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ITEM
2.
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MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
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As
used herein, the term “we,” “our,” “us,” and the “Company” refers to Kallo, Inc.,
a Nevada corporation unless otherwise noted.
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.
There
is a high risk that the Company may be facing severe and prolonged financial adversity, a filing in U.S. Bankruptcy Court with
the high likelihood that the Company’s stockholders will lose their entire investment.
Status
as Insolvent Company with Continuing Losses, No Revenues and Negative Equity
We
agree with our independent auditors in that there is substantial doubt about our ability to continue as a going concern since:
(a)
our Total Current Liabilities exceed our Total Current Assets which are currently $12,391 and thus we are insolvent;
(b)
we have no cash assets and our Total Liabilities are in excess of $6.55 million;
(c)
as of December 31, 2020 we have incurred over $81,000,000 in accumulated losses and there is no certain prospect that we will
achieve and sustain any positive cash flow, profitability or either of them;
(d)
we incurred losses of over $9,000,000 during our most recent fiscal year ending December 31, 2020; and
(e)
we have over $6.55 million in Liabilities as of March 31, 2021.
In
every respect, we are insolvent and anyone who acquires our Common Stock should be prepared to lose their entire investment. Our
Common Stock, our Preferred Stock, and any other instrument that we have or will issue, should be considered a “HIGH
RISK” investment suitable only for those persons who can afford the total loss of their investment.
Overall,
we are a small company with minimal financial and managerial resources, and our business model and all of our plans have not been
reviewed or evaluated by any independent third party. We incurred over $9,000,000 in losses in our most recent fiscal year ending
December 31, 2020 and we are insolvent. Make no mistake: 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 and meet our operating expenses. This
is because we have generated insignificant 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 significant 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 and there can be no assurance that we will ever 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
with positive cash flow. Our consolidated financial statements were prepared under the assumption that we will continue as a going
concern, however, there can be no assurance that we can raise any additional funds or otherwise obtain the necessary financial
support to allow us to remain as a corporate entity. There can be no guarantee that we have any ability to raise funds or otherwise
maintain our corporate existence as a Nevada corporation. In every respect, our financial circumstances raise substantial doubt
about our ability to continue as a going concern and, for that matter, our very existence as a corporation. The consolidated financial
statements do not include any adjustments that might result from the outcome of this uncertainty.
For
the last eleven fiscal years, starting January 2010, our management and board of directors raised funds through a personal and
professional network of investors. This allowed us to undertake a limited amount of business development, maintain minimal operations,
and generate limited amount of potential customer interest. We had losses of over $9 million for the fiscal year ending December
31, 2020 and we have no basis to believe that we will avoid further losses at or around that magnitude during the fiscal year
ending December 31, 2021. In order to continue operations, we need to raise significant additional capital and sustain operations.
We cannot assure you that we will achieve any success in either raising additional capital and in sustaining our operations. We
know that other companies raise capital from one or more existing shareholders or via debt and equity offers to independent investment
professionals and through various other financing alternatives. We do not have many viable options and we know that if we
are to avoid bankruptcy and the decimation of the Company, we would need significant amounts of additional capital on a timely
basis, in sufficient amounts and on reasonable terms. Unless this is achieved without undue delay and without any significant
legal complications, we may, if circumstances and market conditions allow, continue our existing limited operations. However,
we are insolvent, we have no cash assets, and we have no basis to believe that we will raise any additional capital on
a timely basis and on reasonable terms that may 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 if we are to sustain our Company
as a corporate entity or otherwise allow us to meet our financial obligations.
Any
reading of this Quarterly Report on Form 10-Q should also include a reading of Item 1A, Risk Factors in our Annual Report on Form
10-K for the fiscal year ending December 31, 2020. We have no recent history of generating any revenues or positive cash flow
and there can be no assurance that we will be successful in generating any revenues or, if we are successful in generating revenues,
that we can sustain any such revenues at a level that will allow us to become solvent or otherwise operate with a positive cash
flow at any time in the future. There is a high risk that the Company may be facing severe and prolonged financial adversity with
the high likelihood that the Company’s stockholders will lose their entire investment.
We
are a small company with very limited 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 and meet our operating
expenses. This is because we have generated only insignificant revenues from our operations during the last eleven 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
certain other related 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.
