Crossroads Systems Reports Fiscal Third Quarter 2018 Financial Results

Crossroads Systems Reports Fiscal Third Quarter 2018 Financial Results
Crossroads Systems Reports Fiscal Third Quarter 2018 Financial Results

DALLAS, Sept. 7, 2018 /PRNewswire/ -- Crossroads Systems, Inc. (OTC:CRSS), a holding company focused on investing in businesses that promote economic vitality and community development, reported financial results for its fiscal third quarter ended July 31, 2018.

crossroads_systems_logo.jpgwww.crossroads.com (PRNewsFoto/Crossroads Systems)" alt="Crossroads Systems - www.crossroads.com (PRNewsFoto/Crossroads Systems)">

Fiscal Q3 2018 Financial Results

Revenue for the fiscal third quarter of 2018 was $8.3 million and gross profit was $2.6 million or 31 percent of revenue. Property sales income for the quarter was $5.8 million or 71 percent of total revenues.  Interest income was $2.6 million or 32 percent of revenue. Fiscal third quarter results included $100,000 write-down related to the wind down of the Crossroads legacy business. Fiscal third quarter net income was $1.22 million or $0.20 income per share.

At July 31, 2018, cash and cash equivalents totaled $3.8 million.

Management Commentary

Eric A. Donnelly, Chief Executive Officer at Crossroads Systems, said, "Capital Plus Financial celebrated two humbling honors during the quarter bestowed upon us by B Corp and D CEO Magazine, respectively. It's a testament to our incredible team and a wonderful recognition of the impact social enterprises make every day. Our financial results show that social impact and increased shareholder value don't have to be mutually exclusive. Additionally, we remain on course to eliminate all legacy expenses of Crossroads by fiscal year end."

About Crossroads Systems

Crossroads Systems, Inc. (OTC:CRSS), is a holding company focused on investing in businesses that promote economic vitality and community development. Crossroads' subsidiary, Capital Plus Financial (CPF), is a certified Community Development Financial Institution (CDFI) and certified B- Corp which supports Hispanic homeownership with a long term, fixed rate single family mortgage product.

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 Capital Plus Financial 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' and Capital Plus Financial's ability to implement their business strategy, and their ability to achieve or maintain profitability. The future performance of Crossroads Systems and Capital Plus Financial may be adversely affected by the following risks and uncertainties: economic changes affecting homeownership in the geographies where Capital Plus Financial conducts business, developments in lending markets that may not align with Capital Plus Financial's expectations and that may affect Capital Plus Financial's plans to grow its portfolio, variations in quarterly results, 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' annual and quarterly reports. 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.

©2018 Crossroads Systems, Inc., Crossroads and Crossroads Systems are registered trademarks of Crossroads Systems, Inc. All trademarks are the property of their respective owners.

Investor Contact:
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)
























July 31,






2018

ASSETS









Current assets:





Cash and cash equivalents


$    3,755


Restricted Cash


1,639


Accounts receivable, net 


706


Current portion of mortgage notes receivable


955


Inventories



5,818


Prepaids and other current assets


352



Total current assets 


13,225







Mortgage Notes Receivable


100,486

Goodwill



5,033

Other assets 



756



Total assets


$ 119,501







LIABILITIES AND STOCKHOLDERS' EQUITY







Current liabilities:




Accounts payable 


$       263


Accrued expenses 


351


Escrow liabilities


1,662


Current portion of senior secured credit facilities


43,498



Total current liabilities


45,774

Senior secured credit facilities, net


43,805

Acquisition debt, net


18,244



Total liabilities 


107,823







Stockholders' equity


11,678



Total liabilities and stockholders' equity


$ 119,501

 

CROSSROADS SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In Thousands)










For the three months ended


For the nine months ended




July 31, 2018


July 31, 2018













Revenue:






Interest income

$                                  2,608


$                                6,244


Property sales

5,839


$                              15,224


Other revenue 

(174)


(11)



Total revenue

8,273


21,457







Cost of revenue:





Interest expense

1,175


2,479


Cost of properties sold

4,491


11,732


Other cost of revenue

-


3



Total cost of revenue

5,667


14,214







Gross profit

2,606


7,243







Operating expenses:





General and administrative 

109


1,934


Salaries and wages

955


2,394



Total operating expenses

1,064


4,328







Income (loss) from operations 

1,542


2,915







Other income (expense):





Interest (expense) income 

(323)


(810)


State income tax expense

-


-

Net Income (loss) 

$                                  1,219


$                                2,105

 

CROSSROADS SYSTEMS, INC.







