AUSTIN, Texas, Dec. 18, 2017 /PRNewswire/ -- Crossroads Systems, Inc. (OTC Pink: CRSS), an intellectual property licensing company, announced that it has closed on the acquisition of Capital Plus Financial, LLC (CPF), a leading provider of affordable housing and mortgage financing to underserved communities in Texas.
Capital Plus Financial is a certified Community Development Financial Institution (CDFI) and Certified B Corp whose mission is to support Hispanic homeownership in Texas. Over 85% of its mortgages have been made to low to moderate income and first-time homebuyers. With a track record of having injected over $250 million into underserved communities and populations in Texas, the Company plans to grow its loan portfolio over the next decade as traditional portfolio lending institutions continue to exit the single family residential lending market. More information about CPF can be found at www.capitalplusfin.com.
As part of the transaction, CPF stockholders received $30.8 million in cash and an aggregate of 2,955,028 newly issued shares of Crossroads stock, representing 49.5% of Crossroads' outstanding shares after giving effect to the closing. Crossroads' fully diluted post-acquisition share count is 5,969,754. The cash portion of the purchase price is being funded with $24.2 million of new Crossroads debt plus $6.6 million of CPF cash on hand.
As of October 31, 2017, CPF held approximately $92 million in consumer mortgage notes receivables and had generated $3.4 million in 2017 pretax earnings. Crossroads intends to report consolidated fiscal first quarter financial results in March 2018. CPF will continue to be led by its existing management team and operate as a wholly owned subsidiary of Crossroads.
CPF's Chief Executive Officer, Eric Donnelly, and Chief Financial Officer, Farzana Giga, have replaced Richard K. Coleman, Jr. and Robert G. Pearse on Crossroads' board of directors. Mr. Donnelly has also been appointed Crossroads' Chief Executive Officer.
Richard K. Coleman, Jr., Principal Executive Officer at Crossroads Systems, said, "We are thrilled to announce the acquisition of CPF and I am excited to turn over the reins to our new CEO. Eric Donnelly and his team have built a profitable and growing social enterprise providing affordable housing and mortgage financing to low income and well deserving borrowers. The acquisition delivers on our commitment to create long-term shareholder value while delivering impact to underserved communities."
About Crossroads Systems
Crossroads Systems, Inc. (OTC Pink: CRSS) is an intellectual property licensing company headquartered in Austin, Texas. Founded in 1996 as a product solutions company, Crossroads created some of the storage industry's most fundamental patents and has licensed patents to more than 50 companies since 2000. Visit www.crossroads.com.
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.
©2017 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.
Zintel Public Relations
SOURCE Crossroads Systems