SCHEDULE 14C INFORMATION
Information Statement
Pursuant to Section 14(c) of
the Securities
Exchange Act of 1934
Check the appropriate box:
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Preliminary Information Statement
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Confidential, for Use of the Commission Only (as permitted
by Rule 14c-5(d)(2))
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[X]
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Definitive Information Statement
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ALR TECHNOLOGIES
INC.
(Name of Registrant
as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate
box):
[X]
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None required
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Fee computed on table below per Exchange
Act Rules 14c-5(g) and 0-11.
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Title of each class of securities to which transaction
applies:
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Aggregate number of securities to which transaction
applies:
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Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth amount on which filing fee is calculated and state how it was determined):
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Proposed maximum aggregate value of transaction:
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Total fee paid:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset
as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the Form or Schedule and the date of the filing.
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1.
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Amount previously paid:
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Form, Schedule or Registration Statement No.:
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Filing Party:
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Date Filed:
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ALR TECHNOLOGIES
INC.
7400 Beaufont Springs
Drive
Suite 300
Richmond, VA 23225
(804) 554-3500
INFORMATION STATEMENT
Introduction
This
information statement is being mailed or otherwise furnished to stockholders of ALR TECHNOLOGIES INC., a Nevada corporation (the “Company”
or “We”) in connection with the prior receipt by the Board of Directors of approval by written consent of the holders of
a majority of our common stock of proposals to elect Sidney Chan, Dr. Alfonso Salas, Kenneth Robulak, Peter Stafford and Ronald Cheng
to our board of directors.
This information statement
is being first sent to stockholders on or about August 25, 2021.
WE ARE NOT ASKING
YOU FOR A PROXY
AND YOU ARE REQUESTED
NOT TO SEND US A PROXY
Vote Required
The
proposed action requires the approval of a majority of the outstanding shares of common stock. Each holder of common stock is entitled
to one (1) vote for each share held for each director. The record date for the purpose of determining the number of shares outstanding,
and for determining stockholders entitled to vote, is the close of business on August 11, 2021 (the “Record Date”). As of
the record date, we had 542,716,344 shares of common stock issued and outstanding. Holders of the shares of common stock have no preemptive
rights. All outstanding shares are fully paid and non-assessable. The transfer agent for the common stock is Pacific Stock Transfer Company,
6725 Via Austi Parkway, Suite 300, Las Vegas, Nevada 89119 (the “Transfer Agent”). The Transfer Agent’s telephone number
is 1 (800) 785-7782.
On
August 6, 2021, shareholders holding a majority of the outstanding shares of our common stock executed a written consent approving the
election of Sidney Chan, Dr. Alfonso Salas, Kenneth Robulak, Peter Stafford and Ronald Cheng to our board of directors.
Meeting Not Required
Nevada
Revised Statutes 78.320(2) provides that any action required or permitted to be taken at a meeting of stockholders may be taken without
a meeting if, before or after the action, a written consent thereto is signed by the stockholders holding at least a majority of the
voting power.
Furnishing Information
This
information statement is being furnished to all holders of our common stock. The Form 10-K for the year ending December 31, 2020 and
all subsequent filings may be viewed on the Securities and Exchange Commission web site at www.sec.gov
in the EDGAR Archives and are incorporated herein by reference. We are presently current in the filing of all reports required to be
filed with the Securities and Exchange Commission.
Dissenters Rights
of Appraisal
There
are no dissenter’s rights of appraisal applicable this action to amend the articles of incorporation and create a class of preferred
stock.
Proposals by Security
holders
No
security holders entitled to vote has transmitted any proposals to be acted upon by you.
Vote Obtained
The following individuals
own the number of shares and percentages set forth opposite their names:
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Sidney Chan
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189,845,000
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35.0%
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Christine Kan
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193,153,482
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35.6%
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Total
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382,998,482
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70.6%
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On August 6, 2021,
the foregoing persons or entities executed a written consent approving the election of Sidney Chan, Dr. Alfonso Salas, Kenneth Robulak,
Peter Stafford and Ronald Cheng to our board of directors.
