Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2018 | Nov. 01, 2018 | |
Document And Entity Information | ||
Entity Registrant Name | Kallo Inc. | |
Entity Central Index Key | 1,389,034 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | true | |
Entity Common Stock, Shares Outstanding | 1,135,699,249 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,018 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Current Assets: | ||
Prepaid expenses | $ 3,000 | $ 4,000 |
Total Current Assets | 3,000 | 4,000 |
TOTAL ASSETS | 3,000 | 4,000 |
Current Liabilities: | ||
Accounts payable and accrued liabilities | 3,320,387 | 3,362,802 |
Convertible loans payable - third parties | 227,842 | 215,520 |
Short term loans payable | 17,006 | 17,827 |
Convertible loans payable - related parties | 777,112 | 734,246 |
Total Current Liabilities | 4,342,347 | 4,330,395 |
TOTAL LIABILITIES | 4,342,347 | 4,330,395 |
Commitments and Contingencies (Note 7) | ||
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 1,135,699,249 shares issued and outstanding, respectively. | 11,357 | 11,357 |
Additional paid-in capital | 41,435,879 | 41,435,879 |
Assignment of liabilities | (3,462,545) | (3,600,452) |
Accumulated deficit | (42,324,988) | (42,174,129) |
Total Stockholders' Deficiency | (4,339,347) | (4,326,395) |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY | $ 3,000 | $ 4,000 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.00001 | $ 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 | $ 0.00001 | $ 0.00001 |
Common stock, authorized | 1,150,000,000 | 1,150,000,000 |
Common stock, issued | 1,135,699,249 | 1,135,699,249 |
Common Stock, outstanding | 1,135,699,249 | 1,135,699,249 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Operating Expenses | ||||
General and administration | $ 121,909 | $ 5,423,306 | $ 244,729 | $ 5,650,079 |
Selling and marketing | 4 | 2,437 | 4 | 2,940 |
Operating loss | (121,913) | (5,425,743) | (244,733) | (5,653,019) |
Interest and financing costs | (27,746) | (53,623) | (55,188) | (112,016) |
Change in fair value on derivative liabilities | 0 | (6,347) | 0 | (3,012) |
Gain on extinguishment of derivative liability | 0 | 227,196 | 0 | 227,196 |
Foreign exchange (loss) gain | 65,128 | (89,507) | 149,062 | (118,958) |
Net Loss | $ (84,531) | $ (5,348,024) | $ (150,859) | $ (5,659,809) |
Basic and diluted net loss per share | $ 0 | $ 0 | $ 0 | $ 0 |
Weighted average shares used in calculating basic and diluted net loss per share | 1,135,699,249 | 9,410,988,514 | 1,135,699,249 | 8,971,813,510 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net Loss | $ (150,859) | $ (5,659,809) |
Adjustment to reconcile net loss to cash used in operating activities: | ||
Stock based compensation | 0 | 5,318,964 |
Change in fair value on derivative liabilities | 0 | 3,012 |
Gain on extinguishment of derivative liability | 0 | (227,196) |
Interest and penalties | 55,188 | 101,164 |
Deferred lease inducement | 0 | (1,260) |
Amortization of debt discount | 0 | 8,872 |
Unrealized foreign exchange (gain) loss | (150,810) | 29,764 |
Changes in operating assets and liabilities: | ||
(Increase) decrease in prepaid expenses | 1,000 | 21,263 |
Increase (decrease) in accounts payable and accrued liabilities | 245,481 | 404,965 |
NET CASH USED IN OPERATING ACTIVITIES | 0 | (261) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from short term loans payable | 0 | 472 |
Decrease in bank indebtedness | 0 | (211) |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 0 | 261 |
NET (DECREASE) INCREASE IN CASH | 0 | 0 |
CASH - BEGINNING OF PERIOD | 0 | 0 |
CASH - END OF PERIOD | 0 | 0 |
SUPPLEMENTAL CASH FLOW INFORMATION | ||
Income tax paid | 0 | 0 |
Interest paid | 0 | 0 |
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES | ||
Conversion of promissory notes into common shares | 0 | 60,954 |
Convertible loan payable for expenses paid directly by lender | 0 | 27,151 |
Stock issued to related party for current and future settlement of accounts payable and convertible debts | 0 | 4,135,037 |
Settlement of accounts payable by FE Pharmacy, Inc. | $ 137,907 | $ 328,091 |
NOTE 1 - BUSINESS AND GOING CON
NOTE 1 - BUSINESS AND GOING CONCERN | 6 Months Ended |
Jun. 30, 2018 | |
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 unaudited 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 June 30, 2018. 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 short term loans. In order to not burden the Company, the officer/stockholder has 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. These 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 | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
