SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2)
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
Radiant Technology Corporation
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(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction
applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:(1)
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Dated Filed:
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(1) Set forth the amount on which the filing fee is calculated and state
how it was determined.
RADIANT TECHNOLOGY CORPORATION
1335 SOUTH ACACIA AVENUE
FULLERTON, CALIFORNIA 92831
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 19, 2001
1:00 P.M.
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Notice is hereby given that the Annual Meeting of Shareholders of
Radiant Technology Corporation will be held at 1335 South Acacia Avenue,
Fullerton, California 92831, on Thursday, April 19, 2001, at 1:00 p.m. to
consider and vote upon:
1. The election of a Board of Directors consisting of five (5)
directors. The Proxy Statement which accompanies this Notice
includes the names of the nominees to be presented by the
Board of Directors for election; and
2. The transaction of such other business as may properly come
before the Annual Meeting.
The Board of Directors has fixed the close of business on March 12,
2001 as the record date for determination of shareholders entitled to notice of,
and to vote, at the Annual Meeting. TO ASSURE THAT YOUR SHARES WILL BE
REPRESENTED AT THE ANNUAL MEETING, PLEASE MARK, SIGN, DATE AND PROMPTLY RETURN
THE ACCOMPANYING PROXY CARD IN THE ENCLOSED ENVELOPE. YOU MAY REVOKE YOUR PROXY
AT ANY TIME BEFORE IT IS VOTED.
Shareholders are cordially invited to attend the meeting in person.
Please indicate on the enclosed proxy whether you plan to attend the meeting.
Shareholders may vote in person if they attend the meeting even though they have
executed and returned a proxy.
By Order of the Board of Directors,
By: /S/ Mercy Gingrich
---------------------------------
Mercy Gingrich
Secretary
Dated: March 23, 2001
RADIANT TECHNOLOGY CORPORATION
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PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
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INTRODUCTION
This Proxy Statement is furnished by the Board of Directors of Radiant
Technology Corporation, a California corporation, (the "Company") in connection
with the solicitation of proxies for use at the Annual Meeting of Shareholders
to be held on April 19, 2001 and at any adjournments thereof. The Annual Meeting
has been called to consider and vote upon the election of five (5) Directors and
to consider such other business as may properly come before the Annual Meeting.
This Proxy Statement and the accompanying Proxy are being sent to shareholders
on or about March 23, 2001.
PERSONS MAKING THE SOLICITATION
The Proxy is solicited on behalf of the Board of Directors of the
Company. The original solicitation will be by mail. Following the original
solicitation, the Board of Directors expects that certain individual
shareholders will be further solicited through telephone or other oral
communications from the Board of Directors. The Board of Directors does not
intend to use specially engaged employees or paid solicitors. The Board of
Directors intends to solicit proxies for shares which are held of record by
brokers, dealers, banks or voting trustees, or their nominees, and may pay the
reasonable expenses of such record holders for completing the mailing of
solicitation materials to persons for whom they hold shares. All solicitation
expenses will be borne by the Company.
TERMS OF THE PROXY
The enclosed Proxy indicates the matter to be acted upon at the Annual
Meeting and provides boxes to be marked to indicate the manner in which the
shareholder's shares are to be voted with respect to such matter. By
appropriately marking the boxes, a shareholder may specify whether the proxies
shall vote for or against or shall be without authority to vote the shares
represented by the Proxy. The Proxy also confers upon the proxies discretionary
voting authority with respect to such other business as may properly come before
the Annual Meeting.
If the Proxy is executed properly and is received by the proxies prior
to the Annual Meeting, the shares represented by the Proxy will be voted. Where
a shareholder specifies a choice with respect to the matter to be acted upon,
the shares will be voted in accordance with such specification. Any Proxy which
is executed in such a manner as not to withhold authority to vote for the
election of the specified nominees as directors (see "Matter To Be Acted Upon --
Election of Directors") shall be deemed to confer such authority. A Proxy may be
revoked at any time prior to its exercise by giving written notice of the
revocation thereof to Mercy Gingrich, Secretary, Radiant Technology Corporation,
1335 South Acacia Avenue, Fullerton, California 92831, by attending the meeting
and electing to vote in person, or by a duly executed proxy bearing a later
date.
-1-
VOTING RIGHTS AND REQUIREMENTS
VOTING SECURITIES
The securities entitled to vote at the Annual Meeting consist of all of
the issued and outstanding shares of the Company's common stock, no par value
per share. The close of business on March 12, 2001 has been fixed by the Board
of Directors of the Company as the record date. Only shareholders of record as
of the record date may vote at the Annual Meeting. As of the record date, there
were 1,905,678 issued and outstanding shares of the Company's common stock
entitled to vote at the Annual Meeting and approximately 410 holders of record
of the Company's common stock.
CUMULATIVE VOTING
Each shareholder of record as of the record date will be entitled to
one vote for each share of the Company's common stock held as of the record
date. Cumulative voting is permitted in the election of directors. Every
shareholder complying with certain conditions set forth below may cumulate votes
and give one candidate a number of votes equal to the number of directors to be
elected (five) multiplied by the number of votes to which the shareholder's
shares are normally entitled, or distribute the shareholder's votes on the same
principle among the candidates as the shareholder thinks fit. Under California
law, a shareholder can cumulate votes only if the candidate's names have been
placed in nomination prior to the voting and the shareholder has given notice at
the meeting prior to voting of the shareholders' intention to cumulate the
shareholder's votes. If any one shareholder has given such notice, all
shareholders may cumulate their votes for candidates in nomination.
Discretionary authority to invoke cumulative voting and to cumulate
votes represented by Proxies is solicited by the Board of Directors because, in
the event nominations are made in opposition to the nominees of the Board of
Directors, it is the intention of the persons named as proxies in the enclosed
Proxy to cumulate votes represented by Proxies for individual nominees in
accordance with their best judgment allocated among as many of the five nominees
of the Board of Directors as possible, unless such authority is withheld as to
any nominee. In that event, those votes will be cumulated for the remaining
nominees of the Board of Directors.
If cumulative voting is invoked by any shareholder in accordance with
California law, shareholders who attend the meeting and vote in person will be
entitled to personally exercise their right to cumulate votes among the nominees
for director. However, because a shareholder who votes by Proxy grants the
proxies discretionary authority to cumulate votes, the proxies and not the
shareholder who has executed a Proxy will have the sole authority to cumulate
votes, unless the shareholder revokes the Proxy and votes in person at the
meeting.
