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KALO Kallo

Filed: 2 Mar 21, 7:00pm
 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

 

FORM 10-K

 

xANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2020

 

Commission file number 000-53183

KALLO INC.

(Exact name of registrant as specified in its charter)

 

Nevada98-0542529

(State or other jurisdiction of 

incorporation or organization)

(I.R.S. Employer Identification No.)

 

255 Duncan Mill Road, Suite 504, Toronto, Ontario, Canada M3B 3H9

(Address of Principal Executive Offices) (Zip Code)

 

(416) 246-9997

(Issuer’s telephone number including area code)

 

Securities registered pursuant to Section 12(b) of the Act:Securities registered pursuant to section 12(g) of the Act:

None

(Title of Class)

Common Stock

(Title of Class)

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes o No x

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes x No o

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes x No o

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated fileroAccelerated filero
Non-accelerated fileroSmaller reporting companyx
  Emerging growth companyo

(Do not check if a smaller reporting company)

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes x No o

 

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of January 31, 2021: $1,241,015

 

The registrant had 1,147,698,199 shares of common stock outstanding as of January 31, 2021.

 

 

 

 

As used herein, the term “we,” “us,” “our,” and the “Company” refers to Kallo, Inc. a Nevada corporation.

 

FORWARD-LOOKING STATEMENTS

 

THIS FORM 10-K CONTAINS "FORWARD-LOOKING STATEMENTS". FORWARD-LOOKING STATEMENTS ARE STATEMENTS CONCERNING ESTIMATES, PLANS, OBJECTIVES, GOALS, STRATEGIES, EXPECTATIONS, INTENTIONS, PROJECTIONS, DEVELOPMENTS, FUTURE EVENTS, PERFORMANCE OR PRODUCTS, UNDERLYING (EXPRESSED OR IMPLIED) ASUMPTIONS AND OTHER STATEMENTS THAT ARE OTHER THAN HISTORICAL FACTS. IN SOME CASES FORWARD-LOOKING STATEMENTS CAN BE IDENTIFIED BY THE USE OF FORWARD-LOOKING WORDS SUCH AS “ESTIMATED,” "BELIEVES," "EXPECTS," "MAY," "WILL," "SHOULD," OR "ANTICIPATES," OR THE NEGATIVE OF THESE WORDS OR OTHER VARIATIONS OF THESE WORDS OR COMPARABLE WORDS, OR BY DISCUSSIONS OF PLANS OR STRATEGY THAT INVOLVE RISKS AND UNCERTAINTIES. MANAGEMENT WISHES TO CAUTION THE READER THAT THESE FORWARD-LOOKING STATEMENTS, INCLUDING, BUT NOT LIMITED TO, STATEMENTS REGARDING THE COMPANY AND ITS PLANS OR INTENTIONS, ESTIMATES, GOALS, COMPETITIVE TRENDS AND OTHER MATTERS THAT ARE NOT HISTORICAL FACTS ARE ONLY PREDICTIONS. NO ASSURANCES CAN BE GIVEN THAT SUCH PREDICTIONS WILL PROVE CORRECT OR THAT THE ANTICIPATED FUTURE RESULTS WILL BE ACHIEVED. ACTUAL EVENTS OR RESULTS MAY DIFFER MATERIALLY EITHER BECAUSE ONE OR MORE PREDICTIONS PROVE TO BE ERRONEOUS OR AS A RESULT OF OTHER RISKS FACING THE COMPANY. FORWARD-LOOKING STATEMENTS SHOULD BE READ IN LIGHT OF THE CAUTIONARY STATEMENTS AND IMPORTANT FACTORS DESCRIBED IN THIS FORM 10-K, INCLUDING, BUT NOT LIMITED TO "THE FACTORS THAT MAY AFFECT FUTURE RESULTS" SHOWN AS ITEM 1A AND IN MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. THE RISKS INCLUDE, BUT ARE NOT LIMITED TO, THE RISKS ASSOCIATED WITH AN EARLY-STAGE COMPANY HAS LIMITED ASSETS AND OPERATIONS, THE COMPARATIVELY LIMITED FINANCIAL RESOURCES OF THE COMPANY, THE LOSSES THAT THE COMPANY INCURS EACH YEAR, THE COMPANY IS INSOLVENT AND ITS TOTAL LIABILITIES EXCEED ITS TOTAL ASSETS, THE INTENSE COMPETITION THE COMPANY FACES FROM OTHER ESTABLISHED COMPETITORS, AND THE LEGAL UNCERTAINTIES THAT DIRECTLY AND INDIRECTLY IMPACT DEVELOPMENT-STAGE COMPANIES. ANY ONE OR MORE OF THESE OR OTHER RISKS COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THE FUTURE RESULTS INDICATED, EXPRESSED, OR IMPLIED IN SUCH FORWARD-LOOKING STATEMENTS. WE UNDERTAKE NO OBLIGATION TO UPDATE OR REVISE ANY FORWARD-LOOKING STATEMENT TO REFLECT EVENTS, CIRCUMSTANCES, OR NEW INFORMATION AFTER THE DATE OF THIS FORM 10-K OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED OR OTHER SUBSEQUENT EVENTS.

 

 

TABLE OF CONTENTS

 

  Page
 PART I 
   
Item 1.Business.1
Item 1A.Risk Factors.8
Item 1B.Unresolved Staff Comments.11
Item 2.Properties.11
Item 3.Legal Proceedings.11
Item 4.Mine Safety Disclosures.11
   
 PART II 
   
Item 5.Market for Our Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.12
Item 6.Selected Financial Data.13
Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations.13
Item 7A.Quantitative and Qualitative Disclosures about Market Risk.19
Item 8.Financial Statements and Supplementary Data.20
Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.39
Item 9A.Controls and Procedures.39
Item 9B.Other Information.40
   
 PART III 
   
Item 10.Directors, Executive Officers and Corporate Governance.41
Item 11.Executive Compensation.45
Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.47
Item 13.Certain Relationships and Related Transactions, and Director Independence.48
Item 14.Principal Accountant Fees and Services.48
   
 PART IV 
   
Item 15.Exhibits and Financial Statement Schedules.49
   
Signatures52

 

PART I

 

 

 ITEM 1.BUSINESS.

 

As used herein, the term “we,” “our,” “us,” and the “Company” refers to Kallo, Inc., a Nevada corporation unless otherwise noted.

 

We were incorporated in the state of Nevada on December 12, 2006 as Printing Components Inc. and then changed our name to Diamond Technologies Inc. and then to our current name of Kallo Inc. On December 11, 2009, we merged with Kallo Technologies Inc. (formerly known as Rophe Medical Technologies Inc.), an Ontario corporation and its shareholders (collectively “Rophe”) wherein we acquired all of the issued and outstanding shares of common stock of Rophe in exchange for 3,000,000 common shares and $1,200,000.

 

Upon acquiring Rophe, the focus of our business was to develop medical information technology software. It has since expanded to the delivery and support of what we believe may offer an end-to-end healthcare solution for developing countries and rural communities with the goal on improving all aspects of health care delivery. We have incurred over $9,000,000 in losses in 2020 and we cannot be certain that we will avoid additional losses at that level or higher.

 

Business Overview

 

We are a small company with limited financial resources and we offer what we believe may be an end-to-end health care solution that is called the Kallo Integrated Delivery System (KIDS). Our KIDS product currently consists of the following three (3) components:

 

 1.Care Platforms
 a.These include the care facility platforms – MobileCareTM and RuralCareTM described in more detail in the MD&A section, Dialysis care and brick and mortar hospitals as well as the emergency medical services care both land and air transportation.
 2.Digital Technology
 a.This component of the business includes the Electronic Medical Records (EMR), Picture Archiving and Communication System (PACS), eLearning system, eGovernance solutions as well as our Tele-health solution that supports the Global and Regional response centers for real time support of medical emergencies.
 3.Education & Training
 a.This component includes the education and training for all aspects of healthcare management – clinical including clinical informatics, engineering including bio-medical, information and communications technology and health administration.

 

Each of these components are currently included in the full KIDS solution but can also be used as individual components to enhance an existing health care infrastructure.

 

Our Copyrighted Technologies:

 

While we believe that our technologies are protected under Canadian and International copyrights and are authored by and owned by John Cecil., we have not obtained any evaluation of the extent of our copyright or other intellectual property right claims by any independent third party and we have no present plans to obtain any such evaluation at this time. And in that context, we believe that Kallo Inc. has the rights to the products referred in this section, of which items B, C, and D (listed below) are under development and we anticipate that they will likely require further development work. There can be no assurance that we will not later discover that the extent of our copyright claims are limited and/or that we may be subject to claims of infringement asserted by other persons. In that event we may be exposed to significant and protracted litigation with likely consequential and serious financial losses resulting thereby.

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 A.M.C. Telehealth – Mobile Clinic Telehealth System – Developed and launched in November 2011.

 

 B.EMR Integration Engine – Electronic Medical Record Integration Engine - Under development.

 

 C.C&ID-IMS – Communicable and Infectious Disease Information Management System - Under Development

 

 D.CCG Technology – Clinical-Care Globalization technology – Under Development

 

The following is a summary of the information:

 

Number Date of Filing Place of Filing Duration
 1072203   November 3, 2009   Canada  Life of the Author, the remainder of the calendar year in which the author dies, and a period of 50 years following the end of that calendar year
 1072204   November 3, 2009   Canada  Life of the Author, the remainder of the calendar year in which the author dies, and a period of 50 years following the end of that calendar year
 1072205   November 3, 2009   Canada  Life of the Author, the remainder of the calendar year in which the author dies, and a period of 50 years following the end of that calendar year
 1072543   November 17, 2009   Canada  Life of the Author, the remainder of the calendar year in which the author dies, and a period of 50 years following the end of that calendar year

 

Our Products in Development

 

Our product portfolio includes three earlier stage products listed below, all of which highlight the broad applicability of our proprietary technologies to what we believe may offer us potential future product opportunities if market conditions allow and in that event we plan to evaluate partnership opportunities for further development and commercialization of these products.

 

 1.The company has Copyrighted Technology “EMR Integration Engine” that demonstrate the future direction for integrated solutions as well as current efforts that illustrate interoperability within the continuum of care. EMR Integration Engine is software, which connects all the other applications in or outside a hospital/clinic with the EMR system. This enables the doctor/nurse to seamlessly access information in other healthcare applications without moving from one computer to the next.

 

 2.

C&ID-IMS is an Internet-based solution for monitoring and managing Communicable and Infectious Disease information. Our target markets are Health Organizations and Ministries of Health, hospitals and Center for Disease Control (CDC) & the World Health Organization (WHO) members around the globe.

 

While we believe that our technologies are protected under Canadian and International copyrights and are authored by and owned by John Cecil, we have not obtained any third-party independent evaluation of the extent of our copyright or other intellectual property right claims by any independent third-party and we have no present plans to obtain any such evaluation. And in that context, we believe that Kallo Inc. has the rights to the products referred in this section, of which items B, C, and D (listed below) are under development and we anticipate that they will likely require further development work. There can be no assurance that we will not later discover that the extent of our copyright claims are limited and/or that we may be subject to claims of infringement asserted by other persons.

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 3.CCG is our clinical-care globalization technology. We believe that this product may, if market and competitive conditions allow, offer us an opportunity to respond to the growing “medical tourism phenomenon” - patients going to low-cost countries for elective medical procedures.  Based on our own internal and limited assessment undertaken without any independent third -party evaluation, we believe that this may be a fast-growing worldwide industry segment that may be actively promoted by certain countries. In that sense, it may be that CCG may be used by both the destination and home country of a patient to maintain complete and accurate records of the treatment history, avoiding errors due to incomplete patient data and lessening the burden and expense of corrective action on the home country when medical tourists return home. But we also know that any such growth in this segment will likely be subject to then current laws and regulations in addition to other factors over which we have no control.

 

 4.MC-Telehealth (Mobile Clinic with Telehealth system) is our planned mobile clinic long distance or Telehealth technology. We believe that our product, if properly installed and used, may allow the remote transmission of standardized formats of data for laboratory information, diagnostic imaging, diagnosis and clinical notes.

 

 5.KIDS (Kallo Integrated Delivery System), a Technology & process framework defines and describes the component parts of the various products and services that Kallo is delivering to its clients, including the human resources component, and how these parts interact and relate to one another. The framework also recognizes the need for collaboration with local care facilities, services and providers to support continuity of care and facilitate patient transport between facilities.

 

 6.

KIDS (Kallo Integrated Delivery System) Global Tele-Health Ecosystems. The Tele-health Program encompasses the broad variety of Technologies and administrative processes needed to deliver virtual medical care, health promotion/prevention and other patient education to KIDS patients. If properly installed and managed, we believe that our tele-health program may serve to facilitate synchronous and asynchronous interactions where patients or care providers are in different locations. The KIDS system includes scheduling, information delivery and care management services that we believe may offer opportunities to enhance the delivery of healthcare services if the system is properly installed and managed.

 

Overall, we have conducted only a limited amount of internal evaluation of our technology and our planned business operations. That is, we have not engaged or secured any independent third-party evaluation of our technology, our copyright claims, and our planned business operations and even our business model. In that respect there is a clear risk that we may later discover that our limited internal management assessments are materially inaccurate and in one or more respects we have made inaccurate assumptions regarding the willingness of the marketplace to adopt, accept or utilize all of our technology and/or the business model that we have adopted. We may also discover that our copyright claims are invalid and conflict with superior claims asserted by other persons with the result we are exposed to conflicting claims with resulting liability thereby. To the extent that our assumptions and/or our business model is materially inaccurate or fails to address the needs of the healthcare marketplace, we will likely incur significant and protracted financial losses thereby.

