Financial Performance - Revenues for the year ended December 31, 2022, were $10,931,188, an increase of 47.5% compared to $7,425,707 in 2021[38]. - Gross profit for 2022 was $4,908,996, up from $3,196,492 in 2021, reflecting a gross margin improvement[38]. - The net loss for 2022 was $(1,355,417), a reduction in loss compared to $(2,758,567) in 2021[38]. - The Company's unaudited revenues over the last eight quarters ranged from $1,220,487 to $2,963,851, with the latest quarter ending December 31, 2022, reporting $2,389,477[77]. - The Company's unaudited net income (loss) over the last eight quarters showed consistent losses, with the latest quarter ending December 31, 2022, reporting a loss of $(420,316)[78]. - The Company reported a net loss of $1,355,417 ($0.02 per share) for 2022, an improvement from a net loss of $2,758,567 ($0.05 per share) in 2021[200]. - Total operational expenses decreased by 2% to $6,126,992 in 2022, compared to $6,254,981 in 2021, aligning with management's strategic plans[202]. Assets and Equity - As of December 31, 2022, total assets were $12,147,143, down from $13,728,510 in 2021[38]. - Shareholders' equity decreased to $10,781,672 in 2022 from $12,055,113 in 2021[38]. - The Company's working capital was $7,000,568 as of December 31, 2022, which includes $4,144,196 in inventories for future deliveries[134]. - Cash reserves at the end of 2022 were $2,712,446, a decrease from $3,377,464 in 2021, while working capital was $7,000,568[193]. - The Company's working capital position decreased to $7,000,568 as of December 31, 2022, from $8,670,165 as of December 31, 2021, a decline of about 19.2%[227]. - Net assets decreased to $10,781,672 as of December 31, 2022, from $12,055,113 as of December 31, 2021, indicating a reduction of approximately 10.6%[228]. - The Company had no interest-bearing long-term liabilities or debt as of December 31, 2022, consistent with the previous year[228]. Working Capital and Funding - The company has a positive working capital of $7,000,568 as of December 31, 2022, but may face working capital deficits in the future[50]. - The Company plans to generate necessary capital resources through product sales, but faces risks if unable to do so[223]. - The Company has previously raised funds through private placements and the exercise of options, but future success is not guaranteed[225]. - The working capital position in 2021 was bolstered by a private equity placement of 7,000,000 units at CAD $0.91 per unit[227]. Research and Development - The company is engaged in R&D for new products, focusing on rail/road tank cars and automotive suspension technology, with uncertain returns on investment[49]. - The Company has obtained patents for key products, but faces risks related to intellectual property and regulatory qualifications[45][47]. - Research and development costs for new products, including the KXI Suspension System, were $1,068,708 in 2022, down from $1,697,497 in 2021[204]. - The Company has engaged automotive engineers to shift R&D focus towards heavy-duty vehicle platforms, representing a larger commercial market opportunity[163]. Market and Operational Risks - The impact of COVID-19 continues to be monitored, with potential risks to operations and revenue generation in 2023[43]. - There is a risk of parts and raw materials shortages, which could negatively impact business development and revenues[60]. - The Company may face production capacity constraints if market demand exceeds projections, potentially affecting customer retention and revenue generation[61]. - Management acknowledges potential risks that could impact future performance, including product development delays and market adoption challenges[224]. Customer Dependency and Sales - The Company is dependent on three major OEM customers, which represent a significant portion of its revenue, and the loss of any of these customers could materially impact operations[58]. - In 2022, the Company experienced a 47% increase in sales compared to 2021, with total OEM production output of 9,812 rail tank cars, of which the Company provided 4,609 valves (47%) for new tank car production[99]. - The Company provided 4,609 valves (47%) for new tank car production and 2,445 valves for retrofit and repair activity in 2022[152]. - New tank car demand is projected to reach 10,650 tank cars in 2023, with significant retrofits planned for 135,000 tank cars delivered between 2012 and 2017[156]. Product Development and Innovations - The K2AV, a new 2" angle valve, is expected to generate multi-million-dollar revenues as it is specified by oil refiners for use in approximately 85,000 pressure tank cars[102][103]. - The KXI HD prototype vehicle is anticipated to be completed in 2023, utilizing advanced hydraulic mechatronic technologies and proprietary software for enhanced performance in wilderness applications[109][112]. - The KXI HD project aims to create a new suspension control technology to improve vehicle performance in challenging environments, with initial testing expected to begin in 2023[108][117]. - The Company has received approvals for new products, including the KTBV and K2AV valves, which are currently undergoing commercial field service trials[85][86]. - The Company aims to diversify its business risks by accessing non-rail markets to mitigate the impacts of cyclical downturns in the rail industry[137]. - The KXI HD technology aims to improve traction and balance, reducing ecological impact and fuel consumption during operations[166]. Insurance and Liability - The Company maintains commercial general liability insurance for claims up to $4,000,000 in aggregate and $1,000,000 per incident, but there is a risk that coverage may not be sufficient for future claims[63]. Workforce and Management - The Company employs 38 individuals as of December 31, 2022, down from 45 in the previous year, with a focus on retaining skilled personnel in production and management[179]. - Management continues to focus on cost-cutting measures and improving operational efficiency to support future growth initiatives[195].

