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As filed with the Securities and Exchange Commission on April 5, 1999
Registration No. 333-_____
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
Under
The Securities Act of 1933
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ANCOR COMMUNICATIONS, INCORPORATED
(Exact name of registrant as specified in its charter)
Minnesota 41-1569659
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6130 Blue Circle Drive
Minnetonka, Minnesota 55343
(612) 932-4000
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
Kenneth E. Hendrickson Copy to: Amy E. Ayotte
Ancor Communications, Incorporated Dorsey & Whitney LLP
6130 Blue Circle Drive 220 South Sixth Street
Minnetonka, Minnesota 55343 Minneapolis, MN 55402
(612) 932-4000 (612) 340-6323
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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Approximate date of commencement of proposed sale to the public:
From time to time after the effective date of this Registration Statement.
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
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Proposed Proposed
Title of Each Amount Maximum Maximum Amount of
Class of Securities to be Offering Price Aggregate Registration
to be Registered Registered(1) Per Share* Offering Price* Fee
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Common Stock
($.01 par value) 750,000 $5.75 $4,312,500.00 $1,199.00
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* Estimated solely for purposes of computing the registration fee and based
upon the average of the high and low sales prices for such common stock on
March 31, 1999, as reported on the Nasdaq SmallCap Market.
(1) This amount represents shares to be offered by the selling shareholder from
time to time after the effective date of this Registration Statement at
prevailing market prices at time of sale.
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The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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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.
SUBJECT TO COMPLETION, DATED APRIL 5, 1999
PROSPECTUS
ANCOR COMMUNICATIONS, INCORPORATED
6130 Blue Circle Drive
Minnetonka, Minnesota 55343
(612) 932-4000
750,000 Shares of
Common Stock
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This Prospectus covers the sale of up to 750,000 shares of common stock of Ancor
Communications, Incorporated offered for the account of INRANGE Technologies
Corporation, the selling shareholder. We will not receive any of the proceeds
from the sale of the shares.
Our common stock is traded on the Nasdaq SmallCap Market and the Pacific Stock
Exchange under the symbol "ANCR." On March 31, 1999, the last sale price of our
common stock as reported on the Nasdaq SmallCap Market was $6.25 per share.
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The information is this Prospectus is not complete and may be changed. These
securities may not be sold until the registration statement filed with the
Securities and Exchange Commission is effective. This Prospectus is not an offer
to sell these securities and we are not soliciting offers to buy these
securities in any state where the offer or sale is not permitted
See the section titled "Risk Factors" beginning on page 3 to read about certain
factors you should consider before buying shares of common stock.
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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 ___________, 1999
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ABOUT THIS PROSPECTUS
This Prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission (the "SEC"). The Prospectus relates to
750,000 shares (the "Shares") of our common stock which INRANGE Technologies
Corporation may sell from time to time. We will not receive any of the proceeds
from these sales. We have agreed to pay the expenses incurred in registering the
Shares, including legal and accounting fees.
The Shares have not been registered under the securities laws of any state
or other jurisdiction as of the date of this Prospectus. Brokers or dealers
should confirm the existence of an exemption from registration or effectuate
such registration in connection with any offer and sale of the Shares.
This Prospectus describes a certain risk factors that you should consider
before purchasing the Shares. See "Risk Factors" beginning on page 3. You should
read this Prospectus together with the additional information described under
the heading "Where You Can Find More Information."
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TABLE OF CONTENTS
About This Prospectus .....................................................2
Risk Factors ..............................................................3
Where You Can Find More Information .......................................9
About Ancor Communications, Incorporated .................................10
Selling Shareholder ......................................................11
Plan of Distribution .....................................................12
Experts ..................................................................12
Legal Matters ............................................................12
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RISK FACTORS
An investment in the Shares involves a high degree of risk. You should
consider carefully the following risk factors, togther with the other
information in this Prospectus, before buying any Shares. You should also be
aware that certain statements contained in this Prospectus that are not related
to historical results are forward-looking statements. These forward-looking
statements, such as statements of our strategies, plans, objectives,
expectations and intentions, involve risks and uncertainties. Our actual results
could differ materially from those anticipated in these forward-looking
statements.
Uncertain market acceptance of Fibre Channel technology
Our current products are all designed to comply with the Fibre Channel
standard for data communications. Therefore, our success depends on the market
acceptance of the Fibre Channel standard. Our products have historically sought
to compete in the high performance local area network ("LAN") market. Our
current effort is to deploy our products as switching devices in high
performance storage area network ("SAN") markets.
