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| 8-K - CURRENT REPORT - CROSSROADS SYSTEMS INC | v304621_8k.htm |
PRESS RELEASE
Investor Contact:
Jennifer Crane
Crossroads Systems
jcrane@crossroads.com
512.928.6897 or 800.643.7148
Press Contact:
Matthew Zintel
Zintel Public Relations
matthew.zintel@zintelpr.com
281.444.1590
FOR IMMEDIATE RELEASE
Crossroads Systems Reports Fiscal First Quarter 2012 Financial Results
AUSTIN, TX – February 29, 2012 – Crossroads Systems, Inc. (NASDAQ: CRDS), a global provider of data protection solutions and services, reported financial results for its fiscal first quarter ended January 31, 2012.
Highlights
| · | Shipped StrongBox®, its online all-the-time, non-proprietary and fully portable data vault for long-term data retention, on schedule to first customer, Capgemini, one of the world's leading providers of IT services. |
| · | Formed strategic alliance with Fujitsu to deliver StrongBox data vault, providing a complete solution for leveraging Linear Tape File System (LTFS) technology in Fujitsu’s NuVola Private Cloud Platform. |
| · | Generated exciting industry buzz around the StrongBox solution as evidenced by dozens of financial and trade press articles (visit the Crossroads Systems Web site for an ongoing list). |
| · | Created a growing sales funnel and backlog of StrongBox opportunities despite being just a few weeks post launch. |
| · | Released RVA® 5.0, featuring new advanced reporting capabilities and enhanced visibility into tape systems. Crossroads recorded record quarterly revenue for RVA with a growing backlog. |
Fiscal Q1 2012 Financial Results
Revenue for fiscal Q1 2012 decreased 28% to $2.6 million from $3.6 million in the same quarter a year ago. The decrease was primarily due to a 36% decrease in intellectual property (IP) licensing, royalty and other revenue from fiscal Q1 2011. The company’s IP licensing revenue can vary significantly from quarter-to-quarter and should be considered on an annual basis, as Crossroads does not control the timing or pace of negotiations.
Gross profit for fiscal Q1 2012 was $2.3 million or 88% of total revenue, as compared to $3.1 million or 86% of total revenue in the same quarter a year ago. The increase in gross profit as a percent of revenue was due to product mix and decreased costs associated with the company’s IP licensing campaign.
Operating expenses for fiscal Q1 2012 totaled $5.0 million, which included $763,000 of stock-based compensation, as compared to $4.3 million, which included $82,000 of stock-based compensation in the same period a year ago. The increase was primarily due to the timing of stock-based compensation expenses.
Net loss for fiscal Q1 2012 totaled $2.7 million or $(0.25) per share, as compared to a net loss of $1.2 million or $(0.12) per share in the same quarter a year ago.
At January 31, 2011, cash and cash equivalents and short-term investments totaled $9.2 million, as compared to $10.7 million in the previous quarter. The decrease in cash was largely due to the decline in IP revenue in the quarter.
Management Commentary
“The overall explosion of data creation is threatening to overwhelm the current budget and pricing constraints of existing, largely disk based solutions,” said Rob Sims, president and CEO of Crossroads Systems. “From a market perspective, StrongBox plays in what we define as the archive portion of the data storage market. StrongBox is an on-line, all the time, network attached archive that has come to market with a game changing value proposition. Data in the archive space is expected to grow from 69,000 Petabytes to more than 170,000 Petabytes by 2014, which represents 250% growth over 5 years. This market is also called Tier 3, defined generally as ‘write once, read rarely’ data. This was a $23 billion market last year that is expected to grow to more than $40 billion in the next three years. We believe StrongBox is well positioned to gain a meaningful piece of this market given our disruptive pricing at up to a 90% lower cost versus disk-based solutions, when the storage need is measured at a Petabyte or more.