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Target Market

 

Based on our current internal management assessments undertaken without the benefit of any independent third-party review or evaluation, we believe that our primary target market for the Kallo Integrated Delivery System (KIDS) may be one or more selected markets in certain developing countries where health care services are limited and where we may be able to enter into what we hope may be commercially feasible contractual arrangements without undue and unacceptable risks and challenges. To that end and in anticipation that we may be successful in these efforts, we have established several sales and marketing partnership agreements under “Business Associate” section either representing Kallo independently or as an organization. While we are currently in various stages of our sales cycle with more than 10 countries, we cannot assure you that we will be successful in these efforts or, if we are successful, that we can implement and undertake our business plans without incurring significant and protracted losses and negative cash flow. Yet, we have incurred over $9,000,000 in losses in 2020 and we cannot be certain that we will avoid additional losses at that level or higher.

 

Additionally, with the components of our KIDS solution, we are targeting markets where, if our financial resources and market conditions allow, we believe we may be able to offer complimentary services to existing health care infrastructures. These markets currently include the following:

 

 Communicable & Infectious disease Information Management System – supporting World Health Organization (WHO) and Center for Disease Control (CDC); $200B market
 Electronic Medical Records integration engine for Health Information Access Layer – focused on clinics, hospitals, IDC & IHC; $100B market
 Clinical Care Globalization – focused on medical tourism; $40B market
 

Mobile Medical Clinics – focused on disaster recovery management and rural community health services for wide range of services, HIV monitoring, chemotherapy, acute care, dialysis, etc; $30B market

 

However, we are acutely aware that market conditions are ever-changing and we can not assure you that we can undertake these efforts, or if we do, that we can do so without incurring significant and protracted losses and negative cash flow.

 

Intellectual Property and Research and Development

 

If market conditions and our financial resources allow, we anticipate that we likely will continue our efforts in research and development through collaborations with medical faculties in Canada and the United States on an ongoing basis where our company stands to benefit from the technology ownership of the treatment or diagnostic systems developed for commercial use.

 

Since 2016, we decreased our expenses relating to research and development but we anticipate that we will, if market conditions and our financial resources allow, continue our research and development work on the Mobile Clinic and Telehealth system, which we anticipate will may1 be in demand in the future if our internal management assessments are accurate and market conditions do not become unfavorable.

 

Competition

 

We are a small company with limited financial resources. We compete with many larger, well-established entities in various sectors; mobile clinic and temporary medical facility manufacturers, health care equipment resellers, EMR developers, health care education providers, EMS contracted services, etc. Our competitors tend to be focused on a component of our health care solution, but do have established histories in their particular area of expertise affording them a resource advantage. We are effectively in the start-up phase of operations and as a result, we have little or no impact upon our competition. We believe that, if market conditions and our financial resources allow, we may be able to offer a fully integrated solution. In the opportunities that we have been engaged in, we have not encountered a competitor that offers the full end to end solution that we are offering in the marketplace.

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Management’s View of the Market Trend

 

The Intelligence Unit of The Economist published a report in 2017 recognizing that access to healthcare is a key topic of debate worldwide and that countries are facing a range of healthcare challenges.

 

In 2016, they developed the Global Access to Healthcare Index to measure how healthcare systems across 60 countries are working to address their most pressing healthcare needs.

 

As shown in Chart 1 below, the index is based on a set of accessibility and healthcare-system measures. The accessibility domain measures access to specific kinds of care and the healthcare systems domain measures access to effective and relevant healthcare services such as policy, institutions, and infrastructure.

 

(CHART)

 

One of the primary findings of this report is that much more needs to be done to develop and extend coverage, the geographical reach of infrastructure, equity of access, and efficiency to improve the sustainability of health systems.

 

Specifically, the key findings of the report are as follows:

 

1.Political will and a social compact are prerequisites for both access and sustainable health systems.
2.Public investment underpins good access and demonstrates the commitment of governments to ensuring the health of their populations.
3.Universal coverage does not mean universal access, but extending universal health coverage (UHC) can be a crucial part of improving access.
4.Access to data is fundamental.
5.A well-trained and integrated workforce is the backbone of a sustainable healthcare system.
6.Good primary care is a vital building block for good access.

 

As might be expected, the index reveals that developed countries are performing much better in all areas compared with developing countries. For example, Chart 8 below identifies the lowest performing countries in the area of equity of access to healthcare.

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(CHART)

 

The report also recognizes that many developing countries have shown significant improvements in their efforts to meet the UN’s Millennium Development Goals (MDGs), and the countries that have signed up to the Sustainable Development Goals (SDGs) have agreed to aim for a 40% reduction in premature deaths by 2030. As part of the SDGs, countries have pledged to reduce child and maternal deaths and mortality from tuberculosis, HIV and malaria by two-thirds, and deaths from non-communicable diseases (NCDs) and other causes by one-third. Yet it is increasingly clear that insufficient investment in healthcare, particularly in the developing world, has led to disparities in health outcomes globally.

 

Over the last couple of decades we have noted that there have been growing multilateral efforts to encourage countries to increase the amount of money they spend on healthcare. The WHO has recommended that countries spend a minimum of 5% of GDP on health in order to be taken seriously on provision of access. Meanwhile, in the Abuja Declaration of 2001 the heads of state of African Union countries pledged to set a target of allocating at least 15% of their budgets to improving healthcare. Over a decade later, however, many of them were still making insufficient progress.

 

The extensive work that Kallo has done over the past 10 years studying the health challenges faced by many African countries has led to the design of our comprehensive healthcare delivery solution which addresses all of the key findings of this report.

 

With respect to the importance of political will, Kallo’s approach of working closely with the government, providing a national healthcare system tailored to the specific needs of the country and Kallo’s commitment to providing ongoing support helps to engender the political will that developing countries need to achieve success.

 

With respect to the importance of public investment in healthcare, Kallo is helping to address this need by providing innovative financing options which allow developing countries to make the needed healthcare investments without creating undue negative economic impact.

 

With respect to the issue of universal health coverage, the report states that there is an important distinction to be made between the ability to access healthcare services and its successful delivery to a wide population. Further, the report states that a right to healthcare may be guaranteed in law, but not actually available in reality, especially in remote and underdeveloped regions. Kallo’s KIDS solution specifically recognizes the importance of extending universal health coverage through the innovative use of a variety of care platforms that can reach the unreached while using technology to ensure that the access to healthcare services is available to all the citizens of a country.

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With respect to access to data, we believe that our KIDS solution includes state-of-the-art integrated electronic medical records and hospital information systems to gather and process the data that is critical to allowing governance structures to effectively oversee the entire healthcare system.

 

With regards to the importance of a well-trained and integrated workforce, Kallo has recognized the importance of providing education and training to local healthcare practitioners by establishing Kallo University which collaborates with teaching institutions and hospitals in Canada to provide a wide range of these services.

 

With respect to the importance of good primary care, our KIDS solution specifically focuses on providing primary care through all of its care platforms as well as providing specialized care as required.

 

Through all of Kallo’s extensive study of the healthcare challenges of developing countries and as confirmed by the key findings of this Economist Intelligence Unit report, we believe that our comprehensive KIDS solution and our approach to working directly with the governments of developing countries provides the greatest opportunity for achieving success in significantly improving access to world class healthcare services for all.

 

Government Regulation and Compliance

 

The healthcare regulations and standards vary widely in the geographic areas that we are focused in, with the primary concerns around patient health, safety, and privacy. With rapid advances in clinical and technology changes, the increased scrutiny by governments, the media and consumers has created continual monitoring and increased regulation on drug and patient safety specifically.

 

Within the global market that we serve, North America has some of the most stringent regulations and standards for medical technology and pharmaceutical approvals. As such, we have partnered with a number of major biomedical devices/equipment suppliers to ensure the highest standards of equipment. If we are successful, we intend to utilize only the highest standards of product regardless of the market that we are serving.

 

Employees

 

As of February 22, 2021, we have four full time employees.

 

Warranties

 

We do not provide warranties in connection with our products or services. Our third party products are supplied with the manufacturer’s warranty and we offer additional coverage with a service agreement.

 

Insurance

 

We currently do not have insurance but, if our financial resources allow, we plan to obtain general liability and other insurance as appropriate.

 

Executive Offices

 

Our administrative office is located at 255 Duncan Mill Road, Suite 504, Toronto, Ontario, Canada, M3B 3H9, our telephone number is (416) 246-9997. Our registered agent for services of process is the Corporation Trust Company of Nevada, located at 6100 Neil Road, Suite 500, Reno, Nevada 89511. Our fiscal year end is December 31st.

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ITEM 1A.RISK FACTORS.

 

Our Common Stock is subject to a number of substantial risks, including those described below. No attempt has been made to rank these risks in the order of their likelihood or potential harm. In addition to those general risks enumerated elsewhere in the document, any purchaser of the Company’s common stock should also consider the following risk factors:

 

Risks Related to the Ownership of the Company’s Stock

 

1. No Revenues from Operations & Continuing Losses; Risk of Loss & Insolvency. During the past two fiscal years we have not generated and revenues and there can be no assurances that we will be successful in generating revenues in the future. In that respect we face all of the risks inherent in an early-stage business. We have incurred losses and there can be no assurance that we will ever achieve profitability and positive cash flow. While we believe that our business strategies are sound, there can be no assurance that our business will generate profits and positive cash flow or if we generate profits and positive cash flow, that it can be sustained. Investors should be aware that they may lose all or substantially all of their investment. We are also insolvent since our Total Liabilities exceed our Total Assets. In that connection, we incurred over $9,000,000 in losses in 2020 and we cannot be certain that we will avoid additional losses at that level or higher in future years.

 

2. Limited Corporate Officers & Employees. We have only three corporate officers, one of which is part-time and an aggregate of four employees, including our three officers. As a result, we may not be able to evaluate ever-changing market, technology and competitive trends effectively and we are likely to incur losses thereby.

 

3. Auditor’s Opinion: Going Concern & Insolvency. Our independent auditors have expressed substantial doubt about the Company’s ability to continue as a going concern since: (a) our Total Current Liabilities exceed our Total Current Assets; (b) our Total Liabilities exceed our Total Assets; and (c) we are an early-stage company and there exists only a limited history of operations. Since our Total Liabilities exceed our Total Assets, we are insolvent and anyone who acquires our Common Stock should be prepared to lose their entire investment.

 

4. Limited Financial Resources; Need for Additional Financing. Our financial resources are minimal and we are insolvent. We need to obtain additional financing from the sale of our Common Stock, Debt, or some combination thereof in order to undertake further business plans. Our ability to operate as a going concern is contingent upon our receipt of additional financing through private placements or by loans. We anticipate that we will require significant additional funds in the future if we are successful in marketing our products and services. There can be no assurance that if additional funds are required they will be available, or, if available, that they can be obtained on terms satisfactory to our Board of Directors. In the event the Company elects to issue stock to raise additional capital, any rights or privileges attached to such stock may either (i) dilute the percentage of ownership of the already issued common shares or (ii) dilute the value of such shares; or (iii) both. No rights or privileges have been assigned to the stock and any such rights and privileges will be at the total discretion of the Board of Directors of the Company. There can be no guarantee that we will be able to obtain additional financing, or if we are successful, that we will be able to do so on terms that are reasonable in light of current market conditions. Further, we have not received any commitment from any person to provide any additional financing and we cannot assure that any such commitment is forthcoming.

 

5. Limited and Sporadic Trading Market for Common Stock. Our Common Stock trades on the OTC Market on a limited and sporadic basis and there can be no assurance that a liquid trading market for our Common Stock will develop and, if it does develop, that it can be sustained.

 

6. Lack of Revenues and Development Stage Company. We face all of the risks inherent in a new business. There is no information at this time upon which to base an assumption that our plans will either materialize or prove successful. Our present business plans and strategies have been developed by our corporate officers and they have been evaluated by any independent third party. plans have not been determined. There can be no assurance that any of our business plans and strategies will generate sales revenues that will result in any profits or positive cash flow. Investors should be aware that they may lose all or substantially all of their investment.

 

7. Lack of Dividends & No Likelihood of Dividends. We have not paid dividends and do not contemplate paying dividends in the foreseeable future.

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8. Competition. We are an insignificant participant among firms which offer health care products and services. There are many well-established health care product and service companies which have significantly greater financial and managerial resources, technical expertise and experience than the Company. In view of our limited financial and managerial resources, we will likely be at a significant competitive disadvantage vis-a-vis our competitors.

 

9. No Ability to Control & Matter of Voting Rights Held by our President. Any person who acquires our Common Stock will have no real ability to influence or control the Company or otherwise have any ability to elect any person to our Board of Directors. Our officers, directors, and certain other persons currently control the Company and there is no likelihood that any person who acquires our Common Stock will have any real ability to influence or control the Company in any meaningful way. Further and at present, our President, John Cecil, is the owner and holder of 5,000,000 shares of our Series B Preferred Stock with each share having one thousand (1,000) votes per share with the right to vote with our Common Stockholders at any meeting of or action taken by the holders of our Common Stock. As a result, Mr. Cecil has the clear ability to control the Company via the exercise of his voting rights provided by the Series B Preferred Stock and all of the holders of our Common Stock effectively have no real ability to exercise any influence upon the affairs of the Company. In addition, Mr. Cecil is the owner and holder of 70,000,000 shares of the Company’s Series A Preferred Stock with each Series A Preferred share having one hundred (100) votes per share. As a result of the foregoing, any holder or group of holders of our Common Stock will have no reasonable ability to influence or control the Company’s policies, affairs, or strategies.