We have decided to focus the majority of our marketing and sales efforts on
the SAN market. In the SAN market, adoption of Fibre Channel technology requires
computer systems manufacturers to convert from the Small Computer System
Interface interconnect protocol currently being used by many manufacturers.
While many computer systems manufacturers have announced their intentions to
convert to Fibre Channel as the standard for their products, we cannot assure
you that they will. Nor can we assure you that manufacturers who have not
announced their intentions will adopt the Fibre Channel standard. Even if Fibre
Channel becomes a widely adopted standard, we cannot assure you that
manufacturers will incorporate our products into the products they make.
In the LAN market, Fibre Channel competes with a number of other network
technologies which are more established than Fibre Channel. We do not plan to
emphasize the LAN market for future sales
Competition in the Fibre Channel market
Our Fibre Channel products must compete with Fibre Channel products of
other companies. For example, Brocade Communications Systems, Inc., Vixel, and
McData have developed Fibre Channel switches. Other companies may also be
developing switches. In addition, a number of companies, including Emulex Corp.,
Q Logic Corp., Jaycor Corp., Gadzoox Corp., G2 Corp. and Interphase Corp., are
developing, or have developed, Fibre Channel products other than switches, such
as adapters or hubs. We anticipate that these and other companies will introduce
commercial Fibre Channel products in the near future. In the event that Fibre
Channel technology gains wider market acceptance, it is likely that an
increasing number of competitors will begin developing and marketing Fibre
Channel products. Some of the companies that produce or may produce competitive
Fibre Channel products have substantially greater financial, technological and
marketing resources than Ancor. We may not be able to compete effectively
against current or future competitors. Our competitors may succeed in adapting
more rapidly and effectively to changes in technology or the market. Our
competitors may develop or market products that will be more widely accepted
than ours. If we fail to compete effectively, it would prevent us from
generating sufficient sales to allow us to attain profitable operations.
Dependence on Fibre Channel switches and ASICs
We currently market only Fibre Channel switches and application specific
integrated circuits ("ASICs"), and do not market other Fibre Channel products
such as interface adapters. In the past, we have designed, manufactured and
marketed interface adapters, but we no longer do so. There may be some future
sales of previously developed interface adapters, but we expect that the sales
will be small. As a result, we must derive all of our sales from Fibre Channel
switches or ASICs. Although ASICs can either be sold as components for other
companies' products or
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the underlying technology can be licensed to other companies, we have not sold
any ASICs as components and have only licensed the underlying technology to one
company.
Risk of technological obsolescence
The data network communications and storage markets experience rapid
technological change, including changes in customer requirements, frequent new
product introductions and enhancements, and evolving industry standards. Our
success depends in part on our ability to keep pace with technological
developments and emerging industry standards. We must also respond to customer
requirements by enhancing our current products and developing and introducing
new products. If we fail to anticipate or respond rapidly to advances in
technology by adapting our products appropriately, our products could become
obsolete. If our products become obsolete, it would have a material adverse
effect on our business, financial condition and results of operations.
Product development risks
Our success depends in part on our ability to develop and introduce product
enhancements and new products. The success of any product enhancement or new
product depends on many factors, including the amount of resources devoted to
its development, product competition and marketing campaigns. We may not succeed
in developing, introducing and marketing any product enhancements or new
products. We cannot assure you that if we introduce new products they will gain
market acceptance. Our failure to develop or introduce enhancements or new
products, or significant delays in doing so, could have a material adverse
effect on our business, financial condition and results of operations.
Products as complex as ours frequently contain undetected hardware or
software errors ("bugs") when first introduced or as new versions are released.
Despite our testing and quality control efforts, we anticipate that errors may
be found from time to time in our new or enhanced products after commercial
introduction. In addition, errors may occur when our products are integrated
with products of other companies which are designed to interoperate with our
products. If we are unable to easily fix any errors it could result in the
following and other consequences:
o delay or loss of market acceptance of our products;
o possible warranty expense;
o diversion of engineering and other resources from product development
efforts;
o the loss of credibility in the market.
Any of these consequences could have a material adverse effect on our
business, financial condition and results of operations.
Uncertainty of future profitability
We have incurred net losses in each of the past three years and, at
December 31, 1998, we had an accumulated shareholders' deficit of approximately
$41.6 million. We have incurred operating losses of $14.5 million for the twelve
months ended December 31, 1998. Net losses for the years ended December 31, 1996
and 1997 were approximately $5.3 million and $9.8 million, respectively. Future
operating results will depend on many factors, including the growth of the Fibre
Channel market, demand for our products, the level of product and price
competition, our ability to develop and market new products, general economic
conditions and other factors. We cannot assure you that we will achieve or
sustain profitability in the future.
