or by proxy at a meeting for which not less than 21 days’ written notice is given) during a shareholders meeting. ALR Singapore’s board of directors has no right to amend the Constitution.

 

ALR Singapore may not allot any preference shares or convert any issued shares into preference shares unless there are set out in its Constitution the rights of the holders of those shares with respect to repayment of capital, participation in surplus assets and profits, cumulative or non-cumulative dividends, voting and priority of payment of capital and dividend in relation to other shares or other classes of preference shares.

 

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Any shareholders of any class of preference shares who hold not less than 5% of the total number of issued shares of that class may apply to the Court to have the variation of the rights or shares to be cancelled, and, if any such application is made, the variation or abrogation shall not have effect until confirmed by the Court.

 

Meeting of Shareholders

 

ALR Singapore is required to hold an annual general meeting each calendar year and within six months after the end of each financial year. The directors may convene an extraordinary general meeting whenever they think fit and they must do so upon the written request of shareholders holding not less than 10% of the total number of paid-up shares as of the date of deposit of the requisition carrying the right to vote at a general meeting. In addition, two or more shareholders holding not less than 10% of ALR Singapore’s total number of issued shares (excluding treasury shares) may call a meeting of ALR Singapore’s shareholders.

 

The Companies Act provides that a shareholder is entitled to attend any general meeting and speak on any resolution put before the general meeting. Unless otherwise required by law or by ALR Singapore’s Constitution, resolutions put forth at general meetings may be decided by ordinary resolution, requiring the affirmative vote of a majority of the shareholders present in person or represented by proxy at the meeting and entitled to vote on the resolution. An ordinary resolution suffices, for example, for appointments of directors. A special resolution, requiring an affirmative vote of not less than 75% of the shareholders present in person or represented by proxy at the meeting and entitled to vote on the resolution, is necessary for certain matters under Singapore law, such as an alteration of ALR Singapore’s Constitution. A shareholder entitled to attend and vote at a meeting of the Company, or at a meeting of any class of shareholders of the Company, shall be entitled to appoint another person or persons, whether a shareholder of the Company or not, as his proxy to attend and vote instead of the shareholder at the meeting. Under the Companies Act, a proxy appointed to attend and vote instead of the shareholder shall also have the same right as the shareholder to speak at the meeting, but unless the Constitution of ALR Singapore otherwise provides, (i) a proxy shall not be entitled to vote except on a poll, (ii) a shareholder shall not be entitled to appoint more than two proxies to attend and vote at the same meeting and (iii) where a shareholder appoints two proxies the appointment shall be invalid unless the shareholder specifies the proportions of his holdings to be represented by each proxy.

 

Notwithstanding the foregoing, a registered shareholder entitled to attend and vote at a meeting of the Company held pursuant to an order of court under Section 210(1) of the Singapore Companies Act, or at any adjourned meeting under Section 210(3) of the Singapore Companies Act, is, unless the court orders otherwise, entitled to appoint only one proxy to attend and vote at the same meeting, and except where the aforementioned applies, a registered shareholder having a share capital who is a relevant intermediary (as defined under the Companies Act) may appoint more than two proxies in relation to a meeting to exercise all or any of his rights to attend and to speak and vote at the meeting, but each proxy must be appointed to exercise the rights attached to a different share or shares held by him (which number and class of shares shall be specified), and at such meeting, the proxy has the right to vote on a show of hands.

 

Only registered shareholders of ALR Singapore, and their proxies, will be entitled to attend, speak and vote at any meeting of shareholders. Under the Companies Act, public companies may issue non-voting shares and shares that confer special, limited or conditional voting rights, such that the holder of a share may vote on a resolution before a general meeting of the Company if, in accordance with the provisions of Section 64A of the Companies Act, the share confers on the holder a right to vote on that resolution.

 

Election and Removal of Directors

 

Directors can be appointed by the shareholders or the directors of ALR Singapore. ALR Singapore’s board of directors shall have the power, at any time and from time to time, to appoint any person to be a director either to fill a casual vacancy or as an additional director so long as the total number of directors shall not at any time exceed the maximum number (if any) fixed by or in accordance with ALR Singapore’s Constitution.

 

ALR Singapore may, by ordinary resolution, remove any director before the expiration of his or her period of office, notwithstanding anything in ALR Singapore’s Constitution or in any agreement between ALR Singapore and such director. ALR Singapore may also, by an ordinary resolution, appoint another person in place of a director removed from office pursuant to the foregoing.

 

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Under ALR Singapore’s Constitution, subject to the Companies Act, any director shall retire at the next annual general meeting and shall then be eligible for re-election at that meeting.

 

Proceedings of Board of Directors

 

The business of ALR Singapore will be managed by, or under the direction or supervision of, the board of directors. This is subject to any limitations in either the Companies Act or ALR Singapore’s Constitution.

 

ALR Singapore must have at least 1 director who ordinarily resides in Singapore. All directors must be natural persons who have attained 18 years of age and who are otherwise of full legal capacity.

 

Fees and percentages, any sums paid by way of expenses allowance in so far as those sums are charged to income tax in Singapore, any contribution paid in respect of a director under any pension scheme and any benefits received by the directors otherwise than in cash in respect of his services as director may be paid to the directors of ALR Singapore for services rendered to ALR Singapore. However, these payments have to be approved in accordance with section 169(1) of the Companies Act which provides that the payment has to be approved in a general meeting by a resolution, of which such resolution must be for the sole purpose of approving such director’s fees and is not related to other matters.

 

Subject to the provisions of ALR Singapore’s Constitution and the Companies Act, every director of ALR Singapore who is in any way, whether directly or indirectly, interested in a transaction or proposed transaction with ALR Singapore shall as soon as is practicable after the relevant facts have come to his knowledge (i) declare the nature of his interest at a meeting of the directors of the Company; or (ii) send a written notice to ALR Singapore containing details on the nature, character and extent of his interest in the transaction or proposed transaction with the Company.

 

Indemnification of Directors and Officers

 

Section 172 of the Companies Act provides that any provision that purports to exempt an officer of a company (to any extent) from any liability that would otherwise attach to him in connection with any negligence, default, breach of duty or breach of trust in relation to the company is void.

 

Any provision by which ALR Singapore directly or indirectly provides an indemnity (to any extent) for an officer of the Company against any liability attaching to him in connection with any negligence, default, breach of duty or breach of trust in relation to ALR Singapore is void. However, there is an exception, which is where the provision for indemnity is against liability incurred by the officer to a person other than the Company, subject to the other provisions of the Companies Act.

 

ALR Singapore may however purchase and maintain for an officer of the Company insurance against any such liability in connection with any negligence, default, breach of duty or breach of trust in relation to the ALR Singapore.

 

ALR Singapore may also indemnify such officer against liability incurred by the officer to a person other than ALR Singapore except when the indemnity is against (i) any liability of the officer to pay a fine in criminal proceedings or a sum payable to a regulatory authority by way of a penalty in respect of non-compliance with any requirement of a regulatory nature (however arising); or (ii) any liability incurred by the officer (1) in defending criminal proceedings in which he is convicted, (2) in defending civil proceedings brought by ALR Singapore or a related company of ALR Singapore in which judgment is given against him or her or (3) in connection with an application for relief under specified sections of the Companies Act in which the court refuses to grant him or her relief.

 

Amalgamations and Business Combinations

 

Amalgamations

 

215A to 215C of the Companies Act, the amalgamation of a Singapore company with another company or corporation (other than certain affiliated companies) requires an amalgamation proposal be approved by the Company’s board of directors and subject to the constitution of each amalgamating company, by the members of each amalgamating company by special resolution (i.e. 75% of the shareholders voting and able to vote) at a general meeting.

 

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Under Singapore law, in the event of 75% of the shareholders voting at such meeting did not vote in favor of the amalgamation, an application may be made under Section 212 of the Companies Act to the High Court of Singapore for the approval of such amalgamation.

 

Business Combinations

 

The Singapore Companies Act and the Insolvency, Restructuring and Dissolution Act 2018 of Singapore (No. 40 of 2018) (“IRDA”) mandates that specified corporate actions require approval by the shareholders in a general meeting, notably:

 

  notwithstanding anything in the Company’s Constitution, directors are not permitted to carry into effect any proposals for disposing of the whole or substantially the whole of the Company’s undertaking or property unless those proposals have been approved by shareholders in a general meeting;

 

  the Company may by special resolution resolve that it be wound up voluntarily;

 

  subject to the constitution of each amalgamating company, an amalgamation proposal must be approved by the shareholders of each amalgamating company via special resolution at a general meeting;

 

  a compromise or arrangement proposed between a company and its shareholders, or any class of them, must, among other things, be approved by a majority in number representing three-fourths in value of the shareholders or class of shareholders present and voting either in person or by proxy at the meeting ordered by the court; and

 

  notwithstanding anything in the Company’s Constitution, the directors may not, without the prior approval of shareholders, issue shares, including shares being issued in connection with corporate actions.

 

Compulsory Acquisition of Shares Held by Minority Holders

 

An acquiring party is generally able to acquire compulsorily the common shares of minority holders in the following ways:

 

  (1) By a procedure under section 210 the Companies Act and section 70 of the IRDA known as a “scheme of arrangement”: A scheme of arrangement could be effected by obtaining the agreement of the company and of holders of its shares (or any class of shares), representing in the aggregate a majority in number and at least 75% in value of the shares or class of shares present and voting at a court ordered meeting held to consider the scheme or arrangement. The scheme of arrangement must then be sanctioned by the High Court of Singapore. Once an order for a scheme is approved by the High Court, it binds all shareholders, including those who objected to or abstained from voting on the scheme at the scheme meeting or objected to the scheme in the High Court.

 

  (2) By a procedure under section 215 the Companies Act: Where a scheme or contract involving the transfer of all of the shares or all of the shares in any particular class in a company (the “transferor company”) to a person (the “transferee”) has, within 4 months after the making of the offer in that behalf by the transferee, been approved as to the shares or as to each class of shares whose transfer is involved by the holders of not less than 90% of the total number of those shares (excluding treasury shares) or of the shares of that class (other than shares already held at the date of the offer by the transferee, and excluding any shares in the transferor company held as treasury shares), the transferee may at any time within 2 months, after the offer has been so approved, give notice in the prescribed manner to any dissenting shareholder that it desires to acquire his shares; and when such a notice is given the transferee shall, unless on an application made by the dissenting shareholder within one month from the date on which the notice was given or within 14 days of a statement being supplied to a dissenting shareholder pursuant to section 215(2) of the Companies Act (whichever is the later) the High Court of Singapore thinks fit to order otherwise, be entitled and bound to acquire those shares on the terms which, under the scheme or contract the shares of the approving shareholders are to be transferred to the transferee or if the offer contained 2 or more alternative sets of terms upon the terms which were specified in the offer as being applicable to dissenting shareholders.

 

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Anti-Takeovers

 

The Singapore Code on Take-overs and Mergers regulates, among other things, the acquisition of voting shares of Singapore-incorporated listed public companies or unlisted public companies with more than 50 shareholders and net tangible assets of S$5 million or more. Any person acquiring an interest, whether by a series of transactions over a period of time or not, either on their own or together with parties acting in concert with such person, in 30% or more of our voting shares, or, if such person holds, either on their own or together with parties acting in concert with such person, between 30% and 50% (amounts inclusive) of our voting shares, and such person (or parties acting in concert with such person) acquires additional voting shares representing more than 1% of ALR Singapore’s voting shares in any six-month period, must, except with the consent of the Securities Industry Council in Singapore, extend a mandatory takeover offer for the remaining voting shares in accordance with the provisions of the Singapore Code on Takeovers and Mergers. Responsibility for ensuring compliance with the Singapore Code on Take-overs and Mergers rests with parties (including ALR Singapore’s directors) to a take-over or merger and their advisors.

 

“Parties acting in concert” comprise individuals or companies who, pursuant to an agreement or understanding (whether formal or informal), cooperate, through the acquisition by any of them of shares in a company, to obtain or consolidate effective control of that company. Certain persons are presumed (unless the presumption is rebutted) to be acting in concert with each other. They are as follows:

 

  a company and its related corporations, the associated companies of any of the company and its related corporations, companies whose associated companies include any of these companies and any person who has provided financial assistance (other than a bank in the ordinary course of business) to any of the foregoing for the purchase of voting rights;

 

  a company and its directors (including their close relatives, related trusts and companies controlled by any of the directors, their close relatives and related trusts);

 

  a company and its pension funds and employee share schemes;

 

  a person with any investment company, unit trust or other fund whose investment such person manages on a discretionary basis but only in respect of the investment account which such person manages;

 

  a financial or other professional adviser, including a stockbroker, and its clients in respect of shares held by the adviser and persons controlling, controlled by or under the same control as the adviser and all the funds managed by the adviser on a discretionary basis, where the shareholdings of the adviser and any of those funds in the client total 10% or more of the client’s equity share capital;

 

  directors of a company (including their close relatives, related trusts and companies controlled by any of such directors, their close relatives and related trusts) which is subject to an offer or where the directors have reason to believe a bona fide offer for the company may be imminent;

 

  partners; and

 

  an individual and such person’s close relatives, related trusts, any person who is accustomed to act in accordance with such person’s instructions and companies controlled by the individual, such person’s close relatives, related trusts or any person who is accustomed to act in accordance with such person’s instructions and any person who has provided financial assistance (other than a bank in the ordinary course of business) to any of the foregoing for the purchase of voting rights.

 

A mandatory offer must be in cash or be accompanied by a cash alternative at not less than the highest price paid by the offeror or parties acting in concert with the offeror during the offer period and within the six months preceding the acquisition of shares that triggered the mandatory offer obligation.

 

Under the Singapore Code on Take-overs and Mergers, where effective control of a company is acquired or consolidated by a person, or persons acting in concert, a mandatory general offer to all other shareholders is normally required. An offeror must treat all shareholders of the same class in an offeree company equally. A fundamental requirement is that shareholders in the company subject to the takeover offer must be given sufficient information, advice and time to consider and decide on the offer. These legal requirements may impede or delay a takeover of our Company by a third-party.

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Shareholder Suits

 

Standing

 

Only registered shareholders reflected in the electronic register of members are recognized under Singapore law as shareholders of a company. As a result, only registered shareholders of ALR Singapore have legal standing to institute shareholder actions or otherwise seek to enforce their rights as shareholders. Holders of book-entry or dematerialised interests in ALR Singapore’s shares will be required to exchange their book-entry or dematerialised interests for certificated shares and to be registered as shareholders in the electronic register of members in order to institute or enforce any legal proceedings or claims against ALR Singapore, the directors or officers relating to shareholder rights. A holder of book-entry or dematerialised interests may become a registered shareholder of ALR Singapore by exchanging its interest in the shares for certificated shares and being registered in the electronic register of members.

 

Personal remedies in the case of oppression or injustice

 

A shareholder may apply to the court for an order under Section 216 of the Companies Act to remedy situations where (i) ALR Singapore’s affairs are being conducted or the powers of the Company’s directors are being exercised in a manner oppressive to, or in disregard of the interests of, one or more of the shareholders or holders of debentures of the Company, including the applicant; or (ii) ALR Singapore has done an act, or threatens to do an act, or the shareholders or holders of debentures have passed or proposed some resolution, which unfairly discriminates against, or is otherwise prejudicial to, one or more of ALR Singapore’s shareholders or holders of debentures, including the applicant.

 

Singapore courts have wide discretion as to the relief they may grant under such application, including, inter alia, directing or prohibiting any act or cancelling or varying any transaction or resolution, providing that ALR Singapore be wound up, or authorizing civil proceedings to be brought in the name of or on behalf of ALR Singapore by such person or persons and on such terms as the court directs.

 

Derivative Actions

 

Section 216A of the Companies Act provides a mechanism enabling shareholders to apply to the court for leave to bring a derivative action or commence an arbitration on behalf of the company. Derivative actions are also allowed as a common law action.

 

Applications are generally made by shareholders of the company, but courts are given the discretion to allow such persons as they deem proper to apply (e.g., beneficial owner of shares).

 

It should be noted that this provision of the Companies Act is primarily used by minority shareholders to bring an action in the name and on behalf of the company or intervene in an action to which the company is a party for the purpose of prosecuting, defending or discontinuing the action on behalf of the company. Prior to commencing a derivative action, the court must be satisfied that (i) 14 days’ notice has been given to the directors of the company of the party’s intention to commence such action if the directors of the company do not bring, diligently prosecute or defend or discontinue the action, (ii) the party is acting in good faith and (iii) it appears to be prima facie in the interests of the company that the action be brought, prosecuted, defended or discontinued.

 

Capitalization of Profits and Reserves

 

In a general meeting, ALR Singapore’s shareholders may, upon the recommendation of the directors, capitalize any reserves or profits and distribute them as fully paid bonus shares to the shareholders in proportion to their shareholdings.

 

Liquidation or other Return of Capital

 

On a winding-up or other return of capital, subject to any special rights attaching to any other class of shares, holders of ordinary shares will be entitled to participate in any surplus assets in proportion to their shareholdings.

 

Registrar or Transfer Agent

 

It is anticipated that the register of holders of the ordinary shares after the Reincorporation Merger will continue to be Pacific Stock Transfer.

