WEB NEWS Deal Flow
8K filed 12/2/2013
On November 27, 2013 we entered into an Account Purchase Agreement with Accesstel Investors LLC, a California limited liability company (the “Buyer”), pursuant which we sold the Buyer an interest in one of our accounts receivable. Specifically, we sold a 53% interest in a $1.875 million account receivable. The purchase price for the interest was $875,000 in cash, plus the issuance of 4,000,000 shares of common stock, $0.0001 par value.
We agreed to use the proceeds from the sale to meet our operating expenses including accrued payroll expenses, to make monthly payments under our Loan and Security Agreement with Silicon Valley Bank, and to make payments to contract manufacturers to manufacture products to fulfill new customer orders. We also agreed to appoint a representative from the Buyer to serve on our board of directors until the later of the our next annual meeting of stockholders or the date the account receivable is paid in full. See Item 5.02 below.
On November 25, 2013 we entered into a Forbearance and Second Amendment to Loan and Security Agreement with Silicon Valley Bank (the “Forbearance Agreement”). In connection with the Forbearance Agreement, Silicon Valley Bank consented to the sale of the interest in the account receivable under the Account Purchase Agreement. The bank also agreed to forbear from exercising any of its rights or remedies related to our existing events of default under the Loan and Security Agreement until December 20, 2013, provided that we meet the terms of the Forbearance Agreement.
The foregoing summary description of the Account Purchase Agreement and the Forbearance Agreement is qualified by reference to the complete copy of each agreement, both of which are filed as exhibits to this report.
Item 3.02. Unregistered Sales of Equity Securities.
In connection with the Account Purchase Agreement, we issued to the members of Buyer an aggregate of 4,000,000 shares of our common stock, $0.0001 par value. The shares were issued in a private placement, without registration, pursuant to the exemption provided by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”). The shares were issued pursuant to private negotiations, and the Buyer and each of its members represented that it is an “accredited investor” as defined in Rule 501 of Regulation D promulgated under the Securities Act.
Comments & Business Outlook
SAN DIEGO, June 13, 2013 (GLOBE NEWSWIRE ) -- Axesstel (OTCQB:AXST), a leading provider of wireless voice, broadband access and connected home solutions to the worldwide telecommunications market, provided updates on its sales leadership following the resignation of Henrik Hoeffner, its chief marketing officer, as well as its anticipated second quarter performance and full year 2013 outlook.
Clark Hickock, the Company's chief executive officer, has been increasingly active in key customer relationships and has assumed Mr. Hoeffner's management responsibilities. The sales executives for each of its four key regional markets now report directly to Mr. Hickock. The Company has reached an agreement with Mr. Hoeffner to provide advisory consulting services to transition key accounts and advance key strategic opportunities.
"We want to thank Henrik for his service and contribution to Axesstel," said Hickock. "He has been the consummate professional and assembled a team of experienced and capable regional sales executives who manage our day-to-day sales operations in North America, Latin America, Europe and the Middle East and Africa. We wish Henrik well."
The Company is anticipating a weak second quarter due to slower demand in Europe, product launches in Africa that were delayed to the second quarter as a result of minor warranty issues, and a slower than expected rollout of the Company's new products in 2013. The Company believes that revenues for the second quarter will fall substantially below first quarter revenue of $10.1 million, and may be as low as $2 million.
Hickock continued, "Our quarterly revenues have always been subject to volatility based on the timing of large orders. The transition to our next generation product lines is moving slower than anticipated, but we will work through these issues and expect our performance to return to historic levels later in 2013. Despite what looks like a very weak second quarter, we are continuing to receive positive feedback from our customers about our new product lines, and expect that the second half of the year will show improved sales and results of operations."
"We are confident in our product strategies, including our entrance into the rapidly growing M2M and connected home markets. We expect to retain market share in Europe with our broadband gateway devices and to expand our addressable market with the recent launch of our dual-mode gateway device. We are adding functionality to our next generation of wireline replacement terminals for the North American market. We have multiple releases scheduled for our Home Alert product line, targeted to address the requirements of specific geographic regions or customers. Scheduled for launch in North America later in 2013, we are putting Home Alert products in the development lab with Sprint, and are working with other carriers in North America and other regions. We need to get these products completed, tested and released, but expect that the Home Alert products will be one of our largest selling product lines. We remain very excited about our future," concluded Hickock.