As a result of our switch in focus from the LAN market to the SAN market
and general economic conditions in Japan (where one of our largest customers is
located), we must develop relationships with new customers to generate
significant revenues in the future.
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Risk of product returns
We have allowed customers to return our products to us because we feel it
is necessary to make concessions to customers during the initial introduction of
a new technology product. During 1998 we fully used our allowances for product
returns. We can not assure you that significant returns will not occur in the
future. Any future returns could have a material adverse effect on our business,
financial condition and results of operation.
Dependence on certain customers
A significant portion of our revenues have been generated by three
customers. Hucom, Inc. generated 4% of our revenue in 1998, 88% in 1997, and 41%
in 1996. Netmarks, Inc. generated 22% of our revenue in 1998. Additionally,
Boeing Company generated 50% of our revenue in 1998, 9% in 1997, and 1% in 1996.
A significant portion of products sold to Hucom, Inc. and Netmarks, Inc., our
Japanese distributors, in 1998, 1997 and 1996 were to one end user. In future
periods, our Japanese distributors' sales of our products to this specific end
user are expected to decline from current levels. Additionally, general economic
conditions in Japan make future sales to our Japanese distributors uncertain. If
any of our large customers reduced their purchases of our products, it would
have a material adverse effect on our business, financial condition and results
of operation. Our revenues in the future may also be generated by a small number
of significant customers.
Lack of OEM selling experience
To succeed in the SAN market, we will need to sell directly to original
equipment manufacturers ("OEMs"). We have sold our products in the past either
directly to end users or through resellers. Only recently have we sold our
products to OEMs and, therefore, we have limited experience selling our products
through this channel. We cannot assure you that we will be successful selling
our products to OEMs.
Risks associated with managing growth
The anticipated growth of our operations will place significant strain on
our management, sales and marketing, manufacturing, operating and financial
systems resources. If our business grows, we may encounter the following
difficulties and others:
o lower than projected production rates;
o lower quality control and assurance;
o decreased product reliability;
o increased manufacturing costs;
o difficulties in maintaining internal accounting controls;
o malfunctioning of existing and new equipment;
o insufficient or untimely component supplies;
o shortages of personnel.
We may not be able to successfully plan for, or manage increased production
and marketing of, our products. Our failure to do so could have a material
adverse effect on our business, financial condition and results of operations.
Dependence on subcontractors
We subcontract a majority of our production activities, including the
manufacture, assembly and testing of our proprietary Fibre Channel switch
designs. We depend on subcontractors to deliver high quality products in a
timely manner, but we cannot assure you that they will. Poor performance by one
of our subcontractors would have a material adverse effect on us until we could
find an alternate subcontractor. We cannot assure you that we would be able to
find an alternate subcontractor to deliver quality products at an acceptable
price. Therefore, if we
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experience problems with one of our subcontractors, it will likely have a
material adverse effect on our business, financial condition and results of
operations.
Dependence on suppliers and availability of components
Some of the components we use in our products are available only from a
single supplier, or from a limited number of suppliers. Other components may
from time to time be in short supply or temporarily be available from only a
single supplier. The following factors could each have a material adverse effect
on our ability to produce and market our products:
o scarce quantities of components;
o a reduction or interruption in component supply;
o a disruption of existing supplier relationships;
o an inability to develop alternative sources;
o a significant increase in the price of components.
Need to attract and retain key personnel
Our success depends on our ability to attract and retain highly trained
personnel for such areas as management, sales and engineering. In particular,
our success will depend in part on the continued service of Mr. Ken Hendrickson,
our Chief Executive Officer, Mr. Calvin G. Nelson, our President, and Mr. Steven
E. Snyder, our Chief Financial Officer. As we increase our production and sales
levels, we will need to attract and retain additional qualified skilled and
unskilled workers for our operations. In recent years there has been great
demand for qualified skilled and unskilled employees in the Minneapolis area,
where our main operations are located. We can give no assurance that we will be
successful in attracting and retaining the personnel needed for our business.
Any failure to do so would adversely affect our business, financial condition
and results of operations.
