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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended Commission File Number:
March 31, 1998 0-22065
RADIANT SYSTEMS, INC.
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(Exact name of registrant as specified in its charter)
Georgia 11-2749765
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1000 Alderman Drive, Alpharetta, Georgia 30005
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (770) 772-3000
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Not applicable
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(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes X No ________
The number of the registrant's shares outstanding as of May 7, 1998 was
15,954,374.
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RADIANT SYSTEMS, INC. AND SUBSIDIARIES
FORM 10-Q
TABLE OF CONTENTS
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PART I: FINANCIAL INFORMATION PAGE NO.
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Item 1: Financial Statements
Condensed Consolidated Balance Sheets as of March 31,
1998 and December 31, 1997 3
Condensed Consolidated Statements of Operations for the Three
Months Ended March 31, 1998 and 1997 4
Condensed Consolidated Statements of Cash Flows for the Three
Months Ended March 31, 1998 and 1997 5
Notes to Condensed Consolidated Financial Statements 6
Item 2: Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
PART II: OTHER INFORMATION
Item 1: Exhibits and Reports on Form 8-K
Signature
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2
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PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
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RADIANT SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
ASSETS
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
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(unaudited)
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Current assets
Cash and cash equivalents................................... $36,091 $47,567
Accounts receivable, net of allowance for
doubtful accounts of $370 and $350......................... 20,764 17,557
Inventories................................................. 11,597 8,706
Other short-term assets..................................... 2,767 1,867
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Total current assets...................................... 71,219 75,697
Property and equipment, net.................................. 6,053 4,844
Software development costs, net.............................. 2,329 1,773
Intangibles, net............................................. 7,637 10,332
Other long-term assets....................................... 3,001 869
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$90,239 $93,515
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable............................................ $ 6,301 $ 7,234
Accrued liabilities......................................... 4,399 5,887
Client deposits and unearned revenue........................ 3,307 4,645
Current portion of long term debt........................... 333 672
-------- --------
Total current liabilities................................ 14,340 18,438
Long-term debt, less current portion......................... 3,998 4,056
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Total liabilities......................................... 18,338 22,494
Shareholders' equity
Common stock, no par value; 20,000,000 shares authorized;
15,933,939 and 15,423,587 shares issued and outstanding.... 0 0
Common stock Series A, no par value; 10,000,000 shares
authorized; 0 and 1,442,889 shares issued and outstanding.. 0 0
Additional paid-in capital.................................. 91,375 90,708
Deferred compensation....................................... (490) (535)
Accumulated deficit......................................... (18,984) (19,152)
-------- --------
71,901 71,021
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$ 90,239 $ 93,515
========= ========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements
3
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RADIANT SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
UNAUDITED
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<CAPTION>
For the three months ended,
March 31, 1998 March 31, 1997
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Revenues:
Systems sales......................................... $16,647 $10,742
Client support, maintenance and other services........ 4,897 1,818
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Total revenues....................................... 21,544 12,560
Cost of revenues:
Systems sales......................................... 7,996 6,278
Client support, maintenance and other services........ 4,154 1,749
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Total cost of revenues............................... 12,150 8,027
Gross profit........................................... 9,394 4,533
Operating expenses:
Product development................................... 2,793 1,153
Sales and marketing expenses.......................... 2,823 872
Depreciation and amortization......................... 987 367
General and administrative............................ 3,051 1,689
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Income (loss) from operations.......................... (260) 452
Interest (income) expense, net........................ (539) 209
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Income before income tax provision (benefit)........... 279 243
Income tax provision (benefit)........................ 111 (212)
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Net income before extraordinary item................... 168 455
Extraordinary item:
Loss from early extinguishment of debt, net of taxes.. $ 0 131
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Net income............................................. $ 168 $ 324
======= =======
Basic earnings per share:
Income before extraordinary item...................... $ 0.01 $ 0.04
Extraordinary loss on early extinguishment of debt.... 0.00 (0.01)
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Basic earnings per share............................... $ 0.01 (0.03)
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Diluted earnings (loss) per share:
Income before extraordinary items..................... $ 0.01 $ 0.03
Extraordinary loss on early extinguishment of debt.... 0.00 (0.01)
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Diluted earnings per share............................. $ 0.01 $ 0.02
