Kallo Inc. - Annual Report: 2021 (Form 10-K)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-K

Commission file number 000-53183

KALLO INC.

(Exact name of registrant as specified in its charter)

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

(Address of Principal Executive Offices) (Zip Code)

(416) 246-9997

(Issuer’s telephone number including area code)

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

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

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

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

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

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

(Do not check if a smaller reporting company)

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

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

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of January 31, 2022: $10,226,975

The registrant had 6,356,429,586 shares of common stock outstanding as of April 21, 2022.

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

FORWARD-LOOKING STATEMENTS

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

TABLE OF CONTENTS

PART I

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

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

Upon acquiring Rophe, the focus of our business was to develop medical information technology software. It has since expanded to the delivery and support of what we believe may offer an end-to-end healthcare solution for developing countries and rural communities with the goal on improving all aspects of health care delivery. We have incurred over $8,000,000 in losses in 2021 and we cannot be certain that we will avoid additional losses at that level or higher.

Business Overview

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

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

Our Copyrighted Technologies:

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

The following is a summary of the information:

Our Products in Development

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

Target Market

Based on our current internal management assessments undertaken without the benefit of any independent third-party review or evaluation, we believe that our primary target market for the Kallo Integrated Delivery System (KIDS) may be one or more selected markets in certain developing countries where health care services are limited and where we may be able to enter into what we hope may be commercially feasible contractual arrangements without undue and unacceptable risks and challenges. To that end and in anticipation that we may be successful in these efforts, we have established several sales and marketing partnership agreements under “Business Associate” section either representing Kallo independently or as an organization. While we are currently in various stages of our sales cycle with more than 10 countries, we cannot assure you that we will be successful in these efforts or, if we are successful, that we can implement and undertake our business plans without incurring significant and protracted losses and negative cash flow. Yet, we have incurred over $8,000,000 in losses in 2021 and we cannot be certain that we will avoid additional losses at that level or higher.

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

Intellectual Property and Research and Development

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

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

Competition

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

Management’s View of the Market Trend

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

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

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

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

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

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

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

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

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

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

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

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

With respect to access to data, we believe that our KIDS solution includes state-of-the-art integrated electronic medical records and hospital information systems to gather and process the data that is critical to allowing governance structures to effectively oversee the entire healthcare system. However, we have not evaluated our technology relative to the technology offered by others. We may discover that far better technology is offered by other established providers who offer better technology and at a price level that is a perceived “greater-value” to the purchaser.

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

We believe that in today’s market, offering high quality primary care is critically important. And although we have not conducted or received any independent research, we have taken steps to ensure that our KIDS solution specifically focuses on providing primary care through all of its care platforms as well as providing specialized care as required.

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

Government Regulation and Compliance

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

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

Employees

As of March 31, 2022, we have four full time employees.

Warranties

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

Insurance

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

Executive Offices

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

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

Risks Related to the Ownership of the Company’s Stock

1. No Revenues from Operations & Continuing Losses; Risk of Loss & Insolvency. During the past two fiscal years we have not generated and revenues and there can be no assurances that we will be successful in generating revenues in the future. In that respect we face all of the risks inherent in an early-stage business. We have incurred losses and there can be no assurance that we will ever achieve profitability and positive cash flow. While we believe that our business strategies are sound, there can be no assurance that our business will generate profits and positive cash flow or if we generate profits and positive cash flow, that it can be sustained. Investors should be aware that they may lose all or substantially all of their investment. We are also insolvent since our Total Liabilities exceed our Total Assets. In that connection, we incurred over $8,000,000 in losses in 2021 and we cannot be certain that we will avoid additional losses at that level or higher in future years.

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

3. Conduct and Decisions while in the “Zone of Insolvency.” 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 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 additional losses thereby.

4. Auditor’s Opinion: Going Concern & Insolvency. Our independent auditors have expressed substantial doubt about the Company’s ability to continue as a going concern since: (a) our Total Current Liabilities exceed our Total Current Assets; (b) our Total Liabilities exceed our Total Assets; and (c) we are an early-stage company and there exists only a limited history of operations. Since our Total Liabilities exceed our Total Assets, we are insolvent and anyone who acquires our Common Stock should be prepared to lose their entire investment. We incurred losses of over $8 million in our fiscal year ending December 31, 2021 and we cannot assure you that we will not incur losses at or exceeding that level in the future.

5. Absence of any Financial Resources; Need for Additional Financing. Our financial resources are minimal and we are insolvent (since we have limited assets and over $6.5 million in liabilities). We need to obtain additional financing from the sale of our Common Stock, Debt, or some combination thereof in order to undertake further business plans. Our ability to operate as a going concern is contingent upon our receipt of additional financing through private placements or by loans. We anticipate that we will require significant additional funds in the future if we are successful in marketing our products and services. There can be no assurance that if additional funds are required they will be available, or, if available, that they can be obtained on terms satisfactory to our Board of Directors. In the event the Company elects to issue stock to raise additional capital, any rights or privileges attached to such stock may either (i) dilute the percentage of ownership of the already issued common shares or (ii) dilute the value of such shares; or (iii) both. No rights or privileges have been assigned to the stock and any such rights and privileges will be at the total discretion of the Board of Directors of the Company. There can be no guarantee that we will be able to obtain additional financing, or if we are successful, that we will be able to do so on terms that are reasonable in light of current market conditions. Further, we have not received any commitment from any person to provide any additional financing and we cannot assure that any such commitment is forthcoming.

