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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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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:

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:

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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:

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Melbourne, Prague, and Singapore and representation in the United Kingdom and Spain.

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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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:

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The following is a summary of the features of the Enterprise Productivity Suite:

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.

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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.

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:

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:

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changes in their strategic priorities, project objectives, budgetary constraints or company management;

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 to achieve compatibility between the Company’s products and retail systems the Company believes are or will become popular and widely adopted. The Company invests substantial resources in development efforts aimed at achieving such compatibility. Any failure by the Company to anticipate or respond adequately to technology or market developments could materially adversely affect the Company’s business, operating results and financial condition.

The Company operates in a highly competitive market and can make no assurance that it will be able to compete successfully against its current or future competitors.

The market for retail information systems is intensely competitive. The Company believes the principal competitive factors in such market are product quality, reliability, performance and price, vendor and product reputation, financial stability, features and functions, ease of use and quality of support and degree of integration effort required with other systems. A number of companies offer competitive products addressing certain of the Company’s target markets. See “-Competition.” In addition, the Company believes that new market entrants may attempt to develop fully integrated systems targeting the retail industry. In the market for consulting services, the Company competes with Accenture, Ltd., The Cap Gemini Ernst & Young Group, Electronic Data Systems, Inc., International Business Machines and other systems integrators. Many of the Company’s existing competitors, as well as a number of potential new competitors, have significantly greater financial, technical and marketing resources than the Company. There can be no assurance that the Company will be able to compete successfully against its current or future competitors or that competition will not have a material adverse effect on the Company’s business, operating results and financial condition.

Additionally, the Company competes with a variety of hardware and software vendors. Some of the Company’s competitors may have advantages over the Company due to their significant worldwide presence, longer operating and product development history, and substantially greater financial, technical and marketing resources. If competitors offer more favorable payment terms and/or more favorable contractual implementation terms or guarantees, the Company may need to lower prices or offer other favorable terms in order to compete successfully. Any such changes would be likely to reduce margins.

The Company’s increased investment in the international market could expose it to risks in addition to those experienced in the United States.

The Company’s international revenues represented 14.5% or $16.2 million of the Company’s total revenues in 2003 and the Company continued to invest in expanding its international operations. The global reach of the Company’s business could cause it to be subject to unexpected, uncontrollable and rapidly changing events and circumstances in addition to those experienced in United States locations. The following factors, among others, present risks that could have an adverse impact on the Company’s business operating results and financial condition:

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The loss of our key personnel could have a material adverse effect on the Company.

The Company’s future success depends in part on the performance of its executive officers and key employees. The Company does not have in place employment agreements with any of its executive officers. The loss of the services of any of its executive officers or other key employees could have a material adverse effect on the business, operating results and financial condition of the Company.

The Company’s inability to attract, hire or retain the necessary technical and managerial and finance personnel could have a material adverse effect on the Company’s business, operating results and financial condition.

The Company is heavily dependent upon its ability to attract, retain and motivate skilled technical and managerial personnel, especially highly skilled engineers involved in ongoing product development and consulting personnel who assist in the development and implementation of the Company’s total business solutions. The market for such individuals is intensely competitive. Due to the critical role of the Company’s product development and consulting staffs, the inability to recruit successfully or the loss of a significant part of its product development or consulting staffs would have a material adverse effect on the Company. The software industry is characterized by a high level of employee mobility and aggressive recruiting of skilled personnel. There can be no assurance that the Company will be able to retain its current personnel, or that it will be able to attract, assimilate or retain other highly qualified technical and managerial personnel in the future. The inability to attract, hire or retain the necessary technical and managerial personnel could have a material adverse effect upon the Company’s business, operating results and financial condition.

The Company’s success and ability to compete is dependent upon its ability to protect its proprietary technology.

The Company’s success and ability to compete is dependent in part upon its ability to protect its proprietary technology. The Company relies on a combination of patent, copyright and trade secret laws and non-disclosure agreements to protect this proprietary technology. The Company enters into confidentiality and non-compete agreements with its employees and license agreements with its clients and potential clients, which limits access to and distribution of its software, documentation and other proprietary information. There can be no assurance that the steps taken by the Company to protect its proprietary rights will be adequate to prevent misappropriation of its technology or that the Company’s competitors will not independently develop technologies that are substantially equivalent or superior to the Company’s technology. In addition, the laws of some foreign countries do not protect the Company’s proprietary rights to the same extent as do the laws of the United States.

Certain technology used in conjunction with the Company’s products is licensed from third parties, generally on a non-exclusive basis. The termination of any such licenses, or the failure of the third-party licensors to adequately maintain or update their products, could result in delay in the Company’s ability to ship certain of its products while it seeks to implement technology offered by alternative sources, and any required replacement licenses could prove costly. While it may be necessary or desirable in the future to obtain other licenses relating to one or more of the Company’s products or relating to current or future technologies, there can be no assurance that the Company will be able to do so on commercially reasonable terms or at all.

The Company’s executive officers own a significant amount of the Company’s common stock and will be able to exercise significant influence on matters requiring shareholder approval.

The Company’s executive officers collectively owned approximately 41.3% and 33.3% of the Company’s outstanding common stock as of December 31, 2003 and March 4, 2004, respectively. Consequently, together they continue to be able to exert significant influence over the election of the Company’s directors, the outcome of most corporate actions requiring shareholder approval and the business of the Company.

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The market price for the Company’s common stock is extremely volatile and the Company does not expect to pay dividends on its common stock in the foreseeable future.

The market price for the Company’s common stock has experienced substantial price volatility since its initial public offering in February 1997 and such volatility may continue in the future. Quarterly operating results of the Company or of other companies participating in the computer-based products and services industry, changes in conditions in the economy, the financial markets of the computer products and services industries, natural disasters or other developments affecting the Company or its competitors could cause the market price of the common stock to fluctuate substantially. In addition, the stock market has experienced extreme price and volume fluctuations that have affected the market price of many technology stocks in particular and that have often been unrelated or disproportionate to the operating performance of these companies. For the foreseeable future, it is expected that earnings, if any, generated from the Company’s operations will be used to finance the growth of its business, and that no dividends will be paid to holders of the common stock.

The Company’s Articles of Incorporation contain anti-takeover provisions which could have the effect of making it more difficult for a third party to acquire control of the Company.

The Company’s Amended and Restated Articles of Incorporation authorize the Board of Directors to issue up to 5,000,000 shares of preferred stock and to fix the rights, preferences, privileges and restrictions, including voting rights, of the preferred stock without further vote or action by the Company’s shareholders. The rights of the holders of common stock will be subject to, and may be adversely affected by, the rights of the holders of any preferred stock that may be issued in the future. While the Company has no present intention to issue additional shares of preferred stock, such issuance, while providing desired flexibility in connection with possible acquisitions and other corporate purposes, could have the effect of making it more difficult for a third party to acquire a majority of the outstanding voting stock of the Company. In addition, certain provisions of the Company’s Articles of Incorporation and Bylaws may discourage proposals or bids to acquire the Company. This could limit the price that certain investors might be willing to pay in the future for shares of Common Stock. The Company’s Articles of Incorporation divide the Board of Directors into three classes, as nearly equal in size as possible, with staggered three-year terms. One class will be elected each year. The classification of the Board of Directors could have the effect of making it more difficult for a third party to acquire control of the Company. The Company is also subject to certain provisions of the Georgia Business Corporation Code which relate to business combinations with interested shareholders.

Item 2.    Properties.