Dependence on intellectual property
Our success will depend in part on our ability to protect our proprietary
rights and to operate without infringing on the proprietary rights of others. We
currently hold one U.S. patent covering certain aspects of one of our Fibre
Channel switches. This patent will expire February 6, 2007. We have applied for
additional patents and may apply for additional patents in the future. We cannot
assure you that any of our future patent applications will result in issued
patents, or that the scope of any current or future patents will prevent
competitors from introducing competitive products. There is also a risk that any
current or future patents issued to us would not be enforceable if challenged.
In addition, other parties may hold or receive patents that contain claims
covering other technology included in our current or future products that could
hinder or prevent the sale of our products or require us to obtain licenses to
such technology. Such licenses might not be available on acceptable terms or at
all.
In addition to patents, the source code for the software contained in our
products is protected by copyright law. We also rely upon unpatented trade
secrets, the know-how and expertise of our employees and on non-disclosure and
confidentiality agreements with our employees, vendors and customers. Although
we believe that we have been careful to protect our unpatented proprietary
rights, we cannot assure you that our measures will be sufficient to protect our
rights against third parties. Likewise, we cannot assure you that others will
not independently develop or otherwise acquire unpatented technologies or
products similar or superior to ours.
We have registered four trademarks with the United States Patent and
Trademark Office and have filed for registration of four additional marks in
which we claim trademark rights, one of which has been allowed. United States
trademark rights are acquired by use rather than by registration, and we cannot
assure you that others do not have conflicting or superior rights to our
unregistered trademarks. We cannot assure you that any of the trademarks covered
by our applications for registration will be found registrable, that
registrations will issue, or that we can support the cost of defense of our
trademarks.
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The high technology area frequently features disputes over intellectual
property. We may be required to defend our intellectual property rights against
infringement, duplication and discovery by third parties or to defend ourselves
against third-party claims of infringement. Likewise, disputes may arise with
respect to ownership of technology developed by employees who were previously
employed by other companies. Any such litigation or disputes could result in
substantial costs. An adverse determination could subject us to significant
liabilities to third parties, require us to seek licenses from or pay royalties
to third parties or require us to develop appropriate alternative technology. We
can give no assurance that any such licenses would be available on acceptable
terms or at all, or that we could develop alternate technology at an acceptable
price or at all. Any of these events could have a material adverse effect on our
business, financial condition and results of operations.
Quarterly operating results are subject to fluctuation
Our quarterly revenue and operating results have varied in the past and can
be expected to vary in the future. In the future, our operating results may
vary significantly from quarter to quarter due to such factors as:
o changes in customer buying patterns;
o the timing of the announcement and introduction of new products
by Ancor or our competitors;
o the tactics of our competitors; technological developments
affecting the data communication network market;
o the overall strength of the economy; uncertainties associated
with the introduction of any new product or product enhancement;
o gauging ultimate customer demand;
o predicting general trends in the market for our products.
Fluctuations in our quarterly operating results or our failure to meet
analysts' projections or public expectations as to results may adversely affect
the market price of our stock. Our operating results for any particular quarter
are not necessarily indicative of results that we may achieve for any subsequent
quarter or full fiscal year.
Stock price volatility
Like other technology companies, our stock price may be volatile. We may
experience volatility in our stock price due to the following and other factors:
o quarterly variations in our operating results;
o the liquidity of the market for our stock;
o announcements of business developments by Ancor or our
competitors;
o public perception regarding Fibre Channel's market status;
o developments or disputes concerning proprietary rights;
o technological innovations or newly introduced products;
o general conditions in the data communications network industry
and the economy.
Future capital needs; uncertainty of additional funding
We anticipate that cash on hand and anticipated revenues from operations
will be sufficient to finance our operations at least through December 1999.
However, we may require additional capital sooner than December 1999. In order
to meet our needs beyond such time, we may be required to raise additional
capital. Additional capital may be unavailable, or available only on unfavorable
terms. Any additional equity financings may be dilutive to purchasers in this
offering. Any debt financing may involve restrictive covenants. Failure to
secure additional financing if and when needed could adversely affect our
operations. If we are unable to raise additional capital we would be required to
delay, scale back, or eliminate market expansion activities and research and
development on existing or new products, or cease operations entirely.
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Year 2000 risks
We have completed an assessment of Year 2000 compliance for our critical
operating and application systems. We have determined that through normal
recurring system upgrades, the vast majority of our systems are currently, or
will be by early 1999, Year 2000 compliant. In 1996 we purchased an
enterprise-wide information system from a world-wide supplier and developer of
information systems. 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, our products,
including software, are not date sensitive as to functionality. The costs of
becoming Year 2000 compliant has not had and is not expected to have a material
effect on our financial position, operations or cash flow because compliance has
largely been the result of normal system upgrades.
