<PAGE>
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
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
Radiant Technology Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Registrant
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ X ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:(1)
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4) Proposed maximum aggregate value of transaction:
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[ ] 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:
----------------------------------------
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.
<PAGE>
RADIANT TECHNOLOGY CORPORATION
1335 South Acacia Avenue
Fullerton, California 92831
--------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 16, 1998
1:00 p.m.
--------------------
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 16, 1998, 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;
2. Approval of the Radiant Technology Corporation 1998 Stock
Option Plan; and
3. 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 February 19,
1998 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,
Mercy Gingrich
Secretary
Dated: March 16, 1998
<PAGE>
RADIANT TECHNOLOGY CORPORATION
--------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
--------------------
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 16, 1998 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 16, 1998.
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.
VOTING RIGHTS AND REQUIREMENTS
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<PAGE>
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 February 19, 1998 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 1,867,638 issued and outstanding shares of the Company's common
stock to vote at the Annual Meeting and approximately 419 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.
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<PAGE>
COMMON STOCK OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information, as of January 15, 1998,
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 983,890(3) 44.4%
Joseph S. Romance 164,329(4) 8.7%
Carson T. Richert 197,587(5) 10.5%
Peter D. Bundy 50,000(5) 2.6%
Robert B. Thompson 20,000(5) 1.1%
Raymond Kruzek 122,813 6.6%
Roger Horsburgh 147,813(6) 7.8%
Mercy Gingrich 130,286(5) 7.0%
All Directors and Officers
as a group (8 persons) 1,816,718(7) 76.7%
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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 346,666 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 20,000 shares issuable pursuant to presently exercisable
stock options.
(5) Includes 20,000 shares issuable pursuant to presently exercisable
stock options.
(6) Includes 25,000 shares issuable pursuant to presently exercisable
stock options.
(7) Includes 471,666 shares issuable pursuant to presently exercisable
stock options.
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<PAGE>
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 16, 1998. 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 66 1991 Chairman of the Board and
Chief Executive Officer
Carson T. Richert 57 1972 President and Director
Joseph S. Romance 66 1972 Director
Peter Bundy 66 1995 Director
Robert B. Thompson 62 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.
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<PAGE>
The executive officers of the Company as of January 15, 1998 who are
not also a directors are as follows:
Mercy Gingrich, the Secretary of the Company, age 56, 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.
Roger T. Horsburgh, the Controller of the Company, age 58, joined the
Company in March 1993. Previously he was a consultant to several businesses
providing accounting services. Prior thereto, Mr. Horsburgh was Director of
Finance for Irvin Industries from 1990 to 1992 with full financial
responsibilities. From 1972 through 1989, Mr. Horsburgh was Controller for
Edcliff Industries where he was responsible for preparing financial reports for
commercial and government contracts.
Board of Directors Meetings and Committees
During the fiscal year ended September 30, 1997, there were four
meetings of the Board of Directors. No director was absent from more than one
meeting. 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, 1997.
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 $100,000 per annum during any of the Company's last three fiscal
years.
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation Awards
Securities
Restricted Underlying
Stock Stock
Name and Fiscal Other Annual Awards Options LTIP All Other
Principal Position Year Salary Bonus($) Compensation($) ($) (#) Payouts($) Compensation
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Lawrence R. McNamee 1997 $98,800 --- --- --- --- --- ---
Chairman of the Board 1996 $98,800 --- $4,090(1) --- --- --- ---
and Chief Executive 1995 $98,800 --- --- --- --- --- ---
Officer
</TABLE>
1991 Incentive Stock Option Plan and the 1991 Nonstatutory Stock Option Plan
On April 30, 1991, the Company adopted the 1991 Incentive Stock Option
Plan and the 1991 Non Statutory Stock Option Plan (together the "1991 Plan")
which provides for the granting of (i) incentive stock options pursuant to
section 422A of the Internal Revenue Code of 1986, as amended, to key employees
and
-----------------------------------
(1) Other compensation consists of 113,598 shares of common stock issued in
accordance with the Company's plan of reorganization at a value of $.036 per
share for unpaid wages.
- 5 -
<PAGE>
(ii) nonstatutory stock options to key employees, directors and consultants to
the Company. Under the 1991 Plan, options for up to 1,000,000 shares may be
granted.
Under the 1991 plan, the following options which were previously
granted to officers and directors remain outstanding and are currently
exercisable:
Officers Shares Price Expire
Mercy Gingrich 10,000 $.3125 2/98
10,000 $.0625 12/00
Roger Horsburgh 25,000 $.3125 2/98
The 1991 Plan is administered by the Board of Directors or by a
committee appointed by the Board, which determines the terms of options granted,
including the exercise price, the number of shares subject to the options, and
the terms and conditions of exercise. No option granted under the 1991 Plan is
transferable by the optionee other than by will or the laws of descent and
distribution, and each option is exercisable during the lifetime of the optionee
and only by such optionee.
The exercise price of all stock options granted under the 1991 Plan
must be at least equal to 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 be not less than 110% of the fair market value on the date of
the grant and the maximum term of such option may not exceed five years.
Other Stock Option Grants
During fiscal 1995, each of the Company's three outside directors were
granted options to purchase 20,000 shares of common stock of the Company at an
exercise price equal to $.48 per share, the fair market value of the shares on
the date of the option grant. One-half of the options became exercisable
immediately and the remaining one-half of the options became exercisable on
September 30, 1997.
