As filed with the Securities and Exchange Commission on April 28, 2000.
Registration No. 333-__________
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------
OMEGA RESEARCH, INC.
(Exact name of registrant as specified in its charter)
FLORIDA 59-2223464
(State or other Jurisdiction of (I.R.S Employer Identification Number)
Incorporation or Organization)
8700 WEST FLAGLER STREET
MIAMI, FLORIDA 33174
(305) 485-7000
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
----------------
WILLIAM R. CRUZ AND RALPH L. CRUZ
CO-CHIEF EXECUTIVE OFFICERS
OMEGA RESEARCH, INC.
8700 WEST FLAGLER STREET
MIAMI, FLORIDA 33174
(305) 485-7000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
---------------
COPY TO:
ALAN D. AXELROD, ESQ.
BILZIN SUMBERG DUNN PRICE & AXELROD, LLP
200 SOUTH BISCAYNE BOULEVARD
SUITE 2500
MIAMI, FL 33131
(305) 374-7580
---------------
Approximate Date of Commencement of Proposed Sale to the Public: From
time to time after the effective date of this Registration Statement as
determined by the selling shareholders.
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 investment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
======================================== ===========================================================================================
TITLE OF EACH CLASS AMOUNT TO BE PROPOSED MAXIMUM OFFERING PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PRICE PER SHARE (1) AGGREGATE OFFERING PRICE (1) REGISTRATION FEE
<S> <C> <C> <C> <C>
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Common Stock, par value
.01 per share............. 1,999,995 $3.75 $7,499,882 $2,010
======================================== ===========================================================================================
</TABLE>
(1) Estimated solely for the purpose of computing the amount of the
registration fee, based upon the average of the high and low prices of
Omega Research's common stock as reported on The Nasdaq National Market
on April 24, 2000 in accordance with Rule 457(c) under the Securities
Act of 1933.
--------------------
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.
<PAGE>
The information in this prospectus is not complete and may be changed. The
selling shareholders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission becomes effective.
The prospectus is not an offer to sell these securities and it is not soliciting
an offer to buy these securities in any state where the offer or sale is not
permitted.
PROSPECTUS
SUBJECT TO COMPLETION, DATED APRIL 28, 2000
1,999,995 SHARES
OMEGA RESEARCH, INC.
COMMON STOCK
This prospectus relates to the public offering, which is not being
underwritten, of up to 1,999,995 shares of common stock, par value $0.01 per
share, of Omega Research, Inc. ("Omega Research"), which may be offered from
time to time by shareholders of Omega Research or by donees, transferees or
other successors in interest that receive shares of Omega Research as a gift or
other non-sale related transfer. We will receive no part of the proceeds of such
sales. All of the shares of Omega Research common stock described above were
issued by us in consideration of our acquisition of all of the outstanding
common stock of Window on WallStreet Inc. ("Window on WallStreet"), a Texas
corporation. See "SELLING SHAREHOLDERS" for further information. The 1,999,995
shares were issued pursuant to an exemption from the registration requirements
of the Securities Act of 1933, as amended.
These shares may be offered by shareholders of Omega Research from time
to time in one or more transactions as described under "PLAN OF DISTRIBUTION."
To the extent required, the number of shares to be sold, the name of any selling
shareholder(s), the purchase price, the name of any agent or broker-dealer and
any applicable commissions, discounts or other items constituting compensation
to such agent or broker-dealer with respect to a particular offering will be set
forth in a supplement or supplements to this prospectus. The aggregate proceeds
to any selling shareholder(s) from the sale of the shares offered from time to
time will be the purchase price of the shares sold less commissions, discounts
and other compensation, if any, paid by such selling shareholder(s) to any agent
or broker-dealer. The price at which any of the shares may be sold, and the
commissions, if any paid, in connection with any sale, are unknown and may vary
from transaction to transaction. We will pay all expenses incident to the
offering and sale of the shares to the public other than any commissions and
discounts of underwriters, dealers or agents and any transfer taxes. See
"SELLING SHAREHOLDERS" and "PLAN OF DISTRIBUTION."
Omega Research's common stock is listed on The Nasdaq National Market
under the symbol "OMGA." On ________, 2000, the last sale price of Omega
Research's common stock was $______ per share.
-------------
THIS OFFERING INVOLVES A DEGREE OF RISK.
FOR MORE INFORMATION, SEE "RISK FACTORS" ON PAGE 3.
-------------
The Securities and Exchange Commission may take the view that, under
certain circumstances, Omega Research's shareholders and any broker-dealers or
agents that participate with such shareholders in the distribution of these
registered shares may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933. Commissions, discounts or concessions received by any
such broker-dealer or agent may be deemed to be underwriting commissions under
the Securities Act of 1933.
NEITHER THE SEC 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 ______, 2000.
<PAGE>
TABLE OF CONTENTS
WHERE YOU CAN FIND MORE INFORMATION.................................1
THE COMPANY.........................................................2
RISK FACTORS........................................................3
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS..................10
USE OF PROCEEDS....................................................11
SELLING SHAREHOLDERS...............................................11
PLAN OF DISTRIBUTION...............................................12
LEGAL MATTERS......................................................13
EXPERTS ..........................................................14
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
Omega Research files annual, quarterly and special reports, proxy
statements and other information with the SEC. You may read and copy any
reports, statements or other information Omega Research files at the SEC's
public reference rooms at the following locations:
Public Reference Room
450 Fifth Street, N.W.
Room 1024
Washington, D.C. 20549
New York Regional Office
7 World Trade Center
Suite 1300
New York, New York 10048
Chicago Regional Office
Citicorp Center
500 West Madison Street
Suite 1400
Chicago, Illinois 60661-2511
Please call the SEC at 1-800-SEC-0330 for further information on the
public reference rooms. Omega Research's SEC filings are also available to the
public from commercial document retrieval services and at the Website maintained
by the SEC at "http://www.sec.gov." Reports, proxy statements and other
information pertaining to Omega Research are also available for inspection at
the offices of The Nasdaq Stock Market, which is located at 1735 K Street, N.W.,
Washington, D.C. 20006.
Omega Research has filed a registration statement to register with the
SEC the Omega Research common stock listed in this prospectus. This prospectus
is part of that registration statement. As allowed by SEC rules, this prospectus
does not contain all of the information you can find in the registration
statement or the exhibits to the registration statement.
Some of the important business and financial information that you may
want to consider is not included in this prospectus, but rather is "incorporated
by reference" to documents that have been filed by Omega Research with the SEC.
The information incorporated by reference is considered part of this prospectus,
except for any information superceded by information contained directly in this
prospectus or in later filed documents incorporated by reference in this
prospectus. The information that is incorporated by reference consists of:
o Omega Research's Annual Report on Form 10-K for the fiscal
year ended December 31, 1999, as filed on March 22, 2000;
o Omega Research's Current Reports on Form 8-K filed on November
8, 1999 (as amended on January 7, 2000), November 10, 1999 and
January 28, 2000 (as amended on April 28, 2000);
o The description of Omega Research's common stock contained in
its Registration Statement on Form S-1 filed on July 25, 1997;
and
o All documents filed by Omega Research under the Securities
Exchange Act of 1934 (e.g., Forms 10-Q and 8-K) after the date
of this prospectus and prior to the termination of this
offering.
If there is any contrary information in a previously filed document
that is incorporated by reference, then you should rely on the information in
this prospectus. You should rely only on the information contained or
incorporated by reference in this prospectus. We have not authorized anyone to
provide you with information that is different from that which is contained or
incorporated by reference in this prospectus. You should not assume that the
information in this prospectus is accurate as of any date other than the date on
the front of this prospectus.
If you are a shareholder, you can obtain any of the documents
incorporated by reference through Omega Research or the SEC. Documents
incorporated by reference are available from Omega Research without charge,
<PAGE>
excluding all exhibits. You may obtain documents incorporated by reference in
this prospectus by requesting them in writing to the following address or by
telephone:
Omega Research, Inc.
