CHOICETEL COMMUNICATIONS INC /MN/, S-3, 2000-05-10

CHOICETEL COMMUNICATIONS INC /MN/
S-3, 2000-05-10
TELEPHONE COMMUNICATIONS (NO RADIOTELEPHONE)

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<PAGE> 1

As filed with the Securities and Exchange Commission on May 10, 2000

Registration No. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

CHOICETEL COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C>
MINNESOTA 41-1649949
(State or other jurisdiction of incorporation (I.R.S. Employer Identification Number)
or organization)
9724 10TH AVENUE NORTH
PLYMOUTH, MINNESOTA 55441
TELEPHONE: (612) 544-1260
(Address, including zip code, and telephone number, including area code, of registrant's
principal executive offices)
JACK S. KOHLER Copies of communications to:
CHIEF FINANCIAL OFFICER ROBERT T. MONTAGUE
9724 10TH AVENUE NORTH ROBINS, KAPLAN, MILLER & CIRESI L.L.P.
PLYMOUTH, MINNESOTA 55441 2800 LASALLE PLAZA, 800 LASALLE AVENUE
TELEPHONE: (612) 544-1260 MINNEAPOLIS, MINNESOTA 55402-2015
(Name, address, including zip code, and TELEPHONE: (612) 349-0822
telephone TELECOPIER: (612) 339-4181
number, including area code, of agent for
service)
</TABLE>

Approximate date of commencement of proposed sale to the public:
FROM TIME TO TIME AFTER THE REGISTRATION STATEMENT BECOMES EFFECTIVE.

If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
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PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER SHARE(1) PRICE(1) FEE
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
Common Stock, $.01 par
value....................... 1,201,690 shares $3.94 $4,734,659 $1,250
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(c) under the Securities Act of 1933, based on the average of the
high and low prices for the Common Stock on May 8, 2000, as reported on the
Nasdaq SmallCap Market.
- --------------------------------------------------------------------------------
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<PAGE> 2

Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with
the Securities and Exchange Commission. These securities may not be sold
nor may offers to buy be accepted prior to the time the registration
statement becomes effective. This prospectus shall not constitute an
offer to sell or the solicitation of an offer to buy nor shall there be
any sale of these securities in any State in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such State.

1,201,690 SHARES

CHOICETEL COMMUNICATIONS, INC.

COMMON STOCK

This Prospectus relates to the offer and sale of up to 1,201,690 shares of
Common Stock, par value $.01 per share ("Common Stock"), of ChoiceTel
Communications, Inc., a Minnesota corporation ("ChoiceTel"), that may be offered
and sold from time to time by the shareholders described in this Prospectus or
other successors in interest that receive the shares as a gift, distribution, or
other non-sale transfer. The selling shareholders may offer their shares from
time to time through or to brokers or dealers in the over-the-counter market at
market prices prevailing at the time of sale or in negotiated transactions at
prices acceptable to the selling shareholders. ChoiceTel will not receive any
proceeds from the sale of shares by selling shareholders.

ChoiceTel's Common Stock is quoted on the NASDAQ SmallCap Market under the
symbol "PHON." On May 8, 2000, the last reported sale price for the Common Stock
was $3.875 per share.

The shares offered by this Prospectus include 572,233 shares of ChoiceTel's
Common Stock issued to certain shareholders on April 25, 2000 in a private
offering, 572,233 shares of Common Stock of the Company issuable upon the
exercise of warrants issued to certain shareholders on April 25, 2000 in the
same private offering, and 57,224 shares issuable upon exercise of warrants
issued to ChoiceTel's agent on April 25, 2000, as compensation for acting as
agent in connection with the private offering.

THE COMMON STOCK OFFERED BY THIS PROSPECTUS IS SPECULATIVE AND INVOLVES A
HIGH DEGREE OF RISK. SEE "RISK FACTORS" BEGINNING ON PAGE 6 FOR A DISCUSSION OF
CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

The date of this Prospectus is May 10, 2000.
<PAGE> 3

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information....................................... 3
Incorporation of Certain Documents by Reference............. 4
Prospectus Summary.......................................... 5
Risk Factors................................................ 6
Use of Proceeds............................................. 9
Dividend Policy............................................. 9
Selling Shareholders........................................ 9
Plan of Distribution........................................ 13
Legal Matters............................................... 14
Experts..................................................... 14
Material Changes............................................ 14
Indemnification............................................. 14
</TABLE>

AVAILABLE INFORMATION

ChoiceTel has filed with the Securities and Exchange Commission a
Registration Statement on Form S-3 under the Securities Act of 1933, as amended,
with respect to the offering of the shares of Common Stock made by this
Prospectus. This Prospectus does not contain all of the information set forth in
the registration statement. For further information with respect to ChoiceTel
and its Common Stock, reference is made to the registration statement.
Statements made in this Prospectus as to the contents of any contract, agreement
or other documents are not necessarily complete. With respect to each such
contract, agreement or other document filed as an exhibit to the registration
statement, reference is made to the exhibit for a more complete description of
the matter involved. ChoiceTel is subject to the informational requirements of
the Securities Exchange Act of 1934, as amended, and files periodic reports,
proxy statements and other information with the Securities and Exchange
Commission. The registration statement and the reports, proxy statements or
other information filed with the Securities and Exchange Commission may be
inspected without charge and copied at the public reference facilities
maintained by the Securities and Exchange Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549; 500 West Madison, Suite 1400, Chicago Illinois 60661;
and 7 World Trade Center, Suite 1300, New York, New York 10048. Copies of such
materials may also be obtained at prescribed rates from the Securities and
Exchange Commission's Public Reference Section at 450 Fifth Street, N.W.,
Washington, D.C. 20549. The Registration Statement may also be accessed through
the Securities and Exchange Commission's Web site located at
<http://www.sec.gov>.

