ALR Technologies risk analysis
ALR Technologies (ALRTF) Risk Analysis
Risk Overview Q4, 2023
Source: the company's latest filing for the period ended Dec 31, 2023, filed Apr 30, 2024
Risk Change Over Time
- Accounting & Financial Operations - Risk 1Although our consolidated financial statements (or "financial statements") have been prepared on a going concern basis, our management believe that our recurring losses from operations and other factors have raised substantial doubt about our ability to continue as a going concern as of December 31, 2023.
Our audited financial statements for the fiscal year ended December 31, 2023 were prepared on a going concern basis in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP"). The going concern basis assumes that we will continue in operation for the next 12 months and will be able to realize our assets and discharge our liabilities and commitments in the normal course of business, thus our financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern. Our recurring losses, anticipated future losses, negative cash flow, need for additional capital and the uncertainties surrounding our ability to raise such funding, raises substantial doubt about our ability to continue as a going concern. In order for us to continue operations beyond the next 12 months and to be able to discharge our liabilities and commitments in the normal course of business, we must complete the development and deployment of our products, and sell our products directly to end-users, establish profitable operations through increased sales, decrease expenses, generate cash from operations or raise additional funds when needed. We intend to improve our financial condition and ultimately improve our financial results by increasing revenues through introduction of our product into new markets, continuing to expand and develop our field sales force and distributor relationships both domestically and internationally, forming strategic arrangements within the health & wellness and medical industries, educating medical professionals and patients as to the benefits of our diabetes management services, and reducing expenses. If we are unable to increase sales, reduce expenses or raise sufficient additional capital we may be unable to continue to fund our operations, develop our products, realize value from our assets, or discharge our liabilities in the normal course of business. If we become unable to continue as a going concern, we could be forced to liquidate our assets, and potentially realize significantly less than the values at which they are carried on our financial statements, and shareholders could lose all or part of their investment in our ordinary shares.
Risk Highlights Q4, 2023
Risk Word Cloud
Risk Factors Full Breakdown - Total Risks 35
- Share Price & Shareholder Rights - Risk 1We may be unable to maintain compliance with the OTCQB Standards for Continued Eligibility, which could cause our ordinary shares to be demoted from the OTCQB. This could result in the lack of a market for our ordinary shares, cause a decrease in the value of an investment in us, and adversely affect our business, financial condition, and results of operations.
Our ordinary shares are currently quoted on the OTCQB tier of the electronic quotation service operated by OTC Markets Group. To maintain the listing of our ordinary shares on the OTCQB, we are required to meet certain listing requirements, including, among others (i) having audited annual financials by a Public Company Accounting Oversight Board auditor; (ii) meeting minimum bid price test of $0.01; (iii) maintaining Securities and Exchange Commission ("SEC") reporting standards or equivalent alternative reporting standards; and (iv) not being in bankruptcy. If we fail to meet the OTCQB Standards for Continued Eligibility, the trading of our ordinary shares will most likely take place on a lower tier of the over-the-counter market, such as those established for financially distressed companies or those in bankruptcy. There is no assurance that we will meet the minimum Standards for Continued Eligibility. An investor is likely to find it less convenient to sell, or to obtain accurate quotations in seeking to buy, our ordinary shares on the OTC Pink, and many investors may not buy or sell our ordinary shares due to difficulty in accessing OTC Pink, or over-the-counter markets, generally, due to policies preventing them from trading in securities not listed on a national exchange, not maintaining SEC reporting requirements, or other reasons.
- Share Price & Shareholder Rights - Risk 2As the SEC imposes additional sales practice requirements on brokers who deal in shares of penny stocks, some brokers may be unwilling to trade our securities. This means that you may have difficulty reselling your shares, which may cause the value of your investment to decline.
Our shares are classified as penny stocks and are covered by Section 15(g) of the Securities Exchange Act of 1934 (the "Exchange Act"), which imposes additional sales practice requirements on broker-dealers who sell our securities in this offering or in the aftermarket. For sales of our securities, broker-dealers must make a special suitability determination and receive a written agreement from you prior to making a sale on your behalf. Due to the imposition of the foregoing additional sales practices, it is possible that broker-dealers will not want to make a market in our common stock. This could prevent you from reselling your shares and may cause the value of your investment to decline.
- Share Price & Shareholder Rights - Risk 3The liquidity and trading volume of our ordinary shares could be low, and our ownership is concentrated.
The liquidity and trading volume of our ordinary shares has at times been low in the past and could again be low in the future. If the liquidity and trading volume of our ordinary shares is low, this could adversely impact the trading price of our shares, our ability to issue shares and our shareholders' ability to obtain liquidity in their shares. In addition, our Chairman and Chief Executive Officer (or "CEO"), Sidney Chan, and his affiliates own in excess of 60% of our outstanding ordinary shares as at the date of this Annual Report. As a result, Mr. Chan and his affiliates will be able to affect the outcome of, or exert significant influence over, all matters requiring shareholder approval, including the election and removal of directors and any change in control. In particular, this concentration of ownership of our ordinary shares could have the effect of delaying or preventing our change in control or otherwise discouraging or preventing a potential acquirer from attempting to obtain control of us. This, in turn, could have a negative effect on the market price of our ordinary shares. It could also prevent our shareholders from realizing a premium over the market prices for their ordinary shares. Moreover, the interests of this concentration of ownership may not always coincide with our interests or the interests of other shareholders. The concentration of ownership also contributes to the low trading volume and volatility of our ordinary shares.