6. Limited and Sporadic Trading Market for Common Stock. Our Common Stock trades on the OTC Market on a limited and sporadic basis and there can be no assurance that a liquid trading market for our Common Stock will develop and, if it does develop, that it can be sustained. Currently we do not have a sponsoring registered broker-dealer serving as our market-maker. Since the Securities and Exchange Commission amended Rule 15c2-11 effective September 28, 2021, our lack of a market-maker may result in a cessation of our listing and trading of our Common Stock on the U.S. OTC Market. In that event, holders of our Common Stock may lose an ability to offer and/or sell our Common Stock on the OTC Market with the result that our Common Stock will not be tradable in any market and the value of our Common Stock will dramatically and significantly decline. In that event holders of our Common Stock will likely lose their entire investment.

7. Lack of Revenues and Development Stage Company. We have no history of generating Sales Revenues and we cannot assure that we will generate any Sales Revenues at ant time in the future or, if we do, that we can achieve Sales Revenues at a level that will allow us to also achieve and maintain profitability and positive cash flow. We face all of the risks inherent in a new business. There is no information at this time upon which to base an assumption that our plans will either materialize or prove successful. Our present business plans and strategies have been developed by our corporate officers and they have been evaluated by any independent third party. plans have not been determined. There can be no assurance that any of our business plans and strategies will generate sales revenues that will result in any profits or positive cash flow. Investors should be aware that they may lose all or substantially all of their investment.

8. Lack of Dividends & No Likelihood of Dividends. We have not paid dividends and do not contemplate paying dividends in the foreseeable future. We have no cash assets and we have an accumulated deficit.

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

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

11. Negative Equity & “Zone of Insolvency”. Our Total Liabilities exceed our Total Assets. Since we have limited cash assets and given our accumulated deficit, we are in the “Zone of Insolvency” which can result in the interests of our Common Stockholders becoming subject to the interests of our creditors. As a result, we are insolvent, and we cannot assure you that we will be able to become solvent at any time in the future.

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

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

14. Ten Day Stop Trading Order Imposed by SEC in March 2021. As set forth in greater detail elsewhere in this Annual Report, in March of 2021, the U.S. Securities and Exchange Commission (the “SEC”) imposed a Ten Day Stop Trading Order on the trading of our Common Stock (the ‘Order”). While the Order has expired, we cannot assure you that the SEC or any other securities regulator has not undertaken or will undertake further investigative action or other action that may further disrupt our affairs and cause significant financial injury to us. It is not uncommon that such “follow-on” actions to be taken by one or more securities regulators after the SEC takes action as set forth in the Order. IN that event, we may incur significant and prolonged costs and expenses and resulting financial losses and resulting permanent damage to our reputation.

15. Risks of Low-Priced Stocks. In the past, the Company’s common stock had only limited and sporadic trading in the so-called “pink sheets,” and before that, on the “Electronic Bulletin Board.” As a result and due to the absence of a market, a shareholder may find it more difficult to dispose of, or to obtain accurate quotations as to the price of, the Company’s securities. In the absence of a security being quoted on NASDAQ, or the Company having $2,000,000 in net tangible assets, trading in the Common Stock is covered by Rule 3a51-1 promulgated under the Securities Exchange Act of 1934 for non-NASDAQ and non-exchange listed securities. Under such rule, broker/dealers who recommend such securities to persons other than established customers and accredited investors (generally institutions with assets in excess of $5,000,000 or individuals with net worth in excess of $1,000,000 or an annual income exceeding $200,000 or $300,000 jointly with their spouse) must make a special written suitability determination for the purchaser and receive the purchaser’s written agreement to a transaction prior to sale.

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

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

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

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

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

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

None.

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

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

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

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

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

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

None.

PART II

Our shares are traded on OTC Markets under the symbol “KALO”. A summary of trading by quarter for 2021 and 2020 is as follows:

Dividends

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

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

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

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

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

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

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.

WARNING: Matter of Ten Day Stop Trading Order & Related Risks. As noted above and in our prior periodic filings with the Securities and Exchange Commission (including but not limited to the Form 8-K that we filed on March 26, 2021) on March 24, 2021, the U.S. Securities and Exchange Commission issued a Ten Day Stop Trading Order to stop the trading in our Common Stock (the “Order”). The Order was issued pursuant to Section 12(k) of the Securities Exchange Act of 1934, as amended and it expired on April 7, 2021. As a result, we have expended and continue to expend significant efforts to secure at least one market-maker who may be willing, subject to a complete and satisfactory due diligence review and evaluation of our corporate, business, and financial affairs, to serve as our market-maker for our Common Stock. Currently and despite our continuing efforts, we have not been successful in securing the services of a duly licensed and registered market-maker for our Common Stock and we cannot assure you that we will be successful in these and other efforts needed that may allow the holders of our Common Stock to regain trading privileges on OTC Markets.