We cannot assure you that the Year 2000 issue will be properly addressed by
customers, vendors, service utilities, government and other external entities.
We are communicating with these parties to determine how they are addressing the
Year 2000 issue and to evaluate any likely impact on us. We have requested
commitment dates from these parties as to their Year 2000 readiness. This
process will continue in fiscal 1999. The efforts of third parties are not
within our control, however, and their failure to remedy Year 2000 issues
successfully could result in business disruption, loss of revenue and increased
operating cost. At the present time, it is not possible to determine whether any
such events are likely to occur, or to quantify any potential negative impact
they may have on our future results of operations and financial condition. We
have not established contingency plans, but expect to assess our need for
contingency plans during 1999.
The foregoing discussion regarding Year 2000 contains forward-looking
statements which are based on management's best estimates derived using various
assumptions. These forward-looking statements involve inherent risks and
uncertainties, and actual results could differ materially from those
contemplated by such statements. Factors that might cause material differences
include, but are not limited to, (i) our ability to obtain alternative
manufacturing sources should our current sources' operations be disrupted due to
Year 2000 complications, and (ii) our ability to respond to unforeseen Year 2000
complications. Such material differences could result in, among other things,
business disruption, operational problems, financial loss, legal liability and
similar risks.
Inventory obsolescence
We operate in a market characterized by rapid technological change. Our
existing inventory could become obsolete due to changes in customer
requirements, frequent new product introductions and enhancements, and evolving
industry standards. These events may materially and adversely affect our
business, financial conditions and results of operations.
Anti-takeover provisions
Provisions of our amended and restated articles of incorporation, Minnesota
law and our Shareholders' Rights Plan could make it more difficult for a third
party to acquire us, even if doing so would be beneficial to our shareholders.
No dividends
We have never declared or paid any cash dividends on our capital stock and
do not anticipate paying any cash dividends in the forseeable future.
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference room at 450 Fifth Street, N.W. Washington, D.C. 20549, or
at the SEC's public-reference rooms in New York, N.Y. and Chicago, Illinois.
Please call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms. Our SEC filings are also available to the public from the SEC's
web site at http://www.sec.gov. You may visit our web site at
http://www.ancor.com.
The SEC allows us to "incorporate by reference" the information that we
file with it, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this Prospectus, and later information that we file
with the SEC will automatically update and supercede this Prospectus. We
incorporate by reference the following documents listed below and any future
filings made with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), until INRANGE
Technologies Corporation sells all the Shares:
0 Annual Report on Form 10-K for the year ended December 31, 1998;
and
o the description of the common stock contained in our Registration
Statement on Form 8-A, dated March 11, 1994, and any amendment or
report filed to update such description filed subsequent to the
date of this Prospectus and prior to the termination of the
offering of the Shares.
You may request a copy of these filings at no cost, by writing or
telephoning us at the following address:
Ancor Communications, Incorporated
6130 Blue Circle Drive
Minnetonka, Minnesota 55343
Attn: Steven E. Snyder, CFO
(612) 932-4000
You should rely only on the information incorporated by reference or
provided in this Prospectus or any supplement. We have not authorized anyone
else to provide you with different information. INRANGE Technologies Corporation
should not make an offer of the Shares in any state where the offer is not
permitted. You should not assume that the information in this Prospectus or any
supplement is accurate as of any date other than the date on the front of those
documents.
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ABOUT ANCOR COMMUNICATIONS, INCORPORATED
Ancor Communications, Incorporated, incorporated in 1986, is recognized as
a leading developer of Fibre Channel products. Fibre Channel is a high
bandwidth, low latency advance in data storage communications technology,
developed under the auspices of the American National Standards Institute
("ANSI"), currently enabling the transfer of data at speeds of one Gigabit per
second. We develop, manufacture, and market Fibre Channel switches and
application specific integrated circuits ("ASICs").
Since our inception, our core technology has been built around the
utilization of fiber optic cable for data transmission. In 1992, we delivered
our first prototype Fibre Channel products, and commercial deliveries began in
1993. Our Fibre Channel products are used by organizations worldwide for
enhanced network performance, scalability and connectivity. Today Ancor -- an
active member of the ANSI Fibre Channel committee and the Fibre Channel
Association -- focuses entirely on the development of Fibre Channel solutions.
