Axesstel Reports Second Quarter 2013 Results

Axesstel Reports Second Quarter 2013 Results

SAN DIEGO, Aug. 13, 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 second
quarter ended June 30, 2013.

Axesstel reported revenues for the second quarter of 2013 of $1.2 million and
net loss of $2.5 million, or a loss of $0.10 per diluted share. This compares
to revenues of $15.5 million and net income of $896,000, or earnings of $0.03
per diluted share, for the same period in the prior year.

Clark Hickock, CEO of Axesstel, stated, "The second quarter of 2013 was a
'perfect storm' for Axesstel, with several issues hitting us all at the same
time. We experienced a drop in sales of our traditional products, a delay in
the launch of our new product lines, and slow collection of receivables that
impacted our cash and working capital position. While we did not anticipate
the timing or concurrence of these events, they are each known risks inherent
to our business, and we are aggressively managing our way through them. At the
same time, and despite the launch delays, our new Home Alert products have
generated opportunities that will be very significant if we can convert them
to firm orders."

"In Europe, our two largest gateway customers did not place any significant
orders during the second quarter. One of these customers ordered their first
half requirements in the first quarter and we expect follow-on orders from
this customer in the third quarter. We expect full year orders from this
customer to be comparable to last year. The other principal customer for our
gateway products experienced slower than expected sell through of our gateway
products during the first half of 2013 and continues to work through
accumulated inventory. Although we anticipate additional orders once it
corrects its inventory levels, the yearly volume for this customer will fall
significantly below our original expectations for 2013."

"In North America, we are transitioning our wireline replacement terminal
product line to next generation products. We have developed the next
generation version of our base terminal with improved performance and a lower
price point and are working to establish market share for this product with
carriers in North America. In addition, we are nearing completion of a
wireline replacement terminal that incorporates some of the functions of our
Home Alert product line. We are working with Sprint and other customers on
this device. We expected orders for these products to commence in the second
quarter, but testing and launch have progressed slower than we originally
anticipated, and we now expect orders to commence in the second half of 2013."

"Finally, the rollout of our new Home Alert product line has progressed slower
than originally anticipated. We have experienced some of the normal issues
associated with the transition to a new product category. A minor warranty
issue in the first quarter delayed the product launch in Africa. We corrected
that issue in the second quarter. Those units are now being moved into the
channel and are expected to launch during the third quarter, which should
result in follow-on orders from those customers in Africa later in the second
half of 2013. We are also continuing to demonstrate our Home Alert products to
carriers in North America, Europe, and Latin America and are receiving
significant interest. Testing and product launch have progressed slower than
anticipated, but interest in the product line remains high, and we expect
orders to come in later in the third quarter or fourth quarter of the year.
Due to the elongated sales cycles with Tier 1 carriers in North America, we
are pursuing an additional path to bring our new Home Alert product line
directly to retail outlets through various mobile virtual network operators.
This strategy allows for a more streamlined certification process, thereby
quickening time to market."

"We are not going to minimize the significance of our first half operating
results. The net loss has had a significant impact on our working capital
position. Nonetheless, we continue to have confidence in our long term
strategic direction. We expect orders for our gateway and Home Alert products
to build in the third quarter. We continue to receive high customer interest
in our Home Alert products and are pursuing significant opportunities for this
new product line which, if successful, could result in a strong fourth
quarter. We continue to believe our new Home Alert product line, along with
our new gateway and advanced terminal products, position the company well for
growth in late 2013 and beyond," Hickock concluded.

Financial Results

Revenues for the second quarter of 2013 were $1.2 million, compared to $15.5
million in the second quarter of 2012. Gross margin was $335,000, or 28
percent of revenue, for the second quarter compared to gross margin of $3.6
million, or 23 percent of revenue, in the same period last year. Second
quarter 2013 operating expenses were $2.9 million compared to $2.3 million in
the second quarter of 2012. Net loss for the quarter was $2.5 million, or a
loss of $0.10 per diluted share, compared to second quarter 2012 net income of
$896,000, or earnings of $0.03 per diluted share.

