Axesstel Reports First Quarter 2013 Results

Axesstel Reports First Quarter 2013 Results

                        – Revenues of $10.1 million –
                  – Record gross margin percentage of 29% –
                          – Net income of $84,000 –
  – New $2.3 million three year term loan secured with Silicon Valley Bank –

SAN DIEGO, May 14, 2013 (GLOBE NEWSWIRE) -- Axesstel (OTCQB:AXST), a leading
provider of wireless voice, broadband access and connected home solutions to
the worldwide telecommunications market, reported results for its first
quarter ended March 31, 2013.

Axesstel reported revenues for the first quarter of 2013 of $10.1 million and
net income of $84,000, or $0.00 per diluted share. This compares to revenues
of $12.0 million and net income of $472,000, or $0.02 per diluted share, for
the same period in the prior year.

Clark Hickock, CEO of Axesstel, stated, "Revenue in the first quarter was
below our operating target, but we delivered strong performance on our new
Home Alert products and our gross margin percentage. We sold over $4.0 million
of our new Home Alert security systems to new customers in the MEA region,
which boosted our gross margin percentage to a record 29%. With tight control
over operating expenses, we generated net income of $84,000. We also improved
our working capital position by $95,000."

"Sales from our Rev. B Wi-Fi gateways contributed revenue of $4.3 million,
Home Alert security systems delivered $4.0 million, with wireline replacement
terminals contributing $1.6 million and phones adding $0.2 million in revenue.
We did not receive orders from two significant customers for our top-selling
gateway and wireline replacement terminals during the quarter. However, in the
second half we expect overall sales for our existing gateway and new dual mode
gateway products to pick up as our European customers work through inventory
issues and complete homologation testing of new products. While we did not
receive any orders for wireline replacement terminals from Sprint during the
quarter, we had record sales of these terminals to regional Tier 2 and 3
carriers in North America. Looking ahead, we are working with Sprint and other
national carriers to develop products for launch in the second half of 2013.
We also addressed a minor design issue in our newly-released Home Alert
security systems that caused a delay in collection of certain outstanding
accounts receivable as well as a slowdown in follow-on orders for those

"Our Home Alert product line is our initial entrance into the M2M and
connected home markets with a security application, giving wireless network
operators access to a new segment of these markets. We are pleased with the
interest we have received to date and are excited about the new opportunities
to broaden our product, geographic and customer platforms. We are also
launching the next generation of our core gateway and wireline replacement
terminal products. Based on customer feedback, we expect those products to be
well received."

"As stated at the beginning of the year, our primary operating goals for 2013
are to maintain consistent profitability and to increase revenue by ten to
fifteen percent year-over-year. As first quarter 2013 revenues were lower than
expected, we now anticipate first half 2013 revenue to be lower than initially
planned due to a slower rollout of our new products in 2013, and delays in
customer testing and customer acceptance. The precise timing and success of
these product introductions will have a material impact on our full year
results, and the slower first half of the year will make it more difficult to
meet our goal for annual revenue growth. We are releasing the next generation
of our core products, as well as additions to our Home Alert products. We
believe we will be very well positioned for significant growth in the second
half of the year and beyond," Hickock concluded.

Financial Results

Revenues for the first quarter of 2013 were $10.1 million, compared to $12.0
million in the first quarter of 2012. Gross margin was $3.0 million, or 29
percent of revenue, for the first quarter compared to gross margin of $3.2
million, or 26 percent of revenue, in the same period last year. First quarter
2013 operating expenses were $2.7 million compared to $2.3 million in the
first quarter of 2012. Net income for the quarter was $84,000, or $0.00 per
diluted share, compared to first quarter 2012 net income of $472,000, or $0.02
per diluted share.

At March 31, 2013, cash and cash equivalents were $2.2 million, compared to
$1.9 million at December 31, 2012. Working capital was a deficit of $2.1
million at March 31, 2013, compared to working capital deficit of $2.2 million
at December 31, 2012.

The company continues to fund its operating requirements through cash flows
from operations and bank financings. On March 27, 2013, the company secured a
three year $2.3 million term loan with Silicon Valley Bank. In April 2013, the
company successfully renewed a one year $1.6 million term loan with a
commercial bank in China. 

Because of delayed customer collections from sales generated late in the
fourth quarter of 2012, the company's accounts receivable balance increased
significantly by $6.7 million to $21.9 million at March 31, 2013. The delay in
collections necessitated increased borrowing under the company's credit
facility to help manage accounts payable to key vendors.Borrowings from the
company's bank line of credit were $6.0 million at March 31, 2013, against an
aggregate borrowing limit of $7.0 million.

Pat Gray, chief financial officer, commented, "While receivables and bank
borrowings increased during the quarter, we continue to maintain strong
relationships with our key customers, vendors and banks. Since the end of the
quarter, we have receivedpayments on the accounts, and expect to collect the
balances, and to pay down corresponding bank balances to more traditional
levels, over the next several months."

As a result of these transactions, Axesstel ended the first quarter of 2013
with $9.8 million in bank financings, including $6.0 million under the
company's account receivable financing facility, and $3.8 million under two
term loans with commercial banks in the United States and China.