Further and as a result of the Order, we do not currently have a FINRA-registered market-maker and we have no certain prospect that we will be successful in gaining a FINRA-registered market-maker in the near future (“to make a market” in our common stock). As a result of the Order and given our state of insolvency, and the severely high risks associated with our business strategy, there is a clear and unmistakable very high risk that we will not longer have the status of being a publicly traded company. In that context and for these and other reasons, any person who acquires our Common Stock, our Preferred Stock or any debt instrument that we issued, faces a clear and unmistakable HIGH RISK that they will lose their entire investment.

If we are not successful in gaining a FINRA-registered market-maker, then holders of our Common Stock will surely incur the total loss on their investment since our Common Stock will lose all liquidity and all marketability of the shares of our Common Stock that they hold. In that context and unless we are successful in securing the services of such a market-maker, the Company will effectively become a “privately-held” company and the fair market value of our Common Stock will likely be $0.00. We cannot assure you that we will be successful in securing a market-maker for our Common Stock and any person who acquires our Common Stock should be prepared to lose all of their investment since there can be no guarantee that any market-maker will be willing to provide us with market-making services for our Common Stock at any time in the future.

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 $6,495,562 and thus we are insolvent;

(b) we have no cash assets and our Total Liabilities are in excess of $6.5 million;

(c) as of December 31, 2021 we have incurred over $89 million in accumulated losses and there is no certain prospect that we will ever achieve and sustain any positive cash flow, profitability or either of them;

(d) we incurred losses of over $8 million during our most recent fiscal year ending December 31, 2021; and

(e) we have over $6.5 million in Liabilities as of December 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 $8 million in losses in our most recent fiscal year ending December 31, 2021 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 and we have no clear prospect that we will generate any revenues at any time in the future. We have been able to remain in business primarily as a result of management’s determination and the efforts by certain other parties but we cannot assure you that we will have the necessary resources that will allow us to continue our corporate existence. 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. Moreover, we cannot assure you that we will be successful in securing a FINRA-registered market-maker that may be willing to serve as a market-maker for our Common Stock. In that event, we will lose our status as a public company. 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 $8 million for the fiscal year ending December 31, 2021 and we have no basis to believe that we will avoid further losses at or around that magnitude in the future. 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 almost 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.

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. Make no mistake: 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 shares of 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.

Highly 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:

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 clear and unmistakable 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-K 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 six (6) governmental agreements are as follows:

A.       Ghana. 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 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:

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 our own internal 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. As a result, there can be no assurance that our contemplated strategy and contemplated business is financially 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 should be prepared to lose all of their investment. As of the date of the filing of this 2021 Annual Report on Form 10-K for the fiscal year ending December 31, 2021, we have not received any indication that the project as envisioned by the agreements that we entered into will be implemented or undertaken at any time.

B.        Kenya. 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. For these and other reasons, we are acutely aware that we face significant “political risks” in Kenya and, for that matter, in each country where we seek to implement our contemplated business. These risks are inherent and we are not able to mitigate or reduce our exposure to the unpredictable and dramatic political risks that we face in Kenya or, for that matter, in any foreign country. In that light, our contemplated business strategy will likely remain a HIGH RISK strategy for the foreseeable future. As of the date of the filing of this 2021 Annual Report on Form 10-K for the fiscal year ending December 31, 2021, we have not received any indication that the project as envisioned by the agreements that we entered into will be implemented or undertaken at any time.

C.       Eswatini. 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 risks that we encountered in the Kenya Contract. (See discussion regarding Kenya above.) As of the date of the filing of this 2021 Annual Report on Form 10-K for the fiscal year ending December 31, 2021, we have not received any indication that the project as envisioned by the agreements that we entered into will be implemented or undertaken at any time.

D.       Ethiopia. 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. (See discussion regarding Kenya above.) As of the date of the filing of this 2021 Annual Report on Form 10-K for the fiscal year ending December 31, 2021, we have not received any indication that the project as envisioned by the agreements that we entered into will be implemented or undertaken at any time.

E.       Mozambique. 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. (See discussion above regarding the Kenya contract.) As of the date of the filing of this 2021 Annual Report on Form 10-K for the fiscal year ending December 31, 2021, we have not received any indication that the project as envisioned by the agreements that we entered into will be implemented or undertaken at any time.

F.        Eritrea. 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. (See the discussion above regarding the Kenya Contract.) As of the date of the filing of this 2021 Annual Report on Form 10-K for the fiscal year ending December 31, 2021, we have not received any indication that the project as envisioned by the agreements that we entered into will be implemented or undertaken at any time.

Status Update on contracts signed with Kenya, Eswatini, Mozambique, Ethiopia and Eritrea

We have been working diligently for the past several years to introduce our Kallo Integrated Delivery System (KIDS), a comprehensive healthcare delivery solution, to developing countries in Africa.

In 2019 we began working with a local representative in Africa, Global Interest Services (GIS). Working through GIS, Kallo entered into detailed discussions and negotiations with a number of African countries including Kenya, Eswatini, Mozambique, Ethiopia and Eritrea. These efforts culminated in signing project and loan contracts with each of these countries through the second half of 2020.

Normally, during the final stages of negotiations and signing of such contracts, the President and CEO of Kallo would have travelled to the countries in question and would have concluded the negotiations and signing of the contracts in person. However, with the advent of Covid-19 and the imposition of lockdowns and travel restrictions in early 2020, in-person meetings were not possible.