Financial Performance - Revenues for the year ended December 31, 2022, were $10,931,188, a 47% increase from $7,425,707 in 2021[11] - Gross profit for 2022 was $4,908,996, with a gross profit margin of 45%, up from 43% in 2021[11] - The net loss for 2022 was $1,355,417, an improvement from a net loss of $2,758,567 in 2021[11] - Adjusted EBITDA for 2022 was a loss of $83,575, compared to a loss of $1,436,435 in 2021[11] - Sales performance for the year ended December 31, 2022 improved by 47% compared to the previous year, indicating a recovery in business prospects[58] - The Company reported a net loss of $1,355,417 ($0.02 per share) on revenues of $10,931,188, an improvement from a net loss of $2,758,567 ($0.05 per share) on revenues of $7,425,707 in 2021[61] - Adjusted EBITDA loss for 2022 was $83,575, significantly improved from a loss of $1,436,435 in 2021[65] - Basic and diluted loss per share improved to $0.02 in 2022 from $0.05 in 2021[156] Assets and Liabilities - The total assets as of December 31, 2022, were $12,147,143, down from $13,728,510 in 2021[11] - The Company had cash on deposit of $2,712,446 and working capital of $7,000,568 as of December 31, 2022, compared to $3,377,464 and $8,670,165 respectively in 2021[76][77] - The company’s total liabilities decreased to $1,365,471 in 2022 from $1,673,397 in 2021, a reduction of 18.4%[154] - Cash reserves decreased to $2,712,446 in 2022 from $3,377,464 in 2021, while working capital also declined to $7,000,568 from $8,670,165[81] Operational Highlights - The company has active service field trials for new rail tank car products, including a ceramic ball bottom outlet valve, which are pending AAR approval[21] - The KXI™ Wildertec™ Suspension System is under development to enhance commercial wilderness transportation capabilities[24] - The KXI HD prototype vehicle was completed in late 2022 and is undergoing extensive testing to ensure compliance with Canadian Motor Vehicle Safety Standards (CMVSS) and Federal Motor Vehicle Safety Standards (FMVSS)[29][50] - The anticipated new tank car demand is projected to reach 10,650 units in 2023, alongside significant retrofits for 135,000 tank cars delivered between 2012 and 2017[37] - The company plans to initiate pilot production and sales of the KXI HD in late 2023, following successful compliance testing[30][53] - The company operates two production and R&D facilities totaling 50,000 square feet in Bonham, Texas, and a new facility in West Kelowna, British Columbia, for KXI HD development[52][53] Market and Customer Dependency - The company aims to diversify its market presence beyond rail to mitigate risks associated with reliance on a small number of customers[23] - The Company is dependent on three major customers for a significant portion of its revenue, with no formal long-term agreements in place, posing a risk to revenue stability[117] - The company generated over $137 million in revenues since 2012 from the distribution of more than 89,000 valves, with 9,812 rail tank cars produced in 2022[33] - The Company’s market share in new tank car production is approximately 47%, bolstered by its reputation for reliability during supply chain disruptions[132] Research and Development - The company is engaged in R&D activities focused on new products for rail/road tank cars and automotive suspension technology, with uncertain returns on investment[107] - The company has obtained patents for key products, including external constant force spring pressure relief valves, which are crucial for future product development[105] - The Company’s R&D investments are aimed at developing new products for the rail and automotive industries, with ongoing projects expected to enhance future financial success[134] Challenges and Risks - Management anticipates potential challenges in 2023 due to slow economic rail activity, hyperinflation, and supply chain concerns, despite a cautiously optimistic outlook from OEMs and tank car owners[78] - The Company’s ability to meet production schedules may be impacted by potential shortages of parts and raw materials, which could adversely affect business development plans[119] - The company has been impacted by COVID-19, which has caused material disruption to business globally, affecting financial results[159] Financial Management - Kelso's financial performance reflects its ability to manage capital resources effectively and navigate improved market conditions post-COVID-19[59] - The Company maintains a debt-free financial position, allowing it to execute strategic business plans for 2023[95] - The company recognizes variable lease payments not dependent on an index or rate as an expense in the period incurred[199]