Domestic offices

The Company currently has leases for space in two principal facilities occupying approximately 150,000 square feet in Alpharetta, Georgia. One of the lease agreements expires in 2010 and the other in 2013.

The Company has an additional lease agreement for a building which houses its Integration Operations, with approximately 102,000 square feet. This lease agreement, also in Alpharetta, Georgia, expires in 2011.

International offices

The Company currently has leases for space in five principal facilities occupying approximately 18,000 square feet in Geelong, Australia. The lease agreements expire in 2004 and 2005. Additionally, to satisfy other sales, service and support and product development needs, the Company leases space in Singapore and Prague, Czech Republic.

The Company believes its facilities are adequate for its current needs and does not anticipate any material difficulty in securing facilities for new space, if needed.

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Item 3.    Legal Proceedings.

There are no material pending legal proceedings to which the Company is a party or of which any of its properties are subject; nor are there material proceedings known to the Company to be contemplated by any governmental authority. There are no material proceedings known to the Company, pending or contemplated, in which any director, officer or affiliate or any principal security holder of the Company, or any associate of any of the foregoing is a party or has an interest adverse to the Company.

Item 4.    Submission of Matters to a Vote of Security Holders.

The Company held a Special Meeting of Shareholders on January 30, 2004. The purpose of the Special Meeting was to consider and vote on a proposal to approve the separation of Radiant’s enterprise software business in a split-off transaction to Erez Goren, who was, at the time of the vote, Co-Chairman of the Radiant board of directors and Radiant’s Co-Chief Executive Officer. All shareholders of record (other than Erez Goren, Alon Goren and members of their immediate family) as of the close of business on November 28, 2003, were entitled to vote at the special meeting. Of the 17,896,404 disinterested shares of common stock outstanding and entitled to vote at the special meeting, 13,314,851 shares were represented at the meeting in person or by proxy and approximately 70% voted in favor of the transaction. The voting results were as follows:

The 12, 717,907 shares of common stock that voted for the transaction represented approximately 70% of the total amount of disinterested shares issued and outstanding and entitled to vote at the special meeting. Approval of a majority of the shares held by disinterested shareholders was a condition to the closing of the transaction.

PART II

Item 5.    Market for Registrant’s Common Equity and Related Stockholder Matters.

The Company’s Common Stock has traded on The Nasdaq National Market under the symbol “RADS” since the Company’s initial public offering on February 13, 1997. Prior to that time, there was no public market for the Common Stock. The following table sets forth the high and low bid prices per share for the Common Stock for the periods indicated as reported by The Nasdaq National Market.

As of March 4, 2004 there were 176 holders of record of the Common Stock. Management of the Company believes that there are in excess of 4,900 beneficial holders of its Common Stock.

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The Company currently anticipates that all of its earnings will be retained for development of the Company’s business and does not anticipate paying any cash dividends in the foreseeable future. Future cash dividends, if any, will be at the discretion of the Company’s Board of Directors and will depend upon, among other things, the Company’s future earnings, operations, capital requirements and surplus, general financial condition, contractual restrictions and such other factors as the Board of Directors may deem relevant.

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Item 6.    Selected Consolidated Financial Data.

The following table sets forth selected consolidated financial data of the Company for the periods indicated, which data has been derived from the audited consolidated financial statements of the Company. This selected consolidated financial data should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements of the Company and the notes thereto included elsewhere herein.

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Item 7.    Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion should be read in conjunction with the consolidated financial statements of the Company (including the notes thereto) contained in Item 8 of this Report.

Overview

We are a leading provider of retail technology focused on the development, installation and delivery of solutions for managing site operations of retail and food service businesses. Our point-of-sale and back office technology is designed to enable businesses to deliver exceptional client service while improving profitability. We offer a full range of products that are tailored to specific retail and food service market needs including hardware, software and professional services. The Company offers best-of-breed solutions designed for ease of integration in managing site operations enabling operators to improve customer service and reduce costs. We believe our approach to site operations is unique in that our product solutions provide enterprise visibility and control at the site, field, and the headquarters levels.

Prior to April 1, 2003, the Company operated through five primary reportable segments (i) Petroleum and Convenience Store (ii) Hospitality and Food Service (iii) Entertainment (iv) International and (v) General Retail as the Company’s product applications have historically been focused on these segments and these markets require many of the same product features and functionality. During the second quarter 2003, the Company restructured its business units and as a result, operated during 2003 under two 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, while 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.

Significant Trends and Developments in the Business

Economic Conditions

The Company has experienced both direct and indirect impacts from declining global economic conditions over the past three years. The retail industry has remained cautious of investment in information technology during difficult economic times which has resulted in reduced budgets and spending. This has impacted us through reduced revenues, elongated selling cycles, delay in product implementation, and increased competitive margin pressure. While these impacts have occurred in recent periods, the longer term impact has been on technology spending habits. We believe that general economic conditions are showing concrete signs of improvement, however, we also recognize that buying patterns have changed. Demand has shifted from large scale enterprise wide investments to more targeted investments with quicker deployment requirements. As a result, we expect our revenue base to shift from primarily large dollar purchases by a limited number of customers to a mix of smaller sized purchases by an increased number of customers in a given period. In addition, pricing has been cut by various competitors creating the potential for long-term reductions in product margins. Our expectations for future periods are based on our current view that the major global markets are experiencing an improvement in economic conditions. Given the uncertain nature of the economic environment, these trends could

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change quickly and have a direct impact on the results of the Company.

Changes in Business Performance

The Company entered 2003 anticipating revenue growth over 2002 results and increased profits based on planned spending by existing customers and projected closure of deals in the sales pipeline. Beginning in the first quarter ended March 31, 2003 and continuing through the year, the Company experienced a decline in revenues and negative operating results. At the end of the first quarter the Company updated market expectations for the change in conditions and the uncertainty in results for the year. The Company attributes this decline to slower than anticipated acceptance and implementations of the Radiant 6e Enterprise Productivity Suite by both new and existing clients as well as the global economic downturn and the resulting delay in purchases by new and existing clients. In response to these conditions, during the latter part of the first quarter and through the second quarter of 2003, the Company, in addition to other measures, downsized its personnel by approximately 5.0% in order to reduce its operating costs. During the second quarter, the Company established a restructuring reserve of approximately $211,000 for purposes of employee severance related to a downsizing of the Company’s workforce. The Company paid all amounts under this reserve by the end of the second quarter 2003 and had no further liabilities related to this action.

Restructuring of Business Segments

During the second quarter of 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 markets. At the time of the restructuring, management determined it was more likely than not that a portion of the business, the Enterprise Software Systems Business, would be sold or otherwise disposed. The Company performed an interim impairment test. As a result of this impairment test, it was determined that assets were impaired and therefore the Company took an impairment charge in the second quarter of 2003. Details of these non-recurring charges are described in the year-over-year comparison included below under “Results of Operations.”

Disposition of the Enterprise Software Systems Segment

On October 13, 2003 the Company announced it had entered into a definitive agreement with Erez Goren, the Company’s then Co-Chairman and Co-Chief Executive Officer, in connection with the Company’s previously announced plan to split-off its enterprise software business. The Board of Directors authorized and approved the transaction based on the recommendation of a special committee comprised of the Company’s independent directors. On January 30, 2004 the split-off transaction received the approval of approximately 70% of the disinterested shareholders of Radiant at the special meeting of shareholders on that date and the transaction was completed as of January 31, 2004. 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 this 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. Under certain customer agreements Radiant has retained the obligation to perform contract obligations that have been sub-contracted to the new company. As further described in note 16 to the consolidated financial statements, the separation agreement provides for a shared liability for contract claims of specified contracts over the initial 18 month term of the separation. Management does not believe that liabilities under these agreements are likely but they do represent a potential risk for the Company. The Company believes that the disposition of the Enterprise Software Systems segment will materially improve the Company’s near term profits and cash flow while preserving the opportunity to sell and market the Enterprise Productivity Software Suite through a re-seller agreement with the new entity.