During fiscal 1996, Carson T. Richert, a director and officer employee
of the Company, was granted options to purchase 50,000 shares of common stock of
the Company at an exercise price equal to $.48 per share, the fair market value
of the shares on the date of the option grant. One- fifth of the options became
exercisable immediately and one-fifth become exercisable on November 24, 1997,
1998, 1999 and 2000.
Option Exercise and Fiscal Year-End Values
<TABLE>
AGGREGATED OPTION EXERCISES IN THE LAST FISCAL YEAR
AND OPTION VALUES AT SEPTEMBER 30, 1996
<CAPTION>
Number of
Securities Underlying Value of Unexercised
Unexercised Options "In-the-Money" Options at
at September 1997(#) September 1997($)(1)
-------------------------- -----------------------------
Shares Acquired on Value
Name Exercise (Shares) Realized($) Exercisable Unexercisable Exercisable(2) Unexercisable
------------------- ------------------ ----------- ----------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Lawrence R. McNamee --- --- 346,666 --- $108,333 ---
</TABLE>
- - --------------------
(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.
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<PAGE>
(2) The fair market value of unexercised "in-the-money" options was based
on trading prices for the Company's shares at September 30, 1997. 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
$250 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.
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<PAGE>
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 as described under the caption "Employment Agreement" above. 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
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<PAGE>
ITEM 2: APPROVAL OF 1998 STOCK OPTION PLAN
On January 22, 1998, the Board of Directors of the Company adopted,
subject to obtaining shareholder approval, the Radiant Technology Corporation
1998 Stock Option Plan (the "1998 Plan"). The 1998 Plan provides for the grant
to employees, officers, directors, consultants and independent contractors of
non-qualified stock options as well as for the grant of stock options to
employees that qualify as incentive stock options under Section 422 of the
Internal Revenue Code of 1986 ("Code"). Although the Company has approximately
45 employees technically eligible to participate in the 1998 Plan, it is
anticipated the stock options will be granted only to a limited number of
management level personnel. The 1998 Plan terminates on January 21, 2008. The
purpose of the 1998 Plan is to enable the Company to attract and retain
qualified persons as employees, officers and directors and others whose services
are required by the Company, and to motivate such persons by providing them with
an equity participation in the Company. The 1998 Plan reserved 180,000 shares of
the Company's common stock for issuance pursuant to the 1998 Plan.
The 1998 Plan is administered by a committee made up of the members of
the Board of Directors (the "Committee"), which has, subject to specified
limitations, the full authority to grant options and establish the terms and
conditions under which they may be exercised. The exercise price of incentive
stock options granted under the 1998 Plan is required to be not less than the
fair market value of the common stock on the date of grant (110% in the case of
a greater than 10% shareholder). The exercise price of non-qualified stock
options can be no less than 85% of the fair market value on the date of grant.
Options may be granted for terms of up to ten (10) years (five (5) years in the
case of incentive stock options granted to greater than 10% shareholders). No
optionee may be granted incentive stock options such that the fair market value
of the options which first become exercisable in any one calendar year exceeds
$100,000. If an optionee ceases to be employed by, or ceases to have a
relationship with the Company, such optionee's options expire one (1) year after
termination of the employment or consulting relationship by reason of permanent
disability, immediately upon termination for cause and three (3) months after
termination for death or any other reason.
In order to exercise an option granted under the 1998 Plan, the
optionee must pay the full exercise price of the shares being purchased. Payment
may be made either: (i) in cash; (ii) at the discretion of the Committee, by
delivering shares of common stock already owned by the optionee and having a
fair market value equal to the applicable exercise price; or (iii) such other
consideration as may be determined by the Committee and permitted by applicable
law.
Subject to the foregoing, the Committee has broad discretion to
describe the terms and conditions applicable to options granted under the 1998
Plan. The Committee may at any time discontinue granting options under the 1998
Plan or otherwise suspend, amend or terminate the 1998 Plan and may, with the
consent of an optionee, make such modification of the terms and conditions of
such optionee's option as it shall deem advisable; except that the Committee
shall have no authority to make any amendment or modifications to the 1998 Plan
or any outstanding option which would: (i) increase the maximum number of shares
which may be purchased pursuant to options granted under the 1998 Plan, either
in the aggregate or by an optionee; (ii) change the designation of the class of
employees eligible to receive qualified options; (iii) extend the term of the
1998 Plan or the maximum option period thereunder; (iv) decrease the minimum
qualified option price or permit reductions of the price at which shares may be
purchased for qualified options granted under the 1998 Plan; or (v) cause
qualified stock options issued under the 1998 Plan to fail to meet the
requirements of incentive stock options under Section 422 of the Code. Any such
amendment or modification shall be effective immediately, subject to shareholder
approval thereof within twelve (12) months before or after the effective date.
No option may be granted during any suspension or after termination of the 1998
Plan.
The 1998 Plan is designed to meet the requirements of an incentive
stock option plan as defined in Code Section 422. As a result, an optionee will
realize no taxable income, for federal income tax purposes, upon either the
grant of an incentive stock option under the 1998 Plan or its exercise, except
that the difference between the fair market value of the stock on the date of
exercise and the exercise price is included
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<PAGE>
as income for purposes of calculating Alternative Minimum Tax. If no disposition
of the shares acquired upon exercise is made by the optionee within two (2)
years from the date of grant or within one (1) year from the date the shares are
transferred to him, any gain realized upon the subsequent sale of the shares
will be taxable as capital gain. In such case, the Company will be entitled to
no deduction for federal income tax purposes in connection with either the grant
or the exercise of the option. If, however, the optionee disposes of the shares
within the period mentioned above, the optionee will realize earned income in an
amount equal to the excess of the fair market value of the shares on the date of
exercise (or the amount realized on disposition if less) over the exercise
price, and the Company will be allowed a deduction for a corresponding amount.