 

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Comparison of Corporate Law

 

Certain provisions of the Singapore Companies Act (Cap. 50 – “CA”) differ from laws applicable to Nevada corporations and their shareholders. Set forth below is a summary of certain differences between the provisions of Nevada law and the Singapore Companies Act applicable to ALRT Singapore and relating to stockholders’ rights and protections. This summary is not intended to be a complete discussion of the respective rights and it is qualified in its entirety by reference to Nevada law and Singapore law.

 

 

  Nevada Corporation Singapore Company Limited by Shares

Issuance of Shares

 

 

 

 

 

There is a lot of flexibility in the type of stock (for example, common, preferred, convertible debt, phantom) that can be issued, but the corporation is limited by the number of shares authorized in its articles of incorporation (NRS 78.035(3)).

 

 

 

Generally, Singapore companies issue two main types of shares:

 

● Ordinary shares.

 

● Preference shares.

 

Under Singapore law, companies may allot new shares (other than a deemed allotment) by lodging with the Registrar a return of the allotment in the prescribed form containing particulars as required by the CA (CA s63 and s63A).

 

Authorized Shares

 

 

 

 

 

The number of authorized shares can be increased by amending the articles of incorporation, which generally requires board and stockholder approval (NRS 78.390).

 

Notwithstanding, Nevada law allows the board of directors of a corporation, unless restricted by the articles of incorporation, to increase or decrease the number of authorized shares in the class or series of the corporation’s shares and correspondingly effect a forward or reverse split of any such class or series of the corporation’s shares without a vote of the stockholders, so long as the action taken does not change or alter any right or preference of the stockholder and does not include any provision or provisions pursuant to which only money will be paid or script issued to stockholders who hold 10% or more of the outstanding shares of the affected class and series, and who would otherwise be entitled to receive fractions of shares in exchange for the cancellation of all of their outstanding shares (NRS 78.207).

 

A company (if authorized by its constitution), may in a general meeting, alter its share capital in the ways set out in CA s71(1).

 

The company is allowed to issue more preference shares ranking pari passu with certain existing preference shares if (i) the issue of the new shares was authorized by the terms of issue of the existing shares or (ii) the issuance of new shares is authorized by the constitution of the company in force at the time the existing preference shares were issued (CA s74(6)).

 

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Classes and Series of Shares

 

Multiple classes and series of stock (usually common stock and preferred stock), with different rights and preferences, are permitted (NRS 78.195(1)). Issuance of shares with different rights are permitted (CA s64 and 64A).
Preferred Shares

The terms of preferred stock are typically set out in a certificate of designation (NRS 78.195(1) and 78.1955(1)).

 

 

 

If shares of a class or series of stock established by a resolution of the board of directors have been issued, the designation of the class or series, the number of the class or series and the voting powers, designations, preferences, limitations, restrictions and relative rights of the class or series may be amended by a resolution of the board of directors and the proposed amendment adopted by the board of directors must be approved by the vote of stockholders holding shares in the corporation entitling them to exercise a majority of the voting power (NRS 78.1955).

 

 

 

The rights of holders of preference shares are set out in the constitution of the company or in a shareholders’ agreement (or both). Any changes to the rights of the holders of preference shares will have to be made by way of amendment to the constitution.

 

Companies may not allot any preference shares or convert any issued shares into preference shares unless there are set out in its constitution the rights of the holders of those shares with respect to repayment of capital, participation in surplus assets and profits, cumulative or non-cumulative dividends, voting and priority of payment of capital and dividend in relation to other shares or other classes of preference shares (CA s75 (1)).

 

Any shareholders of any class of preference shares who hold not less than 5% of the total number of issued shares of that class may apply to the Court to have the variation of the rights or shares to be cancelled, and, if any such application is made, the variation or abrogation shall not have effect until confirmed by the Court (CA s74(1)).

Transfer of Shares

 

 

 

 

 

Shares are transferable unless restricted in:

 

● The articles of incorporation.

 

● The bylaws.

 

● An agreement:

 

● among any number of stockholders; or

 

● between or among one or more stockholders and the corporation.

 

(NRS 78.242(2).)

Restriction on the right to transfer shares is a foundational requirement for the incorporation of private companies in Singapore (CA s18).

 

There are generally no restrictions on the transfer of shares of public companies subject to the constitution of the company.

 

 

 

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Management and Voting

 

  Nevada Corporation Singapore Company Limited by Shares

Board of Directors

 

 

 

 

 

A corporation is governed by a board of directors, subject to any limitations of:

 

● The Nevada Act.

 

● The articles of incorporation.

 

(NRS 78.115 and 78.120(1).)

 

The business of a Singapore incorporated company is managed by, or under the direction or supervision of, the board of directors.

 

This is subject to any limitations in either (i) the CA, or the constitution of the company.

 

(CA s157A (1) and s157A (2)).

Officers

 

 

 

 

 

A corporation must have a president, secretary, and treasurer (or equivalent officers). All officers must be natural persons. A person may hold more than one office. (NRS 78.130(1), (3).)

 

 

 

Every company incorporated in Singapore must have at least 1 director who ordinarily resides in Singapore. All directors must be natural persons who have attained 18 years of age. (CA s145 (1), (2).)

 

Every company shall have one or more secretaries each of whom shall be a natural person who has his principal or only place of residence in Singapore and who is not debarred under the CA from acting as secretary of the company (CA s171 (1)).

 

Committees

 

Unless otherwise provided by the articles of incorporation, the board of directors may delegate full or partial authority to committees (NRS 78.125). There are no provisions regarding delegation of authority in the CA, however, under Singapore common law, a director is allowed to delegate his powers to another officer.

Director Action
Without a Meeting

 

 

Unless otherwise provided by the articles of incorporation or bylaws, the board of directors may take action without a meeting with the written consent of all directors (NRS 78.315(2)).

 

 

 

The directors may exercise all the powers of a company except any power that the CA or the constitution of the company requires the company to exercise in general meeting (CA s157A (2)).

 

The directors of a private or unlisted public company who wish to pass a resolution by written means without a meeting may do so by sending a copy of the resolution to all the members who have the right to vote (CA s184C (1)).

 

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Right to Call a Meeting

 

 

 

 

 

 

 

Unless otherwise provided in the articles of incorporation or bylaws, the entire board of directors, any two directors or the president may call annual and special meetings of the stockholders and directors. Stockholders may call a special meeting of stockholders only if authorized by the articles of incorporation or bylaws (NRS 78.310(2)).

 

Nevada law provides that if a corporation fails to elect directors within 18 months after the last election of directors, a Nevada district court will have jurisdiction in equity and may order an election upon petition of one or more stockholders holding at least 15% of the voting power.

Any two or more members holding not less than 10% (or such lesser number as is provided by the constitution) of the total number of issued shares of the company may call a meeting of the company (CA s177 (1)).

 

The directors of a company, shall, notwithstanding the constitution, on the requisition of members holding not less than 10% of the total number of paid-up shares, immediately proceed to convene an extraordinary general meeting of the company as soon as practicable but in any case no later than 2 months after the requisition (CA s176(1)).

     

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Right to Call a Meeting (cont’d)   If it is impracticable to call a meeting in manner as prescribed by the CA or by the constitution of the company, the Court may order a meeting to be called, held and conducted in such manner as the Court thinks fit, and may give such ancillary or consequential directions as it thinks expedient (CA s182).

Stockholder Action
Without a Meeting

 

 

 

 

 

Unless otherwise provided by the articles of incorporation or bylaws, stockholders may take action without a meeting with the written consent of the stockholders holding:

 

● A majority of the voting power.

 

● If different, the proportion of voting power required to take the action at a stockholders’ meeting.

 

(NRS 78.320(2).)

 

The corporation is not required to give notice of action taken by written consent (NRS 78.320).

A private or an unlisted public company may pass any resolution without a meeting through written means in accordance with the provisions of the CA (CA s184A (1)).

 

Unless otherwise provided by the constitution of the company, an ordinary resolution can be passed by written means if it has been formally agreed on any date by one or more members of the company who on that date represent a majority of the total voting rights of all the members who would have the right to vote on that resolution (CA s184A (4)).

 

Unless otherwise provided by the constitution of the company, a special resolution can be passed by written means if it has been formally agreed on any date by one or more members of the company who on that date represent at least 75% of the total voting rights of all the members who would have the right to vote on that resolution (CA s184A (3)).

 

Acts Requiring
Stockholder
Approval

 

 

 

 

 

Fundamental changes generally require approval by a majority of the voting power of the stockholders, such as:

 

● A merger, conversion, or exchange (NRS 92A.120(5), (6)).

 

● A sale, lease, or exchange of assets (NRS 78.565(1)).

 

 

 

Fundamental changes generally require approval by at least 75% of the voting power of the shareholders, for example:

 

● Amendment of the constitution (CA s26(1));

 

● Change from private to public company (CA s31);

 

● Reduction of capital (CA s78B and s78C); and

 

● An amalgamation (CA s215C).

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Removal of Directors Under Nevada law, any one or all of the directors of a corporation may be removed, with or without cause, by the holders of not less than two-thirds of the voting power of a corporation’s issued and outstanding stock.

A public company may by ordinary resolution remove a director before the expiration of his period of office, notwithstanding anything in its constitution or in any agreement between the company and the director (CA s152 (1)).

 

     

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Removal of Directors (cont’d)   Subject to any provisions in the constitution, a private company may by ordinary resolution remove a director before the expiration of his period of office notwithstanding anything in any agreement between the private company and the director (CA s152 (9)).
Filling Vacancies Nevada corporate law provides that all vacancies, including those caused by an increase in the number of directors, may be filled by a majority of the remaining directors, though less than a quorum, unless it is otherwise provided in the articles of incorporation. Unless otherwise provided in the articles of incorporation, pursuant to a resignation by a director, the board may fill the vacancy or vacancies with each director so appointed to hold office during the remainder of the term of office of the resigning director or directors.

Under Singapore law, a vacancy created by the removal of a director of a public company under s152 of the CA, if not filled at the meeting at which he is removed, may be filled as a casual vacancy (CA s152 (5)).

 

The constitution of a Singapore company typically provides that the shareholders have powers to appoint any person to be a director, either to fill a vacancy or as an addition to the existing directors, but so that the total number of directors will not at any time exceed the maximum number fixed in the constitution (if any).

 

Limitation of Liability Under Nevada law, unless the articles of incorporation provide for greater individual liability, a director or officer is not individually liable to the corporation or its stockholders for any damages as a result of any act or failure to act in his capacity as a director or office unless it is proven that: (a) his act or failure to act constituted a breach of his fiduciary duties as a director or officer; and (b) his breach of those duties involved intentional misconduct, fraud or a knowing violation of law. Under Singapore law, any provision that purports to exempt an officer of a company from any liability that would otherwise attach to him in connection with any negligence, default, breach of duty or breach of trust in relation to the company is void (CA s172 (1)).

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Indemnification

 

 

In suits that are not brought by or in the right of the corporation, Nevada law permits a corporation to indemnify directors, officers, employees and agents for attorney’s fees and other expenses, judgments and amounts paid in settlement. The person seeking indemnity may recover as long as he acted in good faith and believed his actions were either in the best interests of or not opposed to the best interests of the corporation. Similarly, the person seeking indemnification must not have had any reason to believe his conduct was unlawful.

 

In derivative suits, a corporation may indemnify its agents for expenses that the person actually and reasonably incurred. A corporation may not indemnify a person if the person was adjudged to be liable to the corporation unless a court otherwise orders.

 

Companies incorporated in Singapore are allowed to purchase and maintain for any officer insurance against any liability attaching to such officer in respect of any negligence, default, breach of duty or breach of trust in relation to the company (CA s172A).

 

In principle, Singapore law does not allow a company to directly or indirectly provide indemnity for an officer of the company against any liability attaching to him in connection with any negligence, default, breach of duty or breach of trust in relation to the company (CA s172 (2)). However, there is an exception, which is where the provision for indemnity is against liability incurred by the officer to a person other than the company, subject to the other provisions of the CA (CA s172B (1)).

 

     

55

 

 

 

Indemnification (cont’d) No corporation may indemnify a party unless it makes a determination, through its stockholders, directors or independent counsel, that the indemnification is proper.  
Expiration of Proxies Nevada law provides that proxies may not be valid for more than 6 months, unless the proxy is coupled with an interest or the stockholder specifies that the proxy is to continue in force for a longer period, not to exceed 7 years. There is no express rule on the expiration of proxies in the CA.

 

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Fiduciary Duties

 

 

  Nevada Corporation Singapore Company Limited by Shares

Duties Owed

 

 

 

 

 

Directors and officers must exercise their powers:

 

● In good faith.

 

● With a view to the corporation’s interests.

 

(NRS 78.138(1).)

 

 

 

Directors must exercise their powers:

 

● Honestly.

 

● With reasonable diligence.

 

in the discharge of the duties of their office (CA s157 (1)).

 

Officers shall not make improper use of his position as an officer or agent of the company or any information acquired by virtue of his position as an officer or agent of the company to gain, directly or indirectly, an advantage for himself or for any other person or to cause detriment to the company (CA s157 (2)).

Duty of Loyalty

 

 

 

 

 

 

 

 

Under Nevada law, a director breaches their duty of loyalty to the corporation if the director takes a business opportunity that is within the scope of the corporation’s potential business for himself or presents it to another party without first giving the corporation an opportunity to fairly consider the business opportunity. All such opportunities should be presented first to the corporation and fully considered. However, a contract or other transaction is not void or voidable solely because the contract or transaction is between a Nevada corporation and its director if the fact of financial interest is known to the board of directors or committee, and the board or committee authorizes, approves or ratifies the contract or transaction in good faith by a vote sufficient for the purpose without counting the vote of the interested director, and the contract or transaction is fair as to the corporation at the time it is authorized.

Under Singapore law, the duties owed by directors are:

 

● the duty to avoid conflict of interests between directors’ duties to the company and their personal interests or duties to others;

 

● the duty to act in good faith in the interest of the company;

 

● the duty to act for proper purposes; and

 

● the duty of care, skill and diligence in the discharge of the duties of the office.

     

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Duty of Loyalty (cont’d)  

In addition, a director is required to fulfill the statutory obligation to disclose his direct or indirect interests in transactions or proposed transactions with the company, which might result in a conflict of interests with his duties or interests as a director. If the disclosure is approved by the company, the conflict of interest shall be ratified (CA s156).

 

Under Singapore law, it is unlawful for a company to make certain transaction with its directors, which include:

 

● Loans or quasi-loans;

 

● Any guarantee or providing any security in connection with a loan or quasi-loan made to a relevant director by any other person; and

 

● A credit transaction as creditor for the benefit of a relevant director.

 

(CA s162(1)).

 

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Reliance

 

 

 

 

 

Unless the director has knowledge which makes the reliance unwarranted, a director can rely on information, opinions, reports, or statements from:

 

● Directors, officers, or employees reasonably believed to be reliable and competent in the matters prepared or presented.

 

● Counsel, public accountants, or other persons as to matters reasonably believed to be within the person’s professional or expert competence.

 

● Committees on which the director does not serve as to matters on which the committee is reasonably believed to merit confidence.

 

(NRS 78.138(2).)

 

 

 

A director, when exercising powers or performing duties as a director, may rely on reports, statements, financial data and other information prepared or supplied, and on professional or expert advice given, by any of the following persons:

 

● an employee of the company whom the director believes on reasonable grounds to be reliable and competent in relation to the matters concerned;

 

● a professional advisor or an expert in relation to matters which the director believes on reasonable grounds to be within the person’s professional or expert competence;

 

● any other director or any committee of directors upon which the director did not serve in relation to matters within that other director’s or committee’s designated authority,

 

if the director:

 

● acts in good faith;

 

● makes proper inquiry where the need for inquiry is indicated by the circumstances; and

 

● has no knowledge that such reliance is unwarranted.

 

(CA s157C).

Business Judgment Rule

 

 

 

 

 

Under the business judgment rule, director action is generally presumed valid if the director acted:

 

● In good faith.

 

● On an informed basis.

 

● With a view to the corporation’s interest.

 

(NRS 78.138(3) and 78.139.)

The business of a Singapore incorporated company is managed by, or under the direction or supervision of, the directors. This is subjected to any limitations of (i) the CA, and (ii) the constitution of the company.

 

(CA s157A (1) and s157A (2).)

 

There is no formal business judgement rule in Singapore. However, it is accepted that Singapore courts should be slow to interfere with commercial decisions taken by directors.

 

Elimination or Limitation of Liability

 

The articles of incorporation may contain any provision, consistent with Nevada law, to limit director liability for breach of fiduciary duty (NRS 78.037(2)).

 

Under Singapore law, any provision that purports to exempt an officer of a company from any liability that would otherwise attach to him in connection with any negligence, default, breach of duty or breach of trust in relation to the company is void (CA s172 (1))

 

 

59

 

 

 

 

Stockholder Protections

 

 

 

  Nevada Corporation Singapore Company Limited by Shares

Stockholder Liability

 

Unless otherwise provided in the articles of incorporation, a stockholder’s liability is limited to the consideration paid for shares (NRS 78.225).

The liability of a member of a company limited by shares is limited to the amount, if any, unpaid on the shares held by them.

 

(CA s22 (3)).

