Axesstel Reports Fiscal 2003 Results; Net Revenues Increase 41% Year over Year; Conference Call Scheduled for Today at 10:00 a.m. Pacific Time.Business Editors/High-Tech Writers SAN DIEGO--(BUSINESS WIRE)--March 22, 2004 Axesstel, Inc. (OTCBB OTCBB See OTC Bulletin Board (OTCBB). :AXES axes [L., Gr.] plural of axis. The straight lines which intersect at right angles and on which graphs are drawn. Usually the horizontal axis is the x-axis and the vertical one the y-axis. Called also axes of reference. ), a leader in developing, manufacturing and marketing high-quality, CDMA-based fixed wireless local loop (WLL See wireless local loop and PHS-WLL. ), hybrid terminals and engineering services to operators worldwide, today announced financial results for fiscal year 2003, which ended December December: see month. 31, 2003. Key consolidated performance highlights included: -- Axesstel's transition from Engineering Development Services (NRE (Non-Recurring Engineering) Refers to the cost of creating a new product, which is paid up front. Contrast with "production cost," which is ongoing and based on the quantity of material produced. ) to Wireless Local Loop (WLL) Product Sales, begun in 2003 and now complete, negatively impacted 2003 profitability. -- Net revenues for fiscal 2003 totaled $11.4 million, a 41% increase over fiscal 2002 net revenues of $8.1 million, a 1% increase in Product sales and a 80% increase in Engineering development. -- Gross profit margin Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. declined from 57% in 2002 to 34% in 2003. With the acquisition of Entatel, an engineering house in Korea Korea (kôrē`ə, kə–), Korean Hanguk or Choson, region and historic country (85,049 sq mi/220,277 sq km), E Asia. , at the end of 2002 to support Engineering sales to Verizon and a major telecommunications company See telecom company. , Axesstel engineering costs were recorded as a cost of goods for engineering services. -- During the year Axesstel also added to its U.S. Research and Development team to create future products. -- Axesstel's fiscal 2003 operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. was $2.9 million, versus 2002 operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. of $752,000. Primarily, the loss reflects the buildup build·up also build-up n. 1. The act or process of amassing or increasing: a military buildup; a buildup of tension during the strike. 2. of resources for the expanded projected sales, which had not occurred prior to year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. , as Axesstel pursued product sales development. -- Axesstel's fiscal 2003 net loss was $2.2 million, as compared to fiscal 2002 net income of $636,000 primarily due to the increases in R&D and SG&A as the company invested in future products and infrastructure to meet the needs of projected growth. -- Fully 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. net loss per share for 2003 was $.03 vs. the prior year net income of $.06. "The first half of 2003 benefited from the NRE contracts from Verizon and a major telecommunications company, which were successfully completed during the summer 2003. Our strategy of emphasizing WLL product sales with the transfer of production to Wistron NeWeb did not positively impact results until 2004. Based upon the financing we have completed in 2004, ongoing discussions to finance 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. software licenses In computing, software that is copyrighted and licensed under a software license is done under a variety of licensing schemes. For end-users there are proprietary licenses and there are free software licenses, and there are proprietary Within these schemes are further classifications. , our structure to alleviate Alleviate To make something easier to be endured. Mentioned in: Kinesiology, Applied working capital strains caused by growth, and our projected third quarter return to positive cash flow, we believe Axesstel has sufficient financial resources to accomplish our aggressive growth targets for 2004," said John Chough, Chief Financial Officer for Axesstel. "Between multi-million-dollar new contracts with TeleCard in Pakistan Pakistan (păk`ĭstăn', päkĭstän`), officially Islamic Republic of Pakistan, republic (2005 est. pop. 162,420,000), 310,403 sq mi (803,944 sq km), S Asia. and a significant, newly signed agreement with a major service provider with operations in ten Latin Lat·in n. 1. a. The Indo-European language of the ancient Latins and Romans and the most important cultural language of western Europe until the end of the 17th century. b. American countries List of American countries Nations:
Conference call to be held at 10:00 a.m. Pacific time today Management of Axesstel, Inc. will host a conference call at 10:00 a.m. PST PST Paroxysmal supraventricular tachycardia, see there (1:00 p.m. EST P.M. also p.m. or p.m. abbr. post meridiem Usage Note: By definition, 12 a.m. ) today, Monday, March 22, 2004, to discuss fiscal 2003 results and plans for 2004. To participate in the conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: (800) 399-7496. International callers should dial (706) 634-6508. There is no pass code required for this call. If you are unable to participate in the call at this time, a replay will be available on Monday, March 22 at 11:00 a.m. PST, through Monday, March 29 at 9:00 p.m. PST. To access the replay dial (800) 642-1687 and enter the conference ID number 6101752. About Axesstel, Inc. Axesstel, Inc., a Nevada Corporation A Nevada Corporation is a corporation chartered under the laws of the U.S. state of Nevada. Nevada, like the state of Delaware (See Delaware corporation), is well known as a corporate haven. , (OTCBB:AXES) is powering the next generation of wireless, fixed and hybrid mobile devices based on CDMA, CDMA2000, 802.11, and emerging 3G and 4G 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). IP technologies. The company is pursuing technology and applications that will enable the development and delivery of carrier-class subscriber based solutions, including fixed terminals, handsets and wireless payphones. To date, Axesstel's Qualcomm-licensed products can be found in more than 15 countries worldwide. The company 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 in Seoul, Korea. For more information, visit the company's Web site at www.axesstel.com. "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 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. that involve risk and uncertainties. The Company wishes to caution readers that a number of important factors could cause actual results to differ materially from those in the forward-looking statements. Those factors include but are not limited to the risk factors noted in the Company's filings with the Securities & 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 ability to gain market acceptance for its products; the Company's ability to attract and retain skilled personnel; and the Company's reliance on third-party suppliers and the availability of required financing on acceptable terms.
