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    KALO   US48343P2083

KALLO INC.

(KALO)
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KALLO INC. : Entry into a Material Definitive Agreement, Regulation FD Disclosure (form 8-K)

12/03/2020 | 04:40pm EST

Item 1.01 Entry into a Material Definitive Agreement.

On November 30, 2020 we received executed copies of the following contract documents for National Healthcare Projects from the Ministry of Health and the Ministry of Finance of the Federal Democratic Republic of Ethiopia (the "Ministry" or the "Borrower") as entered into between and among: the Ministries, Techno-Investment Module Limited, a corporation domiciled in the Republic of Belarus with offices in Minsk, Republic of Belarus ("TIM") and Kallo Inc. (the "Agreement").



  1. National Healthcare Project Contract
  2. Loan Agreement / Contract.


Under the terms of the Agreement, the Ministry is seeking to borrow the sum of 2,459,817,336 Euros from TIM and the funds are to be used primarily to fund that certain healthcare project to be undertaken by Kallo with the Ministry solely within the Republic of Ethiopia (the "Healthcare Project").

As envisioned, we are to provide certain services to the Ministry subject to the terms and conditions set forth in the Agreement and TIM is to loan certain funds to the Ministry.

Under the terms of the Agreement:



   º the Agreement is governed by and subject to the laws of the Federal
     Democratic Republic of Ethiopia.
   º in the event of any dispute, all disputed matters are to be resolved
     through mandatory arbitration under the Rules of Arbitration of the
     International Chamber of Commerce which shall be conducted in London,
     England;
   º all goods and services to be provided by Kallo are to be supplied in
     accordance with the National Healthcare Infrastructure, Technical Proposal
     Ref# AF/ET/NOV-2020/TP-000103/ and the Medical Tourism Project, Financial
     Proposal Ref# AF/ET/NOV-2020/TP-000102 and costs of all goods and services
     as specified in the Bill of Goods (all of which, collectively, as the
     "Proposal Documents")
   º all goods and services to be provided by Kallo are to be supplied in
     accordance with the Medical Tourism project, Technical Proposal Ref#
     AF/ET/NOV-2020/TP-000102 and costs of all goods and services shall be as
     specified in the Financial Proposal; Ref# AF/ET/NOV-2020/FP-000102/ (both,
     collectively, as the Proposal Documents")
   º Kallo is solely responsible for the delivery to the Ministry, all goods
     that are to be provided under the Agreement;
   º Kallo assumes all risk of loss for the delivery of all goods to the
     Ministry and all such goods are to be insured at Kallo's sole expense and
     in a freely convertible currency;
   º Kallo is solely responsible to complete tests and inspections of all goods
     to be delivered to the Ministry and do so without any cost or expense to
     the Ministry;
   º The Ministry has the right to require that Kallo carry out any one or more
     additional tests that the Ministry may deem necessary to verify that the
     characteristics and performance of the goods delivered by Kallo comply with
     technical specifications at the expense of the Ministry as set forth in the
     Agreement;
   º upon delivery of goods to the Ministry by Kallo, satisfactory completion of
     all tests and the approval and acceptance of the test results by the
     Ministry, the Ministry is to issue a "Notice of Acceptance";
   º the Ministry has the right to reject any goods provided by Kallo that fail
     to pass manufacturer's prescribed tests and/or inspection or do not conform
     to the specifications set forth in the Agreement or in any referenced
     understandings;
   º all goods and services provided by Kallo under the Agreement are warranted
     by Kallo to be suitable for the purposes set forth in the Agreement and are
     to conform to the specifications set forth therein.