In each case, all parties involved agreed to sign contracts remotely with all signatures being legally notarized. As required by regulation, in each instance, we reported the signing of these contracts as material events by filing the required Form 8-K with the U.S. Securities and Exchange Commission and in each instance, we believe that we provided and fulfilled our disclosure obligations in accordance with U.S. securities laws and accepted good practices.

With the signing of each contract, work proceeded with arranging financing for the projects. These are all major projects and arranging financing is a major undertaking. Techno Investment Module SL (TIM), a financier based in Spain, was willing to provide financing for the projects. In order to provide the financing, it was established that collateral for the required loans would need to be provided in the form of a cash-backed standby letter of credit to be issued by the central bank of each country and confirmed by a corresponding major bank in the United Kingdom.

Beginning in late 2020, TIM and Kallo have been working through GIS to establish the required collateral with the governments of each country. This part of the process has proven to be much more challenging and time consuming than anticipated. Although efforts have been continuous and persistent, with regular communications through our local representative, none of these governments has yet to provide this essential requirement before financing can be finalized.

A number of factors may have contributed to the delays in completing this process in each country. During this period there have been multiple elections in Ethiopia which have disrupted the normal process of government. Further deliberations with the government of Kenya have been put on hold as the government prepares for major elections later this summer. Political unrest and regional conflicts in Mozambique, Eswatini and Ethiopia have had economic impacts and have also disrupted the process of government in these countries. We do not know why the governments and the governmental agencies in each of these countries did not and have not completed the additional steps needed that would allow us to proceed with the implementation of the agreements that we entered into with each such government and each such agency. More than that, we do not understand what would provoke any such delays or hesitation by any of our counterparties in these instances.

As we have previously disclosed, we have spent a considerable amount of time and energy negotiating these significant contracts while also incurring significant expenses. We want to provide every opportunity to allow these efforts to be concluded successfully. However, we cannot continue to expend time and energy on these engagements indefinitely. As well, TIM is growing increasingly impatient with the prolonged timeframe to conclude this part of arranging the financing.

Accordingly, we will formally request video conference calls with the appropriate government officials of each of these countries to confirm their willingness and ability to provide the required collateral instruments for the financing of these projects within reasonable timeframes. If these video conference calls are not forthcoming, or if the governments cannot commit to providing their collateral instrument in a reasonable timeframe, we will have to consider cancelling these contracts in order to focus on more promising business opportunities.

Throughout this period Kallo has continued with its business development efforts in Africa. Kallo has been in discussions with several other African countries that have expressed keen interest in the unique and comprehensive healthcare delivery solution that Kallo offers. In some instances, discussions have progressed to an advanced stage with the potential of leading to contractual commitments that may be promising. However, and given the circumstances, Kallo is also considering alternative financing options to provide more flexibility to its client countries.

If circumstances and market conditions allow, we may also seek business development opportunities in other parts of the globe including Southeast Asia, the Caribbean and North America as its unique healthcare delivery solution is relevant to many countries and circumstances.

In general, and as we have become more fully aware of the business landscape and the risks and uncertainties associated with efforts to conduct any business in countries where the rule of law can easily become subject to ever unpredictable and changing political pressures, we cannot approach our business plans and strategies without deep concern that we face risks that we cannot realistically mitigate or otherwise contain. In that respect and when any business enterprise commits its limited financial and managerial resources to a business strategy where there is no certainty that the rule of law will be upheld and fully observed, the risks facing the enterprise are existential. For that reason, we face the clear and unmistakable risk that our business and our assets may be entirely lost and we may have little or no recourse to protect the Company, its planned business and assets and the stockholders’ investment. In that respect, any person who acquires our Common Stock, our Preferred Stock, or any debt instrument that we may issue, should be prepared to lose their entire investment.

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.

However, any person who reads this Report on Form 10-K should know that we are acutely aware that we face significant “political risks” in each and every country where we seek to implement our contemplated business. These risks are inherent and we are not able to mitigate or reduce our exposure to the unpredictable and dramatic political risks that we face in Kenya or, for that matter, in any foreign country. In that light, our contemplated business strategy will likely remain a HIGH-RISK strategy for the foreseeable future.

In that context and subject to the serious risks that we face, including but not limited to: (a) our current state of insolvency; (b) the effect that the Ten Day Stop Trading Order has had on our Common Stockholders; (c) the lack of any market-maker for our Common Stock and the likelihood that, as a result of the amendment to Rule 15c2-11 that will directly and adversely impact us and our Common Stockholders likely in September 2021; and (d) other risks and issues that we are likely to face in the near future assuming that we survive as a corporate entity, then and subject to the Risk Factors set forth here and those set forth in Item 1A of our 2020 Annual Report filed on Form 10-K for the fiscal year ending December 31, 2020, then and if 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 at the beginning of this Form 10-K and subject to the Risk Factors set forth herein.

MobileCare^TM – 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.

RuralCare^TM – 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 cannot 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 $50.5 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 and avoid bankruptcy as well as the other very significant risks set forth in the Risk Factors set forth herein, 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 what we hope may provide us with an opportunity to demonstrate that our business strategy can be successfully implemented. However, we cannot assure any holder of our Common Stock, our Preferred Stock or our debt instruments that we will have the managerial and financial resources that will allow us to undertake the steps needed to implement our business plan.

