Costar Technologies, Inc. Announces Financial Results For the Third Quarter Ended September 30, 2020

COPPELL, Texas, Nov. 13, 2020 /PRNewswire/ -- Costar Technologies, Inc. (the "Company") (OTC Markets Group: CSTI) announced today its financial results for the third quarter ended September 30, 2020 that have been reviewed by the independent accounting firm BKD, LLP.

Financial Results for the Quarter Ended September 30, 2020

• Revenues of $15,727, a 11.5% decrease compared to the third quarter of 2019.
• Operating expenses, net of a goodwill impairment loss of $939, were down 19.4% to $5,062, compared to $6,283 in the third quarter of 2019.
• GAAP net loss of $8,292, or ($5.17) per diluted share, compared to GAAP net income of $840, or $0.51 per diluted share, in the third quarter of 2019.
• Adjusted earnings of $372, or $0.234 per diluted share, compared to $1,287, or $0.79 per diluted share, for the quarter ended September 30, 2019. Adjusted earnings of $1,036, or $0.65 per diluted share, for the nine months ended September 30, 2020, compared to $37, or $0.02 per diluted share, for the nine months ended September 30, 2019. Adjusted earnings, a non-GAAP measure, is defined below.
• Adjusted EBITDA of $974, compared to $2,010 for the quarter ended September 30, 2019. Adjusted EBITDA of $2,124, compared to $904 for the nine months ended September 30, 2019 Adjusted EBITDA, a non-GAAP measure, is defined below.

Scott Switzer, the Company's Interim Chief Executive Officer stated, "Like many businesses, we continue to adapt and evolve in response to the global pandemic. Our "One Costar" initiative has led to increased collaboration across our subsidiaries which has opened the door to new opportunities by expanding our ability to introduce products into new markets. The initiative has also driven many efficiencies that increase our agility to respond to the ever-changing market environment.  I am encouraged by how well our team continues to navigate new challenges while remaining focused on providing industry leading customer service and support."

Sarah Ryder, the Company's Chief Financial Officer, went on to say, "During the third quarter we saw a nearly 7.5% increase in revenue over the prior quarter, while realizing the benefit of expense reduction efforts executed throughout the second and third quarters. There were large non-cash charges incurred in the quarter as we put a valuation allowance on our deferred tax asset, recognized an impairment loss on the goodwill associated with the Arecont Vision acquisition and modified our inventory excess and obsolescence reserve policy. We will continue to evaluate our cost structure to ensure alignment with potential COVID-19 related restrictions which may continue to impact revenue."

The Company's independent auditors completed their analysis of the Company's financial condition. The Independent Auditor's Review Report, including financial statements and applicable footnote disclosures, is available on our website at www.costartechnologies.com.

Non-GAAP Financial Measures

The Company defines adjusted earnings, a non-GAAP measure, as net income (loss) excluding stock-based compensation and amortization of acquisition-related intangible assets. The Company defines adjusted EBITDA, a non-GAAP measure, as earnings before interest, taxes, depreciation, amortization and stock-based compensation. The following tables reconcile the non-GAAP financial measures disclosed in this release to GAAP net income (loss):

These reconciliations of GAAP to non-GAAP measures should be considered together with the Company's financial statements. These non-GAAP measures are not meant as a substitute for GAAP, but are included solely for informational and comparative purposes. The Company's management believes that this information can assist investors in evaluating the Company's operational trends, financial performance, and cash generating capacity. Management believes these non-GAAP measures allow investors to evaluate the Company's financial performance using some of the same measures as management. However, the non-GAAP financial measures should not be regarded as a replacement for (or superior to) corresponding, similarly captioned, GAAP measures.

About Costar Technologies, Inc.

Costar Technologies, Inc. develops, designs, manufactures and distributes a range of security solution products including surveillance cameras, lenses, digital video recorders and high-speed domes. The Company also develops, designs and distributes industrial vision products to observe repetitive production and assembly lines, thereby increasing efficiency by detecting faults in the production process. Headquartered in Coppell, Texas, the Company's shares currently trade on the OTC Markets Group under the ticker symbol "CSTI". Costar was ranked as the 40^th largest company in a&s magazine's Security 50 for 2020. Security 50 is an annual ranking by the magazine of the world's largest security manufacturers in the areas of video surveillance, access control and intruder alarms, based on sales revenue.

Cautionary Statement Regarding Forward Looking Statements

This press release contains forward-looking statements, including statements regarding the Company's ability to grow revenue and earnings, that are subject to substantial risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements, including but not limited to risks related to the ability to diversify business across vertical markets, secure new customer wins, and launch new products. You can often identify forward-looking statements by words such as "believe," "may," "estimate," "continue," "anticipate," "intend," "plan," "expect," "predict," "potential," or the negative of these terms or other comparable terminology. These forward-looking statements are based on management's current expectations, but they involve risks and uncertainties. Actual results and the timing of events could differ materially from those anticipated in the forward-looking statements as a result of the risks and uncertainties.

You should not place undue reliance on any forward-looking statements. The Company assumes no obligation to update forward-looking statements to reflect actual results, changes in assumptions, or changes in other factors affecting forward-looking information, except to the extent required by applicable laws.

SOURCE Costar Technologies, Inc.