 

10. Negative Equity. Our Total Liabilities exceed our Total Assets. As a result, we are insolvent and we cannot assure you that we will be able to become solvent at any time in the future.

 

11. Possible Rule 144 Stock Sales. Many of our shares of our outstanding Common Stock are “restricted securities” and may be sold only in compliance with Rule 144 adopted under the Securities Act of 1933, as amended or other applicable exemptions from registration. Any person who acquires our common stock in any private placement should carefully review Rule 144 since any potential public resale may be limited and current broker-dealer and clearing firm requirements may make any re-sale of our common stock difficult at best.

 

12. Absence of Underwriter Commitment. Based on our current plans, we anticipate that we will likely need to raise significant additional capital to meet our current and anticipated financial needs, we have not received any commitment from any registered broker-dealer or underwriter to assist us in raising needed capital. As a result, we face a clear risk that we will not have sufficient cash resources to meet our current financial obligations and otherwise implement our business plans. In that event, we may not be able to implement our plans and we will not be able to achieve profitability and positive cash flow or, if we do, that we can sustain either or both of them for any period of time.

 

13. Risks of Low-Priced Stocks. Currently, our common stock is not trading in any market and there is no certain prospect that the Company’s common stock will regain any trading in any organized market. In the past, the Company’s common stock had only limited and sporadic trading in the so-called “pink sheets,” and before that, on the “Electronic Bulletin Board.” As a result and due to the absence of a market, a shareholder may find it more difficult to dispose of, or to obtain accurate quotations as to the price of, the Company’s securities. In the absence of a security being quoted on NASDAQ, or the Company having $2,000,000 in net tangible assets, trading in the Common Stock is covered by Rule 3a51-1 promulgated under the Securities Exchange Act of 1934 for non-NASDAQ and non-exchange listed securities. Under such rule, broker/dealers who recommend such securities to persons other than established customers and accredited investors (generally institutions with assets in excess of $5,000,000 or individuals with net worth in excess of $1,000,000 or an annual income exceeding $200,000 or $300,000 jointly with their spouse) must make a special written suitability determination for the purchaser and receive the purchaser’s written agreement to a transaction prior to sale.

 

In general, securities are also exempt from this rule if the market price is at least $5.00 per share, or for warrants, if the warrants have an exercise price of at least $5.00 per share. The Securities Enforcement and Penny Stock Reform Act of 1990 requires additional disclosure related to the market for penny stocks and for trades in any stock defined as a penny stock. The Commission has recently adopted regulations under such Act which define a penny stock to be any NASDAQ or non-NASDAQ equity security that has a market price or exercise price of less than $5.00 per share and allow for the enforcement against violators of the proposed rules.

 

In addition, unless exempt, the rules require the delivery, prior to any transaction involving a penny stock, of a disclosure schedule prepared by the Commission explaining important concepts involving the penny stock market, the nature of such market, terms used in such market, the broker/dealer’s duties to the customer, a toll-free telephone number for inquiries about the broker/dealer’s disciplinary history, and the customer’s rights and remedies in case of fraud or abuse in the sale.

-9-

Disclosure also must be made about commissions payable to both the broker/dealer and the registered representative, current quotations for the securities, and if the broker/dealer is the sole market-maker, the broker/dealer must disclose this fact and its control over the market.

 

Finally, monthly statements must be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. While many NASDAQ stocks are covered by the proposed definition of penny stock, transactions in NASDAQ stock are exempt from all but the sole market-maker provision for (i) issuers who have $2,000,000 in tangible assets ($5,000,000 if the issuer has not been in continuous operation for three years), (ii) transactions in which the customer is an institutional accredited investor and (iii) transactions that are not recommended by the broker/dealer. In addition, transactions in a NASDAQ security directly with the NASDAQ market-maker for such securities, are subject only to the sole market-maker disclosure, and the disclosure with regard to commissions to be paid to the broker/dealer and the registered representatives.

 

Finally, all NASDAQ securities are exempt if NASDAQ raised its requirements for continued listing so that any issuer with less than $2,000,000 in net tangible assets or stockholder’s equity would be subject to delisting. These criteria are more stringent than the proposed increased in NASDAQ’s maintenance requirements.

 

Our securities are subject to the above rules on penny stocks and the market liquidity for our securities could be severely affected by limiting the ability of broker/dealers to sell our securities.

-10-

ITEM 1B.UNRESOLVED STAFF COMMENTS.

 

None.

 

ITEM 2.PROPERTIES.

 

The executive offices of Kallo Inc. are located at 255 Duncan Mill Road, Suite 504, Toronto, Ontario, Canada, M3B 3H9, our telephone number is (416) 246-9997. This location is the office of one of our directors, who has graciously agreed to provide us use of this address and a meeting room, when needed, without charge.

 

ITEM 3.LEGAL PROCEEDINGS.

 

On April 21, 2017, an ex-employee of Kallo obtained a judgement ordering Kallo to pay Canadian $ 135,959 for unpaid wages and expenses relating to services performed in 2016. The full amount has been accrued for in the financial statements of Kallo.

 

On October 24, 2016, a consultant obtained a judgement ordering Kallo to pay Canadian $34,924 for unpaid fees. The full amount has been accrued for in the financial statements of Kallo.

 

On October 6, 2017, Thornley Fallis Communications Inc. (“Thornley”) commenced a third party claim against Kallo concerning monies that Kallo allegedly owed to Thornley for redesign of a website and public relation services. Thornley is seeking damages in the amount of Canadian $169,345 plus interest on the amounts outstanding and indemnification of the costs of the action. An amount of Canadian $134,960 has been accrued for in the financial statements of Kallo.

 

While we believe that we may be successful in resolving these claims, we cannot assure that the outcome will not have a material adverse effect upon us.

 

ITEM 4.MINE SAFETY DISCLOSURES.

 

None.

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PART II

 

ITEM 5.MARKET FOR OUR COMMON STOCK, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

 

Our shares are traded on OTC Markets under the symbol “KALO”. A summary of trading by quarter for 2020 and 2019 is as follows:

 

Fiscal Year 

2020

 High Bid Low Bid
Fourth Quarter 10-1-20 to 12-31-20 $0.0750  $0.0100 
Third Quarter 7-1-20 to 9-30-20 $0.0390  $0.0070 
Second Quarter 4-1-20 to 6-30-20 $0.0250  $0.0075 
First Quarter 1-1-20 to 3-31-20 $0.0166  $0.0106 

 

Fiscal Year

2019

 High Bid Low Bid
Fourth Quarter 10-1-19 to 12-31-19 $0.0400  $0.0013 
Third Quarter 7-1-19 to 9-30-19 $0.0360  $0.0128 
Second Quarter 4-1-19 to 6-30-19 $0.0237  $0.0125 
First Quarter 1-1-19 to 3-31-19 $0.0400  $0.0140 

 

Dividends

 

We have not declared any cash dividends, nor do we intend to declare cash dividends at this point. We are not subject to any legal restrictions respecting the payment of cash dividends, except that they may not be paid to render us insolvent and any payment of any dividends is subject to the limitations of the Nevada General Corporation Law. Dividend policy will be based on our cash resources and needs and it is anticipated that any cash that may be available will likely be needed for our operations and to pay our creditors in the foreseeable future.

 

A stock dividend was declared on February 11, 2008, wherein two additional common shares were issued for each one common share issued and outstanding as at February 25, 2008. We have not declared any other dividends.

 

Section 15(g) of the Securities Exchange Act of 1934

 

Our company’s shares are covered by Section 15(g) of the Securities Exchange Act of 1934, as amended that imposes additional sales practice requirements on broker/dealers who sell such securities to persons other than established customers and accredited investors (generally institutions with assets in excess of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouses). For transactions covered by the Rule, the broker/dealer must make a special suitability determination for the purchase and have received the purchaser’s written agreement to the transaction prior to the sale. Consequently, the Rule may affect the ability of broker/dealers to sell our securities and also may affect your ability to sell your shares in the secondary market.

 

Section 15(g) also imposes additional sales practice requirements on broker/dealers who sell penny securities. These rules require a one page summary of certain essential items. The items include the risk of investing in penny stocks in both public offerings and secondary marketing; terms important to in understanding of the function of the penny stock market, such as “bid” and “offer” quotes, a dealers “spread” and broker/dealer compensation; the broker/dealer compensation, the broker/dealers duties to its customers, including the disclosures required by any other penny stock disclosure rules; the customers rights and remedies in causes of fraud in penny stock transactions; and, the FINRA’s toll free telephone number and the central number of the North American Administrators Association, for information on the disciplinary history of broker/dealers and their associated persons.

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Securities authorized for issuance under equity compensation plans

 

We currently have two equity compensation plans: the 2012 Non-Qualified Incentive Stock Option Plan and the 2011 Non-Qualified Incentive Stock Option Plan.

 

The 2012 Non-Qualified Incentive Stock Option Plan provides for the issuance of shares of our Common Stock for services rendered to us. The board of directors is vested with the power to determine the terms and conditions of the options. The Plan includes 50,000,000 shares of common stock.

 

The 2011 Non-Qualified Incentive Stock Option Plan provides for the issuance of shares of our Common Stock for services rendered to us. The board of directors is vested with the power to determine the terms and conditions of the shares. The Plan included 10,000,000 shares of common stock. On September 7, 2012, 7,233,334 shares have been issued under this 2011 Non-Qualified Stock Option Plan; and, 2,766,666 shares of common stock remain available under this plan.

 

  Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights
 Weighted-average exercise
price of outstanding options,
warrants and rights
 Number of securities remaining
available for future issuance under
equity compensation plans
(excluding securities in column (a))
Plan category (a) (b) (c)
Equity compensation plans approved by security holders  None   None   None 
             
Equity compensation plans not approved by securities holders  0  $0.0   52,766,666 
             
Total  0  $0.0   52,766,666 

 

ITEM 6.SELECTED FINANCIAL DATA.

 

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

 

ITEM 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

 

Our management believes that, if market conditions and our financial resources allow, we may be well-positioned to assist in the global focus on improving health care delivery through our solution platforms. Global spending on health care in 2013 totaled $7.2 trillion or 10.6% of global gross domestic product. Health spending is expected to increase an average of 5.2% a year in 2014 – 2019 to $9.3 trillion. A number of these factors drive the increase that includes emerging market expansion, infrastructure improvements and treatment and technology advances. Overall, we believe that if these market trends and our financial resources allow, may offer us opportunities to provide our products and services. Our assessments and our plans are based solely upon the determinations made by our internal management without the benefit of any independent third party review or evaluation. In that respect there is a clear risk that our plans do not accurately reflect and do not accurately incorporate market trends, inherent risks and other known and unknown factors that could result in protracted and significant losses and further negative cash flow with the result that our financial condition could materially deteriorate with resulting destruction of each stockholder’s investment.

 

There is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our bills. This is because we have generated no revenues from our operations during the last ten years. We have been able to remain in business as a result of investments, in debt or equity securities, by our officers and directors and by other unrelated parties. We expect to incur operating losses in the foreseeable future and our ability to continue as a going concern is dependent upon our ability to raise additional money through investments by others and achieve profitable operations. There is no assurance that we will be able to raise additional money or that additional money or that additional financing will be available to us on satisfactory terms or that we will be able to achieve profitable operations. The consolidated statements were prepared under the assumption that we will continue as a going concern, however, there can be no assurance that such financial support shall be ongoing or available on terms or conditions acceptable to the Company. This raises substantial doubt about our ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

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For the last ten fiscal years, starting January 2010, our management and board of directors have raised funds through a personal and professional network of investors. This has enabled product and business development, continued operations, and generation of customer interest. In order to continue operations, management has contemplated several options to raise capital and sustain operations in the next 12 months. These options include, but are not limited to, debt and equity offers to existing shareholders, debt and equity offers to independent investment professionals and through various other financing alternatives. We currently believe that if we can secure sufficient additional capital on reasonable terms and on a timely basis and if we are successful in securing at least one project that likely will enable us to continue operations for the next 12 months. There can be no guarantee that we will receive sufficient additional capital on a timely basis in sufficient amounts and on reasonable terms that will allow is to continue to remain in business. Currently we have not received any commitment from any third party to provide the additional capital that we believe we will require to sustain our company as a corporate entity or otherwise allow us to meet our financial obligations.

 

On April 8, 2017, the Company entered into an agreement with FE Pharmacy Inc. whereby in consideration for the issuance of 475,000,000 shares of our common stock, FE Pharmacy Inc. assumed and will pay all of the Company’s outstanding indebtedness as at April 7, 2017. Management believes that with this agreement in place, it can concentrate on bringing the potential projects as detailed below to fruition and any additional funding can be met through one of the three options mentioned above.

 

In 2017 the Government of Ghana initiated several discussions with us, to revisit how the Ministry of Defense – Military Hospital requirements, the Ministry of Health healthcare infrastructure requirements and the Ministry of Education Teaching Hospital infrastructure requirements can be met using the Kallo Integrated Delivery Model. The success of these discussions confirmed Ghana’s continued belief in the Kallo Integrated Delivery System, as the best solution for the nations healthcare infrastructure development, which is very encouraging for our continued business in Ghana.

