Management Discussion & Analysis  INTERNAL CONTROLS OVER FINANCIAL REPORTING A. Disclosure Controls and Procedures  B. Management Report on Internal Controls over Financial Reporting  An evaluation was performed under the supervision and with the participation of the Corporation’s  management (including the CEO and CFO) of the effectiveness of the design and operation of the  Corporation’s disclosure controls and procedures, as defined in National Instrument 52-109. Based on that  evaluation, the Corporation’s management (including the CEO and CFO) concluded that the  Corporation’s disclosure controls and procedures were designed to provide a reasonable level of assurance  over disclosures of material information and are effective as of December 31, 2011.  The Corporation’s management, (including the CEO and CFO) have assessed and evaluated the design and  effectiveness of the Corporation’s internal controls over financial reporting as defined in National  Instrument 52-109 as of December 31, 2011. The Corporation’s assessment included documentation,  evaluation and testing of its internal controls over financial reporting. Based on that evaluation, the  Corporation’s management concluded that the Corporation’s internal controls over financial reporting are  effective and provide reasonable assurance regarding the reliability of the Corporation’s financial reporting  and its preparation of financial statements for external purposes in accordance with Canadian GAAP and  are effective as of December 31, 2011.  Internal controls over financial reporting, no matter how well designed, have inherent limitations and can  only provide reasonable assurance with respect to financial statement presentation and may not prevent or  detect all misstatements.  Other than the senior credit facility described under “Liquidity and Capital Resources”, the only material  contractual obligation of the Corporation is its lease for office space. The Corporation agreed to a new  seven-year lease at a new location that commenced in 2009. Annual leasing costs will be approximately  $160,000.  SUMMARY OF CONTRACTUAL OBLIGATIONS  TRANSACTIONS WITH RELATED PARTIES  In 2011, the Corporation formed a wholly-owned subsidiary, Alaris Cooperatief, U.A., a cooperative in The  Netherlands. The Corporation also formed a wholly-owned subsidiary of the Corporation, Alaris USA Inc,  a Delaware Corporation. All intercompany loans, interest and dividends have been eliminated upon  consolidation. All transactions with related parties are recorded at exchange amount. Related party  transactions are measured at fair value.  In 2010, the Corporation had a $6.5 million demand loan owing to a company controlled by the  Corporation’s largest shareholder. The loan was repaid before the end of 2010. For the year ended  December 31, 2010, the Corporation paid interest of $410,515 to this company.  Alaris Royalty Corp. 2011 Annual Report   61  Contractual Obligations  Total  Less than 1 year  1 – 3 years  4 – 5 years  After 5 years  Long term debt  6,500,000  0  6,500,000  0  0  Office lease  811,406  159,851  499,063  152,491  0  Total Contractual Obligations  7,311,406  159,851  6,999,063  152,491  0 