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SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
For the six months ended June 30, 2000
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OLICOM A/S
(Translation of registrant's name into English)
Nybrovej 114
DK-2800 Lyngby
Denmark
(Address of principal executive offices)
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[Indicate by check mark whether the registrant files or will file
annual reports under cover of Form 20-F or Form 40-F
Form 20-F [X] Form 40-F [ ]
[Indicate by check mark whether the registrant by finishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 13g3-2(b) under the Securities Exchange Act of 1934.
Yes [ ] No [X]
[If "Yes" is marked, indicate below the file number assigned to
the registrant in connection with Rule 13g3-2(b): Not Applicable
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OLICOM A/S
FORM 6-K
TABLE OF CONTENTS
Page
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ITEM 1. FINANCIAL INFORMATION 3
ITEM 2. DISCUSSION OF THE COMPANY'S NEW BUSINESS PLAN 3
ITEM 3. RISK FACTORS 4
ITEM 4. EXHIBIT 16
Exhibit 99.1 Press Release dated August 24, 2000,
Announcing Results of Operations for the
Six Months Ended June 30, 2000.
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ITEM 1. FINANCIAL INFORMATION
See Condensed Consolidated Statements of Income of Olicom A/S (the
"Company," "we" or "us") for the six months ended June 30, 2000, and Condensed
Consolidated Balance Sheets at December 31, 1999 and June 30, 2000, attached to
the Press Release annexed hereto as Exhibit 99.1. Such unaudited financial
statements include only such normally recurring adjustments necessary for a fair
presentation of the results of operations for the interim periods presented and
of the financial position of the Company at the date of the interim balance
sheet. The results for such interim periods are not necessarily indicative of
the results for the entire year. Such financial data should be read in
conjunction with the audited consolidated financial statements and notes thereto
included in the 1999 Annual Report to Shareholders.
ITEM 2. DISCUSSION OF THE COMPANY'S NEW BUSINESS PLAN
On April 14, 2000, the Annual General Meeting of Shareholders of the
Company elected the following persons to the Company's Board of Directors: Lars
Eskesen, Ralf Egede Andersen, Kriss Damon, Monica Graham, Tim Frank Andersen,
Eric Korre Horten and Boje Rinhart (Messrs. Egede Andersen and Frank Andersen
are not related).
On May 15, 2000, the Company announced that its recently-elected Board
of Directors had approved the future strategic direction for the Company. The
Company's business plan will be to initiate or participate in the development of
new products and services, which leverage leading edge technology, primarily
with a focus on satisfying the needs of mobile data communications users. The
Company anticipates that business opportunities will be identified both through
the Company's internal research and through the solicitation of ventures with
start-up companies, which will be offered seed and venture financing and access
to the Company's established business network and infrastructure.
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ITEM 3. RISK FACTORS
In view of the Company's new strategic direction, the Company has
identified various trends and factors, which may affect the Company's future
operating results. In addition, there are trends and factors that are beyond the
Company's control that may affect its operations. Any of the following risks
could materially adversely affect our business, financial condition or operating
results and could negatively impact the value of our common shares.
RISKS PARTICULAR TO US
OUR FINANCIAL AND OPERATING SUCCESS DEPENDS ON THE FINANCIAL AND OPERATING
SUCCESS OF THE ENTERPRISES IN WHICH WE INVEST OR PARTICIPATE (OUR "ASSOCIATED
COMPANIES"), AND OUR BUSINESS WILL BE ADVERSELY AFFECTED TO THE EXTENT OUR
ASSOCIATED COMPANIES ARE NOT SUCCESSFUL.
Many of the risks described in these risk factors may affect our
associated companies and may, therefore, affect us to the extent of our interest
in the affected associated company. If any one of our associated companies is
harmed or fails as a result of any of these risks, our business will be
adversely affected, and the adverse effect on us could be material, depending on
the size and nature of the business of the affected company and the amount of
capital that we have committed to that company. Any adverse impact on us will be
magnified to the extent that multiple associated companies are harmed or fail.
WE IMPLEMENTED OUR NEW STRATEGIC PLAN IN MAY 2000, AND OUR ASSOCIATED COMPANIES
HAVE LITTLE OPERATING HISTORY, BOTH OF WHICH MAKES IT DIFFICULT TO EVALUATE OUR
BUSINESS.
We have only recently acquired interests in our initial associated
companies, and analyzed and engaged in discussions with other potential
associated companies. Because we have only recently begun operating under our
new strategic plan and because many of our associated companies are in the early
stages of their development, we are unable to provide investors with significant
data upon which they can evaluate our prospects. For example, most of our
associated companies are in the development stage. We cannot be certain that our
business strategy or the business strategies of our associated companies will be
successful, because these strategies are new and unproven. As early-stage
companies, our associated companies (as well as the Company) will be
particularly susceptible to the risks and uncertainties described in these risk
factors and will be more likely to incur the expenses associated with addressing
them.
Because we have interests in several early-stage companies, we are
exposed not only to the risks associated with implementing a new business plan,
but also to the start-up risks associated with each of our associated companies.
