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Crossroads Systems Reports Fiscal First Quarter 2017 Financial Results

AUSTIN, Texas, March 10, 2017 /PRNewswire/ -- Crossroads Systems, Inc. (CRDS), an intellectual property licensing company, reported financial results for its fiscal first quarter ended January 31, 2017.

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 in the prior period.

Fiscal Q1 2017 Financial Results
Intellectual property ("IP") license revenue for the fiscal first quarter was $19,000, compared to $210,000 in the same quarter a year ago. Gross profit was $16,000 or 84 percent of revenue, compared to $159,000, or 76 percent of revenue in the same quarter a year ago.

Fiscal Q1 2017 operating expenses decreased 63% to $863,000, compared to $2.3 million in the same period a year ago. The decreases were primarily due to reduced litigation related expenses.

Fiscal Q1 2017 net loss available to common stockholders was $(444,000) or $(0.36) loss per share, compared to a net loss available to common stockholders of $(188,000) or $(0.15) loss per share in the same quarter a year ago. 

At January 31, 2017, cash, cash equivalents and restricted cash totaled $3.1 million compared to $4.1 million at October 31, 2016.

Management Commentary
Richard K. Coleman, Jr., President and CEO at Crossroads Systems, said, "The hearing before the Federal Circuit on March 7, 2017 concludes the appeals phase of our '972 litigation. We look forward to a timely and favorable decision that permits us to continue our efforts to compel the defendants in our cases to pay for the use of Crossroads' technology. The non-'972 sales efforts are ongoing as the company seeks to maximize shareholder value."

About Crossroads Systems
Crossroads Systems, Inc. (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://www.crossroads.com/investor-information. 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.

©2017 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

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)












January 31,


October 31,

ASSETS


2017


2016





(unaudited)



Current assets:






Cash and cash equivalents


$        2,005


$      2,634


Restricted cash


1,050


1,459










Total cash, cash equivalents and restricted cash


3,055


4,093









Accounts receivable


1,212


1,212


Prepaid expenses and other current assets


244


179










Total current assets


4,511


5,484








Other assets


107


120










Total assets


$        4,618


$        5,604





























LIABILITIES AND STOCKHOLDERS' EQUITY












Current liabilities:






Accounts payable


$           391


$          339


Accrued expenses


501


637


Deferred revenue


1,068


1,531










Total current liabilities


1,960


2,507















Commitments and contingencies


-


-










Total liabilities


1,960


2,507








Stockholders' equity:






Convertible preferred stock, $0.001 par value, 25,000,000 shares authorized, 2,591,257 and 2,591,257 shares issued and outstanding, respectively







3


3


Common stock, $0.001 par value, 75,000,000 shares authorized, 1,225,472 and 1,225,472 shares issued and outstanding, respectively







1


1


Additional paid-in capital


239,906


239,835


Accumulated deficit


(237,252)


(236,742)










Total stockholders' equity


2,658


3,097










Total liabilities and stockholders' equity


$       4,618


$       5,604








 

CROSSROADS SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In Thousands, Except Share and Per Share Data)

     Unaudited






















Three Months Ended






January 31,






2017


2016









Revenue:







IP license, royalty and other revenue


$                  19


$                210

















Cost of revenue:






IP license, royalty and other cost of revenue


3


51

















Gross profit


16


159









Operating expenses:






General and administrative


863


2,349



















Total operating expenses


863


2,349









Loss from operations


(847)


(2,190)

















Other expense:







Other income


471


2,671

Income (Loss) from continuing operations


(376)


481

Loss from discontinued operations


-


(618)

Net loss


$              (376)


$              (137)









Dividends attributable to preferred stock


$                (68)


$                (51)

Net loss available to common stockholders, basic and diluted


$              (444)


$              (188)

















Earnings (loss) per share, basic and diluted:





Discontinued operations


$                    -


$             (0.51)

Continuing operations


$             (0.36)


$               0.40

Available to common stockholder


$             (0.36)


$             (0.15)









Weighted average number of common shares outstanding, basic and diluted






1,225,472


1,214,634









 

CROSSROADS SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

Unaudited





Three Months Ended





January 31,





2017


2016








Cash flows from operating activities:






Net loss

$      (376)


$      (137)


Adjustments to reconcile net loss to net cash (used in) provided by operating activities:












Depreciation from discontinued operations


-


52



Stock-based compensation

71


309



Provision for doubtful accounts receivable

-


(1)


Changes in assets and liabilities:







Accounts receivable

-


(490)



Inventory

-


33



Prepaid expenses and other assets

(51)


(135)



Accounts payable

52


(558)



Accrued expenses

(134)


(675)



Deferred revenue

(464)


(2,518)



    Net cash used in operating activities

(902)


(4,120)








Cash flows from investing activities:






Purchase of property and equipment from discontinued operations

-


(10)



     Net cash used in investing activities

-


(10)

Cash flows from financing activities:






Preferred dividends


(136)


-



     Net cash used in financing activities

(136)


-








Effect of foreign exchange rate on cash and cash equivalents

-


(4)

Change in cash and cash equivalents


(1,038)


(4,134)

Cash, cash equivalents, and restricted cash beginning of period

4,093


11,792

Cash, cash equivalents, and restricted cash end of period

$     3,055


$     7,658















Supplemental disclosure of cash flow information:












Cash paid for interest

$           -


$        128

Cash paid for income taxes

$            2


$           -








Supplemental disclosure of non cash financing activities:





Conversion of preferred stock to common stock


$             -


$        302

Common stock dividends issued to preferred shareholders

$             -


$        139








 

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