UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K
Annual Report pursuant to Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For the Fiscal Year ended Commission File Number
September 30, 2001 0 - 10125
Radiant Technology Corporation
------------------------------
(Exact name of the registrant as specified in its charter)
California 95-2800355
---------- ----------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) identification number)
1335 South Acacia Avenue, Fullerton, California 92831
(Address of principal executive offices)(Zip code)
Registrant Telephone Number, including area code: (714) 991-0200
Securities registered pursuant to section 12 (b) of the act: None
Securities registered pursuant to section 12 (g) of the Act: Common stock,
without par value
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15 (d) of the Securities Exchange act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes _X__ No _____
The aggregate market value of the voting stock held by non-affiliates of
the registrant was $936,800 as of November 30, 2001.
Applicable only to registrants involved in bankruptcy proceedings during
the preceding five years: Indicate by check mark whether the registrant has
filed all documents and reports required to be filed by section 12, 13, or 15
(d) of the Securities Exchange Act of 1934 subsequent to the distribution of
securities under a plan confirmed by a court. Yes ___ No ___ Not applicable X
---
The number of shares of the registrant's common stock, no par value,
outstanding as of November 30, 2001 was 2,081,678.
1
Documents incorporated by reference. Part III Items 10 through 13 of this
Form 10-K are incorporated by reference to the registrant's definitive proxy
statement for the Annual Meeting of Shareholders held on April 19, 2001.
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
PART 1
ITEM 1 BUSINESS
Radiant Technology Corporation (RTC) was incorporated in California in
1972. The initial public offering (IPO) was in 1979. The Company is engaged in
the marketing, design, manufacture and service of highly precision thermal
processing systems that are primarily used by manufacturers of microelectronic
componentry. The Company's conveyorized ovens and furnaces are in worldwide
demand to meet ever-changing process requirements in the semiconductor
packaging, photovoltaic (solar cell), flat panel display, hybrid thick film
firing, multichip module, and printed circuit board assembly industries.
To obtain financial growth and stability we concentrate on managing the
following key elements of its business:
Technological Leadership: We are constantly in contact with our customers
soliciting their input for both continued product improvement and new product
development. We encourage customers anticipating new thermal processing
requirements to contact us regarding their new opportunities and needs.
Customer Diversity: Customers from different facets of the electronics and
photovoltaic industries are sought and maintained. As demand for the various
manufacturing elements in the electronics high technology industry shifts, RTC
works to position itself to be ready to be immediately responsive to changing
market emphasis.
Service: We concentrate on providing timeliness, high quality, and
responsiveness to our customer base. Most service concerns are handled by Phone,
FAX or E-mail immediately. Customer Service Engineers, when needed, are
dispatched within the day. Internationally, we retain Sales/Service
representatives, factory trained, to provide the same level of dedication in
placing the concerns and needs of the customer first. Modems are installed in
customer's equipment, making it possible to analyze and implement customer
requests online from Company headquarters.
MARKETS AND PRODUCTS:
The nature and high intensity of the infrared heat produced in our furnaces
permits a high rate of heat absorption by the electronic parts processed through
the furnaces, making them more adaptable to the exacting tolerances and
high-speed heating requirements of certain industrial users. Infrared heating
affords many advantages, including the furnace's ability to achieve operating
temperatures in a shorter time span, operate at a faster conveyor belt speed,
require less floor space, and use less electric energy, all of which result in
significantly lower operating costs than for conventional ovens and furnaces.
2
Our near infrared processing systems are principally in demand for the
following applications:
Photovoltaics: RTC furnaces serve the photovoltaic industry in both contact
firing and diffusion processes. For well over a decade, RTC has been the major
supplier of sintering furnaces used by photocell manufacturers for firing
metallized inks to form the front-side contacts and the back-side fields on the
individual solar cells. The product ideally suited for sintering of the
metallized inks is our C-series furnace. In recent years, RTC customers have
been using a special version of our furnaces for phosphorus diffusion. An
extremely precise thermal process is required for phosphorus diffusion as this
step ultimately determines the cell's photovoltaic efficiency in generating
power when exposed to sunlight.
Semiconductor Packaging: In recent years, flip chip packaging technology has
gained widespread acceptance. The first process, called wafer bumping, involves
a reflow solder process to form the solder balls on all of the input/output
(I/O) pads on the wafer. Because of the extremely small geometries involved, in
some instances this process is best accomplished in a hydrogen atmosphere. For
this application, RTC offers a high temperature furnace which provides a re-flow
process in a 100% hydrogen atmosphere. For a second process, called "chip
joining", RTC offers both a near infrared or forced convection oven. RTC's
D-series ovens are well suited for low temperature curing applications such as
"under-fill" epoxy or curing epoxy glob tops for chip on board manufacturers.
For more traditional chip packaging technologies, RTC offers an AG-series
furnace designed specifically for the silver-glass die-attach process. A
critical thermal profile is required to achieve the proper mechanical and
thermal properties of the silver-glass material. Other packaging thermal
processes such as final lid sealing (metal or glass) and lead frame embed or pin
brazing are easily accomplished in RTC's furnaces.
Flat Panel Display: While the flat panel display market has been based primarily
in Japan, it is a relatively new market for US equipment manufacturers. RTC has
developed, in close cooperation with a flat panel manufacturer, one of the first
US built systems for processing large glass panels. This RTC furnace can handle
glass panels up to 58 inches wide. In addition to the challenges of achieving
uniform heating over the entire panel width, RTC's furnace can meet the
mechanical challenges of handling large glass panels while loading and unloading
the furnace.
Hybrid Thick Film: Hybrid thick film technology involves the firing of various
types of "inks" screen printed on ceramic substrates to form conductors and
resistors. Precise thermal profiles are required to achieve desired resistor
values and electrical properties of hybrid conductors. RTC offers furnaces for
firing thick film inks in air, and for firing thick film materials in a
controlled, inert atmosphere with low oxygen content.
