Add
ALRT.OB to Portfolio
Set Alert
Email to a
Friend
| |||
|
|
Quotes & Info
|
| ALRT.OB > SEC Filings for ALRT.OB > Form 10-Q on 19-Aug-2009 | All Recent SEC Filings |
19-Aug-2009
Quarterly Report
Forward Looking Statements
The following information must be read in conjunction with the unaudited Financial Statements and Notes thereto included in Item 1 of this Quarterly Report and the audited Consolidated Financial Statements and Notes thereto and Management's Discussion and Analysis or Plan of Operations contained in the Company's Annual Report on Form 10-KSB for the year ended December 31, 2008. Except for the description of historical facts contained herein, the Form 10Q contains certain forward-looking statements concerning future applications of the Company's technologies and the Company's proposed services and future prospects, that involve risk and uncertainties, including the possibility that the Company will: (i) be unable to commercialize services based on its technology, (ii) ever achieve profitable operations, or (iii) not receive additional financing as required to support future operations, as detailed herein and from time to time in the Company's future filings with the Securities and Exchange Commission and elsewhere. Such statements are based on management's current expectations and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements.
Critical Accounting Policies
The preparation of our financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reported periods. Actual results may differ from these estimates under different assumptions or conditions. We believe the accounting polices that are most critical to our financial condition and results of operations and involve management's judgment and/or evaluation of inherent uncertain factors are as follows:
Basis of Presentation. The financial statements have been prepared on the going concern basis, which assumes the realization of assets and liquidation of liabilities in the normal course of operations. If the Company were not to continue as a going concern, it would likely not be able to realize on its assets at values comparable to the carrying value or the fair value estimates reflected in the balances set out in the preparation of the financial statements. As described in note 1 to the interim financial statements, at June 30, 2009, there are certain conditions that exist which raise substantial doubt about the validity of this assumption. The Company's ability to continue as a going concern is dependent upon continued financial support of its creditors and its ability to obtain financing to repay its current obligations and fund working capital and its ability to achieve profitable operations. The Company will seek to obtain creditors consent to delay repayment of its outstanding promissory notes payable until it is able to replace this financing with funds generated from operations, replacement debt or from equity financing 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. Management plans to obtain financing through the issuance of additional debt, the issuance of shares on the exercise of options and warrants and through future common share private placements. Management hopes to realize sufficient sales in future years to achieve profitable operations. Failure to achieve management's plans may result in the Company curtailing operations or writing assets and liabilities down to liquidation values, or both.
Prepaid expenses and deposits. Prepaid expenses and deposits primarily consists of prepaid commission expenses for market development purposes.
Inventories. Inventories are recorded at the lower of cost, determined on a weighted average cost basis, and net realizable value. Net realizable value reflects the current estimated net selling price or value in use of the item in inventory in a non-forced sale. The Company assesses the need for inventory write-downs based on its assessment of the estimated net realizable value using assumptions about future demand and market conditions. When the results of these assumptions differ from the Company's projections, an additional inventory write-down may be required.
Revenue recognition. The Company recognizes sales revenue at the time of delivery when title has transferred to the customer, persuasive evidence of an arrangement exists, the fee is fixed and determinable and the sales proceeds are collectible. Provisions are recorded for product returns based on historical experience. Sales revenue, in transactions for which the Company does not have sufficient historical experience, is recognized when the return privilege period has expired. Changes in sales terms could materially impact the extent and timing of revenue recognition.
Stock-Based Compensation. The Company follows the provisions of SFAS 123(R),
"Share-Based Payment". The fair value of options at the date of grant was
estimated using the Black-Scholes option pricing model. The Company took into
consideration guidance under SFAS 123(R) and SEC Staff Accounting Bulletin No.
107 (SAB 107) when reviewing and updating assumptions. The expected option life
is derived from assumed exercise rates based upon historical exercise patterns
and represents the period of time that options granted are expected to be
outstanding. The expected volatility is based upon historical volatility of our
shares using daily price observations over an observation period of five years.
The risk-free rate is based on the U.S. treasury rate in effect at the time of
grant for periods similar to the expected option life. Due to the Company's
history with respect to forfeitures of incentive stock options, the estimate of
expired or cancelled options included in the above option valuation was zero.
Valuation of Long-lived Assets The Company assesses the potential impairment of long-lived tangible and intangible assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Changes in the operating strategy can significantly reduce the estimated useful life of such assets.