The Company adopted a similar plan in 1991. There are 53,000 options
outstanding under this prior plan and the Board of Directors of the Company does
not intend to grant any options under such plan.
Vote Required
The approval of the 1998 Plan will require the affirmative vote of
the holders of at least a majority of the outstanding shares of the Company's
common stock present or represented at the meeting.
ITEM 3: 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.
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<PAGE>
INDEPENDENT PUBLIC ACCOUNTANTS
The Company's independent public accountants for the fiscal year ended
September 30, 1997 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, 1997 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, 1997, 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 1998
Annual Meeting of shareholders and to be included in the proxy materials for
that meeting must be received by the Company's Secretary not later than October
16, 1998.
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,
Mercy Gingrich,
Secretary
Fullerton, California
March 16, 1998
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<PAGE>
RADIANT TECHNOLOGY CORPORATION PROXY - 1997 ANNUAL MEETING
Solicited on behalf of the Board of Directors for the Annual Meeting
April 16, 1998
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 16, 1998, 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 16, 1998 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: APPROVAL OF RADIANT TECHNOLOGY CORPORATION STOCK OPTION PLAN
_____ FOR _____ AGAINST _____ ABSTAIN
ITEM 3: 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:____________________________, 1998
--------------------------------------------
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
<PAGE>
<PAGE>
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
- -------
In 1997 Radiant Technology Corporation celebrated both its 25th
anniversary and its most profitable year. A profit of $.32 per share represents
a return on shareholders equity, from the beginning of the year, of 37%.
Revenue increased 6% and backlog at year-end was 27% greater than the
prior year's end.
The Company is positioning itself for growth over the next several
years. RTC moved into newer facilities during the year, enhancing production,
customer service and staff growth capabilities. Management continues to remain
optimistic in obtaining continued growth in revenue and profits.
SALES
- -----
During the fiscal years ended September 30, 1997, 1996, and 1995, the
Company's revenues were derived from sales of the following products:
Gross Sales
- -----------
(in thousands) 1997 1996 1995
---- ---- ----
$ % $ % $ %
-------------------------------------------
Conveyorized Infrared
Ovens and Furnaces 3,797 86 3,574 86 3,382 84
Field Service & Parts 615 14 598 14 641 16
Total 4,412 100 4,172 100 4,023 100
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, flat panel display, hybrid thick
film firing, multichip module, photovoltaic (solar cell) 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 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 challenges.
1
<PAGE>
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 to
placing the concerns and needs of the customer first.
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. RTC provides products for key process steps in
this packaging technology. 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, this
process is best accomplished in a hydrogen atmosphere. RTC offers the S-series
high temperature furnace for this application which, when equipped with the
hydrogen safety package, provides the high temperature (350(Degree)C) reflow
process in a 100% hydrogen atmosphere. The second process, called "chip joining"
is a reflow solder process for attaching the flip chip die to the semiconductor
package or alternatively to a printed circuit assembly (direct chip attach). RTC
offers both a near infrared or forced convection oven for the chip joining or
direct chip attach processes. RTC's D-series ovens are suitable for low
temperature curing applications such as required for the "under-fill" epoxy
dispensed under the die in a flip chip package or curing epoxy glob tops for
chip on board requirements.
For more traditional chip packaging technologies, RTC offers an AG-series
furnace designed specifically for the silver-glass die attach process.
Silver-glass die attach is an adhesive curing step prior to the wire bonding of
the die to the package. 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 S- or AG-series
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. This process had previously been accomplished in batch mode in a
tube furnace. An extremely precise thermal process is required for phosphorus
diffusion because this step ultimately determines the cell's efficiency in
generating power when exposed to sunlight.
Flat Panel Display: While the flat panel display market has been around for
several years 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 system 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 low temperature ovens are
used for mass reflow soldering of surface mount components to a printed circuit
assembly after the solder paste has been screened onto the assembly and the
various components have been placed into proper position.
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. The thick film materials commonly referred to as inks consist of
mixtures of metal, glass and/or ceramic powders dispersed in organic vehicles or
solutions of polymers in solvents. Precise thermal profiles are required to
achieve the desired resistor value, or electrical properties of the conductors.
RTC offers the TF-series furnace for firing thick film inks in air, and the
TFA-series for firing thick film materials in a controlled, inert atmosphere
having a low oxygen content.
2
<PAGE>
Multichip Modules: Multichip module technology is an emerging packaging
technology. All RTC products can be used in some combination to manufacture a
multichip module (or package). A unique requirement exists in the manufacture of
a MCM-D structure which is a thin film laminate structure whose inter-layer
adhesion is critically dependant on multiple pass curing steps. RTC has
developed an intelligent curing oven for just this purpose where integrated
sensors, through feed back mechanisms, control the curing process in real-time.
All systems use P. C.'s to provide appropriate man/machine interface with
embedded microprocessors achieving precise control of thermal operations. Such.
functions as power, temperature, belt speed, process gas measurement, profiling,
maintenance requirements, data logging, local and remote communications,
diagnostics and operation, and computer integrated manufacturing with SECS/GEM
interface are available.
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 direct sales offices 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.
Operating Data
- --------------
(in thousands) Year Ended September 30
-----------------------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
Net Sales $4,412 $4,173 $4,023 $2,219 $3,916
Income (loss) from
Continuing Operations 592 222 (85) (656) 101
Total Assets 4,102 2,524 1,775 1,413 2,041
Long-term debt 0 0 0 0 0
Per Share Information
Income(loss) from
Continuing Operations .32 .18 (.44) (3.47) .53
Cash Dividends 0 0 0 0 0
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 $4,412,000 increased $239,425 or 6% for the fiscal year
ended September 30, 1997. Net sales of $4,173,000 fiscal 1996 increased $149,372
or 4% from the fiscal 1995 level of $4,023,000.
