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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended March 31, 1998
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Commission File Number 1-2982
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ANCOR COMMUNICATIONS, INCORPORATED
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(Exact name of small business issuer as specified in its charter)
Minnesota 41-1569659
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
6130 Blue Circle Drive Minnetonka, Minnesota 55343
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(Address of principal executive offices) (Zip code)
Registrant's Telephone number, including area code (612) 932-4000
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or such shorter period that the registrant was required
to file such reports) and (2) has been subject to such filing requirements for
the past 90 days. Yes [X] No [ ]
11,928,426
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(Number of shares of common stock of the
registrant outstanding as of Apriil 23, 1998)
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ANCOR COMMUNICATIONS, INCORPORATED
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED
MARCH 31, 1998
Page
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PART I - FINANCIAL INFORMATION
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ITEM 1: FINANCIAL STATEMENTS
Balance Sheets as of March 31, 1998 (unaudited)
and December 31, 1997 3
Statements of Operations for the three
month periods ended March 31, 1998
and 1997 (unaudited) 4
Statements of Cash Flows for the three
month periods ended March 31, 1998
and 1997 (unaudited) 5
Notes to Financial Statements 6
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS 8
PART II - OTHER INFORMATION 12
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2
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PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
ANCOR COMMUNICATIONS, INCORPORATED
BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
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ASSETS (Unaudited)
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 2,146,021 $ 2,001,404
Short-term investments 7,882,673 0
Accounts receivable, less allowances of
$563,000 and $804,000, respectively 1,133,250 1,499,634
Inventories (Note 2) 3,188,521 2,493,722
Prepaid expenses and other current assets 146,796 154,983
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Total current assets 14,497,261 6,149,743
Equipment, net of accumulated depreciation 3,355,855 3,273,528
Patents, prepaid royalties, and other assets,
net of accumulated amortization 255,489 269,190
Capitalized software development costs
net of accumulated amortization 395,722 471,043
------------ ------------
TOTAL ASSETS $ 18,504,327 $ 10,163,504
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current maturities of long-term debt $ 143,071 $ 65,145
Accounts payable 1,549,578 963,321
Accrued liabilities 781,077 688,990
------------ ------------
Total current liabilities 2,473,725 1,717,456
Long-term debt, less current maturities 173,606 129,702
Shareholders' Equity (Note 3)
Preferred stock, par value $.01 per share,
authorized 5,000,000 shares; issued and outstanding
Series A, 0 shares in 1998 and 42 shares in 1997 $ 0 $ 1
Series B, 440 shares in 1998 and 440 shares in 1997 $ 4 $ 4
Series C, 1,100 shares in 1998 and none issued in 1997 $ 11
Common stock, par value $.01 per share,
authorized 20,000,000 shares; issued and outstanding
11,919,163 Shares in 1998 and 11,778,006 shares in 1997 119,192 117,780
Additional paid-in capital 45,595,012 35,290,763
Accumulated deficit (29,857,223) (27,092,202)
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Total shareholders' equity 15,856,995 8,316,346
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 18,504,327 $ 10,163,504
============ ============
</TABLE>
See Notes to Financial Statements
3
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ANCOR COMMUNICATIONS, INCORPORATED
STATEMENT OF OPERATIONS
(Unaudited)
Three Months Ended
March 31,
----------------------------
1998 1997
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Net sales $ 1,042,227 $ 1,802,778
Cost of goods sold 699,608 1,093,068
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Gross profit 342,618 709,710
Operating expenses
Selling, general and administrative 1,711,117 1,501,996
Research and development 1,449,206 1,023,373
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Total operating expenses 3,160,323 2,525,370
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Operating loss (2,817,704) (1,815,660)
Nonoperating income (expense)
Interest expense (13,055) (2,599)
Other, primarily interest income 65,739 21,025
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Net loss ($ 2,765,021) ($ 1,797,234)
============ ============
Basic and diluted net loss per common share ($ 0.25) ($ 0.18)
============ ============
Weighted average common shares
outstanding 11,884,248 10,430,948
============ ============
See Notes to Financial Statements
4
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ANCOR COMMUNICATIONS, INCORPORATED
STATEMENT OF CASH FLOWS
(Unaudited)
