Shortly after market open yesterday, the share price of ALR Technologies, Inc. (OTC:ALRT) more than doubled on the news that the company has received FDA clearance for its Health-e-Connect System. However, that exuberant market response does not mean that ALRT future could be now considered secured. 
ALRT closed Monday session with a 100% increase in its share price at $0.20, while during the session the value of ALRT shares stopped rising one cent before the 52-week high at $0.24. Trading volume was among the highest for the past six months with 1.15 million traded shares. ALRT latest announcement formed that bullish pattern on the stock chart.
It said that the company has received 510(k) clearance from the FDA for its Health-e-Connect (HeC) System which should be used for remote management of patients and should act in support of diabetes treatment programs. That FDA clearance would now allow ALRT start the marketing and the sales of its product, which makes the event actually a very important one in the history of ALR Technologies.
What benefits and when the HeC could bring to the company is another matter. According to the latest 10-Q report, ALRT has been in that business for more than 10 years now and so far has accumulated only losses for a total amount of over $35.5 million. Although that may change with the market launch of an innovative product, ALRT current state looks still very uncertain.
At the end of June 2011, the company had only about $309,000 in total assets, $4,900 of which in cash. On the other hand, the debts exceeded $9.8 million, all of which current and due on demand. The management expects to keep depending on outside funding for an undetermined period of time, which is likely to cause shareholder dilution as the company plans to raise capital over the exercise of stock options and common share private placements.
Also yesterday, ALRT filed with the SEC that it intends to increase the use of the funds available under its existent line of credit to allow general corporate purposes. The funds were so far limited only to marketing purposes. Yet, there is no assurance that the lender would agree on such an amendment.