QUORUM
The presence at the Annual Meeting of the holders of a number of shares
of the Company's common stock and proxies representing the right to vote shares
of the Company's common stock in excess of one-half of the number of shares of
the Company's common stock outstanding as of the record date will constitute a
quorum for transacting business.
-2-
COMMON STOCK OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information, as of March 12, 2001, with
respect to the ownership of the Company's common stock by: (i) each person known
by the Company to be the beneficial owner of more than 5% of the Company's
common stock; (ii) by each director; (iii) by each nominee for director; and
(iv) by all officers and directors of the Company as a group.
Name and Address of Amount and Nature of Percent
Beneficial Owner(1) Beneficial Ownership(2) of Class
------------------- ----------------------- --------
Lawrence R. McNamee 808,890(3) 38.9%
Joseph S. Romance 154,329(4) 8.1%
Carson T. Richert 217,587(5) 11.2%
Peter D. Bundy 50,000(2) 2.6%
Robert B. Thompson 10,000(6) .5%
Raymond Kruzek 142,813(6) 7.5%
Mercy Gingrich 115,286(2) 6.0%
All Directors and Officers
as a group (7 persons) 1,498,905(7) 63.7%
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(1) The address of each named person is 1335 South Acacia Avenue,
Fullerton, California 92831.
(2) Unless otherwise indicated, each person has sole voting and investment
power over the common stock shown as beneficially owned, subject to
community property laws where applicable and the information contained
in footnotes to this table.
(3) Includes 171,666 shares issuable pursuant to stock options all of which
are currently exercisable.
(4) Includes 138,434 shares, including 57,372 shares held in a living trust
with his wife, over which Mr. Romance may be deemed to have shared
investment power, an aggregate of 5,895 shares owned by his immediate
family, and 10,000 shares issuable pursuant to presently exercisable
stock options.
(5) Includes 40,000 shares issuable pursuant to presently exercisable stock
options.
(6) Includes 10,000 shares issuable pursuant to presently exercisable stock
options.
(7) Includes 446,666 shares issuable pursuant to presently exercisable
stock options.
-3-
MATTERS TO BE ACTED UPON
ITEM 1: ELECTION OF DIRECTORS
DIRECTORS
The Company's Bylaws give the Board the power to set the number of
directors at no less than three nor more than seven. The size of the Company's
Board is currently set at five. The directors so elected will serve until the
next Annual Meeting of Shareholders. Five (5) directors are to be elected at the
Annual Meeting to be held on April 19, 2001. All of the nominees are currently
directors of the Company. The Board knows of no reason why any nominee for
director would be unable to serve as a director. In the event that any of them
should become unavailable prior to the Annual Meeting, the proxy will be voted
for a substitute nominee or nominees designated by the Board of Directors, or
the number of directors may be reduced accordingly.
The following table sets forth the name and age of each nominee for
director, the year he was first elected a director and his position(s) with the
Company.
NAME AGE DIRECTOR SINCE POSITION(S) HELD
- ---- --- -------------- ----------------
Lawrence R. McNamee 69 1991 Chairman of the Board and
Chief Executive Officer
Carson T. Richert 60 1972 President and Director
Joseph S. Romance 69 1972 Director
Peter Bundy 69 1995 Director
Robert B. Thompson 65 1996 Director
LAWRENCE MCNAMEE joined the Company in September 1990 and was elected
Chairman of the Board of Directors in March 1991. Mr. McNamee has 14 years prior
experience in working as a consultant with companies in turnaround management.
Mr. McNamee was previously associated with Booz-Allen and Hamilton and Arthur P.
Little, Inc.
CARSON T. RICHERT was a founder of the Company and has been a director
since its incorporation in 1972. Mr. Richert was Vice President - Marketing of
the Company from 1972 until 1981 when he was elected Executive Vice President.
Mr. Richert was elected President in August 1990. Carson T. Richert and Joseph
S. Romance are first cousins.
JOSEPH S. ROMANCE was a founder of the Company and was the Chairman of
the Board of Directors from the Company's incorporation 1972 until March of
1991. From 1972 to October 1980 and again from July 1981 to February 1988, he
also served as President. Joseph S. Romance and Carson T. Richert are first
cousins.
PETER D. BUNDY was elected to the Board of Directors in January 1995.
Mr. Bundy is an investor and consultant. His expertise is in marketing. He was a
partner with Howard Hirsh Group, a designer and manufacturer of several apparel
lines. Prior to that he was a Vice President of Associated Department Stores.
ROBERT B. THOMPSON was elected to the Board of Directors in July 1996.
Mr. Thompson is Vice Chairman and a Director of InspecTech, Inc., a company
engaged in the business of providing and franchising building inspection
services in connection with the transfer of real property. Mr. Thompson is also
an investor and consultant with expertise in the banking industry. Mr. Thompson
has previously served as President of Western Federal Bank in California.
-4-
The executive officer of the Company as of March 12, 2001 who is not
also a director is as follows:
MERCY GINGRICH, the Secretary of the Company, age 59, who has been the
Secretary of the Company since September 1990. Ms. Gingrich joined the Company
in June 1990 and has held positions of Administrative Assistant and Director of
Human Resources within the Company.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
During the fiscal year ended September 30, 2000, there were four
meetings of the Board of Directors. No director except Robert B. Thompson was
absent from more than one meeting. Mr. Thompson was absent from two meetings. In
addition, actions were taken with the unanimous written consent of the
directors. The Board of Directors does not have a standing nominating committee.
Nominating functions are performed by the entire Board of Directors. Joseph S.
Romance, Peter D. Bundy and Robert B. Thompson, the Company's three outside
directors, serve on the Company's audit committee and compensation committee.
All committee members attended the one compensation and audit committee meeting
held during the fiscal year ended September 30, 2000.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's officers, directors and persons who beneficially own more
than 10% of a registered class of the Company's equity securities to file
reports of securities ownership and changes in such ownership with the
Securities and Exchange Commission (the "SEC"). Officers, directors and greater
than 10% beneficial owners are also required by rules promulgated by the SEC to
furnish the Company with copies of all Section 16(a) forms they file.
Based solely upon a review of the copies of such forms furnished to the
Company, or representations that no Form 5 filings were required, the Company
believes that during the period from October 1, 1999 through September 30, 2000,
its officers, directors and greater than 10% beneficial owners complied with all
Section 16(a) requirements applicable to them.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
EXECUTIVE COMPENSATION
The following table sets forth the compensation (cash and non cash),
for the Chief Executive Officer and all the executive officers who earned in
excess of $100,000 per annum during any of the Company's last three fiscal
years.
