Document And Entity Information
Document And Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Mar. 08, 2018 | Jun. 30, 2017 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | Kallo Inc. | ||
Document Type | 10-K | ||
Current Fiscal Year End Date | --12-31 | ||
Amendment Flag | false | ||
Entity Central Index Key | 1,389,034 | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Well-known Seasoned Issuer | No | ||
Document Period End Date | Dec. 31, 2017 | ||
Document Fiscal Year Focus | 2,017 | ||
Document Fiscal Period Focus | FY | ||
Entity Public Float | $ 582,958 | ||
Entity Common Stock, Shares Outstanding | 1,135,699,249 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Current Assets: | ||
Prepaid expenses | $ 4,000 | $ 57,011 |
Total Current Assets | 4,000 | 57,011 |
TOTAL ASSETS | 4,000 | 57,011 |
Current Liabilities: | ||
Bank overdraft | 0 | 211 |
Accounts payable and accrued liabilities | 3,362,802 | 2,731,879 |
Derivative liabilities | 0 | 270,581 |
Convertible promissory notes, net of discount of $NIL and $8,872 respectively | 0 | 324,586 |
Convertible loans payable – third parties | 215,520 | 191,510 |
Short term loans payable | 17,827 | 16,215 |
Convertible loans payable – related parties | 734,246 | 615,163 |
Deferred lease inducement | 0 | 1,260 |
Total Current Liabilities | 4,330,395 | 4,151,405 |
TOTAL LIABILITIES | 4,330,395 | 4,151,405 |
Commitments and Contingencies | ||
Stockholders' Deficiency | ||
Preferred stock, $0.00001 par value, 100,000,000 shares authorized, 95,000,000 Series A preferred shares issued and outstanding | 950 | 950 |
Common stock, $0.00001 par value, 1,150,000,000 shares authorized, 1,135,699,249 and 13,497,905 shares issued and outstanding respectively. | 11,357 | 135 |
Additional paid-in capital | 41,435,879 | 31,046,675 |
Assignment of liabilities | (3,600,452) | 0 |
Accumulated deficit | (42,174,129) | (35,142,154) |
Total Stockholders' Deficiency | (4,326,395) | (4,094,394) |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY | $ 4,000 | $ 57,011 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Convertible promissory notes, net of discount | $ 0 | $ 8,872 |
Preferred stock, par value | $ .00001 | $ 0.00001 |
Preferred stock, authorized | 100,000,000 | 100,000,000 |
Preferred stock, issued | 95,000,000 | 95,000,000 |
Preferred stock, outstanding | 95,000,000 | 95,000,000 |
Common stock, par value | $ .00001 | $ 0.00001 |
Common stock, authorized | 1,150,000,000 | 1,150,000,000 |
Common stock, issued | 1,135,699,249 | 13,497,905 |
Common Stock, outstanding | 1,135,699,249 | 13,497,905 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Operating Expenses | ||
General and administration | $ 6,720,230 | $ 2,396,884 |
Selling and marketing | 5,520 | 25,553 |
Impairment of assets | 0 | 104,018 |
Depreciation | 0 | 31,533 |
Operating loss | (6,725,750) | (2,557,988) |
Interest and financing costs | (168,885) | (323,944) |
Change in fair value on derivative liabilities | 44,509 | (147,970) |
Foreign exchange gain (loss) | (189,572) | 30,792 |
Gain on settlement of debt | 7,723 | 0 |
Net Loss | $ (7,031,975) | $ (2,999,110) |
Net loss per share - Basic and diluted | $ (0.01) | $ (0.24) |
Weighted average number of shares outstanding - Basic and diluted | 732,384,815 | 12,278,206 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Deficiency - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Preferred Stock | ||
Beginning balance, Shares | 95,000,000 | 95,000,000 |
Beginning balance, Amount | $ 950 | $ 950 |
Ending balance, Shares | 95,000,000 | 95,000,000 |
Ending balance, Amount | $ 950 | $ 950 |
Common Stock | ||
Beginning balance, Shares | 13,497,905 | 9,413,985 |
Beginning balance, Amount | $ 135 | $ 94 |
Shares issued to directors and employees, Shares | 628,000,000 | 7,475,000 |
Shares issued to directors and employees, Amount | $ 6,280 | $ 75 |
Shares issued for debt conversion, Shares | 1,201,344 | 4,083,920 |
Shares issued for debt conversion, Amount | $ 12 | $ 41 |
Cancellation of shares issued to directors and employees, Shares | (7,475,000) | |
Cancellation of shares issued to directors and employees, Amount | $ (75) | |
Shares issued to FE Pharmacy Inc., Shares | 475,000,000 | |
Shares issued to FE Pharmacy Inc., Amount | $ 4,750 | |
Shares issuable for consulting services, Shares | 18,000,000 | |
Shares issuable for consulting services, Amount | $ 180 | |
Ending balance, Shares | 1,135,699,249 | 13,497,905 |
Ending balance, Amount | $ 11,357 | $ 135 |
Additional Paid-In Capital | ||
Beginning balance, Amount | 31,046,675 | 30,381,065 |
Shares issued to directors and employees, Amount | 5,836,697 | 448,425 |
Shares issued for debt conversion, Amount | 60,942 | 217,110 |
Cancellation of shares issued to directors and employees, Amount | 75 | |
Shares issued to FE Pharmacy Inc., Amount | 4,130,287 | |
Shares issuable for consulting services, Amount | 156,516 | |
Unissued shares for consulting services reclassified to liability | (156,435) | |
Reclassification of shares for consulting services to equity | 361,197 | |
Ending balance, Amount | 41,435,879 | 31,046,675 |
Assignment of Liabilities | ||
Beginning balance, Amount | 0 | 0 |
Shares issued to FE Pharmacy Inc., Amount | (4,135,037) | |
Cash settlement of liabilities | 534,585 | |
Ending balance, Amount | (3,600,452) | 0 |
Deficit Accumulated During the Development Stage | ||
Beginning balance, Amount | (35,142,154) | (32,143,044) |
Net Loss | (7,031,975) | (2,999,110) |
Ending balance, Amount | (42,174,129) | (35,142,154) |
Beginning balance, Amount | (4,094,394) | (1,760,935) |
Shares issued to directors and employees, Amount | 5,842,977 | 448,500 |
Shares issued for debt conversion, Amount | 60,954 | 217,151 |
Cancellation of shares issued to directors and employees, Amount | 0 | |
Shares issued to FE Pharmacy Inc., Amount | 0 | |
Shares issuable for consulting services, Amount | 156,696 | |
