SOURCE: Crossroads Systems

Crossroads Systems

September 01, 2010 16:00 ET

Crossroads Systems Reports Fiscal Third Quarter Financial Results

AUSTIN, TX--(Marketwire - September 1, 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 third quarter ended July 31, 2010 (Q3'10).

Revenue totaled $3.2 million for Q3'10 compared to $5.0 million in the fiscal second quarter ended April 30, 2010 (Q2'10). Product revenue totaled $884,000 for Q3'10 compared to $941,000 for Q2'10. Revenue from IP license, royalty and other totaled $2.3 million for Q3'10 compared to $4.1 million for Q2'10. Gross profit was $2.7 million, or 86 percent for Q3'10, compared to $4.0 million, or 79 percent for Q2'10. Net loss for Q3'10 was $1.5 million, or $0.05 cents loss per share, compared to a net loss of $393,000, or $0.01 cent loss per share in Q2'10.

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.

©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,    July 31,
                                                     2009          2010
                                                  -----------   -----------
                     ASSETS

Current assets:
  Cash and cash equivalents                       $     5,297   $     6,152
  Accounts receivable, net                              5,124         2,817
  Inventories, net                                        111            68
  Prepaids and other current assets                       423           304
                                                  -----------   -----------
      Total current assets                             10,955         9,341

Property and equipment, net                               830           596
Intangible, net                                         1,502           707
Investment in Subsidiaries                                940           940
Other assets                                               69            57
                                                  -----------   -----------
      Total assets                                $    14,296   $    11,641
                                                  ===========   ===========

       LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Deferred revenue                                        199         1,510
  Line of Credit                                        1,973         1,973
                                                  -----------   -----------
      Total current liabilities                         5,103         5,854

Long-term liabilities                                      59            88
Stockholders' equity                                    9,134         5,699
                                                  -----------   -----------
      Total liabilities and stockholders' equity  $    14,296   $    11,641
                                                  ===========   ===========




                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,
                            ----------------------  ----------------------
                               2009        2010        2009        2010
                            ----------  ----------  ----------  ----------
Revenue:
   Product                  $    1,277  $      884  $    3,998  $    2,918
   IP License, royalty and
    other                        2,584       2,275       6,846       8,006
                            ----------  ----------  ----------  ----------

      Total revenue              3,861       3,159      10,844      10,924

Cost of revenue:
   Product                          87          91         495         312
   IP License, royalty and
    other                          507         337       1,324       1,439
                            ----------  ----------  ----------  ----------

      Total cost of revenue        594         428       1,819       1,751
                            ----------  ----------  ----------  ----------

Gross profit                     3,267       2,731       9,025       9,173
                            ----------  ----------  ----------  ----------

Operating expenses:
   Sales and marketing           1,164       1,208       4,181       3,766
   Research and development      2,320       2,113       7,074       6,432
   General and
    administrative                 460         550       1,252       1,512
   FAS 123R and stock based
    compensation                   191          55         592         571
   Business restructuring
    expense                          -           -         217           -
   Amortization of
    intangibles                    265         265         814         795
                            ----------  ----------  ----------  ----------

      Total operating
       expenses                  4,400       4,191      14,130      13,076
                            ----------  ----------  ----------  ----------

Income (Loss) from
 operations                     (1,133)     (1,460)     (5,105)     (3,903)

Interest (expense) income           (7)        (24)        (77)        (71)
                            ----------  ----------  ----------  ----------

Net Income (Loss)           $   (1,140) $   (1,484) $   (5,182) $   (3,974)
                            ==========  ==========  ==========  ==========

Basic net gain (loss) per
 share                           (0.04)      (0.05)      (0.18)      (0.13)

Shares used in computing:
   Basic net gain (loss)
    per share               29,103,391  30,411,046  28,953,483  29,920,847
                            ----------  ----------  ----------  ----------



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

                                                     Nine Months Ended
                                                          July 31,
                                                  ------------------------
                                                     2009          2010
                                                  ----------    ----------
Cash flows from operating activities:
   Net loss                                       $   (5,182)   $   (3,974)
   Adjustments to reconcile net loss to net cash
    provided by (used in) operating activities:
      Depreciation                                       658           438
      Business restructuring expenses                    217             -
      Amortization of intangibles                        814           795
      Loss on disposal of fixed assets                     1             0
      Stock-based compensation and FAS 123R              592           571
      Provision for doubtful accounts receivable           2           (16)
      Provision for excess and obsolete inventory        107            22
   Changes in assets and liabilities:
      Accounts receivable                              2,248         2,322
      Inventories                                         75            20
      Prepaids and other current assets                   94           116
      Accounts payable                                  (705)          237
      Accrued expenses and other                        (360)         (366)
      Deferred revenue and other                         (18)        1,322
                                                  ----------    ----------
         Net cash provided by (used in) operating
          activities                                  (1,457)        1,487
                                                  ----------    ----------
Cash flows from investing activities:
   Purchase of property and equipment                   (203)         (232)
                                                  ----------    ----------
         Net cash used in investing activities          (203)         (232)
                                                  ----------    ----------
Cash flows from financing activities:
   Proceeds from issuance of common stock                  1             -
   Paydown of Line of Credit                             (51)            -
                                                  ----------    ----------
         Net cash provided by (used in) financing
          activities                                     (50)            -
                                                  ----------    ----------

Effect of Exchange Rate on Cash                          247          (400)
Net increase (decrease) in cash and cash
 equivalents                                          (1,463)          855
Cash and cash equivalents, beginning of period         7,086         5,297
                                                  ----------    ----------
Cash and cash equivalents, end of period          $    5,623    $    6,152
                                                  ==========    ==========

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
    317.848.8804