On
April 8, 2017, the Company entered into an agreement with FE Pharmacy, Inc. (the “Prior FE Pharmacy Agreement”) whereby
in consideration for the issuance of 475,000,000 common stock of Kallo, FE Pharmacy, Inc. assumed and agreed to pay all of the
Company’s outstanding indebtedness as of April 7, 2017. We currently do not have any additional or similar commitment from
FE Pharmacy, Inc. which would assure us that FE Pharmacy, Inc. will provide any additional funds to us at any time in the future.
While this agreement has, in the past, allowed us to pursue our business strategy, there can be no assurance that any such agreement
or similar arrangement with FE Pharmacy, Inc. will be obtained
Every
person who is considering the purchase of our Common Stock, our Preferred Stock or any other instrument that we may issue
should fully appreciate that if an agreement with FE Pharmacy, Inc. similar to the Prior FE Pharmacy Agreement is not obtained
on a timely basis and on similar terms, we will likely need to cease operations and pursue the liquidation of the Company and
otherwise likely terminate the very existence of the Company. Thus, our Common Stock, our Preferred Stock and any other instrument
that we have issued must be considered a HIGH RISK investment that is suitable only for persons who can afford to LOSE THEIR ENTIRE
INVESTMENT.
Risky
& Uncertain Agreements with Countries in Africa & Agreements with Project Funding Source
The
following summarizes certain agreements that we currently have with five (5) countries in Africa. In each case, the agreements
provide for us to provide certain healthcare services to the named country located in Africa and in each instance, we also entered
into a financing arrangement with the same provider of funding that is lending funds to the country that is our counterparty in
each agreement. While the agreements between us and each country vary and the funding provisions in the financing agreements with
the financing source follow a general pattern, we recognize that the agreements and arrangements are subject to significant risks
and uncertainties that include, but are not limited to the following:
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There
are implicit and significant political risks in that each country does not have an established rule of law and as a result, the
rights and the obligations of each of the parties to these agreements do not offer the level of certainty or enforceability that
is found in comparable agreements entered into between parties in the United States, Canada, or the United Kingdom.
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There
are political processes that are not predictable but can result in not just a sudden change of government but the wholesale abrogation
of existing agreements and contracts and thereby the destruction of our property rights and contractual rights that otherwise,
in another context, may be assumed to be inviolate.
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There
are many unforeseeable political forces and institutional challenges that may arise which can directly or indirectly result in
an adverse economic and political environment that can effectively inhibit our ability to conduct our planned business operations
for months if not years.
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The
vagaries and circumstances relating or involving the conduct of each of the governments that is a counterparty to our agreements
are not at all predictable and the political systems and legal systems present in each of the countries do not readily conform
or allow any predictable legal outcomes which, as a result, create risks that fundamentally undermine our investment of our resources
in each of the governmental agreements that we reached with each of these governments and all of the collateral and related agreements
that we entered into which assumed the validity of the governmental agreements.
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In
the event of any later dispute or controversy arising out of any one or more of the governmental agreements that we have, we are
likely to experience significant challenges in enforcing our rights and ensuring that each governmental entity that is the counterparty
to our agreement, fulfills its contractual obligations to us. As a result, we are exposed to significant risks and uncertainties
in all of our dealings with each country and these risks far exceed the contractual risks associated with contracts in the United
States, Canada, and the United Kingdom.
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It
is in that context that we have entered into the following agreements in the following countries and, as we have learned by our
experiences, that we face continuing significant risks and uncertainties which we inherently cannot mitigate or avoid in any significant
way. We caution you that these risks and uncertainties are likely to remain at all times and any person who acquires our Common
Stock, our Preferred Stock or any other instrument that we have issued will face the risk of a Total Loss of their investment.
That is, we have not had any experience where we have been successful in operating or managing any health care program in any
country. Thus, any person who reads this Form 10-Q should understand that we have no experience, no track record, and no obvious
ability to manage and maintain any health care services in any country at any time in the history of Kallo, Inc.
The
four (4) governmental agreements are as follows:
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 our impression that
the Kallo Integrated Delivery System may be a viable solution for the nation’s healthcare infrastructure development, which
is very encouraging given the significant risks and uncertainties involved.