Unissued shares for consulting services reclassified to liability | (156,435) | |
Reclassification of shares for consulting services to equity | 361,197 | |
Cash settlement of liabilities | 534,585 | |
Net Loss | (7,031,975) | (2,999,110) |
Ending balance, Amount | $ (4,326,395) | $ (4,094,394) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net Loss | $ (7,031,975) | $ (2,999,110) |
Adjustment to reconcile net loss to cash used in operating activities: | ||
Depreciation | 0 | 31,533 |
Stock based compensation | 5,999,673 | 448,500 |
Impairment of assets | 0 | 104,018 |
Impairment of prepaid expenses | 32,747 | 0 |
Amortization of debt discount | 8,872 | 120,635 |
Deferred lease inducement | (1,260) | (14,120) |
Change in fair value on derivative liabilities | (44,509) | 147,970 |
Gain on settlement of debt | (7,723) | 0 |
Interest and penalties on promissory notes | 158,033 | 201,642 |
Unrealized foreign exchange gain | 188,902 | 7,244 |
Changes in operating assets and liabilities: | ||
Decrease (Increase) in prepaid expenses | 21,264 | 95,875 |
Increase (Decrease) in accounts payable and accrued liabilities | 675,715 | 1,526,965 |
NET CASH USED IN OPERATING ACTIVITIES | (261) | (328,848) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from short term loans payable | 472 | 0 |
Proceeds from other convertible notes (2016 - $268,311 from related parties) | 0 | 323,667 |
Change in bank indebtedness | (211) | 211 |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 261 | 323,878 |
Effect of exchange rate changes on cash | 0 | (28) |
NET DECREASE IN CASH | 0 | (4,998) |
CASH - Beginning of year | 0 | 4,998 |
CASH - End of year | 0 | 0 |
SUPPLEMENTAL CASH FLOW INFORMATION | ||
Income tax paid | 0 | 0 |
Interest paid | 0 | 0 |
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES | ||
Stock issued to related party for current and future settlement of accounts payable and convertible debts | 4,135,037 | 0 |
Settlement of promissory notes and accounts payable by FE Pharmacy Inc. | 534,585 | 0 |
Conversion of promissory notes into common shares | 60,954 | 217,151 |
Convertible loan payable for expenses paid directly by lender | 27,151 | 5,434 |
Unissued shares for consulting services reclassified to liability | 156,435 | 0 |
Reclassification of shares for consulting services to equity | $ 361,197 | $ 0 |
NOTE 1 - BUSINESS AND GOING CON
NOTE 1 - BUSINESS AND GOING CONCERN | 12 Months Ended |
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
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, 2017. 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. |
NOTE 2 - ACCOUNTING POLICIES AN
NOTE 2 - ACCOUNTING POLICIES AND OPERATIONS | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
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. Cash Cash includes cash on hand and highly liquid investments with a maturity of three months or less at acquisition. Earnings Per Share The Company computes basic net loss per share in accordance with ASC 260, Earnings Per Share 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 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 Income Taxes The Company accounts for income taxes under FASB ASC 740, Income Taxes 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 2017 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 Level 2 • Quoted prices for identical or similar assets or liabilities in non-active markets (examples include corporate and municipal bonds which trade infrequently); • Inputs other than quoted prices that are observable for substantially the full term of the asset or liability (examples include interest rate and currency swaps); and • Inputs that are derived principally from or corroborated by observable market data for substantially the full term of the asset or liability (examples include certain securities and derivatives). Level 3 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. The following is a summary of our financial instruments that are accounted for at fair value by level within the fair value hierarchy at December 31, 2017 and 2016: December 31, 2017 Level 1 Level 2 Level 3 Total Liabilities: Derivative liability $ - $ - $ - $ - December 31, 2016 Level 1 Level 2 Level 3 Total Liabilities: Derivative liabilities $ - $ - $ 270,581 $ 270,581 Stock-Based Compensation The Company accounts for share-based compensation in accordance with ASC 718, Stock Compensation 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. 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 2017 and 2016. Lease accounting The Company evaluates each lease for classification as either a capital lease or an operating lease. If substantially all of the benefits and risks of ownership have been transferred to the Company as lessee, the Company records the lease as a capital lease at its inception. The Company performs this evaluation at the inception of the lease and when a modification is made to a lease. If the lease agreement calls for a scheduled rent increase during the lease term, the Company recognizes the lease expense on a straight-line basis over the lease term. 