SOURCE: Crossroads Systems

Crossroads Systems

February 24, 2010 16:00 ET

Crossroads Systems Reports Fiscal First Quarter Financial Results

AUSTIN, TX--(Marketwire - February 24, 2010) - Crossroads Systems, Inc. (PINKSHEETS: CRDS), a global leading provider of solutions to connect, protect, secure and restore data, today announced results for its fiscal first quarter ended January 31, 2010 (Q1'10).

Revenue totaled $2.7 million for Q1'10 compared to $6.0 million in the fiscal fourth quarter ended October 31, 2009 (Q4'09). Product revenue totaled $1.1 million for Q1'10 compared to $1.9 million for Q4'09. In addition, revenue from IP license, royalty and other totaled $1.6 million for Q1'10 compared to $4.1 million for Q4'09. Gross profit was $2.5 million, or 91 percent for Q1'10, compared to $5.2 million, or 86 percent for Q4'09. Net loss for Q1'10 was $2.1 million, or $0.07 cents loss per share, compared to net income of $775 thousand, or $0.03 cents gain per share in Q4'09.

"Revenue fluctuation from Q4 2009 to Q1 2010 was as expected due to our OEM business cycles and economic impact," said Rob Sims, President and CEO. "Our cash balance also grew as expected due to the collection of cash from intellectual property licensing as well as the continued focus on managing our business going forward."

For additional financial information, visit www.crossroads.com/InvestorRelations/.

About Crossroads Systems, Inc.

Headquartered in Austin, Texas, Crossroads Systems is a global leading provider of solutions to connect, protect, secure and restore data. Crossroads (PINKSHEETS: CRDS) trades over-the-counter on Pink Sheets and posts its financial disclosure reports, press releases and other related documentation on the OTCIQ Web service of the Pink Sheets Web site. Visit www.crossroads.com.

Forward-Looking Statements

This release may include forward-looking statements. The words "believe," "expect," "intend," "plan," "project," "will" and similar phrases as they relate to Crossroads are intended to identify such forward-looking statements. These statements reflect the current views and assumptions of Crossroads and are subject to various risks and uncertainties that could cause actual results to differ materially from expectations.

©2010 Crossroads Systems, Inc. Crossroads and Crossroads Systems are registered trademarks of Crossroads Systems, Inc. All specifications are subject to change without notice.

                CROSSROADS SYSTEMS, INC. AND SUBSIDIARIES
                  CONDENSED CONSOLIDATED BALANCE SHEETS
                                (Unaudited)
                              (In Thousands)

                                                  October 31,  January 31,
                                                      2009         2010
                                                  ------------ ------------
                      ASSETS

Current assets:
  Cash and cash equivalents                       $      5,297 $      5,851
  Accounts receivable, net                               5,124        2,124
  Inventories, net                                         111           91
  Prepaids and other current assets                        423          424
                                                  ------------ ------------
    Total current assets                                10,955        8,490

Property and equipment, net                                830          723
Intangible, net                                          1,502        1,237
Investment in Subsidiaries                                 940          940
Other assets                                                69           57
                                                  ------------ ------------
    Total assets                                  $     14,296 $     11,447
                                                  ============ ============

       LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable                                $      1,036 $        550
  Accrued expenses                                       1,877        1,209
  Accrued warranty costs                                    18           16
  Deferred revenue                                         199          185
  Line of Credit                                         1,973        1,973
                                                  ------------ ------------
    Total current liabilities                            5,103        3,933

Long-term liabilities                                       59          110
Stockholders' equity                                     9,134        7,404
                                                  ------------ ------------
    Total liabilities and stockholders' equity    $     14,296 $     11,447
                                                  ============ ============





                CROSSROADS SYSTEMS, INC. AND SUBSIDIARIES
              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                (Unaudited)
              (In Thousands, Except Share and Per Share Data)

                                                     Three Months Ended
                                                        January 31,
                                                  ------------------------
                                                      2009         2010
                                                  -----------  -----------
Revenue:
  Product                                         $     1,562  $     1,093
  IP License, royalty and other                         1,684        1,629
                                                  -----------  -----------
      Total revenue                                     3,246        2,722

Cost of revenue:
  Product                                                 284           83
  IP License, royalty and other                           369          172
                                                  -----------  -----------
      Total cost of revenue                               653          255
                                                  -----------  -----------

Gross profit                                            2,593        2,467
                                                  -----------  -----------
Operating expenses:
  Sales and marketing                                   1,564        1,257
  Research and development                              2,487        2,169
  General and administrative                              233          457
  FAS 123R and stock based compensation                   283          392
  Business restructuring expense                          217            -
  Amortization of intangibles                             284          265
                                                  -----------  -----------

      Total operating expenses                          5,068        4,540
                                                  -----------  -----------
Income (Loss) from operations                          (2,475)      (2,073)

Interest (expense) income                                 (22)         (24)
                                                  -----------  -----------
Net Income (Loss)                                 $    (2,497) $    (2,097)
                                                  ===========  =========== 

Basic net gain (loss) per share                         (0.09)       (0.07)

Shares used in computing:
  Basic net gain (loss) per share                  28,791,047   29,199,586
                                                  -----------  -----------





                CROSSROADS SYSTEMS, INC. AND SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (Unaudited)
                              (In thousands)

                                                        Three Months Ended
                                                            January 31,
                                                        ------------------
                                                          2009      2010
                                                        --------  --------
Cash flows from operating activities:
  Net loss                                              $ (2,497) $ (2,097)
  Adjustments to reconcile net loss to net cash
   provided by (used in) operating activities:
    Depreciation                                             232       163
    Business restructuring expenses                          217         -
    Amortization of intangibles                              284       265
    Stock-based compensation and FAS 123R                    283       392
    Provision for doubtful accounts receivable                 1       (12)
    Provision for excess and obsolete inventory               24        (2)
  Changes in assets and liabilities:
    Accounts receivable                                    1,358     3,007
    Inventories                                               53        22
    Prepaids and other current assets                         86        (3)
    Accounts payable                                        (382)     (241)
    Accrued expenses and other                              (735)     (608)
    Deferred revenue and other                                 -        (3)
                                                        --------  --------
        Net cash provided by (used in) operating
         activities                                       (1,076)      883
                                                        --------  --------
Cash flows from investing activities:
  Purchase of property and equipment                         (71)      (85)
                                                        --------  --------
        Net cash used in investing activities                (71)      (85)
                                                        --------  --------
Cash flows from financing activities:
  Proceeds from issuance of common stock                       1         -
                                                        --------  --------
       Net cash provided by financing activities               1         -
                                                        --------  --------

Effect of Exchange Rate on Cash                              (52)     (244)
Net increase (decrease) in cash and cash equivalents      (1,198)      554
Cash and cash equivalents, beginning of period             7,086     5,297
                                                        --------  --------
Cash and cash equivalents, end of period                $  5,888  $  5,851
                                                        ========  ========

Contact Information

  • Investor Contact:
    Jennifer Crane
    Crossroads Systems
    Email Contact
    512.928.6897
    800.643.7148

    Press Contact:
    Matthew Zintel
    Zintel Public Relations
    Email Contact
    317.848.8804