SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the fiscal year ended December 31, 2003
Commission File No. 0-22065
RADIANT SYSTEMS, INC.
A Georgia Corporation
(IRS Employer Identification No. 11-2749765)
3925 Brookside Parkway
Alpharetta, Georgia 30022
(770) 576-6000
Securities Registered Pursuant to Section 12(b)
of the Securities Exchange Act of 1934:
None
Securities Registered Pursuant to Section 12(g)
of the Securities Exchange Act of 1934:
Common Stock, no par value
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Securities Exchange Act of 1934) Yes x No ¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
The aggregate market value of the common stock of the registrant held by nonaffiliates of the registrant (13,843,428 shares) on June 30, 2003 was approximately $94,689,047 based on the closing price ($6.84) of the registrant’s common stock as reported on The Nasdaq National Market on that date. For the purposes of this response, officers, directors and holders of 10% or more of the registrant’s common stock are considered to be affiliates of the registrant at that date.
The number of shares outstanding of the registrant’s common stock, as of March 4, 2004: 28,436,823 shares of no par value common stock.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant’s definitive proxy statement to be delivered to the shareholders in connection with the 2004 Annual Meeting of the Shareholders are incorporated by reference in response to Part III of this Report.
PART I
Item 1. Business.
General
Founded in 1985, Radiant Systems, Inc. (the “Company” or “Radiant”) builds and delivers technology solutions for the retail and hospitality industries. The Company provides an array of solutions including site management and enterprise management technology. During 2003, the Company restructured its business units into two distinct operating segments, Store Systems and Enterprise Software Systems. The Store Systems segment focuses on delivering site management systems, including point-of-sale (POS), self-service kiosk, and back-office systems, designed specifically for the Company’s core vertical markets of Petroleum and Convenience Store, Food Service and Entertainment. John Heyman was appointed CEO of the Store Systems Segment with a strategic direction to re-focus the Company’s efforts on better serving it’s core markets and increasing market penetration. The Enterprise Software Systems segment focused on delivering its web-based Radiant 6e Enterprise Productivity Software Suite including functionality such as workforce and supply chain management to the broader retail markets both within and outside the Company’s core vertical markets. Erez Goren was appointed CEO of the Enterprise Software Systems segment with a strategic direction of delivering against large contract commitments associated with the Enterprise Productivity Software Suite and continuing to market to large retailers across vertical segments.
In January of 2004, Radiant completed the previously announced split-off of its enterprise software business, now known as BlueCube Software, to Erez Goren, the Company’s former Co-Chairman of the Board and Co-Chief Executive Officer. Pursuant to the terms of the Share Exchange Agreement between Radiant and Mr. Goren, Radiant contributed specified assets and liabilities of the enterprise software business, together with $4.0 million in cash, to the newly formed subsidiary, and then transferred all of the shares of the new company to Erez Goren in exchange for the redemption of 2.0 million shares of common stock of the Company held by Mr. Goren. The transaction resulted in two separate companies, Radiant continued as the publicly traded company focused on its point-of-sale systems for the petroleum, convenience store, food service and entertainment markets. Enterprise, which is initially 100% owned by Erez Goren, assumed development of the enterprise software business.
Additionally, in January of 2004, Radiant completed the acquisition of substantially all of the assets of Aloha Technologies, a leading provider of point-of-sale systems for the hospitality/ food service industry, and certain affiliated entities of Aloha (collectively, “Aloha”). Following the completion of the transaction, Manny Negreiro, the Chief Executive Officer of Aloha, became the head of Radiant’s new hospitality division based in Dallas, Texas. The hospitality division serves the industry employing key personnel from both Radiant and Aloha. With this expansion, Radiant aims to greatly enhance its presence in the industry, offering comprehensive solutions from advanced POS systems to self-service kiosks, customer loyalty systems, and integrated back-office solutions.
Store Systems Business Unit (Store Systems)
Store Systems focuses on delivering site management systems, including point-of-sale (POS), self-service kiosk, and back-office systems, designed specifically for the Company’s core vertical markets of Petroleum and Convenience Store, Food Service and Entertainment. Radiant’s site management solution includes software products, site hardware, professional services and support services. Each product can be purchased independently or as a suite of integrated products depending on the customer’s individual preferences.
Radiant offers best-of-breed solutions designed for ease of integration with operators’ existing infrastructures. Radiant’s site management technology enables retail and food service operators to improve customer service and profitability. Radiant believes its approach to site management is unique in that its product solutions provide visibility and control at the site, field, and headquarters levels. Additionally, Radiant focuses on addressing the unique requirements of the highly specialized environments in which its customers operate. These environments require a high degree of reliability, specialized functionality, and peripheral compatibility. Using Radiant’s point-of-sale, customer self-service and back-office technology, businesses are able to improve their speed of service, reduce fraud and shrink, optimize labor resources, and effectively manage inventory. Radiant’s full line of open, standards-based site management hardware allows
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operators to leverage advance technology built specifically for the environment that they operate in.
Management believes its current generation of point-of-sale and customer self-service products, which utilizes Microsoft Windows 2000, Windows XP, Windows XP Embedded, and Windows CE operating systems, represents an innovative platform based on an open, modular software and hardware architecture that offers increased functionality and stability compared to other systems in the marketplace, at a lower total cost of ownership.
Site Systems Markets
Petroleum and Convenience Store Market
In the United States, there currently are approximately 132,000 convenience stores, which derive a significant portion of revenues from selling products other than gasoline. Additionally, Radiant believes that the international petroleum and convenience store market represents a substantial opportunity for its technology solutions.
Radiant believes that its technology solutions in the petroleum and convenience store market will continue to have strong demand for the foreseeable future as store owners continue to experience gross margin pressure, high turnover, and extensive competition as high-volume retailers and grocery stores are now selling fuel. In response, convenience store operators are changing business models and pursuing new revenue channels. Made-to-order food and expanded services such as car washes, lottery, and money orders present new operating challenges. These challenges encourage additional investments in store automation in order to more efficiently manage store operations. In addition, high-volume retailers and grocery stores also represent growth opportunities for Radiant as they add fuel and made-to-order food to their offerings. Management also believes that based on the success of technology in recent years, and the positive return on investment associated with Radiant’s solutions, demand for new technology will remain strong from both new and existing customers.