PROPOSAL NO. 1
NOMINEES
Each of our directors
serves until his or her successor is elected and qualified. Each of our officers is elected by the board of directors to a term of one
(1) year and serves until his or her successor is duly elected and qualified, or until he or she is removed from office. The board of
directors has audit, nominating and compensation committees.
The
name, address, age and position(s) of our present officers and directors are set forth below:
Name
and Address
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Age
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Position(s)
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Sidney Chan
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70
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Director since August 1997.
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7400
Beaufont Springs Dr., Suite 300
Richmond, VA 23225
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Chairman of the Board of
Directors, Secretary, Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer.
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Dr. Alfonso Salas
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61
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Director since August 21,
2012.
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7400
Beaufont Springs Dr., Suite 300
Richmond, VA 23225
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Kenneth Robulak
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73
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Director since August 21,
2012.
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7400
Beaufont Springs Dr., Suite 300
Richmond, VA 23225
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Peter Stafford
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84
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Director since August 1,
2014.
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7400
Beaufont Springs Dr., Suite 300
Richmond, VA 23225
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Ronald
Cheng
7400 Beaufont Springs Dr., Suite 300
Richmond, VA 23225
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71
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Director since January
30, 2015
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The foregoing persons
are our directors, and where disclosed, officers.
Background of our directors and director
nominees
Sidney Chan - Chairman of the Board
of Directors, Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer, Secretary, Treasurer and a Member of the Board
of Directors of the Company
Mr.
Chan joined ALR Technologies Inc. in August 1997. He has been instrumental in the Company’s financing, product development and
corporate development. Mr. Chan has led the product development of the Company’s Diabetes Management System. 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 Robulak
- Member of the Board of Directors of the Company
From
December 14, 1999 to January 31, 2001 and since August 21, 2012, Mr. Robulak was a member of our board of directors and from April 4,
2000 to January 31, 2001 Mr. Robulak was our chief financial officer, secretary, treasurer and vice president. Mr. Robulak
resigned as an officer and director on January 31, 2001. At the time of his resignation, Mr. Robulak did not have any disagreements
with us relating to our operations, policies, or practices. Mr. Robulak’s three decade career with Canadian banks and financial
institutions included corporate and investment banking. Mr. Robulak earned a Bachelor of Commerce degree in finance and marketing in
1972 and is a Fellow of the Institute of Canadian Bankers.
Dr. Alfonso Salas
- Member of the Board of Directors of the Company
Dr.
Salas graduated with distinction from Universidad Metroplitana of Barranquilla, Colombia in 1983 with a Doctor of Medicine degree. He
began practicing in Santa Marta, Columbia in rural medical facilities and then opened a private practice in 1984. He worked as a
physician with a number of shipping companies and became the Medical Director in the office of the Ministry of Social Security and Labor
of Columbia in 1991, doing medical assessments for work related accidents. In 1993 Dr. Salas was appointed Director of a Medical
Service Plan of Columbia and with a support staff of more than thirty people, maintained a caseload, provided assessment procedures,
and referral services to hospitals, clinics, and specialists and organizing and monitoring 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. Currently Dr. Salas operates an
import/export business, Salas Trading, and serves on the board of directors of and as the treasurer for Westbrook Education Fund, a not
for profit entity.
Peter Stafford
- Member of the Board of Directors of the Company
Mr.
Stafford is a retired lawyer and business consultant, having practised with Fasken Martineau DuMoulin LLP, a major Canadian based international
law firm, and its predecessor firms, from 1966 to 2013, except for several years spent as in-house counsel for clients of the firm. From
1989 until his retirement from full-time practice in 2006, Mr. Stafford served as senior partner in Fasken Martineu DuMoulin LLP, including
leading the start of its Johannesburg, South Africa office in 2003. 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. From August 2013 to March 2018, Mr. Stafford was a director, secretary
and audit committee chair of Russell Breweries Inc. (TSX-V: RB). Mr. Stafford also served as Director of two private companies, Pikes
Peak Resources Inc. from 2007 to 2012 and Paraguay Minerals Inc., from 2007 to date. Mr. Stafford obtained his Bachelor of Arts from
the University of Cape Town in 1957 and obtained an LL.B. from the University of South Africa in 1960.
