Financial Results for the Six Months Ended June 30, 2013

VANCOUVER, BRITISH COLUMBIA and LISLE, ILLINOIS--(Marketwired - Aug. 7, 2013) - Kelso Technologies Inc. (the "Company" or "Kelso") (TSX VENTURE:KLS)(OTCQX:KEOSF)

The Company reports that it has released its financial statements covering the three and six month periods ended June 30, 2013. These reporting periods are subsequent to the fiscal year end change to December 31. In accordance with year end transition rules the June 30, 2013 results have been compared to the three and six month periods ended May 31, 2012 where applicable. All amounts are expressed in United States dollars.

HIGHLIGHTS OF THE THREE MONTHS ENDED JUNE 30, 2013

• Reported net income for the three months ended June 30, 2013 was $160,664 compared to a loss of $313,994 for the three months ended May 31, 2012.
  
  
• Revenue for the three months ended June 30, 2013 reached $2,660,140 compared to the three months ended May 31, 2012 of $519,778.
  
  
• Positive cash flow derived from operations was $179,341 for the three months ended June 30, 2013.
  
  
• Business expenditures and financial results are in line with management's budgets and expectations.
  
  

HIGHLIGHTS OF THE SIX MONTHS ENDED JUNE 30, 2013

• Reported net income for the six months ended June 30, 2013 was $240,636 compared to a loss of $604,850 for the six months ended May 31, 2012.
  
  
• Revenue for the six months ended June 30, 2013 reached $4,674,202 compared to the six months ended May 31, 2012 of $760,696.
  
  
• Positive cash flow derived from operations was $282,722 for the six months ended June 30, 2013.
  
  
• Reported net income of $240,636 included items not involving cash for amortization of $37,830 and recognition of share based payments (Black Scholes option pricing model) in the amount of $4,256 which estimates the dilutive effect of incentive stock options granted during the period and vesting from the prior year.
  
  
• Business growth; product and market development progress; pre-sales strategic costs and; financial results are in line with management's budgets and expectations.
  
  
• Average gross profit on sales was 33% for the six months ended June 30, 2013.
  
  
• Cash on deposit at June 30, 2013 was $1,538,530.
  
  
• Working capital at June 30, 2013 remained healthy at $3,946,648.
  
  
• Company remained free of interest-bearing long-term debt commitments.
  
  
• Net tangible assets grew to $4,478,140 at June 30, 2013 up from $4,036,440 at December 31, 2012.
  
  

LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL RISKS

At June 30, 2013 the Company had cash on deposit in the amount of $1,538,530; accounts receivable of $1,073,687; HST receivable of $46,371; prepaid expenses of $116,743 and inventory of $1,496,556 compared to cash on deposit in the amount of $1,421,053; accounts receivable of $1,016,129; HST receivable of $39,649; prepaid expenses of $88,506 and inventory of $1,188,467 at December 31, 2012.

The working capital position of the Company at June 30, 2013 was $3,946,648 compared to a working capital position of $3,470,762 which includes $12,247 due to related parties at December 31, 2012.

OUTLOOK

The tragic accident in Lac Mégantic in Quebec in July 2013 has been a clear reminder that the transport of hazmat is a very dangerous activity and that all hazmat stakeholders and regulators have an obligation to do so as safely as possible. That has been the key focus of our business model for the past three years - to innovate, design and deliver the best available service equipment possible for tank cars used in hazmat applications.

Our priority is to continue to build the quality of our brand and sales in railroad applications. Our sales growth will be based on our continuing ability to create and reliably deliver a wide range of "best available" products that address the demanding design criteria that our hazmat customers require.

Under our business development plan implemented in 2010 Kelso reached the key milestone of profitability from operations during the four month period ended December 31, 2012 and we have sustained this earnings trend for the first six months ended June 30, 2013. Earnings growth is expected to continue as orders delivered or to be delivered in 2013 are currently approaching $11,000,000 of our $12,000,000 target for the year.

We remain unencumbered; carry no long term interest-bearing debt; and with the exercise of warrants in July we have a working capital position in excess of $4,400,000. From these financial resources we continue to invest in new product development; independent lab testing and outside design engineering services; new patent applications; enhanced Tier 1 regulatory disclosure and listing strategies in Canada and the United States; more efficient accounting systems and controls; pre-sales production capability for our KKM and; the preliminary planning for the construction of a new 40,000 square foot production facility in Bonham, Texas scheduled to be finished in mid 2014 that will handle the production of our current and future product lines. Our strategic investments have been improving our revenue and profitability growth and the overall value of our Company.

Although we have many challenges ahead we are extremely optimistic about the prospects of our many business opportunities. Management remains dedicated to the health, welfare and growth of our business so that Kelso can continue to grow its profitability; enhance dividend potential; and increase corporate value on behalf of the shareholders of Kelso.

About Kelso Technologies

Kelso is a railroad equipment supplier that produces and sells proprietary tank car service equipment used in the safe loading, unloading and containment of hazardous materials during transport. Products are specifically designed to provide economic and operational advantages while reducing the potential effects of human error and environmental harm during the transport of hazardous materials.

For a more complete business and financial profile of the Company, the financials statements and management discussion and analysis can be viewed in their entirety on the Company's website at www.kelsotech.com or www.sedar.com.

On behalf of the Board of Directors,

James R. Bond, CEO and President

Legal Notice Regarding Forward-Looking Statements: This news release contains "forward-looking statements" within the meaning of applicable Canadian securities legislation. Forward-looking statements are indicated expectations or intentions. Forward-looking statements in this news release include that earnings growth is expected to continue as orders delivered or to be delivered in 2013 are currently approaching $11,000,000 of our $12,000,000 target for the year. The Company's products involve detailed proprietary and engineering knowledge and specific customer adoption criteria, hence factors that could cause actual results to be materially different include that we may be unsuccessful in raising any additional capital needs that may arise; we may not have sufficient capital to develop, produce and deliver new orders; product development may face unexpected delays; orders that are placed may be cancelled; delivery of orders may be rescheduled; product may not perform as well as expected; markets may not develop as quickly as anticipated or at all; and operations may run into permit, labor or other problems. Further, we are reliant on certain key employees who may leave the Company and we may be unable to protect or defend our intellectual property. Investors are cautioned against placing undue reliance on forward-looking statements. We assume no responsibility to update these forward looking statements except to the extent required by law.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.