Research Pit

[lonestar1a1]

CRDS: I took a small position in this one yesterday, the 26th, and have some DD here for you to study.

- CRDS provides data routing solutions for storage area networks. A
former high flyer, stock hit $200 in Jan 2000, today $1.

- Top three customers are HPQ, STK and EMC.

- Market cap = $27 million, cash = $20 million, so the enterprise
value is only $7 million.

- Insiders bought more than 1 million shares this year.

- CRDS reported Q3 results on Thursday. In Q3/05, revenue totaled $5.8
million, up 35% sequentially from Q2, and up 18% from Q3 last year.

- Net loss narrowed significantly to ($0.5) million, compared to loss of ($3.7) million in Q2 and ($2.1) million in Q3 last year.

- The loss includes investments in NexQL, a development stage company. Backing out the NexQL investments, CRDS generated net income of $0.2 million, the first time in its history.

- During the quarter, the company signed a new OEM customer, Tributary Systems. They announced expanded alliance with Quantum on 8/25.

- CEO stated on the CC that they are gaining traction, so the next few quarters may show continued growth in revenue and profitability.

- CC replay can be listened at 1-866-453-6660 using passcode 202073.


In summary, for a $1 stock with $0.8/share in cash and no debt, you're paying just $0.2 for a high tech business that has completed the restructuring, turned the corner and become profitable from operations for the first time in its history. Do your own DD and see if you agree with the insiders who have been buying the company stock.