Hospitality/Food Service Market
The domestic food service market includes approximately 874,000 sites. Radiant believes that food service operators today face an environment in which consumers eat out more often, have more dining choices than ever, and demand good food and fast service. To meet these challenges, food service operators require new technology that enables them to improve speed of service, manage site operations more efficiently, and reduce the total cost of technology ownership. Systems must permit employees to increase the speed and accuracy with which they take an order, prepare the food, and fill the order, often accommodating numerous concurrent orders at multiple table-top, counter-top or drive-through locations. Operators need solutions to better manage menu and pricing functions, manage recipes and inventory, and schedule and track labor. Additionally, food service operators need the ability to centrally manage changes across sites and brands. Above-store managers need access to timely operational information in order to proactively make good business decisions across all sites. The market for automated information and transaction systems for restaurants is typically more advanced than in the convenience store and entertainment markets, but is highly fragmented and includes a large number of proprietary, closed systems.
Entertainment Market
The United States and Canadian cinema industry is concentrated, with the top five chains operating approximately 50% of the cinema screens. In addition to increasing the number of screens per site, “megaplexes” have evolved, which combine restaurants, movies and other forms of entertainment in one facility. There are approximately 36,000 cinema screens in the United States. These screens are operated at more than 6,100 sites. While cinema sites typically are operated in a decentralized manner, Radiant believes cinema operators are focusing on implementing cost controls from headquarters. Operators can improve customer service and profitability by implementing integrated site management systems that enable them to speed customer transactions, reduce lines, manage inventory, and schedule labor to meet variations in traffic. Due to economic conditions during 2000 and 2001, the cinema market suffered significant financial losses resulting in bankruptcies and site closings. During 2002, box office revenues set an all-time high. More importantly, admissions rose approximately 10% to a level not seen since 1957. As the industry continues to stabilize, Radiant expects that cinema operators will begin investing in technology to more efficiently manage site operations.
Industry Background and Trends
Successful retail and food service operators increasingly require information systems that capture detailed information of
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consumer activity at the point-of-sale and store and transport that data in an easy-to-access fashion. Early technology innovators in the retail and food service industries deployed robust, integrated information systems at the point-of-sale and used the information to react quickly to changing consumer preferences, ultimately gaining market share in the process. In addition, integrated information systems helped these early innovators achieve operational efficiencies. Many large national retail and food service companies have followed suit by investing in proprietary information systems.
For many types of retail and food service operators, however, this type of information system did not make economic or business sense. In particular, merchants with a large number of relatively small sites, such as convenience stores, petroleum retail sites, and food service and entertainment venues, generally have not been able to cost-effectively develop and deploy sophisticated, enterprise-wide information systems. Economic and standardization problems for these markets are exacerbated by the fact that many sites operate as franchises, dealerships or under other decentralized ownership and control structures. Without an investment in technology, these operators continue to depend on labor and paper to process transactions. Management believes that high labor costs, lack of centralized management control of distributed sites, and inadequate informational reporting, together with emerging technology trends, have caused many of these retail and food service businesses to reexamine how technology solutions can benefit their operations.
Typically, the existing information systems in these industries consist of stand-alone devices such as cash registers or other point-of-sale systems with little or no integration with either the back office of the site or an enterprise-wide information system. Implementation of information systems providing this functionality typically involves multiple vendors and an independent systems integration firm. The resulting proprietary solutions are often difficult to support and have inherently high risks associated with implementation. Management believes that technology solutions that are highly functional and scalable, relatively inexpensive, and easy to deploy are critical for successful penetration in these markets.
In the absence of an integrated solution, operators in these markets typically rely on manual reporting to capture data on site activity and disseminate it to different levels of management. Basic information on consumers (i.e., who they are, when they visit and what they buy) is not captured in sufficient detail, at the right time or in a manner that can be communicated easily to others in the organization. Similarly, information such as price changes does not flow from headquarters to individual sites in a timely manner. In addition, communications with vendors often remain manual, involving paperwork, delays, and other process-related problems.
Recent trends in the retail and food service industries have accelerated the need for information and have heightened demand for feature-rich operational systems. Based in part upon industry association reports and other studies, as well as Radiant’s experience in marketing its products, Radiant believes consumer preferences have shifted away from brand loyalty toward value and convenience, creating a greater need for timely data concerning consumer buying patterns and preferences. Management also believes that convenient consumer-activated ordering and payment systems, such as automated kiosks, ATMs, voice response units and “pay at the pump” systems have become important to retailers, food service providers, and cinema operators that wish to retain and build a customer base. Additionally, through the use of integrated systems, retail and food service businesses can improve operational efficiencies through better management of inventory, purchasing, merchandising, pricing, promotions and shrinkage control. Management believes that the ability to provide tight system integration to a variety of industry standard back office solutions can enable customers to improve control and enforce best practices across operational sites. Furthermore, management believes that the constant flow of information among the point-of-sale, the back office, headquarters, and the supply chain has become a key competitive advantage in the retail and food service industries, resulting in operators demanding more sophisticated and easily integrated solutions from their systems vendors. In a parallel development, technological advances have improved the capability of information systems that are available. With the price of computing power declining, technology investments have become economically feasible for many retail and food service businesses. Furthermore, computing power has become increasingly flexible and distributable, facilitating data capture and processing by applications located at the point-of-sale. Also, front-end graphical user interfaces have made systems easier to use, which reduces training time and transaction costs and facilitates more types of consumer-activated applications.
The Radiant Solution
The Radiant site management solution is tailored to the unique requirements of the markets of the retail and food service industries that Radiant serves, such as petroleum and convenience stores, quick service restaurants, table service restaurants, and cinemas. Radiant believes that its site management solutions provide unique value and are easy to
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implement. Assuming the site is using an existing technology system, it typically requires less than one week to install Radiant’s system and a few hours to train individual users. Depending on the customer’s particular needs, Radiant can provide an entire suite of integrated products or the customer can purchase these products individually.