Printed Circuit Board: RTC offers both infrared and forced convection heating
technologies for printed circuit board assemblies. These ovens are used for
high-volume reflow soldering of surface mount components to a printed circuit
assembly.
All RTC systems use on-board computers to provide appropriate man/machine
interface with embedded microprocessors, achieving precise control of thermal
operations. RTC's furnace computers provide power, temperature, belt speed,
process gas measurement, profiling, maintenance requirements, data logging,
local and remote communications diagnostics and operation, and computer
integrated manufacturing.
3
MARKETING, SALES AND CUSTOMERS
Our products are sold throughout the world, primarily to organizations
engaged in the microelectronics or photovoltaic manufacturing. RTC maintains
direct sales offices in the United States. Internationally the Company is
represented through independent sales/service organizations. Note 1 to the
Financial Statements depicts a breakdown of international sales.
Customers tend to evaluate furnace vendors for technological leadership
that results in high process yields for material produced. This primary benefit
combined with high RTC up time, low meantime between failure (MTBF), quick
reliable service and spare parts response combine to produce low cost of
equipment ownership for our customers.
Two customers, AMD and IBM accounted for 31% and 11%, respectively, of
RTC's revenue in fiscal year 2001. In 2000, they were: AMD 17% and Astropower
15%. In 1999, 18% of revenue came from AMD.
The Company does not experience a seasonal demand for its product. Rather
the demand for RTC furnaces tends to follow the demand for new manufacturing
equipment in the economy.
BACKLOG
We regard as backlog all signed purchase orders received from customers for
delivery at specified dates. At September 30, 2001, the backlog was $808,484 vs.
$3,203,427 in 2000, and $595,401 in 1999. This backlog of orders will be
completed over a three to five month period. There can be no assurance that
backlog will be replicated or increased or translated into higher revenues in
the future. The success of our business depends on a multitude of factors that
are beyond of our control.
RESEARCH AND DEVELOPMENT
Research and Development expenses are charged to specific product
enhancement activities and new product development. Research and Development
expenses were $260,330, $230,599, and $282,766 in fiscal 2001, 2000 and 1999,
respectively, which represents primarily the development for new products, which
we hope will provide significant value to future years income. It is more ideal,
theoretically, to have new products developed over a longer period of time.
However, the opportunities of the market place dictate concentration on
increased product development at this time. New products include equipment for
the 300mm wafer fabrication, the photovoltaic industry, research laboratories
and 1300(Degree)C processing temperatures.
COMPETITION
We confront competition from two primary domestic companies: BTU
International, and Sierra-Therm. There are numerous other competitors both
domestically and internationally.
We believe that we are one of the principal manufacturers of conveyorized,
controlled atmosphere, variable speed, high temperature infrared furnaces used
in the manufacture of precision, microelectronic circuitry for the
semiconductor, solar cell, hybrid micro circuits and general microelectronic
industries. The competitive environment in the market for ovens and furnaces is
based on superior technology, design and delivery and ultimate cost of ownership
beyond initial purchase price. The Company believes that its higher temperature
near infrared products are more technologically advanced than that of the
conventional products of its competitors. The Company has patents issued and
pending covering the basic technology involved in the principal markets. See
"Patents" below.
4
MATERIAL
We purchase raw materials, mechanical parts and electronic components. The
Company manufactures most of its sheet metal and some mechanical and electronic
components. Alternative sources of material exist for nearly all parts,
components and materials. We have selected a single source supplier for much of
our electronic componentry, due to high levels of quality and service. Should
this favorable condition degenerate, an alternative supplier can be found but
not without extra initial expenditures.
PATENTS
We own a number of current patents on its products issued from 1983 to
1997. RTC also has patents pending. The Company's patents are the result of its
creative energies and innovative technology. RTC believes that it must
continually work to maintain technological leadership for its customer base. We
further believe that patents may provide creative and competitive hurdles to
competition. However, it is primarily our attention to customer service with
high quality products, produced in a timely manner, ultimately providing the
customer with low cost of ownership that provide us our greatest competitive
strength.
TRADEMARKS
We have registered trademark No. 1425668, "RTC radiant technology
corporation", with the United Stated patent and Trademark Office on January 20,
1987 and trademark No. 1556707, "MEZZANINE", with the United States Patent and
Trademark Office on September 19, 1989. Both trademarks are in force for twenty
years.
EMPLOYEES
We employed 42 full-time individuals as of November 30, 2001.
WARRANTY
We warrant our ovens and furnaces against defects existing at the time of
shipment for material and workmanship under normal use and service for a period
of one year on parts and labor after shipment to an original user. Under this
warranty, the Company will provide, F.O.B. Anaheim, repair or replacement, at
its own cost, any heating elements, SCR control packages, printed circuit
boards, components, and conveyor speed controls (including digital readouts)
which, within the warranty period, are proved to the satisfaction of the Company
to have been defective.
GOVERNMENTAL REGULATIONS
The operations of the Company are subject to various federal and state laws
and regulations. Management believes the Company is in substantial compliance
with all applicable laws and regulations. The cost of compliance has not been a
significant burden to the Company.
5
ITEM 2. PROPERTIES
----------
Our executive offices and manufacturing facility are located in a quality
industrial park where expansion may be possible.
The 25,000 square foot building is leased for 5 years with an option to
renew for an additional 5 years. See Note 7 to the financial Statements, for
more detail.
ITEM 3. LEGAL PROCEEDINGS
-----------------
There are no legal proceedings pending at the time of this report.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
No matters were submitted to a vote of security holders during the fourth
quarter of FY 2002.
PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTER
---------------------------------------------------------------------
The Company's common stock is quoted on the OTC Bulletin Board. The table
below sets forth the representative high and low bid prices for the common stock
during each calendar period indicated. The Quotations represent interdealer
prices without adjustments for retail mark-ups, mark-downs or commissions and
consequently do not necessarily reflect actual transactions.
Year Ended
September 30,
-------------
2001 2000
HIGH LOW HIGH LOW
---- --- ---- ---
1st Quarter $ 1.031 $ .375 $ 1.25 $ .437
2nd Quarter 2.50 .375 4.00 .656
3rd Quarter 1.75 .35 1.37 .625
4th Quarter 1.12 1.12 1.00 .625
Holders of shares of Common Stock are entitled to receive such dividends,
if any, as may be declared by the Board of Directors of the Company out of funds
legally available therefore and, upon the liquidation, dissolution or winding up
of the Company are entitled to share ratably in all net assets available for
distribution to such shareholders. The Company has never paid any dividends. It
is anticipated that all earnings will be retained for development of working
capital to grow the business of the Company and there is no present intention to
declare dividends in the foreseeable future. See Item 7 "Management's Discussion
and Analysis of Financial Condition and Results of Operations".
6
Shareholders of Record: As of September 30, 2001, the number of record
------------------------
holders of the Company's Common Stock was 402.
ITEM 6. SELECTED FINANCIAL DATA
-----------------------
The following table summarizes certain selected financial data of the
Company:
Operating Data
(in thousands) except per share Year Ended September 30,____________
information -----------------------------------------------------------
2001 2000 1999 1998 1997
---- ---- ---- ---- ----
Net Sales $5,069 $4,717 $3,337 $4,686 $4,412
Income (Loss) From Continuing Operations (157) 287 (476) 416 592
Total Assets 2,967 4,551 4,061 4,063 4,102
Long-term debt 0 0 0 0 0
Per Share Information:
Income (Loss) From Continuing Operations (.08) .15 (.25) .22 .32
Cash Dividends per Common Share - - - -
See Notes to Financial Statements
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------------------------------------------------
CONDITIONS AND RESULTS OF OPERATIONS
------------------------------------
Cautionary Statement
This 10-K Report contains statements relating to future results of the Company
(including certain projections and business trends) that are "forward-looking
statements" as defined in Section 27A of the Securities Act of 1933. Actual
results may differ materially from those projected as a result of certain risks
and uncertainties, including but not limited to economic and political changes
in markets where the Company competes such as inflation rates, recession, and
other external factors over which the Company has no control; domestic and
foreign government spending, budgetary and trade policies; demand for and market
acceptance of new and existing products; successful development of advanced
technologies; and competitive product and pricing pressures as well as other
risks and uncertainties, including but not limited to those detailed from time
to time in the Company's Securities and Exchange Commission filings.
7
GENERAL
We pioneered the design and application of near infrared high temperature
furnaces with the semiconductor manufacturing and electronics assembly markets.
RTC products are now principally used by manufacturers of semiconductor
packaging, solar cells, flat panel displays, printed circuit boards, hybrid
thick film and multichip modules. New and inventive uses of the product line for
other applications continue to be discovered.
RESULTS OF OPERATIONS
Revenues were $5.1 million, $4.7 million and $3.3 million in fiscal years
2001, 2000 and 1999 respectively, representing an increase of 7% from 2000 to
2001 and an increase of 42% from 1999 to 2000. The increase in fiscal year 2001
was primarily attributable to increased volume shipments as a result of
increased sales orders from photovoltaic (solar cell) customers. The increase in
fiscal year 2000 was primarily attributable to increased shipments as a result
of increased sales orders.
Cost of sales consists of costs related to the purchase of raw materials,
assembled and subcontracted parts, services provided by third party suppliers,
as well as costs arising from in house manufacturing support operations and the
costs to run it. Cost of sales as a percentage of revenues was 75.4%, 65.4% and
68.5% for fiscal years 2001, 2000 and 1999 respectively. The increase in
material, direct labor, temporary labor, and freight from 2000 to 2001 was
attributable to inefficiencies caused by responding quickly to an 87% increase
in sales in the first two quarters of the fiscal year compared to the prior
year. RTC continues to use the latest technology available in an effort to
reduce both cost of revenues (and the maintenance of optimal inventory levels)
and operating expenses, and ultimately an increase overall company profits.
Research and development expense expressed as a percentage of revenues was
7.2% , 8.7% and 8.5% in fiscal years 2001, 2000 and 1999 respectively. These
reflect costs related to the design of new products, new product development and
product enhancements for existing standard products. These costs are essential
to the Company's long term future, a future that can change very quickly in the
high technology field.
Selling, general and administrative expenses represented 23.8%, 20.2% and
38.7% of total revenues in fiscal years 2001, 2000 and 1999 respectively. The
increase in 2001 was attributed to increased marketing, administrative, computer
support staff, and outside consultants to prepare the Company's infrastructure
to support future sales growth.
LIQUIDITY AND CAPITAL RESOURCES
Our consolidated cash decreased from $1,528,383 at September 30, 2000 to
$1,118,630 at September 30, 2001. The decrease of $409,753 is attributable to
the payment of a $500,000 note payable. Net cash provided by operating
activities of $202,613 compared to cash from operating activities of $171,039 in
the prior year. Management believes that the expected revenues from operations
of RTC will be sufficient to provide adequate cash to fund anticipated working
capital and other cash needs. There may be occasional periods when short-term
borrowing will be utilized, although little of this type of activity is
foreseen.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
----------------------------------------------------------
Inapplicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
-------------------------------------------
The following are included in this 10-K as exhibits:
1. Report of Independent Certified Public Accountants
2. Balance Sheets as of September 30, 2001 and 2000.
3. Statements of operations for the years ended September 30, 2001,
2000, 1999.
