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Crossroads Systems Reports Fiscal Second Quarter 2021 Financial Results

Crossroads Systems Reports Fiscal Second Quarter 2021 Financial Results

Crossroads Systems Reports Fiscal Second Quarter 2021 Financial Results

Record Issuance of PPP Loans Drives Record Operating Income of $150.4 Million, or $25.16 Per Share

4th Largest PPP Lender by Net Dollars; 2nd Largest by Loans Approved

PR Newswire

DALLAS, June 14, 2021

DALLAS, June 14, 2021 /PRNewswire/ -- Crossroads Systems, Inc. (OTCQX: CRSS) ("Crossroads" or the "Company"), a holding company focused on investing in businesses that promote economic vitality and community development, reported financial results for its fiscal second quarter 2021 ended April 30, 2021.

Fiscal Second Quarter 2021 Key Performance Indicators (KPIs)

  • Gross origination fees associated with PPP loans totaled $464.1 million for the quarter. Net of cost of fees and margin split with loan service providers, the Company recorded $150.2 million in operating income from origination fees during the second fiscal quarter.
  • Capital Plus Financial, a designated CDFI, issued and approved 364,079 PPP loans to small business owners and independent contractors during the quarter. As of the culmination of the program on May 31, 2021, the Company has approved 472,036 loans at an average amount of $16,062. 80% of loans issued and approved went to minority small business owners and individuals.
  • Expects to accrue a total of $1.1 billion in deferred gross origination fees from the program, which will be recognized when expenses are incurred in a later period.
  • Added $4.9 million in new single-family mortgages during the fiscal second quarter.
  • The Company's mortgage portfolio grew to $132 million from $121.4 million for the comparative period in 2020.
  • The serious delinquency rate as of the period ended April 30, 2021 was 1.1%, compared to 1.4% at the end of the same period in 2020. The Federal Home Loan Mortgage Corporation (Freddie Mac) reported a single-family serious delinquency rate of 2.15% as of the period ended April 30, 2021. The serious delinquency rate is based on the number of mortgage loans that are three monthly payments or more past due or in the process of foreclosure.
  • Held 113 properties in inventory compared to 119 at the same time in 2020. As of April 30, 2021, gross inventory was $11.6 million compared to $11.5 million as of April 30, 2020. The housing boom in Texas is providing very stable employment and growth for CPF's customers. This is, however, providing, supply constraints for housing stock but inventory is selling as fast as it comes to market.

Fiscal Second Quarter 2021 Financial Highlights

  • Total property sales income was $6.6 million for the quarter, up from $6.4 million for the same period in 2020. The increase in property sales income for the quarter was primarily due to slightly increased pricing on homes sold.
  • Total interest income increased 76% to $5.6 million, up from $3.2 million in the comparative 2020 period. The increase in interest income was the result of interest income earned from the growth in the mortgage loan portfolio and the interest from the PPP loans.
  • Operating income increased to $150.4 million, up from $1.3 million in the same period in 2020. The substantial increase in operating income was primarily due to origination fees associated with the Company's participation in the PPP loan program.
  • Cash EPS (operating income less income to non-controlling interests) was $25.16 compared to $0.16 for the comparative period in 2020. The Company utilized its tax losses of $103 million and its deferred tax asset of $21 million and booked a cash tax expense of $9.6 million for the quarter.
  • Book value as reported was $173.5 million, or $29.05 per share. Adjusted book value including $1.2 million of subordinated debt totaled $174.8 million, or $29.26 per share.
  • As of April 30, 2021, the Company held a cash balance of $213.1 million compared to $2.6 million as of October 31, 2020.

Management Commentary
"In the last several months, Capital Plus has transformed from a regional single-family mortgage-based lending institution into one of the country's largest providers of small business loans," said Eric A. Donnelly, Chief Executive Officer of Crossroads Systems. "When the SBA announced its reopening of the program in January, we immediately identified strong synergies between the program's focus on small businesses and Capital Plus' core mission as a CDFI. Together with our loan service providers, we established early incumbency as the go-to institution for small business owners, independent contractors, and sole proprietors. Financially, our success in the program has put us into the best position we have ever been in, netting us more than $150 million in operating income for the quarter. At a record cash position, we are well-capitalized to support the future growth initiatives that will drive our double-bottom line.  We will provide a more detailed review of the quarter and these growth initiatives in the near future upon the completion of PPP.