We believe that our 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. However, we have not received and we do not anticipate receiving any independent or third party evaluation of our plans, strategies, or business model and for this reason we may be exposed to significant additional existential problems that could result in the total destruction of the Company and, for our common stockholders, the total loss of their investment. Our Common Stock is suitable only for those investors who are able to suffer the TOTAL LOSS of their investment.

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 that we would seek to implement if we were able to obtain sufficient managerial and financial resources that would be required to undertake these efforts.

In addition, and if we are successful in avoiding bankruptcy and the liquidation of the Company as well as avoiding the effects of the other very significant existential risks that we face, then we may proceed to implement our business plan (with such revisions as we deem necessary in light of then existing circumstances) that may allow us to raise additional capital on a timely basis and in sufficient amounts while avoiding bankruptcy or insolvency, 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 six countries, namely, Ghana, Kenya, Ethiopia, Eswatini, Mozambique, and Eritrea. However, 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 some of 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, avoid bankruptcy and avoid other very significant existential risks that we face (as set forth herein) 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:

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:

Kallo’s Key Market Differentiators

Notwithstanding the clear and unmistakable existential risks that we face, we know that we face ever-changing technology and competition from many others who possess greater managerial and financial resources, if we can avoid bankruptcy and insolvency and provided that we can raise additional capital in sufficient amounts and on a timely basis, 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

Subject to our ability to avoid bankruptcy and the existential risks that we face, 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:

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, if we can avoid bankruptcy and the existential risks that we face and if circumstances allow, 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 of over $89 million; (b) we incurred losses of over $8 million in the fiscal year ending December 31, 2021; and (c) we have limited 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

December 31, 2021 compared to December 31, 2020

Revenues

We did not generate any revenues during the year ended December 31, 2021 or at any time during 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 over $8 million in losses in the 2021 fiscal year that ended December 31, 2021 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 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 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 and holders of our debt instruments will very likely suffer the total loss of their investment.

Expenses

During the year ended December 31, 2021 we incurred total expenses of $8,093,468, including $7,713,041 in salaries and compensation, $218,119 in professional fees, $27,784 in selling and marketing, $111,403 in interest and financing costs, $15,476 in foreign exchange loss and $11,835 as other general and administrative expenses offset by $4,190 in debt forgiveness. Our professional fees consist of legal, consulting, accounting and auditing fees. Many of our costs are primarily fixed costs and, as a result, we cannot effectively reduce these costs as aggressively as we would like.

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. Many of our costs are primarily fixed costs and, as a result, we cannot effectively reduce these costs as aggressively as we would like.

The decrease in our expenses for the year ended December 31, 2021 was primarily due to a decrease in salaries and compensation of $28,076,274 as a result of lower non-cash stock-based compensation in 2021 compared to in 2020 issued to management and employees. There is however an increase in professional fees of $138,713 as the Company was catching up on all its previously late filings in 2021, an increase in selling and marketing of $9,221 and a decrease in debt forgiveness of $45,695, offset by a decrease in foreign exchange loss of $79,632. 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 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 year ended December 31, 2021 we did not generate any revenues and incurred a net loss of $8,093,468 compared to a net loss of $36,055,668 in 2020. The main reason for the decrease in the loss is the decrease in salaries and compensation 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 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 December 31, 2021, we had current assets of $13,535, current liabilities of $6,509,097 and a working capital deficiency of $6,495,562. As of December 31, 2021, we had no assets and our total liabilities were $6,509,097 comprised of $4,802,752 in accounts payable and accrued liabilities, loans payable of $311,109 and convertible loans payable of $1,395,236.

Cash used in operating activities amounted to $236,032 during fiscal 2021, 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 $236,828 from proceeds from short term loans payable.

There was no cash movement in investing activities during the year ended December 31, 2021.

We have insignificant 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.”

As of December 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, our debt instruments and all of them.

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).

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

INDEX

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors of

Kallo Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Kallo Inc. and its subsidiary (collectively, the “Company”) as of December 31, 2021 and 2020, and the related consolidated statements of operations, stockholders’ deficiency, and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Going Concern Matter

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

Basis for Opinion

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

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

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

KALLO INC.

Consolidated Balance Sheets

As at December 31, 2021 and 2020

(Amounts expressed in US dollars)

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

KALLO INC.

Consolidated Statements of Operations

(Amounts expressed in US dollars)

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

KALLO INC.

Consolidated Statements of Changes in Stockholders’ Deficiency

(Amounts expressed in US dollars)

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

KALLO INC.

Consolidated Statements of Cash Flows

(Amounts expressed in US dollars)

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

KALLO INC.

Notes to Consolidated Financial Statements

December 31, 2021 and 2020

(Amounts expressed in US dollars)

NOTE 1 - BUSINESS AND GOING CONCERN

Organization

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

Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The amounts of assets and liabilities in the consolidated financial statements do not purport to represent realizable or settlement values. The Company has incurred operating losses since inception and has an accumulated deficit and a working capital deficit at December 31, 2021. The Company is expected to incur additional losses as it executes its go to market strategy. This raises substantial doubt about the Company’s ability to continue as a going concern.

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

COVID-19

The Company’s results of operations are affected by economic conditions, including macroeconomic conditions and levels of business confidence. There continues to be significant volatility and economic uncertainty in many markets and the ongoing COVID-19 pandemic contributes to that level of volatility and uncertainty and has created economic disruption. The Company is actively managing its business to respond to the impact. There were no adjustments recorded in the financial statements that might result from the outcome of these uncertainties.

