Crossroads Systems Inc. (CRDS), the patent monetization company run by CEO Richard Coleman Jr. said it plans to raise up to $6 million from a rights offering.
The Austin, Texas-based company said it plans to make the rights offering through the distribution to its common and preferred stock holders to purchase shares of the company's common stock at a subscription price to be determined and subject to certain protection mechanics in place to preserve the company's ability to utilize its net operating loss (NOL) carryforwards.
Currently, Crossroads has approximately $128.7 million in federal NOLs. A change in ownership could reduce the availability of net operating losses for federal and state income tax purposes. A change in ownership could result from the purchase of common stock by an existing or new 5% stockholder including as a result of the rights offering.
Shares of Crossroads gained 2 cents to $2.41 today in trading. They’ve traded between $1.80 and $3.71 over the past year.
Crossroads said it expects to use proceeds of the rights offering to continue to fund efforts related to the monetization of its intellectual property portfolio, including the costs of ongoing litigation and other proceedings, repayment of indebtedness, and for working capital purposes.
Lone Star Value Investors GP LLC, the general partner of Lone Star Value Investors LP, which is run by Jeffrey Eberwein, who also is chairman of Crossroads, has indicated it intends to exercise all of its basic subscription rights, subject to the limitations to comply with Crossroads’ NOL forward rights plan, though no formal commitment has been made.
Crossroads was down to cash and cash equivalent of $8.17 million as of January 31, after posting a net loss of $2.3 million, or 15 cents a share that quiarter.
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