Axcess International Announces Improved First Quarter 2005 Results
RFID Revenue Grows 47% Sequentially
DALLAS, TX, May 10, 2005 — AXCESS International Inc. (OTC Bulletin Board: AXSI.OB), a leading provider of active Radio Frequency Identification (RFID) solutions with applications in the security, supply chain and sensing industries, today reported results for the first quarter ended March 31, 2005.
First Quarter Highlights Include:
· RFID revenue increased 47% to $221,494 compared with fourth quarter RFID revenue of $151,080. Total revenue rose 35% to $241,158 versus fourth quarter total revenue of $177,870 and $206,678 in the year ago period
· Continued adoption of AXCESS' RFID technology as ActiveTag™ & FleetTag™ solutions secured key customer wins across a range of verticals, including Bechtel Hanford & JFK International Airport
· Signed GTSI, a $1.2 billion federal distributor as an AXCESS strategic integrator
· Formalized the design and engineering efforts required to develop the Company's next generation tag
"The pieces we put into place last year enabled us to maintain positive momentum into the first quarter of 2005 as we grew revenue, added new RFID solutions to our portfolio and signed a new strategic integrator," commented Allan Griebenow, President & CEO of AXCESS. "We experienced 47% growth in our RFID revenue, as our expanded offering has seen greater adoption throughout a range of industries, including critical sectors such as HAZMAT tracking, airport access and healthcare. The increasingly broad awareness and acceptance of RFID has facilitated our expansion into these new sectors, and will only increase the opportunities we see for utilization of our technology in the future."
RFID revenue of $221,494 increased 47% for the quarter, compared to $151,080 in 2004 fourth quarter. The year ago RFID revenue was $174,307. The sequential and year-over-year increase is due to the Company's growing traction, focus and available product in the active RFID market. Total revenue rose 35% for the quarter to $241,158, compared to total revenue of $177,870 in the fourth quarter and $206,678 in the year ago period.
Net loss applicable to common stock was $2,884,676 or $0.11 per basic and diluted share for the quarter, compared to a net loss applicable to common stock of $723,087 or $0.03 per basic and diluted share in the 2004 fourth quarter. The year-ago loss was $1,043,488 or $0.05 per basic and diluted shares. Preferred stock dividend requirements for the three months ending March 31, 2005 were $2,141,244 compared to $81,735 in the fourth quarter of 2004 and $65,520 for the first quarter in 2004.
As a result of raising cash during the quarter, the Company's balance sheet improved with a cash balance of $1.2 million at March 31, 2005 compared to $461,101 at December 31, 2004.
First Quarter Product Developments
New product development continued at a robust pace in the first quarter, as the Company introduced several key new additions to the portfolio and saw recently introduced technology incorporated by several key customers. Building on the patented ActiveTag technology, the Company introduced its active RFID hospital patient ID tag, released its FleetTag tracking solution for commercial fleets and expanded access control solutions to gated communities and secure areas such as JFK International Airport.
The patient ID tag marks an important expansion into the healthcare sector, as it allows long range automatic identification, tracking and protection for hospital patients as well as securely facilitating a doctor's ability to rapidly access patient records and information. This solution, developed with Creative Healthcare is already being implemented in a medium-sized hospital and is among the first to enable compliance with the upcoming HIPAA Privacy Mandate.
The Company also recently announced its latest ActiveTag development, with the signing of an agreement with Bechtel Hanford to automate its HAZMAT truck payload management. This client win is a strong endorsement of the FleetTag system, and continued adaptation is expected in the coming quarters. The continued success of the ActiveTag solution, most recently at JFK International, together with the new FleetTag offering, creates a comprehensive range of secure tracking and access capabilities. AXCESS now has the capability to securely and effectively track all manner of items, from hospital patients to industrial gravel trucks.
Outlook
"As reflected by the new business wins, we continue to grow our business and reaching profitability remains our key objective," continued Griebenow. "We believe we have the strategy to achieve this goal, as our RFID technology has an important role to play in the broad markets of security, homeland defense and supply chain management. Additionally, we have formalized the design and engineering efforts required to develop our next generation tag as we continue to develop the potential of our technology. RFID is increasingly seen as the solution to myriad issues in the asset management space, and with the progress we have made over the quarter AXCESS is in an excellent position to take full advantage of this opportunity."
Earnings Conference Call
In conjunction with the first quarter earnings release, AXCESS invites you to listen to its conference call via its webcast over the Internet at 4:45 p.m. (Eastern), on May 10th. The Webcast may be accessed at www.axcessinc.com. To participate in the conference call, domestic callers can dial (800) 322-0079 and international callers can dial (973) 409-9258.
For those who cannot access the live broadcast, a replay will be available by dialing (877) 519-4471 for domestic callers and (973) 341-3080 for international callers and entering "5630329" from two hours after the end of the call until 11:59 p.m. (Eastern) on May 17, 2005. A replay of the conference call will also be available on the company's website approximately two hours after the end of the call for thirty days.