Recent Highlights

  *Sold $4.0 million of new Home Alert systems in the first quarter of 2013
    totaling $7.5 million over the past two quarters since the product
  *Secured a new three year $2.3 million term loan with Silicon Valley Bank.
  *Renewed its one year $1.6 million term loan with a commercial bank in
  *Amended its $7.0 million accounts receivable credit facility to reduce the
    interest rate on borrowings against eligible accounts receivable.

Conference Call

Axesstel will host a conference call at 8:00 a.m. PT (11:00 a.m. ET) today,
May 14^th, to discuss its first quarter 2013 financial results. Participating
in the call will be Clark Hickock, chief executive officer; and Patrick Gray,
chief financial officer.

The call is being webcast and can be accessed from the "Investor Relations"
section of the company's website at Alternatively,
investors may participate in the call by dialing 1-877-663-9622. International
callers should dial 00-1-973-200-3973. The conference ID/password will be
37105707. Participants are encouraged to dial in 10 minutes prior to the call
to prevent a delay in joining. If you are unable to participate in the call at
that time, the webcast will be archived on the Axesstel website. In addition,
a telephonic replay will be available at 1:00 p.m. ET today through Thursday,
May 16^th at 11:59 p.m. ET. To access the replay, please dial
1-855-859-2056.International callers should dial 00-1-404-537-3406.The pass
code will be 37105707.

About Axesstel, Inc.

Axesstel (OTCQB:AXST) is a leading provider of wireless voice, broadband
access and connected home solutions for the worldwide telecommunications
market. Axesstel's best in class product portfolio includes phones, wireline
replacement terminals, security alert systems, and 3G and 4G broadband gateway
devices. These products are used for voice calling, high-speed data access,
and connected home management services. The company has supplied millions of
devices to leading telecommunications operators and distributors in over 50
countries worldwide. Axesstel is headquartered in San Diego, California. For
more information on Axesstel, visit

The Axesstel, Inc. logo is available at

© 2013 Axesstel, Inc. All rights reserved. The Axesstel logo is a trademark of
Axesstel, Inc.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
1995: With the exception of historical information, the statements set forth
above include forward-looking statements relating to market penetration and
conditions, product capabilities and the timing of new product introductions
which may affect future results and the future viability of Axesstel.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 risk factors. Those factors include
but are not limited to the risk factors noted in Axesstel's filings with the
Securities and Exchange Commission, including the need for additional working
capital; economic and political instability in developing markets served by
Axesstel; unforeseen manufacturing difficulties, unanticipated component
shortages, competitive pricing pressures and the rapidly changing nature of
technology and frequent introductions of new products and enhancements by
competitors; the competitive nature of the markets for Axesstel's products;
product and customer mix; Axesstel's need to gain market acceptance for its
products; dependence on a limited number of large customers; potential
intellectual property-related litigation; Axesstel's need to attract and
retain skilled personnel; and Axesstel's reliance on its contract
manufacturers.All forward-looking statements are qualified in their entirety
by this cautionary statement, and Axesstel undertakes no obligation to revise
or update this press release to reflect events or circumstances occurring
after this press release.

                             - Tables to follow -

AXESSTEL, INC.                                     
                                    For the three months ended
                                    March 31, 2013 March 31, 2012
Revenues                             $10,124,432  $12,032,001
Cost of goods sold                   7,157,613     8,855,130
Gross margin                         2,966,819     3,176,871
Operating expenses                                 
Research and development             696,559        576,059
Sales and marketing                  659,112        737,725
General and administrative           1,311,797      1,002,168
Total operating expenses             2,667,468      2,315,952
Operating income                     299,351       860,919
Interest expense, net                211,525       363,651
Income before income tax provision   87,826        497,268
Income tax provision                 4,000         25,000
Net income                           $83,826      $472,268
Earnings per share:                                
Basic                                $0.00        $0.02
Diluted                              $0.00        $0.02
Weighted average shares outstanding:               
Basic                                24,197,079     23,799,731
Diluted                             27,264,797     25,597,976

AXESSTEL, INC.                                             
Current assets:                               March 31, 2013 December 31, 2012
Cash and cash equivalents                     $2,179,035   $1,875,487
Accounts receivable, net                      21,911,627    15,198,752
Inventories, net                              230,414       330,000
Prepayments and other current assets          510,953       460,726
Total current assets                          24,832,029    17,864,965
Property and equipment, net                  202,138       225,021
Other assets, net                            411,264       74,076
Total assets                                  $25,445,431  $18,164,062
Current liabilities:                                        
Accounts payable                              $12,449,689  $10,203,148
Note payable - current, net of discount       2,180,000     1,850,000
Bank financings - current                     8,013,823     3,477,007
Accrued commissions                           692,000       633,000
Accrued royalties                             1,318,000     1,389,000
Accrued warranties                            390,000       350,000
Other accrued expenses and current            1,857,325     2,127,013
Total current liabilities                     26,900,837    20,029,168
Long-term liabilities:                                      
Note payable - long term, net of discount     3,118,000     5,096,000
Bank financing - long term                    1,826,000     --
Total long-term liabilities                   4,944,000     5,096,000
Stockholders' deficit                         (6,399,406)   (6,961,106)
Total liabilities and stockholders' deficit   $25,445,431  $18,164,062

Investor Relations Contact:
Cathy Mattison
(415) 433-3777

Axesstel, Inc. Logo
Press spacebar to pause and continue. Press esc to stop.