Attention: Investor Relations
8700 West Flagler Street
Miami, Florida 33174
(305) 485-7000
THE COMPANY
Omega Research, a Florida corporation, was incorporated in 1982 to
develop, market and sell investment analysis and trading strategy testing and
automation (collectively, "trading strategy") software tools to individual and
professional investors and traders (collectively, "traders"). Our current
products and services provide traders with the ability to develop, historically
test and computer automate trading strategies and to access streaming real-time
charts, quotes and news via the Internet.
We are in the process of changing our business model. We have taken
steps, one of which is the proposed merger with onlinetradinginc.com
("OnlineTrading.com"), to transform from a trading strategy client software
company to one that includes an online brokerage firm -- a company which intends
to provide to active traders a trading platform that incorporates and seamlessly
integrates powerful trading strategy tools, historical and streaming real-time
market data and news, and high-speed access directly to an electronic order
execution system. Our historical business model has consisted of sales of client
software products, payment for which is committed to in full by the customer at
the time of sale. Under the new business model, we will seek to derive recurring
revenues from customers by offering monthly subscription services for trading
strategy tools integrated with streaming real-time market data and news for
which a monthly fee is payable, and by offering through OnlineTrading.com
(subject to completion of the merger) online brokerage services for which
commissions are payable. We believe that we will be able to leverage our
historical success in selling trading strategy tools to build a subscriber base
of active traders that will, assuming completion of the merger, use the online
brokerage services of OnlineTrading.com or, at a minimum, our trading strategy
subscription services.
We have been, and remain, a leading provider of real-time trading
strategy client software for the Microsoft Windows operating system. In February
1999, we released our current generation of premium software products, branded
"2000I," which included upgrade versions of our then-existing products and new
products. As of February 22, 1999, our client software product line has
consisted of TRADESTATION 2000I, OPTIONSTATION 2000I, RADARSCREEN 2000I, OMEGA
RESEARCH PROSUITE 2000I and SUPERCHARTS 4.
Approximately five months ago, we began to implement the change in our
business model. On October 26, 1999, we acquired Window on WallStreet, a leading
provider of Internet-based streaming real-time market data (FINANCIAL DATA CAST
NETWORK, or "FDCN") and a developer of client software and online trading
strategy tools, in a merger transaction in which the Window On WallStreet
shareholders received 1,999,995 newly-issued shares of Omega Research common
stock.
On November 8, 1999, we announced that we would focus on serving active
online traders through the design, marketing and implementation of an
Internet-based trading strategy platform that is to be named TRADESTATION.COM.
TRADESTATION.COM, expected to be launched later this year, will include premium
trading strategy tools of TRADESTATION seamlessly integrated with the FDCN'S
streaming real-time market quotes and news.
On January 19, 2000, we signed a definitive, 100% share-exchange merger
agreement with OnlineTrading.com. OnlineTrading.com provides electronic order
execution technology that directly accesses electronic communications networks
("ECN's"), exchanges and market makers in order to provide OnlineTrading.com's
customers with high-speed and efficient order execution that avoids traditional
market maker participation and brokerage order-flow arrangements. The prime
objective of the pending merger with OnlineTrading.com is to offer to active
traders online brokerage services that are integrated with TRADESTATION.COM,
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<PAGE>
thereby creating a trading platform that incorporates and seamlessly integrates
powerful trading strategy tools, historical and streaming real-time market data
and news, and a high-speed electronic order execution system.
Pursuant to an Agreement and Plan of Merger and Reorganization, as
amended, a recently-formed holding company named OnlineTrading.com Group, Inc.
("OnlineTrading.com Group") will own 100% of the issued and outstanding capital
stock of Omega Research and OnlineTrading.com. Upon completion of the merger, as
a result of share exchanges between OnlineTrading.com Group and each of Omega
Research and OnlineTrading.com, and the listing of OnlineTrading.com Group
shares, OnlineTrading.com Group will be the sole publicly-traded company in the
group, with its outstanding shares of common stock listed on The Nasdaq National
Market. OnlineTrading.com Group, based upon the exchange ratio set forth in the
merger agreement, would initially be owned between 62% and approximately 57% (on
a fully diluted basis) by Omega Research's shareholders and between 38% and
approximately 43% (on a fully diluted basis) by OnlineTrading.com's
shareholders. The precise percentages will be determined by the formulae set
forth in the merger agreement. The initial eight-member board of directors of
OnlineTrading.com Group would consist of five directors (two of whom would be
independent directors) designated by Omega Research, and three directors (one of
whom would be an independent director) designated by OnlineTrading.com. Closing
of the merger is conditioned upon and subject to the effectiveness of a
registration statement on Form S-4, the approval of the shareholders of each of
Omega Research and OnlineTrading.com, and the satisfaction of other conditions
precedent.
On January 25, 2000, we launched WINDOWONWALLSTREET.COM, our first
Internet subscription service. WINDOWONWALLSTREET.COM offers streaming real-time
charts, quotes and news powered by some of our award-winning trading tools. We
believe that the subscriber base being built with WINDOWONWALLSTREET.COM will
contain many potential OnlineTrading.com brokerage clients.
On February 29, 2000, we announced that in light of the apparent
successful launch of WINDOWONWALLSTREET.COM, we were accelerating our transition
to our new business model by focusing our marketing efforts and resources on
WINDOWONWALLSTREET.COM (as opposed to our client software). Marketing of client
software products is expected to be discontinued in May 2000, although
availability and customer support of our client software products are expected
to continue for the foreseeable future.
The word "Company," as used in this prospectus, refers collectively to
OnlineTrading.com Group as the anticipated publicly-traded holding company,
Omega Research as its wholly-owned subsidiary responsible for the development
and operation of the trading strategy tools/real-time market data services
business, and OnlineTrading.com as its wholly-owned subsidiary responsible for
brokerage services. Those subsidiaries are intended to be operated as separate,
independent companies. The anticipated brokerage services to be provided through
OnlineTrading.com are subject to the closing of the merger, of which no
assurance can be given.
Omega Research's principal executive offices are located at 8700 West
Flagler Street, Miami, Florida 33174, and its telephone number is (305)
485-7000.
RISK FACTORS
The following risk factors should be considered in conjunction with the
other information included and incorporated by reference in this prospectus
before purchasing our common stock.
FAILURE TO COMPLETE THE MERGER WITH ONLINETRADING.COM COULD NEGATIVELY IMPACT
OUR STOCK PRICES AND FUTURE BUSINESS AND OPERATIONS
If the merger with OnlineTrading.com is not completed, we may be
subject to a number of material negative events, including the following:
o we may be required to pay OnlineTrading.com a termination fee
of $5 million under certain circumstances;
3
<PAGE>
o the stock option we granted to OnlineTrading.com may become
exercisable under certain circumstances;and
o costs related to the merger, such as legal, accounting and
financial advisor fees, must be paid even if the merger is not
completed.
In addition, our customers, suppliers and potential strategic partners
may, in response to the announcement of the merger, delay or defer decisions
concerning us. Any delay or deferral in those decisions by such customers,
suppliers or potential strategic partners could have a material adverse effect
on our business, regardless of whether or not the merger is ultimately
completed. Similarly, our current and prospective employees may experience
uncertainty about their future roles after the merger until our strategies are
completely announced or executed. This may adversely affect our ability to
attract and retain key management, sales, marketing and technical personnel.
Further, if the merger is terminated and our board of directors
determines to seek another merger or business combination, there can be no
assurance that we will be able to find a partner willing to pay or accept (as
the case may be) an equivalent or better price than that which would be paid or
accepted in the merger. In addition, while the merger agreement is in effect,
subject to certain limited exceptions, we are prohibited from soliciting,
initiating, encouraging or entering into certain extraordinary transactions,
such as a merger, sale of assets or other business combination, with any other
party. Furthermore, if the merger agreement is terminated and OnlineTrading.com
is entitled to exercise and does exercise its option to purchase our common
stock, we may not be able to account for future transactions as a
pooling-of-interests.
