SOURCE: Crossroads Systems

Crossroads Systems

August 26, 2009 16:15 ET

Crossroads Systems Reports Fiscal Third Quarter Financial Results

AUSTIN, TX--(Marketwire - August 26, 2009) - Crossroads Systems, Inc. (PINKSHEETS: CRDS), a global leading provider of solutions to connect, protect, secure and restore data, today announced results for its fiscal third quarter ended July 31, 2009 (Q3'09).

Revenue totaled $3.9 million for Q3'09 compared to $3.7 million in the fiscal second quarter ended April 30, 2009 (Q2'09). Product revenue totaled $1.3 million for Q3'09 compared to $1.2 million for Q2'09. Product revenue remained low due to our largest OEM continued to have sales below their traditional run-rate as well as a slow recovery in the economy. In addition, revenue from IP license, royalty and other totaled $2.6 million for Q3'09 compared to $2.5 million for Q2'09. Gross profit was $3.3 million, or 85 percent for Q3'09, compared to $3.2 million, or 85 percent for Q2'09. Net loss for Q3'09 was $1.1 million, or $0.04 cents loss per share, compared to a net loss of $1.5 million, or $0.05 cents loss per share in Q2'09.

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-at-rest. 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.

©2009 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, July 31,
                                                          2008       2009
                                                       ----------- --------
                 ASSETS

Current assets:
  Cash and cash equivalents                            $     7,086 $  5,623
  Accounts receivable, net                                   5,535    3,480
  Inventories, net                                             329      147
  Prepaids and other current assets                            343      262
                                                       ----------- --------
    Total current assets                                    13,293    9,512

Property and equipment, net                                  1,444      986
Intangible, net                                              2,791    1,767
Investment in Subsidiaries                                     968      940
Goodwill                                                       324        -
Other assets                                                    17       69
                                                       ----------- --------
    Total assets                                       $    18,837 $ 13,274
                                                       =========== ========

     LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable                                     $     1,321 $  1,030
  Accrued expenses                                           2,333    1,629
  Accrued warranty costs                                        33       22
  Deferred revenue                                             298      333
  Line of Credit                                             2,024    1,973
                                                       ----------- --------
    Total current liabilities                                6,009    4,987

Long-term liabilities                                           53       81
Stockholders' equity                                        12,775    8,206
                                                       ----------- --------
    Total liabilities and stockholders' equity         $    18,837 $ 13,274
                                                       =========== ========




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


                              Three Months Ended      Nine Months Ended
                                   July 31,                July 31,
                            ----------  ----------  ----------  ----------
                               2008        2009        2008        2009
                            ----------  ----------  ----------  ----------
Revenue:
   Product                  $    2,230  $    1,277  $    7,336  $    3,998
   IP License, royalty and
    other                        1,881       2,584       7,374       6,846
                            ----------  ----------  ----------  ----------
      Total revenue              4,111       3,861      14,710      10,844

Cost of revenue:
   Product                         356          87       1,458         495
   IP License, royalty and
    other                          376         507       1,239       1,324
                            ----------  ----------  ----------  ----------
      Total cost of revenue        732         594       2,697       1,819
                            ----------  ----------  ----------  ----------
Gross profit                     3,379       3,267      12,013       9,025
                            ----------  ----------  ----------  ----------
Operating expenses:
   Sales and marketing           1,737       1,164       5,403       4,181
   Research and development      2,784       2,320       8,819       7,074
   General and
    administrative                 792         460       2,624       1,252
   FAS 123R and stock based
    compensation                   174         191         509         592
   Business restructuring
    expense                          -           -           -         217
   Amortization of
    intangibles                    284         265         836         814
                            ----------  ----------  ----------  ----------

      Total operating
       expenses                  5,771       4,400      18,191      14,130
                            ----------  ----------  ----------  ----------
Income (Loss) from
 operations                     (2,392)     (1,133)     (6,178)     (5,105)
Interest (expense) income        3,572          (7)      3,616         (77)
                            ----------  ----------  ----------  ----------
Net Income (Loss)           $    1,180  $   (1,140) $   (2,562) $   (5,182)
                            ==========  ==========  ==========  ==========

Basic net gain (loss) per
 share                            0.04       (0.04)       0.04       (0.18)
Shares used in computing:
   Basic net gain (loss)
    per share               28,154,311  29,103,391  28,154,311  28,953,483
                            ----------  ----------  ----------  ----------
   Fully Diluted net gain
    (loss) per share        28,154,311  29,103,391  28,154,311  28,953,483
                            ----------  ----------  ----------  ----------




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


                                                        Nine Months Ended
                                                             July 31,
                                                        ------------------
                                                          2008      2009
                                                        --------  --------
Cash flows from operating activities:
   Net loss                                             $ (2,562) $ (5,182)
   Adjustments to reconcile net loss to net cash
    provided by (used in) operating activities:
      Depreciation                                           736       658
      Business restructuring expenses                          -       217
      Amortization of intangibles                            836       814
      Loss on disposal of fixed assets                       (11)        1
      Stock-based compensation                                 -       130
      FAS 123R expense                                       510       462
      Provision for doubtful accounts receivable               3         2
      Provision for excess and obsolete inventory             20       107
   Changes in assets and liabilities:
      Accounts receivable                                    886     2,248
      Inventories                                             98        75
      Prepaids and other current assets                     (253)       94
      Accounts payable                                    (1,218)     (705)
      Accrued expenses and other                             780      (360)
      Deferred revenue and other                               -       (18)
                                                        --------  --------
         Net cash used in operating activities              (175)   (1,457)
                                                        --------  --------
Cash flows from investing activities:
   Purchase of property and equipment                       (307)     (203)
   Investment in privately-held company                   (2,378)        -
                                                        --------  --------
         Net cash used in investing activities            (2,685)     (203)
                                                        --------  --------
Cash flows from financing activities:
   Proceeds from issuance of common stock                      -         1
   Proceeds from Borrowing on Line of Credit               2,024       (51)
         Net cash provided by (used in) financing
          activities                                       2,024       (50)
                                                        --------  --------

Effect of Exchange Rate on Cash                               33       247
Net increase (decrease) in cash and cash equivalents        (803)   (1,463)
Cash and cash equivalents, beginning of period             9,261     7,086
                                                        --------  --------
Cash and cash equivalents, end of period                $  8,458  $  5,623
                                                        ========  ========

Contact Information

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

    Press Contact:
    Matthew Zintel
    Zintel Public Relations
    Email Contact
    310.574.8888