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]
Kelso(KIQ) - 2019 Q4 - Annual Report