CHANGE OF BUSINESS MODEL
We are, through our recent Window On WallStreet acquisition and the
pending merger with Online Trading.com, in the process of changing our business
model from being a trading strategy client software company to being part of,
and controlling, a company (i.e., OnlineTrading.com Group) that provides an
Internet platform of trading strategy tools and streaming real-time market data
and news, and trade execution through a high-speed electronic order execution
system. We have limited experience in the real-time market data industry (all of
such experience has been acquired by Window On WallStreet, and Window On
WallStreet had only one year of experience operating a real-time data service at
the time it was acquired by us). We have no experience in the brokerage services
industry, and the Company will be relying completely upon the experience of
OnlineTrading.com. OnlineTrading.com itself has only been providing brokerage
services for approximately four years, and primarily to institutional investors
(as opposed to the individual active traders the Company seeks to attract). The
lack of experience in key components of the new business model, even after
considering the experience of Window On WallStreet and OnlineTrading.com, is
substantial, and may result in delays, mistakes and liabilities unlikely to
happen to a company that has more experience. Such delays, mistakes and
liabilities, if and to the extent they occur, are likely to have material
adverse effects upon the Company's business, financial condition, results of
operations and prospects.
If customer acceptance of the Company's Internet-based trading strategy
tools, real-time market data services or online brokerage services does not meet
our expectations (due to technical difficulties or errors in the products or
services, unfavorable critical reviews, failure to market effectively, the
introduction by others of more-accepted products and services, or other
reasons), its business, financial condition, results of operations and prospects
will be materially adversely affected. All software, including Internet-based
software, contains errors, particularly new, highly-complex, innovative products
or services. Accordingly, there is a substantial risk that the Company's
Internet-based trading strategy tools, real-time market data services and online
brokerage services in development will contain numerous technical errors, some
of which may be significant and deeply, negatively impact customer acceptance of
such products and services.
The decision to change our business model also means that we must
develop and depend upon a different operational infrastructure than the one
which supported a client software business, and substantially modify our
approaches to product development and sales and marketing. Our infrastructure
must be changed to support three separate kinds of businesses (development of
trading strategy tools, organization and delivery of streaming real-time data
and news, and online brokerage services) that need to be seamlessly integrated.
This will require substantial changes in information technology and databases,
mechanisms and methods of delivery of products and services, administrative
functions, and use of personnel resources. Product development must change its
focus to a large
4
<PAGE>
extent from client software to Internet and web site-related technology, and
sales and marketing must change its focus from high-priced client software sales
to brokerage services (commission revenues), the advertising of which is
intensely regulated by governmental and quasi-governmental authorities, and
Internet-based, lower-priced, monthly subscriptions for trading strategy tools
integrated with streaming real-time data and news (monthly subscription
revenues). The Company has virtually no prior experience in marketing these
services, as we have never (until the Window On WallStreet acquisition) been in
those businesses, and Window On WallStreet and OnlineTrading.com have engaged in
little or no media advertising of their respective services. There are
substantial risks that we will fail, to some degree, to sufficiently rebuild our
infrastructure and integrate the three key components of the new business model
(trading tools/real-time data/online brokerage services), and/or to re-focus
product development and sales and marketing on the new business model. Such
failures, if and to the extent they occur, are likely to have material adverse
effects upon our business, financial condition, results of operations and
prospects.
Our transition to the new business model has placed, and will continue
to place, a significant strain on our management and operations. Our future
operating results will depend, in part, on our ability to continue to broaden
our senior and middle management groups and administrative infrastructure, and
our ability to attract, hire, and retain skilled employees, particularly in
product development, marketing and sales, web site design and information
technology.
Because the new business model is one with no historical record for the
Company, and, to our knowledge, one with no historical record for any other
company, our attempts to anticipate revenues and costs, to prepare budgets which
organize the implementation of our transition to the new business model, and to
make decisions regarding obtaining third-party financing that may be required,
will generally be based upon theoretical assumptions. Future events and results
may differ drastically from those planned or anticipated, which, if negative,
would result in a material adverse effect on our business, financial condition,
results of operations and prospects.
The substantial risks discussed above are magnified by the rapid pace
at which we are attempting to complete the transition to the new business model.
We are assuming that the merger will close no later than June (even though there
is risk that the merger will close later or not at all) and that the new
business model will be fully launched in a relatively short period of time after
closing of the merger. If that occurs, we will have changed our business
entirely in a period of approximately eight months. The rapid pace obviously
increases the likelihood of occurrence of the possible mistakes and failures
discussed above, and increases the risks of the likelihood of resulting material
adverse effects that will damage our business, financial condition, results of
operations and prospects.
FAILURE TO CLOSE THE MERGER
Our new business model is dependent upon closing of the merger with
OnlineTrading.com. If the merger does not occur, our choices would be to modify
our new business model to exclude online brokerage services, to seek to develop
arrangements to integrate our trading strategy tools/streaming real-time data
platform with third-party online brokers, to search for a different online
broker with which to merge or create a joint venture relationship, or to create
our own online brokerage service. We do not believe that excluding online
brokerage services from our new business model or developing integration
arrangements with third-party online brokers are favorable alternatives. We
believe that integrated online brokerage services are critical in meeting the
current and evolving needs of the active trader, and that the potential success
of the new business model is dramatically reduced if it includes only trading
strategy tools and streaming real-time data without integration of that platform
with electronic order execution services owned and provided by the same company.
Further, we believe that, in the new business model, brokerage commissions are
likely to become the largest source of revenues for the Company. Finding a new
online broker partner may or may not be feasible, and in all cases would cause a
huge delay in our transition to the new business model. Our development of our
own online brokerage services would likely cause an even longer delay, as well
as contain the additional risk of our entering a heavily government-regulated
business in which we have no prior experience. The merger is subject to
conditions precedent which, if not fulfilled or waived (if waivable), would
result in failure to complete the merger. Those conditions precedent include,
but are not limited to, another company making a superior proposal to merge with
us or OnlineTrading.com which our or their (as applicable) board of directors
believes it is duty-bound to accept, satisfying all broker-dealer regulatory
requirements relating to the merger, approval by our and their shareholders, the
effectiveness of the registration statement on Form S-4 filed by
OnlineTrading.com Group, and the listing of OnlineTrading.com Group shares on
5
<PAGE>
The Nasdaq National Market. Failure of the merger to occur as and when planned,
or at all, would likely have a material adverse effect on our business,
financial condition, results of operations and prospects.
Assuming the merger with OnlineTrading.com does occur, the success of
the new business model will be dependent, in part, upon the two companies being
able to rapidly integrate with one another from technological, operational and
marketing aspects. The two companies are currently working on the completion of
OnlineTrading.com's proprietary order routing and execution technology, the
integration of that technology with TRADESTATION.COM (which itself is currently
under development) in order to be able to access electronic order execution from
the TRADESTATION.COM platform, and the required operational, information
technology and marketing integrations. Given the rapid pace and the number of
items currently in development, there are substantial risks that the completion
of those tasks and expected integrations will not occur as or when planned, will
contain significant errors or problems, or will not be completed at a time
and/or in a manner that results in commercial viability. To the extent such
errors, problems or failures occur, they are likely to have a material adverse
effect on our business, financial condition, results of operations and
prospects.