Prior to 1998, we focused our business and products on the local area
network ("LAN") market, developing and marketing Fibre Channel switches and
adapter cards for the LAN market. However, in 1998 we completed the refocusing
of our business and our Fibre Channel products from the local area network
market to the storage area network ("SAN") market. With Gigabit Ethernet the
technology of choice for local area networks and with high quality, low-cost
Fibre Channel host adapters now available from other sources, we discontinued
that portion of our business to intensify our pursuit of the emerging Fibre
Channel SAN market.
Over the last decade, applications and computer processing performance have
increased by many orders of magnitude. Additionally, with computer networks
running more business critical applications, access to, and availability of, the
associated data is strategic to business operations. Historically, the devices
storing the required data were directly attached to individual servers on the
LAN. However, LAN data paths often do not have the necessary performance to
address storage requirements, resulting in network bottlenecks and overall
system degradation. Thus, separate networks of storage devices are being
developed.
A SAN is a dedicated network optimized for storage-related functions over
which information is permitted to be accessed, managed, and shared among various
storage devices and servers. Although SANs are usually connected to the more
widely accessed LAN, the SAN operates complementary to the LAN. Overall
enterprise network performance improves because the LAN is free from the
cumbersome overhead associated with file access, retrieval, storage, and data
backup functions which place significant demands on network bandwidth. These
functions are instead more effectively and efficiently performed by a network
optimized for the demands of storage functions.
The components of a typical SAN are software to manage and control the SAN,
storage devices, network interface cards which are inserted into the servers,
and a hub or switch to facilitate the interconnection between the servers and
storage devices. We develop and market Fibre Channel switches.
We currently sell Fibre Channel switches under the Gigworks trademark.
During 1998 we introduced our GigWorks MKII 8-port switch, complementing our
MKII 16-port switch and previous-generation switches. Our current switches
enable very large SANs to be built by linking multiple switches in 8 and 16 node
increments. Through the Fibre Channel switch, users are able to establish
multiple simultaneous connect links.
We have also developed ASICs which are a component of our switches, but
which may be sold as separate products. Our ASICs provide building blocks at the
chip level for implementing Fibre Channel technology. These ASICs combine a
number of Fibre Channel functions in a single chip and thereby substantially
reduce the number of components needed to implement Fibre Channel switches.
Although our ASICs may be sold as a separate product, we have not done so in
recent years. We have, however, licensed the use of the ASIC to a third party,
and may sell our ASICs as a separate product in the future.
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Our principal executive offices are located at 6130 Blue Circle Drive,
Minnetonka, Minnesota 55343, (telephone number (612) 932-4000). For further
information concerning Ancor, see the section titled "Where You Can Find More
Information."
SELLING SHAREHOLDER
INRANGE Technologies Corporation is selling the Shares pursuant to this
Prospectus. The following table sets forth certain information with respect to
the ownership of our common stock by INRANGE Technologies Corporation as of
April 1, 1999 and as adjusted to reflect the sale of the Shares.
Number of
Shares Maximum Number of Shares
Beneficially Shares to be Sold Beneficially
Owned Prior to Pursuant to this Owned After
Name the Offering Prospectus(1) Offering(1)
- ------------------ ----------------- -------------------- ------------------
INRANGE Technologies 750,000 750,000 0
Corporation(2)
- --------------------
(1) Assumes the sale of all the Shares offered by this Prospectus.
(2) Entire ownership consists of shares to be issued upon exercise of a warrant
to purchase 750,000 shares of common stock issued to INRANGE Technologies
Corporation in connection with a Technology License Agreement dated
September 24, 1998.
-11-
<PAGE>
PLAN OF DISTRIBUTION
We are registering the Shares on behalf of INRANGE Technologies Corporation
(together with any donees, pledgees or other transferees selling Shares received
from INRANGE Technologies Corporation after the date of this Prospectus, the
"Selling Shareholder"). The Selling Shareholder will offer and sell the Shares
to which this Prospectus relates for their own accounts. We will not receive any
proceeds from the sale of the Shares. We will bear all expenses and fees of
registration of the Shares.
The Selling Shareholder may offer and sell the Shares from time to time in
the over-the-counter market in regular brokerage transactions, in transactions
directly with market makers or in privately negotiated transactions, through put
or call options transactions, through short sales or a combination of such
methods of sales at prices relating to prevailing market prices or at negotiated
prices. Sales may be made to or through brokers or dealers who may receive
compensation in the form of discounts, concessions or commissions from the
Selling Shareholder or the purchasers of the Shares. As of the date of this
Prospectus, we are not aware of any agreement, arrangement or understanding
between any broker or dealer and the Selling Shareholder. There is no assurance
that the Selling Shareholder will sell any or all of the Shares that it offers.
