AUSTIN, TX
-- (Marketwired)
-- 03/06/14
Crossroads Systems, Inc. (NASDAQ: CRDS), a global provider of data archive solutions, reported financial results for its fiscal first quarter ended January 31, 2014.
Revenue for fiscal Q1 2014 was $4.1 million, an increase of 16 percent from $3.6 million in the same quarter a year ago. The increase is primarily attributable to an increase in IP license, royalty and other revenue. Gross profit for fiscal Q1 2014 was $3.5 million, or 85 percent of total revenue, as compared to $2.6 million or 73 percent of total revenue in the same quarter a year ago.
Operating expenses for fiscal Q1 2014 totaled $3.9 million as compared to $5.7 million in the same period a year ago, a decrease of 31 percent, primarily due to our reduction in force in October 2013.
The Company improved its loss from operations to $(395,000) in the quarter from $(3.1) million in the same quarter of 2013. The Company also recorded a $1.1 million gain on the termination of a previous service contract, resulting in income before interest and derivative expense of $655,000 in fiscal Q1 2014 compared to a loss of $(3.1) million in the same quarter a year ago.
Net loss available to common stockholders for fiscal Q1 2014 totaled $(3.5) million or $(0.28) loss per share, compared to a net loss available to common stockholders of $(3.1) million or $(0.27) loss per share in the same quarter a year ago. Approximately $(3.4) million of the loss is attributable to the change in value of derivative instruments as a result of fluctuations in our stock price. These derivative instruments are marked to market each quarter and a change in the value of the derivative instruments may cause fluctuations in our net loss per share from quarter to quarter until the ratchet on our Series F preferred stock and warrants expires in March.
At January 31, 2014, cash and cash equivalents increased $0.2 million to $8.0 million from $7.8 million in the previous quarter.
Management Commentary
Richard K. Coleman, Jr., President and CEO at Crossroads Systems, said, "I'm pleased with the progress we're making toward generating positive cash flow from operations in 2014. We continue to believe the untapped potential for our products and patents offers tremendous upside for the company and for our shareholders."
Conference Call Information
Crossroads will hold a conference call on Thursday, March 6, 2014 at 4:30 p.m. Eastern Time (3:30 p.m. Central Time) to discuss the financial results. President and CEO Richard K. Coleman, Jr., and CFO Jennifer Crane will host the call. A question and answer session will follow management's presentation.
Date: Thursday, March 6, 2014
Time: 4:30 p.m. Eastern Time (3:30 p.m. Central Time)
Dial-In Number: (877) 221-8809
International: (706) 679-8667
To access the live or recorded webcast, visit:
http://us.meeting-stream.com/crossroadssystemsinc_030614
Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. The conference call will also be available via the company's website in the Investor Relations Events & Presentations section. For more information and to view recent press releases, visit www.crossroads.com.
About Crossroads Systems
Crossroads Systems, Inc. (NASDAQ: CRDS) is a global provider of data archive solutions. Through the innovative use of new technologies, Crossroads delivers customer-driven solutions that enable proactive data security, advanced data archiving, optimized performance and significant cost-savings. Founded in 1996 and headquartered in Austin, TX, Crossroads has been awarded more than 100 patents and has been honored with numerous industry awards for data archiving, storage and protection. 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, including the transition from a hardware storage company to a software solutions and services provider, its ability to expand its distribution channels, its ability to maintain or broaden relationships with existing distribution channels and strategic alliances and develop new industry relationships, the performance of third parties in its distribution channels and of its strategic alliances, 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: uncertainties relating to product development and commercialization, uncertain market acceptance of Crossroads Systems products, including StrongBox, intense competition in the data protection and storage markets, variations in quarterly results and a consequence of unpredictable sales cycles and other factors, the ability to obtain, maintain or protect patent and other proprietary intellectual property rights, 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 and Form 10-Q 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. Crossroads Systems undertakes no duty to update this information to reflect future events, information or circumstances.
©2014 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.
