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 Commentary
Richard 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 Information
Crossroads 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, 2016
Time: 4:30 p.m. Eastern Time (3:30 p.m. Central Time)
Dial-In Number: (888) 727-7725
International: (913) 312-1520
Conference 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 Systems
Crossroads 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 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://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 Hood
Crossroads Systems
ir@crossroads.com
Press Contact:
Matthew Zintel
Zintel Public Relations
matthew.zintel@zintelpr.com
|
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 | ||||||
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SOURCE Crossroads Systems
