Crossroads Systems Reports Fiscal First Quarter 2013 Financial Results

Crossroads Systems Reports Fiscal First Quarter 2013 Financial Results 
AUSTIN, TX -- (Marketwire) -- 03/12/13 --  Crossroads Systems, Inc.
(NASDAQ: CRDS), a global provider of data archive solutions, reported
financial results for its fiscal first quarter ended January 31,
Fiscal Q1 2013 Financial Results
 Revenue for fiscal Q1 2013
increased 38% to $3.6 million from $2.6 million in the same quarter a
year ago. The increase was due to the addition of StrongBox(R)
Gross profit for fiscal Q1 2013 was $2.6 million, or 73% of total
revenue, as compared to $2.3 million or 88% of total revenue in the
same quarter a year ago. The decrease in gross margin as a percentage
of revenue was due to the lower margin percentage attributable to the
development efforts associated with StrongBox service revenue in Q1
Operating expenses for fiscal Q1 2013 totaled $5.7 million as
compared to $5.0 million in the same period a year ago. The increase
in operating expenses is mainly due to increases in sales and
marketing personnel from the same quarter a year ago. 
Net loss for fiscal Q1 2013 totaled $3.1 million or $.27 per share,
as compared to a net loss of $2.7 million or $.25 per share in the
same quarter a year ago. Gross profit increases were offset by
increased operating expenses in Q1 2013 as compared to the same
quarter a year ago. 
At January 31, 2013, cash and cash equivalents and short-term
investments totaled $2.5 million, as compared to $6.9 million in the
previous quarter. The decrease in cash was largely due to continued
development, marketing and sales efforts of StrongBox as well as a
payment on Crossroads' debt facility of $1.5 million. 
Management Commentary
 "StrongBox continues to gain traction as
evidenced by $1.4 million in revenue from StrongBox in our fiscal
first quarter," said Rob Sims, President and CEO at Crossroads
Systems. "We are adding to the growing list of StrongBox customers as
evidenced by our pipeline growing from $14 million to $17 million
over the last quarter. Our recent reduction in workforce has
strengthened our operational efficiency, reducing our annual expenses
by more than $5 million and positioning us for profitability as we
continue to see growth in StrongBox."  
Crossroads will hold a conference 
call later today (Tuesday, March
12, 2013) at 4:30 p.m. Eastern Time (3:30 p.m. Central Time) to
discuss the financial results. Crossroads' 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. 
Date: Tuesday, March 12, 2013
 Time: 4:30 p.m. Eastern Time (3:30
p.m. Central Time)
 Dial-In Number: (877) 221-8809
(706) 679-8667 
The conference call will be broadcasted and available for replay at: 
The conference call will also be available via the company's Web site
in the Investor Relations Events & Presentations section. 
Please call the conference telephone number 5-10 minutes prior to the
start time. An operator will register your name and organization. For
more information and to view recent press releases, visit  
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 holds
more than 100 patents and has been honored with numerous industry
awards for data archiving, storage and protection. Visit  
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. 
Copyright2013 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                           2012         2013    
                                                   -----------  ----------- 
Current assets:                                                             
  Cash and cash equivalents                        $     6,895  $     2,456 
  Accounts receivable, net of allowance for                                 
   doubtful accounts of $102 and $97, respectively       2,847        2,282 
  Inventory                                                376          405 
  Prepaid expenses and other current assets                309          324 
                                                   -----------  ----------- 
    Total current assets                                10,427        5,467 
Property and equipment, net                              1,521        1,439 
Other assets                                 
               76           98 
                                                   -----------  ----------- 
    Total assets                                   $    12,024  $     7,004 
                                                   ===========  =========== 
Current liabilities:                                                        
  Accounts payable                                 $     1,260  $     1,158 
  Accrued expenses                                       2,879        1,869 
  Deferred revenue                                       1,306        1,506 
  Current portion of long term debt                      2,948        1,481 
                                                   -----------  ----------- 
    Total current liabilities                            8,393        6,014 
Long term liabilities                                    1,634        1,445 
Commitments and contingencies (See Note 7)                   -            - 
Stockholders' equity:                                                       
  Common stock, $0.001 par value, 75,000,000                                
   shares authorized, 11,679,860 and 11,827,458                             
   shares issued and outstanding, respectively              12           12 
  Additional paid-in capital                           204,582      205,280 
  Accumulated other comprehensive loss                     (39)         (44)
  Accumulated deficit                                 (202,558)    (205,703)
                                                   -----------  ----------- 
    Total stockholders' equity (deficit)                 1,997         (455)
                                                   -----------  ----------- 
    Total liabilities and stockholders' equity     $    12,024  $     7,004 
                                                   ===========  =========== 
                 CROSSROADS SYSTEMS, INC. AND SUBSIDIARIES                  
                   CONSOLIDATED STATEMENTS OF OPERATIONS                    
              (In Thousands, Except Share and Per Share Data)               
                                                      Three Months Ended    
                                                          January 31,       
                                                       2012         2013    