Three Months Ended
March 31,
----------------------------
1998 1997
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CASH FLOW FROM OPERATING ACTIVITIES:
Net loss ($ 2,765,021) ($ 1,797,234)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 307,087 219,620
Changes in current assets and liabilities:
Accounts receivable 366,385 779,107
Inventories (694,799) 88,981
Prepaid expenses and other 8,186 86,216
Accounts payable 586,257 (134,656)
Accrued liabilities 92,087 (25,648)
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Net cash used in operating activities (2,099,818) (783,614)
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CASH FLOW FROM INVESTING ACTIVITIES:
Purchases of equipment (121,611) (558,670)
Purchase of short-term investments (7,882,673) 1,003,530
Decrease in other, net (4,936) 48,173
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Net cash provided by (used in)
investing activities (8,009,220) 493,033
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CASH FLOW FROM FINANCING ACTIVITIES:
Principal payments on long-term debt (52,015) (25,385)
Net proceeds from sale of preferred stock 10,254,375 7,995,808
Net proceeds from sale of common stock
and exercise of options 51,295 152,807
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Net cash provided by financing activities 10,253,655 8,123,230
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Net increase (decrease) in cash 144,617 7,832,649
Cash, at beginning of period 2,001,404 507,041
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Cash, at end of period $ 2,146,021 $ 8,339,690
=========== ===========
Supplemental Schedule of Noncash Investing
and Financing Activities:
Equipment acquired under capital lease $ 173,845 $ 0
=========== ============
See Notes to Financial Statements
5
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ANCOR COMMUNICATIONS, INCORPORATED
NOTES TO FINANCIAL STATEMENTS
March 31, 1998
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information.
In the opinion of management, the interim financial statements include all
adjustments necessary for a fair presentation of the results of operations for
the interim periods presented. Operating results for the three months ended
March 31, 1998 are not necessarily indicative of the operating results to be
expected for the year ending December 31, 1998.
Certain information and footnote disclosures normally included in financial
statements in accordance with generally accepted accounting principles have been
condensed or omitted.
NOTE 2 - INVENTORIES
Inventories at March 31, 1998 and December 31, 1997 consisted of:
1998 1997
- --------------------------------------------------------------------------------
Raw materials $ 2,801,031 $ 2,398,066
Finished goods consigned to customers and others 797,204 527,078
Finished goods 715,208 663,500
Reserve for obsolescence (1,124,922) (1,094,922)
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$ 3,188,521 $ 2,493,722
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NOTE 3 - EQUITY FINANCING
On February 19, 1998, the Company sold 1,100 shares of Series C Preferred Stock
through a private placement at its stated value of $10,000 per share. Total net
proceeds from this private placement were $10,254,375, after reduction for
commissions and issuance costs of $745,625. In conjunction with the transaction,
the placement agent was granted a five year warrant to purchase 90,644 shares of
common stock at $7.281 per share.
The Series C Preferred Stock is convertible into Common Stock of the Company,
subject to certain restrictions, at a variable conversion rate equal to the
lower of (i) the Maximum Conversion Price (as defined below) or (ii) the average
of the three lowest closing bid prices of the Common Stock during the applicable
Pricing Period (as defined below). The Maximum Conversion Price for the first
year is $11.00. After the first year, the conversion price is equal to the
lesser of $11 and the average closing bid price of the five Wednesdays
immediately preceding the first anniversary of the date the Series C Preferred
Stock was issued. The applicable Pricing Period is a number of consecutive
trading days immediately preceding the date of conversion of the Series C
Preferred Stock initially equal to twelve and increased by one additional
consecutive trading day for each full calendar month which has elapsed since
February 19, 1998.
6
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NOTE 4 - NET LOSS PER SHARE
The FASB has issued Statement No. 128, "Earnings Per Share," which supersedes
APB Opinion No. 15. Statement No. 128 requires the presentation of earnings per
share by all entities that have common stock or potential common stock, such as
options, warrants and convertible securities, outstanding that trade in a public
market. Those entities that have only common stock outstanding are required to
present basic earnings per-share amounts. All other entities are required to
present basic and diluted per-share amounts. Diluted per-share amounts assume
the conversion, exercise or issuance of all potential common stock instruments
unless the effect is to reduce a loss or increase the income per common share
from continuing operations.