Point-of-Sale
Radiant builds and delivers open point-of-sale technology for petroleum and convenience store, food service, and cinema businesses. With ten years experience in providing touch-screen systems for the retail and food service industries, Radiant’s point-of-sale systems increase speed and quality of service, minimize user training, and provide mission-critical reliability. The point-of-sale systems can be integrated with Radiant’s back-office system or other third party back-office applications. Radiant’s point-of-sale software runs on IBM, NCR, PAR, WincorNixdorf, and Radiant hardware. At the same time, Radiant’s point-of-sale hardware supports Radiant Point-of-Sale software and third-party point-of-sale software products that adhere to open standards. Radiant’s point-of-sale terminals offer an open architecture, retail-hardened design, comprehensive support and return-to-service programs, and run on Windows CE, Windows XP, Windows XP Embedded, and Windows 2000.
Customer Self-Service (CSS)
Within many markets of the retail and food service industry, customer self-service has emerged as a preferred ordering and transaction method. Radiant has an easy to use, consumer-activated system that allows a consumer to purchase tickets, place a food order, pay with a credit card, make inquiries, and view promotions through the use of a touch screen application. The software development environment and authoring tools allow various media such as video clips, logos, pictures, and recordings to be quickly integrated into a consumer-friendly application.
Management believes customer self-service kiosks allow food service and cinema operators to accelerate speed of service, increase revenues through suggestive up-selling, increase order accuracy, capture consumer information at the point-of-sale, increase labor productivity, and respond quickly to changing consumer preferences. Radiant’s Customer Self-Service products help operators create a uniform and repeatable approach to customer service while improving revenue.
Back-Office Systems—Legacy
Radiant back-office software provides operators with the capabilities to manage employees and inventory, automate daily reports, analyze costs, and forecast results. Additionally, these systems provide the means for operators to easily gather point-of-sale and management information including current sales monitoring.
Headquarters-Based Management Systems—Legacy
Radiant headquarters-based management systems permit convenience store operators to manage individual sites from headquarters including inventory management, price book management, purchasing and receiving, decision support tools and reporting.
Professional Services
The integration, design, implementation, application and installation of technology solutions are critical to Radiant’s ability to effectively market its solutions. The following is a summary of some of the professional services Radiant provides:
• Consulting. Business consultants, systems analysts and technical personnel assist customers in all phases of systems development, including systems planning and design, customer specific configuration of application modules and on-site implementation or conversion from existing systems. Directors in Radiant’s consulting organization typically have significant consulting or retail technology experience. Radiant’s consulting personnel undergo extensive training in retail operations and Radiant’s products. Consulting services typically are billed on a per diem basis.
• Customization. Radiant provides custom application development work for customers billed on a project or per diem basis. All customization remains the property of Radiant.
• Training. Radiant has a formal training program available to its customers, which is provided on a per diem rate at Radiant’s offices or at the customer’s site.
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| • | Integration. Radiant integrates and builds interfaces for both site level and enterprise level systems for its customers. As part of the site implementation, the goal is to maximize the quality of the overall site solution and to provide the customers with a system that is easy to support over the long term. As part of the enterprise implementation, interfaces and integration points are developed to ensure customers achieve their ultimate business objectives. |
The market for Radiant’s professional services is intensely competitive. Radiant believes the principal competitive factors are the professional qualifications, expertise and experience of individual consultants. In the market for professional services, Radiant competes with Accenture, Ltd., The Cap Gemini Ernst & Young Group, Electronic Data Systems, Inc., International Business Machines and other systems integrators.
Maintenance and Client Support
Radiant offers client support on a 24-hour basis, a service that historically has been purchased by a majority of its clients and also entitles the client to product upgrades. In some cases, hardware support is provided by third parties. Radiant can remotely access its clients’ systems in order to perform quick diagnostics and provide on-line assistance. The annual support option is typically priced at a percentage of the software and hardware cost. Additionally, Radiant offers its clients hardware and software maintenance and unspecified software enhancements. Revenue from support and maintenance is recognized ratably over the term of the agreement.
Retail and food service businesses derive the following benefits from Radiant’s solutions:
| • | Improved customer service—Radiant’s technology enables operators to improve customer service by quickly processing customer transactions, increasing transaction accuracy, maximizing point-of-sale system uptime, reducing lines, avoiding stock outs, and scheduling labor according to forecasted sales volume. |
| • | Increased profitability—Radiant’s site management technology enables retail and food service operators to increase profitability by increasing customer throughput, maximizing sales of high-margin items through intelligent, automated up-selling, reducing labor costs, reducing inventory shrink, enforcing best practices across sites, and reducing fraud. |
| • | Increased productivity—Radiant’s site management solution enables retail and food service businesses to increase productivity by reducing employee training time, automating the order-taking process, reducing administration time, and freeing up managers to spend more time coaching employees and driving customer service. |
| • | Reduced total cost of technology ownership—Radiant’s site management solution enables operators to reduce the total cost of technology ownership by lowering initial deployment and ongoing maintenance costs. The technology’s Web-based centralized administration reduces the cost of deploying changes. |
Customers
During the year ended December 31, 2003 and 2002, no customer individually accounted for more than 10.0% of Radiant’s total revenues, while in 2001, one customer, Speedway SuperAmerica, LLC accounted for 10.2% of Radiant’s total revenues.
The following is a partial list of customers who have licensed or purchased Radiant’s products and services:
| Petroleum, Convenience, and Grocery Store |
Entertainment | Food Service | ||
| BP Amoco, p.l.c. |
AMC Entertainment | AFC Enterprises, Inc. | ||
| ConocoPhillips |
Loews Cineplex Entertainment | KFC | ||
| Holiday Stationstores |
National Amusements, Inc. | Chick-fil-A, Inc. | ||
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| Petroleum, Convenience, and Grocery Store |
Entertainment | Food Service | ||
| Kroger Corporation |
Regal Entertainment Group | Hooters of America | ||
| Maverick Country Stores |
The Marcus Corporation | Krispy Kreme Doughnut Corp. | ||
| Repsol YPF, S.A. |
Muvico Theaters | New World Restaurant Group, Inc. | ||
| Sheetz, Inc. |
Harkins Theatres | The Krystal Company | ||
| Speedway SuperAmerica, LLC |
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| Valero Energy Corporation |
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| Wawa, Inc. |
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Competition
In marketing its technology solutions, Radiant faces intense competition, including internal efforts by some potential customers. Radiant believes the principal competitive factors are quality, reliability, performance, price, vendor and product reputation, financial stability, features and functions, ease of use, quality of support and degree of integration effort required with other systems. The Internet has presented new competition to Radiant. Companies often offer new business models, which may force Radiant to change its terms of business to continue to maintain its market position.
