Document And Entity Information
Document And Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Feb. 02, 2018 | Jun. 30, 2017 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | ALR Technologies Inc. | ||
Document Type | 10-K | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Common Stock, Shares Outstanding | 242,777,909 | ||
Entity Public Float | $ 0 | ||
Amendment Flag | false | ||
Entity Central Index Key | 1,087,022 | ||
Entity Current Reporting Status | No | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Well-known Seasoned Issuer | No | ||
Document Period End Date | Dec. 31, 2016 | ||
Document Fiscal Year Focus | 2,016 | ||
Document Fiscal Period Focus | FY |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash | $ 2,607 | $ 52,688 |
Prepaid expenses and other | 1,429 | 1,565 |
Total assets | 4,036 | 54,253 |
Current liabilities: | ||
Accounts payable and accrued liabilities | 942,967 | 982,069 |
Promissory notes payable due to related parties | 2,891,966 | 2,891,966 |
Promissory notes payable due to unrelated parties | 2,394,353 | 2,394,353 |
Interest payable | 3,629,913 | 3,135,743 |
Lines of credit from related parties | 13,375,562 | 11,272,094 |
Total liabilities | 23,234,761 | 20,676,225 |
Stockholders' Deficit | ||
Preferred stock Authorized: 500,000,000 shares of preferred stock (2015 - 500,000,000) with a par value of $0.001 per share Shares issued and outstanding: No shares of preferred stock (2015: No) were issued and outstanding | ||
Common stock Authorized: 2,000,000,000 shares of common stock (2015 - 500,000,000) with a par value of $0.001 per share Shares issued and outstanding: 242,777,909 shares of common stock (2015 - 242,777,909 shares of common stock). | 242,777 | 242,777 |
Additional paid-in capital | 48,212,548 | 40,727,568 |
Accumulated deficit | (71,686,050) | (61,592,317) |
Stockholders' deficit | (23,230,725) | (20,621,972) |
Total liabilities and stockholders' deficit | $ 4,036 | $ 54,253 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parentheticals) - $ / shares | Dec. 31, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Preferred stock: par value (in Dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock: Authorized | 500,000,000 | 500,000,000 |
Preferred stock: issued | 0 | 0 |
Preferred stock: outstanding | 0 | 0 |
Common stock, par value (in Dollars per share) | $ 0.001 | $ 0.001 |
Common stock Authorized | 2,000,000,000 | 500,000,000 |
Common stock Shares, issued | 242,777,909 | 242,777,909 |
Common stock Shares, outstanding | 242,777,909 | 242,777,909 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Operating Expenses | ||
Product development | $ 565,804 | $ 522,918 |
Professional fees | 108,275 | 217,454 |
Selling, general and administration | 354,948 | 836,756 |
Operating Loss | 1,029,027 | 1,577,128 |
Foreign exchange gain | (3,483) | |
Recovery of expense | (70,000) | |
Interest expense | 9,064,706 | 4,795,168 |
Net loss | $ (10,093,733) | $ (6,298,813) |
Weighted average number of shares of common stock outstanding, basic and diluted | 242,777,909 | 242,777,909 |
Loss per share, basic and diluted | $ (0.04) | $ (0.03) |
Consolidated Statements of Chan
Consolidated Statements of Change in Shareholders Deficit - USD ($) | Common Stock | Additional Paid-in Capital | Retained Earnings | Total |
Balance at year end (in Shares) at Dec. 31, 2014 | 242,777,909 | |||
Balance at year end at Dec. 31, 2014 | $ 242,777 | $ 37,355,956 | $ (55,293,504) | $ (17,694,771) |
Imputed interest | 148,621 | 148,621 | ||
Stock options granted as compensation | 3,222,992 | 3,222,992 | ||
Net loss for the year | (6,298,813) | $ (6,298,813) | ||
Balance at year end (in Shares) at Dec. 31, 2015 | 242,777,909 | 242,777,909 | ||
Balance at year end at Dec. 31, 2015 | $ 242,777 | 40,727,569 | (61,592,317) | $ (20,621,972) |
Imputed interest | 148,426 | 148,426 | ||
Stock options granted as compensation | 7,336,554 | 7,336,554 | ||
Net loss for the year | (10,093,733) | $ (10,093,733) | ||
Balance at year end (in Shares) at Dec. 31, 2016 | 242,777,909 | 242,777,909 | ||
Balance at year end at Dec. 31, 2016 | $ 242,777 | $ 48,212,548 | $ (71,686,050) | $ (23,230,725) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
OPERATING ACTIVITIES | ||
Net loss | $ (10,093,733) | $ (6,298,813) |
Stock-based compensation-product development | 14,268 | 14,374 |
Stock-based compensation-interest expenses | 7,318,539 | 3,184,459 |
Stock-based compensation-selling, general and admin | 3,170 | 20,355 |
Stock-based compensation-professional fees | 577 | 3,804 |
Unpaid interest expense on line of credit | 1,102,243 | 944,010 |
Non-cash imputed interest expense | 148,426 | 148,620 |
Non-cash gain on reversal of accrual | (70,000) | |
Changes in assets and liabilities: | ||
Decrease in prepaid expenses | 136 | 5,145 |
Increase in accounts payable and accrued liabilities | (39,102) | (3,399) |
Increase in interest payable | 494,170 | 515,571 |
Net cash used in operating activities | (1,051,307) | (1,535,874) |
FINANCING ACTIVITIES | ||
Proceeds from lines of credit | 1,001,226 | 1,529,720 |
Net cash provided by financing activities | 1,001,226 | 1,529,720 |
Decrease in cash | (50,081) | (6,154) |
Cash, beginning of year | 52,688 | 58,842 |
Cash, end of year | $ 2,607 | $ 52,688 |
1. Basis of Presentation, Natur
1. Basis of Presentation, Nature of Operations and Going Concern | 12 Months Ended |
Dec. 31, 2016 | |
Basisof Presentation Natureof Operationsand Going Concern [Abstract] | |
Basisof Presentation Nature of Operations and Going Concern | 1. Basis of presentation, nature of operations and going concern ALR Technologies Inc. (the “Company”) was incorporated under the laws of the state of Nevada on March 24, 1987. The Company has developed a compliance monitoring system that will allow for health care professionals to remotely monitor patient health conditions and provide patient health management. On October 17, 2011 the Company announced that it had received Section 510(k) clearance from the United States Food and Drug Administration for its Health-e-Connect System. The Company is currently seeking pilot programs to deploy its product. These consolidated financial statements have been prepared in accordance with Generally Accepted Accounting Principles in the United States of America (“U.S. GAAP”) in U.S dollars and on a going-concern basis, which presumes the realization of assets and the discharge of liabilities and commitments in the normal course of operations for the foreseeable future. Several adverse conditions cast substantial doubt on the validity of this assumption. The Company has incurred significant losses over the past several fiscal years (2016 - $10,093,733; 2015 - $6,298,813), is currently unable to self-finance its operations, has a working capital deficit of $23,230,725 (2015 - $20,621,972), accumulated deficit of $71,686,050 (2015 - $61,592,317), limited resources, no source of operating cash flow, and no assurance that sufficient funding will be available to conduct continued product development activities. If the Company is able to finance its required product development activities, there is no assurance the Company’s current projects will be commercially viable or profitable. The Company has debts comprised of accounts payable, interest, lines of credit and promissory notes payable totaling $23,234,762 currently due, due on demand or considered delinquent. There is no assurance that the Company will not face additional legal action from creditors regarding delinquent accounts payable, payroll payable, promissory notes and interest payable. Any one or a combination of these above conditions could result in the failure of the business and cause the Company to cease operations. The Company’s ability to continue as a going-concern is dependent upon the continued financial support of its creditors and its ability to obtain financing to fund working capital and overhead requirements, fund the development of the Company’s product line and ultimately, the Company’s ability to achieve profitable operations and repay overdue obligations. Management has obtained short-term financing from related parties through lines of credit facilities with available borrowing in principal amount up to $10,500,000. As of December 31, 2016 the total principal balance outstanding was $9,628,210. The resolution of whether