LIQUIDITY CONCERNS
We are experiencing a period of net losses. As of April 10, 2000, we
had less than $4.3 million in cash, cash equivalents and marketable securities
to address our current and anticipated losses and our other cash requirements as
we transition to the new business model. As we implement the transition to the
new business model and thereafter, we may need to raise additional funds in
order to fund any operating losses, support more rapid expansion, develop new or
enhanced services and products, implement sufficient marketing campaigns,
respond to competitive pressures, acquire necessary or complementary businesses
or technologies, and take advantage of unanticipated opportunities. We have also
recently substantially increased our rental obligations under real property,
facilities and equipment leases. The Company's future liquidity and capital
requirements will depend upon numerous factors, including the period of time it
takes to execute the transition to the new business model, and customer
acceptance thereof, costs and timing of expansion of research and development
and marketing efforts, the success and timing of such efforts, the success of
our existing and new product and service offerings, and competing technological
and market developments. Funds may be raised through debt financing and/or the
issuance of equity securities (there being no assurance that any such type of
financing on terms satisfactory to us will occur). Any equity financing or debt
financing which requires issuance of equity securities or warrants to the lender
would reduce the percentage ownership of the shareholders of the Company. You
also may, if issuance of equities occurs, experience additional dilution in net
book value per share, or the issued equities may have rights, preferences or
privileges senior to yours.
POTENTIAL FLUCTUATIONS IN QUARTERLY OPERATING RESULTS
Our quarterly revenues and operating results have fluctuated
significantly in the past and will likely fluctuate in the future. These
fluctuations may be expected to be even greater during 2000, and thereafter, due
to the unpredictability inherent in the change to the new business model the
merger with OnlineTrading.com will effectuate. Causes of such significant
fluctuations may include, but are not limited to:
o the timing, completion (if any) and costs of: the merger; our
development and launch of TRADESTATION.COM and other trading
strategy platforms; development and launch of
OnlineTrading.com's proprietary electronic order routing and
execution technology; the integration and launch of
TRADESTATION.COM as a platform for OnlineTrading.com's
electronic order routing and execution technology; and
creation of the Company's infrastructure, including
information technology and databases, mechanisms and methods
of delivery of products and services, administrative
functions, product development and sales and marketing;
o cash flow problems that may occur;
o the transition in our business model from deriving revenues on
expensive client software sales at the time of the sale to
deriving revenues on lower-priced subscription services on a
monthly basis;
o OnlineTrading.com's shift from high net-worth individual and
institutional clients to active traders;
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o our actual returns and bad debt exceeding or being smaller
than our reserves (which are estimates) for returns and bad
debt;
o costs and payment obligations associated with debt and/or
equity financings, if any;
o the level of product/service and price competition;
o continuous changes in sales incentive or marketing strategies
(which have undergone significant change recently and are
expected to continue to evolve);
o changes in demand for our products and services;
o costs that may occur with respect to regulatory compliance or
other regulatory issues;
o changes in operating expenses;
o adverse results in lawsuits that may be filed in the future;
o attempts to enter additional related new markets or expand
into additional related businesses and the cost, timing and
success thereof;
o the incurrence of significant costs in one quarter related to
revenues anticipated to be realized in a subsequent quarter;
and
o general economic and market factors, including changes in the
securities and financial markets.
COMPETITION
The markets for (i) online brokerage services, (ii) client software and
Internet-based trading tools and (iii) real-time market data services are
intensely competitive and rapidly evolving, and there appears to be substantial
consolidation of those three products and services occurring in the industry.
The new business model embraces this evolution and consolidation. However, we
believe that due to the current and anticipated rapid growth of the market for
integrated trading tools, real-time market data and online brokerage services,
competition, as well as consolidation, will substantially increase and intensify
in the future. We believe our ability to compete will depend upon many factors
both within and outside our control. These include: the timing and market
acceptance of new products and services and enhancements developed by us and our
competitors; our ability to integrate the respective businesses in an orderly,
efficient and otherwise successful manner; the operation and support of
efficient, materially error-free Internet-based systems; product and service
functionality; data availability; ease of use; pricing; reliability; customer
service and support; and sales and marketing efforts.
POTENTIAL LIABILITY TO CUSTOMERS
Our products and services and planned products and services are and
will be used by traders in the financial markets, and, as a result, an investor
or trader might claim that investment or trading losses or lost profits resulted
from use of a flawed version of one of our trading tools or inaccurate
assumptions made by the trading tools regarding data, or inaccurate data. This
risk is heightened by our decision to provide real-time financial market
information to our customers, which routinely contain errors and omissions, but
which are nevertheless relied upon by customers in making investment and trading
decisions using our trading tools. This risk will, assuming completion of the
merger with OnlineTrading.com, again be substantially heightened by the
Company's planned offering of online brokerage services seamlessly integrated
with real-time trading strategy tools. Contributing to these possible
occurrences are risks that the electronic communications and other systems upon
which these products and services rely, and will continue to rely, may operate
too slowly or fail. Major failures of this kind will affect all customers who
are online simultaneously. Many aspects of the securities brokerage business,
including online trading services, involve substantial risks of liability. In
recent years there has been an increasing incidence of litigation involving the
securities brokerage industry, including class action and other suits that
generally seek substantial damages, including in some cases punitive damages.
Any such litigation could have a material adverse effect on the Company's
business, financial condition, results of operations and prospects.
7
<PAGE>
In addition, there can be no assurance that the Company's Year 2000
compliance efforts, or compliance modifications, have not and will not adversely
affect products and services in ways we have not anticipated, or that customers
will not assert that we have or had an obligation to provide Year 2000 solutions
for older versions of existing products or services or for discontinued products
or services, any of which occurrences could result in claims by customers. Any
such litigation could result in substantial damages and significant costs in
terms of the deployment of financial and managerial resources.
RETURNS AND BAD DEBT
Historically, our net revenues from licensing fees for sales of client
software have been determined by estimating reserves for returns and bad debt
quarterly based upon historical experience and other relevant factors. There can
be no assurance, in particular given the possible effects of our announcements
of our change in business model, that actual returns and bad debt will not
exceed estimated reserves for returns and bad debt.
RISKS ASSOCIATED WITH RELIANCE ON THE INTERNET
The new business model means that our future growth will depend upon
our continuing to adopt the Internet as our primary medium for commerce and
communication, including the delivery of browser-based trading tools,
high-quality streaming real-time market data, online electronic order routing
and execution systems, and comprehensive web sites that include discussion
forums, electronic discussion groups, educational content, marketing materials
and customer support. There can be no assurance that we will successfully
develop and implement such Internet capabilities, or effectively adjust our
marketing and customer support approaches. Further, we will be relying
increasingly on our web sites and related systems, and the Internet generally,
to maximize the use and cost-efficiency of our products and services, to accept
orders and payments, to track and account for orders and payments and fulfill
reporting obligations under regulatory laws and marketing agreements with third
parties, to register attendees for events, to market our products and services,
and to provide technical information and assistance to our customers. In
addition to the risk that we may not adequately transition our business to the
Internet, there is the risk that, over time, the Internet may not prove to be a
viable commercial marketplace because of a failure to continue to develop the
necessary infrastructure, such as reliable network backbones and adequate band-
widths, or the failure to develop complementary products and services, such as
high-speed modems. The Internet has experienced, and is expected to continue to
experience, significant growth in the number of users and amount of traffic.
There can be no assurance that the Internet infrastructure will continue to be
able to support the demands placed on it by this continued growth.
SYSTEMS FAILURE
Assuming completion of the merger with OnlineTrading.com, the Company
will be receiving and processing trade orders through Internet-based trading
platforms and online order execution systems. Thus, we will depend heavily on
the integrity of the electronic systems supporting this type of trading,
including the trading strategy tools containing buy and sell alerts that
initiate trading decisions or order placement. Heavy stress placed on these
systems during peak trading times could cause these systems to operate too
slowly or fail. Additionally, the integrity of these systems is increasingly
being attacked by persons sometimes referred to as "hackers" who intentionally
introduce viruses or other defects to cause damage, inaccuracies or complete
failure. If these systems or any other systems in the trading process slow down
significantly or fail even for a short time, our brokerage customers would
suffer delays in trading, potentially causing substantial losses and possibly
subjecting us to claims for such losses or to litigation claiming fraud or
negligence. In addition, a hardware or software failure, power or
telecommunications interruption or natural disaster could cause a systems
failure. Any systems failure that interrupts our operations could have a
material adverse effect on our business, financial condition, results of
operations and prospects.