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. If we are not successful
in obtaining sufficient financing on a timely basis and on reasonable terms, we may be unable to pursue any of our plans involving
Ghana or any of the other countries.
We
have entered into four major concession agreements with four key governmental institutions in Ghana. We have also, through our
SPVs entered into the following concession arrangements for the construction and operation of various hospital facilities in Ghana:
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Project
Description
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Kallo
SPV
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1
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Tamale
Military Hospital project
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K-TMH
Ghana Limited
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2
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Cape
Coast Teaching Hospital project
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K-UCC
Cape Coast Limited
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3
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Sunyani
Teaching Hospital project
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K-UENR
Sunyani Limited
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4
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Ho
Teaching Hospital project
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K-UHAS
Ho Limited
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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 that is required that would allow us to pursue
and implement our plans in Ghana (and each of the other countries) has not been received and we cannot guarantee that we will
ever receive any financing that would allow us to implement any of our plans in Ghana or otherwise. In
every way, 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 any of these opportunities. If we are not successful in obtaining sufficient financing on a timely
basis and on reasonable terms, we may be unable to pursue any of our plans involving Ghana or any of the other countries.
Notwithstanding
the many uncertainties and risks that we face, we continue to believe that the global need for standardized healthcare service
delivery to all geographies and to all people is fundamental. And we believe that we can offer an innovative approach via our
Kallo Integrated Delivery System – “KIDS”.
And
while we have not conducted any extensive market research or otherwise received any assessment from an independent consultant,
we continue to believe that our approach is a unique and comprehensive concept which we developed based on firsthand 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.
We
have adopted what we believe is a “strategic market approach” in that our strategy is to ensure that our potential
customers (the counterparties to our health services agreements) undertake a well-informed decision that we hope will allow them
to work with us to embrace a national strategy for healthcare infrastructure and a standardized healthcare services delivery model
across the country. This led us to develop what we believe may be a structured business development process and management of
the services that we seek to offer and the benefits that we seek to provide to each national health care agency in each country.
However, we have no record of achieving any of our goals and we have not been successful in entering into any agreement with any
country that has allowed us to demonstrate that our business strategy is viable.
After
many years of hard work in developing countries we believe that there is 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. Our assessments and our evaluations in all of these matters are based solely upon
the determinations made internally by our management and we have not had the benefit of any independent and professional third-party
evaluation in any of these matters. We may later discover that our assumptions, our analysis, and our assessments are fatally
inaccurate and otherwise not commercially viable. In that event, investors in our Company may lose all of their investment.
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 (the “Kenya Contract”) with Kallo Inc. and a Loan Contract
with Techno-Investment Module SL. now with its registered office in Spain (the “Financing Source”) 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 March 23, 2021, we received a letter from the Cabinet Secretary for the National
Treasury & Planning, the Republic of Kenya, informing us that the project and agreements previously entered into have been
put on hold. We can not assure you that the Kenya Contract will later be implemented and if it is later implemented whether the
terms and conditions will resemble or adhere to the terms and conditions that were set forth in the Kenya Contract. Overall, we
do not know and we cannot predict whether the Kenya Contract will later be abrogated or if other events and political considerations
in the Republic of Kenya will prevent or preclude us from achieving our original objectives that we sought to achieve when we
originally entered into the Kenya Contract and the agreement with the Financing Source. While we did not fully appreciate the
extent of the risks and uncertainties that we face in entering into the Kenya Contract and completing what we thought were appropriate
steps to securing the financing with the Financing Source, we now appreciate the apparently significantly greater risks and uncertainties
that are inherent in all transactions similar to the Kenya Contract.
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 (the “Eswatini Contract”) with Techno-Investment Module SL., now with its registered
office in Spain (the “Financing Source”) for implementing Kallo Integrated Delivery Systems (KIDS) in the Kingdom
of Eswatini to strengthen their National Healthcare Infrastructure and build a robust, sustainable healthcare ecosystem. Given
our recent experience with the Kenya Contract, we can not assure you that the Eswatini Contract will later be implemented and
if it is later implemented whether the terms and conditions will resemble or adhere to the terms and conditions that were set
forth in the Eswatini Contract. Overall, we do not know and we cannot predict whether the Eswatini Contract will later be abrogated
or if other events and political considerations in the Kingdom of Eswatini will prevent or preclude us from achieving our original
objectives that we sought to achieve when we originally entered into the Eswatini Contract and the agreement with the Financing
Source. While we did not fully appreciate the extent of the risks and uncertainties that we face in entering the Eswatini Contract
and completing what we thought were appropriate steps to securing the financing with the Financing Source, we now appreciate the
apparently significantly greater risks and uncertainties that are inherent in all transactions similar to the risks that we encountered
in the Kenya Contract.
