Financial Performance - Revenues for the year ended December 31, 2021, were $7,425,707, a decrease of 33% from $11,149,130 in 2020[41] - Gross profit for 2021 was $3,196,492, down 33% from $4,792,678 in 2020[41] - The net loss for 2021 was $(2,758,567), compared to a loss of $(1,307,890) in 2020[41] - The gross profit margin for 2021 remained strong at 43%, despite a 2% increase in operating expenses over 2020[113] - Total operational expenses increased by 8% to $6,254,981 in 2021, up from $5,768,476 in 2020[193] - The Company recorded a significant loss of ($1,130,973) for the quarter ended December 31, 2021, compared to a profit of $1,283,295 for the quarter ended March 31, 2020[84] - The Company reported a net income growth to $3,334,043 ($0.07 per share) against revenues of $20,550,682 for the year ended December 31, 2019, compared to a net income of $194,453 against revenues of $12,716,596 for the year ended December 31, 2018[87] Assets and Equity - As of December 31, 2021, total assets were $13,728,510, an increase from $12,016,515 in 2020[43] - Shareholders' equity increased to $12,055,113 as of December 31, 2021, from $10,960,923 in 2020[43] - The Company’s working capital improved to $8,670,165 in 2021, compared to $6,251,893 in 2020[184] - Cash reserves increased to $3,377,464 in 2021, up from $1,049,049 in 2020[184] - The Company had no income tax payable as of December 31, 2021, down from $91,566 in 2020[218] Capital and Funding - The company completed a private placement in March 2021, issuing 7,000,000 units at CAD$0.91 per unit to secure additional capital[57] - The Company recorded a gain of $658,626 on the revaluation of derivative warrant liability due to a private placement conducted in Canadian dollars[113] Research and Development - The company is engaged in R&D activities focused on new products for rail/road tank cars and wilderness automotive suspension technology, with uncertain returns on investment[55] - Research, design, testing, and qualification costs for new products amounted to $1,697,497 in 2021, compared to $1,391,712 in 2020, primarily related to the KXI Suspension System[195] - The Company is focusing on developing new business opportunities and products to mitigate the cyclical nature of the rail tank car market[195] - The KXI Suspension System aims to produce a market-ready heavy-duty vehicle prototype by late 2022, with pilot production and sales targeted for 2022/2023[161] Market and Customer Dependency - The company is dependent on three major customers for a significant portion of its revenue, which poses a risk to its financial stability[64] - The Company has multiple suppliers in the U.S. and Canada for component parts, but risks facing shortages could negatively impact revenues and operations[66] - The Company’s production capacity may not be sufficient to meet growing market demand, which could hinder customer retention and revenue generation[67] - The pressure tank car market, which includes approximately 85,000 tank cars, represents a significant opportunity for the company to expand its product footprint with the K2AV[101][116] - The company anticipates new tank car demand to grow to 11,300 in 2022 and 15,125 in 2023, driven by an upswing in new-build and retrofit activity[129] Management and Personnel - The Company’s future success heavily relies on the continued efforts of senior executives, with potential disruptions if key personnel leave[72] - Management compensation for 2021 was $720,923, an increase from $670,269 in 2020, with no performance bonuses accrued for 2021[196] - James R. Bond serves as President and CEO, also a director at Bondwest Enterprises Inc. and SIQ Mountain Industries Inc.[232] - Richard Lee has been the CFO since April 8, 2010, and also holds CFO positions at SIQ Mountain Industries Inc. and Happy Creek Minerals Inc.[232] - Peter Hughes is a director and CEO of multiple companies, including SIQ Mountain Industries Inc. and Gourmet Ocean Products Inc.[232] - Anthony Andrukaitis is an independent business consultant and serves as Executive Vice President and COO.[232] - Paul Cass is a self-employed businessman and serves as Chair of the Audit Committee and a member of the Compensation Committee.[232] Risk Factors - The Company’s raw materials are subject to price fluctuations, which could adversely affect profitability and operating results[71] - The Company maintains commercial general liability insurance for claims up to $4,000,000 in aggregate and $1,000,000 per incident, but risks remain regarding sufficiency of coverage for future product claims[69][70] - The Company is focused on mitigating the impacts of the COVID-19 pandemic and preparing for post-pandemic normalization to support future business growth[128] - The Company is revising its R&D objectives due to ongoing uncertainties from the COVID-19 pandemic, delaying light-duty truck production plans[134]
Kelso(KIQ) - 2021 Q4 - Annual Report