Cumulative Voting

 

 

Stockholders have the right to cumulative voting in the election of directors only if and to the extent that the articles of incorporation provide that right (NRS 78.360(1)). No similar rule in the CA.

Preemptive Rights

 

Stockholders have preemptive rights only if and to the extent the articles of incorporation provide those rights (NRS 78.267(2)). Pre-emptive rights are not guaranteed in Singapore, it depends on the individual constitutions of each company.
Dilution Protections The corporation may be restricted from diluting its current stockholders by the terms of a stockholders’ agreement. A shareholders agreement and/or the constitution of the company may contain anti-dilution provisions.
     

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Dilution Protections (cont’d) If the corporation has current holders of preferred shares, they may also have anti-dilution protection (NRS 78.390(2), (4)).

Further, the issue by a company of preference shares ranking pari passu with existing preference shares issued by the company shall be deemed to be a variation of the rights attached to those existing preference shares unless the issue of the first-mentioned shares was authorised by the terms of issue of the existing preference shares or by the constitution of the company in force at the time the existing preference shares were issued.

 

(CA s74(6)).

61

 

 

Appraisal Rights

 

 

 

 

 

Dissenters’ rights are available if the corporation takes any of the following actions:

 

● A merger where:

 

● stockholder approval is required;

 

● the corporation is a subsidiary being merged with its parent; or

 

● the corporation is a publicly traded corporation (NRS 92A.133).

 

● A conversion.

 

● An exchange.

 

● Action taken by stockholder vote if dissenters’ rights are provided by:

 

● the articles of incorporation;

 

● the bylaws; or

 

● a board resolution.

 

● Conferring full voting rights to control shares (NRS 78.3784).

 

● Action obligating the stockholder to accept money or scrip instead of fractional shares in exchange for the cancellation of all of the stockholder’s outstanding shares (subject to certain exceptions).

 

(NRS 92A.380(1).)

 

The corporation must pay (or offer to pay) in cash the amount it estimates to be the fair value of the shares, plus accrued interest (NRS 92A.460(1) and 92A.470(3)).

 

A stockholder dissatisfied with the amount of the payment (or offer of payment) may demand payment of the stockholder’s estimate of the fair value of the shares (NRS 92A.480(1)).

 

If the stockholder’s demand remains unsettled, the corporation must, within 60 days of the demand, petition the court to determine the fair value of the shares and accrued interest (NRS 92A.490(1)).

There is no equivalent provision under the CA in respect of companies incorporated in Singapore.

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Anti-Takeover Provisions

 

 

  Nevada Corporation Singapore Company Limited by Shares

Business Combinations

 

 

 

 

 

The business combination statute generally prohibits a corporation from engaging in any business combination with an interested stockholder (or any affiliate or associate of the interested stockholder), unless it meets the requirements of the corporation’s articles of incorporation and is approved in accordance with the applicable provisions of the Nevada Act (depending on the time period) when occurring either:

 

● Up to two years after the person becomes an interested stockholder (NRS 78.438).

 

● More than two years after the person becomes an interested stockholder (NRS 78.439).

 

The statute generally does not apply to a corporation that either:

 

● Is not publicly traded, unless otherwise provided in its articles of incorporation (NRS 78.433(1)).

 

● Opts out of the statute in its articles of incorporation (NRS 78.434).

Business combinations are not governed by the CA, however the CA does stipulate that parties in a take-over (typically public companies which are entities with more than 50 shareholders) shall comply with the Singapore Code on Take-overs and Mergers enforced by the Securities Industry Council (Securities and Futures Act s139(4)).

 

If a director of the offeror has shareholding in the offeree company, the offer document must state:

 

● the shareholdings in the offeror (in the case of a securities exchange offer only) and in the offeree company in which directors of the offeror are interested;

 

● the shareholdings in the offeror (in the case of a securities exchange offer only) and in the offeree company which any person acting in concert with the offeror owns or controls (with the names of such persons acting in concert);

Application of Business Judgment Rule on Change in Control

 

 

 

 

 

If directors or officers resist a change (or potential change) in the corporation’s control and thereby impede the stockholders’ right to vote for or remove directors:

 

● The directors or officers must reasonably believe that there is a threat to corporate policy and effectiveness.

 

● The impeding action must be reasonable in relation to the threat.

 

(NRS 78.139(1).)

 

This is an exception to the business judgment rule (NRS 78.138(3)).

There is no equivalent provision of the business judgement rule under the CA in respect of companies incorporated in Singapore.

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Control Share Acquisitions

 

 

 

 

The control share acquisition statute:

 

● Generally limits the voting rights of a person acquiring a substantial percentage of an issuing corporation’s voting shares, unless full voting rights are approved by the holders of a majority of:

 

● the corporation’s voting power; and

There is no equivalent provision under the CA in respect of companies incorporated in Singapore.

 

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Control Share Acquisitions (cont’d)

●     each class or series of shares adversely affected by the acquisition.

 

●     (NRS 78.379(1) and 78.3791.)

 

●     Applies (unless otherwise provided by the articles of incorporation or bylaws) to corporations that, as of any date:

 

●     have 200 or more stockholders of record (100 or more of which had Nevada addresses on the corporation’s stock ledger at all times during the preceding 90 days); and

 

●     do business in Nevada directly or through an affiliated corporation.

 

(NRS 78.378(1) and 78.3788.)

 

Directors’ Protection of Interests

 

 

Directors may also protect the corporation’s and stockholders’ interests through plans, arrangements, or instruments that grant or deny rights, privileges, power, or authority to a holder or holders of a specified number or percentage of shares or voting power (NRS 78.195(5), 78.350(4), and 78.378(3)).  There is no equivalent provision under the CA in respect of companies incorporated in Singapore.

 

Distributions

 

  Nevada Corporation Singapore Company Limited by Shares

Form of Distributions

 

 

Distributions to stockholders are typically dividends paid in cash or in property (other than the corporation’s own shares) (NRS 78.191). Share dividends may also be paid (NRS 78.215(3) to (5)). Dividends may be paid out in cash or in kind (e.g. a company may pay its shareholders dividends in the form of the company’s shares).

Limitations on Distributions

 

 

 

 

 

 

Distributions may not be made if, after giving them effect, either:

 

● The corporation would be unable to pay its debts as they become due in the usual course of business.

 

● Except as otherwise specifically allowed by the articles of incorporation, the corporation’s total assets would be less than:

 

● the sum of its total liabilities; and

The CA provides that no dividends can be paid to shareholders except out of profits (CA s 403(1)).

 

A company can, if the constitution allows, pay dividends in proportion to the amount paid up on each share where a larger amount is paid up on some shares than on other (CA s65 (1)(c)).

 

 

 

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  Nevada Corporation Singapore Company Limited by Shares

Limitations on Distributions

(cont’d) 

●     the amount needed, if the corporation were dissolved immediately after the distribution, to satisfy any preferential dissolution rights of stockholders.

 

(NRS 78.288(2).)

 

 Distributions must be proportionate to share ownership (NRS 78.195(2)). 

 

Liability for Unlawful Distributions

 

 

 

 

 

Directors are jointly and severally liable for three years after an unlawful distribution to the corporation for the lesser of:

 

●     The full amount of the distribution made.

 

●     Any loss sustained by the corporation because of the distribution.

 

(NRS 78.300(2).)

 

 There is no liability for a director who either:

 

●     Dissented at the meeting at which the action was taken.

 

●     Was not present at the meeting but dissented on learning of the action.

 

(NRS 78.300(3).) 

Any director or chief executive officer of a company who willfully pays or permits to be paid any dividend in contravention of the CA shall be liable to either:

 

a)    a fine not exceeding $5,000 or to imprisonment for a term not exceeding 12 months; and

 

b)    shall be liable to the creditors of the company for the amount of debt due to the creditors to the extent by which the dividends so paid have exceeded the profits.

 

(CA s403 (2)).

 

 

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Historical Consolidated Financial Statements
and

Pro Forma Financial Information

 

We have attached to this prospectus/information statement the selected financial data, including our consolidated statements of operations and consolidated balance sheets for the fiscal years ended December 31, 2021 and 2020, included in our Annual Report on Form 10-K which was filed with the SEC on March 30, 2022.

 

We have also included our consolidated statements of operations and consolidated balance sheets for the six months ended June 30, 2022, included in our Quarterly Report on Form 10-Q which was filed with the SEC on August 15, 2022.

 

We have not included separate financial information for ALR Singapore, as it has existed as a wholly-owned subsidiary of ALR Nevada since it was first organized on May 16, 2020. Nor have we included separate financial information for ALR Delaware, as it has no operations and is being used for the sole purpose of effecting the Reincorporation Merger.

 

No pro forma financial information is presented in this prospectus/information statement because there are no significant pro forma adjustments required to be made to the historical consolidated balance sheets nor consolidated statements of operations of ALR Nevada to give effect to the Reincorporation Merger. The Reincorporation Merger will be accounted for as a legal reorganization with no change in ultimate ownership interest immediately before and after the transaction. Please see the section entitled Reincorporation Merger – Accounting Treatment of the Reincorporation.

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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 health care management programs through artificial intelligence, machine learning, patient monitoring and improved communications. The Company’s primary business markets are health care providers, the providers of health insurance, and the providers of disease and case management services, including the home care industry.

 

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

 

Revenue

 

The Company generated $2,023 in revenue during the first six months of 2022, $7,468 in revenue during the year ended December 31, 2021 and did not generate any revenue in 2020. For the past several years, the Company has been devoting its efforts to developing and commercializing its Diabetes Solution product, which is a diabetes management system that combines patient monitoring, patient adherence, care team communications, automated patient management and insulin dosage suggestions.

 

Product Development

 

During the first six months of 2022 and the 2021 fiscal year, the majority of the Company’s product development efforts were expended to:

  Further develop its Diabetes Solution;
  Prepare for additional functionality to enhance care facilitation activity;
  Increase compatibility and usability of the Diabetes Solution;
  Integrate with payment processors in Singapore to prepare for customer enrollment;
  Initiate development of its Diabetes Solution for compatibility with CGM technologies; and
  Implement advances as a result of user feedback.

 

The Company is currently focusing its efforts on the commercial launch plans of the Diabetes Solution and undertaking development activities that will support the user experience in preparation for enrolling large populations of customers.

 

Product development and research costs were $250,000 in the first six months of 2022, and $499,000 and $1,433,000 in the fiscal years ended 2021 and 2020, respectively. Included in product development costs were stock-based compensation costs of $222,000 in fiscal 2021 and $1,156,000 in fiscal 2020.

 

Operating Capital and Recent Developments Related to Operating Capital

 

The Company generated $2,023 in revenue during the first six months of 2022 and $7,468 in revenue during the year ended December 31, 2021. The Company is funding operations through funds raised through the rights offering in 2020 and the line of credit financing available. The Company has used the funds it raised through the rights offering that closed in January 2021 and the related subsequent placement of shares by management. 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.

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There is no certainty of the timing or amount of cash flows from sales, and 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 entrenched competition with much greater resources. The Company is seeking to displace generally accepted processes for diabetes management, which means it is seeking to establish new benchmark practices for diabetes care. Management is evaluating alternatives to penetrate both existing and new marketplaces in order to generate cash flows. Management believes the business plan of the Company will give it the best opportunity to achieve commercial feasibility. There is substantial uncertainty over the Company’s ability to execute the plan, the level of success associated with the execution of its business plan or the actual timeline to execute the plan. If the actual timeline for the execution of the business plan is substantially longer than planned, it could jeopardize the Company’s long-term success. For these reasons the Company sought additional financing through the extension of the rights offering pursuant to the post effective amendment filed on December 14, 2021.

 

The Company has operating lines of credit with a borrowing limit of $14,300,000. As at December 31, 2021, the Company had borrowing available of approximately $1,612,000 on its lines of credit. The Company does not have any other facilities readily available at this time and has continued to receive funding under the terms of the existing line of credit that has reached the borrowing limit from the Chief Executive Officer. Management will seek to acquire additional financing to allow the Company to become a commercially viable enterprise, whereby it can generate sufficient cash flow from the sales of its Diabetes Solution to support its cost of operations, overhead and repay its obligations.

 

On December 4, 2020, the Company filed a Form S-1 Registration Statement to distribute subscription rights to purchase up to an aggregate 127,522,227 shares of our common stock at a price of $0.05 per share. As at December 31, 2021, the Company issued 26,496,635 unrestricted shares of common stock related to proceeds received of $1,324,832. The Company had until October 29, 2021 to sell the remaining 101,025,592 shares of common stock for total proceeds of $5,051,280, if exercised. On December 14, 2021, the Company filed a post effective amendment to distribute subscription rights to purchase up to an aggregate of 101,025,592 shares of our common stock at a price of $0.05 per share. Each stockholder as of the record date of the December 4, 2020 Form S-1 Registration Statement who received rights and had not previously exercised those subscription rights as of the expiration date of January 22, 2021, received one subscription right for each previous subscription right held as at such time.

 

This extension of rights expired March 15, 2022. However, management provided the opportunity to shareholders who may have received their rights offering mailing package with insufficient time to exercise their subscription rights, to contact the Company regarding any desire to exercise such rights. In such cases, the Company intended to allow for the exercise of subscription rights by such shareholders until April 1, 2022. As of the date of this Information Statement, only nominal funds have been invested as a result of the extended Rights Offering. In March 2022, the Company recognized share subscription receivable of $25 pursuant to its registration statement and issued an additional 500 shares of common stock for gross proceeds of $25. Per the terms of the extended rights offering, management may, in its discretion, allocate unexercised subscription rights to non-shareholders within 150 days following the expiration date of March 15, 2022.

 

On March 18, 2022, the Company extended the commitment letters previously issued to two creditors who are relatives of the Chairman and Chief Executive Officer of the Company offering them an aggregate 20,000,000 shares of common stock in exchange for the extinguishment of $1,541,000 in promissory notes and interest payable from December 31, 2021 to December 31, 2022.

 

On March 18, 2022, the Company modified 70,000,000 options previously granted to a number of advisors and independent contractors by extending the vesting period under vesting terms, which have not been met, from September 30, 2021 and December 31, 2021 to December 31, 2022 and from June 30, 2022 to June 30, 2023.

 

On March 18, 2022, the Company amended 2,500,000 options previously granted to an individual on October 4, 2021 by vesting 1,000,000 options and cancelling the remaining 1,500,000 options with performance conditions.

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Effective March 18, 2022, the Company cancelled 20,000,000 stock options exercisable at $0.015, 10,000,000 stock options exercisable at $0.035 and 28,500,000 exercisable at $0.05 related to the termination of certain contractors.

 

In March 2022, the Company received an advance from a shareholder for SGD$270,000 (US$194,049), with a fixed interest amount of SGD$8,000, which was repaid in full.

 

On April 27, 2022, the Company provided termination notice to a contractor, and as a result, the contractor’s 30,000,000 stock options exercisable at $0.05 were cancelled, unvested, effective June 30, 2022.

 

On June 3, 2022, the Company issued an aggregate of 9,250,000 shares of common stock at a fair value of $0.04 per share in exchange for the retirement of $125,000 of accounts payable and $245,000 for bonuses issued and recognized in consulting fees.

 

During the period ended June 30, 2022, the Company recorded a total of $518,659 in compensation expense related to the vesting of stock options granted in 2021, including the $59,639 from the modification of vesting terms of 1,000,000 options.

 

On July 7, 2022, the Company entered into an Option Agreement with Sidney Chan, which grants Mr. Chan the option to acquire 115,500,000 stock options exercisable at $0.05 until December 31, 2026.

 

On July 12, 2022, ALR Singapore received advances from a relative of Sidney Chan aggregating SGD$500,000, with interest of $150 per day outstanding, payable upon maturity or early payment, which will mature and be repayable on August 31, 2022. The principal amount of SGD$500,000 was repaid on July 18, 2022.

 

On September 6, 2022, ALR Singapore entered into a loan agreement with Kan Wan Chen Pte. Ltd., a Singapore private company limited by shares (“KWC”), memorializing KWC’s prior aggregate advances to ALR Singapore of SGD$2,500,000 and KWC’s agreement option to make additional advances to ALR Singapore from time to time for the purpose of commercializing the DX GluCurve Pet CGM, clinical trials for the Diabetes Solution for human health, working capital and general corporate purposes. Under the terms of the loan agreement, ALR Singapore may repay the principal owing thereunder at any time prior to the launch of the DX GluCurve Pet CGM, in whole or in part, at ALR Singapore’s option, with a payment equal to 120% of such principal amount owing. Any such principal amounts repaid prior to the launch of the DX GluCurve Pet CGM will not be subject to the royalty payment described herein. Subject to the foregoing, ALR Singapore is obligated to pay KWC US$10 from the sale of each unit of GluCurve Pet CGM sensors sold to its distributor, which will be accounted for as follows: (i) US$5 as a reduction in the principal balance owing to KWC, and (ii) US$5 as a royalty payment to compensate KWC for the cost of the principal advances. The loan is scheduled to mature on March 31, 2024, at which time, an amount equal to 120% of the principal then outstanding will be due and payable to KWC. In connection with the loan, (i) ALR Singapore is obligated to grant KWC (i) a general security interest in its assets, and (ii) a first right to any proceeds received as liquidated damages, or similar, pursuant to a prospective manufacturing and supply agreement between ALR Singapore and Infinovo Medical Co., Ltd., or an alternative similar arrangement, subject to such agreement or arrangement being finalized. Ms. Christine Kan is a director and significant shareholder of KWC. Ms. Kan is also a director and the V.P. of Corporate Development of ALR Singapore, an insider of the Company and the spouse of Sidney Chan.