3
<PAGE> 4

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents are hereby incorporated by reference in this
Prospectus except as superseded or modified herein:

1) ChoiceTel's Annual Report on Form 10-KSB40 for the fiscal year ended
December 31, 1999, filed with the Securities and Exchange Commission on
March 30, 2000.

2) The description of ChoiceTel's Common Stock contained in the Prospectus
constituting part of the registration statement on Form SB-2 (File No.
333-29969) filed by ChoiceTel with the Securities and Exchange
Commission on June 25, 1997.

3) All documents filed by ChoiceTel pursuant to Sections 13(a), 139(c), 14
or 15(d) of the Securities Exchange Act of 1934, as amended, after the
date of this Prospectus and prior to the termination of the offering of
the shares.

Any statement contained in a document incorporated or deemed to be
incorporated by reference shall be deemed to be modified or superseded for
purposes of this Prospectus to the extent that a statement contained herein or
in any other subsequently filed document which also is or is deemed to be
incorporated by reference modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as modified or
superseded, to constitute a part of this Prospectus.

ChoiceTel will provide without charge to each person, including a
beneficial owner, to whom this Prospectus is delivered, upon written or oral
request of such person, a copy of any or all documents that have been or may be
incorporated by reference herein (other than exhibits to such documents which
are not specifically incorporated by reference into such documents). Requests
should be directed to Jack S. Kohler, Chief Financial Officer, at ChoiceTel's
principal executive offices at 9724 10th Avenue North, Plymouth, MN 55441,
telephone number (612) 544-1260.

FORWARD-LOOKING STATEMENTS

The information contained in this Prospectus may contain various
forward-looking statements, which may be identified by the use of
forward-looking terminology, such as "may," "except," "goal," "estimate,"
"continue," or other comparable terminology. Such statements are subject to
certain risks and uncertainties relating to the future performance of ChoiceTel
and its operating subsidiary, Advants, Inc. Actual results or events may
materially differ from those indicated in such forward-looking statements. In
evaluating such statements, prospective investors are cautioned not to place
undue reliance on such forward-looking statements and are specifically directed
to review the various factors identified under the caption "RISK FACTORS" which
could cause actual results to differ materially from those indicated in such
forward-looking statements.

4
<PAGE> 5

PROSPECTUS SUMMARY

The following information is qualified in its entirety by the more detailed
information and financial statements of ChoiceTel, including the notes thereto,
contained elsewhere in this Prospectus or incorporated herein by reference.

THE COMPANY

ChoiceTel Communications, Inc. was formed as a Minnesota corporation in
1989. Since that time ChoiceTel has been in the business of operating pay
telephones. The board of directors of ChoiceTel recently concluded that the pay
telephone industry is no longer a growth industry and that ChoiceTel lacks the
size and resources necessary to compete in the business. The board of directors,
therefore, authorized management to sell all of ChoiceTel's pay telephone
assets. Much of ChoiceTel's previously held pay telephone assets were sold
during 1999. ChoiceTel expects to divest the remainder of its pay telephone
assets, which are located in Puerto Rico, during 2000. ChoiceTel intends to
develop a profitable model for employing public Internet access terminals
through its majority owned subsidiary, Advants, Inc.

In April of 2000, ChoiceTel sold a total of 572,233 units to a limited
number of accredited investors through a private offering. Each unit consisted
of one share of ChoiceTel's Common Stock, $.01 par value, and one warrant to
purchase one additional share of ChoiceTel's Common Stock, $.01 par value, at an
exercise price of $4.95 per share. The units were sold for $4.2126 per unit. In
addition to the units, ChoiceTel issued warrants to purchase 57,224 additional
shares of its common stock to its agent, Miller, Johnson & Kuehn, Incorporated.

On May 2, 2000, ChoiceTel purchased 750,000 shares of common stock of its
majority owned subsidiary, Advants, Inc., and 1,500,000 warrants to purchase
additional shares of Advants for an aggregate purchase price of $3 million.

Advants, Inc., was incorporated in Minnesota in September of 1998 under the
original name "Public Internet Access Holdings Corporation," which was changed
in November of 1999. Advants is in the business of offering Internet access
through public Internet terminals. Advants presently operates approximately 50
terminals.

THE OFFERING

<TABLE>
<S> <C>
Common Stock Offered: Up to 1,201,690 shares
Common Stock Outstanding: 3,499,139 shares as of May 5, 2000 (this number does not
include 629,457 shares issuable upon the exercise of
warrants held by the selling shareholders and which may be
offered by this Prospectus)
Offering Price: The selling shareholders will offer shares from time to time
through or to brokers or dealers in the over-the-counter
market at market prices prevailing at the time or in one or
more negotiated transactions at prices acceptable to the
selling shareholders
Use of Proceeds: ChoiceTel will not receive any of the proceeds from the sale
of shares by the selling shareholders, but will receive
proceeds from the selling shareholders upon their exercise
of up to 629,457 warrants; ChoiceTel will use any proceeds
derived from the exercise of warrants (if any) in connection
with ChoiceTel's then current business opportunities,
whatever they may be
</TABLE>

5
<PAGE> 6

RISK FACTORS

Prospective investors should carefully review and consider the following
risk factors and other information contained elsewhere in this Prospectus or
incorporated herein by reference.