Comments & Business Outlook
First Quarter 2013 Results
Axesstel reported revenues for the first quarter of 2013 of $ 10.1 million vs. $12.0 in prior year period.
First quarter 2013 net income of $84,000, or $0.00 per diluted share vs net income of $472,000, or $0.02 per diluted share in prior year period.
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 products."
"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.
Comments & Business Outlook
Third Quarter 2012 Results
Reported revenues for the third quarter of 2012 of $16.3 million vs. $17.1 in the prior year.
Net income of $2.1 million, or $0.08 per diluted share vs $0.05 per share in the prior year quarter. Net income for the third quarter of 2012 was positively impacted by a one-time note payable discount of $791,000 or $0.03 per share in connection with the restructuring of certain accounts payable.
Clark Hickock, chief executive officer of Axesstel, said, "Our strong third quarter and year-to-date 2012 performance is a significant indication of the progress we have made and the momentum ahead for the business in 2013 and beyond. We are on track to achieve our key operating goals for 2012, posting consistent quarterly profitability and year-over-year revenue growth. We also delivered on our commitments to improve our working capital position and reduce our cost of capital this quarter. Our business model of customer driven innovation and extension of our product footprint is delivering value for our stockholders."
"Our solid third quarter results were driven by sales of our Rev. B Wi-Fi gateway with VoIP capability in Europe and our wire-line replacement terminal in North America. Our 2012 research and development initiatives continue to be focused in three product areas. First, we will be introducing a line of affordable home alert products that allow network operators to offer new products to their entire subscriber base while also using those products to attract new subscribers. Second, we will be launching a new dual-mode gateway supporting both GSM and CDMA technologies in one device, making it easier for operators to meet customer needs while optimizing network usage. This gateway complements our 4G gateway, which is our number one selling product globally. Finally, we are working with customers on the design of the next generation of our wire-line replacement terminal. We expect to begin initial shipments of these products in the late 2012, early 2013 timeframe. We are looking forward to an exciting future," Hickock added.
Deal Flow
SAN DIEGO, Oct. 1, 2012 (GLOBE NEWSWIRE ) -- Axesstel (OTCQB:AXST), a leading provider of fixed wireless voice and broadband access solutions to the worldwide telecommunications market, has secured a $7.0 million revolving line of credit with Silicon Valley Bank. The accounts receivable financing facility replaced an existing facility and is being used to fund the company's short-term working capital needs, but at significantly lower interest rates. The effective interest at current market rates on borrowings under the new Silicon Valley Bank facility are between 6.0% and 7.0% per annum, compared to interest rates ranging from 16.0% to 24.0% under the company's prior facility.
Patrick Gray, chief financial officer of Axesstel, said, "An important goal for 2012 was to use the improvement in our operating performance to reduce our cost of borrowing and further improve profitability. We are particularly pleased to have restructured our financing facility with a leading banking institution like Silicon Valley Bank, and to have done it without the issuance of any warrants or dilution to our stockholders."
"We are excited to expand our relationship with Axesstel by providing the line of credit to finance the company's working capital needs," said Frederick "Buzz" Kreppel, senior relationship manager for Silicon Valley Bank. "We look forward to helping the team with continued success."
The new credit facility provides for a working capital-based revolving line of credit where Silicon Valley Bank, in its discretion, will make advances in the amount of up to 80.0% of the value of eligible accounts receivable and eligible purchase orders for inventory in transit to a customer. Interest on each advance is calculated on the basis of Silicon Valley Bank's prime rate plus a specified margin multiplied by the face amount of the eligible account receivable or purchase order. The specified margin is 1.0% for eligible accounts receivable and 1.4% for eligible purchase orders. However, if the company's EBITDA for any trailing six month period falls below $1.0 million, the specified margins increase to 3.0% and 3.2%, respectively. The credit facility has a term of one year.
Advances under the financing facility are secured by a lien on substantially all of the company's assets. The financing agreements contain affirmative and negative covenants, including an agreement not to incur additional indebtedness or pledge or encumber the company's assets, other than for certain permitted debt and permitted liens. Any default under the loan agreement could result in the acceleration of the company's obligations under the new credit facility, an increase in the applicable interest rate, and would permit Silicon Valley Bank to exercise remedies with respect to its security interest in the company's assets.