the Company is able to continue as a going concern is dependent upon the realization of management’s plans. If additional financing is required, the Company plans to raise needed capital through the exercise of share options and by future common share private placements. There can be no assurance that the Company will be able to raise any additional debt or equity capital from the sources described above, or that the lenders in the line of credit arrangements will maintain the availability of borrowing from the line. If management is unsuccessful in obtaining short-term financing or achieving long-term profitable operations, the Company will be required to cease operations. All of the Company’s debt is either due on demand or is in default, while continuing to accrue interest at its stated rate. The Company will seek to obtain creditors’ consents to delay repayment of the outstanding promissory notes payable and related interest thereto, until it is able to replace this financing with funds generated by operations, recapitalization with replacement debt or from equity financings through private placements. While some of the Company’s creditors have agreed to extend repayment deadlines in the past, there is no assurance that they will continue to do so in the future. In the past, creditors have successfully commenced legal action against the Company to recover debts outstanding. In those instances, the Company was able to obtain financing from related parties to cover the verdict or settlement; however, there is no assurance that the Company would be able to obtain the same financing in the future. If the Company is unsuccessful in obtaining financing to cover any potential verdicts or settlements, the Company will be required to cease operations. The Company’s activities will necessitate significant uses of working capital beyond 2016. Additionally, the Company’s capital requirements will depend on many factors, including the success of the Company’s continued product development and distribution efforts. The Company plans to continue financing its operations with the lines of credit it has available. While the Company strongly believes that its capital resources will be sufficient in the near term, there is no assurance that the Company’s activities will generate sufficient revenues to sustain its operations without additional capital or if additional capital is needed, that such funds, if available, will be obtainable on terms satisfactory to the Company. |
2. Significant accounting polic
2. Significant accounting policies | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | 2. Significant accounting policies a) Principles of consolidation These consolidated financial statements include the accounts of the Company and its integrated wholly-owned subsidiary, Canada ALRTech Health Systems Inc., which was incorporated on April 15, 2008 in Canada. All significant inter-company balances and transactions have been eliminated. b) Stock-based compensation The Company follows the fair value method of accounting for stock-based compensation. The Company estimates the fair value of share-based payment awards on the date of grant using an option pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as an expense over the requisite service period in the Company’s consolidated financial statements. The Company estimates the fair value of the stock options using the Black-Scholes Option Pricing Model. The Black-Scholes Option Pricing Model requires the input of highly subjective assumptions, including the option’s expected life and the price volatility of the underlying stock. c) Income taxes Income taxes are accounted for under the asset and liability method. Deferred income tax assets and liabilities are recognized for the differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis, and operating loss carry-forwards that are available to be carried forward to future years for tax purposes. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. When it is not considered to be more likely than not that a deferred income tax asset will be realized, a valuation allowance is provided for the excess. The Company follows the accounting requirements associated with uncertainty in income taxes using the provisions of Financial Accounting Standards Board (“FASB”) ASC 740, Income Taxes. Using that guidance, tax positions initially need to be recognized in the financial statements when it is more-likely-than-not the positions will be sustained upon examination by the tax authorities. It also provides guidance for derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. As of December 31, 2016, the Company has no uncertain tax positions that qualify for either recognition or disclosure in the financial statements. d) Use of estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, the measurement of stock-based compensation, the fair value of financial instruments and the reported amounts of revenues and expenses during the reporting period. Management believes the estimates are reasonable; however, actual results could differ from those estimates. e) Loss per share Basic loss per common share is calculated by dividing net loss by the weighted average number of common shares outstanding during the year. Diluted loss per common share is calculated by dividing the net loss by the sum of the weighted average number of common shares outstanding and the dilutive common equivalent shares outstanding during the year. Common equivalent shares consist of the shares issuable upon exercise of stock options and warrants calculated using the treasury stock method. Common equivalent shares are not included in the calculation of the weighted average number of shares outstanding for diluted loss per common shares when the effect would be anti-dilutive. f) Comprehensive income Comprehensive income is the overall change in the net assets of the Company for a period, other than changes attributable to transactions with stockholders. It is made up of net income and other comprehensive income. Other comprehensive income consists of net income and other gains and losses affecting stockholders' equity that under generally accepted accounting principles are excluded from net income. The Company has no items of other comprehensive income (loss) in any period presented. Therefore, as presented in the Company's consolidated statements of loss, net loss equals comprehensive loss. g) Fair value of financial instruments The Company’s financial instruments include cash, accounts payable, promissory notes payable and lines of credit. The fair values of these financial instruments approximate their carrying values due to the relatively short periods to maturity of these instruments. For fair value measurement, U.S. GAAP establishes a three-tier hierarchy which prioritizes the inputs used in the valuation methodologies in measuring fair value: Level 1 — observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 — include other inputs that are directly or indirectly observable in the marketplace. Level 3 — unobservable inputs which are supported by little or no market activity. h) Recently adopted and issued accounting pronouncements i. Adopted In August 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-15, “Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entitiy’s Ability to Continue as a Going Concern” (“ASU 2014-15”). ASU 2014-15 requires management to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern for each annual and interim reporting period. If substantial doubt exists, additional disclosure is required. This new standard was effective for the Company for annual and interim periods beginning after December 15, 2016. Adoption of this pronouncement did not have a material impact on the Company’s consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-09, Compensation — Stock Compensation: Improvements to Employee Share-Based Payment Accounting ii. Issued In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities. This new standard provides guidance on how entities measure certain equity investments and present changes in the fair value. This standard requires that entities measure certain equity investments that do not result in consolidation and are not accounted for under the equity method at fair value and recognize any changes in fair value in net income. ASU 2016-01 is