This exposure will increase as we continue to acquire interests in and establish
new associated companies. In the future, we may acquire greater percentage
equity interests in companies, and we may acquire interests in larger companies
than has been the case with our acquisitions to date, further increasing our
exposure to these risks.
OUR SHAREHOLDERS MAY HAVE DIFFICULTY EVALUATING THE SUCCESS OF INDIVIDUAL
ASSOCIATED COMPANIES BECAUSE WE WILL GENERALLY NOT BE REQUIRED TO PROVIDE
SEPARATE FINANCIAL STATEMENTS FOR THEM.
We will not be required to provide separate financial statements for
our associated companies for periods subsequent to our acquiring an interest
therein, except under very limited circumstances. For periods prior to our
acquiring an interest in an associated company, we will only be required to
provide separate financial statements where at least one of three conditions
specified by the Securities and Exchange Commission ("Commission") is met: (i)
our proportionate share of the total assets of the associated company exceeds
20% of our consolidated total assets; (ii) our equity in the pre-tax income or
loss of the associated company exceeds 20% of our consolidated pre-tax income or
loss; or (iii) the amount paid by us as consideration for the interest in the
associated company exceeds 20% of our consolidated total assets. Therefore, our
shareholders may not be able to assess the impact of the risks described in
these risk factors on an individual associated company. Further, our
shareholders may have difficulty evaluating the success of our individual
associated companies and, accordingly, the success of our business strategy. In
addition, we recognize revenues, expenses and other income from our associated
companies (each of which has a different cost structure and revenue model), and
we generate expenses independent of our associated companies.
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Our total revenues, expenses and other income may therefore correlate to a
lesser extent than those of other companies. As a result, our operating results
may be difficult for investors and securities analysts to interpret.
WE EXPECT TO INCUR LOSSES FOR AT LEAST THE SHORT TERM, WE AND OUR ASSOCIATED
COMPANIES MAY NEVER BECOME PROFITABLE.
Although we realized net income of approximately US$10,908,000 for the
six months ended June 30, 2000, such net income related in significant part to
the winding up of our networking business. With respect to our new strategic
direction, we expect to incur losses for at least the short term, owing to
existing overhead, amortization charges relating to acquisitions of interests in
associated companies, and the delay inherent in obtaining liquidity from the
acquisition of financially successful interests. Our current associated
companies are, and we expect that our future associated companies will be, in
the early stages of development and will have limited or no revenues. Because
companies that operate in the industries in which we are concentrating, even if
successful, typically generate significant losses while they grow, we do not
expect our associated companies to generate income for us for the foreseeable
future, and they may never generate income. Further, the income, if any,
generated by our associated companies may (and probably will) be offset by the
losses of our other associated companies. Moreover, our continuing acquisitions
of interests in, and establishment of, early stage associated companies may
further delay or prevent our profitability.
OUR LOSSES WILL BE INCREASED, OR OUR EARNINGS, IF WE HAVE THEM IN THE FUTURE,
WILL BE REDUCED, BY AMORTIZATION CHARGES.
Our losses will be increased, or our earnings, if we have them in the
future, will be reduced, by amortization charges associated with completed and
future acquisitions of interests in associated companies.
Our amortization of identifiable intangible assets and goodwill will
increase our losses or reduce our earnings, if we have them in the future. After
we complete an acquisition of a voting interest in an associated company of at
least 20%, but not more than 50%, we must amortize our net excess investment
over the equity in the net assets of the acquired company over future periods.
After we complete an acquisition of a greater than 50% voting interest in an
associated company, we must amortize any identifiable intangible assets and
goodwill associated with the acquired company over future periods. We expect
that, typically, we will amortize these amounts over one to three years. Our
amortization of these amounts will increase our losses or reduce our earnings,
if we have them in the future, in the affected periods.
As we acquire interests of at least 20% in associated companies, the
amortization amounts relating to our net excess investment over the equity in
net assets in associated companies and, accordingly, the negative impact on our
earnings will increase. Further, we may complete larger transactions in the
future than we have completed to date, which could result in higher amortization
charges and a greater adverse effect on future earnings.
WE EXPECT OUR EXPENSES TO INCREASE.
While our expenses may decline through the first half of fiscal year
2001, we expect that our expenses will increase as we:
o acquire interests in and establish new associated companies;
o build the operations of our current and new associated
companies;
o hire additional employees; and
o lease more space to accommodate our operations and possibly to
sublease to some of our associated companies.
Our future contributions to each of the associated companies in which
we have invested may be significantly increased or decreased, and accelerated or
decelerated, based on various factors, including the investee's development of
its business plans and objectives and its progress toward achievement of its
performance goals, as well as additional funding available to it from
third-party sources. Given the early stages of our associated
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companies and the high speed at which they expect to develop, their business
plans and objectives are subject to rapid and substantial change.
We are currently in active discussions with a number of potential
associated companies, but do not have plans to acquire interests in or establish
a specific number of new associated companies or to commit a target amount of
capital to these transactions. Instead, we continuously seek to identify
opportunities suitable for our business strategy, employing our associated
company evaluation criteria and considering our available funds and the
condition of the capital markets. Costs associated with building our associated
companies and developing the infrastructure we will need to support them will
vary based upon many factors, including the number of investees and the size,
nature and state of development of each company. Therefore, we cannot now
determine the amount by which our expenses will increase as we make additional
investments. In the future, we may change our business plans and our operational
structure.