“The quarter has been a buzz of activity as we’ve been working with strategic partners and channel partners to bring StrongBox to market. We have a very specific go-to-market strategy for StrongBox. While StrongBox is a horizontal solution, our initial focus is in three verticals that stand out as early and large opportunities: media entertainment, medical imaging, and video surveillance. These three industries are generating large, rich content media and all are growing well over 50 percent year over year. We already have a large backlog for StrongBox for upcoming quarters. We look forward to closing these opportunities and recording revenue going forward.”
Conference Call
Crossroads will hold a conference call later today (Wednesday, February 29, 2012) to discuss these financial results. The company’s president and CEO, Rob Sims, and CFO, Jennifer Crane, will host the call starting at 4:30 p.m. Eastern time. A question and answer session will follow management's presentation.
To participate in the call, dial the number 5-10 minutes prior to the start time and ask for the Crossroads Systems’ conference call:
Date: Wednesday, February 29, 2012
Time: 4:30 p.m. Eastern time (3:30 p.m. Central time)
Dial-In Number: 1-877-221-8809
International: 1-706-679-8667
The conference call will be broadcasted and available for replay at http://us.meeting-stream.com/crossroadssystemsinc_022912 and via the company's Web site in the Investor Relations Events & Presentations section.
For the webcast, please go to the Web site at least 15 minutes early to register, download, and install any necessary audio software.
About Crossroads Systems
Crossroads Systems, Inc. (NASDAQ: CRDS) is a global provider data protection solutions and services. Crossroads offers organizations
proactive data security, intelligent storage connectivity, high performance, and significant cost savings. Founded in 1996 and
headquartered in Austin, Texas, Crossroads holds more than 100 patents granted and pending and has been honored with numerous industry
awards for innovation in data protection and storage. Visit www.crossroads.com.
Important Cautions Regarding Forward-Looking Statements
This press release includes forward-looking statements that relate to the business and 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, uncertainties relating to product development and commercialization, the ability to obtain, maintain or protect patent
and other proprietary intellectual property rights, technological change in its industry, market acceptance of its products and
services, future capital requirements, regulatory actions or delays, competition in general and other factors that may cause actual
results to be materially different from those described herein. Forward-looking statements in this press release are based on management's
beliefs and opinions at the time the statements are made. Crossroads Systems does not intend, and undertakes no duty, to update
this information to reflect future events or circumstances.
©2012 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, 2011 | January 31, 2012 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 7,336 | $ | 7,227 | ||||
| Short-term investments | 3,385 | 1,992 | ||||||
| Total cash, cash equivalents and short-term investments | 10,721 | 9,219 | ||||||
| Accounts receivable, net of allowance for doubtful | ||||||||
| accounts of $71 and $104, respectively | 2,659 | 2,943 | ||||||
| Inventories | 188 | 350 | ||||||
| Prepaid expenses and other current assets | 297 | 272 | ||||||
| Total current assets | 13,865 | 12,784 | ||||||
| Property and equipment, net | 1,320 | 1,274 | ||||||
| Intangible assets, net | 110 | 63 | ||||||
| Other assets | 56 | 34 | ||||||
| Total assets | $ | 15,351 | $ | 14,155 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 2,228 | $ | 821 | ||||
| Accrued expenses | 2,156 | 1,675 | ||||||
| Deferred revenue | 1,009 | 1,528 | ||||||
