10-Q 1 q101202.txt 10Q-12/31/02 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10Q Quarterly Report Under Section 13 or 15 (d) Of the Securities Exchange Act of 1934 For the Quarter ended December 31, 2002 Commission File Number 0-10125 Radiant Technology Corporation ------------------------------ (Exact name of registrant as specified in its charter) California 95-2800355 ---------------------- ---------------------- (State or other jurisdiction of (I.R.S Employer incorporation or organization) identification number) 1335 South Acacia Avenue, Fullerton, CA 92831 --------------------------------------------- (Address of principal executive offices)(Zip Code) (714) 991 - 0200 ---------------- (Registrant's Telephone number, including area code) Inapplicable ------------ (Former name, former address and former fiscal year, if changed since last report) 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 ____ ------ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Stock, no par value 2,081,678 -------------------------- -------------------------- (Class) (Outstanding at December 31, 2002) 1 RADIANT TECHNOLOGY CORPORATION INDEX Part I Financial Information:...........................................Page No. Condensed Balance Sheet- December, 2002 and September 30, 2002 (unaudited)...............................3 Condensed Statement of Operations - Three Months Ended December 31, 2002 and 2001 (unaudited).....................4 Condensed Statement of Cash Flows - Three Months Ended December 31, 2002 and 2001 (unaudited).....................5 Notes to Condensed Financial Statements (unaudited)................6 Management's Discussion and Analysis of Financial Condition and Results of Operation..............................6-7-8 Part II Other Information: Legal Proceedings and Exhibits.....................................8 Signature Page.....................................................9 2 RADIANT TECHNOLOGY CORPORATION PART I FINANCIAL INFORMATION CONDENSED BALANCE SHEETS (UNAUDITED) ASSETS ------ December 31 September 30 2002 2002 ----------- ----------- Current Assets Cash $ 158,052 $ 2,069,784 Accounts receivable 548,363 449,162 Inventories 645,706 980,362 Prepaid expenses 22,461 31,841 Deferred income taxes 263,500 263,500 ----------- ----------- Total Current Assets 1,638,082 3,794,649 Machinery and equipment 286,113 321,873 Other assets 12,748 11,670 ----------- ----------- Total Assets $ 1,936,943 $ 4,128,192 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ Current Liabilities Short Term Debt $ - $ 1,916,000 Accounts payable 366,385 364,341 Accrued expenses 143,109 199,440 Customer deposits 319,920 159,509 ----------- ----------- Total Current Liabilities 829,414 2,639,290 ----------- ----------- Stockholders' Equity Common stock, no par value 1,167,608 1,167,608 Retained earnings (60,079) 321,294 ----------- ----------- Total stockholders' equity 1,107,529 1,488,902 ----------- ----------- Total Liabilities and Stockholders' Equity $ 1,936,943 $ 4,128,192 =========== =========== 3 RADIANT TECHNOLOGY CORPORATION PART I FINANCIAL INFORMATION-CONTINUED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended December 31 ----------- 2002 2001 ----------- ----------- Net sales $ 921,518 $ 655,139 Cost of sales 869,254 515,746 ----------- ----------- Gross profit 52,264 139,393 Operating expenses: Selling, general and administrative 396,982 486,453 Depreciation and amortization 36,473 31,046 ----------- ----------- Total operating expenses 433,455 517,499 ----------- ----------- Income (loss) from operations (381,191) (378,106) Interest income, net (183) 6,238 ----------- ----------- Income (loss) before tax provision (381,374) (371,868) Provision for income taxes -- 800 ----------- ----------- Net income (loss) $ (381,374) $ (372,668) =========== =========== Basic earning per share: ------------------------ Net income (loss) $ (0.18) $ (0.18) =========== =========== Diluted earning per share: -------------------------- Net income (loss) $ (0.18) $ (0.18) =========== =========== Basic weighted average shares outstanding 2,081,678 2,081,678 =========== =========== Diluted weighted average shares outstanding 2,081,678 2,081,678 =========== =========== 4 RADIANT TECHNOLOGY CORPORATION PART I FINANCIAL INFORMATION-CONTINUED CONDENSED STATEMENT OF CASH FLOWS (UNAUDITED) Three Months Ended December 31 ----------- 2002 2001 ----------- ----------- Cash flows from operating activities: net income (loss) $ (381,374) $ (372,668) Adjustments to reconcile income to net cash from operating activities: Depreciation and amortization 36,473 31,046 Changes in assets and liabilities: Accounts receivable (99,201) (191,575) Inventories 334,656 119,649 Prepaid expenses & other assets 7,589 (1,392) Increase (decrease) in: Accounts payable 2,044 (161,032) Accrued expenses (56,330) (36,675) Customer deposits 160,411 323,946 ----------- ----------- Net cash provided by (used by) operating 4,268 (288,701) ----------- ----------- Cash flows used by investing activities: Purchase of property and equipment -- (8,207) ----------- ----------- Cash flows from financing activities: Short-term debt (1,916,000) -- ----------- ----------- Net cash (used in) financing activities (1,916,000) -- ----------- ----------- Net increase (decrease) in cash (1,911,732) (296,908) Cash at beginning of period 2,069,784 1,118,630 ----------- ----------- Cash at end of period $ 158,052 $ 821,722 =========== =========== 5 RADIANT TECHNOLOGY CORPORATION PART I FINANCIAL