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. (the “Ethiopia Contract”) and a Loan Contract with Techno-Investment Module SL.,
now with its registered office in Spain (the “Financing Source”) for implementing Kallo Integrated Delivery Systems
(KIDS) in the Federal Democratic Republic of Ethiopia to strengthen their National Healthcare Infrastructure and build a robust,
sustainable healthcare ecosystem. Included in the contract is a Medical Tourism project with a Medical Center of Excellence. Again,
and given our recent experience with the Kenya Contract, we can not assure you that the Ethiopia Contract will later be implemented
and if it is later implemented whether the terms and conditions will resemble or adhere to the terms and conditions that were
set forth in Ethiopia Contract. Overall, we do not know and we cannot predict whether the Ethiopia Contract will later be abrogated
or if other events and political considerations in the Federal Democratic Republic of Ethiopia will prevent or preclude us from
achieving our original objectives that we sought to achieve when we originally entered into the Ethiopia Contract and the agreement
with the Financing Source. While we did not fully appreciate the extent of the risks and uncertainties that we face in entering
into the Ethiopia Contract and completing what we thought were appropriate steps to securing the financing with the Financing
Source, we now appreciate the apparently significantly greater risks and uncertainties that are inherent in all transactions similar
to the risks that we have encountered in the Kenya Contract.
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. (the “Mozambique Contract”) and a Loan Contract (Phase-1) with Techno-Investment Module
SL., now with its registered office in Spain (the “Financing Source”) for implementing Kallo Integrated Delivery Systems
(KIDS) in the Republic of Mozambique to strengthen their National Healthcare Infrastructure and build a robust, sustainable healthcare
ecosystem. Given our recent experience with the Kenya Contract, we can not assure you that the Mozambique Contract will later
be implemented and if it is later implemented whether the terms and conditions will resemble or adhere to the terms and conditions
that were set forth in the Mozambique Contract. Overall, we do not know and we cannot predict whether the Mozambique Contract
will later be abrogated or if other events and political considerations in the Republic of Mozambique will prevent or preclude
us from achieving our original objectives that we sought to achieve when we originally entered into the Mozambique Contract and
the agreement with the Financing Source. While we did not fully appreciate the extent of the risks and uncertainties that we face
in entering into the Mozambique Contract and completing what we thought were appropriate steps to securing the financing with
the Financing Source, we now appreciate the apparently significantly greater risks and uncertainties that are inherent in all
transactions similar to the Kenya Contract.
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. (the “Eritrea Contract”) and a Loan Contract with Techno-Investment Module SL., now with its registered
office in Spain (the “Financing Source”) for implementing Kallo Integrated Delivery Systems (KIDS) in the State of
Eritrea to strengthen their National Healthcare Infrastructure and build a robust, sustainable healthcare ecosystem. Given our
recent experience with the Kenya Contract, we can not assure you that the Eritrea Contract will later be implemented and if it
is later implemented whether the terms and conditions will resemble or adhere to the terms and conditions that were set forth
in the Eritrea Contract. Overall, we do not know and we cannot predict whether the Eritrea Contract will later be abrogated or
if other events and political considerations in the State of Eritrea will prevent or preclude us from achieving our original objectives
that we sought to achieve when we originally entered into the Eritrea Contract and the agreement with the Financing Source.
While
we did not fully appreciate the extent of the risks and uncertainties that we face in entering into the Eritrea Contract and completing
what we thought were appropriate steps to securing the financing with the Financing Source, we now appreciate the apparently significantly
greater risks and uncertainties that are inherent in all transactions similar to the Kenya Contract.