                                       -2-



   º Notwithstanding any satisfactory test results, Kallo is not released from
     any of the warranties made by Kallo under the Agreement and all warranties
     continue for a period of twelve (12) months from and after completion of
     any "acceptance testing" by the Ministry;
   º Kallo indemnifies and holds the Ministry harmless from and against any
     claims, suits, and actions asserting any violation of any applicable patent
     claims, copyright claims, and both;
   º except for criminal negligence or willful misconduct, Kallo is not
     responsible, whether in contract, tort, or otherwise, for any indirect or
     consequential loss or damages suffered or incurred by the Ministry or other
     persons affiliated with the Ministry and the aggregate liability of Kallo
     shall not exceed the purchase price of the goods acquired from Kallo by the
     Ministry;
   º in the event that Kallo fails to perform its obligations under the
     Agreement and such failure is the result of an event of a force majeure,
     Kallo shall not be liable with the term "force majeure" defined as an event
     or situation beyond the control of Kallo and which is not foreseeable, is
     unavoidable, and its origin is not due to the negligence or lack of care
     von the part of Kallo;
   º the Ministry has the right, upon notice to Kallo, to make changes within
     the general scope of the Agreement and the same may result in a change to
     the contract price;
   º in the event of any "change orders" the Agreement requires that Kallo and
     the Ministry incorporate such "change orders" into an amendment to the
     Agreement;
   º the Agreement and the rights duties set forth therein are not assignable by
     either of the parties;
   º all goods and services to be provided by Kallo to the Ministry are to be
     provided and delivered in accordance with accepted commercial standards as
     provided by the Agreement and at a fixed price unless the vendor increases
     the price from that originally presented;
   º TIM is to provide and deliver the sum of 2,459,817,336 Euros (the "Loan
     Amount") to the Ministry in four (4) equal payments (the "Contract
     Payments") as follows: (1) the first payment is expected to be made within
     ten (10) Banking days after completion of the "Finance Process"; (2) the
     second payment is expected to be made within five (5) Banking days from the
     delivery of the first payment; (3) the third payment is expected to be made
     within five (5) Banking days from the delivery of the second payment; and
     (4) the fourth payment is expected to be made within five (5) Banking days
     from the delivery of the third payment.



   º Of the Loan Amount, the Ministry is to use: (1) the sum of 1,860,437,075
     Euros is to be used in connection with the National Healthcare
     Infrastructure program and (2) the sum of 599,380,261 Euros are to be used
     in connection with the Medical Tourism program.


Further, the Ministry, TIM and Kallo have agreed that:



   º The Loan Amount is to carry an annual interest rater of LIBOR plus 2%.
   º The Ministry, as the borrower, will have no obligation to make any payments
     to the Lender during the first three (3) years (the "Grace Period") of the
     twenty (20) year term of the Loan (the "Maturity Date") but interest will
     accrue on the outstanding balance of the Loan Amount during that first
     three year period.
   º The Government of the Federal Democratic Republic of Ethiopia, as the
     Borrower, is responsible for the repayment of the Loan Amount and all
     financial obligations to TIM, as the Lender under the terms of the Loan.
   º The Loan Amount may be prepaid at any time by the Borrower, prior to the
     Maturity Date and without any prepayment penalty.
   º Each of the Contract Payments is expected to be delivered to Kallo and
     Kallo will deliver 125,000,000 Euros of each payment to the Ministry's
     National Food Security Program.



                                       -3-


Overall, the Agreement and the transactions contemplated by the Agreement involve significant risks and uncertainties. In that respect and in other respects, we cannot assure you that any of the express written contractual understandings contained in the Agreement and any of the unwritten but implied understandings not recited in the Agreement and those that we may enter into will be successfully undertaken. We have no prior contractual experience working with the Federal Democratic Republic of Ethiopia or any persons at the Ministry except as set forth in the Agreement.

We also have no history or any track record of entering into any agreement, joint venture or other arrangement with any foreign government that has resulted or allowed us to generate revenues or, for that matter, any profits or positive cash flow from any such efforts. In that respect we clearly face many unknown and uncontrollable variables that we may discover will significantly and adversely impact us financially.

While we have long sought to implement our business plans by entering into agreements similar to that set forth in the Agreement, we have no track record and no experience of successfully undertaking any business venture anywhere involving any such business activities. As a result, we are facing all of the many risks and uncertainties associated with starting a new business and we caution the reader of this Form 8-K that we cannot provide any assurance that we will successfully overcome any one or more of these known risks and uncertainties or any one or more of any unknown risks and uncertainties.

We are dependent upon any revenues that we may generate and may arise out of the Agreement and the goods and services that we contemplate providing the Ministry. There can be no assurance that we will, in fact, successfully generate any revenues as set forth in the Agreement or if we do, that the revenues that we generate will also result in us achieving and maintaining profitability and positive cash flow. We remain entirely dependent upon the outcome of the Agreement and we cannot guarantee that the Agreement will allow us to achieve our contractual expectations thereunder or otherwise that we can perform our obligations under the Agreement and do so on any basis that will allow us to achieve and sustain profits, positive cash flow, or both, if ever.

