Daily News: July 26, 2013

Crossroads Secures IP-Backed Financing from Fortress

Crossroads Systems, a global provider of data archive solutions, announced that it secured a $10 million credit facility backed by a portion of its intellectual property (IP) portfolio, from an affiliate of Fortress Investment Group, a global investment firm.

As a condition of the credit agreement, Crossroads will issue to Fortress 1,454,545 warrants to purchase common stock. The warrants are exercisable at an initial conversion price of $2.0625 per share, subject to anti-dilution adjustments. National Securities Corporation, a wholly owned subsidiary of National Holdings Corporation, acted as an advisor to Crossroads Systems on the transaction.

Richard K. Coleman, Jr., interim president and chief executive officer at Crossroads Systems, said, “We are pleased that Fortress recognizes the untapped value of our IP. Crossroads has a proven record of generating IP revenue, recognizing more than $60 million in license fees. The Fortress financing is an important component of Crossroads’ previously announced strategy to access capital through the monetization of our patent portfolio, and underscores the value of our extensive IP portfolio.”

Eran Zur, managing director and head of the Intellectual Property Finance Group at Fortress Investment Group, said, “Crossroads has demonstrated a history of successful intellectual property creation and Fortress is excited to help fund Crossroads’ future growth.”