Within the markets it serves, Radiant believes it is uniquely positioned with its exclusive focus on providing site management systems for petroleum and convenience, food service, and entertainment businesses. Within these product lines, Radiant faces intense levels of competition from a variety of competitors. International Business Machines, Corp., NCR Corporation, VeriFone, Inc. (owned by Gores Technology Group, an international acquisition and management company), Dresser Wayne, Retalix, Ltd., Pacer/CATS (owned by Clarity Commerce Solutions plc), Micros Systems, Inc., Par Technology Corporation, Danaher Corporation, Panasonic, The Pinnacle Corporation, InfoGenesis, and others provide point-of-sale and site management systems with varying degrees of functionality.
Radiant believes there are barriers to entry in the market for retail and food service automation solutions. Radiant has invested a significant amount of time and effort to create the functionality of its point-of-sale and back-office headquarters-based management systems. Radiant believes that the time required for a competitor to duplicate the functionality of these products is substantial and would require detailed knowledge of a retailer’s operations at local sites and headquarters. Also, developing a credit card network interface often can take an additional six to nine months, as the certification process can be time consuming. Moreover, the major petroleum companies are extremely selective about which automation system providers are permitted to interface to their credit networks.
Sales and Marketing
Through a focused and dedicated sales effort designed to address the requirements of the petroleum and convenience store, food service, and entertainment industries, Radiant believes its sales force is positioned to understand its customers’ businesses, trends in the marketplace, competitive products, and opportunities for new product development. This allows Radiant to take a consultative approach to working with customers.
Radiant’s sales personnel focus on selling its technology solutions to major customers, both domestically and internationally. All sales personnel are compensated with a base salary and commission based on revenue quotas, gross margins, and other profitability measures.
Over the last few years, Radiant has increased investments in developing relationships with third party resellers to distribute the product. The Company has built a reseller operations group and a sales support strategy to help ensure the success of this channel. The Company plans to continue to expand its coverage across the United States through third party resellers as well as a regional based sales force.
To date, Radiant’s primary marketing objectives have been to increase awareness of Radiant’s technology solutions and generate sales leads. To this end, Radiant attends industry trade shows, executes direct marketing programs, and selectively advertises in industry publications. Radiant intends to increase its sales and marketing activities both domestically and internationally. Additionally, Radiant intends to continue expanding an independent distribution network
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to sell and service its products to certain segments of the domestic and international markets.
Product Development
Radiant’s product development strategy is focused on creating common technology elements that can be leveraged in applications across its core markets. Radiant’s software architecture is based on open platforms and is modular, thereby allowing it to be phased into a customer’s operations. Radiant has developed numerous applications running on Microsoft Windows-based platforms, including Windows 2000, Windows XP, Windows XP Embedded, and Windows CE. The software architecture incorporates Microsoft’s Component Object Model, providing an efficient environment for application development.
During 1998 Radiant’s management determined that significant internal cost efficiencies and increased market appeal could be obtained through the consolidation of its legacy point-of-sale products into a single family of products, Radiant 6e Point-of-Sale. This consolidation effort integrated the best business and technical knowledge from multiple markets. Throughout 1999, Radiant enhanced its Radiant 6e Point-of-Sale product, and successfully introduced this replacement technology into the convenience store, food service, and entertainment markets. By the end of 2000, Radiant 6e Point-of-Sale had been released in all of the markets Radiant serves. Radiant continues to make significant improvements, enhancements and increase the functionality of the Radiant 6e Point-of-Sale product.
Site Systems Strategy
Radiant’s objective is to be the leading worldwide provider of site management systems for petroleum and convenience store, food service, and cinema businesses. Radiant is pursuing the following strategies to achieve this objective:
| • | Further develop reseller channel. A large portion of the food service and convenience store market is comprised of small businesses. Historically, Radiant has primarily built its business on serving large operators. While serving large operators remains a top priority, Radiant intends to serve the needs of all operators within its core segments. To better serve the small to medium-size market, Radiant will continue to develop the reseller channel and package its solutions in a manner that is easy for operators to afford, implement, and support. Radiant’s strategy is to deliver rich products that are easy to implement and support, establish a strong presence within critical franchised brands, and support resellers with strong operational tools. While Radiant has focused on a limited number of reseller relationships in targeted regions of the U.S., management plans to expand the reseller base to gain nationwide coverage over the next couple of years. With the acquisition of Aloha Technologies, (which was completed in January 2004), Radiant has accelerated this strategy by acquiring a fully developed reseller network focused on the food service market. |
| • | Increase sales and marketing efforts outside the United States. In 2003 the Company’s international revenues accounted for approximately 14.5% of total revenues. Management believes that this percentage can be increased substantially in the coming years. The growing number of large, multi-national companies who are among Radiant’s major North American customers together with its successful record of implementing solutions with retailers in Western Europe, Eastern Europe and Asia will allow Radiant to make additional progress internationally in the future. Additionally, the majority of Radiant’s current business outside the United States has been in the petroleum and convenience store market. Management believes there is opportunity for significant growth in the food service and entertainment markets outside the United States. With Radiant’s acquisition of Breeze Software Proprietary Limited (“Breeze”) in 2001, it increased its international presence and its development, consulting and sales capabilities. Currently, Radiant has more than 100 employees in Europe, Asia, and Australia. Radiant has previously executed international projects in Australia, Canada, Spain, the Czech Republic, Hong Kong, Hungary, Japan, Macau, Malaysia, Poland, Slovakia, Sweden, Switzerland, Thailand, Trinidad and Tobago and the United Kingdom. Radiant currently has offices in |
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Melbourne, Prague, and Singapore and representation in the United Kingdom and Spain.