The Company computed net loss per common share based upon the weighted average
number of common shares outstanding during the year. Common equivalent shares,
consisting of options, warrants and convertible perferred stock for all periods,
were not included in the computation as their effect was antidilutive. However,
the eight and five percent premium earned by the preferred shareholders was
added to the net loss for computation purposes. Therefore, basic and diluted
loss per-share amounts are the same in each period presented.
NOTE 5 - CONTINGENCY
The Company, along with Stephen O'Hara, Lee B. Lewis and Dale Showers, has been
named as a defendant in a securities action captioned Richard Radman and Sol
Rosenthal v. Ancor Communications, Inc., et al. filed in the United States
District Court for the District of Minnesota on July 24, 1997. The lawsuit
alleges that the Company violated sections 10(b) and 20(a) of the Securities
Exchange Act of 1934 when it allegedly made misleading public disclosures
relating to the Company's contract with Sequent Computer Systems, Inc. and the
Company's financial results, and seeks compensatory losses in an undetermined
amount. The lawsuit is also seeking class-action status. The lawsuit was amended
on December 1, 1997, by the plaintiffs after the Company moved to dismiss the
initial complaint. The amended complaint alleges the same claims as the initial
complaint. On March 16, 1998 the Company filed its motion to dismiss the amended
complaint, which was heard on April 24, 1998. This action is in its preliminary
stages and discovery is currently stayed. The Company believes that the lawsuit
is without merit and intends to defend it vigorously. However, there is no
assurance that any judgment, order or decree against the Company arising out of
this action will not have a material adverse effect on the Company or its
business. The Company is unable to determine at this time if there will be a
material adverse outcome. Accordingly no accrual for any possible loss has been
provided in the accompanying financial statements.
7
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ITEM 2
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MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
- ---------------------
For the three months ended March 31, 1998 and 1997.
The following table sets forth, for the periods indicated, certain statements of
operations data as a percentage of net sales.
For the Three Months
Ended March 31
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1998 1997
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Net sales 100.0% 100.0%
Cost of goods sold 67.1 60.6
Gross profit 32.9 39.4
Operating expenses:
Selling, general & admin. 164.2 83.3
Research & development 139.0 56.8
Total operating expenses 303.2 140.1
Operating loss (270.3) (100.7)
Other income (expense)
Interest expense (1.3) (0.1)
Other, net 6.3 1.2
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Net loss (265.3)% (99.6)%
======= ======
Net Sales. Net sales for the first quarter 1998 decreased by
approximately $761,000 (42%) from 1997 to $1,042,227. This decrease in net
sales is due primarily to a significant decrease in net sales to the Company's
Japanese distributor, Hucom, Inc., whose implementation of product was delayed.
International net sales in the first quarter decreased from approximately
$1,501,000 in 1997 to approximately $657,000 in 1998, representing 63% of net
sales to all customers for the first quarter of 1998. Domestic sales volume in
the three month period ending March 31, 1998, increased by 28% from the similar
period in 1997, as the Company recorded a large sale in the domestic high-speed
data backup market.
8
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Net sales for the first quarter of 1997 include the effect of an allowance
against sales of $368,000 for product returns and customer stock rotation. There
was no allowance recorded in the first quarter of 1998. The Company does not
generally provide customers with a right of return at the date of sale; however,
in response to significant pressure from the marketplace, the Company has
allowed product returns in the past from certain customers as a marketing
concession to stimulate a positive impression of the Company and its products in
the marketplace. In addition, resellers have incorrectly anticipated the
configuration needed by end user equipment purchasers and have requested that
purchased but unused product be exchanged for the product needed to meet the end
user requirements. Further, certain end users have requested that they purchase
their initial products from the Company, instead of the reseller, which resulted
in credits issued to the resellers. Additionally, in the fourth quarter of 1997,
the Company recorded additional reserves for sales returns and allowances which
may occur as a result of the Company's shift in marketing focus to OEMs and
resellers who are more experienced in and are focused on specific vertical
markets that the Company believes are most appropriate for its products. As a
result of all of these factors, the Company's net assets include a reserve to
provide for potential future return of product sold in the current and previous
periods. The reserve at March 31, 1998, was approximately $454,000 ($650,000
gross sales less the estimated value of product to be returned).