The Selling Shareholder and any brokers or dealers who participate in the
sale of the Shares may be deemed to be "underwriters' within the meaning of the
Securities Act, and any commissions received by them and any profits realized by
them on the resale of Shares may be deemed to be underwriting discounts or
commissions under the Securities Act. Because the Selling Shareholder may be
deemed to be an "underwriter" within the meaning of the Securities Act, the
Selling Shareholder will be subject to the prospectus delivery requirements of
the Securities Act. We have informed the Selling Shareholder that the
anti-manipulative provisions of Regulation M promulgated under the Exchange Act
may apply to their sales in the market.
The Selling Shareholder may also resell all or a portion of the Shares in
open market transactions in reliance upon Rule 144 under the Securities Act,
provided it meets the criteria and conforms to the requirements of such Rule.
EXPERTS
The financial statements and schedules of Ancor Communications,
Incorporated as of December 31, 1998 and for the year then ended have been
incorporated by reference herein and in the registration statement in reliance
upon the report of KPMG Peat Marwick LLP, independent certified public
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing.
The audited financial statements of Ancor Communications, Incorporated for
the years ended December 31, 1997 and December 31, 1996 incorporated in this
Prospectus and in the registration statement by reference to Ancor's Annual
Report on Form 10-K have been audited by McGladrey & Pullen, LLP, independent
accountants, to the extent set forth in their report and incorporated in this
Prospectus by reference. Such financial statements are incorporated in this
Prospectus by reference in reliance upon such reports given upon the authority
of such firm as experts in accounting and auditing.
LEGAL MATTERS
The validity of the Shares offered in this Prospectus has been passed upon
for us by Dorsey & Whitney LLP, 220 South Sixth Street, Minneapolis, Minnesota
55402.
-12-
<PAGE>
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
SEC Registration Fee................................. $ 1,199
Accounting Fees and Expenses......................... $ 2,000
Legal Fees and Expenses.............................. $ 8,000
------
Total....................................... $11,199
All fees and expenses other than the SEC registration fee are estimated.
The expenses listed above will be paid by us.
Item 15. Indemnification of Directors and Officers
Article eight of our Second Amended and Restated Articles of Incorporation
provides that a director shall not be liable to us or our shareholders for
monetary damages for a breach of fiduciary duty as a director, except for
liability (i) for any breach of the director's duty of loyalty to us or our
shareholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Sections
302A.559 or 80A.23 of the Minnesota Statutes, (iv) for any transaction from
which the director derived an improper personal benefit, or (v) for any act or
omission occurring prior to the date when such Article eight became effective.
Our Restated Bylaws provide that our officers and directors and certain
others will be indemnified to substantially the same extent permitted by
Minnesota law.
Section 302A.521 of the Minnesota Business Corporation Act provides that a
corporation shall indemnify any person who was or is made or is threatened to be
made a party to any proceeding, by reason of the former or present official
capacity (as defined) of such person, against judgments, penalties, fines,
settlements and reasonable expenses, including attorneys' fees and
disbursements, incurred by such person in connection with the proceeding if
certain statutory standards are met. "Proceeding" means a threatened, pending or
complete civil, criminal, administrative, arbitration or investigative
proceeding, including one by or in the right of the corporation. Section
302A.521 contains detailed terms regarding such right of indemnification and
reference is made to that section for a complete statement of such
indemnification rights.
We maintain a standard policy of officers' and directors' insurance.
Item 16. List of Exhibits
5 Opinion of Dorsey & Whitney LLP
23.1 Consent of KPMG Peat Marwick LLP
23.2 Consent of McGladrey & Pullen, LLP
23.3 Consent of Dorsey & Whitney LLP (included in Exhibit 5
to this Registration Statement)
24 Power of Attorney (included on signature page of this
Registration Statement)
<PAGE>
Item 17. Undertakings
The undersigned registrant 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;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or most recent
post-effective amendment thereof) which, individually or in the aggregate,
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;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change in the information set forth in the registration statement;
Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
registration statement is on Form S-3 or Form S-8, and the information
required to be included in a post-effective amendment by those paragraphs
is contained in periodic reports filed by the registrant pursuant to
section 13 or section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for purposes of determining any liability under the Securities
Act of 1933, 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 thereof.
(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.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement 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 thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers, and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
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
liabilities (other than the payment by the registrant 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 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.
II-2
<PAGE>
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 April 1, 1999.