Ronald Cheng –
Member of the Board of Directors of the Company
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. 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 received his Bachelor of Arts from Amherst
College in 1970 and a Juris Doctor degree from the University of Toronto in 1975.
Involvement in Certain Legal Proceedings
During the past ten
years, Messrs. Chan, Robulak, Stafford, Cheng and Dr. Salas have not been the subject of the following events:
1.
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A petition under the Federal bankruptcy
laws or any state insolvency law was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court
for the business or property of such person, or any partnership in which he was a general partner at or within two years before the
time of such filing, or any corporation or business association of which he was an executive officer at or within two years before
the time of such filing;
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Convicted in a criminal proceeding or is
a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses);
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3.
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The subject of any order, judgment, or
decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining
him from, or otherwise limiting, the following activities;
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i)
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Acting as a futures commission merchant,
introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other
person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment
adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company,
bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with
such activity;
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ii)
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Engaging in any type of business practice; or
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iii)
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Engaging in any activity in connection with the purchase
or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities
laws;
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4.
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The subject of any order, judgment or decree,
not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for
more than 60 days the right of such person to engage in any activity described in paragraph 3.i in the preceding paragraph or to
be associated with persons engaged in any such activity;
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5.
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Was found by a court of competent jurisdiction
in a civil action or by the Commission to have violated any Federal or State securities law, and the judgment in such civil action
or finding by the Commission has not been subsequently reversed, suspended, or vacated;
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Was found by a court of competent jurisdiction
in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in
such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated;
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7.
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Was the subject of, or a party to, any
Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated,
relating to an alleged violation of:
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i)
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Any Federal or State securities
or commodities law or regulation; or
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ii)
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Any law or regulation respecting financial institutions
or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution,
civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or
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iii)
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Any law or regulation prohibiting mail or wire fraud
or fraud in connection with any business entity; or
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8.
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Was the subject of, or a party to, any
sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26)
of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act
(7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members
or persons associated with a member.
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Audit Committee and Charter
We
have a separately-designated audit committee of the board. The Audit Committee is composed of three members of our board of directors:
Mr. Sidney Chan, Mr. Kenneth Robulak and Dr. Alfonso Salas. Mr. Robulak and Dr. Salas are deemed independent. Mr. Chan holds office as
Chief Executive Officer and Chief Financial Officer of the Company. Our audit committee is responsible for: (1) selection and oversight
of our independent accountant; (2) establishing procedures for the receipt, retention and treatment of complaints regarding accounting,
internal controls and auditing matters; (3) establishing procedures for the confidential, anonymous submission by our employees of concerns
regarding accounting and auditing matters; (4) engaging outside advisors; and, (5) funding for the outside auditory and any outside advisors
engagement by the audit committee. A copy of our audit committee charter is filed as Exhibit 99.19 with our 2013 Form 10-K on March 31,
2014.
Audit Committee Financial Expert
None
of our directors or officers have the qualifications or experience to be considered a financial expert. We believe the cost related to
retaining a financial expert at this time is prohibitive. Further, because of our limited operations, we believe the services of a financial
expert are not warranted and the members of our Audit Committee have an appropriate level of financial knowledge and experience.
Code of Ethics
We
have adopted a corporate code of ethics. We believe our code of ethics is reasonably designed to deter wrongdoing and promote honest
and ethical conduct; provide full, fair, accurate, timely and understandable disclosure in public reports; comply with applicable laws;
ensure prompt internal reporting of code violations; and provide accountability for adherence to the code. A copy of the code of ethics
is filed as Exhibit 14.1 with our 2003 Form 10-K on April 14, 2004.
Disclosure Committee and Committee
Charter
We
have a disclosure committee and disclosure committee charter. Our disclosure committee is comprised of all of our officers and directors.
The purpose of the committee is to provide assistance to the Chief Executive Officer and the Chief Financial Officer in fulfilling their
responsibilities regarding the identification and disclosure of material information about us, and the accuracy, completeness and timeliness
of our financial reports. A copy of the disclosure committee charter is filed as Exhibit 99.2 with our 2003 Form 10-K
on April 14, 2004.
