DALLAS, March 5, 2020 /PRNewswire/ -- Crossroads Systems, Inc. (OTCQB: CRSS), a holding company focused on investing in businesses that promote economic vitality and community development, reported financial results for its fiscal first quarter ended January 31, 2020.
The company continues to consistently demonstrate increased earnings period over period since current management's transformation of CRSS a little over two years ago. Asset quality remains strong and demand for affordable housing in Texas continues to be robust. With the strength of the Texas economy strong, the company has ample in market room for more growth and impact.
Fiscal Q1 2020 Financial Highlights
- Total property sales income was $4.2 million for the quarter compared to $4.3 million for the comparative period of 2019
- Total interest income was $3.2 million up from $2.8 million from the comparative period of 2019. The mortgage portfolio grew to $123.3 million from $110.4 million for the comparative period of 2019
- Operating income of $1.1 million, up from $690,000 for the comparative period of 2019
- Cash EPS (operating income less income to non-controlling interests) increased to $0.16 from $0.09 for the comparative period of 2019
- Held 134 properties in inventory compared to 103 at the same time in 2019
- Added $4.5 million in new single-family mortgages during the quarter
- Book Value as reported of $48.2 million or $8.06 per share. The book value with subordinated debt of $3.5 million totals $51.8 million or $8.67 per share
- Cash balance of $413,000
Eric A. Donnelly, Chief Executive Officer at Crossroads Systems, said, "We are proud of the 60% increase to earnings year over year and over 70% cash EPS for the same period comparison. It's a testament to our team and the efficiency with which we run the company in order to maximize social and financial impact. As we begin year 3 of our journey in running a public social enterprise, we're reminded of how fortunate we are to have an incredible community of borrowers who are realizing the dream of homeownership and are making meaningful contributions to the Texas economy."
About Crossroads Systems
Crossroads Systems, Inc. (OTCQB: 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.
©2020 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
[email protected]
Press Contact:
Matthew Zintel
Zintel Public Relations
[email protected]
CROSSROADS SYSTEMS, INC. AND SUBSIDIARIES |
|||
CONSOLIDATED BALANCE SHEET |
|||
ASSETS |
January 31, 2020 |
October 31, 2019 |
|
CURRENT ASSETS |
|||
Cash and cash equivalents |
$ 412,992 |
$ 1,656,114 |
|
Restricted cash |
623,747 |
2,583,057 |
|
Interest receivable |
1,319,349 |
893,343 |
|
Current portion of notes receivable |
1,380,352 |
1,447,842 |
|
Current portion of other notes receivable |
89,918 |
339,429 |
|
Inventory |
13,056,189 |
11,796,430 |
|
Prepaid expenses and other current assets |
294,941 |
351,547 |
|
Total current assets |
17,177,487 |
19,067,762 |
|
NOTES RECEIVABLE, net of current maturities and allowance of $0 |
116,991,740 |
115,435,031 |
|
OTHER NOTES RECEIVABLE, net of current maturities and allowance of $0 |
6,499,846 |
6,463,049 |
|
GOODWILL |
18,566,966 |
18,566,966 |
|
DEFERRED TAX ASSET |
19,548,954 |
19,680,324 |
|
OTHER NON-CURRENT ASSETS |
42,886 |
36,083 |
|
TOTAL ASSETS |
$ 178,827,880 |
$ 179,249,215 |
|
LIABILITIES AND EQUITY |
|||
CURRENT LIABILITIES |