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, 2017 and 2016. Recently Adopted Accounting Pronouncements In May 2014, the Financial Accounting Standards Board ("FASB") issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in ASC 605, Revenue Recognition. This ASU is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. The effective date will be the first quarter of fiscal year 2018 using one of two retrospective application methods or a cumulative effect approach. The Company intends to apply the amendment retrospectively with the cumulative effect of initially applying this update recognized at the date of initial application but does not expect it will have a material impact on the consolidated financial statements as there were insignificant revenues in the past. In August 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-15, Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern ("ASU 2015-14"). Under the new standard, management must evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern within one year after the date that the financial statements are issued. This evaluation initially does not take into consideration the potential mitigating effect of management's plans that have not been fully implemented as of the date the financial statements are issued. When substantial doubt exists under this methodology, management evaluates whether the mitigating effect of its plans sufficiently alleviates substantial doubt about the Company's ability to continue as a going concern. The mitigating effect of management's plans, however, is only considered if both (1) it is probable that the plans will be effectively implemented within one year after the date that the financial statements are issued, and (2) it is probable that the plans, when implemented, will mitigate the relevant conditions or events that raise substantial doubt about the entity's ability to continue as a going concern within one year after the date that the financial statements are issued. In February 2016, the FASB issued an ASU related to the accounting for leases. The new standard establishes a right-of-use ("ROU") model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. This pronouncement is effective for annual and interim periods beginning after December 15, 2018, with early adoption permitted. The Company is evaluating the impact that the new standard will have on its consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 addresses the classification of certain specific cash flow issues including debt prepayment or extinguishment costs, settlement of certain debt instruments, contingent consideration payments made after a business combination, proceeds from the settlement of certain insurance claims and distributions received from equity method investees. ASU 2016-15 is effective for the Company in the first quarter of 2018 and early adoption is permitted. An entity that elects early adoption must adopt all of the amendments in the same period. The Company is evaluating the impact of this guidance on its consolidated statement of cash flows. In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting. ASU 2017-09 clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award changes as a result of the change in terms or conditions. ASU 2017-09 will be applied prospectively to awards modified on or after the adoption date. ASU 2017-09 is effective for the Company for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. The Company is evaluating the impact of this guidance on its consolidated financial statements. |
NOTE 3 - CAPITAL STOCK
NOTE 3 - CAPITAL STOCK | 12 Months Ended |
Dec. 31, 2017 | |
Stockholders' Equity Note [Abstract] | |
CAPITAL STOCK | Common Stock During the year ended December 31, 2017, the holders of promissory notes converted the principal and the related interest outstanding of $39,644 into 1,201,344 shares. The fair value of the derivative liability associated with the notes that were converted, $21,310 was reclassified to equity upon conversion. Therefore the Company recorded $60,954 in conjunction with the conversions. On April 18, 2017, the Board of Directors approved a reverse stock split of the authorized and outstanding shares of common stock on a 1 for 600 basis, after which, the authorized number of common stock will decrease from 15,000,000,000 to 25,000,000. After the completion of the reverse stock split, the Board of Directors approved the increase of the authorized number of common stock from 25,000,000 to 1,150,000,000. FINRA approved the reverse stock split in December 2017 and 9,907,548,954 common shares outstanding as at December 19, 2017 were replaced by 16,512,582 post reverse stock split common shares. 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 post reverse stock split common stock of Kallo, FE Pharmacy Inc. assumed and will pay all of the Company's outstanding indebtedness as at April 7, 2017. Because the 475,000,000 shares were issued before the approval by FINRA of the reverse stock split, the 475,000,000 shares issued during the quarter ended June 30, 2017 were reduced to 791,667 when the reverse stock split became effective and 474,208,333 additional post reverse stock split shares were issued on December 27, 2017 to make them whole again. 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, 2017, the assignment of liabilities amount has been reduced by $332,000 cash settlement of convertible promissory notes and $202,585 cash settlement of accounts payable. On May 25, 2017, the Company approved the issuance of 595,000,000 post reverse stock split common stock valued at $5,179,678 to various directors and employees as compensation for services rendered and the issuance of 16,000,000 post reverse stock split common stock valued at $139,285 to the controlling shareholder of FE Pharmacy Inc. and a related party as compensation for services rendered and for nominal cash. On July 5, 2017, the Company approved the issuance of 2,000,000 post reverse stock split common stock valued at $17,411 to a party related to the controlling shareholder of FE Pharmacy Inc. as compensation for services rendered. Because the 613,000,000 shares were issued before the approval by FINRA of the reverse stock split, the 613,000,000 shares were reduced to 1,021,667 when the reverse stock split becomes effective and 611,978,333 additional post reverse stock split shares were issued on December 27, 2017 to make them whole again. It was determined that the unissued shares relating to the compensation for services to the consultant and controlling shareholder of FE Pharmacy Inc. was a derivative under ASC 815 and therefore the related amount of $156,435 was shown as a