Long-Term
Annual Compensation Compensation Awards
------------------------- -----------------------
Securities
Restricted Underlying
Stock Stock
Name and Fiscal Other Annual Awards Options LTIP All Other
Principal Position Year Salary Bonus($) Compensation($) ($) (#) Payouts($) Compensation
- -------------------- ------ -------- -------- --------------- ----------- ---------- ---------- ------------
Lawrence R. McNamee 2000 $104,000 --- --- --- --- --- ---
Chairman of the Board 1999 $108,000 --- --- --- --- --- ---
and Chief Executive 1998 $103,200 --- --- --- --- --- ---
Officer
-5-
OPTION EXERCISE AND FISCAL YEAR-END VALUES
AGGREGATED OPTION EXERCISES IN THE LAST FISCAL YEAR
AND OPTION VALUES AT SEPTEMBER 30, 2000
Number of
Securities Underlying Value of Unexercised
Unexercised Options "In-the-Money" Options at
at September 2000(#) September 2000($)(1)
-------------------- --------------------
Shares
Acquired on
Exercise Value
Name (Shares) Realized($) Exercisable Unexercisable Exercisable(2) Unexercisable
---- -------- ----------- ----------- ------------- -------------- -------------
Lawrence R. McNamee 175,000 $51,625 171,666 --- $115,875 ---
- -------------
(1) Options are "in-the-money" at the fiscal year end if the fair market
value of the underlying securities on such date exceeds the exercise or
base price of the option.
(2) The fair market value of unexercised "in-the-money" options was based
on trading prices for the Company's shares at September 22, 2000, the
day prior to September 30, 2000 on which the Company's common stock
last traded. The Company's common stock is thinly traded and it is not
possible to determine the accuracy of this fair market value
projection.
DIRECTOR COMPENSATION
Directors who are not directly employed by the Company receive a fee of
$800 quarterly for their attendance at board meetings. All directors are
reimbursed for expenses connected with attendance at the meetings of the Board
of Directors.
EMPLOYMENT AGREEMENT
Lawrence R. McNamee is employed under a renewable one year employment
agreement commencing January 1, 1991 pursuant to which he is entitled to earn an
annual salary of $156,000.
OTHER MANAGEMENT TRANSACTIONS WITH THE COMPANY
In April 1994, Lawrence R. McNamee and Operation Phoenix, a partnership
of which directors, officers and employees and an outside investor were
partners, loaned the Company $150,000 and $200,000, respectively, bearing
interest at the rate of 10% per annum due in June 1995. As a part of the
Company's reorganization, these loans were converted to common stock. On
February 20, 1996, upon conversion of the loan, the Company issued 380,818
shares to Mr. McNamee and 571,277 shares to the participants in Operation
Phoenix, some of whom were directors and/or officers of the Company.
-6-
REPORT OF THE COMPENSATION COMMITTEE ON
EXECUTIVE COMPENSATION
COMPENSATION PHILOSOPHY
The executive compensation philosophy of the Company is to (i) attract
and retain qualified management to run the business efficiently and guide the
Company's growth in both existing and new markets throughout the country, (ii)
establish a link between management compensation and the achievement of the
Company's annual and long-term performance goals, and (iii) recognize and reward
individual initiative and achievement.
BASE SALARIES
Base salaries for new management employees are based primarily on the
responsibilities of the position and the experience of the individual, with
reference to the competitive marketplace for management talent, which is
measured in terms of executive compensation offered by comparable companies in
related businesses.
STOCK OPTIONS
The Company has granted stock options to its Chief Executive Officer as
part of his employment agreement. The option exercise prices were equal to the
fair market value of the Company's common stock on the grant date and the
options are fully vested. The exercise price of the options was subsequently
adjusted. No options have been exercised to date. Because the amount of
compensation which will be realized from these options is directly related to
the price of the Company's stock, this form of compensation is directly related
to the performance of the Company and the results of its operations.
CONCLUSION
Through the option described above, a significant portion of the
Company's Chief Executive Officer's compensation is linked directly to Company
performance. The Compensation Committee will continually review all compensation
practices and make changes as appropriate.
Sincerely,
Joseph S. Romance
Peter D. Bundy
Robert B. Thompson
COMPENSATION COMMITTEE
-7-
REPORT OF THE AUDIT COMMITTEE
The Company's audit committee consists of the Company's three outside
directors, Joseph S. Romance, Peter Bundy and Robert B. Thompson. The members of
the audit committee are independent. The Board of Directors has not adopted a
written charter for the audit committee. The audit committee has reviewed and
discussed the audited financial statements with management. The audit committee
plans to discuss with the independent auditors the matters required to be
discussed by SAS 61. The audit committee has received the written disclosures
and the letter from the independent accountants required by Independence
Standards Board Standard No. 1 (Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees), as may be modified or
supplemented, but has not yet discussed with the independent accountant the
independent accountant's independence. Based on the review, the audit committee
recommended to the Board of Directors that the audited financial statements be
included in the company's Annual Report on Form 10-K for the last fiscal year
for filing with the Securities and Exchange Commission.
Sincerely,
Joseph S. Romance
Peter Bundy
Robert B. Thompson
AUDIT FEES
The aggregate fees billed for professional services rendered for the
audit of the registrant's annual financial statements for the most recent fiscal
year and the reviews of the financial statements included in the registrant's
Forms 10-Q for that fiscal year was $22,700.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
No fees were billed for professional services directly or indirectly
operating, or supervising the operation of, the audit client's information
system or managing the audit client's local area network or for designing or
implementing a hardware or software system that aggregates source data
underlying the financial statements or generates information that is significant
to the audit client's financial statements taken as a whole or for appraisal or
valuation services or fairness opinions rendered by the principal accountant for
the most recent fiscal year.
ALL OTHER FEES
The aggregate fees billed for other services rendered by the principal
accountant was $2,250 for the most recent fiscal year. The audit committee has
not yet considered whether the provision of other services is compatible with
maintaining the principal accountant's independence.
-8-
ITEM 2: OTHER MATTERS
Except for the matters referred to in the accompanying Notice of Annual
Meeting, management does not intend to present any matter for action at the
Annual Meeting and knows of no matter to be presented at the meeting that is a
proper subject for action by the shareholders. However, if any other matters
should properly come before the meeting, it is intended that votes will be cast
pursuant to the authority granted by the enclosed Proxy in accordance with the
best judgment of the person or persons acting under the Proxy.