effective for fiscal years beginning after December 31, 2017. In June 2016, the FASB issued Accounting Standards Update ("ASU") No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The new standard requires financial assets measured at amortized cost be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The standard will be effective for the Company beginning January 1, 2020, with early application permitted. This standard is not expected to have a material impact on the Company’s financial position, results of operations or statement of cash flows upon adoption. In August 2016, the FASB issued Accounting Standards Update ("ASU") No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The new standard will make eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. The standard will be effective for the Company beginning January 1, 2018, with early application permitted. The standard will require adoption on a retrospective basis unless it is impracticable to apply, in which case we would be required to apply the amendments prospectively as of the earliest date practicable. The Company has implemented all new accounting pronouncements that are in effect and may impact its financial statements. The Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or statement of operations. |
3. Promissory notes interest pa
3. Promissory notes interest payable | 12 Months Ended |
Dec. 31, 2016 | |
Interest Advancesand Promissory Notes Payable [Abstract] | |
Promissory notes interest payable | 3. Promissory notes and interest payable a) Promissory notes payable to related parties: A summary of the promissory notes payable to related parties is as follows: Promissory Notes Payable to Related Parties December 31, 2016 December 31, 2015 Promissory notes payable to relatives of directors collateralized by a general security agreement on all the assets of the Company, due on demand: i. Interest at 1% per month $ 580,619 $ 580,619 ii. Interest at 1.25% per month 51,347 51,347 iii. Interest at the U.S. bank prime rate plus 1% 100,000 100,000 iv. Interest at 0.5% per month 695,000 695,00 Promissory notes payable, unsecured, to relatives of a director, bearing interest at 1% per month, due on demand 1,465,000 1,465,000 Total Promissory Notes Payable to Related Parties $ 2,891,966 $ 2,891,966 b) Promissory notes payable to unrelated parties A summary of the promissory notes payable to unrelated parties is as follows: Promissory Notes Payable to Unrelated Parties December 31, December 31, 2016 2015 Unsecured promissory notes payable to unrelated lenders: i. Interest at 1% per month, repayable on March 31, 2009, due on demand $ 450,000 $ 450,000 ii. Interest at 1% per month, with $50,000 repayable on December 31, 2004, $75,000 repayable on August 18, 2007, $75,000 repayable on November 19, 2007 and the balance due on demand. All are due on demand, accruing interest at the same rate. 887,455 887,455 iii. Interest at 0.625% per month, with $50,000 repayable on October 5, 2004, $40,000 repayable on December 31, 2004, and $60,000 repayable on July 28, 2006, all due on demand 150,000 150,000 iv. Non-interest-bearing, repayable on July 17, 2005, due on demand 270,912 270,912 v. Non-interest-bearing loan repayable at $25,000 per month beginning October 2009, none repaid to date 310,986 310,986 vi. Interest at 0.667% per month, with $125,000 due January 15, 2011 125,000 125,000 Promissory notes payable, secured by a guarantee from the Chief Executive Officer, bearing interest at 1% per month 200,000 230,000 Total Promissory Notes Payable to Unrelated Parties $ 2,394,353 $ 2,394,353 c) Interest payable A summary of the interest payable activity is as follows: Balance, December 31, 2014 $ 2,620,172 Interest incurred on promissory notes payable 515,571 Balance, December 31, 2015 3,135,743 Interest incurred on promissory notes payable 494,171 Balance, December 31, 2016 $ 3,629,913 December 31, December 31, 2016 2015 Related parties (relatives of the Chairman) $ 1,956,403 $ 1,667,977 Non-related parties 1,673,511 1,467,766 $ 3,629,913 $ 3,135,743 The payment terms, security and any interest payable are based on the underlying promissory notes payable that the Company has outstanding. d) Interest expense During the year ended December 31, 2016, the Company incurred interest expense of $9,064,906 (2015: $4,795,168) substantially as follows: - $494,170 (2015: $515,571), including interest incurred on promissory notes (note 3(a)) and other payables; - $1,102,242 (2015: $944,010) incurred on lines of credit payable as shown in note 4; - $148,426 (2015: $148,620) incurred from the calculation of imputed interest on accounts payable outstanding for longer than one year, advances payable and promissory notes payable, which had no stated interest rate; and - $7,318,539 (2015: $3,184,459) incurred on stock options granted to creditors (note 6(a)). |
4. Lines of Credit
4. Lines of Credit | 12 Months Ended |
Dec. 31, 2016 | |
Linesof Credit Related Party [Abstract] | |
Lines of Credit | 4. Lines of credit As of December 31, 2016, the Company has two lines of credit as follows: Creditor Interest Rate Borrowing Limit Repayment Terms Principal Borrowed Accrued Interest Total Outstanding Security Purpose Chairman and CEO 1% per Month $8,500,000 Due on Demand $ 7,628,219 $ 2,490,958 $10,119,177 General Security over Assets General Corporate Requirements Wife of Chairman 1% per Month $2,000,000 Due on Demand $ 2,000,000 $ 1,256,385 $ 3,256,385 General Security over Assets General Corporate Requirements Total $10,500,000 $ 9,628,219 $ 3,747,343 $13,375,562 On July 1, 2016, the Company and the Chief Executive Officer of the Company agreed to amend the existing credit agreement to increase the borrowing limit on the line of credit provided to the Company from $7,000,000 to $8,500,000. As of December 31, 2015, the Company has two lines of credit as follows: Creditor Interest Rate Borrowing Limit Repayment Terms Principal Borrowed Accrued Interest Total Outstanding Security Purpose Chairman and CEO 1% per Month $7,000,000 Due on Demand $ 6,626,993 $ 1,628,716 $ 8,255,708 General Security over Assets General Corporate Requirements Wife of Chairman 1% per Month $2,000,000 Due on Demand $ 2,000,000 $ 1,016,385 $ 3,016,385 General Security over Assets General Corporate Requirements Total $9,000,000 $ 8,626,993 $ 2,645,101 $11,272,093 On May 29, 2015, the Company and the Chief Executive Officer of the Company agreed to amend the existing credit agreement to increase the borrowing limit on the line of credit provided to the Company from $5,500,000 to $7,000,000. |
5. Capital Stock
5. Capital Stock | 12 Months Ended |
Dec. 31, 2016 | |
Stockholders' Equity Note [Abstract] | |
Capital Stock | 5. Capital stock a) Authorized share capital i. Common Stock During the year ended December 31, 2016: On December 21, 2016, the Company’s shareholders holding a majority of the issued capital stock consented in writing to increase the authorized shares of common stock of the Company from two billion shares (2,000,000,000) to ten billion shares (10,000,000,000) shares. The increase in the authorized shares of common stock of the Company is pending approval from the Securities and Exchange Commission (“SEC”). During the year ended December 31, 2015: On June 25, 2015, the Company’s articles of incorporation were amended to increase the authorized shares of common stock from 500,000,000 to 2,000,000,000 shares with a par value of $0.001 per share. ii. Preferred Stock 500,000,000 shares of preferred stock with a par value of $0.001 per share. b) Issued share capital During the years ended December 31, 2016 and December 31, 2015: There was no activity during the period. |
6. Additional paid in capital
6. Additional paid in capital | 12 Months Ended |
Dec. 31, 2016 | |
Additional Paid in Capital [Abstract] | |