We anticipate that if circumstances allow and subject to our ability to implement the contemplated Agreement (and any further negotiations and understandings), we may have an opportunity to demonstrate our ability to provide certain healthcare services within the Federal Democratic Republic of Ethiopia ("Ethiopia"). However, we cannot assure you that we will achieve that or any other objective.

As we face these and other unknown risks, we anticipate that even if we are successful in these efforts, we will be required to complete other negotiations with certain critically important sub-contractors that we anticipate will likely be needed to allow us to perform our obligations under the Agreement.

There can be no assurance that we will not face additional challenges, delays and a multitude of risks and uncertainties as we proceed further in any of these matters.

We also face certain legal risks in that the Agreement is to be governed by the laws of Ethiopia and not the laws of Ontario, Canada or the laws of any state within the United States. In that respect, we may discover that the laws and jurisprudence of Ethiopia (the "Local Laws") are uncertain and subject to significant and unpredictable uncertainties and likely adverse political influence that may well preclude our ability to rely upon the Local Laws and to assume that we can rely upon traditional notions of justice associated with contracts that are subject to Ontario, Canada law or subject to the laws of state law in the United States. We are not likely able to limit or mitigate the risks of any of these uncertainties and as a result, these risks likely will increase over time. In that event our stockholders would likely lose all or substantially all of their investment.



                                       -4-


We also face continuing political uncertainty in that while we believe that the political and institutional environment in Ethiopia is stable, there can be no assurance that the environment may later become far less stable with the result that we face the loss of our entire investment together with significant and protracted losses resulting thereby. In that event we likely would face significant and protracted financial losses.

Prior to the Agreement, we have not had any direct experience in working with the Ministry and we have not had any experience in any project within Ethiopia. As a result we may discover that we may be facing significant delays and potentially insurmountable difficulties in working with the Ministry and others in Ethiopia that may result in our inability to fully achieve the goals and objectives of the Agreement. In that event, we may incur significant and protracted losses as a result thereby.

We are also aware that in today's more uncertain COVID 19 environment, parties to a contract (and sub-contractors, vendors, and other necessary third parties) may assert that they find it more difficult to perform their obligations as provided by any oral or written contractual understanding and then assert, as a defense to their non-performance of their contractual obligations, that unforeseen circumstances prevent them from fulfilling their obligations to the other party to any oral or written agreement or understanding. This defense, known as the force majeure defense, is, in today's environment, commonly asserted and we may encounter such an asserted defense from one or more direct or indirect contractual parties that are necessary to the implementation of the purposes of each and every oral or written agreement or understanding that we may have with any persons or entities that are or may be later directly or indirectly involved.

The force majeure defense, if successfully asserted, is commonly viewed as a complete defense. That is, it completely excuses the other party from performing its contractual obligations. In that sense, we face a clear risk that all of our efforts and our performance of our contractual obligations can easily result in our non-receipt of any performance by any counter party to any agreement or understanding that we may have with anyone, including, but not limited to, the agreement and understandings with the Ministry and with TIM or both of them and any other persons that may be sub-contractors to the Ministry or us in any of the tasks undertaken in connection with the Agreement. . . .

Item 7.01 Regulation FD Disclosure.

On November 30, 2020 we received executed copies of the following contract documents for National Healthcare Projects from the Ministry of Health and the Ministry of Finance of the Federal Democratic Republic of Ethiopia (the "Ministry" or the "Borrower") as entered into between and among: the Ministries, Techno-Investment Module Limited, a corporation domiciled in the Republic of Belarus with offices in Minsk, Republic of Belarus ("TIM") and Kallo Inc. (the "Agreement").



                                       -5-


We are also aware that in today's more uncertain environment, parties to a contract may assert that they find it more difficult to perform their obligations either as a vendor, supplier, or necessary third party (or as a party to the Agreement) and then assert, as a defense to their non-performance of their contractual obligations, that unforeseen circumstances prevent them from fulfilling their obligations to the other party to the Agreement. This defense, known as the force majeure defense, is, in today's environment, commonly asserted and we may encounter such an asserted defense from one or more direct or indirect contractual parties in connection with the Agreement.

