AUSTIN, Texas, Sept. 8, 2016 /PRNewswire/ -- Crossroads
Systems, Inc. (NASDAQ: CRDS), an intellectual property licensing
company, reported financial results for its fiscal third quarter
ended July 31, 2016. On
March 22, 2016, Crossroads sold its
product business to Canadian-based StrongBox Data Solutions, Inc.
The presentation of the company's quarterly financial results
excludes product revenues and expenses, which are now reflected as
discontinued operations.
Intellectual property license revenue for the fiscal third
quarter was $57,000, compared to
$445,000 in the same quarter a year
ago. Gross profit was $34,000, or 60
percent of total revenue, compared to $257,000 or 58 percent of total revenue in the
same quarter a year ago.
Operating expenses for the third quarter decreased to
$1.2 million, compared to
$2.8 million in the same period a
year ago. This decrease is primarily due to lower headcount
and lower intellectual property litigation expenses.
Net loss available to common stockholders was $(481,000) or $(0.39) loss per share, compared to a net loss
available to common stockholders of $(3.3)
million or $(3.40) loss per
share in the same quarter a year ago.
At July 31, 2016, cash, cash
equivalents, and restricted cash totaled $4.9 million compared to $6.1 million in the previous quarter.
Management Commentary
Richard
K. Coleman, Jr., President and CEO at Crossroads Systems,
said, "We are near the end of the scheduled bidding process for the
non-972 portfolio. Although we cannot guarantee the results or
timing of a sale, we hope to consummate a transaction in 2016. Also
in the third quarter, we continued our appeals related to the '972
patent portfolio before the US Court of Appeals for the Federal
Circuit. We remain confident that Crossroads has compelling
arguments and look forward to the hearing in January."
Conference Call Information
Crossroads will hold a
conference call on Thursday, September 8,
2016 at 4:30 p.m. Eastern Time
(3:30 p.m. Central Time) to discuss
the financial results. Richard K. Coleman,
Jr., President and CEO, and CFO Jennifer Crane will host the presentation
followed by a question and answer period.
Date: Thursday, September 8,
2016
Time: 4:30 p.m. Eastern Time
(3:30 p.m. Central Time)
Dial-In Number: (888) 727-7725
International: (913) 312-1520
Conference ID: 5920769
To access the live or recorded webcast, visit:
http://edge.media-server.com/m/p/dg9tm8gp
Please call the conference telephone number 5-10 minutes prior
to the start time. An operator will register your name and
organization. For those unable to listen to the live call, a
webcast replay of the call will be available the day after the call
in the Investor Relations Events & Presentations section of the
Crossroads website.
About Crossroads Systems
Crossroads Systems, Inc.
(NASDAQ: CRDS) is an intellectual property licensing company
headquartered in Austin, Texas.
Founded in 1996 as a product solutions company, Crossroads created
some of the storage industry's most fundamental patents and has
licensed patents to more than 50 companies since 2000. Visit
www.crossroads.com.
Important Cautions Regarding Forward-Looking
Statements
This press release includes forward-looking
statements that relate to the business and expected future events
or future performance of Crossroads Systems, Inc. and involve known
and unknown risks, uncertainties and other factors that may cause
its actual results, levels of activity, performance or achievements
to differ materially from any future results, levels of activity,
performance or achievements expressed or implied by these
forward-looking statements. Words such as, but not limited to,
"believe," "expect," "anticipate," "estimate," "intend," "plan,"
"targets," "likely," "will," "would," "could," and similar
expressions or phrases identify forward-looking statements.
Forward-looking statements include, but are not limited to,
statements about Crossroads Systems' ability to implement its
business strategy, changes in the fair value of its derivative
instruments and its ability to achieve or maintain profitability.
The future performance of Crossroads Systems may be adversely
affected by the following risks and uncertainties: variations in
quarterly results, the ability to obtain, maintain or protect
patent and other proprietary intellectual property rights,
developments in litigation to which we may be a party,
technological change in the industry, future capital requirements,
regulatory actions or delays and other factors that may cause
actual results to be materially different from those described or
anticipated by these forward-looking statements. For a more
detailed discussion of these factors and risks, investors should
review Crossroads Systems' reports on Form 10-K, Form
10-Q, Form 8-K and other reports filed with the
Securities and Exchange Commission, which can be accessed through
the SEC's website or by clicking "SEC Filings" on the Company's
Investor Relations website
at http://investors.crossroads.com. Forward-looking
statements in this press release are based on management's beliefs
and opinions at the time the statements are made. All
forward-looking statements are qualified in their entirety by this
cautionary statement, and Crossroads Systems undertakes no
duty to update this information to reflect future events,
information or circumstances.