Radiant has agreed to sublease a portion of Radiant’s property, currently under an operating lease, to BlueCube. This

sublease will expire concurrently with Radiant’s operating lease on the property in January 2013. BlueCube has the right to early termination beginning on January 31, 2007, and must provide Radiant with an 18 month notice that early termination will occur. Aggregate future minimum lease payments under this sublease agreement as of January 31, 2004, are approximately: $1.2 million in 2004, $1.3 million in 2005, $1.5 million for years 2006 through 2010, and a total of $3.0 million over the remaining 25 months of the lease. These amounts are included in Radiant’s operating lease disclosure at December 31, 2003 (see Note 10). In conjunction with this sublease agreement, Radiant and BlueCube entered into a right of refusal and option agreement pertaining to real property currently owned by Radiant and adjacent to the property being subleased by BlueCube. Under this agreement, BlueCube has an option to purchase the real property at a stated value, which management believes is the fair value at the time of the split-off. BlueCube has the right of refusal if Radiant obtains an offer to sell the real property to another party. The exercising of this right will result in BlueCube purchasing the real property at a price based on a formula and the third-party offer obtained by Radiant. This agreement is subordinate to a right of first refusal with a third-party.

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Acquisition of Aloha Technologies, Inc.

On December 15, 2003 the Company announced that it had entered into a definitive agreement to acquire Aloha Technologies, a leading provider of point-of-sale (POS) systems for the hospitality/food service industry. The new division is expected to be one of the premier technology providers for the hospitality industry, with key personnel from both Radiant and Aloha continuing to serve the industry. With this expansion, Radiant intends 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. With proven experience in large-scale enterprise deployments and an expansive reseller channel, Radiant will be well positioned to offer the leading solution for quick-service, table-service, and contract food service operators, from the largest multi-national chains to single-site businesses. On January 13, 2004 the Company completed the acquisition of substantially all of the assets of Aloha Technologies for approximately $49 million. Under the terms of the purchase agreement, the purchase price consisted of $11 million in cash, a five-year note in the principal amount of $19 million (subject to a post-closing adjustment), a one-year note in the principal amount of $1.7 million, 2,353,846 shares of restricted Radiant common stock at a market price of $6.50 on the announcement date, and the assumption of Aloha’s accounts payable, contractual obligations and certain other liabilities. Management anticipates the acquisition to be accretive and for the future cash flows to support the cash requirements of the notes associated with the transaction.

Results of Operations

The following table sets forth, for the periods indicated, the percentage relationship of certain statement of operation items to total revenues:

Year ended December 31, 2003 compared to year ended December 31, 2002

System Sales. The Company derives the majority of its revenues from sales and licensing fees of its headquarters-based, back office management, and point-of-sale solutions. During the year the Company experienced a significant reduction in system sales with a decrease of 41.9% to $47.3 million for the year ended December 31, 2003 (“2003”) from $81.4 million for the year ended December 31, 2002 (“2002”). This decrease was primarily the result of decreased spending for large information technology initiatives by the Company’s customers compared to a high level of spending in the previous year, as well as slower than expected acceptance and implementations of the Radiant 6e Enterprise Productivity Suite by both new and existing clients. During 2002 the Company had a large number of systems shipments associated with implementation projects, including record revenue in the fourth quarter of the year. In 2003 several implementations with

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customers were put on hold due to economic uncertainties and budget constraints, while new purchase decisions were delayed by many of the large retailers in the industry.

Client Support, Maintenance and Other Services. The Company also derives revenues from client support, maintenance and other services including training, custom software development, project management and implementation services (professional services). The majority of these revenues is from support and maintenance and are structured on a recurring revenue basis associated with installed sites in the field, while additional professional services are associated with projects related to new sales or implementation of products. Services revenues were relatively flat as detailed below:

(1) In accordance with EITF 01-14 reimbursements received for out-of-pocket expenses are reported as revenue with associated expenses reported as cost of sales for client support, maintenance and other services.

Business Segment Revenues. Total revenues in the Store Systems segment decreased 20.8% to $93.8 million in 2003 from $118.5 million in 2002. The decline in revenue is primarily due to reduced systems sales in the Company’s core industries during the year due to economic uncertainties. The segment accounted for 83.9% of the Company’s total revenues in 2003 compared to 81% in 2002. Revenues in the Enterprise Software Systems segment decreased 35.0% to $18.0 million in 2003 from $27.8 million in 2002. The decrease was primarily due to a reduction in software license sales for existing products that were sold on an up front license basis in addition to delays in deployments of products that were sold under the subscription revenue model. The segment accounted for 16.1% of the Company’s total Revenues in 2003 compared to 19% in 2002.

Cost of System Sales. Cost of system sales consists primarily of hardware and peripherals for site-based systems, amortization of software costs and labor. All costs, other than amortization, are expensed as products are shipped, while software amortization is expensed at the greater of straight line amortization or proportion to sales volume. Cost of system sales decreased 33.6% during 2003 to $28.8 million compared to $43.3 million for 2002. This decrease was directly attributable to reduced system sales in 2003 over 2002 as well as decreased amortization of capitalized software and acquired software technology primarily related to the impairment of capitalized software and acquired software technology during the fiscal period 2003 as more fully described in Notes 3 and 5 to the consolidated financial statements. Cost of system sales as a percentage of system revenues increased to 60.8% in 2003 from 53.2% in 2002. This increase was due primarily to the allocation of certain fixed costs over a smaller revenue base due to the decrease in system sales revenues over the prior periods, offset by the decrease in the amortization of capitalized software costs and acquired technology.

Impairment of Capitalized Software and Acquired Software Technology—The Company recorded charges of $17.6 million as a combined result of charges totaling $16.2 million for the impairment of capitalized software costs associated with the Enterprise Productivity Software, a charge of $734,000 for the impairment of acquired software technology associated with the HotelTools software, a charge of $535,000 associated with capitalized software costs associated with specific software modules that were no longer planned for active sale, and a charge of $169,000 for the impairment of the acquired software technology related to the ICON software source code which is recorded as a component of cost of revenues in the condensed consolidated statements of operations.

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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 12.6% to $43.9 million for 2003 from $39 million for 2002 as detailed in the table below:

(1) In accordance with EITF 01-14 reimbursements received for out-of-pocket expenses are reported as revenue with associated expenses reported as cost of sales for client support, maintenance and other services.

The increase in support and maintenance costs was primarily due to increased maintenance costs associated with the general release of the Radiant 6e Enterprise Productivity Suite in March 2002. These costs are expected to continue as the product matures through installations with a wide variety of customers in the field. This increase was partially off-set by a decline in hardware maintenance costs of approximately $1.0 million due to reduced volume, efficiency improvements and product quality improvements. The largest cost increase came from the addition of professional services headcount during the year in advance of anticipated professional services revenues relating to future sales and implementations of the Radiant 6e Enterprise Productivity Suite and for investments associated with the early implementations and adoption of the Enterprise Productivity Software. In addition, the Company made services investments in specific brand template development activities in the food service industry. The total cost of client support, maintenance and other services as a percentage of client support, maintenance and other services revenues increased to 68% for 2003 from 60% in 2002, as a result of the professional services investments, slower than anticipated acceptance and future implementations of the Radiant 6e Enterprise Productivity Suite.