CHOICETEL WILL HAVE LIMITED ASSETS GOING FORWARD. ChoiceTel is in the
process of selling substantially all of its pay telephone operating assets. In
addition to its remaining pay telephones in Puerto Rico (approximately 1,000)
and cash-on-hand and receivables of approximately $3,000,000, the only other
asset ChoiceTel owns is shares of stock of its majority owned subsidiary,
Advants, Inc. ChoiceTel currently owns approximately 68% of Advants. If you
purchase ChoiceTel Common Stock, you will essentially be investing in Advants.
If Advants fails to become a profitable business, you may lose part or all of
your investment.

ADVANTS HAS VERY LITTLE OPERATING HISTORY. Formed in 1998, Advants has a
very limited operating history upon which to evaluate its current business and
prospects. Before you purchase ChoiceTel Common Stock, you should evaluate the
risks, expenses and problems frequently encountered by companies in the early
stages of development and companies entering new and rapidly changing markets
like the Internet.

ADVANTS MAY NOT BE ABLE TO FUND ITS FUTURE CAPITAL NEEDS AND IT MAY NEED
ADDITIONAL FUNDS SOONER THAN ANTICIPATED. Advants estimates that its Internet
terminals will initially cost approximately $4,000 per location. Advants
estimates that its planned capital expenditures during fiscal year 2000 will be
approximately $7,000,000 and that capital expenditures during future years will
exceed $7,000,000. ChoiceTel has not performed any independent evaluation of
Advants' estimates.

ChoiceTel recently purchased 750,000 shares of Common Stock of Advants and
warrants to purchase 1,500,000 additional shares of Common Stock for the
aggregate purchase price of $3 million. ChoiceTel and Advants believe that
financing in addition to ChoiceTel's recent $3 million investment will be needed
to continue to develop Advants' business. ChoiceTel has no obligation to invest
additional funds in Advants and at present does not expect to provide additional
financing. ChoiceTel has no obligation to exercise its warrants to purchase
additional shares of Advants' common stock and has no plans to do so in the
foreseeable future. There can be no assurance that Advants will be able to
obtain needed financing, or, if such financing is available, that it will be
available on favorable or acceptable terms. If Advants is unable to obtain
needed financing, it will have to curtail or discontinue its operations.

If Advants obtains additional financing by selling any of its capital
stock, the percentage of Advants owned by ChoiceTel will be reduced.
Consequently, your ownership interest in Advants through ownership of
ChoiceTel's common stock will be diluted.

ADVANTS PLANS TO SECURE ADDITIONAL FINANCING BY ISSUING DEBT
SECURITIES. Advants expects to secure additional financing by issuing debt
securities. Any debt securities that are issued could have priority over the
Advants common stock in the event of the liquidation of Advants. Additionally,
there is no guarantee that, once issued, Advants will be able to make payments
required by the debt securities.

ADVANTS HAS A HISTORY OF NET LOSSES AND EXPECTATION OF NET LOSSES FOR THE
FORESEEABLE FUTURE. Advants has incurred net losses since its inception and
accumulated a deficit of approximately $400,000 as of March 31, 2000. ChoiceTel
expects Advants to have increasing net losses and negative cash flows for the
near future. ChoiceTel also expect that Advants, operating expenses will
increase significantly during the next several years, especially as it places
terminals in public places. With increased expenses, Advants will need to
generate significant additional revenues to achieve profitability. As a result,
Advants may never achieve or sustain profitability, and, if it does achieve
profitability in any period, Advants may not be able to sustain or increase
profitability on a quarterly or annual basis.

ADVANTS WILL PURSUE A NEW AND UNPROVEN BUSINESS MODEL. The business of
providing Internet access through public Internet terminals is new and unproven.
There can be no assurance that Advants will be able to develop technology that
provides fast, stable access to the Internet though its public terminals. If
Advants does develop such technology, there may be no demand for this manner of
Internet access. Finally, even if there is demand for Internet access through
public terminals, providing Internet access to the public may not be profitable.
Failure to develop technology or a profitable market for Advants services will
have a materially

6
<PAGE> 7

adverse affect on Advants' business, financial condition and results of
operations with a resulting negative impact on the value of ChoiceTel's Common
Stock.

ADVANTS FACES INCREASING COMPETITION. Although no competitor yet has a
significant portion of Advants' chosen market, many companies have already
entered the market. Advants' competitors range from small companies to large
corporations such as Bell South and US West. Many of these competitors have more
extensive financial, marketing and technical resources than Advants and enjoy
superior name recognition in the market. Advants may also face competition from
currently unknown new market entrants who may possess substantially greater
financial, marketing and technical resources than Advants.

Access to the Internet is presently possible using lap top computers,
cellular telephones and other portable devices. Advants will face increasing
competition from the manufacturers of these types of portable Internet access
devices. Many of the companies developing such products have longer operating
histories in the Internet market, greater name recognition, larger consumer
bases and significantly greater financial, technical and marketing resources
than Advants. Customers may prefer such portable Internet access devices to the
public terminals offered by Advants. Advants may not be able to compete
successfully. Failure to compete successfully will materially adversely affect
Advants' business, financial condition and results from operations which may
have a resulting negative impact on the value of ChoiceTel's Common Stock.