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 our planned operations will occur and there can be no
assurance that we will achieve anything that is commercially viable given the significant risks and uncertainties inherent in
our business and given that we are insolvent with no history of generating and sustaining any sales revenues, profits and positive
cash flow during anytime in the past eleven (11) years.
To
the extent that we are financially able and if circumstances allow, we plan to continue to develop components of Kallo Integrated
Delivery System:
Kallo
Integrated Delivery System (KIDS)
The
following are “Forward-Looking Statements” that are subject to the qualifications set forth on page 11 of this Form
10-Q and subject to the Risk Factors set forth herein.
MobileCareTM
– as currently planned and subject to our ability to successfully implement our business plan, we plan to establish
a mobile trailer that opens into a state of the art clinical setup in a vehicle equipped with the latest technology in healthcare. As
currently envisioned, MobileCare TM may be able to instantly connect the onboard physician with specialists for on-demand consultation
via satellite through its Telehealth system. In that respect and if we are successful, we believe that this would provide a 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
– if we are successful, we currently plan to establish prefabricated modular healthcare units focused in rural
areas where no roads infrastructure is available. As currently planned and subject to our ability to successfully implement
our business plan, these units are to be 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 – as currently planned and subject to our ability to successfully implement our business plan, this center
is to be located in the Kallo headquarters in Canada and serve as a hoped-for escalation point for the coordination of our planned
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 – as currently planned and subject to our ability to successfully implement
our business plan, we intend to establish centers which, if we are able to secure one or more contracts with a host country, we
currently plan to locate centers 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 our planned Global response center.
Kallo
University – as currently planned and subject to our ability to successfully implement our business plan, we seek to
establish a focal point that we hope may provide education, training and development of local resources for all aspects of the
healthcare delivery which includes clinical, engineering and administration.
Emergency
Medical Services – as currently planned and subject to our ability to successfully implement our business plan, we seek
to establish an ancillary organization that we hope will provide ground and air ambulance vehicles for emergency patient transport. We
have now incorporated Medical Drone Services.
All
of the foregoing is 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 plan to 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 in implementing our business plan and if we have sufficient
financial resources, 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
cannot be certain that we will achieve either or both of these goals at any time in the future. We are currently insolvent, we
have no cash assets and we have liabilities in excess of $6.55 million.
Business
Overview
Our
plans and strategies were developed internally without the benefit of any independent professional consultants but we believe
that the global need for standardized healthcare service delivery to all geographies and to all people may be the fundamental
business driver for the innovation of the Kallo Integrated Delivery System – “KIDS”.
We
developed what we believe may be a unique and comprehensive concept as a result of our internal assessments over the past 15 years.
We believe that if we can implement our business plan and raise a sufficient amount of additional capital on reasonable terms
and on a timely basis, we may be able to address what we believe may be the core business issues in the current healthcare systems
with intricate orchestration of technologies both proprietary and off the shelf to create a standardized healthcare delivery model
across the continuum of care.
If
market conditions allow and if we are successful in raising additional capital on reasonable terms, on a timely basis and in sufficient
amounts, we believe that we may be able to implement a strategic market approach that may allow our potential 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, is planned to include 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.
We
previously developed 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, and if we are successful in implementing our business plan, in raising additional capital on a timely basis and in sufficient
amounts we may be able to develop a network of financial institutions and banks across the globe that we hope may be focused on
humanitarian and healthcare projects. However, given our recent adverse experience with the Kenya Contract, we remain far more
skeptical and entirely concerned that we may be facing unanticipated but significantly greater risks and uncertainties that may
well prevent us from undertaking any of our plans as provided in each of the agreements with each of the five countries, namely,
Kenya, Ethiopia, Eswatini, Mozambique, and Eritrea. In the event that we are not successful in mitigating and limiting our exposure
to these and other risks and uncertainties and if we raise a sufficient amount of additional capital on reasonable terms and on
a timely basis, we may not be able to implement our business plans and strategies as described herein. In that event we may revise
or alter or plans based on then-existing market conditions and assessments that we make as we reassess our ability to conduct
our business and meet our obligations to creditors and others.
Go-To-Market
Strategy
If
we are successful in implementing our business plan and provided that we are able to raise a sufficient amount of additional capital
on reasonable terms, in sufficient amounts and on a timely basis, then we currently intend to implement what we call our “Our
Sales Go-To-Market Strategy” – a strategy that is segmented based on the varying needs of our customers in the following
three categories:
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1.