Comments & Business Outlook
SAN DIEGO, Calif., Sept. 5, 2012 (GLOBE NEWSWIRE ) -- Axesstel, Inc. (OTCQB:AXST), a leader in the design and development of fixed wireless voice and broadband data products, extends its global leadership in CDMA 1xEV-DO 450MHz with shipments to Orange of the world's first 4G EV-DO Rev. B 450MHz Wi-Fi Gateway with optional VoIP. Orange, a telecom operator providing mobile broadband access, VoIP and machine-to-machine services for consumers and businesses in Poland, is now making initial shipments to consumers.
Clark Hickock, Chief Executive Officer of Axesstel, stated: "With the continued acceptance of our first 4G product, we demonstrate our market leading capabilities in developing next-generation products for CDMA 1xEV-DO 450MHz. The evolution to EV-DO Rev. B enables higher streaming rates for video and audio; quicker upload of pictures, videos, and audio files; and faster mobile broadband for mobile devices. Our EV-DO Rev. B Wi-Fi Gateway with VoIP capability offers an innovative solution around EV-DO."
Henryk Morski, Customer Systems and Equipment Sourcing Director, commented: "The launch of the Axesstel Rev. B router is an important milestone for Orange in the Polish internet market and it helps us to take the business to the next level. A higher speed in combination with our unique coverage makes a very attractive internet offer for our customers. These efforts strengthen our commitment to offer the most comprehensive services in mobile communications."
"The MV600 Rev. B gateway represents our fourth product launch with Orange. Our relationship expands our presence in a developed market where demand for fixed wireless products is growing," said Henrik Hoeffner, Chief Marketing Officer of Axesstel. "We believe our innovative wireless broadband products will drive adoption of Orange services. We are excited about supporting them in their further market expansion."
The MV600 Series EV-DO Rev. B Gateways seamlessly combine wireless wide area networking (WWAN), a Wi-Fi wireless local area network (WLAN) router and a four port Ethernet switch to provide wireless broadband data access in one easy to use, plug-and-play desktop networking device. Leveraging CDMA2000 1xEV-DO Rev. B technology, the MV600 Series Gateways provide broadband data for high-speed access to email, the Internet, data intensive files and multi-media streaming. The integrated Wi-Fi router allows remote access to broadband data from any room at home or office and trouble-free set up of a local hotspot. A four port Ethernet switch provides a plug-and-play solution that enables users to network multiple desktop and laptop PCs as well as other devices.
Benefits
Integrated Wi-Fi router allows access to broadband data from anywhere at home or office
Four-port Ethernet switch provides a plug-and-play solution for networking multiple desktops, laptops and other devices
Receive Diversity Antennas providing maximum coverage range and data throughput
Embedded VoIP functionality provides Voice call through the RJ-11 port (V model only)
Features
Backward compatible with CDMA2000 1xEV-DO Rev. 0/A and CDMA2000 1X
SIP Application Support Optional
802.11 b/g/n Wi-Fi Router with 4-Port Ethernet
5 LED Indicators (Power/Signal/Connect/1xEV-DO/Wi-Fi)
Receive Diversity Antennas
Desktop or Wall Mountable
IPv6 / IPv4
Backup Battery Optional
Comments & Business Outlook
Second Quarter 2012 Results
Axesstel reported revenues for the second quarter of 2012 of $15.5 million vs $7.5 million in prior year period.
Net income of $896,000, or $0.03 per diluted share vs a net loss of $687,000, or a loss of $0.03 per share, for the same period in the prior year.
Clark Hickock, chief executive officer of Axesstel, said, "Our second quarter results continue to demonstrate the strength of our new business model. Committed to profitability, we continued to lower the cost of our products, focus on markets where we could drive better margins and implement strong operating cost controls. As of June 30th , we have delivered a trailing twelve month net income of $3.7 million and achieved four consecutive quarters of profitability – a first in the company's history. We are solidly on track to reach our 2012 operating goal of year-over-year revenue growth and consistent quarterly profitability."
