Axesstel Achieves Profitability; Revenues $37 Million, EPS $0.01, Gross Margin 12.2%.SAN DIEGO San Diego (săn dēā`gō), city (1990 pop. 1,110,549), seat of San Diego co., S Calif., on San Diego Bay; inc. 1850. San Diego includes the unincorporated communities of La Jolla and Spring Valley. Coronado is across the bay. -- Axesstel, Inc. (AMEX AMEX See: American Stock Exchange :AFT), a leader in the design and development of fixed wireless voice and broadband broadband Term describing the radiation from a source that produces a broad, continuous spectrum of frequencies (contrasted with a laser, which produces a single frequency or very narrow range of frequencies). data products, today announced positive results for the second quarter of 2005. Revenues for the second quarter of 2005 were $37.0 million, an increase of approximately 369% compared to revenues of $7.9 million reported in the same period last year and an increase of approximately 27% compared to revenues of $29.0 million in the first quarter of 2005. The company reported net income of $.3 million or $0.01 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share as compared to a net loss of $1.0 million or ($0.13) per diluted share for the same period a year ago, and a net loss of $1.4 million or ($0.10) per diluted share for the first quarter of 2005. Gross margin for the second quarter of 2005 was $4.5 million or 12.2% compared to $1.0 million or 12.4% reported in the same period last year and $3.6 million or 12.3% in the first quarter of 2005. "We are very pleased to have reached a significant financial milestone in the second quarter by achieving profitability," said Mike Kwon Kwon is a Korean family name. List of famous Kwons
v. so·lid·i·fied, so·lid·i·fy·ing, so·lid·i·fies v.tr. 1. To make solid, compact, or hard. 2. To make strong or united. v.intr. our position as a leading provider of high-quality fixed wireless products by growing revenues through new product introductions, expanding current customer relationships and acquiring new customers in markets worldwide." Significant recent developments include: --In July July: see month. , Axesstel announced it will supply Tele Barta with the AXW-P1900 Fixed Wireless Phone to support the launch of their CDMA (Code Division Multiple Access) A method for transmitting simultaneous signals over a shared portion of the spectrum. The foremost application of CDMA is the digital cellular phone technology from QUALCOMM that operates in the 800 MHz band and 1.9 GHz PCS band. 2000 1X fixed wireless network in Bangladesh Bangladesh (bäng-lädĕsh`, băng–) [Bengali,=Bengal nation], officially People's Republic of Bangladesh, republic (2005 est. pop. 144,320,000), 55,126 sq mi (142,776 sq km), S Asia. . --In June June: see month. , Axesstel purchased manufacturing capabilities in South Korea and moved volume manufacturing to China to reduce production costs, increase manufacturing efficiencies and expedite ex·pe·dite tr.v. ex·pe·dit·ed, ex·pe·dit·ing, ex·pe·dites 1. To speed up the progress of; accelerate. 2. product introductions. The company also announced it will supply Suntel with the AXW-P800 Fixed Wireless Phone to support the launch of Sri Lanka's first CDMA2000 1X fixed wireless network. --In May, Axesstel strengthened its management team with the appointment of Clark Hickock as chief operating officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. and built on marketing with the addition of Kim Haneke as senior director of marketing. --In April, Axesstel expanded a supplier relationship with Telecard Limited of Pakistan and opened a representative office in China. Third Quarter and Full Year 2005 Guidance The following statements are forward looking and actual results may differ materially. Please see the description of certain risk factors in this release and Axesstel's reports on file with the Securities and Exchange Commission (SEC) for a more complete description of risks. Based on the current business outlook, Axesstel anticipates revenues for the third quarter of 2005 to be between $34 and $38 million. Full year guidance for 2005 revenues continues to be at the high end of $135 to $145 million. Axesstel continues to expect to generate an operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. for 2005. Conference Call Axesstel will host a conference call today, August 2, 2005 at 10:30 a.m. PDT PDT abbr. Pacific Daylight Time PDT Pacific Daylight Time PDT n abbr (US) (= Pacific Daylight Time) → hora de verano del Pacífico PDT (1:30 p.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT ) to discuss the second quarter 2005 results. Participating in the call will be Axesstel's chairman and CEO, Mike H.P. Kwon, David Morash, president and CFO See Chief Financial Officer. , and Patrick Gray, vice president and controller. To participate in the conference call, please dial the following number at least ten minutes prior to the scheduled conference call time: 800-862-9098. International callers should dial 785-424-1051. There is no reservation code required for this call. For those unable to participate in the call at this time, a replay will be available from August 2, 2005 through August 11, 2005. To access the replay, please dial 888-562-0853. International callers should dial 402-220-7338. About Axesstel Axesstel is a leader in the design and development of fixed wireless voice and broadband data products. Axesstel's product portfolio includes fixed wireless desktop phones, payphones, voice/data terminals and broadband modems for access to voice calling and high-speed data services. Axesstel delivers innovative fixed wireless solutions, currently based on 3G Code Division Multiple Access (CDMA) technology, to leading telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. operators and distributors worldwide. Headquartered in San Diego, California “San Diego” redirects here. For other uses, see San Diego (disambiguation). San Diego is a coastal Southern California city located in the southwestern corner of the continental United States. As of 2006, the city has a population of 1,256,951. with a research and development center in Seoul, South Korea, Axesstel is listed on AMEX: AFT. For more information on Axesstel visit www.axesstel.com. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. "Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. " Statement under the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995: With the exception of historical information, the statements set forth above include forward-looking statements relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc revenues and profitability as well as anticipated future production capabilities, cost reductions, manufacturing efficiencies and expected product introductions which may affect future results and future viability. Axesstel wishes to caution readers that actual results could differ materially from those suggested by the forward-looking statements due to risks and uncertainties and a number of important factors. Those factors include, but are not limited to, the risk of delays in the adoption of new technologies in developing markets; the lack of continued acceptance or growth of CDMA technology in target markets; the possibility that networks that can support our CDMA EV-DO (EVolution-Data Only) A 3G high-speed digital data service provided by cellular carriers worldwide that use the CDMA technology, including Verizon and Sprint in the U.S. EV-DO works on EV-DO cellphones as well as laptops and portable devices that have EV-DO modems. and EV-DV (EVolution-Data Voice) Part of the third generation of high-speed data enhancements to the CDMA cellphone technology. See CDMA2000 for more details. broadband modems will not be widely deployed; competition for contracts with our large telecommunication telecommunication Communication between parties at a distance from one another. Modern telecommunication systems—capable of transmitting telephone, fax, data, radio, or television signals—can transmit large volumes of information over long distances. carrier customers; the risks of dependence on a limited number of those customers; the requirement for end users to accept our products and technologies; our dependence on limited or sole source suppliers, including QUALCOMM Incorporated for CDMA chips; the possibility of unforeseen manufacturing difficulties including those associated with Axesstel manufacturing its own products; the risk that the implementation of the new manufacturing facilities or moving outsourced manufacturing to China will not provide cost reductions, improve efficiencies, or expedite product introductions; and other risk factors and information contained in Axesstel's filings with the Securities and Exchange Commission, such as the rapidly changing nature of technology, evolving industry standards, and frequent introductions of new products and enhancements by competitors; the competitive nature of the markets for Axesstel's products; Axesstel's need to gain market acceptance for its products; Axesstel's need to attract and retain skilled personnel; potential intellectual property-related litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. , and Axesstel's primary dependence on one large customer. All forward-looking statements are qualified in their entirety The whole, in contradistinction to a moiety or part only. When land is conveyed to Husband and Wife, they do not take by moieties, but both are seised of the entirety. by this cautionary statement, and Axesstel undertakes no obligation to revise or update this press release to reflect events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or occurring after this press release.
AXESSTEL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the three months ended For the six months ended
July 1, June 30, July 1, June 30,
2005 2004 2005 2004
------------ ----------- ------------ -----------
Net revenues $36,969,554 $7,874,990 $65,980,009 $8,303,590
Cost of goods sold 32,457,773 6,897,584 57,901,365 7,243,001
------------ ----------- ------------ -----------
Gross margin 4,511,781 977,406 8,078,644 1,060,589
Operating expenses:
Research and
development 1,376,946 867,315 2,731,512 1,829,662
Selling, general and
administrative 2,969,361 1,725,362 5,794,786 3,423,412
------------ ----------- ------------ -----------
Total operating
expenses 4,346,307 2,592,677 8,526,298 5,253,074
------------ ----------- ------------ -----------
Operating income
(loss) 165,474 (1,615,271) (447,654) (4,192,485)
Other income (expense):
Interest and other
income 196,524 2,444 213,567 7,003
Interest and other
expense (14,124) (127,005) (797,962) (211,688)
------------ ----------- ------------ -----------
Total other income
(expense) 182,400 (124,561) (584,395) (204,685)
------------ ----------- ------------ -----------
Profit (loss) before
benefit for income
taxes 347,874 (1,739,832) (1,032,049) (4,397,170)
Provision (benefit)
for income taxes 19,742 (695,933) 29,037 (1,758,868)
------------ ----------- ------------ -----------
Net income (loss) 328,132 (1,043,899) (1,061,086) (2,638,302)
Earnings (Loss) per share:
Basic $0.01 ($0.13) ($0.06) ($0.33)
============ =========== ============ ===========
Diluted $0.01 ($0.13) ($0.06) ($0.33)
============ =========== ============ ===========
Weighted average
shares outstanding:
Basic 22,069,581 8,314,801 17,970,929 8,108,310
============ =========== ============ ===========
Diluted 23,286,613 8,314,801 17,970,929 8,108,310
============ =========== ============ ===========
AXESSTEL, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
ASSETS
Current assets: July 1, December 31,
2005 2004
------------ ------------
Cash and cash equivalents $20,536,214 $7,525,259
Accounts receivable 16,216,056 8,776,340
Deferred tax assets 640,000 640,000
Deferred offering expenses - 974,833
Prepayments and other current assets 717,540 929,712
------------ ------------
Total current assets 38,109,810 18,846,144
Property and equipment, net 1,732,910 1,878,831
Other assets:
Deferred tax assets 1,260,000 1,260,000
License, net 4,197,524 1,971,121
Goodwill 385,564 385,564
Other, net 524,577 648,932
------------ ------------
Total other assets 6,367,665 4,265,617
------------ ------------
Total assets $46,210,385 $24,990,592
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
July 1, December 31,
2005 2004
------------ ------------
Current liabilities:
Accounts payable $327,810 $599,095
Due to Wistron NeWeb, a related party 15,613,332 13,623,474
Current portion of long-term debt - 1,140,000
Customer advances 559,500 135,300
Accrued litigation settlement - 958,000
Accrued royalties 1,733,161 1,364,246
Accrued expenses and other current
liabilities 1,432,700 1,417,951
------------ ------------
Total current liabilities 19,666,503 19,238,066
Long-term liabilities:
Note payable - 250,000
Long-term debt - 2,379,000
Other long-term liabilities 2,500,000 -
------------ ------------
Total long-term liabilities 2,500,000 2,629,000
Stockholders' equity 24,043,882 3,123,526
------------ ------------
Total liabilities and
stockholders' equity $46,210,385 $24,990,592
============ ============
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