Mr. James Bond reports

KELSO TECHNOLOGIES INC. FINANCIAL RESULTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018

Kelso Technologies Inc. has released its unaudited interim consolidated financial statements and management's discussion and analysis for the three and nine months ended Sept. 30, 2018.

The unaudited interim consolidated financial statements were prepared in accordance with international financial reporting standards (IFRS), as issued by the International Accounting Standards Board (IASB). Unless otherwise indicated, all amounts herein are expressed in U.S. dollars (the company's functional currency).

                                 SUMMARY OF FINANCIAL PERFORMANCE
 
                                    Three months ended Sept. 30,       Nine months ended Sept. 30,  
                                           2018            2017              2018            2017
          
Revenues                            $ 3,491,602     $ 1,153,341       $ 8,538,716     $ 4,150,321   
Cost of goods sold                    1,947,607         887,986         5,067,037       3,302,990   
Inventory write-off                            -         443,769                 -         443,769     
Gross profit (loss)                   1,543,995        (178,414)        3,471,679         847,331     
Income tax expense (recovery)               161          17,856            (3,052)         17,856      
Net income (loss)                       261,717      (1,380,495)         (180,336)     (2,803,514) 
EBITDA (loss)                           383,563        (936,011)           62,195      (2,256,111) 
EPS (basic and diluted)                    0.01           (0.03)            (0.00)          (0.06)      

Liquidity and capital resources

As at Sept. 30, 2018, the company had cash on deposit in the amount of $421,500, accounts receivable of $1,754,749, prepaid expenses of $145,908 and inventory of $3,732,559, compared with cash on deposit in the amount of $411,223, accounts receivable of $653,445, prepaid expenses of $183,966 and inventory of $3,980,243 at Dec. 31, 2017.

The working capital position of the company at Sept. 30, 2018, was $3,711,142, compared with $3,628,911 at Dec. 31, 2017. Accounts receivable are collected within 30 days from invoicing shipments, giving Kelso Technologies $1,754,749 of incoming cash flow and $421,500 of available cash to discharge liabilities of $1,634,287 on a timely basis subsequent to Sept. 30, 2018.

Net assets of the company were $7,483,152 at Sept. 30, 2018, compared with $7,565,233 at Dec. 31, 2017. At Sept. 30, 2018, the company had no interest-bearing long-term liabilities or debt.

Outlook

Kelso Technologies' team of dedicated stakeholders have actively pulled together to turnaround its business capabilities and improve its financial performance during very difficult recessionary challenges over the past three years. The company's strategic plan has been focused on rebranding Kelso Technologies as a reliable American-made supplier of high-quality performance equipment for the rail tank car industry. This was imperative and the company believed that this process would eventually lead to a healthy financial turnaround. Under these established initiatives, Kelso Technologies has experienced improved sales results, providing a steady return to its available capital reserves. This turn of events has allowed Kelso Technologies to survive and keep its ambitions of business growth, product development and pursuit of regulatory approvals on course.

Management has been encouraged by sales-to-date growth for 2018 and the revenue prospects for 2019. Crude oil, ethanol and chemicals are the key commodities that are leading the way in the resurgence of tank car market activity. This stimulus has led rail tank car analysts to expect average new-build production rates to grow from approximately 12,000 tank cars in 2018 to 19,000 tank cars in 2019. Based on these new-build predictions and the company's historic retrofit/repair business, Kelso Technologies expects to supply its specialized tank car equipment to over 8,000 tank cars in 2018 and over 10,000 tank cars in 2019.

A key dynamic for Kelso Technologies' growth of financial performance will be getting a wider variety of its tank car products adopted by hazmat shippers. Once this adoption trend is established, Kelso Technologies expects customers to begin to specify combinations of its One-Bolt Manway, VRV and BOV along with its proven PRV. Kelso Technologies' long-term goal is to improve tank car revenues from approximately $1,400 per tank car to in excess of $10,000 per tank car.

The key hurdle for sales growth is the achievement of full Association of American Railroads (AAR) regulatory approvals, which are required for full commercial adoption. Currently, the company's VRV is in the final stages of full AAR approval. Once final approvals are received, sales of VRV are expected to commence.

There is no mandatory requirement for any company to participate in service trials of new technology, which means Kelso Technologies has to source volunteer companies to participate in service trial programs. This is a difficult circumstance, but Kelso Technologies has successfully found these technology partners and service trials for its ceramic ball BOV, high-pressure PRV and angle valve are in process. Customers' willingness to participate in this process is an encouraging indication that these products will be in demand once approvals are completed.

The company's research and development model has delivered an array of promising new products that include specialized truck tanker equipment, rail wheel cleaning systems, fuel loading systems, military applications, first responder emergency response kits and an ASCS suspension system for motor vehicles being used in rugged outback terrain applications.

The company continues to prioritize promising product development initiatives to build future value propositions for Kelso Technologies' stakeholders even though research and development projects are often complex, expensive and the timing of revenue streams are unpredictable and not guaranteed. Although many operational and human resource expenses have been reduced, Kelso Technologies' capital management remains challenging, but recent improvements in cash flows from sales growth in 2018 have been adequate to finance current business activities. The company can currently operate without immediate access to new equity capital or debt, and the company remains free of interest-bearing long-term debt.

In 2017, Kelso Technologies began rebranding its organization by implementing new business processes, new personnel, changing its corporate culture and revamping its approach to customer service, marketing and sales processes. In 2018, the results have been encouraging, with growth in sales and improved financial performance. Business momentum also seems to be building for future periods. The key objectives of the company's strategic plans are the eventual satisfaction of all Kelso Technologies stakeholders with reliable growth of profitability, improved financial health and market valuation.

About Kelso Technologies Inc.

Kelso Technologies is an engineering product development company that specializes in the development, production and distribution of proprietary service equipment used in transportation applications. The company's reputation has been earned as a developer and reliable supplier of unique high performance rail tank car equipment for the handling and containment of hazardous and non-hazardous commodities during transport. All Kelso Technologies products are developed with emphasis on economic and operational advantages to customers while mitigating the impact of human error and environmental release. Kelso Technologies offers specialized truck tanker equipment, rail wheel cleaning systems, fuel loading systems, military applications, first responder emergency response kits and suspension systems for motor vehicles being used in rugged outback terrains.

We seek Safe Harbor.