"We work closely with our customers in the development of our products. Our 2011 research and development investments focused on our new Rev. B Wi-Fi gateway with VoIP capability and our wire-line replacement terminals, each of which contributed to our strong second quarter revenue. We are also excited about our 2012 research and development initiatives. First, we will be launching a new dual-mode gateway supporting both GSM and CDMA technologies in one device, making it easier for operators to meet customer needs while optimizing network usage. This gateway complements our existing Rev. B Wi-Fi gateway, which is our number one selling product globally. We also plan to roll out the next generation of our wire-line replacement terminal. In addition, we will be introducing self-sustained, affordable wireless security alert products that allow wireless operators to enter the security market with another 'cut the cord' solution for residential and small business use. We have received very enthusiastic feedback from our global customers, and these products are opening doors to new operators. We expect to begin initial shipments of the gateway and the security alert products late in the year," Hickock concluded.
"We are leveraging our improved performance to evaluate financing options to lower our cost of capital," said Patrick Gray, chief financial officer of Axesstel. "Following four quarters of consistent profitability, we have received increased interest from financial institutions and continue to pursue opportunities for additional financing."
Recent Highlights
Partnered with GetWireless to provide fixed wireless voice terminals for "C Spire Home Phone Connect," the new landline replacement phone service of C Spire Wireless, a diversified wireless communications company.
Showcased its innovative voice, data and security product lines at International CTIA Wireless 2012 in New Orleans in May.
Received strong investor interest at the B. Riley Financial Conference in May.
Comments & Business Outlook
First Quarter 2012 Results
Axesstel reported revenues for the first quarter of 2012 of $12.0 million vs revenue of $12.6 in the prior year period.
Net income of $472,000, or $0.02 per diluted share vs a net loss of $539,000, or a loss of $0.02 per share, for the same period in the prior year.
"The first quarter of 2012 marks our third consecutive quarter of profitability since completing the transition of our business in mid-2011," said Clark Hickock, chief executive officer of Axesstel. "The results of that transition were evident this quarter with a swing in profitability of more than $1.0 million compared to the same period last year, despite slightly lower revenues."
In mid-2011, the company completed a two-year initiative to diversify its manufacturing capabilities in China, produce lower cost products, improve gross margins and reduce operating costs. The company also shifted its customer focus to concentrate on servicing major carriers in specific markets and focused its product development initiatives on addressing the unique requirements of those customers. The company reiterated that its operating goal for 2012 is to achieve consistent quarterly profitability and year-over-year revenue growth.
"Revenues for the first quarter were lower than the third and fourth quarter of 2011 primarily as a result of the timing of customer orders," continued Hickock. "A number of our key customers periodically place large orders with us and the timing of shipment materially impacts our quarterly operating results. Looking forward in 2012, we have significant orders for our Sprint terminal product for delivery in both the second and third quarters as a result of Sprint's recently increased marketing efforts for its nationwide 'Sprint Phone Connect' wire-line replacement program. We also anticipate strong revenue from Europe, as two of our primary customers there have launched our new 4G EV-DO Rev. B Wi-Fi gateway with VoIP capability into their markets."
Comments & Business Outlook
Fourth Quarter 2011 Results
Revenues for the fourth quarter of 2011 were $16.9 million, compared to $9.7 million in the fourth quarter of 2010.
Net income for the quarter was $1.0 million, or $0.04 per diluted share, compared to a fourth quarter 2010 net loss of $2.4 million, or a loss of $0.10 per share.
Clark Hickock, CEO of Axesstel, stated, "Axesstel's return to profitability in 2011 is the culmination of our two year program to re-design our products to be more price competitive, increase sales in markets that support better margins, and aggressively reduce operating costs. These initiatives began producing results in the second half of 2011 and drove record profitability for any six month period in our company history. We are very pleased to have achieved our stated goal of profitability with revenues of $50 million to $60 million annually with gross margins in the low- to mid-twenty percent range."
"Our strong fourth quarter results were driven by $6.4 million in revenues from sales of our wire-line replacement terminal to Sprint in North America. The Europe and MEA regions were also solid contributors with revenues of $6.3 million and $3.0 million for the quarter, respectively."