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]

Form 52-109F1 Certification of Annual Filings Full Certificate I, James R. Bond, President and Chief Executive Officer of Kelso Technologies Inc., certify the following: 1. Review: I have reviewed the AIF, if any, annual financial statements and annual MD&A, including, for greater certainty, all documents and information that are incorporated by reference in the AIF (together, the "annual filings") of Kelso Technologies Inc. (the "issuer") for the financial year ended December 31, 2021. 2. No misrepresentat ...

Financial Performance - Revenues for the year ended December 31, 2020, were $11,149,130, a decrease of 45.1% compared to $20,550,682 in 2019[37] - Gross profit for 2020 was $4,792,678, down 50.0% from $9,582,879 in 2019[37] - The company reported a net loss of $1,307,890 for 2020, compared to a net income of $3,334,043 in 2019[37] - The Company reported unaudited revenues of $1,394,958 for the quarter ended December 31, 2020, and $5,643,428 for the quarter ended March 31, 2020, showing a significant decline in revenue over the quarters[78] - The Company's net income (loss) for the quarter ended December 31, 2020 was ($1,655,230), compared to a net income of $1,283,295 for the quarter ended March 31, 2020, indicating a substantial decrease in profitability[79] - The Company experienced a 46% decline in sales activity in 2020 compared to the previous year, with revenues of $11,149,130[105] - Gross profit margin decreased to 43% in 2020 from 47% in 2019, with gross profit of $4,792,678 compared to $9,582,879 in the previous year[166][174] - Total operational expenses were reduced by 5% to $5,768,476 in 2020 from $6,087,357 in 2019, aligning with management's COVID-19 revised strategic plans[166][175] Assets and Capital - As of December 31, 2020, total assets were $12,016,515, a decrease from $13,731,571 in 2019[37] - The Company had a positive working capital of $6,251,893 as of December 31, 2020[50] - The Company's working capital was $6,251,893 as of December 31, 2020, with available cash reserves becoming depleted[107] - Cash reserves decreased to $1,049,049 in 2020 from $4,418,236 in 2019, necessitating a private placement for capital influx post-2020[166][170] - The working capital position decreased to $6,251,893 as of December 31, 2020, down 21.2% from $7,937,873 at December 31, 2019[200] - The net assets of the Company declined to $10,960,923 as of December 31, 2020, down from $11,845,275 as of December 31, 2019[201] Customer Dependency and Market Risks - The company is dependent on three major customers for a significant portion of its revenue, which poses a risk to its financial stability[58] - The company faces risks related to the COVID-19 pandemic, which may negatively impact its operating plans and revenue generation[43] - The Company has faced challenges in production capacity, which may not be sufficient to meet growing market demand, potentially impacting revenue generation[61] - The Company aims to diversify its product offerings to mitigate risks associated with the cyclical nature of the rail industry[124] Product Development and Innovation - The company has obtained patents for key products, including external constant force spring pressure relief valves, which are crucial for protecting its intellectual property[45] - The Company is developing a proprietary vehicle suspension system aimed at improving rapid response capabilities in wilderness areas, addressing public safety concerns[91][94] - The Company’s core products include pressure relief valves and vacuum relief valves, which are essential for the safe handling of hazardous materials during transport[77] - The Company invested $1,391,712 in industrial product design and development costs in 2020, up from $1,129,007 in 2019, focusing on the KXI Suspension System[177] - The KXI Suspension System project has shifted focus to the Heavy-Duty truck market for 2021 and 2022 due to delays caused by the COVID-19 pandemic[126] - The Company has active field trials for new products, including a standard profile ceramic ball bottom outlet valve and a