RISKS ASSOCIATED WITH FLUCTUATIONS IN THE SECURITIES AND FINANCIAL MARKETS
Our current and planned products and services are and will be marketed
to customers who invest or trade in the securities and financial markets. To the
extent that interest in investing or trading decreases due to volatility in the
securities or financial markets, tax law changes, recession, depression, or
otherwise, our business, financial condition, results of operations and
prospects could be materially adversely affected. It is possible, if not likely,
that
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<PAGE>
increased losses by customers that occur as a result of any such recession,
depression or other negative event will increase the quantity and size of legal
claims made against us.
OPERATION IN A HIGHLY-REGULATED INDUSTRY AND COMPLIANCE FAILURES
The securities industry is subject to extensive regulation covering all
aspects of the securities business. Regulatory authorities are currently
focusing intensely on the online trading industry, particularly the segment that
seeks the accounts of active traders by offering well-integrated, sophisticated
trading platforms and order execution. The various government authorities and
industry self-regulatory organizations that supervise and regulate and will
supervise and regulate the Company (assuming the merger is completed) generally
have broad enforcement powers to censure, fine, issue cease-and-desist orders or
suspend, enjoin or expel us or any of our officers or employees who violate
applicable laws or regulations. Additionally, new rules relating to active
traders may be enacted which severely limit the operations and potential success
of our new business model. Our ability to comply with all applicable laws and
rules is largely dependent on our maintenance of compliance and reporting
systems, as well as our ability to attract and retain qualified compliance and
other personnel. We could be subject to disciplinary or other regulatory or
legal actions in the future due to noncompliance. In addition, it is possible
that any past noncompliance of OnlineTrading.com could subject the Company to
future civil lawsuits or regulatory actions, the outcome of which could have a
material adverse effect on our financial condition and operating results.
DEPENDENCE UPON OUTSIDE DATA SOURCES
Our business is dependent upon our ability to enter into contracts with
private business information compilers in order to provide market data and news
to our customers. We obtain such information pursuant to non-exclusive licenses
from private information compilers, some of which are our current or potential
competitors. The private sector contracts typically provide for royalties based
on usage or minimums. We have licenses from certain data suppliers to provide
market data information that those suppliers also market in competition with us.
We must also comply with rules and regulations of the exchanges that are the
sources of market data information. Failure to comply could result in our
becoming a prohibited recipient of market data from exchanges the rules or
regulations of which were violated. While we are not aware of any material data
supplier contracts that are in jeopardy of being terminated or not renewed,
there can be no assurance that we will be able to renew our current contracts
with data sources, maintain comparable price levels for information, or
negotiate additional contracts with data sources as necessary to maintain
existing products and services or introduce new products and services. There is
no assurance comparable alternative sources of information could be obtained
should existing contracts be terminated or not renewed. Termination of our
relationship with one or more information suppliers could have a material
adverse effect on our financial condition and results of operations.
DEPENDENCE ON KEY EMPLOYEES
Our success depends to a very significant extent on the continued
availability and performance of a number of senior management, engineering and
sales and marketing personnel. The loss of one or more of these key employees,
including William R. Cruz or Ralph L. Cruz, our Co-Chairmen and Co-Chief
Executive Officers, or certain of our key technology personnel, could have a
material adverse effect on us.
DEPENDENCE ON RELATIONSHIP WITH BRIDGE TELERATE
We are party to a Software License, Maintenance and Development
Agreement with Telerate, Inc. (a Bridge Information Systems, Inc. subsidiary)
relating to TRADESTATION. The agreement provides a substantial, high-margin,
minimum royalty stream in 2000 and 2001, the loss of which would materially
adversely affect our revenues and earnings (or size of our losses) and could
cause cash flow problems in those years. While the agreement is non-cancelable,
there can be no assurance that our anticipated royalties and other anticipated
benefits from our relations with Telerate, Inc. will be realized.
NET CAPITAL REQUIREMENTS
The SEC, the NASD and various other regulatory agencies have stringent
rules with respect to the maintenance of specific levels of net capital by
securities broker-dealers. Net capital is the net worth of a broker or dealer
(assets minus liabilities), less deductions for certain types of assets as well
as other charges. If a firm fails to
9
<PAGE>
maintain the required net capital it may be subject to suspension or revocation
of registration by the SEC and suspension or expulsion by the NASD, and it could
ultimately lead to the firm's liquidation. If such net capital rules are changed
or expanded, or if there is an unusually large charge against net capital,
operations that require the use of capital would be limited. Also, the Company's
ability to withdraw capital from OnlineTrading.com, its brokerage subsidiary
(after the merger), will be restricted under SEC rules, which in turn could
materially impact the Company's available working capital and materially impact
or limit the Company's ability to repay debt as and when due, redeem or purchase
shares of Company's outstanding stock, if required, and pay dividends in the
future. A large operating loss or charge against net capital could adversely
affect the Company's ability to expand or even maintain its then present levels
of business, which could have a material adverse effect on our business,
financial condition, results of operations and prospects.
INTERNET BUSINESS RISKS RELATING TO CUSTOMER PRIVACY AND SECURITY AND INCREASING
REGULATION
A significant risk for our existing and planned Internet operations is
that customers may refuse to transact business over the Internet, particularly
business, such as ours, that involves the handling of significant amounts of
customers' funds (assuming completion of the merger), due to privacy or security
concerns. We currently incorporate and plan to incorporate security measures
into our privacy policies. However, a major breach of customer privacy or
security could have serious consequences for our Internet-based operations. Use
of the Internet, particularly for commercial transactions, may not continue to
increase as rapidly as it has during the past few years as a result of privacy
or security concerns, or for other reasons. If this occurs, the growth of our
Internet-based operations would be materially hindered. If Internet activity
becomes heavily regulated in these respects, that could also have significant
negative consequences for the growth of our current and planned Internet-based
operations.
RISK OF INTELLECTUAL PROPERTY LITIGATION
There has been substantial litigation in the software industry
involving intellectual property rights. Although we do not believe that we are
or will be infringing upon the intellectual property rights of others, there can
be no assurance that infringement claims, if asserted, would not have a material
adverse effect on our business, financial condition and results of operations,
or result in our being unable to use intellectual property which is integral to
one or more of our products or services. The risk of infringement claims is
heightened with respect to the new business model technology in development
because any new business model technology, as opposed to our historical client
software technology, will not have stood any "test of time."
INTELLECTUAL PROPERTY
Our success is and will be heavily dependent on proprietary technology,
including existing trading tools, as well as the trading tool, Internet, web
site and order execution technology currently in development. We view our
technology as proprietary, and rely, and will be relying, on a combination of
copyright, trade secret and trademark laws, nondisclosure agreements and other
contractual provisions and technical measures to protect our proprietary rights.
Policing unauthorized use of our products and services is difficult, however,
and we are unable to determine the extent to which piracy of our products and
services exists. There can be no assurance that the steps taken by us to protect
our proprietary rights will be adequate or that our competitors will not
independently develop technologies that are substantially equivalent or superior
to our technologies or products and services.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements that involve risks
and uncertainties. These statements relate to future events or our future
financial performance and include statements about our plans, objectives,
products and services as well as our expectations and intentions. In some cases,
you can identify forward-looking statements by terminology such as "may,"
"will," "should," "expects," "plans," "anticipates," "believes," "estimates,"
"predicts," "potential" or "continue" or the negative of such terms or other
comparable terminology. These statements are only predictions and involve known
and unknown risks, uncertainties and other factors, including the risks outlined
under "RISK FACTORS," that may cause our (or our industry's) actual results,
activities, performance or achievements to be materially different from any
future results, activities, performance or achievements expressed or implied by
any forward-looking statements.