INFORMATION - CONTINUED NOTES TO CONDENSED FINANCIAL STATEMENTS FOR DECEMBER 31, 2002 (UNAUDITED) ITEM 1 - Notes 1. General ------- The accompanying unaudited condensed financial statements of Radiant Technology Corporation (the "Company") have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. These statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Form 10-K for the year ended September 30, 2002. In the opinion of management, all adjustments, consisting of normal recurring adjustments, considered necessary for the fair presentation have been included. Operating results for interim periods are not necessarily indicative of results expected for a full year. ITEM 2 - Management's Discussion and Analysis of Financial Condition and Results of Operation All statements, other than statements of historical fact, included in this Form 10-Q are, or may be deemed to be, "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements involve assumptions, known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements contained in this Form 10-Q. Overview -------- As discussed in more detail throughout our MD&A: o Our results of operations during the past seven quarters were adversely affected by the sustained decline of the electronics markets. Backlog of orders to ship have declined during fiscal 2002 and 2001 by 60% and 74% respectively as compared the respective prior year. The significant reduction in capital spending by our customers and aggressive pricing by desperate competitors, among other factors contributed to this decline. The Company's order backlog at December 31, 2002 was approximately $676,000. 6 ITEM 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued o Our gross margins, which historically have been at near the 35% mark, have declined over the past two years to 13.6% in the first quarter of 2003 from 24.1% for all of 2002 and 26.6% for all of 2001. The significant decline in demand and coupled with the development of new product lines has led to significant inventory charges and manufacturing inefficiencies, which adversely affected our gross margin rates. o Our cash position has also declined significantly as a result of the operating losses in the first quarter of 2003 of $(381,374), $(756,284) for all of 2002 and $(157,210) in 2001. Cash at the end of the first quarter of 2003 is $158,052. During this extended market weakness we have worked to improve our product offering, improve manufacturing methods, strengthen our management staff and aggressively pursue new markets. If capital spending does not improve or improves at a slower pace than we anticipate, our revenues and profitability will continue to be adversely affected. Financial Condition, Liquidity and Capital Resources ---------------------------------------------------- The Company's cash and equivalents decreased from $2,069,784 at September 30, 2002 to $158,052 at December 31, 2002. This decrease of $1,911,732 is primarily attributable to the repayment of the short-term loan of $1,916,000. The net loss of $(381,784) was offset by a reduction in working capital of $349,169, plus depreciation of $36,473. Management believes that planned actions for significant cost cuts, aggressive collections of outstanding receivable balances, improved manufacturing methods and improved inventory management systems will be sufficient to provide adequate cash to fund anticipated working capital and other cash needs during the remainder of the year. Results of Operations --------------------- Three Months Ended December 31, 2002 ------------------------------------ Net Sales were $921,518 and $655,139 for the three months ended December 31, 2002 and 2001, respectively, or an increase of 41%. The increase in revenues resulted principally from one shipment amounting to $309,000. The cost of sales as a percentage of sales for the three months ended December 31, 2002 was 94%, as compared to 79% in the prior year third quarter. Although sales increased significantly in the quarter, the one order that represented more than one-third of sales for the quarter was produced at a loss, providing a significant affect on the current quarter margins. This system included several newly designed features and higher costs were incurred in the initial design and manufacture. Future systems of this type will have profitable margins. 7 ITEM 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued Selling, general and administrative expenses were $285,706 in the current quarter as compared to $486,453 in the year earlier period, a decrease of 41%. This decrease was mainly due to reduced payroll and related expenses in engineering, research and development and sales and marketing. Cash generated by operating activities was $4,268 and $(288,701) for the three months ended December 31, 2002 and 2001 respectively. Cash flows from operating losses for the three months ended December 31, 2002 and 2001 were roughly equivalent $(381,374) and $(372,668) respectively, however, cash provided by reductions in working capital levels in the quarter ended December 31, 2002 were $349,169 as compared to $52,921 for the quarter ended December 31, 2001. RADIANT TECHNOLOGY CORPORATION PART II - OTHER INFORMATION Item 1. Legal Proceedings None. Item 6. Reports on 8-K None. 8 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. RADIANT TECHNOLOGY CORPORATION (Registrant) Dated: February 11, 2003 /s/ L. R. McNamee ----------------------------------- Lawrence R. McNamee Chairman of the Board, Chief Executive Officer 9