We continually analyze our business plans and internal operations and
the operations and business plans of each of our associated companies in light
of market developments. As a result of this ongoing analysis, we may decide to
make substantial changes in our business plan and organization and in the
business plans and organizations of the associated companies that we control.
We continually examine all of our associated companies to assess their
potential for financial success as part of our organization, whether on a
stand-alone basis or otherwise. This examination includes consideration of the
development by each associated company of its business plans and objectives and
progress toward achievement of its performance goals. Based on this examination,
we expect to make future funding decisions with respect to existing and new
associated companies, including whether to adjust our currently intended
contributions to our associated companies. We may determine not to provide any
future capital to particular associated companies, including associated
companies that we control, and those companies may need to obtain third-party
financing, if available, to continue operations as currently anticipated, if at
all. In some cases, these companies may elect, or be forced, to lay off
employees or take other measures to reduce costs. In addition, we may decide in
the future to combine, restructure or alter the business plans of associated
companies that we control to enhance their potential value in the public markets
or their value to potential acquirers. We expect that we will apply these same
principles, and a consideration of our available cash and other resources, in
making decisions with respect to future acquisitions of interests in associated
companies.
IF OUR MANAGEMENT FAILS TO PROPERLY IDENTIFY ASSOCIATED COMPANIES IN WHICH TO
ACQUIRE INTERESTS OR TO ESTABLISH AND EFFECTIVELY COMPLETE THESE TRANSACTIONS,
THE VALUE OF OUR COMMON SHARES MAY DECLINE.
Our success depends on our ability to identify opportunities to
participate in the development of new products and services that leverage
leading edge technology primarily with a focus on satisfying the needs of mobile
data communications users and to successfully negotiate the terms of any such
transactions. Our management will have sole and absolute discretion in
identifying and selecting associated companies in which to participate, acquire
interests or establish, and in structuring, negotiating and undertaking of
interests in our associated companies. We may combine, reorganize, alter the
business plan of or sell any of our associated companies at any time, as our
management determines is appropriate. Investors may not be able to evaluate the
merits of the acquisition of an interest in, or the establishment of, or the
reorganization or change in business plans of, any particular associated company
before we take any of these actions. In addition, in making decisions to
participate or acquire interests in or establish associated companies, we will
rely, in part, on financial projections developed by our management and the
management of potential associated companies. These projections will be based on
assumptions and subjective judgments. The actual results of our associated
companies may differ significantly from these projections.
We may be unable to acquire an interest in companies that we identify
for many reasons, including:
o our inability to agree on the terms of a participation or
acquisition or to acquire an interest in an investee; and
o incompatibility between us and management of the investee.
We estimate that upon the conclusion of the winding up of our
networking business we will have approximately US$30,000,000 of cash and cash
equivalents (which excludes cash and cash equivalents held by our
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associated companies) available for acquiring interests in and establishing new
associated companies, as well as to provide additional funding for existing
associated companies and for general corporate and working capital purposes. If
we cannot continue to acquire interests in and establish emerging companies with
this capital, our strategy to build a portfolio of associated companies will not
succeed. Further, we expect that, even if we can identify, acquire and establish
associated companies, we will not be profitable for the foreseeable future and
may never regain profitability.
WE WILL NOT BE ABLE TO SUCCESSFULLY EXECUTE OUR BUSINESS STRATEGY IF WE ARE
DEEMED TO BE AN INVESTMENT COMPANY UNDER THE INVESTMENT COMPANY ACT.
Companies that have more than 100 U.S. shareholders or are publicly
traded in the United States and are, or hold themselves out as being, engaged
primarily in the business of investing, reinvesting or trading in securities are
subject to regulation under the U.S. Investment Company Act of 1940 (the
"Investment Company Act"). Unless a substantial part of our assets consists of,
and a substantial part of our income is derived from, interests in
majority-owned subsidiaries and companies that we primarily control, we may be
required to register and become subject to regulation under the Investment
Company Act. Because regulation under the Investment Company Act is, for the
most part, inconsistent with our strategy of actively managing, operating and
promoting collaboration among our network of associated companies, we cannot
feasibly operate our business as a registered investment company. If we are
deemed to be, and are required to register as, an investment company, we will be
forced to comply with substantive requirements under the Investment Company Act,
including:
o limitations on our ability to borrow;
o limitations on our capital structure;
o restrictions on acquisitions of interests in associated
companies;
o prohibitions on transactions with affiliates;
o restrictions on specific investments; and
o compliance with reporting, record keeping, voting, proxy
disclosure and other rules and regulations.
If we were forced to comply with the rules and regulations of the
Investment Company Act, our operations would significantly change, and we would
be prevented from successfully executing our business strategy.
We also may acquire interests in other companies with business models
that could subject them to regulation under the Investment Company Act. If any
associated company becomes subject to regulation under the Investment Company
Act, it will be subject to the risks, uncertainties and operating restrictions
described in this and other risk factors.