|||
Accounts payable |
$ 267,436 |
$ 289,230 |
|
Accrued liabilities |
490,442 |
609,546 |
|
Escrow liabilities |
440,335 |
2,646,581 |
|
Current portion of credit facilities |
58,384,100 |
66,167,346 |
|
Current portion of other note payable (subordinated) |
135,579 |
179,327 |
|
Current portion of acquisition notes payable |
1,871,378 |
2,495,168 |
|
Total current liabilities |
61,589,270 |
72,387,198 |
|
CREDIT FACILITIES, net of current maturities |
54,949,201 |
45,608,430 |
|
OTHER NOTE PAYABLE, net of current maturities (subordinated) |
1,335,571 |
1,335,571 |
|
ACQUISITION NOTES PAYABLE, net of current maturities (includes $2.2M subordinated) |
12,429,611 |
12,418,163 |
|
OTHER LONG-TERM LIABILITIES |
370,322 |
156,049 |
|
TOTAL LIABILITIES |
130,673,976 |
131,905,411 |
|
EQUITY |
|||
Common stock, $0.001 par value: 75,000,000 shares authorized, 5,971,994 shares issued and outstanding |
5,972 |
5,972 |
|
Additional paid in capital |
242,357,163 |
242,358,843 |
|
Accumulated deficit |
(212,262,737) |
(213,074,517) |
|
Crossroads Systems, Inc. stockholders' equity |
30,100,398 |
29,290,298 |
|
Non-controlling interests |
18,053,506 |
18,053,506 |
|
TOTAL EQUITY |
48,153,904 |
47,343,804 |
|
TOTAL LIABILITIES AND EQUITY |
$ 178,827,880 |
$ 179,249,215 |
CROSSROADS SYSTEMS, INC. AND SUBSIDIARIES |
|||||||
CONSOLIDATED STATEMENT OF OPERATIONS |
|||||||
For the Three Months Ended |
Increase/(Decrease) |
||||||
January 31, 2020 |
January 31, 2019 |
$ |
% |
||||
REVENUES |
|||||||
Interest income |
$ 3,179,853 |
2,848,662 |
$ 331,192 |
11.6% |
|||
Property sales |
4,180,400 |
4,315,103 |
(134,703) |
-3.1% |
|||
Other revenue |
284,321 |
45,600 |
238,722 |
523.5% |
|||
Total revenues |
7,644,575 |
7,209,365 |
435,210 |
6.0% |
|||
COSTS AND EXPENSES |
|||||||
Interest expense |
1,515,581 |
1,391,024 |
124,557 |
9.0% |
|||
Cost of properties sold |
3,669,899 |
3,678,146 |
(8,247) |
-0.2% |
|||
General and administrative |
471,810 |
412,768 |
59,042 |
14.3% |
|||
Salaries and wages |
673,464 |
737,483 |
(64,019) |
-8.7% |
|||
Total costs and expenses |
6,330,753 |
6,219,421 |
111,333 |
1.8% |
|||
Income from operations |
1,313,821 |
989,944 |
323,877 |
32.7% |
|||
OTHER EXPENSES |
|||||||
Interest expense |
(211,876) |
(300,270) |
88,394 |
-29.4% |
|||
Total other expenses |
(211,876) |
(300,270) |
88,394 |
-29.4% |
|||
Income before income tax provision |
1,101,945 |
689,674 |
412,271 |
59.8% |
|||
INCOME TAX PROVISION |
(131,370) |
(61,726) |
(69,644) |
112.8% |
|||
NET INCOME |
970,575 |
627,948 |
342,627 |
54.6% |
|||
Less: net income attributable to non-controlling interests |
(158,795) |
(136,740) |
(22,055) |
16.1% |
|||
NET INCOME ATTRIBUTABLE TO CONTROLLING INTERESTS |
$ 811,780 |
$ 491,208 |
$ 320,572 |
65.3% |
|||
Earnings (loss) per share: |
|||||||
Cash income attributable to common shareholders |
943,150 |
552,934 |
390,216 |
70.6% |
|||
Weighted average shares outstanding |
5,971,994 |
5,971,994 |
- |
0.0% |
|||
Cash income per share |
$ 0.16 |
$ 0.09 |
$ 0.07 |
70.6% |
CROSSROADS SYSTEMS, INC. AND SUBSIDIARIES |
|||
CONSOLIDATED STATEMENT OF CASH FLOWS |
|||
January 31, 2020 |
January 31, 2019 |
||
CASH FLOWS FROM OPERATING ACTIVITIES |
|||
Net income |
$ 970,575 |
$ 627,949 |
|
Adjustments to reconcile net income to net cash |
|||
used in operating activities: |
|||
Loss on derivative related activity |
(6,803) |
(154,870) |
