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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-K)

03/03/2021 | 06:04am EST

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 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 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.


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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.


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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.


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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.

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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.


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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).

© Edgar Online, source Glimpses

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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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Managers and Directors
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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