 

On June 20, 2017, our branch office was legally registered in Ghana. A valid tax identification number was issued and this number is to be used by us in all of our anticipated business that we hope to conduct within Ghana. We have incorporated four SPVs (Special Purpose Vehicles / Companies) to oversee the various projects we seek to undertake in Ghana. The SPVs are all incorporated under the laws of Ghana as private companies. Based on our internal management assessments conducted without the benefit of any independent third-party review or evaluation, we believe that our business plans involving Ghana are sound and may offer us significant business opportunities. However, we cannot assure you that we will be able to obtain sufficient financing on reasonable terms and on a timely basis that will allow us to pursue these opportunities.

 

We have entered into four major concession agreements with four key governmental institutions in Ghana. We have also through our SPVs has entered into the following concession arrangements for the construction and operation of various hospital facilities in Ghana:

 

 Project Description Kallo SPV
 1 Tamale Military Hospital project K-TMH Ghana Limited
 2 Cape Coast Teaching Hospital project K-UCC Cape Coast Limited
 3 Sunyani Teaching Hospital project K-UENR Sunyani Limited
 4 Ho Teaching Hospital project K-UHAS Ho Limited

 

These agreements are effective upon execution and the concession period will start from the date on which appropriate financial commitments are received and all conditions precedent are satisfied or waived. The financing has not closed yet and there is no guarantee that financial close will be achieved.

 

The Global need for standardized healthcare service delivery to all geographies and to all people is the fundamental business driver for the innovation of the Kallo Integrated Delivery System – “KIDS”.

 

This unique and comprehensive concept was developed based on first hand discovery and a detailed study of ground realities and causal analysis over 15 years. The business issues in the current healthcare systems are addressed by intricate orchestration of technologies both proprietary and off the shelf to create a standardized healthcare delivery model across the continuum of care.

 

A strategic market approach was defined for customers to take a well-informed decision and to work with Kallo on a national strategy for healthcare infrastructure and a standardized healthcare services delivery model across the country. This led to the development of a structured business development process and management for business success.

 

After many years of hard work in developing countries we now see a dynamic shift in the thought process within the developing countries to consider innovative solutions leveraging technology for strengthening and advancing their healthcare infrastructure and services delivery for all citizens alike.

-14-

On June 26, 2020, the Cabinet Secretary of the Department of Health and the Cabinet Secretary of the National Treasury and Planning of the Republic of Kenya entered into a Project Contract with Kallo Inc. and a Loan Contract with Techno-Investment Module Ltd., now with its registered office in Spain for implementing Kallo Integrated Delivery Systems (KIDS) in the Republic of Kenya to strengthen their National Healthcare Infrastructure and build a robust, sustainable healthcare ecosystem.

 

On November 10, 2020, the Minister of Health and the Minister of Finance of the Kingdom of Eswatini entered into a Project Contract with Kallo Inc. and a Loan Contract with Techno-Investment Module Ltd., now with its registered office in Spain for implementing Kallo Integrated Delivery Systems (KIDS) in the Republic of Kenya to strengthen their National Healthcare Infrastructure and build a robust, sustainable healthcare ecosystem.

 

On November 30, 2020, the Minister of Health and the Minister of Finance of the Federal Democratic Republic of Ethiopia entered into a Project Contract with Kallo Inc. and a Loan Contract with Techno-Investment Module Ltd., now with its registered office in Spain for implementing Kallo Integrated Delivery Systems (KIDS) in the Republic of Kenya to strengthen their National Healthcare Infrastructure and build a robust, sustainable healthcare ecosystem. Included in the contract is Medical Tourism project with a Medical Center of Excellence.

 

On December 10, 2020, the Minister of Health and the Minister of Finance of the Republic of Mozambique entered into a Project Contract (Phase-1) with Kallo Inc. and a Loan Contract (Phase-1) with Techno-Investment Module Ltd., now with its registered office in Spain for implementing Kallo Integrated Delivery Systems (KIDS) in the Republic of Kenya to strengthen their National Healthcare Infrastructure and build a robust, sustainable healthcare ecosystem.

 

On December 11, 2020, the Minister of Health and the Minister of Finance of the State of Eritrea entered into a Project Contract with Kallo Inc. and a Loan Contract with Techno-Investment Module Ltd., now with its registered office in Spain for implementing Kallo Integrated Delivery Systems (KIDS) in the Republic of Kenya to strengthen their National Healthcare Infrastructure and build a robust, sustainable healthcare ecosystem.

 

Plan of Operation

 

The following plan of operation contains forward-looking statements, which involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth elsewhere in this document. Because of the speculative nature of our operations and the nature of the African countries we are attempting to do business with, there is no assurance that any of the planned operations will occur.

 

To the extent that we are financially able and if market conditions are favorable, we plan to continue to develop components of Kallo Integrated Delivery System:

 

Kallo Integrated Delivery System (KIDS)

 

MobileCareTM– a mobile trailer that opens into a state of the art clinical setup in a vehicle equipped with the latest technology in healthcare.   More than just a facility, MobileCareTM can instantly connect the onboard physician with specialists for on-demand consultation via satellite through its Telehealth system. This is truly a holistic approach to delivering healthcare to the remotely located. For many rural communities, the nearest hospital, doctor or nurse may be hundreds of kilometers away. In many cases, this gap can be bridged using Telehealth technology that allows patients, nurses and doctors to talk as if they were in the same room.

 

RuralCareTM – prefabricated modular healthcare units focused in rural areas where no roads infrastructure is available.  They are equipped to provide primary healthcare including X-Ray, ultrasound, surgery, pharmacy and lab services.  Ranging from 1,200 to 3,800 square feet, these clinics can be up and running in disaster zones or rural areas in as little as one week.  Similar to the MobileCare TM product, RuralCare TM also utilizes satellite communications to access the Telehealth system.

 

Our overall healthcare mission is to “reach the unreached”. Based on our own internal assessments conducted by our officers and without the benefit of any independent third party evaluation, we believe that may be able to offer end-to-end solution that may include the following:

 

Global command center – located in the Kallo headquarters in Canada, this is the escalation point for the coordination of delivery of Telehealth and eHealth support. It consists of both the Clinical Command Center and the Administrative Command Center.

 

Regional command centers, Clinical and Administrative – located in the urban area hospitals and connected with satellite communications, these centers coordinate all aspects of the healthcare delivery solution with the Mobile clinics and Rural clinics including clinical services, Telehealth services, pharmacy and medical consumable coordination as well as escalations to the Global response center.

-15-

Kallo University – provides education, training and development of local resources for all aspects of the healthcare delivery which includes clinical, engineering and administration.

 

Emergency Medical Services – provides ground and air ambulance vehicles for emergency patient transport. We have now incorporated Medical Drone Services. 

 

Based solely on our internal management assessments conducted without the benefit of any independent third-party review or evaluation, we believe that our end-to-end delivery solution is equipped with necessary medical equipment as per regional healthcare requirements. We also install our copyrighted software and third-party software as required along with a five (5) year support agreement renewable after the five (5) year initial term that includes the medical equipment, software licenses, installation implementation and training. If we are successful then we anticipate that may, if circumstances and market conditions are favorable, allow us to generate an ongoing revenue stream for service, maintenance, spare-parts, and consumables. However, we can not assure you that even if we are able to achieve these goals, that we can do so at levels that may allow us to achieve and sustain positive cash flow and profitability. We have incurred significant and protracted losses and we have no record of achieving and sustaining positive cash flow and profitability and we can not be certain that we will achieve either or both of these goals at any time in the future.

 

Business Overview

 

The Global need for standardized healthcare service delivery to all geographies and to all people is the fundamental business driver for the innovation of the Kallo Integrated Delivery System – “KIDS”.

 

This unique and comprehensive concept was developed based on first hand discovery and a detailed study of ground realities and causal analysis over 15 years. The business issues in the current healthcare systems are addressed by intricate orchestration of technologies both proprietary and off the shelf to create a standardized healthcare delivery model across the continuum of care.

 

A strategic market approach was defined for customers to take a well-informed decision and to work with Kallo on a national strategy for healthcare infrastructure and a standardized healthcare services delivery model across the country. This led to the development of a structured business development process and management for business success.

 

The business development model, unique to KIDS, included in-country stakeholder workshops and white-board sessions on the KIDS concept and it’s application in their context of healthcare infrastructure and healthcare services delivery model.

 

Kallo instituted the concept of conducting detailed Clinical, Engineering and Technology studies led by Kallo to establish detailed requirements for preparation of a customized proposal for the country and a phased roll out plan.

 

In addition, Kallo has addressed the major issue of financing such large initiatives in under developed countries by developing a network of financial institutions and Banks across the globe focused on humanitarian and healthcare projects.

 

Go-to-Market Strategy

 

Our Sales Go-To-Market Strategy is segmented based on the varying needs of our customers in the following three categories:

 

1.Full solution with Kallo Integrated Delivery System (KIDS) – typically longer sales cycle and includes the end to end solution of Mobile Clinics, Rural Poly Clinics, Global and Regional response centers, Clinical and Administrative command centers, telehealth support, Kallo University training, pharmacy and medical consumable support and Emergency services with ground and air ambulance vehicles. This solution is focused on the end-to-end healthcare needs of developing countries.
2.Medical Tourism
3.COVID-19 Rapid Response Program

 

Kallo’s Value Proposition

 

Laying the foundational elements in building the primary care infrastructure for an entire country
Providing Technologies for current and future adoption of advancements in clinical services such as Telemedicine, remote maintenance and management etc.
Creating operational policies and procedures to set higher standards of care
Provide Education and training to build resource capacity within the country
KIDS provide a modular and flexible Point-of-Care facility to enable healthcare services from cities to the most rural areas in a given country and helps overcome inequalities in healthcare services across all geographies.

-16-

Kallo’s Key Market Differentiators

 

Kallo differentiates itself in our market segment by offering the most comprehensive and holistic healthcare deliver solution available to meet the needs of developing countries and countries with rural and remote populations. Kallo has invested considerable time and energy studying and understanding the healthcare needs of our target market.

 

Unequivocal Differentiators

 

1.Care platforms (Point-of-care facilities - Mobile Clinics, Rural clinics & Modular Hospitals) manufactured to North American and internationally accepted standards
2.Programs, facilities and services set-up to proactively detect and treat infectious diseases
3.On-going Tele-health service support, leveraging both local and international expertise
4.On-going education, training, & certification programs offered through Kallo University
5.On-going service & maintenance programs for all facilities and equipment
6.Leverages local skillsets and creates employment opportunities

 

Competitive Landscape

 

Healthcare landscape is the most complex industry at large. It has developed in each area of its function in an isolated fashion and hence today we have disparate functions, technologies and infrastructure. Globally healthcare industry leaders are working hard to bring a synchronized approach in patient encounter, diagnosis and treatment including preventive care. Kallo has leaped into the future with the KIDS concept and have successfully brought together technologies including global telemedicine, infrastructure and functional expertise leading the industry and have created the Kallo business ecosystem.

 

Kallo Integrated Delivery System (KIDS) has been the key to our success in the under-developed, countries and will take a lead into developing and developed countries with the flexibility of deploying components of KIDS.

 

Need for additional capital

 

We have incurred significant and protracted operating losses since inception and we have an accumulated deficit and a working capital deficit at December 31, 2020. We expect to incur additional losses as it executes its go to market strategy. This raises substantial doubt about the Company’s ability to continue as a going concern.

 

We cannot guarantee we will be successful in our business operations or that we will not incur additional and substantial protracted losses and negative cash flow in the future. Our business is subject to risks inherent in the establishment of a business enterprise, including limited capital resources and possible cost overruns due to price increases in services and products.

 

To become profitable and competitive, we anticipate that we will have to sell our products and services in sufficient volumes and with margins that may allow us to achieve profitability. We cannot assure you or anyone that we will be successful in any of these efforts.

 

There is no guaranty that we will obtain sufficient additional financing on a timely basis and on reasonable terms. If financing is not available on satisfactory terms, we may be unable to continue, develop, or expand our operations. Any equity financing will likely result in immediate and substantial dilution of existing stockholders.

-17-

Results of operations

 

December 31, 2020 compared to December 31, 2019

 

Revenues

 

We did not generate any revenues during the year ended December 31, 2020 or 2019. However, we are pursuing what we hope may be suitable business opportunities that, based on our own internal management assessments conducted without the benefit of any independent third-party review or evaluation, may offer us commercially feasible and appropriate opportunities. However, we cannot assure you that we will be successful in any of these matters or, if we achieve any success, that it will allow to achieve and sustain positive cash flow and profitability.

 

Expenses

 

During the year ended December 31, 2020 we incurred total expenses of $36,055,668, including $35,789,315 in salaries and compensation, $79,406 in professional fees, $18,563 in selling and marketing, $111,596 in interest and financing costs, $95,108 in foreign exchange loss and $11,565 as other general and administrative expenses offset by $49,885 in debt forgiveness. Our professional fees consist of legal, consulting, accounting and auditing fees.

 

During the year ended December 31, 2019 we incurred total expenses of $2,355,889, including $1,974,082 in salaries and compensation, $39,647 in professional fees, $51,908 in selling and marketing, $111,292 in interest and financing costs, $160,062 in foreign exchange loss and $18,898 as other general and administrative expenses. Our professional fees consist of legal, consulting, accounting and auditing fees.