Additional paid in capital | 6. Additional paid-in capital a) Stock options A summary of stock option activity is as follows: Year Ended Year Ended December 31, 2016 December 31, 2015 Weighted Average Weighted Average Number of Options Exercise Price Number of Options Exercise Price Outstanding, beginning of period 579,000,200 $ 0.015 245,700,100 $ 0.030 Granted 4,390,001,300 0.002 334,500,100 0.015 Cancelled (6,700,000) (0.030) - - Expired - - (1,200,000) (0.250) Exercised - - - - Outstanding, end of period 4,962,301,500 $ 0.004 579,000,200 $ 0.015 Exercisable, end of period 4,960,101,500 $ 0.004 575,650,200 $ 0.015 During the year ended December 31, 2016: On July 1, 2016, the Company and the Chief Executive Officer of the Company agreed to amend the existing credit agreement to increase the borrowing limit on the line of credit provided to the Company from $7,000,000 to $8,500,000 (Note 4). In exchange for Mr. Chan making available the additional loan of $1,500,000 to the Company, the Company: · reduced the exercise price of the 560,000,200 shares of common stock under option to Mr. Chan and his spouse from $0.015 to $0.002; · granted Mr. Chan and his spouse the right and option to purchase, an additional 4,390,001,300 shares of common stock at a price of $0.002 per share for a term of five years The interest expense recognized related to the option grant was $7,318,539. The Company recorded a further $18,014 in compensation expense related to vesting of stock options granted in previous years. During the year ended December 31, 2015: On January 30, 2015, the Company granted options to acquire 4,500,000 shares of common stock at a price of $0.03 per share to 14 individuals. The fair value of the options granted was $42,858. During the year the Company recognized fair value of $10,964 and will recognize the balance over the vesting period for the unvested options. On April 22, 2015, our Board of Directors approved the modification of the exercise price to acquire 12,400,000 shares of common stock of the Company from $0.03 per share to $0.015 per share held by 20 individuals. There was no increase in the fair value of the options from this modification. None of these option agreements have been executed. On May 29, 2015, the Company and the Chief Executive Officer of the Company agreed to amend the existing credit agreement to increase the borrowing limit on the line of credit provided to the Company from $5,500,000 to $7,000,000 (Note 4). In exchange for Mr. Chan making available the additional loan of $1,500,000 to the Company, the Company: · reduced the exercise price of the 230,000,100 shares of common stock under option to Mr. Chan and his spouse from $0.03 to $0.015; · extended the expiry date of the 230,000,100 shares of common stock under option to Mr. Chan to be five years from the date of execution of the amended credit agreement; · granted Mr. Chan the right and option to purchase, an additional 329,999,967 shares of common stock at a price of $0.015 per share for a term of five years from the date of execution of the amended credit agreement. The interest expense recognized related to the option grant was $3,184,459. The Company recorded a further $27,569 in compensation expense related to vesting of stock options granted in previous years. The options outstanding at December 31, 2016 and 2015 were as follows: December 31, 2016 December 31, 2015 Expiry Date Options Exercise Price Intrinsic Value Options Exercise Price Intrinsic Value May 4, 2016 - $ - - 1,000,000 $ 0.050 - May 23, 2016 - $ - - 100,000 $ 0.030 - May 27, 2017 400,000 $ 0.030 - 400,000 $ 0.030 - May 31, 2017 500,000 $ 0.050 - 500,000 $ 0.050 - August 16, 2017 250,000 $ 0.030 - 250,000 $ 0.030 - December 28, 2017 1,000,000 $ 0.030 - 1,000,000 $ 0.030 - January 28, 2018 1,500,000 $ 0.030 - 2,300,000 $ 0.030 - March 26, 2018 500,000 $ 0.030 - 500,000 $ 0.030 - April 9, 2018 1,000,000 $ 0.030 - 1,000,000 $ 0.030 - October 1, 2018 - $ - - 500,000 $ 0.030 - February 7, 2019 - $ - - 700,000 $ 0.030 - April 18,2019 - $ - - 2,000,000 $ 0.030 - May 21, 2019 500,000 $ 0.030 - 500,000 $ 0.030 - July 25, 2019 1,000,000 $ 0.030 - 1,000,000 $ 0.030 - August 1, 2019 1,250,000 $ 0.030 - 1,250,000 $ 0.030 - August 26, 2019 1,500,000 $ 0.030 - 1,500,000 $ 0.030 - January 30, 2020 2,900,000 $ 0.030 - 4,500,000 $ 0.030 - May 29, 2020 560,000,200 $ 0.002 - 560,000,200 $ 0.015 - July 21, 2021 4,390,001,300 $ 0.002 - $ - Total 4,962,301,500 $ 0.002 - 579,000,200 $ 0.015 - Weighted Average Remaining Contractual Life 4.81 4.37 The Company uses the fair value method for determining stock-based compensation for all options granted during the fiscal periods. The fair value was determined using the Black-Scholes Option Pricing Model based on the following weighted average assumptions: December 31, 2016 December 31, 2015 Risk-free interest rate 1.68 % 1.68 % Expected life 5 years 5 years Expected dividends 0 % 0 % Expected volatility 210 % 194 % Forfeiture rate 0 % 0 % The weighted average fair value for the options granted during 2016 was $0.002 (2015: $0.010). The fair value of the stock options granted was allocated as follows: December 31, 2016 December 31, 2015 Interest expense $ 7,318,539 $ 3,184,459 Product development expense 14,267 14,374 Professional expense 577 3,806 Selling, general and administration expenses: 3,170 20,355 $ 7,336,553 $ 3,222,992 |
7. Related party transactions a
7. Related party transactions and balances | 12 Months Ended |
Dec. 31, 2016 | |
Related Party Transactions [Abstract] | |
Related party transactions and balances | 7. Related party transactions and balances a) Related party transactions Year End December 31, 2016 Year End December 31, 2015 Related party transaction included within interest expense: Interest expenses on promissory notes issued to relatives of the Chairman & Chief Executive Officer of the Company $ 288,426 $ 309,826 Interest expense on lines of credit payable to the Chairman & Chief Executive Officer of the Company and his spouse $ 1,102,242 $ 944,010 Stock based compensation related to stock options granted to the Chairman & Chief Executive Officer for increasing the borrowing limit on the line of credit available to the Company $ 7,318,539 $ 3,184,459 Related party transactions including within selling, general and administration expenses Consulting fees to the Chairman & Chief Executive Officer of the Company accrued on the line of credit available to the Company $ 189,600 $ 189,600 Consulting fees paid to the President of the Company $ 15,500 $ 186,000 Interest on promissory notes payable to related parties, management compensation and compensation paid to a relative of a director have been recorded at the exchange amount, which is the amount agreed to by the parties. Options granted to related parties have been recorded at their estimated fair value. b) Related party balances Included in accounts payable is $nil (2015: $15,529) due to a Director of the Company. |
8. Commitments and contingencie
8. Commitments and contingencies | 12 Months Ended |
Dec. 31, 2016 | |
Compensation Related Costs [Abstract] | |
Commitments and contingencies | 8. Commitments and contingencies a) Contingencies The Company has had three judgments against it relating to overdue promissory notes and accrued interest and a fourth creditor has demanded repayment of an overdue promissory note and accrued interest. To date, the Company has not repaid any of these promissory notes and related accrued interest and could be subject to further action. The legal liability, totaling $1,076,168, of these promissory notes and related accrued interest have been fully recognized and recorded by the Company. b) Commitments The Company has a consulting arrangement with Mr. Sidney Chan, Chief Executive Officer and Chairman of the Board of Directors of the Company. Under the terms of the contract, Mr. Chan will be paid $180,000 per annum for services as Chief Executive Officer. The contract can be terminated at any time with thirty days’ notice and the payment of two years annual salary. Should the contract be terminated, all debts owed to Mr. Chan and his spouse must be immediately repaid. The initial term of the contract is for one year and automatically renews for continuous one year terms. Also under the terms of the contract are the following: i. Incentive Revenue Bonus Mr. Chan will be entitled to a 1% net sales commission from the sales of any of the Company’s products at any time during his life, regardless if Mr. Chan is still under contract with the Company. ii. Sale of Business If more than 50% of the Company’s stock or assets are sold, Mr. Chan will be compensated for entering into non-compete agreements based on the selling price of the Company or its assets as follows: - 2% of sales price up to $24,999,999 plus - 3% of sales price between $25,000,000 and $49,999,999 plus - 4% of sales price between $50,000,000 and $199,999,999 plus - 5% of sales price in excess of $200,000,000 |