Results of Operations
Management is focusing the majority of its efforts on introducing and marketing the HealthEConnect health management platform and its diabetes management system to the healthcare industry. A health services company based in Georgia has been signed on and has successfully gained customer commitments to implement the HealthEConnect diabetes management system. Corporations that are self-insured are being targeted due to the potential benefits they can achieve with the ALRT HealthEConnect and CHC system. Expected results are better health outcome with their employees and dependents along with lower cost of care for these targeted individuals with diabetes.
The Company is first targeting customers located in United States and in Canada. Pilot programs have been established in each and with pilot outcome results now becoming available, extensive selling activities are being planned for currently in process.
Sales revenue for the six months ended June 30, 2009, sales revenue was $Nil as compared to $8,938 for the same six months period last year. The decrease in sales was mainly due to the Company's new product is in the final stage of development and early stage of marketing campaign. The Company is fine-tuning the HealthEConnect healthcare management software platform and coordination of software protocols from the various diagnostic equipment such as glucometers necessary for remote monitoring through the ALRT HealthEConnect.
Development costs were $115,250 for the quarter ended June 30, 2009 as compared with $237,336 for the quarter ended June 30, 2008. Development costs incurred during the first quarter of 2009 related to the allocation of additional programming resources required for the development of the ALRT500 LCD (Liquid Crystal Display) Med Reminders and the ALRT Interactive Response System (AIRS).
Development costs for the six months ended June 30, 2009 and 2008 include $22,250 and $237,336, respectively, of stock-based compensation recognized in the period.
Interest expense was $448,633 for the six months ended June 30, 2009 as compared with $353,712 for the six months ended June 30, 2008. The amount for the six months period included $71,372 relating to options issued in exchange for $120,699 loan received during the period which loans were repayable at demand secured by a floating charge against the Company's assets.
Professional fees were $34,646 for the six months ended June 30, 2009 as compared with $35,790 for the six months ended June 30, 2008. Fees were slightly lower due to less accounting and audit services obtained in the period.
The selling, general and administrative expenses were $242,246 for the six months ended June 30, 2009 as compared to $283,379 for the six months ended June 30, 2008. The decrease relates primarily to lower compensation expenses incurred during the current period.
Net loss of $862,426 for the six months ended June 30, 2009 decreased from a loss of $924,536 for the same period in 2008 mainly due to decrease in product development costs as the produce development is close to maturing stage.
Liquidity and Capital Resources
Cash Balances and Working Capital
As of June 30, 2009, the Company's cash balance was $607 compared to $7,901 as of December 31, 2008. As of June 30 2009, the Company had a working capital deficiency of $13,126,341 as compared to a working capital deficiency of $12,324,804 as of December 31, 2008.
Short and Long Term Liquidity
As of June 30, 2009, the Company does not have the current financial resources and committed financing to enable it to meet its overheads, purchase commitments and debt obligations over the next 12 months.
All of the Company's debt financing is either due on demand or has a maturity date of less than one year. 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. Failure to obtain either replacement financing or creditor consent to delay the repayment of existing financing could result in the Company having to curtail operations.
Cash Provided by (Used in) Operating Activities
Cash used by the Company in operating activities during the six months ended June 30, 2009 was $127,993 in comparison with $354,302 used during the same period last year. The decrease was mainly due to decreased payments to suppliers during the current period.
Cash Proceeds from Financing Activities
During the six months ended June 30, 2009, the Company received $120,699 loan from a relative of a director as compared to $450,000 from a non-related party in the six months period of 2008.
Off Balance Sheet Arrangement
The Company has no off balance sheet financing arrangements that have or are reasonably likely to have a current or future effect on the Company's financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources, that is material to investors.
The Company's ability to continue as a going concern is dependent upon the continued financial support of its creditors and its ability to obtain financing to repay its current obligations and fund working capital and its ability to achieve profitable operations. All of the Company's debt financing is either due on demand or is overdue and now due on demand. The Company will seek to obtain creditors' consents to delay repayment of these outstanding promissory notes payable until it is able to replace this financing 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. Management plans to obtain financing through the issuance of shares on the exercise of options and warrants and through future common share private placements. Management hopes to realize sufficient sales in future periods to achieve profitable operations. The resolution of the going concern issue is dependent upon the realization of management's plans. There can be no assurance provided that the Company will be able to raise sufficient debt or equity capital, from the sources described above, on satisfactory terms. If management is unsuccessful in obtaining financing or in achieving profitable operations, the Company will be required to cease operations. The outcome of these matters cannot be predicted at this time. The Company is currently financed by loans from a relative of a director of the Company.
|
|