Compensation Committee and Charter
We
have a separately-designated compensation committee of the board. The compensation committee is composed of three members of our board
of directors: Mr. Sidney Chan, Mr. Kenneth Robulak and Dr. Alfonso Salas. Mr. Robulak and Dr. Salas are deemed independent. Mr. Chan
holds office as Chief Executive Officer and Chief Financial Officer of the Company. Our compensation committee is responsible for making
recommendations on appropriate compensation packages for directors, executives and employees that will be competitive directly with compensation
packages offered by medical technology or pre-commercialization companies and also industries that source executives and employees directly
from the same talent pool. A copy of our compensation committee charter is filed as Exhibit 99.7 with our 2013 Form 10-Q on August 14,
2013.
Nomination Committee and Charter
We
have a separately-designated nomination committee of the board. The nomination committee is composed of three members of our board of
directors: Mr. Sidney Chan, Mr. Kenneth Robulak and Dr. Alfonso Salas. Mr. Robulak and Dr. Salas are deemed independent. Mr. Chan holds
office as Chief Executive Officer of the Company. Our nomination committee is responsible for evaluating and recommending candidates
as directors of the Company as well as evaluating the current board of directors. A copy of our nomination charter is filed as Exhibit
99.8 with our 2013 Form 10-Q on August 14, 2013.
Section 16(a) of the Securities Exchange
Act of 1934
Section
16(a) of the Securities Exchange Act of 1934, as amended, requires the Company’s directors, officers and persons who beneficially
owned more than ten percent of the Company’s common stock to file reports of ownership and changes in ownership of common stock.
Based
solely upon a review of Forms 3, 4 and 5 furnished to the Company during the fiscal years 2019, 2020 and the fiscal year to date of 2021,
Messrs., Chan, Robulak, Stafford, Cheng and Dr. Salas have filed all Form 3s and 4s required by law.
EXECUTIVE COMPENSATION
The
following table sets forth the compensation paid by us during the last three fiscal years for our officers. This information includes
the dollar value of base salaries, bonus awards and number of stock options granted, and certain other compensation, if any. The compensation
discussed addresses all compensation awarded to, earned by, or paid to our named executive officers.
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
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Year
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Services
Fee
(US$)
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Bonus
(US$)
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Stock
Awards
(US$)
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Option
Awards
(US$)
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Non-Equity
Incentive
Plan
(US$)
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Non-qualified
Deferred
Earnings
(US$)
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All
Other
(US$)
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Total
(US$)
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(a)
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(b)
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(c)
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(d)
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(e)
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(f)
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(g)
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(h)
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(i)
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(j)
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Sidney
Chan [1][2][3]
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2020
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240,000
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0
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0
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0
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0
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0
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9,600
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249,600
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Chairman,
CEO,
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2019
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180,000
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0
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0
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0
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0
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0
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9,600
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189,600
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President
and CFO
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2018
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180,000
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0
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0
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0
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0
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0
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9,600
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189,600
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[1]
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All other compensation
includes automobile allowance.
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[2]
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Services fee and other
annual compensation for fiscal 2020 totaling $249,600, 2019 and 2018 totaling $189,600 in each year respectively has accrued against
the line of credit payable provided by Mr. Chan to the Company. Options granted to acquire shares of common stock of the Company
to Mr. Chan and his spouse for providing operating lines of credit to the Company are not included in the table above.
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[3]
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Effective January 1, 2020,
the consulting fees earned by the Chief Executive Officer increased from $180,000 per annum to $240,000 per annum.
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Outstanding Equity
Awards as at August xx, 2021
Name
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Number
of
Securities
Underlying
Unexercised
Options
Exercisable
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Number
of
Securities
Underlying
Unexercised
Options
Unexercisable
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Equity
Incentive
Plan Awards:
Securities
Underlying
Unexercised
Unearned
Options
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Option
Exercise
Price
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Option
Expiration
Date
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Number
of
Shares or
Units of
Stock
that have
not Vested
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Equity
Incentive
Plan Awards:
Number of
Unearned
Shares, Units
that have
not vested
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(a)
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(b)
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(c)
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(d)
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(e)
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(f)
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(g)
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(h)
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Sidney
Chan
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5,045,001,500
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0
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0
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$0.002
- $0.015
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2024
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0
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0
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Dr.