| • | Integrate with third-party back-office systems. Convenience store, food service, and cinema operators have varying requirements for back office systems—from the most basic site-based technology to the most advanced centralized back office system. In addition, many operators need to move up to next-generation point-of-sale products, but retain an adequate back office infrastructure. While Radiant has traditionally focused on serving large operators with very sophisticated back office requirements, management believes that Radiant can expand its market position by integrating its best-of-breed point-of-sale and customer self service technology with leading third-party back-office systems. This strategy will give operators the flexibility to deploy the Radiant site management solution with basic site-based back-office capabilities, a powerful Web-based back office or an existing back office infrastructure. |
| • | Make strategic acquisitions. Radiant has accelerated its entry into new vertical markets through acquisitions and joint venture arrangements. In 2001, Radiant purchased Breeze, a leading provider of software applications for retailers in the Australian and Asia-Pacific marketplaces. In January 2004, Radiant purchased Aloha Technologies a leading provider of software applications for food service operators. To the extent Radiant believes acquisitions or joint ventures can better position it to serve its current markets, it will continue to pursue such opportunities. |
| • | Attract and retain outstanding personnel. Radiant believes its strongest asset is its people. To attract and retain top talent, Radiant intends to maintain its entrepreneurial culture and to continue offering competitive benefit programs. Radiant has granted stock options to a majority of its employees and will strive to continue to align employee interests with those of Radiant’s shareholders. |
Enterprise Software Systems Business Unit (“Enterprise”)
Introductory Note
On January 31, 2004 Radiant completed the previously announced split-off of its enterprise software business, now known as BlueCube Software, to Erez Goren, the Company’s former Co-Chairman of the Board and Co-Chief Executive Officer. The split-off transaction received the approval of approximately 70% of the disinterested shareholders of Radiant at the special meeting of shareholders held on January 30, 2004. Approval of a majority of the disinterested shareholders was a condition to the closing of the transaction. Pursuant to the terms of the Share Exchange Agreement between Radiant and Mr. Goren, Radiant contributed specified assets and liabilities of the enterprise software business, together with $4.0 million in cash, to the newly formed subsidiary, and then transferred all of the shares of the new company to Erez Goren in exchange for the redemption of 2.0 million shares of common stock of the Company held by Mr. Goren. The shares redeemed represented approximately 7.0% of the Company’s outstanding shares. The consideration for the transaction was determined based on arms-length negotiations between Mr. Goren and the special committee of the Company’s board of directors, comprised of three independent directors.
Radiant will continue to be a reseller of the Enterprise/BlueCube product.
General
In 1999, Radiant began developing its new generation of back-office software products—Radiant 6e™ Enterprise Productivity Suite, formerly WAVE™. This product’s architecture was designed to combine and expand the functionality of Radiant’s previous generation back-office systems primarily for use on a broader operational scale than its previous generation back office software. Enterprise’s architecture and platform for these products is entirely web-based, which Enterprise believes will enable it to increase the functionality while decreasing the costs of implementing and maintaining technology solutions for retail and food service businesses. The centerpiece of Enterprise’s technology, the Enterprise Productivity Suite, includes the following software products, each of which can be purchased independently or as a suite of integrated products depending on the client’s individual preferences:
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| • | Inventory Management |
| • | Workforce Management |
| • | Business Performance Management |
| • | Financial Management |
| • | Merchandise Management |
| • | Sales Management |
| • | e-Learning |
| • | Development Tools |
The Enterprise Productivity Suite was generally released by Radiant during the first quarter of 2002. The Enterprise Productivity Suite is offered both through the application service provider, or “ASP”, delivery model as well as through installations directly in client locations as “client-hosted” systems. In instances where clients select the ASP delivery model, Enterprise remotely hosts applications from an off-site central server that users can access over dedicated lines, virtual private networks or the Internet. Enterprise continues to develop the Enterprise Productivity Suite and to establish strategic relationships to facilitate its product offerings.
Enterprise may offer its products on a subscription-based pricing model. Under this subscription-based pricing model, clients pay a fixed, monthly fee for use of the Enterprise Productivity Suite and the hosting services needed to utilize those applications and solutions. This price model is different from Radiant’s historical pricing model, which charged clients an initial licensing fee for use of Radiant’s products and continuing maintenance and support during the license period.
Enterprise’s Markets.
In addition to providing products to core markets of the Radiant Store Systems business unit, Enterprise is focused on providing technology to the general retail market. This market consists of grocery, big box, apparel, department stores, drug stores, and specialty retail establishments. The primary products marketed to this industry include Workforce Management, Business Performance Management, e-Learning and Development tools. The market consists of approximately 300 Tier 1 and Tier 2 retailers in excess of $250 million in revenue.
The integration, design, implementation, application and installation of technology solutions are critical to Enterprise’s ability to effectively market its solutions.
Enterprise Products.
The Enterprise Productivity Suite
The Enterprise Productivity Suite uniquely offers the following key architectural elements:
| • | Native Web architecture—built on the principle of a single, centralized database shared by all users across the business, that is accessed via a Web browser and network connection; |
| • | Tiered architecture—provides businesses with a high degree of flexibility in how they use and improve technology systems; |
| • | Integration architecture—designed from the ground up to simplify communication and integration with headquarters-based applications such as finance, human resource, and others; |
| • | Customization framework—designed to support frequently changing business requirements with rich configuration capabilities, custom report building, and an application customization environment; |
| • | Corporate Data Management—technology that provides businesses with tremendous system flexibility in how they centrally collect, consolidate, and distribute information across distributed sites; |
| • | Business Activity Monitoring—technology that enables operators to evaluate performance in near real time and deliver the resulting information to the right people within the enterprise; and |
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| • | Site-use design—designed for site-level users, accommodating limitations in computing skills, time, and network infrastructure at the site. |
The following is a summary of the features of the Enterprise Productivity Suite:
| • | Workforce Management—provides automated forecasting, labor scheduling, and time and attendance across all sites. The Workforce Management software enables businesses to reduce labor costs, improve customer service, and reduce administration time. The software allows for employee self-service to their profile, schedules and time off requests. |
| • | Inventory Management—perpetually tracks all inventory transactions in the store and improves efficiency and control of inventory ordering, receiving, counting, and transfers between stores. It provides visibility into inventory in the supply chain and other stores. The Inventory Management software enables operators to control inventory shrink and meet customer demand more effectively. |
| • | Business Performance Management—provides site-level and above-store reports, graphical snapshots of performance, and alerts to focus attention on critical areas of the business and provide guidance to problem resolution. The Business Performance Management software enables operators to monitor performance at the site and consolidated levels and make proactive decisions. |
| • | Financial Management—provides simple accounts receivable, general ledger, and loss prevention functions including interfaces to major financial systems providers. Allows clients to seamlessly track the financial impact of store level transactions to the enterprise. Also provides the ability to quickly isolate and resolve cash control issues. |
| • | Merchandise Management—provides price book management, supplier management and contract management functions. This allows clients to centrally manage their pricing strategies down to the store level, as well as centrally manage all suppliers to the enterprise. |
| • | Sales Management—provides sales order entry, sales transactions processing and cash management functions. The Sales Management software enables retailers to record sales orders associated with a specific customer or account and better control cash using various counting methods and corporate exception reporting. |
| • | e-Learning—provides the ability to administer and deliver training to field employees. Includes the ability to create and score tests as well as report on results. This application significantly reduces the cost to train employees and improves the clients’ ability to more rapidly implement change. E-Courses on the Enterprise Productivity Suite modules are available through e-Learning. |
| • | Development Tools—provides clients with the ability to customize their implementation of the Enterprise software. This allows clients to get the benefit of packaged software, with the ability to implement enhancements that provide competitive advantage. |
Workforce Management Software—Legacy
Enterprise also offers Radiant’s Legacy Workforce Management Software. Radiant acquired the Workforce Management Software through its acquisition of the TimeCorp division of Verifone, Inc. in 2000. This software provides retail and hospitality operators the ability to forecast anticipated demand at a store level, project the corresponding labor required to meet this demand, schedule the appropriate personnel for the labor requirement, manage employee time and attendance activity and generate payroll and interface with time clocks for ease in monitoring hours worked. It also provides job costing and exception reporting, as well as management reporting functionality. These workforce management systems, which were developed with a user friendly, graphical interface and are based on open architecture, have been installed in various supermarket, retail, food service, and hospitality chains.