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Shares used to compute basic earnings per share........ 15,926 9,847
======= =======
Shares used to compute diluted earnings per share........ 18,624 13,125
======= =======
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
4
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RADIANT SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
Unaudited
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<CAPTION>
For the three months ended,
March 31, 1998 March 31,1997
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income...................................................................... $ 168 $ 324
Adjustments to reconcile net income to net cash
used in operating activities:
Amortization of deferred compensation........................................... 45 0
Depreciation and amortization................................................... 987 367
Pro forma income tax benefit.................................................... 0 (212)
Deferred income tax provision (benefit)......................................... 111 (397)
Discounts earned on software license sales...................................... 0 52
Amortization and write off of loan discount and
loan origination fees........................................................ 0 332
Imputed interest on shareholder note............................................ 57 0
Changes in assets and liabilities:
Accounts receivable.......................................................... (3,207) (2,256)
Inventories.................................................................. (2,891) (1,462)
Other assets................................................................. (173) (104)
Accounts payable............................................................. (511) 431
Accrued liabilities.......................................................... (2,007) 0
Client deposits and deferred revenues........................................ (1,338) (536)
-------- -------
Net cash used in operating activities....................................... (8,759) (3,461)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment............................................. (1,786) (556)
Capitalized software development costs.......................................... (643) (202)
Increase in goodwill attributed to acquisitions................................. 0 (42)
-------- -------
Net cash used in investing activities....................................... (2,429) (800)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock warrants................................. 0 960
Proceeds from the issuance of common stock, net of issuance
costs......................................................................... 0 24,251
Exercise of employee stock options.............................................. 666 0
Repurchase of common stock from shareholders.................................... 0 (2,122)
Employee loans............................................................... (500) 0
Principal payments under capital lease obligations.............................. (71) (91)
Repayments of shareholder loans................................................. 0 (4,094)
Principal payments under long-term debt......................................... (383) (4,506)
Other........................................................................... 0 9
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Net cash (used in) provided by financing activities......................... (288) 14,407
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(Decrease) increase in cash and cash equivalents................................. (11,476) 10,146
Cash and cash equivalents at beginning of year................................... 47,567 2,342
-------- -------
Cash and cash equivalents at end of period....................................... $ 36,091 $12,488
======== =======
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest............................................................ $ 76 $ 122
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Income taxes........................................................ $ 1,556 $ 0
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Noncash investing and financing activities:
Equipment purchases financed by borrowings under capital
lease obligations............................................................ $ 0 $ 43
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Reclassification of S Corporation retained earnings to additional
paid-in capital.............................................................. $ 0 $ 8,203
======== =======
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements
5
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles applicable
to interim financial statements. Accordingly, they do not include all of the
information and notes required by generally accepted accounting principles for
complete financial statements. In the opinion of Radiant Systems, Inc. (the
"Company") management, these condensed consolidated financial statements contain
all adjustments (which comprise only normal and recurring accruals) necessary
for fair presentation of the consolidated financial condition and results of
operations for these periods. The interim results for the three months ended
March 31, 1998 are not necessarily indicative of the results to be expected for
the full year. These statements should be read in conjunction with the Company's
consolidated financial statements as filed in its Annual Report on Form 10-K for
the year ended December 31, 1997.
2. Completion of Public Offerings
On February 19, 1997, the Company completed its initial public offering of
common stock. The Company sold 2.8 million shares of common stock, including
the underwriters' over-allotment of 325,000 shares of common stock, in the
initial public offering for $26.8 million less issuance costs of $2.6 million.
Subsequent to the public offering of common stock, the Company repurchased and
subsequently retired 793,093 shares of common stock from two shareholders for a
total of $2.1 million.
On July 21, 1997, the Company sold 2.6 million shares of its common stock and
received approximately $58.4 million, after deducting underwriting discounts and
offering expenses. The proceeds of the offering were used to repay $3.3 million
of debt incurred in connection with the acquisition of Restaurant Management and
Control Systems, Inc. ("ReMACS"), more fully described in Note 3, and for
general corporate purposes, including research and development, sales and
marketing, possible strategic acquisitions and the increased working capital
requirements of the Company generated by its growth.