liability for issuable shares on the Consolidated Balance Sheet pending issuance. When the remaining shares were finally issued on December 19, 2017, they were revalued, based on quoted price, to $361,197 and reclassified from liability for issuable shares to Additional Paid-In Capital and resulted in a derivative loss of $204,762. On December 19, 2017, the Company approved the issuance of 33,000,000 post reverse stock split common stock valued at $663,299 to various directors and employees as compensation for services rendered. During 2016, the holders of promissory notes converted the principal and the related interest outstanding of $128,928 into 4,083,920 shares. The fair value of the derivative liability associated with the notes that were converted, $88,223 was reclassified to equity upon conversion. Therefore the Company recorded $217,151 in conjunction with the conversions. During the quarter ended June 30, 2016, the Board of Directors approved the issuance of 7,475,000 common shares valued at $448,500 to various employees and directors as compensation for services rendered. On September 12, 2016, the Company rescinded its decision to issue the 7,475,000 common shares to various directors and employees. 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 issued 95,000,000 Series A Preferred shares 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 2017 and 2016, the Company did not issue any Preferred Class shares. |
NOTE 4 - RELATED PARTY TRANSACT
NOTE 4 - RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2017 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | During 2017, 625,000,000 shares (2016 – 6,291,667) were issued to directors of the Company as stock-based compensation and were valued, using the market closing price on the date of the grant, at $5,816,861 (2016 - $377,500). The 6,291,667 shares to be issued to the directors during 2016 were subsequently rescinded and not issued. On May 25, 2017, 16,000,000 shares valued at $139,285 were issued to the controlling shareholder of FE Pharmacy Inc. and a related party as compensation for services rendered and for nominal cash. On July 5, 2017, 2,000,000 shares valued at $17,411 were issued to a party related to the controlling shareholder of FE Pharmacy Inc. as compensation for services rendered. Because the 18,000,000 shares were issued before the approval by FINRA of the reverse stock split, the 18,000,000 shares were reduced to 30,000 when the reverse stock split becomes effective and 17,970,000 additional post reverse stock split shares were issued on December 19, 2017 to make them whole again, resulting in an increase in the original valuation of $204,762. 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, 2017, the assignment of liabilities amount has been reduced by $332,000 cash settlement of convertible promissory notes and $202,585 cash settlement of accounts payable. Subsequent to December 31, 2017, there were additional cash settlement of accounts payable of $24,086 which reduced the assignment of liabilities amount. During 2016, $268,311 was received from a director and an affiliate of the Company and is included in the convertible loans payable to related parties. At December 31, 2017, $734,246 (2016 - $615,173), including accrued interest, was owing to the two related parties. Included in accounts payable and accrued liabilities is an amount of $667,239 (2016 - $306,664) due to directors and officers of the Company as at December 31, 2017. |
NOTE 5 - EQUIPMENT
NOTE 5 - EQUIPMENT | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
EQUIPMENT | 2017 2016 Computer equipment under capital lease $ - $ 223,683 Nexus computer equipment under capital lease - 42,023 Computer equipment - 50,724 Computer software - 37,210 Hardware & Installation - 10,128 Office furniture and equipment - 27,739 Leasehold improvement - 55,072 Medical Equipment - 13,274 Clinical Command Center - 15,790 Infrastructure - 7,911 Total Equipment - 483,554 Less accumulated depreciation - (379,536 ) Less impairment - (104,018 ) Equipment – net $ - $ - Depreciation expense during 2017 and 2016 were $Nil and $31,533 respectively. Impairment on fixed assets during 2017 and 2016 were $Nil and $104,018. |
NOTE 6 - CONVERTIBLE PROMISSORY
NOTE 6 - CONVERTIBLE PROMISSORY NOTES AND DERIVATIVE LIABILITIES | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
CONVERTIBLE PROMISSORY NOTES AND DERIVATIVE LIABILITIES | The convertible promissory notes were unsecured and bore interest at between 8% and 12% per annum with all principal and accrued interest due and payable between one and two years from the dates of execution of the Notes. The Holders of the Notes could, in lieu of payment of the principal and interest, elect to convert such amount into common shares of the Company at the agreed conversion price per share. There were no remaining notes outstanding as of December 31, 2017. A summary of the promissory notes is as follows: 2017 2016 Balance as at Beginning of Period $ 324,586 $ 229,377 Interest and penalties 45,909 103,502 Converted into shares (39,644 ) (128,928 ) Settled by FE Pharmacy Inc. in cash (332,000 ) - Amortization of debt discount 8,872 120,635 Gain on settlement (7,723 ) - Balance as at end of period - 324,586 Convertible notes – short term - (324,586 ) Convertible notes – long term $ - $ - 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 conversion option does not meet the criteria for classification in stockholders' equity. Therefore, derivative accounting is applicable for the conversion option. During the year 2016, there were no new promissory notes but there were additions due to accrued interest and penalties. On December 31, 2016, all the derivative liabilities were valued at $270,581 which resulted in a loss in fair value of $147,970 for the year ended December 31, 2017. The debt discounts were amortized over the terms of the respective