INDEPENDENT PUBLIC ACCOUNTANTS
The Company's independent public accountants for the fiscal year ended
September 30, 2000 were Cacciamatta Accountancy Corporation, Independent Public
Accountants. A representative of that firm is expected to be present at the
meeting and will be available to make a statement or respond to appropriate
questions.
ANNUAL REPORT
The annual report to shareholders covering the Company's fiscal year
ended September 30, 2000 is being mailed to shareholders with this Proxy
Statement. The Company's annual report on Form 10-K under the Securities
Exchange Act of 1934 for the year ended September 30, 2000, including the
financial statements and schedules thereto, which the Company has filed with the
Securities and Exchange Commission will be made available to beneficial owners
of the Company's securities upon request. The annual report does not form any
part of the material for the solicitation of the Proxy.
SHAREHOLDER PROPOSALS
All shareholder proposals that are intended to be presented at the 2001
Annual Meeting of shareholders and to be included in the proxy materials for
that meeting should be received by the Company's Secretary not later than
November 15, 2001. If the Company receives notice of a shareholder proposal to
be voted on at the next Annual Meeting of Shareholders after November 15, 2001,
the persons named as proxies in the Company's proxy statement and form for such
meeting will have discretionary authority to vote on the proposal.
REQUEST TO RETURN PROXIES PROMPTLY
A Proxy is enclosed for your use. Please mark, date, sign and return
the Proxy at your earliest convenience. The Proxy requires no postage if mailed
in the United States in the postage-paid envelope provided. A prompt return of
your Proxy will be appreciated.
By Order of the Board of Directors,
By: /S/ Mercy Gingrich
--------------------------------
Mercy Gingrich,
Secretary
Fullerton, California
March 23, 2001
-9-
RADIANT TECHNOLOGY CORPORATION PROXY - 2000 ANNUAL MEETING
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING APRIL 19, 2001
The undersigned, a shareholder of Radiant Technology Corporation, a California
corporation, appoints Mercy Gingrich his, her or its true and lawful agents and
proxies, with full power of substitution, to vote all the shares of stock that
the undersigned would be entitled to vote if personally present at the Annual
Meeting of Shareholders of Radiant Technology Corporation to be held at its
corporate office, 1335 South Acacia Avenue, Fullerton, California 92831, on
Thursday, April 19, 2001, at 1:00 p.m., and any adjournment thereof, with
respect to the following matters which are more fully explained in the Proxy
Statement of the Company dated March 23, 2001 receipt of which is acknowledged
by the undersigned:
ITEM 1: ELECTION OF DIRECTORS.
______ FOR all nominees ______ WITHHOLD AUTHORITY
(Except as listed below.) (As to all nominees.)
---
NOMINEES: LAWRENCE R. MCNAMEE, CARSON T. RICHERT, JOSEPH S. ROMANCE,
PETER D. BUNDY AND ROBERT B. THOMPSON.
INSTRUCTION: To withhold authority to vote for any individual nominee(s),
write that nominee's name in the space provided below.
---------------------------------------------
ITEM 2: OTHER MATTERS. The Board of Directors at present knows of
no other matters to be brought before the Annual Meeting.
This proxy will be voted in accordance with the instructions given. If no
direction is made, the shares represented by this proxy will be voted FOR the
election of the directors nominated by the Board of Directors and will be voted
in accordance with the discretion of the proxies upon all other matters which
may come before the Annual Meeting.
DATED:____________________________, 2001
-----------------------------------------
Signature of Shareholder
-----------------------------------------
Signature of Shareholder
PLEASE SIGN AS YOUR NAME APPEARS ON THE PROXY
Trustees, Guardians, Personal and other Representatives, please
indicate full titles.
IMPORTANT: PLEASE VOTE, DATE, SIGN AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED POSTAGE-PAID ENVELOPE
[RTC LOGO] Radiant Technology Corporation
2000
ANNUAL REPORT
TO SHAREHOLDERS
An OTC publicly traded Company
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS: BELOW AND ELSEWHERE IN THIS ANNUAL REPORT INCLUDES "FORWARD LOOKING
STATEMENTS" WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT, AND IS
SUBJECT TO THE SAFE HARBOR CREATED BY THAT SECTION. FACTORS THAT COULD CAUSE
ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTAINED IN THE FORWARD LOOKING
STATEMENTS INCLUDE CHANGES IN GENERAL ECONOMIC CONDITIONS, INDUSTRY TRENDS,
CUSTOMER REQUIREMENTS, CUSTOMER CAPITAL EXPENDITURES AND PRODUCT DEVELOPMENTS BY
COMPETITORS.
PREFACE
- -------
Radiant Technology Corporation completed its fiscal 2000 year posting a
significant gain. This restores profitable performance after 1999's
disappointing loss. Management attributes the profit to increased revenue and
cost containment of G & A expense.
SALES
During the fiscal years ended September 30, 2000, 1999, and 1998, the
Company's revenues were derived from sales of the following products:
================================================================================
Gross Sales
- -----------
(in thousands) 2000 1999 1998
---- ---- ----
$ % $ % $ %
----------------------------------------------
Conveyorized Infrared
Ovens and Furnaces 4,331 92 2,313 70 3,919 84
Field Service & Parts 386 8 971 30 767 16
================================================================================
The Company is engaged in the marketing, design, manufacture and
service of highly precision thermal processing systems that are primarily used
by manufacturers of electronic componentry. The Company's conveyorized (belt)
ovens and furnaces are in demand, worldwide, to meet ever-changing process
requirements in the semiconductor packaging, photovoltaic (solar cell), flat
panel display, hybrid thick film firing, and printed circuit board assembly
industries. New and inventive uses of the product line for other applications
continue to be discovered.
The nature and high intensity of the infrared heat produced in the
Company's furnaces permits a high rate of heat absorption by the electronic
parts processed through them, making them more adaptable to the exacting
tolerances and high-speed heating requirements of certain industrial users.
Operating costs for RTC units are significantly lower than for
conventional ovens and furnaces. Since these ovens and furnaces can be brought
up to operating temperatures in a shorter time span, operate at a faster
conveyor belt speed, require less floor space and use less electric energy.
To obtain financial growth and stability the Company concentrates on
managing the following key elements of its business:
Technological Leadership: The Company is constantly in contact with its
customers soliciting their input for both continued product improvement and new
product development. The Company encourages customers anticipating new thermal
processing requirements to contact it regarding their new opportunities and
needs.
-1-
The Company's new products are:
A conduction furnace for the wafer bump manufacturing step of the growing flip
chip assembly market. RTC's new TriBelt(TM) tool incorporates three conveyor
belts in series; one for each of the major stages of the wafer bump process.
