Axesstel Announces First Quarter 2006 Results; Reports Revenue of $10.5 Million; Expanded Geographically and Diversified Customer Base; Launched Innovative New Gateway and Broadband Modem Products.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 results for the first quarter ended March 31, 2006. First Quarter 2006 Results Revenues for the first quarter of 2006 were $10.5 million, compared to revenues of $29.0 million in the year ago quarter. Gross margin for first quarter 2006 was $269,000 or three percent of revenues, mainly due to lower revenues and reduced factory utilization, compared to $3.6 million, or 12 percent of revenues, for the same period last year. The company reported a net loss of $3.4 million, compared to a net loss of $1.4 million in the year ago quarter. First quarter 2006 loss per share was $0.15, compared to a loss of $0.10 for the same period last year. "We are not satisfied with our first quarter results," said Mike Kwon, chairman and chief executive officer of Axesstel. "However, we are encouraged by recent order strength and growing backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. . Our visibility into the second quarter of 2006 shows improving financial trends. With five weeks of the quarter behind us, we are approaching the first quarter's revenue levels and expect to exceed it significantly in the second quarter. "While revenues declined, we continued to diversify diversify To acquire a variety of assets that do not tend to change in value at the same time. To diversify a securities portfolio is to purchase different types of securities in different companies in unrelated industries. our customer base and broaden product portfolio with superior fixed wireless products for voice and high-speed data based on 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. and GSM (Global System for Mobile Communications) A digital cellular phone technology based on TDMA that is the predominant system in Europe, but also used worldwide. Developed in the 1980s, GSM was first deployed in seven European countries in 1992. technologies. During the quarter, we added nine new customers to reach a total of 40 carrier customers worldwide; began sales to the Philippines; and continued sales to new and existing customers in our emerging markets including India, Indonesia, Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. , Pakistan, Africa and Eastern Europe Eastern Europe The countries of eastern Europe, especially those that were allied with the USSR in the Warsaw Pact, which was established in 1955 and dissolved in 1991. . Also, we launched innovative products for the growing third-generation telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. market, announcing two new products aimed at more developed regions, including eight new product models serving the emerging Wi-Fi and broadband markets. Our product development efforts are targeted at expanding our addressable Reachable. When something is addressable, it can be identified and manipulated independently of its surroundings. For example, screen pixels and RAM memory are addressable. Each of the screen's picture elements can be individually turned on and off, and each of the memory's bytes can be market and delivering valuable solutions to the billions of people worldwide who are not currently connected to phone and data service. Overall, these actions position us well for what we believe will be a promising 2006," concluded Kwon. Significant developments recently and in the first quarter 2006 include: Customer Developments --Announced the award of a tender in April for more than 350,000 low cost, fixed wireless desktop phones based on the L800 platform from BNSL, one of the largest government telecommunications service providers A Telecommunications Service Provider or TSP is a type of Communications Service Provider that has traditionally provided telephone and similar services. This category includes ILECs, CLECs, and mobile wireless companies. in India --Began delivering L1900 Public Call Office Fixed Wireless Desktop Phones in March to Worldcall Telecom Limited to support Worldcall's nationwide network expansion of low-cost voice services to consumers and businesses in rural, urban and underserved areas in Pakistan --Received $4.4 million in purchase orders from two new customers in India and the Philippines in March and anticipate shipping in the second quarter --Announced Tata Teleservices Tata Teleservices Limited (TTSL) is part of the Tata Group of Companies, an Indian Conglomerate. It runs the brand name Tata Indicom in India in various telecom circles of India. The company forms part of the Tata Group's prescence in the Telecommunication Industry in India, along with Limited, a telecom service provider in India, launched the L800 and P830 CDMA2000 1X Fixed Wireless Desktop Phones in March, targeting first-time users and subscribers demanding greater functionality --Initiated shipments of P450R and L450R fixed wireless phones in February to PT Sampoerna Telekomunikasi Indonesia to support nationwide telecom access in what we believe is the world's second largest fixed wireless market --Announced the award of orders totaling $5.1 million in January from five operators in Latin America and the Caribbean for fixed wireless broadband High-speed wireless transmission of data. What is "high" speed is always a changing number. Wireless systems are typically slower than land-based, wireline networks. In the past, wireless broadband started at 250 Kbps, whereas land-based broadband was generally considered to start at T1 modems Product Developments --Unveiled MV300 Series in April at CTIA (1) See CompTIA. (2) (Cellular Telecommunications & Internet Association, Washington, DC, www.ctia.org, www.wow-com.com) A membership organization founded in 1984 that is involved with regulatory and public affairs issues in the wireless industry. Wireless 2006 and Mobile Focus. The MV300 Series is a line of 3G wireless broadband gateways offering residential, business and commercial users CDMA2000 1x 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. wireless wide area networking (WWAN See wireless WAN. ), a WiFi wireless local area networking (WLAN See wireless LAN. WLAN - wireless local area network ) router router Portable electric power tool used in carpentry and furniture making that consists of an electric motor, a base, two handle knobs, and bits (cutting tools). A router can cut fancy edges for shelving, grooves for storm windows and weather stripping, circles and ovals , circuit switch cellular voice and analog fax in one integrated device. Shipments are anticipated in the third quarter. --Launched MV200 Series, which seamlessly combines WWAN, circuit switch cellular voice and analog fax technology to provide wireless broadband data access, voice calling and fax capabilities all in one easy to use, plug-and-play desktop networking device Financial Guidance While management is not providing detailed financial guidance, the company anticipates 2006 revenue will exceed 2005 revenue. The revenue growth rate is expected to exceed the expense growth rate. The company will continue to report on significant customer developments as they occur. Conference Call Axesstel will host a conference call at 1:30 p.m. PT (4:30 p.m. ET) today to discuss its first quarter results. Participating in the call will be Mike Kwon, chairman and chief executive officer; Clark Hickock, 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 Patrick Gray, senior vice president finance and corporate controller. The call is being webcast and can be accessed from the "Investor Relations Investor relations The process by which the corporation communicates with its investors. " section of the company's website at http://www.axesstel.com. If you do not have Internet access See how to access the Internet. , please dial the following number five to ten minutes prior to the scheduled conference call time: 1-877-707-9628. International callers should dial 00-1-785-832-1508. There is no pass code required for this call. If you are unable to participate in the call at this time, the webcast will be archived on the Axesstel website. In addition, a telephonic replay will be available on Monday, May 8 at 7:00 p.m. ET, through Wednesday, May 10 at 11:59 p.m. ET. To access the replay, please dial 1-888-567-0047. International callers should dial 00-1-402-220-6953. There is no pass code required for this call. About Axesstel, Inc. Axesstel (AMEX:AFT) is a leader in the design, development and sale of fixed wireless voice and broadband data products. Axesstel's product portfolio includes fixed wireless desktop phones, public call office phones, voice/data terminals, broadband modems and 3G gateways for access to voice calling and high-speed data services. The company delivers innovative fixed wireless solutions to leading telecommunications operators and distributors worldwide. Axesstel is 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 and manufacturing facilities in Seoul, South Korea. For more information on Axesstel, visit www.axesstel.com. (C) 2006 Axesstel, Inc. All rights reserved. The Axesstel logo is a trademark of Axesstel, Inc. 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, margins and profitability as well as anticipated cost reductions, manufacturing efficiencies, expected product introductions, and potential customers and markets 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 fixed wireless products in target markets; the possibility that networks that can support our broadband products 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; the possibility of unforeseen manufacturing difficulties; 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 dependence on a few significant 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 BALANCE SHEET
(Unaudited)
ASSETS
Current assets: March 31, December 31,
2006 2005
------------ ------------
Cash and cash equivalents $4,468,589 $9,161,502
Accounts receivable 9,592,509 13,696,081
Inventory 6,868,400 3,314,019
Prepayments and other current assets 1,620,989 1,749,139
------------ ------------
Total current assets 22,550,487 27,920,741
Property and equipment, net 3,458,217 3,709,351
Other assets:
License, net 3,465,042 3,674,592
Goodwill 385,564 385,564
Other, net 850,966 860,520
------------ ------------
Total other assets 4,701,572 4,920,676
------------ ------------
Total assets $30,710,276 $36,550,768
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
March 31, December 31,
2006 2005
------------ ------------
Current liabilities:
Accounts payable $4,383,133 $1,127,280
Due to Wistron NeWeb, a related party 6,131,440 7,483,342
Bank financing 1,995,000 7,239,000
Customer advances 631,380 -
Accrued royalties 538,375 569,561
Accrued warranties 558,400 558,400
Accrued expenses and other current
liabilities 1,698,771 1,611,910
------------ ------------
Total current liabilities 15,936,499 18,589,493
Long-term liabilities:
Other long-term liabilities 2,500,000 2,500,000
------------ ------------
Total long-term liabilities 2,500,000 2,500,000
Stockholders' equity 12,273,777 15,461,275
------------ ------------
Total liabilities and stockholders'
equity $30,710,276 $36,550,768
============ ============
AXESSTEL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the three months ended
March 31, April 1,
2006 2005
-------------------------
Net revenues $10,510,388 $29,010,455
Cost of goods sold 10,241,564 25,443,592
------------ ------------
Gross margin 268,824 3,566,863
Operating expenses:
Research and development 1,305,377 1,354,566
Selling, general and administrative 2,723,887 2,825,425
------------ ------------
Total operating expenses 4,029,264 4,179,991
------------ ------------
Operating loss (3,760,440) (613,128)
Other income (expense):
Interest and other income 375,166 17,043
Interest and other expense (28,900) (783,838)
------------ ------------
Total other income (expense) 346,266 (766,795)
------------ ------------
Loss before provision for income taxes (3,414,174) (1,379,923)
Provision for income taxes - 9,295
------------ ------------
Net loss (3,414,174) (1,389,218)
Loss per share:
Basic ($0.15) ($0.10)
============ ============
Diluted ($0.15) ($0.10)
============ ============
Weighted average shares outstanding:
Basic 22,585,256 13,872,276
============ ============
Diluted 22,585,256 13,872,276
============ ============
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