PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and the consolidated financial statements and notes thereto
appearing elsewhere in this Prospectus.
THE COMPANY
Object Design develops, markets and supports the ObjectStore database
management system and related tools, used to build and deploy Internet, Intranet
and other applications. The Company's database products are designed to handle
the data types and data relationships found on the rapidly expanding World Wide
Web. ObjectStore provides support for extended data types such as image, free
text, video, audio, HTML, and Java software objects, as well as for the extended
relationships among data exemplified by the non-tabular unstructured data found
on the Internet.
Over time, new types of database management systems have been adopted as
new computing platforms have emerged. The Company believes that the computer
industry is presently undergoing such a fundamental platform shift with the
rapid adoption of the Internet and the World Wide Web. This latest platform
shift is creating a new set of requirements for database management systems. As
the World Wide Web expands, developers are increasingly building applications
that include multimedia content, require the ability to rapidly search and
browse diverse types of data and provide greater interactivity and more dynamic
context-sensitive and user-sensitive behavior.
The Company's ObjectStore database, Internet Solution Suite, and related
tools provide a powerful data management solution for building Internet
applications. ObjectStore, in conjunction with the Internet Solution Suite,
provides native support for extended data types and is readily extensible to
accommodate new data types. Unlike relational and extended-relational database
management systems, ObjectStore provides the ability both to store these new
data types and to encapsulate the functions that define their behavior. In
addition, ObjectStore allows customers to directly model the complex and
extended data relationships common to emerging Internet applications, which
provides a performance advantage over relational and object-relational systems.
ObjectStore natively supports object oriented programming languages, allowing
JAVA, C++, and other programming language objects to be stored in the database
exactly as they are represented in programs, eliminating the time and effort
needed to convert the objects to relational tables for storage.
Customers that have recently built Internet applications using the
Company's products include Southwest Airlines and GTE Directories Corporation.
Southwest Airlines recently introduced a Web-based electronic ticketing system
using ObjectStore. GTE used ObjectStore and the Internet Solution Suite to
deploy its Superpages(SM) application, a listing of over ten million businesses
nationwide that can be rapidly searched over the Web.
The Company has yet to recognize material revenues from its new Internet
products, which were introduced in March 1996. However, since the introduction
of ObjectStore in 1990, the Company has licensed over 20,000 copies of its
software to an installed base of more than 700 customers. The Company's
customers have used ObjectStore to build high-performance applications in a
variety of challenging computing environments where relational databases were
unable to provide adequate functionality.
The open architecture of the Company's products provides compatibility with
a wide range of third party applications, tools and programming languages. The
Company's products operate on standard industry hardware platforms and operating
systems such as Windows 95, Windows NT and UNIX.
The Company employs a multi-channel sales and marketing strategy, using
direct sales, systems integrators, independent software vendors, distributors
and other channel partners to address its global market.
THE OFFERING
Common Stock offered by the Company........................ 3,000,000 shares
Common Stock to be outstanding after the offering.......... 26,267,685 shares(1)
Use of proceeds............................................ Working capital and other general
corporate purposes, including
repayment of debt
Proposed Nasdaq National Market Symbol..................... ODIS
SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------------------------- ----------------
1991 1992 1993 1994 1995 1995 1996
------- ------- ------- -------- -------- ------- ------
STATEMENT OF OPERATIONS DATA:
Revenues:
Software................ $ 3,322 $ 8,607 $ 8,688 $ 15,706 $ 18,700 $ 4,972 $5,612
Services................ 706 1,989 4,155 6,731 10,928 2,647 2,369
Related party software
and services.......... -- -- 11,807 3,052 3,078 402 1,015
------- ------- ------- -------- -------- ------- ------
Total revenues........ 4,028 10,596 24,650 25,489 32,706 8,021 8,996
Gross profit............... 2,815 8,611 19,333 18,513 23,786 5,857 6,590
Operating income
(loss)(2)............... (3,856) (2,262) 565 (12,387) (10,407) (2,116) 191
Net income (loss)(2)....... (3,868) (2,342) 627 (12,021) (10,282) (1,996) 145
Pro forma net income (loss)
per common and common
equivalent share(3)..... $ (0.40) $ 0.01
Pro forma weighted average
common and common
equivalent shares
outstanding(3).......... 25,837 26,427
MARCH 31, 1996
------------------------------------------
PRO FORMA
AS
ACTUAL PRO FORMA(3) ADJUSTED(3)(4)
-------- ------------ --------------
BALANCE SHEET DATA:
Cash and cash equivalents....................... $ 3,382 $ 3,382 $29,414
Marketable securities, current.................. 4,949 4,949 4,949
Working capital................................. 4,274 4,274 30,830
Total assets.................................... 21,805 21,805 47,837
Redeemable convertible preferred stock.......... 41,232 -- --
Long-term obligations........................... 344 344 --
Total stockholders' equity (deficit)............ (32,835) 8,397 35,297
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(1) Based on shares outstanding at May 31, 1996. Includes 2,883,714 shares of
Common Stock issued upon the exercise of stock options between March 31,
1996 and May 31, 1996. Assumes the issuance of 49,758 shares of Common Stock
upon the cashless exercise of an outstanding warrant to purchase 57,858
shares of Common Stock at an exercise price of $1.40 per share (the
"Warrant"). The holder of the Warrant has notified the Company of its
intention to exercise the Warrant at the closing of this offering. Excludes
(i) 3,484,396 shares of Common Stock issuable upon exercise of outstanding
options outstanding at May 31, 1996, at a weighted average exercise price of
$0.96 per share, (ii) 2,700,000 shares of Common Stock reserved for issuance
upon exercise of stock options that may be granted after May 31, 1996 under
the Company's 1996 Incentive and Nonqualified Stock Option Plan (the "1996
Stock Option Plan") and 300,000 shares reserved for issuance under the
Company's 1996 Employee Stock Purchase Plan (the "Stock Purchase Plan"). See
"Management -- Executive Compensation -- Stock Option Plans" and
"-- Employee Stock Purchase Plan" and "Description of Capital
Stock -- Warrant."
(2) The Company's results of operations for 1995 include restructuring charges
of approximately $2.7 million, consisting principally of severance costs and
expenses related to consolidation of the Company's facilities in connection
with a strategic realignment of the Company's business undertaken during the
second half of 1995.
(3) Pro forma information reflects the conversion to Common Stock at the closing
of this offering of all outstanding preferred stock of the Company. See Note
B of Notes to Consolidated Financial Statements.
(4) As adjusted, reflects the sale of the 3,000,000 shares offered hereby at an
assumed public offering price of $10.00 per share and the application of the
estimated net proceeds therefrom. See "Use of Proceeds."
This Prospectus contains forward-looking statements which involve risks and
uncertainties. The Company's actual results may differ significantly from the
results discussed in the forward-looking statements. Factors that might cause
such a difference include, but are not limited to, those discussed in "Risk
Factors." Except as otherwise specified, all information in this Prospectus
assumes no exercise of the Underwriters' over-allotment option and has been
adjusted to give effect to (i) the conversion upon the closing of this offering
of all outstanding shares of the preferred stock, $.01 par value, of the Company
("Preferred Stock") into an aggregate of 17,891,654 shares of Common Stock and
(ii) the amendment of the Company's Certificate of Incorporation on or before
the closing of this offering to, among other things, increase the number of
authorized shares of Common Stock to 200,000,000 and create a class of 5,000,000
shares of undesignated preferred stock. See "Description of Capital Stock" and
"Underwriting."