This design provides a more thermally reliable and cost effective process than
other equipment being offered for the nitrogen-enhanced environment. It is
complimentary to and augments the RTC hydrogen furnaces being offered to
customers whose products require this method of production.
A new furnace extending the thermal processing range of RTC equipment from
1000(Degree)C higher to 1300(Degree)C in either a nitrogen or oxygenated
environment. Until now customers who required higher temperature furnaces where
required to look to other suppliers. Now they can stay with RTC as their
preferred and primary vendor.
A furnace incorporating ultra-violet enhanced heating in conjunction with or
separated from infrared heating. This was the result of the expression of a high
degree of interest in the potential value of UV enhancement by solar cell
industry. RTC has orders for three such systems from as many customers. The
company expects to sell other units to the industry in the near future; and also
finds requests from other customer areas interested in this new technology.
Customer Diversity: Customers from different facets of the electronics industry
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: The Company concentrates on providing timely, high quality,
responsiveness to its 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, the Company retains 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
customers equipment, making it possible to analyze and implement customer
requests online from Company headquarters.
MARKETS AND PRODUCTS:
The Company's near infrared processing systems are principally in
demand for the following applications:
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. RTC
offers a high temperature furnace for this application, equipped with the
hydrogen package, providing a reflow 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.
Photovoltaics: 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, existing RTC customers have been
experimenting with using a modified version of our S-series furnace for
phosphorus diffusion, which is the first thermal process in the manufacture of
solar cells. An extremely precise thermal process is required for phosphorus
diffusion as this step ultimately determines the cell's efficiency in generating
power when exposed to sunlight.
-2-
Flat Panel Display: While the flat panel display market has been 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. The RTC furnace can handle
glass panels up to 58 inches wide. In addition to the challenges of achieving
uniform heating over the entire panel, there were unique mechanical challenges
for handling the large glass panels while loading and unloading the furnace.
Printed Circuit Board: RTC offers both infrared and forced convection heating
technology for printed circuit board assembly. These ovens are used for mass
reflow soldering of surface mount components to a printed circuit assembly.
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 the desired resistor
value, or electrical properties of the conductors. RTC offers furnaces for
firing thick film inks in air, and for firing thick film materials in a
controlled, inert atmosphere having a low oxygen content.
================================================================================
Operating Data
- --------------
(in thousands)
Year Ended September 30
---------------------------------------------------
2000 1999 1998 1997 1996
---- ---- ---- ---- ----
Net Sales $4,717 $3,336 $4,686 $4,412 $4,173
Income (loss) from
Continuing Operations 301 (476) 416 592 222
Total Assets 4,551 4,061 4,063 4,102 2,524
Long-term debt 0 0 0 0 0
Per Share Information
Income (loss) from
Continuing Operations .15 (.25) .22 .32 .18
================================================================================
MARKETING, SALES AND CUSTOMERS
The Company sells its products throughout the world, primarily to
organizations engaged in the manufacture of electronic components and
assemblies. RTC maintains factory direct sales in the United States.
Internationally the Company is represented through independent sales/service
organizations.
Customers evaluate furnace vendors on their technological leadership resulting
in high process yield of material produced. This primary benefit combined with
high up time, low meantime between failure, (MTBF) quick reliable service and
spare parts response time combine to produce low cost of equipment ownership.
The Company does not experience a seasonal demand for its product. Rather the
demand for product, is dependent on the demand for new manufacturing equipment.
HISTORY AND PROFITS
Radiant Technology Corporation was incorporated in the State of
California in 1972.
Net sales of $4,717,316 increased $1,380,642 or 42% for the fiscal year
ended September 2000. Net sales of $3,336,674 decreased $1,349,708 or 29% for
the fiscal year ended September 30, 1999.
-3-
Fiscal 2000 was a financially successful year for the Company. The
Company achieved a profit of $287,729 after taxes or $.15 per share.
Cost of Sales were down, due to a relative reduction in burden. Selling
and G & A costs were up slightly when the effect of an allowance for a doubtful
debt experienced in FY 1999 is eliminated.
Interest was booked as income, rather than expense. Borrowing is
reserved only for short-term requirements.
Research and Development costs were reduced slightly over prior years.
These costs are essential to the Company's long term future. A future that can
move very quickly in the high technology field. New products initiated this year
and should help secure future years income.
LIQUIDITY AND CAPITAL RESOURCES
During 2000, cash increased by $171,039. The Company anticipates that
it has sufficient cash to fund planned sales growth in 2001 without any long
term borrowing. There may be occasional periods when short- term borrowing will
be accommodated, although little of this type of activity is foreseen.
Furthermore, the Company anticipates having sufficient cash to purchase planned
capital equipment requirements.
================================================================================
STOCK PRICE
- -----------
HIGH LOW
---- ---
2000
1ST QUARTER............... $ 1.438 $ .938
2ND QUARTER............... 1.797 1.375
3RD QUARTER............... .656 .625
4TH QUARTER............... .75 .75
1999
1ST QUARTER............... $ 1.75 $ .78125
2ND QUARTER............... 1.03125 .53125
3RD QUARTER............... 1.125 .40625
4TH QUARTER............... 1.01 .375
================================================================================
MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED SECURITY HOLDER MATTER
The Company's common stock, symbol RTNC, is quoted by the National
Quotation Bureau, Inc. ("NQBI") on the "Pink Sheets". The table below sets forth
the representative high and low bid prices for the common stock 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.
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 share holders. The Company has never paid any
dividends. It is anticipated that all earnings, if any, 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.
Shareholders of Record: As of September 30, 2000, the number of
recorded holders of the Company's Common Stock was 404.
-4-
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, 2000 and 1999, and the related statements of
operations, stockholders' equity and cash flows for each of the years in the
three year period ended September 30, 2000. 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 generally accepted auditing
standards. 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, 2000 and 1999 and the results of its operations and its cash
flows for each of the three years in the period ended September 30, 2000 in
conformity with generally accepted accounting principles.