For the six months ended June 30, 2013, the company reported revenue of $11.3
million and gross margin of 29 percent, compared to $27.6 million and 25
percent, respectively, for the first half of 2012. Net loss for the first half
of 2013 was $2.4 million, or a loss of $0.10 per diluted share, compared to a
net income of $1.4 million, or earnings of $0.05 per diluted share, in the
first half of 2012.

At June 30, 2013, cash and cash equivalents were $76,000, compared to $1.9
million at December 31, 2012. Working capital was a deficit of $4.8 million at
June 30, 2013.

Pat Gray, chief financial officer, commented, "The reduction in cash is due in
part to slow collection of accounts receivable. We started the quarter with
$21.9 million of accounts receivable. We finished the quarter with an account
receivable balance of $15.2 million, of which, $12.2 million was past due. We
collected $7.7 million of accounts receivable during the quarter and an
additional $3.0 million to date in the third quarter. We expect to collect the
remaining receivables in the second half of 2013."

The company has traditionally funded its operating requirements through cash
flows from operations and bank financings. Axesstel ended the second quarter
of 2013 with $6.0 million in bank financings, including $2.1 million under the
company's account receivable financing facility, and $3.9 million under two
term loans with commercial banks in the United States and China. The recent
net loss caused an event of default under the Company's $2.25 million term
loan facility, and the company is working with the bank on a forbearance
arrangement and restructured repayment arrangement. Consequently, the company
has reclassified the long term portion of the term loan to a short term
liability at June 30, 2013.

Conference Call

Axesstel will host a conference call at 1:30 p.m. PT (4:30 p.m. ET) today,
August 13^th, to discuss its second 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
23231102. 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 7:30 p.m. ET today through Thursday,
August 15^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 23231102.

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   For the six months ended
                    June 30, 2013  June 30, 2012 June 30, 2013  June 30, 2012
Revenues             $1,218,060   $15,531,778 $11,342,492  $27,563,779
Cost of goods sold   882,808       11,902,010   8,040,421     20,757,140
Gross margin         335,252       3,629,768    3,302,071     6,806,639
Operating expenses                                            
Research and         740,578       495,775      1,437,137     1,071,834
Sales and marketing  597,070        647,366       1,256,182      1,385,091
General and          1,556,151     1,182,221    2,867,948     2,184,389
Total operating      2,893,799     2,325,362    5,561,267     4,641,314
Operating income     (2,558,547)   1,304,406    (2,259,196)   2,165,325
Interest expense,    (189,871)      (361,895)     (401,396)      (725,546)
Other income         215,000        0             215,000        0
Income (loss) before (2,533,418)   942,511      (2,445,592)   1,439,779
income tax provision
Income tax provision (4,000)       47,000       --            72,000
Net income (loss)    $(2,529,418) $895,511    $(2,445,592) $1,367,779
Earnings (loss) per                                           
Basic                $(0.10)      $0.04       $(0.10)      $0.06
Diluted              $(0.10)      $0.03       $(0.10)      $0.05
Weighted average                                              
shares outstanding:
Basic                24,484,105     23,900,669    24,340,592     23,850,200
Diluted              24,484,105     26,330,869    24,340,592     25,921,637

AXESSTEL, INC.                                             
Current assets:                                June 30, 2013 December 31, 2012
Cash and cash equivalents                      $76,101     $1,875,487
Accounts receivable, net                       15,151,458   15,198,752
Inventories, net                               216,000      330,000
Prepayments and other current assets           463,778      460,726
Total current assets                           15,907,337   17,864,965
Property and equipment, net                   178,661      225,021
Other assets, net                             283,452      74,076
Total assets                                   $16,369,450 $18,164,062
Current liabilities:                                        
Accounts payable                               $10,295,948 $10,203,148
Note payable - current, net of discount        322,000      1,850,000
Bank financings                                6,016,619    3,477,007
Accrued commissions                            631,000      633,000
Accrued royalties                              1,382,000    1,389,000
Accrued warranties                             350,000      350,000
Other accrued expenses and current liabilities 1,712,041    2,127,013
Total current liabilities                      20,709,608   20,029,168
Long-term liabilities:                                      
Note payable - long term, net of discount      4,689,000    5,096,000
Stockholders' deficit                          (9,029,158)  (6,961,106)
Total liabilities and stockholders' deficit    $16,369,450 $18,164,062

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

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