About Crossroads Systems
Crossroads Systems, Inc. (OTCQX: 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.

©2021 Crossroads Systems, Inc., Crossroads and Crossroads Systems are registered trademarks of Crossroads Systems, Inc. All trademarks are the property of their respective owners.

Company Contact:
Crossroads Systems
IR@crossroads.com 

Investor Relations Contact:
Gateway Investor Relations
Matt Glover and Tom Colton
CRSS@gatewayir.com
(949) 574-3860

Press/Media Contact:
dovetail solutions
Andy Boian
aboian@dovetailsolutions.com 
(720) 221-9211

CROSSROADS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

          ASSETS

April 30,
2021


October 31,
2020

CURRENT ASSETS




Cash and cash equivalents

$      213,077,424


$      2,127,059

Restricted cash

450,918,490


3,004,051

Interest receivable

103,358,931


930,871

Current portion of notes receivable

782,923


1,527,234

Current portion of other notes receivable

3,611


7,014

Inventory

11,604,491


10,544,236

Prepaid expenses and other current assets

186,022


411,645

Total current assets

779,931,893


18,552,110





NOTES RECEIVABLE, net of current maturities and allowance of $0

129,441,757


127,304,450

OTHER NOTES RECEIVABLE, net of current maturities, participations and allowance of $0

1,607,379


1,583,761

PPP LOAN RECEIVABLES

3,500,663,375


-

GOODWILL

18,566,966


18,566,966

DEFERRED TAX ASSET

-


18,300,334

OTHER NON-CURRENT ASSETS

132,673


-





TOTAL ASSETS

$   4,430,344,043


$   184,307,621





          LIABILITIES AND EQUITY




CURRENT LIABILITIES




Accounts payable

$            287,489


$         222,610

Accrued liabilities

194,786,029


353,901

Escrow liabilities

1,420,841


2,886,249




-

Current portion of credit facilities

39,441,501


75,694,845

Current portion of other note payable (subordinated)

97,218


191,337

Current portion of acquisition notes payable

-


2,495,172

Total current liabilities

236,033,077


81,844,114





CREDIT FACILITIES, net of current maturities

60,828,194


39,481,435

OTHER NOTE PAYABLE, net of current maturities (subordinated)

1,144,235


1,144,234

ACQUISITION NOTES PAYABLE, net of current maturities

9,647,991


10,582,769

PAYROLL PROTECTION PROGRAM LOAN 

376,800


376,800

FED PPPLF CREDIT FACILITY

3,948,207,844


-

OTHER LONG-TERM LIABILITIES

601,391


407,091

TOTAL LIABILITIES

4,256,839,533


133,836,443





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

242,619,673


242,471,412

Accumulated deficit

(87,171,619)


(210,057,986)

Crossroads Systems, Inc. stockholders' equity

155,454,026


32,419,398

Non-controlling interests

18,050,485


18,051,780

TOTAL EQUITY

173,504,511


50,471,178





TOTAL LIABILITIES AND EQUITY

$   4,430,344,043


$   184,307,621

 

CROSSROADS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS


For the Three Months Ended 


April 30, 2021


April 30,2020

REVENUES




Interest income

$    5,596,975


3,034,272

Property sales

6,641,800


6,423,312

Other revenue

464,303,570


81,047

Total revenues

476,542,345


9,538,631





COSTS AND EXPENSES




Interest expense

2,155,291


1,569,158

Cost of properties sold

5,602,611


5,457,218

General and administrative

317,603,771


481,437

Salaries and wages

781,454


687,361

Total costs and expenses

326,143,128


8,195,175





Income from operations

150,399,217


1,343,456





OTHER EXPENSES




Interest expense

(123,838)


