SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended MARCH 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to ____________
Commission file number 0-22895
OMEGA RESEARCH, INC.
(Exact name of registrant as specified in its charter)
FLORIDA 59-2223464
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8700 WEST FLAGLER STREET, MIAMI, FLORIDA 33174
(Address of principal executive offices)
(Zip Code)
(305) 551-9991
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No _____
AS OF APRIL 28, 1998 THERE WERE 22,246,508 SHARES OF THE REGISTRANT'S
COMMON STOCK OUTSTANDING.
<PAGE>
OMEGA RESEARCH, INC.
INDEX
PAGE
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Balance Sheets
March 31, 1998 (unaudited) and December 31, 1997 (audited)........ 3
Statements of Income
Three months ended March 31, 1998 and 1997 (unaudited)............ 4
Statements of Cash Flows
Three months ended March 31, 1998 and 1997 (unaudited)............ 5
Notes to Financial Statements...................................... 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations............................................. 7
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds.......................... 11
Item 6. Exhibits and Reports on Form 8-K................................... 11
Signature.................................................................. 12
Exhibit Index.............................................................. 13
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
OMEGA RESEARCH, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1998 1997
------------------- -------------------
ASSETS (UNAUDITED) (AUDITED)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 13,622,429 $ 12,323,515
Marketable securities 1,009,270 1,014,590
Accounts receivable, net 9,593,334 9,438,218
Inventories 107,047 146,821
Other current assets 606,582 520,537
Deferred income taxes 3,650,000 2,963,000
------------------- -------------------
Total current assets 28,588,662 26,406,681
PROPERTY AND EQUIPMENT, net 1,090,584 971,511
OTHER ASSETS 91,626 91,626
------------------- -------------------
Total assets $ 29,770,872 $ 27,469,818
=================== ===================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 1,088,665 $ 1,119,202
Accrued expenses 678,919 561,552
Income taxes payable
Deferred revenue 282,803 47,395
Income taxes payable 1,645,000 509,000
------------------- -------------------
Total current liabilities 3,695,387 2,237,149
------------------- -------------------
SHAREHOLDERS' EQUITY:
Preferred stock, $.01 par value; 25,000,000 shares
authorized, none issued and outstanding - -
Common stock, $.01 par value; 100,000,000
shares authorized, 22,246,508 and 22,246,108
issued and outstanding at March 31, 1998 and
December 31, 1997, respectively 222,465 222,461
Additional paid-in capital 23,786,109 23,745,251
Retained earnings 2,066,911 1,264,957
------------------- -------------------
Total shareholders' equity 26,075,485 25,232,669
------------------- -------------------
Total liabilities and shareholders' equity $ 29,770,872 $ 27,469,818
=================== ===================
</TABLE>
The accompanying notes to financial statements are an integral part of these
balance sheets.
3
<PAGE>
OMEGA RESEARCH, INC.
STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------------------------------
1998 1997
------------------- -------------------
<S> <C> <C>
REVENUES:
Licensing fees $ 5,645,903 $ 5,549,627
Other revenues 1,384,891 1,123,456
------------------- -------------------
Total revenues 7,030,794 6,673,083
------------------- -------------------
OPERATING EXPENSES:
Cost of licensing fees 451,252 387,654
Product development 715,019 363,951
Sales and marketing 3,321,596 1,996,244
General and administrative 1,397,256 1,263,371
------------------- -------------------
Total operating expenses 5,885,123 4,011,220
------------------- -------------------
Income from operations 1,145,671 2,661,863
OTHER INCOME, net 105,283 7,105
------------------- -------------------
Income before income taxes 1,250,954 2,668,968
INCOME TAX PROVISION 449,000 -
------------------- -------------------
Income before pro forma income
tax adjustment 801,954 2,668,968
PRO FORMA INCOME TAX
ADJUSTMENT (Note 1):
Pro forma income taxes for periods
prior to September 30, 1997 - 1,054,242
------------------- -------------------
Pro forma net income $ 801,954 $ 1,614,726
=================== ===================
PRO FORMA EARNINGS PER
SHARE (Note 2):
Basic $ 0.04 $ 0.08
=================== ===================
Diluted $ 0.04 $ 0.08
=================== ===================
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
4
<PAGE>
OMEGA RESEARCH, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------------------------
1998 1997
----------------- -----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Pro forma net income $ 801,954 $ 1,614,726
Adjustments to reconcile pro forma net income to net
cash provided by operating activities:
Pro forma tax adjustment - 1,054,242
Depreciation and amortization 81,205 229,755
Provision for doubtful accounts 480,835 650,204
Compensation expense on stock option grants 40,062 15,740
Deferred income tax benefit (687,000) -
(Increase) decrease in:
Accounts receivable (635,951) (2,152,990)
Inventories 39,774 (37,422)
Other current assets (80,725) (23,700)
Increase (decrease) in:
Accounts payable (30,537) 337,738
Accrued expenses 117,367 (27,041)
Deferred revenue 235,408 -
Income taxes payable 1,136,000 -
----------------- ----------------
Net cash provided by operating activities 1,498,392 1,661,252
----------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (200,278) (316,057)
Capitalized software development costs - (110,073)
----------------- ----------------
Net cash used in investing activities (200,278) (426,130)
----------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options 800 -
Distributions to shareholders - (50,000)
----------------- ----------------
Net cash provided by (used in) financing activities 800 (50,000)
----------------- ----------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 1,298,914 1,185,122
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 12,323,515 141,633
----------------- ----------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 13,622,429 $ 1,326,755
================= ================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest $ - $ -
================= ================
Cash paid for income taxes $ - $ -
================= ================
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
5
<PAGE>
OMEGA RESEARCH, INC
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
The accompanying financial statements should be read in conjunction with
the Financial Statements and Notes to Financial Statements included in the
Company's Annual Report on Form 10-K dated December 31, 1997. In the opinion of
management, all adjustments (consisting only of normal recurring accruals)
necessary to present fairly the financial position as of March 31, 1998, the
results of operations for the three months ended March 31, 1998 and 1997 and
cash flows for the three months ended March 31, 1998 and 1997 have been made.
The results of operations and cash flows for an interim period are not
necessarily indicative of the results of operations or cash flows which may be
reported for the year or for any subsequent period.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed in
the preparation of these financial statements.
ACCOUNTS RECEIVABLE
Accounts receivable are principally from individuals, distributors and
retailers of the Company's products. The Company performs periodic credit
evaluations and maintains allowances for potential credit losses of
approximately $3,710,000 and $3,229,000 at March 31, 1998 and December 31, 1997,
respectively, and allowances for potential returns of approximately $5,100,000
and $4,150,000 at March 31, 1998 and December 31, 1997, respectively.
INCOME TAXES
For income tax purposes, the Company was an S corporation prior to September
30, 1997. Accordingly, net income and related timing differences which arise in
the recording of income and expense items for financial reporting and tax
reporting purposes were included in the individual tax returns of the S
corporation shareholders. Effective September 30, 1997, the Company terminated
its S corporation election, and, as a result, adopted Statement of Financial
Accounting Standards ("SFAS") No. 109, ACCOUNTING FOR INCOME TAXES. SFAS No. 109
requires that deferred income tax balances be recognized based on the
differences between the financial statement and income tax bases of assets and
liabilities using the enacted tax rates.
PRO FORMA INCOME TAX ADJUSTMENT
The pro forma income tax adjustment for the three month period ended March
31, 1997, included in the accompanying statements of income, is for
informational purposes only. Pro forma income taxes have been provided at the
estimated effective rate of 39.5%.
2. PRO FORMA EARNINGS PER SHARE
Pro forma earnings per share is calculated as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
----------------------------------
1998 1997
---- ----
<S> <C> <C>
Pro forma net income available to common shareholders $ 801,954 $ 1,614,726
=========== ============
Weighted average shares outstanding 22,246,308 19,480,000
Impact of dilutive options after applying
the treasury stock method 445,352 344,676
----------- ------------
Shares outstanding (diluted) 22,691,660 19,824,676
=========== ============
Per share amounts:
Basic $ 0.04 $ 0.08
========= =========
Diluted $ 0.04 $ 0.08
========= =========
</TABLE>
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This discussion should be read in conjunction with the Financial Statements
and the Notes to Financial Statements contained herein. The results of
operations for an interim period may not give a true indication of results for
the year, or for any subsequent period.