Alfonso Salas
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5,000,000
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0
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0
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$0.035
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2024
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0
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0
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Kenneth
Robulak
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18,000,000
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0
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0
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$0.015
- $0.05
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2022
- 2025
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0
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0
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Ronald
Cheng
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5,000,000
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0
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0
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$0.015
- $0.035
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2024
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0
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0
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Peter
Stafford
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5,000,000
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0
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0
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$0.015
- $0.035
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2024
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0
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0
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Mr. Sidney Chan
On
March 6, 2011, Mr. Chan was granted the option to acquire 20,000,000 shares of common stock of the Company, exercisable at $0.125 per
share. For each dollar the Company borrowed 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:
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i.
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The
options in respect of shares not vested were vested immediately, and
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ii.
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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.
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On
June 27, 2012, the Company granted Mr. Chan the option to acquire 15,750,000 shares of common stock of the Company with an exercise price
of $0.07 per share until March 6, 2016. On December 28, 2012, the exercise price of this option granted on June 27, 2012 was reduced
to $0.05 per share.
On
December 28, 2012, the Company granted Mr. Chan the option to acquire:
-
14,250,000 shares
of common stock of the Company at an exercise price of $0.05 per share
-
50,000,000 shares
of common stock of the Company at an exercise price of $0.03 per share
The options granted
to acquire 64,250,000 shares of common stock were exercisable until December 28, 2017.
Mr. Sidney Chan
(continued)
On
April 1, 2014, 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 $4,000,000 to $5,500,000. In exchange for increasing the borrowing limit, the Company:
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·
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granted
Mr. Chan the option to acquire 83,333,400 shares of common stock of the Company at a price
of $0.03 per share for a term of five years,
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·
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reduced
the exercise price of Mr. Chan’s option to acquire 35,750,000 shares of common stock
of the Company, granted June 2012, from $0.05 per share to $0.03 per share,
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·
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reduced
the exercise price of Mr. Chan’s option to acquire 14,250,000 shares of common stock
of the Company, granted December 2012, from $0.05 per share to $0.03 per share,
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·
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granted
Ms. Kan the option to acquire 26,666,700 shares of common stock of the Company at an exercise
price of $0.03 per share for a term of five years.
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·
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reduced
the exercise price of the option granted January 2011 to the spouse of Mr. Chan (Ms. Kan),
to acquire 20,000,000 shares of common stock of the Company from $0.05 per share to $0.03
per share, and
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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 increasing the borrowing limit the Company:
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·
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reduced
the exercise price of the 230,000,100 shares of common stock under option to Mr. Chan and
his spouse from $0.03 per share to $0.015 per share;
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·
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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;
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·
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granted
Mr. Chan the right and option to purchase, an additional 330,000,100 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.
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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 increasing the borrowing limit the Company:
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·
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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;
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·
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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 a term of five years
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On April 12, 2019,
the expiry date of May 29, 2020 for the option held by Mr. Chan and his spouse to acquire 560,000,200 shares of common stock at a price
of $0.002 was extended to April 12, 2024.
On June 19, 2019,
Mr. Chan exercised his option to acquire 25,000,000 shares of common stock of the Company at a price of $0.002 per share by providing
his forgiveness of an outstanding debt owed by the Company to him in the amount of $50,000.
Mr. Sidney Chan
(continued)
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 a term of five years.
On
June 30, 2021, the Company and Mr. Chan agreed to extend the expiry date of the options held by Mr. Chan and his spouse, Ms. Kan, to
acquire 4,365,001,300 shares of common stock of the Company from July 1, 2021 to April 12, 2024. The options were originally granted
on July 1, 2016 and continue to be exercisable at a price of $0.002 per share.
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.