4. Statements of Stockholders' Equity for the years ended September 30,
2001, 2000, 1999.
5. Statements of Cash Flows for the years ended September 30, 2001,
2000, 1999.
6. Notes to Financial Statements.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
-----------------------------------------------------------
AND FINANCIAL DISCLOSURE
------------------------
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
--------------------------------------------------
The response to this item is incorporated herein by reference to the
Company's definitive proxy statement for the Annual Meeting of Stockholders to
be held on April 22, 2002.
ITEM 11. EXECUTIVE COMPENSATION
----------------------
The response to this item is incorporated herein by reference to the
Company's definitive proxy statement for the Annual Meeting of Stockholders to
be held on April 22, 2002.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------------------------------------
The response to this item is incorporated herein by reference to the
Company's definitive proxy statement for the Annual Meeting of Stockholders to
be held on April 22, 2002.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------
The response to this item is incorporated herein by reference to the
Company's definitive proxy statement for the Annual Meeting of Stockholders to
be held on April 22, 2002.
8
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
----------------------------------------------------------------
(a) (1) Financial Statements
The following financial statements are included in this Form 10-K:
Page No.
1. Report of Independent Certified Public Accountants. 15
2. Balance Sheets as of September 30, 2001 and 2000. 16
3. Statements of Operations for the years ended September 30,
2001, 2000, and 1999. 17
4. Statements of Stockholders' Equity for the years ended September
30, 2001, 2000 and 1999. 18
5. Statements of Cash Flows for the years ended September 30, 2001,
2000, and 1999. 19-20
6. Notes to Financial Statements 21-33
(2) Financial Statements Schedules
None.
(3) Exhibits
Exhibit No. Description Page No.
- ----------- ----------- --------
3.1 Certificate of Restated Articles of Incorporation
incorporated by reference to the Registration
Statement of Form S-18 (Registration No.
2-72528-LA) filed on July 14, 1981.
3.1(a) Certificate of Amendment of Articles of
Incorporation incorporated by reference to the
Proxy Statement dated January 14, 1986.
3.1(b) Certificate of Amendment of Articles of
Incorporation incorporated by reference to Annual
Report on Form 10-K filed January 15, 1990.
3.2 Restated By-Laws incorporated by reference to the
Registration Statement on Form s-18 (Registration
No. 2-72528-LA) filed on July 14, 1981.
3.2(a) Amendment to Bylaws incorporated by reference to
Annual Report on Form 10-K filed January 15,
1990.
4.1 Specimen Certificate of Common Stock incorporated
by reference to the Registration Statement on
Form S-18 (Registration No. 2-72528-LA) filed on
July 14, 1981.
10.22(a) Amendment No. 1 to Employment Agreement effective
as of November 7, 1991 by and between the Company
and Lawrence R. McNamee incorporated by reference
to Annual Report on Form 10-K filed January 15,
1990.
10.24 Form of Indemnity Agreement incorporated by
reference to Annual Report of Form 10-K filed
January 15, 1990.
(b) Reports on Form 8-K.
None.
10
SIGNATURES
Pursuant to the requirements of section 13 or 15 (d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
this behalf by the undersigned, thereunto duly authorized.
Dated: January 14, 2002
RADIANT TECHNOLOGY CORPORATION
By: /s/ L. R. McNamee
-----------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the persons on behalf of the registrant in the
capacities and on the dates indicated.
/s/ L. R. McNamee January 14, 2002
- --------------------------------
Lawrence R. McNamee
Chairman of the Board and a Director
(Principal Financial Officer and
Principal Executive Officer)
/s/ Carson T. Richert January 14, 2002
- --------------------------------
Executive President and a Director
/s/ R. B. Thompson
- -------------------------------- January 14, 2002
Robert B. Thompson
Director
11
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors and Stockholders
Radiant Technology Corporation
We have audited the accompanying balance sheets of Radiant Technology
Corporation as of September 30, 2001 and 2000, and the related statements of
operations, stockholders' equity and cash flows for each of the years in the
three year period ended September 30, 2001. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Radiant Technology Corporation
as of September 30, 2001 and 2000 and the results of its operations and its cash
flows for each of the three years in the period ended September 30, 2001 in
conformity with accounting principles generally accepted in the United States.
