Kelso Technologies Inc. Financial Results for the Quarter Ended June 30, 2026

Kelso Technologies Inc. (TSX: KLS) reports that the Company has released the interim financial statements and Management Discussion and Analysis for the quarter ended June 30, 2026. The interim financial statements were prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). All amounts herein are expressed in United States dollars (the Company's functional currency) unless otherwise indicated. The Company's interim financial statements and MD&A for the quarter ended June 30, 2026 were approved by the Board of Directors on July 27, 2026.

HIGHLIGHTS: Second quarter revenue of $2,245,498 increased 28% over the first quarter of 2026, confirming management's expectation that the first quarter would represent the operational trough of the fiscal year and reflecting strengthening order flow through the period, notwithstanding industry forecasts of an approximately 30% decline in North American tank car deliveries in 2026. Gross profit of $725,897 (32% of revenues) in the quarter, with six-month gross margin of 34%, reflecting continued discipline over direct production costs against a substantially fixed cost base, partially offset by a shift in sales mix toward lower-margin products during the quarter.

Management has already taken proactive steps to reduce the Company's cost structure, the impact of which is expected to be realized in the second half of fiscal 2026 and continues to evaluate opportunities to unlock value across the business, with updates to be provided as and when such initiatives are successfully concluded. The Company maintained a solid financial position at June 30, 2026, with total assets of $5,351,244, shareholders' equity of $3,998,467, working capital of $1,940,549, and cash of $372,684. The Company continued to make disciplined use of its $1,000,000 revolving credit facility, with $350,000 drawn and $650,000 available at June 30, 2026 — funding working capital through the cyclical downturn while preserving liquidity and avoiding shareholder dilution, consistent with the Company's history of drawing and repaying the facility as operating needs require.

Cost management delivered year-over-year reductions across office and administration expense, management fees, and professional fees for the quarter, with accounting, audit and legal fees declining to $122,146 from $187,279 in Q2 2025 following completion of the elevated FY2025 audit and disclosure cycle. The wind-down of the KIQ X discontinued operations is effectively complete: discontinued operations contributed income of $3,885 in the quarter and were essentially breakeven for the six months (a loss of $32, compared to a loss of $91,225 in the comparative period), with the sublease of the West Kelowna facility offsetting the remaining lease obligation, which expires in January 2027.

The capital structure remains clean, with 56,100,085 common shares outstanding, no stock options or warrants outstanding, and 203,329 restricted share units remaining. During the quarter the Company settled an $80,000 obligation through the issuance of 800,000 common shares upon the vesting of restricted share units, conserving cash while aligning compensation with shareholders. The senior leadership transition completed in April 2026 — Jesse Crews as Chief Executive Officer, supported by continuing Chief Operating Officer Amanda Smith and Chief Financial Officer Sameer Uplenchwar, with Mark Temen as Lead Director — is fully in place, and the Company's strategic direction remains unchanged. The primary focus for the remainder of FY2026 is the continuation of disciplined cost management and the commercial launch of the new Angle Valve, positioning the Company for the projected recovery in new tank car builds commencing in 2027 and 2028.