©2016 Crossroads Systems, Inc., Crossroads and Crossroads
Systems are registered trademarks of Crossroads Systems, Inc. All
trademarks are the property of their respective owners. All
specifications are subject to change without notice.
Investor Contact:
Mark
Hood
Crossroads Systems
ir@crossroads.com
Press Contact:
Matthew
Zintel
Zintel Public Relations
matthew.zintel@zintelpr.com
|
CROSSROADS SYSTEMS,
INC. AND SUBSIDIARIES
|
|
CONSOLIDATED BALANCE
SHEETS
|
|
(In thousands, except
share data)
|
|
|
|
|
|
|
|
|
|
|
|
July
31,
|
|
October
31,
|
|
ASSETS
|
|
2016
|
|
2015
|
|
|
|
|
(unaudited)
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
2,718
|
|
$
5,314
|
|
Restricted
cash
|
|
2,192
|
|
6,478
|
|
|
|
|
|
|
|
|
|
Total cash, cash
equivalents and restricted cash
|
|
4,910
|
|
11,792
|
|
|
|
|
|
|
|
|
Accounts receivable,
net of allowance for doubtful
|
|
|
|
|
|
|
accounts of $0 and
$5, respectively
|
|
1,049
|
|
656
|
|
Current assets of
discontinued operations
|
|
-
|
|
1,544
|
|
Prepaid expenses and
other current assets
|
|
172
|
|
218
|
|
|
|
|
|
|
|
|
|
Total current
assets
|
|
6,131
|
|
14,210
|
|
|
|
|
|
|
|
|
Non-current assets of
discontinued operations
|
|
-
|
|
562
|
|
Other
assets
|
|
186
|
|
141
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$
6,317
|
|
$
14,913
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts
payable
|
|
$
409
|
|
$
1,823
|
|
Accrued
expenses
|
|
508
|
|
1,727
|
|
Deferred revenue,
current portion
|
|
2,280
|
|
6,343
|
|
Current liabilities
of discontinued operations
|
|
-
|
|
1,359
|
|
|
Total current
liabilities
|
|
3,197
|
|
11,252
|
|
|
|
|
|
|
|
|
Non-current
liabilities of discontinued operations
|
|
-
|
|
597
|
|
|
|
|
|
|
|
|
Commitments and
contingencies (See Note 4)
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
3,197
|
|
11,849
|
|
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
Convertible preferred
stock, $0.001 par value, 25,000,000 shares authorized,
|
|
|
|
|
|
|
2,591,257 and
2,791,257 shares issued and outstanding, respectively
|
|
3
|
|
3
|
|
Common stock, $0.001
par value, 75,000,000 shares authorized,
|
|
|
|
|
|
|
1,225,472 and
1,209,126 shares issued and outstanding, respectively
|
|
1
|
|
1
|
|
Additional paid-in
capital
|
|
239,708
|
|
238,905
|
|
Accumulated other
comprehensive loss
|
|
-
|
|
(90)
|
|
Accumulated
deficit
|
|
(236,592)
|
|
(235,755)
|
|
|
Total stockholders'
equity
|
|
3,120
|
|
3,064
|
|
|
Total liabilities and
stockholders' equity
|
|
$
6,317
|
|
$
14,913
|
|
CROSSROADS SYSTEMS,
INC. AND SUBSIDIARIES
|
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
|
(Unaudited)
|
|
(In Thousands, Except
Share and Per Share Data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
|
|
|
July
31,
|
|
July
31,
|
|
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
IP license, royalty
and other revenue
|
|
$
57
|
|
$
445
|
|
$
477
|
|
$
838
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenue:
|
|
|
|
|
|
|
|
|
|
IP license, royalty
and other cost of revenue
|
|
23
|
|
188
|
|
122
|
|
242
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
34
|
|
257
|
|
355
|
|
596
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
General and
administrative
|
|
1,186
|
|
2,809
|
|
4,891
|
|
6,876
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating
expenses
|
|
1,186
|
|
2,809
|
|
4,891
|
|
6,876
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from
operations
|
|
(1,152)
|
|
(2,552)
|
|
(4,536)
|
|
(6,280)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
expense:
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
-
|
|
(79)
|
|
-
|
|
(306)
|
|
Amortization of debt
discount and issuance costs
|
|
-
|
|
(122)
|
|
-
|
|
(522)
|
|
Other
income
|
|
713
|
|
(1)
|
|
4,012
|
|
18
|
|
Loss from continuing
operations
|
|
(439)
|
|
(2,754)
|
|
(524)
|
|