Product Development Expenses. Product development expenses consist primarily of wages and materials expended on product development efforts excluding any development expenses related to associated revenues which are included in costs of client support, maintenance and other services. During 2003, product development expenses increased 8.6% to $15.7 million from $14.5 million for 2002. This increase was due primarily to increased wage expense associated with increased headcount and merit pay increases in the fourth quarter 2002 which were fully reflected in the fiscal period 2003. This increase was partially offset by additional product development personnel assigned to software maintenance efforts due to increased software maintenance requirements associated with the release of the Radiant 6e Enterprise Productivity Suite in March 2002. These software maintenance costs are included in cost of client support, maintenance and other services. As more fully described in Note 3 to the consolidated financial statements, during 2003 the Company recorded capitalized software development costs of $5.5 million, or 26% of its total product development costs, as compared to approximately $5.9 million, or 28.9% of its total product development costs for 2002. Product development expenses as a percentage of total revenues increased to 14.1% in 2003 compared to 9.9% in 2002. This percentage increase was due to the Company’s continued expenditures in the development efforts of Radiant 6e Enterprise Productivity Suite and due to the decline in total revenues.

Sales and Marketing Expenses. Sales and marketing expenses decreased 21% to $16.7 million during 2003 from $21.1 million in 2002, due primarily reduction in the sales force and reduced commission expense in line with the reduced sales volume. As part of the cost reductions in the business, the Company aligned the size of the sales force with the available opportunity set in the market. Sales and marketing expenses as a percentage of total revenues remained consistent at approximately 15% for 2003 and 2002, as sales and marketing costs decreased at the same pace as revenues.

Depreciation and Amortization. Depreciation and amortization expenses decreased 13.6% to $4.3 million during 2003 compared to $5.0 million during 2002. The decrease was due primarily to the retirement of certain fully depreciated fixed

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assets during 2002 with limited fixed asset additions during 2003. Depreciation and amortization as a percentage of total revenues increased to 3.9% for 2003 from 3.4% in 2002 due to the decline in total revenues.

Impairment of TriYumf Asset. During the second quarter 2003 the Company recorded a charge of $10.6 million for the impairment of the TriYumf Asset. This was the result of a charge of $14.3 million for the TriYumf Asset, reduced by $3.7 million of deferred revenues associated with Yum! Brands Agreement.

Impairment of Goodwill. As a result of an interim impairment test performed during the second quarter 2003 the Company recorded charges totaling $6.2 million for the impairment of goodwill. This was the result of a charge of $2.3 million for the impairment of goodwill associated with the Company’s Hospitality and Food Service business unit, and a charge of $3.9 million for the impairment of goodwill associated with the Company’s International business unit.

Non-recurring Charges. During 2003, the Company recorded an additional non-recurring charge of approximately $1.0 million. This charge related to actual lease settlement fees associated with the closure of one of the California facilities in 2001, as well as management’s estimate of settlement fees, recorded at the minimum amount of a probable range, associated with a second California facility.

General and Administrative Expenses. General and administrative expenses increased 4.6% during 2003 to $13.4 million from $12.8 million during 2002. This increase was due primarily to the reinstatement during the fourth quarter of 2002 of the salaries previously forfeited by the Company’s senior leadership team during the fourth quarter 2001 as well as increased costs for insurance and compliance activities. This increase was offset by the headcount reductions as a result of the downsizing during the second quarter 2003. General and administrative expenses as a percentage of total revenues were 12% and 8.8% for 2003 and 2002, respectively.

Interest Income, Net. Net interest income decreased 19.8% to $605,000 during 2003, compared to net interest and other income of $754,000 for 2002. The Company’s net interest income includes interest income derived from the investment of its cash and cash equivalents, less interest expense incurred on its long-term debt. The decrease in net interest income resulted primarily from a decrease in the Company’s weighted average interest rate it received on cash balances in 2003 compared to 2002 and the decrease in the average cash balance in 2003 compared to 2002.

Income Tax Provision. The Company recorded an income tax provision of $1.7 million, or an effective tax rate of 3.8% in 2003 compared to a tax provision of $4.6 million, or an effective tax rate of 41.4% in 2002. No tax benefit was recorded on the 2003 loss due to the uncertainty of realizing the benefit of the net operating losses generated during the year. In addition, as part of the provision for taxes a $1.2 million reserve was placed on existing tax assets due to the uncertainty of realizing future benefit. At December 31, 2003, a valuation allowance has been established for all net deferred tax assets. Realization is dependent upon generating sufficient taxable income in future periods. Although realization is not currently assured, in the future, should management determine that realization of these losses is more likely than not, the tax benefit will be realized and the Company’s effective tax rate will be reduced. The remaining tax provision represents various foreign and state income taxes.

Net (Loss) Income. Net loss for 2003 was $47.7 or $1.71 per diluted share, a decrease of $54.3 million, or $1.94 per diluted share, compared to net income of $6.5 million, or $.23 per diluted share, for 2002.

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Year ended December 31, 2002 compared to year ended December 31, 2001

System Sales. The Company derives the majority of its revenues from sales and licensing fees of its headquarters-based, back office management, and point-of-sale solutions. System sales increased 14.3% to $81.4 million for the year ended December 31, 2002 (“2002”), compared to $71.3 million for the year ended December 31, 2001 (“2001”). This increase was primarily the result of increased sales to new and existing customers. Specifically, the Company’s international system sales grew to $11.4 million, or 13.9% of the Company’s total system sales in 2002 from $7.3 million, or 10.3% of the Company’s total system sales in 2001. Additionally, during 2001 the Company experienced a significant decline in system sales. The Company attributed this decline primarily to the global economic environment and the product transition the Company was undertaking in advance of the general release of the Radiant 6e Enterprise Productivity Suite.

Client Support, Maintenance and Other Services. The Company also derives revenues from client support, maintenance and other services including training, custom software development, project management and implementation services (professional services). The majority of these revenues is from support and maintenance and are structured on a recurring revenue basis associated with installed sites in the field, while additional professional services are associated with projects related to new sales or implementation of the product.

During 2002 software support and maintenance revenue as well as hardware maintenance revenue increased due to the increase of installed sites from sales to new and existing customers. This increase was partially off set by a decline in professional services. This decline was due primarily to the completion of several large services projects in the year that were not replaced with new revenue producing projects.

Business Segment Revenues. Total revenues in the Store Systems segment decreased 2.1% to $118.5 million in 2002 from $121 million in 2001. The decline in revenue is primarily due to reduced sales to new customers due to weak economic conditions. The segment accounted for 81% of the Company’s total Revenues in 2002 compared to 91.7% in 2001. Revenues in the Enterprise Software Systems segment increased 154% to $27.7 million in 2002 from $10.9 million in 2001. The increase was primarily due to increased software license sales of the Company’s client server based back office software products that were sold on an up front license basis. The segment accounted for 19% of the Company’s total Revenues in 2002 compared to 8.3% in 2001.

Cost of System Sales. Cost of system sales consists primarily of hardware and peripherals for site-based systems and labor. These costs are expensed as products are shipped. Cost of system sales increased 11.7% to $43.3 million in 2002, compared to $38.8 million in 2001. This increase was directly attributable to the increase in system sales during 2002 as compared to 2001. Cost of system sales as a percentage of system sales decreased to 53.2% in 2002 from 54.4% in 2001. This decrease was due primarily to the increase in system sales revenues over the prior periods, which enabled certain fixed costs to be leveraged over a larger revenue base, as well as changes in product sales mix during 2002. These increased efficiencies were somewhat offset by an increase in amortization of capitalized software costs during 2002 over the same period in 2001. Amortization of capitalized software development costs increased 74.7% to $4.1 million in 2002 from $2.4 million 2001 due to the general release of the Radiant 6e Enterprise Productivity Suite.

