Crossroads Announces Q2

AUSTIN, Texas -- Crossroads Systems, Inc. (Pink Sheets:CRDS), a leading provider of business information assurance solutions for secure storage and data protection, today announced results for its fiscal second quarter ended April 30, 2007 (Q207).

Revenue totaled $4.9 million for Q2’07 compared to $4.8 million in the fiscal first quarter ended January 31, 2007 (Q1’07). Product revenue totaled $1.9 million for Q2’07 compared to $1.8 million for Q1’07. In addition, revenue from IP license, royalty and other totaled $3.0 million for Q2’07 compared to $3.0 million for Q1’07. Gross profit was $4.2 million, or 84 percent for Q2’07, compared to $3.9 million, or 82 percent for Q1’07. Net loss for Q2’07 was $2.3 million, or $0.08 cents loss per share, compared to a net loss of $1.5 million, or $0.05 cents loss per share in Q1’07.

Crossroads Systems is in the process of completing a 382 study to understand the status of its net operating losses (NOLs). Under Section 382 rules, a change in ownership can occur whenever there is a shift in ownership by more than 50 percentage points by one or more five-percent shareholders within a three-year period.

When a change of ownership is triggered, the NOLs may be impaired. In order to continue to protect this NOL asset, Crossroads Systems is requesting that all of its investors directly contact the company's investor relations department prior to allowing their ownership interest to approach a five percent level.

Crossroads Systems Inc.