                                                   -----------  ----------- 
  Product                                          $     1,112  $     1,918 
  IP license, royalty and other                          1,467        1,633 
                                                   -----------  ----------- 
    Total revenue                                        2,579        3,551 
Cost of revenue:                                                            
  Product                                                   81          194 
  IP license, royalty and other                            236          754 
                                                   -----------  ----------- 
    Total cost of revenue                                  317          948 
                                                   -----------  ----------- 
Gross profit                                             2,262        2,603 
                                                   -----------  ----------- 
Operating expenses:                                                         
  Sales and marketing                                    1,409        1,960 
  Research and development                               2,757        2,857 
  General and administrative                               762          876 
  Amortization of intangible assets                         47            - 
                                                   -----------  ----------- 
    Total operating expenses                             4,975        5,693 
                                                   -----------  ----------- 
Loss from operations                                    (2,713)      (3,090)
Interest expense                                           (50)         (54)
Other expense                                               14           (1)
                                                   -----------  ----------- 
Net loss                                           $    (2,749) $    (3,145)
                                                   ===========  =========== 
Basic and diluted net loss per share               $     (0.25) $     (0.27)
                                                   ===========  =========== 
Basic and diluted average common shares                                     
 outstanding                                        10,974,049   11,819,003 
                                                   ===========  =========== 
                 CROSSROADS SYSTEMS, INC. AND SUBSIDIARIES                  
                   CONSOLIDATED STATEMENTS OF CASH FLOWS                    
                               (In thousands)                               
                                                      Three Months Ended    
                                                          January 31,       
                                                       2012         2013    
                                                   -----------  ----------- 
Cash flows from operating activities:                                       
  Net loss                                         $    (2,749) $    (3,145)
  Adjustments to reconcile net loss to net cash                             
   used in operating activities:                                            
    Depreciation                                           161          201 
    Amortization of intangible assets                       47            - 
    Gain on disposal of property and equipment             (15)           - 
    Stock-based compensation                               763          383 
    Provision for doubtful accounts receivable              33           (5)
  Changes in assets and liabilities:                                        
    Accounts receivable                                   (304)         570 
    Inventory                                             (162)         (29)
    Prepaid expenses and other assets                       26          (37)
    Accounts payable                                    (1,237)        (102)
    Accrued expenses                                      (468)        (706)
    Deferred revenue                                       665          264 
                                                   -----------  ----------- 
      Net cash used in operating activities             (3,240)      (2,606)
                                                   -----------  ----------- 
Cash flows from investing activities:                                       
  Purchase of property and equipment                      (119)        (119)
  Purchase of held-to-maturity investments                (185)           - 
  Maturity of held-to-maturity investments               1,578            - 
                                                   -----------  ----------- 
      Net cash provided by (used in) investing                              
       activities                                        1,274         (119)
                                                   -----------  ----------- 
Cash flows from financing activities:                                       
  Proceeds from issuance of common stock, net of                            
   expenses                                                 34            2 
  Proceeds from borrowing on debt                        2,000            - 
  Repayment of debt                                          -       (1,720)
                                                   -----------  ----------- 
      Net cash provided by (used in) financing                              
       activities                                        2,034       (1,718)
                                                   -----------  ----------- 
Effect of foreign exchange rate on cash and cash                            
 equivalents                                              (177)           4 
                                                   -----------  ----------- 
Net decrease in cash and cash equivalents                 (109)      (4,439)
Cash and cash equivalents, beginning of period           7,336        6,895 
                                                   -----------  ----------- 
Cash and cash equivalents, end of period           $     7,227  $     2,456 
                                                   ===========  =========== 

Company Contacts:
Jennifer Crane
Crossroads Systems
512.928.6897 or 800.643.7148 
Investor Contact:
Mark Hood
Crossroads Systems 
Press Contact:
Matthew Zintel
Zintel Public Relations
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