(211,876)

Total other expenses

(123,838)


(211,876)





Income before income tax provision

150,275,379


1,131,581





INCOME TAX PROVISION

(27,883,562)


(164,582)





NET INCOME

122,391,817


966,999

Less: net income attributable to non-controlling interests

(155,432)


(157,068)





NET INCOME ATTRIBUTABLE TO CONTROLLING INTERESTS

$ 122,236,385


$ 809,931





Earnings (loss) per share:








Cash income attributable to common shareholders

140,424,274


974,513

Weighted average shaes outstanding

5,971,994


5,971,994

Cash income per share

$          23.51


$      0.16

 

CROSSROADS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS


For the Six Months Ended 


April 30, 2021


April 30, 2020

REVENUES




Interest income

$    8,866,882


$ 6,214,126

Property sales

10,640,860


10,603,712

Other revenue

464,354,061


365,368

Total revenues

483,861,803


17,183,206





COSTS AND EXPENSES




Interest expense

3,558,240


3,084,739

Cost of properties sold

9,217,053


9,127,287

General and administrative

318,101,557


974,053

Salaries and wages

1,526,832


1,360,825

Total costs and expenses

332,403,682


14,546,903





Income from operations

151,458,121


2,636,303





OTHER EXPENSES




Interest expense

(261,609)


(395,322)

Total other expenses

(261,609)


(395,322)





Income before income tax provision

151,196,512


2,240,981





INCOME TAX PROVISION

(27,996,007)


(295,952)





NET INCOME

123,200,505


1,945,029

Less: net income attributable to non-controlling interests

(314,137)


(315,863)





NET INCOME ATTRIBUTABLE TO CONTROLLING INTERESTS

$ 122,886,368


$ 1,629,166





Earnings (loss) per share:








Cash income attributable to common shareholders

141,186,702


1,925,118

Weighted average shaes outstanding

5,971,994


5,971,994

Cash income per share

$          23.64


$        0.32

 

CROSSROADS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS


As of April 30,
2021


As of April 30,
2020





CASH FLOWS FROM OPERATING ACTIVITIES




Net income

$   123,199,210


$  1,945,029

Adjustments to reconcile net income to net cash




used in operating activities:




Loss on derivative related activity

(105,702)


(105,702)

Stock based compensation

148,261


(1,681)

Amortization of deferred financing fees

(132,673)


22,993

Provision for income taxes

18,300,334


295,952

Changes in operating assets and liabilities:




Account & Interest receivable

(102,428,060)


(9,506)

Notes receivable (Mortgages, other and PPP)

(3,502,076,587)


(3,914,231)

Inventory

(1,060,255)


322,679

Prepaids and other assets

225,623


70,986

Accounts payable

64,879


(4,195)

Accrued liabilities

194,732,130


270,841

Escrow liabilities

(1,465,408)


(1,846,279)

Net cash used in operating activities

(3,270,598,249)


(2,953,112)





CASH FLOWS FROM FINANCING ACTIVITIES




Preferred equity dividend distributions

(314,137)


(315,863)

Paycheck Protection Program loan

-


376,800

Borrowings on credit facilities, net

-


10,780,490

Principal payments on credit facilities

(14,906,585)


(8,509,019)

Principal payments on other notes payable

(94,118)


(88,211)

Principal payments on acquisition note payable

(3,429,950)


(1,028,203)

Principal payments on participations in mortgage notes and other receivables

-


1,275,978

Proceeds from the federal reserve PPP credit facility

3,948,207,844


-

      Net cash provided by financing activities

3,929,463,055


2,491,973





Net change in cash and cash equivalents and restricted cash

658,864,805


(461,139)

Cash and cash equivalents and restricted cash at beginning of period

5,131,110


3,030,074

Cash and cash equivalents and restricted cash at end of period

$   663,995,915


$  2,568,935





SUPPLEMENTAL INFORMATION




Cash paid for interest

$       3,137,559


$  3,221,615

 

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SOURCE Crossroads Systems; Capital Plus Financial

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