 

The increase in our expenses for the year ended December 31, 2020 was primarily due to an increase in salaries and compensation of $33,815,233 as a result of non-cash stock-based compensation of $35,398,420 in 2020 compared to $1,574,480 in 2019 issued to management and employees. There is also an increase in professional fees of $39,759 as the Company was catching up on all its previously late filings in 2020, offset by a decrease in selling and marketing of $33,345, a decrease in foreign exchange loss of $64,954 and debt forgiveness of $49,885. The decrease in foreign exchange loss is due to the depreciation of the Canadian dollar versus the US dollar. The Company is operating with a minimal number of full-time employees and office space until it can secure new contracts.

 

Net Loss

 

During the year ended December 31, 2020 we incurred a net loss of $36,055,668 compared to a net loss of $2,355,889 in 2019. The main reason for the increase in the loss is the increase in salaries and compensation as discussed above. In that respect, we can not assure you that we will be successful in reducing our losses at any time in the future and we may face significant and protracted financial losses and we cannot guarantee that we will achieve any of our business goals.

 

Liquidity and capital resources

 

As at December 31, 2020, we had no current assets, current liabilities of $42,871,884 and a working capital deficiency of $42,871,884. As of December 31, 2020, we had no assets and our total liabilities were $42,871,884 comprised of $4,359,752 in accounts payable and accrued liabilities, loans payable of $78,397, convertible loans payable of $1,283,945 and liability for issuable shares of $37,149,790.

 

Cash used in operating activities amounted to $65,614 during fiscal 2020, primarily and as a result of the net loss adjusted for non-cash items and various changes in operating assets and liabilities.

 

Cash provided by financing activities amounted to $65,614 from proceeds from short term loans payable.

 

As of December 31, 2020, our Total Liabilities exceeded our Total Assets and we were insolvent. In that respect we face all the risks and uncertainties that could easily result in stockholders losing all or substantially all of their investment. Our common stock and our preferred stock are securities that should only be acquired by persons who can accept the HIGH RISK of such an investment.

-18-

Summary of critical accounting policies

 

Basis of Presentation

 

The accompanying consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) and in accordance with the instructions to Form 10-K related to smaller reporting companies as promulgated by the Securities and Exchange Commission.

 

Stock-Based Compensation

 

The Company accounts for share-based compensation in accordance with ASC 718, Stock Compensation. Under the provisions of ASC 718, share-based compensation cost is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense for services rendered and over the employee’s requisite service period (generally the vesting period of the equity grant).

 

Stock Issued in Exchange for Services

 

The valuation of the Company’s common stock issued to non-employees in exchange for services is valued at an estimated fair market value as determined by Management of the Company based upon trading prices of the Company’s common stock on the dates of the stock transactions. The corresponding expense of the services rendered is recognized over the contractor’s requisite service period (generally the vesting period of the equity grant).

 

ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

-19-

ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

 

INDEX

 

 PAGE
  
Report of Independent Registered Public Accounting Firm for December 31, 2020 and 201921
  
Consolidated Balance Sheets22
  
Consolidated Statements of Operations23
  
Consolidated Statements of Changes in Stockholders’ (Deficiency)24
  
Consolidated Statements of Cash Flows25
  
Notes to Consolidated Financial Statements26 - 38

-20-

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Shareholders and Board of Directors of

Kallo Inc.

 

Opinion on the Financial Statements

 

We have audited the accompanying consolidated balance sheets of Kallo Inc. and its subsidiary (collectively, the “Company”) as of December 31, 2020 and 2019, and the related consolidated statements of operations, stockholders’ deficiency, and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

 

Going Concern Matter

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency that raises substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Basis for Opinion

 

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 

/s/ BF Borgers CPA PC

  
   

We have served as the Company’s auditor since 2020.

Lakewood, Colorado

March 1, 2021 

-21-

KALLO INC.

Consolidated Balance Sheets

As at December 31, 2020 and 2019

(Amounts expressed in US dollars)

 

ASSETS 2020 2019
     
Current Assets:    
Total Current Assets $  $ 
         
TOTAL ASSETS $  $ 
         
LIABILITIES AND STOCKHOLDERS’ DEFICIENCY        
Current Liabilities:        
Accounts payable and accrued liabilities $4,359,752  $3,860,499 
Convertible loans payable – third parties  290,133   265,217 
Short term loans payable  78,397   66,521 
Convertible loans payable – related parties  993,812   907,132 
Liability for issuable shares  37,149,790   1,724,290 
Total Current Liabilities  42,871,884   6,823,659 
TOTAL LIABILITIES  42,871,884   6,823,659 
         
Commitments and Contingencies        
         
Stockholders’ Deficiency:        
Preferred stock, $0.00001 par value, 100,000,000 shares authorized, 95,000,000 Series A preferred shares issued and outstanding  950   950 
Common stock, $0.00001 par value, 1,150,000,000 shares authorized, 1,147,698,199 and 1,147,698,199 shares issued and outstanding respectively  11,478   11,478 
Additional paid-in capital  41,920,116   41,920,116 
Assignment of liabilities  (3,455,111)  (3,462,554)
Accumulated deficit  (81,349,317)  (45,293,649)
         
Total Stockholders’ Deficiency  (42,871,884)  (6,823,659)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIENCY $  $ 

 

The accompanying notes are an integral part of these consolidated financial statements

-22-

KALLO INC.

Consolidated Statements of Operations

(Amounts expressed in US dollars)

 

  For the Year Ended December 31,
  2020 2019
     
Operating Expenses    
General and administration $35,880,286  $2,032,627 
Selling and marketing  18,563   51,908 
Operating loss  (35,898,849)  (2,084,535)
         
Interest and financing costs  (111,596)  (111,292)
Foreign exchange gain (loss)  (95,108)  (160,062)
Debt forgiveness  49,885    
         
Net loss $(36,055,668) $(2,355,889)
         
Net loss per share - Basic and diluted $(0.03) $(0.00)
         
Weighted average number of shares outstanding - Basic and diluted  1,147,698,199   1,147,698,199 

 

The accompanying notes are an integral part of these consolidated financial statements

-23-

KALLO INC.

Consolidated Statements of Changes in Stockholders’ Deficiency

(Amounts expressed in US dollars)

 

          Deficit  
          Accumulated Total
  Preferred Stock Common Stock Additional Assignment During the Stockholders’
  $.00001 par value $.00001 par value Paid-In Of Development Equity
  Shares Amount Shares Amount Capital Liabilities Stage (Deficit)
                 
Balance December 31, 2018  95,000,000  $950   1,147,698,199  $11,478  $41,920,116  $(3,550,857) $(42,937,760) $(4,556,073)
Cash settlement of liabilities                 88,303      88,303 
Net Loss                    (2,355,889)  (2,355,889)
Balance December 31, 2019  95,000,000   950   1,147,698,199   11,478   41,920,116   (3,462,554)  (45,293,649)  (6,823,659)
Cash settlement of liabilities                 7,443      7,443 
Net loss                    (36,055,668)  (36,055,668)
Balance December 31, 2020  95,000,000  $950   1,147,698,199  $11,478  $41,920,116  $(3,455,111) $(81,349,317) $(42,871,884)

 

The accompanying notes are an integral part of these consolidated financial statements

-24-

KALLO INC.

Consolidated Statements of Cash Flows

(Amounts expressed in US dollars)

 

  For the Year Ended December 31,
  2020 2019
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net loss $(36,055,668) $(2,355,889)
Adjustments to reconcile net loss to net cash used in operating activities        
Stock-based compensation  35,398,420   1,574,480 
Interest and penalties  111,596   111,292 
Unrealized foreign exchange gains  96,136   160,631 
Debt forgiveness  (49,885)   
Changes in operating assets and liabilities:        
Increase in accounts payable and accrued liabilities  433,787   482,124 
NET CASH USED IN OPERATING ACTIVITIES  (65,614)  (27,362)
         
CASH FLOWS FROM FINANCING ACTIVITIES:        
Proceeds from short term loans payable  65,614   27,362 
NET CASH PROVIDED BY FINANCING ACTIVITIES  65,614   27,362 
         
Effect of exchange rate changes on cash      
         
NET DECREASE IN CASH      
CASH        
 Beginning of year      
 End of year $  $ 
         
SUPPLEMENTAL CASH FLOW INFORMATION:        
Income tax paid $  $ 
Interest paid      
         
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES        
Settlement of accounts payable by FE Pharmacy Inc.  7,443   88,303 
Unissued shares for services reclassified to liability  35,425,500   1,575,050 

 

The accompanying notes are an integral part of these consolidated financial statements

-25-

KALLO INC.

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(Amounts expressed in US dollars)

 

NOTE 1 - BUSINESS AND GOING CONCERN

 

Organization

 

Kallo Inc. (“Kallo” or the “Company”) develops customized health care solutions designed to improve or enhance the delivery of care in the countries and regions we serve. 

 

Going Concern

 

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The amounts of assets and liabilities in the consolidated financial statements do not purport to represent realizable or settlement values. The Company has incurred operating losses since inception and has an accumulated deficit and a working capital deficit at December 31, 2020. The Company is expected to incur additional losses as it executes its go to market strategy. This raises substantial doubt about the Company’s ability to continue as a going concern.

 

The Company has met its historical working capital requirements from the sale of common shares and related party loans. In order to not burden the Company, certain officers/stockholders have agreed to provide funding to the Company to pay its annual audit fees, filing costs and legal fees as long as the board of directors deems it necessary. However, there can be no assurance that such financial support shall be ongoing or available on terms or conditions acceptable to the Company. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

NOTE 2 - ACCOUNTING POLICIES AND OPERATIONS

 

Basis of Presentation

 

The accompanying consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) and in accordance with the instructions to Form 10-K related to smaller reporting companies as promulgated by the Securities and Exchange Commission.

 

Basis of Consolidation

 

The consolidated financial statements include the accounts of Kallo and its wholly-owned subsidiary, Rophe Medical Technologies Inc. Significant inter-company transactions and balances have been eliminated on consolidation.

-26-

KALLO INC.

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(Amounts expressed in US dollars)

 

NOTE 2 - ACCOUNTING POLICIES AND OPERATIONS (continued)

 

Earnings Per Share

 

The Company computes basic net loss per share in accordance with ASC 260, Earnings Per Share, by dividing the net loss for the period by the weighted average number of common shares outstanding during the year. Diluted loss per share reflects the potential dilution of securities that could share in earnings of an entity.  In a loss year, dilutive common equivalent shares are excluded from the loss per share calculation as the effect would be anti-dilutive.  For the years ended December 31, 2020 and 2019, basic and diluted losses per share are the same for both years.

 

Use of Estimates

 

The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Key estimates include the fair value of common stock issued for services received by the Company, valuation of financial instruments, measurement of non-monetary transactions and provision for penalties and interest on estimated payroll tax liabilities.

 

Software Development Costs

 

Software development costs are accounted for in accordance with ASC 985-20, Costs of Software to be Sold, Leased or Marketed. Software development costs incurred internally in creating computer software products are expensed until technological feasibility has been established upon completion of a detailed program design. Based on the Company’s product development process, technological feasibility is established upon completion of a working model. The determination of technological feasibility and the ongoing assessment of the recoverability of these costs require considerable judgment by management with respect to certain external factors including anticipated future gross product revenues, estimated economic life and changes in hardware and software technology.

 

Thereafter, all software development costs incurred through the software’s general release date are capitalized and subsequently reported at the lower of amortized cost or net realizable value. Capitalized costs are amortized based on current and expected future revenue for each software solution with minimum annual amortization equal to the straight-line amortization over the estimated economic life of the solution. No costs have been capitalized to date as the Company has not completed a working model as of yet.

 

Related party transactions

 

FASB ASC 850, “Related Party Disclosures” requires companies to include in their financial statements disclosures of material related party transactions.  The Company discloses all material related party transactions.  Related parties are defined to include any principal owner, director or executive officer of the Company and any immediate family members of a principal owner, director or executive officer.

-27-

KALLO INC.

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(Amounts expressed in US dollars)

 

NOTE 2 – ACCOUNTING POLICIES AND OPERATIONS (continued)

 

Research and Development

 

The Company accounts for research and development costs in accordance with ASC 730-10, Research and Development. Accordingly, all research and development costs are charged to expense as incurred as software development costs.

 

Foreign Currency Translation

 

The Company’s functional and reporting currency is the United States dollar. Transaction may occur in Canadian dollars which are accounted for under ASC 830, Foreign Currency Matters. Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. Non-monetary assets and liabilities denominated in foreign currencies are translated at rates of exchange in effect at the date of the transaction. Average monthly rates are used to translate revenues and expenses. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the Statements of Operations. The Company has not, to the date of these consolidated financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.

 

Income Taxes

 

The Company accounts for income taxes under FASB ASC 740, Income Taxes. Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Deferred 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 tax assets and liabilities of a change in tax rates is recognized in the statements of operations in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized.

 

The Company recognizes the effect of income tax positions only if those positions are more likely than not to be sustained.  Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized.  Changes in recognition or measurement are reflected in the period in which a change in judgement occurs, as a result of information that arises or when a tax position is effectively settled.  Interest and penalties related to income tax matters are recognized in general and administrative expense.