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<PAGE>
Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee future results,
specific activities, performance or achievements. We are under no duty to update
any of the forward-looking statements after the date of this prospectus to
conform these statements to actual results.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of these shares
of common stock. All proceeds from the sale of these shares of common stock will
be for the account of the selling shareholders, as described below. See "SELLING
SHAREHOLDERS" and "PLAN OF DISTRIBUTION" described below.
SELLING SHAREHOLDERS
The following table sets forth, as of the date of this prospectus, the
names of the selling shareholders, the number of shares that the selling
shareholders own as of such date, the number of shares owned by the selling
shareholders that may be offered for sale from time to time by this prospectus,
and, assuming the sale of all of the shares offered hereby, the number of shares
to be held by the selling shareholders.
<TABLE>
<CAPTION>
Shares Beneficially Owned Shares Beneficially Owned If All
Prior To Offering And Being Shares Being Registered
Registered For Sale (1) Hereunder Are Sold (2)(3)
- ------------------------------------------------------------------------------------------------------------------------
Selling Shareholder Number Percent Number Percent
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
John R. Jennings........................... 664,645 2.7 0 0
T. Keith Black ......................... 664,645 2.7 0 0
Alan Moore................................. 611,363 2.5 0 0
Jeffrey L. Hines........................... 29,726 * 0 0
Ashgar Afghani............................. 11,147 * 19,409 *
Dinh Nguyen................................ 11,147 * 0 0
David Barnes............................... 4,219 * 55,443 *
---------------------------------------------------------------------------
Selling Shareholder Number Percent Number Percent
- ------------------------------------------------------------------------------------------------------------------------
Jerry Trojan............................... 2,682 * 0 0
Carl Martin................................ 421 * 0 0
TOTAL.................................... 1,999,995 8.1 0 0
</TABLE>
- -----------------
* Less than 1.0%.
(1) The number and percentage of shares beneficially owned prior to
offering and being registered for sale does not include any shares
which the individual has the right to acquire after the date of this
prospectus because the shares underlying any such rights to acquire
shares are not being registered pursuant to this prospectus. In all
other respects, the number and percentage of shares beneficially owned
is determined in
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<PAGE>
accordance with Rule 13d-3 of the Securities Exchange Act of 1934, and
the information is not necessarily indicative of beneficial ownership
for any other purpose.
(2) The number and percentage of shares beneficially owned includes shares
which the individual has the right to acquire after the date of this
prospectus which are not being registered pursuant to this prospectus.
(3) Assumes that the selling shareholders will sell all the shares set
forth above under "Shares Beneficially Owned Prior to Offering and
Being Registered for Sale." There can be no assurance that the selling
shareholders will sell all or any of the shares offered hereunder.
PLAN OF DISTRIBUTION
The shares of common stock covered by this prospectus may be offered
and sold from time to time by the selling shareholders, including donees,
transferees, pledgees or other successors in interest that receive such shares
as a gift or other non-sale related transfer. Each of the selling shareholders
will act independently of us in making decisions with respect to the timing,
manner and size of any sale. Each of the selling shareholders may sell the
shares as follows:
o on The Nasdaq National Market at prices and under terms then
prevailing or at prices related to the then current market
price or at negotiated prices;
o through a block trade in which the broker-dealer so engaged
will attempt to sell shares as agent, but may position and
resell a portion of the block as principal to facilitate the
transaction;
o through purchases by a broker-dealer as principal;
o through an over-the-counter distribution in accordance with
the rules of The Nasdaq National Market;
o through ordinary brokerage transactions and transactions in
which the broker solicits purchasers;
o in privately negotiated transactions;
o through underwriters, dealers and agents who may receive
compensation in the form of underwriting discounts,
concessions or commissions from the selling shareholder and/or
purchasers of the shares for whom they may act as agent;
o through the writing of options on the shares;
o through the pledge of shares as security for any loan or
obligation, including pledges to brokers or dealers who may
from time to time effect distributions of the shares or other
interests in the shares;
o through exchange distributions in accordance with the rules of
the applicable exchange;
o in any combination of one or more of these methods; or
o in any other lawful manner.
To the extent required, this prospectus may be amended and supplemented
from time to time to describe a specific plan of distribution. In connection
with distributions of the shares or otherwise, each of the selling
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<PAGE>
shareholders may enter into hedging transactions with broker-dealers or other
financial institutions. In connection with these transactions, broker-dealers or
other financial institutions may engage in short sales of Omega Research common
stock in the course of hedging the positions they assume with such selling
shareholder. Each of the selling shareholders may also sell short Omega Research
common stock and redeliver the shares to close out such short positions. Each of
the selling shareholders also may enter into option or other transactions with
broker-dealers or other financial institutions which require the delivery to the
broker-dealer or other financial institution of shares offered hereby, which the
broker-dealer or other financial institution may resell pursuant to this
prospectus (as supplemented or amended to reflect such transaction). Each of the
selling shareholders also may pledge shares to a broker-dealer or other
financial institution, and, upon a default, the broker-dealer or other financial
institution may effect sales of the pledged shares pursuant to this prospectus
(as supplemented or amended to reflect such transaction). In addition, any
shares that qualify for sale pursuant to Rule 144 may be sold under Rule 144
rather than pursuant to this prospectus.
In effecting sales, brokers, dealers or agents engaged by the selling
shareholders may arrange for other brokers or dealers to participate. Brokers,
dealers or agents may receive commissions, discounts or concessions from the
selling shareholders in amounts negotiated prior to the sale. These brokers or
dealers and any other participating brokers or dealers may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933 in connection
with these sales, and any commissions, discounts or concessions may be deemed to
be underwriting discounts or commissions under the Securities Act of 1933. We
will pay all expenses incident to the offering and sale of the shares to the
public other than any commissions or discounts of underwriters, dealers or
agents or any transfer taxes.
In order to comply with the securities laws of certain states, if
applicable, the shares must be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirements is available and is complied with.
We have advised each of the selling shareholders that the
anti-manipulation rules of Regulation M under the Securities and Exchange Act of
1934 may apply to sales of shares in the market and to the activities of the
selling shareholders and their respective affiliates. In addition, Omega
Research will make copies of this prospectus available to each of the selling
shareholders and has informed each of them of the need for delivery of copies of
this prospectus to purchasers at or prior to the time of any sale of the shares.
Each of the selling shareholders may indemnify any broker-dealer that
participates in transactions involving the sale of the shares against certain
liabilities, including liabilities arising under the Securities Act of 1933.
At the time a particular offer of shares is made, a prospectus
supplement will, if required, be distributed that sets forth the number of
shares being offered and the terms of the offering, including the name of any
dealer or agent, any discount, commission and other item constituting
compensation, any discount, commission or concession allowed or reallowed or
paid to any dealer, and the proposed selling price to the public. We cannot
assure you that the selling shareholders will sell all or any of the shares.
We have agreed with each of the selling shareholders to keep the
registration statement of which this prospectus constitutes a part effective
until the earlier to occur of (i) the sale of all the shares covered by this
prospectus and (ii) October 25, 2001. We intend to de-register any of the shares
not sold by any selling shareholder prior to October 25, 2001.
LEGAL MATTERS
The validity of the shares offered will be passed upon by Bilzin
Sumberg Dunn Price & Axelrod LLP, Miami, Florida, counsel to Omega Research.