We may be required to sell, buy or retain assets when we would not
otherwise wish to in order to avoid regulation as an investment company. To
avoid regulation under the Investment Company Act and related Commission rules,
we may need to sell assets which we would otherwise desire to retain and may be
unable to sell assets which we would otherwise prefer to sell. In addition, we
may be forced to acquire additional, or retain existing, income-generating or
loss-generating assets which we would not otherwise have acquired or retained,
and may need to forego opportunities to acquire interests in attractive
enterprises that would benefit our business. If we were forced to sell, buy or
retain assets in this manner, we would be prevented from successfully executing
our business strategy. In addition, if we dispose of our interests in associated
companies, the strength of our collaborative network will be adversely affected.
If any associated company with a business model similar to ours becomes subject
to regulation under the Investment Company Act, it will be subject to the risks
and uncertainties described in this risk factor, and we may be forced to dispose
of our interest in such company.
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WE MAY SELL OUR ASSOCIATED COMPANY INTERESTS FOR LESS THAN THEIR MAXIMUM VALUE,
OR AT A LOSS.
Our ability to sell associated company interests to generate income or
to avoid regulation under the Investment Company Act may be limited, especially
where there is no public market for an associated company's stock. Market,
regulatory, contractual and other conditions largely beyond our control will
affect:
o our ability to sell our interests in associated companies;
o the timing of these sales; and
o the amount of proceeds from these sales.
If we divest all or part of our interest in an associated company, we
may not receive maximum value for the interest, and we may sell it for less than
the amount we paid to acquire it. Even if an associated company has
publicly-traded stock, we may be unable to sell our interest in that enterprise
at then-quoted market prices.
OUR BUSINESS STRATEGY MAY NOT BE SUCCESSFUL IF VALUATIONS OF TECHNOLOGY-RELATED
COMPANIES DECLINE.
Our strategy involves helping our associated companies grow and access
the public capital markets. Therefore, our success is dependent on acceptance by
these markets of technology companies in general, and in particular, the
receptivity of these markets to mergers and acquisitions involving such
companies and of initial public offerings of those companies. Diminished
receptivity to mergers and acquisitions, and weak capital markets for initial
public offerings of technology-related companies may delay or prevent our
realization of exit strategies in an anticipated time horizon.
INTENSE COMPETITION FROM OTHER CAPITAL PROVIDERS TO ACQUIRE INTERESTS IN
TECHNOLOGY COMPANIES COULD RESULT IN LOWER RETURNS OR LOSSES ON ACQUISITIONS.
We face intense competition from traditional venture capital firms,
companies with business strategies similar to our own, corporate strategic
investors and other capital providers to develop and acquire interests in
technology enterprises. In addition, we may face competition from an emerging
group of online service providers that facilitate relationships between
entrepreneurs and venture capitalists. Further, several professional service
firms have recently announced their intention to provide capital and services to
technology companies. Many of our competitors have more experience identifying
and acquiring interests in technology companies and have greater financial and
management resources, brand name recognition and industry contacts than we do.
This intense competition, and the impact it has on the valuation of
technology companies, could limit our opportunities to acquire interests in
associated companies or force us to pay higher prices to acquire these
interests, which would result in lower returns or losses on acquisitions. In
addition, some of our competitors, including venture capital firms, private
companies with business strategies similar to ours and corporate strategic
investors, may have a competitive advantage over us because they have more
flexibility than we do in structuring acquisitions in companies because they do
not need to acquire majority or controlling interests in companies to avoid
regulation under the Investment Company Act.
WE MAY NOT BE ABLE TO SECURE ADDITIONAL FINANCING WHEN WE NEED IT IN THE FUTURE
TO SUPPORT OUR GROWTH.
In the future, we may need to access the public and private equity or
debt markets periodically to obtain the funds we need to acquire interests in
and establish new associated companies and to otherwise support our operations
and continued growth and the operations and growth of our associated companies.
Our future capital requirements will depend in large part on the number of
associated companies in which we acquire interests and which we establish, the
amounts of capital we provide to these companies and the timing of these
payments. Our plans and the related capital requirements will be dependent on
various factors, such as developments in our markets and the availability of
acquisition and entrepreneurial opportunities. We may not be able to obtain
financing on acceptable terms, or at all, when we need it. If we require, but
are unable to obtain, additional financing in the future on acceptable terms, or
at all, we will not be able to continue our business strategy, respond to
changing business or economic conditions, withstand adverse operating results or
compete effectively.
OUR MANAGEMENT HAS NOT PREVIOUSLY ACTIVELY MANAGED, OPERATED OR PROMOTED
START-UP COMPANIES, AND IF THEY CANNOT DO SO EFFECTIVELY, OUR BUSINESS STRATEGY
WILL FAIL.
Our strategy involves helping associated companies grow and access the
public capital markets by providing them with management and operational
support. Our senior management has not previously actively managed, operated or
promoted start-up companies, and we cannot assure investors that they will be
able to do so effectively. In addition, we may acquire interests in or establish
companies focused on industries in which our
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senior management has little experience. If our senior management cannot
effectively manage, operate and promote our associated companies, they may not
become profitable or gain access to the public capital markets.