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 2.5% to $39.0 million in 2002 from $38.0 million in 2001. The increase was due primarily to increases in personnel associated with the effort of supporting higher revenues in this area. Cost of client support, maintenance and other services as a percentage of client support, maintenance and other services revenues decreased to 60.2% in 2002 from 62.7% in 2001 due to increased efficiencies and staff utilization.

Product Development Expenses. Product development expenses consist primarily of wages and materials expended on product development efforts excluding any development expenses related to associated revenues which are included in costs of client support, maintenance and other services. Product development expenses increased 28.8% to $14.5 million in 2002, compared to $11.2 million in 2001. This increase was due primarily to increased development costs resulting from the acquisitions of HotelTools and Breeze during 2001, as well as the reduction in capitalized software development costs during 2002. As more fully described in Note 3 to the consolidated financial statements, during 2002 the Company

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capitalized software development costs of $5.9 million, or 29.0% of its total product development costs, compared to $8.0 million, or 41.7%, during 2001. Product development expenses as a percentage of total revenues increased to 9.9% during 2002 from 8.5% during 2001 as product development expenses increased at a faster pace than revenues.

Sales and Marketing Expenses. Sales and marketing expenses increased 7.2% to $21.1 million in 2002, compared to $19.7 million in 2001. This increase was the direct result of increased revenues during 2002 over 2001, resulting in increased bonus and commission expense. Sales and marketing expenses as a percentage of total revenues were 14.5% and 14.9% for 2002 and 2001, respectively.

Depreciation and Amortization. Depreciation and amortization expenses decreased 48.2% to $5.0 million in 2002, compared to $9.6 million in 2001. This decrease resulted primarily from a decrease in goodwill amortization of approximately $2.3 million during 2002 attributed to the adoption of SFAS No. 142 (See Note 2 and Note 6 to the consolidated financial statements). As a result of the adoption of SFAS No. 142, the Company ceased amortization of goodwill on all of its acquisitions made prior to June 30, 2001. Additionally, the decrease is due to the retirement of certain fully deprecated fixed assets during 2002. Depreciation and amortization as a percentage of total revenues was 3.4% and 7.3% in 2002 and 2001, respectively.

Non-recurring charges. On January 23 and 26, 2001, respectively, the Company announced the permanent closure of its facilities in Hillsboro, Oregon and Pleasanton, California. The decision was made in an effort to reduce costs and consolidate operations at the Company’s headquarters in Alpharetta, Georgia. The Hillsboro office had served primarily as a sales office for the Company’s small business food products, while the Pleasanton office had served primarily as a sales office for hospitality and food service products. The office closure costs related to these two offices are comprised primarily of severance benefits and lease reserves. As part of the closings, the Company terminated 25 of the 34 employees at these facilities. As a result, the Company recorded a non-recurring charge of approximately $1.0 million associated with this action during the first of quarter 2001. At December 31, 2002, the Company had no remaining liabilities related to the remaining exit costs.

General and Administrative Expenses. General and administrative expenses decreased 15.0% to $12.8 million in 2002, compared to $15.1 million in 2001. The decrease was due primarily to increased efficiencies, reduction of certain support personnel and other cost cutting measures, including a change in compensation to its senior management team. Under this plan, each senior leadership team member was granted a certain number of stock options in return for a specified reduction in salary compensation (as more fully described in Note 13 to the consolidated financial statements). General and administrative expenses as a percentage of total revenues decreased to 8.8% in 2002 from 11.4% in 2001, as total revenues grew at a faster pace than these expenses.

Interest Income, Net. Net interest income decreased 50.1% to $754,000 in 2002, compared to $1.5 million in 2001. The Company’s interest income is derived from the investment of its cash and cash equivalents. The decreases in net interest income resulted primarily from a decrease in cash and cash equivalents from an average cash balance of $34.1 million during 2002 from $38.0 million during 2001. Additionally, the Company’s weighted average interest rates it receives on cash balances declined in 2002 over 2001. See “—Liquidity and Capital Resources” and “Item 3. Quantitative and Qualitative Disclosures About Market Risks.”

Income Tax Provision. The Company recorded a tax provision of $4.6 million, or an effective tax rate of 41.4% in 2002 compared to a tax provision of $183,000, or an effective tax rate of 74.3% in 2001. As more fully explained in Note 10 of the consolidated financial statements, the tax rate decrease in 2002 was primarily due to an increase in the Company’s pretax income of $11.2 million in 2002 compared to its pretax loss of $245,000 in 2001.

Net Income (Loss). Net income for 2002, was $6.5 million, or $0.23 per diluted share, an increase of $7.0 million, or $0.25 per diluted share, over a net loss of $428,000, or $0.02 per diluted share, for 2001.

Liquidity and Capital Resources

The Company’s working capital decreased $21.7 million, or 33%, to $44.5 million at December 31, 2003 compared to $66.2 million at December 31, 2002. This decrease was due primarily to a decrease in accounts receivable of $12.6

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million, or 40%, to $18.6 million at December 31, 2003 compared to $31.2 million at December 31, 2002 as cash collections exceeded revenues during 2003. Additionally, Cash and cash equivalents decreased $9.6 million, or 22% to $33.8 million at December 31, 2003 compared with $43.4 million at December 31, 2002. During 2003, the Company used $15.0 million in cash on investing activities and $335,000 in financing activities. The Company funds its business through cash generated by operations. If near-term demand for the Company’s products weakens or if significant anticipated sales in any quarter do not close when expected, the availability of such funds may be adversely affected. If the need arises, management believes that based on its current balance sheet and financial position, it would be successful in securing third-party financing which would provide an additional source of liquidity for the Company.

Cash provided by operating activities was $6.3 million and $22.5 million in 2003 and 2002, respectively. In 2003, cash provided by operating activities consisted primarily of a $17.7 million non-cash charge for the impairment of capitalized software and acquired technology, $10.6 million for the impairment of the TriYumf Asset and $6.2 million for the impairment of goodwill. These impairments are more fully described in Notes 5, 6 and 7 of the consolidated financial statements. In addition, cash provided by operating activities included a decrease in accounts receivable of $12.6 million as cash collections exceeded revenues during 2003, a decrease in inventories of $443,000, an increase in client deposits and deferred revenue of $2.5 million as client payments were received in advance of delivered goods and services and depreciation and amortization of $8.0 million. These amounts were offset by a net loss of $47.7 million, a decrease in accounts payable and accrued liabilities, net, of $3.5 million and an increase in other assets of $1.5 million. The changes in accounts payable and accrued liabilities were due to the timing of certain vendor payments. In the fiscal period 2002, cash provided by operating activities consisted primarily of net income of $6.5 million, depreciation and amortization of $10.0 million, as well as decreased inventories of $3.7 million, decreased other assets of $2.5 million, an increase in accounts payable of $4.6 million, an increase in client deposits and deferred revenue of $3.7 million and an increase in accrued liabilities of $1.5 million. These amounts were offset by an increase in accounts receivable of $10.2 million.