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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.
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3.
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COVID-19
Rapid Response Program
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Kallo’s
Value Proposition
All
of the above and the following is based on our internal assessments made by our three (3) corporate officers/directors without
the benefit of any independent third-party professional consultants:
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Laying
the foundational elements in building the primary care infrastructure for an entire country
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Providing
Technologies for current and future adoption of advancements in clinical services such as Telemedicine, remote maintenance and
management etc.
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Creating
operational policies and procedures to set higher standards of care
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Provide
Education and training to build resource capacity within the country
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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
We
believe that we may be able to offer and differentiate our services in our current market segment by currently offering a far
more comprehensive and holistic healthcare delivery solution compared to that currently offered by others. However, we are well-aware
that other competitors have significantly greater financial and managerial resources and we know that our competitors are familiar
with our business plans and strategies which they can freely adopt in competing with us. However, we have invested considerable
time and energy studying and understanding the healthcare needs of our target market segments.
Unequivocal
Differentiators
We
believe that we may be able to offer what we describe as the following “Unequivocal Differentiators” – attributes
that we may be able to offer and provide that we believe (based on our own internal assessments without the benefit of any independent
third party professional consulting advice) may provide us with opportunities that may allow us to implement one or more parts
of our business plan assuming that we have and can obtain sufficient amounts of additional financing on reasonable terms, in sufficient
amounts and on a timely basis:
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1.
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Care
platforms (Point-of-care facilities - Mobile Clinics, Rural clinics & Modular Hospitals) to be manufactured to North American
and internationally accepted standards.
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2.
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Programs,
facilities and services to be set-up to proactively detect and treat infectious diseases.
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3.
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On-going
Tele-health service support, leveraging to be established with both local and international expertise.
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4.
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On-going
education, training, & certification programs to be offered through Kallo University.
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5.
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On-going
service & maintenance programs to be provided for all facilities and equipment.
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6.
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Leverages
local skillsets to be offered so as to provide employment opportunities.
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Competitive
Landscape
Based
solely upon our own internal assessments without the benefit of any third-party professional consulting advice, we believe that
the 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.
We
also believe that the Kallo Integrated Delivery System (KIDS) may provide us with an ability to offer health care services in
the under-developed, countries which may allow us, if we able to successfully implement our business plan, to provide 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: (a) we have an accumulated deficit o over $81 million;
(b) we incurred losses of over $9 million in the fiscal year ending December 31, 2020; and (c) we have no cash assets and over
$6.5 million in liabilities. We have both a working capital deficit and we are insolvent. We expect to incur additional significant
losses as we execute our current business plan and strategy as well. These losses and our state of insolvency both raise substantial
doubt about our ability to continue as a going concern. In that respect, our Common Stock should be considered a HIGH RISK
investment suitable only to those persons who can afford the total loss of their investment.
As
stated below, we may be in the “Zone of Insolvency.” Under the corporate common law of many jurisdictions,
a Board of Directors of a corporation that is in the “Zone of Insolvency” generally owe a duty of care to the holders
of its debt instruments and other creditors to take steps to avoid or minimize the losses that such persons would otherwise incur.
While we believe that we have acted with due regard to our duty of care to our stockholders and to our creditors, we cannot assure
you that we have always acted with the requisite level to discharge our duties to each of the foregoing . In that event,
holders of our Common Stock and holders of our Preferred Stock will likely suffer the total loss of their investment.
We
cannot guarantee we will be successful in our business operations or in implementing our business plan. Our business is subject
to significant risks and uncertainties inherent in the establishment of a business enterprise, including those risks set forth
herein.
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 and that we will avoid any of the severe financial and nonfinancial consequences that commonly result
when a corporation is insolvent and has had a history of losses with a large accumulated deficit.
There
is no guarantee 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, 2021 or 2020. 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 us to achieve
and sustain positive cash flow and profitability for any period of time.