Fiscal 1997 was the most profitable in the history of the Company.
Income before benefit of taxes was $433,812, with the after tax benefit it
amounted to $591,812 or $.32 per share. This represents a Return on Equity, from
the beginning of the year, of 37%. It compares most favorably with prior 2 years
earnings, especially when the adjustment for extraordinary item is eliminated as
depicted in the statements of income.
Cost of Sales was up slightly due primarily to the introduction of a
new furnace line and discounts incurred in conjunction with a large order.
Selling and G & A costs were kept at moderate levels despite gains in sales and
backlog during the reporting fiscal year.
Interest was booked as income, rather than expense, for the first time
in many years. Borrowing is reserved only for short-term requirements.
3
<PAGE>
Research and Development costs were maintained at the same relevant
rate as 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.
LIQUIDITY AND CAPITAL RESOURCES
During 1997, cash increased by $446,476. The Company anticipates that
it has sufficient cash to fund planned sales growth in 1998 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.
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 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.
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, 1997, the number of
recorded holders of the Company's Common Stock was 421.
Stock Price
- -----------
HIGH LOW
----------------------
1997
1st Quarter................. $ .50 $ .125
2nd Quarter................. .25 .125
3rd Quarter................. .25 .125
4th Quarter................. .25 .125
1996
1st Quarter............... * *
2nd Quarter................. * *
3rd Quarter................. .625 .188
4th Quarter................. 1.50 .313
* No trading in this quarter due to trading suspension relative
to the reverse stock split processing as outlined in the reorganization plan.
4
<PAGE>
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, 1997 and 1996, and the related statements of
income, stockholders' equity (deficit) and cash flows for each of the years in
the three year period ended September 30, 1997. 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, 1997 and 1996 and the results of its income and its cash
flows for each of the three years in the period ended September 30, 1997 in
conformity with generally accepted accounting principles.
CACCIAMATTA ACCOUNTANCY CORPORATION
Irvine, California
December 2, 1997
16
<PAGE>
RADIANT TECHNOLOGY CORPORATION
Balance Sheets
September 30,
------------------------------------
1997 1996
--------------- ---------------
ASSETS
Current assets:
Cash and equivalents $ 1,817,316 $ 610,128
Accounts receivable 756,505 759,123
Inventories 714,458 640,846
Deferred taxes 170,000 -
--------------- ---------------
Total current assets 3,458,279 2,010,097
Property and equipment 573,504 444,445
Other 70,222 69,830
--------------- ---------------
$ 4,102,005 $ 2,524,372
=============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 1,000,000 $ -
Accounts payable 168,598 174,760
Accrued expenses 384,722 314,638
Customer deposits 368,384 446,485
--------------- ---------------
Total current liabilities 1,921,704 935,883
--------------- ---------------
Commitments and contingencies - -
Stockholders' equity:
Preferred stock - -
Capital stock 1,143,008 1,143,008
Retained earnings 1,037,293 445,481
--------------- ---------------
Total stockholders' equity 2,180,301 1,588,489
--------------- ---------------
$ 4,102,005 $ 2,524,372
=============== ===============
The accompanying notes are an integral part of these financial statements.
17
<PAGE>
<TABLE>
RADIANT TECHNOLOGY CORPORATION
Statements of Income
<CAPTION>
Year Ended September 30,
------------------------------------------------
1997 1996 1995
-------------- -------------- --------------
<S> <C> <C> <C>
Net sales $ 4,412,024 $ 4,172,575 $ 4,023,203
Cost of Sales 2,859,096 2,545,246 2,548,852
-------------- -------------- --------------
Gross profit 1,552,928 1,627,329 1,474,351
-------------- -------------- --------------
Operating expenses:
Selling, general and administrative 906,379 1,089,438 885,257
Research and development 254,561 264,954 239,569
-------------- -------------- --------------
Total operating expenses 1,160,940 1,354,392 1,124,826
-------------- -------------- --------------
Income from operations 391,988 272,937 349,525
Interest income (expense) 41,824 (10,020) (37,231)
-------------- -------------- --------------
Income before reorganization expenses, provision
for income taxes and extraordinary item 433,812 262,917 312,294
-------------- -------------- --------------
Reorganization expenses:
Provision for bankruptcy claims - - 373,130
Professional fees - 40,327 87,395
-------------- -------------- --------------
- 40,327 460,525
-------------- -------------- --------------
Income (loss) before provision for income taxes
and extraordinary item 433,812 222,590 (148,231)
Provision (benefit) for income taxes (158,000) 800 (63,400)
-------------- -------------- --------------
Income (loss) before extraordinary item 591,812 221,790 (84,831)
Extraordinary item:
Gain on extinguishment of debt (net of taxes
of $64,200 in 1995) - 223,691 632,849
-------------- -------------- --------------
Net income $ 591,812 $ 445,481 $ 548,018
============== ============== ==============
Income (loss) per share:
Before extraordinary item $ 0.32 $ 0.18 $ (0.44)
Extraordinary item - 0.19 3.32
-------------- -------------- --------------
Net income $ 0.32 $ 0.37 $ 2.88
============== ============== ==============
Weighted average number of
common shares outstanding 1,867,638 1,209,405 190,409
============== ============== ==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
18
<PAGE>
<TABLE>
RADIANT TECHNOLOGY CORPORATION
Statements of Stockholders' Equity (Deficit)
Years Ended September 30, 1997, 1996 and 1995
<CAPTION>
(Accumulated
Deficit) Stockholders'
Capital Stock Retained Equity
--------------------------
Shares Amount Earnings (Deficit)
------------ ------------- --------------- ---------------
<S> <C> <C> <C> <C>
Balance, September 30, 1994 190,409 $ 2,981,195 $ (3,032,342) $ (51,147)
Net loss - - 548,018 548,018
------------ ------------- --------------- ---------------
Balance, September 30, 1995 190,409 2,981,195 (2,484,324) 496,871
Issuance of shares -
Bankruptcy reorganization
McNamee loan 380,818 175,051 - 175,051
Operation Phoenix loan 571,227 229,172 - 229,172
Creditors and original shareholders 380,818 3,900 - 3,900
Employees 380,818 13,709 - 13,709
Other 90,750 36,300 - 36,300
Repurchase of shares (127,202) (38,989) - (38,989)
Application of fresh start accounting - (2,257,330) 2,484,324 226,994
Net income - - 445,481 445,481
------------ ------------- --------------- ---------------
Balance, September 30, 1996 1,867,638 1,143,008 445,481 1,588,489
Net income - - 591,812 591,812
------------ ------------- --------------- ---------------
Balance, September 30, 1997 1,867,638 $ 1,143,008 $ 1,037,293 $ 2,180,301
============ ============= =============== ===============
</TABLE>
The accompanying notes are an integral part of these financial statements.
