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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
May 19, 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 first quarter results.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
Filed herewith is the following exhibit:
99 Press release of May 19, 1998, a copy of which is filed herewith as
Exhibit A.
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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: May 19, 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 MAY 19, 1998 EXHIBIT A
CONTACT: JEFF PALETZ, PRESIDENT
(612) 544-1260
CHOICETEL COMMUNICATIONS SHOWS 49% INCREASE IN FIRST
QUARTER REVENUE
Company has a profitable first quarter.
Minneapolis, MN - ChoiceTel Communications announced first quarter earnings were
$52,028 or $0.02 per share, compared to a loss in last year's first quarter of
$136,666 or $0.07 per share. Revenue in the first quarter increased by $655,500
or 49% over the previous year's period. The increase in profitability is
attributable to a 20% increase in the number of phones in service, higher rates
for dial-around compensation, higher local coin rates on many of the company's
Minnesota phones, and the reseller's discount on phone lines purchased from US
West in Minnesota, which the company started to receive in the fourth quarter of
1997.
Selling, general and administrative expenses were up $212,000, which is an
increase of 60% over last year, due to the Company's increased spending for
marketing, acquisitions, and increased costs associated with being a publicly
reporting company. Included in S,G & A are $25,000 spent for due diligence for
the Sine Communications acquisition, which the company elected not to complete,
and a bid to obtain the Minneapolis-St. Paul airport payphone contract, which
was awarded to Ameritech. Ameritech will replace the U.S. West payphones
currently installed at the Minneapolis-St. Paul Airport. The Company used the
proceeds of the November 1997 IPO to reduce long-term debt, thereby reducing
interest expense in the first quarter by $102,000 or 71% compared to the prior
year.
Dial around revenue increased from $6.00 per phone per month in the first
quarter of 1997 to $29.82 per phone per month in the first quarter of 1998.
First quarter revenues have historically been lower than the rest of the year
because of the seasonality of the outdoor payphones the Company operates in the
northern states of Minnesota, Oregon and Idaho.
ChoiceTel Communications announced on May 8 a purchase agreement with Jay
Telephone Vending of Philadelphia PA to acquire its payphone route of
approximately 1,000 phones. This acquisition is expected to increase
ChoiceTel's base of installed payphones to 4,300, a 30% increase. The Company
expects to close the transaction in June.
Jeff Paletz, president of ChoiceTel Communications stated "the Jay Telephone
payphone route is similar to our Minnesota route in that it consists of
primarily high coin revenue phones, with
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attractive cashflow. The phones are located in the densely populated city and
will be very efficient to operate. We expect this route will be additive to our
earnings per share."
Certain information included in this press release (as well as information
included in oral statements or other written statements made or to be made by
ChoiceTel) 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 proposed acquisition of approximately 1,000 pay phones from Jay Telephone
Vending in Philadelphia. A closing of the transaction is subject to the
completion of due diligence and closing may be subject to unanticipated delays.
In the event the transaction is completed, the actual results of operating the
Philadelphia-based phones may differ from those expressed in any forward-looking
statements made by or on behalf of ChoiceTel due to unexpected costs incurred in
taking over the management of the acquired assets.
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