Notes and were $120,635 at December 31, 2017 and, together with interest and penalties of $103,502 on the promissory notes, were included in net finance charge of $323,944 for the year ended December 31, 2016 in the consolidated statement of operations. The fair value of the embedded conversion feature was estimated at the end of each quarterly reporting period using the Multinomial lattice model. During the year 2017, there were no new promissory notes but there were additions due to accrued interest and penalties. The debt discounts were amortized over the terms of the respective Notes and were $8,872 at December 31, 2017 and, together with interest and penalties of $45,909 on the promissory notes, were included in net finance charge of $168,885 for the year ended December 31, 2017 in the consolidated statement of operations. The fair value of the embedded conversion feature is estimated at the end of each quarterly reporting period using the Multinomial lattice model. Revaluations of the derivative liabilities and their subsequent extinguishment resulted in change in fair value of $249,271 during the year ended December 31, 2017. Some convertible promissory notes were also cash settled for $332,000 by FE Pharmacy Inc. resulting in a gain on settlement of debt of $7,723. The key assumptions for the valuation of the derivative liability during the year were as follows: • The notes convert with an initial conversion price of 55%-75% of the average or low of the close or bid prices over the 15-25 previous days. • The projected annual volatility curve for each valuation period was based on the historical annual volatility of the company in the range 117% - 264%. • The holder would automatically convert the note at the maximum of 2 times the conversion price. • Full Reset events are projected to occur quarterly generating a projected conversion prices at 125% of market. The following table illustrates the fair value adjustments that were recorded related to the level 3 derivative liabilities, associated with the convertible promissory notes: 2017 2016 Fair value as at Beginning of Year $ 270,581 $ 210,834 Elimination associated with conversion and settlement of promissory notes (21,310 ) (88,223 ) Change in fair value loss (gain) (249,271 ) 147,970 Fair value as at End of Year $ - $ 270,581 As discussed in Note 3, during 2017, a loss of $204,762 was recognized on the liability for issuable shares. This resulted in a net derivative gain of $44,509 during 2017. |
NOTE 7 - CONVERTIBLE LOANS PAYA
NOTE 7 - CONVERTIBLE LOANS PAYABLE | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
CONVERTIBLE LOANS PAYABLE | 2017 2016 Convertible promissory note bearing interest at 15% per annum - third party $ 215,520 $ 191,510 Convertible promissory note bearing interest at 15% per annum – related party 734,246 615,163 $ 949,766 $ 806,673 During the year ended December 31, 2017, $Nil (2016 - $323,667) was received in cash and $27,151 was paid directly by the lender for expenses resulting in Convertible loans payable which 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 from the debt offering is $949,766, including accrued interest, of which $734,246 is to from related parties. Interest of $112,125 on the convertible loans payable are included in net finance charge of $168,885 for the year ended December 31, 2017 included in the consolidated statement of operations. $919,218 of the above convertible loans payable were in default as at December 31, 2017. |
NOTE 8 - SHORT TERM LOANS PAYAB
NOTE 8 - SHORT TERM LOANS PAYABLE | 12 Months Ended |
Dec. 31, 2017 | |
Short-term Debt, Other Disclosures [Abstract] | |
SHORT TERM LOANS PAYABLE | 2017 2016 Non-interest bearing short term funding from third parties $ 17,827 $ 16,215 $ 17,827 $ 16,215 As at December 31, 2017, the balance of $17,827 (2016 - $16,215) represented short term funding provided by third parties which are non-interest bearing, unsecured and have no fixed repayment date. The amount in Canadian dollars is $21,772 which is subject to revaluation at the end of each period end. |
NOTE 9 - INCOME TAXES
NOTE 9 - INCOME TAXES | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | The Company had no income taxes payable at December 31, 2017 and 2016. The reconciliation of income tax provision computed at statutory rates to the reported income tax provision is as follows: 2017 2016 Net loss for the year $ (7,031,975 ) $ (2,999,110 ) Effective statutory rate 34 % 34 % Expected tax recovery $ (2,390,871 ) $ (1,019,697 ) Net effects of non deductible and allowable items 2,115,233 254,917 Change in valuation allowance 275,638 764,780 $ - $ - 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: 2017 2016 Net operating loss carry forward $ 3,602,486 $ 5,525,126 Equipment 65,669 138,154 Valuation allowance (3,668,155 ) (5,663,280 ) Deferred tax assets, net of valuation allowance $ - $ - Net operating loss carry forwards totaled approximately $17,155,000 at December 31, 2017. The net operating loss carry forwards will begin to expire in the year 2021 if not utilized. After consideration of all the evidence, management has recorded a valuation allowance at December 31, 2017 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 2017 remain open to examination by tax authorities. On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cut and Jobs Act, which establishes new tax laws that affects 2018 and future years, including a reduction in the U.S. federal corporate income tax rate to 21%, effective January 1, 2018. |
NOTE 10 - COMMITMENTS AND CONTI