About Axcess International Inc.
Axcess International Inc. (OTCBB: AXSI) delivers wireless intelligence through real-time business activity monitoring solutions that improve productivity, security and revenue growth. The systems derive wireless intelligence from automatic advanced workforce management, workflow management, asset monitoring and distributed sensing. As the smallest, most powerful battery powered wireless computer, Dot, a patented micro-wireless technology platform, combines RFID, RTLS and wireless sensing for better decision-making and control throughout the enterprise. Dot adds transmission flexibility by interfacing with multiple enterprise legacy systems including the popular Electronic Product Code (EPC) standard system now used by RFID tags in the retail supply chain. Dot has set an industry low price point for multi-frequency, micro-wireless tagging at $7.95 MSRP with asset tags starting at $8.95. Axcess is a portfolio company of Amphion Innovations plc (AIM: AMP). For more information on Axcess, visit www.axcessinc.com.
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This release contains forward-looking statements as defined in Section 21E of the Securities Exchange Act of 1934, including statements about future business operations, financial performance and market conditions. Such forward looking statements involve risks and uncertainties inherent in business forecasts. |
AXCESS INTERNATIONAL INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited) March 31, 2005 |
December 31, 2004 |
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ASSETS |
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| Current assets: | ||
| Cash and cash equivalents | 1,236,620 | 461,101 |
| Accounts receivable - trade, net of allowance for doubtful accounts of $8,859 in 2005 and 2004 | 48,553 | 79,965 |
| Inventory, net | 174,651 | 144,714 |
| Prepaid expenses and other | 122,643 | 97,164 |
| Total current assets | 1,582,467 | 782,944 |
| Property, plant and equipment, net | 41,213 | 49,395 |
| Intellectual property, net | — | 133 |
| Deferred debt issuance costs | 464,648 | 506,889 |
| Other assets | 2,674 | 3,906 |
| Total assets | 2,091,002 | 1,343,267 |
LIABILITIES AND STOCKHOLDERS’ DEFICIT |
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| Current liabilities: | ||
| Accounts payable | 346,693 | 490,100 |
| Accrued liabilities | 849,032 | 789,589 |
| Notes payable: | ||
| Convertible notes payable (includes $80,000 and $66,667 with related party in 2005 and 2004, respectively) | 613,333 | 483,333 |
| Discounts on convertible debt | (258,605) | (289,482) |
| Dividends payable | 396,909 | 316,062 |
| Total current liabilities | 1,947,362 | 1,789,602 |
| Notes payable to stockholders | 3,766,973 | 3,932,092 |
| Convertible notes payable (includes $13,333 with related party in 2004) | — | 236,667 |
| Discount on convertible debt | — | (34,084) |
| Total liabilities | 5,714,335 | 5,924,277 |
| Commitments and contingencies | ||
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Stockholders’ deficit: Convertible preferred stock, 7,000,000 shares authorized, $0.01 par value, 2,415,000 shares issued and outstanding in 2005 and 2004. |
24,150 | 24,150 |
| Common stock, $.01 par value, 50,000,000 shares authorized in 2005 and 2004; 26,594,850 shares issued and outstanding in 2005 and 24,720,939 shares issued and outstanding in 2004 | 265,949 | 247,209 |
| Shares of common stock to be issued, 5,333 shares in 2005 | 53 | — |
| Additional paid-in capital | 151,661,762 | 149,898,600 |
| Accumulated deficit | (155,575,247) | (154,750,969) |
| Total stockholders’ deficit | (3,623,333) | (4,581,010) |
| Total liabilities and stockholders’ deficit | 2,091,002 | 1,343,267 |
AXCESS INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF OPERATION
(Unaudited)
Three Months Ended
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2005 |
2004 |
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| Sales | 241,158 | 206,678 |
| Cost of sales | 124,348 | 98,886 |
| Gross profit | 116,810 | 107,792 |
| Expenses: | ||
| Research and development | 184,181 | 185,359 |
| General and administrative | 355,463 | 404,215 |
| Selling and marketing | 255,097 | 174,583 |
| Depreciation and amortization | 9,073 | 93,632 |
| Operating expenses | 803,814 | 857,789 |
| Loss from operations | (687,004) | (749,997) |
| Other income (expense): | ||
| Interest expense, net | (165,138) | (322,723) |
| Gain in vendor settlements | 108,710 | 88,243 |
| Other | — | 6,509 |
| Other expense, net | (56,428) | (227,971) |
| Net loss | (743,432) | (977,968) |
| Preferred stock dividend requirements: | ||
| Recurring | (80,847) | (65,520) |
| Warrant inducement | (2,060,397) | — |
| Preferred stock dividend requirements | (2,141,244) | (65,520) |
| Net loss applicable to common stock | (2,884,676) | (1,043,488) |
| Basic and diluted net loss per share | (0.11) | (0.05) |
| Weighted average shares of common stock outstanding | 25,728,563 | 21,594,791 |
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