3. Acquisitions
In May 1997, the Company completed the acquisitions of ReMACS, based in
Pleasanton, California, and RSI Merger Corporation (d.b.a.Twenty/20 Visual
Systems) ("Twenty/20"), based in Dallas, Texas. ReMACS is a leading provider of
back office management systems for clients in the restaurant industry with over
8,000 installed or licensed sites. Twenty/20 is a provider of point of sale and
table management systems for full-service restaurants.
In October 1997, the Company acquired RapidFire Software, Inc. ("RapidFire
Software") and EquiLease Financial Services, Inc. ("EquiLease") (collectively
"RapidFire") based in Hillsboro, Oregon. RapidFire Software is a leading
provider of point of sale systems to the pizza industry and other delivery
restaurants, with installations in over 2,000 restaurant sites nationwide.
EquiLease provides lease financing to certain clients of RapidFire.
In November 1997, the Company completed its acquisition of Logic Shop, Inc.
("Logic Shop"), based in Atlanta, Georgia. Logic Shop is a leading provider of
management software to the convenient automotive service center market, with
over 1,500 sites installed.
6
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4. Income Tax (Benefit) Provision
Income tax (benefit) provision for interim periods is based on estimated
effective annual income tax rates. As a result of its election to be treated as
an S Corporation for income tax purposes, the Company, prior to the completion
of its initial public offering in February 1997, was not subject to federal or
state income taxes. Pro forma net income amounts include additional provisions
for income taxes determined by applying the Company's anticipated statutory tax
rate to pretax income (loss), adjusted for permanent tax differences. The
Company's S Corporation status was terminated upon completion of its initial
public offering in February 1997. Upon the termination of its S Corporation
election, the Company recorded certain deferred tax assets in the amount of
$592,000. Simultaneously, with the recording of these deferred tax assets, the
Company recorded a tax benefit of $305,000 and a valuation allowance of $287,000
due to uncertainty surrounding the future utilization of such deferred tax
assets.
In connection with the filing of the Company's 1997 income tax returns, the
Company revised the tax basis of the intangible assets acquired in connection
with its fourth quarter 1997 acquisitions of RapidFire and Logic Shop resulting
in the reduction of intangible assets of $2.3 million.
5. Net Income Per Share
In 1997, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards ("SFAS") No. 128, "Earnings Per Share," effective for
fiscal years ending after December 15, 1997. The Company adopted the new
guidelines for the calculation and presentation of earnings per share, and
restated all prior periods. Basic loss per share is based on the weighted
average number of shares outstanding. Diluted loss per share is based on the
weighted average number of shares outstanding and the dilutive effect of common
stock equivalent shares ("CSEs") issuable upon the exercise of stock options and
warrants (using the treasury stock method).
The following table represents a reconciliation of basic and dilutive weighted
average shares and earnings per share using the guidelines of SFAS 128.
For the three months
ended March 31,
--------------------
000s omitted except per share data 1998 1997
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Basic weighted average shares
outstanding.......................... 15,926 9,847
Shares of common stock assumed
issued upon exercise of common
stock equivalents using the "treasury
stock" method as it applies to the
computation of diluted earnings
per share............................ 2,698 3,278
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Diluted weighted average shares
outstanding.......................... 18,624 13,125
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Net earnings (loss) used in the
computation of basic and diluted
earnings per share................... $ 168 $ 324
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7
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Earnings per share:
Basic.............................. $ 0.01 $0.03
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Diluted............................ $ 0.01 $0.02
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6. Accounting Pronouncements
In June 1997, the Financial Accounting Standards Board ("FASB") issued SFAS No.
130, "Reporting Comprehensive Income" ("SFAS No.130"). SFAS No. 130 establishes
standards for the disclosure of all components of comprehensive income.
Comprehensive income is defined as the change in equity (net assets) of a
business enterprise during a period from transactions and other events and
circumstances from nonowner sources. Other comprehensive income refers to
revenues, expenses, gains, and losses that under generally accepted accounting
principles are included in comprehensive income but bypass net income.