NOTE 10 - COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | Commitments Sales commission agreement On January 23, 2014, Kallo Inc. announced the signing of a US$200,000,925 Supply Contract with the Ministry of Health and Public Hygiene of the Republic Of Guinea (the "Guinea Project"). Under the Supply Contract, Kallo will implement customized healthcare delivery solutions for the Republic of Guinea. The components of the solutions include, MobileCare, RuralCare, Hospital Information Systems, Telehealth Systems, Pharmacy Information, disaster management, air and surface patient transportation systems and clinical training. In respect of the Guinea Project mentioned above, the Company has agreed with two third parties in Guinea to pay sales commissions for facilitating and securing the Contract with the Ministry of Health of the Republic of Guinea as follows: - equal to $20,000,000, payable as to an advance of $300,000 immediately after the loan agreement for the Kallo MobileCare and RuralCare program is signed by the Minister of Finance of the Republic of Guinea and the remainder within 7 to 14 business days of receipt of payment for the Project by Kallo in proportion to the payments received by Kallo. - equal to $4,000,000, payable within 7 to 14 business days of receipt of payment for the Project by Kallo in proportion to the payments received by Kallo. In addition, a performance incentive payment of $1,000,000 will be payable to three persons related to the third party in accordance to the same terms of payment described herein. On October 13, 2017, Kallo sent notices of termination of the agreements with the above two third parties to be effective 30 days later. Agreements with suppliers The Company has entered into agreements with a number of service providers for licensing of software and other professional services to be rendered. The total remaining amount committed is $2,773,737. 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 $25,000 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 $26,515 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 Canadian $360,400 representing unremitted employee source deductions, 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. |
NOTE 11 - SUBSEQUENT EVENTS
NOTE 11 - SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2017 | |
Note 11 - Subsequent Events | |
SUBSEQUENT EVENTS | During January to March 2018, FE Pharmacy. Inc. settled Kallo’s accounts payable for a total of $24,184. |
NOTE 2 - ACCOUNTING POLICIES 18
NOTE 2 - ACCOUNTING POLICIES AND OPERATIONS (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
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. |
Cash | Cash includes cash on hand and highly liquid investments with a maturity of three months or less at acquisition. |
Earnings Per Share | The Company computes basic net loss per share in accordance with ASC 260, Earnings Per Share |
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 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 |
Income Taxes | The Company accounts for income taxes under FASB ASC 740, Income Taxes 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 2017 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 Level 2 • Quoted prices for identical or similar assets or liabilities in non-active markets (examples include corporate and municipal bonds which trade infrequently); • Inputs other than quoted prices that are observable for substantially the full term of the asset or liability (examples include interest rate and currency swaps); and • Inputs that are derived principally from or corroborated by observable market data for substantially the full term of the asset or liability (examples include certain securities and derivatives). Level 3 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. The following is a summary of our financial instruments that are accounted for at fair value by level within the fair value hierarchy at December 31, 2017 and 2016: December 31, 2017 Level 1 Level 2 Level 3 Total Liabilities: Derivative liability $ - $ - $ - $ - December 31, 2016 Level 1 Level 2 Level 3 Total Liabilities: Derivative liabilities $ - $ - $ 270,581 $ 270,581 |
Stock-Based Compensation | The Company accounts for share-based compensation in accordance with ASC 718, Stock Compensation |
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. |
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 2017 and 2016. |
Lease accounting | The Company evaluates each lease for classification as either a capital lease or an operating lease. If substantially all of the benefits and risks of ownership have been transferred to the Company as lessee, the Company records the lease as a capital lease at its inception. The Company performs this evaluation at the inception of the lease and when a modification is made to a lease. If the lease agreement calls for a scheduled rent increase during the lease term, the Company recognizes the lease expense on a straight-line basis over the lease term. |
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, 2017 and 2016. |
Recently Adopted Accounting Pronouncements | In May 2014, the Financial Accounting Standards Board ("FASB") issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in ASC 605, Revenue Recognition. This ASU is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. The effective date will be the first quarter of fiscal year 2018 using one of two retrospective application methods or a cumulative effect approach. The Company intends to apply the amendment retrospectively with the cumulative effect of initially applying this update recognized at the date of initial application but does not expect it will have a material impact on the consolidated financial statements as there were insignificant revenues in the past. In August 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-15, Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern ("ASU 2015-14"). Under the new standard, management must evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern within one year after the date that the financial statements are issued. This evaluation initially does not take into consideration the potential mitigating effect of management's plans that have