ADVANTS MAY BE UNABLE TO MANAGE GROWTH. If successful, Advants may
experience a period of rapid growth, which could significantly strain its
managerial, operational, financial and other resources. To effectively manage
future growth, if any, Advants will need to recruit, train, assimilate, motivate
and retain qualified managers and employees. To compensate for the increase in
operating expenses which could result from expansion, Advants will need to
increase its revenues significantly. We can not predict whether Advants will be
able to successfully manage any current or future growth. Any failure to
successfully manage growth will have a material adverse affect on the results of
operations and financial condition of Advants.

ADVANTS IS HIGHLY DEPENDENT ON A SMALL NUMBER OF KEY PERSONNEL. Advants'
future success is substantially dependent on its senior management and its
directors. If one or more key employees decides to leave Advants, this could
have a material adverse effect on Advants' business, results of operations and
financial condition.

Advants' future success also depends on its continuing ability to retain
and attract highly qualified technical and managerial personnel. There can be no
assurance that Advants will be able to attract and retain such personnel on
acceptable terms. In addition, Advants' anticipated growth and expansion will
place increased demands on its management resources. These demands are expected
to require the addition of new management personnel. The failure to acquire
additional qualified personnel on acceptable terms could materially adversely
affect any prospects for Advants' success.

INCREASED GOVERNMENTAL REGULATION OF THE INTERNET COULD ADVERSELY AFFECT
ADVANTS' BUSINESS. A number of legislative and regulatory proposals under
consideration by federal, state, local and foreign governmental organizations
may lead to laws or regulations concerning various aspects of the Internet,
including, but not limited to, online content, user privacy, taxation, access
charges, liability for third-party activities and jurisdiction. Additionally, it
is uncertain as to how existing laws will be applied to the Internet. The
adoption of new laws or the application of existing laws may decrease growth in
the use of the which could in turn decrease demand for Advants' services (if any
exists), increase the cost of doing business or otherwise have a material
adverse effect on Advants' business, results of operations and financial
condition.

The tax treatment of the Internet and e-commerce is currently unsettled. A
number of proposals have been made at the federal, state and local level and by
certain foreign governments that could impose taxes on the sale of goods and
services and certain other Internet activities. Currently, the Internet Tax
Information Act places a temporary moratorium on new state and local taxes on
Internet commerce. However, future laws imposing taxes, access fees, or other
regulations on commerce over the Internet may substantially impair the growth of
use of the Internet and as a result have a material adverse effect on Advants'
business, results of operations and financial condition.

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<PAGE> 8

ADVANTS WILL BE HIGHLY DEPENDENT ON INCREASED USE OF THE
INTERNET. Consumers and businesses will likely widely accept and adopt the
Internet for conducting business and exchanging information only if the Internet
provides these consumers and businesses with greater efficiencies and
improvements in commerce and communication. Advants future success and revenue
growth depends substantially upon continued growth in the use of the Internet.
The Internet may prove not to be a viable commercial marketplace. If use of the
Internet does not continue to increase, Advants' business, results of operations
and financial condition would be materially and adversely affected.

ADVANTS WILL BE HIGHLY DEPENDENT ON CONTINUED IMPROVEMENTS TO ITS PUBLIC
INTERNET TERMINALS AND THE INTERNET INFRASTRUCTURE. Advants' ability to attract
customers and advertisers, and to achieve market acceptance of Advants services,
depends significantly upon the performance of its systems and network
infrastructure. Any system, mechanical or other technological failure that
results in interrupted or slower Internet access could result in less customer
use and, if sustained or repeated, could reduce the attractiveness of Advants'
services to its customers and advertisers.

Further, security and authentication concerns regarding the transmission of
confidential information over the Internet, such as credit card numbers, may
continue. Any failure of Advants' systems to provide privacy and security for
its users which is on par with the general marketplace would materially
adversely impact Advants business, results of operations and financial
condition.

If Internet usage continues to increase rapidly, the Internet
infrastructure may not be able to support the demands placed on it by such
growth and its performance and reliability may decline. If outages or delays on
the Internet occur frequently, overall Internet usage or usage of Advants'
public Internet terminals may decline. Consequently, the emergence and growth of
the market for Advants' services is dependent on future improvements to the
entire Internet. We can not assure you that such improvements will be made.

ADVANTS IS HIGHLY DEPENDENT ON CONTINUED, UNINTERRUPTED SUPPLY FROM
SUPPLIERS. Advants depends upon a small number of suppliers to supply, among
other things, the equipment which comprises the public Internet terminals and
equipment necessary to install the public Internet terminals. In the event any
current suppler becomes unable or unwilling to supply equipment on terms
acceptable to the company, it would be difficult, if not impossible, for the
company to make acceptable arrangements with alternate suppliers because of the
small number of existing suppliers. Any temporary or permanent interruption of
the supply from suppliers or reduction in the speed with which any supplier is
able to fill an order may materially adversely affect Advants' business, results
of operations and financial condition.

ADVANTS MAY BE UNABLE TO MANAGE THE RAPID TECHNOLOGICAL CHANGES WHICH
CHARACTERIZE THE INTERNET MARKET. Technology relating to Advants' activities has
undergone rapid and significant development. Advants expects that the technology
associated with Advants activities will continue to develop rapidly, and
Advants' success will depend in large part on its ability to maintain a
competitive position with respect to this technology. Advants may find it
difficult to update its equipment or services and develop and deliver its new
products and services in a cost-effective manner, especially when faced with
rapid technological changes that are hard to predict.