9. Financial instruments
9. Financial instruments | 12 Months Ended |
Dec. 31, 2016 | |
Disclosure Text Block Supplement [Abstract] | |
Financial Instruments | 9. Financial instruments The Company’s financial instruments consist of cash, accounts payable, interest payable, promissory notes payable to unrelated parties and promissory notes payable to related parties. a) Fair value The fair values of cash and certain accounts payable and accrued liabilities approximate their carrying values due to the relatively short periods to maturity of these instruments. Certain accounts payable have been outstanding longer than one year. The Company has recorded imputed interest at a rate of 1% per month over the period the payables have been outstanding for longer than one year, with a corresponding amount recognized in additional paid-in capital. The calculated amount represents the implicit compensation for the use of funds beyond a reasonable term for regular trade payables. For the purposes of fair value analysis, promissory notes payable to related parties and promissory notes payable to unrelated parties can be separated into two classes of financial liabilities. i. Interest-bearing promissory notes, lines of credit and related interest payable ii. Non-interest-bearing promissory notes past due The interest-bearing promissory notes payable are all delinquent and have continued to accrue interest at their stated rates. The Company currently does not have the funds to extinguish these debts and will continue to incur interest until such time as the liabilities are extinguished. There is not an active market for delinquent loans for a Company with a similar financial position. Management asserts the carrying values of the promissory notes and related interest payable are a reasonable estimate of fair value as they represent the Company’s best estimate of their legal obligation for these debts. As there is no observable market for interest rates on similar promissory notes, the fair value was estimated using level 2 inputs in the fair value hierarchy. The Company has three non-interest-bearing promissory notes payable past due. The first is several years delinquent and there have been no renegotiated repayment terms. There is not an active market for default loans not bearing interest nor is there an observable market for lending to companies with a financial position similar to the Company. The Company has recorded imputed interest at a rate of 1% per month over the life of the promissory notes, with a corresponding amount recognized in additional paid-in capital representing the implicit compensation for the use of funds. Management asserts the payment date for these amounts cannot be reasonably determined. Management further asserts there is not a determinable interest rate for arm’s-length borrowings based on the current financial position of the Company and asserts the carrying value is the best estimate of the Company’s legal liability and represents the fair value for the promissory note. This would be considered a level 2 input in the fair value hierarchy. b) Credit risk Financial instruments that potentially subject the Company to credit risk consist of cash. The Company only has an immaterial cash balance and is not exposed to significant credit risk. c) Market risk Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises two types of risk: interest rate risk and foreign currency risk. i. Interest rate risk Interest rate risk consists of two components: a) Cash flow risk To the extent that payments made or received on the Company’s monetary assets and liabilities are affected by changes in the prevailing market interest rates, the Company is exposed to interest rate cash flow risk. The Company is exposed to interest rate cash flow risk on promissory notes payable of $500,000, which incur a variable interest rate of prime plus 1%. A hypothetical change of 1% on interest rates would increase or decrease net loss and comprehensive loss by $5,000. b) Price risk To the extent that changes in prevailing market interest rates differ from the interest rate on the Company’s monetary assets and liabilities, the Company is exposed to price risk. The Company’s promissory notes payable consist of $500,000 of variable interest rate notes and $4,786,319 of fixed interest rate notes. All of these notes are past due and are currently due on demand while interest continues to accrue. Due to the delinquency of the fixed interest rate promissory notes payable, there is no active market for these instruments and fluctuations in market interest rates do not have a significant impact on their estimated fair values as of December 31, 2016. At December 31, 2016, the effect on the net loss and comprehensive loss of a hypothetical change of 1% in market interest rate cannot be reasonably determined. c) Foreign currency risk The Company incurs certain accounts payable and expenses in Canadian dollars and is exposed to fluctuations in changes in exchange rates between the US and Canadian dollars. As at December 31, 2016, the effect on net loss and comprehensive loss of a hypothetical change of 10% between the US and Canadian dollar would not be material. The Company has not entered into any foreign currency contracts to mitigate risk. |
10. Income taxes
10. Income taxes | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 10. Income taxes The provision for income taxes differs from the result that would be obtained by applying the statutory tax rate of 34% (2015 - 34%) to income before income taxes. The difference results from the following items: December 31, 2016 December 31, 2015 Computed expected benefit of income taxes $ (3,431,869 ) $ (2,141,596 ) Stock-based compensation 2,494,428 1,095,817 Non-deductible interest expense 50,465 50,531 Increase in valuation allowance 886,976 995,248 Income tax provision $ — $ — The components of the net deferred income tax asset, the statutory tax rate and the amount of the valuation allowance are as follows: December 31, 2016 December 31, 2015 Net operating loss carried forward $ 37,532,822 $ 34,924,072 Tax rate 34 % 34 % Deferred income tax assets 12,761,159 11,874,184 Valuation allowance (12,761,159 ) (11,874,184 ) Net deferred income tax asset $ — $ — The potential benefit of the deferred income tax asset has not been recognized in these financial statements since it cannot be assured that it is more likely than not that such benefit will be utilized in future years. The Company believes that the available objective evidence creates sufficient uncertainty regarding the realizability of the deferred income tax assets such that a full valuation allowance has been recorded. The operating losses amounting to $37,532,822 for utilization in the United States of America, the jurisdiction where they were incurred, will expire between 2019 and 2036 if they are not used. The following table lists the fiscal year in which the loss was incurred and the expiration date of the operating loss carry-forwards: Fiscal Year Amount Expiry Date 1999 $ 88,022 2019 2000 4,425,866 2020 2001 3,681,189 2021 2002 2,503,951 2022 2003 2,775,900 2023 2004 1,250,783 2024 2005 1,304,283 2025 2006 1,532,322 2026 2007 1,479,818 2027 2008 1,599,919 2028 2009 1,723,146 2029 2010 822,678 2030 2011 1,746,615 2031 2012 1,638,421 2032 2013 2,568,328 2033 2014 2,855,631 2034 2015 2,927,200 2035 2016 2,608,750 2036 Total $ 37,532,822 |
11. Subsequent event
11. Subsequent event | 12 Months Ended |
Dec. 31, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | 11. Subsequent events a) On January 27, 2017, the Company’s Board of Directors approved a 100:1 reverse share split of the Company’s common stock. The reverse share split is pending approval from the SEC and other regulatory bodies. b) On November 27, 2017, the Company’s Board of Directors approved the grant of the option to 8,700,000 shares of common stock of the Company at a price of $0.015 per share for a term of five years. 2,200,000 of the approved options were to a director of the Company and 6,500,000 were to consultants of the Company. c) On January 31, 2018, the Company’s Board of Directors approved the following grants: · the option to acquire 47,000,000 shares of common stock of the Company at a price of $0.015 per share for a term of five years to 9 consultants of the Company, and · the option to acquire 200,000 shares of common stock of the Company at a price of $0.015 per share until April 19, 2019 to 1 consultant of the Company. Of the options granted with a term of five years, options to acquire a total of 11,000,000 shares of common stock were granted to three relatives of the Chairman of the Board. |