|
Stock awards in settlement of liabilities |
(1,680) |
2,521 |
|
Amortization of deferred financing fees |
11,450 |
11,450 |
|
Provision for income taxes |
131,370 |
61,726 |
|
Changes in operating assets and liabilities: |
|||
Interest receivable |
(426,006) |
(69,911) |
|
Notes receivable |
(1,276,506) |
(1,429,993) |
|
Inventory |
(1,259,759) |
(2,034,971) |
|
Prepaids and other assets |
56,606 |
(28,797) |
|
Accounts payable |
(21,794) |
21,955 |
|
Accrued liabilities |
95,170 |
(271,617) |
|
Escrow liabilities |
(2,206,246) |
(2,096,082) |
|
Net cash used in operating activities |
(3,933,623) |
(5,360,641) |
|
CASH FLOWS FROM INVESTING ACTIVITIES |
|||
Restricted cash |
1,959,310 |
1,869,078 |
|
Net cash used in investing activities |
1,959,310 |
1,869,078 |
|
CASH FLOWS FROM FINANCING ACTIVITIES |
|||
Preferred equity contributions |
- |
2,500,000 |
|
Preferred equity dividend distributions |
(158,795) |
(136,740) |
|
Borrowings on credit facilities, net |
5,137,946 |
2,434,117 |
|
Principal payments on credit facilities |
(3,580,421) |
- |
|
Principal payments on other notes payable |
(43,748) |
(41,002) |
|
Principal payments on acquisition note payable |
(623,792) |
(2,555,679) |
|
Net cash provided by financing activities |
731,190 |
2,200,696 |
|
Net change in cash and cash equivalents and restricted cash |
(1,243,122) |
(1,290,867) |
|
Cash and cash equivalents and restricted cash at beginning of period |
1,656,114 |
2,323,614 |
|
Cash and cash equivalents and restricted cash at end of period |
$ 412,992 |
$ 1,032,747 |
|
SUPPLEMENTAL INFORMATION |
|||
Cash paid for interest |
$ 1,887,976 |
$ 1,426,636 |
|
Cash paid for income taxes |
$ - |
$ - |
CROSSROADS SYSTEMS, INC. AND SUBSIDIARIES |
|||||||
SUPPLEMENTAL SCHEDULE I: CONSOLIDATED BALANCE SHEET |
|||||||
January 31, 2020 |
|||||||
Crossroads |
Capital Plus |
||||||
Systems, Inc. |
Financial, LLC |
Eliminations |
Total |
||||
ASSETS |
|||||||
CURRENT ASSETS |
|||||||
Cash and cash equivalents |
$ 27,784 |
$ 385,208 |
$ - |
$ 412,992 |
|||
Restricted cash |
- |
623,747 |
- |
623,747 |
|||
Interest receivable |
- |
1,319,349 |
- |
1,319,349 |
|||
Current portion of notes receivable |
- |
1,380,352 |
- |
1,380,352 |
|||
Current portion of other notes receivable |
- |
89,918 |
- |
89,918 |
|||
Intercompany receivables |
3,143,910 |
19,576,266 |
(22,720,176) |
(0) |
|||
Inventory |
- |
13,056,189 |
- |
13,056,189 |
|||
Prepaid expenses and other current assets |
175,284 |
119,657 |
- |
294,941 |
|||
Total current assets |
3,346,978 |
36,550,685 |
(22,720,176) |
17,177,487 |
|||
NOTES RECEIVABLE, net of current |
- |
116,991,740 |
- |
116,991,740 |
|||
maturities and allowance of $0 |
- |
- |
- |
||||
OTHER NOTES RECEIVABLE, net of current |
0 |
6,499,846 |
- |
6,499,846 |
|||
maturities and allowance of $0 |
- |
- |
- |
||||
GOODWILL |
18,566,966 |
- |
- |
18,566,966 |
|||
DEFERRED TAX ASSET |
19,548,954 |
- |
- |
19,548,954 |
|||
INVESTMENT IN SUBSIDIARY |
13,386,175 |
- |
(13,386,175) |
- |
|||
OTHER NON-CURRENT ASSETS |
- |
42,886 |
- |
42,886 |
|||
TOTAL ASSETS |
$ 54,849,073 |
$ 160,085,157 |
$ (36,106,351) |
$ 178,827,879 |
|||
LIABILITIES AND EQUITY |
|||||||
CURRENT LIABILITIES |
|||||||
Accounts payable |
$ 9,953 |
$ 257,483 |
$ - |
$ 267,436 |
|||
Accrued liabilities |
49,012 |
441,430 |
- |
490,442 |
|||
Escrow liabilities |
- |
440,335 |
- |
440,335 |
|||
Intercompany payables |