We
are insolvent, we incurred $9 million in losses in the 2020 fiscal year that ended December 31, 2020 and we will continue to incur
losses with no assurance that we will ever generate any revenues or if we do generate any revenues, that we can sustain such revenues
at any level in excess of our costs. We have no history of generating and sustaining revenues, positive cash flow or profitability
and we cannot assure you that we will ever generate and sustain any revenues, positive cash and profitability at any time in the
future. Our Common Stock and our Preferred Stock should be viewed as HIGH RISK securities that are suitable only for persons
who can accept the TOTAL LOSS of their investment.
We
believe that we are in the “Zone of Insolvency.” Under the corporate common law of many jurisdictions, a Board
of Directors of a corporation that is in the “Zone of Insolvency” generally owes a duty of care to the holders of
its debt instruments and other creditors and thereby it is obligated to take steps to avoid or minimize the losses that such persons
would otherwise incur. While we believe that we have acted with due regard to our duty of care to our stockholders and to our
creditors, we can not assure you that we have always acted with the requisite level to discharge our duties to each of the foregoing .
In that event, holders of our Common Stock and holders of our Preferred Stock will likely suffer the total loss of their investment.
Expenses
During
the three months ended March 31, 2021 we incurred total expenses of $312,525, including $104,531 in salaries and compensation,
$126,402 in professional fees, $27,441 in interest and financing costs, $2,995 as other expenses and loss on foreign exchange
of $51,156 whereas during the three months ended March 31, 2020 we incurred total expenses of $145,008, including $92,654 in salaries
and compensation, $2,000 in professional fees. $27,746 in interest and financing costs, $18,563 in selling and marketing and $4,045
as other expenses offset by gain on foreign exchange of $306,223. Many of our costs are primarily fixed costs and, as a result,
we can not effectively reduce these costs as aggressively as we would like.
The
increase in our total expenses for the three months ended March 31, 2021 from the comparative period is mainly due to an increase
in professional fees of $124,402 as the Company caught up on all its filings. There is also a negative change in foreign exchange
of $357,379 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 such time as we may be able to secure
new contracts, if any. As stated above, we face significant risks and uncertainties that we cannot control.
Net
Loss
During
the three months ended March 31, 2021 we did not generate any revenues and incurred a net loss of $312,525 compared to a net income
of $161,215 during the same period in 2020. The main reasons were the increase in professional fees and unfavorable movement in
foreign exchange 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. We are insolvent and our Total Liabilities exceed our Total Assets and we may become more insolvent
unless and until we can generate sufficient revenues and positive cash flow that may allow us to meet our financial and legal
obligations to our creditors.
We
incurred over $9 million in losses in the twelve months ending December 31, 2020 and there can be no assurance that we will not
incur losses at or above that level in the twelve months ending December 31, 2021. We are in the “zone of insolvency”
and holders of our Common Stock and our Preferred Stock face the total loss of their investment.
Liquidity
and capital resources
As
at March 31, 2021, the Company had current assets of $12,391 and current liabilities of $42,995,450, indicating working capital
deficiency of $42,983,059. As of March 31, 2021, our total assets of $12,391 comprised prepaid expenses and our total liabilities
were $42,995,450 comprised of $4,474,664 in accounts payable and accrued liabilities, convertible loans payable of $1,311,386,
short term loans of $260,960 and liability for issuable shares of $36,948,440.
Cash
used in operating activities amounted to $182,350 during the three months ended March 31, 2021, 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 $182,350 from proceeds from short term loans payable. We have no cash, our liabilities
are in excess of $6.5 million and we are insolvent. In this context we are considered to be in the “zone of insolvency.”
There
was no cash movement in investing activities during the current three months period ended March 31, 2021.
As
of March 31, 2021, 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 and the total loss of their investment.
As
stated above, we believe that we may be in the “Zone of Insolvency.” Under the corporate common law of many
jurisdictions, a Board of Directors of a corporation that is in the “Zone of Insolvency” generally owe a duty of care
to the holders of its debt instruments and other creditors to take steps to avoid or minimize the losses that such persons would
otherwise incur. While we believe that we have acted with due regard to our duty of care to our stockholders and to our creditors,
we cannot assure you that we have always acted with the requisite level to discharge our duties to each of the foregoing .
In that event, our creditors may assert additional claims against us which would further destroy any value that may be otherwise
recoverable by holders of our Common Stock, our Preferred Stock, and both of them.