Costar Technologies : Announces Financial Results for the Third Quarter Ended September 30, 2022

	Corporate Headquarters
	101 Wrangler Drive, Ste 201
	Coppell, TX 75019
	Phone: [phone]
	www.costartechnologies.com
FOR IMMEDIATE RELEASE	CONTACT: Sarah Ryder
November 14, 2022	Chief Financial Officer
	Costar Technologies, Inc.
	[phone]

Costar Technologies, Inc. Announces Financial Results

For the Third Quarter Ended September 30, 2022

($ in thousands except per share amounts)

Coppell, Texas - November 14, 2022 - Costar Technologies, Inc. (the "Company") (OTC Markets Group: CSTI) announced today its financial results for the third quarter ended September 30, 2022.

Financial Results for the Quarter Ended September 30, 2022

• Revenues of $16,365, a 29.4% increase compared to the third quarter of 2021.
• Operating expenses were up 3.3% to $4,290, compared to $4,152 in the third quarter of 2021.
• GAAP net income of $665, or $0.40 per diluted share, compared to GAAP net income of $364, or $0.22 per diluted share, in the third quarter of 2021.
• Adjusted earnings of $1,002, or $0.60 per diluted share, compared to $641, or $0.39 per diluted share, for the quarter ended September 30, 2021. Adjusted earnings, a non-GAAP measure, is defined below.
• Adjusted EBITDA of $1,363, compared to $74 for the quarter ended September 30, 2021. Adjusted EBITDA, a non-GAAP measure, is defined below.

Scott Switzer, the Company's Chief Executive Officer, stated "Our team has done a tremendous job over the last quarter navigating supply chain issues and improving production capacity. The decreased lead times enabled us to not only satisfy our customers but exceed their expectations. During the quarter we attended one of our largest tradeshows where we gained valuable insights from our customers on what we are doing right and how we can better serve them in the future. As we close out the year, we will continue to focus on enhancing our customer experience and capitalizing on new opportunities with our existing customer base."

Sarah Ryder, the Company's Chief Financial Officer, went on to say, "With supply chain and logistics challenges beginning to ease, we delivered our strongest revenue quarter in over two years. We enter the fourth quarter with a $6.3 million backlog and a continued focus on cost management and more efficiently utilizing our resources to decrease overall debt and deliver increased value to our shareholders."

Corporate Headquarters

101 Wrangler Drive, Ste 201

Coppell, TX 75019

Phone: [phone]

www.costartechnologies.com

The Company's independent auditors completed their analysis of the Company's financial condition. The Independent Accountant'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, amortization of acquisition-related intangible assets, PPP loan forgiveness and accrual of Employee Retention Credit. The Company defines adjusted EBITDA,

1. non-GAAPmeasure, as earnings before interest, taxes, depreciation, amortization, stock-based compensation, PPP loan forgiveness and accrual of Employee Retention Credit. The following tables reconcile the non-GAAP financial measures disclosed in this release to GAAP 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.

Corporate Headquarters

101 Wrangler Drive, Ste 201

Coppell, TX 75019

Phone: [phone]

www.costartechnologies.com

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 2022. 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.

* * * * *

Corporate Headquarters

101 Wrangler Drive, Ste 201

Coppell, TX 75019

Phone: [phone]

www.costartechnologies.com

COSTAR TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (AMOUNTS SHOWN IN THOUSANDS)

		September 30, 2022			December 31, 2021
ASSETS		(Reviewed)				(Audited)
Current assets		1				4
Cash and cash equivalents	$	$
Accounts receivable, less allowance for doubtful accounts		9,629				6,544
of $287 and $205, respectively
Inventories		17,517				15,069
Prepaid expenses and other current assets			2,774				3,562
Total current assets			29,921				25,179
Non-current assets
Property and equipment, net		65				164
Intangible assets, net		4,546				5,274
Goodwill		5,574				5,574
Right of use assets, net		899				1,214
Other non-current assets			117				114
Total non-current assets		11,201				12,340
Total assets	$	41,122		$	37,519
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities		6,264	$	6,935
Accounts payable	$
Accrued expenses and other current liabilities		3,543				3,894
Line of credit		15,000				9,337
Current maturities of long-term debt, net of unamortized
financing fees		2,216				2,807
Current maturities of lease liabilities		513				732
Total current liabilities			27,536				23,705
Long-Term liabilities		179				179
Deferred tax liability
Non-current maturities of lease liabilities		464				608
Total long-term liabilities			643				787
Total liabilities			28,179				24,492
Stockholders' Equity
Preferred stock		3				3
Common stock
Additional paid-in capital		158,004				157,899
Accumulated deficit		(140,543)				(140,354)
Less common stock held in treasury, at cost			(4,521)				(4,521)
Total stockholders' equity			12,943				13,027
Total liabilities and stockholders' equity	$	41,122		$	37,519

Corporate Headquarters

101 Wrangler Drive, Ste 201

Coppell, TX 75019

Phone: [phone]

www.costartechnologies.com

COSTAR TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(AMOUNTS SHOWN IN THOUSANDS, EXCEPT NET INCOME PER SHARE)

		Three Months Ended September 30,			Nine Months Ended September 30,
		2022			2021			2022			2021
		(Reviewed)			(Reviewed)			(Reviewed)			(Reviewed)
Net revenues	$	16,365	$	12,646	$	41,547	$	38,145
Cost of revenues		11,067			8,789			28,080			25,479
Gross profit		5,298			3,857			13,467			12,666
Selling, general and administrative		3,819			3,413			11,314			10,778
expenses
Engineering and development expense		471			739			1,558			2,357
		4,290			4,152			12,872			13,135
Income (Loss) from operations		1,008			(295)			595			(469)
Other income (expenses)
Interest expense		(336)			(240)			(809)			(740)
Other income, net		1			883			48			5,687
Total other income (expenses), net		(335)			643			(761)			4,947
Income (Loss) before taxes		673			348			(166)			4,478
Income tax provision (benefit)		8			(16)			23			51
Net income (loss)	$	665	$	364	$	(189)	$	4,427
Net income (loss) per share:
Basic	$	0.40	$	0.22	$	(0.11)	$	2.68
Diluted	$	0.40	$	0.22	$	(0.11)	$	2.68
Weighted average shares outstanding:
Basic		1,654			1,652			1,653			1,649
Diluted		1,674			1,655			1,653			1,652