The ultimate impact of the COVID-19 pandemic on the Company’s operations is unknown and will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the COVID-19 outbreak, new information which may emerge concerning the severity of the COVID-19 pandemic, and any additional preventative and protective actions that governments, or the Company, may direct, which may result in an extended period of continued business disruption, reduced customer traffic and reduced operations. Any resulting financial impact cannot be reasonably estimated at this time but may have a material impact on the Company’s business, financial condition and results of operations. Management continues to monitor the business environment for any significant changes that could impact the Company’s operations.

NOTE 2 - ACCOUNTING POLICIES AND OPERATIONS

Basis of Presentation

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

Basis of Consolidation

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

Earnings Per Share

The Company computes basic net loss per share in accordance with ASC 260, Earnings Per Share, by dividing the net loss for the period by the weighted average number of common shares outstanding during the year. Diluted loss per share reflects the potential dilution of securities that could share in earnings of an entity.  In a loss year, dilutive common equivalent shares are excluded from the loss per share calculation as the effect would be anti-dilutive.  For the years ended December 31, 2021 and 2020, basic and diluted losses per share are the same for both years.

Use of Estimates

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

Software Development Costs

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

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

Related party transactions

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

Research and Development

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

Foreign Currency Translation

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

Income Taxes

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

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

In accordance with the statute of limitations for federal tax returns, the Company’s federal tax returns for the years 2011 through 2021 are subject to examination. The Company had no material adjustments to its liabilities for unrecognized income tax benefits according to the provisions of FASB ASC 740.

Fair Value of Financial Instruments

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

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

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

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

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

There are no financial instruments that are accounted for at fair value at December 31, 2021 and 2020.

Stock-Based Compensation

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

Contingencies

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

Stock Issued in Exchange for Services

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

Convertible promissory note

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

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

Revenue recognition

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

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

Training services will be recognized upon delivery of the training.

There were no revenues during 2021 and 2020.

Lease accounting

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

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

Advertising costs

The Company expenses advertising costs as incurred. The total costs the Company recognized related to advertising were $Nil during the years ended December 31, 2021 and 2020.

Recent Accounting Pronouncements

Accounting Standards Adopted

On December 18, 2019 the FASB issued the ASU 2019-12 “Income taxes (Topic 740)—Simplifying the accounting for income taxes”. The amendments in this update simplify the accounting for income taxes by removing certain exceptions to the general principles and also improve consistent application by clarifying and amending existing guidance, such as franchise taxes and interim recognition of enactment of tax laws or rate changes. The amendments in this update are effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. The Company adopted this standard in the first quarter of 2021 and it did not have any impact on its financial statements and related disclosures.

Recently Issued Accounting Standards Not Yet Adopted

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

In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40). The ASU addresses issuer’s accounting for certain modifications or exchanges of freestanding equity-classified written call options. This amendment is effective for all entities, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted. The Company is does not believe adoption of this ASU will have a material impact on its consolidated financial statements.

KALLO INC.

Notes to Consolidated Financial Statements

December 31, 2021 and 2020

(Amounts expressed in US dollars)

NOTE 3 – CAPITAL STOCK

Common Stock

During the year ended December 31, 2021, the Company issued 5,208,731,005 common shares for compensation valued at $44,268,440, which were approved and accrued for between 2018 and 2021.

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

On April 8, 2017, the Company entered into an agreement with FE Pharmacy Inc., a company controlled by a shareholder of Kallo, and a related party, whereby in consideration for the issuance of 475,000,000 common stock of Kallo, FE Pharmacy Inc. assumed and will pay all of the Company’s outstanding indebtedness as at April 7, 2017. The 475,000,000 shares issuable to FE Pharmacy Inc. has been valued at the book value of the total liabilities assigned to FE Pharmacy Inc. of $4,135,037. The assignment of the liabilities to FE Pharmacy Inc. has been recorded as a receivable in the equity section of the consolidated balance sheet and will be reduced as the liabilities are settled by FE Pharmacy Inc. During the year ended December 31, 2021, the assignment of liabilities amount has been reduced by $ Nil (2020 - $7,443) cash settlement of accounts payable.

Preferred Stock

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

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

During the year ended December 31, 2021, the Company issued 5,000,000 Series B Preferred shares to a director. The shares of Series B Preferred stock which are not convertible and carry voting rights of 1,000 votes per Preferred share were approved for issuance on February 19, 2019. The fair value of the Series B Preferred shares were deemed to be $201,350 based on their voting rights relative to the fair value of the Company at the date of approval and were accrued for in 2019.

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

KALLO INC.

Notes to Consolidated Financial Statements

December 31, 2021 and 2020

(Amounts expressed in US dollars)

NOTE 4 – RELATED PARTY TRANSACTIONS

During the quarter ended December 31, 2020, the Board of Directors approved the issuance of 1,619,000,000 shares to directors and shareholders of the Company for par value of $16,190, resulting in stock-based compensation valued at $26,697,310. These shares were issued during 2021.

During the quarter ended September 30, 2020, the Board of Directors approved the issuance of 1,089,000,000 shares to directors and shareholders of the Company for par value of $10,890, resulting in stock-based compensation valued at $8,701,110. These shares were issued during 2021.