CROSSROADS SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
October 31, January 31,
ASSETS 2013 2014
------------- -------------
(Unaudited)
Current assets:
Cash and cash equivalents $ 7,795 $ 7,998
Accounts receivable, net of allowance for
doubtful accounts of $94 and $100,
respectively. 2,301 3,001
Inventory 313 323
Prepaid expenses and other current assets 694 628
------------- -------------
Total current assets 11,103 11,950
Property and equipment, net 1,031 841
Other assets 256 180
------------- -------------
Total assets $ 12,390 $ 12,971
============= =============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 1,066 $ 904
Accrued expenses 2,095 1,394
Deferred revenue 1,090 1,215
Current portion of long term debt, net of
debt discount 1,605 2,763
------------- -------------
Total current liabilities 5,856 6,276
Long term debt, net of debt discount 6,984 5,902
Long term derivative liability 772 3,957
Other long term liabilities 299 384
Commitments and contingencies - -
Convertible preferred stock, $0.001 par value,
25,000,000 shares authorized, 4,231,154 and
3,783,697 shares issued and outstanding,
respectively, net 6,394 5,720
Stockholders' deficit:
Common stock, $0.001 par value, 75,000,000
shares authorized, 11,949,937 and
12,883,023 shares issued and outstanding,
respectively 12 13
Additional paid-in capital 208,702 211,044
Accumulated other comprehensive loss (51) (50)
Accumulated deficit (216,578) (220,275)
------------- -------------
Total stockholders' deficit (7,915) (9,268)
------------- -------------
Total liabilities and stockholders'
deficit $ 12,390 $ 12,971
============= =============
CROSSROADS SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In Thousands, Except Share and Per Share Data)
Three Months Ended
January 31,
------------------------
2013 2014
----------- -----------
Revenue:
Product $ 1,918 $ 1,230
IP license, royalty and other 1,633 2,895
----------- -----------
Total revenue 3,551 4,125
Cost of revenue:
Product 194 236
IP license, royalty and other 754 383
----------- -----------
Total cost of revenue 948 619
----------- -----------
Gross profit 2,603 3,506
----------- -----------
Operating expenses:
Sales and marketing 1,960 1,032
Research and development 2,857 1,531
General and administrative 876 1,338
----------- -----------
Total operating expenses 5,693 3,901
----------- -----------
Loss from operations (3,090) (395)
Gain on settlement - 1,050
----------- -----------
(Loss) income before interest and derivative
expense (3,090) 655
Other expense:
Interest expense (54) (587)
Change in value of derivative liability - (3,400)
Other expense (1) -
=========== ===========
Net loss $ (3,145) $ (3,332)
=========== ===========
Dividends attributable to preferred stock $ - $ (155)
----------- -----------
Net loss available to common stockholders, basic
and diluted $ (3,145) $ (3,487)
=========== ===========
Net loss per share available to common
stockholders, basic and diluted $ (0.27) $ (0.28)
=========== ===========
Shares used in computing net loss per share:
Available to common stockholders, basic and
diluted 11,819,003 12,368,715
=========== ===========
CROSSROADS SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Three Months Ended
January 31,
--------------------
2013 2014
--------- ---------
Cash flows from operating activities:
Net loss $ (3,145) $ (3,332)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation 201 198
Loss on change in value of derivative liability - 3,400
Amortization of debt discount - 341
Stock-based compensation 383 548
Provision for doubtful accounts receivable (5) 6
Changes in assets and liabilities:
Accounts receivable 570 (707)
Inventory (29) (10)
Prepaid expenses and other assets (37) 45
Accounts payable (102) (161)
Accrued expenses (706) (606)
Deferred revenue 264 213
--------- ---------
Net cash used in operating activities (2,606) (65)
--------- ---------
Cash flows from investing activities:
Purchase of property and equipment (119) (9)
--------- ---------
Net cash used in investing activities (119) (9)
--------- ---------
Cash flows from financing activities:
Proceeds from issuance of common stock, net of
expenses 2 488
Repayment of debt (1,720) (208)
--------- ---------
Net cash (used in) provided by financing activities (1,718) 280
--------- ---------
Effect of foreign exchange rate on cash and cash
equivalents 4 (3)
--------- ---------
Net (decrease) increase in cash and cash equivalents (4,439) 203
Cash and cash equivalents, beginning of period 6,895 7,795
--------- ---------
Cash and cash equivalents, end of period $ 2,456 $ 7,998
========= =========
Supplemental disclosure of cash flow information:
Cash paid for interest $ 45 $ 256
========= =========
Cash paid for income taxes $ 1 $ -
========= =========
Supplemental disclosure of non cash financing
activities:
Conversion of preferred stock to common stock $ - $ 674
========= =========
Common stock dividends issued to preferred
shareholders $ - $ 366
========= =========
Conversion of derivative liability to equity $ - $ 215
========= =========
Company Contacts:
Jennifer Crane
Crossroads Systems
Email Contact
512.928.6897
Investor Contact:
Mark Hood
Crossroads Systems
Email Contact
512.928.7330
Press Contact:
Matthew Zintel
Zintel Public Relations
Email Contact
281.444.1590
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