RESULTS OF OPERATIONS
The following table presents, for the periods indicated, certain items in the
Company's statement of income reflected as a percentage of total revenues and as
a percentage of licensing fees:
THREE MONTHS ENDED
MARCH 31,
---------------------------------
1998 1997
---- ----
AS A PERCENTAGE OF TOTAL REVENUES:
Licensing fees 80.3 % 83.2 %
Other revenues 19.7 16.8
------ ------
Total revenues 100.0 100.0
------ ------
Operating expenses:
Cost of licensing fees 6.4 5.8
Product development 10.2 5.5
Sales and marketing 47.2 29.9
General and administrative 19.9 18.9
----- -----
Total operating expenses 83.7 60.1
----- -----
Income from operations 16.3 % 39.9 %
====== ======
AS A PERCENTAGE OF LICENSING FEES:
Operating expenses:
Cost of licensing fees 8.0 % 7.0 %
Product development 12.7 6.5
Sales and marketing 58.8 36.0
General and administrative 24.7 22.8
----- -----
Total operating expenses 104.2 % 72.3 %
====== =====
QUARTERS ENDED MARCH 31, 1998 AND 1997
REVENUES
TOTAL REVENUES. The Company's total revenues increased 5% from $6.7
million in the three months ended March 31, 1997 to $7.0 million in the
comparable period of 1998.
LICENSING FEES. Licensing fees increased 2% from $5.5 million in the
three months ended March 31, 1997 to $5.6 million in the comparable period of
1998, primarily due to an increase in sales of TRADESTATION, OPTIONSTATION and
complementary products and services ("Add-On Solutions"). The Company believes
that growth in licensing fees is being impacted by slower than anticipated
demand for its products, which was first experienced during the fourth quarter
of 1997. Management believes that the slower demand was due in part to customer
delays in decision making (in anticipation of the release of the next versions
of TRADESTATION and OPTIONSTATION expected near the end of the second quarter of
1998 and the release of the next version of
7
<PAGE>
SUPERCHARTS expected in the third quarter of 1998). Management also believes
that product sales will continue to be in line with the level of revenues
experienced during the first quarter of 1998 until the next versions of such
products are released and accepted by the market place, however, no assurances
can be given that the market place will accept the next versions of such
products.
OTHER REVENUES. Other revenues increased 23% from $1.1 million in the
three months ended March 31, 1997 to $1.4 million in the comparable period of
1998, primarily due to an increase in minimum royalties under the Company's
license agreement with Dow Jones Markets.
OPERATING EXPENSES
COST OF LICENSING FEES. Cost of licensing fees consists primarily of
product media, packaging and storage and inventory costs. Cost of licensing fees
increased from $388,000 in the three months ended March 31, 1997 to $451,000 in
the comparable period of 1998, primarily due to a one-time payment made to a
third party in conjunction with the development of certain technology for the
Company. Cost of licensing fees as a percentage of licensing fees increased from
7% in the three months ended March 31, 1997 to 8% in the comparable period of
1998, primarily due to this one-time royalty payment.
PRODUCT DEVELOPMENT. Product development expenses include expenses
associated with the development of new products, enhancements to existing
products, testing of products and the creation of training manuals, and consist
primarily of salaries, other personnel costs and depreciation of computer and
related equipment. Product development expenses increased from $364,000 in the
three months ended March 31, 1997 to $715,000 in the comparable period of 1998,
primarily due to an increase in the number of individuals employed in product
development and recruiting fees related to the hiring of such employees. Product
development expenses as a percentage of licensing fees increased from 7% in the
three months ended March 31, 1997 to 13% in the comparable period of 1998,
primarily due to increased personnel. The Company anticipates that the absolute
dollar amount of product development expense will increase for the foreseeable
future as the Company seeks to develop new products and enhance existing
products.