ANCOR COMMUNICATIONS, INCORPORATED
By /s/ Kenneth E. Hendrickson
--------------------------------
Kenneth E. Hendrickson
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on April 1, 1999.
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Kenneth E. Hendrickson and Steven
E. Snyder, his true and lawful attorneys-in-fact and agents, with full powers of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities to execute a Registration Statement on Form S-3 to be
filed under the Securities Act of 1933, as amended, for the registration of the
resale of shares of common stock of Ancor Communications, Incorporated to be
issued in connection with the exercise of a certain outstanding warrant, and any
and all post-effective amendments thereto, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents full power and authority to do and perform to all intents and purposes as
he might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or their substitutes, may lawfully do or cause to
be done by virtue hereof.
Signature Title
--------- -----
/s/ Kenneth E. Hendrickson Chief Executive Officer and Director
- ------------------------------ (principal executive officer)
Kenneth E.Hendrickson
/s/Steven E. Snyder Chief Financial Officer
- ------------------------------ (principal financial officer)
Steven E. Snyder
/s/Amyl Ahola Director
- ------------------------------
Amyl Ahola
Director
- ------------------------------
Gerald M. Bestler
Director
- ------------------------------
John F. Carlson
/s/Thomas F. Hunt, Jr. Director
- ------------------------------
Thomas F. Hunt, Jr.
/s/Michael L. Huntley Director
- ------------------------------
Michael L. Huntley
Director
- ------------------------------
Paul F. Lidsky
II-3
<PAGE>
Exhibit 5
DORSEY & WHITNEY LLP
220 South Sixth Street
Minneapolis, Minnesota 55402
(612) 340-2600
FAX (612) 340-2868
Ancor Communications, Inc.
6130 Blue Circle Drive
Minnetonka, Minnesota 55343
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as counsel to Ancor Communications, Inc., a Minnesota
corporation (the "Company"), in connection with a Registration Statement on Form
S-3 (the "Registration Statement") to be filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, relating to the sale of
750,000 shares (the "Shares") of common stock of the Company, par value $.01 per
share ("Common Stock"), to be acquired by the Selling Shareholder named in the
Registration Statement upon exercise of a warrant issued by the Company on
September 24, 1998 (the "Warrant") and which will be sold from time to time by
the Selling Shareholder named in the Registration Statement on the Nasdaq
SmallCap Market, the Pacific Stock Exchange or otherwise, directly or through
underwriters, brokers or dealers.
We have examined such documents and have reviewed such questions of law as
we have considered necessary and appropriate for the purposes of our opinions
set forth below. In rendering our opinions set forth below, we have assumed the
authenticity of all documents submitted to us as originals, the genuineness of
all signatures and the conformity to authentic originals of all documents
submitted to us as copies. We have also assumed the legal capacity for all
purposes relevant hereto of all natural persons and, with respect to all parties
to agreements or instruments relevant hereto other than the Company, that such
parties had the requisite power and authority (corporate or otherwise) to
execute, deliver and perform such agreements or instruments, that such
agreements or instruments have been duly authorized by all requisite action
(corporate or otherwise), executed and delivered by such parties and that such
agreements or instruments are the valid, binding and enforceable obligations of
such parties. As to questions of fact material to our opinions, we have relied
upon certificates of officers of the Company and of public officials.
Based on the foregoing, we are of the opinion that the Shares to be sold by
the Selling Shareholder pursuant to the Registration Statement, upon exercise of
the Warrant in accordance with its terms, will be duly authorized by all
requisite corporate action, validly issued, fully paid and nonassessable.
Our opinions expressed above are limited to the laws of the State of
Minnesota.
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 heading
"Legal Matters" in the Prospectus constituting part of the Registration
Statement.
Dated: April 1, 1999.
Very truly yours,
/s/ DORSEY & WHITNEY LLP
AEA
<PAGE>
Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Ancor Communications, Inc.:
We consent to the use of our report incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the prospectus.
/s/KPMG Peat Marwick LLP
Minneapolis, Minnesota
April 1, 1999
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANT
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report, dated February 19, 1998, relating to the
balance sheet of Ancor Communications, Incorporated as of December 31, 1997, and
the related statements of operations, shareholder's equity, and cash flows for
each of the two years in the period ended December 31, 1997, which report
appears in the Company's Annual Report on Form 10-K for the year ended December
31, 1998 and to the reference to our Firm under the caption "Experts" in the
Prospectus.
/s/ McGladrey & Pullen, LLP
St. Paul, Minnesota
April 1, 1999