CACCIAMATTA ACCOUNTANCY CORPORATION
Irvine, California
November 15, 2000
-5-
RADIANT TECHNOLOGY CORPORATION
BALANCE SHEET
SEPTEMBER 30,
----------------------------
2000 1999
----------- -----------
ASSETS
CURRENT ASSETS:
Cash and equivalents $1,528,383 $2,384,902
Accounts receivable 1,844,418 591,306
Inventories 689,133 433,906
Prepaid expenses 42,411 -
Deferred taxes 170,000 100,000
----------- -----------
Total current assets 4,274,345 3,510,114
PROPERTY AND EQUIPMENT 265,671 421,801
DEFERRED TAXES - 70,000
OTHER 11,443 59,164
----------- -----------
$4,551,459 $4,061,079
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term debt $ 500,000 $1,500,000
Accounts payable 397,164 176,123
Accrued expenses 254,754 236,041
Income taxes payable 13,000 -
Customer deposits 967,269 18,747
----------- -----------
Total current liabilities 2,132,187 1,930,911
STOCKHOLDERS' EQUITY:
Preferred stock - -
Capital stock 1,154,483 1,153,108
Retained earnings 1,264,789 977,060
----------- -----------
Total stockholders' equity 2,419,272 2,130,168
$4,551,459 $4,061,079
=========== ===========
The accompanying notes are an integral part of these financial statements.
-6-
RADIANT TECHNOLOGY CORPORATION
STATEMENTS OF OPERATIONS
YEAR ENDED SEPTEMBER 30,
-------------------------------------------
2000 1999 1998
------------ ------------ ------------
NET SALES $ 4,717,316 $ 3,336,674 $ 4,686,382
COST OF SALES 3,086,122 2,283,801 3,038,095
------------ ------------ ------------
Gross profit 1,631,194 1,052,873 1,648,287
OPERATING EXPENSES:
Selling, general and administrative 944,293 1,095,036 797,217
Research and development 230,599 282,766 250,964
Depreciation and amortization 193,113 195,011 179,539
------------ ------------ ------------
Total operating expenses 1,368,005 1,572,813 1,227,720
------------ ------------ ------------
Income/(loss) from operations 263,189 (519,940) 420,567
INTEREST INCOME, NET 37,540 44,120 46,020
------------ ------------ ------------
Income/(loss) before provision for income taxes 300,729 (475,820) 466,587
PROVISION FOR INCOME TAXES 13,000 - 51,000
------------ ------------ ------------
NET INCOME/(LOSS) $ 287,729 $ (475,820) $ 415,587
============ ============ ============
BASIC EARNINGS PER SHARE:
Net income/(loss) $ 0.15 $ (0.25) $ 0.22
============ ============ ============
DILUTED EARNINGS PER SHARE:
Net income/(loss) $ 0.13 $ (0.25) $ 0.18
============ ============ ============
BASIC NUMBER OF COMMON SHARES OUTSTANDING: 1,901,594 1,895,678 1,875,474
============ ============ ============
DILUTED NUMBER OF COMMON SHARES OUTSTANDING: 2,188,764 1,895,678 2,277,096
============ ============ ============
The accompanying notes are an integral part of these financial statements.
-7-
RADIANT TECHNOLOGY CORPORATION
STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED SEPTEMBER 30, 2000, 1999 AND 1998
Capital Stock
--------------------------- Retained Stockholders'
Shares Amount Earnings Equity
------------ ------------ ------------ ------------
BALANCE, SEPTEMBER 30, 1996 1,867,678 $ 1,143,008 $ 445,481 $ 1,588,489
Net income - - 591,812 591,812
------------ ------------ ------------ ------------
BALANCE, SEPTEMBER 30, 1997 1,867,678 1,143,008 1,037,293 2,180,301
Exercise of options 28,000 10,100 - 10,100
Net income - - 415,587 415,587
------------ ------------ ------------ ------------
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 1,153,108 977,060 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
============ ============ ============ ============
The accompanying notes are an integral part of these financial statements.
-8-
RADIANT TECHNOLOGY CORPORATION
STATEMENTS OF CASH FLOWS
2000 1999 1998
------------ ------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income/ (loss) $ 287,729 $ (475,820) $ 415,587
Adjustments to reconcile net income/(loss) to net cash
provided by operating activities:
Bad debt expense - 183,807 3,500
Depreciation and amortization 193,113 195,011 179,539
Inventory obsolescence 40,000 40,000 39,000
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable (1,253,112) (209,336) 187,228
Inventories (305,227) (30,299) 231,851
Other assets 7,260 (14,549) 8,155
Increase (decrease) in:
Accounts payable 221,041 115,083 (107,558)
Accrued expenses 18,713 38,157 (148,198)
Income taxes payable 13,000 (38,640) -
Customer deposits 948,522 (140,719) (208,918)
------------ ------------ ------------
Net cash provided (used in) operating activities 171,039 (337,305) 600,186
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (28,933) (105,718) (99,677)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock 1,375 - 10,100
Borrowing on short-term debt 500,000 500,000 -
Repayment on short-term debt (1,500,000) - -
------------ ------------ ------------
Net cash provided (used in) financing activities (998,625) 500,000 10,100
------------ ------------ ------------
Net increase (decrease) in cash and equivalents (856,519) 56,977 510,609
CASH AND EQUIVALENTS, BEGINNING OF YEAR 2,384,902 2,327,925 1,817,316
------------ ------------ ------------
CASH AND EQUIVALENTS, END OF YEAR $ 1,528,383 $ 2,384,902 $ 2,327,925
============ ============ ============
The accompanying notes are an integral part of these financial statements.
-9-
RADIANT TECHNOLOGY CORPORATION
STATEMENTS OF CASH FLOWS (CONTINUED)
Supplemental disclosures of cash flow information and non-cash investing and
financing activities:
2000 1999 1998
------------ ------------ ------------
Cash paid during the year for:
Interest $ 429 $ 4,614 $ 7,317
Income taxes $ - $ 34,286 $ 9,270
The accompanying notes are an integral part of these financial statements.
-10-
RADIANT TECHNOLOGY CORPORATION
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- ------------------------------------------------
Nature of Operations
--------------------
Radiant Technology Corporation (the "Company") is engaged in the marketing
and manufacturing 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 2000 1999 1998
---------------- ----------- ----------- -----------
European $ 966,723 $ 640,511 $ 605,800
Pacific Rim 316,235 178,170 847,700
NAFTA 120,935 38,963 116,200
Middle East 5,731 443,178 -
----------- ----------- -----------
1,409,624 $1,300,822 $1,569,700
=========== =========== ===========
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.
-11-
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 is amortized using the straight line method over their
estimated lives of five years. Amortization expense charged to operations
in 2000, 1999 and 1998 was $8,712, 8,716, and $8,737, 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 $77,213, $106,550, and $63,330 for 2000, 1999,
and 1998, respectively.
Customer deposits
-----------------
The Company may require 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 cash 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.