CERTAIN EXISTING SHAREHOLDERS OWN A LARGE PERCENTAGE OF CHOICETEL'S
STOCK. Thirty-five percent (35%) of ChoiceTel's outstanding common stock is
beneficially owned by Gary Kohler. Mr. Kohler is the chairman of the board of
directors of ChoiceTel. Because of such ownership, Mr. Kohler will, in large
part, be able to direct the affairs of ChoiceTel, including the election of its
board of directors.

CUMULATIVE VOTING FOR DIRECTORS IS NOT PERMITTED. Cumulative voting for
directors is not permitted. Because there is no cumulative voting, the holders
of more than 50% of the outstanding shares of common stock will be able to elect
all of ChoiceTel's board of directors.

CHOICETEL MAY NOT BE ABLE TO MEET ITS RETURN ON INVESTMENT
OBJECTIVES. There can be no assurance that ChoiceTel's return on investment
objectives will be achieved. Actual results of Advants may significantly vary
from ChoiceTel's reasonable expectations, especially due to the start up nature
of Advants, and may be substantially less favorable.

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<PAGE> 9

USE OF PROCEEDS

ChoiceTel will not receive any proceeds from the sale of the shares offered
by this Prospectus, but may receive proceeds of up to $3,115,812 from the
exercise of warrants held by the selling shareholders. Whether the warrants are
exercised is in the sole discretion of the selling shareholders, and there can
be no assurance as to the number of warrants (if any) that will be exercised.
ChoiceTel intends to apply any net proceeds it receives from the exercise of the
warrants for general corporate purposes, including working capital.

DIVIDEND POLICY

ChoiceTel has never paid or declared any cash dividends on its Common Stock
and does not intend to pay cash dividends on its Common Stock in the foreseeable
future. The payment by ChoiceTel of cash dividends, if any, on its Common Stock
in the future is subject to the discretion of ChoiceTel's board of directors and
will depend on ChoiceTel's earnings, financial condition, capital requirements
and other relevant factors.

SELLING SHAREHOLDERS

Set forth below are the names of the selling shareholders, the number of
shares of common stock of ChoiceTel beneficially owned by each of them as of
April 26, 2000, the number of shares of common stock of ChoiceTel issuable to
each of them upon exercise of warrants as of April 26, 2000, the number of
shares offered hereby and the percentage of the outstanding common stock to be
owned if all the shares registered hereunder are sold by the selling
shareholders. The shares offered hereby shall be deemed to include shares
offered by any pledgee, donee, transferee or other successor in interest of any
of the selling shareholders listed below, provided that this Prospectus is
amended or supplemented if required by applicable law.

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<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
PRIOR TO OFFERING SHARES BENEFICIALLY
------------------------------- NUMBER OWNED
OF AFTER OFFERING(3)
WARRANT SHARES --------------------
SELLING SHAREHOLDER SHARES SHARES(1) TOTAL OFFERED(2) NUMBER PERCENT(4)
------------------- ------ --------- ----- ---------- ------ ----------
<S> <C> <C> <C> <C> <C> <C>
Stanley D. Rahm(6)................... 0 3,767 3,767 3,767 0 *
16810 45th Ave N
Plymouth, MN 55446
Jeffrey D. Rahm & Susan D. Rahm
Jt/Ten............................. 5,934 5,934 11,868 11,868 0 *
16810 45th Ave N
Plymouth, MN 55446
Stanley D. Rahm Trust(6)............. 11,870 11,870 23,740 23,740 0 *
Stanley D. Rahm & Mary Ann Rahm
Trustees u/a dtd 12/17/92
5500 Wayzata Blvd Suite 800
Minneapolis, MN 55416
Brian R. Johnson & Jennifer Johnson
Jt/Ten............................. 5,934 5,934 11,868 11,868 0 *
4805 Saratoga Lane N
Plymouth, MN 55442
Kyle Mansfield....................... 5,934 5,934 11,868 11,868 0 *
Mansfield & Foley
1108 Nicollet Mall Suite 200
Minneapolis, MN 55403
Thomas Tsatsos IRA................... 5,934 5,934 11,868 11,868 0 *
First Trust Natl Assoc TTEE
7400 Edinborough Way #5310
Edina, MN 55435
Steven J. Bateman.................... 5,934 5,934 11,868 11,868 0 *
c/o Price Waterhouse
630 3rd Ave. S
Minneapolis, MN 55402
Industricorp & Co, Inc. FBO.......... 47,476 47,476 94,952 94,952 0 *
Twin City Carpenters Pension Plan
Union Bank & Trust
Securities Dept
312 Central Ave
Minneapolis, MN 55414
Pyramid Partners, LP................. 59,346 59,346 118,692 118,692 0 *
USB Piper Jaffray
Dealer Relations Dept
222 South Ninth Street
Minneapolis, MN 55402
Ellis Limited Partnership............ 11,870 11,870 23,740 23,740 0 *
USB Piper Jaffray
Dealer Relations Dept
222 South Ninth Street
Minneapolis, MN 55402
</TABLE>