 

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, 2021 were $24,505,360. As of that date, a total of $18,251,018 was owed to the Chairman and his family.

 

Operating Issues

 

The Company has expended significant efforts introducing the Diabetes Solution 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 2021 and 2020 fiscal years, the Company has devoted 100% of its efforts to developing the Diabetes Solution for commercial launch. Management plans for the Company to become a commercially viable enterprise through the sale of Diabetes Solution and GluCurve subscriptions.

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

 

Management Compensation

 

During 2021, the Company’s sole executive officer, Mr. Sidney Chan, earned $20,000 per month, which was recorded as an increase to the borrowings on the line of credit provided by Mr. Chan to the Company. Mr. Chan’s compensation during the 2020 fiscal year was $20,000 per month.

 

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 2021, the Company granted to Peter Stafford incentive options to acquire 5,000,000 shares of common stock of the Company at a price of $0.05 per share until June 30, 2026. The options granted to Mr. Stafford had no vesting conditions. During 2020, the Company granted to Ken Robulak incentive options to acquire 8,000,000 shares of common stock of the Company at a price of $0.05 per share until May 31, 2025. The options granted to Mr. Robulak during 2020 are subject to performance vesting conditions which have not yet been realized.

 

Neither Dr. Alfonso Salas nor Ronald Cheng were granted options during 2021 and 2020.

 

Capital Structure

 

As of the date of this prospectus/information statement:

 

Common Stock

  Authorized: 10,000,000,000 shares of common stock with a par value of $0.001 per share.
  Issued: 551,966,844 shares of common stock are issued and outstanding.

 

Preferred Stock

  Authorized: 500,000,000 shares of preferred stock with a par value of $0.001 per share.
  Issued: No shares of preferred stock have been issued.

 

Incentive Stock Options

  Outstanding: Options to acquire 362,000,000 shares of common stock are outstanding.

 

Finance Stock Options

  Outstanding: Options to acquire 5,160,501,500 shares of common stock are outstanding.

 

Subscription Rights

  Issued: 101,025,592 subscription rights which expired initially on March 15, 2022, and were extended by management upon request until April 1, 2022. Thereafter, until August 12, 2022, management has the right to allocate any unexercised subscription rights to non-shareholders of the Company. On July 7, 2022, the Company canceled the subscription rights to distribute the remaining 101,025,592 shares pursuant to the prospectus.

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Results of Operations

 

Six months ended June 30, 2022 compared to Six months ended June 30, 2021

 

    Six Months Ended
June 30,
2022
  Six Months Ended
June 30,
2021
  Amount ($)
Increase /
(Decrease)
  Percentage (%) Increase / (Decrease)
                 
Revenue   $ 2,000       —         2,000       100  
Cost of revenue     (1,000 )     —         (1,000 )     100  
Gross margin     1,000       —         1,000       100  
                                 
Operating Expenses                                
  Product development costs     250,000       240,000       10,000       4  
  Professional fees     525,000       356,000       169,000       47  
  Selling, general and administrative     1,009,000       424,000       585,000       138  
Operating loss     1,784,000       1,020,000       764,000       75  
                                 
Loss before other items     1,783,000       1,020,000       763,000       75  
                                 
Other Items                                
  Interest expense     1,110,000       2,284,000       (1,174,000 )     (51 )
  Loss on settlement of debt     —         33,000       (33,000 )     (100 )
Total other items     1,110,000       2,317,000       (1,207,000 )     (52 )
                                 
Net Loss   $ 2,893,000       3,337,000       (444,000 )     (13 )

 

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The net loss for the six months ended June 30, 2022 was 13% ($444,000) lower than the net loss at June 30, 2021. Loss before other items and stock-based compensation was $385,000 (44%) higher during the six months ended June 30, 2022, as compared to the six months ended June 30, 2021. We highlight that loss before other items and stock-based compensation is a “non-GAAP financial measure”. This measure is calculated by removing those items from the net loss presented on our unaudited condensed consolidated statements of operations. This measure does not have a standardized meaning under U.S. GAAP. Management uses this measure internally to evaluate its results of operations as it removes the impact of stock-based compensation, non-operational losses and interest accretion.

 

    Six Months Ended
June 30,
2022
  Six Months Ended
June 30,
2021
  Amount ($)
Increase /
(Decrease)
  Percentage (%) Increase / (Decrease)
                 
Loss Before Other Items   $ 1,783,000       1,020,000       763,000       75  
Stock-based compensation included in selling, general and administrative expenses, professional fees and product development costs     519,000       141,000       378,000       268  
Loss Before Other Items and Stock-based Compensation   $ 1,264,000       879,000       385,000       44  
                                 

 

The net loss before interest and stock-based compensation for the Company’s six months ended June 30, 2022 increased by $385,000 due primarily to increased selling, general and administrative expenses as a result of costs incurred in relation to ALR Singapore and in relation to the rights offering.

 

Selling, General and Administrative

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

 

During the period, the Company had increased selling, general and administrative operating expenses, as compared to the same period in 2021. The selling, general and administrative expenses, excluding stock-based compensation, increased by $203,000 during 2022, as compared to 2021, primarily driven by an increase in salaries, payroll expenses and consulting fees paid to personnel related to GluCurve Pet CGM, mailing and printing of materials related to the rights offering in the current period offset by fees paid to a market research firm related to commercialization plans for the Company’s GluCurve Pet CGM in the comparative period of the prior year. The components of selling, general and administrative expenses and the changes therein can be seen as follows:

 

Selling, General and Administrative:   Six Months Ended
June 30,
2022
  Six Months Ended
June 30,
2021
  Amount ($)
Increase /
(Decrease)
Salaries and consulting fees   $ 479,000       305,000       174,000  
Travel and trade shows     6,000       10,000       (4,000 )
Website and information technology     13,000       9,000       4,000  
Transfer agent, filing fees and quotation costs     15,000       8,000       7,000  
Market research consulting fees     10,000       44,000       (34,000 )
Payroll expenses     39,000       9,000       30,000  
License and permits     1,000       10,000       (9,000 )
Shareholder communications     28,000       5,000       23,000  
Foreign exchange     8,000       7,000       1,000  
Other general and administrative costs     28,000       17,000       11,000  
Subtotal     627,000       424,000       203,000  
Stock-based compensation     382,000       —         382,000  
Total   $ 1,009,000       424,000       585,000  
                             

 

 

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Product development costs

Substantially all of the product development costs incurred related to a) services provided by contractors of the Company, and b) expenses incurred for product development. The Company incurred stock-based compensation expense of $119,000 during Q2 2022 related to the grant and vesting of options to its product development team compared to $98,000 during Q2 2021.

 

Professional fees

Professional fees incurred consists of consulting and advisory fees of certain professionals retained, audit fees, tax consultant fees, recruiter fees, legal fees and stock-based compensation for options granted to professionals. Excluding the difference in net loss attributed to the vesting of stock options granted in the prior year, professional fees increased by $194,000 from the comparative period of the prior year. The increase in professional fees was mainly due to accounting and legal fees in the current period offset by recruiter fees paid in the comparative period of the prior year. During the period, the increase in accounting and legal fees related to:

  · Assessing business structure alternatives, including evaluating and forming the animal health division;
  · Evaluating retaining additional personnel to support commercialization strategies in Singapore and the United States;
  · Increased compensation paid to certain accounting professionals retained;
  · Its proposed migration to Singapore and preparation of the Form F-4 filed on May 24, 2022; and
  · Completing the rights offering financing, preparing subsequent amendments to extend the rights offering and issuing the post-effective amendment to the rights offering.

 

By type of professional cost, the variance can be seen as follows:

 

Professional fees:   Six Months Ended
June 30,
2022
  Six Months Ended
June 30,
2021
  Amount ($)
Increase /
(Decrease)
Corporate auditor   $ 29,000       14,000       15,000  
Accounting fees     203,000       76,000       127,000  
Tax consultant fees     14,000       40,000       (26,000 )
Legal fees     260,000       90,000       170,000  
Recruiter fees     —         48,000       (48,000 )
Market consultants and outreach     1,000       45,000       (44,000 )
Subtotal     507,000       313,000       194,000  
Stock-based compensation     18,000       43,000       (25,000 )
Total   $ 525,000       356,000       169,000  

 

Interest expense

Interest expense was from the following sources for the six months ended June 30, 2022 and 2021:

 

Interest expense:   Six Months Ended
June 30,
2022
  Six Months Ended
June 30,
2021
  Amount ($)
Increase /
(Decrease)
Interest expense incurred on promissory notes   $ 277,000       264,000       13,000  
Interest expense incurred on lines of credit     778,000       671,000       107,000  
Imputed interest on zero interest loans     52,000       60,000       (8,000 )
Other interest     3,000       1,000       2,000  
Subtotal     1,110,000       996,000       114,000  
Interest expense incurred on stock options modified     —         1,288,000       (1,288,000 )
Total   $ 1,110,000       2,284,000       (1,174,000 )

 

 

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Interest on Promissory Notes

The Company received an advance from two shareholders for an aggregate SGD$340,000 ($244,000), with a fixed interest amount of $10,000, during the six months ended June 30, 2022. The Company also received an advance from two related parties for an aggregate $50,000, with a fixed interest amount of $4,000, during the six months ended June 30, 2022. There were no other significant changes in the amount of promissory notes outstanding as at June 30, 2022 and 2021. The interest incurred on promissory notes was consistent during the six months ended June 30, 2022 and 2021.

 

Interest on Lines of Credit

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

 

Lines of credit:   Six Months Ended
June 30,
2022
  Six Months Ended
June 30,
2021
  Amount ($)
Increase /
(Decrease)
Line of credit provided by Sidney Chan   $ 10,300,000       9,941,000       359,000  
Line of credit provided by Christine Kan     2,827,000       2,000,000       827,000  
Total   $ 13,127,000       11,941,000       1,186,000  

 

The principal balance of the lines of credit due to Mr. Sidney Chan and Ms. Christine Kan increased due to advances from Mr. Chan and Ms. Kan under the lines of credit to finance the operations of the Company.

 

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

 

Interest expense on lines of credit:   Six Months Ended
June 30,
2022
  Six Months Ended
June 30,
2021
  Amount ($)
Increase /
(Decrease)
Interest expense incurred on the line of credit from Sidney Chan during the period   $ 617,000       551,000       66,000  
Interest expense incurred on the line of credit from Christine Kan during the period     161,000       120,000       41,000  
Total   $ 778,000       671,000       107,000  

 

Imputed Interest

During the 2022 and 2021 periods, the Company had certain zero interest promissory notes and accounts payable in excess of one year. Pursuant to the Company’s accounting policy, these zero interest amounts are considered to be financing items in nature and are assigned a deemed interest rate (1% per month). The interest incurred on these is expensed as imputed interest and instead of increasing the liabilities of the Company, it is allocated to equity under the financial statement line item additional paid-in capital. The change from the prior period is related to the discussion included under Interest on Promissory Notes above.

 

Liquidity and Capital Resources

 

Working Capital   As At
June 30,
2022
  As At
December 31, 2021
  Amount ($)
Increase /
(Decrease)
  Percentage (%) Increase / (Decrease)
Current Assets   $ 96,000       193,000       (97,000 )     (50 )
Current Liabilities     26,355,000       24,505,000       1,850,000       8  
Working Capital Deficiency   $ (26,259,000 )     (24,312,000 )     (1,947,000 )     8  
                                 

 

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Year ended December 31, 2021 compared to Year ended December 31, 2020

 

    2021   2020   Amount ($)
Increase /
(Decrease)
  Percentage
(%) Increase
/ (Decrease)
                 
Revenue   $ 8,000      $       8,000       100  
Cost of revenue     (3,000 )           (3,000 )     100  
Gross margin     5,000             5,000       100  
                                 
Operating expenses                                
  Product development costs     499,000       1,433,000       (934,000 )     (65 )
  Professional fees     881,000       953,000       (72,000 )     (8 )
  Selling, general and administration     1,566,000       1,440,000       126,000       9  
Operating loss     2,946,000       3,826,000       (880,000 )     (23 )
                                 
Loss before other items     2,941,000       3,826,000       (885,000 )     (23 )
                                 
Other items                                
  Interest expense     5,468,000       2,116,000       3,352,000       158  
  Loss on settlement of debt     34,000             34,000       100  
  Other income           (26,000 )     26,000       (100 )
Total other items     5,502,000       2,090,000       3,412,000       163  
                                 
Net Loss   $ 8,443,000     $ 5,916,000       2,527,000       43  

 

The net loss for the year ended December 31, 2021 was 43% ($2,527,000) higher than the net loss at December 31, 2020. Loss before other items and stock-based compensation was $965,000 (97%) higher during the year ended December 31, 2021, as compared to the year ended December 31, 2020. We highlight that loss before other items and stock-based compensation are each “non-GAAP financial measure”. This measure is calculated by removing those items from the net loss presented on our consolidated statements of operations. This measure does not have a standardized meaning under U.S. GAAP. Management uses this measure internally to evaluate its results of operations, as it removes the impact of stock-based compensation, non-operational losses and interest accretion.

 

    Year Ended
December 31,
2021
  Year Ended
December 31,
2020
  Amount ($)
Increase /
(Decrease)
  Percentage
(%) Increase
/ (Decrease)
                 
Loss before other items   $ 2,941,000     $ 3,826,000       (885,000 )     (23 )
Stock-based compensation included in selling, general and administration expense, professional fees and product development costs     978,000       2,828,000       (1,850,000 )     (65 )
Loss Before Other Items and Stock-based Compensation   $ 1,963,000     $ 998,000       965,000       97  

 

The loss before interest and stock-based compensation for the Company’s year ended December 31, 2021 increased by $965,000 due primarily to increased professional fees of $501,000 and selling, general and administration expense of $469,000 offset by gross margin of $5,000.

  The Company incurred increased professional costs related to assessing business structure alternatives;

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  The Company has retained additional personnel to support commercialization strategies in Singapore and the U.S.;
  The Company has incurred professional costs related to its proposed migration to Singapore; and
  The Company has retained additional personnel related to evaluating and forming its pet division.

 

Selling, General and Administration

 

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

 

During the year, the Company had an increase in selling, general and administration expenses, primarily driven by an increase in salaries and consulting fees paid to personnel and to a market research firm related to commercialization plans for the Company’s Diabetes Solution. The components of selling, general and administration expenses and the changes therein can be seen as follows:

 

Selling, General and Administration:   Year Ended
December 31,
2021
  Year Ended
December 31,
2020
  Amount ($)
Increase /
(Decrease)
Salaries and consulting fees   $ 729,000     $ 379,000       350,000  
Travel and trade shows     14,000       10,000       4,000  
Website and information technology     26,000       18,000       8,000  
Transfer agent, filing fees and quotation costs     29,000       75,000       (46,000 )
Market research consulting fees     44,000             44,000  
License and permits     26,000       10,000       16,000  
Foreign exchange     35,000             35,000  
Other general and administration costs     76,000       18,000       58,000  
Subtotal     979,000       510,000       469,000  
Stock-based compensation     587,000       930,000       (343,000 )
Total   $ 1,566,000     $ 1,440,000       126,000  

 

During 2021, the Company had increased selling, general and administration operating expenses, as compared to the same period in 2020. The selling, general and administration expenses excluding stock-based compensation increased by $469,000 during 2021, as compared to 2020, which was primarily related to increased personnel costs and market research consulting fees.

 

Product development costs

 

Substantially all of the product development costs incurred related to a) services provided by contractors of the Company, and b) expenses incurred for product development. The change in balance from the previous year relates primarily to changes in composition of our technical team in the current year, as compared to the previous year. The Company incurred stock-based compensation expense of $222,000 during 2021 related to the grant and vesting of options to its product development team compared to $1,156,000 during 2020. The reduction in product development costs related to stock-based compensation expenses of $934,000 for the year ended December 31, 2021 accounted for 100% of the reduction in total product development costs from the year ended December 31, 2020.

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 Professional fees

 

Professional fees incurred consists of consulting and advisory fees of certain professionals retained, audit fees, tax consultant fees, recruiter fees, legal fees and stock-based compensation for options granted to professionals. During the year, there was a significant increase in professional fees related to:

  assessing business structure alternatives, including evaluating and forming the animal health division;
  evaluating retaining additional personnel to support commercialization strategies in Singapore and the United States;
  its proposed migration to Singapore; and
  completing the rights offering financing, preparing subsequent amendments to extend the rights offering and issuing the post-effective amendment to the rights offering.