Supplemental Schedule - Unaudited Consolidated Balance Sheet





As of July 31, 2018



























 Unaudited 


 Unaudited 


 Unaudited 


 Unaudited 







Crossroads 


 CPF 


 Elimination Entries 


 Crossroads Consolidated 







July 31, 2018


July 31, 2018


July 31, 2018


July 31, 2018

ASSETS











Current assets:












Cash and cash equivalents


406,846


3,340,503


7,559


3,754,908



Restricted cash


-


1,638,919


-


1,638,919



Accounts receivable, net


4,500


701,636


-


706,136



Inventories



-


5,818,287


-


5,818,287



Intercompany receivable


3,143,910


11,341,693


(14,485,603)


(0)



Prepaids and other current assets


242,678


7,994


-


250,672



Earnest money deposits


-


101,260


-


101,260



Mortgage notes receivable


-


101,441,491


-


101,441,491




Total current assets 


3,797,934


124,391,784


(14,478,044)


113,711,675















Property and equipment, net 


-


24,540


-


24,540


Investment in subsidiaries


26,919,888




(26,919,888)


-


Goodwill



5,033,253


-


-


5,033,253


Other assets 



235,194


496,524


-


731,718




Total assets


$               35,986,269


$               124,912,849


$               (41,397,932)


$               119,501,186







-







LIABILITIES AND STOCKHOLDERS' EQUITY








Current liabilities:












Accounts payable


204


262,676


-


262,880



Accrued and other current liabilities 


78,606


274,530


-


353,136



Escrow liabilities


-


1,661,740


-


1,661,740



Due to subsidiaries


11,341,693


-


(11,341,693)


(0)



Revolving line of credit, inventory


-


4,963,731


-


4,963,731



Revolving line of credit, mortgage notes (current maturities)


-


38,533,993


-


38,533,993



Payroll liabilities


-


(1,968)


-


(1,968)













-




Total current liabilities


11,420,503


45,694,702


(11,341,693)


45,773,512















Senior secured term notes (long-term)


-


43,805,354


-


43,805,354


Acquisition debt (long-term)


18,244,130


-


-


18,244,130




Total liabilities


29,664,633


89,500,056


(11,341,693)


107,822,996















Stockholders' equity:










Total participating payables


-


157,928


-


157,928


Total preferred equity investment


-


15,103,349


-


15,103,349


Total subordinated debt


2,200,000


1,723,311


-


3,923,311



Members equity in CPF


-


13,595,715


-


13,595,715



Common stock 


5,883


-


-


5,883



Additional paid-in capital 


242,309,739


-


(26,885,638)


215,424,101



(Accumulated deficit)/Retained Earnings


(235,466,465)




(3,170,601)


(238,637,066)



Current year net (loss) income


(2,727,521)


4,832,489


-


2,104,968




Total stockholders' equity (deficit)


6,321,636


35,412,793


(30,056,239)


11,678,191













-




Total liabilities and stockholders' equity (deficit)


$               35,986,269


$               124,912,849


$               (41,397,932)


$               119,501,186

 

 CROSSROADS SYSTEMS, INC.



 Supplemental Schedule - Unaudited Consolidated Income Statement


 For the Nine Months Ended July 31, 2018

















Unaudited

Unaudited

Unaudited






Crossroads

CPF

Crossroads Consolidated






July 31, 2018

July 31, 2018

July 31, 2018


Revenue:








Interest income


$                   -

$      6,243,996

$                            6,243,996



Property sales


-

15,223,984

15,223,984



Other revenue 


(212,878)

201,508

(11,370)




Total revenue 

(212,878)

21,669,489

21,456,611










Cost of revenue:







Interest expense


-

2,478,794

2,478,794



Cost of properties sold

-

11,731,819

11,731,819



Other cost of revenue

3,430

-

3,430




Total cost of revenue

3,430

14,210,613

14,214,044










Gross Profit


(216,309)

7,458,876

7,242,567


















Operating expenses:







General and administrative 

964,917

969,268

1,934,185



Salaries and wages

736,673

1,657,119

2,393,792




Total operating expenses 

1,701,590

2,626,386

4,327,977










Income (Loss) from operations 

(1,917,899)

4,832,489

2,914,590










Other income (expense):






Interest (expense) income 

(809,622)

-

(809,622)



State income tax expense

-

-

-


Net Income (Loss) 


$     (2,727,521)

$      4,832,489

$                            2,104,968

 

 CROSSROADS SYSTEMS, INC.