In that event we may be facing a very high likelihood that the purposes of the Agreement, as envisioned, cannot be undertaken or implemented in any financially or reasonably feasible manner. We also face political risks in all of undertakings involving the Agreement that we cannot mitigate or reduce in any meaningful way. These and the ever-present risks of serious and material foreign exchange losses are also significant.

As a result, all of our efforts that we have taken in connection with the Agreement may not result in any financial benefits to the Company and we will incur further significant financial losses thereby with little or no prospect of recovering any sums that we have expended to achieve the goals as envisioned by the Agreement.

For these reasons and based on our current assessments, there is a clear risk that the purposes and goals set forth in the Agreement will not be achieved and we anticipate that, in that and other instances, we may incur significant additional financial losses as a result of these developments. (See "Risk Factors Related to the Agreement and Our Financial Condition" below.)

Risk Factors Related to the Agreement and Our Financial Condition

While we have long sought to enter into an agreement to provide the types of services set forth in the Agreement and we believe that such an agreement remains an essential part of our corporate strategy, we have no experience in providing the services set forth in the Agreement. As a result, it can be said that we are entering into a new business with all of the attendant risks and uncertainties associated with any new business venture. However, and in this context and the current uncertain environment of the COVID-19 and the global pandemic, we are aware that we may not achieve any of our objectives as set forth in the Agreement.

As we have said previously, our stockholders are reminded that our business strategy involves significant risks and uncertainties over which we have little or no control. These risks and uncertainties are far higher today given the current uncertain environment of the COVID-19 and the global pandemic.

Overall, we have no way to control or limit these risks and uncertainties and we believe that the extent of the risks and uncertainties that we are facing as a party to any agreement or understanding involving foreign entities and those entities having operations in countries where current healthcare and disease prevention practices are dramatically below the healthcare and disease prevention practices found in the United States and Canada, are significantly higher and more uncertain than that which existed prior to March 2020 before the current global pandemic was recognized. As a result, we caution any reader of this Form 8-K that we cannot assure you that the Agreement, the purposes of the Agreement, and the financial benefits that we may, if we are successful and if circumstances allow, will ever be realized at any time.

However, and in addition to the above, these risks include, but are not limited to, the risks set forth in our most recent Annual Report on Form 10-K under Item 1A together with the following:

º We need to raise a significant amount of additional capital to support our

     current financial needs and the capital that we are likely to need if we
     are to sustain our corporate existence and otherwise conduct our intended
     business as contemplated by the Agreement and otherwise.



                                       -6-


º At present we have not received any commitment from any capable and

     qualified third party to provide a sufficient amount of additional funds
     that will allow us to meet our current and projected needs and there can be
     no assurance that we will receive a sufficient amount of funds at any time
     in the near future or, if we do receive such funds, that the funds will be
     provided on reasonable terms and in sufficient amounts and on a timely
     basis given our current financial condition. If we are not successful in
     obtaining such funds, in sufficient amounts, on reasonable terms, and on a
     timely basis, any person who acquires our Common Stock, our Preferred
     Stock, or both of them, will likely lose their entire investment.

º Holders of our Common Stock face an almost certain prospect of immediate

     and substantial dilution since even if a qualified and capable prospective
     investor were willing to assume the extraordinary risks involved in making
     an investment into our Company, existing investors would very likely suffer
     dilution in ownership, in destruction of the current book value per share,
     and the destruction of the extent of their voting rights that likely would
     be permanent and without recourse. Thus, any person who acquires our Common
     Stock should be prepared to lose all or substantially of their investment.

º In the unlikely event that, pursuant to the Agreement, any financial

     transactions that were to occur, we face significant and inherent exposure
     to foreign exchange rate losses in connection with any revenues that we
     derive under any such agreement. Currently, we do not have any ability to
     "hedge" against any foreign exchange risks and we have no present plans to
     undertake any such activity that would allow us to gain any ability to
     "hedge" against any such risks. As a result, any revenues or funds that we
     receive resulting from any agreements with foreign countries may, after
     giving effect to any exchange rates, be dramatically reduced with the
     result that we will incur significant and protracted losses and negative
     cash flow thereby.