Currently, the Company has no other comprehensive income items. Accordingly,
the adoption of SFAS No. 130 in the first quarter 1998 had no impact on the
Company's financial statements.
8
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Item 2. Management's Discussion and Analysis of Financial Condition and Results
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of Operations
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Overview
The Company provides enterprise-wide technology solutions to the retail
industry. The Company offers fully integrated retail automation solutions
including point of sale systems, consumer-activated ordering systems, back
office management systems and headquarters-based management systems. The
Company's products enable retailers to interact electronically with their
clients, capture detailed data at the point of sale, manage labor and inventory
at their sites and communicate electronically with their sites, vendors and
credit networks. In addition, the Company offers system planning, design and
implementation services to tailor its solutions to each retailer's
specifications.
The Company derives its revenues primarily from the sale of integrated systems,
which include software, hardware and related support and consulting services.
The Company plans to increase licensing of certain of its software products on a
stand-alone basis. In addition, the Company offers implementation and
integration services which are billed on a per diem basis. The Company's
revenues from its various technology solutions are, for the most part, dependent
on the number of installed sites a client has. Accordingly, while the typical
sale is the result of a long, complex process, the Company's client usually
continues installing additional sites over an extended period of time. Revenues
from software and systems sales are recognized as products are shipped, provided
that collection is probable and no significant post shipment vendor obligations
remain. Revenues from client support, maintenance and other services are
generally recognized as the service is performed.
Prior to 1993, the Company developed software solutions for the video rental and
car care markets. The Company entered the convenience store market in 1993 by
introducing a new product line. In order to increase the Company's focus on
revenue growth and profitability, the Company expanded its senior management
team in 1995 and 1996. In addition, the Company has responded to strong demand
for its technology solutions by investing heavily in new product development.
The Company also identified additional market opportunities for its new
products. As a result of these and other factors, the Company has substantially
increased its sales, marketing and product development activities.
Since November 1995, a number of events resulted in strong revenue growth for
the Company. The Company developed new products, established relationships with
new clients and increased sales to existing clients. The Company expanded its
presence into the retail industry in November 1995 by entering into a joint
venture (PrysmTech) to market enterprise-wide technology solutions to cinema
operators. On December 31, 1996, the Company purchased the remaining interest in
PrysmTech. Accordingly, the operations of PrysmTech are reflected in the 1996
financial statements of the Company with a deduction for the minority interest
in the earnings of PrysmTech. Continuing its growth in the retail industry, in
May 1996 the Company purchased Liberty Systems International, Inc. ("LSI"), a
technology solution provider to the quick service restaurant ("QSR") operators.
To broaden its presence in the restaurant market, the Company acquired ReMACS
and Twenty/20, in May 1997 and RapidFire in October 1997. In November 1997, the
Company acquired Logic Shop to serve the convenient automotive service centers.
During this period, the Company also expanded its sales force and continued to
add management, consulting and product development personnel.
As a result of its election to be treated as an S Corporation for income tax
purposes, prior to the completion of its initial public offering in February
1997, the Company was not subject to federal or state income taxes. Pro forma
net loss amounts discussed herein include additional income tax benefits
determined by applying the
9
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Company's anticipated statutory tax rate to pretax loss, adjusted for permanent
tax differences. The Company's S Corporation status terminated upon completion
of its initial public offering in February 1997.
The Company is currently in the process of performing a review of its business
systems, including its computer systems and its product offerings, and is
querying its clients, vendors and resellers as to their progress in identifying
and addressing problems that their computer systems may face in correctly
interrelating and processing date information as the year 2000 approaches and is
reached. The Company does not expect that the cost to modify its information
technology infrastructure to be Year 2000 compliant will be material to its
financial condition or results of operations. To date, the expense of upgrading
product applications to be Year 2000 compliant has not been material. Moreover,
the Company does not anticipate any material disruption in its operations as a
result of any failure by the Company to be in compliance. In the event that any
of the Company's significant suppliers or clients do not successfully and timely
achieve Year 2000 compliance, the Company's business or operations could be
adversely affected.