| • | Visual Labor Management Software |
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| • | Minute Man Labor Management Software |
Food Service Management Software—Legacy
Enterprise also offers Radiant’s Legacy Food Service Management Software. Radiant acquired the Food Service Management Software through its acquisition of Restaurant Management and Control Systems, Inc. in 1997. This software provides food service operators the ability to manage inventory, labor, operations, and reporting at the site through a client server based system.
| • | ReMACS Back Office Software |
Professional Services
The integration, design, implementation, application and installation of technology solutions are critical to Enterprise’s ability to effectively market its solutions. The following is a summary of some of the professional services Enterprise provides:
Consulting. Business consultants, systems analysts and technical personnel assist retailers in all phases of systems development, including systems planning and design, client-specific configuration of application modules and on-site implementation or conversion from existing systems.
Customization. Enterprise provides custom application development work for clients billed on a project or per diem basis. All customization remains the property of Enterprise.
Training. Enterprise has a formal training program available to its clients, which is provided on a per diem rate at Enterprise’s offices or at the client’s site.
Integration. Enterprise develops and performs implementation, interfaces and integration points to ensure clients achieve their ultimate business objectives.
Maintenance and Client Support
Enterprise offers client support on a 24-hour basis, a service that historically has been purchased by a majority of its clients and also entitles the client to product upgrades. In some cases, hardware support is provided by third parties. Enterprise will be able to remotely access its clients’ systems in order to perform quick diagnostics and provide on-line assistance. The annual support option is typically priced at a percentage of the software and hardware cost. Additionally, Enterprise will offer its clients software maintenance and unspecified software enhancements. Revenue from support and maintenance is recognized ratably over the term of the agreement.
Proprietary Rights
Radiant’s success and ability to compete is dependent in part upon its proprietary technology, including its software source code. To protect its proprietary technology, Radiant relies on a combination of trade secret, nondisclosure, copyright and patent law, which may afford only limited protection. In addition, effective copyright and trade secret protection may be unavailable or limited in certain foreign countries. Although Radiant relies on the limited protection afforded by such intellectual property laws, it also believes that factors such as the technological and creative skills of its personnel, new product developments, frequent product enhancements, name recognition and reliable maintenance are essential to establishing and maintaining a technology leadership position. Radiant presently has seven patents and five patents pending. The source code for Radiant’s various proprietary software products is protected both as a trade secret and as a copyrighted work. Radiant generally enters into confidentiality or license agreements with its employees, consultants and customers and generally controls access to and distribution of its software, documentation and other proprietary information. Although Radiant restricts its customers’ use of Radiant’s software and does not permit the resale, sublicense or other transfer of such software, there can be no assurance that unauthorized use of Radiant’s technology will not occur.
Despite the measures taken by Radiant to protect its proprietary rights, unauthorized parties may attempt to reverse engineer or copy aspects of Radiant’s products or to obtain and use information that Radiant regards as proprietary.
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Policing unauthorized use of Radiant’s products is difficult. In addition, litigation may be necessary in the future to enforce Radiant’s intellectual property rights, such as to protect Radiant’s trade secrets, to determine the validity and scope of Radiant’s and or others proprietary rights, or to defend against claims of infringement or invalidity. Such litigation could result in substantial costs and diversion of resources and could have a material adverse effect on Radiant’s business, operating results and financial condition.
Certain technology used in conjunction with Radiant’s products is licensed from third parties, generally on a non-exclusive basis. These licenses usually require Radiant to pay royalties and fulfill confidentiality obligations. Radiant believes that there are alternative sources for each of the material components of technology licensed by Radiant from third parties. However, the termination of any of these licenses, or the failure of the third-party licensors to adequately maintain or update their products, could result in a delay in Radiant’s ability to ship certain of its products while it seeks to implement technology offered by alternative sources. Any required alternative licenses could prove costly. Also, any such delay, to the extent it becomes extended or occurs at or near the end of a fiscal quarter, could result in a material adverse effect on Radiant’s business, operating results and financial condition. While it may be necessary or desirable in the future to obtain other licenses relating to one or more of Radiant’s products or relating to current or future technologies, there can be no assurance that Radiant will be able to do so on commercially reasonable terms or at all.