SALES AND MARKETING. Sales and marketing expenses consist primarily of
marketing programs, including advertising, brochures, direct mail programs and
seminars to promote the Company's products to investors, as well as commissions,
salaries for the customer support center and marketing personnel, other
personnel costs and shipping expenses. Sales and marketing expenses increased
from $2.0 million in the three months ended March 31, 1997 to $3.3 million in
the comparable period of 1998, primarily due to increased advertising (including
print advertising, the use of sales seminars, television advertising and direct
mailers) of $920,000, increased personnel and related costs for the customer
support center, marketing personnel and commissions of $301,000 and increased
shipping costs of $78,000. Sales and marketing expenses as a percentage of
licensing fees increased from 36% in the three months ended March 31, 1997 to
59% in the comparable period of 1998. The Company expects to continue hiring
additional personnel and anticipates that sales and marketing expenses will
increase in absolute dollar amount at least through the remainder of 1998.
GENERAL AND ADMINISTRATIVE. General and administrative expenses consist
primarily of employee related costs for administrative personnel such as
executive, human resources, finance and information systems employees, as well
as external professional fees, rent and other facilities expense and provision
for bad debt. General and administrative expenses increased from $1.3 million in
the three months ended March 31, 1997 to $1.4 million in the comparable period
of 1998, primarily due to increases in personnel and related costs, contract
labor and professional fees necessary to manage the growth of the Company and
costs of being a public company, offset by decreases in the provision for bad
debt. General and administrative expenses as a percentage of licensing fees
increased from 23% in the three months ended March 31, 1997 to 25% in the
comparable period of 1998. Management believes that the absolute dollar amount
of its general and administrative expenses in the future will depend, to a large
extent, on the levels of provision required for bad debt and for the defense of
the class action lawsuit against the Company, as well as the hiring of
additional personnel to support the expected growth of the Company and the
extent, if any, to which the Company enters new markets or related businesses.
8
<PAGE>
OTHER INCOME, NET
Other income, net consists primarily of investment income from cash and
cash equivalents. The Company generally invests in overnight investments, tax
exempt commercial paper and investment grade short-term municipal bonds. The
amount of interest income fluctuates based on the amount of funds available for
investment and the prevailing interest rates. Other income, net increased from
$7,000 in the three months ended March 31, 1997 to $105,000 in the comparable
period of 1998, primarily due to income earned on the proceeds from the
Company's initial public offering which closed in October 1997.
LIQUIDITY AND CAPITAL RESOURCES
Cash provided by operating activities totaled $1.5 and $1.7 million for the
three months ended March 31, 1998 and 1997, respectively. The decrease in net
cash provided by operations in the three months ended March 31, 1998 was
primarily attributable to lower net income of the Company in the 1998 first
quarter as compared to the comparable period during 1997.
The Company's investing activities used cash of $200,000 and $426,000 in
the three months ended March 31, 1998 and 1997, respectively. The principal use
of cash in investing activities was primarily for capital expenditures related
to the acquisition of computer and related equipment and software required to
support expansion of the Company's operations. During 1997 investing activities
also used cash as a result of purchases of furniture and fixtures and leasehold
improvements related to the Company's move to a new corporate headquarters in
February 1997 and capitalized software development costs.
The Company's financing activities provided cash of $1,000 in the three
months ended March 31, 1998 and used cash of $50,000 for the three months ended
March 31, 1997. Cash provided during the three months ended March 31, 1998 was
from the exercise of stock options. Cash used during the three months ended
March 31, 1997 was due to cash distributions to the Company's shareholders prior
to the Company's initial public offering.
As of March 31, 1998, the Company had cash and cash equivalents of
approximately $13.6 million and working capital of approximately $24.9 million.
Assuming there is no significant change in the Company's business, the Company
believes that existing cash balances, including proceeds received from its
initial public offering, and cash flow from operations will be sufficient to
meet its normal working capital and capital expenditure requirements for at
least the next 12 months. The Company expects to incur significant capital
expenditures during the remainder of 1998 in order to upgrade its telephone
systems and complete the implementation of its new customer tracking and
management and accounting systems.