Gross Profit. Gross profit in the first quarter of 1998 decreased to
$342,618, or 32.9% of sales, from $709,710, or 39.4% of sales, in the first
quarter of 1997. Gross profit dollars for the first quarter decreased from the
prior period primarily due to the decreased sales volume. Gross profit
percentage is impacted by the mix of product sold within a period. In general,
adapter cards have lower margins than switches and different switch types have
different margins. Gross profit percentage is also affected by indirect costs,
such as normal scrap and overhead allocations, the impact of which is decreased
as sales increase. Whereas the gross margin percentage for the first quarter of
1998 was positively impacted because the mix of product sold during this period
carried greater margins than that sold in the comparable period in 1997, due to
the significantly lower sales volume, the indirect costs brought the overall
gross profit percentage down.
Operating Expense. The Company's operating expenses for the first quarter
of 1998 were $3,160,323, or 303.2% of net sales, compared to $2,525,370, or
140.1% of net sales, in the first quarter of 1997. The Company believes that
the level of expense incurred is appropriate to address the opportunities
available to it in the Original Equipment Manufacturer ("OEM") storage and high-
performance networking marketplaces. The increase in operating expenses is
primarily due to increases in the cost for personnel and product development
expenses. Growth in personnel, particularly in sales and marketing senior
management positions, resulted in personnel and related expenses increasing
approximately $419,000 in the first quarter of 1998 as compared with the first
quarter of 1997. Also included in this increase is a charge of approximately
$100,000 to reflect compensation owed a former executive of the Company whose
services are being discontinued. The amount of the charge was based on the
compensation payable to such officer under the terms of the officer's employment
contract. Additionally, the Company's ongoing commitment to product development
and enhancements resulted in development expenses increasing $204,000 in the
first quarter 1998 as compared with the first quarter 1997.
9
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Other Income (Expense) Interest expense increased to $13,055 in the first
three months of 1998 from $2,599 in the first three months of 1997 as a result
of the Company's payments on an increased level of capitalized lease
obligations. Interest income of $65,739 and approximately $21,025 in the first
quarters of 1998 and 1997, respectively, was earned from the investment of the
net proceeds of preferred stock offerings occurring in February and March of
each year, respectively.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Company's cash, cash equivalents and short-term investments were $10,028,694
as of March 31, 1998, compared to $2,001,404 as of December 31, 1997. Cash
flows used in operating activities totaled $2,099,818, due to the operating loss
and inventory purchases in anticipation of future sales, as offset by net
collections of accounts receivable and increase in accounts payable. Cash flows
used in investing activities totaled $8,009,220 primarily as a result of the
purchase of short-term investments of the Company's private placement proceeds.
On February 19, 1998, the Company completed a private placement of $11,000,000
(1,100 shares) of Series C Preferred Stock which resulted in net proceeds of
approximately $10,254,375. The Securities were privately sold to accredited
investors by Dunwoody Brokerage Services, Inc. ("Dunwoody"). As consideration
for its services, Dunwoody received a fee equal to 6% of the gross proceeds,
plus a five-year warrant to purchase 90,644 shares of Common Stock at a price
per share equal to $7.281. The securities were sold pursuant to Rule 506 under
Regulation D.
The Series C Preferred Stock is convertible into Common Stock of the Company,
subject to certain restrictions, at a variable conversion rate equal to the
lower of (i) the Maximum Conversion Price (as defined below) or (ii) the average
of the three lowest closing bid prices of the Common Stock during the applicable
pricing Period (as defined below). The Maximum Conversion Price for the first
year is $11.00. After the first year, the conversion price is equal to the
lesser of $11 and the average closing bid price of the five Wednesdays
immediately preceding the first anniversary of the date the Series C Preferred
Stock was issued. The applicable Pricing Period is a number of consecutive
trading days immediately preceding the date of conversion of the Series C
Preferred Stock initially equal to twelve and increased by one additional
consecutive trading day for each full calendar month which has elapsed since
February 19, 1998.
The Company believes that the capital received from the private placement will
provide adequate liquidity to fund growth, operations and capital expenditures
for 1998.
Shareholder Litigation. The Company, along with Stephen O'Hara, Lee B.
