Financial Performance - The Company's unaudited revenues for the quarter ended December 31, 2023, were $3,069,359, showing a decrease from $3,138,137 in the previous quarter[78]. - The Company's revenues for the year ended December 31, 2023, were $10,819,916, a decrease of 1% compared to $10,931,188 in 2022, following a 47% increase in 2022 after a 33% decline in 2021[131][135]. - The Company's net loss for the quarter ended December 31, 2023, was $(165,368), compared to a loss of $(66,174) in the prior quarter[79]. - The net loss for the year ended December 31, 2023 was $2,101,886, or $0.04 per share, compared to a net loss of $1,355,417, or $0.02 per share, in 2022[213]. - Gross profit margin for 2023 was 42%, down from 45% in 2022, attributed to inflationary pressures and higher raw material costs[214]. - Total operational expenses decreased slightly to $5,876,383 in 2023 from $6,126,992 in 2022, aligning with management's expectations[215]. - Cash reserves decreased to $1,433,838 as of December 31, 2023, down from $2,712,446 in 2022[206]. - Total assets decreased to $9,703,271 in 2023 from $12,147,143 in 2022, reflecting ongoing market challenges[206]. Working Capital and Financial Position - The Company had a positive working capital of $5,026,580 as of December 31, 2023, but may face working capital deficits in the future[47]. - The Company's working capital as of December 31, 2023, was $5,026,580, which includes $3,376,005 in inventories for future deliveries[137]. - Kelso's working capital was $5,026,580 as of December 31, 2023, with no interest-bearing long-term debt[117]. - The Company’s working capital was reported at $8,670,165 as of December 31, 2021, indicating a strong financial position[88]. Revenue Growth and Market Demand - The Company reported a 47% increase in sales in 2022 compared to 2021, with a total of 4,609 valves (47% of total production) provided for new tank car production[89]. - Industry analysts project new tank car demand to reach 8,290 tank cars in 2023, with significant re-qualifications planned for 135,000 tank cars delivered between 2012 and 2017[159]. - The K2AV angle valve is expected to generate multi-million-dollar revenues as oil refiners specify more units, with approximately 85,000 pressure tank cars utilizing three K2AV units each[93]. - The average revenue per tank car is projected to increase from $1,500 to over $10,000 following full AAR approval of the pressure car package[107]. Research and Development - The Company invests in R&D for new products in rail/road tank cars and automotive suspension technologies, focusing on long-term growth[43]. - The Company has made significant progress in R&D for new products, although timing for regulatory approvals remains unpredictable[115]. - The ongoing research and development of the KXI Suspension System is a significant focus for future revenue growth[229]. - The KXI HD prototype is expected to enter pilot production in early 2024, targeting a larger commercial market opportunity for heavy-duty vehicles[165]. - The KXI HD project aims to enhance vehicle performance in extreme terrains, focusing on improved traction and balance for commercial wilderness and disaster response operations[166]. - The KXI Wildertec™ Software Division filed a patent application for its Automated Traction Optimization Method, positioning the Company for future growth in the ADAS market[111]. Risks and Challenges - The Company is dependent on three major Original Equipment Manufacturer (OEM) customers for a significant portion of its revenue, which poses a risk if any of these customers are lost[55]. - The Company may face shortages of parts and raw materials, which could negatively impact business development and revenues[57]. - The Company’s products are subject to price fluctuations in raw materials like steel and rubber, which could affect profitability[62]. - The Company has faced supply chain issues due to COVID-19, impacting the completion timeline of its prototype[86]. - The Company has obtained patents for its external constant force spring pressure relief valves and other products, but faces risks related to intellectual property protection[41]. Strategic Initiatives - The Company aims to obtain full AAR approvals for its rail pressure car products in 2024, which is crucial for sustainable financial growth[104]. - The Company aims to diversify its business risks by pursuing non-rail market opportunities, including the development of the KXI™ Wildertec™ Suspension System[141][142]. - The Company is focusing on developing application agreements for KXI Wildertec technologies in sectors such as firefighting, medical operations, and emergency response[178]. - The Company has extended the contracts of its senior executives until June 30, 2024, which is critical for maintaining operational stability[63]. - The Company plans to voluntarily delist from the NYSE American due to low share prices and the costs associated with maintaining a dual listing[72]. Operational Insights - The Company completed a private placement in March 2021, raising gross proceeds of CAD $6,370,000 by issuing 7,000,000 units at CAD $0.91 per unit[82]. - The Company has distributed over 89,000 valves since 2012, generating more than $137 million in revenues[156]. - The Phase-One production facility is expected to generate approximately $25 million in annual revenue starting in late 2024, with potential to scale to over $100 million[122]. - The Company has engaged military and automotive OEM suppliers to support R&D schedules for the KXI HD project, enhancing its technological capabilities[165].
Kelso(KIQ) - 2023 Q4 - Annual Report