19
<PAGE>
<TABLE>
RADIANT TECHNOLOGY CORPORATION
Statements of Cash Flows
<CAPTION>
Year Ended September 30,
--------------------------------------------
1997 1996 1995
-------------- -------------- --------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 591,812 $ 445,481 $ 548,018
Adjustments to reconcile net income to net cash
provided by operating activities:
Gain on forgiveness of debt - (223,691) (632,849)
Issuance of stock for compensation - 13,709 -
Bad debt expense 17,800 55,000 23,500
Depreciation and amortization 118,924 100,236 131,422
Inventory obsolescence 15,000 53,000 -
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable (15,182) (201,539) (296,271)
Inventory (88,612) (111,749) (84,897)
Deferred taxes (170,000) - -
Prepaid and other assets (9,087) 9,398 22,825
Increase (decrease) in:
Accounts payable (6,162) 128,126 -
Accrued expenses 70,084 (28,223) -
Customer deposits (78,101) 235,400 -
-------------- -------------- --------------
Net cash provided (used) by operating
activities before reorganization items 446,476 475,148 (288,252)
-------------- -------------- --------------
Changes in reorganization items:
Increase (decrease) in liabilities:
Not subject to compromise - - 446,985
Subject to compromise - (45,809) -
-------------- -------------- --------------
Net change in reorganization items - (45,809) 446,985
-------------- -------------- --------------
Net cash provided (used) by
operating activities 446,476 429,339 158,733
-------------- -------------- --------------
Cash flows from investing activities:
Capital expenditures (239,288) (160,158) (48,183)
-------------- -------------- --------------
The accompanying notes are an integral part of these financial statements.
(continued)
20
<PAGE>
</TABLE>
<TABLE>
RADIANT TECHNOLOGY CORPORATION
Statements of Cash Flows (continued)
<CAPTION>
Year Ended September 30,
--------------------------------------------
1997 1996 1995
-------------- -------------- --------------
<S> <C> <C> <C>
Cash flows from financing activities:
Repurchase of common stock $ - $ (38,989) $ -
Borrowing on line of credit 1,000,000 - -
-------------- -------------- --------------
Net cash provided (used) by
financing activities 1,000,000 (38,989) -
-------------- -------------- --------------
Net increase in cash 1,207,188 230,192 110,550
Cash and cash equivalents, beginning of year 610,128 379,936 269,386
-------------- -------------- --------------
Cash and cash equivalents, end of year $ 1,817,316 $ 610,128 $ 379,936
============== ============== ==============
</TABLE>
<TABLE>
Supplemental disclosures of cash flow information and non-cash investing and financing activities:
<CAPTION>
1997 1996 1995
-------------- -------------- --------------
<S> <C> <C> <C>
Cash paid during the year for:
Interest $ - $ - $ -
Income taxes $ 800 $ 800 $ 13,369
</TABLE>
In 1996, as part of the bankruptcy plan, debt and accrued interest of $406,223
and payables of $3,900 were retired through the issuance of common stock.
In 1996, the Company issued common shares with a value of $36,309 to purchase
accounts receivable originally seized by Bank of America during the bankruptcy
proceedings.
Upon emergence from bankruptcy the Company applied fresh-start accounting,
resulting in an increase in fixed assets and patents, the elimination of
accumulated deficit and a reduction in the capital stock as follows:
Fixed assets $ 176,994
Patents 50,000
Capital stock 2,257,330
Retained Earnings (2,484,324)
-------------
$ -
=============
The accompanying notes are an integral part of these financial statements.
21
<PAGE>
RADIANT TECHNOLOGY CORPORATION
SEPTEMBER 30, 1997
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 by the microcircuit manufacturing industry.