pressure car angle valve, which are awaiting AAR approvals[123] Regulatory Compliance and Certifications - The company must comply with specific regulatory standards, such as those set by the Association of American Railroads, to ensure its products can be utilized in the market[47] - The Company received its M-1003 certification from the AAR on January 15, 2019, which is valid until January 15, 2022, enhancing its credibility in the market[89] Equity and Financing - A private placement was completed post-December 31, 2020, issuing 7,000,000 units at CAD$0.91 per unit to secure additional capital[51] - The Company secured new equity capital of CAD $6,370,000 to support ongoing business operations[110] - The Company completed a private placement on March 4, 2021, raising gross proceeds of CAD$6,370,000 to support ongoing operations[200] Management and Governance - The Company’s management team includes individuals with significant experience in corporate finance and investment strategies, contributing to its long-term portfolio management[221] - The Company has established a focus on market and business development, particularly in environmental projects and new product launches[225] - The Company’s directors have diverse backgrounds, including expertise in finance, law, and engineering, enhancing the board's strategic capabilities[227] - The Company is committed to maintaining a structured compensation framework for its executives, including stock option grants and performance-based bonuses[228][230] - The Company has a severance clause in its management agreements, providing for 24 months of base fee compensation in the event of termination without cause[228][230] Industry Outlook - The rail tank car industry is expected to see new tank car demand grow to 14,800 in 2022 and 19,100 in 2023, following a significant decline in 2020[122] - The anticipated upswing in new-build and retrofit activity is expected to fuel financial growth from rail operations in the coming years[122] - Industry analysts project total tank car loading levels in 2021 to be slightly above 2020 levels, with new tank car demand expected to grow to 14,800 in 2022 and 19,100 in 2023[137] - The introduction of new types of valves in 2020 is anticipated to improve revenue opportunities per new or retrofitted railcar[136] Employment and Workforce - As of December 31, 2020, the company had 43 employees, a slight decrease from 45 in the previous year[155]

Financial Performance - Revenues for the year ended December 31, 2019, were $20,550,682, representing a 61.8% increase from $12,716,596 in 2018[39] - Gross profit for 2019 was $9,582,879, up 81.5% from $5,287,216 in 2018[39] - Net income for 2019 was $3,334,043, compared to a net income of $194,453 in 2018, marking a significant turnaround from a net loss of $5,015,911 in 2017[39] - The Company's unaudited revenues over the last eight quarters ranged from $2,511,878 to $5,596,031, with the latest quarter ending December 31, 2019, reporting $5,303,193[77] - The Company’s net income for the quarter ended December 31, 2019, was $1,242,539, showing a significant increase compared to a net loss of $(279,143) for the quarter ended March 31, 2018[77] - For the year ended December 31, 2019, the company reported a net income of $3,334,043 ($0.07 per share) on revenues of $20,550,682, compared to a net income of $194,453 ($0.00 per share) on revenues of $12,716,596 for the year ended December 31, 2018, representing a revenue growth of approximately 61.5%[96] - Revenues over the last five audited year-end periods were as follows: $20,550,682 for 2019; $12,716,596 for 2018; $6,062,778 for 2017; $8,077,143 for 2016; and $18,910,122 for 2015, indicating a recovery trend in revenue generation[110] Assets and Equity - Total assets increased to $13,731,571 as of December 31, 2019, from $9,944,990 in 2018, reflecting a growth of 38.0%[39] - Shareholders' equity rose to $11,845,275 in 2019, up from $8,165,734 in 2018, indicating a 45.0% increase[39] - The total carrying value of the Company's property, plant, and equipment as of December 31, 2019, was $3,389,994, an increase from $3,087,893 in 2018[153] - Cash on deposit at the end of Fiscal 2019 was $4,418,236, up from $1,246,244 at the end of Fiscal 2018, indicating improved liquidity[186] - Working capital position improved to $7,937,873 at December 31, 2019, compared to $4,469,882 at December 31, 2018[188] - Net