VANCOUVER, BRITISH COLUMBIA, Jul. 28, 2010 (Marketwire) -- James R. Bond, CEO and President of the Company (TSX VENTURE:KLS) reports that the Company has released its third quarter results for the nine months ended May 31, 2010.
On April 7, 2010 a new management team was engaged to turnaround the insolvency issues that faced the Company. During the third quarter the Company began to implement its reorganization plan to improve its financial health and business infrastructure.
The Company consolidated and commenced trading on the TSX Venture Exchange on a 1 for 7 basis on May 13, 2010. Post consolidation capitalization resulted in an unlimited number of common shares with no par value of which 12,354,783 are issued and outstanding. No shares are subject to escrow.
The Company closed an $827,000 non-brokered private placement on May 25, 2010. The Company issued 8,270,000 units of the Company at a price of $0.10 per unit. Each unit consists of one common share and one-half of one share purchase warrant. One whole warrant will entitle the holder to purchase one additional common share of the Company exercisable at a price of $0.18 until May 25, 2012. All the securities issued in connection with this private placement are subject to a four-month hold period expiring September 25, 2010. The financing increased share capitalization to 20,624,783 issued and outstanding common shares.
The Company was able to settle current financial obligations; commence marketing initiatives; secure additional proprietary rights; begin investor relations and provide additional working capital. The financing has allowed Kelso to meet the solvency standards of customers in the railroad transportation industry and the TSXV.
The Company's net income for the nine months ended May 31, 2010 was $42,800 against revenue of $31,434 compared to a loss of $432,944 against revenue of $269,845 for the same period in 2009. A key factor in the gain for the period was the effect of the forgiveness of a large portion of debt by related parties and shareholders to reorganize the Company's financial health. Expenses for the nine months ended May 31, 2010 are related to the operations, accounting, auditing, legal and other costs associated with the financing and reorganization of the Company's affairs.
Results for the nine months ended May 31, 2010 are indicative of a junior engineering and development company with limited financial resources attempting to develop a full scale marketing platform and business infrastructure while attempting to access new capital financing for its transition from product development activities to full exploitation marketing plans.
At May 31, 2010, the Company had improved its financial condition. It had cash on deposit in the amount of $601,641; accounts and GST receivable of $11,674 and prepaid expenses of $2,100. Working capital was $144,437 which includes $168,270 due to related parties compared to a working capital deficiency of $905,898 which included $544,539 due to related parties at August 31, 2009.
Based on the Company's financial position at May 31, 2010 the Company will require significant growth of revenue from operations and may require new equity capital to meet its near-term cash requirements in the foreseeable future.
The prospects for the Company have improved dramatically. With the enforcement of US environmental regulations and the new tank-car build rebound that is forecast to begin in the third quarter of 2010, Kelso is confident that new tank-car builders, repair shops and retrofitters will resume ordering Kelso products for installation. Kelso continues to maintain its reputation as a valued supplier of pressure relief and inspection valves to the rail tank car sector. This has been an important accomplishment as Kelso looks forward to what appears to be a better outlook for Kelso's product market by fourth quarter of 2010 when the new tank car builds being commissioned are expected to begin to rebound.
For a more complete business and financial profile of the Company, management encourages interested parties to view the Company's documents posted on 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 Kelso looks forward to what appears to be a better outlook for Kelso's product market by third quarter of 2010 when the new tank car builds being commissioned are expected to begin to rebound. Kelso secured $827,000 in new equity and the funds allowed us to commence marketing initiatives, secure additional proprietary rights, begin investor relations and allow Kelso to meet the solvency standards of vendor status with customers; and that the technological products of Kelso are beginning to generate meaningful purchase orders that may expand Kelso's commercial viability. 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 capital, we may not have sufficient capital to produce and deliver orders, orders that are placed may be cancelled, product may not perform as well as expected, markets may not develop as quickly as anticipated or at all or that the productive capacity of Kelso may not be large enough to handle market demand. Further, we are reliant on certain key employees and we may be unable to protect or defend our intellectual property. Investors are cautioned against placing undue reliance on forward-looking statements.
The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.