-12-
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 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 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"). APB 25 requires compensation costs for stock based
compensation plans to be recognized based on the difference, if any,
between the fair market value of the stock on the date of the grant and
the option exercise price. Statement of Financial Accounting Standards
123, Accounting for Stock-Based Compensation ("SFAS 123"). established a
fair value-based method of accounting for compensation costs related to
stock options and other forms of stock-based compensation plans. However,
SFAS 123 allows an entity to continue to measure compensation costs using
the principles of APB 25 if certain pro forma disclosures are made.
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 1998 and 1999 financial statements have been
reclassified to conform with the 2000 presentation.
-13-
RADIANT TECHNOLOGY CORPORATION
NOTES TO FINANCIAL STATEMENTS
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, Europe, Middle East and NAFTA 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.
Net accounts receivable by geographic markets are as follows:
COUNTRIES 2000 1999
--------------------- ------------- -------------
United States 73% 28%
European 14% 51%
Middle East 8% 21%
NAFTA 5% -
------------- -------------
100% 100%
============= =============
- --------------------------------------------------------------------------------
During 2000, 1999 and 1998, the five largest customers represented 51, 52
and 53 percent of revenues, respectively. At September 30, 2000 and 1999
the five largest balances represented 82 and 72 percent, respectively, of
total accounts receivable.
3. ACCOUNTS RECEIVABLE
- -------------------------
2000 1999
--------------- ---------------
Trade receivables $ 1,849,418 $ 802,123
Allowance for doubtful accounts
and sales returns (5,000) (210,817)
--------------- ---------------
$ 1,844,418 $ 591,306
=============== ===============
-14-
RADIANT TECHNOLOGY CORPORATION
NOTES TO FINANCIAL STATEMENTS
3. ACCOUNTS RECEIVABLE (CONTINUED)
- -------------------------------------
Activity in the allowance for doubtful accounts and sales returns is as
follows:
2000 1999 1998
---------- ---------- ----------
Balance at beginning of year $ 210,817 $ 37,500 $ 37,500
Provision - 183,807 3,500
Write offs (205,817) (10,490) (3,500)
---------- ---------- ----------
Balance at end of year $ 5,000 $ 210,817 $ 37,500
========== ========== ==========
4. INVENTORIES
- -----------------
2000 1999
---------- ----------
Raw materials $ 384,727 $ 358,778
Work in process 313,357 183,774
Finished goods 121,049 31,354
---------- ----------
819,133 573,906
Allowance for obsolescence (130,000) (140,000)
---------- ----------
$ 689,133 $ 433,906
========== ==========
- --------------------------------------------------------------------------------
Activity in the allowance for obsolescence is as follows:
2000 1999 1998
---------- ---------- ----------
Balance at beginning of year $ 140,000 $ 100,000 $ 100,000
Provision 40,000 40,000 39,000
Write offs (50,000) - (39,000)
---------- ---------- ----------
Balance at end of year $ 130,000 $ 140,000 $ 100,000
========== ========== ==========
-15-
RADIANT TECHNOLOGY CORPORATION
NOTES TO FINANCIAL STATEMENTS
5. EQUIPMENT
- ---------------
Life in years 2000 1999
------------- ---------- ----------
Machinery and equipment 7 $ 387,530 $ 384,270
Office furniture and equipment 7 68,847 66,371
Leasehold improvements 5 67,934 53,226
Vehicles 5 15,050 15,050
Capitalized computer software 3 405,542 397,714
---------- ----------
944,902 916,631
Less: accumulated depreciation and amortization (679,231) (494,830)
---------- ----------
$ 265,671 $ 421,801
========== ==========
- --------------------------------------------------------------------------------
Depreciation and amortization expense for 2000, 1999, and 1998 was
$193,113, $195,011 and $179,539, respectively.
6. SHORT-TERM DEBT
- ---------------------
The Company's borrowings are at LIBOR plus 2 3/8 percent and due on
demand. The entire balance of $500,000 was repaid on October 2, 2000.
7. ACCRUED EXPENSES
- ----------------------
2000 1999
--------- ---------
Payroll and related items $109,499 $ 96,173
Commissions 89,959 79,100
Warranties 40,000 40,000
Other 15,296 20,768
--------- ---------
$254,754 $236,041
========= =========
-16-
RADIANT TECHNOLOGY CORPORATION
NOTES TO FINANCIAL STATEMENTS
8. COMMITMENTS AND CONTINGENCIES
- -----------------------------------
Operating leases
----------------
In November 1996 the Company signed a five year lease on a building in
Fullerton, California. Base monthly rent is $10,600 plus common area
charges of approximately $3,400 per month. The Company also leases office
equipment under operating leases expiring in various years through 2002.
Minimum future lease payments under non-cancelable operating leases are:
Year ending September 30,
2001 $ 175,512
2002 71,524
------------
$ 247,036
============
- --------------------------------------------------------------------------------
Rent expense for 2000, 1999 and 1998 was $168,650, $172,228, and $150,090,
respectively.
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.
9. STOCKHOLDERS' EQUITY
- --------------------------
Preferred stock
---------------
At September 30, 2000 and 1999 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, 2000 and 1999, 1,906,678 and 1,895,638, respectively
shares were issued outstanding.
-17-
RADIANT TECHNOLOGY CORPORATION
NOTES TO FINANCIAL STATEMENTS
9. STOCKHOLDERS' EQUITY (CONTINUED)
- --------------------------------------
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 and April 15, 1999 the Board authorized options to
purchase 70,000 and 100,000 shares, respectively. Of these shares, 120,000
have been granted at an exercise price that was at or above the market
price on the date of the grant. The options vested on January 5, 2000 and
expire three years from the vesting date. During fiscal year 2000, 55,000
of these options were canceled and 11,000 exercised.
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, 2000, 20,000 of these options remain
outstanding.
Lawrence McNamee
----------------
Mr. McNamee holds options to acquire 346,666 shares at $.075 per share
issued to him in lieu of salary in 1992. These options have no expiration
date.