All of the Company's operations are located in California. Sales to
entities located outside the United States are as follows:
1997 1996 1995
-------------- -------------- --------------
Pacific Rim countries $ 616,860 $ 538,100 $ 1,037,400
European countries 819,631 311,600 207,100
NAFTA countries 52,500 215,900 328,200
-------------- -------------- --------------
$ 1,488,991 $ 1,065,600 $ 1,572,700
============== ============== ==============
Revenue recognition
-------------------
The Company recognizes revenue from product sales upon 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 and sales returns
-------------------------------------
The allowance for doubtful accounts and sales returns includes management's
estimate of the amount expected to be lost on specific accounts and for
losses on other as yet unidentified accounts included in accounts
receivable. In estimating the allowance component for unidentified losses
and returns, 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
and sales returns 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.
22
<PAGE>
RADIANT TECHNOLOGY CORPORATION
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.
Maintenance and repairs are expensed as incurred while renewals and
betterments are capitalized. Upon the sale or retirement of equipment, the
accounts are relieved of the cost and the related accumulated depreciation
and amortization, and any resulting gain or loss is included in operations.
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
$45,363, $52,794 and $105,591 for 1997, 1996 and 1995, 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.
23
<PAGE>
RADIANT TECHNOLOGY CORPORATION
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 computations of
earnings per share 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 notes
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"). 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. In October 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards 123, Accounting for Stock-Based
Compensation ("SFAS 123"). 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. SFAS 123 is effective for fiscal
years beginning after December 15, 1995. The Company adopted the provisions
of pro forma disclosure requirements of SFAS 123 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 1996 and 1995 financial statements have been
reclassified to conform with the 1997 presentation.
24
<PAGE>
RADIANT TECHNOLOGY CORPORATION
2. BANKRUPTCY PROCEEDINGS
- ---------------------------
On November 12, 1993 the Company filed petition for relief under Chapter 11
of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the
Central District of California. The Bankruptcy Court confirmed the Plan of
Reorganization on August 3, 1995 and the bankruptcy was dismissed on
February 20, 1996. The plan called for the following:
* Existing outstanding common shares at the time of bankruptcy were diluted
30:1. Upon this reverse stock split, the shareholders in this class were
given the option to redeem all their new shares for $.20 per share.
Shareholders left with five or fewer shares after the reverse split were
subject to automatic repurchase.
* Unsecured general creditors with claims in excess of $300 were given the
option to either a) convert to equity by accepting a pro-rata portion of
380,818 shares of common stock or b) accept cash equivalent to 15
percent of their allowed claims. If option a) was selected, the pro-rata
share was determined by claims allowed, not by the number of creditors
selecting this option. Any of the 380,818 shares not distributed because
the creditors elected option b) were distributed to existing
shareholders who did not elect to receive cash for their shares. As a
result 370,647 shares were distributed to existing shareholders.
* Unsecured general creditors with claims of $300 or less were paid in
full.
* Lawrence McNamee received 380,818 shares of common stock as payment for
his post-petition loan and related accrued interest totaling $177,051.
* Operation Phoenix, a general partnership consisting of Company employees,
received 571,227 shares of common stock as payment for a post-petition
loan and related accrued interest totaling $229,172.
* Employees who agreed to take no wages during the shutdown period and
agreed to reduce wages for a period of two years were awarded 380,818
shares of common stock.
Total debt forgiven was $920,740. The Company accounted for the
reorganization using fresh-start reporting. Accordingly all assets and
liabilities were restated at the date of dismissal to reflect their
reorganization value, which approximates fair value at the date of
reorganization. Independent appraisers were used to determine the fair
value of assets. The book value of fixed assets were increased by $177,000
and patents by $50,000. Accumulated deficit of $2,484,324 was eliminated
with a corresponding net reduction in capital stock.
While the 1995 financial statement information is presented to satisfy
regulatory requirements, this presentation should not be viewed as a
continuum because the 1996 and 1997 financial statements are those of a
different reporting entity prepared using a different basis of accounting,
and therefore, are not comparable to those of prior periods.
25
<PAGE>
RADIANT TECHNOLOGY CORPORATION
3. 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 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.
Net accounts receivable by geographic markets are as follows:
1997 1996
--------------- ---------------
United States 94% 99%
European countries 5% 1%
Pacific Rim countries 1% -
NAFTA countries - -
--------------- ---------------
100% 100%
=============== ===============
During 1997, 1996 and 1995, the five largest customers represented 63, 38
and 34 percent of revenues. At September 30, 1997 and 1996 the five largest
account receivable balances represented 74 and 95 percent, respectively, of
total accounts receivable.
4. ACCOUNTS RECEIVABLE
- -------------------------
1997 1996
--------------- ----------------
Trade receivables $ 794,005 $ 845,123
Less: allowance for doubtful accounts (37,500) (86,000)
--------------- ----------------
$ 756,505 $ 759,123
=============== ================
26
<PAGE>
RADIANT TECHNOLOGY CORPORATION
4. ACCOUNTS RECEIVABLE (CONTINUED)
- ------------------------------------
Activity relating to the allowance for doubtful accounts and sales returns
is as follows:
1997 1996 1995
---------- ----------- ----------
Balance at beginning of year $ 86,000 $ 31,000 $ 7,500
Provision 17,800 71,300 45,000
Write offs (66,300) (16,300) (21,500)
----------- ----------- -----------
Balance at end of year $ 37,500 $ 86,000 $ 31,000
=========== =========== ============
5. INVENTORIES
1997 1996
--------------- ---------------
Raw materials $ 455,848 $ 394,176
Work in process 358,610 425,670
--------------- ---------------
814,458 819,846
Allowance for obsolete inventories (100,000) (179,000)
--------------- ---------------
$ 714,458 $ 640,846
=============== ===============
Activity relating to the allowance for obsolete inventories is as follows:
1997 1996 1995
--------------- --------------- ---------------
Balance at beginning of year $ 179,000 $ 126,000 $ 348,000
Provision 15,000 80,000 24,000
Write offs (94,000) (27,000) (246,000)
--------------- --------------- ---------------
Balance at end of year $ 100,000 $ 179,000 $ 126,000
=============== =============== ===============
27
<PAGE>
RADIANT TECHNOLOGY CORPORATION
6. EQUIPMENT
Life in years 1997 1996
--------------- ---------- ----------
Machinery and equipment 7 $ 318,649 $ 288,935
Office furniture and equipment 7 43,200 31,873
Leasehold improvements 5 60,867 125,408
Vehicles 5 15,050 15,050
Capitalized computer software 3 273,470 136,090
---------- ----------
711,236 597,356
Less: accumulated depreciation and amortization (137,732) (152,911)
---------- ----------
$ 573,504 $ 444,445
========== ==========
Leasehold improvements of $125,408, which were fully depreciated, were
removed from the Company's books upon moving to a new building in January
1997.
