PR Newswire | May 13, 2021 10:19PM EDT

Ended March 31, 2021

05/13 21:18 CDT

Costar Technologies, Inc. Announces Financial Results For the First Quarter Ended March 31, 2021($ in thousands except per share amounts) COPPELL, Texas, May 13, 2021

COPPELL, Texas, May 13, 2021 /PRNewswire/ -- Costar Technologies, Inc. (the "Company") (OTC Markets Group: CSTI) announced today its financial results for the first quarter ended March 31, 2021.

Financial Results for the Quarter Ended March 31, 2021

* Revenues of $10,782, a 36.7% decrease compared to the first quarter of 2020. * Operating expenses were down 34.0% to $4,368, compared to $6,617 in the first quarter of 2020. * GAAP net loss of $799 or ($0.49) per diluted share, compared to GAAP net loss of $193, or ($0.12) per diluted share, in the first quarter of 2020. * Adjusted earnings of ($481), or ($0.29) per diluted share, compared to $156, or $0.10 per diluted share, for the quarter ended Mach 31, 2020. Adjusted earnings, a non-GAAP measure, is defined below. * Adjusted EBITDA of ($118), compared to $500 for the quarter ended March 31, 2020. Adjusted EBITDA, a non-GAAP measure, is defined below.

Scott Switzer, the Company's Interim Chief Executive Officer stated, "Typically the first quarter is our slowest time of year and 2021 was no exception. While our sales were soft in the first quarter, we are starting to see the market return to pre-Covid activity, as opportunities open and sales activity increases. We continue to focus on aligning our product development to meet our customers' needs. The expansion of our line of NDAA compliant cameras in the second quarter positions us to meet high demand in the marketplace. With our new camera line and increased activity in the retail vertical, we have high confidence in delivering significantly improved results in the coming quarters."

Sarah Ryder, the Company's Chief Financial Officer went on to say, "The slower than anticipated reopening of the economy negatively impacted our first quarter revenues. This, combined with an unusually strong first quarter in the prior year, drove the significant decline in year-over-year sales. Conversely, operating expenses were down $2.25M from the prior year first quarter and project delays in the first quarter of 2021 contributed to strong April sales. With the rapid pace of the vaccine rollout, return to work and improving economic conditions, we remain optimistic about our 2021 financial performance."

The Company's independent auditors completed their analysis of the Company's financial condition. The Independent Auditor's 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):

Quarter Quarter Ended 3/31/21 Ended 3/31/20

Adjusted Earnings (481) 156

Less:

Stock-Based Compensation (4) (32)

Intangible Amortization (314) (317)

Net Loss (799) (193)

Quarter Quarter Ended 3/31/21 Ended 3/31/20

Adjusted EBITDA (118) 500

Less:

Interest (245) (291)

Income Taxes (Benefit) (10) 65

Depreciation (108) (118)

Intangible Amortization (314) (317)

Stock-Based Compensation (4) (32)

Net Loss (799) (193)

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 40th 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.

COSTAR TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(AMOUNTS SHOWN IN THOUSANDS)

March 31, 2021 December 31, 2020

(Reviewed) (Audited)

ASSETS

Current assets

Cash and cash equivalents $ 88 $ 480

Accounts receivable, less allowance fordoubtful accounts

of $182 and $175, respectively 5,768 8,579

Inventories 14,435 14,225

Prepaid expenses and other current assets 1,743 2,170

Total current assets 22,034 25,454

Non-currentassets

Property and equipment, net 425 533

Deferred financing costs, net 10 20

Intangible assets, net 6,097 6,411

Goodwill 5,574 5,574

Right of use assets, net 1,946 2,185

Other non-current assets 149 149

Total non-current assets 14,201 14,872

Total assets $ 36,235 $ 40,326

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities

Accounts payable $ 5,116 $ 4,591

Accrued expenses and other current 5,511 5,141liabilities

Line of credit 9,250 13,024

Current maturities of long-term debt, netof unamortized

financing fees 3,396 3,592

Current maturities of lease liabilities 939 1,049

Total current liabilities 24,212 27,397

Long-Term liabilities

Payroll Protection Program loan 3,025 3,025

Deferred tax liability 116 116

Non-current maturities of lease 1,194 1,340liabilities

Total long-term liabilities 4,335 4,481

Total liabilities 28,547 31,878

Stockholders' Equity

Preferred stock

Common stock 3 3

Additional paid-in capital 157,725 157,686

Accumulated deficit (145,519) (144,720)

Less common stock held in treasury, at cost (4,521) (4,521)

Total stockholders' equity 7,688 8,448

Total liabilities and $ 36,235 $ 40,326 stockholders' equity

COSTAR TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(AMOUNTS SHOWN IN THOUSANDS, EXCEPT NET INCOME PERSHARE)

Three Months Ended March 31,

2021 2020

(Reviewed) (Reviewed)

Net revenues $ 10,782 $ 17,028

Cost of revenues 6,962 10,378

Gross profit 3,820 6,650

Selling, general and administrative expenses 3,601 5,185

Engineering and development expense 767 1,432

4,368 6,617

Income (loss) from operations (548) 33

Other expenses

Interest expense (245) (291)

Other income, net 4

Total other expenses, net (241) (291)

Loss before taxes (789) (258)

Income tax provision (benefit) 10 (65)

Net Loss $ (799) $ (193)

Net loss per share:

Basic $ (0.49) $ (0.12)

Diluted $ (0.49) $ (0.12)

Weighted average shares outstanding:

Basic 1,643 1,586

Diluted 1,643 1,586

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SOURCE Costar Technologies, Inc.