Crossroads Systems Reports Fiscal Third Quarter 2016 Financial Results

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September 8, 2016 4:05 PM EDT

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 CommentaryRichard 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 InformationCrossroads 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, 2016Time: 4:30 p.m. Eastern Time (3:30 p.m. Central Time)Dial-In Number: (888) 727-7725International:  (913) 312-1520Conference 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 SystemsCrossroads 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 StatementsThis 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 HoodCrossroads Systems[email protected]

Press Contact:Matthew ZintelZintel Public Relations[email protected]

 

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

Logo - http://photos.prnewswire.com/prnh/20140721/128960

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/crossroads-systems-reports-fiscal-third-quarter-2016-financial-results-300324647.html

SOURCE Crossroads Systems


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