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. 3 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) THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, -------------------------- ------------------------- 1997 1998 1997 1998 ----------- ----------- ----------- ----------- 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 ----------- ----------- ----------- ----------- 896,956 1,056,903 1,650,989 2,022,029 ----------- ----------- ----------- ----------- 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 ----------- ----------- ----------- ----------- Shares outstanding-diluted . . . . . . . . . . . . 2,943,577 2,943,577