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<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
PRIOR TO OFFERING SHARES BENEFICIALLY
------------------------------- NUMBER OWNED
OF AFTER OFFERING(3)
WARRANT SHARES --------------------
SELLING SHAREHOLDER SHARES SHARES(1) TOTAL OFFERED(2) NUMBER PERCENT(4)
------------------- ------ --------- ----- ---------- ------ ----------
<S> <C> <C> <C> <C> <C> <C>
USB Piper Jaffray.................... 11,870 11,870 23,740 23,740 0 *
FBO Harold Roitenberg IRA
USB Piper Jaffray
Dealer Relations Dept
222 South Ninth Street
Minneapolis, MN 55402
John F. Rooney....................... 8,902 8,902 17,804 17,804 0 *
USB Piper Jaffray
Dealer Relations Dept
222 South Ninth Street
Minneapolis, MN 55402
Robert G. Allison.................... 9,934 5,934 15,868 11,868 0 *
USB Piper Jaffray
Dealer Relations Dept
222 South Ninth Street
Minneapolis, MN 55402
Gary A. Bergren...................... 5,934 5,934 11,868 11,868 0 *
USB Piper Jaffray
Dealer Relations Dept
222 South Ninth Street
Minneapolis, MN 55402
Craig L. Campbell.................... 5,934 5,934 11,868 11,868 0 *
USB Piper Jaffray
Dealer Relations Dept
222 South Ninth Street
Minneapolis, MN 55402
USB Piper Jaffray as Custodian....... 5,934 5,934 11,868 11,868 0 *
FBO Bradley A. Erickson
IRA 100-263185-7777
USB Piper Jaffray
Dealer Relations Dept
222 South Ninth Street
Minneapolis, MN 55402
Dennis D. Gonyea..................... 5,934 5,934 11,868 11,868 0 *
USB Piper Jaffray
Dealer Relations Dept
222 South Ninth Street
Minneapolis, MN 55402
John T. Potter....................... 5,934 5,934 11,868 11,868 0 *
USB Piper Jaffray
Dealer Relations Dept
222 South Ninth Street
Minneapolis, MN 55402
</TABLE>

11
<PAGE> 12

<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
PRIOR TO OFFERING SHARES BENEFICIALLY
------------------------------- NUMBER OWNED
OF AFTER OFFERING(3)
WARRANT SHARES --------------------
SELLING SHAREHOLDER SHARES SHARES(1) TOTAL OFFERED(2) NUMBER PERCENT(4)
------------------- ------ --------- ----- ---------- ------ ----------
<S> <C> <C> <C> <C> <C> <C>
Richard C. Perkins................... 5,934 5,934 11,868 11,868 0 *
USB Piper Jaffray
Dealer Relations Dept
222 South Ninth Street
Minneapolis, MN 55402
David M. Westrum, TTEE............... 5,934 5,934 11,868 11,868 0 *
FBO David M. Westrum
Revocable Living Trust
u/a dtd 6/1/97
USB Piper Jaffray
Dealer Relations Dept
222 South Ninth Street
Minneapolis, MN 55402
David E. Riviere..................... 5,934 5,934 11,868 11,868 0 *
11510 52nd Ave N
Plymouth, MN 55442
John Gardiner........................ 5,934 5,934 11,868 11,868 0 *
19895 Cottagewood Ave
Deephaven, MN 55331
VBS General Partnership.............. 11,869 11,869 23,738 23,738 0 *
c/o J Simon
445 TigerTail Rd
Los Angeles, CA 90049
Everett Jensen Rev Trust............. 5,934 5,934 11,868 11,868 0 *
Everett Jensen TTEE 3/7/95
PO Box 119
Clarks Grove, MN 56016
Paul Forsberg........................ 50,000 50,000 100,000 100,000 0 *
932 Nine Mile Cove
Hopkins, MN 55343
Miller, Johnson & Kuehn,
Incorporated(5).................... 0 10,069 10,069 10,069 0 *
5500 Wayzata Blvd. Suite 800
Minneapolis, MN 55416
Miller, Johnson & Kuehn Investment
Pool(5)............................ 0 5,000 5,000 5,000 0 *
5500 Wayzata Blvd. Suite 800
Minneapolis, MN 55410
Eldon C. Miller(6)................... 0 3,767 3,767 3,767 0 *
5500 Wayzata Blvd. Suite 800
Minneapolis, MN 55410
</TABLE>

12
<PAGE> 13

- -------------------------
* Less than one percent.

(1) Includes all shares to be issued to the shareholder upon exercise of a
warrant.

(2) Includes shares that such selling stockholder may acquire upon the exercise
of warrants.

(3) The number of shares beneficially owned after this offering assumes the sale
of all shares being offered.

(4) The percentage is based on 4,128,596 shares of common stock outstanding,
including 3,499,139 shares outstanding as of April 26, 2000 and 629,457
additional shares to be outstanding if all of the warrants are exercised.

(5) Miller, Johnson & Kuehn, Incorporated, acted as ChoiceTel's placement agent
in connection with the private offering in which the shares being offered by
this prospectus were originally issued.

(6) Eldon C. Miller, Paul R. Kuehn, Stanley D. Rahm and David B. Johnson are
principals in the firm Miller, Johnson & Kuehn, Incorporated.

(7) The David B. Johnson Family Foundation is a charitable foundation controlled
by David B. Johnson, a principal of Miller, Johnson & Kuehn, Incorporated.

(8) Joseph D. Leach is an associate with the firm of Miller, Johnson & Kuehn,
Incorporated.