19,576,266 |
- |
(19,576,266) |
(0) |
|||
Current portion of credit facilities |
- |
69,556,841 |
(11,172,741) |
58,384,100 |
|||
Current portion of other note payable (subordinated debt) |
- |
135,579 |
135,579 |
||||
Current portion of acquisition notes payable |
- |
- |
1,871,378 |
1,871,378 |
|||
Total current liabilities |
19,635,231 |
70,696,089 |
(28,742,050) |
61,589,270 |
|||
CREDIT FACILITIES, net of current maturities |
- |
43,776,460 |
11,172,741 |
54,949,201 |
|||
OTHER NOTE PAYABLE, net of current maturities (subordinated) |
- |
1,471,150 |
(135,579) |
1,335,571 |
|||
ACQUISITION NOTES PAYABLE, net of current maturities (includes $2.2M subordinated debt) |
14,300,989 |
- |
(1,871,378) |
12,429,611 |
|||
OTHER LONG-TERM LIABILITIES |
- |
370,322 |
- |
370,322 |
|||
TOTAL LIABILITIES |
33,936,220 |
116,314,022 |
(19,576,266) |
130,673,976 |
|||
EQUITY |
|||||||
Common stock, $0.001 par value: 75,000,000 shares authorized, 5,971,994 shares issued and outstanding |
5,972 |
- |
- |
5,972 |
|||
Additional paid in capital |
242,361,362 |
- |
(2,519) |
242,358,843 |
|||
Accumulated earnings (deficit) |
(221,454,482) |
25,717,630 |
(16,527,566) |
(212,264,418) |
|||
Crossroads Systems, Inc. stockholders' equity |
20,912,853 |
25,717,630 |
(16,530,085) |
30,100,397 |
|||
Non-controlling interests |
- |
18,053,506 |
- |
18,053,506 |
|||
TOTAL EQUITY |
20,912,853 |
43,771,136 |
(16,530,085) |
48,153,903 |
|||
TOTAL LIABILITIES AND EQUITY |
$ 54,849,073 |
$ 160,085,157 |
$ (36,106,351) |
$ 178,827,879 |
CROSSROADS SYSTEMS, INC. AND SUBSIDIARIES |
||||||
SUPPLEMENTAL SCHEDULE II: CONSOLIDATED STATEMENT OF OPERATIONS |
||||||
Crossroads |
Capital Plus |
|||||
Systems, Inc. |
Financial, LLC |
Total |
||||
REVENUES |
||||||
Interest income |
$ - |
$ 3,179,853 |
$ 3,179,853 |
|||
Property sales |
- |
4,180,400 |
4,180,400 |
|||
Other revenue |
- |
284,321 |
284,321 |
|||
Total revenues |
- |
7,644,575 |
7,644,575 |
|||
COSTS AND EXPENSES |
||||||
Interest expense |
- |
1,515,581 |
1,515,581 |
|||
Cost of properties sold |
- |
3,669,899 |
3,669,899 |
|||
General and administrative |
54,899 |
416,911 |
471,810 |
|||
Salaries and wages |
- |
673,464 |
673,464 |
|||
Total costs and expenses |
54,899 |
6,275,854 |
6,330,753 |
|||
Income (loss) from operations |
(54,899) |
1,368,721 |
1,313,821 |
|||
OTHER EXPENSES |
||||||
Interest expense |
(211,876) |
- |
(211,876) |
|||
Total other expenses |
(211,876) |
- |
(211,876) |
|||
Income (loss) before income tax provision |
(266,775) |
1,368,721 |
1,101,945 |
|||
INCOME TAX PROVISION |
(131,370) |
- |
(131,370) |
|||
NET INCOME (LOSS) |
(398,145) |
1,368,721 |
970,575 |
|||
Less: net income attributable to non-controlling interests |
- |
(158,795) |
(158,795) |
|||
NET INCOME (LOSS) ATTRIBUTABLE TO |
||||||
CONTROLLING INTERESTS |
$ (398,145) |
$ 1,209,926 |
$ 811,780 |
Fiscal First Quarter Shareholder Report for The Three Months Ended January 31, 2020 |
|
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: OTCQB |
|
75,000,000 Common Shares Authorized |
|
5,971,994 Shares Issued and Outstanding as of January 31, 2020 |
Dear Shareholder:
We are happy to report that we are now trading on the OTCQB. This adds an extra layer of disclosure documents and as we continue to progress in our bank regulatory applications, we feel this is a natural progression for the company. In addition to preparing bank applications and models, the first quarter was spent ensuring we would begin our Spring sales season with enough renovated homes to meet the growing demand for affordable housing in our markets. The historically slow sales quarter did, however, provide enough good weather to meet our completion targets.
In prior years, we have been racing at this time of year to complete homes in our pipeline to be ready for the Spring sales season. A year ago, we made a concerted effort to start the process of putting more homes in our pipeline to be fully renovated at this time of year. We are very happy to report that we currently have 54 homes available for sale which equates to three months' supply of homes on the market to meet the strong demand for affordable housing in our markets. For comparison, the last two years during the same period, we had a 1 month's supply and were pressing construction crews to complete homes to keep up with demand and thus, not fully able to meet the demand of our buyers and borrowers. We look forward to a robust sales season and to updating you on the results of these efforts in second and third quarters.
Additionally, we have expanded into the South Texas (McAllen) region, one of the fastest growing in the country. We are building out a small neighborhood of new, 2,000 sf homes and are excited about being able to expand our product offering. We are careful to not step out too far on the risk curve, however, and are maintaining no more than two spec homes at a time and the majority of our new home construction projects are to prequalified, contracted buyers.
CPF's outstanding mortgage loan portfolio balance at the end of the quarter was $123.3 million which included $4.9 million in its higher value residential mortgages. For the first quarter, CPF generated $3.2 million in interest income and $4.2 million sales from the sale of properties in low to moderate income census tracts and $284,000 in non interest income. As we plan for the bank merger consummation, we continue to look for opportunities for non-interest income to diversify the revenue stream. Again, the winter months are inventory building months vs robust home sales periods. This mirrors industry cycles. The consolidated operating income for the quarter was approximately $1.1 million before income attributable to non-controlling interests of $159,000 and accruing for a non-cash tax provision of $131,000. Note the Company offsets its tax provision against its deferred tax asset of $19.5M. The net income after the provision and before income attributable to non-controlling interest was $812,000 compared to $491,000 for the same period of 2019. At January 31, 2020, CPF's unadjusted leverage was 2.51x and the consolidated cash coverage ratio, adjusted for one-time and transaction expenses was 1.80x. Cash EPS (net of non controlling interest) is up over 70% year over year.
The expenses at the holding company (Crossroads) level have been reduced to essential operating expenses and interest expense on the original acquisition loan. Crossroads and CPF continue to focus on impacting communities and delivering long term shareholder value while operating at efficiency expense ratios.
We thank you for your support of our social enterprise.
Saludos Cordiales,
Robert H. Alpert & Eric A. Donnelly
SOURCE Crossroads Systems
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