Lewis and Dale Showers, has been named as a defendant in a securities action
captioned Richard Radman and Sol Rosenthal v. Ancor Communications, Inc., et al.
filed in the United States District Court for the District of Minnesota on July
24, 1997. The lawsuit alleges that the Company violated sections 10(b) and
20(a) of the Securities Exchange Act of 1934 when it allegedly made misleading
public disclosures relating to the Company's contract with Sequent Computer
10
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Systems, Inc. and the Company's financial results, and seeks compensatory losses
in an undetermined amount. The lawsuit is also seeking class-action status. The
lawsuit was amended on December 1, 1997, by the plaintiffs after the Company
moved to dismiss the initial complaint. The amended complaint alleges the same
claims as the initial complaint. On March 16, 1998 the Company filed its motion
to dismiss the amended complaint, which was heard on April 24, 1998. This action
is in its preliminary stages and discovery is currently stayed. The Company
believes that the lawsuit is without merit and intends to defend it vigorously.
However, there is no assurance that any judgment, order or decree against the
Company arising out of this action will not have a material adverse effect on
the Company or its business. The Company is unable to determine at this time if
there will be a material adverse outcome. No provision has been made for any
loss that may occur as a result of an adverse outcome of the suit.
Year 2000 Issue. Per SEC Staff Legal Bulletin No. 5 issued October 8,
1997, revised January 12, 1998, the Company has investigated the impact of the
Year 2000 ("Y2K") issue on its information systems. During fiscal 1996 the
Company purchased from a world-wide supplier and developer of information
systems an enterprise-wide information system. The developer of this
information system has provided its clients written assurance that the system
will correctly function across the year 2000, as verified by previous system
tests and year 2000 certification by the International Technology Association of
America. Additionally, the Company's products, including software, are not date
sensitive as to functionality. Therefore, Y2K is not expected to have a
material effect on the Company's financial position, operations or cash flow.
SAFE HARBOR CAUTIONARY STATEMENT
- --------------------------------
Statements made in this Management's Discussion and Analysis that are not
historical in nature, including statements regarding the level of future
revenues and expenses, are "forward-looking statements" as defined in the
Private Securities Litigation Reform Act of 1995 and are subject to risks and
uncertainties. Factors that may affect the Company's future performance and
results are set forth in the Company's filings with the Securities and Exchange
Commission and include the level of market acceptance of Fibre Channel
technology and the Company's products, the Company's ability to retain current
customers and attract new customers, the Company's ability to compete with
others providing Fibre Channel technology, competition from existing and new
technologies, the Company's ability to manage growth, the Company's ability to
attract and retain qualified personnel and the ability of the Company's products
to interoperate with products manufactured by others.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
The Company, along with Stephen O'Hara, Lee B. Lewis and Dale Showers,
has been named as a defendant in a securities action captioned Richard Radman
and Sol Rosenthal v. Ancor Communications, Inc., et al. filed in the United
States District Court for the District of Minnesota on July 24, 1997. The
lawsuit alleges that the Company violated sections 10(b) and
11
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20(a) of the Securities Exchange Act of 1934 when it allegedly made misleading
public disclosures relating to the Company's contract with Sequent Computer
Systems, Inc. and the Company's financial results, and seeks compensatory losses
in an undetermined amount. The lawsuit is also seeking class-action status. The
lawsuit was amended on December 1, 1997, by the plaintiffs after the Company
moved to dismiss the initial complaint. The amended complaint alleges the same
claims as the initial complaint. On March 16, 1998 the Company filed its motion
to dismiss the amended complaint, which was heard on April 24, 1998. This action
is in its preliminary stages and discovery is currently stayed. The Company
believes that the lawsuit is without merit and intends to defend it vigorously.
However, there is no assurance that any judgment, order or decree against the
Company arising out of this action will not have a material adverse effect on
the Company or its business. The Company is unable to determine at this time if
there will be a material adverse outcome. No provision has been made for any
loss that may occur as a result of an adverse outcome of the suit.
Item 2. Changes in Securities.
(a.) None.
(b.) None.
(c.) On February 19, 1998, the Company completed a private placement of
$11,000,000 (1,100 shares) of Series C Preferred Stock. The
Securities were privately sold to accredited investors by Dunwoody
Brokerage Services, Inc. ("Dunwoody"). As consideration for its
services, Dunwoody received a fee equal to 6% of the gross proceeds,
plus a five-year warrant to purchase 90,644 shares of Common Stock at
a price per share equal to $7.281. The securities were sold pursuant
to Rule 506 under Regulation D.