Mr. Kenneth Robulak
On
July 25, 2014, the Company granted Mr. Robulak the option to acquire 1,000,000 shares of common stock at a price of $0.03 for a term
of five years. On July 2, 2015, the exercise price of the option to acquire 1,000,000 shares of common stock was reduced from $0.03 per
share to $0.015 per share. On April 12, 2019, the expiry
date of this option to acquire 1,000,000 shares of common stock of the Company was extended to April 12, 2024.
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
October 12, 2020, the Company granted Mr. Robulak the option to acquire 8,000,000 shares of common stock at a price of $0.05 per share
until May 31, 2025 subject to performance vesting conditions.
Mr. Peter Stafford
On
August 1, 2014, the Company granted Mr. Stafford the option to acquire 500,000 shares of common stock at a price of $0.03 for a term
of five years. On July 2, 2015, the exercise price of
the option to acquire 500,000 shares of common stock of the Company was reduced from $0.03 per share to $0.015 per share. On April 12,
2019, the expiry date of August 1, 2019 for the option held by Mr. Stafford to acquire 500,000 shares of common stock of the Company
at a price of $0.015 was extended 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.
Mr. Ronald Cheng
On
August 1, 2014, the Company granted Mr. Cheng the option to acquire 500,000 shares of common stock at a price of $0.03 for a term of
five years. On July
2, 2015, the exercise price of the option to acquire 500,000 shares of common stock of the Company was reduced from $0.03 per
share to $0.015 per share. On April 12, 2019, the expiry date of August 1, 2019 for the option held by Mr. Cheng to acquire 500,000 shares
of common stock of the Company at a price of $0.015 was extended 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 $0.035 per share for a term of five
years.
Option Exercises
and Stock Vested for the year ended December 31, 2020
Name
|
Number
of Shares
Acquired On
Exercise
(#)
|
Value
Realized
On Exercise
($)
|
Number
of Shares
Acquired On
Vesting
(#)
|
Value
Realized
On Vesting
($)
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
Sidney
Chan
|
0
|
0
|
0
|
0
|
Dr.
Alfonso Salas
|
0
|
0
|
0
|
0
|
Kenneth
Robulak
|
0
|
0
|
0
|
0
|
Peter
Stafford
|
0
|
0
|
0
|
0
|
Ronald
Cheng
|
0
|
0
|
0
|
0
|
The Company does not
have any long-term incentive plans. The Company has contractual compensation arrangements with the following individuals:
Sidney Chan
The
Company has a consulting arrangement with Mr. Sidney Chan, Chief Executive Officer and Chairman of the Board of Directors of the Company.
Under the terms of the contract, Mr. Chan is paid $240,000 per annum for services, receive a vehicle allowance of $800 per month, receive
health care insurance and receive club allowances. The contract can be terminated at any time with thirty days’ notice and the
payment of two years annual salary. Should the contract be terminated, all debts owed to Mr. Chan and his spouse must be immediately
repaid. The initial term of the contract is for one year and automatically renews for continuous one year terms. Also under the terms
of the contract are the following:
|
i.
|
Incentive
Revenue Bonus
|
Mr. Chan
will be entitled to a 1% net sales commission from the sales of any of the Company’s products at any time during his life, regardless
if Mr. Chan is still under contract with the Company.
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
|
Effective
January 1, 2020, the consulting agreement between the Company and Mr. Chan was modified whereby Mr. Chan will be paid $240,000 per annum
for services. All other terms and conditions remain unchanged.
Compensation of Directors
The
Board of Directors consists of five members, Mr. Sidney Chan, Mr. Kenneth James Robulak, Dr. Alfonso Salas, Mr. Peter Stafford and Mr.
Ronald Cheng. Mr. Kenneth Robulak, Dr. Alfonso Salas, Mr. Peter Stafford and Mr. Ronald Cheng are independent directors.
The
Company’s Board of Directors unanimously resolved that members receive no cash compensation for their services; however, they are
reimbursed for travel expenses incurred in serving on the Board of Directors. Independent directors are compensated from time to time
through the grant of options to purchase shares of common stock of the Company. Directors whom are also Officers or consultants of the
Company are compensated for those positions as disclosed under Executive Compensation for those positions.
