Crossroads Completes $10 Million Equity Financing

Crossroads Systems, Inc. announced the completion of a $10.0 million equity financing in a private placement transaction to a group of institutional investors led by Compass Global Management, Ltd.

The Company sold 12,500,000 shares of its common stock at $0.80 per share for gross proceeds to the Company of $10.0 million and issued warrants to purchase an additional 4,296,875 shares of common stock (including shares underlying a warrant issued to the placement agent) with an exercise price of $0.80 per share. The net proceeds of the offering, after deducting placement agent fees and estimated financing expenses, are expected to be approximately $9.2 million. MDB Capital Group LLC acted as sole placement agent for the offering.

"This equity financing marks an important inflection point for Crossroads Systems which we believe validates our vision to become a global leader delivering high-value software solutions for enterprise cloud storage," said Rob Sims, President and CEO of Crossroads Systems. "The cloud storage market is growing rapidly with large underserved needs that we believe Crossroads Systems is well-positioned to address. With this capital, Crossroads Systems will be able to accelerate its strategic operating and growth plan."

In conjunction with this equity financing, Crossroads Systems agreed to become a reporting company and to arrange for the quotation of its common stock and warrants on the OTC bulletin board or the listing of its common stock and warrants on a NASDAQ exchange during 2011.

The securities sold by the Company in the private placement, and the underlying shares of common stock issuable upon exercise of the warrants sold in the private placement, have not been registered under the Securities Act of 1933, as amended, and may not be offered or sold absent such registration or an applicable exemption from the registration requirements. In connection with the offering, the Company entered into a registration rights agreement with investors that requires that the Company to register the securities issued in the financing.