IF WE OR OUR ASSOCIATED COMPANIES EXPAND INTERNATIONALLY, WE OR THEY MAY FACE
DIFFICULTIES MANAGING REMOTE FACILITIES AND WILL BE SUBJECT TO OTHER CHALLENGES,
INCLUDING FOREIGN REGULATORY REQUIREMENTS AND TECHNOLOGY STANDARDS.
We and our associated companies expect to develop additional
international operations. Our entry, or the entry of our associated companies,
into international markets will require significant management attention and
financial resources, which could harm our or their ability to effectively manage
existing business. We and our associated companies will also be subject to the
following challenges associated with conducting international business:
o difficulties of managing remote offices;
o burdens of complying with foreign laws and regulatory
requirements;
o reduced protection of proprietary rights;
o problems in meeting different technology standards;
o increased tax burdens; and
o exposure to general foreign economic declines, currency
fluctuations and political instability.
As we are based in Denmark, we conduct a significant portion of our
business outside of the United States, which entails certain risks that are
generally not material to companies whose operations are limited to the United
States, including, without limitation, longer payment cycles, unexpected changes
in regulatory requirements and tariffs, export licenses, political instability,
difficulties in staffing and managing foreign operations, greater difficulty in
accounts receivable collection, and potentially adverse tax consequences.
International sales are also affected by seasonal fluctuations resulting from
lower sales that typically occur during the summer months in Europe and other
parts of the world.
The business of our associated companies may also be affected by
changes in demand resulting from fluctuations in currency exchange rates. Our
associated companies generate sales primarily in local currency and incur
expenses in a number of currencies. Fluctuations in the value of foreign
currencies cause local currency-translated amounts to change in comparison with
previous periods. Due to the number of currencies involved, the constantly
changing currency exposures and the fact that all foreign currencies do not
react in the same manner, we cannot quantify, in any meaningful way, the effect
of exchange rate fluctuations on future income. Although our associated
companies seek to manage their foreign currency exposures by matching non-local
currency revenues and expenses and by entering into hedging transactions, there
can be no assurance that exchange rate fluctuations will not harm the business
of our associated companies.
THE INFORMATION TECHNOLOGY SERVICES WHICH WE PROVIDE TO OUR ASSOCIATED COMPANIES
MAY FAIL OR WORK IMPROPERLY DUE TO PHYSICAL DAMAGE, FAILURE OF THIRD-PARTY
SERVICES OR OTHER UNEXPECTED PROBLEMS.
We provide information technology services including data warehousing
and web server and network facilities, to support some of our associated
companies' operations. An unexpected event, such as a power or
telecommunications failure, fire or flood, physical or electronic break-in, or
computer virus at any of our facilities or server facilities, or those of any
third parties on which we rely, could cause a loss of our, and our associated
companies', critical data and prevent us from offering services to our
associated companies. If our information technology services were interrupted,
our business and the businesses of associated companies using these services
would be disrupted, which could result in decreased revenues, lost customers and
impaired business reputation for us and them. As a result, we could experience
greater difficulty attracting associated companies to join our network. Our
business interruption insurance may not adequately compensate us or our
associated companies for losses that may occur. A failure by us or any third
parties on which we rely to provide these services satisfactorily would impair
our ability to support our operations and those of our associated companies and
could subject us to legal claims.
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WE MAY ISSUE SHARES IN CONNECTION WITH OUR ACQUISITIONS OF INTERESTS IN
ASSOCIATED COMPANIES, WHICH COULD CAUSE SHAREHOLDERS TO SUFFER FURTHER DILUTION
IN THE VALUE OF THEIR SHARES.
We may issue shares of our common stock, or debt or equity securities
convertible into our common shares, in the future to raise capital to carry out
our business strategy of establishing and acquiring interests in associated
companies. We may also issue these shares or convertible securities as
consideration in our acquisitions of interests of associated companies. These
issuances may cause dilution to our shareholders.
THE MARKET PRICE OF OUR COMMON SHARES MAY FLUCTUATE WIDELY, AND THIS VOLATILITY
COULD RESULT IN SHAREHOLDER LAWSUITS.
We believe that the market price of our common shares could fluctuate
widely because of announcements of acquisitions of interests in technology
companies or strategic relationships by us, our inability to avoid regulation
under the Investment Company Act or because of any of the following factors,
which are, in large part, beyond our control:
o announcements of acquisitions of interests in technology
companies or strategic relationships by our competitors;
o announcements of new services, products, technological
innovations, acquisitions or strategic relationships by
associated companies that we do not control or other
companies;
o trends or conditions in the technology industry;
o changes in valuation estimates by securities analysts and in
analyst recommendations;
o variations in the operating results of our associated
companies;
o changes in the stock prices of our associated companies that
are publicly traded;
o changes in market valuations of other capital and service
providers for technology companies;
o general political, economic and market conditions; and
o litigation.
Any of these factors may cause a decrease in the market price of our common
shares, regardless of our operating performance.