not been fully implemented as of the date the financial statements are issued. When substantial doubt exists under this methodology, management evaluates whether the mitigating effect of its plans sufficiently alleviates substantial doubt about the Company's ability to continue as a going concern. The mitigating effect of management's plans, however, is only considered if both (1) it is probable that the plans will be effectively implemented within one year after the date that the financial statements are issued, and (2) it is probable that the plans, when implemented, will mitigate the relevant conditions or events that raise substantial doubt about the entity's ability to continue as a going concern within one year after the date that the financial statements are issued. In February 2016, the FASB issued an ASU related to the accounting for leases. The new standard establishes a right-of-use ("ROU") model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. This pronouncement is effective for annual and interim periods beginning after December 15, 2018, with early adoption permitted. The Company is evaluating the impact that the new standard will have on its consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 addresses the classification of certain specific cash flow issues including debt prepayment or extinguishment costs, settlement of certain debt instruments, contingent consideration payments made after a business combination, proceeds from the settlement of certain insurance claims and distributions received from equity method investees. ASU 2016-15 is effective for the Company in the first quarter of 2018 and early adoption is permitted. An entity that elects early adoption must adopt all of the amendments in the same period. The Company is evaluating the impact of this guidance on its consolidated statement of cash flows. In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting. ASU 2017-09 clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award changes as a result of the change in terms or conditions. ASU 2017-09 will be applied prospectively to awards modified on or after the adoption date. ASU 2017-09 is effective for the Company for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. The Company is evaluating the impact of this guidance on its consolidated financial statements. |
NOTE 2 - ACCOUNTING POLICIES 19
NOTE 2 - ACCOUNTING POLICIES AND OPERATIONS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Fair value hierarchy | December 31, 2017 Level 1 Level 2 Level 3 Total Liabilities: Derivative liability $ - $ - $ - $ - December 31, 2016 Level 1 Level 2 Level 3 Total Liabilities: Derivative liabilities $ - $ - $ 270,581 $ 270,581 |
NOTE 5 - EQUIPMENT (Tables)
NOTE 5 - EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Schedule of equipment | 2017 2016 Computer equipment under capital lease $ - $ 223,683 Nexus computer equipment under capital lease - 42,023 Computer equipment - 50,724 Computer software - 37,210 Hardware & Installation - 10,128 Office furniture and equipment - 27,739 Leasehold improvement - 55,072 Medical Equipment - 13,274 Clinical Command Center - 15,790 Infrastructure - 7,911 Total Equipment - 483,554 Less accumulated depreciation - (379,536 ) Less impairment - (104,018 ) Equipment – net $ - $ - |
NOTE 6 - CONVERTIBLE PROMISSO21
NOTE 6 - CONVERTIBLE PROMISSORY NOTES AND DERIVATIVE LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Summary of promissory notes | 2017 2016 Balance as at Beginning of Period $ 324,586 $ 229,377 Interest and penalties 45,909 103,502 Converted into shares (39,644 ) (128,928 ) Settled by FE Pharmacy Inc. in cash (332,000 ) - Amortization of debt discount 8,872 120,635 Gain on settlement (7,723 ) - Balance as at end of period - 324,586 Convertible notes – short term - (324,586 ) Convertible notes – long term $ - $ - |
Schedule of derivative liabilities at fair value | 2017 2016 Fair value as at Beginning of Year $ 270,581 $ 210,834 Elimination associated with conversion and settlement of promissory notes (21,310 ) (88,223 ) Change in fair value loss (gain) (249,271 ) 147,970 Fair value as at End of Year $ - $ 270,581 |
NOTE 7 - CONVERTIBLE LOANS PA22
NOTE 7 - CONVERTIBLE LOANS PAYABLE (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Summary of convertible loans payable | 2017 2016 Convertible promissory note bearing interest at 15% per annum - third party $ 215,520 $ 191,510 Convertible promissory note bearing interest at 15% per annum – related party 734,246 615,163 $ 949,766 $ 806,673 |
NOTE 8 - SHORT TERM LOANS PAY23
NOTE 8 - SHORT TERM LOANS PAYABLE (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Short-term Debt, Other Disclosures [Abstract] | |
Summary of short term loans payable | 2017 2016 Non-interest bearing short term funding from third parties $ 17,827 $ 16,215 $ 17,827 $ 16,215 |
NOTE 9 - INCOME TAXES (Tables)
NOTE 9 - INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income tax provision | 2017 2016 Net loss for the year $ (7,031,975 ) $ (2,999,110 ) Effective statutory rate 34 % 34 % Expected tax recovery $ (2,390,871 ) $ (1,019,697 ) Net effects of non deductible and allowable items 2,115,233 254,917 Change in valuation allowance 275,638 764,780 $ - $ - |
Deferred income tax assets and liabilities | 2017 2016 Net operating loss carry forward $ 3,602,486 $ 5,525,126 Equipment 65,669 138,154 Valuation allowance (3,668,155 ) (5,663,280 ) Deferred tax assets, net of valuation allowance $ - $ - |
NOTE 2 - ACCOUNTING POLICIES 25
NOTE 2 - ACCOUNTING POLICIES AND OPERATIONS (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Derivative liabilities | $ 0 | $ 270,581 | $ 210,834 |
Level 1 | |||
Derivative liabilities | 0 | 0 | |
Level 2 | |||
Derivative liabilities | 0 | 0 | |
Level 3 | |||
Derivative liabilities | $ 0 | $ 270,581 |
NOTE 2 - ACCOUNTING POLICIES 26