(7,090)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued
operations:
|
|
|
|
|
|
|
|
|
|
Loss on discontinued
operations
|
|
-
|
|
(503)
|
|
(1,812)
|
|
(1,989)
|
|
Gain on disposal of
discontinued operations
|
|
-
|
|
-
|
|
1,771
|
|
-
|
|
Gain (loss) from
discontinued operations
|
|
-
|
|
(503)
|
|
(41)
|
|
(1,989)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
(439)
|
|
$
(3,257)
|
|
$
(565)
|
|
$
(9,079)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends
attributable to preferred stock
|
|
$
(42)
|
|
$
(43)
|
|
$
(171)
|
|
$
(228)
|
|
Net loss available to
common stockholders, basic and diluted
|
|
$
(481)
|
|
$
(3,300)
|
|
$
(736)
|
|
$
(9,307)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per
share, basic and diluted:
|
|
|
|
|
|
|
|
|
|
Discontinued
operations
|
|
$
-
|
|
$
(0.52)
|
|
$
(0.03)
|
|
$
(2.19)
|
|
Continuing
operations
|
|
$
(0.36)
|
|
$
(2.84)
|
|
$
(0.43)
|
|
$
(7.79)
|
|
Available to common
stockholder
|
|
$
(0.39)
|
|
$
(3.40)
|
|
$
(0.60)
|
|
$
(10.22)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of common shares
|
|
|
|
|
|
|
|
|
|
outstanding, basic
and diluted
|
|
1,225,472
|
|
971,403
|
|
1,224,801
|
|
910,300
|
|
CROSSROADS SYSTEMS,
INC. AND SUBSIDIARIES
|
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
(Unaudited)
|
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months
Ended
|
|
|
|
|
|
|
July
31,
|
|
|
|
|
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
Net loss
|
|
$
(565)
|
|
$
(9,079)
|
|
Adjustments to
reconcile net loss to net cash used in
|
|
|
|
|
|
|
operating
activities:
|
|
|
|
|
|
|
Depreciation from
discontinued operations
|
|
69
|
|
300
|
|
|
Gain on sale of
discontinued operations
|
|
(919)
|
|
-
|
|
|
Amortization of debt
discount
|
|
-
|
|
512
|
|
|
Stock-based
compensation
|
|
557
|
|
743
|
|
|
Provision for
doubtful accounts receivable
|
|
(4)
|
|
61
|
|
Changes in assets and
liabilities:
|
|
|
|
|
|
|
Accounts
receivable
|
|
641
|
|
260
|
|
|
Inventory
|
|
54
|
|
(123)
|
|
|
Prepaid expenses and
other assets
|
|
62
|
|
209
|
|
|
Accounts
payable
|
|
(1,310)
|
|
1,337
|
|
|
Accrued
expenses
|
|
(737)
|
|
211
|
|
|
Deferred
revenue
|
|
(5,300)
|
|
154
|
|
|
|
Net cash used in
operating activities
|
|
(7,452)
|
|
(5,415)
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
Purchase of property
and equipment from discontinued operations
|
|
(28)
|
|
(180)
|
|
Proceeds from sale of
discontinued operations
|
|
852
|
|
-
|
|
Maturity of
held-to-maturity investments
|
|
-
|
|
-
|
|
|
|
Net cash provided by
(used in) investing activities
|
|
824
|
|
(180)
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
Proceeds from
issuance of common stock, net of expenses
|
|
-
|
|
10,549
|
|
Preferred
dividends
|
|
(133)
|
|
-
|
|
Repayment of
debt
|
|
-
|
|
(2,534)
|
|
Net cash (used in)
provided by financing activities
|
|
(133)
|
|
8,015
|
|
|
|
|
|
|
|
|
|
|
Effect of foreign
exchange rate on cash and cash equivalents
|
|
(121)
|
|
(55)
|
|
Change in cash and
cash equivalents
|
|
(6,882)
|
|
2,365
|
|
Cash, cash
equivalents, and restricted cash beginning of period
|
|
11,792
|
|
4,946
|
|
Cash, cash
equivalents, and restricted cash end of period
|
|
$
4,910
|
|
$
7,311
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for
interest
|
|
$
-
|
|
$
309
|
|
Cash paid for income
taxes
|
|
$
2
|
|
$
1
|
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosure of non cash financing activities:
|
|
|
|
|
|
Conversion of
preferred stock to common stock
|
|
$
302
|
|
$
418
|
|
Common stock
dividends issued to preferred shareholders
|
|
$
139
|
|
$
298
|
|
Warrants issued with
private placement stock
|
|
$
-
|
|
$
1,893
|
|
Lease incentive
received, non-cash addition to fixed assets
|
|
$
-
|
|
$
243
|
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SOURCE Crossroads Systems