There can be no assurance that Radiant will not become the subject of infringement claims or legal proceedings by third parties with respect to current or future products. In addition, Radiant may initiate claims or litigation against third parties for infringement of Radiant’s proprietary rights or to establish the validity of Radiant’s proprietary rights. Defending against any such claim could be time-consuming, result in costly litigation, cause product shipment delays or force Radiant to enter into royalty or license agreements rather than dispute the merits of such claims. Moreover, an adverse outcome in litigation or similar adversarial proceedings could subject Radiant to significant liabilities to third parties, require the expenditure of significant resources to develop non-infringing technology, require disputed rights to be licensed from others or require Radiant to cease the marketing or use of certain products, any of which could have a material adverse effect on Radiant’s business, operating results and financial condition. To the extent Radiant desires or is required to obtain licenses to patents or proprietary rights of others, there can be no assurance that any such licenses will be made available on terms acceptable to Radiant, if at all. As the number of software products in the industry increases and the functionality of these products further overlaps, Radiant believes that software developers may become increasingly subject to infringement claims. Any such claims against Radiant, with or without merit, as well as claims initiated by Radiant against third parties, can be time consuming and expensive to defend, prosecute or resolve.
Employees
As of December 31, 2003, Radiant employed 853 persons. Following the split-off of its enterprise software business and the purchase of Aloha in January 2004, Radiant employed 842 persons as of March 4, 2004. None of Radiant’s employees is represented by a collective bargaining agreement nor has Radiant experienced any work stoppages. Radiant considers its relations with its employees to be good.
Radiant’s future operating results depend in significant part upon the continued service of its key technical, consulting and senior management personnel and its continuing ability to attract and retain highly qualified technical and managerial personnel. Competition for such personnel is intense, and there can be no assurance that Radiant will retain its key managerial or technical personnel or attract such personnel in the future. Radiant has at times experienced and continues to experience difficulty recruiting qualified personnel, and there can be no assurance that Radiant will not experience such difficulties in the future. Radiant, either directly or through personnel search firms, actively recruits qualified product development, consulting and sales and marketing personnel. If Radiant is unable to hire and retain qualified personnel in the future, such inability could have a material adverse effect on Radiant’s business, operating results and financial condition.
Available Information
Radiant maintains a website at www.radiantsystems.com. Radiant makes available free of charge its annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K on its website as soon as practicable after such reports are filed with the SEC. These filings can be accessed through the ‘Investor Relations’ page on Radiant’s
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website. Radiant’s common stock is traded on the Nasdaq National Market under the symbol “RADS.”
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 future business development activities, and are thus prospective. These statements appear in a number of places in this Annual Report and include all statements that are not statements of historical fact regarding intent, belief or current expectations of the Company, its directors or its officers with respect to, among other things: (i) the Company’s financing plans; (ii) trends affecting the Company’s financial condition or results of operations; (iii) the Company’s growth strategy and operating strategy; (iv) the Company’s new or future product offerings, and (v) the declaration and payment of dividends. The words “may,” “would,” “could,” “will,” “expect,” “estimate,” “anticipate,” “believe,” “intend,” “plans,” and similar expressions and variations thereof are intended to identify forward-looking statements. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, many of which are beyond the Company’s ability to control. Actual results may differ materially from those projected in the forward-looking statements as a result of various factors. Among the key risks, assumptions and factors that may affect operating results, performance and financial condition are the Company’s reliance on a small number of clients for a larger portion of its revenues, fluctuations in its quarterly results, ability to continue and manage its growth, liquidity and other capital resources issues, competition and the other factors discussed in detail in the Company’s filings with the Securities and Exchange Commission, as well as the “Risk Factors” section below and other places in this Report.
Risk Factors
In addition to the other information contained in this Report, the following risks should be considered carefully in evaluating the Company and its business.
The Company has a history of operating losses and an investment in the Company’s common stock is extremely speculative and involves a high degree of risk.
The Company reported a net loss of $47.7 million in 2003. As a result, there can be no assurance that the Company will be able to achieve and maintain profitability for 2004 and beyond. The Company anticipates that completing its products under development, and marketing existing products and new releases will require additional ongoing expenditures, while the majority of the Company’s revenues are not guaranteed. Accordingly, an investment in the Company’s common stock is extremely speculative in nature and involves a high degree of risk.
The Company’s revenues are significantly concentrated in the convenience store market and demand for its products and services could be disproportionately affected by instability or a downturn in the convenience store market.
Approximately 48.6%, 57.1% and 53.4% of the Company’s total revenues in 2003, 2002 and 2001, respectively, was attributed to the convenience store market, which is dependent on the domestic and international economy. The convenience store market is affected by a variety of factors, including global and regional instability, governmental policy and regulation, natural disasters, consumer buying habits, consolidation in the petroleum industry, war and general
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economic conditions. Adverse developments in the convenience store market could materially and adversely affect the Company’s business, operating results and financial condition. In addition, the Company believes the purchase of its products is relatively discretionary and generally involves a significant commitment of capital, because purchases of the Company’s products are often accompanied by large scale hardware purchases. As a result, although the Company believes its products can assist convenience stores in a competitive environment, demand for the Company’s products and services could be disproportionately affected by instability or downturns in the convenience store market which may cause clients to exit the industry or delay, cancel or reduce planned for information management systems and software products.
The Company may be required to defer recognition of revenues on its software products which may have a material adverse effect on its financial results.
The Company may be required to defer recognition of revenues for a significant period of time after entering into a license agreement for a variety of reasons, including:
| • | transactions that include both currently deliverable software products and software products that are under development or other undeliverable elements; |
| • | transactions where the client demands services that include significant modifications, customizations or complex interfaces that could delay product delivery or acceptance; |
| • | transactions that involve acceptance criteria that may preclude revenue recognition or if there are identified product-related issues, such as performance issues; and |
| • | transactions that involve payment terms or fees that depend upon contingencies. |
Because of the factors listed above and other specific requirements under generally accepted accounting principles (“GAAP”) for software revenue recognition, the Company must have very precise terms in its license agreements in order to recognize revenue when it initially delivers software or performs services. Although the Company has a standard form of license agreement that meets the criteria under GAAP for current revenue recognition on delivered elements, it negotiates and revises these terms and conditions in some transactions. Negotiation of mutually acceptable terms and conditions can extend the sales cycle, and sometimes result in deferred revenue recognition well after the time of delivery or project completion.
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The Company’s failure to effectively manage its growth could have a material adverse effect on the Company’s business, operating results and financial condition.