Depreciation and amortization for 1997 and 1996 was $110,229 and $95,878,
respectively.
7. OTHER ASSETS -
- -------------------
1997 1996
--------------- ---------------
Deposits $ 24,430 $ 18,288
Patents, net of amortization
of $13,053 and $4,358 36,947 45,642
Other 8,845 5,900
--------------- ---------------
$ 70,222 $ 69,830
=============== ===============
8. NOTES PAYABLE
- ------------------
The Company has a $1,000,000 revolving line of credit, bearing interest at
the LIBOR rate plus 2 percent. The line expires in September 1998, but may
be renewed at the option of the Company.
28
<PAGE>
RADIANT TECHNOLOGY CORPORATION
9. ACCRUED EXPENSES
- ---------------------
1997 1996
--------------- ---------------
Payroll and related items $ 143,388 $ 77,364
Commissions 52,792 64,973
Warranties 120,000 40,000
Moving expenses - 90,000
Other 68,542 42,301
--------------- ---------------
$ 384,722 $ 314,638
=============== ===============
10. 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 $2,300 per month. Minimum future lease payments
under non-cancellable operating leases for each of the next five years and
in the aggregate are:
Year ending September 30,
1998 $ 154,800
1999 155,595
2000 164,340
2001 164,340
2002 51,600
Thereafter -
----------------
$ 690,675
================
Rent expense for 1997, 1996 and 1995 was $147,200, $121,000 and $96,942,
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.
29
<PAGE>
RADIANT TECHNOLOGY CORPORATION
11. STOCKHOLDERS' EQUITY
- -------------------------
Preferred stock
---------------
At September 30, 1997 and 1996 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, 1997 and 1996, 1,867,638 shares were issued and
outstanding.
Warrants
--------
As a result of a successful private placement, an investment banking firm
was issued stock warrants to purchase up to 8,000 shares of the Company's
common stock at $12.00 per share The warrants became exercisable on June
30, 1992 and expired in August 1997 without being exercised.
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.
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 vest 50% at September 30,
1996 with the balance vesting at the end of year one, and the options
expire three years after vesting. The option price is $.48 per share which
was equal to the market price at the date of the grant.
30
<PAGE>
RADIANT TECHNOLOGY CORPORATION
11. STOCKHOLDERS' EQUITY (CONTINUED)
- -------------------------------------
Lawrence McNamee
----------------
On January 1, 1991, the Company and its chairman, Lawrence McNamee,
executed a one year employment agreement wherein Mr. McNamee was granted
six blocks of options totaling 275,350 options which amounted to 10% of the
outstanding shares. The option price varied according to the date of the
grant. The employment agreement provided that in the event the Company
issued any additional (or repurchased existing) shares of common stock
(excluding shares issued or issuable pursuant to Mr. McNamee's employment
agreement), the number of options issued to Mr. McNamee should be
automatically and proportionately adjusted as to preserve the ratio of ten
percent of the outstanding common stock. Under certain conditions, Mr.
McNamee may be issued additional options in the amount equal to five
percent of the outstanding options and warrants excluding those belonging
to Mr. McNamee. The exercise price of any additional options issued would
be the fair market value of the stock on the date of grant. This adjustment
provision of Mr. McNamee's employment agreement is referred to as the
"Adjustment" clause. During the year ended September 30, 1996 Mr. McNamee
was granted 167,723 options under this adjustment clause, while 248,715 of
the original options expired. Option prices range from $.075 to $.375. In
fiscal 1997, all of these options expired.
Mr. McNamee also holds options to acquire 326,666 shares at $.075 per share
issued to him in lieu of salary in 1992. These options have no
expiration date.