During 2019, the Board of Directors approved the issuance of 57,000,000 shares to directors and shareholders of the Company for par value of $570, resulting in as stock-based compensation valued at $1,373,130. These shares were issued during 2021.

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

During 2019, the Board of Directors approved the issuance of 5,000,000 Series B preferred shares to a director as compensation for services rendered and their fair value were deemed to be $201,350 based on the voting rights of the preferred shares relative to the fair value of the Company at the date of the approved issuance. These shares were issued during 2021.

During 2018, 3,031,900 valued at $121,276 were issued to the family of the controlling shareholder of FE Pharmacy Inc. and a related party as compensation for services rendered and for nominal cash. A further 3,731,005 valued at $149,240 was approved for issuance to the same family of the controlling shareholder of FE Pharmacy Inc, as compensation for services rendered and were issued during 2021.

On April 8, 2017, the Company entered into an agreement with FE Pharmacy Inc., a company controlled by a shareholder of Kallo, and a related party, whereby in consideration for the issuance of 475,000,000 shares of Kallo, FE Pharmacy Inc. assumed and will pay all of the Company’s outstanding indebtedness as at April 7, 2017. The 475,000,000 shares issued to FE Pharmacy Inc. has been valued at the book value of the total liabilities assigned to FE Pharmacy Inc. of $4,135,037. The assignment of the liabilities to FE Pharmacy Inc. has been recorded as a receivable in the equity section of the consolidated balance sheet and will be reduced as the liabilities are settled by FE Pharmacy Inc. During the year ended December 31, 2021, the assignment of liabilities amount has been reduced by $Nil (2020 - $7,443) cash settlement of accounts payable.

Included in convertible loans payable to related parties is an amount of $1,080,255 (2020 - $993,812), including accrued interest, owing to a director and a shareholder of the Company.

Included in accounts payable and accrued liabilities is an amount of $1,988,921 (2020 - $1,675,108) due to directors and officers of the Company as at December 31, 2021.

Included in short term loans payable is an amount of $2,206 (2020 - $Nil) due to the controlling shareholder of FE Pharmacy Inc. and a related party as at December 31, 2021.

Included in short term loans payable is an amount of $291,729 (2020 - $61,297) due to a director and officer of the Company as at December 31, 2021.

KALLO INC.

Notes to Consolidated Financial Statements

December 31, 2021 and 2020

(Amounts expressed in US dollars)

NOTE 5 – CONVERTIBLE LOANS PAYABLE

Schedule of Convertible Loans Payable

The Convertible loans payable bear 15% interest per annum and are convertible at a fixed price at any time during the 1 year term.  The Company has the option to pay the note at any time.  The Company analyzed the conversion option for derivative accounting consideration under ASC Topic 815-40, Derivatives and Hedging – Contract in Entity’s Own Stock and concluded that the embedded conversion was a derivative but the fair value of the feature was zero. The total outstanding notes is $1,395,236, including accrued interest, of which $1,080,255 is to from related parties. Interest of $111,291 (2020 - $111,596) on the convertible loans payable are included in net finance charge for the year ended December 31, 2021 included in the consolidated statement of operations. All of the above convertible loans payable were in default as at December 31, 2021.

NOTE 6 – SHORT TERM LOANS PAYABLE

Schedule of Short Term Loans payable

As at December 31, 2021, the balance of $311,109 (2020 - $78,397) represented short term funding provided by a third party and related parties which are non-interest bearing, unsecured and have no fixed repayment date.  The portion of the loan from third party in Canadian dollars is $21,772 which is subject to revaluation at the end of each period end.

KALLO INC.

Notes to Consolidated Financial Statements

December 31, 2021 and 2020

(Amounts expressed in US dollars)

NOTE 7 – INCOME TAXES

The Company had no income taxes payable at December 31, 2021 and 2020.

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

Deferred income taxes reflect the net income tax effect of temporary differences between the carrying amounts of the assets and liabilities for financial reporting purposes and amounts used for income taxes.

The Company’s deferred income tax assets and liabilities consist of the following:

Net operating loss carry forwards totaled approximately $20,144,000 at December 31, 2021. The net operating loss carry forwards will begin to expire in the year 2022 if not utilized. After consideration of all the evidence, management has recorded a valuation allowance at December 31, 2021 due to uncertainty of realizing the deferred tax assets. Utilization of the Company’s net operating loss carry forwards may be limited based on changes in ownership as defined in Internal Revenue Code Section 382. Tax years 2011 through 2021 remain open to examination by tax authorities.

KALLO INC.

Notes to Consolidated Financial Statements

December 31, 2021 and 2020

(Amounts expressed in US dollars)

NOTE 8 – COMMITMENTS AND CONTINGENCIES

Contingencies

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

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

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

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

Canada Revenue Agency has assessed the Company for unpaid Canadian $84,643 representing unremitted employee source deductions and related penalties and interest, the full amount of which has been accrued in the financial statements of Kallo.

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

None

Evaluation of Disclosure Controls and Procedures

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

 Management’s Report on Internal Control Over Financial Reporting.