No
additional amounts are payable to the members of the Company’s Board of Directors for committee participation or special assignments.
Compensation for the Directors for the
year ended December 31, 2020 was as follows:
Name
|
Fees
Earned or
Paid in
Cash
(US$)
|
Stock
Awards
(US$)
|
Option
Awards
(US$)
|
Non-equity
Incentive Plan
Compensation
(US$)
|
Non-qualified
Deferred
Compensation
Earnings
(US$)
|
All
Other
Compensation
(US$)
|
Total
(US$)
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
Sidney Chan
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
Kenneth Robulak#
|
0
|
0
|
559,554
|
0
|
0
|
0
|
559,554
|
Peter Stafford
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
Dr. Alfonso Salas
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
Ronald Cheng
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
# The
Company granted Mr. Robulak the option 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 will vest subject to fulfillment of performance conditions. The options had a fair value of $559,554 calculated
using the Black Scholes option pricing model. To date, no options have vested.
Indemnification
Under
our Bylaws, we may indemnify an officer or director who is made a party to any proceeding, including a lawsuit, because of his position,
if he/she acted in good faith and in a manner he/she reasonably believed to be in our best interest. We may advance expenses incurred
in defending a proceeding. To the extent that the officer or director is successful on the merits in a proceeding as to which he/she
is to be indemnified, we must indemnify him/her against all expenses incurred, including attorney’s fees. With respect to a derivative
action, indemnity may be made only for expenses actually and reasonably incurred in defending the proceeding, and if the officer or director
is judged liable, only by a court order. The indemnification is intended to be to the fullest extent permitted by the laws of the State
of Nevada.
Regarding
indemnification for liabilities arising under the Securities Act of 1933, as amended, which may be permitted to directors or officers
under Nevada law, we are informed that, in the opinion of the Securities and Exchange Commission, indemnification is against public policy,
as expressed in the Act and is, therefore, unenforceable.
CERTAIN RELATIONSHIPS
AND TRANSACTIONS
All transactions with
related parties were incurred in the normal course of operations and measured at the exchange amount, which is the amount of consideration
and agreed upon by the transaction parties.
Year Ended December 31, 2020
During
the 2020 fiscal year, the Company:
|
·
|
incurred
interest expense of $316,000 on $3,032,000 of promissory notes due to relatives of Sidney
Chan;
|
|
·
|
incurred
interest expense of $1,464,000 on $11,539,000 of amounts borrowed and outstanding on the
lines of credit payable to Sidney Chan and Christine Kan.
|
|
·
|
issued
240,000,000 shares of common stock to Sidney Chan and Christine Kan to settle interest owing
on promissory notes and line of credits amount payable aggregating $12,000,000
|
As
at December 31, 2020, Company owed:
|
·
|
accrued
interest on promissory notes owed to relatives of Sidney Chan of $874,000, and
|
|
·
|
accrued
interest on the lines of credit of $375,000.
|
Year Ended December 31, 2019
During
the 2019 fiscal year, the Company:
|
·
|
incurred
interest expense of $299,100 on $2,892,000 of promissory notes due to relatives of Sidney
Chan,
|
|
·
|
pursuant
to a private transaction, had promissory notes principal of $140,000 assigned from an arm’s
length party to Christine Kan, bringing promissory notes due to relatives of Sidney Chan
to $3,032,000, and
|
|
·
|
incurred
interest expense of $1,366,000 on $11,757,300 of amounts borrowed and outstanding on the
lines of credit payable to Sidney Chan and Christine Kan.
|
As
at December 31, 2019, Company owed:
|
·
|
accrued
interest on promissory notes owed to relatives of Sidney Chan of $2,876,300, and
|
|
·
|
accrued
interest on the lines of credit of $7,553,400.
|
SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth, as of the date of this report, the total number of shares owned beneficially by each of our directors, officers
and key employees, individually and as a group, and the present owners of 5% or more of our total outstanding shares. The stockholder
listed below has direct ownership of his/her shares and possesses sole voting and dispositive power with respect to the shares.