2. Significant accounting pol18
2. Significant accounting policies (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Significant Accounting Policies Policies | |
a) Principles of consolidation | a) Principles of consolidation These consolidated financial statements include the accounts of the Company and its integrated wholly-owned subsidiary, Canada ALRTech Health Systems Inc., which was incorporated on April 15, 2008 in Canada. All significant inter-company balances and transactions have been eliminated. |
b) Stock-based compensation | b) Stock-based compensation The Company follows the fair value method of accounting for stock-based compensation. The Company estimates the fair value of share-based payment awards on the date of grant using an option pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as an expense over the requisite service period in the Company’s consolidated financial statements. The Company estimates the fair value of the stock options using the Black-Scholes Option Pricing Model. The Black-Scholes Option Pricing Model requires the input of highly subjective assumptions, including the option’s expected life and the price volatility of the underlying stock. |
c) Income taxes | c) Income taxes Income taxes are accounted for under the asset and liability method. Deferred income tax assets and liabilities are recognized for the differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis, and operating loss carry-forwards that are available to be carried forward to future years for tax purposes. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. When it is not considered to be more likely than not that a deferred income tax asset will be realized, a valuation allowance is provided for the excess. The Company follows the accounting requirements associated with uncertainty in income taxes using the provisions of Financial Accounting Standards Board (“FASB”) ASC 740, Income Taxes. Using that guidance, tax positions initially need to be recognized in the financial statements when it is more-likely-than-not the positions will be sustained upon examination by the tax authorities. It also provides guidance for derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. As of December 31, 2016, the Company has no uncertain tax positions that qualify for either recognition or disclosure in the financial statements. |
d) Use of estimates | d) Use of estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, the measurement of stock-based compensation, the fair value of financial instruments and the reported amounts of revenues and expenses during the reporting period. Management believes the estimates are reasonable; however, actual results could differ from those estimates. |
e) Loss per share | e) Loss per share Basic loss per common share is calculated by dividing net loss by the weighted average number of common shares outstanding during the year. Diluted loss per common share is calculated by dividing the net loss by the sum of the weighted average number of common shares outstanding and the dilutive common equivalent shares outstanding during the year. Common equivalent shares consist of the shares issuable upon exercise of stock options and warrants calculated using the treasury stock method. Common equivalent shares are not included in the calculation of the weighted average number of shares outstanding for diluted loss per common shares when the effect would be anti-dilutive. |
f) Comprehensive income | f) Comprehensive income Comprehensive income is the overall change in the net assets of the Company for a period, other than changes attributable to transactions with stockholders. It is made up of net income and other comprehensive income. Other comprehensive income consists of net income and other gains and losses affecting stockholders' equity that under generally accepted accounting principles are excluded from net income. The Company has no items of other comprehensive income (loss) in any period presented. Therefore, as presented in the Company's consolidated statements of loss, net loss equals comprehensive loss. |
g) Fair value of financial instruments | g) Fair value of financial instruments The Company’s financial instruments include cash, accounts payable, promissory notes payable and lines of credit. The fair values of these financial instruments approximate their carrying values due to the relatively short periods to maturity of these instruments. For fair value measurement, U.S. GAAP establishes a three-tier hierarchy which prioritizes the inputs used in the valuation methodologies in measuring fair value: Level 1 — observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 — include other inputs that are directly or indirectly observable in the marketplace. Level 3 — unobservable inputs which are supported by little or no market activity. |
h) Recently adopted and issued accounting pronouncements | h) Recently adopted and issued accounting pronouncements i. Adopted In August 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-15, “Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entitiy’s Ability to Continue as a Going Concern” (“ASU 2014-15”). ASU 2014-15 requires management to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern for each annual and interim reporting period. If substantial doubt exists, additional disclosure is required. This new standard was effective for the Company for annual and interim periods beginning after December 15, 2016. Adoption of this pronouncement did not have a material impact on the Company’s consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-09, Compensation — Stock Compensation: Improvements to Employee Share-Based Payment Accounting ii. Issued In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities. This new standard provides guidance on how entities measure certain equity investments and present changes in the fair value. This standard requires that entities measure certain equity investments that do not result in consolidation and are not accounted for under the equity method at fair value and recognize any changes in fair value in net income. ASU 2016-01 is effective for fiscal years beginning after December 31, 2017. In June 2016, the FASB issued Accounting Standards Update ("ASU") No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The new standard requires financial assets measured at amortized cost be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The standard will be effective for the Company beginning January 1, 2020, with early application permitted. This standard is not expected to have a material impact on the Company’s financial position, results of operations or statement of cash flows upon adoption. In August 2016, the FASB issued Accounting Standards Update ("ASU") No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The new standard will make eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. The standard will be effective for the Company beginning January 1, 2018, with early application permitted. The standard will require adoption on a retrospective basis unless it is impracticable to apply, in which case we would be required to apply the amendments prospectively as of the earliest date practicable. The Company has implemented all new accounting pronouncements that are in effect and may impact its financial statements. The Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or statement of operations. |
3. Interest, advances and promi
3. Interest, advances and promissory notes payable (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Interest Advancesand Promissory Notes Payable [Abstract] | |