PLAN OF DISTRIBUTION

Any or all of the shares of Common Stock being offered by this Prospectus
may be sold by the selling shareholders or by pledgees, donees, transferees or
other successors in interest. Such sales may be made in the over-the -counter
market or otherwise at prices and at terms then prevailing or in negotiated
transactions. The shares may be sold by one or more of the of the following
means: (a) ordinary brokerage or market making transactions and transactions in
which a broker or dealer solicits purchasers; (b) block trades in which a broker
or dealer will attempt to sell the shares as agent but may resell a portion of
the block as principal to facilitate the transaction; and (c) purchases by a
broker or dealer as principal and resales by such broker or dealer for its
account pursuant to this Prospectus. In effecting sales, brokers or dealers
engaged by the selling shareholders may arrange for other brokers or dealers to
participate. Brokers or dealers will receive commissions or discounts from the
selling shareholders in amounts to be negotiated immediately prior to the sale.
Such brokers or dealers and any other participating brokers or dealers may be
deemed to be "underwriters" within the meaning of the Securities Act in
connection with such sales. In addition, any securities covered by this
Prospectus which qualify for sale pursuant to Rule 144 under the Securities Act
may be sold under Rule 144 rather than pursuant to this Prospectus.

13
<PAGE> 14

LEGAL MATTERS

The validity of the shares of Common Stock being offered hereby will be
passed upon for the Company by Robins, Kaplan, Miller & Ciresi L.L.P.,
Minneapolis, Minnesota.

EXPERTS

The financial statements of ChoiceTel incorporated by reference in this
Prospectus and registration statement from ChoiceTel's Annual Report (Form 10-K)
for the year ended December 31, 1999, have been audited by Schechter, Dokken,
Kanter, Andrews and Selcer, Ltd., independent auditors, as set forth in their
report included in the financial statements. The financial statements are
incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.

MATERIAL CHANGES

In April, 2000, ChoiceTel sold an aggregate of 572,233 units to a limited
number of accredited investors through a private offering. Each unit consisted
of one share of ChoiceTel's Common Stock, and one warrant to purchase one
additional share of ChoiceTel's Common Stock at an exercise price of $4.95 per
share. The units were sold for $4.2126 per unit.

ChoiceTel derived gross proceeds of $2,410,588.75 from the private
offering. From that amount, ChoiceTel paid $241,058.88 to Miller, Johnson and
Kuehn, Incorporated as a sales commission for acting as placement agent for the
private offering, and reimbursed Miller, Johnson & Kuehn, Incorporated an amount
of $11,112.50 for costs and expenses. The net proceeds received by ChoiceTel
from the private offering were $2,158,417.37, less legal and other expenses
incurred in connection with that private offering.

On May 2, 2000 , ChoiceTel purchased 750,000 shares of its majority owned
subsidiary Advants, Inc. for a purchase price of $3,000,000.

INDEMNIFICATION

Section 302A.521 of the Minnesota Statutes provides that unless prohibited
or limited by a corporation's articles of incorporation or bylaws, the Company
must indemnify its current and former officers, directors, employees and agents
against reasonable expenses (including attorneys' fees), judgments, penalties,
fines and amounts paid in settlement and which were incurred in connection with
actions, suits, or proceedings in which such persons are parties by reason of
the fact that they are or were an officer, director, employee or agent of the
corporation, if they (i) have not been indemnified by another organization, (ii)
acted in good faith, (iii) received no improper personal benefit, (iv) in the
case of a criminal proceeding, had no reasonable cause to believe the conduct
was unlawful, and (v) reasonably believed that the conduct was in the best
interests of the corporation. Section 302A.521 also permits a corporation to
purchase and maintain insurance on behalf of its officers, directors, employees
and agents against any liability which may be asserted against, or incurred by,
such persons in their capacities as officers, directors, employees and agents of
the corporation, whether or not the corporation would have been required to
indemnify the person against the liability under the provisions of such section.

Article VII of ChoiceTel's Bylaws provides that the directors, officers,
committee members, of the Company and other persons shall have the rights to
indemnification provided by Section 302A.521 of the Minnesota Statutes.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers or persons controlling the
registrant pursuant to the foregoing provisions, the registrant has been
informed that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable.

14
<PAGE> 15

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the estimated expenses to be incurred in
connection with the distribution of the shares of Common Stock offered hereby:

<TABLE>
<CAPTION>
SELLING
COMPANY STOCKHOLDERS
------- ------------
<S> <C> <C>
SEC registration fee........................................ $ 1,250 $-0-
Legal fees and expenses..................................... 15,000 -0-
Accounting fees and expenses................................ 1,000 -0-
Printing expenses........................................... 5,000 -0-
Miscellaneous............................................... 750 -0-
------- ----
TOTAL.................................................. $23,000 $-0-
======= ====
</TABLE>

Each of the amounts set forth above, except the SEC registration fee, are
estimated. The selling shareholders will pay no portion of the expenses
described above, all of which will be paid by ChoiceTel.

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Article VII of the Bylaws of the Company provides that the directors,
officers, committee members, of the Company and other persons shall have the
rights to indemnification provided by Section 302A.521 of the Minnesota
Statutes.

ITEM 16. EXHIBITS

See "Exhibit Index" at page .

ITEM 17. UNDERTAKINGS

(a) RULE 415 OFFERING.

ChoiceTel hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933 (the "Securities Act");

(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,

15
<PAGE> 16

represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective registration statement; and

(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;

Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Securities and Exchange Commission by the registrant pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934, as amended, that are
incorporated by reference in the registration statement.

(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering.

(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.

(e) REQUEST FOR ACCELERATION OF EFFECTIVE DATE.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
ChoiceTel pursuant to the foregoing provisions, or otherwise, ChoiceTel has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by ChoiceTel of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the act and will be governed by the final
adjudication of such issue.

(f) REGISTRATION STATEMENT PERMITTED BY RULE 430A.

