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FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) NOVEMBER 16, 1998
COMMISSION FILE NUMBER 0-230 17
CHOICETEL CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MINNESOTA 41-1649949
(STATE OF JURISDICTION OR IRS EMPLOYER ID NO.
INCORPORATION OF ORGANIZATION)
9724 10TH AVE. NORTH, PLYMOUTH, MN 55441
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT S TELEPHONE NUMBER, INCLUDING AREA CODE 612-544-1260
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ITEM 5. OTHER EVENTS
ChoiceTel Communications, Inc. announced third quarter results.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
Filed herewith is the following exhibit:
99 Press release of November 16, 1998 a copy of which is filed herewith as
Exhibit A.
Signatures
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused to be signed on its behalf by the undersigned
thereunto duly authorized.
CHOICETEL COMMUNICATIONS, INC.
(Registrant)
Dated: November 16, 1998 By \s\ Jack S. Kohler
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Jack S. Kohler
Vice President and Chief Financial Officer
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FOR IMMEDIATE RELEASE
ChoiceTel Communications, Inc. (NASDAQ-PHON)
Contact: Jeff Paletz
Press Release: November 16, 1998
CHOICETEL COMPLETES 4TH CONSECUTIVE QUARTER OF PROFITABILITY SINCE GOING PUBLIC
IN NOVEMBER 1997
ChoiceTel Communications announced today that third quarter earnings for the
quarter ended September 30, 1998 were $24,000 or one cent per share. This
compares to a loss in the third quarter of 1997 of $112,000 or six cents per
share. Revenue during the third quarter increased $983,000 or 51.8% compared to
the three months ended September 30, 1997, primarily as a result of a 40%
increase in the number of phones in service and recognition of dial-around
compensation at a higher rate. Earnings for the first nine months ended
September 30, 1998 were $99,000 or three cents per share. For the nine months
ended September 30, 1998, the Company had a loss of $275,000 or thirteen cents
per share. Revenue for the first nine months of 1998 increased 37%. As of
October 31, 1998, ChoiceTel Communications was operating approximately 4,500
payphones in 12 states and Puerto Rico.
Earnings for the third quarter were negatively impacted by $69,835 or two cents
per share from the new Puerto Rico operation which does not yet have enough
payphones installed to cover its costs. The 200 payphones installed during the
first 6 months of operations in Puerto Rico represent more than double the
number of payphones installed by the Company during its first year of operations
in Minnesota, which was ChoiceTel Communications first market. To date in
Puerto Rico, the Company has placed over 1,700 locations under contract, of
which approximately 1,500 locations are not yet installed.
The Company suffered little damage in September when Hurricane Georges went
through Puerto Rico. The Company programmed all of its payphones to provide
free local calls during the week following the hurricane as a way to help storm
victims. Radio stations let people know that ChoiceTel Communications
payphones were providing free local calls. Carol Lugo, ChoiceTel
Communications head of Puerto Rico sales, and a Puerto Rico native, commented,
People were very appreciative of ChoiceTel Communications support during our
time of need.
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CHOICETEL COMMUNICATIONS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1997 AND 1998 (UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1998 (UNAUDITED)
<TABLE>
<CAPTION>
Three months ended Three months ended %
September 30, 1998 September 30, 1997 Change
<S> <C> <C> <C>
Service revenue $ ,881 $ 1,898 51.8%
Cost of service 1,396 1,072 30.2
Gross margin 1,485 826 80.0
Selling, general and admin 841 492 70.9
Depreciation and amortization 420 285 47.3
Interest 126 158 (20.3)
Sales tax contingency 58 63 (7.9)
Income (losss) before income taxes 40 (172) n.m.
Provision (credit) for income taxes 16 (60) n.m.
Net income (loss) $24 $ (112) n.m.
Per share net income $ 0.01 $ (0.06) n.m.
Shares outstanding-weighted avg 2,915 2,019
Per share diluted net income $ .01
Shares outstanding-diluted 2,958
<CAPTION>
Nine months ended Nine months ended %
September 30, 1998 September 30, 1997 Change
Service revenue $ 6,880 $ 5,018 37.1%
Cost of service 3,247 2,791 16.3
Gross margin 3,632 2,227 63.1
Selling, general and admin 2,075 1,306 58.8
Depreciation and amortization 1,001 687 45.7
Interest 199 483 (58.8)
Sales tax contingency 191 173 10.4
Income (losss) before income taxes 165 (422) n.m.
Provision (credit) for income taxes 66 (147) n.m.
Net income (loss) $99 $ (275) n.m.
Per share net income $ 0.03 $ (0.13) n.m.
Shares outstanding-weighted avg 2,915 2,103
Per share diluted net income $ 0.03
Shares outstanding-diluted 2,959
</TABLE>
Figures in thousands except per share numbers.