º Currently we are seriously delinquent in meeting our disclosure obligations

     under Section 13 of the Securities Exchange Act of 1934, as amended (the
     "1934 Act"). That is, we have not filed our Annual Report on Form 10-K for
     the 2018 fiscal year and we have not filed our three (3) Quarterly Reports
     on Form 10-Q for the first three (3) quarterly periods in fiscal 2019 and
     we have not filed any such reports for the first three (3) quarters of
     fiscal 2020. More than that, there can be no assurance that we will obtain
     sufficient funds in the future that will allow us to eliminate our existing
     delinquencies and not incur additional delinquencies as well. Given these
     circumstances, we face a clear and certain high risk that the Securities
     and Exchange Commission could take adverse action against us to preclude
     further trading in our Common Stock. In that event, any person who acquires
     our Common Stock may be entirely unable to liquidate their investment. As a
     result, any person who acquires our Common Stock or our Preferred Stock
     should be prepared to lose their entire investment.

º There is no continuous and liquid trading market for our Common Stock and

there is no likelihood that any such trading market will ever develop or,

if it does develop, that it can be sustained.

º We have not achieved profitability, positive cash flow or both of them and

there can be no assurance that we will ever achieve profitability, positive

cash flow, or both of them in the future or if we do, that either or both

of them can be sustained.

º We have no history of paying dividends on our Common Stock and given our

lack of profitability and lack of positive cash flow, it is highly unlikely

that we will ever be paying any dividends at any time in the near future.

º We face significant operational and other risks in implementing the

     Agreement (and any later Anticipated Agreement) given the nature of the
     parties to the Agreement and the obvious and expensive challenges involved
     in any undertakings that we may have in any foreign venture.

                                       -7-




º We have not received any independent third-party evaluation of the business

     venture implicit in the Agreement and the underlying transactions set forth
     therein and we have no present plans to secure any such evaluation. We may
     discover that notwithstanding our efforts that we expended to secure the
     Agreement, the Agreement may not be financially feasible for any one or
     more reasons. We are aware that many commercial transactions that were
     undertaken prior to the onset of the current and unanticipated global
     pandemic are now not feasible because of the dramatic changes resulting
     from the pandemic or other changes.

º For these reasons and in view of the high risks and continuing unmitigated

uncertainties involved, we cannot assure you that we will ever expect to

gain any financial or other benefits as a result of the Agreement. As a

result, we may incur further protracted losses and negative cash flow

thereby.

º In the current unprecedented environment of COVID-19, we face even greater

     risks and uncertainties in undertaking any business venture particularly
     where the business that is to be conducted is located in a part of the
     world where healthcare and disease prevention is far below the standards
     found in Canada, the United States and Europe. As a result and to be clear,
     we strongly believe that our strategy of undertaking and establishing
     business ventures in other countries face significantly greater risks and
     uncertainties that may cause us to increase our financial losses and lead
     to further losses to stockholders who acquire our common stock, our
     preferred stock, and any other security that we may issue. All of our
     securities should be considered HIGH RISK investments. For these reasons,
     any person who seeks to acquire our securities should be prepared to lose
     all of their investment.

º All of our securities should be considered HIGH RISK investments. For these

     reasons and many others, holders of our Common Stock and holders of our
     Preferred Stock should understand that our Common Stock and our Preferred
     Stock should only be acquired by persons who can afford the total loss of
     their investment.

 Item 9.01 Exhibits.



Exhibit Number Description

   99.44 A       National Healthcare Projects
   99.44 B       Loan Agreement / Contract




                                       -8-

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Financials (USD)
Sales 2020 - - -
Net income 2020 -36,1 M - -
Net Debt 2020 1,36 M - -
P/E ratio 2020 -1,21x
Yield 2020 -
Capitalization 35,0 M 35,0 M -
EV / Sales 2019 -
EV / Sales 2020 -
Nbr of Employees 4
Free-Float 80,5%
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John Cecil Chairman, President, CEO, CFO & Treasurer
Marion B. Lyver Chief Medical Officer
Rod MacMillan Technology Director
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Samuel R. Baker Secretary & Director
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