Name
of Beneficial Owner
|
Direct
Amount of
Beneficial
Owner
|
|
Position
|
Percent
of Class
|
Sidney
Chan
|
383,498,482
|
[1][2]
|
Chairman,
Chief Executive Officer, Chief Financial
Officer and member of the Board of
Directors
|
70.7%
|
|
|
|
|
|
Dr.
Alfonso Salas
|
1,577,738
|
[3]
|
Member
of the Board of Directors
|
0.3%
|
|
|
|
|
|
Kenneth
Robulak
|
1,190,000
|
[4]
|
Member
of the Board of Directors
|
0.2%
|
|
|
|
|
|
Peter
Stafford
|
500,000
|
[5]
|
Member
of the Board of Directors
|
0.1%
|
|
|
|
|
|
Ronald
Cheng
|
1,205,800
|
[6]
|
Member
of the Board of Directors
|
0.2%
|
|
|
|
|
|
All
Officers and Directors
as a group (5 people)
|
387,972,020
|
|
|
71.5%
|
[1]
|
189,845,000 shares are held in the name
of Sidney Chan, 500,000 shares are held in the name of KRS Retraction Limited, and, 193,153,482 shares are owned by Christine Kan,
Mr. Chan’s wife.
|
[2]
|
Mr. Chan and his wife also hold the option
to acquire 5,045,001,500 shares of common stock of the Company.
|
[3]
|
Dr. Salas also holds the option to acquire
5,000,000 shares of common stock of the Company.
|
[4]
|
Mr. Robulak also holds the option to acquire
18,000,000 shares of common stock of the Company.
|
[5]
|
Mr. Stafford also holds the option to acquire
5,000,000 shares of common stock of the Company.
|
[6]
|
Mr. Cheng also holds the option to acquire
5,000,000 shares of common stock of the Company.
|
|
|
|
|
|
|
AUDIT COMMITTEE
REPORT
From
January 1, 2020 to December 31, 2020, the Audit Committee was composed of three members of the Board of Directors. The Audit Committee
met to approve the December 31, 2019 Form 10-K and each of the 2020 Form 10-Qs. Each member of the Audit Committee was present for all
four meetings.
BOARD OF DIRECTORS
REPORT
From
January 1, 2020 to December 31, 2020, the Board of Directors met 8 times. The board of directors’ attendance for the meetings was
as follows:
|
·
|
Mr.
Stafford 7 Meetings
|
FEES PAID TO
INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
(1) Audit
Fees
The
aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for audit
of the Company’s financial statements included in its Form 10-K and review of its consolidated financial statements included in
the its Form 10-Qs or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements
for those fiscal years was:
2020
|
$20,000
|
DMCL
LLP
|
2019
|
$20,000
|
DMCL
LLP
|
(2) Audit-Related
Fees
The
aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountants that are reasonably
related to the performance of the audit or review of the Company’s consolidated financial statements and are not reported in the
preceding paragraph:
2020
|
$24,000
|
DMCL
LLP
|
2019
|
$12,000
|
DMCL
LLP
|
(3) Tax
Fees
The
aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance,
tax advice, and tax planning was:
2020
|
$2,000
|
DMCL
LLP
|
2019
|
$2,000
|
DMCL
LLP
|
(4) All
Other Fees
The
aggregate fees billed in each of the last two fiscal years for the products and services provided by the principal accountant, other
than the services reported in paragraphs (1), (2), and (3) was:
2020
|
$0
|
DMCL
LLP
|
2019
|
$0
|
DMCL
LLP
|
(5) The
Company’s audit committee’s pre-approval policies and procedures described in paragraph (c)(7)(i) of Rule 2-01 of Regulation
S-X were that the audit committee pre-approve all accounting related activities prior to the performance of any services by any accountant
or auditor.
(6) The
percentage of hours expended on the principal accountant’s engagement to audit the Company’s consolidated financial statements
for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant’s full time,
permanent employees was 0%.
|
By Order of the Board of Directors
|
|
|
|
/s/ SIDNEY CHAN
|
|
|
|
Sidney Chan
|
|
Chairman of the Board of Directors, Chief Executive
Officer and Chief Financial Officer
|
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