RECENTLY ISSUED ACCOUNTING STANDARDS
In March 1998, the Accounting Standards Executive Committee of the American
Institute of Certified Public Accountants ("ACSEC") issued Statement of Position
("SOP") 98-1, ACCOUNTING FOR THE COSTS OF COMPUTER SOFTWARE DEVELOPED OR
OBTAINED FOR INTERNAL USE. SOP 98-1 establishes criteria for determining which
costs of developing or obtaining internal-use computer software should be
charged to expense and which should be capitalized. SOP 98-1 is effective for
all transactions entered into in fiscal years beginning after December 15, 1998.
Management does not believe that the adoption of SOP 98-1 will have a material
effect on the Company's financial position or results of operations.
In October 1997, ACSEC issued SOP 97-2, SOFTWARE REVENUE RECOGNITION. SOP
97-2 supersedes SOP 91-1. SOP 97-2 requires companies to defer revenue and
profit recognition unless four required criteria of a sale are met. In addition,
SOP 97-2 requires that revenue recognized from software arrangements be
allocated to each element of the arrangement based on the relative fair values
of the elements, such as software products, upgrades, enhancements,
post-contract customer support, installation, or training. SOP 97-2 is effective
for all transactions entered into in fiscal years beginning after December 15,
1997 and has been adopted by the Company effective January 1, 1998. The adoption
of SOP 97-2 did not have a material effect on the Company's financial position
or results of operations for the quarter ended March 31, 1998.
In June 1997, the Financial Accounting Standards Board issued SFAS No. 130,
REPORTING COMPREHENSIVE INCOME, and SFAS No. 131, DISCLOSURES ABOUT SEGMENTS OF
AN ENTERPRISE AND RELATED INFORMATION.
9
<PAGE>
SFAS No. 130 establishes standards for the reporting and disclosure of
comprehensive income and its components which will be presented in association
with a company's financial statements. Comprehensive income is defined as the
change in a business enterprise's equity during a period arising from
transactions, events or circumstances relating to non-owner sources, such as
foreign currency translation adjustments and unrealized gains or losses on
available-for-sale securities. It includes all changes in equity during a period
except those resulting from investments by, or distributions to, owners. The
Company adopted SFAS No. 130 as of January 1, 1998 and such adoption did not
have an impact on the disclosures herein as comprehensive income is equal to net
income for the three months ended March 31, 1998.
SFAS No. 131 establishes standards for the way that public companies report
selected information about operating segments in annual and interim financial
reports to shareholders. It also establishes standards for related disclosures
about an enterprise's business segments, products, services, geographic areas
and major customers. SFAS No. 131 supersedes SFAS No. 14, FINANCIAL REPORTING
FOR SEGMENTS OF A BUSINESS ENTERPRISE, but retains the requirement to report
information about major customers and requires that a public company report
financial and descriptive information about its reportable operating segments.
Generally, financial information is required to be reported on the basis that it
is used internally for evaluating segment performance and deciding how to
allocate resources to segments. SFAS No. 131 requires that a public company
report segment profit or loss, certain specific revenue and expense items and
segment assets. SFAS No. 131 is effective as of December 31, 1998.
FORWARD-LOOKING STATEMENTS
This report contains statements that are forward-looking within the meaning
of Section 27A of the Securities Act and Section 21E of the Securities Exchange
Act of 1934, as amended. Such forward-looking statements are made pursuant to
the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. When used in this report, the words "believes," "estimates," "plans,"
"expects," "intends," "anticipates," "may," "prospect" and similar expressions
as they relate to the Company or its management are intended to identify the
forward-looking statements. These statements are based on current expectations
and beliefs concerning future events that are subject to risks and
uncertainties. Actual results may differ materially from the results suggested
herein and from the results historically experienced. Factors that may cause or
contribute to such differences and impact future events include, but are not
limited to, increases in the number of potential customers who delay purchases
until the Company's product upgrades are released, the Company meeting its
timetable for the anticipated second quarter upgrade releases of its premium
products, customer acceptance of such upgraded products, unfavorable critical
reviews of such upgraded products, the Company's ability to market effectively
such upgraded products, the introduction of competitive products in the market
or increased customer acceptance of recently-introduced competitive products,
changes in conditions in the financial markets, changes in operating expenses as
a result of decisions by the Company to enter into new markets or expand into
related businesses, and the Company's ability to attract and retain high-quality
product development personnel, as well as those discussed in the Company's press
releases and filings with the Securities and Exchange Commission, including but
not limited to its Annual Report on Form 10-K for the year ended December 31,
1997 (including in the section titled "Forward Looking Statements; Business
Risks" in Item 7 thereof), any of which could have a material adverse effect on
the results of operations and financial condition of the Company.