Schedule of Promissory Notes Payable - Relatives of Board of Directors | Promissory Notes Payable to Related Parties December 31, 2016 December 31, 2015 Promissory notes payable to relatives of directors collateralized by a general security agreement on all the assets of the Company, due on demand: i. Interest at 1% per month $ 580,619 $ 580,619 ii. Interest at 1.25% per month 51,347 51,347 iii. Interest at the U.S. bank prime rate plus 1% 100,000 100,000 iv. Interest at 0.5% per month 695,000 695,00 Promissory notes payable, unsecured, to relatives of a director, bearing interest at 1% per month, due on demand 1,465,000 1,465,000 Total Promissory Notes Payable to Related Parties $ 2,891,966 $ 2,891,966 |
Schedule of Activity of Promissory Notes Payable to Unrelated Lenders | Promissory Notes Payable to Unrelated Parties December 31, December 31, 2016 2015 Unsecured promissory notes payable to unrelated lenders: i. Interest at 1% per month, repayable on March 31, 2009, due on demand $ 450,000 $ 450,000 ii. Interest at 1% per month, with $50,000 repayable on December 31, 2004, $75,000 repayable on August 18, 2007, $75,000 repayable on November 19, 2007 and the balance due on demand. All are due on demand, accruing interest at the same rate. 887,455 887,455 iii. Interest at 0.625% per month, with $50,000 repayable on October 5, 2004, $40,000 repayable on December 31, 2004, and $60,000 repayable on July 28, 2006, all due on demand 150,000 150,000 iv. Non-interest-bearing, repayable on July 17, 2005, due on demand 270,912 270,912 v. Non-interest-bearing loan repayable at $25,000 per month beginning October 2009, none repaid to date 310,986 310,986 vi. Interest at 0.667% per month, with $125,000 due January 15, 2011 125,000 125,000 Promissory notes payable, secured by a guarantee from the Chief Executive Officer, bearing interest at 1% per month 200,000 230,000 Total Promissory Notes Payable to Unrelated Parties $ 2,394,353 $ 2,394,353 |
Schedule of Interest Payable | $ 2,620,172 515,571 3,135,743 494,171 $ 3,629,913 December 31, December 31, 2016 2015 Related parties (relatives of the Chairman) $ 1,956,403 $ 1,667,977 Non-related parties 1,673,511 1,467,766 $ 3,629,913 $ 3,135,743 |
4. Lines of Credit (Tables)
4. Lines of Credit (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Linesof Credit Related Party [Abstract] | |
Schedule Line of Credit Related Party | As of December 31, 2016, the Company has two lines of credit as follows: Creditor Interest Rate Borrowing Limit Repayment Terms Principal Borrowed Accrued Interest Total Outstanding Security Purpose Chairman and CEO 1% per Month $8,500,000 Due on Demand $ 7,628,219 $ 2,490,958 $10,119,177 General Security over Assets General Corporate Requirements Wife of Chairman 1% per Month $2,000,000 Due on Demand $ 2,000,000 $ 1,256,385 $ 3,256,385 General Security over Assets General Corporate Requirements Total $10,500,000 $ 9,628,219 $ 3,747,343 $13,375,562 As of December 31, 2015, the Company has two lines of credit as follows: Creditor Interest Rate Borrowing Limit Repayment Terms Principal Borrowed Accrued Interest Total Outstanding Security Purpose Chairman and CEO 1% per Month $7,000,000 Due on Demand $ 6,626,993 $ 1,628,716 $ 8,255,708 General Security over Assets General Corporate Requirements Wife of Chairman 1% per Month $2,000,000 Due on Demand $ 2,000,000 $ 1,016,385 $ 3,016,385 General Security over Assets General Corporate Requirements Total $9,000,000 $ 8,626,993 $ 2,645,101 $11,272,093 |
6. Additional paid in capital (
6. Additional paid in capital (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Stockholders' Equity Note [Abstract] | |
Schedule of Share-based Compensation, Stock Options, Activity | Year Ended Year Ended December 31, 2016 December 31, 2015 Weighted Average Weighted Average Number of Options Exercise Price Number of Options Exercise Price Outstanding, beginning of period 579,000,200 $ 0.015 245,700,100 $ 0.030 Granted 4,390,001,300 0.002 334,500,100 0.015 Cancelled (6,700,000) (0.030) - - Expired - - (1,200,000) (0.250) Exercised - - - - Outstanding, end of period 4,962,301,500 $ 0.004 579,000,200 $ 0.015 Exercisable, end of period 4,960,101,500 $ 0.004 575,650,200 $ 0.015 |
Schedule of Options Outstanding | December 31, 2016 December 31, 2015 Expiry Date Options Exercise Price Intrinsic Value Options Exercise Price Intrinsic Value May 4, 2016 - $ - - 1,000,000 $ 0.050 - May 23, 2016 - $ - - 100,000 $ 0.030 - May 27, 2017 400,000 $ 0.030 - 400,000 $ 0.030 - May 31, 2017 500,000 $ 0.050 - 500,000 $ 0.050 - August 16, 2017 250,000 $ 0.030 - 250,000 $ 0.030 - December 28, 2017 1,000,000 $ 0.030 - 1,000,000 $ 0.030 - January 28, 2018 1,500,000 $ 0.030 - 2,300,000 $ 0.030 - March 26, 2018 500,000 $ 0.030 - 500,000 $ 0.030 - April 9, 2018 1,000,000 $ 0.030 - 1,000,000 $ 0.030 - October 1, 2018 - $ - - 500,000 $ 0.030 - February 7, 2019 - $ - - 700,000 $ 0.030 - April 18,2019 - $ - - 2,000,000 $ 0.030 - May 21, 2019 500,000 $ 0.030 - 500,000 $ 0.030 - July 25, 2019 1,000,000 $ 0.030 - 1,000,000 $ 0.030 - August 1, 2019 1,250,000 $ 0.030 - 1,250,000 $ 0.030 - August 26, 2019 1,500,000 $ 0.030 - 1,500,000 $ 0.030 - January 30, 2020 2,900,000 $ 0.030 - 4,500,000 $ 0.030 - May 29, 2020 560,000,200 $ 0.002 - 560,000,200 $ 0.015 - July 21, 2021 4,390,001,300 $ 0.002 - $ - Total 4,962,301,500 $ 0.002 - 579,000,200 $ 0.015 - Weighted Average Remaining Contractual Life 4.81 4.37 |
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | December 31, December 31, Risk-free interest rate 1.68 % 1.68 % Expected life 5 years 5 years Expected dividends 0 % 0 % Expected volatility 210 % 194 % Forfeiture rate 0 % 0 % |
Schedule of Recognized Compensation Cost, Vested Awards | December 31, 2016 December 31, 2015 Interest expense $ 7,318,539 $ 3,184,459 Product development expense 14,267 14,374 Professional expense 577 3,806 Selling, general and administration expenses: 3,170 20,355 $ 7,336,553 $ 3,222,992 |
7. Related party transactions22
7. Related party transactions and balances (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Related Party Transactions And Balances Tables | |
Schedule of related party transactions | Year End December 31, 2016 Year End December 31, 2015 Related party transaction included within interest expense: Interest expenses on promissory notes issued to relatives of the Chairman & Chief Executive Officer of the Company $ 288,426 $ 309,826 Interest expense on lines of credit payable to the Chairman & Chief Executive Officer of the Company and his spouse $ 1,102,242 $ 944,010 Stock based compensation related to stock options granted to the Chairman & Chief Executive Officer for increasing the borrowing limit on the line of credit available to the Company $ 7,318,539 $ 3,184,459 Related party transactions including within selling, general and administration expenses Consulting fees to the Chairman & Chief Executive Officer of the Company accrued on the line of credit available to the Company $ 189,600 $ 189,600 Consulting fees paid to the President of the Company $ 15,500 $ 186,000 |
10. Income taxes_ (Tables)
10. Income taxes: (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Schedule of Components of Income Tax Expense (Benefit) | December 31, 2016 December 31, 2015 Computed expected benefit of income taxes $ (3,431,869 ) $ (2,141,596 ) Stock-based compensation 2,494,428 1,095,817 Non-deductible interest expense 50,465 50,531 Increase in valuation allowance 886,976 995,248 Income tax provision $ — $ — |
Schedule of Deferred Tax Assets and Liabilities | December 31, 2016 December 31, 2015 Net operating loss carried forward $ 37,532,822 $ 34,924,072 Tax rate 34 % 34 % Deferred income tax assets 12,761,159 11,874,184 Valuation allowance (12,761,159 ) (11,874,184 ) Net deferred income tax asset $ — $ — |
Summary of Operating Loss Carryforwards | Fiscal Year Amount Expiry Date 1999 $ 88,022 2019 2000 4,425,866 2020 2001 3,681,189 2021 2002 2,503,951 2022 2003 2,775,900 2023 2004 1,250,783 2024 2005 1,304,283 2025 2006 1,532,322 2026 2007 1,479,818 2027 2008 1,599,919 2028 2009 1,723,146 2029 2010 822,678 2030 2011 1,746,615 2031 2012 1,638,421 2032 2013 2,568,328 2033 2014 2,855,631 2034 2015 2,927,200 2035 2016 2,608,750 2036 Total $ 37,532,822 |
1. Basis of Presentation, Nat24
1. Basis of Presentation, Nature of Operations and Going Concern (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Basisof Presentation Natureof Operationsand Going Concern [Abstract] | ||
Working Capital Deficit | $ 23,230,725 | $ 20,621,972 |
Net Income (Loss) Attributable to Parent | $ (10,093,733) | $ (6,298,813) |
3. Interest, advances and pro25