Cash used in investing activities during 2003 and 2002 was $15.6 million and $15.1 million, respectively. The uses of cash in investing activities during 2003 consisted primarily of purchases of property and equipment of $3.9 million and capitalized software costs of $5.5 million as well as the purchase of the TriYumf Asset and capitalized professional services costs for a total of $5.5 million. As more fully described in Note 6 of the consolidated financial statements, the Company paid Yum! Brands $4.4 million as the third installment for the source code and object code for certain back office software previously developed by Yum! Brands and capitalized approximately $620,000 in professional services costs during the fiscal period 2003. The uses of cash in investing activities for the fiscal period 2002 was due to the Company’s payment of the second installment for the purchase of the TriYumf Asset of $5.2 million, capitalized professional services costs of approximately $800,000, purchases of property and equipment of $2.7 million and capitalized software development costs of $5.9 million.

Cash of $336,000 was used in financing activities during the fiscal period 2003 due primarily to fund the Company’s purchase of common stock pursuant to its stock repurchase program for approximately $2.0 million and principal payments under capital lease obligations of approximately $491,000, offset by cash received from the exercise of stock options of approximately $836,000 and approximately $1.1 million of cash received from stock issued under the Company’s employee stock purchase plan. Cash of $2.1 million was provided by financing activities during the fiscal period 2002 due primarily to approximately $1.3 million of cash received from the exercise of employee stock options, approximately $818,000 of cash received from repayments of shareholder loans and approximately $560,000 of cash received from stock issued under the Company’s employee stock purchase plan, offset by principal payments under capital lease obligations of approximately $460,000 and approximately $196,000 used to purchase the Company’s common stock pursuant to its stock repurchase plan.

In May 2001, the Board of Directors of the Company renewed the stock repurchase program whereby the Company was authorized to repurchase up to 1.0 million shares of common stock of the Company through May 2002. During the fiscal period 2002, the Company repurchased and subsequently retired approximately 25,000 shares at prices ranging from $7.71 to $8.00 per share, for total consideration of approximately $196,000 under this program. In August 2002, the Board of Directors of the Company authorized a re-commencement of the Company’s stock repurchase program authorizing the repurchase of up to 1.0 million shares of its common stock through August 2003. The Company did not repurchase any shares under this plan in 2002. During the fiscal period 2003, the Company repurchased and subsequently

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retired approximately 495,000 shares at prices ranging from $5.81 to $8.16 per share, for total consideration of approximately $3.4 million under this program.

As more fully described in Note 16 of the consolidated financial statements, on October 13, 2003 the Company announced it had entered into a definitive agreement with Erez Goren, the Company’s then Co-Chairman and Co-Chief Executive Officer, in connection to the Company’s previously announced plan to split-off its enterprise software business. The transaction was subsequently completed on January 31, 2004. Under the agreement Company contributed specified assets and liabilities of the enterprise software business, together with $4.0 million in cash and assets, to a newly formed subsidiary, and then transferred all of the shares of this 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.

As more fully described in Note 16 of the consolidated financial statements, on December 15, 2003 the Company announced that it had entered into a definitive agreement to acquire Aloha Technologies, a leading provider of point-of-sale (POS) systems for the hospitality industry. On January 13, 2004 the Company completed the acquisition of substantially all of the assets of Aloha Technologies. Under the terms of the purchase agreement, the purchase price consisted of $11 million in cash, a five-year note in the principal amount of $19 million (subject to a post-closing adjustment), a one-year note in the principal amount of $1.7 million, 2,353,846 shares of restricted Radiant common stock, and the assumption of Aloha’s accounts payable, contractual obligations and certain other liabilities. The company believes that the incremental cash flow from the operations of the business unit are sufficient to fund the ongoing annual debt obligations under the agreement.

The Company leases office space, equipment and certain vehicles under non-cancelable operating lease agreements expiring on various dates through 2013. Additionally, the Company leases various equipment and furniture under a four-year capital lease agreement. The capital lease runs until March 31, 2005. Aggregate future minimum lease payments under the capital lease and non-cancelable operating leases as of December 31, 2003, and contractual obligations including the purchase of Aloha Technologies are as follows (in thousands):

The Company believes there are opportunities to grow the business through the acquisition of complementary and synergistic companies, products, and technologies. We look for acquisitions that can be readily integrated and accretive to earnings, although we may pursue smaller non-accretive acquisitions that will shorten our time to market with new technologies. We believe the general size of cash acquisitions we would currently consider would be in the $1 million to $15 million range. Any material acquisition could result in a decrease to our working capital depending on the amount, timing and nature of the consideration to be paid. In addition, any material acquisitions of complementary or synergistic companies, products or technologies could require that we obtain additional equity financing. There can be no assurance that such additional financing will be available or that, if available, such financing will be obtained on terms favorable to us and would not result in additional dilution to our stockholders.

The Company believes that its cash and cash equivalents, investments in marketable securities, and funds generated from operations will provide adequate liquidity to meet our normal operating requirements, as well as to fund the above

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mentioned transactions that closed subsequent to year end, for at least the next twelve months.

Critical Accounting Estimates

General

The Company’s discussion and analysis of its financial condition and results of operations are based upon its consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires the Company’s management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, the Company evaluates its estimates, including those related to revenue recognition, product returns, bad debts, inventories, intangible assets, and income taxes. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. An accounting estimate is a critical accounting estimate for purposes of this disclosure only if it meets two criteria. First, the accounting estimate must require the Company to make assumption about matters that are highly uncertain at the time of the accounting estimate is made. Second, it must be the case that different estimates that the Company reasonably could have used for the accounting estimate in the current period, or changes in the accounting estimate that are reasonably likely to occur from period to period, would have a material impact on the presentation of the Company’s financial condition, changes in financial condition or results of operations.

Management believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of its consolidated financial statements.

Revenue Recognition

The Company’s revenue is generated primarily through software and system sales, support and maintenance, and other services. The Company recognizes revenue using the guidance from AICPA Statement of Position (SOP) 97-2, Software Revenue Recognition, as amended by SOP 98-9, Modification of SOP 97-2, Software Revenue Recognition, with Respect to Certain Transactions, SOP 81-1, Accounting for Performance of Construction-Type and Certain Production-Type Contracts (“SOP 81-1”), Accounting Research Bulletin (ARB) No. 45, Long-Term Construction-Type Contracts (“ARB 45”), SEC Staff Accounting Bulletin No. 104, Revenue Recognition and Emerging Issues Task Force No. 00-03, Application of AICPA Statement of Position 97-2 to Arrangements That Include the Right to Use Software Stored on Another Entity’s Hardware. Under these guidelines, the Company recognizes revenue when the following criteria are met: (1) persuasive evidence of an agreement exists; (2) delivery of the product has occurred; (3) the fee is fixed or determinable; (4) collectibility is reasonably assured; and (5) remaining obligations under the agreement are insignificant. Under multiple element arrangements, where each element is separately stated, sold and priced, the Company allocates revenues to the various elements based on vendor-specific objective evidence (“VSOE”) of fair value. The Company’s VSOE of fair value is determined based on the price charged when the same element is sold separately. If evidence of fair value does not exist for all elements in a multiple element arrangement, the Company recognizes revenue using the residual method. Under the residual method, the fair value of the undelivered elements is deferred and the remaining portion of the arrangement is recognized as revenue.

Under contracts where revenue is recognized using the percentage of completion method under the provisions of SOP 81-1, the Company measures its progress-to-completion by using input measures, primarily labor hours. The Company continually updates and revises estimates of its input measures. If those estimates indicate a loss will be incurred, the entire loss is recognized in that period.