Axesstel, Inc. and Subsidiaries
Consolidated Statements of Operations and Comprehensive Income (Loss)
For the fiscal years ended December 31, 2002 and 2003
Unaudited
2002 2003
----------- -----------
Net sales
Product sales $4,066,787 $4,122,013
Engineering development services 4,020,000 7,253,980
----------- -----------
8,086,787 11,375,993
Cost of goods sold
Product sales 3,498,651 4,067,376
Engineering sales 0 3,391,537
----------- -----------
Gross profit 4,588,136 3,917,080
Research and development 13,084 1,807,512
Selling, general and administrative expenses 3,823,062 4,963,053
----------- -----------
Operating income (loss) 751,990 (2,853,485)
----------- -----------
Other income (expense)
Interest income and other income 204,564 230,749
Loss from sale of marketable securities (41,987) -
Loss from write-down and disposition of assets - (318,244)
Interest expense and other expense (35,210) (50,201)
----------- -----------
Total other income (expense) 127,367 (137,696)
----------- -----------
Income (loss) before income taxes 879,357 (2,991,181)
Provision (benefit) for income taxes 243,731 (748,675)
----------- -----------
Net income (loss) 635,626 (2,242,506)
Other comprehensive income (loss)
Foreign currency translation adjustment (43,055) 5,361
----------- -----------
Comprehensive income (loss) 592,571 (2,237,145)
=========== ===========
Basic earnings (loss) per common share $0.09 ($0.03)
=========== ===========
Diluted earnings (loss) per common share $0.06 ($0.03)
=========== ===========
Weighted average number of common shares -
basic 6,879,120 6,417,376
=========== ===========
Weighted average number of common shares -
diluted 9,869,321 6,417,376
=========== ===========
Axesstel, Inc. and Subsidiaries
Consolidated Balance Sheet
December 31, 2002 and 2003
ASSETS
Unaudited
-----------
2002 2003
----------- -----------
Current assets
Cash and cash equivalents $768,665 $376,336
Accounts receivable, net of allowance for
doubtful accounts of $0 1,322,022 1,408,888
Prepayments and other current assets 381,217 550,187
----------- -----------
Total current assets 2,471,904 2,335,411
Property and equipment, net 1,380,554 1,463,266
Other assets
Security deposits 174,990 158,418
Deferred tax assets - 880,000
License fee 1,700,000 3,000,000
Development costs 217,164 1,033,909
Goodwill and Other Intangibles 296,889 847,434
----------- -----------
Total other assets 2,389,043 5,919,761
----------- -----------
Total assets $6,241,501 $9,718,438
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Unaudited
-----------
2002 2003
----------- -----------
Current liabilities
Accounts payable $0 $2,779,466
Accrued Expense and Other Current Liabilities 2,014,529 2,951,564
----------- -----------
Total current liabilities 2,014,529 5,731,030
Long-term liabilities
Obligations under capital leases, excluding
current installments 107,831 0
----------- -----------
Total long-term liabilities 107,831 0
Stockholders' equity
Common stock, par value $0.001;
Authorized 50,000,000 shares; 6,077,816
and 6,699,168 shares issued and outstanding
at 2002 and 2003, respectively 6,078 6,700
Additional paid-in capital 4,296,012 6,400,802
Accumulated other comprehensive loss (43,055) 0
Accumulated deficit (139,894) (2,420,094)
----------- -----------
Total stockholders' equity 4,119,141 3,987,408
----------- -----------
Total liabilities and stockholders'
equity $6,241,501 $9,718,438
=========== ===========
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