"In 2012, our primary goal is to achieve consistent quarterly profitability and year-over-year revenue growth. We expect our quarterly revenue performance to vary as a result of our customer concentration and the timing of large customer orders. We are focused on servicing our Tier 1 operators worldwide through close customer support and market leading products. We are currently working on the next generation of fixed wireless voice terminals for Sprint. As announced in the fourth quarter, we continue to demonstrate leadership in developing products for CDMA 1xEV-DO 450MHz with the launch of our 4G MV600 Series Wi-Fi Gateway and initial sales to a Tier 1 operator in Scandinavia," Hickock concluded.
Comments & Business Outlook
Third Quarter Results
Revenues for the third quarter of 2011 were $17.1 million, compared to $9.1 million in the third quarter of 2010.
Third quarter 2011 net income was $1.3 million, or $0.05 per diluted share, compared to a third quarter 2010 net loss of $1.1 million, or a loss of $0.05 per share.
Clark Hickock, CEO of Axesstel, stated, "Two years ago, we undertook a program to re-engineer our core products, increase sales in markets that support better margins and aggressively reduce operating costs. Those initiatives produced results in the third quarter, where we recorded the highest net income for any quarter in our history, delivering $0.05 EPS on revenue of $17.1 million."
"Our strong revenue this quarter included $8.7 million in the United States, driven primarily by sales of our wireless terminals to Sprint for use in its Sprint Phone Connect program. We are proud that Axesstel was selected to provide the gateway device for enabling high-quality home and office phone service using the Sprint Wireless Network instead of a landline or broadband connection. We have received follow on orders for our wireless terminals and are currently working with Sprint on the development of a next generation product for Sprint's 'cut the cord' program," Hickock continued.
"In addition to growth in U.S., we achieved continued strong sales in our EMEA region with revenues of $7.5 million for the quarter that were largely driven by our existing customer base in Europe. We also added new accounts in the Middle East and Africa, which we anticipate will boost future sales in the region," concluded Hickock.
At October 15, 2011, Axesstel reported backlog of $17.6 million, substantially all of which is expected to be delivered in the fourth quarter. Based on the current backlog, Axesstel expects to be profitable and generate positive cash flow in the fourth quarter and for the full year.
Research
We will be tracking the AXST story @ $0.20:
Has near term order pipeline that will lead to an attainment of at least $16 million in revenues in the up-coming 2011 third quarter, which would be highest revenue quarter looking back 10 quarters
Fourth quarter numbers are also expected to be strong
Issues:
company has lost money for 11 stratight quarters
even with positive outlook looks like company will only attain break even results
historic lumpiness in order flow
Comments & Business Outlook
Second Quarter 2011 Results
Revenues for the second quarter of 2011 were $7.5 million, compared to $11.2 million in the second quarter of 2010.
Second quarter 2011 net loss was $687,000, or a loss of $0.03 per share, compared to second quarter 2010 net loss of $1.4 million, or a loss of $0.06 per share.
Clark Hickock, CEO of Axesstel, stated, "Our revenues can be impacted by the timing of large orders, and this was the case for the second quarter. However, there are a number of operating trends showing significant improvement. Our gross margin returned to an historic high level. Second quarter gross margin was 25% compared to 18% in the second quarter of 2010 and 20% in the first quarter of 2011. We expect gross margin to remain near 25% for the remainder of 2011, driven by increasing sales to North America and the efforts we took in 2010 to re-engineer our products and reduce costs of goods sold. We also reduced operating expenses during the second quarter of 2011 which, combined with our improved gross margin, narrowed our net loss despite the lower revenues."
"Our North American business achieved a significant milestone on August 1st when a tier one wireless carrier launched its wireline replacement program using our wireless terminal platform. Under an OEM arrangement, the carrier will sell our terminals in North America as part of its strategic initiative to get businesses and consumers to replace traditional wireline service with wireless service via its wireless network. During the second quarter, we received an initial purchase order from the carrier's distributor for $7.9 million of these terminals, which we expect to deliver in the third quarter of 2011. The initial purchase order was a stocking order to provide product for the carrier's retail and distribution channels. The amount and timing of additional orders will depend upon the success of the product's sales," Hickock concluded.
At August 1, 2011, Axesstel reported backlog of $16.3 million, substantially all of which is expected to be delivered in the third quarter. Based on the current backlog, and expectations for follow on orders from the carrier, Axesstel believes that its third and fourth quarter revenues and results from operations will be significantly improved over those experienced in the second quarter.
