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LAC-MEGANTIC, QUEBEC--(Marketwire - May 26, 2010) - Bestar Inc. (CNSX:BES) - Sales for the first quarter ending March 31^st, 2010 showed $10,140,000 CA, a decrease of 12% compared to $11,523,000 for the same period in 2009. The strengthening of the Canadian dollar versus its US counterpart accounts for almost $800,000 of the sales decrease

The promotion and introduction of a new product revealed interesting results, generating a 21% increase in sales during the first part of this year compared to the 4^th quarter of 2009. However, sales of this new product decreased significantly in March. In addition, even though furniture sales slightly increased in Canada, US sales, affected by the weak economic recovery in our sector, along with the increased strength of the Canadian dollar, have contributed to a substantial decrease compared to the first quarter of 2009. Component sales have significantly decreased in comparison to the first quarter of 2009. Since the second quarter of 2009 activity in this sector has not improved. During these slow economic times, our component clients have the capacity to respond to current demands.

A loss before taxes of $157,000 CA was recorded for the first quarter of 2010, while earnings before taxes of $305,000 CA were recorded for the same period of 2009. (The combination of the rate of exchange and the fair market value of exchange contracts had a positive effect of $147,000 CA in 2010 and $3,000 in 2009) A net loss of $113,000 CA or ($.01) per share was recorded for 2010 in comparison to a net profit of $206,000 CA or $.02 per share, for the same quarter in 2009.

The negative results are due to a decrease in sales, of which a large portion is due mainly to the increased value of our Canadian dollar versus its US counterpart.

In view of the decreased sales, management decided to close down production for one week in early May and if needed may take other steps in order to limit inventories in relation to anticipated needs, without adversely affecting delivery schedules.

Cash Flows

During the course of the first quarter of 2010, cash flows generated by operations were $568,000 compared to a negative cash flow of $511,000 for the same quarter in 2009. During the first three months, cash generated by operations activities before changes in working capital items was $300,000 while changes in working capital generated $268,000. A decrease in accounts receivable, a slight increase in inventories and prepaid expenses explain the essential working capital variations. Investment activities used $22,000 compared to $40,000 for the same quarter in 2009. Financing activities used $1,218,000. On March 31, 2010 the Company reduced its operating loan to $890,000 while at December 31^st,2009 it was at $1,810,000. The remaining cash was used to reimburse capital on certain long term loans.

Financing

As explained in the annual report, during the first quarter of 2010, The Company obtained a moratorium for the period from March 1^st, 2010 to December 31^st, 2010. This moratorium represents 75% of the capital due on loans totaling $1,300,000 granted by related parties.

Outlook

• Although analysts say the recession is over, in our sector, there is a few months delay between the economic recovery and an increase in demand for furniture, especially the demand for office furniture. We have just begun to see modest signs of the economic recovery, however prospects for growth remain limited. A large part of our sales depends on the rate and strength of the economic recovery in the U.S." explained Mr. Paulin Tardif, President and CEO
• Until the full economic recovery is felt in our sector of operations and to better face globalization and the ever increasing Asian competition we continue to make necessary changes to reduce costs and increase productivity. As mentioned in our 2009 annual report, we have undertaken a strategic marketing initiative to improve our image and update our product line to better serve our present customers while recruiting new ones. In the beginning of May 2010, we started to use a new packaging method which will enable us to offer our customers better quality packaging with totally recyclable materials without increasing the costs. We have also introduced on the market new commercially oriented collections which should have a positive impact on our second quarter sales. We continue to seek out business alliances with suppliers, customers and companies engaged in complementary activities in order to strengthen and maintain Bestar' s development" concluded Mr. Tardif.

Subsequent Event

Mr. Eric Ménard, Vice President, Finance, gave notice of his departure at the end of June 2010. Mr. Daniel Langlois, C.M.A., controller of the Company since February 2009 will assume the finance responsibilities until the nomination of a new Vice-President, Finance.

Results Summary