Le Lézard
Classified in: Science and technology, Business
Subjects: ERN, PSF

Costar Technologies, Inc. Announces Financial Results For the Third Quarter Ended September 30, 2019


COPPELL, Texas, Nov. 14, 2019 /PRNewswire/ -- Costar Technologies, Inc. (the "Company") (OTC Markets Group: CSTI) announced today its financial results for the third quarter ended September 30, 2019 that have been reviewed by the independent accounting firm BKD, LLP.

Financial Results for the Quarter Ended September 30, 2019

Scott Switzer, Chief Operating Officer and Chief Financial Officer, stated, "This quarter marks our second consecutive profitable quarter since the acquisition of Arecont Vision. The third quarter is historically our strongest quarter, and 2019 was no exception. Except for CohuHD and Arecont Vision, our divisions were up 11% over the third quarter of 2018. We have experienced softness in CohuHD's transportation market segment, which generated $4M in revenue during the third quarter of 2019, a decline of over $0.6M from the third quarter of 2018 due to weather delays and tariffs affecting state budgets."

President and Chief Executive Officer, James Pritchett stated, "We have made significant advances at Arecont Vision Costar in a relatively short period of time. The effects of the bankruptcy still impact the division's revenues, but the cost reduction actions taken early in 2019 are having a positive result. Arecont Vision's third quarter was the division's second positive quarter as revenues stabilized. We recently won two major long-term contacts with financial institutions, both domestic and international, that will begin shipping in the fourth quarter. We continue to invest in developing artificial intelligence for our cameras for retail, financial and Smart City applications. I am confident the changes we have made, and are continuing to make, will position us for long-term growth and profitability for our shareholders."

The Company's outside 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):





Quarter
Ended
9/30/19

Quarter
Ended
9/30/18

Adjusted Earnings

1,287

1,099

Less:



    Stock-Based Compensation

(124)

(66)

    Intangible Amortization

(323)

(324)

    Transaction and Related Expenses


(243)

    Loan Forgiveness Required Under AVC Purchase Agreement


(410)

Net Income (Loss)

840

56





Quarter
Ended
9/30/19

Quarter
Ended
9/30/18

Adjusted EBITDA

2,010

1,560

Less:



    Interest

(350)

(329)

    Income Taxes 

(255)

(24)

    Depreciation

(118)

(108)

    Intangible Amortization

(323)

(324)

    Stock-Based Compensation

(124)

(66)

    Transaction and Related Expenses


(243)

    Loan Forgiveness Required Under AVC Purchase Agreement


(410)

Net Income (Loss)

840

56

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 35th largest company in a&s magazine's Security 50 for 2019. 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)
























September 30, 2019


December 31, 2018




(Reviewed)



(Audited)

ASSETS







Current assets






   Cash and cash equivalents

$

1


$

189

   Accounts receivable, less allowance for doubtful accounts






      of $570 and $859 in 2019 and 2018, respectively


9,250



9,333

   Inventories, net of reserve for obsolescence






      of $1,026and $1,101 in 2019 and 2018, respectively


20,525



20,618

   Prepaid expenses and other current assets


2,573



1,531


  Total current assets


32,349



31,671








Non-current assets






   Property and equipment, net


991



915

   Deferred financing costs, net


69



99

   Deferred tax asset, net


3,766



3,766

   Trade names, net


2,289



2,561

   Distribution agreements, net


827



905

   Customer relationships, net


4,361



4,884

   Covenants not to compete, net


68



92

   Patents, net


177



200

   Technology, net


285



335

   Goodwill


6,513



6,513

   Other non-current assets


149



109









  Total non-current assets


19,495



20,379









  Total assets

$

51,844


$

52,050









LIABILITIES AND STOCKHOLDERS' EQUITY













Current liabilities






   Accounts payable

$

4,885


$

5,786

   Accrued expenses and other


7,026



7,075

   Line of credit


14,772



11,738

   Current maturities of long-term debt, net of unamortized 






      financing fees


779



773

   Current portion of contingent purchase price


992



1,048

   Current maturities of notes payable, unrelated party


833




   Current maturities of notes payable, related party


206



805


  Total current liabilities


29,493



27,225








Long-Term liabilities






   Long-term debt, net of current maturities and 






      unamortized financing fees


3,788



4,373

   Contingent purchase price, net of current portion





992


  Total long-term liabilities


3,788



5,365


  Total liabilities


33,281



32,590















Stockholders' Equity






   Preferred stock






   Common stock


3



3

   Additional paid-in capital


157,363



157,029

   Accumulated deficit


(134,282)



(133,051)

   Less common stock held in treasury, at cost


(4,521)



(4,521)


  Total stockholders' equity


18,563



19,460









  Total liabilities and stockholders' equity

$

51,844


$

52,050

 

CONSOLIDATED STATEMENTS OF OPERATIONS

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



















































Three Months Ended September 30, 



Nine Months Ended September 30, 





2019


2018


2019


2018






(Reviewed)



(Reviewed)



(Reviewed)



(Reviewed)
















Net revenues



$

17,774


$

18,960


$

52,588


$

41,864

Cost of revenues




10,054



11,426



31,527



25,400
















Gross profit




7,720



7,534



21,061



16,464
















Selling, general and administrative expenses



4,821



5,264



17,358



12,327

Engineering and development expense



1,462



1,204



4,411



2,746

Transaction and related expense






243






307






6,283



6,711



21,769



15,380
















Income (loss) from operations



1,437



823



(708)



1,084
















Other expenses















Interest expense




(350)



(329)



(1,006)



(521)


Other income (expense), net



8



(414)



9



(414)

Total other expenses, net




(342)



(743)



(997)



(935)
















Income (loss) before taxes




1,095



80



(1,705)



149

Income tax provision (benefit)



255



24



(474)



81
















Net income (loss)



$

840


$

56


$

(1,231)


$

68































Net income (loss) per share:














Basic



$

0.53


$

0.04


$

(0.78)


$

0.04
































Diluted



$

0.51


$

0.04


$

(0.78)


$

0.04































Weighted average shares outstanding:














Basic




1,597



1,546



1,576



1,546
































Diluted




1,633



1,600



1,576



1,600

 

SOURCE Costar Technologies, Inc.


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