NOTE 2 - ACCOUNTING POLICIES AND OPERATIONS (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Accounting Policies [Abstract] | ||
Revenue | $ 0 | $ 0 |
Advertising costs | $ 0 | $ 0 |
NOTE 3 - CAPITAL STOCK (Details
NOTE 3 - CAPITAL STOCK (Details Narrative) | 12 Months Ended |
Dec. 31, 2017USD ($)shares | |
Stockholders' Equity Note [Abstract] | |
Principal and the related interest outstanding | $ 39,644 |
Shares converted | shares | 1,201,344 |
Cash settlement of liabilities | $ 534,585 |
NOTE 4 - RELATED PARTY TRANSA28
NOTE 4 - RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Related Party Transactions [Abstract] | ||
Shares issued to directors and employees, Shares | 625,000,000 | 6,291,667 |
Shares issued to directors and employees, Amount | $ 5,816,861 | $ 377,500 |
Advances from related parties | 268,311 | |
Accounts payable, related parties | 734,246 | 615,163 |
Due to related parties | $ 667,239 | $ 306,664 |
NOTE 5 - EQUIPMENT (Details)
NOTE 5 - EQUIPMENT (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Equipment, gross | $ 0 | $ 483,554 |
Less accumulated depreciation | 0 | (379,536) |
Less impairment | 0 | (104,018) |
Equipment, net | 0 | 0 |
Computer equipment under capital lease | ||
Equipment, gross | 0 | 223,683 |
Nexus computer equipment under capital lease | ||
Equipment, gross | 0 | 420,023 |
Computer equipment | ||
Equipment, gross | 0 | 50,724 |
Computer software | ||
Equipment, gross | 0 | 37,210 |
Hardware & Installation | ||
Equipment, gross | 0 | 10,128 |
Office furniture and equipment | ||
Equipment, gross | 0 | 27,739 |
Leasehold improvement | ||
Equipment, gross | 0 | 55,072 |
Medical Equipment | ||
Equipment, gross | 0 | 13,274 |
Clinical Command Center | ||
Equipment, gross | 0 | 15,790 |
Infrastructure | ||
Equipment, gross | $ 0 | $ 7,911 |
NOTE 5 - EQUIPMENT (Details Nar
NOTE 5 - EQUIPMENT (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 0 | $ 31,533 |
Impairment on fixed assets | $ 0 | $ 104,018 |
NOTE 6 - CONVERTIBLE PROMISSO31
NOTE 6 - CONVERTIBLE PROMISSORY NOTES AND DERIVATIVE LIABILITIES (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Debt Disclosure [Abstract] | ||
Convertible notes, beginning | $ 324,586 | $ 229,377 |
Interest and penalties | 45,909 | 103,502 |
Converted into shares | (39,644) | (128,928) |
Settled by FE Pharmacy Inc. in cash | (332,000) | 0 |
Amortization of debt discount | 8,872 | 120,635 |
Gain on settlement | (7,723) | 0 |
Convertible notes, ending | 0 | 324,586 |
Convertible notes, short term | 0 | (324,586) |
Convertible notes, long term | $ 0 | $ 0 |
NOTE 6 - CONVERTIBLE PROMISSO32
NOTE 6 - CONVERTIBLE PROMISSORY NOTES AND DERIVATIVE LIABILITIES (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Debt Disclosure [Abstract] | ||
Derivative liabilities, beginning | $ 270,581 | $ 210,834 |
Elimination associated with conversion of promissory notes | (21,310) | (88,223) |
Change in fair value loss (gain) | (249,271) | 147,970 |
Derivative liabilities, ending | $ 0 | $ 270,581 |
NOTE 6 - CONVERTIBLE PROMISSO33
NOTE 6 - CONVERTIBLE PROMISSORY NOTES AND DERIVATIVE LIABILITIES (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Debt Disclosure [Abstract] | |||
Derivative liabilities | $ 0 | $ 270,581 | $ 210,834 |
Change in fair value loss (gain) | (249,271) | 147,970 | |
Amortization of debt discount | 8,872 | 120,635 | |
Interest and Penalties | 45,909 | 103,502 | |
Interest and financing costs | (168,885) | (323,944) | |
Settled by FE Pharmacy Inc. in cash | (332,000) | 0 | |
Gain on settlement | $ (7,723) | $ 0 |
NOTE 7 - CONVERTIBLE LOANS PA34
NOTE 7 - CONVERTIBLE LOANS PAYABLE (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Convertible loans payable | $ 949,766 | $ 806,673 |
Convertible promissory notes bearing interest at 15% per annum third party | ||
Convertible loans payable | 215,520 | 191,510 |
Convertible promissory notes bearing interest at 15% per annum related parties | ||
Convertible loans payable | $ 734,246 | $ 615,163 |
NOTE 7 - CONVERTIBLE LOANS PA35
NOTE 7 - CONVERTIBLE LOANS PAYABLE (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Debt Disclosure [Abstract] | ||
Proceeds from convertible loans payable | $ 0 | $ 323,667 |
Convertible loans payable | 949,766 | 806,673 |
Intetest expense on convertible loans payable | 112,125 | |
Interest and financing costs | $ (168,885) | $ (323,944) |
NOTE 8 - SHORT TERM LOANS PAY36
NOTE 8 - SHORT TERM LOANS PAYABLE (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Short term loans payable | $ 17,827 | $ 16,215 |
Non-interest bearing short term funding from third parties | ||
Short term loans payable | $ 17,827 | $ 16,215 |
NOTE 7 - SHORT TERM LOANS PAYAB
NOTE 7 - SHORT TERM LOANS PAYABLE (Details Narrative) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Short-term Debt, Other Disclosures [Abstract] | ||
Short term loans payable | $ 17,827 | $ 16,215 |
NOTE 9 - INCOME TAXES (Details)
NOTE 9 - INCOME TAXES (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | ||
Net loss for the year | $ (7,031,975) | $ (2,999,110) |
Effective statutory rate | 34.00% | 34.00% |
Expected tax recovery | $ (2,390,871) | $ (1,019,697) |
Net effects of non deductible and allowable items | 2,115,233 | 254,917 |
Change in valuation allowance | 275,638 | 764,780 |
Income tax expense | $ 0 | $ 0 |
NOTE 9 - INCOME TAXES (Details
NOTE 9 - INCOME TAXES (Details 1) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Income Tax Disclosure [Abstract] | ||
Net operating loss carry forward | $ 3,602,486 | $ 5,525,126 |
Equipment | 56,559 | 138,154 |
Valuation allowance | (3,668,155) | (5,663,280) |
Deferred tax assets, net of valuation allowance | $ 0 | $ 0 |
NOTE 9 - INCOME TAXES (Detail40
NOTE 9 - INCOME TAXES (Details Narrative) | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Income Tax Disclosure [Abstract] | |
Net operating loss carry forwards | $ 17,155,000 |
Net operating loss carry forwards expiration | Dec. 31, 2021 |