 Supplemental Schedule - Unaudited Consolidated Income Statement


 For the Quarter Ended July 31, 2018

















Unaudited

Unaudited

Unaudited






Crossroads

CPF

Crossroads Consolidated






July 31, 2018

July 31, 2018

July 31, 2018


Revenue:








Interest income


$               -

$      2,607,992

$                            2,607,992



Property sales


-

5,838,500

5,838,500



Other revenue 


(224,960)

51,026

(173,934)




Total revenue 

(224,960)

8,497,518

8,272,558










Cost of revenue:







Interest expense


-

1,175,319

1,175,319



Cost of properties sold

-

4,491,483

4,491,483



Other cost of revenue

-

-

-




Total cost of revenue

-

5,666,802

5,666,802










Gross Profit


(224,960)

2,830,716

2,605,756


















Operating expenses:







General and administrative 

(179,274)

287,860

108,586



Salaries and wages

263,730

691,322

955,052




Total operating expenses 

84,456

979,182

1,063,638










Income (Loss) from operations 

(309,416)

1,851,534

1,542,117










Other income (expense):






Interest (expense) income 

(323,155)

-

(323,155)



State income tax expense

-

-

-


Net Income (Loss) 


$        (632,571)

$      1,851,534

$                            1,218,963

 

Unaudited Fiscal Second Quarter 2018 Shareholder Report for

The Three Months Ended

July 31, 2018


Crossroads Systems, Inc.


Delaware 

74-284664  

(State of Incorporation)

(IRS Employer Identification No.)



8214 Westchester Drive

Suite 950

Dallas, TX 75225

(Address of principal executive office)


(214) 999-0149

(Company's telephone number)


Common Stock

$0.001 Par Value

Trading Symbol: CRSS

Trading Market: OTC Pink Open Market


75,000,000 Common Shares Authorized


5,979,994 Shares Issued and Outstanding as of July 2, 2018

Dear Shareholder:

The third quarter brought some important recognition of our social enterprise and its importance to our customers and communities we serve. Capital Plus Financial (CPF) was recognized by B Corp as one of the Best for World 2018 for its commitment to our customers. Additionally, D CEO Magazine announced it was one of three finalists for best mid-size Latino business in North Texas.

As stated in prior quarters, management is focused on settling all legacy operations and expenses of Crossroads. To that end, the settlement announced with Dot Hill and continued reduction of holding company ongoing expenses were important steps in this direction.

CPF celebrated a major milestone as we surpassed $100MM in mortgage notes held on our balance sheet.  For the third quarter, CPF generated $2.6 million in interest income from its $101 million fixed rate conventional mortgage portfolio and $5.8 million sales from the sale of properties in low to moderate income census tracts. Sales for the quarter reflect seasonality typically found in home sale cycles. Thus, the reduction in home sales for the quarter is expected and the company's quarters will reflect typical seasonal trends for the industry. The operating income for the quarter was $2.6 million. CPF's unadjusted leverage was 2.53x at July 31, 2018, and the consolidated cash coverage ratio, adjusted for one-time and transaction expenses for the same period, was 1.86x.

CPF applied for the FY 2018 CDFI Fund Bond Guarantee Program by the July 12, 2018 application deadline. We encourage any shareholders to read more about this incredible program on the CDFI Fund's website – www.cdfifund.gov. CPF has also applied for membership into the Federal Home Loan Bank system cooperative of eligible banks, credit unions, savings institutions, CDFIs and insurance companies. As a member, the company would have access to competitively priced financing and other banking services. Moreover, the partnership is a perfect fit given the synergistic missions of each institution.

As a wholly owned subsidiary of Crossroads, the financials are presented on a consolidated basis (supplementary schedules are included for reference). The year to date financials include CPF's financials from December 19, 2017 to July 31, 2018.  Please note the initial accounting for the acquisition of CPF has not yet been finalized; accordingly, the purchase price allocation contains balances that could differ from the balances reported upon completion.

Saludos Cordiales,

Robert H. Alpert & Eric A. Donnelly

 

Cision View original content with multimedia:http://www.prnewswire.com/news-releases/crossroads-systems-reports-fiscal-third-quarter-2018-financial-results-300708646.html

SOURCE Crossroads Systems

This article was written by cool news network.

Get the latest news delivered to your inbox

Follow us on social media networks

PREV Sears Hometown and Outlet Stores, Inc. Reports Second Quarter 2018 Results
NEXT Liberty Tax Service Announces Fiscal Year 2018 Results