 

By type of professional cost, the variance can be seen as follows:

 

Professional fees:   Year Ended
December 31,
2021
  Year Ended
December 31,
2020
  Amount ($)
Increase /
(Decrease)
Corporate auditor   $ 46,000     44,000       2,000  
Accounting fees     149,000       63,000       86,000  
Tax consultant fees     43,000             43,000  
Legal fees     292,000       70,000       222,000  
Recruiter fees     48,000             48,000  
Market consultants and outreach     88,000             88,000  
Professionals retained     46,000       35,000       11,000  
Subtotal     712,000       212,000       500,000  
Stock-based compensation     169,000       741,000       (572,000 )
Total   $ 881,000     $ 953,000       (72,000 )

 

Excluding the difference in net loss attributed to the grant of stock options, professional fees increased by $500,000 from the prior year, as indicated above.

 

Interest expense

 

Interest expense was from the following sources for the years ended December 31, 2021 and 2020:

 

Interest expense:   Year Ended
December 31,  
2021
  Year Ended
December 31,
2020
  Amount ($)
Increase /
(Decrease)
Interest expense incurred on promissory notes   $ 527,000     $ 529,000       (2,000 )
Interest expense incurred on lines of credit     1,402,000       1,464,000       (62,000 )
Stock-based compensation of extension of line of credit and modification of stock options     3,425,000             3,425,000  
Imputed interest on zero interest loans     113,000       123,000       (10,000 )
Other interest     1,000             1,000  
Total   $ 5,468,000     $ 2,116,000       3,352,000  

 

Interest expense incurred on stock options modified of $3,425,000 related to the grant of options as consideration for receiving an increase to the borrowing limit on the line of credit between the Company and the spouse of the Chairman and the extension of the life of stock options held by the Chairman and Chief Executive Officer of the Company and his spouse related to financing provided and outstanding.

 

Interest on Promissory Notes

 

During the year there were the following changes in promissory notes payable:

 

  On May 10, 2021, the Company issued 2,000,000 shares of common stock with a fair market price of $0.057 to a creditor to extinguish $20,000 in promissory notes and $3,000 in accrued interest on promissory notes.

  

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There were no other significant changes in the amount of promissory notes outstanding as at December 31, 2021 and 2020. The interest incurred on promissory notes was consistent during the years ended December 31, 2021 and 2020.

 

Interest on Lines of Credit

 

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

 

Lines of credit:   2021   2020   Amount ($)
Increase /
(Decrease)
Line of credit provided by Sidney Chan   $ 10,221,000     $ 9,539,000       682,000  
Line of credit provided by Christine Kan     2,468,000       2,000,000       468,000  
Total   $ 12,689,000     $ 11,539,000       1,150,000  

 

The principal balance of the line of credit due to Mr. Sidney Chan and Ms. Christine Kan increased due to advances from Mr. Chan and Ms. Kan under the line of credit to finance the operations of the Company. On December 10, 2021, the Company and the spouse of the Chairman entered into an amendment agreement to increase the borrowing limit on the line of credit provided by the spouse of the Chairman to the Company from $2,000,000 to $4,000,000.

 

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

 

Interest expense on lines of credit:   Year Ended  
December 31,  
2021
  Year Ended
December 31,
2020
  Amount ($)
Increase / 
(Decrease)
Interest expense incurred on the line of credit from Sidney Chan during the period   $ 1,157,000     $ 1,224,000       (67,000 )
Interest expense incurred on the line of credit from Christine Kan during the period     245,000       240,000       5,000  
Total   $ 1,402,000     $ 1,464,000       (62,000 )

 

Imputed Interest

 

During 2021 and 2020, the Company had certain zero interest promissory notes and accounts payable in excess of one year. Pursuant to the Company’s accounting policy, these zero interest amounts are considered to be financing items in nature and are assigned a deemed interest rate (1% per month). The interest incurred on these is expensed as imputed interest and, instead of increasing the liabilities of the Company, it is allocated to equity under the financial statement line item additional paid-in capital. The change from the prior year is related to the discussion included under Interest on Promissory Notes above.

 

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Liquidity and Capital Resources

 

The Company has a severe working capital deficiency. It does not have the ability to service its current liabilities for the next twelve months and is reliant on its line of credit facilities to meet its ongoing operations. Until the Company has revenue-producing activities that exceed its operating requirements, it will be unable to service its current liabilities and the working capital deficit will continue to increase. As of the date of this report, the Company has not commenced commercial revenue-generating activities. The Company is expected to continue generating revenues in Singapore during the 2022 fiscal year; however, the amount and timing are uncertain. The revenues generated in 2021 and 2022 are not expected to be sufficient to finance the ongoing operations of the business and repay the current liabilities. The Company is also evaluating opportunities for its GluCurve product, the timing and amount of revenues from which are uncertain. There is substantial doubt about the Company’s ability to repay its current liabilities in the near term or any time in the future, which could ultimately lead to business failure.

 

Current Assets

 

The Company’s nominal current assets as at June 30, 2022 and December 31, 2021 consist of cash and prepaid expenses.

 

Current Liabilities

 

The Company has current liabilities of $26,355,000 at June 30, 2022, as compared to $24,505,000 at December 31, 2021. Current liabilities are as follows:

 

    June 30,
2022
  December 31, 2021   Change
($)
  Change
(%)
Accounts payable and accrued liabilities   $ 1,330,000       1,130,000       200,000       18  
Promissory notes to related parties     3,092,000       3,042,000       50,000       2  
Promissory notes to arm’s length parties     2,458,000       2,213,000       245,000       11  
Interest payable     4,388,000       4,111,000       277,000       7  
Lines of credit from related parties     15,087,000       14,009,000       1,078,000       8  
Total current liabilities   $ 26,355,000       24,505,000       1,850,000       8  

 

Accounts payable and accrued liabilities

Accounts payable and accrued liabilities consists of trade payables and accrued liabilities of the Company. Accounts payable totaling approximately $1,075,000 and accrued liabilities totaling approximately $255,000. Approximately $600,000 of accounts payable is more than one year old with the majority of these being more than ten years old.

 

The fluctuations in accounts payable occurred in the regular course of business.

 

Promissory notes to related parties and promissory notes payable to arm’s length parties

As at June 30, 2022, the Company had promissory notes with 24 individuals or corporations that related to historical amounts borrowed. With the exception of the SGD$340,000 advance received from arm’s length parties and $50,000 received from related parties during the six month period ended June 30, 2022, there has been no new activity for several years. All of the promissory notes, other than the SGD$340,000 and $50,000 loan received during the current period, are past due and continue to accrue interest at their respective legal rates of interest (mostly 1% per month). During the six months ended June 30, 2022, the Company received an advance from two shareholders for SGD$340,000 ($244,000), with a fixed interest amount of $10,000, due August 31, 2022, and from two related parties for $50,000, with a fixed interest amount of $4,000, due August 31, 2022.

 

Interest payable

Interest payable relates to the unpaid interest expense incurred on the promissory notes to related parties and promissory notes to arm’s length parties. The change from December 31, 2021 to June 30, 2022 relates to $277,000 of accrued interest incurred on promissory notes at their stated rates of interest.

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All of the promissory notes, except for the promissory notes received during the most recent six month period, and related interest payable, are overdue.

 

Cash Flows

 

Cash Flows   Six Months Ended
June 30, 2022
  Six Months Ended
June 30, 2021
Cash flows used in Operating Activities   $ (707,000 )   $ (857,000 )
Cash flows provided by Financing Activities     595,000       1,167,000  
Effect of foreign exchange on cash     5,000       —    
Net Increase (Decrease) in Cash During Period   $ (107,000 )   $ 310,000  

 

Cash Balances and Working Capital

 

As of June 30, 2022, the Company’s cash balance was $9,000 compared to $116,000 as of December 31, 2021. The Company does not have sufficient cash on hand to fund its requirements for the 2022 fiscal year and will need to secure additional financing.

 

Cash Used in Operating Activities

 

Cash used by the Company in operating activities during the six months ended June 30, 2022 was $707,000 in comparison with $857,000 used during the same period last year. The Company’s expenditures from operations were used as follows (approximate amounts):

 

Cash Used in Operating Activities Reconciliation   Six Months Ended
June 30,
2022
  Six Months Ended
June 30,
2021
Net loss   $ (2,893,000 )   $ (3,337,000 )
Stock-based compensation incurred for product development, professional fees and interest expense     519,000       1,429,000  
Non-cash imputed interest expense     52,000       60,000  
Loss on debt settlement     —         33,000  
Bonuses settled by issuance of shares     245,000       —    
Net purchases with balances owing in accounts payable and accrued liabilities     325,000       18,000  
Retainers and prepaid services     (10,000 )     5,000  
Accrued interest on lines of credit     778,000       671,000  
Accrued interest from promissory notes     277,000       264,000  
Cash used in operating activities   $ (707,000 )   $ (857,000 )
                 

 

The expenditures incurred were to fund the operating activities of the business.

 

 

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Cash Proceeds from Financing Activities

 

Cash sourced by the Company from financing activities during the six months ended June 30, 2022 was $595,000 in comparison with $1,167,000 sourced during the same period last year. The funds were sourced as follows:

 

Cash from Financing Activities Reconciliation   Six Months Ended
June 30,
2022
  Six Months Ended
June 30,
2021
Proceeds from rights offering   $ —       $ 1,125,000  
Proceeds from exercise of options     —         12,000  
Proceeds from promissory notes     294,000       —    
Net proceeds from line of credit from Mr. Sidney Chan     301,000       30,000  
Cash provided by financing activities   $ 595,000     $ 1,167,000  

 

Short- and Long-term Liquidity

 

As of June 30, 2022, the Company does not have the current financial resources and committed financing to enable it to meet its administrative overhead, product development budgeted costs and debt obligations over the next twelve months.

 

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

 

Tabular Disclosure of Contractual Obligations:

 

    Payments Due by Period
    Total  

Less

Than 1

Year

 

1-3

Years

 

3-5

Years

 

More

Than 5

Years

Accounts payable and accrued liabilities   $ 1,330,000     $ 1,330,000     $ —       $ —       $ —    
Promissory notes to related parties     3,092,000       3,092,000       —         —         —    
Promissory notes to arm’s length parties     2,458,000       2,458,000       —         —         —    
Interest payable     4,388,000       4,388,000       —         —         —    
Lines of credit     15,087,000       15,087,000       —         —         —    
    $ 26,355,000     $ 26,355,000     $ —       $ —       $ —    
                                         

 

The Company will continue to use the funds available from the lines of credit to cover administrative overhead and product development requirements until such time as it can establish cash flows from operations. In the next year, the Company anticipates the amount borrowed under the lines of credit to increase, as it expects to commercially launch its GluCurve before December 31, 2022 and proceed with activities to launch the Diabetes Solution with CGM for Human Health during 2023.

 

 

Liquidity and Capital Resources as at December 31, 2021 

 

Working Capital   As At
December 31,
2021
  As At
December 31,
2020
  Amount ($)
Increase /
(Decrease)
  Percentage
(%) Increase
/ (Decrease)
Current Assets   $ 193,000     $ 129,000       64,000       50  
Current Liabilities     24,505,000       21,889,000       2,616,000       12  
Working Capital Deficiency   $ (24,312,000 )   $ (21,760,000 )     (2,552,000 )     12  

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The Company has a severe working capital deficiency. It does not have the ability to service its current liabilities for the next twelve months and is reliant on its line of credit facilities to meet its ongoing operations. Until the Company has revenue-producing activities that exceed its operating requirements, it will be unable to service its current liabilities and the working capital deficit will continue to increase. As of the date of this report, the Company has commenced minimal revenue-generating activities. The Company is expecting to continue generating revenues in Singapore during the 2022 fiscal year; however, the amount and timing are uncertain. The revenues generated in 2022 from its operations in Singapore are not expected to be sufficient to finance the ongoing operations of the business and repay the current liabilities. The Company is also evaluating opportunities for its Pet GluCurve product, the timing and amount of revenues from which are uncertain. The Company is seeking to complete an extension of its Rights Offering pursuant to an amended registration statement filed with the SEC in December 2021. The extended offering may provide as much as $5,051,000 in additional financing, assuming that all shareholders who were granted subscription rights in the extension were to exercise their full subscription allotments. However, even that level of additional financing is significantly less than the current liabilities outstanding, and there can be no guarantee of any additional financing for the Company from the Rights Offering. There is substantial doubt about the Company’s ability to repay its current liabilities in the near term or any time in the future, which could ultimately lead to business failure.

 

Current Assets

 

The Company’s nominal current assets as at December 31, 2021 and 2020 consist of cash and prepaid expenses.

 

Current Liabilities

 

The Company has current liabilities of $24,505,000 at December 31, 2021, as compared to $21,889,000 at December 31, 2020. Current liabilities are as follows:

 

    December 31, 2021   December 31, 2020   Change
($)
  Change
(%)
Accounts payable and accrued liabilities   $ 1,130,000     $ 1,114,000       16,000       1  
Promissory notes to related parties     3,042,000       3,032,000       10,000       0  
Promissory notes to arm’s length parties     2,213,000       2,254,000       (41,000 )     (2 )
Interest payable     4,111,000       3,575,000       536,000       15  
Lines of credit from related parties     14,009,000       11,914,000       2,095,000       18  
Total current liabilities   $ 24,505,000     $ 21,889,000       2,616,000       12  

 

Accounts Payable and Accrued Liabilities

 

Accounts payable and accrued liabilities consists of trade payables and accrued liabilities of the Company, including accounts payable totaling approximately $806,000, accrued liabilities totaling approximately $322,000 and unearned revenue totaling approximately $2,000. Approximately $600,000 of accounts payable is more than one year old with the majority of these being more than ten years old.

 

The fluctuations in accounts payable occurred in the regular course of business. Accounts payable of $194,000 was extinguished as a result of the issuance of shares of common stock.

 

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

 

As at December 31, 2021, the Company had promissory notes with 20 individuals or corporations that related 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). The change from December 31, 2021 to December 31, 2020 relates to:

  $11,000 reclassified from promissory note payable principal to promissory note interest payable;

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  $20,000 extinguished through issuance of shares of common stock; and
  $10,000 transferred from unrelated party promissory note principal to related part promissory note principal.

 

Interest Payable

 

Interest payable relates to the unpaid interest expense incurred on the promissory notes to related parties and promissory notes to arm’s length parties. The change from December 31, 2021 to December 31, 2020 relates to:

  $528,000 of accrued interest incurred on promissory notes at their stated rates of interest;
  $11,000 for the reclassification from promissory notes to arm’s length parties to interest payable; and
  $3,000 extinguished as a result of the issuance of shares of common stock.

 

All of the promissory notes and related interest payable is overdue.

 

Lines of Credit

 

As of December 31, 2021, the Company has borrowed total principal of $12,689,000 (2020 - $11,539,000). During the December 31, 2021 year, the Company incurred interest expense of $1,402,000 (2020 - $1,464,000).

 

The increase in the lines of credit payable of $2,095,000 is attributable to borrowings of:

  $1,150,000 to fund Company operations, product development activities, overhead, and its sales and marketing program;
  $1,402,000 of unpaid interest incurred on the principal of the borrowed amounts, and
  $457,000 of interest repayment toward interest payable.

 

Line of Credit from Ms. Christine Kan

 

The Company obtained a line of credit of $1,000,000 from Ms. Christine Kan (the spouse of the Chairman of the Board and Chief Executive Officer of the Company) in March 2010 (the terms of which were finalized in May 2010). The loan was unsecured with interest payable on funds borrowed at 1% per month. These proceeds were used for working capital and the continued development of the Company’s technologies and product. On January 3, 2011, the creditor granted the Company an increase in the borrowing limit from $1,000,000 to $2,000,000 and further increased to $4,000,000 on December 10, 2021. As of December 31, 2021, the Company has borrowed $2,468,000 (2020 - $2,000,000) and has accrued interest outstanding of $112,000 (2020 - $60,000). During the 2021 fiscal year, the Company borrowed $468,000 (2020 - $nil), incurred interest of $245,000 (2020 - $240,000) and extinguished accrued interest of $194,000 (2020 - $2,156,000) through cash payment during 2021 and through the issuance of shares of common stock during 2020.

 

Line of Credit from Mr. Sidney Chan

 

On March 6, 2011, the Company obtained a $2,500,000 line of credit from Mr. Sidney Chan (the Chairman of the Board and Chief Executive Officer of the Company). Under the terms of the arrangement, the amount borrowed by the Company bears simple interest at a rate of 1% per month. The amount borrowed is secured by a general security agreement over the assets of the Company and is due on demand. Originally, the line of credit was for a comprehensive marketing program, but subsequently was amended to be for general corporate purposes. On April 1, 2014, Mr. Chan and the Company executed an amending agreement whereby Mr. Chan increased the borrowing limit of the line of credit he has provided to the Company from $4,000,000 to $5,500,000. On May 29, 2015, the borrowing limit was further increased to $7,000,000. On July 1, 2016, the borrowing limit was further increased to $8,500,000 and, on December 11, 2019, increased further to $10,300,000. As of December 31, 2021, the Company has borrowed $10,221,000 (2020 - $9,539,000) and has accrued interest outstanding of $1,209,000 (2020 - $315,000). During 2021, the Company borrowed $682,000 (2020 - $821,000), incurred interest of $1,157,000 (2020 - $1,224,000), extinguished principal of $nil (2020 - $1,039,000) and extinguished accrued interest of $263,000 (2020 - $6,486,000) through cash payment during 2021 and through the issuance of shares of common stock during 2020.

