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    KALO   US48343P2083

KALLO INC.

(KALO)
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KALLO : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. (form 10-Q)

01/14/2021 | 04:11pm EST

This section of the report includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like: believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this report. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or our predictions. All funds are reflected in United States dollars unless otherwise indicated.

We are a small company with limited financial and managerial resources and we are insolvent. 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 insignificant revenues from our operations during the last eight 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.

For the last eight 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 a timely basis, in sufficient amounts and on reasonable terms 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 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 common stock of Kallo, FE Pharmacy Inc. assumed and will pay all of the Company's outstanding indebtedness as of 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.



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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 nation's 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 financial close is achieved with the Lenders 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.



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 circumstances allow, we plan to continue to develop components of Kallo Integrated Delivery System:



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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, MobileCare TM 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 response 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 response centers, Clinical and Administrative Command centers - 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.

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 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.



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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 its 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

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Kallo's Value Proposition



   º Laying the foundational elements in building the primary care
     infrastructure for an entire country
   º Providing Technologies for current and future adoption of advancements in
     clinical services such as Telemedicine, remote maintenance and management
     etc.
   º Creating operational policies and procedures to set higher standards of
     care
   º Provide Education and training to build resource capacity within the
     country
   º 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.

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.



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Need for additional capital

We have incurred significant and protracted operating losses since inception and have an accumulated deficit and a working capital deficit at March 31, 2019. We expect to incur additional losses as we execute our 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. 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 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.



Results of operations



Revenues


We did not generate any revenues during the three months ended March 31, 2019 or 2018. 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 three months ended March 31, 2019 we incurred total expenses of $1,804,738, including $1,672,873 in salaries and compensation, $32,897 in professional fees, $27,442 in interest and financing costs, $64,736 in loss on foreign exchange, $1,086 in selling and marketing and $5,704 as other expenses whereas during the three months ended March 31, 2018 we incurred total expenses of $66,328, including $101,945 in salaries and compensation, $17,155 in professional fees. $27,442 in interest and financing costs, $83,934 in gain on foreign exchange and $3,720 as other expenses.

The increase in our total expenses for the three months ended March 31, 2019 from the comparative period is mainly due to an increase in salaries and compensation of $1,570,928 due to non-cash stock-based compensation of $1,574,480, an increase in professional fees of $15,742, an increase of $148,670 in foreign exchange loss. The negative change in foreign exchange is due to the depreciation of the US dollar vis a vis the Canadian dollar.

The Company is operating with a minimal number of full time employees and office space until it can secure new contracts.



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Net Loss


During the three months ended March 31, 2019 we did not generate any revenues and incurred a net loss of $1,804,738 compared to a net loss of $66,328 during the same period in 2018. The main reasons were the increase in salaries and compensation and foreign exchange loss as discussed above. In that respect, we cannot 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 March 31, 2019, the Company had no current assets and current liabilities of $6,304,396, indicating working capital deficiency of $6,304,396. As of March 31, 2019, we had no assets and our total liabilities were $6,304,396 comprised of $3,426,576 in accounts payable and accrued liabilities, convertible loans payable of $1,088,499, short term loans of $65,031 and liability for issuable shares of $1,724,290.

Cash used in operating activities amounted to $26,343 during the three months ended March 31, 2019, primarily 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 $26,343 from proceeds from short term loans payable.

There was no cash movement in investing activities during the current three months period ended March 31, 2019.

As of March 31, 2019, our Total Liabilities exceeded our Total Assets and we were insolvent. In that respect we face all the risks and uncertainties of any insolvent corporation 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.



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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 19,9%
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John Cecil Chairman, President, CEO, CFO & Treasurer
Marion B. Lyver Chief Medical Officer
Rod MacMillan Technology Director
Lloyd A. Chiotti Chief Operating Officer, Director & Executive VP
Samuel R. Baker Secretary & Director
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