 

In accordance with the statute of limitations for federal tax returns, the Company’s federal tax returns for the years 2011 through 2020 are subject to examination. The Company had no material adjustments to its liabilities for unrecognized income tax benefits according to the provisions of FASB ASC 740.

-28-

KALLO INC.

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(Amounts expressed in US dollars)

 

NOTE 2 – ACCOUNTING POLICIES AND OPERATIONS (continued)

 

Fair Value of Financial Instruments

 

The Company used a three-level hierarchy that prioritizes the inputs used in valuation techniques for determining fair value of investments and liabilities. The Company defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets and liabilities recorded in the accompanying consolidated balance sheets are categorized based on the inputs to the valuation techniques as follows:

 

Level 1 – Financial assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that the company has the ability to access at the measurement date (examples include active exchange-traded equity securities, listed derivatives and most United States Government and agency securities).

 

Level 2 – Financial assets and liabilities whose values are based on quoted prices in markets where trading occurs infrequently or whose values are based on quoted prices of instruments with similar attributes in active markets. Level 2 inputs include the following:

 

 Quoted prices for identical or similar assets or liabilities in non-active markets (examples include corporate and municipal bonds which trade infrequently);
   
 Inputs other than quoted prices that are observable for substantially the full term of the asset or liability (examples include interest rate and currency swaps); and
   
 Inputs that are derived principally from or corroborated by observable market data for substantially the full term of the asset or liability (examples include certain securities and derivatives).

 

Level 3 – Financial assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect management’s own assumptions about the assumptions a market participant would use in pricing the asset or liability.

 

An asset or liability’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Availability of observable inputs can vary and is affected by a variety of factors. The Company uses judgment in determining fair value of assets and liabilities and Level 3 assets and liabilities involve greater judgment than Level 1 and Level 2 assets or liabilities.

 

There are no financial instruments that are accounted for at fair value at December 31, 2020 and 2019.

-29-

KALLO INC.

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(Amounts expressed in US dollars)

 

NOTE 2 – ACCOUNTING POLICIES AND OPERATIONS (continued)

 

Stock-Based Compensation

 

The Company accounts for share-based compensation in accordance with ASC 718, Stock Compensation. Under the provisions of ASC 718, share-based compensation cost is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense for services rendered and over the employee’s requisite service period (generally the vesting period of the equity grant).

 

Contingencies

 

The Company accrues estimates for resolution of any legal and other contingencies when losses are probable and estimable, in accordance with ASC 450, Contingencies. Legal defense costs are accrued as incurred.

 

Stock Issued in Exchange for Services

 

In accordance with ASC 505, the valuation of the Company’s common stock issued to non-employees in exchange for services is valued at an estimated fair market value as determined by Management of the Company based upon trading prices of the Company’s common stock on the dates of the stock transactions. The corresponding expense of the services rendered is recognized over the contractor’s requisite service period (generally the vesting period of the equity grant).

 

Convertible promissory note

 

The Company accounts for conversion options embedded in convertible notes in accordance with ASC 815. ASC 815 generally requires companies to bifurcate conversion options embedded in convertible notes from their host instruments and to account for them as free standing derivative financial instruments if they do not meet the criteria for classification in stockholders’ equity.

 

The Company has evaluated the terms and conditions of its convertible notes under the guidance of ASC 815. The conversion feature did not meet the definition of “indexed to a company’s own stock” provided for in ASC 815. Therefore, the conversion features require bifurcation and liability classification. The Company recorded the conversion feature as a derivative liability and debt discount and is amortized over the life of the convertible note. The debt discount is recorded against the related convertible note outstanding. The amortization is recorded as interest expense. The derivative liabilities are re-valued at the end of each reporting period using the lattice Model, with changes in the fair value of the derivative liability recorded as charges or credits to income, in the period in which the changes occur.

-30-

KALLO INC.

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(Amounts expressed in US dollars)

 

NOTE 2 - ACCOUNTING POLICIES AND OPERATIONS (continued)

 

Revenue recognition

 

Revenue will be recognized when all of the following criteria are met: persuasive evidence of an arrangement exists; delivery or performance has occurred; the sales price is fixed or determinable; and collection is reasonably assured.

 

Professional service revenue will primarily consist of the fees the Company earns related to installation and consulting services. The Company will recognize revenue from professional services upon delivery or completion of performance.

 

Training services will be recognized upon delivery of the training.

 

There were no revenues during 2020 and 2019.

 

Lease accounting

 

The Company follows ASU 2016-02 (Topic 842), “Leases”. ASU 2016-02 requires that a lessee recognize the assets and liabilities that arise from operating leases. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. In transition, lessees and lessors may use the effective date method and elected certain practical expedients allowing the Company not to reassess:

 

 whether expired or existing contracts contain leases under the new definition of a lease;
 lease classification for expired or existing leases; and
 whether previously capitalized initial direct costs would qualify for capitalization under Topic 842.

 

The Company also made the accounting policy decision not to recognize lease assets and liabilities for leases with a term of 12 months or less.

 

Advertising costs

 

The Company expenses advertising costs as incurred. The total costs the Company recognized related to advertising were $Nil during the years ended December 31, 2020 and 2019.

 

Recent Accounting Pronouncements

 

Accounting Standards Adopted

 

In August 2018, the FASB issued ASU No. 2018 13, Fair Value Measurement (Topic 820): Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13"), which removes and modifies some existing disclosure requirements and adds others. ASU 2018-13 modifies the disclosure requirements for fair value measurements and removes the requirement to disclose (1) the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, (2) the policy for timing of transfers between levels, and (3) the valuation processes for Level 3 fair value measurements. ASU 2018-13 requires disclosure of changes in unrealized gains and losses for the period included in other comprehensive income (loss) for recurring Level 3 fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. The ASU is effective for all entities for fiscal years beginning after December 15, 2019, including interim periods therein. The Company adopted this standard in the first quarter of 2020 and it did not have any impact on its financial statements and related disclosures.

-31-

KALLO INC.

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(Amounts expressed in US dollars)

 

NOTE 2 - ACCOUNTING POLICIES AND OPERATIONS (continued)

 

Recent Accounting Pronouncements

 

Accounting Standards Adopted

 

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments which requires the use of a new current expected credit loss (“CECL”) model in estimating allowances for doubtful accounts with respect to accounts receivable. Receivables from revenue transactions, or trade receivables, are recognized when the corresponding revenue is recognized under ASC Topic 606, Revenue from Contracts with Customers. The CECL model requires that the Company estimate its lifetime expected credit loss with respect to these receivables and record allowances that when deducted from the balance of the receivables, represent the estimated net amounts expected to be collected. Given the generally short term nature of trade receivables, we do not apply a discounted cash flow methodology. However, the Company considers whether historical loss rates are consistent with expectations of forward-looking estimates for our trade receivables. This ASU is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The Company adopted the new standard on January 1, 2020. The adoption of this ASU did not have a material impact on our consolidated financial statements and related disclosures.

 

Recently Issued Accounting Standards Not Yet Adopted

 

On December 18, 2019 the FASB issued the ASU 2019-12 “Income taxes (Topic 740)—Simplifying the accounting for income taxes”. The amendments in this update simplify the accounting for income taxes by removing certain exceptions to the general principles and also improve consistent application by clarifying and amending existing guidance, such as franchise taxes and interim recognition of enactment of tax laws or rate changes. The amendments in this update are effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. The Company is assessing the effects that the adoption of this accounting pronouncement may have on its financial statements.

 

In August 2020, the FASB issued ASU 2020-06, “Debt - Debt with Conversion Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”. This ASU simplifies the accounting for certain convertible instruments such that the embedded conversion features are no longer separated from the host contract for convertible instruments with conversion features that are not required to be accounted for as derivatives under ASC 815, or that do not result in substantial premiums accounted for as paid-in-capital. As a result, more convertible debt instruments will be accounted for as a single liability measured at its amortized cost. In addition, the ASU requires the use of the if-converted method to be applied to convertible instruments when calculating earnings per share. The ASU is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years, using either a modified retrospective or a full retrospective approach. Early adoption is permitted for fiscal years beginning after December 15, 2020. The Company is currently evaluating the impact of this standard on its consolidated financial statements.

-32-

KALLO INC.

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(Amounts expressed in US dollars)

 

NOTE 3 – CAPITAL STOCK

 

Common Stock

 

During the years ended December 31, 2020 and 2019, there were no movements in share capital issued and outstanding.

 

On April 8, 2017, the Company entered into an agreement with FE Pharmacy Inc., a company controlled by a shareholder of Kallo, and a related party, whereby in consideration for the issuance of 475,000,000 common stock of Kallo, FE Pharmacy Inc. assumed and will pay all of the Company’s outstanding indebtedness as at April 7, 2017. The 475,000,000 shares issuable to FE Pharmacy Inc. has been valued at the book value of the total liabilities assigned to FE Pharmacy Inc. of $4,135,037. The assignment of the liabilities to FE Pharmacy Inc. has been recorded as a receivable in the equity section of the consolidated balance sheet and will be reduced as the liabilities are settled by FE Pharmacy Inc. During the year ended December 31, 2020, the assignment of liabilities amount has been reduced by $7,443 (2019 - $88,303) cash settlement of accounts payable.

 

Preferred Stock

 

The Company has designated 95,000,000 of its preferred stock as Series A Preferred Stock, each of which has 100 votes. The Company, will not, without the affirmative vote or written consent of the holders of at least a majority of the outstanding Series A Preferred Stock (i) authorize or create any additional series of stock ranking prior to or on a parity with the Series A Preferred Stock as to dividends, voting rights, or the distribution of assets upon liquidation; or (ii) change any of the rights, privileges or preferences of the Series A Preferred Stock.

 

The Company’s Board of Directors approved the issuance of an aggregate of 95,000,000 shares of the Company’s Series A Preferred Stock to several directors as compensation for services rendered during 2014. The shares of Series A Preferred stock are not convertible, carry voting rights of 100 votes per Preferred share and the fair value of the Preferred shares were deemed to be $288,780 based on the voting rights of the Preferred shares relative to the fair value of the Company at the date of the issuance.

 

During 2020, the Company did not issue any Preferred Class shares.

 

On February 19, 2019 the Company’s Board of Directors approved the issuance of 5,000,000 shares of the Company’s Series B Preferred Stock to John Cecil, the Company’s President. Each share of the Series B Preferred Stock has one thousand (1,000) votes per share. These shares will be issued after the Company becomes current on all its filings requirements.

-33-

KALLO INC.

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(Amounts expressed in US dollars)

 

NOTE 4 – RELATED PARTY TRANSACTIONS

 

During the quarter ended December 31, 2020, the Board of Directors approved the issuance of 1,619,000,000 shares to directors and shareholders of the Company for par value of $16,190, resulting in stock-based compensation valued at $26,697,310. These shares will be issued after the Company is able to increase its authorized number of common shares.

 

During the quarter ended September 30, 2020, the Board of Directors approved the issuance of 1,089,000,000 shares to directors and shareholders of the Company for par value of $10,890, resulting in stock-based compensation valued at $8,701,110. These shares will be issued after the Company is able to increase its authorized number of common shares.

 

During 2019, the Board of Directors approved the issuance of 57,000,000 shares to directors and shareholders of the Company for par value of $570, resulting in as stock-based compensation valued at $1,373,130. These shares will be issued after the Company is able to increase its authorized number of common shares.

 

During 2019, the Company designated 5,000,000 of is preferred stock as Series B preferred stock, each of which has 1,000 votes and are not convertible. The Company, will not, without the approval or express written consent of the all the holders of the Series B preferred stock (i) establish, create, authorize or approve the issuance of any series or class of preferred stock (ii) change any of the rights, privileges or preferences of the Series B preferred stock or (iii) redeem the Series B preferred stock..

 

During 2019, the Board of Directors approved the issuance of 5,000,000 Series B preferred shares to a director as compensation for services rendered and their fair value were deemed to be $201,350 based on the voting rights of the preferred shares relative to the fair value of the Company at the date of the approved issuance. These shares will be issued after the Company becomes current on all its filings requirements.

 

During 2018, 3,031,900 valued at $121,276 were issued to the family of the controlling shareholder of FE Pharmacy Inc. and a related party as compensation for services rendered and for nominal cash. A further 3,731,005 valued at $149,240 was approved for issuance to the same family of the controlling shareholder of FE Pharmacy Inc, as compensation for services rendered but will be issued after the authorized number of common shares of the Company is increased. The transfer agent has erroneously issued these shares in spite of the Company’s instructions to wait for the increase in authorized number of common shares.

 

On April 8, 2017, the Company entered into an agreement with FE Pharmacy Inc., a company controlled by a shareholder of Kallo, and a related party, whereby in consideration for the issuance of 475,000,000 shares of Kallo, FE Pharmacy Inc. assumed and will pay all of the Company’s outstanding indebtedness as at April 7, 2017. The 475,000,000 shares issued to FE Pharmacy Inc. has been valued at the book value of the total liabilities assigned to FE Pharmacy Inc. of $4,135,037. The assignment of the liabilities to FE Pharmacy Inc. has been recorded as a receivable in the equity section of the consolidated balance sheet and will be reduced as the liabilities are settled by FE Pharmacy Inc. During the year ended December 31, 2020, the assignment of liabilities amount has been reduced by $7,443 (2019 - $88,303) cash settlement of accounts payable.

 

Included in convertible loans payable to related parties is an amount of $993,812 (2019 - $907,132), including accrued interest, owing to a director and a shareholder of the Company.

