Costar Technologies, Inc. Announces Financial Results for the Second Quarter Ended June 30, 2013

FOR IMMEDIATE RELEASE
CONTACT:
Scott Switzer

August
14, 2013 Chief
Financial Officer

Costar
Technologies, Inc.

(469)
635-6800

Costar
Technologies, Inc. Announces Financial Results

for
the Second Quarter Ended June 30, 2013

($
in thousands)

Coppell,
Texas ? August 14, 2012 ? Costar
Technologies, Inc. (the ?Company?) (OTC Markets Group: CSTI), reported its
unaudited financial results for the quarter ended June 30, 2013 that have been compiled
by the independent accounting firm Rothstein, Kass & Company, P.C.

Highlights

Net
income of $438, or $0.30 basic earnings per share, for the three months
ended June 30, 2013, as compared to $58, or $0.04 basic earnings per
share, for the three months ended June 30, 2012. For the six months ended June
30, 2013 and 2012 the Company had net income of $1,034, or $0.71 basic
earnings per share, and $649, or $0.45 basic earnings per share,
respectively.

Sales increased 32%
for the second quarter of 2013 as compared to the same period for 2012. Sales
increased 19% for the six month period ended June 30, 2013 as compared to
the same period in 2012.

The
Company paid down its line of credit to $0 and ended the quarterly period
with $706 in cash.

Book value increased to $6.24 per share.

Financial Results, Second
Quarter of 2013 as Compared to Second Quarter of 2012

Revenue
for the second quarter of 2013 totaled $6,219, as compared to revenue of $4,709
for the second quarter of the prior year, an increase of 32%. The increase was mainly
due to several retailers opening new stores and increasing remodels.

Gross
profit for the second quarter of 2013 totaled $1,828. This compares to gross
profit of $1,331 for the second quarter of 2012, an increase of 37%. The
Company realized continued strong sales of its DVR line and growth in its IP
product segment, resulting in improved margins.

Selling,
general and administrative expenses from continuing operations for the second quarter
of 2013 totaled $1,384. This compares to selling, general and administrative
expenses from continuing operations of $1,236 for the second quarter of 2012, an
increase of 12%. The increase of $148 was due to the hiring of four sales and
support employees in the latter half of 2012 to stimulate future growth, along
with increased commissions and other incentive compensation related to the
Company?s current performance.

Other
income (expense) for the second quarter of 2013 totaled $(6). This compares to
other income (expense) of $(37) for the second quarter
of 2012. For the second quarter of 2013, interest expense was $40 as compared
to interest expense of $41 for the second quarter of 2012. With the cash
flows generated from positive net income and the Company?s new bank loan,
interest expense is expected to decrease significantly for the Company for the
remainder of 2013.

Net
income for the second quarter of 2013 was approximately $438, or $0.30 basic
earnings per share. This compares to net income for the second quarter of 2012
of $58, or $0.04 basic earnings per share.

Financial Results,
Six Months Ended June 30, 2013 as Compared to Six Months Ended June 30, 2012

Revenue
from continuing operations for the six months ended June 30, 2013 totaled $13,528,
an increase of 19% as compared to revenue of $11,325 for the same period last
year.

Gross
profit for the six months ended June 30, 2013 totaled $3,978. This compares to
gross profit of $3,265 for the six months ended June 30, 2012.

Selling,
general and administrative expenses for the six months ended June 30, 2013
totaled $2,929. This compares to selling, general and administrative expenses
of $2,525 for the six months ended June 30, 2012, an increase of 16%.

Other
income (expense) for the six months ended June 30, 2013 totaled $(15). This
compares to other income (expense) of $(91) for the six months ended June 30,
2012. For the six months ended June 30,
2013, interest expense was $51, as compared to interest expense of $99 for the
six months ended June 30, 2012.

Net
income for the six months ended June 30, 2013 was approximately $1,034, or $0.71
basic earnings per share, as compared to net income for the same period in 2012
of $649, or $.45 basic earnings per share.

Credit Facility

On
April 1, 2013, the Company entered into a one year $1,000 credit facility with
Bank of Texas. Borrowings under the credit facility accrue interest at a rate
equal to Bank of Texas Prime, currently 4.0% per annum. As of June 30, 2013, $0
was owed to Bank of Texas. Further information can be found in Note 5 of the
Company?s financial statements for the second quarter of 2013 and the Company?s
April 3, 2013 press release.

James
Pritchett, President and Chief Executive Officer of the Company, stated, ?We
are pleased to announce that the Company is debt free for the first time in its
history. This completes our turnaround that began in 2008. The new
additions to our sales team and the new network product offerings continue to
provide year-over-year improvement. Our product mix, coupled with strategic
product purchases, resulted in improving gross profit margins. While we remain
cautiously optimistic due to the slow economic recovery, we are encouraged by
our results and are dedicated to continue to deliver on our commitment of
strong earnings and double digit sales growth.?

The
Company?s outside independent accountants completed their analysis of the Company?s
financial condition. The Independent Accountants Compilation Report, including
financial statements and applicable footnote disclosures, is available on our website
at www.costartechnologies.com.

About Costar
Technologies, Inc.

Costar
Technologies, Inc. develops, designs 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?.

Cautionary Statement
Regarding Forward Looking Statements

This
document contains forward-looking statements that involve risks and
uncertainties, as well as assumptions, that if they never materialize or prove
incorrect, could cause the results of the Company to differ materially from
those expressed or implied by such forward-looking statements. Forward-looking
statements generally are identified by the words ?expects,? ?anticipates,?
?believes,? ?intends,? ?estimates,? ?should,? ?would,? ?strategy,? ?plan? and
similar expressions. All statements other than statements of historical fact
are statements that could be deemed forward-looking statements. The risks,
uncertainties and assumptions include developments in the marketplace for our
products, competition, related products and services and general economic
conditions, as well as other risks and uncertainties. Accordingly, we cannot
give assurance that any of the events anticipated by the forward-looking
statements will transpire or occur, or if any of them do so, what impact they
will have on the results of operations or financial condition of the Company.