The Series C Preferred Stock is convertible into Common Stock of the
Company, subject to certain restrictions, at a variable conversion
rate equal to the lower of (i) the Maximum Conversion Price (as
defined below) or (ii) the average of the three lowest closing bid
prices of the Common Stock during the applicable pricing Period (as
defined below). The Maximum Conversion Price for the first year is
$11.00. After the first year, the conversion price is equal to the
lesser of $11 and the average closing bid price of the five Wednesdays
immediately preceding the first anniversary of the date the Series C
Preferred Stock was issued.
The applicable Pricing Period is a number of consecutive trading days
immediately preceding the date of conversion of the Series C Preferred
Stock initially equal to twelve and increased by one additional
consecutive trading day for each full calendar month which has elapsed
since February 19, 1998.
(d.) None.
Item 3 Defaults Upon Senior Securities.
None.
12
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Item 4. Submission of Matters to a Vote of Securities Holders.
None.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a.) Exhibits
4.1(a) Loan and Warrant Purchase Agreement, dated as of June 24,
1992, between Ancor Communications, Incorporated and
International Business Machines Incorporated.
4.2(a) Agreement and Amendment to Loan and Warrant Purchase
Agreement, dated March 10, 1994, by and among Ancor
Communications, Incorporated, International Business
Machines Corporation and IBM Credit Corporation.
4.3(b) Second Amendment to Loan and Warrant Purchase Agreement
dated April 25, 1994, by and among Ancor Communications,
Incorporated, International Business Machines Corporation
and IBM Credit Corporation.
4.4(a) Shareholders Agreement, dated as of June 24, 1992, among
Ancor Communications, Incorporated, International Business
Machines Incorporated and the shareholders of the Company
named on the signature page thereto.
4.5(c) Representative's Warrant.
4.6(a) Form of Warrant issued November 8, 1993.
4.7(e) Form of Warrant issued April 28, 1995.
4.8(f) Form of Warrant issued to Andcor Human Resources on August
28, 1995.
4.9(f) Form of Warrant issued to John G. Kinnard & Company on
October 23, 1995.
4.10(g) Certificate of Designation of Series A Preferred Stock.
13
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4.11(g) Form of Warrant issued to Swartz Investments, Inc. on March
7, 1996.
4.12(i) Form of Warrant issued to Dunwoody Brokerage Services, Inc.
on March 24, 1997.
4.13(i) Form of Warrant to be issued to Purchasers of the Company's
Series B Preferred Stock.
4.14(i) Certificate of Designation of Series B Preferred Stock.
4.15(k) Certificate of Designation of Series C Preferred Stock.
4.16(l) Form of Warrant issued to Dunwoody Brokerage Services, Inc.
on February 19, 1998.
10.1 [Reserved.]
*10.2(a) Ancor Communications, Incorporated 1990 Stock Option Plan.
*10.3(a) Ancor Communications, Incorporated 1994 Long-Term Incentive
and Stock Option Plan.
*10.4(a) Employment Agreement, dated January 1, 1994, between Ancor
Communications, Incorporated and Dale C. Showers.
*10.5(a) Employment Agreement, dated January 1, 1994, between Ancor
Communications, Incorporated and Stephen C. O'Hara.
10.6 [Reserved.]
10.7 [Reserved.]
10.8(a) Sublease, dated March 29, 1988, by and between Anderson
Cornelius and Unisys Corporation, formerly known as
Burroughs Corporation.
10.9(a) Sublease, Amendment Agreement, dated March 8, 1989, by and
between Anderson Cornelius and Unisys Corporation, formerly
known as Burroughs Corporation.
14
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10.10(a) Sublease, Amendment Agreement, dated August 31, 1992, by and
between the Company and Unisys Corporation, formerly known
as Burroughs Corporation.
10.11(a) Development and License Agreement between the Company and
International Business Machines Corporation dated June 4,
1992, as amended on February 8, 1993, May 10, 1993 and
October 5, 1993 (a request for confidentiality of certain
portions of this agreement has been granted).
10.12 [Reserved.]
*10.13(d) Amendment No. 1 to Employment Agreement dated November 4,
1994 between the Company and Dale C. Showers amending the
Employment Agreement dated January 1, 1994 between the
Company and Mr. Showers filed as exhibit No 10.4
10.14 [Reserved.]