In particular, the market price for our common shares may be affected
by our ability to meet or exceed expectations of analysts or investors. Any
failure to meet or, in some cases, exceed these expectations, even if minor,
could cause the market price of our common shares to decline. In addition, the
market price of our common shares may fluctuate widely because we depend on
technology companies for our revenue. The market prices of equity securities of
companies in the technology industry often fluctuate significantly for reasons
unrelated to the operating performance of these companies. We expect to be
particularly susceptible to such volatility, as have been other public companies
with models similar to ours, because we may be valued in the future on the basis
of a number of minority interests we hold in public technology companies.
Therefore, fluctuations in the valuations of any of our associated companies may
cause our valuation to fluctuate. The trading prices of many technology
companies have reached historical highs within the last 52 weeks and have
reflected relative valuations substantially above historical levels. During the
same period, these companies' stocks have also been highly volatile and have
recorded lows well below such historical highs. Our common shares may not trade
at the same levels as other technology-related stocks, and technology-related
stocks in general may not sustain their current market prices. Our results of
operations for a particular quarter are not necessarily indicative of results to
be expected in future periods. In the past, following periods of volatility in
the market price of a company's securities, securities class action litigation
has often been instituted against that company. If any securities litigation is
initiated against us, we could incur substantial costs and our management's
attention and resources could be diverted from our business.
THE TRADEMARK "OLICOM" IS LICENSED, AND THE TERMINATION OF OUR RIGHT TO USE SUCH
NAME COULD CAUSE CONFUSION.
We license the trademark "Olicom" pursuant to a license from Ing. C.
Olivetti & C., S.p.A. that prohibits Olivetti from using, or granting to a third
party any rights to use, the trademark. We have no ownership rights in the
trademark. In the event that the license of the trademark were terminated, we
would be required to change our name
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and cease using the trademark. A change in our name and the creation of a new
trademark could involve significant expense and the possibility of confusion,
which, in turn, could harm our business.
OUR ORGANIZATION IN DENMARK RESULTS IN SHAREHOLDER RIGHTS AND REMEDIES THAT VARY
FROM THOSE FOUND IN THE UNITED STATES.
We are a Danish corporation, and our corporate affairs are governed by
our Articles of Association and the Companies Act of the Kingdom of Denmark.
Although certain provisions of the Companies Act resemble some of the provisions
of the corporation laws of a number of states in the United States, principles
of law relating to such matters as the validity of corporate procedures, the
fiduciary duties of management and the rights of our shareholders may differ
from those that would apply if we were incorporated in a jurisdiction within the
United States. In particular, there is no statutory right of appraisal under
Danish law with respect to mergers, nor is there a right for shareholders of a
Danish corporation to sue a corporation derivatively.
A significant majority of our directors and substantially all of our
executive officers are non-residents of the United States, and all or a
substantial portion of the assets of such persons are located outside the United
States. A substantial portion of our assets are located in Denmark. As a result,
it may not be possible for United States shareholders to effect service of
process within the United States upon such persons or to enforce against such
persons or us judgments of United States courts predicated upon the civil
liability provisions of the federal securities laws of the United States. We
have been advised by our Danish counsel that civil liabilities under the
Securities Act or the Exchange Act, probably are not enforceable in original
actions instituted in the Kingdom of Denmark, or in actions instituted in the
Kingdom of Denmark to enforce judgments of United States courts.
CERTAIN OF OUR CHARTER PROVISIONS MAY DISCOURAGE AN ACQUISITION OR CHANGE IN
CONTROL OF US.
Our Articles of Association prohibit any person from holding more than
33% of our outstanding common shares without obtaining the approval of our Board
of Directors, which may condition its approval in such manner as it determines
to be appropriate. A holder of more than 33% of our outstanding common shares
who fails to obtain the approval of our Board is prohibited by our Articles of
Association from having any right to vote, or receive dividends or distributions
on, any shares in excess of the 33% threshold. In addition, a shareholder who
acquires common shares by means of a transfer cannot vote these shares until
three months after the holder has been registered in our list of stockholders.
These provisions may have the effect of (i) limiting the price that certain
investors might be willing to pay in the future for our common shares, (ii)
delaying, deferring or otherwise discouraging an acquisition or change in
control of us that is deemed undesirable by our Board, or (iii) adversely
affecting the voting power of shareholders who own common shares.
RISKS PARTICULAR TO OUR ASSOCIATED COMPANIES
OUR ASSOCIATED COMPANIES MAY FACE INTENSE COMPETITION IN THEIR PRODUCT AND
SERVICE MARKETS, AND IF THEY CANNOT COMPETE EFFECTIVELY, THEY WILL FAIL.
Our associated companies experience significant competition and expect
substantial additional competition from established and emerging technology
companies. There can be no assurance that our associated companies will be able
to compete successfully in the future with existing or new competitors. Barriers
to entry in many sectors of the technology industry in which our associated
companies operate are generally minimal, and competitors can offer products and
services at a relatively low cost. Further, our associated companies'
competitors may develop products or services that are superior to, or have
greater market acceptance than, the solutions offered by our associated
companies. Industry consolidation or alliances may also affect the competitive
environment. Many of the current and potential competitors of our associated
companies have longer operating histories and substantially greater financial,
technical, sales, marketing and other resources, as well as greater name
recognition than our associated companies. As a result, these competitors may be
able to devote greater resources to the development, promotion, marketing and
support of their products than our associated companies. Increased competition
could result in reduced profit margins or loss of market share, any of which
could harm our associated companies revenues. This may place our associated
companies at a disadvantage in responding to their competitors' pricing
strategies, technological advances, advertising campaigns, strategic
partnerships and other initiatives. If our associated companies are unable to
compete successfully against their competitors, they will fail. In addition, our
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associated companies may compete with each other for business opportunities. If
this type of competition develops, it may deter other companies from seeking our
investment and limit our business opportunities. Further, we may acquire
interests in companies that compete with our current associated companies, which
may deprive them of some of the competitive benefits of being part of our
network.
