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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
August 11, 1998
Date of Report (Date of earliest event reported)
CHOICETEL COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
MINNESOTA 0-23017 41-1649949
(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification No.)
incorporation)
9724 10TH AVENUE NORTH
PLYMOUTH, MINNESOTA 55441
(Address of principal executive offices)
(612) 544-1260
(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS
ChoiceTel Communications, Inc. announced second quarter results
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
Filed herewith is the following exhibit:
99 Press release of August 11, 1998, a copy of which is filed herewith as
Exhibit A.
********
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CHOICETEL COMMUNICATIONS, INC.
(Registrant)
Dated: August 18, 1998 By /s/ Jack S. Kohler
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Jack S. Kohler
Vice President and Chief Financial Officer
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EXHIBIT A
FOR IMMEDIATE RELEASE
CHOICETEL COMMUNICATIONS, INC.
Contact: Jeffrey R. Paletz, President
(612) 544-1260
CHOICETEL ANNOUNCES ENTRY INTO PUERTO RICO AND SECOND QUARTER RESULTS
ChoiceTel Communications today announced its entry into the Puerto Rico pay
telephone market and its third consecutive quarter of profitability since going
public in November 1997.
ChoiceTel Communications has signed contracts for the installation of over 600
pay phones including a contract with Pueblo International Inc., the dominant
grocery store chain with 45 stores throughout the island of Puerto Rico.
C.E.O Jeffrey Paletz stated "I am extremely pleased with our rapid success in
the Puerto Rico market, which only recently was opened to competition. The
contracts signed to date represent more locations for pay telephones than
ChoiceTel signed in its first three years of operations in Minnesota, our first
market. I believe Puerto Rico, a U.S. territory, is an excellent market, with
year round access to outdoor pay phones, a high population density, a greater
reliance on pay telephones by the general population, and a skilled workforce
that will be able to meet our standard of superior customer service."
Carol Lugo, ChoiceTel's head of Puerto Rico sales, and a Puerto Rican native
commented, "Our new clients are happy to have a supplier dedicated solely to pay
telephones. ChoiceTel's competitive revenue sharing and seven day a week repair
service is something new for our business partners in Puerto Rico, and is being
very well received."
Based on the results of the first 72 phones installed through August 7,
ChoiceTel believes that a substantial number of the phones are financially
viable. Installations to date have been hampered by the strike of Puerto Rico
Telephone, Puerto Rico's local exchange carrier, which ran for 45 days and ended
July 28.
Second quarter earnings were $22,980 or one cent per share compared to a loss in
1997 in the second quarter of $14,632 or one cent per share. Earnings for the
first half of 1998 were $75,008 or three cents per share compared to a loss for
the first half of 1997 of $162,678 or eight cents per share. The second quarter
1998 earnings were negatively impacted by $60,000 or two cents per share by
startup costs in Puerto Rico. ChoiceTel Communications acquisition of Jay
Telephone Vending on June 30, 1998 had no material impact on the second quarter
1998 results. As of June 30, ChoiceTel was operating approximately 4,275 pay
phones, including those acquired from Jay Telephone Vending.
Certain information included in this press release contains statements that are
forward-looking (as defined in Section 27A of the Securities Act of 1933, as
amended), such as statements relating to the Company's expectation of the
performance of phones installed or under contract to be installed in Puerto
Rico. Unanticipated delays in installation, operating costs not consistent with
the Company's existing installed base of phones or below-average utilization of
phones may adversely affect the results of operations in Puerto Rico.
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CHOICETEL COMMUNICATIONS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1997 AND 1998 (UNAUDITED)
SIX MONTHS ENDED JUNE 30, 1997 AND 1998 (UNAUDITED)
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<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------------- -------------------------
1997 1998 1997 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Service revenue. . . . . . . . . . . . . . . . . . $ 1,791,638 $ 2,015,074 $ 3,120,000 $ 3,998,755
Cost of service. . . . . . . . . . . . . . . . . . 917,193 920,051 1,719,284 1,851,712
----------- ----------- ----------- -----------
Gross margin . . . . . . . . . . . . . . . . . . . 874,445 1,095,023 1,400,716 2,147,043
----------- ----------- ----------- -----------
Selling, general and admin:
Salary and benefits. . . . . . . . . . . . . . . 338,097 435,962 586,585 804,196
Travel and related . . . . . . . . . . . . . . . 35,869 47,983 61,992 90,025
Office and overhead. . . . . . . . . . . . . . . 88,337 186,781 165,205 339,941
----------- ----------- ----------- -----------
462,303 670,726 813,782 1,234,162
Depreciation and amortization. . . . . . . . . . . 193,702 289,677 402,147 581,174
Interest . . . . . . . . . . . . . . . . . . . . . 181,886 32,659 324,920 73,144
Sales tax contingency. . . . . . . . . . . . . . . 59,065 63,841 110,140 133,550
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896,956 1,056,903 1,650,989 2,022,029
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Income (loss) before income taxes. . . . . . . . . (22,511) 38,120 (250,273) 125,014
Provision for income taxes . . . . . . . . . . . . (7,879) 15,140 (87,595) 50,006
----------- ----------- ----------- -----------
Net income (loss). . . . . . . . . . . . . . . . . $ (14,632) $ 22,980 $ (162,678) $ 75,008
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Per share net income (loss) . . . . . . . . . . . $ (0.01) $ 0.01 $ (0.08) $ 0.03
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Shares outstanding-weighted average . . . . . . . 1,948,489 2,915,006 1,951,516 2,915,006
Per share diluted net income . . . . . . . . . . . $ 0.01 $ 0.03
----------- -----------
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Shares outstanding-diluted . . . . . . . . . . . . 2,943,577 2,943,577
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