3. Interest, advances and promissory notes payable (Details) - Promissory Notes Payable - Relatives of Board of Directors - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Promissory notes payable to relatives of directors collateralized by a general security agreement on all the assets of the Company, due on demand: | ||
i.Interest at 1% per month | $ 580,619 | $ 580,619 |
ii.Interest at 1.25% per month | 51,347 | 51,347 |
iii.Interest at the U.S. bank prime rate plus 1% | 100,000 | 100,000 |
iv. Interest at 0.5% per month | 695,000 | 69,500 |
Promissory notes payable, unsecured, to relatives of a director, bearing interest at 1% per month, due on demand | 1,465,000 | 1,465,000 |
Total Related Promissory Notes | $ 2,891,966 | $ 2,891,966 |
3. Interest, advances and pro26
3. Interest, advances and promissory notes payable (Details) - Unsecured Promissory Notes Payable to Unrelated Leaders - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Unsecured promissory notes payable to unrelated lenders: | ||
i. Interest at 1% per month, repayable on March 31, 2009, due on demand | $ 450,000 | $ 450,000 |
ii. Interest at 1% per month, with $50,000 repayable on December 31, 2004, $75,000 repayable on August 18, 2007, $75,000 repayable on November 19, 2007 and the balance due on demand. All are due on demand, accruing interest at the same rate. | 887,455 | 887,455 |
iii. Interest at 0.625% per month, with $50,000 repayable on October 5, 2004, $40,000 repayable on December 31, 2004, and $60,000 repayable on July 28, 2006, all due on demand | 150,000 | 150,000 |
iv. Non-interest-bearing, repayable on July 17, 2005, due on demand | 270,912 | 270,912 |
v. Non-interest-bearing loan repayable at $25,000 per month beginning October 2009, none repaid to date | 310,986 | 310,986 |
vi. Interest at 0.667% per month, with $125,000 due January 15, 2011 | 125,000 | 125,000 |
Promissory notes payable, secured by a guarantee from the Chief Executive Officer, bearing interest at 1% per month | 200,000 | 230,000 |
Total Promissory Notes Payable to Unrelated Parties | $ 2,394,353 | $ 2,394,353 |
3. Interest, advances and pro27
3. Interest, advances and promissory notes payable (Details) - Summary of Interest Payable Activity - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Summary of Interest Payable Activity [Abstract] | ||
Beginning Balance | $ 3,135,743 | $ 2,620,172 |
Interest incurred on promissory notes payable | 494,171 | 515,571 |
Ending Balance | $ 3,629,913 | $ 3,135,743 |
3. Interest, advances and pro28
3. Interest, advances and promissory notes payable (Details) - Interest Payable - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Interest Payable [Abstract] | |||
Relatives of directors | $ 1,956,403 | $ 1,667,977 | |
Non-related parties | 1,673,511 | 1,467,766 | |
Total | $ 3,629,913 | $ 3,135,743 | $ 2,620,172 |
4. Lines of Credit (Details)
4. Lines of Credit (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Principal Borrowed | $ 9,628,219 | $ 8,626,993 |
Accrued Interest | 3,747,343 | 2,645,101 |
Total Outstanding | $ 13,375,562 | $ 11,272,093 |
Chairman and CEO | ||
Interest Rate | 1.00% | 1.00% |
Borrowing Limit | $ 8,500,000 | $ 7,000,000 |
Repayment Terms | Due on Demand | Due on Demand |
Principal Borrowed | $ 7,628,219 | $ 6,626,993 |
Accrued Interest | 2,490,958 | 1,628,716 |
Total Outstanding | $ 10,119,177 | $ 8,255,708 |
Security | General Security over Assets | General Security over Assets |
Purpose | General Corporate Requirements | General Corporate Requirements |
Wife of Chairman | ||
Interest Rate | 1.00% | 1.00% |
Borrowing Limit | $ 2,000,000 | $ 2,000,000 |
Repayment Terms | Due on Demand | Due on Demand |
Principal Borrowed | $ 2,000,000 | $ 2,000,000 |
Accrued Interest | 1,256,385 | 1,016,385 |
Total Outstanding | $ 3,256,385 | $ 3,016,385 |
Security | General Security over Assets | General Security over Assets |
Purpose | General Corporate Requirements | General Corporate Requirements |
6. Additional paid in capital -
6. Additional paid in capital - Summary of Stock Option Activity (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Summary of Stock Option Activity [Abstract] | ||
Outstanding, beginning of period | 579,000,200 | 245,700,100 |
Average Exercise Price, beginning | $ 0.015 | $ 0.030 |
Exercisable, end of period | $ 0.002 | $ 0.015 |
Granted | 4,390,001,300 | 334,500,100 |
Granted, per share | $ 0.002 | $ 0.015 |
Cancelled | (6,700,000) | |
Cancelled per share | $ (0.030) | |
Expired | (1,200,000) | |
Expired pe share | $ (0.250) | |
Outstanding, end of period | 4,962,301,500 | 579,000,200 |
Average Exercise price, ending | $ 0.004 | $ 0.015 |
6. Additional paid in capital31
6. Additional paid in capital - Options Outstanding (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Options Outstanding [Abstract] | |||
Options Outstanding | 4,962,301,500 | 579,000,200 | 245,700,100 |
Exercise Price | $ 0.002 | $ 0.015 | |
Weighted Average Remaining Contractual Life | 4 years 9 months 22 days | 4 years 4 months 13 days |
6. Additional paid in capital32
6. Additional paid in capital - Fair Value Method Stock-Based Compensation (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Fair Value Method Stock-Based Compensation [Abstract] | ||
Risk-free interest rate | 1.68% | 1.68% |
Expected life | 5 years | 5 years |
Expected dividends | 0.00% | 0.00% |
Expected volatility | 210.00% | 194.00% |
Forfeiture rate | $ 0 | $ 0 |
6. Additional paid in capital33
6. Additional paid in capital - Fair Value of Stock Options (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Fair Value of Stock Options [Abstract] | ||
Interest expense | $ 7,318,539 | $ 3,184,459 |
Product development expense | 14,267 | 14,374 |
Professional expense | 577 | 3,806 |
Selling, general and administration expenses: | 3,170 | 20,355 |
Total | $ 7,336,553 | $ 3,222,992 |
7. Related Party Transactions (
7. Related Party Transactions (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Related party transaction included within interest expense: | ||
Interest expenses on promissory notes issued to relatives of the Chairman & Chief Executive Officer of the Company | $ 288,426 | $ 309,826 |
Interest expense on lines of credit payable to the Chairman & Chief Executive Officer of the Company and his spouse | 1,102,242 | 944,010 |
Stock based compensation related to stock options granted to the Chairman & Chief Executive Officer for increasing the borrowing limit on the line of credit available to the Company | 7,318,539 | 3,184,459 |
Related party transactions including within selling, general and administration expenses: | ||
Consulting fees to the Chairman & Chief Executive Officer of the Company accrued on the line of credit available to the Company | 189,600 | 189,600 |
Consulting fees paid to the President of the Company | $ 15,500 | $ 186,000 |
10. Income taxes_ (Details) - P
10. Income taxes: (Details) - Provision for Income Taxes - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Provision for Income Taxes [Abstract] | ||
Computed expected benefit of income taxes | $ (3,431,869) | $ (2,141,596) |
Stock-based compensation | 2,494,428 | 1,095,817 |
Non-deductible interest expense | 50,465 | 50,531 |
Increase in valuation allowance | 886,976 | 995,248 |
Income tax provision | $ 0 | $ 0 |
10. Income taxes_ (Details) - N
10. Income taxes: (Details) - Net Deferred Income Tax Asset - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Net Deferred Income Tax Asset [Abstract] | ||
Net operating loss carried forward | $ 37,532,822 | $ 34,924,072 |
Tax rate | 34.00% | 34.00% |
Deferred income tax assets | $ 12,761,150 | $ 11,874,184 |
Valuation allowance | (12,761,150) | (11,874,184) |
Net deferred income tax asset | $ 0 | $ 0 |
10. Income taxes_ (Details) - S
10. Income taxes: (Details) - Summary of Operating Loss Carryforwards - USD ($) | Dec. 31, 2036 | Dec. 31, 2035 | Dec. 31, 2034 | Dec. 31, 2033 | Dec. 31, 2032 | Dec. 31, 2031 | Dec. 31, 2030 | Dec. 31, 2029 | Dec. 31, 2028 | Dec. 31, 2027 | Dec. 31, 2026 | Dec. 31, 2025 | Dec. 31, 2024 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Summary of Operating Loss Carryforwards [Abstract] | ||||||||||||||||||
Opearting Loss Carryforward | $ 2,608,750 | $ 2,927,200 | $ 2,855,631 | $ 2,568,328 | $ 1,638,421 | $ 1,746,615 | $ 822,678 | $ 1,723,146 | $ 1,599,919 | $ 1,479,818 | $ 1,532,322 | $ 1,304,283 | $ 1,250,783 | $ 2,775,900 | $ 2,503,951 | $ 3,681,189 | $ 4,425,866 | $ 88,022 |