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<PAGE>
EXPERTS
The audited consolidated financial statements of Omega Research as of
December 31, 1999 and 1998 and for each of the years in the three-year period
ended December 31, 1999 incorporated by reference in this Registration Statement
and included in our Annual Report on Form 10-K for the year ended December 31,
1999, have been audited by Arthur Andersen LLP, independent certified public
accountants, as indicated in their report with respect thereto, and are included
therein in reliance upon the authority of such firm as experts in giving said
report.
The financial statements of onlinetradinginc.com corp. as of and for
the year ended ended January 31, 2000, incorporated by reference in this
Registration Statement and included in our Form 8-K/A as filed on April 28,
2000, have been audited by Arthur Andersen LLP, independent certified public
accountants, as indicated in their report with respect thereto, and are included
therein in reliance upon the authority of such firm as experts in giving said
report.
The statement of financial condition of onlinetradinginc.com corp. as
of January 31, 1999 and the related statements of income, changes in
stockholders' equity and cash flows for the year ended January 31, 1999
incorporated by reference in this Registration Statement on Form S-3 as included
in our Form 8-K/A as filed April 28, 2000, with a Date of Report (date of
earliest event reported) of January 19, 2000, have been audited by Ahearn, Jasco
+ Company, P.A., independent auditors, as stated in their report appearing with
the financial statements in the Form 8-K/A referred to above, and this report is
included in reliance on their authority as experts in accounting and auditing.
14
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Omega Research will pay all expenses incident to the offering and sale
to the public of the shares being registered other than any commissions or
discounts of underwriters, dealers or agents or any transfer taxes. Such
expenses are set forth in the following table. All the amounts shown are
estimates except the Securities and Exchange Commission registration fee.
<TABLE>
<S> <C>
SEC registration fee................................................................................$2,010
NASDAQ National Market listing fee.................................................................$17,500
Legal fees and expenses............................................................................$15,000
Printing expenses...................................................................................$5,000
Miscellaneous expenses.............................................................................$10,490
-------
Total.....................................................................................$50,000
======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The following summary is qualified in its entirety by reference to the
complete text of Omega Research's Second Amended and Restated Articles of
Incorporation ("Articles"), Omega Research's Second Amended and Restated Bylaws
("Bylaws") and the statute and agreements referred to below. Section 607.0850 of
the Florida Business Corporation Act (the "Statute") sets forth conditions and
limitations governing the indemnification of officers, directors, and other
persons.
The Articles and Bylaws contain certain indemnification provisions
adopted pursuant to authority contained in the Statute. The Articles contain a
provision eliminating the personal liability of its directors for monetary
damages resulting from breaches of their fiduciary duty to the extent permitted
by the Statute. Under the Bylaws, we will indemnify any person who is or was a
director or officer of Omega Research, and may indemnify a person who is or was
an employee or agent of Omega Research or who is or was serving at the request
of Omega Research as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other enterprise against: (a)
liability incurred in connection with any proceeding (other than an action by or
in the right of Omega Research) to which such person was or is a party by reason
of acting in any such capacity; and (b) expenses and amounts paid in settlement
(not exceeding, in the judgment of our board of directors, the estimated expense
of litigating the proceeding to conclusion) actually and reasonably incurred in
connection with the defense or settlement of any proceeding by or in the right
of Omega Research to procure a judgment in its favor to which such person was or
is a party by reason of acting in any such capacity, provided that: (i) such
person acted in good faith and in a manner he reasonably believed to be in, or
not opposed to, the best interests of Omega Research and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful; and (ii) no indemnification shall be made in respect of any claim,
issue, or matter in any proceeding by or in the right of
II - 1
<PAGE>
Omega Research as to which such person shall have been adjudged to be liable
unless, and only to the extent that, the court in which such proceeding was
brought, or any other court of competent jurisdiction, shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses as the court shall deem proper.
Under the Bylaws, to the extent a director or officer of Omega
Research, or an employee or agent of Omega Research which we have elected to
indemnify, has been successful on the merits or otherwise in defense of any
proceeding described above, or in the defense of any claim, issue, or matter
therein, such person shall be indemnified against expenses actually and
reasonably incurred by him in connection therewith. For all other
indemnification which may be provided under the Bylaws in connection with any
proceeding, unless made pursuant to a determination by a court, indemnification
shall be made only as authorized in the specific case upon a determination that
indemnification is proper in the circumstances because the director, officer,
employee or agent has met the applicable standard of conduct set forth in the
Bylaws, which determination shall be made: (a) by the board of directors by a
majority vote of a quorum consisting of directors who were not parties to such
proceeding; (b) if such quorum is not obtainable, or even if obtainable, by
majority vote of a committee duly designated by the board of directors
consisting solely of two or more directors not at the time parties to the
proceeding; (c) by independent legal counsel selected by the board of directors
or a committee thereof as prescribed by the Statute; or (d) by the shareholders
by majority vote of a quorum consisting of shareholders who were not parties to
such proceeding or if such a quorum is not obtainable, by a majority vote of
shareholders who were not parties to such proceeding. Evaluation as to
reasonableness of expenses and authorization of indemnification must be made in
the same manner as the determination that indemnification is permissible, except
that if the determination of permissibility is made by independent legal
counsel, then the board of directors or the committee thereof which appointed
such legal counsel must evaluate the reasonableness of expenses. The Bylaws also
permit us to pay expenses incurred by our officers, directors, employees, and
agents in advance of the final disposition of a proceeding, provided that we may
advance expenses to an officer or director only after receiving an undertaking
by or on behalf of such officer or director to repay such amount if he is
ultimately found not to be entitled to indemnification pursuant to the Bylaws.
We have entered into agreements to indemnify our directors and
executive officers, in addition to the indemnification provided for in the
Articles and Bylaws. These agreements create certain indemnification obligations
of Omega Research in favor of the officers and directors and, as permitted by
applicable law, clarify and expand the circumstances under which an officer or
director will be indemnified. We believe that these provisions and agreements
are necessary to attract and retain talented and experienced directors and
officers.
We have obtained liability insurance for the benefit of our directors
and officers.
ITEM 16. EXHIBITS
2.1 Registration Rights Agreement, dated as of October 25, 1999,
among Registrant, Window on WallStreet, John R. Jennings, T.
Keith Black, Jeffrey Hines, Ashgar Afghani, Dinh Nguyen, David
Barnes, Carl Martin, Alan Moore and Jerry Trojan (incorporated
by reference to Exhibit 2.1 of Registrant's Current Report on
Form 8-K filed November 8, 1999)
3.1 Second Amended and Restated Articles of Incorporation of
Registrant (incorporated by reference to Exhibit 3.1 of
Registrant's Registration Statement on Form S-1, Registration
No. 333-3207)
3.2 Second Amended and Restated Bylaws of Registrant (incorporated
by reference to Exhibit 3.21 of Registrant's Registration
Statement on Form S-1, Registration No. 333-3207)
5.1 Opinion of Bilzin Sumberg Dunn Price & Axelrod, LLP
II - 2
<PAGE>
10.1 Form of Indemnification Agreement (incorporated by reference
to Exhibit 10.7 of Registrant's Registration Statement on Form
S-1, Registration No. 333-3207)
23.1 Consent of Arthur Andersen LLP, Independent Certified Public
Accountants
23.2 Consent of Arthur Andersen LLP, Independent Certified Public
Accountants
23.3 Consent of Ahearn Jasco + Company, P.A., Independent Auditors
23.4 Consent of Bilzin Sumberg Dunn Price & Axelrod, LLP (included
in Exhibit 5.1)
24.1 Power of Attorney (included on signature page)
ITEM 17. UNDERTAKINGS
A. UNDERTAKING PURSUANT TO RULE 415
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
to include any material information with respect to the plan of
distribution not previously disclosed in this registration statement or
any material change to the information in this registration statement;
(2) That, for the purpose 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; and
(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 this offering.
B. UNDERTAKING REGARDING FILINGS INCORPORATING SUBSEQUENT EXCHANGE ACT
DOCUMENTS BY REFERENCE
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 and Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to 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.