ACCOUNTING POLICIES AND OPERATIONS | Basis of Presentation The accompanying unaudited consolidated financial statements of the Company have been prepared in conformity with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 8-03 of Regulation S-X related to smaller reporting companies. These unaudited consolidated financial statements should be read in conjunction with the annual audited consolidated financial statements and notes, which are included as part of the Company's Form 10-K filed with the SEC for the year ended December 31, 2017. Operating results for the periods presented are not necessarily indicative of the results that may be expected for the full year. Notes to the financial statements which substantially duplicate the disclosure contained in the audited consolidated financial statements for fiscal year ended December 31, 2017 as reported in the 10-K have been omitted. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, considered necessary for a fair presentation, have been included in the accompanying unaudited consolidated financial statements. 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 applied the amendment retrospectively with the cumulative effect of initially applying this update recognized at the date of initial application but it did not have a material impact on the consolidated financial statements as there were insignificant revenues in the past. |
NOTE 3 - COMMON STOCK
NOTE 3 - COMMON STOCK | 6 Months Ended |
Jun. 30, 2018 | |
Stockholders' Equity Note [Abstract] | |
COMMON STOCK | During the six months ended June 30, 2018, there were no movements in share capital issued and outstanding. 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 decreased 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. The common share and per common share data in these financial statements and related notes hereto have been retroactively adjusted to account for the effect of the reverse stock split for all periods presented. 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. 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 six months ended June 30, 2018, the assignment of liabilities amount has been reduced by $137,907 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 16,000,000 post reverse stock split common stock valued at $139,285 to a consultant as compensation for services rendered and for nominal cash. Because FINRA had not yet approved the reverse stock split at that time, the 611,000,000 shares issued during the quarter ended June 30, 2017 were reduced to 1,018,333 when the reverse stock split became effective and 609,981,667 additional post reverse stock split shares were issued to make them whole again. During the six months ended June 30, 2017, the holders of promissory notes converted the principal and the related interest outstanding of $39,644 into 720,806,182 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. |
NOTE 4 - RELATED PARTY TRANSACT
NOTE 4 - RELATED PARTY TRANSACTIONS | 6 Months Ended |
Jun. 30, 2018 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | Included in accounts payable and accrued liabilities is an amount of $786,182 (December 31, 2017 - $667,239) due to directors of the Company as of June 30, 2018. |
NOTE 5 - CONVERTIBLE LOANS PAYA
NOTE 5 - CONVERTIBLE LOANS PAYABLE | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
CONVERTIBLE LOANS PAYABLE | June 30, 2018 December 31, 2017 Convertible promissory notes bearing interest at 15% per annum – third party $ 227,842 $ 215,520 Convertible promissory notes bearing interest at 15% per annum – related parties 777,112 734,246 $ 1,004,954 $ 949,766 The Convertible loans payable bear 15% interest per annum and are convertible at a fixed price at any time during their 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 this debt offering is $1,004,954, including accrued interest, of which $777,112 is to from related parties. Interest of $55,188 on the convertible loans payable are included in net finance charge for the six months ended June 30, 2018 included in the consolidated statement of operations. All of the above convertible loans payable were in default as of June 30, 2018. |
NOTE 6 - SHORT TERM LOANS PAYAB
NOTE 6 - SHORT TERM LOANS PAYABLE | 6 Months Ended |
Jun. 30, 2018 | |
Short-term Debt, Other Disclosures [Abstract] | |
SHORT TERM LOANS PAYABLE | June 30, 2018 December 31, 2017 Non-interest bearing short term funding from third parties $ 17,006 $ 17,827 $ 17,006 $ 17,827 As of June 30, 2018, the balance of $17,006 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 $22,016 which is subject to revaluation at the end of each quarter. |