| Current portion of long term debt | 1,973 | 2,597 | ||||||
| Total current liabilities | 7,366 | 6,621 | ||||||
| Long term liabilities | 126 | 1,629 | ||||||
| Commitments and contingencies (See Note 8) | - | - | ||||||
| Stockholders' equity: | ||||||||
| Common stock, $0.001 par value, 75,000,000 shares authorized, | ||||||||
| 10,923,543 and 11,019,487 shares issued and outstanding, respectively | 11 | 11 | ||||||
| Additional paid-in capital | 199,750 | 200,547 | ||||||
| Accumulated other comprehensive loss | (40 | ) | (42 | ) | ||||
| Accumulated deficit | (191,862 | ) | (194,611 | ) | ||||
| Total stockholders' equity | 7,859 | 5,905 | ||||||
| Total liabilities and stockholders' equity | $ | 15,351 | $ | 14,155 | ||||
CROSSROADS SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In Thousands, Except Share and Per Share Data)
| Three Months Ended January 31, | ||||||||
| 2011 | 2012 | |||||||
| Revenue: | ||||||||
| Product | $ | 1,309 | $ | 1,112 | ||||
| IP license, royalty and other | 2,292 | 1,467 | ||||||
| Total revenue | 3,601 | 2,579 | ||||||
| Cost of revenue: | ||||||||
| Product | 105 | 81 | ||||||
| IP license, royalty and other | 398 | 236 | ||||||
| Total cost of revenue | 503 | 317 | ||||||
| Gross profit | 3,098 | 2,262 | ||||||
| Operating expenses: | ||||||||
| Sales and marketing | 1,215 | 1,409 | ||||||
| Research and development | 2,117 | 2,757 | ||||||
| General and administrative | 647 | 762 | ||||||
| Amortization of intangible assets | 312 | 47 | ||||||
| Total operating expenses | 4,291 | 4,975 | ||||||
| Loss from operations | (1,193 | ) | (2,713 | ) | ||||
| Interest expense | (31 | ) | (50 | ) | ||||
| Other (expense) income | (7 | ) | 14 | |||||
| Net loss | $ | (1,231 | ) | $ | (2,749 | ) | ||
| Basic and diluted net loss per share | $ | (0.12 | ) | $ | (0.25 | ) | ||
| Basic and diluted average common shares outstanding | 10,668,733 | 10,974,049 | ||||||
CROSSROADS SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In Thousands)
| Three Months Ended January 31, | ||||||||
| 2011 | 2012 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (1,231 | ) | $ | (2,749 | ) | ||
| Adjustments to reconcile net loss to net cash | ||||||||
| provided by (used in) operating activities: | ||||||||
| Depreciation | 100 | 161 | ||||||
| Amortization of intangible assets | 312 | 47 | ||||||
| Loss (gain) on disposal of fixed assets | 6 | (15 | ) | |||||
| Stock-based compensation | 82 | 763 | ||||||
| Provision for doubtful accounts receivable | - | 33 | ||||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable | 2,651 | (304 | ) | |||||
| Inventories | (74 | ) | (162 | ) | ||||
| Prepaid expenses and other current assets | 66 | 26 | ||||||
| Accounts payable | (224 | ) | (1,237 | ) | ||||
| Accrued expenses | (297 | ) | (468 | ) | ||||
| Deferred revenue | (266 | ) | 665 | |||||
| Net cash provided by (used in) operating activities | 1,125 | (3,240 | ) | |||||
| Cash flows from investing activities: | ||||||||
| Purchase of property and equipment | (142 | ) | (119 | ) | ||||
| Purchase of held-to-maturity investments | - | (185 | ) | |||||
| Maturity of held-to-maturity investments | - | 1,578 | ||||||
| Net cash (used in) provided by investing activities | (142 | ) | 1,274 | |||||
| Cash flows from financing activities: | ||||||||
| Proceeds from issuance of common stock, net of expenses | 1 | 34 | ||||||
| Proceeds from borrowing on term loan | - | 2,000 | ||||||
| Net cash provided by financing activities | 1 | 2,034 | ||||||
| Effect of exchange rate on cash | (92 | ) | (177 | ) | ||||
| Net increase (decrease) in cash and cash equivalents | 892 | (109 | ) | |||||
| Cash and cash equivalents, beginning of period | 13,811 | 7,336 | ||||||
| Cash and cash equivalents, end of period | $ | 14,703 | $ | 7,227 | ||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for interest | $ | 30 | $ | 22 | ||||