 

Included in accounts payable and accrued liabilities is an amount of $1,675,108 (2019 - $1,332,488) due to directors and officers of the Company as at December 31, 2020.

 

Included in short term loans payable is an amount of $Nil (2019 - $49,758) due to the controlling shareholder of FE Pharmacy Inc. and a related party as at December 31, 2020. 

 

Included in short term loans payable is an amount of $61,297 (2019 - $Nil) due to a director and officer of the Company as at December 31, 2020. 

-34-

KALLO INC.

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(Amounts expressed in US dollars)

 

NOTE 5 – CONVERTIBLE LOANS PAYABLE

 

  2020 2019
     
Convertible promissory note bearing interest at 15% per annum - third parties $290,133  $265,217 
Convertible promissory note bearing interest at 15% per annum – related parties  993,812   907,132 
  $1,283,945  $1,172,349 

 

The Convertible loans payable bear 15% interest per annum and are convertible at a fixed price at any time during the 1 year term.  The Company has the option to pay the note at any time.  The Company analyzed the conversion option for derivative accounting consideration under ASC Topic 815-40, Derivatives and Hedging – Contract in Entity’s Own Stock and concluded that the embedded conversion was a derivative but the fair value of the feature was zero. The total outstanding notes is $1,283,945, including accrued interest, of which $993,812 is to from related parties. Interest of $111,596 (2019 - $111,292) on the convertible loans payable are included in net finance charge for the year ended December 31, 2020 included in the consolidated statement of operations. All of the above convertible loans payable were in default as at December 31, 2020.

 

NOTE 6 – SHORT TERM LOANS PAYABLE

 

  

2020

 

2019

     
Non-interest bearing short term funding from third party $17,100  $16,763 
Non-interest bearing short term funding from related party  —     49,758 
Non-interest bearing short term funding from director  61,297   —   
  $78,397  $66,521 

 

As at December 31, 2020, the balance of $78,397 (2019 - $66,521) represented short term funding provided by a third party and a related party which are non-interest bearing, unsecured and have no fixed repayment date.  The portion of the loan from third party in Canadian dollars is $21,772 which is subject to revaluation at the end of each period end.

-35-

 KALLO INC.

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(Amounts expressed in US dollars)

 

NOTE 7 – INCOME TAXES

 

The Company had no income taxes payable at December 31, 2020 and 2019.

 

The reconciliation of income tax provision computed at statutory rates to the reported income tax provision is as follows:

 

  2020 2019
Net loss for the year $(36,055,668) $(2,355,889)
Effective statutory rate  21%  21%
Expected tax recovery $(7,571,690) $(494,737)
Net effects of non deductible and allowable items  7,433,668   330,641 
Change in valuation allowance  138,022   164,096 
  $—    $—   

 

Deferred income taxes reflect the net income tax effect of temporary differences between the carrying amounts of the assets and liabilities for financial reporting purposes and amounts used for income taxes. The Company’s deferred income tax assets and liabilities consist of the following:

 

  2020 2019
Net operating loss carry forward $4,058,167  $3,904,460 
Equipment  15,660   31,345 
Valuation allowance  (4,073,827)  (3,935,805)
Deferred tax assets, net of valuation allowance $—    $—   

 

Net operating loss carry forwards totaled approximately $19,325,000 at December 31, 2020. The net operating loss carry forwards will begin to expire in the year 2021 if not utilized. After consideration of all the evidence, management has recorded a valuation allowance at December 31, 2020 due to uncertainty of realizing the deferred tax assets. Utilization of the Company’s net operating loss carry forwards may be limited based on changes in ownership as defined in Internal Revenue Code Section 382. Tax years 2011 through 2020 remain open to examination by tax authorities.

-36-

KALLO INC.

Notes to Consolidated Financial Statements

 December 31, 2020 and 2019

(Amounts expressed in US dollars)

 

NOTE 8 – COMMITMENTS AND CONTINGENCIES

 

Contingencies

 

On April 21, 2017, an ex-employee of Kallo obtained a judgement ordering Kallo to pay Canadian $ 135,959 for unpaid wages and expenses relating to services performed in 2016. The full amount has been accrued for in the financial statements of Kallo.

 

On October 24, 2016, a consultant obtained a judgement ordering Kallo to pay Canadian $34,924 for unpaid fees. The full amount has been accrued for in the financial statements of Kallo.

 

On October 6, 2017, Thornley Fallis Communications Inc. (“Thornley”) commenced a third party claim against Kallo concerning monies that Kallo allegedly owed to Thornley for redesign of a website and public relation services. Thornley is seeking damages in the amount of Canadian $169,345 plus interest on the amounts outstanding and indemnification of the costs of the action. An amount of Canadian $134,960 has been accrued for in the financial statements of Kallo.

 

There is also a claim by Commercial Credit Adjusters on behalf of Northwest Company for payment of Canadian $34,000. An amount of Canadian $24,016 has been accrued for in the financial statements of Kallo. Negotiations are in process for the settlement of this debt for a lump sum.

 

Canada Revenue Agency has assessed the Company for unpaid Canadian $81,236 representing unremitted employee source deductions and related penalties and interest, the full amount of which has been accrued in the financial statements of Kallo.

 

Responsibility for payments of the above claims has been assumed by FE Pharmacy Inc. under the terms of the agreement mentioned in Note 3.

 

Agreements

 

On June 26, 2020, the Company finalized contracts with the Republic of Kenya (“Kenya”) and Techno-Investment Module Limited (“TIM”) for a Project Contract and a Finance Contract. Under the terms of the Agreement, Kenya is seeking to borrow the sum of 1,068,932,543 Euros from TIM and the funds are to be used primarily to build phase one of a planned National Healthcare Infrastructure in the Republic of Kenya to be undertaken by Kallo Inc. In accordance with the Finance Contract, Kallo Inc. may receive up to four payments of 40,261,253 Euros in consideration for the goods and services that the Company is to provide under the Project Contract.

 

On November 10, 2020, the Company finalized contracts with the Ministry of Health and the Ministry of Finance of the Kingdom of Eswatini (“Eswatini”) and Techno-Investment Module Limited (“TIM”) for National Healthcare Projects and Loan Agreement/Contract. Under the terms of the Agreement, Eswatini is seeking to borrow the sum of 549,978,787 Euros from TIM and the funds are to be used primarily to fund certain healthcare projects to be undertaken by Kallo Inc. TIM is to provide 549,978,787 Euros in four equal instalments to Kallo Inc and the Company will deliver 75,000,000 Euros of each payment to Eswatini’s National Food Security Program.

 

On November 30, 2020, the Company finalized with the Ministry of Health and the Ministry of Finance of the Federal Democratic Republic of Ethiopia (the “Borrower”) and Techno-Investment Module Limited (“TIM”) for National Healthcare Projects and Loan Agreement/Contract. Under the terms of the Agreement, the Borrower is seeking to borrow the sum of 2,459,817,336 Euros from TIM and the funds are to be used primarily to fund certain healthcare projects to be undertaken by Kallo Inc. TIM is to provide 2,459,817,336 Euros in four equal instalments to the Borrower, of which 1,860,437,075 Euros is to be used in connection with the National Healthcare Infrastructure program. After receiving its share of the instalments payment, Kallo Inc. will then deliver 125,000,000 Euros of each instalment payment received to the Borrower’s National Food Security Program.

-37-

KALLO INC.

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(Amounts expressed in US dollars)

 

NOTE 8 – COMMITMENTS AND CONTINGENCIES (continued)

 

Agreements (continued)

 

On December 10, 2020, the Company finalized contracts with the Ministry of Health and the Ministry of Finance of the Republic of Mozambique (“Mozambique”) and Techno-Investment Module Limited (“TIM”) for National Healthcare Projects and Loan Agreement/Contract. Under the terms of the Agreement, Mozambique is seeking to borrow the sum of 1,305,256,575 Euros from TIM and the funds are to be used primarily to fund certain healthcare projects to be undertaken by Kallo Inc. TIM is to provide 1,305,256,575 Euros in four equal instalments. After receiving its share of the instalments payment, Kallo Inc. will then deliver 125,000,000 Euros of each payment to the Ministry’s National Food Security Program.

 

On December 11, 2020, the Company finalized contracts with the Ministry of Health and the Ministry of Finance of the State of Eritrea (the “Ministry”) and Techno-Investment Module Limited (“TIM”) for National Healthcare Projects and Loan Agreement/Contract. Under the terms of the Agreement, the Ministry is seeking to borrow the sum of 521,437,477 Euros from TIM and the funds are to be used primarily to fund certain healthcare projects to be undertaken by Kallo Inc. TIM is to provide 521,437,477 Euros in four equal instalments. After receiving its share of the instalments payment, Kallo Inc. will deliver 25,000,000 Euros of each payment to the Ministry’s National Food Security Program.

-38-

ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

 

On May 7, 2019, we received the resignation of our principal independent accountant, Malone Bailey, LLP.

 

MaloneBailey has served as our principal independent accountant for the prior fiscal years since 2014. The principal independent accountant’s report issued by MaloneBailey, LLP for either of the years ended December 31, 2016 and December 31, 2017 did not contain any adverse opinion or disclaimer of opinion and it was not modified as to uncertainty, audit scope, or accounting principles except for an explanatory paragraph regarding our ability to continue as a going concern.

 

We are able to report that during the years ended December 31, 2015, December 31, 2016 and December 2017  through May 7, 2019 there were no disagreements with MaloneBailey, our former principal independent accountant, on any matter of accounting principles or practices, financial statement  disclosure, or auditing scope or procedure, which, if not resolved to MaloneBailey’s satisfaction, would have caused it to make reference to the subject matter of the disagreement(s) in connection with its reports on our consolidated financial statements for such periods. During the period of engagement there were no reportable events as that term is defined in Item 304(a)(1)(iv) of Regulation S-K except MaloneBailey having advised us that it identified certain deficiencies in our internal control over financial reporting that constitute material weaknesses as described in Item 9A of our Annual Report on Form 10-K for the year ended December 31, 2018.  At no time in the past two years did the accounting opinion of MaloneBailey contain an adverse opinion or disclaimer of opinion or was qualified or modified as to uncertainty, audit scope, or accounting principles except for an explanatory paragraph regarding our ability to continue as a going concern.

 

New independent registered public accounting firm

 

On November 12, 2020 we retained the services of BF Borgers, Certified Public Accountants (“B.F. Borgers CPA”) to serve as our principal independent accountant for the fiscal years ended December 31, 2018 and December 31, 2019. B.F. Borgers CPA is the successor to our prior principal independent accountant, MaloneBailey, LLP.

 

ITEM 9A.CONTROLS AND PROCEDURES.

 

Evaluation of Disclosure Controls and Procedures

 

We maintain “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. We conducted an evaluation (the “Evaluation”), under the supervision and with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the design and operation of our disclosure controls and procedures (“Disclosure Controls”) as of the end of the period covered by this report pursuant to Rule 13a-15 of the Exchange Act. Based on this Evaluation, our CEO and CFO concluded that our Disclosure Controls were not effective as of the end of the period covered by this report due to lack of segregation of duties in financial reporting and presence of adjusting journal entries during the audit.

-39-

Management’s Report on Internal Control Over Financial Reporting.

 

Management is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Exchange Act Rule 13a -15(f). The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

 

Because of the inherent limitations due to, for example, the potential for human error or circumvention of controls, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may deteriorate.

 

Management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control – Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

 

Based on this evaluation, management concluded that the Company’s internal control over financial reporting was not effective as of December 31, 2020. Material weakness identified included:

 

*Lack of segregation of duties
*Insufficient controls over the financial close process and preparation of the financial statements identified by the auditors during the audit of the company’s financial statements for the year ended December 31, 2020.

 

We will begin to take steps to remedy the foregoing material weaknesses, including hiring a VP of Finance to oversee the accounting and financial reporting process, after the Company secures new contracts.

 

Changes in Internal Controls

 

There were no changes in our internal control over financial reporting during the quarter ended December 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

ITEM 9B.OTHER INFORMATION.

 

None.

-40-

PART III

 

ITEM 10.DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE.

 

Officers and Directors

 

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 no nominating, auditing or compensation committees.  It does have an audit committee comprised of the board of directors.

 

The names, addresses, ages and positions of our present officers and directors are set forth below:

 

Name and Address Age Position(s)
John Cecil
255 Duncan Mill Road,
Suite 504
Toronto, Ontario
Canada M3B 3H9
 55 President, Chairman of the Board of Directors, Chief Executive Officer and Chief Financial Officer
     
Lloyd A. Chiotti
255 Duncan Mill Road,
Suite 504
Toronto, Ontario
Canada M3B 3H9
 70 Chief Operating Officer and Director
     
Samuel R Baker
255 Duncan Mill Road,
Suite 504
Toronto, Ontario
Canada M3B 3H9
 83 Secretary and a Director

-41-

Background of officers and directors

 

John Cecil – President, Chairman of the Board of Directors, Chief Executive Officer and Chief Financial Officer

 

On October 20, 2010, John Cecil was appointed Chairman of the Board of Directors, Chief Executive Officer and a Director and on February 29, 2016, Mr Cecil was appointed President. And as of March 25, 2011, John Cecil was appointed the treasurer, principal financial officer and principal accounting officer of Kallo Inc. Since December 31, 2009, John Cecil was on our board of directors.  Since December 2003 John Cecil has been the president of Rophe Medical Technologies Inc., in Toronto, Canada.  He was responsible for its research and development and the design and copyright of the company’s technology.  From May 2008 to April 2009 Mr. Cecil was the Senior Healthcare Solutions Architect at SUN Microsystems Canada Inc., in Toronto, Canada, a publicly traded company listed on the NASDAQ under the symbol JAVA.  He was responsible for Innovative product positioning by workshops / white board sessions with stakeholders of the customer to increase business value and support sales in revenue growth and design innovative technology solutions.  From April 2007 to May 2008, Mr. Cecil was the Healthcare Director at Satyam Computer Service Ltd., in Toronto, Canada, a publicly traded company listed on the NYSE under the symbol “SAY”.  He managed healthcare consulting practices and services. On February 29, 2016, Mr Cecil was appointed to the position of President of Kallo Inc.