NOTE 7 - COMMITMENTS AND CONTIN
NOTE 7 - COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | 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 $255,400 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 8 - SUBSEQUENT EVENTS
NOTE 8 - SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2018 | |
Note 8 - Subsequent Events | |
SUBSEQUENT EVENTS | After June 30, 2018, accounts payable for a total of $39,059 were settled in cash by FE Pharmacy Inc. under the agreement mentioned in Note 3. |
NOTE 2 - ACCOUNTING POLICIES _2
NOTE 2 - ACCOUNTING POLICIES AND OPERATIONS (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
Note 2 - Accounting Policies And Operations | |
Basis of Presentation | The accompanying unaudited consolidated financial statements of the Company have been prepared in conformity with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 8-03 of Regulation S-X related to smaller reporting companies. These unaudited consolidated financial statements should be read in conjunction with the annual audited consolidated financial statements and notes, which are included as part of the Company's Form 10-K filed with the SEC for the year ended December 31, 2017. Operating results for the periods presented are not necessarily indicative of the results that may be expected for the full year. Notes to the financial statements which substantially duplicate the disclosure contained in the audited consolidated financial statements for fiscal year ended December 31, 2017 as reported in the 10-K have been omitted. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, considered necessary for a fair presentation, have been included in the accompanying unaudited consolidated financial statements. |
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 applied the amendment retrospectively with the cumulative effect of initially applying this update recognized at the date of initial application but it did not have a material impact on the consolidated financial statements as there were insignificant revenues in the past. |
NOTE 5 - CONVERTIBLE LOANS PA_2
NOTE 5 - CONVERTIBLE LOANS PAYABLE (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Summary of convertible loans payable | June 30, 2018 December 31, 2017 Convertible promissory notes bearing interest at 15% per annum – third party $ 227,842 $ 215,520 Convertible promissory notes bearing interest at 15% per annum – related parties 777,112 734,246 $ 1,004,954 $ 949,766 |
NOTE 6 - SHORT TERM LOANS PAY_2
NOTE 6 - SHORT TERM LOANS PAYABLE (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Short-term Debt, Other Disclosures [Abstract] | |
Summary of short term loans payable | June 30, 2018 December 31, 2017 Non-interest bearing short term funding from third parties $ 17,006 $ 17,827 $ 17,006 $ 17,827 |
NOTE 4 - RELATED PARTY TRANSA_2
NOTE 4 - RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Note 4 - Related Party Transactions | ||
Due to directors | $ 786,182 | $ 667,239 |
NOTE 5 - CONVERTIBLE LOANS PA_3
NOTE 5 - CONVERTIBLE LOANS PAYABLE (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Convertible loans payable | $ 1,004,954 | $ 949,766 |
Convertible promissory notes bearing interest at 15% per annum - third party | ||
Convertible loans payable | 227,842 | 215,520 |
Convertible promissory notes bearing interest at 15% per annum - related parties | ||
Convertible loans payable | $ 777,112 | $ 734,246 |
NOTE 5 - CONVERTIBLE LOANS PA_4
NOTE 5 - CONVERTIBLE LOANS PAYABLE (Details Narrative) - USD ($) | 6 Months Ended | |
Jun. 30, 2018 | Dec. 31, 2017 | |
Debt Disclosure [Abstract] | ||
Convertible loans payable | $ 1,004,954 | $ 949,766 |
Interest expense on convertible loans payable | $ 55,188 |
NOTE 6 - SHORT TERM LOANS PAY_3
NOTE 6 - SHORT TERM LOANS PAYABLE (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Short term loans payable | $ 17,006 | $ 17,827 |
Non-interest bearing short term funding from third parties | ||
Short term loans payable | $ 17,006 | $ 17,827 |
NOTE 6 - SHORT TERM LOANS PAY_4
NOTE 6 - SHORT TERM LOANS PAYABLE (Details Narrative) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Short-term Debt, Other Disclosures [Abstract] | ||
Short term loans payable | $ 17,006 | $ 17,827 |
NOTE 7 - COMMITMENTS AND CONT_2
NOTE 7 - COMMITMENTS AND CONTINGENCIES (Details Narrative) | Jun. 30, 2018USD ($) |
Note 7 - Commitments And Contingencies | |
Total remaining commitment with suppliers | $ 2,773,737 |