10
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Results of Operations
Systems Sales. The Company derives the majority of its revenues from sales and
licensing fees for its headquarters and point of sale solutions. Systems sales
increased 55.0% to $16.6 million for the quarter ended March 31, 1998 (the
"first quarter 1998"), compared to $10.7 million for the quarter ended March 31,
1997 (the "first quarter 1997"). The increase related to sales and license fees
from new and existing clients, and the acquisitions of ReMACS and Twenty/20 in
the second quarter of 1997 and RapidFire, and Logic Shop in the fourth quarter
of 1997.
Client Support, Maintenance and Other Services. The Company also derives
revenues from client support, maintenance and other services, which increased
169.3% to $4.9 million for the first quarter 1998, compared to $1.8 million for
the first quarter 1997. The increase was due to increased support, maintenance
and services revenues within its existing markets as well as those related to
the Company's 1997 acquisitions. Additionally, increased client demand of
professional services contributed to this increase.
Cost of Systems Sales. Cost of systems sales consists primarily of hardware and
peripherals for site-based systems and labor. These costs are expensed as
products are shipped. Cost of systems sales increased 27.4% to $8.0 million for
the first quarter 1998, compared to $6.3 million for the first quarter 1997. The
increase was attributable to the increase in systems sales. Cost of systems
sales as a percentage of systems revenues decreased to 48.0% from 58.4%. The
decreases were due primarily to increased efficiencies associated with the
manufacturing of site-based systems, as well as increased sales of software
licenses from existing and newly introduced and acquired products. These
products typically have higher gross margins than the site-based systems sold by
the Company.
Cost of Client Support, Maintenance and Other Services. Cost of client support,
maintenance and other services consists primarily of personnel and other costs
associated with the Company's services operations. Cost of client support,
maintenance and other services increased 137.5% to $4.2 million for the first
quarter 1998 from $1.7 million for the first quarter 1997. The increase was due
primarily to the Company's acquisitions and their related costs in this area as
well as the Company's decision to expand its professional services offerings and
the related increase in wages associated with this effort. Cost of client
support, maintenance and other services as a percentage of client support,
maintenance and other services revenues decreased to 84.8% from 96.2%, due to
increased efficiencies and staff utilization.
Product Development Expenses. Product development expenses consist primarily of
wages and materials expended on product development efforts. Product
development expenses increased 142.2% to $2.8 million for the first quarter
1998, compared to $1.2 million for the first quarter 1997. The increase was due
to higher development costs associated with new product development, including
development activity associated with the acquisitions of ReMACS, Twenty/20,
RapidFire and Logic Shop and the development of new credit card network
interfaces. Product development expenses as a percentage of total revenues
increased to 13.0% from 9.2%, as product development expenses increased at a
faster pace than total revenues. The Company capitalizes a portion of its
software development costs. In the first quarter 1998, software development
costs of $643,000, or 18.7% of its total product development costs, were
capitalized by the Company, as compared to approximately $202,000, or 14.9% of
its total product development costs for 1997.
Sales and Marketing Expenses. Sales and marketing expenses increased 224.0% to
$2.8 million during the first quarter 1998, compared to $872,000 in the first
quarter 1997. The increase was associated with the Company's acquisitions,
continued expansion of its sales activities and increased commission expense
attributable to higher sales. Sales and marketing expenses as a percentage of
total revenues increased to 13.1% from 6.9%.
11
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Depreciation and Amortization. Depreciation and amortization expenses increased
168.7% to $987,000 for the first quarter 1998, compared to approximately
$367,000 for the first quarter 1997. The increase resulted from an increase in
computer equipment and other assets required to support an increased number of
employees and locations, as well as increased goodwill amortization resulting
from acquisitions. Depreciation and amortization as a percentage of total
revenues increased to 4.6% from 2.9% during the period, primarily because
associated personnel support costs increased at a pace higher than associated
revenues. Additionally, amortization of capitalized software development costs
was approximately $87,000 for both the first quarter 1997 and the first quarter
1998.
General and Administrative Expenses. General and administrative expenses
increased 80.7% to $3.1 million for the first quarter 1998, compared to $1.7
million for the first quarter 1997. The increase was due primarily to personnel
increases and related costs associated with the Company's 1997 acquisitions.