C. UNDERTAKING IN RESPECT OF INCORPORATED ANNUAL AND QUARTERLY REPORTS
The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X is not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
II - 3
<PAGE>
D. UNDERTAKING IN RESPECT OF INDEMNIFICATION
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
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such 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 of whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
II - 4
<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 Miami, State of Florida, on this 28th day of April, 2000.
Omega Research, Inc.
By:/S/ WILLIAM R. CRUZ
--------------------------------------------------------
Co-Chairman of the Board of Directors and Co-Chief
Executive Officer
By:/S/ RALPH L. CRUZ
--------------------------------------------------------
Co-Chairman of the Board of Directors and Co-Chief
Executive Officer
II - 5
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS THAT each person whose signature appears
below constitutes and appoints William R. Cruz and Ralph L. Cruz and each of
them, with the power to act without the other, as attorneys-in-fact, each with
the power of substitution, for him or her in any and all capacities, to sign any
amendment or post-effective amendment to this registration statement and to file
the same, with exhibits thereto and other documents in connection therewith,
with the Securities and Exchange Commission, granting to said attorneys-
in-fact, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in connection therewith,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact or any of them, or
their or his substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
Co-Chairman of the Board and Co-
/S/ WILLIAM R. CRUZ Chief Executive Officer April 28, 2000
- --------------------------------------- (Co-Principal Executive Officer)
William R. Cruz
Co-Chairman of the Board and Co-
/S/ RALPH L. CRUZ Chief Executive Officer April 28, 2000
- --------------------------------------- (Co-Principal Executive Officer)
Ralph L. Cruz
President, Chief Operating Officer,
/S/ SALOMON SREDNI and Director (Principal Operating April 28, 2000
- --------------------------------------- Officer)
Salomon Sredni
Chief Financial Officer, Vice
/S/ GREGG STEWART President of Finance and Treasurer April 28, 2000
- --------------------------------------- (Principal Financial and
Gregg Stewart Accounting Officer)
/S/ PETER A. PARANDJUK April 28, 2000
- ---------------------------------------
Peter A. Parandjuk Director
/S/ MARC J. STONE April 28, 2000
- ---------------------------------------
Marc. J. Stone Director
- ---------------------------------------
Stephen C. Richards Director
- ---------------------------------------
Brian D. Smith Director
</TABLE>
II - 6
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description
2.1 Registration Rights Agreement, dated as of October 25, 1999, among
Registrant, Window on WallStreet, John R. Jennings, T. Keith Black,
Jeffrey Hines, Ashgar Afghani, Dinh Nguyen, David Barnes, Carl Martin,
Alan Moore and Jerry Trojan (incorporated by reference to Exhibit 2.1
of Registrant's Current Report on Form 8-K filed November 8, 1999)
3.1 Second Amended and Restated Articles of Incorporation of Registrant
(incorporated by reference to Exhibit 3.1 of Registrant's Registration
Statement on Form S-1, Registration No. 333-3207)
3.2 Second Amended and Restated Bylaws of Registrant (incorporated by
reference to Exhibit 3.21 of Registrant's Registration Statement on
Form S-1, Registration No. 333-3207)
5.1 Opinion of Bilzin Sumberg Dunn Price & Axelrod LLP
10.1 Form of Indemnification Agreement (incorporated by reference to Exhibit
10.7 of Registrant's Registration Statement on Form S-1, Registration
No. 333-3207)
23.1 Consent of Arthur Andersen LLP, Independent Certified Public
Accountants
23.2 Consent of Arthur Andersen LLP, Independent Certified Public
Accountants
23.3 Consent of Ahearn Jasco + Company, P.A., Independent Auditors
23.4 Consent of Bilzin Sumberg Dunn Price & Axelrod LLP (included in Exhibit
5.1)
24.1 Power of Attorney (included on signature page)
i
EXHIBIT 5.1
OPINION OF BILZIN SUMBERG DUNN PRICE & AXELROD LLP
[LETTERHEAD OF BILZIN SUMBERG DUNN PRICE & AXELROD LLP]
April 28, 2000
Omega Research, Inc.
8700 West Flagler Street
Suite 250
Miami, Florida 33174
Re: Omega Research, Inc. Registration Statement on Form S-3 for
1,999,995 Shares of Common Stock
Ladies and Gentlemen:
We have acted as counsel to Omega Research, Inc., a Florida corporation
("Omega Research"), in connection with the registration of 1,999,995 shares of
Omega Research's common stock (the "Shares"), as described in Omega Research's
Registration Statement on Form S-3 ("Registration Statement") filed with the
Securities and Exchange Commission under the Securities Act of 1933, as amended
(the "Act").
This opinion is being furnished in accordance with the requirements of
Item 16 of Form S-3 and Item 601(b)(5)(i) of Regulation S-K.
We have reviewed Omega Research's charter documents and the corporate
proceedings taken by Omega Research in connection with the original issuance and
sale of the Shares, the Articles of Merger dated October 25, 1999 and filed on
October 26, 1999 with the Secretary of State of the State of Texas, and such
other documents as we have deemed relevant. Based on such review and assuming
the Registration Statement becomes effective and remains effective, and all
applicable state and federal laws are complied with, we are of the opinion that
the Shares are duly authorized, validly issued, fully paid and nonassessable.
We consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement and to the reference to this firm under the caption
"Legal Matters" in the prospectus which is part of the Registration Statement.
In giving this consent, we do not thereby admit that we are within the category
of persons whose consent is required under Section 7 of the Act, the rules and
regulations of the Securities and Exchange Commission promulgated thereunder, or
Item 509 of Regulation S-K.
This opinion letter is rendered as of the date first written above and
we disclaim any obligation to advise you of facts, circumstances, events or
developments which hereafter may be brought to our attention and which may
alter, affect or modify the opinion expressed herein. Our opinion is expressly
limited to the matters set forth above and we render no opinion, whether by
implication or otherwise, as to any other matters relating to Omega Research or
the Shares.
Very truly yours,
/s/ Bilzin Sumberg Dunn Price & Axelrod
BILZIN SUMBERG DUNN PRICE & AXELROD LLP
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent certified public accountants, we hereby consent to the
incorporation of our report dated February 18, 2000, with respect to the Omega
Research, Inc. consolidated financial statements as of December 31, 1999 and
1998 and for each of the years in the three-year period ended December 31, 1999,
included in its Annual Report on Form 10-K for the year ended December 31, 1999,
and to all references to our Firm included in or made a part of this
Registration Statement.
/S/ ARTHUR ANDERSEN LLP
- ---------------------------
Arthur Andersen LLP
Miami, Florida,
April 26, 2000.
EXHIBIT 23.2
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent certified public accountants, we hereby consent to the
incorporation of our report dated March 15, 2000, with respect to the
onlinetradinginc.com corp. financial statements as of January 31, 2000 and for
the year then ended, included in the Form 8-K/A of Omega Research, Inc. filed on
April 28, 2000, and to all references to our Firm included in or made a part of
this Registration Statement.
/S/ ARTHUR ANDERSEN LLP
- ------------------------------
Arthur Andersen LLP
Miami, Florida,
April 26, 2000.
EXHIBIT 23.3
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration
Statement of Omega Research, Inc. on Form S-3 of our report dated March 2, 1999
(March 25, 1999 as to Note 10) relating to the financial statements of
onlinetradinginc.com corp. for the year ended January 31, 1999, included in the
Form 8-K/A of Omega Research, Inc. as filed April 28, 2000, with a Date of
Report (date of earliest event reported): January 19, 2000.
We also consent to the reference to us under the heading "Experts" in
this Registration Statement.
/S/ AHEARN, JASCO + COMPANY, P.A.
- ---------------------------------
AHEARN, JASCO + COMPANY, P.A.
Pompano Beach, Florida
April 26, 2000