CACCIAMATTA ACCOUNTANCY CORPORATION
Irvine, California
December 17, 2001
12
RADIANT TECHNOLOGY CORPORATION
Balance Sheet
September 30,
-------------
2001 2000
---- ----
ASSETS
Current assets:
Cash and equivalents ............................ $ 1,118,630 $ 1,528,383
Accounts receivable ............................. 407,814 1,844,418
Inventories ..................................... 845,823 689,133
Prepaid expenses ................................ 53,467 42,411
Deferred taxes .................................. 283,500 170,000
------- -------
Total current assets ........................... 2,709,234 4,274,345
Property and equipment ............................ 252,243 265,671
Patents ........................................... 5,035 11,443
----- ------
$ 2,966, $ 4,551,459
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt ................................. $ -- $ 500,000
Accounts payable ................................ 274,582 410,164
Accrued expenses ................................ 216,080 254,754
Customer deposits ............................... 200,663 967,269
------- -------
Total current liabilities ..................... 691,325 2,132,187
------- ---------
Stockholders' equity:
Preferred stock ................................. -- --
Capital stock ................................... 1,167,608 1,154,483
Retained earnings ............................... 1,107,579 1,264,789
--------- ---------
Total stockholders' equity .................... 2,275,187 2,419,272
--------- ---------
$ 2,966,512 $ 4,551,459
=========== ===========
13
RADIANT TECHNOLOGY CORPORATION
Statements of Operations
Year Ended September 30,
------------------------
2001 2000 1999
---- ---- ----
Net sales $5,069,280 $4,717,316 $3,336,674
Cost of Sales 3,820,550 3,086,122 2,283,801
--------- --------- ---------
Gross profit 1,248,730 1,631,194 1,052,873
--------- --------- ---------
Operating expenses:
Selling, general and administrative 1,206,277 954,525 1,290,047
Engineering, research and development 365,372 413,480 282,766
------- ------- -------
Total operating expenses 1,571,649 1,368,005 1,572,813
--------- --------- ---------
Income/(loss) from operations (322,919) 263,189 (519,940)
Interest income, net 52,209 37,540 44,120
------ ------ ------
Income/(loss) before provision for
income taxes (270,710) 300,729 (475,820)
Provision (benefit) for income taxes (113,500) 13,000 --
-------- ------ ------
Net income/(loss) $(157,210) $287,729 $(475,820)
========= ======== =========
Basic earnings per share:
Net income/(loss) $ (0.08) $ 0.15 (0.25)
========= ======== =====
Diluted earnings per share:
Net income/(loss) $ (0.08) $ 0.13 $ (0.25)
========= ======== ========
Basic number of common shares outstanding: 2,040,445 1,901,594 1,895,678
========= ========= =========
Diluted number of common shares outstanding: 2,040,445 2,188,764 1,895,678
========= ========= =========
14
RADIANT TECHNOLOGY CORPORATION
Statements of Stockholders' Equity
Years Ended September 30, 2001, 2000 and 1999
Total
Capital Stock Retained Stockholders'
-------------
Shares Amount Earnings Equity
------ ------ -------- ------
Balance, September 30, 1998 $1,895,678 $1,153,108 $1,452,880 $2,605,988
Net loss .............. - - (475,820) (475,820)
---------- ----------- ----------- -----------
Balance, September 30, 1999 1,895,678 153,108 977,060 2,130,168
Exercise of options ... 11,000 1,375 - 1,375
Net income ............ - - 287,729 287,729
---------- ---------- ----------- -----------
Balance, September 30, 2000 1,906,678 1,154,483 1,264,789 2,419,272
---------- ---------- ----------- -----------
Exercise of options ... 175,000 13,125 - 13,125
Net income (loss) ..... - - (157,210) (157,210)
---------- ----------- ----------- -----------
Balance, September 30, 2001 $2,081,678 $1,167,608 $1,107,579 $2,275,187
=========== ========== ========== ===========
15
RADIANT TECHNOLOGY CORPORATION
Statements of Cash Flows
Year Ended September 30,
------------------------
2001 2000 1999
---- ---- ----
Cash flows from operating activities:
Net income/ (loss) $ (157,210) $ 287,729 $(475,820)
Adjustments to reconcile net income/(loss) to net cash
provided by operating activities:
Bad debt expense - - 183,807
Depreciation and amortization 133,884 193,113 195,011
Inventory obsolescence 26,000 40,000 40,000
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable 1,436,604 (1,253,112) (209,336)
Inventory (182,690) (305,227) (30,299)
Deferred taxes (113,519) - -
Other assets 406 7,260 (14,549)
Increase (decrease) in:
Accounts payable (135,582) 221,041 115,083
Accrued expenses (38,674) 18,713 38,157
Income taxes payable - 13,000 (38,640)
Customer deposits (766,606) 948,522 (140,719)
-------- ------- --------
Net cash provided by/(used in) operating activities 202,613 171,039 (337,305)
------- ------- --------
Cash flows from investing activities:
Capital expenditures (125,491) (28,933) (105,718)
-------- ------- --------
Cash flows from financing activities:
Issuance of common stock 13,125 1,375 -
Borrowing on short-term debt - 500,000 500,000
Repayment on short-term debt (500,000) (1,500,000) -
-------- ---------- ----------
Net cash provided by (used in) financing activities (486,875) (998,625) 500,000
-------- -------- -------
Net increase in cash and equivalents (409,753) (856,519) 56,977
Cash and equivalents, beginning of year 1,528,383 2,384,902 2,327,925
--------- --------- ---------
Cash and equivalents, end of year $1,118,630 $1,528,383 $ 2,384,902
========== ========== =============
16
(continued)
RADIANT TECHNOLOGY CORPORATION
Statements of Cash Flows (continued)
Supplemental disclosures of cash flow information and non-cash investing and
financing activities:
2001 2000 1999
---- ---- ----
Cash paid during the year for:
Interest ............... $ - $ 429 $ 4,614
Income taxes ............ $ $ - $ 34,286
17
RADIANT TECHNOLOGY CORPORATION
Notes to financial statements
September 30, 2001
1 Summary of significant accounting policies
- -----------------------------------------------
Nature of Operations
--------------------
Radiant Technology Corporation (the "Company") is engaged in the
manufacturing and marketing of infrared conveyorized ovens and furnaces
used primarily by the microelectronics manufacturing industry.
All of the Company's operations are located in California. Sales to
entities located outside the United States are as follows:
Countries 2001 2000 1999
--------- ---- ---- ----
European $1,047,596 $ 966,723 $ 640,511
Asia 549,073 316,235 178,170
Other international 377,243 126,666 482,161
$1,973,912 $1,409,624 $1,300,842
Revenue Recognition
-------------------
The Company recognizes revenue from product sales upon shipment or upon
completion when the customer requests the unit to be held at the facility
for later shipment.
Cash and Cash equivalents
-------------------------
For purposes of the statement of cash flows, cash equivalents include time
deposits, certificates of deposit and all highly liquid debt instruments
with original maturities of three months or less.
Accounts Receivable
-------------------
The allowance for doubtful accounts includes management's estimate of the
amount expected to be lost on specific accounts and for losses on other
unidentified accounts included in accounts receivable. In estimating the
allowance component for unidentified losses, management relies on
historical experience. The amounts the Company will ultimately realize
could differ materially in the near term from the amounts assumed in
arriving at the allowance for doubtful accounts in the accompanying
financial statements.