General and administrative expenses as a percentage of total revenues increased
to 14.2% from 13.4% as personnel and related expenses grew at a faster rate than
revenues.
Interest (Income) Expense. Interest (income) expense increased 357.9% to net
interest income of $539,000 for the first quarter 1998, compared to net interest
expense of $209,000 for the first quarter 1997. The increase resulted primarily
from interest income earned on the proceeds of the sale of 5.4 million shares of
the Company's common stock during the first and third quarters of 1997, compared
to interest expense resulting from the Company borrowing $4.5 million in 1996
and the borrowing costs associated therewith.
Income Tax Provision (Benefit). As a result of its election to be treated as an
S Corporation for income tax purposes, the Company, prior to the completion of
its initial public offering in February 1997, was not subject to federal or
state income taxes. The Company's S Corporation status was terminated upon
completion of its initial public offering in February 1997 and upon termination
of its S Corporation status, the Company recorded deferred tax assets in the
amount of $592,000. Simultaneously, with the recording of these deferred tax
assets, the Company recorded a tax benefit of $305,000 and a valuation allowance
of $287,000. The valuation allowance was recorded due to the uncertainty
surrounding the future utilization of such deferred tax assets. For all periods
presented, the accompanying financial statements reflect provisions for income
taxes computed in accordance with the provisions of Statement of Accounting
Standards No. 109, "Accounting for Income Taxes". For those periods prior to
the Company's initial public offering, the tax benefit has been presented on a
pro forma basis as if the Company had been liable for federal and state income
taxes during those periods. The pro forma effective tax rate for the period
from January 1, 1997 through February 19, 1997, the date the Company terminated
its S Corporation status was a benefit of 1.1%, compared to a provision of 40.0%
for first quarter 1998.
Extraordinary Item. During the first quarter 1997, a loss from early
extinguishment of debt of $213,000, net of taxes of $82,000, was recognized due
to the write off of certain unamortized loan origination costs and unamortized
debt discounts associated with the repayment of outstanding indebtedness to
Sirrom Capital Corporation of $4.5 million. There was no such charge during the
first quarter of 1998.
Net Income. During the first quarter 1998, net income decreased $156,000 or
48.2% compared to the first quarter 1997. The decrease was due to the reasons
noted above, and the recording of a pro forma income tax benefit in the first
quarter 1997 and an income tax provision in the first quarter 1998. This
decrease was reduced as a result of the extraordinary loss recognized in the
first quarter 1997. Net income for the first quarter 1998, was $168,000 or $0.01
per share, a decrease of $287,000 or $0.02 per share over net income before
extraordinary item of $455,000 or $0.03 per share for the first quarter 1997.
12
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Liquidity and Capital Resources
In February 1997, the Company completed its initial public offering, in which
the Company received net proceeds of approximately $24.3 million after deducting
underwriting discounts and offering expenses. The Company applied the proceeds
of the offering to (i) repay all of the Company's outstanding indebtedness to
Sirrom Capital Corporation ($4.5 million), (ii) repay debt incurred in
connection with its acquisition of PrysmTech ($3.1 million), (iii) repay
outstanding shareholder notes ($1.1 million) and (iv) to repurchase an aggregate
of 793,073 shares of common stock from two shareholders from whom the Company
had a right of repurchase at a substantial discount to the initial public
offering price ($2.1 million). The balance of the net proceeds of the offering
(approximately $13.5 million) was utilized for general corporate purposes,
including research and development, sales and marketing, strategic acquisitions
and the increased working capital requirements of the Company generated by its
growth.
The exercise of outstanding warrants to purchase 1,333,002 shares of common
stock in connection with the initial public offering in February 1997 provided
the Company with proceeds of approximately $960,000.
In July 1997, the Company completed a public offering of 2.6 million shares of
common stock and received net proceeds of approximately $58.4 million after
deducting estimated underwriting discounts and offering expenses. A portion of
the offering proceeds was used to repay $3.3 million of debt incurred in
connection with the acquisition of ReMACS. The remaining proceeds will be used
for general corporate purposes, including research and development, sales and
marketing, possible strategic acquisitions and the increased working capital
requirements of the Company generated by its growth. As of March 31, 1998, the
Company had $36.1 million in cash and cash equivalents.