ChoiceTel hereby undertakes that:

(1) For the purpose of determining any liability under the Securities Act
of 1933, as amended, ChoiceTel will treat any information omitted from the form
of prospectus filed as part of this registration statement in reliance upon Rule
430A and contained in a form of prospectus filed by ChoiceTel under rule
424(b)(1), or (4) or 497(h) under the Securities Act of 1933, as amended, as
part of this registration statement as of the time the Securities and Exchange
Commission declared it effective.

(2) For the purpose of determining any liability under the Securities Act
of 1933, ChoiceTel will treat each post-effective amendment that contains a form
of prospectus as a new registration statement for the securities offered
therein, and the offering of such securities at that time as the initial bona
fide offering thereof.

16
<PAGE> 17

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Minneapolis, State of Minnesota, on May 9, 2000.

CHOICETEL COMMUNICATIONS, INC.

By /s/ GARY S. KOHLER
------------------------------------
Gary S. Kohler
Chairman of the Board of Directors

POWER OF ATTORNEY

Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated. Each person whose signature to this
registration statement appears below appoints Jeffrey R. Paletz and Jack S.
Kohler as his true and lawful attorneys-in-fact and agents, each acting alone,
with full power of substitution and resubstitution, to sign on his behalf to
perform any acts necessary to be done in order to file all amendments and
post-effective amendments to this registration statement, and any and all
instruments or documents filed as part of or in connection with this
registration statement or the amendments thereto, and each of the undersigned
does hereby ratify and confirm all that said attorney-in-fact and agent, or his
or her substitutes, shall do or cause to be done by virtue of this power of
attorney.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>

/s/ GARY S. KOHLER Chairman of the Board of Directors May 9, 2000
- ------------------------------------------
Gary S. Kohler

/s/ JEFFERY R. PALETZ President and Director May 9, 2000
- ------------------------------------------
Jeffery R. Paletz

/s/ JACK S. KOHLER Vice President and Chief Financial Officer May 9, 2000
- ------------------------------------------
Jack S. Kohler

/s/ MELVIN GRAF Executive Vice President and Director May 9, 2000
- ------------------------------------------
Melvin Graf

/s/ ROBERT A. HEGSTROM Director May 9, 2000
- ------------------------------------------
Robert A. Hegstrom

/s/ MICHAEL WIGLEY Director May 9, 2000
- ------------------------------------------
Michael Wigley
</TABLE>

17
<PAGE> 18

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION METHOD OF FILING
------- ----------- ----------------
<C> <S> <C>
5.1 Opinion of Robins, Kaplan, Miller & Ciresi L.L.P... Filed electronically herewith
23.1 Consent of Schechter, Dokken, Andrews & Selcer Filed electronically herewith
Ltd., Independent Auditors.........................
23.2 Consent of Robins, Kaplan, Miller & Ciresi Included in Exhibit 5.1
L.L.P..............................................
24.1 Powers of Attorney................................. Included as part of the signature
page to this registration statement
</TABLE>

<PAGE> 1

EXHIBIT 5.1

ROBINS, KAPLAN, MILLER & CIRESI L.L.P.
2800 LASALLE PLAZA
800 LASALLE AVENUE
MINNEAPOLIS, MINNESOTA 55402-2015
TELEPHONE (612) 349-8500

May 9, 2000

ChoiceTel Communications, Inc.
9724 10th Avenue North
Plymouth, Minnesota 55441
Re: Registration Statement on Form S-3
1,201,690 Shares of Common Stock

Ladies and Gentlemen:

We have acted as counsel for ChoiceTel Communications, Inc. (the "Company")
in connection with the Company's filing of a registration statement on Form S-3
(the "Registration Statement") relating to the registration under the Securities
Act of 1933 (the "Act") of an offering of 1,201,690 shares of common stock of
the Company by persons who are currently holders of common stock of the Company
(the "Shares") or who may become such holders upon exercise of outstanding
warrants (the "Warrants").

In connection with rendering this opinion, we have reviewed the following;

1. The Company's Amended and Restated Articles of Incorporation;

2. The Company's Bylaws;

3. Certain corporate resolutions, including resolutions of the Company's
Board of Directors pertaining to the issuance by the Company of the
Shares and the Warrants;

4. The Warrants; and

5. The Registration Statement;

Based upon the foregoing and upon representations and information provided
b the Company, we hereby advise you that in our opinion:

1. The Company's Amended and Restated Articles of Incorporation validly
authorize the issuance of the Shares registered pursuant to the
Registration Statement.

2. The Shares to be sold by the selling shareholders named in the
Registration Statement are, or upon exercise in accordance with the
terms and conditions of the Warrants, will be validly issued and
outstanding, fully paid and nonassessable.

We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the caption "Legal
Matters" included in the Registration Statement and the related prospectus.

Very truly yours,

ROBINS, KAPLAN, MILLER & CIRESI L.L.P.

/s/ Robins, Kaplan, Miller & Ciresi
L.L.P.

<PAGE> 1

EXHIBIT 23.1

CONSENT OF SCHECHTER, DOKKEN, KANTER, ANDREWS & SELCER LTD.

We consent to the incorporation by reference in this Registration Statement
(Form S-3) of our report dated March 23, 2000, with respect to the financial
statements included in the Annual Report (Form 10-KSB) of ChoiceTel
Communications, Inc., and to the references to our firm under the caption
"Experts" in this Registration Statement.

/s/ SCHECHTER DOKKEN KANTER ANDREWS & SELCER LTD.

Minneapolis, Minnesota
May 10, 2000