assets increased to $11,845,275 at December 31, 2019, from $8,165,734 at December 31, 2018, with no long-term liabilities reported[189] Research and Development - The company is focused on research and development for new products in the railroad industry, although there is no guarantee these efforts will yield commercially viable products[61] - The Company has invested significantly in research and development, with total expenditures of $1,129,007 in Fiscal 2019, $1,352,817 in Fiscal 2018, and $1,572,714 in Fiscal 2017[193] - Research and development costs for new products were $1,129,007 in Fiscal 2019, down from $1,352,817 in Fiscal 2018, focusing on KXI wilderness response technologies[169] Market Opportunities - The total automotive aftermarket conversion industry is valued at approximately $44 billion annually, presenting significant market opportunities for the company[120] - The Company has established itself as a leading North American producer and supplier of specialized rail tank car equipment, focusing on economic and operational advantages to customers[108] - Total tank car loadings in North America increased by 3.5% in 2019, with a projected increase of 2.5% in 2020, indicating a positive market trend[114] Operational Risks and Compliance - The company is dependent on three major OEM customers for the majority of its annual rail tank car revenue, which poses a risk if any of these customers cease to order[56] - The company has successfully obtained AAR certification for its key products, but future compliance with evolving standards is uncertain[49] - The Company has received its M-1003 certification from the AAR, which is valid until January 15, 2022, indicating compliance with high-quality production standards[95] - The company’s operations may be impacted by government regulations related to COVID-19, which could restrict access to manufacturing facilities[68] Management and Compensation - James R. Bond has served as President and CEO since April 7, 2010, with a total compensation of $220,554 for the fiscal year ended December 31, 2019[208] - Richard Lee has been CFO since April 8, 2010, also receiving $220,554 in total compensation for the same fiscal year[208] - Management compensation increased to $1,037,586 in Fiscal 2019, including a performance bonus accrual of $496,894, compared to $610,570 in Fiscal 2018[170] - The Company has a Professional Services Agreement with Bondwest, which includes a base fee of US$15,000 per month, increasing to US$24,000 upon achieving sales of US$30,000,000[211] - The Company’s management agreements include performance bonuses capped at 1.5 times the base fee, increasing to 3 times upon achieving sales of $50,000,000[211] Production and Operations - The Company operates through five wholly-owned subsidiaries, ensuring a diversified approach to its business operations[75] - The Company operates two rail equipment production and R&D facilities totaling 50,000 square feet in Bonham, Texas[137] - The Company has initiated production tooling and supply chain processes for its ASCS technology, with commercial market planning commencing in March 2018[83] - The Company has engaged individuals with a minimum of five years' experience in similar production operations to enhance its production expertise[139] Patents and Intellectual Property - The company has obtained patents for several products, including the external constant force spring pressure relief valve and the one-bolt manway system, and has patents pending for its Active Suspension Control System[47] - The Company has filed a provisional patent application for an Active Suspension Control System and Method for No-Road Vehicles, aiming to enhance vehicle performance in rugged terrains[78] - The Company holds multiple patents critical to its competitive advantage, including patents expiring in 2023 and 2033[142] Employee Information - As of December 31, 2019, the Company had 45 employees, an increase from 40 employees in 2018[146]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 20-F [ ] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 OR OR [ ] SHELL COMPANY PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of event requiring this shell company report N/A For the transition period from N/A to N/A Commission file number 001-36685 KELSO TECHNOLOGIES INC. (Exact name of Registrant as specified in its charter) [ X ] ANNUAL REPORT PURSUANT ...