The Company used cash from operating activities in the first quarter 1998 and
the first quarter 1997 of $8.8 million and $3.5 million, respectively. In the
first quarter 1998, the Company's uses of cash were the primary result of
increased accounts receivable and inventory due to increased sales, and a
decrease in client deposits and unearned revenues as the Company delivered
products and/or services previously paid by clients. During the first quarter
1997, the Company's use of operating cash was primarily the result of increased
accounts receivable and inventories.
Cash used in investing activities in the first quarter 1998 and the first
quarter 1997 was $2.4 million and $800,000 respectively. The use of cash for the
first quarter 1998 in investing activities consisted primarily of the purchases
of property and equipment for approximately $1.8 million and $556,000 in the
first quarter 1998 and the first quarter 1997, respectively. During the first
quarter 1998, the Company's integration and client support groups moved into its
new 55,000 sq. ft. leased facility in Alpharetta, Georgia. As a result, the
Company purchased equipment and furniture to accommodate the move.
Cash of $288,000 was used in financing activities during the first quarter 1998
due primarily to an advance made by the Company to the former sole shareholder
of RapidFire under its agreement to loan up to $1.5 million, which debt matures
October 31, 2005 and bears interest at 5.0% per annum. Cash of $14.4 million was
provided by financing activities during the first quarter 1997 due to the
issuance of common stock in the initial public offering offset by the repayment
of the Company's outstanding indebtedness noted above.
13
<PAGE>
Forward-Looking Statements
Certain statements contained in this filing are "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995, such
as statements relating to financial results and plans for the future business
development activities, and are thus prospective. Such forward-looking
statements are subject to risks, uncertainties and other factors which could
cause actual results to differ materially from future results expressed or
implied by such forward-looking statements. Potential risks and uncertainties
include, but are not limited to, economic conditions, competition and other
uncertainties detailed from time to time in the Company's Securities and
Exchange Commission filings.
Item 3. Quantitative and Qualitative Disclosures About Market Risks
- -------------------------------------------------------------------
Not Applicable
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) Exhibits.
The following exhibits are filed with this Report:
27.1 Financial Data Schedule
(b) Reports to be filed on Form 8-K
No reports on Form 8-K were filed during the quarter ended
March 31, 1998
RADIANT SYSTEMS, INC. AND SUBSIDIARIES
Dated: May 13, 1998 By: /s/ John H. Heyman
----------------------------------------
John H. Heyman, Executive Vice President
and Chief Financial Officer
14
<PAGE>
EXHIBIT INDEX
Exhibit Number Description of Exhibit
- -------------- ----------------------
27.1 Financial Data Schedule
17
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MARCH 31,
1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1997
<PERIOD-START> JAN-01-1998 JAN-01-1997
<PERIOD-END> MAR-31-1998 MAR-31-1997
<CASH> 36,091 12,488
<SECURITIES> 0 0
<RECEIVABLES> 21,134 7,291
<ALLOWANCES> (370) (150)
<INVENTORY> 11,597 4,767
<CURRENT-ASSETS> 71,219 445
<PP&E> 9,428 3,478
<DEPRECIATION> (3,375) (1,656)
<TOTAL-ASSETS> 90,239 29,431
<CURRENT-LIABILITIES> 14,340 9,852
<BONDS> 0 0
0 0
0 0
<COMMON> 0 0
<OTHER-SE> 71,901 19,347
<TOTAL-LIABILITY-AND-EQUITY> 90,239 29,431
<SALES> 21,544 12,560
<TOTAL-REVENUES> 21,544 12,560
<CGS> 12,150 8,027
<TOTAL-COSTS> 12,150 8,027
<OTHER-EXPENSES> 9,654 4,081
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> (539) 209
<INCOME-PRETAX> 279 243
<INCOME-TAX> 111 (212)
<INCOME-CONTINUING> 168 455
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 131
<CHANGES> 0 0
<NET-INCOME> 168 324
<EPS-PRIMARY> 0.01 0.03
<EPS-DILUTED> 0.01 0.02
</TABLE>