10
<PAGE>
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDINGS
(c) SALES OF UNREGISTERED SECURITIES
On January 9, 1998, in connection with their initial appointment to the
Board of Directors, the Company issued to Christos M. Cotsakos and Brian D.
Smith options to purchase 75,000 and 13,000 shares of Common Stock,
respectively. Such options vest ratably over a three-year period and are
exercisable at a price of $3.03 per share, which was the fair market value of
the Company's Common Stock on the date on which the options were granted. The
options issued to Mr. Cotsakos and Mr. Smith were granted under the Company's
1997 Director Stock Option Plan, as amended, and expire, if they remain
unexercised, on the fifth anniversary of the date on which they were granted.
In addition, during the three months ended March 31, 1998, the Company
issued to 127 employees, options to purchase an aggregate of 544,845 shares of
Common Stock. All such options vest ratably over a five-year period and are
exercisable at prices ranging from $2.88 through $3.88 per share, which was the
fair market value of the Company's Common Stock on the respective dates on which
the options were granted. The options issued to these employees were granted
under the Company's Amended and Restated 1996 Incentive Stock Plan, as amended,
and expire, if they remain unexercised, on the tenth anniversary of the date on
which they were granted.
All the foregoing options were granted by the Company in reliance upon the
exemption from registration available under Section 4(2) of the Securities Act.
Other than as described above, the Company did not issue or sell any
unregistered securities during the first quarter of 1998.
(d) USE OF PROCEEDS
The Company effected an initial public offering pursuant to a Registration
Statement on Form S-1 (File No. 333-3207) which was declared effective by the
Securities and Exchange Commission on September 30, 1997. See Item 2(d) of the
Company's Quarterly Report on Form 10-Q for the fiscal quarter ended September
30, 1997 for a description of the Company's use of proceeds from such offering.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27.1 Financial Data Schedule
(b) Report on Form 8-K
No reports on Form 8-K were filed by the Registrant during the three months
ended March 31, 1998.
11
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
OMEGA RESEARCH, INC.
Registrant
MAY 11, 1998 /S/ SALOMON SREDNI
- ------------ ---------------------------------
Date Salomon Sredni
Vice President of Operations, Chief Financial
Officer and Treasurer
(Signing both in his capacity as an authorized
officer and as Principal Financial and
Accounting Officer of the Registrant)
12
<PAGE>
OMEGA RESEARCH, INC.
EXHIBIT INDEX
EXHIBIT
NO. DOCUMENT DESCRIPTION
------- --------------------
27.1 Financial Data Schedule
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FROM THE COMPANY'S FINANCIAL
STATEMENTS AS OF AND FOR THE QUARTER ENDED MARCH 31, 1998 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001042814
<NAME> OMEGA RESEARCH, INC.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 13,622,429
<SECURITIES> 1,009,270
<RECEIVABLES> 18,403,334
<ALLOWANCES> 8,810,000
<INVENTORY> 107,047
<CURRENT-ASSETS> 28,588,662
<PP&E> 2,407,457
<DEPRECIATION> 1,316,873
<TOTAL-ASSETS> 29,770,872
<CURRENT-LIABILITIES> 3,695,387
<BONDS> 0
0
0
<COMMON> 222,465
<OTHER-SE> 25,853,020
<TOTAL-LIABILITY-AND-EQUITY> 29,770,872
<SALES> 5,645,903
<TOTAL-REVENUES> 7,030,794
<CGS> 451,252
<TOTAL-COSTS> 4,953,036
<OTHER-EXPENSES> (105,283)
<LOSS-PROVISION> 480,835
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,250,954
<INCOME-TAX> 449,000
<INCOME-CONTINUING> 801,954
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 801,954
<EPS-PRIMARY> 0.04
<EPS-DILUTED> 0.04
</TABLE>