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

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

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

Based on this evaluation, management concluded that the Company’s internal control over financial reporting was not effective as of December 31, 2021. Material weakness identified included:

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

Changes in Internal Controls

There were no changes in our internal control over financial reporting during the quarter ended December 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

None.

PART III

Officers and Directors

Each of our directors serves until his or her successor is elected and qualified. Each of our officers is elected by the board of directors to a term of one (1) year and serves until his or her successor is duly elected and qualified, or until he or she is removed from office. The board of directors has no nominating, auditing or compensation committees.  It does have an audit committee comprised of the board of directors.

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

Background of officers and directors

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

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

Samuel Baker - Secretary and a Director

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

Lloyd Chiotti – Chief Operating Officer and Director

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

 Conflicts of Interest

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

Involvement in Certain Legal Proceedings

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

Audit Committee and Charter

We have a separately designated audit committee of the board. Our board of directors performs the audit committee functions. None of our directors are deemed independent. Two of our directors also hold positions as our officers. Our audit committee is responsible for: (1) selection and oversight of our independent accountant; (2) establishing procedures for the receipt, retention and treatment of complaints regarding accounting, internal controls and auditing matters; (3) establishing procedures for the confidential, anonymous submission by our employees of concerns regarding accounting and auditing matters; (4) engaging outside advisors; and, (5) funding for the outside auditory and any outside advisors engagement by the audit committee. A copy of our audit committee charter is filed as an exhibit to our 2007 Form 10-K.

Audit Committee Financial Expert

We do not have an audit committee financial expert.

Code of Ethics

We have adopted a corporate code of ethics. We believe our code of ethics is reasonably designed to deter wrongdoing and promote honest and ethical conduct; provide full, fair, accurate, timely and understandable disclosure in public reports; comply with applicable laws; ensure prompt internal reporting of code violations; and provide accountability for adherence to the code. A copy of the code of ethics is filed as Exhibit 14.1 to our S-1 filed with the Securities and Exchange Commission on August 25, 2014.

Disclosure Committee and Committee Charter

We have a disclosure committee and disclosure committee charter. Our disclosure committee is comprised of all of our officers and directors. The purpose of the committee is to provide assistance to the Chief Executive Officer and the Chief Financial Officer in fulfilling their responsibilities regarding the identification and disclosure of material information about us, and the accuracy, completeness and timeliness of our financial reports. A copy of the disclosure committee charter is filed as Exhibit 99.2 to our 2007 Form 10-K.

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

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors, officers and persons who beneficially owned more than ten percent of our common stock to file reports of ownership and changes in ownership of common stock. Based solely upon a review of Forms 3, 4 and 5 furnished to us during the fiscal year 2020, all officers, directors, and persons who beneficially own more than ten percent of our common stock filed all reports required by Section 16(a) of the Securities Exchange Act of 1934, as amended.

The following table sets forth the compensation payable by us during the last two fiscal years for our officers. This information includes the dollar value of base salaries, bonus awards and number of stock options granted, and certain other compensation, if any. The compensation discussed addresses all compensation awarded to, earned by, or paid to our named executive officers.

Summary Compensation Table

The number of shares approved for issuance as compensation to each named executive officer for the year ended December 31, 2021 was as follows:

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

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

Option/SAR Grants

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

Long-Term Incentive Plan Awards

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

Compensation of Directors

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

Indemnification

Under our Bylaws, we may indemnify an officer or director who is made a party to any proceeding, including a lawsuit, because of his position, if he/she acted in good faith and in a manner he/she reasonably believed to be in our best interest. We may advance expenses incurred in defending a proceeding. To the extent that the officer or director is successful on the merits in a proceeding as to which he/she is to be indemnified, we must indemnify him/her against all expenses incurred, including attorney’s fees. With respect to a derivative action, indemnity may be made only for expenses actually and reasonably incurred in defending the proceeding, and if the officer or director is judged liable, only by a court order. The indemnification is intended to be to the fullest extent permitted by the laws of the State of Nevada.

Regarding indemnification for liabilities arising under the Securities Act of 1933, which may be permitted to directors or officers under Nevada law, we are informed that, in the opinion of the Securities and Exchange Commission, indemnification is against public policy, as expressed in the Act and is, therefore, unenforceable.

The following table sets forth, as of the date of this report, the total number of shares owned beneficially by each of our directors, officers and key employees, individually and as a group, and the present owners of 5% or more of our total outstanding shares. The stockholder listed below has direct ownership of his/her shares and possesses sole voting and dispositive power with respect to the shares.

As at December 31, 2021, we owe our officers and directors $1,988,921 in accounts payable and accrued liabilities.

(1)        Audit Fees

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

(2)        Audit-Related Fees

The aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountants that are reasonably related to the performance of the audit or review of our financial statements and are not reported in the preceding paragraph:

(3)        Tax Fees

The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning was:

(4)        All Other Fees

The aggregate fees billed in each of the last two fiscal years for the products and services provided by the principal accountant, other than the services reported in paragraphs (1), (2), and (3) was:

(5)        Our audit committee’s pre-approval policies and procedures described in paragraph (c)(7)(i) of Rule 2-01 of Regulation S-X were that the audit committee pre-approve all accounting related activities prior to the performance of any services by any accountant or auditor.

(6)        The percentage of hours expended on the principal accountant’s engagement to audit our financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant’s full time, permanent employees was 0%.

PART IV