The following table summarizes shares under option, including options both
under the Plan and outside the Plan, for the years ended September 30, 1997
and 1996:
<TABLE>
<CAPTION>
Weighted
Number of Price Average
Shares Per Share Exercise price Exercisable
------------- ------------- -------------- --------------
<S> <C> <C> <C> <C>
October 1, 1995 765,006 $.063-.50 $0.13 765,006
==============
Granted 227,731 $0.48 $0.48
Exercised -
Canceled (308,715) $.063-.50 $0.10
------------- ------------- --------------
September 30, 1996 684,022 $.063-.50 $0.25 624,014
----------------------------- -------------- ==============
Granted 50,000 $0.48 $0.48
Exercised -
Canceled (234,356) $.075-.50 $0.44
------------- ------------- --------------
September 30, 1997 499,666 $.063-.48 $0.19 419,666
============= ============= ============== ==============
</TABLE>
31
<PAGE>
RADIANT TECHNOLOGY CORPORATION
11. STOCKHOLDERS' EQUITY (CONTINUED)
- -------------------------------------
Stock options (continued)
-------------------------
The following information applies to employee options outstanding at
September 30, 1997:
Outstanding
------------------------------------------------------
Weighted Average Weighted
Remaining Average
Range of Number of Contractual Exercise
exercise prices Shares Life (Years) Price
---------------- --------------- ------------------ -------------
$0.063 18,000 2 $0.06
$0.075 326,666 5 $0.08
$0.313 - .375 45,000 1 $0.33
$0.48 110,000 3 $0.48
--------------- -------------
499,666 $0.19
=============== =============
Statement of Financial Accounting Standards 123, "Accounting for
Stock-Based Compensation", encourages but does not require companies to
record compensation cost for stock-based employee compensation plans at
fair value. The Company has chosen to continue to account for stock-based
compensation using the intrinsic value method prescribed in Accounting
Principles Board Opinion 25, "Accounting for Stock Issued to Employees",
and related interpretations. Accordingly, compensation cost for stock
options is measured as the excess, if any, of the quoted market price of
the Company's stock at the date of grant over the amount an employee must
pay to acquire the stock.
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 and earnings per share would have been:
1997 1996
--------------- ---------------
Net income
As reported $ 591,812 $ 445,481
Pro forma $ 543,759 $ 406,178
Primary earnings per share
As reported $ 0.32 $ 0.37
Pro forma $ 0.29 $ 0.34
32
<PAGE>
RADIANT TECHNOLOGY CORPORATION
11. STOCKHOLDERS' EQUITY (CONTINUED)
- -------------------------------------
Stock options (continued)
-------------------------
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 $19,200 and $15,700 in 1997 and 1996, 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 1997 and 1996:
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, 1997 and 1996 for which the exercise price approximated the market
price on the grant date was $.48.
12. INCOME TAXES
- -----------------
Income tax expense (benefit) consisted of the following:
1997 1996 1995
------------ ------------- -------------
Current tax expense $ 12,000 $ 800 $ (63,400)
Deferred tax benefit (170,000) - -
------------ ------------- -------------
$ (158,000) $ 800 $ (63,400)
============ ============= =============
33
<PAGE>
RADIANT TECHNOLOGY CORPORATION
12. INCOME TAXES (CONTINUED)
- -----------------------------
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 1997, 1996 and 1995 as a result of the following:
<TABLE>
<CAPTION>
1997 1996 1995
------------- ------------ ------------
<S> <C> <C> <C>
Continuing operations:
Federal expected tax expense $ 147,000 $ 68,600 $ (50,400)
State expected tax expense 40,000 20,700 (13,000)
Inventory allowance (32,000) - -
Accounts receivable allowance (19,000) - -
Moving expense accrual (36,000) - -
Depreciation timing differences 14,000 - -
Deferred tax valuation allowance (170,000) - -
Use of NOL carryforwards - federal (88,000) (68,600) -
Use of NOL carryforwards - state (14,000) (19,900) -
------------- ------------ ------------
(158,000) 800 (63,400)
------------- ------------ ------------
Extraordinary item:
Federal - 69,000 215,200
California - 20,800 58,900
Benefit of NOL carryforward - (89,800) (274,100)
------------- ------------ ------------
Income tax expense (benefit) $ (158,000) $ 800 $ (63,400)
============= ============ ============
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of deferred tax assets and liabilities at September 30, 1997 and
1996 are as follows:
1997 1996
--------------- ---------------
Net operating loss carryforwards $ 520,000 $ 687,990
Allowance for slow moving inventories 34,000 61,000
Allowance for doubtful accounts 15,000 29,000
Other (106,000) (90,000)
--------------- ---------------
Deferred tax assets 463,000 687,990
Less valuation allowance (293,000) (687,990)
--------------- ---------------
Net deferred tax asset $ 170,000 $ -
=============== ===============
34
<PAGE>
RADIANT TECHNOLOGY CORPORATION
12. INCOME TAXES (CONTINUED)
- -----------------------------
During the year the Company reduced the valuation allowance to reflect the
deferred tax assets utilized in fiscal 1997 to reduce current income taxes
of $102,000 and to recognize a deferred tax asset of $170,000 at September
30, 1997. 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 $1,523,000 in future
years.
At September 30, 1997, the Company had net operating loss carryforwards for
federal income tax purposes expiring as follows:
2005 $ 250,066
2007 651,993
2009 620,976
--------------
$ 1,523,035
==============
Federal investment credit and other general business credit carryforwards
total $35,600 and $105,500, respectively, and expire at various dates
through 2003.
13. 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. No expense was
charged to operations in 1997 or 1996.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> SEP-30-1997
<CASH> 1817316
<SECURITIES> 0
<RECEIVABLES> 756505
<ALLOWANCES> 0
<INVENTORY> 714458
<CURRENT-ASSETS> 3458279
<PP&E> 573504
<DEPRECIATION> 0
<TOTAL-ASSETS> 4102005
<CURRENT-LIABILITIES> 1921704
<BONDS> 0
0
0
<COMMON> 1143008
<OTHER-SE> 1037293
<TOTAL-LIABILITY-AND-EQUITY> 4102005
<SALES> 4412024
<TOTAL-REVENUES> 4412024
<CGS> 2859096
<TOTAL-COSTS> 4020036
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 41824
<INCOME-PRETAX> 433812
<INCOME-TAX> (158000)
<INCOME-CONTINUING> 591812
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 591812
<EPS-PRIMARY> 0.32
<EPS-DILUTED> 0.32
</TABLE>
