A Supply Contract Sends Kallo Inc (OTCMKTS:KALO) Through the Roof
On December 9, 2013, about three hours before the start of the trading session, a press release appeared on Kallo Inc (OTCMKTS:KALO)’s profile at Yahoo! Finance. In it, we read that the Republic of Guinea intents to implement a unique healthcare delivery system. The country’s Minister of Health and Public Hygiene announced that the project will start during the first quarter of 2014 and that it will use KALO‘s revolutionary mobile healthcare system.
Despite the massively optimistic news, nobody seemed all that interested. KALO‘s stock remained virtually stationary and the dollar volume stood at less than $1,000. Having done a bit of research, we can see why investors seemed reluctant to place too much faith in the ticker.
The 10-Q that covers the third quarter of 2012, for example, states that KALO‘s management team “expect to see sales revenues from Kallo’s Mobile Care business unit in the next twelve (12) months“.
Twelve months later, the report for the corresponding period of 2013 revealed that their expectations have been a touch optimistic. As of September 30, the company had absolutely no revenues coming from its healthcare solutions while the balance sheet looked dismal. Here’s a quick rundown of the numbers as found in the 10-Q:
- cash: $9 thousand
- current assets: $200 thousand
- current liabilities: $1.6 million
- no revenue
- net loss: $298 thousand
You can see that there’s plenty of things to keep investors away from the stock and perhaps that’s why, throughout the next month and a half, KALO remained virtually dormant.
Yesterday, however, everything changed. Three hours before the opening bell, an 8-K form was published and it announced that a supply agreement with Guinea’s Ministry of Health and Public Hygiene has been signed. The contract is worth $200 million and as part of it, KALO will use all of the solutions it has developed to come up with a unique healthcare delivery program for the West African country and its population.
The trading that ensued was absolutely frantic. The ticker opened the session at $0.035, hesitated for about half an hour, but then, it really put its foot down. At one point, it hit an intraday high of a whopping $0.449 but then settled to more manageable levels and finished the day at $0.28 per share.
Sounds like the typical zero-to-hero story, but are things really so simple?
Well, we’ve seen other penny stocks announce developments that are just as positive as this one. Back in July 2013, for example, Bayside Corp (OTCMKTS:BYSD) said that they have received an order which should yield billions of dollars in annual revenues. It’s clear that things haven’t quite worked out since, as we wrote a couple of days ago, they have now turned their attention to bitcoins.
Of course, this doesn’t mean that KALO are going to fail catastrophically, but having all the dangers in mind might not be a bad call.
In any case, we reckon that a company that is on the verge of making millions of dollars shouldn’t be using virtual solutions for both their Canadian headquarters, and their US office.