Inventories
-----------
Inventories include material, direct labor and manufacturing overhead and
are reported at the lower of cost (determined on the first-in-first-out
method) or market. Allowances for slow moving and obsolete inventory are
based on management's estimate of the amount considered obsolete based on
specific review of inventory items. In estimating the allowance, management
relies on its knowledge of the industry as well as its current inventory
levels.
18
RADIANT TECHNOLOGY CORPORATION
Notes to financial statements
1. Summary of significant accounting policies (continued)
- -----------------------------------------------------------
Equipment
---------
Equipment is stated at cost, less accumulated depreciation. Depreciation is
calculated using the straight-line method over the estimated useful lives
of the related assets or over the lesser of the term of the lease or the
estimated useful life for leasehold improvements.
Intangibles
-----------
The cost of patents are being amortized using the straight line method over
their estimated lives of five years. Amortization expense charged to
operations in 2001, 2000 and 1999 was $11,939, $8,712, and $8,716,
respectively.
Research and Development
------------------------
Research and development is expensed as incurred. Research and development
expenses were $260,330, $230,599, and $282,766 in fiscal 2001, 2000, and
1999, respectively.
Software development costs
--------------------------
The Company capitalizes internal software development costs in accordance
with Statement of Financial Accounting Standards No. 86. The capitalization
of these costs begins when a product's technological feasibility has been
established and ends when the product is available for general release to
customers. The Company uses the working model approach to establish
technological feasibility. Amortization is computed on an individual
product group on the straight-line method over the estimated economic life
of the product. Currently, the Company is using an estimated economic life
of three years for all capitalized software costs. Amortization expense was
$31,001, $77,213, and $106,550 for 2001, 2000, and 1999, respectively.
Customer deposits
-----------------
The Company often requires a deposit from customers before commencing work
on a furnace. It is the Company's policy to record the deposit as a
receivable with a corresponding deferred liability at the time the sales
order is written. When the deposit is received, the receivable is relieved.
Income taxes
------------
Deferred income taxes are recognized for the tax consequences in future
years of differences between the tax bases of assets and liabilities and
their financial reporting amounts at each year-end based on enacted tax
laws and statutory rates applicable to the periods in which the differences
are expected to affect taxable income. Valuation allowances are
established, when necessary, to reduce deferred tax assets to the amount
expected to be realized. The provision for income taxes represents the tax
payable for the period and the change during the period in deferred tax
assets and liabilities.
19
RADIANT TECHNOLOGY CORPORATION
Notes to financial statements
1. Summary of significant accounting policies (continued)
- -----------------------------------------------------------
Earnings per common share
-------------------------
Earnings per common share is computed by dividing reported earnings by the
weighted average number of common shares outstanding during the respective
periods. Common stock equivalents were excluded from the computation of
earnings per share in 2001 and 1999 because the effect of including such
equivalents in the computation would have been anti-dilutive.
Fair value of financial instruments
-----------------------------------
The fair value of financial instruments, consisting principally of
short-term debt payable is based on interest rates available to the Company
and comparison to quoted prices. The fair value of these financial
instruments approximates carrying value.
Stock based compensation
------------------------
The Company accounts for compensation costs related to employee stock
options and other forms of employee stock-based compensation plans in
accordance with the requirements of Accounting Principles Board Opinion 25
("APB 25"). The Company adopted the provisions of pro forma disclosure
requirements of Statement of Financial Accounting Standards 123, Accounting
for Stock-Based Compensation in fiscal 1997. Options granted to
non-employees are recognized at their estimated fair value at the date of
grant.
Use of estimates
----------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
Reclassifications
-----------------
Certain items in the 2000 and 1999 financial statements have been
reclassified to conform with the 2001 presentation.
2. Concentration of credit risk and significant customers
- -----------------------------------------------------------
The Company, from time to time, has cash deposits at financial institutions
in amounts in excess of federally-insured limits. The Company believes that
credit risk related to its cash deposits is limited due to the quality of
the financial institutions.
The Company's customers are located in several geographic markets,
primarily in the United States, Middle East, Europe and Pacific Rim
countries and are concentrated within three industries. To minimize the
risk of loss, the Company routinely assesses the financial strength of its
customers, and may require a substantial downpayment prior to commencing
machine production.
20
RADIANT TECHNOLOGY CORPORATION
Notes to financial statements
3. Accounts receivable (continued)
- -----------------------------------
Net accounts receivable by geographic markets are as follows:
Countries 2001 2000
--------- ---- ----
United States ...... 48% 73%
Asia .............. 26% -
European .......... 9% 14%
Other International 17% 13%
-- --
100% 100%
=== ===
During 2001, 2000, and 1999, the five largest customers represented 65, 51,
and 52 percent of revenues, respectively. At September 30, 2001 and 2000
the five largest balances represented 70 and 82 percent, respectively, of
total accounts receivable.