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Cash Flows

 

Cash Flows   Year Ended
December 31,  
2021
  Year Ended
December 31,
2020
Cash flows used in Operating Activities   $ (1,768,000 )   $ (969,000 )
Cash flows provided by Financing Activities     1,829,000       1,033,000  
Effect of foreign exchange on cash     (11,000 )      
Net Increase in Cash During Period   $ 50,000     $ 64,000  

 

Cash Balances

 

As of December 31, 2021, the Company’s cash balance was $116,000 compared to $66,000 as of December 31, 2020. The Company does not have sufficient cash on hand to fund its requirements for the 2022 fiscal year and will need to secure additional financing. On January 18, 2022, the Company issued a prospectus whereby it distributed 101,025,592 subscription rights to its shareholders to purchase shares of common stock of the Company at a price of $0.05 per share.

 

This extension of rights expired March 15, 2022. However, management provided the opportunity to shareholders who may have received their rights offering mailing package with insufficient time to exercise their subscription rights, to contact the Company regarding any desire to exercise such rights. In such cases, the Company intended to allow for the exercise of subscription rights by such shareholders until April 1, 2022. As of the date of this Information Statement, only nominal funds have been invested as a result of the extended rights offering. Per the terms of the extended rights offering, management may, in its discretion, allocate unexercised subscription rights to non-shareholders until August 12, 2022.

 

The extended offering may provide as much as $5,051,000 in additional financing, assuming that all shareholders who were granted subscription rights in the extension were to exercise their full subscription allotments. However, there can be no guaranty of any additional financing for the Company from the Rights Offering

 

Cash Used in Operating Activities

 

Cash used by the Company in operating activities during the year ended December 31, 2021 was $1,779,000 in comparison with $969,000 for the year ended December 31, 2020. The Company’s expenditures from operations were used as follows (approximate amounts):

 

Cash Used in Operating Activities Reconciliation   Year Ended
December 31,
2021
  Year Ended
December 31,
2020
Net loss   $ (8,443,000 )   $ (5,916,000 )
Stock-based compensation incurred for product development, selling, general and administration, professional fees and interest expense     4,403,000       2,828,000  
Non-cash imputed interest expense     113,000       123,000  
Loss on debt settlement     34,000        
Fair value of shares issued for services           20,000  
Net purchases with balances owing in accounts payable and accrued liabilities     211,000       46,000  
Retainers and prepaid services     (15,000 )     (63,000 )
Accrued interest on lines of credit     1,402,000       1,464,000  
Accrued interest from promissory notes     527,000       529,000  
Cash used in operating activities   $ (1,768,000 )   $ (969,000 )

 

The expenditures incurred were to fund the operating activities of the business.

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Cash Proceeds from Financing Activities

 

Cash sourced by the Company from financing activities during the year ended December 31, 2021 was $1,829,000 in comparison with $1,033,000 sourced during the same period last year. The funds were sourced as follows:

 

Cash from Financing Activities Reconciliation   Year Ended
December 31,
2021
  Year Ended
December 31,
2020
Proceeds from Rights Offering   $ 1,125,000     $ 200,000  
Proceeds from exercise of options     12,000        
Proceeds from private placement           12,000  
Net proceeds from line of credit from Mr. Sidney Chan     692,000       821,000  
Cash provided by financing activities   $ 1,829,000     $ 1,033,000  

 

Short- and Long-Term Liquidity

 

As of December 31, 2021, the Company does not have the current financial resources and committed financing to enable it to meet its administrative overhead, product development budgeted costs, commercial operations and debt obligations over the next twelve months.

 

All of the Company’s debt financing is due on demand or overdue. The Company will seek to obtain creditors’ consents to delay repayment of these loans until it is able to replace these financings with funds generated by operations, replacement debt, or from equity financings through private placements, the exercise of rights or the exercise of options and warrants. While the Company is hopeful that shareholders will exercise their rights to purchase stock in the Rights Offering, there is no certainty that they will do so. If subscriptions available under the Rights Offering are not exercised, the Company will not have sufficient funds to repay the debt financing past maturity and it will be due on demand. While the Company’s creditors have agreed to extend repayment deadlines in the past, there is no assurance that they will continue to do so in the future. The Company has faced litigation from creditors in the past and is currently being sued by one creditor. There is no assurance that additional creditors will not make claims against the Company in the future. Failure to obtain either replacement financing or creditor consent to delay the repayment of existing financing could result in the Company experiencing delays to planned development and business activities and having to cease operations.

 

Tabular Disclosure of Contractual Obligations:

 

    Payments Due by Period
    Total  

Less

Than 1

Year

 

1-3

Years 

 

3-5

Years

 

More

Than 5

Years 

Accounts payable and accrued liabilities   $ 1,130,000     $ 1,130,000     $     $     $  
Promissory notes to related parties     3,042,000       3,042,000                    
Promissory notes to arm’s length parties     2,213,000       2,213,000                    
Interest payable     4,111,000       4,111,000                    
Lines of credit     14,009,000       14,009,000                    
    $ 24,505,000     $ 24,505,000     $     $     $  

 

The Company will continue to use the funds available from the lines of credit to cover administrative overhead and product development requirements until such time as it can establish cash flows from operations. In the next year, the Company anticipates the amount borrowed under the lines of credit to increase as it expects to commercially launch its GluCurve before December 31, 2022 and proceed with activities to launch the Diabetes Solution with CGM for Human Health during 2023.

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

 

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

 

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

 

Recent Accounting Pronouncements

 

Issued But Not Yet Effective

 

The Company has implemented all new accounting pronouncements that are in effect and may impact its consolidated 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 consolidated financial position or consolidated statements of operations.

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Market value of securities

 

The ALR Nevada Shares are traded on the OTCQB under the symbol “ALRT.” ALR Nevada’s common stock recommenced trading on OTCQB on May 4, 2020.

 

ALR Nevada has not paid any cash dividends on its common stock to date and does not intend to pay cash dividends prior to the completion of the Reincorporation Merger. The payment of any dividends subsequent to the Reincorporation Merger will be within the discretion of the ALR Singapore board of directors. It is the present intention of ALR Nevada’s board of directors to retain all earnings, if any, for use in its business operations and, accordingly, ALR Nevada’s board does not anticipate declaring any dividends in the foreseeable future.

 

ALR Singapore and ALR Delaware’s securities are not currently publicly traded. We are applying to list the ALR Singapore Ordinary Shares on the OTCQB in connection with the Reincorporation Merger.

 

Business

 

Summary Background and Recent Developments

 

ALRT is a data management company that developed a comprehensive approach to diabetes care that includes: (i) an FDA-cleared and HIPAA compliant diabetes management system (as previously defined, the “Diabetes Solution”) that collects data directly from blood glucose meters (and which was subsequently modified to integrate with continuous glucose monitoring devices); (ii) a patent pending Predictive A1C algorithm to track treatment success between lab reports, and (iii) an FDA-cleared Insulin Dosing Adjustment program. From this technology portfolio, the Company has developed the Diabetes Solution for human health, and the GluCurve.

 

ALRT was incorporated under the laws of the State of Nevada on March 24, 1987 as Mo Betta Corp. In April 1998, the Company changed its business purpose to marketing a pharmaceutical compliance device. In December 1998, the common shares of the Company began trading on the Bulletin Board operated by the National Association of Securities Dealers Inc. under the symbol “MBET.” On December 28, 1998, the Company changed its name from Mo Betta Corp. to ALR Technologies Inc. Subsequently the symbol was changed to “ALRT.”

 

The Company has had two subsidiaries:

 

Entity Jurisdiction Ownership
Percentage
Incorporation
Date
ALR Technologies SG Ltd. (previously known as ALR Technologies SG Pte. Ltd., and as previously defined, “ALR Singapore”) Singapore 100%1 May 16, 2020
Canada Diabetes Solution Centre Inc. Canada 100% June 9, 2021

 

During 2011, the Company received FDA clearance and achieved HIPAA compliance for an early version of its Diabetes Solution. The Company subsequently completed a clinic trial and pilot programs, which led to the development of its “Insulin Dosage Adjustment” technology, for which it received FDA clearance in 2017, and its “Predictive A1C” technology, for which it has submitted a worldwide patent application under the Patent Cooperation Treaty (the “PCT”) to the World Intellectual Property Organization. Subsequently the Company has continued making advancements to its Diabetes Solution technology by increasing functionality and capability to improve diabetes care for patients. The Company is actively seeking to commence revenue generating activities for the Diabetes Solution.

 

1 As noted above, in order to facilitate the Reincorporation Merger and to comply with Singapore law, (i) ownership of ALR Singapore has been transferred (pending completion of Reincorporation) to KAD. At the effective time of the Reincorporation Merger, each outstanding share of Common Stock of ALR Nevada will be exchanged for one ordinary share of ALR Singapore, and with the exception of the one ordinary share held by KAD, ALR Singapore will be owned 100% by the former shareholders of ALR Nevada, with ALR Nevada becoming wholly-owned subsidiary of ALR Singapore.  

 

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In 2020, the Company: (i) entered in an agreement with Bionime Corporation (Bionime) whereby the Company will bundle its Diabetes Solution Application with Bionime blood glucose meters (“BGM”) and diabetes test supplies and sell the bundle to diabetes patients of private medical clinics in Singapore, (ii) initiated a clinic pilot with Singapore General Hospital to prove the efficacy of the ALRT Diabetes Solution in insulin-treated diabetes patients, (iii) entered into a memorandum of understanding to form a collaboration with Diabetes Singapore, a local charity that champions the interests of diabetic people in Singapore, with the view of raising the diabetes management standard in Singapore, and (iv) advanced its Diabetes Solution to integrate with continuous glucose monitoring (“CGM”) devices. CGM has become the standard of care for patients with type 1 diabetes and is quickly gaining favor with type 2 diabetes patients who use insulin.

 

In 2021: (i) the Company announced it had advanced its Diabetes Solution for animal health purposes under the brand name “GluCurve,” and (ii) the Company announced its intent to redomicile to Singapore.

 

In June 2022, the clinic pilot with Singapore General Hospital, which was delayed a number of times due to COVID-19, was completed. Singapore General Hospital is currently preparing a report, which will describe the efficacy of the ALRT Diabetes Solution in insulin-treated diabetes patients.

 

While the ALRT Diabetes Solution is offered both individually and bundled with BGMs, the Company is focused on offering the ALRT Diabetes Solution with a cost effective CGM. ALRT believes that the current trend in diabetes care is shifting from the use of traditional blood glucose meters to diabetes care management using CGM and that CGM will become the future standard of diabetes care. ALRT believes it is uniquely positioned to bundle it Diabetes Solution application with CGM to improve health outcomes globally at a price point that is reasonable for wide scale adoption. The Company is focusing its resources on seeking opportunities in the ASEAN (Association of Southeast Asia Nations) area to secure supply of CGM through one or more strategic transactions. No assurance can be given as to the timing or successful completion of such a strategic transaction, nor of the Company’s planned redomestication in Singapore.

 

Continuous Glucose Monitoring

 

A CGM is a medical device that is worn on the body of a diabetic subject for up to 14 days and continually takes glucose (blood sugar) readings every 1-5 minutes. A CGM consists of three pieces:

  1) a sensor that measures glucose levels in the interstitial fluid that is attached to the skin of the subject via an adhesive pad;
  2) a Bluetooth transmitter that wirelessly sends the glucose readings to a mobile device or reader and can be integrated into the sensor or come as a separate piece that clips into the sensor; and
  3) an applicator that applies the sensor onto the subject.

 

A CGM can be factory calibrated thus eliminating the need for diabetics to prick their finger to test blood on a strip inserted into a BGM throughout the day. A CGM works by utilizing glucose oxidase-based enzymes that are coated onto an electrode that is inserted into the subcutaneous tissue when the sensor is applied to the skin. The transmitter than securely sends the data wirelessly to a receiver, such as a mobile device, where the data is organized and displayed for the user.

 

All subjects have a target blood glucose range. Time in range is the amount a subject spends in the target blood glucose range. The time in range method works with the data provided by the CGM’s data by looking at the amount of time your blood sugar has been in target range and the times you have had high blood sugar or low blood sugar. This data is helpful in finding out which types of foods and what activity level causes your blood sugar to rise and fall and assessing adherence to a care plan.

 

Animal Health

 

On December 7, 2021 the Company entered into a non-binding Memorandum of Understanding (the “MOU”) with Infinovo Medical Co. Ltd. (“Infinovo”) to assess how the parties can work towards entering into a global supply agreement for the Infinovo CGM for use by ALRT in the animal health sector. Founded in 2016, Infinovo is a medical technology company focused on developing an accurate and affordable CGM for patients which will be available for both Type 1 and Type 2 Diabetics. Under the terms of the MOU, ALR and Infinovo will collaborate to integrate Infinovo’s CGM with ALRT’s GluCurve platform. In February 2022, the Company completed integration between the GluCurve platform and the Infinovo CGM. The Company conducted a non-inferiority study which concluded in March 2022 which indicated the Infinovo CGM was non-inferior to certain competing CGM systems. While the parties originally planned to conduct certain validation activities, the timing of which are uncertain and the design of which is expected to be dependent on the potential distribution groups the Company is seeking to work with. ALRT and Infinovo are negotiating a definitive global supply agreement for the Infinovo CGM for use by the Company under its name for the global animal health marketplace. No assurance can be given as to the timing of completion or the likelihood of success of the studies, or that if those are completed, that the parties will enter into a definitive agreement.

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On June 28, 2022, ALR Singapore entered into a Manufacturing and Supply Agreement (the “Supply Agreement”) with Infinovo, pursuant to which Infinovo will manufacture and supply certain CGM components necessary to ALRT’s GluCurve platform. The term of the Supply Agreement is for a period of three years, unless earlier terminated in accordance with the terms of the Supply Agreement, and will automatically renew for additional one (1) year terms unless ALR Singapore or Infinovo provides written notice of its intent to terminate the Supply Agreement. The Supply Agreement provides for customary reasons to terminate the Supply Agreement for cause with immediate effect. The Supply Agreement also includes customary indemnification, intellectual property protection, confidentiality, remedies, and representations and warranties terms, as well as certain quality requirements. The Supply Agreement, however, is conditioned upon (1) ALR Singapore entering into a binding distribution agreement for the sale and distribution of GluCurve by July 31, 2022, and (2) ALR Singapore and Infinovo entering into a quality agreement by July 31, 2022.

 

On August 1, 2022 the Supply Agreement with Infinovo terminated as the closing conditions were not met. The parties are working on a new manufacturing and supply agreement with the closing condition that ALR Singapore enter into a distribution agreement of GluCurve. During August 2022, the Company issued a purchase order to Infinovo for the GluCurve Pet CGM hardware in advance of completing such a manufacturing and supply agreement. The Company anticipates receiving the CGM hardware units under purchase order in the fourth quarter of 2022.

 

Human Health

 

ALRT is preparing for a CGM clinical trial and subsequent FDA submission to be completed during 2022 or 2023. The Company is evaluating CGM suppliers for the human health market. ALRT is targeting to offer its Diabetes Solution bundled with CGM in 2023, with pricing to compete with the standalone BGM offerings. No assurance can be given that the Company will apply for FDA clearance to market CGM for human health, or commercialize CGM for human health thereafter.

 

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Recent Developments

 

The Diabetes Pandemic

 

Diabetes is a leading cause of death, serious illness and disability globally. By the year 2030, it is expected that 1 in 10 adults, globally, will have diabetes (diagnosed and undiagnosed instances). We believe diabetes is a global pandemic.

 

Data from the American Diabetes Association (“ADA”) shows 30 million Americans have diabetes and 84 million have prediabetes. That is 1 in 3 Americans coping with the disease or serious threat of it. The total cost of diagnosed diabetes is staggering at $327 billion annually ($237 billion in direct medical costs and $90 billion in reduced productivity), putting serious drag on an already strained health care system. Taking a broader view, the global cost of diabetes was estimated at a whopping $825 billion annually in 2016.

 

Diabetes is a lifelong chronic disease with no cure. However, people with diabetes can take steps to control their disease and reduce the risk of developing the associated serious complications, thereby controlling health care costs. The Canadian Diabetes Association Clinical Practice Guidelines Expert Committee reports that, “Successful diabetes care depends on the daily commitment of persons with diabetes mellitus to self-manage through the balance of lifestyle and medication. Diabetes care should be organized around a multi- and interdisciplinary diabetes health care team that can establish and sustain a communication network between the person with diabetes and the necessary health care and community systems”. Diabetes incidence rates, economic costs and human costs are increasing even though we know how to control the disease. The Diabetes Control and Complication Trial conducted from 1983 to 1993 outlined management as follows:

 

  Testing blood glucose levels four or more times per day;
  Injecting insulin at least three times a day or using an insulin pump;
  Adjust insulin dose according to food intake and exercise;
  Following a diet and exercise plan; and
  Monthly visits to health care team.

 

Failure to Control Diabetes

 

We believe there are five causes for diabetes to not be controlled:

 

  1. Patient non-adherence;
  2. Unreliable data;
  3. Data overload;
  4. Clinical inertia; and
  5. Insulin under prescription.

 

Patient Non-Adherence

 

As noted in Patrick Connole, “UnitedHealth care, Other Large Insurers Seek Better Adherence to Diabetes Care”, Health Plan Week, February 11, 2013 Volume 23 Issue 5, 80% of United States patients with diabetes do not follow their prescribed care plan. Central to conventional diabetes care is patient self-management.