OUR ASSOCIATED COMPANIES MAY FAIL IF THEY DO NOT ADAPT TO THE RAPIDLY CHANGING
TECHNOLOGY MARKETPLACE.
If our associated companies fail to adapt to the rapid changes in
technology and customer and supplier demands, they may not generate revenues or
become or remain profitable.
The markets in which our associated companies operate are characterized
by:
o rapidly changing technology;
o evolving industry standards;
o frequent new product and service introductions;
o shifting distribution channels; and
o changing customer demands.
The market for the products of our associated companies is characterized by
frequent new product introductions, rapidly changing technology, changes in
customer and end user requirements, short product life cycles and continued
emergence of new industry standards any of which could render the existing
products of our associated companies obsolete. The success of our associated
companies will depend to a substantial degree upon their ability to develop and
introduce, on a cost-effective and timely basis, new products and enhancements
to existing products that meet changing customer requirements and emerging
industry standards, and take advantage of technological advances. The
development of new, technologically advanced products is a complex and uncertain
process requiring high levels of innovation, as well as the accurate
anticipation of technological and market trends. Often, delays are experienced
in the introduction of new products and product enhancements. There can be no
assurance that our associated companies will be able to identify, develop,
implement or market new or enhanced products successfully or on a timely basis,
that new products will gain market acceptance, or that our associated companies
will be able to respond effectively to product announcements by competitors,
technological changes, emerging industry standards or changing customer and
end-user requirements. From time to time, our associated companies may announce
new products or product enhancements, capabilities or technologies that have the
potential to replace or shorten the life cycle of existing product offerings and
that may cause customers or end-users to defer purchasing of existing products.
Any failure to continue to introduce new products or product enhancements on a
timely basis, customer and end-user delays in purchasing products in
anticipation of new product introductions, or any inability of our associated
companies to respond effectively to product announcements by competitors,
technological changes, changing customer requirements or emerging industry
standards could harm our associated companies.
Our future success will depend on our associated companies' ability to
adapt to this rapidly evolving marketplace. They may not be able to adapt their
products and services adequately or economically, develop new products and
services or establish and maintain effective distribution channels for their
products and services. If our associated companies are unable to meet these
challenges, they may be unable to sell their products and services and generate
revenues. Therefore, their businesses may become or remain unprofitable.
MANY OF OUR ASSOCIATED COMPANIES MAY GROW RAPIDLY AND MAY BE UNABLE TO MANAGE
THEIR GROWTH.
We expect many of our associated companies to grow rapidly. Rapid
growth often places considerable operational, managerial and financial strain on
a business. To successfully manage rapid growth, our associated companies must
accurately project their rate of growth and:
o rapidly improve, upgrade and expand their business
infrastructures;
o deliver products and services on a timely basis;
o maintain levels of service expected by clients and customers;
o maintain appropriate levels of staffing;
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o maintain adequate levels of liquidity; and
o expand and upgrade their technology, transaction processing
systems and network hardware or software or find third parties
to provide these services.
Our business will suffer if our associated companies are unable to
successfully manage their growth. In addition, many of our associated companies
have only recently begun developing their financial reporting systems and
controls. As a result, these companies may not be able to provide us with their
financial results on a timely basis, making it difficult for us to monitor these
companies and assess our financial position.
OUR ASSOCIATED COMPANIES' GROWTH DEPENDS ON THEIR ABILITY TO ATTRACT AND RETAIN
THEIR KEY PERSONNEL.
We have significant involvement in and influence over the operating
activities of associated companies in which our equity ownership and voting
power percentage is at least 20%, but not more than 50%, in part through board
representation and rights to participate in material decisions. However, the
growth of our associated companies will depend on their ability to attract and
retain their own senior management personnel to oversee the day-to-day operation
of their businesses. As they grow, our associated companies will also need to
continue to hire additional technical, marketing, financial and other key
personnel, unless they rely on us or other associated companies or third parties
to provide these services. A shortage in the availability of required personnel
could limit the ability of our associated companies to grow, sell their existing
products and services, and launch new products and services.
OUR ASSOCIATED COMPANIES COULD MAKE BUSINESS DECISIONS THAT ARE NOT IN OUR BEST
INTERESTS OR THAT WE DO NOT AGREE WITH, WHICH COULD IMPAIR THE VALUE OF OUR
ASSOCIATED COMPANY INTERESTS.
We expect to acquire less than majority voting interests in associated
companies. Further, we may not maintain our current ownership or control levels
in our associated companies, including associated companies that we established,
if we sell portions of our interests or our associated companies issue
additional equity to other parties.