2001 2000
----------- -----------
Trade receivables ............ $ 412,814 $ 1,849,418
Allowance for doubtful accounts (5,000) (5,000)
------ ------
$ 407,814 $ 1,844,418
=========== ===========
Activity relating to the allowance for doubtful accounts and sales returns
is as follows:
2001 2000 1999
---- ---- ----
Balance at beginning of year $ 5,000 $ 210,817 $ 37,500
Provision (490) -- 183,807
Recoveries (Write offs) 490 (205,817) (10,490)
--- -------- -------
Balance at end of year $ 490 $(205,817) $ 210,817
======= ========= =========
21
RADIANT TECHNOLOGY CORPORATION
Notes to financial statements
4. Inventories
- ---------------
2001 2000
---- ----
Raw materials $ 471,882 $ 384,727
Work in process 313,090 313,357
Finished goods 216,851 121,049
------- -------
1,001,823 819,133
Allowance for obsolescence (156,000) (130,000)
-------- --------
$ 845,823 $ 689,133
========= =========
Activity relating to the allowance for obsolescence is as follows:
2001 2000 1999
---- ---- ----
Balance at beginning of year $ 130,000 $ 140,000 $ 100,000
Provision 56,000 40,000 40,000
Write offs (30,000) (50,000) --
------- ------- -------
Balance at end of year $ 156,000 $ 130,000 $ 140,000
========== ========== ==========
5. Property and Equipment
Life in years 2001 2000
------------- ---- ----
Machinery and equipment 7 $ 419,685 $ 387,530
Office furniture and equipment 7 70,105 68,847
Leasehold improvements 5 67,934 67,934
Vehicles 5 15,050 15,050
Capitalized computer software 3 475,145 405,542
------- -------
1,047,919 944,902
Less: accumulated depreciatio (795,676) (679,231)
-------- --------
$ 252,243 $ 265,671
=========== ==========
Depreciation expense for 2001, 2000, and 1999 was $121,945, $184,401, and
$186,295, respectively.
22
RADIANT TECHNOLOGY CORPORATION
Notes to financial statements
6. Accrued expenses
- --------------------
2001 2000
---- ----
Payroll and related items $ 126,785 $ 109,499
Commissions 39,682 89,959
Warranties 30,000 40,000
Other 19,613 15,296
------ ------
$ 216,080 $ 254,754
========= =========
7. Commitments and contingencies
- ---------------------------------
Operating leases
----------------
In November 1996 the Company signed a five year lease on a building in
Fullerton, California, expiring on February 28, 2002. The Company is
negotiating the terms of an existing option to extend the lease. Base
monthly rent is $11,395 plus common area charges of approximately $2,649
per month. The Company also leases office equipment under operating leases
expiring in January, 2002. Minimum future lease payments under
non-cancelable operating leases are:
Year ending September 30,
2002 $ 71,660
============
Rent expense for 2001, 2000 and 1999 was $146,112, $168,650, and $172,228,
respectively.
8. Environmental Matters
- -------------------------
The Company, like others in similar businesses, is subject to federal,
state and local environmental laws and regulations. Although Company
environmental policies and practices are designed to ensure compliance with
these laws and regulations, future developments and increasingly stringent
regulation could require the Company to make unforeseen environmental
expenditures.
23
RADIANT TECHNOLOGY CORPORATION
Notes to financial statements
9. Stockholders' equity
- ------------------------
Preferred stock
----------------
At September 30, 2001 and 2000 there were 5,000,000 authorized shares of
preferred stock, of which no shares were issued and outstanding.
Common stock
------------
The Company has authorized 24,000,000 shares of no par value common stock.
At September 30, 2001 and 2000, 2,081,678 and 1,906,678 shares were issued
and outstanding, respectively.
Employee stock options
----------------------
Incentive and non-statutory option plan
---------------------------------------
The Company adopted an incentive and non-statutory stock option plan which
provides for granting options to key employees and officers. Under the
plan, options up to 1,000,000 shares may be granted at a price not less
than the fair market value of such shares on the date of the grant, and the
maximum term of each option may not exceed ten years. With respect to any
participant who owns stock possessing more than 10% of the voting rights of
the Company's outstanding capital stock, the exercise price of any stock
option must not be less than 110% of the fair market value on the date of
the grant and the maximum term may not exceed five years. On January 22,
1998, April 15, 1999, and January 2, 2001 the Board authorized options to
purchase 70,000, 100,000, and 55,000 shares, respectively. These shares
were granted at an exercise price that was at or above the market price on
the date of the grant. The options vest on January 5, 2000, January 2,
2002, and January 2, 2003 and expire three years from the vesting date. As
of September 30, 2001 314,666 of these options remained outstanding.
Non-statutory director options
------------------------------
On September 30, 1996, the Company granted 20,000 non-statutory options to
each of three outside board members. The options vested immediately and
expire 50% at September 30, 2000 and 50% at September 30, 2001. The option
price is $.48 per share, which was equal to the market price at the date of
the grant. At September 30, 2001, none of these options remain outstanding.
Lawrence McNamee
----------------
Mr. McNamee held options to acquire 346,666 shares at $.075 per share
issued to him in lieu of salary in 1992; 175,000 of these options were
exercised in 2001, resulting in options for 171,666 shares outstanding at
September 30, 2001. These options have no expiration date.