 

Samuel Baker - Secretary and a Director

 

On November 17, 2010, Samuel Baker was appointed Secretary and a member of our Board of Directors.  Since October 1997 Mr. Baker has been the Senior Lawyer at Baker Law Firm in Toronto, Canada. Since September 2008, Mr. Baker has been the director of Arehada Mining Limited.  Arehada Mining Limited operates a lead/zinc mine in Inner Mongolia, China.  It is a public company traded on the Toronto Stock Exchange, ticker symbol AHD.

 

Lloyd Chiotti – Chief Operating Officer and Director

 

On September 22, 2011, Lloyd Chiotti was appointed to our board of directors and on February 29, 2016, Mr Chiotti was appointed Chief Operating Officer. In February 2015, Mr. Chiotti began full time with Kallo Inc. as the Executive Vice President. He holds an Engineering degree and an MBA, both from the University of Toronto. He worked with Enbridge Gas Distribution (formerly The Consumers Gas Company) for over 34 years. Over the course of his career he held a number of senior management positions including Director of Information Services and a number of Regional General Manager roles within Operations. In 2006 he joined the Engineering department to lead the Asset Management initiative as Director, Asset Management Strategy. In this capacity, he led a team which implemented an Asset Management system for gas distribution consistent with the international standard called PAS 55 (now ISO 55001). In 2010 he was appointed to the position of Director, Distribution Asset Management. In this capacity, he was responsible for all distribution system planning and records management and led the development of a comprehensive methodology to develop risk based, long range asset management plans. He was actively involved in the natural gas industry. He served as Chair of the Asset Management Task Force of the Canadian Gas Association from 2006 to 2013 and served as a member of the Distribution Working Committee of the International Gas Union from 2007 to 2012. Throughout his career he has also served on the Boards of a number of not-for-profit organizations including: President, Alternative Computer Training for the Disabled; Chair, United Way of Peel Campaign 1992; Chair of the Board, West Park Healthcare Centre Foundation; Vice-Chair of the Board, Junior Achievement of Toronto and Chair of the Board, Toronto Mendelssohn Choir. He retired from Enbridge on October 1, 2013.

 

 Conflicts of Interest

 

There is no conflict that we foresee as our officers and directors devote full time to the business and the operations of the company except for Samuel R. Baker who is not full time in the organization.

-42-

Involvement in Certain Legal Proceedings

 

During the past ten years, Messrs. Cecil, Baker, and Chiotti have not been the subject of the following events:

 

 1.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;

 

 2.Convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses);

 

 3.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;

 

 i)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;
 ii)Engaging in any type of business practice; or
 iii)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;

 

 4.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;

 

 5.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;

 

 6.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;

 

 7.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:

 

 i)Any Federal or State securities or commodities law or regulation; or
 ii)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
 iii)Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or

 

 8.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.

-43-

 Audit Committee and Charter

 

We have a separately designated audit committee of the board. Our board of directors performs the audit committee functions. None of our directors are deemed independent. Two of our directors also hold positions as our officers. 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 an exhibit to our 2007 Form 10-K.

 

Audit Committee Financial Expert

 

We do not have an audit committee financial expert.

 

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 to our S-1 filed with the Securities and Exchange Commission on August 25, 2014.

 

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 to our 2007 Form 10-K.

 

Section 16(a) of the Securities Exchange Act of 1934

 

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors, officers and persons who beneficially owned more than ten percent of our 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 us during the fiscal year 2019, all officers, directors, and persons who beneficially own more than ten percent of our common stock filed all reports required by Section 16(a) of the Securities Exchange Act of 1934, as amended.

-44-

ITEM 11.EXECUTIVE COMPENSATION.

 

The following table sets forth the compensation payable by us during the last two 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.

 

Summary Compensation Table

 

(a)(b)(c)(d)(e)(f)(g)(h)(i)(j)
       Change in  
       Pension Value &  
       Nonqualified  
      Non-EquityDeferred  
    StockOptionIncentive PlanCompensationAll Other 
Name and Principal SalaryBonusAwardsAwardsCompensationEarningsCompensationTotals
Position [1]Year($)($)($)[1]($)(S)($)($)($)
John Cecil2020161,618019,278,000000019,439,618
Chairman & CEO2019165,08301,068,95000001,234,033
          
Samuel Baker2020001,006,50000001,006,500
Secretary20190072,300000072,300
          
Lloyd Chiotti2020130,10204,660,00000004,790,102
Director & EVP2019132,8910241,0000000373,891

 

 [1]During the year ended December 31, 2020, 1,944,000,000 common shares were approved for issuance to directors and officers for a total amount of $24,944,500 of which $19,440 was contributed as cash by them and $24,925,060 was to be granted to them as stock-based compensation.

 

The number of shares approved for issuance as compensation to each named executive officer for the year ended December 31, 2020 was as follows:

 

 John Cecil – 1,496,000,000 common shares issuable as compensation valued at $19,278,000
 Samuel Baker – 78,000,000 common shares issuable as compensation valued at $1,006,500
 Lloyd Chiotti – 370,000,000 common shares issuable as compensation valued at $4,660,000

 

The values reported represent the issue date fair value of the shares multiplied by the number of shares issuable.

 

All compensation received by our officers and directors has been disclosed.

 

Option/SAR Grants

 

There are no stock option, retirement, pension, or profit sharing plans for the benefit of our officers and directors other than our 2012 Non-Qualified Incentive Stock Option Plans. No options have been granted to our officers and directors thereunder.

-45-

Long-Term Incentive Plan Awards

 

We do not have any long-term incentive plans that provide compensation intended to serve as incentive for performance.

 

Compensation of Directors

 

The members of our board of directors are not compensated for their services as directors. We no longer have employment contracts with our officers or directors.

 

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, 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.

-46-

ITEM 12.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 and Address

Beneficial Owner [1]

 

Number of Common

Shares Owned

 

Percentage of

Ownership

 

Number of Preferred

Shares Owned

 

Percentage of

Ownership

John Cecil [2]  507,756,028   44.10%  70,000,000   73.69%
255 Duncan Mill Road, Suite 504
Toronto, ON M3B 3H9
                
                 
Lloyd Chiotti  91,370,917   7.94%  5,000,000   5.26%
255 Duncan Mill Road, Suite 504
Toronto, ON M3B 3H9
                
                 
Samuel Baker [3]  30,546,508   2.65%  —     0.00%
255 Duncan Mill Road, Unit 504
Toronto, ON, M3B 3H9
                
                 
All Officers and Directors as a Group (3 persons)  629,673,453   54.69%  75,000,000   78.95%

 

[1]The persons named above may be deemed to be a “parent” and “promoter” of our company, within the meaning of such terms under the Securities Act of 1933, as amended, by virtue of his/its direct and indirect stock holdings.
[2]Includes 32,670 shares of common stock owned by family members of John Cecil.
[3]Includes 667 shares of common stock owned by family members of Samuel Baker.
[4]Each preferred share is entitled to 100 votes.

-47-

ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

 

As at December 31, 2020, we owe our officers and directors $1,675,108 in accounts payable and accrued liabilities.

 

ITEM 14.PRINCIPAL ACCOUNTING FEES AND SERVICES.

 

(1)        Audit Fees

 

The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for our audit of annual financial statements and review of financial statements included in our Form 10-Ks or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years was:

 

 2020$30,000 BF Borgers
 2019$30,000 BF Borgers

 

(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 our financial statements and are not reported in the preceding paragraph:

 

 2020$ 30,000 BF Borgers
 2019$30,000 BF Borgers

 

(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$0 BF Borgers
 2019$0 BF Borgers

 

(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$0 BF Borgers
 2019$ 0 BF Borgers

 

(5)        Our 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 our 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%.

-48-

PART IV

 

ITEM 15.EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

 

  Incorporated by
reference
Filed
ExhibitDocument DescriptionFormDateNumberherewith
      
2.1Articles of Merger8-K1/21/112.1 
      
3.1Articles of IncorporationSB-23/05/073.1 
      
3.2BylawsSB-23/05/073.2 
      
3.3Amended Articles of Incorporation (11/23/2015)8-K12/02/153.1 
      
4.1Specimen Stock CertificateSB-23/05/074.1 
      
10.1Agreement with Rophe Medical Technologies Inc. dated December 11, 200910-K3/31/1010.2 
      
10.2Amended Agreement with Rophe Medical Technologies Inc. dated December 18, 200910-K3/31/1010.3 
      
10.3Amended Agreement with Rophe Medical Technologies Inc. dated March 16, 201010-K3/31/1010.4 
      
10.4Investment Agreement with Kodiak Capital Group, LLC dated October 20, 2014S-110/30/1410.6 
      
10.5Amended Agreement with Jarr Capital Corp.8-K2/22/1110.1 
      
10.6Termination of Employment Agreement with John Cecil8-K2/22/1110.2 
      
10.7Termination of Employment Agreement with Samuel Baker8-K2/22/1110.4 
      
10.8Services Agreement with Buchanan Associates Computer Consulting Ltd.10-K5/18/1110.1 
      
10.9Equipment Lease Agreement with Buchanan Associates Computer Consulting Ltd.10-K5/18/1110.2 
      
10.10Agreement with Mansfield Communications Inc.10-K5/18/1110.3 
      
10.11Agreement with Watt International Inc.10-K5/18/1110.4 
      
10.12Pilot EMR Agreement with Nexus Health Management Inc.10-K5/18/1110.5 
      
10.132011 Non-Qualified Stock Option PlanS-86/27/1110.1 
      
10.14Multimedia Contractual Agreement with David Miller8-K10/28/1110.1 

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ITEM 15.EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. (CONTINUED)

 

  Incorporated by
reference
Filed
ExhibitDocument DescriptionFormDateNumberherewith
      
10.15Strategic Alliance Agreement with Petro Data Management Services Limited and Gateway Global Fabrication Ltd.8-K11/02/1110.1 
      
10.16Independent Contractor Agreement with Savers Drug Mart8-K1/26/1210.1 
      
10.172012 Non-Qualified Stock Option PlanS-89/06/1210.1 
      
10.18Memorandum of Offering with Ministry of Health of Republic of GhanaS-1/A-36/26/1310.32 
      
10.19Addendum to Investment Agreement with KodiakS-1/A-47/31/1310.33 
      
10.20Second Addendum to Investment Agreement with KodiakS-18/25/1410.34 
      
10.21Email from KodiakS-1/A-19/24/1410.35 
      
10.22Email from KodiakS-1/A-19/24/1410.36 
      
14.1Code of EthicsS-18/25/1414.2 
      
16.1Letter from Collins Barrow Toronto LLP8-K/A-12/15/1216.3 
      
16.2Letter from Schwartz Levitsky Feldman LLP8-K/A-38/13/1416.1 
      
21.1List of Subsidiary Companies10-K3/31/1021.1 
      
31.1Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002   X
      
32.1Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002   X
      
99.1Audit Committee Charter10-K4/15/0899.1 
      
99.2Disclosure Committee Charter10-K4/15/0899.2 
      
99.3FCPA CodeS-18/25/1499.3 
      
99.4Letter from Ministry of Health8-K6/08/1599.2 
      
99.5Letter from Minister of Health and Public Hygiene8-K6/24/1599.2 

- 50 -

ITEM 15.EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. (CONTINUED)

 

  Incorporated by
reference
Filed
ExhibitDocument DescriptionFormDateNumberherewith
      
101.INSXBRL Instance Document   X
      
101.SCHXBRL Taxonomy Extension – Schema   X
      
101.CALXBRL Taxonomy Extension – Calculations   X
      
101.DEFXBRL Taxonomy Extension – Definitions   X
      
101.LABXBRL Taxonomy Extension – Labels   X
      
101.PREXBRL Taxonomy Extension – Presentation   X

- 51 -

 SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the registrant has duly caused this amended report to be signed on its behalf by the undersigned, thereunto duly authorized, on this 3rd day of March, 2021.

 

 KALLO INC.
  
 BY:JOHN CECIL
  John Cecil
  President, Principal Executive Officer, Principal Financial Officer and Chairman of Board of Directors

 

Pursuant to the requirements of the Securities Act of 1934, this amended report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated:

 

Signature TitleDate
    
JOHN CECIL President, Principal Executive Officer,March 3, 2021
John Cecil Principal Financial Officer and the Chairman of Board of Directors 
    
SAMUEL BAKER Corporate Secretary and member ofMarch 3, 2021
Samuel Baker the Board of Directors 
    

LLOYD A. CHIOTTI

 Chief Operating Officer and member of the Board of DirectorsMarch 3, 2021
Lloyd A. Chiotti   

- 52 -