 

Unreliable Data

 

As noted in Gonder-Frederick, L.A., et al, “Self-Measurement of Blood Glucose: Accuracy of Self-Reporting Data and Adherence to Recommended Regimen” Diabetes Care, Volume 11, no. 7, July 1988, 77% of patient data contain errors.

 

Data Overload

 

Health care professionals (“HCPs”) face a lack of timely and reliable blood glucose data, resulting in delays to advance therapy and sub-optimal insulin dosing. The amount of patient data for clinicians to analyze is too vast and significant during 15-minute clinical appointments and the information they have is unreliable.

 

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Clinical Inertia

 

As noted in Khunti, K., et al, “Clinical Inertia in People with Type 2 Diabetes: A Retrospective Cohort Study of More than 80,000 People.” Diabetes Care, Volume 36, no. 11, July 2013, across over 80,000 patients, when A1C goals were not met, therapy intensification was late across every measure. It was noted that clinical inertia means the failure to intensify therapy when the need is clinically indicated. It took on average 19 months to escalate patients with an average A1C of 8.7% from single medication to dual therapy and 82 months to escalate patients with an average A1C of 8.8% from dual medication to triple therapy. Furthermore, they found that it took approximately 20 years to advance patients with an average A1C of over 9% to insulin. At the end of the study, less than 50% of the patients had their treatment intensified.

 

Furthermore, in Treatment intensification for patients with type 2 diabetes and poor glycaemic control by Fu and Sheenan, it was noted that out of 11,525 patients investigated with an A1C greater than 8% patients received intensification as follows:

 

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

 

Failure to respond to higher than targeted A1C with treatment intensification puts patients with escalated A1C at risk for complications and diabetes-associated co-morbidities.

 

Cleveland Clinic Study

 

A team at Cleveland Clinic examined historical electronic medical record data of more than 7,300 patients with type 2 diabetes and concluded that there is a pervasiveness of clinical inertia for the management of type 2 diabetes in real-world clinical practice settings.

 

The selected patients had an A1C value of ≥ 7% on a stable regimen of two oral anti-diabetic agents for at least 6 months (from 2005 to 2016). The median time to treatment intensification after A1C was above target was longer than one year. For patients with an A1C of ≥ 9%, therapy was not intensified in 44% of patients.

 

According to lead study author Dr. Kevin Pantalone of Cleveland Clinic’s Endocrinology & Metabolism Institute, “Short of a patient reporting non-adherence to their existing regimen of diabetes therapies, it is hard to imagine a reason why treatment intensification was not observed more frequently, when indicated, particularly in patients with an A1C ≥ 9%. In general, if intensification does not occur, the A1C can be expected to stay the same or get worse, it is not magically going to get better”. (emphasis added)

 

Insulin Under Prescription

 

Insulin dosing is complex requiring review of large amounts of data, which takes significant amounts of time. We believe HCPs routinely under prescribe insulin to ensure they avoid insulin dosage adjustments, which could result in hypoglycemia for their patients.

 

Company Products

 

ALRT Diabetes Solution

 

ALR has created the Diabetes Solution to address the diabetes marketplace globally. The Diabetes Solution utilizes internet-based technologies to facilitate the health care provider’s ability to monitor their diabetes patients’ health and ensure adherence to health maintenance activities.

 

The Diabetes Solution is a comprehensive approach to diabetes care that includes: (i) an FDA-cleared and HIPAA compliant diabetes management system that collects data directly from blood glucose meters and continuous glucosemonitoring devices; and (ii) a patent pending Predictive A1C algorithm to track treatment success between lab reports and an FDA-cleared Insulin Dosing Adjustment program. The Diabetes Solution processes and converts each data set to a Predictive A1C value and shares it with the patient’s physician. The System provides the physician with therapy advancement suggestions based on current clinical practice guidelines. Patients receive therapy assessments and adjustments in much shorter cycles, keeping A1Cs at target, mitigating diabetes complications and lowering costs of care.

 

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In addition to insulin dosage adjustment, the ALRT Diabetes Solution also offers an algorithm to provide prescribers support for timely non-insulin medication advancements. The overall goal is to optimize diabetes drug therapies to drive improved patient outcomes. The program tracks performance of all clinical activities to ensure best practices are followed. The ALRT Diabetes Solution gives healthcare providers a platform for remote diabetes care, helping to minimize patient exposure to potential infections in clinical settings. Currently, the Company is focused on diabetes and will expand its services to cover other chronic diseases anchored on verifiable data.

 

The Company’s Diabetes Solution consists of hardware, software and diabetes test supplies. We designed the Diabetes Solution to be focused on the health care provider, and to be agnostic and proactive. Our software operates on iOS, Android, Windows and MacOS systems. Enrollment into the ALRT Diabetes Solution will include a branded glucose meter, diabetes test strips, lancets and a carrying case. Our technology collects all the blood glucose data from the glucose meters, uploads it to a secure account, and ships diabetes test strips as required. The patient data is aggregated to a Predictive A1C value for a comprehensive view of the treatment plan and patient adherence to the plan, with the data available (and messaged) to authorized people.

 

Diabetes Solution Addresses the Causes of Diabetes Control Failure

 

The ALRT Diabetes Solution addresses the five causes for failure to control diabetes with:

 

  Active patient monitoring;
  Direct meter uploads;
  Machine intelligent data processing;
  Predictive A1C; and
  Insulin dosage adjustment.

 

Active Patient Monitoring

 

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

 

The ALRT system monitors patient uploads and the underlying data, providing more timely access to patient blood glucose data. Our system initiates interventions by notifying the HCP of out-of-range results, or failure to upload data in accordance with the requirements of the care plan. The ALRT system does not rely upon the patient for uploading data. The ALRT Diabetes Solution provides the notifications and audit trail needed for achieving best practice results. Its performance tracking allows care teams to identify areas in treatment plans that require change or improvement.

 

Direct Meter Uploads

 

Data is uploaded via Bluetooth directly from the glucometer into the ALRT application. This ensures that the data is accurate and reliable based on the results of testing.

 

Machine Intelligent Data Processing

 

Our machine intelligence processes large amounts of data, notifies relevant stakeholders and flags patients for review, making collaboration real time. Across segments and populations, this also provides significant data points on use of diabetes test strips and insulin, which may be significant for businesses in those industries.

 

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Predicative A1C

 

Predictive A1C is a patent-pending unique feature built into the ALRT Diabetes Solution, for monitoring the effectiveness of care plans. This technology utilizes data diagnostics to compare targeted A1C with indicated results. Weekly patient blood glucose data is evaluated, and HCPs are notified as needed for care plan review when blood glucose values exceed parameters set by the HCPs. Our platform provides HCPs with patient prioritization reports and alerts based on the Predictive A1C measures and other related diagnostics. Predictive A1C was designed to assist HCPs in addressing clinical inertia in diabetes care.

 

Insulin Dose Adjustment

 

Insulin Dose Adjustment is an FDA-cleared feature of our Diabetes Solution that makes optimal insulin adjustment suggestions to HCPs based on dosing guidelines from organizations like the ADA. This ensures that HCPs are making timely insulin dosage assessments based on the blood testing results uploaded. ALRT’s next phase of technology advancement will produce an algorithm for advancing non-insulin diabetes therapies according to clinical practice guidelines.

 

History Behind ALRT’s Diabetes Solution

 

In August 2010, the Company received the results of a clinical trial conducted by Dr. Hugh Tildesley using the ALRT Health-e-Connect System (subsequently advanced and rebranded as the Diabetes Solution). The trial showed A1C dropping from 8.8% to 7.6% for the Intervention Group using ALRT’s Health-e-Connect System as part of a diabetes management program. The A1C test is important in diabetes treatment management as a long-term measure of control over blood glucose for diabetes patients. According to the Center for Disease Control and Prevention, “In general, every percentage drop in A1C blood test results (e.g., from 8% to 7%), can reduce the risk of microvascular complications (eye, kidney and nerve diseases) by 40%”. The trial served as the basis for an article titled Effect of Internet Therapeutic Intervention on A1C Levels in Patients with Type 2 Diabetes Treated with Insulin, which was published in the August 2010 Diabetes Care publication.

 

In July 2011, the follow-up results of the Dr. Tildesley clinical trial were published in the Canadian Journal of Diabetes. Dr. Tildesley conducted a 12-month study using the Health-e-Connect System as an Internet Based Glucose Management 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 FDA for this iteration of the Health-e-Connect System. This system offered remote monitoring of patients in support of effective diabetes management programs. The 510(k) clearance enabled the Company to commence with the United States marketing and sales of its Health-e-Connect System.

 

In September 2014, the Company initiated its pilot program with one of the Kansas City Metropolitan Physician Association (KCMPA) clinics to deploy its Health-e-Connect System. Data from the KCMPA pilot program indicated that a number of patients had achieved reductions in their A1C levels. Furthermore, the data indicated that patients that left the pilot program had subsequent increases in A1C.

 

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 Solution. The Company utilized the publicly available algorithm of the American Association of Clinical Endocrinologists (“AACE”) and ADA, to add this feature. As modified, the Diabetes Solution 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 Solution would provide the health care provider that a dose change may be warranted, and what the change would be, based on AACE and ADA guidelines. The decision about the dose change would rest entirely with the health care provider. However, this new feature may make a significant contribution to improving the outcomes of diabetes patients if it allowed HCPs to keep their patients at the optimal dose for longer periods. On September 18, 2017, the Company received clearance from the FDA for its Insulin Dosage Adjustment feature within the Company’s Diabetes Solution.

 

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On June 20, 2017, the Company’s Chief Executive Officer (“CEO”) filed a worldwide patent application under the PCT to the World Intellectual Property Office for the Predictive A1C feature. The Company holds the rights to use the Predictive A1C feature. During the 2019 year, the Company and the CEO have entered into the National Phase for the applications by applying to target member countries.

 

During 2019, the Company added automated patient management to the Diabetes Solution. The Company was previously seeking to have a private label glucometer, diabetes test strips, lancets and carrying cases produced as part of the Diabetes Solution globally. The Company is now focused on securing supply of CGM to bundle with the Diabetes Solution for the global marketplace.

 

Also during 2019, the Company initiated support for CGM systems with the ALRT Diabetes Solution. CGM has become the standard of care for patients with type 1 diabetes and is quickly gaining favor with type 2 diabetes patients who use insulin. During 2020, the Company advanced its ALRT Diabetes Solution to integrate with CGM.

 

During 2021, the Company enrolled a small number of patients with Diabetes Singapore into the Diabetes Solution, which provided for improved efficacy of the Diabetes Solution.

 

ALRT is preparing for a CGM clinical trial and subsequent FDA submission to be completed during 2022. The Company is evaluating CGM suppliers for the human health market. ALRT is targeting to offer its Diabetes Solution bundled with CGM in 2023, with pricing to compete with the standalone BGM offerings. No assurance can be given that the Company will apply for FDA clearance to market CGM for human health, or commercialize CGM for human health thereafter.

 

ALRT Pre-Diabetes System

 

The Company has developed a prevention-based feature of the Diabetes Solution, known as the ALRT Prediabetes System, in direct response to discussions with government healthcare authorities for a scalable solution to the growing problem of prediabetes. The Prediabetes Solution provides patients with educational videos and supplemental content formatted for mobile devices and a private online community to discuss disease management (e.g., support, weight loss, diet, etc.). Most importantly, the System tracks patients and reminds them to test their A1C according to payer protocols.

 

ALR GluCurve for Pets

 

ALR has developed the GluCurve Pet CGM (as previously defined, “GluCurve”) to address an unmet need in diabetes care for felines and canines by combining the hardware of a CGM with the software of an adapted version of its Diabetes Solution platform for use by veterinarians in animal health.

 

The GluCurve platform allows the blood glucose readings from the medical device placed on the pet to be uploaded to the cloud where the data is processed and converted into daily glucose curve graphs and data sets that can be reviewed and compared by the veterinarian at any time. The system provides the doctor with insulin dose calculators and recommendations based on current clinical practice guidelines.

 

The current method to monitor glucose levels in diabetic felines and canines is to prepare an in-clinic glucose curve that consists of the following steps:

 

  1. The pet is dropped off at a veterinary clinic;
  2. The pet is given an insulin shot;
  3. The clinic staff will draw blood every 2 hours for 10-12 hours, performing the following steps each time:
  a. test the blood in a blood glucose meter;
  b. record readings;
  c. plot the data into a graph;

 

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  d. assess the effectiveness of the insulin dose and glycemic control; and
  4. The pet is picked up by its owner.
       

        

GluCurve Addresses Problems of the In-Clinic Glucose Curve

 

GluCurve solves the multiple issues that arise from doing an in-clinic glucose curve:

 

  Inaccurate data;
  Manual process of data collection, review and analysis; and
  Burden on the clinic staff and the pet owner.

 

Inaccurate Data

 

A CGM is placed on the pet by the veterinarian in minutes and the pet is sent home where the glucose readings will be automatically taken and uploaded for up to 14 days. Home glucose readings eliminate the stress on the animal from being housed in the clinic and from getting its blood drawn, which individually can elevate glucose levels. A CGM also provides readings every 5 minutes. This gives better insight to the veterinarian of the highs and lows of the pet’s glucose levels throughout the day, which are often missed when only checking every 2 hours during an in-clinic glucose curve analysis.

 

Manual Process of Data Collection, Review and Analysis

 

A CGM automatically uploads 288 glucose readings per day to the ALRT cloud, where the data is analyzed, organized, then displayed on the platform for the veterinarian to view. The GluCurve platform provides the pet owner and practitioner with the historical blood glucose data to allow for management of the pet’s health and tracking.

 

Burden on Clinic Staff and Pet Owner

 

A CGM is placed on the pet in minutes, after which the pet is sent home, greatly reducing the time spent by the staff during an in-clinic glucose curve of caring for the pet and manually drawing blood and recording readings every 2 hours. The platform also greatly reduces the time needed by the doctor to review and make insulin dose adjustments by offering dosing calculators, guidelines and decision flowcharts based on current clinical practice guidelines.

 

Current Status

 

The Company is starting validation and non-inferiority studies with a United States based Veterinary clinic on the GluCurve CGM app and the CGM supplies being bundled with the GluCurve app. If the results are successful, the Company will seek to finalize a strategic transaction with a pharmaceutical company with a global sales network in order to commercialize the GluCurve CGM. The Company has made the GluCurve app available on Google Play and the Apple Store for the users of the validation and non-inferiority studies.

 

Reimbursement for Health Professionals

 

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

 

Business Development and Marketing Strategy

 

The Company is focusing its efforts on introducing and marketing its Diabetes Solution and GluCurve products to medical clinics, veterinary clinics, hospitals, healthcare providers and pharmaceutical companies. We believe health care and health benefit plans can achieve a significant return on investment from utilizing the products by keeping employees/plan members healthy.

 

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The Company has achieved collaborations with entities in Singapore and is targeting organizations with global operations in order to work with their sales network to distribute the Company’s products.

 

Manufacturers

 

  The Company has entered into an agreement with Bionime Corporation, pursuant to which Bionime Corporation will produce, market, and sell the ALRT Diabetes Solution to diabetes patients of private physicians in Singapore. Bionime Corporation is also responsible for providing orientation materials to the physicians in Singapore in order to facilitate patient enrollment into the ALRT Diabetes Solution platform. Under the terms of this agreement, the Company is required to maintain the ALRT Diabetes Solution platform, create new portals for the clinics enrolling patients to allow for patient management to be provided by the clinics, and to perform administration of payment based on funds collected. As of July 2022, the Company has generated approximately $10,000 in sales under this agreement.

 

  The Company is evaluating its options for diabetes hardware and supplies to be combined with the ALRT Diabetes Solution for the human health sector for the rest of the world.

 

 

On December 7, 2021 the Company entered into the MOU with Infinovo to assess how the parties can work towards entering into a global supply agreement for the Infinovo CGM for use by ALRT in the animal health sector.

 

  On June 28, 2022 ALR Singapore entered into the Supply Agreement with Infinovo, pursuant to which Infinovo will manufacture and supply ALRT’s CGM and other components necessary to GluCurve for use in the animal health sector.
     
  On August 1, 2022 the Supply Agreement with Infinovo terminated as the closing conditions were not met. The parties are working on a new manufacturing and supply agreement with the closing condition that ALR Singapore enter into a distribution agreement of GluCurve. During August 2022, the Company issued a purchase order to Infinovo for the GluCurve Pet CGM hardware in advance of completing such a manufacturing and supply agreement. The Company anticipates receiving the CGM hardware units under purchase order in the fourth quarter of 2022.

 

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 Solution and GluCurve product to their network and seek to start significant pilot projects that will lead to revenue-generating arrangements.

 

Patents and Trademarks

 

The Company’s Chairman and CEO owns the following patent applications under the PCT:

 

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

 

This patent application has been submitted to Canada, the United States, Singapore and Australia. The Company holds an exclusive license to the patent applications.

 

The Company has submitted a trademark application in the United States for GluCurve dated July 15, 2021 under the serial number 90830675.