24
RADIANT TECHNOLOGY CORPORATION
Notes to financial statements
9. Stockholders' equity (continued)
- ------------------------------------
The following table summarizes the activities under the Plan and outside
the Plan:
Weighted Number
Number of Price Average of Shares
Shares Per Share Exercise price Exercisable
------ --------- -------------- -----------
September 30, 1999 595,666 $.0625 - 1.175 $0.32 446,666
------- ------ ----- ----- -------
Exercised (11,000) $.0625 - 0.75 $0.13
Canceled (85,000) $.48 - 1.175 $0.94
------- ---- ----- -----
September 30, 2000 499,666 $.075 - 0.75 $0.23 459,666
------- ----- ---- ----- -------
Granted 55,000 $0.525 $0.525
Exercised (175,000) $0.075 $0.075
Canceled (65,000) $.48 - 0.75 $0.55
------- ---- ---- -----
September 30, 2001 314,666 $.075-.75 $0.30 229,666
======= ===== === ===== =======
The following information applies to employee options outstanding at
September 30, 2001:
Weighted Average Weighted
Remaining Average
Range of Number of Contractual Exercise
exercise price Shares Life (Years) Price
-------------- ------ ------------ -----
$0.075 171,666 N/A $0.075
$0.48 50,000 2.5 $0.48
$0.525 55,000 3.6 $0.525
$0.75 38,000 1.25 $0.75
----- ------ ---- -----
314,666 $0.30
======= =====
25
RADIANT TECHNOLOGY CORPORATION
Notes to financial statements
9. Stockholders' equity (continued)
- -------------------------------------
Stock options (continued)
-------------------------
Had compensation cost for the plan been determined based on the fair value
of the options at the grant dates consistent with the method of SFAS 123,
the Company's net income/(loss) and earnings/(loss) per share would have
been:
2001 2000 1999
---- ---- ----
Net income/(loss):
As reported $ (157,210) $ 287,729 $ (475,820)
Pro forma $ (169,952) $ 284,444 $ (507,110)
Basic earnings per share:
As reported $ (0.8) $ 0.15 $ (0.25)
Pro forma $ (0.8) $ 0.15 $ (0.27)
Diluted earnings per share:
As reported $ (0.8) $ 0.13 $ (0.25)
Pro forma $ (0.8) $ 0.13 $ (0.27)
These pro forma amounts may not be representative of future disclosures
because they do not take into effect pro forma compensation expense related
to grants made before 1996. In addition, potential deferred tax benefits of
approximately $12,500, $12,500, and $15,000 in 2001, 2000 and 1999
respectively, have not been reflected in the pro forma amounts due to the
uncertainty of realizing any benefit. The fair value of these options was
estimated at the date of grant using the Black-Scholes option-pricing model
with the following weighted average assumptions for 2001, 2000 and 1999:
Expected life (years) 4
Risk-free interest rate 6.00%
Volatility 100%
Expected dividends None
The weighted fair value of options granted during the years ended September
30, 2001 and 2000 for which the exercise price approximated the market
price on the grant date was $.41 and $.21, respectively.
26
RADIANT TECHNOLOGY CORPORATION
Notes to financial statements
10. Income taxes
- -----------------
Income tax expense (benefit) consisted of the following:
2001 2000 1999
---- ---- ----
Current tax expense $ - $ 13,000 $ -
Deferred tax benefit (113,500) - -
--------- --------- ---------
Net income tax expense $(113,500) $ 13,000 $ -
========= ======== ========
Income tax expense (benefit) differed from the amounts computed by applying
the U.S. federal income tax rate of 34% to pretax income from continuing
operations in 2001, 2000 and 1999 as a result of the following:
2001 2000 1999
---- ---- ----
Continuing operations:
Federal expected tax expense (benefit) $ (87,768) $ 102,000 $(167,000)
State expected tax expense (benefit) (25,732) 28,000 (48,000)
Inventory allowance 12,000 (4,000) (40,000)
Accounts receivable allowance - (76,000) (42,000)
------- ------- -------
Depreciation timing differences 20,000 33,000 20,000
Deferred tax valuation allowance (32,000) - 277,000
Use of NOL carryforwards - federal - (64,000) -
Use of NOL carryforwards - state - (6,000) -
------ ------ ------
$(113,500) $ 13,000 $ -
========= ========= =======
The tax effects of temporary differences that give rise to significant
portions of deferred tax assets and liabilities at September 30, 2001 and
2000 are as follows:
2001 2000
---- ----
Net operating loss carryforwards $ 514,000 $ 441,000
Allowance for slow moving inventories 72,000 60,000
Allowance for doubtful accounts 2,000 2,000
Other - -
------ ------
Deferred tax assets 588,000 503,000
Less valuation allowance (304,500) (333,000)
-------- --------
Net deferred tax asset $ 283,500 $ 170,000
========= =========
27
RADIANT TECHNOLOGY CORPORATION
Notes to financial statements
10. Income taxes (continued)
- ------------------------------
At September 30, 2001, the Company had net operating loss carryforwards for
federal and state income tax purposes expiring as follows:
Federal State
------- -----
2007 $ 247,175 $ -
2009 620,976 -
2011 - 121,000
2014 167,361
2021 220,000 -
------- -------
$1,255,512 $ 121,000
========== =========
Federal investment credit and other general business credit carryforwards
total $35,600 and $105,500, respectively, and expire at various dates
through 2003.
11. Employee benefit plan
- --------------------------
The Company's 401(k) plan was re-activated during fiscal 1996. All
employees are eligible as long as they are 21 years of age and have
completed one year of employment. The plan provides for contributions by
the Company in such amounts as management may determine. Contribution
expense charged to operations in 2000 and 1999 were $12,474 and $13,027
respectively. No expense was charged to operations in 2001.
28
RADIANT TECHNOLOGY CORPORATION
Notes to financial statements
12. Basic and diluted earnings/(loss) per share
The following tables illustrate the required disclosure of the
reconciliation of the numerators and denominators of the basic and diluted
earnings/(loss) per share computations.
2001 2000 1999
---- ---- ----
Basic earnings/(loss) per share:
Numerator
Net income/(loss) $ (157,210) $ 287,729 $ (475,820)
=========== =========== ===========
Denominator
Basic weighted average number of common
shares outstanding during the period 2,040,445 1,901,594 1,895,678
========= ========= =========
Basic net income/(loss) per share $ (0.08) $ 0.15 $ (0.25)
=========== =========== ===========
Diluted earnings/(loss) per share:
Denominator
Weighted average number of common
shares used in basic earnings per share 2,040,445 1,901,594 1,895,678
Effect of dilutive securities:
Stock options (1) -- 287,170 --
Weighted number of common shares
and dilutive potential common stock
used in diluted earnings per share 2,040,445 2,188,764 1,895,678
========= ========= =========
Diluted earnings/(loss) per share $ (0.08) $ (0.25) $ 0.18
=========== =========== ===========
(1) Stock options were anti-dilutive for the years ended September 30, 2001
and 1999. See Note 9 for stock option activity .......
29