-18-
RADIANT TECHNOLOGY CORPORATION
NOTES TO FINANCIAL STATEMENTS
9. STOCKHOLDERS' EQUITY (CONTINUED)
- --------------------------------------
Stock options (continued)
-------------------------
The following table summarizes the activities under the plan and outside
the plan:
Weighted
Number of Price Average
Options Per Option Exercise price Exercisable
-------- -------------- -------------- -----------
September 30, 1998 526,666 $.0625 - 0.75 $ 0.22 439,666
-------- -------------- ------ =======
Granted 70,000 $0.75 - 1.175 $ 1.05
-------------- ------
September 30, 1999 596,666 $.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 500,666 $.075-.75 $ 0.23 460,666
======== ============== ====== =======
The following information applies to employee options outstanding at
September 30, 2000:
Outstanding
----------------------------------------
Weighted Average Weighted
Remaining Average
Range of Number of Contractual Exercise
exercise prices Options Life (Years) Price
--------------- --------- ---------------- ---------
$0.075 346,666 N/A $0.075
$0.48 70,000 2 $0.48
$0.50 30,000 3 $0.50
$0.75 54,000 4 $0.75
--------- ---------
500,666 $0.23
========= ==========
-19-
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:
2000 1999 1998
---------- ---------- ----------
Net income/(loss):
As reported $ 287,729 $(475,820) $ 415,587
Pro forma $ 284,444 $(507,110) $ 377,821
Basic earnings per share:
As reported $ 0.15 $ (0.25) $ 0.22
Pro forma $ 0.15 $ (0.27) $ 0.20
Diluted earnings per share:
As reported $ 0.13 $ (0.25) $ 0.18
Pro forma $ 0.13 $ (0.27) $ 0.17
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, $15,000, and $19,200 in 2000, 1999 and
1998 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 2000, 1999 and
1998:
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, 1999 and 1998 for which the exercise price approximated the
market price on the grant date was $.21 and $.58, respectively.
-20-
RADIANT TECHNOLOGY CORPORATION
NOTES TO FINANCIAL STATEMENTS
10. INCOME TAXES
- ------------------
Income tax expense (benefit) consisted of the following:
2000 1999 1998
------------- ------------- -------------
Current tax expense $ 13,000 $ - $ 51,000
============= ============= =============
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 2000, 1999 and 1998 as a result of the following:
2000 1999 1998
---------- ---------- ----------
Continuing operations:
Federal expected tax expense (benefit) $ 102,000 $(167,000) $ 159,000
State expected tax expense (benefit) 28,000 (48,000) 44,000
Inventory allowance (4,000) (40,000) (25,000)
Accounts receivable allowance (76,000) (42,000) -
Moving expense accrual - - -
Depreciation timing differences 33,000 20,000 32,000
Deferred tax valuation allowance - 277,000 -
Use of NOL carryforwards - federal (64,000) - (159,000)
Use of NOL carryforwards - state (6,000) - -
---------- ---------- ----------
$ 13,000 $ - $ 51,000
========== ========== ==========
The tax effects of temporary differences that give rise to significant
portions of deferred tax assets and liabilities at September 30, 2000 and
1999 are as follows:
2000 1999
---------- ----------
Net operating loss carryforwards $ 441,000 $ 516,000
Allowance for slow moving inventories 52,000 56,000
Allowance for doubtful accounts 2,000 32,000
Other - (1,000)
---------- ----------
Deferred tax assets 495,000 603,000
Less valuation allowance (325,000) (433,000)
---------- ----------
Net deferred tax asset $ 170,000 $ 170,000
========== ==========
-21-
RADIANT TECHNOLOGY CORPORATION
NOTES TO FINANCIAL STATEMENTS
10. INCOME TAXES (CONTINUED)
- ------------------------------
During 1998 the Company reduced the valuation allowance to reflect the
deferred tax assets utilized in fiscal 1998. The recognized deferred tax
asset is based upon expected utilization of the net operating loss
carryforwards and reversal of certain temporary differences. The ultimate
realization of the deferred tax asset will require aggregate taxable
income of approximately $1,298,000 in future years.
At September 30, 2000, the Company had net operating loss carryforward for
federal and state income tax purposes expiring as follows:
FEDERAL STATE
---------------------------------
2007 $ 245,788 $ -
2009 620,976 -
2014 431,356 -
---------------------------------
$ 1,298,120 $ -
=================================
Federal investment credit and other general business credit carryforward
total $35,600 and $105,500, respectively, and expire at various dates
through 2003.
11. 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.
2000 1999 1998
---------- ---------- -----------
BASIC EARNINGS/(LOSS) PER SHARE:
Numerator
---------
Net income/(loss) $ 287,729 $(475,820) $ 415,587
========== ========== ===========
Denominator
-----------
Basic weighted average number of common
shares outstanding during the period 1,901,594 1,895,678 1,875,474
========== ========== ===========
Basic net income/(loss) per share $ 0.15 $ (0.25) $ 0.22
========== ========== ===========
-22-
RADIANT TECHNOLOGY CORPORATION
NOTES TO FINANCIAL STATEMENTS
Denominator
-----------
Weighted average number of common
shares used in basic earnings per share 1,901,594 1,895,678 1,875,474
Effect of dilutive securities:
Stock options (1) 287,170 - 401,622
----------- ----------- -----------
Weighted number of common shares
and dilutive potential common stock
used in diluted earnings per share 2,188,764 1,895,678 2,277,096
=========== =========== ===========
Diluted earnings/(loss) per share $ 0.13 $ (0.25) $ 0.18
=========== =========== ===========
- ----------
(1) Stock options were anti-dilutive for the year ended September 30,
1999. See Note 9 for stock option activity.
12. 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 1998.
-23-
BOARD OF DIRECTORS
- ------------------
Lawrence R. McNamee
Chairman of the Board,
Chief Executive Officer,
President
Carson T. Richert
Executive Vice President
Peter D. Bundy
Investor-Consultant
Joseph S. Romance
Consultant
Robert B. Thompson
Investor-Consultant
OFFICERS
- --------
Lawrence R. McNamee,
Chairman of the Board,
Chief Executive Officer,
President
Carson T. Richert
Executive Vice President
Raymond G. Kruzek, PhD
Vice President
Open
Controller
Mercy Gingrich
Corporate Secretary
AUDITORS
- --------
Cacciamatta Accountancy Corporation
2600 Michelson Drive, Suite 490
Irvine, CA 92612
COUNSEL
- -------
Oppenheimer, Wolf & Donnelly, LLP
840 Newport Center Drive
Suite 700
Newport Beach, CA 92660
REGISTRAR AND TRANSFER AGENT
- ----------------------------
U. S. Stock Transfer Corporation
1745 Gardena Avenue
Second Floor
Glendale, CA 91204
The financial statements and related notes, which appear herein, have been
reported to the Securities and Exchange Commission.
A copy of Form 10-K will be made available without charge to beneficial owners
of stock, upon your written request to the company at the following address:
RADIANT TECHNOLOGY CORPORATION
SHAREHOLDER RELATIONS
1335 SOUTH ACACIA AVENUE
FULLERTON, CA 92831
TEL: (714) 991-0200
FAX: (714) 991-0600
E-MAIL: GENERAL@RADIANTTECH.COM