10.15 [Reserved.]
10.16 [Reserved.]
*10.17(f) Ancor Communications, Inc. 1995 Employee Stock Purchase
Plan.
*10.18(f) Ancor Communications, Inc. Non-Employee Director Stock
Option Plan.
10.19(g) Form of Subscription Agreement between the Company and
Purchasers of the Company's Series A Preferred Stock (March
1996).
10.20(g) Registration Rights Agreement dated March 7, 1996 between
the Company, Swartz Investments, Inc. and Purchasers of the
Company's Series A Preferred Stock.
10.21(g) Letter Agreement between the Company and Swartz Investments,
Inc. dated February 1996.
*10.22(h) Separation and General Release Agreement between the Company
and William F. Walker.
10.23(i) Form of Subscription Agreement between the Company and
Purchasers of the Company's Series B Preferred Stock (March
1997).
15
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10.24(i) Registration Rights Agreement dated March 24, 1997 between
the Company, Swartz Investments, Inc. and Purchasers of the
Company's Series B Preferred Stock.
*10.25(j) Letter Employment Agreement with Kenneth E. Hendrickson
dated July 25, 1997.
*10.26(j) Letter Employment Agreement with Steven E. Snyder dated
September 23, 1997.
10.27(k) Form of Subscription Agreement, dated as of February 19,
1998, between Ancor Communications, Incorporated and each
purchaser of Series C Preferred Stock.
10.28(k) Registration Rights Agreement, dated as of February 19,
1998, by and between Ancor Communications, Incorporated, the
placement agent and each purchaser of Series C Preferred
Stock.
*10.29(l) Termination of Employment Agreement dated August 29, 1997,
between the Company and Dale C. Showers.
10.30(l) Sublease, Amendment Agreement, dated February 11, 1998, by
and between the Company and Unisys Corporation, formerly
known as Burroughs Corporation.
*10.31(l) Separation and General Release Agreement between the Company
and Lee B. Lewis.
*10.32(l) Amendments to Ancor Communications, Inc. Non-Employee
Director Stock Option Plan filed as exhibit 10.18.
27.1(m) Financial Data Schedule.
- ----------
* Indicates management contract or compensatory plan or agreement.
a Incorporated by reference to the Company's Registration Statement on
form SB- 2 filed March 11, 1994.
b Incorporated by reference to Amendment No. 2 to the Company's
Registration Statement on form SB-2 Filed April 28, 1994.
16
<PAGE>
c Incorporation by reference to the Company's Form 10-QSB filed for the
quarterly period ended March 31, 1994.
d Incorporated by reference to the Company's Form 10-QSB filed for the
quarterly period ended September 30, 1994.
e Incorporated by reference to the Company's form 10-QSB filed for the
quarterly period ended March 31, 1995.
f Incorporated by reference to the Company's form 10-QSB filed for the
quarterly period ended September 30, 1995.
g Incorporated by reference to the Company's Form 10-KSB filed for the
fiscal year ended December 31, 1995.
h Incorporated by reference to the Company's form 10-QSB filed for the
quarterly period ended March 31, 1996.
i Incorporated by reference to the Company's form 10-Q filed for the
quarterly period ended March 31, 1997.
j Incorporated by reference to the Company's form 10-Q filed for the
quarterly period ended September 30, 1997.
k Incorporated by reference to the Company's form 8-K filed February 19,
1998.
l Incorporated by reference to the Company's Form 10-K filed for the
fiscal year ended December 31, 1997.
m Included herewith.
(b.) Reports on Form 8-K
A Form 8-K dated February 19, 1998 was filed with respect to the
completed sale in a private placement of $11,000,000 of Series C Convertible
Preferred Stock. No financial statements were filed with the Form 8-K.
17
<PAGE>
SIGNATURES
----------
In accordance with the requirements of the Exchange Act, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ANCOR COMMUNICATIONS, INCORPORATED
----------------------------------
Dated: May 14, 1998 By /S/ Kenneth E. Hendrickson
------------------------------
Kenneth E. Hendrickson
Chairman of the Board &
Chief Executive Officer
Dated: May 14, 1998 By /S/ Steven E. Snyder
------------------------------
Steven E. Snyder
Vice President,
Chief Financial Officer & Secretary
18
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<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
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0
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