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Competition

 

The Company competes with other corporations that produce diabetes compliance devices, monitoring systems and wellness applications, many of whom have greater financial, marketing and other resources than we do. A few companies currently offer compliance monitoring systems, but either (i) at much higher prices, (ii) having fewer benefits than our system, or (iii) not having FDA clearance. The Company’s competition includes, but is not limited to, Livongo, Glooko, WellDoc, Medtronics, iGlucose and Microsoft HealthVault.

 

We believe none of these companies currently offers a comprehensive compliance system that offers the full spectrum of benefits and features that our Diabetes Solution does, with the potential cost efficiencies. We believe that while some of the competitors address the issues of unreliable data and patient non-adherence, from our perspective, none of our competitors addresses data overload, clinical inertia, or insulin under prescription.

 

Employees and Independent Contractors

 

The Company currently has 7 personnel under employment agreements. The Company currently has 18 personnel under independent contractor or consulting arrangements and 3 contract sales agents. The employees and independent contractors of the Company have contracts that outline their roles and responsibilities, as well as confidentiality requirements for all matters pertaining to the Company.

 

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Management

 

Management and Board of Directors

 

The officers and directors of ALR Nevada immediately before the Reincorporation Merger becomes effective will continue to serve as officers and directors of ALR Singapore after the Reincorporation Merger. In addition, pursuant to Singapore law, ALR Singapore will be required to appoint certain officers and at least one director who is ordinarily resident in Singapore. Upon effectiveness of the Reincorporation Merger, ALR Singapore will appoint Benjamin Szeto as Secretary and Chief Legal Counsel, and Christine Kan as Vice President and as a locally resident director to serve on the board of directors. The following table presents information about the executive officers and directors of ALR Singapore upon effectiveness of the Reincorporation Merger.

 

Name and Address Age Position(s)

Sidney Chan

80 Robinson Road

#02-00
Singapore 068890

71 Chairman of the Board of Directors, Chief Executive Officer, Chief Financial Officer and Principal Accounting Officer; Director

Benjamin Szeto

80 Robinson Road

#02-00
Singapore 068890

50 Secretary and Chief Legal Counsel

Christine Y S Kan

80 Robinson Road

#02-00
Singapore 068890

70 Vice President; Director

Dr. Alfonso Salas

2106 West 33rd Avenue

Vancouver, British Columbia, Canada

V6M 1B9

61 Director

Kenneth Robulak

1552 Highland Park Drive

Clearwater, Florida

USA 33756

73 Director

Peter Stafford

10405 81st Street

Osoyoos, British Columbia, Canada

VOH 1V2

84 Director

Ronald Cheng

255 Springfield Road

Ottawa, Ontario, Canada

K1M 0K8

71 Director

 

Foreign Private Issuer Status

 

ALR Singapore intends to take all actions necessary for it to maintain compliance as a foreign private issuer under the applicable corporate governance requirements of the Sarbanes-Oxley Act of 2002, the rules adopted by the SEC, and the OTCQB corporate governance rules and listing standards.

 

Because ALR Singapore is, upon closing of the Reincorporation Merger, expected to be a foreign private issuer, its directors and senior management are not subject to short-swing profit and insider trading reporting obligations under Section 16 of the Exchange Act. They will, however, be subject to the obligations to report changes in share ownership under Section 13 of the Exchange Act and related SEC rules.

 

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Background of our directors

 

Sidney Chan - Chairman of the Board of Directors, Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer, Treasurer, and a Member of the Board of Directors of the Company

 

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

 

Kenneth James Robulak - Director

 

From December 14, 1999 to January 31, 2001, Mr. Robulak was a member of ALR Nevada’s Board of Directors, and from April 4, 2000 to January 31, 2001 Mr. Robulak was ALR Nevada’s Chief Financial Officer, Secretary, Treasurer and Vice President. Mr. Robulak resigned as officer and director of ALR Nevada on January 31, 2001. At the time of his resignation, Mr. Robulak did not have any disagreements with ALR Nevada relating to its operations, policies or practices. Mr. Robulak was re-elected to the Board of Directors of ALR Nevada in August 2012, and has served on the Board since that time. Since July 2007, Mr. Robulak has worked as a marketing consultant to Teco Metal Products, LLC, a technology-based manufacturing company with operations in Dallas, Texas, and Guadalajara, Mexico. Mr. Robulak earned a Bachelor of Commerce degree in finance and marketing and is a Fellow of the Institute of Canadian Bankers.

 

Dr. Alfonso Salas - Director

 

Dr. Salas graduated with distinction from Universidad Metropolitana of Barranquilla, Colombia, in 1983 with a Doctor of Medicine degree. He began practicing in Santa Marta, Colombia, in rural medical facilities, and then opened a private practice in 1984. He then worked as a physician with a number of shipping companies and became Medical Director in the office of the Ministry of Social Security and Labor of Colombia in 1991 doing medical assessments for work related accidents. In 1993 Dr. Salas was appointed Director of a Medical Service Plan of Colombia, serving in that capacity until 1995 and, during that period 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 - Director

 

Mr. Stafford is a retired lawyer and business consultant, having practiced with Fasken Martineau DuMoulin LLP, a premier Canadian based international law firm, and its predecessor firms, full-time from 1966 to 2006, and part-time as associate counsel from 2006 to 2013, including 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 Fasken Martineau DuMoulin LLP, including leading the start of its Johannesburg, South Africa, office in 2003. Since August 2013, Mr. Stafford has served as director, secretary and audit committee chair of Russell Breweries Inc. (TSX-V: RB). He was a director and subsequently secretary of WEX Pharmaceuticals Inc. (TSX listed) from September 2001 to its amalgamation in May 2011, a director and board chair of BC Bancorp (TSX listed) from October 1986 until its merger with Canadian Western Bank in November 1996, a director of Nissho Iwai (Canada) Ltd., a subsidiary of Nissho Iwai Corp. (now Sojitz Corp.), from June 1997 until October 2003 and a director of China One Corporation (TSX-V listed) from March 2007 until it was acquired in December 2008. Mr. Stafford also served as director of two private companies, Pikes Peak Resources Inc. from 2007 to 2012 and Paraguay Minerals Inc. from 2007 to 2015. Mr. Stafford obtained his Bachelor of Arts from the University of Cape Town in 1957 and obtained an LLB from the University of South Africa in 1960.

 

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Ronald Cheng – Director

 

Mr. Cheng is a lawyer retired from Osler, Hoskin and Harcourt LLP, a major Canadian based international law firm, where he practiced as a partner from 1980 until his retirement in March 2014. He regularly appeared as counsel before the Canadian International Trade Tribunal, Canadian federal courts, and on NAFTA and WTO matters and advised on NAFTA and other trade agreements. He provided strategic advice to corporations, including startups, trade associations and governments in anti-dumping, countervail and safeguard litigation, customs matters, commodity tax and government procurement disputes, as well as import and export monitoring and controls. Mr. Cheng was listed in the Lexpert® Guide to Leading US/Canada Cross-border Litigation Lawyers and with highest listings in other leading legal directories, such as Chambers, Martindale-Hubbell and Best Lawyers. Mr. Cheng received his Bachelor of Arts from Amherst College in 1970 and a Juris Doctor degree from the University of Toronto in 1975.

 

Christine Y S Kan – Vice President and Director

 

Christine graduated from McGill University in 1974 with a Bachelor of Science and was accredited by the by the Canadian Institute of Chartered Accountants in 1980. Between 1981 and 2008 she held various senior and corporate appointments, including: Controller, Independence Petroleum Inc.; Co-founder, Director and Chief Financial Officer, Knight’s Group of Companies; and Director of Vancouver College, British Columbia. Christine presently also serves as Director and Chief Financial Officer of a private family real estate investment entity in Singapore.

 

Benjamin Szeto – Secretary and Chief Legal Counsel

 

Benjamin has more than 20 years of experience advising on a wide range of transactions spanning diverse jurisdictions. His qualifications include: University of Birmingham, Bachelor of Law (Honours), 1996; Association of Chartered Certified Accountants, Diploma in Financial Management, 2005; National University of Singapore, Master of Science (Real Estate), 2008; and Society of Trust & Estate Practitioners (“STEP”), Diploma in International Trust Management (Distinction) 2015. He was called as a Barrister-at-Law (Lincoln’s Inn) in 1997 and as an Advocate and Solicitor (Singapore) in 1998; and accredited as a Trust and Estate Practitioner by STEP in 2015. He has had stints in best of class companies such as EY Law Singapore, International SOS, and Flextronics (as it was then known).  He served on the Law Society of Singapore’s Tax & Trust Committee 2020 and 2021.  Benjamin is presently a faculty member of the Wealth Management Institute (founded by GIC and Temasek), lecturing on Trust Regulations and Practices.  He was an author for LexisNexis Practical Guidance Singapore on Trusts and his articles have been published in The Business Times.

 

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Executive Compensation

 

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

 

Summary Compensation Table

 

Name and 

Principal Position 

  Year  

Salary 

and 

Fees 

(US$) 

 

Bonus 

(US$) 

 

Stock 

Awards 

(US$) 

 

Option 

Awards 

(US$) 

 

Non-equity 

Incentive 

Plan 

(US$) 

 

Non-qualified 

Deferred 

Earnings 

(US$) 

 

All 

Other 

(US$) 

 

Total 

(US$) 

(a)   (b)   (c)   (d)   (e)   (f)   (g)   (h)   (i)   (j)

Sidney Chan [1] [2][3] 

Chief Executive
Officer & Chief
Financial Officer

  2021   240,000   0   0   0   0   0   9,600   249,600
  2020   240,000   0   0   0   0   0   9,600   249,600
  2019   180,000   0   0   0   0   0   9,600   189,600
                                   

 

[1] All other compensation includes automobile allowance.
   
[2] Salaries and other annual compensation for fiscal 2021, 2020 and 2019 are paid as an increase in the line of credit payable by the Company to Mr. Chan. Options granted and vested to Sidney Chan for providing a line of credit are not included in the table above.
   
[3] Effective January 1, 2020, the consulting fees earned by the Chief Executive Officer increased from $180,000 per annum to $240,000 per annum.

 

Outstanding Equity Awards at December 31, 2021

 

Name  

Number of 

Securities 

Underlying 

Unexercised 

Options 

Exercisable 

 

Number of 

Securities 

Underlying 

Unexercised 

Options 

Unexercisable 

 

Equity Incentive 

Plan Awards: 

Securities 

Underlying 

Unexercised 

Unearned 

Options 

 

Option 

Exercise 

Price 

 

Option 

Expiration 

Date 

 

Number of 

Shares 

or Units of Stock 

that have not 

Vested 

 

Equity Incentive 

Plan Awards: 

Number of 

Unearned Shares, 

Units that 

have not Vested 

(a)   (b)   (c)   (d)   (e)   (f)   (g)   (h)
Sidney Chan1   5,085,001,500   0   0   $0.002 - $0.05   2024 - 2026   0   0
Dr. Alfonso Salas   5,000,000   0   0   $0.035   2024   0   0
Kenneth Robulak   10,000,000   8,000,000   0   $0.015 - $0.05   2022 – 2025   0   0
Ronald Cheng   5,000,000   0   0   $0.015 / $0.035   2024   0   0
Peter Stafford   10,000,000   0   0   $0.015 - $0.05   2024 - 2026   0   0

1 Includes 740,000,500 exercisable options held by Mr. Chan’s spouse. All options to Mr. Chan and his spouse were granted as consideration for financing provided to the Company.

 

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Sidney Chan

 

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

 

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

 

  The options in respect of shares not vested was to vest immediately; and
  The exercise price of the option was reduced from $0.125 per share to $0.07 per share and subsequently reduced to $0.05 per share on December 28, 2012.

 

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

 

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

 

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

 

The options in respect of the 64,250,000 shares vested immediately and were set to 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 an initial term of five years;
  Modifying the exercise price of Mr. Chan’s option to acquire 35,750,000 shares of common stock of the Company, granted in June 2012, from $0.05 per share to $0.03 per share;
  Modifying the exercise price of Mr. Chan’s option to acquire 14,250,000 shares of common stock of the Company, granted in December 2012, from $0.05 per share to $0.03 per share;
  Modifying the exercise price of the option granted in January 2011 to the spouse of Mr. Chan (Ms. Kan) to acquire 20,000,000 shares of common stock of the Company from $0.05 per share to $0.03 per share; and
  Granting Ms. Kan the option to acquire 26,666,700 shares of common stock of the Company at an exercise price of $0.03 per share for an initial term of five years.

 

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

 

  Reduced the exercise price of all previously granted options held by Mr. Chan and his spouse (230,000,100 shares) from $0.03 to $0.015;
  Extended the expiry date of all previously granted options held by Mr. Chan and his spouse (230,000,100 shares) to be five years from the date of execution of the amended credit agreement; and
  Granted Mr. Chan and his spouse the right and option to purchase an additional 330,000,100 shares of common stock at a price of $0.015 per share for an initial 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 all previously granted options held by Mr. Chan and his spouse (560,000,200 shares) from $0.015 to $0.002; and

 

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  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 an initial term of five years.

 

On April 12, 2019, the Company and Mr. Chan agreed to modify the options held by Mr. Chan and his spouse to acquire 560,000,200 shares of common stock exercisable at $0.002 per share by extending the life of the options to April 12, 2024.

 

On June 19, 2019, the Chairman exercised his option to acquire 25,000,000 shares of common stock at a price of $0.002 in exchange for the settlement of accrued interest of $50,000 owed by the Company to the Chairman.

 

On December 12, 2019, the Company and Mr. Chan agreed to amend the existing credit agreement to increase the borrowing limit on the line of credit provided to the Company from $8,500,000 to $10,300,000. In exchange for Mr. Chan making available the $1,800,000 increase of the borrowing limit of the line of credit, the Company granted Mr. Chan the option to acquire 120,000,000 shares of common stock at an exercise price of $0.015 per share for an initial term of five years.

 

On September 21, 2020, the Company entered into two “shares-for-debt” agreements with Mr. Chan and his spouse, to issue an aggregate 240,000,000 restricted shares of common stock at a price of $0.05 per share for a purchase price of $12,000,000, in exchange for the retirement of $12,000,000 of liabilities.

 

On June 30, 2021, the Company and Mr. Chan agreed to modify the option held by Mr. Chan and his spouse to acquire 4,365,001,300 shares of common stock granted on July 1, 2016 by extending the expiry date from July 1, 2021 to April 12, 2024.

 

On December 10, 2021, the Company and Ms. Kan agreed to amend the existing credit agreement to increase the borrowing limit on the line of credit provided to the Company from $2,000,000 to $4,000,000. In exchange for Ms. Kan making available the $2,000,000 increase of the borrowing limit of the line of credit, the Company granted Ms. Kan the option to acquire 40,000,000 shares of common stock of the Company at a price of $0.05 per share, which option is set to expire December 31, 2026.

 

On July 7, 2022, the Company granted the Chairman and Chief Executive Officer the option to acquire 115,500,000 shares of common stock of the Company at a price of $0.05 per share until December 31, 2026.

 

Dr. Alfonso Salas

 

On May 6, 2019, the Company granted Dr. Salas the option to acquire 4,000,000 shares of common stock at a price of $0.035 per share for a term of five years. On May 17, 2019, the Company granted Dr. Salas the option to acquire 1,000,000 shares of common stock at a price of $0.035 per share for a term of five years.

 

Peter Stafford

 

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

 

On April 12, 2019, the Company and Mr. Stafford agreed to modify the option to acquire 500,000 shares of common stock exercisable at $0.015 per share by extending the life of the options to April 12, 2024.

 

On May 6, 2019, the Company granted Mr. Stafford the option to acquire 4,500,000 shares of common stock at a price of $0.035 per share for a term of five years.

 

On August 27, 2021, the Company granted Mr. Stafford the option to acquire 5,000,000 shares of common stock at a price of $0.05 per share with an expiry date of June 30, 2026.

 

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Kenneth Robulak

 

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

 

On March 15, 2019, the Company granted Mr. Robulak the option to acquire 6,650,000 shares of common stock at a price of $0.035 per share for a term of five years.

 

On April 12, 2019, the Company and Mr. Robulak agreed to modify the option to acquire 1,000,000 shares of common stock exercisable at $0.015 per share by extending the life of the options to April 12, 2024.

 

On October 12, 2020, the Company granted Mr. Robulak the option to acquire 8,000,000 shares of common stock of the Company exercisable at $0.05 per share until May 31, 2025. The options will vest upon achievement of performance conditions.

 

Ronald Cheng

 

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

 

On April 12, 2019, the Company and Mr. Cheng agreed to modify the option to acquire 500,000 shares of common stock exercisable at $0.015 per share by extending the life of the options to April 12, 2024.

 

On May 6, 2019, the Company granted Mr. Cheng the option to acquire 4,500,000 shares of common stock at a price of $0.035 per share for a term of five years.

 

Option Exercises and Stock Vested for the Year Ended December 31, 2021

 

Name   Number of 
Shares Acquired 
on Exercise 
(#)
  Value Realized 
on Exercise 
($)
  Number of 
Shares Acquired 
on Vesting 
(#)
  Value 
Realized on 
Vesting 
($)
 
(a)   (b)   (c)   (d)   (e)  
Sidney Chan   0   0   0   0  
Peter Stafford