Allowance for doubtful accounts

The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of clients to make required payments. Estimates are developed by using standard quantitative measures based on historical losses, adjusting for current economic conditions and, in some cases, evaluating specific client accounts for risk of loss. The

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establishment of reserves requires the use of judgment and assumptions regarding the potential for losses on receivable balances. Though the Company considers these balances adequate and proper, if the financial condition of its clients or channel partners were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.

Inventories

Inventories are stated at the lower of cost or market value. Cost is principally determined by the first-in, first-out method. The Company records adjustments to the value of inventory based upon its forecasted plans to sell its inventories. The physical condition (e.g., age and quality) of the inventories is also considered in establishing its valuation. These adjustments are estimates, which could vary significantly, either favorably or unfavorably, from actual requirements if future economic conditions, client inventory levels or competitive conditions differ from expectations.

Long-Lived Assets

The Company evaluates the recoverability of long-lived assets and finite-lived identifiable intangibles not held for sale whenever events or changes in circumstances indicate that an asset’s carrying amount may not be recoverable. Such circumstances could include, but are not limited to, (1) a significant decrease in the market value of an asset, (2) a significant adverse change in the extent or manner in which an asset is used or in its physical condition, or (3) an accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of an asset. The Company measures the carrying amount of the asset against the estimated undiscounted future cash flows associated with it. Should the sum of the expected future net cash flows be less than the carrying value of the asset being evaluated, an impairment loss would be recognized. The impairment loss would be calculated as the amount by which the carrying value of the asset exceeds the fair value of the asset. The fair value is measured based on quoted market prices, if available. If quoted market prices are not available, the estimate of fair value is based on various valuation techniques, including the discounted value of estimated future cash flows.

Goodwill and Intangible Assets

The Company has significant intangible assets related to goodwill and other acquired intangibles as well as capitalized software costs. The determination of related estimated useful lives and whether or not these assets are impaired involves significant judgments. Changes in strategy and/or market conditions could significantly impact these judgments and require adjustments to recorded asset balances.

In accordance with SFAS No. 142 the Company evaluates the carrying value of goodwill as of January 1^st of each year and between annual evaluations if events occur or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying amount. Such circumstances could include, but are not limited to, (1) a significant adverse change in legal factors or in business climate, (2) unanticipated competition, or (3) an adverse action or assessment by a regulator. When evaluating whether goodwill is impaired, the Company compares the fair value of the reporting unit to which the goodwill is assigned to its carrying amount, including goodwill. If the carrying amount of a reporting unit exceeds its fair value, then the amount of the impairment loss must be measured. The impairment loss would be calculated by comparing the implied fair value of reporting unit goodwill to its carrying amount. In calculating the implied fair value of goodwill, the fair value of the reporting unit is allocated to all of the other assets and liabilities of that unit based on their fair values. The excess of the fair value of a reporting unit over the amount assigned to its other assets and liabilities is the implied fair value of goodwill. An impairment loss would be recognized when the carrying amount of goodwill exceeds its implied fair value.

The Company’s software development processes and procedures determine the timing of capitalization of certain development costs. In addition, these software development processes and procedures and estimated future sales determine whether the cost is classified as development expense or cost of license fees. Management is required to use its judgment in determining whether development costs meet the criteria for immediate expense or capitalization.

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Income Taxes

The Company has significant amounts of deferred tax assets that are reviewed for recoverability and valued accordingly. These assets are evaluated by using estimates of future taxable income streams and the impact of tax planning strategies. Valuation allowances related to tax accruals and assets could be impacted by changes to tax codes, changes in statutory tax rates and the Company’s future taxable income levels.

Recent Accounting Pronouncements

In July 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard No. 143, Accounting for Asset Retirement Obligations (“SFAS No. 143”). SFAS No. 143 requires entities to record the fair value of a liability for an asset retirement obligation in the period in which it is incurred. When the liability is initially recorded, the entity capitalizes the cost by increasing the carrying amount of the related long-lived asset. Over time, the liability is accreted to its present value each period and the capitalized cost is depreciated over the useful life of the related asset. Upon settlement of the liability, the entity either settles the obligation for the amount recorded or incurs a gain or loss. SFAS No. 143 is effective for fiscal years beginning after June 15, 2002. The adoption of this statement did not have a material effect on the Company’s results of operations and financial position.

In August 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (“SFAS No. 144”). SFAS No. 144 supersedes Financial Accounting Standards Board Statement No. 121, Accounting for the Impairment of Long—Lived Assets and for Long-lived Assets to Be Disposed Of (“SFAS No. 121”), and the accounting and reporting provisions of Accounting Principles Board Opinion No. 30, Reporting the Results of Operations – Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions (“Opinion 30”) for the disposal of a segment of a business (as previously defined in Opinion 30). The Financial Accounting Standards Board issued SFAS No. 144 to establish a single accounting model, based on the framework established in SFAS No. 121, for long-lived assets to be disposed of by sale. SFAS No. 144 broadens the presentation of discontinued operations in the income statement to include a component of an entity (rather than a segment of a business). A component of an entity comprises operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the entity. SFAS No. 144 also requires that discontinued operations be measured at the lower of the carrying amount or fair value less cost to sell. The Company adopted SFAS 144 effective January 1, 2002. The adoption had no impact on the Company’s results of operations.

In November 2001, the EITF issued EITF No. 01-14, (“EITF 01-14”), Income Statement Characterization of Reimbursements Received for “Out-of-Pocket Expenses” Incurred. EITF 01-14 establishes that reimbursements received for out-of-pocket expenses should be reported as revenue in the income statement. Historically, the Company has classified reimbursed out-of-pocket expenses as a reduction in the cost of consulting services. The Company adopted the guidance of EITF 01-14 in first quarter of 2002. For the years ended December 31, 2003 and 2002, the adoption of EITF 01-14 resulted in an increase in reported client support, maintenance and other services revenues and related costs associated with these revenues of approximately $2.2 million and $1.9 million, respectively. The Company did not reclassify amounts for 2001 as the amounts were immaterial. The impact of this adoption did not and will not affect the Company’s net income or loss in any past or future periods.

In May 2002, the Financial Accounting Standards Board issued Statement No. 145, Rescission of FASB Statements 4, 44, 64, Amendment to FASB Statement No. 13, and Technical Corrections as of April 2002 (“SFAS No. 145”). SFAS No. 145 became effective for 2004. Management does not expect SFAS No. 145 to have a material impact on the consolidated financial statements.

In July 2002, the Financial Accounting Standards Board issued Statement No. 146, Accounting for Costs Associated with Exit or Disposal Activities (“SFAS No. 146”), which replaces EITF Issue No. 94-3, Liability Recognition for Certain

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Employee Termination Benefits and Other Costs to Exit an Activity. SFAS No. 146 requires that liabilities associated with exit or disposal activities be recognized when they are incurred. Under EITF Issue No. 94-3, a liability for exit costs is recognized at the date of a commitment to an exit plan. SFAS No. 146 also requires that the liability be measured and recorded at fair value. The provisions of SFAS No. 146 are effective for restructuring activities initiated after December 31, 2002. The adoption of SFAS No. 146 had no impact on the Company’s consolidated financial statements.

In November 2002, the Financial Accounting Standards Board issued FASB Interpretation No. 45 (“FIN 45”), Guarantor’s Accountings and Disclosure Requirements for Guarantees, Including Indirect Guarantees of the Indebtedness of Others, which clarifies the requirement of SFAS No. 5, Accounting for Contingencies, relating to a guarantor’s accounting for and disclosures of certain guarantee issues. The adoption of FIN 45 had no impact on the Company’s consolidated financial statements.