The growth in the size and complexity of the Company’s business and the expansion of its product lines and its client base may place a significant strain on the Company’s management and operations. An increase in the demand for the Company’s products could strain the Company’s resources or result in delivery problems, delayed software releases, slow response time, or insufficient resources for assisting clients with implementation of the Company’s products and services, which could have a material adverse effect on the Company’s business, operating results and financial condition. The Company anticipates that continued growth, if any, will require it to recruit, hire and assimilate a substantial number of new employees, including consulting, product development, sales and marketing personnel.
The Company’s ability to compete effectively and to manage future growth, if any, also will depend on its ability to continue to implement and improve operational, financial and management information systems on a timely basis and to expand, train, motivate and manage its work force, particularly its direct sales force and consulting services organization. There can be no assurance that the Company will be able to manage any future growth, and any failure to do so could have a material adverse effect on the Company’s business, operating results and financial condition.
The Company may be unable to find suitable acquisition candidates and may not be able to successfully integrate businesses that may be acquired into the Company’s operations.
As part of its operating history and growth strategy, the Company has acquired other businesses. In the future, the Company may continue to seek acquisition candidates in selected markets and from time to time it engages in exploratory discussions with suitable candidates. There can be no assurance, however, that the Company will be able to identify and acquire targeted businesses or obtain financing for such acquisitions on satisfactory terms. The process of integrating acquired businesses into the Company’s operations may result in unforeseen difficulties and may require a disproportionate amount of resources and management attention. In particular, the integration of acquired technologies with the Company’s existing products could cause delays in the introduction of new products. In connection with future acquisitions, the Company may incur significant charges to earnings as a result of, among other things, the write-off of purchased research and development. Future acquisitions may be financed through the issuance of common stock, which may dilute the ownership of the Company’s shareholders, or through the incurrence of additional indebtedness. Furthermore, there can be no assurance that competition for acquisition candidates will not escalate, thereby increasing the costs of making acquisitions or making suitable acquisitions unattainable.
The Company’s revenues and results of operations are difficult to predict and may fluctuate substantially from quarter to quarter which could negatively affect the trading price of the Company’s common stock.
The Company’s revenues and results of operations are difficult to predict and may fluctuate substantially from quarter to quarter. These fluctuations can adversely affect the Company’s business and the market price of its stock. License revenues in any quarter depend substantially upon the Company’s total contracting activity and its ability to recognize revenues in that quarter in accordance with its revenue recognition policies. The Company’s contracting activity is difficult to forecast for a variety of reasons, including the following:
| • | a significant portion of the Company’s license agreements are typically completed within the last few weeks of the quarter; |
| • | the Company’s sales cycle is relatively long and varies as a result of the Company’s expanding its product line and broadening its software product applications to cover a client’s overall business; |
| • | the size of license transactions can vary significantly; |
| • | the possibility that economic downturns are characterized by decreased product demand, price erosion, technological shifts, work slowdowns and layoffs may substantially reduce contracting activity; |
| • | clients may unexpectedly postpone or cancel anticipated system replacement or new system evaluations due to |
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changes in their strategic priorities, project objectives, budgetary constraints or company management;
| • | client evaluations and purchasing processes vary significantly from company to company, and a client’s internal approval and expenditure authorization process can be difficult and time consuming, even after selection of a vendor; |
| • | changes in the Company’s pricing policies and discount plans may affect client purchasing patterns; |
| • | the number, timing and significance of the Company’s and its competitors’ software product enhancements and new software product announcements may affect purchase decisions; and |
| • | the introduction of new research and development projects requires the Company to increase significantly its operating expenses to fund greater levels of product development and to develop and commercialize additional products and services. To the extent that such expenses precede or are not subsequently followed by increased revenues, the Company’s business, results of operations and financial condition may be materially and adversely affected. |
In addition, the Company’s expense levels, operating costs and hiring plans are based on projections of future revenues and are relatively fixed. If the Company’s actual revenues fall below expectations, its net income is likely to be disproportionately adversely affected.
Due to all of the foregoing factors, in some future quarters the Company’s operating results may fall below the expectations of securities analysts and investors. In such event, the trading price of the Company’s common stock would likely be materially and adversely affected.
The Company is highly dependent on a limited number of clients, the loss of one or more of which could have a material adverse effect on its business.
The Company sells systems and services to a limited number of large clients. During 2003, approximately 24.3% of the Company’s revenues were derived from five clients while, during 2002 and 2001 approximately 27.9% and 32.3%, respectively, of the Company’s revenues were derived from five clients. There can be no assurance that the loss of one or more of these clients will not have a material adverse effect on the Company’s business, operating results and financial condition.
The Company has traditionally depended on its installed client base for future revenues from services and licenses of other products. If existing clients fail to renew their maintenance agreements, the Company’s revenues could decrease. The maintenance agreements are generally renewable annually at the option of the clients and there are no mandatory payment obligations or obligations to license additional software. Therefore, current clients may not necessarily generate significant maintenance revenues in future periods. In addition, clients may not purchase additional products or services. Any downturn in software license revenue could result in lower services revenues in future quarters.
The Company’s success will depend on its ability to develop new products and to adapt to rapid technological change.
The Company has a substantial ongoing commitment to research and development. In this regard, the Company is currently designing, coding and testing a number of new products and developing expanded functionality of its current products that will be important for the Company to remain competitive. The types of products sold by the Company are subject to rapid and continual technological change. Products available from the Company, as well as from its competitors, have increasingly offered a wider range of features and capabilities. The Company believes that in order to compete effectively in selected vertical markets, it must provide compatible systems incorporating new technologies at competitive prices. There can be no assurance that the Company will be able to continue funding research and development at levels sufficient to enhance its current product offerings or will be able to develop and introduce on a timely basis new products that keep pace with technological developments and emerging industry standards and address the evolving needs of clients. There can also be no assurance that the Company will not experience difficulties that will result in delaying or preventing the successful development, introduction and marketing of new products in its existing markets or that its new products and product enhancements will adequately meet the requirements of the marketplace or
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achieve any significant degree of market acceptance. Likewise, there can be no assurance as to the acceptance of Company products in new markets, nor can there be any assurance as to the success of the Company’s penetration of these markets, or to the revenue or profit margins with respect to these products. The inability of the Company, for any reason, to develop and introduce new products and product enhancements in a timely manner in response to changing market conditions or client requirements could materially adversely affect the Company’s business, operating results and financial condition.
In addition, the Company strives