Our ownership of interests in associated companies over which we do not
exercise complete control involves risks that could cause the performance of our
interests and our operating results to suffer, including:
o management of an associated company having economic or
business interests or objectives that are different than ours;
and
o associated companies not taking our advice with respect to the
financial or operating difficulties that they encounter.
Our inability to control our associated companies completely could
prevent us from assisting them, financially or otherwise, or could prevent us
from liquidating our interests in them at a time or at a price that is favorable
to us. Additionally, to the extent we do not completely control them, our
associated companies may not act in ways that are consistent with our business
strategy and may compete with us or other associated companies. These factors
could hamper our ability to maximize returns on our interests, and cause us to
recognize losses on our interests in associated companies.
IF WE ARE UNABLE OR UNWILLING TO PROVIDE OUR ASSOCIATED COMPANIES WITH THE
SIGNIFICANT ADDITIONAL FINANCING THEY WILL NEED, OUR INTERESTS IN THEM MAY BE
DILUTED OR THEY MAY FAIL.
Most of our current associated companies are, and we expect that our
future associated companies will be, in the early stages of their development.
Our associated companies will require significant amounts of additional capital
to compete successfully, meet their business objectives, and produce revenues
and profits. We are currently unable to predict the future capital needs of any
of our associated companies, and we may decide not to provide the additional
capital that our associated companies require or may not be given the
opportunity to provide it. If our associated companies receive capital from
other sources, our ownership interest in them may be diluted. If our associated
companies are unable to obtain additional capital, they may fail.
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OUR ASSOCIATED COMPANIES MAY BE AT A COMPETITIVE DISADVANTAGE IF THEY ARE UNABLE
TO PROTECT THEIR PROPRIETARY RIGHTS OR IF THEY INFRINGE ON THE PROPRIETARY
RIGHTS OF OTHERS, AND ANY RELATED LITIGATION COULD BE TIME CONSUMING AND COSTLY.
Because all of our associated companies operate or will operate their
businesses through web sites or rely on hardware and software, proprietary
rights (particularly in the form of trade secrets, copyrights and patents) will
be critical to the success and competitive position of all of our associated
companies. There can be no assurance that the steps taken by our associated
companies to protect their proprietary rights will be adequate to prevent
misappropriation of their technology or that competitors will not independently
develop technologies that are substantially equivalent or superior to their
technology. In addition, effective copyright and trademark protection may be
unenforceable or limited in certain countries, and our associated companies may
be unable to control the dissemination of their content and products and use of
their services due to the global nature of the Internet. A substantial number of
our associated companies license technology which they include in their product
or service offerings from third parties, and they could become subject to
infringement actions as a result. In addition, third parties may claim that our
associated companies have violated their intellectual property rights. To the
extent that any of our associated companies violates a patent or other
intellectual property right of a third party, it may be prevented from operating
its business as planned, and it may be required to pay damages, to obtain a
license, if available, to use the patent or other right or to use a
non-infringing method, if possible, to accomplish its objectives. Any of these
claims, with or without merit, could subject our associated companies to costly
litigation and the diversion of their technical and management personnel. If our
associated companies incur costly litigation and their personnel are not
effectively deployed, the expenses and losses incurred by them will increase,
and their profits, if any, will decrease.
OUR ASSOCIATED COMPANIES' OPERATIONS MAY BE DISRUPTED BY TECHNOLOGICAL PROBLEMS
UNRELATED TO OUR INFORMATION TECHNOLOGY SERVICES.
Our associated companies' businesses will depend on the efficient and
uninterrupted operation of their computer and communications hardware systems to
enable them to continuously provide their products and services. Our associated
companies that do not rely completely on us for information technology services,
and are dependent, to some extent, on third parties for technological support.
Service interruptions could result from natural disasters, power loss,
telecommunications failures and similar events or from other systems failures,
bugs or capacity constraints. These interruptions could cause a complete
shut-down of our associated companies' businesses, which could result in lost
revenues or customers.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Report includes forward-looking statements that reflect our
current expectations and projections about our future results, performance,
prospects and opportunities. We have tried to identify these forward-looking
statements by using words such as "may," "will," "expect," "anticipate,"
"believe," "intend," "plan," "estimate" and similar expressions. These
forward-looking statements are based on information currently available to us
and are subject to a number of risks, uncertainties and other factors that could
cause our actual results, performance, prospects or opportunities to differ
materially from those expressed in, or implied by, these forward-looking
statements. These risks, uncertainties and other factors include:
o our need to continue to identify and acquire interests in
suitable associated companies;
o the intense competition among capital providers to acquire
interests in technology companies;
o existing and future regulations affecting our business, the
businesses of our associated companies or technology
generally; and
o other factors set forth under "Risk Factors" in this Report.
Except as otherwise required by United States federal securities laws,
we undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events, changed
circumstances or any other reason, after the date of this prospectus.
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SIGNATURES
The registrant certifies that it meets all of the requirements for filing and
has duly caused this form to be signed on its behalf by the undersigned,
thereunto duly authorized.
Olicom A/S
Date: January 8, 2001 By: /s/ Boje Rinhart
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Boje Rinhart
Chief Executive Officer
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INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
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99.1 Press Release
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