In December 2002, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 148, Accounting for Stock-Based Compensation—Transition and Disclosure (“SFAS No. 148”) which is effective for fiscal years ending after December 15, 2002. SFAS No. 148 amends SFAS No. 123 to provide alternative methods of transition to SFAS No. 123’s fair value method of accounting for stock-based employee compensation if a company elects to account for its equity awards under this method. SFAS No. 148 also amends the disclosure provisions of SFAS No. 123 and APB Opinion No. 28, Interim Financial Reporting, to require disclosure of the effects of an entity’s accounting policy with respect to stock-based employee compensation on reported net income and earnings per share in both annual and interim financial statements. The Company provides the comparative pro forma disclosures required by SFAS No. 148, however the Company will continue to account for stock compensation in accordance with APB 25.

In January 2003, the Financial Accounting Standards Board issued FASB Interpretation No. 46 (“FIN 46”), Consolidation of Variable Interest Entities. Variable interest entities are defined as entities with a level of invested equity that is not sufficient to fund future activities to permit it to operate on a stand alone basis. In December 2003, the FASB published FASB Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest Entities (FIN 46(R)). FIN 46(R), among other things, defers the effective date of implementation for certain entities. The revised interpretation is effective for the first interim or annual reporting period ending after March 15, 2004, with the exception of structures that are commonly referred to as special-purpose entities, for which the statement is effective for periods ending after December 15, 2003. The Company does not participate in variable interest entities.

In April 2003, the FASB issued SFAS No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities. SFAS No. 149 amends SFAS No. 133 for decisions made as part of the FASB’s Derivatives Implementation Group process, other FASB projects dealing with financial instruments and in connection with implementation issues raised in relation to the application of the definition of a derivative. This statement is generally effective for contracts entered into or modified after June 30, 2003 and for hedging relationships designated after June 30, 2003. The Company’s adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity. SFAS No. 150 clarifies the definition of a liability as currently defined in FASB Concepts Statement No. 6, Elements of Financial Statements, as well as other planned revisions. This statement requires a financial instrument that embodies an obligation of an issuer to be classified as a liability. In addition, the statement establishes standards for the initial and subsequent measurement of these financial instruments and disclosure requirements. SFAS No. 150 is effective for financial instruments entered into or modified after May 31, 2003 and for all other matters, at the beginning of the Company’s first quarter in 2004. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

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Interest Rates

The Company’s financial instruments that are subject to market risks are its cash and cash equivalents. During 2003, the weighted average interest rate on its cash balances was approximately 1.2%. A 10.0% increase or decrease in this rate would impact interest income by approximately $43,400.

Foreign Exchange

As more fully explained in Note 14 of the consolidated financial statements, the Company’s international revenues were $16.2 million, $21.6 million and $13.4 million for the years ended December 31, 2003, 2002 and 2001, respectively. The Company’s international business is subject to risks typical of an international business, including, but not limited to: differing economic conditions, changes in political climate, differing tax structures, other regulations and restrictions and foreign exchange rate volatility. Accordingly, the Company’s future results could be materially adversely impacted by changes in these or other factors. The effect of foreign exchange rate fluctuations on the Company in 2003, 2002 and 2001 were not material.

The following consolidated financial statements are filed with this Report:

Independent Auditors’ Report

Report of Independent Public Accountants

Consolidated Balance Sheets at December 31, 2003 and 2002

Consolidated Statements of Operations for the years ended December 31, 2003, 2002 and 2001

Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2003, 2002 and 2001

Consolidated Statements of Cash Flows for the years ended December 31, 2003, 2002 and 2001

Notes to Consolidated Financial Statements

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INDEPENDENT AUDITORS’ REPORT

INDEPENDENT AUDITOR’S REPORT

To the Board of Directors and Shareholders of

Radiant Systems, Inc.

We have audited the accompanying consolidated balance sheets of Radiant Systems, Inc. (the “Company”) as of December 31, 2003 and 2002, and the related consolidated statements of operations, shareholders’ equity and cash flows for the years then ended. Our audits also included the 2003 and 2002 financial statement schedule listed in the index at item 15. These consolidated financial statements and financial statement schedule are the responsibility of Radiant Systems’ management. Our responsibility is to express an opinion on the 2003 and 2002 financial statements and financial statement schedule based on our audits. The consolidated financial statements and financial statement schedule of Radiant Systems, Inc. for the year ended December 31, 2001, before the inclusion of the disclosures and adjustments discussed in notes 2 and 14 to the consolidated financial statements, were audited by other auditors who have ceased operations. Those auditors expressed an unqualified opinion on those consolidated financial statements and stated that such 2001 financial statement schedule, when considered in relation to the 2001 basic consolidated financial statements taken as a whole, presented fairly, in all material respects, the information set forth therein, in their reports dated February 8, 2002.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the 2003 and 2002 consolidated financial statements present fairly, in all material respects, the financial position of Radiant Systems Inc. as of December 31, 2003 and 2002, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the 2003 and 2002 financial statement schedule, when considered in relation to the 2003 and 2002 basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

As described in Note 2 to the consolidated financial statements, effective January 1, 2002, Radiant Systems, Inc. changed its method of accounting for goodwill and intangible assets to conform with Statement of Financial Accounting Standards (“SFAS”) No. 142, Goodwill and Other Intangible Assets.

As discussed above, the consolidated financial statements of Radiant Systems, Inc., for the year ended December 31, 2001 were audited by other auditors who have ceased operations. These consolidated financial statements have been revised as follows:

In our opinion, the disclosure in Note 2 regarding the adoption of SFAS 142 and the adjustments to the reportable segments described in Note 14 are appropriate and have been properly applied. However, we were not engaged to audit, review, or apply any procedures to the 2001 financial statements of the Company other than with respect to such disclosures and adjustments and, accordingly, we do not express an opinion or any other form of assurance on the 2001 financial statements taken as a whole.

DELOITTE & TOUCHE LLP

Atlanta, Georgia

March 15, 2004

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THE FOLLOWING REPORTS ARE COPIES OF A REPORT PREVIOUSLY ISSUED BY ARTHUR ANDERSEN LLP AND HAS NOT BEEN REISSUED BY ARTHUR ANDERSEN LLP

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Radiant Systems, Inc.:

We have audited the accompanying consolidated balance sheets of RADIANT SYSTEMS, INC. (a Georgia corporation) AND SUBSIDIARIES as of December 31, 2001 and 2000, and the related consolidated statements of operations, shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2001. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Radiant Systems, Inc. and subsidiaries as of December 31, 2001 and 2000, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2001 in conformity with accounting principles generally accepted in the United States.

/s/ ARTHUR ANDERSEN LLP

Atlanta, Georgia

February 8, 2002

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULE

To Radiant Systems, Inc.:

We have audited in accordance with auditing standards generally accepted in the United States, the financial statements of Radiant Systems, Inc. and subsidiaries included in this Form 10-K and have issued our report thereon dated February 8, 2002. Our audits were made for the purpose of forming an opinion on those statements taken as a whole. The forgoing schedule is the responsibility of the Company’s management and is presented for purposes of complying with the Securities and Exchange Commission’s rules and is not part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole.

/s/    Arthur Andersen LLP

Atlanta, Georgia

February 8, 2002

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RADIANT SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2003 AND 2002

(IN THOUSANDS, EXCEPT SHARE DATA)

The accompanying notes are an integral part of these consolidated balance sheets.

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RADIANT SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001

(IN THOUSANDS, EXCEPT PER SHARE DATA)