- Share Price & Shareholder Rights - Risk 4Our share price has been, and could continue to be, volatile.
There has been significant volatility in the market price and trading volume of equity securities, which is often unrelated to the financial performance of the companies issuing the securities. These broad market fluctuations could negatively affect the market price of our shares. The market price and volume of our ordinary shares could fluctuate, and in the past has fluctuated, more dramatically than the stock market in general. You may not be able to resell your shares at or above the price you paid for them due to fluctuations in the market price of our shares caused by changes in our operating performance or prospects or other factors. Some factors, in addition to the other risk factors identified above, which could have a significant effect on our stock market price include, but are not limited to, the following: - actual or anticipated fluctuations in our operating results or future prospects;- our announcements or our competitors' announcements of new products;- the public's reaction to our press releases, our other public announcements, and our filings with the SEC;- strategic actions by us or our competitors, such as acquisitions or restructurings;- new laws or regulations or new interpretations of existing laws or regulations applicable to our business;- changes in accounting standards, policies, guidance, interpretations, or principles;- changes in our growth rates or our competitors' growth rates;- developments regarding our patents or proprietary rights or those of our competitors;- our inability to raise additional capital as needed;- concerns or allegations as to the safety or efficacy of our products;- changes in financial markets or general economic conditions;- sales of shares by us or members of our management team, our board of directors (or "Board"), our significant shareholders, or certain institutional shareholders; and - changes in stock market analyst recommendations or earnings estimates regarding our shares, other comparable companies, or our industry generally.
- Share Price & Shareholder Rights - Risk 5You could experience substantial dilution of your investment as a result of subsequent exercises of our outstanding options, outstanding warrants, future sales of our equity, or the future grant of equity by us.
You could experience substantial dilution of your investment as a result of subsequent exercises of outstanding warrants issued as compensation for lending arrangements and outstanding options issued as compensation for services performed by employees, directors, consultants, and others, future sales of our equity, or the grant of future equity-based awards. As of December 31, 2023, an aggregate 5,600,471,500 ordinary shares were authorized for issuance pursuant to the exercise of outstanding options and warrants having a weighted average exercise price of $0.007 per share. To the extent that such options and warrants are exercised, our existing shareholders will experience dilution. We rely heavily on equity awards to motivate current contractors and employees and to attract new employees. The grant of future equity awards by us to our contractors, employees and other service providers could further dilute our shareholders' interests in us.
- Share Price & Shareholder Rights - Risk 6We are organized under the laws of the Republic of Singapore and our shareholders may have more difficulty in protecting their interest than they would as shareholders of a corporation incorporated in the U.S., and we may have more difficulty attracting and retaining qualified Board members and executives.
Our corporate affairs are governed by our Constitution and by the Companies Act 1967 of Singapore (the "Companies Act"). The rights of our shareholders and the responsibilities of the members of the Board under Singapore law are different from those applicable to a corporation incorporated in the U.S. Therefore, our shareholders may have more difficulty in protecting their interest in connection with actions taken by our management or members of the Board than they would as shareholders of a corporation incorporated in the U.S. In addition, being a public company organized in Singapore may make it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These factors could also make it more difficult for us to attract and retain qualified members of the Board, particularly to serve on committees of the Board, and qualified executive officers.
- Share Price & Shareholder Rights - Risk 7Singapore law may impede our takeover by a third-party.
The Singapore Code on Take-overs and Mergers contains provisions that may delay, deter or prevent our future takeover or change in control by a third-party for so long as we remain a public company with more than 50 shareholders. Any person acquiring an interest, whether by a series of transactions over a period of time or not, either on their own or together with parties acting in concert with such person, in 30% or more of our voting shares, or, if such person holds, either on their own or together with parties acting in concert with such person, between 30% and 50% (both inclusive) of our voting shares, and such person (or parties acting in concert with such person) acquires additional voting shares representing more than 1% of our voting shares in any six-month period, must, except with the consent of the Securities Industry Council in Singapore, extend a mandatory takeover offer for the remaining voting shares in accordance with the provisions of the Singapore Code on Take-overs and Mergers. While the Singapore Code on Take-overs and Mergers seeks to ensure equality of treatment among shareholders, its provisions may discourage or prevent certain types of transactions involving our actual or threatened change of control. These legal requirements may impede or delay our takeover by a third-party.
See a full breakdown of risk according to category and subcategory. The list starts with the category with the most risk. Click on subcategories to read relevant extracts from the most recent report.
